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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.01pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-
Not scored
Net-tone change vs last year's 10-K.
MD&A
-0.01pp
Flat
Net-tone change vs last year's 10-K.
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Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
dropped+2
declined+1
Positive rising
stabilized+1
MD&A (Item 7)
7,042 words
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
2025 FINANCIAL REVIEW
INTRODUCTION
CSB Bancorp, Inc. (the “Company” or “CSB”) was incorporated under the laws of the State of Ohio in 1991 and is a registered financial holding company. The Company’s wholly owned subsidiaries are The Commercial and Savings Bank (the “Bank”) and CSB Investment Services, LLC. The Bank is chartered under the laws of the State of Ohio and was organized in 1879. The Bank is a member of the Federal Reserve System, with deposits insured by the Federal Deposit Insurance Corporation, and its primary regulators are the Ohio Division of Financial Institutions and the Federal Reserve Board.
The Company, through the Bank, provides retail and commercial banking services to its customers including checking and savings accounts, time deposits, cash management, safe deposit facilities, commercial loans, real estate mortgage loans, consumer loans, IRAs, night depository facilities, and trust and brokerage services. Its customers are located primarily in Holmes, Stark, Tuscarawas, Wayne, and portions of surrounding counties in Ohio.
Economic activity in the Company’s market area increased slightly in the fourth quarter of 2025. Consumer demand for goods and services declined moderately and is expected to flatten out in the near future. Reported unemployment levels in December 2025 ranged from 2.8% to 4.4% in the four primary counties served by the Company. These levels decreased from the December 2024 range of 2.9% to 4.6%. Labor demand remained fairly flat while competition for workers with specialized skills has put upward pressure on labor costs. The local housing market has increasing inventory levels. Residential construction activity has increased with stable interest rates increasing demand. Nonresidential construction activity has also increased modestly since the prior year. All deposit types increased and customers continue to move funds into higher yielding interest-bearing accounts.
FORWARD-LOOKING STATEMENTS
Certain statements contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations are not related to historical results but are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks and uncertainties. Any forward-looking statements made by the Company herein and in future reports and statements are not guarantees of future performance. Actual results may differ materially from those in forward-looking statements because of various risk factors as discussed in this annual report. The Company does not undertake, and specifically disclaims, any obligation to publicly release the result of any revisions to any forward-looking statements to reflect the occurrence of unanticipated events or circumstances after the date of such statements.
NON-U.S. GAAP FINANCIAL MEASURES
Management’s Discussion and Analysis of Financial Condition and Results of Operations contains non-U.S. generally accepted accounting principles ("GAAP") financial measures where management believes it to be helpful in understanding CSB’s results of operations or financial position. Where non-U.S. GAAP financial measures are used, the comparable U.S. GAAP financial measure, as well as the reconciliation to the comparable U.S. GAAP financial measure, can be found herein.
FINANCIAL DATA
The following table sets forth certain selected consolidated financial information:
(Dollars in thousands, except per share data)
Statements of income:
Total interest income
Total interest expense
Net interest income
Provision (recovery) for credit loss expense
Net interest income after provision (recovery) for credit loss expense
Noninterest income
Noninterest expense
Income before income taxes
Income tax provision
Net income
Per share of common stock:
Basic earnings per share
Diluted earnings per share
Dividends
Book value
Average basic common shares outstanding
Average diluted common shares outstanding
Year-end balances:
Loans, net
Securities
Total assets
Deposits
Borrowings
Shareholders’ equity
Average balances:
Loans, net
Securities
Total assets
Deposits
Borrowings
Shareholders’ equity
Select ratios:
