What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-03-14 compared with 2024-03-15 · 166 added, 200 removed, 912 unchanged (29% of the section changed)

13 unchanged sentences

Chief Financial Officer

REP ORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of CSB Bancorp, Inc.

5 unchanged sentences

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As discussed in Note 1 to the financial statements, the Company changed its method of accounting for credit losses effective January 1, 2023, due to the adoption of Accounting Standards Codification (ASC) Topic 326, Financial Instruments – Credit Losses .

Basis for Opinion

18 unchanged sentences

Allowance for Credit Losses (ACL) – Qualitative Adjustments

Description of the Matter

The Company’s loan portfolio totaled $738 million as of December 31, 2024, and the associated ACL was $7.6 million.

4 unchanged sentences

Auditing these complex judgments and assumptions involved especially challenging auditor judgment due to the nature of audit evidence and the nature and extent of effort required to address these matters.

How we addressed the matter in our audit

The primary procedures we performed to address this critical audit matter included:

16 unchanged sentences

Held-to-maturity;

fair value of $ 194,730 in 2023 and $ 211,954 in 2022 ($ 0 credit loss allowance)

fair value of $ 172,603 in 2024 and $ 194,730 in 2023 ($ 0 credit loss allowance for 2024 and 2023)

Equity securities

42 unchanged sentences

CREDIT LOSS EXPENSE

Provision (recovery) for credit loss expense - loans

Provision for credit loss expense - off-balance sheet commitments

Total provision (recovery) for credit loss expense

Provision for credit loss expense - loans

Provision (recovery) for credit loss expense - off-balance sheet commitments

Total provision for credit loss expense

NET INTEREST INCOME AFTER CREDIT LOSS EXPENSE

6 unchanged sentences

Earnings on bank owned life insurance

Unrealized gain (loss) on equity securities

Unrealized gain on equity securities

Total noninterest income

19 unchanged sentences

(Dollars in thousands)

Other comprehensive income (loss)

Unrealized gain (loss) on available-for-sale securities arising during the period

Other comprehensive income

Unrealized gain on available-for-sale securities arising during the period

Amortization of held-to-maturity discount resulting from transfer

Income tax effect at 21 %

Other comprehensive income (loss)

Other comprehensive income

Total comprehensive income

6 unchanged sentences

BALANCE AT DECEMBER 31, 2022

Other comprehensive loss

Cumulative effect of adoption of ASU 2016-13

Other comprehensive income

Purchase of 37,638 treasury shares

1 unchanged sentence

BALANCE AT DECEMBER 31, 2023

Cumulative effect of adoption of ASU 2016-13

Other comprehensive income

10 unchanged sentences

Depreciation and amortization of premises, equipment

Deferred income tax expense (benefit)

Provision for (recovery of) credit losses

Deferred income tax expense

Provision for credit loss expense

Gain on sale of loans, net

13 unchanged sentences

Purchases, available-for-sale

Purchases, held-to-maturity

Purchases, equity securities

Redemption of restricted stock

2 unchanged sentences

Purchases of software

Purchase of bank owned life insurance

Sale of property

11 unchanged sentences

Net cash provided by financing activities

NET DECREASE IN CASH AND CASH EQUIVALENTS

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

7 unchanged sentences

The Company’s wholly owned subsidiaries are The Commercial and Savings Bank of Millersburg, Ohio (the “Bank”) and CSB Investment Services, LLC.

The Company, through its subsidiaries, operates in one industry segment, the commercial banking industry.

The Bank, an Ohio-chartered bank organized in 1879, provides financial services through its sixteen Banking Centers located in Holmes, Stark, Tuscarawas and Wayne counties.

The Company, through its subsidiaries, operates in the commercial banking industry.

The Bank, an Ohio-chartered bank organized in 1879, provides financial services through its sixteen Banking Centers located in Holmes, Stark, Tuscarawas and Wayne counties and a loan production office in Medina.

