# CSB Bancorp, Inc.: Form 10-Q for the period ended Sep 30, 2017

- Company: [CSB Bancorp, Inc.](/companies/csbb.md) (CIK 880417)
- Form: 10-Q
- Filed: 2017-11-09
- Accepted by EDGAR: Nov 9, 2017, 15:47 ET
- Period: 2017-09-30
- Accession: 0001193125-17-338705
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/880417/000119312517338705/d472238d10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/880417/000119312517338705/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2017-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Interest expense | 3 months, 2017-07-01 to 2017-09-30 | $562.0k | us-gaap:InterestExpense |
| Interest expense | 9 months, 2017-01-01 to 2017-09-30 | $1.4m | us-gaap:InterestExpense |
| Income tax | 3 months, 2017-07-01 to 2017-09-30 | $826.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2017-01-01 to 2017-09-30 | $2.3m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2017-07-01 to 2017-09-30 | $1.9m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2017-01-01 to 2017-09-30 | $5.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 9 months, 2017-01-01 to 2017-09-30 | $1.94 | us-gaap:EarningsPerShareBasicAndDiluted |
| Capital expenditure | 9 months, 2017-01-01 to 2017-09-30 | $805.0k | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 9 months, 2017-01-01 to 2017-09-30 | $1.1m | us-gaap:PaymentsOfDividendsCommonStock |
| Total assets | at 2017-09-30 | $710.8m | us-gaap:Assets |
| Total liabilities | at 2017-09-30 | $641.0m | us-gaap:Liabilities |
| Shareholders' equity | at 2017-09-30 | $69.8m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 24,749 characters.

The following management’s discussion and analysis focuses on the consolidated financial condition of the Company at September 30, 2017 as compared to December 31, 2016, and the consolidated results of operations for the three and nine month periods ended September 30, 2017 compared to the same periods in 2016. The purpose of this discussion is to provide the reader with a more thorough understanding of the Consolidated Financial Statements. This discussion should be read in conjunction with the interim Consolidated Financial Statements and related footnotes contained in Part I, Item 1 of this Quarterly Report.

### FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report are not historical facts but rather are forward-looking statements that are subject to certain risks and uncertainties. When used herein, the terms “anticipates”, “plans”, “expects”, “believes”, and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company’s actual results, performance or achievements may materially differ from those expressed or implied in the forward-looking statements. Risks and uncertainties that could cause or contribute to such material differences include, but are not limited to, general economic conditions, interest rate environment, competitive conditions in the financial services industry, changes in law, governmental policies and regulations, and rapidly changing technology affecting financial services. Other factors not currently anticipated may also materially and adversely affect the Company’s results of operations, cash flows, and financial position. There can be no assurance that future results will meet expectations. While the Company believes that the forward-looking statements in this report are reasonable, the reader should not place undue reliance on any forward-looking statement.

The Company does not undertake, and specifically disclaims any obligation, to publicly revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as may be required by applicable law.

### FINANCIAL CONDITION

Total assets were $711 million at September 30, 2017 as compared to $670 million at December 31, 2016. During the nine month period ended September 30, 2017, net loans increased $34 million. Cash, cash equivalents, and securities increased $5 million. On the liability side, deposits and repurchase agreements increased by $27 million.

Net loans increased $34 million, or 7%, during the nine months ended September 30, 2017. The increase occurred as demand for both business and consumer loans within the bank’s markets continued. The bank has added lending and operations staff to accommodate the increase in demand. Commercial loans including commercial real estate loans increased $21 million, or 7%, while construction and land development loans increased $487 thousand, or 2%. Residential real estate loans increased $9 million, or 6%, and consumer loans increased $3 million, or 25% from December 31, 2016. Home purchase activity has increased and consumers continued to refinance their mortgage loans for lower long-term fixed rates. Residential mortgage loan originations for the nine months ended September 30, 2017 and 2016 were $44 million and $48 million, respectively. Originations sold into the secondary market were $7 million and $6 million, respectively during the nine month periods ended September 30, 2017 and September 30, 2016. The Bank originates and sells primarily fixed-rate thirty year mortgages into the secondary market.