Net interest margin, FTE basis 1
Return on average total assets
Return on average shareholders’ equity
Average shareholders’ equity as a percent of average total assets
Net loan charge-offs (recoveries) as a percent of average loans
Allowance for credit losses on loans as a percent of loans at year-end
Shareholders’ equity as a percent of total year-end assets
Dividend payout ratio 2
1 Net interest margin is shown on a fully taxable equivalent, ("FTE") basis, (non-GAAP).
2 Dividend payout ratio is calculated as dividends per share as a percentage of earnings per share.
RESULTS OF OPERATIONS
Net Income
CSB’s 2025 net income was $13.4 million compared to $10.0 million for 2024, an increase of 33.5%. Total revenue, net interest income plus noninterest income, increased $5.7 million, or 13%, over the prior year to a total of $50 million. The provision for credit loss expense decreased to $5.4 million as compared to $7.0 million for the prior year. Noninterest expense increased $3.2 million, or 13% and the provision for income tax increased $877 thousand over the prior year due to an increase in taxable income. Basic and diluted earnings per share were $5.07, up 35% from the prior year. The return on average assets was 1.08% in 2025 compared to 0.85% in 2024 and return on average equity was 10.94% in 2025 compared to 8.96% in 2024.
Net Interest Income
(Dollars in thousands)
Net interest income
Taxable equivalent
Net interest income, FTE 1
Net interest margin
Taxable equivalent adjustment
Net interest margin, FTE 1
1 Taxable equivalent adjustments have been computed assuming a 21% tax rate in 2025, and 2024 (non-GAAP).
Net interest income is the largest source of the Company’s revenue and consists of the difference between interest income generated on earning assets and interest expense incurred on liabilities (deposits, short-term and long-term borrowings). Changes in volume, interest rates, composition of interest-earning assets, and interest-bearing liabilities affect net interest income. Net interest income increased $5.5 million, or 15%, in 2025 compared to 2024. The increase was a result of a $5.4 million increase in interest income and a decrease of $95 thousand in interest expense. The FTE net interest margin increased to 3.63% from 3.31% in 2024.
Interest income increased $5.4 million, or 11%, in 2025 compared to 2024 primarily due to an increase of $5.3 million, or 13%, in interest and fees on loans primarily due to an increase in average balances of $70 million and an increase in yield of 15 basis points ("bps"). Interest income on taxable securities decreased $300 thousand due to a decrease in average balances of $35 million. Interest income on interest-earning deposits mainly held at the Federal Reserve increased $530 thousand in 2025 compared to 2024 primarily due to an increase in average balances of $22 million.
Interest expense decreased $95 thousand, or less than 1%, in 2025 as compared to 2024, primarily due to lower cost of deposits as short-term interest rates dropped. Average noninterest-bearing demand and interest-bearing demand deposit balances increased $6 million during the year and average time deposit balances increased $34 million, and the average interest rate paid on time deposits decreased by 30 bps.
The following table provides detailed analysis of changes in average balances, yield, and net interest income:
AVERAGE BALANCE SHEETS AND NET INTEREST MARGIN ANALYSIS
(Dollars in thousands)
Average
Balance 1
Interest
Average
Rate 2
Average
Balance 1
Interest
Average
Rate 2
Interest-earning
assets
Interest-earning
deposits in other banks
Securities:
Taxable
Tax exempt 4
Loans 3, 4
Total interest-
earning assets
Noninterest-
earning assets
Cash and due
from banks
Bank premises
and equipment, net
Other assets
Allowance for credit losses on loans
Total assets
Interest-bearing
liabilities
Demand deposits
Savings deposits
Time deposits
Borrowed funds
Total interest-
bearing liabilities
Noninterest-bearing
liabilities and
shareholders’
equity
Demand deposits
Other liabilities
Shareholders’ equity
Total liabilities
and equity
Net interest
income 4
FTE adjustment
GAAP net interest
income
Net interest margin
FTE
Net interest spread
1 Average balances have been computed on an average daily basis.
2 Average rates have been computed based on the amortized cost of the corresponding asset or liability.
3 Average loan balances include nonaccrual loans.
4 Interest income is shown on a fully tax-equivalent basis (non-GAAP), reconciled to the GAAP amount at the bottom of the table.
The following table compares the impact of changes in average rates and average volumes on net interest income:
RATE/VOLUME ANALYSIS OF CHANGES IN INCOME AND EXPENSE 1
Net Increase
(Dollars in thousands)
(Decrease)
Volume
Rate
Increase (decrease) in interest income:
Federal Funds
Interest-earning deposits in other banks
Securities:
Taxable
Tax exempt 2
Loans 2
Total interest income change 2
Increase (decrease) in interest expense:
Demand deposits
Savings deposits
Time deposits
Borrowed funds
Total interest expense change
Net interest income change 2
1 Changes attributable to both volume and rate, which cannot be segregated, have been allocated based on the absolute value of the change due to volume and the change due to rate.
