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Section 1: 10-Q (10-Q)

csbb-10q_20190930.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:  September 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number:     0-21714

CSB Bancorp, Inc.

(Exact name of registrant as specified in its charter)

 

Ohio

 

34-1687530

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification Number)

Registrant’s address:  91 North Clay, P.O. Box 232, Millersburg, Ohio 44654

Registrant’s telephone number, including area code:  (330) 674-9015

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes (X)         No (   )

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes (X)        No (   )

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer (   ) Accelerated filer (X) Non-accelerated filer (   ) Smaller reporting company ( X ) Emerging growth company (   )

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  (   )

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes (   )         No (X)

 

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Common Stock

 

CSBB

 

OTCPink

 

Indicate the number of shares outstanding of the registrant's common stock, as of the latest practicable date.

 

Common stock, $6.25 par value

Outstanding at November 1, 2019, 2,742,350 common shares

 

 

 

 


 

CSB BANCORP, INC.

FORM 10-Q

QUARTER ENDED September 30, 2019

Table of Contents

 

Part I - Financial Information

 

 

 

 

 

 

 

Page

ITEM 1 –

 

FINANCIAL STATEMENTS (Unaudited)

 

3

Consolidated Balance Sheets

 

3

Consolidated Statements of Income

 

4

Consolidated Statements of Comprehensive Income

 

5

Consolidated Statements of Changes in Shareholders' Equity

 

6

Condensed Consolidated Statements of Cash Flows

 

7

Notes to Consolidated Financial Statements

 

8

 

 

 

ITEM 2 –

 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

26

ITEM 3 –

 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

33

ITEM 4 –

 

CONTROLS AND PROCEDURES

 

34

 

 

 

Part II - Other Information

 

 

 

 

 

ITEM1 –

 

Legal Proceedings

 

35

ITEM1A –

 

Risk Factors

 

35

ITEM2 –

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

35

ITEM3 –

 

Defaults upon Senior Securities

 

35

ITEM4 –

 

Mine Safety Disclosures

 

35

ITEM5

 

Other Information

 

35

ITEM6 –

 

Exhibits

 

36

Signatures

 

37

 

2


 

CSB BANCORP, INC.

PART I – FINANCIAL INFORMATION

ITEM 1. – FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

September 30,

 

 

December 31,

 

(Dollars in thousands)

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

20,696

 

 

$

23,214

 

Interest-earning deposits in other banks

 

 

58,873

 

 

 

22,350

 

Total cash and cash equivalents

 

 

79,569

 

 

 

45,564

 

Securities

 

 

 

 

 

 

 

 

Available-for-sale, at fair value

 

 

89,572

 

 

 

85,528

 

Held-to-maturity (fair value 2019-$15,192; 2018-$20,118)

 

 

15,097

 

 

 

20,688

 

Equity securities

 

 

91

 

 

 

83

 

Restricted stock, at cost

 

 

4,614

 

 

 

4,614

 

Total securities

 

 

109,374

 

 

 

110,913

 

Loans held for sale

 

 

399

 

 

 

108

 

Loans

 

 

566,213

 

 

 

548,974

 

Less allowance for loan losses

 

 

6,776

 

 

 

5,907

 

Net loans

 

 

559,437

 

 

 

543,067

 

Premises and equipment, net

 

 

11,595

 

 

 

9,961

 

Core deposit intangible

 

 

119

 

 

 

167

 

Goodwill

 

 

4,728

 

 

 

4,728

 

Bank-owned life insurance

 

 

16,880

 

 

 

13,554

 

Accrued interest receivable and other assets

 

 

4,691

 

 

 

3,660

 

TOTAL ASSETS

 

$

786,792

 

 

$

731,722

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

192,620

 

 

$

185,871

 

Interest-bearing

 

 

465,499

 

 

 

420,627

 

Total deposits

 

 

658,119

 

 

 

606,498

 

Short-term borrowings

 

 

35,070

 

 

 

37,415

 

Other borrowings

 

 

6,453

 

 

 

8,525

 

Accrued interest payable and other liabilities

 

 

3,536

 

 

 

2,748

 

Total liabilities

 

 

703,178

 

 

 

655,186

 

SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Common stock, $6.25 par value.  Authorized 9,000,000 shares; issued