The allowance for loan losses as a percentage of total loans was 1.07% at September 30, 2017 as compared to 1.11% at December 31, 2016. Outstanding loan balances increased 7% to $509 million at September 30, 2017. A provision of $965 thousand and net charge-offs of $820 thousand, increased the allowance for loan losses to $5.4 million at September 30, 2017.

Nonaccrual loans increased during the first nine months of 2017. For the nine months ending September 30, 2017 loans totaling $6.1 million were placed on nonaccrual status, there were $1.0 million charge-downs recognized, and pay downs of $1.8 million were received. The increase in nonaccrual loans was primarily due to two lending relationships comprised of several loans. Management continues to work through the resolution of the two credit facilities.

*(Dollars in thousands)*

|  | September 30, 2017 | December 31, 2016 | September 30, 2016 |
| --- | ---: | ---: | ---: |
| Non-performing loans | $4,930 | $1,684 | $2,816 |
| Other real estate | — | — | 33 |
| Allowance for loan losses | 5,436 | 5,291 | 5,002 |
| Total loans | 509,458 | 475,449 | 463,211 |
| Allowance: Loans | 1.07% | 1.11% | 1.08% |
| Allowance: Non-performing loans | 1.1x | 3.1x | 1.8 x |

The ratio of gross loans to deposits was 89.1% at September 30, 2017, compared to 87.9% at December 31, 2016.

The Company has no exposure to government-sponsored enterprise preferred stocks, collateralized debt obligations, or trust preferred securities. Management has considered industry analyst reports, sector credit reports, and the volatility within the bond market in concluding that the gross unrealized losses of $1 million within the available-for-sale and held-to-maturity portfolios as of September 30, 2017, were primarily the result of customary and expected fluctuations in the bond market and not necessarily the expected cash flows of the individual securities. As a result, all security impairments on September 30, 2017, are considered temporary and no impairment loss relating to these securities has been recognized.

Deposits increased $31 million, or 6%, from December 31, 2016 with noninterest bearing deposits decreasing $261 thousand and interest-bearing deposit accounts increasing $31 million. Total deposits as of September 30, 2017 are $49 million greater than September 30, 2016 deposit balances. On a year over year comparison, increases were recognized in noninterest-bearing demand deposits, interest-bearing demand, savings, and money market savings accounts.

Short-term borrowings consisting of overnight repurchase agreements with retail customers decreased $4 million to $45 million at September 30, 2017 as compared to December 31, 2016 and other borrowings increased $9 million as the Company obtained a $10 million long-term advance and repaid FHLB advances with required monthly amortization.

Total shareholders’ equity amounted to $70 million, or 9.8%, of total assets, at September 30, 2017, compared to $65 million, or 9.8%, of total assets, at December 31, 2016. The increase in shareholders’ equity during the nine months ending September 30, 2017 was due to net income of $5 million and other comprehensive income of $802 thousand, partially offset by dividends declared of $2 million. The Company and the Bank met all regulatory capital requirements at September 30, 2017.

### RESULTS OF OPERATIONS

### Three months ended September 30, 2017 and 2016

For the quarters ended September 30, 2017 and 2016, the Company recorded net income of $1.9 million and $1.7 million and $.68 and $.61 per share, respectively. The $172 thousand increase in net income for the quarter was primarily the result of a $707 thousand increase in net interest income. The increase was partially offset by an increase in other noninterest expenses of $292 thousand, an increase in the provision for loans losses of $116 thousand, and an increase in the tax provision of $86 thousand. Return on average assets and return on average equity were 1.05% and 10.62%, respectively, for the three month period of 2017, compared to 1.03% and 10.29%, respectively for the same quarter in 2016.