2 Interest income is shown on a fully tax-equivalent basis (non-GAAP).
Provision (Recovery) for Credit Losses on Loans and Off-Balance Sheet Commitments
The provision for credit losses on loans is determined by management as the amount required to bring the allowance for credit losses to a level considered appropriate to absorb an estimation of credit loss during the expected weighted average life of the loan. During 2025, a provision for credit loss expense on loans of $5.3 million was recognized compared to a provision of $7.2 million in 2024. A provision for credit loss expense on off-balance sheet commitments of $72 thousand was recognized in 2025 as compared to a recovery for credit loss expense for off-balance sheet commitments of $213 thousand in 2024. Nonperforming loans decreased $1.1 million from 2024 to 2025. See Financial Condition – Allowance for Credit Losses for additional discussion and information relative to the provision for credit losses.
Noninterest Income
YEARS ENDED DECEMBER 31
Change from 2024
(Dollars in thousands)
Amount
Service charges on deposit accounts
Trust services
Debit card interchange fees
Credit card fees
Gain on sale of loans, including MSRs
Earnings on bank-owned life insurance
Unrealized gain on equity securities
Other
Total noninterest income
Noninterest income increased $193 thousand, or 3%, in 2025 compared to the same period in 2024. Earnings on bank owned life insurance increased $129 thousand, with the purchase of an additional $2 million of insurance. Debit card interchange income increased $92 thousand due to an overall increase in volume. Service charges on deposit accounts increased $56 thousand, as increases in monthly deposit account service charges and increases in non-sufficient funds ("NSF") charges. Trust services revenue decreased $73 thousand due to a one time fee collected in 2024 which did not recur in 2025.
Noninterest Expenses
YEARS ENDED DECEMBER 31
Change from 2024
(Dollars in thousands)
Amount
Salaries and employee benefits
Occupancy expense
Equipment expense
Professional and director fees
Ohio financial institutions tax
Marketing and public relations
Software expense
Debit card expense
FDIC insurance
Other
Total noninterest expenses
Noninterest expense increased $3 million, or 13%, in 2025 compared to 2024. Salaries and employee benefits increased $2 million with increases in base salaries due to filled positions and increases in medical, incentive compensation and retirement benefits. Professional and director fees increased $228 thousand, primarily from increases in legal and audit and accounting expenses. Occupancy expense increased $194 thousand, due to snow removal and HVAC repairs. Other expenses increased $221 thousand, or 8% as increases in education expenses of $53 thousand over the prior year contributed to this difference.
Income Taxes
The provision for income taxes amounted to $3.2 million in 2025 as compared to $2.3 million in 2024. The increase in 2025 resulted from higher taxable income. The corporate statutory tax rate was 21% for 2025 and 2024. The effective tax rate in 2025 and 2024 was 19.3% and 18.8%, respectively.
FINANCIAL CONDITION
Total assets of the Company were $1.3 billion and $1.2 billion on December 31, 2025 and 2024, representing an increase of $101 million, or 8%. Net loans increased $87 million, or 12%, while investment securities decreased $14 million, or 4%, and total cash and cash equivalents increased $26 million, or 35%. Deposits increased $83 million and short-term borrowings decreased $6 million, while other borrowings from the Federal Home Loan Bank (“FHLB”) decreased by $349 thousand.
Securities
Total investment securities decreased $14 million, or 4%, to $317 million at year-end 2025, primarily related to principal repayments on mortgage-backed securities. CSB’s portfolio is primarily comprised of agency mortgage-backed securities, obligations of state and political subdivisions, U.S. Treasury notes, other government agencies’ debt, and corporate bonds. Restricted securities consist primarily of FHLB stock.