   2,980,602 shares; outstanding 2,742,350 shares 2019 and 2,742,242

   shares 2018

 

 

18,629

 

 

 

18,629

 

Additional paid-in capital

 

 

9,815

 

 

 

9,815

 

Retained earnings

 

 

59,915

 

 

 

54,288

 

Treasury stock at cost:  238,252 shares 2019, 238,360 shares 2018

 

 

(4,780

)

 

 

(4,784

)

Accumulated other comprehensive income (loss)

 

 

35

 

 

 

(1,412

)

Total shareholders' equity

 

 

83,614

 

 

 

76,536

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

$

786,792

 

 

$

731,722

 

 

See notes to unaudited consolidated financial statements.

 

3


 

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

(Dollars in thousands, except per share data)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

INTEREST AND DIVIDEND INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

7,239

 

 

$

6,707

 

 

$

21,496

 

 

$

19,361

 

Taxable securities

 

 

534

 

 

 

586

 

 

 

1,705

 

 

 

1,784

 

Nontaxable securities

 

 

133

 

 

 

152

 

 

 

401

 

 

 

464

 

Other

 

 

356

 

 

 

127

 

 

 

749

 

 

 

256

 

Total interest and dividend income

 

 

8,262

 

 

 

7,572

 

 

 

24,351

 

 

 

21,865

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

966

 

 

 

633

 

 

 

2,711

 

 

 

1,647

 

Short-term borrowings

 

 

78

 

 

 

97

 

 

 

264

 

 

 

235

 

Other borrowings

 

 

30

 

 

 

41

 

 

 

106

 

 

 

141

 

Total interest expense

 

 

1,074

 

 

 

771

 

 

 

3,081

 

 

 

2,023

 

NET INTEREST INCOME

 

 

7,188

 

 

 

6,801

 

 

 

21,270

 

 

 

19,842

 

PROVISION FOR LOAN LOSSES

 

 

285

 

 

 

324

 

 

 

855

 

 

 

972

 

Net interest income, after provision for loan losses

 

 

6,903

 

 

 

6,477

 

 

 

20,415

 

 

 

18,870

 

NON INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

333

 

 

 

301

 

 

 

938

 

 

 

885

 

Trust services

 

 

234

 

 

 

204

 

 

 

670

 

 

 

641

 

Debit card interchange fees

 

 

377

 

 

 

330

 

 

 

1,093

 

 

 

966

 

Gain on sale of loans, net

 

 

132

 

 

 

63

 

 

 

287

 

 

 

200

 

Earnings on bank owned life insurance

 

 

120

 

 

 

86

 

 

 

326

 

 

 

252

 

Unrealized gain or (loss) on equity securities, net

 

 

5

 

 

 

(6

)

 

 

8

 

 

 

(2

)

Other income

 

 

239

 

 

 

197

 

 

 

655

 

 

 

546

 

Total noninterest income

 

 

1,440

 

 

 

1,175

 

 

 

3,977

 

 

 

3,488

 

NON INTEREST EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

2,993

 

 

 

2,805

 

 

 

8,750

 

 

 

8,160

 

Occupancy expense

 

 

209

 

 

 

194

 

 

 

618

 

 

 

628

 

Equipment expense

 

 

128

 

 

 

145

 

 

 

408

 

 

 

461

 

Professional and director fees

 

 

316

 

 

 

199

 

 

 

963

 

 

 

749

 

Financial institutions and franchise tax expense

 

 

153

 

 

 

139

 

 

 

459

 

 

 

425

 

Marketing and public relations

 

 

149

 

 

 

124

 

 

 

405

 

 

 

363

 

Software expense

 

 

225

 

 

 

221

 

 

 

674

 

 

 

655

 

Debit card expense

 

 

142

 

 

 

144

 

 

 

401

 

 

 

386

 

Amortization of intangible assets

 

 

16

 

 

 

25

 

 

 

47

 

 

 

76

 

FDIC insurance expense

 

 

 

 

 

66

 

 

 

98

 

 

 

213

 

Other expenses

 

 

668

 

 

 

576

 

 

 

1,867

 

 

 

1,678

 

Total noninterest expenses

 

 

4,999

 

 

 

4,638

 

 

 

14,690

 

 

 

13,794

 

Income before income taxes

 

 

3,344

 

 

 

