What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-09 compared with 2022-08-09 · 83 added, 74 removed, 150 unchanged (51% of the section changed)

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis focuses on the consolidated financial condition of the Company at June 30, 2022 as compared to December 31, 2021, and the consolidated results of operations for the three and six months ended June 30, 2022 compared to the same periods in 2021.

The following management’s discussion and analysis focuses on the consolidated financial condition of the Company on September 30, 2022 as compared to December 31, 2021, and the consolidated results of operations for the three and nine months ended September 30, 2022 compared to the same periods in 2021.

The purpose of this discussion is to provide the reader with a more thorough understanding of the Consolidated Financial Statements.

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FINANCIAL CONDITION

Total assets remained constant at $1.1 billion at June 30, 2022 compared to December 31, 2021.

During the six months ended June 30, 2022, securities increased $86 million, net loans increased $33 million, and cash and cash equivalents decreased $140 million.

Deposits and short-term borrowings decreased $12 million.

Total assets increased to $1.16 billion at September 30, 2022 compared to $1.14 billion December 31, 2021.

During the nine months ended September 30, 2022, securities increased $88 million, net loans increased $61 million, and cash and cash equivalents decreased $136 million.

Deposits and short-term borrowings increased $24 million.

Net loans increased $61 million, or 11%, as construction loans increased $12 million, or 27%, and residential real estate loans increased $22 million, or 13%, from December 31, 2021.

Commercial and commercial real estate loans were flat compared to December 31, 2021 including $3 million in PPP loan forgiveness from year end.

PPP loans outstanding at June 30, 2022 were $1.6 million after the bank originated $129 million in PPP loans during 2020 and 2021.

Consumer refinance activity slowed significantly on mortgage loans, home purchase activity remained stable despite limited inventory through the first six months of 2022, and home equity line originations increased by $5 million.

Residential mortgage loan originations for the six months ended June 30, 2022 totaled $44 million, a decrease from $59 million in originations during the six months ended June 30, 2021.

Originations sold into the secondary market were $7 million and $27 million, respectively during the six months ended June 30, 2022 and June 30, 2021.

Commercial and commercial real estate loans increased $30 million compared to December 31, 2021 including $4 million in PPP loan forgiveness from year end.

PPP loans outstanding on September 30, 2022, were $392 thousand after the bank originated $129 million in PPP loans during 2020 and 2021.

Consumer refinance activity slowed significantly on mortgage loans, home purchase activity remained stable despite limited inventory through the first nine months of 2022, and home equity line balances increased by $7 million.

Residential mortgage loan originations for the nine months ended September 30, 2022 totaled $61 million, a decrease from $85 million in originations during the nine months ended September 30, 2021.

As interest rates rose in 2022, more variable rate residential mortgage loans were originated for the portfolio, with nine-month originations of $48 million in 2022 and $38 million in 2021.

Originations sold into the secondary market were $8 million and $36 million, respectively during the nine months ended September 30, 2022 and September 30, 2021.

The Bank originates and sells primarily fixed rate thirty-year mortgages into the secondary market.

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The Company has not early adopted CECL which has been delayed for smaller reporting companies.

Net recoveries were $295 thousand, or an annualized 0.21% of average loans, in the current six-month period compared to net recoveries of $46 thousand, or 0.01% of average loans in the year-ago six-month period.

At June 30, 2022, the allowance for total loans was 1.25%.

Net recoveries were $285 thousand, or an annualized -0.07% of average loans, in the current nine-month period compared to net recoveries of $26 thousand, or -0.01% of average loans in the year-ago nine-month period.

At September 30, 2022, the allowance for total loans was 1.15%.

We believe the allowance level is appropriate given the low level of problem loans and composition of the overall loan portfolio in the current economic environment.

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20 %, on December 31, 202 1 .

For the six months ended June 30, 2022, $50 thousand in loans were placed on n onaccrual status , $ 436 thousand in paydowns were received , and $ 10 thousand in personal loans were charged-off due to non-payment .

For the nine months ended September 30, 2022 , $ 82 thousand in loans were placed on n onaccrual status , $ 4 70 thousand in paydowns were received , and $ 10 thousand in personal loans were charged-off due to non-payment .

September 30,

(Dollars in thousands)

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Allowance for loan losses to total nonperforming loans

The ratio of gross loans to deposits was 58.6% at June 30, 2022, compared to 54.8% at December 31, 2021.

The ratio of gross loans to deposits was 59.3% at September 30, 2022, compared to 54.8% at December 31, 2021 .

The Company has no exposure to government-sponsored enterprise preferred stocks, collateralized debt obligations, or trust preferred securities.

Management has considered industry analyst reports, sector credit reports, and the volatility within the bond market in concluding that the gross unrealized losses of $35.4 million within the available-for-sale and held-to-maturity portfolios as of June 30, 2022, was primarily the result of current market yields compared to the yields at the time the investments were purchased by the Company and not due to credit quality.

As a result, all embedded security losses on June 30, 2022, are considered temporary and no impairment loss relating to these securities has been recognized.