The Company has no exposure to government-sponsored enterprise preferred stocks, collateralized debt obligations, or trust preferred securities. The Company’s municipal bond portfolio consists of tax-exempt general obligation and revenue bonds. As of December 31, 2025, 99% of such bonds held an S&P or Moody’s investment grade rating, and 1% were non-rated local issues. The municipal portfolio includes a broad spectrum of counties, cities, universities, and school districts with 75% of the portfolio originating in Ohio, and 25% in Pennsylvania. Gross unrealized security losses within the portfolio were 9% of total securities on December 31, 2025, reflecting interest rate increases, not credit downgrades.
One of the primary functions of the securities portfolio is to provide a source of liquidity and it is structured such that maturities and cash flows provide a portion of the Company’s liquidity needs and asset/liability management requirements.
Loans
Total loans increased $92 million, or 12%, during 2025. Volume increases were recognized as follows: commercial real estate $65 million, or 34%, commercial real estate buildings held for investment and leased to others increased $13 million, or 13%, residential real estate loans increased $16 million, or 9%, and home equity lines of credit increased $8 million, or 17%. Commercial and industrial loans increased $8 million, or 6% during 2025, construction loans decreased $16 million, or 25%, and consumer installment loans, including consumer indirect loans, also decreased $2 million, or 10%. At year-end 2025, commercial real estate is comprised mostly of owner occupied buildings of $256 million, and $114 million of buildings held for investment and leased to others. Owner occupied buildings are mostly light industrial, warehouse buildings and auto repair. Investment properties include healthcare buildings, retail strip centers, and residential investment properties.
The Company originated $78 million and $58 million of residential mortgage loans held in the portfolio, including residential construction, conventional 1-4 family, and equity line loans, which were predominately variable rate, in 2025 and 2024, respectively. Demand for homes increased as rates declined then stabilized and borrowers chose variable-rate products hopeful for lower rates in the future, thus limiting the Company's mortgage sales to $8 million in 2025 and $9 million in 2024. Home equity loan balances increased $8 million during 2025 with demand improving as interest rates dropped.
Management anticipates modest economic growth in the Company’s local service areas will continue. Commercial and commercial real estate loans, in aggregate, comprise approximately 63% and 59% of the total loan portfolio at year-end 2025 and 2024, respectively. Residential real estate loans approximated 30% of the portfolio in 2025 and 2024. Construction and land development loans decreased from 9% to 6% of the portfolio. The Company is well within the respective regulatory guidelines for investment in construction, development, and investment property loans that are not owner occupied. The Company has very little exposure to commercial office space leased properties. See Note 3 - Loans for further discussion on Concentrations of Credit. Most of the Company’s lending activity is with customers primarily located within Holmes, Medina, Stark, Tuscarawas and Wayne counties in Ohio.
Nonperforming Assets, Individually Evaluated Loans, and Loans Past Due 90 Days or More
Nonperforming assets consist of nonaccrual loans, loans past due 90 days and still accruing, and other real estate acquired through or in lieu of foreclosure. Loans are placed on nonaccrual status when they become past due 90 days or more, or when mortgage loans are past due as to principal and interest 120 days or more, unless they are both well secured and in the process of collection. During 2025, $614 thousand in nonaccrual loans were collected, $404 thousand were charged-off, and $451 thousand new loans entered nonaccrual status.
NONPERFORMING ASSETS
December 31
(Dollars in thousands)
Nonaccrual loans
Commercial and industrial
Commercial real estate
Commercial lessors of buildings
Construction
Consumer mortgage
Home equity line of credit
Consumer installment
Consumer indirect
Loans past due 90 days or more and still accruing
Total nonperforming loans
Other real estate owned
Other repossessed assets
Total nonperforming assets
Nonaccrual loans to total loans
Allowance for Credit Losses
The allowance for credit losses ("ACL") is maintained at a level considered by management to be adequate to cover credit losses currently expected over the weighted average life of the loan pools. The ACL increased by $5 million, or 64%, to $12.5 million on December 31, 2025, from $7.6 million on December 31, 2024. The additional ACL was primarily the result of the recognition of a fourth quarter valuation allowance of $4 million for one large commercial credit that remains a performing asset. The Bank continues to maintain qualitative factors tied to changes in the lending policy, economic conditions, lending credit management, delinquent and classified loans, and the value of collateral.