### Average Balance Sheets and Net Interest Margin Analysis

*(Dollars in thousands)*

| ASSETS | For the three months ended September 30, 2017 Average balance | Average rate | 2016 Average balance | Average rate |
| --- | ---: | ---: | ---: | ---: |
| Interest-earning deposits in other banks | $25,144 | 1.37% | $13,847 | 0.66% |
| Federal funds sold | 493 | 1.29 | 690 | 0.52 |
| Taxable securities | 100,111 | 2.37 | 116,220 | 2.17 |
| Tax-exempt securities | 31,741 | 3.24 | 28,933 | 3.51 |
| Loans | 504,943 | 4.65 | 456,865 | 4.40 |
| Total earning assets | 662,432 | 4.11% | 616,555 | 3.84% |
| Other assets | 39,608 |  | 37,080 |  |
| **TOTAL ASSETS** | $702,040 |  | $653,635 |  |
| **LIABILITIES AND SHAREHOLDERS’ EQUITY** |  |  |  |  |
| Interest-bearing demand deposits | $107,459 | 0.16% | $83,699 | 0.04% |
| Savings deposits | 171,559 | 0.20 | 162,561 | 0.07 |
| Time deposits | 111,741 | 0.85 | 115,925 | 0.72 |
| Other borrowed funds | 70,761 | 1.09 | 65,933 | 0.71 |
| Total interest bearing liabilities | 461,520 | 0.48% | 428,118 | 0.34% |
| Non-interest bearing demand deposits | 168,436 |  | 157,643 |  |
| Other liabilities | 2,347 |  | 2,403 |  |
| Shareholders’ Equity | 69,737 |  | 65,471 |  |
| **TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY** | $702,040 |  | $653,635 |  |
| Taxable equivalent net interest spread |  | 3.63% |  | 3.50% |
| Taxable equivalent net interest margin |  | 3.77% |  | 3.61% |

Interest income for the quarter ended September 30, 2017, was $6.8 million representing a $903 thousand increase, or a 15% improvement, compared to the same period in 2016. This increase was primarily due to average loan volume increasing $48 million for the quarter ended September 30, 2017 as compared to the third quarter 2016. The volume of taxable securities declined $16 million on a year over year comparison, resulting in a decrease in interest income of $95 thousand from the volume reduction. Interest expense for the quarter ended September 30, 2017 was $562 thousand, an increase of $196 thousand, or 54%, from the same period in 2016. The increase in interest expense occurred primarily due to an increase in rate on all interest-bearing liabilities for the quarter ended September 30, 2017.

For the quarter ended September 30, 2017, the provision for loan losses was $280 thousand, compared to a provision of $164 thousand for the same quarter in 2016. For more discussion see Results of Operations for the nine months ended September 30. The provision for loan losses is determined based on management’s calculation of the adequacy of the allowance for loan losses, which includes provisions for classified loans as well as for the remainder of the portfolio based on historical data, including past charge-offs and current economic trends.

Noninterest income for the quarter ended September 30, 2017, was $1.1 million, a decrease of $41 thousand, or 4%, compared to the same quarter in 2016. Service charges on deposit accounts decreased $14 thousand, or 5%, compared to the same quarter in 2016 primarily from decreases in overdraft fees. The gain on the sale of mortgage loans to the secondary market increased to $94 thousand for the quarter ending September 30, 2017, from $71 thousand in the same quarter in 2016. Debit card interchange income increased $28 thousand, or 10%, with greater fee income in the third quarter of 2017 Fees from trust and brokerage services decreased $91 thousand to $122 thousand for the third quarter 2017 as compared to the same quarter in 2016 due to the realignment of both divisions, the use of representative on demand in the brokerage division in 2017 with decreased commissions, as well as a decrease of assets under management.