These communities are the source of a substantial majority of the Bank’s deposit, loan, and trust activities.

6 unchanged sentences

Significant accounting policies followed by the Company are presented below.

BUSINESS SEGMENTS

The Company's operations have been evaluated for segment reporting and management has determined operations are managed along two operating segments, consisting of banking operations and trust services.

The Company derives its banking operations revenue from business and consumer customers through loan and deposit products.

However, these components are not separately reviewed and all expenses are not segregated from the rest of the Company's operations and therefore are not reportable as segments.

The Company's chief operating decision maker is the senior management team, which includes the CEO, President, CFO, Chief Risk Officer, Senior Loan Officer and Senior Operations Officer.

While the chief operating decision maker uses financial information related to the banking operations and trust services segments to analyze business performance and allocate resources, the trust services segment does not meet the quantitative threshold under GAAP to be considered a reportable segment.

Trust services revenue and net income are less than 4 % of total Company revenue or net income.

As such, these operating segments are aggregated into a single reportable operating segment in the Consolidated Financial Statements.

USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS

8 unchanged sentences

For purposes of the Consolidated Statements of Cash Flows, cash and cash equivalents include cash on hand and amounts due from banks which mature overnight or within ninety days .

CASH RESERVE REQUIREMENTS

Effective, March 26, 2020, the Federal Reserve reduced reserve requirements to zero for all depository institutions.

There were no required federal reserves included in “Cash and due from banks” at December 31, 2023 or December 31, 2022.

When required, reserves are used to facilitate the implementation of monetary policy by the Federal Reserve System.

The required reserves are computed by applying prescribed ratios to the classes of average deposit balances.

These are held in the form of vault cash and depository amounts held with the Federal Reserve Bank.

Federal law prohibits the Company from borrowing from the Bank unless the loans are secured by specific collateral.

DEBT SECURITIES

At the time of purchase all debt securities are evaluated and designated as available-for-sale or held-to-maturity.

Securities designated as available-for-sale are carried at fair value with unrealized gains and losses on such securities, net of applicable income taxes, recognized as other comprehensive income or loss.

Held-to-maturity securities are recorded at amortized cost.

At the time of purchase all debt securities are evaluated and designated as available-for-sale (AFS) or held-to-maturity (HTM).

Securities designated as AFS are carried at fair value with unrealized gains and losses on such securities, net of applicable income taxes, recognized as other comprehensive income or loss.

HTM securities are recorded at amortized cost.

Securities transferred from AFS to HTM are carried at their fair value on the date of transfer.

On December 31, 2023, 61 % of the total investment portfolio was classified as held-to-maturity.

On December 31, 2024 , 62 % of the total investment portfolio was classified as HTM.

The amortized cost of debt securities is adjusted for the accretion of discounts to maturity and the amortization of premiums to the earlier of a bond’s call date or maturity based on the interest method.

Such amortization and accretion is included in interest and dividends on securities.

Such amortization and accretion are included in interest and dividends on securities.

Gains and losses on sales of securities are accounted for on a trade date basis, using the specific identification method, and are included in noninterest income.

11 unchanged sentences

All interest accrued but not collected for loans placed on nonaccrual or charged-off is reversed and charged against interest income.

The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual.

The interest on these loans is accounted for on a cash-basis or cost-recovery method, until qualifying for return to accrual.

Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

4 unchanged sentences

ALLOWANCE FOR CREDIT LOSSES

Loan and Leases Policy - In connection with our adoption of ASU 2016-13, we made changes to our loan portfolio segments to align with the methodology applied in determining the allowance under CECL.

Refer to Note 3 Loans, for further discussion of these portfolio segments.

In addition to our existing segments, our new segmentation breaks out commercial lessors of buildings, and consumer indirect loans as well as separating consumer mortgage loans from home equity line of credit loans.

The ACL is a valuation reserve established and maintained by charges against operating income and is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans.