ALLOWANCE FOR CREDIT LOSSES
FOR THE YEAR ENDED
(Dollars in thousands)
Net charge-offs (recoveries) as a percentage of average total loans
Allowance for credit losses as a percentage of total loans
Allowance for credit losses to total nonaccrual loans
Components of the allowance for credit losses:
General reserves
Specific reserve allocations
Total allowance for credit losses
The ACL on loans totaled $12.5 million, or 1.5% of total loans at year-end 2025 as compared to $7.6 million, or 1.03%, of total loans at year-end 2024. The Bank had net credit losses of $428 thousand in 2025, compared to $6.3 million in 2024. During fourth quarter 2025, a performing loan was determined to be collateral dependent through continued operation. As a result, a $4 million valuation allowance was recognized. As previously disclosed during 2024, the credit facility being liquidated through court receivership has no remaining loan balances at December 31, 2025.
The Company maintains an internal watch list for loans where management’s analysis of the borrower’s operating results and financial condition indicates the borrower’s cash flows are inadequate to meet its debt service requirements and for loans where there exists an increased risk that a shortfall may occur. See the Credit Quality Indicators section of Note 3 to the Consolidated Financial Statements for additional information. Nonperforming loans, which consist of loans past due 90 days or more and nonaccrual loans, aggregated $652 thousand, or 0.08%, of loans at year-end 2025 compared to $1.7 million, or 0.23%, of loans at year-end 2024.
Other Assets
Net premises and equipment decreased $492 thousand to $13.6 million at year-end 2025 with $426 thousand in capitalized purchases and $886 thousand in depreciation expense. Total bank-owned life insurance increased from $28 million at year-end 2024 to $31 million at year-end 2025, including a $2 million purchase of insurance and increasing cash surrender values. There was no other real estate owned on December 31, 2025 or 2024. The Company recognized a net deferred tax asset of $2.3 million on December 31, 2025, and 2024, respectively.
Deposits
The Company’s deposits are obtained primarily from individuals and businesses located in its market area. For deposits, the Company must compete with products offered by other financial institutions, as well as alternative investment options. Market rates on deposits and cash management products decreased during the year.
December 31
Change from 2024
(Dollars in thousands)
Amount
Noninterest-bearing demand
Interest-bearing demand
Traditional savings
Money market savings
Time deposits in excess of $250,000
Other time deposits
Total deposits
Other Funding Sources
The Company obtains additional funds through securities sold under repurchase agreements, overnight borrowings from the FHLB or other financial institutions, and advances from the FHLB. Short-term borrowings, consisting of securities sold under repurchase agreements, increased $5.8 million. Other borrowings, consisting of FHLB advances, decreased $349 thousand as the result of principal repayments. The majority of FHLB borrowings on December 31, 2025, have long term maturities with monthly amortizing payments.
CAPITAL RESOURCES
Total shareholders’ equity was $126.3 million at December 31, 2025, compared to $114.8 million on December 31, 2024. This increase was primarily due to net income of $13.4 million and a $3.4 million decrease in the accumulated other comprehensive loss recognized on the available-for-sale securities portfolio, resulting from investment payment and maturities as well as decreasing interest rates. During 2025, the Company paid $4.3 million in dividends, and repurchased $999 thousand of its common shares. The Board of Directors approved a Stock Repurchase Program on February 26, 2021, allowing the repurchase of up to 5% of the Company’s then-outstanding common shares. Repurchased shares are to be held as treasury stock and are available for general corporate purposes. On December 31, 2025, approximately 22 thousand common shares could still be repurchased under the current authorized program. Shares repurchased during 2025 totaled 23,074 shares for $999 thousand and shares purchased in 2024 totaled 19,849 shares for $762 thousand.