Noninterest expenses for the quarter ended September 30, 2017 increased $292 thousand, or 7%, compared to the third quarter of 2016. Salaries and employee benefits increased $212 thousand, or 9%, a result of increases in employees, base salary, medical, and other benefits. Debit card expenses increased $19 thousand, or 16%, compared to the third quarter 2016 due to the replacement of all outstanding debit cards with EMV chip cards. Software expense rose $16 thousand quarter over quarter with additional investment. Occupancy expense increased $7 thousand in 2017 over the third quarter of 2016. Professional and director fees increased $36 thousand for the quarter ended September 30, 2017 as compared to the third quarter 2016. The increase resulted from an increase in internal audit fees and legal fees for loan collections, partially offset by a decrease in other outside service fees.

Federal income tax expense increased $86 thousand, or 12%, for the quarter ended September 30, 2017 as compared to the third quarter of 2016. The provision for income taxes was $826 thousand (effective rate of 30.7%) for the quarter ended September 30, 2017, compared to $740 thousand (effective rate of 30.4%) for the same quarter ended 2016.

### RESULTS OF OPERATIONS

### Nine months ended September 30, 2017 and 2016

Net income for the nine months ended September 30, 2017, was $5.3 million or $1.94 per share, as compared to $4.8 million or $1.74 per share during the same period in 2016. Return on average assets and return on average equity were 1.04% and 10.44%, respectively, for the nine month period of 2017, compared to 0.99% and 9.99%, respectively for 2016.

Comparative net income increased as total interest and dividend income increased $2 million or 12% for the nine month period in 2017 as compared to 2016. The provision for loan losses increased $472 thousand or 96% during the same comparative period. Noninterest income increased $36 thousand to $3.2 million, or 1%, for the nine month period ending in 2017 as compared to 2016. Noninterest expense increased to $12.6 million for the nine months ended September 30, 2017, an increase of $575 thousand or 5% from the same period last year.

### Average Balance Sheet and Net Interest Margin Analysis

*(Dollars in thousands)*

| ASSETS | For the nine months ended September 30, 2017 Average balance | Average rate | 2016 Average balance | Average rate |
| --- | ---: | ---: | ---: | ---: |
| Due from banks-interest bearing | $20,212 | 1.16% | $13,886 | 0.68% |
| Federal funds sold | 629 | 0.85 | 558 | 0.48 |
| Taxable securities | 101,319 | 2.37 | 124,398 | 2.18 |
| Tax-exempt securities | 31,497 | 3.27 | 27,737 | 3.55 |
| Loans | 492,075 | 4.61 | 443,977 | 4.45 |
| Total earning assets | 645,732 | 4.08% | 610,556 | 3.85% |
| Other assets | 39,478 |  | 36,451 |  |
| **TOTAL ASSETS** | $685,210 |  | $647,007 |  |
| **LIABILITIES AND SHAREHOLDERS’ EQUITY** |  |  |  |  |
| Interest bearing demand deposits | $94,621 | 0.10% | $82,973 | 0.04% |
| Savings deposits | 168,998 | 0.17 | 164,140 | 0.07 |
| Time deposits | 111,647 | 0.79 | 117,266 | 0.73 |
| Other borrowed funds | 69,957 | 0.89 | 65,017 | 0.72 |
| Total interest bearing liabilities | 445,223 | 0.42% | 429,396 | 0.34% |
| Non-interest bearing demand deposits | 169,131 |  | 151,479 |  |
| Other liabilities | 2,684 |  | 2,136 |  |
| Shareholders’ Equity | 68,172 |  | 63,996 |  |
| **TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY** | $685,210 |  | $647,007 |  |
| Taxable equivalent net interest spread |  | 3.66% |  | 3.51% |
| Taxable equivalent net interest margin |  | 3.79% |  | 3.61% |

Interest income on loans increased $2 million, or 15%, for the nine months ended September 30, 2017, as compared to the same period in 2016. This increase was primarily due to an average loan volume increase of $48 million for the comparable nine month periods. Interest income on securities decreased $209 thousand, or 8%, as the average volume of securities decreased $19 million, for the comparable nine month periods. Interest income on fed funds sold and interest bearing deposits increased $107 thousand for the nine months ended September 30, 2017 as the yield on fed funds sold and due from banks interest bearing balances increased 0.48%, compared to the same period in 2016.