26 unchanged sentences

The ACL for off-balance sheet commitments is recorded in other liabilities in the Consolidated Balance Sheets.

HTM Securities - The allowance for HTM debt securities is estimated using a CECL methodology.

Any expected credit loss is recorded through the ACL on HTM securities and is deducted from the amortized cost basis on the balance sheet.

HTM Securities - Any expected credit loss is recorded through the ACL on HTM securities and is deducted from the amortized cost basis on the balance sheet.

The majority of HTM securities are issued by U.S.

3 unchanged sentences

Therefore, there is no credit loss expectation on these securities.

AFS Securities - The AFS securities portfolio is evaluated on a quarterly basis for indicators of impairment.

Management reviews the amount of unrealized loss, the credit rating history, market trends of similar security classes, time remaining to maturity, and the source of principal and interest payments to identify securities which could potentially be impaired.

For those securities that management intends to sell before the recovery of their amortized cost basis, the difference between fair value and amortized cost is considered to be impaired and is recognized in provision for credit loss expense.

For those AFS securities that management does not intend to sell prior to expected recovery of the amortized cost basis, the credit portion of the impairment is recognized through the ACL on AFS securities, while the noncredit portion is recognized through the accumulated other comprehensive income or loss included in shareholders' equity.

AFS Securities - The AFS securities portfolio is evaluated on a quarterly basis for indicators of credit loss.

For those securities that management intends to sell before the recovery of their amortized cost basis, the difference between fair value and amortized cost is considered to have a credit loss and is recognized in provision for credit loss expense and the amortized cost is written down to the realizable value through a charge-off.

For those AFS securities that management does not intend to sell prior to expected recovery of the amortized cost basis, the credit portion is recognized through the ACL on AFS securities, while the noncredit portion is recognized through the accumulated other comprehensive income or loss included in shareholders' equity.

Non-credit related impairment is a result of other factors, including changes in interest rates.

ALLOWANCE FOR LOAN LOSSES

Under the incurred loss methodology in 2022 and prior years, the allowance for loan losses was established as losses were estimated to have occurred through a provision for loan losses charged to income.

Loan losses were charged against the allowance when management believed the uncollectability of a loan balance was confirmed.

Subsequent recoveries, if any, were credited to the allowance.

The allowance for loan losses was evaluated on a regular basis by management and was based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect borrowers’ ability to repay, estimated value of any underlying collateral, and prevailing economic conditions.

This evaluation was inherently subjective as it required estimates that were susceptible to significant revision as more information became available.

OTHER REAL ESTATE OWNED

22 unchanged sentences

MSRs are evaluated on a discounted earnings basis to determine the present value of future earnings of the underlying serviced mortgages.

All assumptions are reviewed annually, or more frequently if necessary, adjusted to reflect current, and anticipated market conditions.

All assumptions are reviewed annually, or more frequently if necessary, and adjusted to reflect current and anticipated market conditions.

BANK-OWNED LIFE INSURANCE

9 unchanged sentences

FEDERAL INCOME TAXES

The Company and its subsidiaries file a consolidated tax return.

The Company and its subsidiaries file a consolidated federal tax return.

Deferred income taxes are recorded on temporary differences between financial statement and income tax reporting.

16 unchanged sentences

(Dollars in thousands, except per share data)

Weighted average common shares

Weighted average common shares issued

Average treasury shares

1 unchanged sentence

Earnings per share, basic and diluted

SUBSEQUENT EVENTS

S UBSEQUENT EVENTS

The Company has evaluated subsequent events through the date these financial statements were issued.

3 unchanged sentences

This new guidance is intended to enhance the transparency and decision usefulness of income tax disclosures.

The amendments in this Update address investor

requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

The amendments in this Update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

This Update also includes certain other amendments to improve the effectiveness of income tax disclosures.

2 unchanged sentences

ACCOUNTING PRONOUNCEMENTS ADOPTED IN 2024

In June 2016, the FASB issued ASU No.