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 rules include: (a) a common equity tier 1 capital ratio of at least 4.5%, (b) a tier 1 capital ratio of at least 6.0%, (c) a minimum total capital ratio of at least 8.0%, and (d) a minimum leverage ratio of 4%. Under the guidelines, capital is compared to the relative risk related to the balance sheet. To derive the risk included in the balance sheet, one of several risk weights is applied to different balance sheet and off-balance sheet assets primarily based on the relative credit risk of the counterparty. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. The rules also place restrictions on the payment of capital distributions, including dividends, and certain discretionary bonus payments to executive officers if the Company does not hold a capital conservation buffer of greater than 2.5% composed of common equity tier 1 capital above its minimum risk-based capital requirements. The Company and Bank’s actual and required capital amounts are disclosed in Note 12 to the Consolidated Financial Statements.
Dividends paid by the Bank to CSB are the primary source of funds available to the Company for payment of dividends to shareholders and for other working capital needs. The payment of dividends by the Bank to the Company is subject to restrictions by regulatory authorities, which generally limit dividends to current year net income and the prior two (2) year's net retained earnings, as defined by regulation. In addition, dividend payments generally cannot reduce regulatory capital levels below the minimum regulatory guidelines discussed above.
LIQUIDITY
December 31
(Dollars in thousands)
Change
from 2024
Cash and cash equivalents
Unused lines of credit
Unpledged AFS securities at fair market value
Net deposits and short-term liabilities
Liquidity ratio
Minimum board approved liquidity ratio
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 CSB’s Asset Liability Committee. The Company was within all Board-approved limits on December 31, 2025, and 2024. Additional sources of liquidity include net income, loan repayments, the availability of borrowings, and adjustments of interest rates to attract deposit accounts.
As summarized in the Consolidated Statements of Cash Flows, the most significant investing activities for the Company in 2025 included net loan originations of $92 million and securities purchases of $52 million, offset by maturities and repayment of securities totaling $71 million. The Company’s financing activities included a $83 million increase in deposits, $6 million increase in short-term borrowings, and $4 million decrease in cash dividends paid.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The most significant market risk the Company is exposed to is interest rate risk. The business of the Company and the composition of its balance sheet consist of investments in interest-earning assets (primarily loans and securities), which are funded by interest-bearing liabilities (deposits and borrowings). These financial instruments have varying levels of sensitivity to changes in the market rates of interest, resulting in market risk. None of the Company’s financial instruments are held for trading purposes.
The Board of Directors establishes policies and operating limits with respect to interest rate risk. The Company manages interest rate risk regularly through its Asset Liability Committee. The Committee meets periodically to review various asset and liability management information including, but not limited to, the Company’s liquidity position, projected sources and uses of funds, interest rate risk position, and economic conditions.
Interest rate risk is monitored primarily through the use of an earnings simulation model. The model is highly dependent on various assumptions, which change regularly as the balance sheet and market interest rates change. The earnings simulation model projects change in net interest income resulting from the effect of changes in interest rates. The analysis is performed quarterly over a twenty-four-month horizon. The analysis includes two (2) balance sheet models, one based on a static balance sheet and one on a dynamic balance sheet with projected growth in assets and liabilities. This analysis is performed by estimating the expected cash flows of the Company’s financial instruments using interest rates in effect at year-end 2025 and 2024. Interest rate risk policy limits are tested by measuring the anticipated change in net interest income over a two-year period. The tests assume quarterly ramped increases and decreases in market interest rates over twenty-four month horizons, as compared to a stable rate environment or base model. The following table reflects the change to net interest income using a dynamic balance sheet for the first twelve-month periods of the twenty-four month horizon.
Net Interest Income at Risk
December 31, 2025
Change In
Interest Rates
(Basis Points)
Net
Interest
Income
Dollar
Change
Percentage
Change
Board
Policy
Limits
(Dollars in thousands)
December 31, 2024
Management reviews Net Interest Income at Risk with the Board on a periodic basis. Additional earnings simulations are run to test an immediate interest rate shock over a twenty-four month period. The Company was within all Board-approved limits at December 31, 2025 and 2024 for the first twelve-month periods of the twenty-four month horizon.