Interest expense increased $300 thousand to $1.4 million for the nine months ended September 30, 2017, compared to the same period in 2016. Interest expense on deposits increased $184 thousand, or 24%, from the same period as last year. Interest expense on short-term and other borrowings increased $116 thousand, or 33%. The increase in interest expense has been caused by higher interest rates being paid on all deposits and borrowings. Additionally, during the comparable nine month periods, the Company grew non-interest bearing deposits by $7 million in 2017. Time deposits continue to renew at higher interest rates, and some depositors have moved monies to savings instruments anticipating higher interest rates. Competition for deposits appears to be increasing from a year ago with larger money center banks and community banks increasing rates offered for money market savings accounts. The net interest margin increased by 18 basis points for the nine month period ended September 30, 2017, to 3.79%, from 3.61% for the same period in 2016. This margin increase is primarily the result of increased loan volume.

The provision for loan losses was $965 thousand during the nine months of 2017, compared to $493 thousand in the same nine month period of 2016. The increase in the provision for loan losses from a year ago reflects an increase in nonperforming loans. Early stage loan delinquency has decreased and net loan losses were reflected in both nine month periods. The provision for loan losses is determined based on management’s calculation of the adequacy of the allowance for loan losses, which includes provisions for classified loans as well as for the remainder of the portfolio based on historical data including past charge-offs and current economic trends.

Non-interest income increased $36 thousand during the nine months ended September 30, 2017, as compared to the same period in 2016. Debit card interchange income increased $79 thousand, or 10%, as a result of increased servicer revenue during the nine months of 2017. Trust services declined $176 thousand during the nine months ended September 30, 2017 compared to the same period in 2016. Brokerage fees within the line declined by $106 thousand during this time as the Company reorganized both brokerage and trust and used the brokerage platform’s representative on demand during the first half of 2017 which provided reduced commissions. The Company has returned to an in-house brokerage representative during the third quarter of 2017. A loss on asset retirement of $64 thousand was recognized in other income during the nine month period in 2016. Service charges on deposits decreased $20 thousand from the same period in 2016 reflecting a decrease in overdraft fees based on volume. A decrease was recognized in gains on mortgage loans sold in the secondary market on a year over year basis as more loans were originated and retained for portfolio.

Non-interest expenses increased $575 thousand, or 5%, for the nine months ended September 30, 2017, compared to the same period in 2016. Salaries and employee benefits increased $517 thousand, or 7%, primarily the result of salary and medical benefit increases. Professional fees increased $76 thousand, or 13%, as audit expense grew by $120 thousand on a year over year basis from the outsourcing of internal audit in 2017. The financial institutions tax expense increased $74 thousand on a year over year basis as capital increased. Debit card expenses increased $72 thousand, or 21%, primarily due to the new issuance of cards with EMV chips. Software expense increased $46 thousand for the nine month period in 2017 as compared to the same period in 2016. Occupancy and equipment expense decreased $75 thousand, or 6%, reflecting a decrease in building lease expense and an increase in building rental income when compared to 2016. Marketing and public relations expense decreased $63 thousand, or 20%, primarily due to expenses related to redesign of the company’s website in 2016. FDIC assessment decreased $62 thousand as the fee calculation changed third quarter 2016. Loan legal and collection fees decreased $13 thousand for the nine month period ended September 30, 2017 with the collection of prior period legal expenses.

The provision for income taxes of $2.3 million increased in 2017 from 2016 with a slight increase to the effective rate of 30.4% for the nine months ended September 30, 2017 as compared to 2016.

### CAPITAL RESOURCES

The Company maintained a strong capital position with tangible common equity to tangible assets of 9.2% at September 30, 2017 compared with 9.1% at December 30, 2016.