3,014

 

 

 

9,702

 

 

 

8,564

 

FEDERAL INCOME TAX PROVISION

 

 

649

 

 

 

582

 

 

 

1,881

 

 

 

1,644

 

NET INCOME

 

$

2,695

 

 

$

2,432

 

 

$

7,821

 

 

$

6,920

 

Basic and diluted net earnings per share

 

$

0.98

 

 

$

0.88

 

 

$

2.85

 

 

$

2.52

 

 

See notes to unaudited consolidated financial statements

4


 

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

(Dollars in thousands)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net income

 

$

2,695

 

 

$

2,432

 

 

$

7,821

 

 

$

6,920

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) arising during the period

 

 

275

 

 

 

(620

)

 

 

1,786

 

 

 

(2,088

)

Amounts reclassified from accumulated other

   comprehensive income, held-to-maturity

 

 

15

 

 

 

20

 

 

 

45

 

 

 

62

 

Income tax effect

 

 

(61

)

 

 

125

 

 

 

(384

)

 

 

425

 

Other comprehensive income (loss)

 

 

229

 

 

 

(475

)

 

 

1,447

 

 

 

(1,601

)

Total comprehensive income

 

$

2,924

 

 

$

1,957

 

 

$

9,268

 

 

$

5,319

 

 

See notes to unaudited consolidated financial statements.

5


 

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

 

(Dollars in thousands)

 

Common

stock

 

 

Additional

paid-in

capital

 

 

Retained

earnings

 

 

Treasury

stock

 

 

Accumulated

other

comprehensive

income (loss)

 

 

Total

 

Three Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

18,629

 

 

$

9,815

 

 

$

57,988

 

 

$

(4,780

)

 

$

(194

)

 

$

81,458

 

Net income

 

 

 

 

 

 

 

 

2,695

 

 

 

 

 

 

 

 

 

2,695

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

229

 

 

 

229

 

Cash dividends declared, $0.28 per share

 

 

 

 

 

 

 

 

(768

)

 

 

 

 

 

 

 

 

(768

)

Balance, end of period

 

$

18,629

 

 

$

9,815

 

 

$

59,915

 

 

$

(4,780

)

 

$

35

 

 

$

83,614

 

Nine Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

18,629

 

 

$

9,815

 

 

$

54,288

 

 

$

(4,784

)

 

$

(1,412

)

 

$

76,536

 

Net income

 

 

 

 

 

 

 

 

7,821

 

 

 

 

 

 

 

 

 

7,821

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,447

 

 

 

1,447

 

Issuance of 108 treasury shares

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

4

 

Cash dividends declared, $0.80 per share

 

 

 

 

 

 

 

 

(2,194

)

 

 

 

 

 

 

 

 

(2,194

)

Balance, end of period

 

$

18,629

 

 

$

9,815

 

 

$

59,915

 

 

$

(4,780

)

 

$

35

 

 

$

83,614

 

Three Months Ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

18,629

 

 

$

9,815

 

 

$

50,736

 

 

$

(4,784

)

 

$

(1,818

)

 

$

72,578

 

Net income

 

 

 

 

 

 

 

 

2,432

 

 

 

 

 

 

 

 

 

2,432

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(475

)

 

 

(475

)

Cash dividends declared, $0.24 per share

 

 

 

 

 

 

 

 

(658

)

 

 

 

 

 

 

 

 

(658

)

Balance, end of period

 

$

18,629

 

 

$

9,815

 

 

$

52,510

 

 

$

(4,784

)

 

$

(2,293

)

 

$

73,877

 

Nine Months Ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

18,629

 

 

$

9,815

 

 

$

47,535

 

 

$

(4,784

)

 

$

(663

)

 

$

70,532

 

Net income

 

 

 

 

 

 

 

 

6,920

 

 

 

 

 

 

 

 

 

6,920

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,601

)

 

 

(1,601

)

Cumulative effect adjustment equity securities,

   related to ASU 2016-01

 

 

 

 

 

 

 

 

29

 

 

 

 

 

 

(29

)

 

 

-

 

Cash dividends declared, $0.72 per share

 

 

 

 

 

 

 

 

(1,974

)

 

 

 

 

 

 

 

 

(1,974

)

Balance, end of period

 

$

18,629

 

 

$

9,815

 

 

$

52,510

 

 

$

(4,784

)

 

$

(2,293

)

 

$

73,877

 

 

See notes to unaudited consolidated financial statements.