Economic Value of Equity at Risk
December 31, 2025
Change In
Interest Rates
(Basis Points)
Percentage
Change
Board
Policy
Limits
December 31, 2024
The economic value of equity is calculated by subjecting the period-end balance sheet to changes in interest rates and measuring the impact of the changes on the values of the assets and liabilities. Hypothetical changes in interest rates are then applied to the financial instruments. The cash flows and fair values are again estimated using these hypothetical rates. For the net interest income estimates, the hypothetical rates are applied to the financial instruments based on the assumed cash flows.
Management periodically measures and reviews the economic value of equity at risk with the Board. As of December 31, 2025, the Company was within all policy limits set by the Board.
Significant Assumptions Related to Market Risk
The market risk analysis is based on numerous assumptions, including relative levels of market interest rates, loan prepayments, and reactions of depositors to changes in interest rates and this should not be relied upon as being indicative of actual results. Further, the analysis does not contemplate all actions the Company may undertake in response to changes in interest rates.
U.S. Treasury securities, obligations of U.S. Government corporations and agencies, obligations of states and political subdivisions will generally repay at their stated maturity or if callable, prior to their final maturity date. Mortgage-backed security payments increase when interest rates are low and decrease when interest rates rise. Most of the Company’s loans permit the borrower to prepay the principal balance prior to maturity without penalty. The likelihood of prepayment depends on a number of factors: current interest rate and interest rate index (if any) on the loan, the financial ability of the borrower to refinance, the economic benefit to be obtained from refinancing, availability of refinancing at attractive terms, as well as economic conditions in specific geographic areas, which affect the sales and price levels of residential and commercial property. In a changing interest rate environment, prepayments may increase or decrease on fixed and adjustable-rate loans depending on the current relative levels and expectations of future short-term and long-term interest rates. Prepayments on adjustable-rate loans generally increase when long-term interest rates fall or are at historically low levels relative to short-term interest rates, thus making fixed rate loans more desirable. While savings and checking deposits generally may be withdrawn upon the customer’s request without prior notice, a continuing relationship with customers resulting in future deposits and withdrawals is generally predictable, leading to a dependable and uninterrupted source of funds. Time deposits generally have early withdrawal penalties, which discourage customer withdrawal prior to maturity. Short-term borrowings have fixed maturities. Certain advances from the FHLB carry prepayment penalties and are expected to be repaid in accordance with their contractual terms.
FAIR VALUE MEASUREMENTS
The Company discloses the estimated fair value of its financial instruments on December 31, 2025, and 2024 in Note 15 to the Consolidated Financial Statements.
OFF-BALANCE SHEET ARRANGEMENTS, CONTRACTUAL OBLIGATIONS, AND CONTINGENT LIABILITIES AND COMMITMENTS
The following table summarizes the Company’s loan commitments, including letters of credit, as of December 31, 2025:
Amount of Commitment to Expire Per Period
(Dollars in thousands)
Type of Commitment
Total
Amount
Less than
1 year
Years
Years
Over 5
Years
Commercial lines of credit
Commercial real estate
Home equity line of credit
Construction
Consumer lines of credit
Credit card lines
Overdraft privilege
Letters of credit
Total commitments
All lines of credit represent either fee-paid or legally binding loan commitments for the loan categories noted. Letters of credit are also included in the amounts noted in the table since the Company requires each letter of credit be supported by a loan agreement. The commercial and consumer lines represent both unsecured and secured obligations. The home equity lines are secured by mortgages on residential property. It is anticipated that a significant portion of these lines will expire without being drawn upon.
The following table summarizes the Company’s other contractual obligations, exclusive of interest, as of December 31, 2025:
Payment Due by Period
(Dollars in thousands)
Contractual Obligations
Total
Amount
Less
than 1
year
Years
Years
Over 5
Years
Total time deposits
Short-term borrowings
Other borrowings
Operating leases
Total obligations
The other borrowings noted in the preceding table represent borrowings from the FHLB. The notes require payment of interest on a monthly basis with principal due in monthly installments. The obligations bear stated fixed interest rates and stipulate a prepayment penalty if the note’s interest rate exceeds the current market rate for similar borrowings at the time of repayment. As the notes mature, the Company evaluates the liquidity and interest rate circumstances at that time to determine whether to pay off or renew the note. The evaluation process typically includes: the strength of current and projected customer loan demand, the Company’s federal funds sold or purchased position, projected cash flows from maturing investment securities, the current and projected market interest rate environment, local and national economic conditions, and customer demand for the Company’s deposit product offerings.