Effective January 1, 2015 the Federal Reserve adopted final rules implementing Basel III and regulatory capital changes required by the Dodd-Frank Act. The rules apply to both the Company and the Bank. The rules established minimum risk-based and leverage capital requirements for all banking organizations. The quality of capital will be provided by the new measurement of Tier 1 capital called common equity tier 1 or (“CET1”). Effective with the March 31, 2015 Call Report the Bank selected the opt-out election for accumulated other comprehensive income (“AOCI”). This election will neutralize the effects of unrealized gains and losses from available-for-sale securities and other elements of the AOCI account for regulatory capital purposes.

Consistent with the Board of Director’s commitment to public confidence and safe and sound banking operations, capital targets and minimum risk-based capital ratios for CSB were established to maintain excess capital to well-capitalized standards. To be considered well-capitalized, an institution must have a total risk-based capital ratio of at least 10%, a tier 1 capital ratio of at least 8%, a leverage capital ratio of at least 5%, a CET1 ratio of at least 6.5%, and must not be subject to any order or directive requiring the institution to improve its capital level. An adequately capitalized institution has a total risk-based capital ratio of at least 8%, a tier 1 capital ratio of at least 6%, a CET1 ratio of at least 4.5%, and a leverage ratio of at least 4%.

Failure to meet specified minimum capital requirements could result in regulatory actions by the Federal Reserve or Ohio Division of Financial Institutions that could have a material effect on the Company’s financial condition or results of operations. Management believes there were no material changes to capital resources as presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. As of September 30, 2017 the Company and the Bank met all capital adequacy requirements to which they were subject.

| Common Equity Tier 1 Capital To Risk Weighted Assets | September 30, 2017 | December 31, 2016 |
| --- | ---: | ---: |
| Consolidated | 12.6% | 12.6% |
| Bank | 12.4% | 12.4% |
| Tier 1 Capital To Risk Weighted Assets Ratio |  |  |
| Consolidated | 12.6% | 12.6% |
| Bank | 12.4% | 12.4% |
| Total Capital To Risk Weighted Assets Ratio |  |  |
| Consolidated | 13.7% | 13.7% |
| Bank | 13.4% | 13.5% |
| Tier 1 Leverage Ratio |  |  |
| Consolidated | 9.3% | 9.3% |
| Bank | 9.2% | 9.1% |

### LIQUIDITY

*(Dollars in millions)*

|  | September 30, 2017 | December 31, 2016 | Change |
| --- | ---: | ---: | ---: |
| Cash and cash equivalents | $45 | $37 | $8 |
| Unused lines of credit | 76 | 66 | 10 |
| Unpledged AFS securities at fair market value | 30 | 37 | (7) |
|  | $151 | $140 | $11 |
| Net deposits and short-term liabilities | $560 | $533 | $27 |
| Liquidity ratio | 27.0% | 26.1% | 0.9 |
| Minimum board approved liquidity ratio | 20.0% | 20.0% | — |

Liquidity refers to the Company’s ability to generate sufficient cash to fund current loan demand, meet deposit withdrawals, pay operating expenses, and meet other obligations. Liquidity is monitored by the Company’s Asset Liability Committee. Other sources of liquidity include, but are not limited to, purchases of federal funds, advances from the FHLB, adjustments of interest rates to attract deposits, brokered deposits, and borrowing at the Federal Reserve discount window. Management believes that its sources of liquidity are adequate to meet cash flow obligations for the foreseeable future.

The liquidity ratio was 27.0% and 26.1% at September 30, 2017 and December 31, 2016.

### OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements (as such term is defined in applicable Securities and Exchange Commission (the “Commission”) rules) that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

## Market risk

As filed, 2,076 characters.

There have been no material changes in the quantitative and qualitative disclosures about market risks as of September 30, 2017, from the disclosures presented in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

Management performs a quarterly analysis of the Company’s interest rate risk over a twenty-four month horizon. The analysis includes two balance sheet models, one based on a static balance sheet and one on a dynamic balance sheet with projected growth in assets and liabilities. Minor variances with net interest income exceeding the board approved policy are being projected in the September 2017 dynamic balance sheet simulation coupled with immediate rate shocks. All other balance sheet positions and interest rate projections are currently within the Company’s board-approved policy.