6


 

CSB BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Nine Months Ended

September 30,

 

(Dollars in thousands)

 

2019

 

 

2018

 

NET CASH FROM OPERATING ACTIVITIES

 

$

7,565

 

 

$

8,110

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Securities:

 

 

 

 

 

 

 

 

Proceeds from repayments, available-for-sale

 

 

13,431

 

 

 

8,726

 

Proceeds from repayments, held-to-maturity

 

 

5,613

 

 

 

6,558

 

Purchases, available-for-sale

 

 

(15,984

)

 

 

(2,998

)

Purchases, held-to-maturity

 

 

 

 

 

(2,030

)

Loan originations, net of repayments

 

 

(17,252

)

 

 

(18,953

)

Property, equipment, and software acquisitions

 

 

(2,150

)

 

 

(822

)

Purchase of bank-owned life insurance

 

 

(3,000

)

 

 

 

Proceeds from sale of other real estate

 

 

 

 

 

30

 

Net cash used in investing activities

 

 

(19,342

)

 

 

(9,489

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Net change in deposits

 

 

51,621

 

 

 

4,272

 

Net change in short-term borrowings

 

 

(2,345

)

 

 

(2,015

)

Repayment of other borrowings

 

 

(2,072

)

 

 

(2,733

)

Cash dividends paid

 

 

(1,426

)

 

 

(1,316

)

Issuance of treasury stock

 

 

4

 

 

 

 

Net cash provided by (used in) financing activities

 

 

45,782

 

 

 

(1,792

)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

34,005

 

 

 

(3,171

)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

 

45,564

 

 

 

36,420

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

79,569

 

 

$

33,249

 

SUPPLEMENTAL DISCLOSURES

 

 

 

 

 

 

 

 

Cash paid during the year for:

 

 

 

 

 

 

 

 

Interest

 

$

3,046

 

 

$

2,037

 

Income taxes

 

 

2,125

 

 

 

1,660

 

Noncash financing activities:

 

 

 

 

 

 

 

 

Dividends declared

 

 

768

 

 

 

658

 

Lease adoption:

 

 

 

 

 

 

 

 

Right of use lease asset

 

 

477

 

 

 

 

Lease liability

 

 

469

 

 

 

 

 

See notes to unaudited consolidated financial statements.

 

 

7


 

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying condensed consolidated financial statements include the accounts of CSB Bancorp, Inc. and its wholly-owned subsidiaries, The Commercial and Savings Bank (the “Bank”) and CSB Investment Services, LLC (together referred to as the “Company” or “CSB”).  All significant intercompany transactions and balances have been eliminated in consolidation.

The condensed consolidated financial statements have been prepared without audit.  In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the Company’s financial position at September 30, 2019, and the results of operations and changes in cash flows for the periods presented have been made.

Certain information and footnote disclosures typically included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been omitted.  The Annual Report for CSB for the year ended December 31, 2018, contains Consolidated Financial Statements and related footnote disclosures, which should be read in conjunction with the accompanying Consolidated Financial Statements. The results of operations for the period ended September 30, 2019 are not necessarily indicative of the operating results for the full year or any future interim period.

Certain items in the prior-year financial statements were reclassified to conform to the current-year presentation.

ADOPTION of New Accounting Pronouncements

ASU 2016-02 – Leases. This Update and all subsequent ASU’s that modified Topic 842 set forth a new lease accounting model for lessors and lessees.   For lessees, virtually all leases will be required to be recognized on the balance sheet by recording a right-of-use asset and lease liability.  Subsequent accounting for leases varies depending on whether the lease is an operating lease or a finance lease.  The accounting provided by a lessor is largely unchanged from that applied under the existing guidance.  The ASU requires additional qualitative and quantitative disclosures with the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.