Deposits decreased $10 million, or less than 1%, from December 31, 2021 with noninterest-bearing deposits decreasing approximately $6 million, or 2%, and interest-bearing deposit accounts decreasing approximately $4 million, or less than 1%.

Total deposits as of June 30, 2022 are $993 million, or less than 1%, greater than June 30, 2021 deposit balances.

Management has considered industry analyst reports, sector credit reports, and the volatility within the bond market in concluding that the gross unrealized losses of $53.7 million within the available-for-sale and held-to-maturity portfolios as of September 30, 2022, was primarily the result of current market yields compared to the yields at the time the investments were purchased by the Company and not due to credit quality.

As a result, all embedded security losses on September 30, 2022, are considered temporary and no impairment loss relating to these securities has been recognized.

Deposits increased $27 million, or 3%, from December 31, 2021 with noninterest-bearing deposits increasing approximately $4 million, or 1%, and interest-bearing deposit accounts increasing approximately $23 million, or 3%.

Total deposits as of September 30, 2022 are $1.03 billion, or 6%, greater than September 30, 2021 deposit balances.

On a year over year comparison, increases were recognized in noninterest-bearing demand deposits of $34 million, money market accounts of $25 million, savings of $12 million, and declines in interest-bearing demand deposits of $2 million and time deposits by $8 million.

Deposit growth has normalized following the Bank’s customers increasing deposits through stimulus payments and cash conservation as a result of the COVID-19 pandemic.

Short-term borrowings consisting of overnight repurchase agreements with retail customers decreased $3 million, or 7%, to $34 million at June 30, 2022 as compared to December 31, 2021 and other borrowings decreased $813 thousand as the Company repaid FHLB advances.

Total shareholders’ equity amounted to $94 million, or 8.3%, of total assets at June 30, 2022, a decrease of $4 million, or 3.8%, from $97 million December 31, 2021.

The decrease in shareholders’ equity during the six months ended June 30, 2022 was due to accumulated other comprehensive loss (“AOCL”) of $8 million, which was partially offset by net income of $5.9 million, less cash dividends of $1.7 million.

Short-term borrowings consisting of overnight repurchase agreements with retail customers decreased $2 million, or 6%, to $34 million at September 30, 2022 as compared to December 31, 2021 and other borrowings decreased $879 thousand as the Company repaid FHLB advances.

Total shareholders’ equity amounted to $92 million, or 7.9%, of total assets at September 30, 2022, a decrease of $5 million, or 5.5%, from $97 million December 31, 2021.

The decrease in shareholders’ equity during the nine months ended September 30, 2022 was due to accumulated other comprehensive loss (“AOCL”) of $11.9 million, which was partially offset by net income of $9.6 million, less cash dividends of $2.6 million.

Rapidly rising interest rates during 2022 have caused the AOCL to increase as AFS securities are marked to fair market value.

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This unrealized loss in securities is temporary and is adjusted monthly for additional interest rate fluctuations, principal paydowns, calls, and maturities.

The Company and the Bank met all regulatory capital requirements at June 30, 2022.

The Company and the Bank met all regulatory capital requirements at September 30, 2022.

RESULTS OF OPERATIONS

Three months ended June 30, 2022 and 2021

For the quarters ended June 30, 2022 and 2021, the Company recorded net income of $3.2 million and $2.7 million and $1.18 and $1.00 per share, respectively.

Three months ended September 30, 2022, and 2021

For the quarters ended September 30, 2022 and 2021, the Company recorded net income of $3.7 million and $2.9 million and $1.35 and $1.06 per share, respectively.

The $749 thousand increase in net income for the period was primarily the result of a $1.2 million increase in net interest income, offset by an increase in noninterest expenses of $232 thousand, and a decrease of $93 thousand in noninterest income.

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Average Balance Sheets and Net Interest Margin Analysis

For the Three Months Ended June 30,

For the Three Months Ended September 30,

(Dollars in thousands)

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4 Interest income is shown on a fully tax-equivalent basis, which is a Non-GAAP measure and is reconciled to the GAAP measure at the bottom of the table.

Interest income for the quarter ended June 30, 2022, was $8 million representing a $989 thousand increase, or 14%, compared to the same period in 2021.

Interest income for the quarter ended September 30, 2022, was $9.2 million representing a $1.4 million increase, or 17%, compared to the same period in 2021.

This increase was primarily due to the additional volume and increased rates on taxable securities, as well as an increase in the rate earned on interest-earning deposits, partially offset by the decrease in loan interest rates in the comparable periods.

Average loan rates decreased 22 basis points for the quarter ended June 30, 2022 as compared to the same period in 2021, primarily from PPP fees declining from $552 thousand in 2021 to $17 thousand in 2022.

Interest expense for the quarter ended June 30, 2022 was $373 thousand, a decrease of $170 thousand, or 31%, from the same quarter in 2021.

The decrease in interest expense occurred primarily due to the decrease in interest rates and the volume of time deposit accounts along with the decrease in rates on interest-bearing demand deposits for the quarter ended June 30, 2022.

Average loan rates decreased 56 basis points for the quarter ended September 30, 2022 as compared to the same period in 2021, primarily from PPP recognized loan fees declining from $909 thousand in 2021 to $24 thousand in 2022.