The following table presents an analysis of the estimated sensitivity of the Company’s annual net interest income to sudden and sustained -100 through +400 basis point changes, in 100 basis point increments, in market interest rates at September 30, 2017 and December 31, 2016. The net interest income reflected is for the first twelve month period of the modeled twenty-four month horizon. The underlying balance sheet for illustrative purposes is dynamic with projected growth in assets and liabilities.

*September 30, 2017*

*(Dollars in thousands)*

| Change in Interest Rates (basis points) | Net Interest Income | Dollar Change | Percentage Change | Board Policy Limits |
| --- | ---: | ---: | ---: | --- |
| +400 | $27,727 | $2,003 | 7.8% | +/-25% |
| +300 | 27,266 | 1,542 | 6.0 | +/-15 |
| +200 | 26,768 | 1,044 | 4.1 | +/-10 |
| +100 | 26,259 | 535 | 2.1 | +/-5 |
| 0 | 25,724 | — | — | — |
| -100 | 25,038 | (686) | (2.7) | +/-5 |
| **December 31, 2016** |  |  |  |  |
| +400 | $25,519 | $1,889 | 8.0% | +/-25% |
| +300 | 25,063 | 1,433 | 6.1 | +/-15 |
| +200 | 24,577 | 947 | 4.0 | +/-10 |
| +100 | 24,092 | 462 | 2.0 | +/-5 |
| 0 | 23,630 | — | — | — |
| -100 | 22,841 | (789) | (3.3) | +/-5 |

34

CONTROLS AND PROCEDURES

## Controls and procedures

As filed, 3,180 characters.

With the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that:

(a) information required to be disclosed by the Company in this Quarterly Report on Form 10-Q would be accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure;

(b) information required to be disclosed by the Company in this Quarterly Report on Form 10-Q would be recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms; and

(c) the Company’s disclosure controls and procedures are effective as of the end of the period covered by this Quarterly Report on Form 10-Q to ensure that material information relating to the Company and its consolidated subsidiary is made known to them, particularly during the period for which the Company’s periodic reports, including this Quarterly Report on Form 10-Q, are being prepared.

### CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes during the period covered by this Quarterly Report on Form 10-Q in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

FORM 10-Q

Quarter ended September 30, 2017

PART II – OTHER INFORMATION

| ITEM 1- | LEGAL PROCEEDINGS. |
| --- | --- |
|  | In the opinion of management there are no outstanding legal proceedings that are reasonably likely to have a material adverse effect on the company’s financial condition or results of operations. |
| **ITEM 1A-** | **RISK FACTORS.** |
|  | There have been no material changes to the Company’s risk factors from those disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016. |
| **ITEM 2-** | **UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.** |
|  | On July 7, 2005 CSB Bancorp, Inc. filed Form 8-K with the Commission announcing that its Board of Directors approved a Stock Repurchase Program authorizing the repurchase of up to 10% of the Company’s common shares then outstanding. Repurchases may be made from time to time as market and business conditions warrant, in the open market, through block purchases, and in negotiated private transactions. No repurchases were made during the quarterly period ended September 30, 2017. |
| **ITEM 3-** | **DEFAULTS UPON SENIOR SECURITIES.** |
|  | Not applicable. |
| **ITEM 4-** | **MINE SAFETY DISCLOSURES.** |
|  | Not applicable. |
| **ITEM 5-** | **OTHER INFORMATION.** |
|  | Not applicable. |

36

FORM 10-Q

Quarter ended September 30, 2017

Filed Nov 9, 2017.
Source: SEC EDGAR, the filing index for accession 0001193125-17-338705. Last ingested by Listed: Nov 2, 2026, 09:27 ET. No prices; not investment advice.