2016-13, " Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments" and subsequent related updates.

This ASU replaces the incurred loss methodology for recognizing credit losses and requires businesses and other organizations to measure the current expected credit losses (CECL) on financial assets measured at amortized cost, including loans and held-to-maturity securities, net investments in leases, off-balance sheet credit exposures such as unfunded commitments, and other financial instruments.

In addition, ASC 326 requires credit losses on available-for-sale debt securities to be presented as an allowance rather than as a write-down when management does not intend to sell or believes that it is not more likely than not they will be required to sell the debt securities.

This guidance became effective on January 1, 2023 for the Bank.

The results reported for periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable accounting standards.

The Bank adopted this guidance, and subsequent related updates, using the modified retrospective approach for all financial assets measured at amortized cost, including loans and held-to-maturity debt securities, available-for-sale debt securities and unfunded commitments.

On January 1, 2023, the Bank recorded a cumulative effect increase to retained earnings of $ 52 thousand, net of tax, of which $ 442 thousand related to loans, offset by $ 390 thousand related to unfunded commitments, net of tax.

There was no allowance for credit losses recorded for either available-for-sale or held-to-maturity debt securities.

See Note 3 for further discussion on the adoption of CECL.

The Bank adopted the provisions of ASC 326 related to presenting other-than-temporary impairment on available-for- sale debt securities on January 1, 2023 using the prospective transition approach, though no such charges had been recorded on the securities held by the Bank as of the date of adoption.

The Bank expanded the pooling utilized under the legacy incurred loss method to include additional segmentation based on risk.

The impact of the change from the incurred loss model to the current expected credit loss model is detailed below:

January 1, 2023

(Dollars in thousands)

Adoption Impact

Commercial and industrial

Commercial real estate

Commercial lessors of buildings

Consumer mortgage

Home equity line of credit

Consumer installment

Consumer indirect

Total allowance for credit losses - loans

ACL for off-balance sheet commitments

Total allowance for credit losses

The following table presents the Bank's loan portfolio, prior to the adoption of ASC 326, by category of loans and the impact of the change from the adoption of the standard:

(Dollars in thousands)

December 31, 2022

Adoption Impact

Post Adoption January 1, 2023

Commercial and industrial

Commercial real estate

Commercial lessors of buildings

Consumer mortgage

Home equity line of credit

Consumer installment

Consumer indirect

Gross loans prior to deferred fees

Deferred loan costs, net

Allowance for credit losses

Total net loans

In January 2020, the FASB issued ASU 2020-04 - Reference Rate Reform (Topic 848).

This update provides temporary optional expedients and exceptions to the U.S.

GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate.

Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls "reference rate reform" if certain criteria are met.

An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination.

Also, entities can elect various optional expedients allowing them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met, and can make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform.

The amendments in this ASU are effective for all entities upon issuance through December 31, 2022.

In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 , which extends the sunset (or expiration) date of Accounting Standards Codification (ASC) Topic 848 to December 31, 2024.

This gives reporting entities two additional years to apply the accounting relief provided under ASC Topic 848 for matters related to reference rate reform.

ASU 2022-06 is effective for all reporting entities immediately upon issuance and must be applied on a prospective basis.

This Update has been adopted and did no t have a significant impact on the Company’s financial statements.

In March 2022, the FASB issued ASU 2022-02, “ Financial Instruments – Credit Losses (ASC 326):

Troubled Debt Restructurings (TDRs) and Vintage Disclosures” .

The guidance amends ASC 326 to eliminate the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancing and restructuring activities by creditors when a borrower is experiencing financial difficulty.

Specifically, rather than applying TDR recognition and measurement guidance, creditors will determine whether a modification results in a new loan or continuation of existing loan.

The guidance also requires disclosures about the performance of modified loans to borrowers experiencing financial difficulty in the 12 months following the modification.

These amendments are intended to enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty.