CRITICAL ACCOUNTING POLICIES
The Company’s Consolidated Financial Statements are prepared in accordance with U.S. Generally Accepted Accounting Principles and follow general practices within the commercial banking industry. Application of these principles requires management to make estimates, assumptions, and judgments affecting the amounts reported in the financial statements. These estimates, assumptions, and judgments are based upon the information available as of the date of the financial statements.
The most significant accounting policies followed by the Company are presented in Note 1 to the Consolidated Financial Statements. These policies, along with the other disclosures presented in the Notes to Consolidated Financial Statements and the 2025 Financial Review, provide information about how significant assets and liabilities are valued in the financial statements and how those values are determined. Management has identified the allowance for credit losses and goodwill as the accounting areas requiring the most subjective and complex estimates, assumptions, and judgments, and as such, could be the most subject to revision as new information becomes available.
As previously noted in the section entitled Allowance for Credit Losses, management performs an analysis to assess the adequacy of its allowance for credit losses using the current expected credit loss (CECL) model. This analysis encompasses a variety of factors including: the potential loss exposure for individually reviewed loans, the historical loss experience, changes in delinquent and classified loans, any significant changes in lending or loan review staff, an evaluation of current and future economic conditions, any significant changes in the volume or mix of loans within each category, a review of the significant concentrations of credit, and any legal, competitive, or regulatory concerns. Potential future earnings volatility is driven by CECL's life of credit loss and economic forecasts of unemployment, recession and future credit loss within the portfolio. Under stress testing performed by the Bank in 2025, the unemployment forecast models as the largest driver of credit loss provision volatility. When sustained unemployment is significantly increased to 8% over a two-year period, an additional provision of approximately $1 million would be required under current model assumptions. While the weighted average life of the loan portfolio remains five years, at December 31, 2025, stressing the commercial real estate, lessors of buildings and residential mortgage portfolios' weighted average lives by 10%, or an increase of 4 months, resulted in a minimal increase of $61 thousand to the allowance for credit losses.
The Company accounts for business combinations using the acquisition method of accounting. Goodwill and intangible assets with indefinite useful lives are not amortized. Intangible assets with finite useful lives are amortized using accelerated methods over their estimated weighted-average useful lives, approximating ten years.
IMPACT OF INFLATION AND CHANGING PRICES
The Consolidated Financial Statements and related data presented herein have been prepared in accordance with U.S. Generally Accepted Accounting Principles, requiring measurement of financial position, and results of operations primarily in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. Most assets and liabilities of the Company are monetary in nature. Therefore, interest rates have a more significant impact on the Company’s performance than the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or magnitude as prices of goods and services. The liquidity, maturity structure, and quality of the Company’s assets and liabilities are critical to maintenance of acceptable performance levels.
COMMON STOCK AND SHAREHOLDER INFORMATION
Common shares of the Company are not traded on an established market. Shares are traded on the OTC market through broker/ dealers under the symbol “CSBB” and through private transactions. The table below represents the range of high and low prices paid for transactions known to the Company. Management does not have knowledge of prices paid on all transactions. Because of the lack of an established market, these prices may not reflect the prices at which stock would trade in an active market. These quotations reflect interdealer prices, without mark-up, mark-down, or commission and may not represent actual transactions. The table specifies cash dividends declared by the Company to its shareholders during 2025 and 2024. No assurances can be given that future dividends will be declared, or if declared, what the amount of any such dividends will be. Additional information concerning restrictions over the payment of dividends is included in Note 12 of the Consolidated Financial Statements.
Quarterly Common Stock Price and Dividend Data
Quarter Ended
High
Low
Dividends
Declared
Per Share
Dividends
Declared
March 31, 2025
June 30, 2025
September 30, 2025
December 31, 2025
March 31, 2024
June 30, 2024
September 30, 2024
December 31, 2024
As of December 31, 2025, the Company had 1,013 shareholders of record and 2,627,015 outstanding shares of common stock.