The Update and its related amendments were adopted as of January 1, 2019, which resulted in the recognition of operating right-of-use assets totaling $477 thousand and operating lease liabilities totaling $469 thousand. The Company elected to adopt the transition relief provisions from ASU 2018-11 and recorded the impact of adoption as of January 1, 2019, without restating any prior-year amounts or disclosures. The Company has presented the necessary disclosures in Note 8.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

ASU 2016-13 - Financial Instruments - Credit Losses. The Update requires that financial assets be presented at the net amount expected to be collected (i.e. net of expected credit losses), eliminating the probable recognition threshold for credit losses on financial assets measured at amortized cost. The measurement of expected credit losses should be based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The Update is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for annual and interim periods beginning after December 15, 2018. We expect the Update will result in an increase in the allowance for credit losses for the estimated life of the financial asset, including an estimate for debt securities. The amount of any increase will be impacted by the portfolio composition and quality at the adoption date, as well as economic conditions and forecasts at that time. A cumulative-effect adjustment to retained earnings is required as of the beginning of the year of adoption. The Company expects to recognize a one-time cumulative effect adjustment to the allowance for loan losses, but cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the new guidance on the consolidated financial statements. On October 16, 2019, the FASB voted to defer the effective date for ASC 326, Financial Instruments – Credit Losses, for smaller reporting companies to fiscal years beginning after

 

 

8


CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

December 15, 2022, and interim periods within those fiscal years. The final ASU is expected to be issued in mid-November 2019.

 

ASU 2017-04 - Simplifying the Test for Goodwill Impairment. The Update simplifies the goodwill impairment test.  Under the new guidance, Step 2 of the goodwill impairment process that requires an entity to determine the implied fair value of its goodwill by assigning fair value to all its assets and liabilities is eliminated. Instead, the entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The new guidance is effective for annual and interim goodwill tests performed in fiscal years beginning after December 15, 2019. Early adoption is permitted. On October 16, 2019, the FASB voted to defer the effective date for ASC 350, Intangibles – Goodwill and Other, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The final ASU is expected to be issued in mid-November, 2019. This Update is not expected to have a material impact on the Company’s financial statements.

ASU 2018-13 - Fair Value Measurement - Changes the Disclosure Requirements for Fair Value Measurements.  The Update removes the requirement to disclose the amount of and reasons for transfers between Level I and Level II of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level III fair value measurements. The Update requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level III fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level III fair value measurements. This Update is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.  This Update is not expected to have a significant impact on the Company’s financial statements.

ASU 2018-15 - Intangibles – Goodwill and Other – Internal-Use Software. This Update addresses customers’ accounting for implementation costs incurred in a cloud computing arrangement that is a service contract and also adds certain disclosure requirements related to implementation costs incurred for internal-use software and cloud computing arrangements. The amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This Update is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The amendments in this Update can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. On October 16, 2019, the FASB voted to defer the effective date for ASC 350, Intangibles – Goodwill and Other, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The final ASU is expected to be issued in mid-November, 2019. This Update is not expected to have a significant impact on the Company’s financial statements.

ASU 2019-01 - Leases (Topic 842): Codification Improvements. This Update addresses issues lessors sometimes encounter.  Specifically addressed in this Update were issues related to 1) determining the fair value of the underlying asset by the lessor that are not manufacturers or dealers (generally financial institutions and captive finance companies, and 2) lessors that are depository and lending institutions should classify principal and payments received under sales-type and direct financing leases within investing activities in the cash flow statement.  The ASU also exempts both lessees and lessors from having to provide the interim disclosures required by ASC 250-10-50-3 in the fiscal year in which a company adopts the new leases standard.  The amendments addressing the two lessor accounting issues are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. This Update is not expected to have a significant impact on the Company’s financial statements.

 

 

9


CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 2 – SECURITIES

Securities consist of the following at September 30, 2019 and December 31, 2018:

 

(Dollars in thousands)

 

Amortized

cost

 

 

Gross

unrealized

gains

 

 

Gross

unrealized

losses

 

 

Fair value

 

September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury security

 

$

996

 

 

$

1

 

 

$

 

 

$

997

 

U.S. Government agencies

 

 

3,500

 

 

 

 

 

 

14

 

 

 

3,486

 

Mortgage-backed securities of government agencies

 

 

53,150

 

 

 

307

 

 

 

127

 

 

 

53,330

 

Asset-backed securities of government agencies

 

 

960

 

 

 

 

 

 

9

 

 

 

951

 

State and political subdivisions

 

 

23,096

 

 

 

345

 

 

 

3

 

 

 

23,438

 

Corporate bonds

 

 

7,615

 

 

 

22