Additionally, the amendments to ASC 326 require that an entity disclose current period gross write-offs by year of origination within the vintage disclosures, which requires that an entity disclose the amortized cost basis of financing receivables by credit quality indicator and class of financing receivable by year of origination.

The guidance is only for entities that have adopted the amendments in Update 2016-13.

This guidance has been adopted as of January 1, 2023 , however, there have been no reportable loan modifications during the year ended December 31, 2023.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires public entities to disclose information about their reportable segments' significant expenses on an interim and annual basis.

This ASU became effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Public entities are required to adopt the changes retrospectively, recasting each prior-period disclosure for which a comparative income statement is presented in the period of adoption .

Upon adoption the Company expanded its disclosures regarding reportable segments, which are included above in Note 1 to the Consolidated Financial Statements.

RECLASSIFICATION OF COMPARATIVE AMOUNTS

54 unchanged sentences

Restricted stock primarily consists of investments in FHLB and Federal Reserve Bank stock.

The Bank’s investment in FHLB stock amounted to $ 1.0 million and $ 2.9 million on December 31, 2023, and 2022, respectively.

The Bank’s investment in FHLB stock amounted to $ 1.0 million on December 31, 2024, and 2023 .

Federal Reserve Bank stock was $ 471 thousand on December 31, 2024, and 2023.

There were no proceeds from sales of debt securities for the years ended December 31, 2024 and 2023 .

Unrealized gains and (losses) recognized on equity securities on the consolidated statements of income were $ 15 thousand and $( 3 ) thousand, respectively for the years ended December 31, 2023 and 2022.

Unrealized gains recognized on equity securities on the consolidated statements of income were $ 8 thousand and $ 15 thousand, respectively for the years ended December 31, 2024 and 2023.

The Bank monitors the credit quality of held-to-maturity debt securities primarily through utilizing their credit rating.

10 unchanged sentences

Credit rating:

The following table presents gross unrealized losses, fair value of securities, aggregated by investment category, and length of time individual available-for-sale securities have been in a continuous unrealized loss position, on December 31 2023:

Less Than 12 Months

16 unchanged sentences

Corporate bonds

Held-to-maturity

Treasury securities

Mortgage-backed securities of government

State and political subdivisions

Total temporarily impaired securities

Total temporarily impaired available-for-sale securities

There were 112 available-for-sale securities in an unrealized loss position on December 31, 2024 , 104 of which were in a continuous loss position for twelve (12) months or more.

22 unchanged sentences

Deferred loan fees, net

(Dollars in thousands)

Commercial real estate

Residential real estate

Construction & land development

Allowance for loan losses

Deferred loan costs, net

* See Note 1 for reclassification of balances due to the adoption of ASC 326.

Loan Origination/Risk Management

21 unchanged sentences

Construction and land development loans are generally based upon estimates of costs and value associated with the completed project.

These estimates may be

These estimates may be inaccurate.

Construction and land development loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the project.

8 unchanged sentences

Concentrations of Credit

Nearly all the Company’s lending activity occurs within the State of Ohio, including the four counties of Holmes, Stark, Tuscarawas, and Wayne, as well as other markets.

Nearly all the Company’s lending activity occurs within the State of Ohio, including the five counties of Holmes, Medina, Stark, Tuscarawas, and Wayne, as well as surrounding counties.

The majority of the Company’s loan portfolio consists of commercial and industrial and commercial real estate loans.

1 unchanged sentence

$ 37 million, or 5 %, of total loans to animal food producers;

and $ 22 million, or 3 % of total loans to lessors of residential buildings.

and $ 30 million, or 4 % of total loans to construction, and equipment rental and leasing.

The Company has less than 2 % of total loans outstanding to loans secured by commercial office space.

1 unchanged sentence

Credit evaluation is based on a review of cash flow coverage of principal and interest payments, and the adequacy of the collateral received.

The top ten collateral exposures in commercial real estate and commercial lessors of buildings at December 31, 2024 are as follows:

Industrial, manufacturing and production $ 56 million;

warehouse $ 39 million;

healthcare facilities $ 27 million;

residential investment property $ 27 million;

retail strip center $ 17 million;

auto repair $ 15 million;

retail store $ 13 million;

senior housing $ 12 million;

hotels $ 11 million;

nonfarm/nonresidential $ 10 million.

Allowance for Credit Losses

1 unchanged sentence

Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

During 2024, the increase in the provision for credit loss expense for commercial and industrial and commercial real estate loans was primarily related to one loan relationship which is in process of court liquidation.

This relationship has been charged down by $ 6.2 million which resulted in an increase in the historical loss rates applied to the loans in each of these categories.

The decrease in the provision for consumer mortgages and home equity loans was primarily due to the stable economy and collateral values, with very few historical losses in these categories.

The increase in the provision for consumer installment and consumer indirect loans is due to the increase in historical losses in this portfolio.

During 2023, ACL balances were affected by the adoption of ASC 326 which changed the methodology for calculating the allowance for credit losses.

5 unchanged sentences

The increase in the consumer indirect category is due to the increase in charge-offs in this portfolio.

During 2022, the decrease in the provision (recovery) for loan losses for construction and land development and commercial real estate loans was primarily related to the improvement in loans to businesses that were negatively impacted by the COVID-19 pandemic, the reduction of impaired and adversely classified loans, as well as a large recovery received on a previously charged-off loan.

The decrease in the provision for consumer loans was primarily related to the tightening of underwriting guidelines pertaining to the RV portfolio along with a decline in RV loan balances and fewer consumer loan charge-offs in 2022.

The provision related to residential real estate loans increased as a result of the growth in loan balances along with an increase in the general loss ratios due to elevated levels of economic uncertainty associated with increased inflation and higher interest rates.

Summary of Allowance for Credit Losses on Loans

1 unchanged sentence

(Dollars in thousands)

Beginning ALL Balance

Impact of Adopting ASC 326

Provisions (Recovery)

Beginning ACL Balance

Provision for Credit Losses (Recovery)

Ending ACL Balance

7 unchanged sentences

Consumer indirect

Summary of Allowance for Loan Losses

The following table details activity in the allowance for loan losses by portfolio segment for the year ended December 31, 2022:

(Dollars in thousands)

Beginning ALL Balance

(Recovery) Provision for Loan Losses

Net (Charge-offs) Recoveries

Ending ALL Balance

Impact of Adopting ASC 326

Provision for Credit Losses (Recovery)

Ending ACL Balance

December 31, 2023

Commercial and industrial

Commercial real estate

Residential real estate

Construction & land development

Commercial lessors of buildings

Consumer mortgage

Home equity line of credit

Consumer installment

Consumer indirect

Age Analysis of Past-Due Loans Receivable and Nonperforming Loans

11 unchanged sentences

Consumer indirect

December 31, 2023

Commercial and industrial

Commercial real estate

Commercial lessors of buildings

Consumer mortgage

Home equity line of credit

Consumer installment

Consumer indirect

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing interest as of December 31:

13 unchanged sentences

Consumer indirect

Interest income recognized on nonaccrual loans as of December 31, 2023 was $ 2 thousand on commercial real estate loans and $ 33 thousand on consumer mortgage loans.

December 31, 2023

Commercial and industrial

Commercial real estate

Commercial lessors of buildings

Consumer mortgage

Home equity line of credit

Consumer installment

Consumer indirect

Interest income recognized on nonaccrual loans as of December 31, 2024 was $ 6 thousand on commercial real estate loans, $ 33 thousand on consumer mortgage loans, and $ 2 thousand on commercial & industrial loans.

Several consumer mortgage loans on nonaccrual are at an amortized cost basis of $ 0 and all payments are being recognized as interest income when received.

The following table presents the aging of accruing past due and nonaccrual loans by class of loans as of December 31, 2022:

Accruing Loans

Collateral-Dependent Financial Assets

When loan repayment is expected to be provided substantially through the operation or sale of collateral and the borrower is experiencing financial difficulty, expected credit losses are based on the fair value of the collateral.

The class of loan represents the primary collateral type associated with the loan.

There were no collateral dependent loans as of December 31, 2023.

The following table presents the amortized cost basis of collateral dependent loans by class of loan:

Type of Collateral

(Dollars in thousands)

Blanket Liens

December 31, 2024

Commercial and industrial

Commercial real estate

Residential real estate

Construction & land development

Total collateral dependent loans

Credit Quality Indicators

20 unchanged sentences

Term Loans Amortized Costs Basis by Origination Year

(Dollars in thousands)

Revolving Loans Amortized Cost Basis

Revolving Loans Converted to Term

(Dollars in thousands)

December 31, 2024

13 unchanged sentences

YTD gross charge-offs

1 Balances include $ 1.9 million USDA guarantee.

2 Balances include $ 16.4 million USDA guarantee.

Term Loans Amortized Costs Basis by Origination Year

(Dollars in thousands)

Revolving Loans Amortized Cost Basis

Revolving Loans Converted to Term

December 31, 2023

Commercial and industrial:

Special mention

YTD gross charge-offs

Commercial real estate:

Construction & land development

Special Mention

YTD gross charge-offs

Commercial lessors of buildings:

Special Mention

YTD gross charge-offs

Commercial construction:

Special Mention

YTD gross charge-offs

Special Mention

YTD gross charge-offs

The Company monitors the credit risk profile by payment activity for the loan classes listed below.

2 unchanged sentences

Term Loans Amortized Costs Basis by Origination Year

(Dollars in thousands)

Revolving Loans Amortized Cost Basis

Revolving Loans Converted to Term

December 31, 2024

Consumer mortgage:

Nonperforming

YTD gross charge-offs

Consumer construction:

Nonperforming

YTD gross charge-offs

Home equity line of credit:

Nonperforming

YTD gross charge-offs

Consumer installment:

Nonperforming

YTD gross charge-offs

Consumer indirect:

Nonperforming

YTD gross charge-offs

Nonperforming

Total YTD gross charge-offs

Term Loans Amortized Costs Basis by Origination Year

(Dollars in thousands)

Revolving Loans Amortized Cost Basis

Revolving Loans Converted to Term

December 31, 2023

24 unchanged sentences

If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted.

There were no modifications of loans to borrowers in financial distress completed during the year ended December 31, 2023.

Impaired Loans

The following impaired loan information relates to required disclosures under the previous incurred loan loss methodology and are only presented with prior period information.

The following table presents the balance in the allowance for loan losses and the ending loan balances by portfolio segment and impairment method at December 31, 2022:

(Dollars in thousands)

December 31, 2022

Allowance for loan losses:

Ending allowance balances

attributable to loans:

Individually evaluated for

Collectively evaluated for

Total ending allowance

Loans individually

evaluated for

Loans collectively

evaluated for

Total ending loans balance

The following table presents loans individually evaluated for impairment by class of loans at December 31, 2022:

(Dollars in thousands)

December 31, 2022

Commercial real estate

Residential real estate

Construction & land development

Total impaired loans

1 Includes principal, accrued interest, unearned fees, and origination costs .

There were no modifications of loans to borrowers in financial distress completed during the year ended December 31, 2024 and 2023.

Real Estate Loans in Foreclosure

There was no other real estate owned on December 31, 2023, or 2022, respectively.

There was no other real estate owned on December 31, 2024, or 2023 .

Mortgage loans in the process of foreclosure were $ 74 thousand on December 31, 2024 and $ 8 thousand on December 31, 2023 .

Repossessed assets were $ 14 thousand on December 31, 2024, and there were no repossessed assets on December 31, 2023.

Mortgage Servicing Rights

33 unchanged sentences

December 31, 2024

December 31, 2023

Weighted-average remaining lease term - operating leases in years

Weighted-average discount rate - operating leases

The following table presents aggregate lease maturities and obligations as of December 31, 2023:

The following table presents aggregate lease maturities and obligations:

(Dollars in thousands)

22 unchanged sentences

Average balances outstanding during the year represent daily average balances;

average interest rates represent interest expenses divided by the related average balances.

average interest rates represent interest expense divided by the related average balances.

The following table provides additional detail regarding the collateral pledged to secure repurchase agreements accounted for as secured borrowings:

49 unchanged sentences

The discretionary profit-sharing contribution is determined annually by the Board of Directors and amounted to 2.25 % in 2024 and 3.25 % in 2023 of each eligible participant’s compensation.

Beginning in 2018, the Plan provided for a 100 % Company match up to a maximum of 4 % of eligible compensation.

The Plan provides for a 100 % Company match up to a maximum of 4 % of eligible compensation.

The Company auto enrolls all eligible new hires into the Plan.

22 unchanged sentences

The Company requires collateral supporting these commitments when deemed appropriate.

The Company had $ 736 thousand allowance for credit losses for unfunded loan commitments as of December 31, 2023 and $ 0 as of December 31, 2022.

The increase in the ACL for unfunded loan commitments was primarily due to construction projects that have not been completed and fully drawn.

The Company had $ 524 thousand allowance for credit losses for unfunded loan commitments as of December 31, 2024 , and $ 736 thousand as of December 31, 2023 .

The decrease in the ACL for unfunded loan commitments was primarily due the removal of a specific allocation to a substandard relationship that is no longer outstanding and a decrease in unfunded commitments on commercial construction loans as of December 31, 2024.

NOTE 11 – RELATED-PARTY TRANSACTIONS

In the ordinary course of business, loans are made by the Bank to executive officers, directors, their immediate family members, and their related business interests consistent with Federal Reserve Regulation O and GAAP definition of related parties.

The following is an analysis of activity of related-party loans for the years ended December 31:

37 unchanged sentences

The Company does not anticipate the financial need to obtain regulatory approval to pay dividends.

Federal law prevents the Company from borrowing from

the Bank unless loans are secured by specific obligations.

Federal law prevents the Company from borrowing from the Bank unless loans are secured by specific obligations.

Further, such secured loans are limited to an amount not exceeding ten percent of the Bank’s common stock and capital surplus.

14 unchanged sentences

Dividends from subsidiary

Unrealized gain (loss) on equity securities

Unrealized gain on equity securities

Operating expenses

9 unchanged sentences

Equity earnings in subsidiary, net of dividends

Unrealized gain on equity securities

Change in other assets and liabilities

Net cash provided by operating activities

Cash flows from investing activities

Purchase of equity securities

Net cash used in investing activities

Cash flows from financing activities

2 unchanged sentences

Net cash used in financing activities

Decrease in cash

Increase (decrease) in cash

Cash at beginning of year

44 unchanged sentences

Securities held-to-maturity

Loans held for sale

Mortgage servicing rights

4 unchanged sentences

Securities held-to-maturity

Loans held for sale

Mortgage servicing rights

3 unchanged sentences

NOTE 16 – ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table presents the changes in accumulated other comprehensive (loss) income by component net of tax for the years ended December 31, 2023, and 2022:

The following table presents the changes in accumulated other comprehensive loss by component net of tax for the years ended December 31, 2024, and 2023:

(Dollars in thousands)

BALANCE AS OF DECEMBER 31, 2022

Unrealized holding loss on available-for-sale

Unrealized holding gain on available-for-sale

securities arising during the period

1 unchanged sentence

from transfer

Total other comprehensive loss

Total other comprehensive income

BALANCE AS OF DECEMBER 31, 2023

12 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data