Interest expense for the quarter ended September 30, 2022 was $596 thousand, an increase of $116 thousand, or 24%, from the same quarter in 2021.

The increase in interest expense occurred primarily due to the increase in interest rates on savings and interest-bearing demand deposits as well as an increase in volume of savings accounts for the quarter ended September 30, 2022.

CSB BANCORP, INC.

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

For the quarter ended June 30, 2022, with improving credit quality and net loan recoveries, the bank recognized a recovery for loan losses of $345 thousand to the provision for loan losses, compared to a recovery for loan losses of $475 thousand for the same quarter in 2021.

The recapture of provision for loan losses for the current quarter primarily reflects the sustained improvement in credit quality including the increase in loans graded as pass as well as a reduction of impaired loans, along with net recoveries during the quarter of $308 thousand.

For the quarter ended September 30, 2022, with improving credit quality and net loan recoveries, the bank recognized a recovery for loan losses of $250 thousand to the provision for loan losses, compared to a recovery for loan losses of $210 thousand for the same quarter in 2021.

Economic indicators reflect improvement in residential real estate prices and low unemployment.

The provision for loan losses is determined based on management’s calculation of the adequacy of the allowance for loan losses, which includes provisions for classified loans as well as for the remainder of the portfolio based on historical data, including past charge-offs and current economic trends.

Noninterest income for the quarter ended June 30, 2022, was $1.8 million, a decrease of $61 thousand, or 3%, compared to the same quarter in 2021.

The gain on the sale of mortgage loans into the secondary market decreased by $270 thousand, or 65%, for the quarter ended June 30, 2022 as fewer loans were sold into the secondary market due to decreasing demand for mortgage refinancing as interest rates increased and inventories of homes available for sale declined.

Fees from trust and brokerage services amounted to $253 thousand for the second quarter 2022, a decrease of $11 thousand, or 4%, as compared to the same quarter in 2021.

Service charges on deposit accounts increased $70 thousand, or 32%, compared to the same quarter in 2021, primarily from increased customer overdraft fees.

Debit card interchange income increased $17 thousand, or 3%, with greater fees generated from usage in the second quarter 2022.

Noninterest income for the quarter ended September 30, 2022, was $1.7 million, a decrease of $93 thousand, or 5%, compared to the same quarter in 2021.

The gain on the sale of mortgage loans into the secondary market decreased by $221 thousand, or 82%, for the quarter ended September 30, 2022 as fewer loans were sold into the secondary market due to decreasing demand for mortgage refinancing as interest rates increased and inventories of homes available for sale declined.

Fees from trust and brokerage services amounted to $216 thousand for the third quarter 2022, a decrease of $36 thousand, or 14%, as compared to the same quarter in 2021.

Credit card fee income increased $43 thousand, or 34%, as improvements to the card program have resulted in increased customer usage.

Earnings on bank owned life insurance increased $24 thousand, or 17%, for the second quarter 2022.

Noninterest expenses for the quarter ended June 30, 2022 increased $384 thousand, or 7%, compared to the second quarter 2021.

Salaries and employee benefits increased $368 thousand, or 12%, a result of increases in base wages and retirement accruals recognized in second quarter 2022 as compared to second quarter 2021.

FDIC assessment amounted to $75 thousand as compared to $120 thousand in the second quarter 2021 due to improvement within nonperforming loans.

Marketing and public relations expense increased $12 thousand, or 12%, primarily due to new opportunities and more events taking place after being cancelled due to COVID-19.

Occupancy and equipment expense increased $54 thousand, or 13%, in 2022 over the second quarter 2021, primarily due to increases in depreciation related to facility improvements and increased cost of building and equipment repairs and maintenance.

The Ohio financial institutions tax increased $7 thousand, or 4%, in the second quarter due to the Company’s increased capital base.

Professional and director fees decreased $26 thousand, or 7%, for the quarter ended June 30, 2022 as compared to the second quarter 2021, as a result of fewer loan collection expenses.

Federal income tax expense increased $120 thousand, or 18%, for the quarter ended June 30, 2022 as compared to the second quarter 2021.

The provision for income taxes was $774 thousand (effective rate of 19.4%) for the quarter ended June 30, 2022, compared to $654 thousand (effective rate of 19.2%) for the same quarter ended 2021.

Service charges on deposit accounts increased $71 thousand, or 28%, compared to the same quarter in 2021, primarily from increased customer overdraft fees.

Debit card interchange income increased $15 thousand, or 3%, with greater fees generated from usage in the third quarter 2022 .

Earnings on bank owned life insurance increased $7 thousand, or 4%, for the third quarter 2022.

Noninterest expenses for the quarter ended September 30, 2022 increased $232 thousand, or 4%, compared to the third quarter 2021.

Salaries and employee benefits decreased $29 thousand, or less than 1%, a result of fewer FTE’s due to open positions which was partially offset by reduced credits from loan originations compared to third quarter 2021.

Occupancy and equipment expense increased $25 thousand, or 6%, in 2022 over the third quarter 2021, primarily due to increases in depreciation related to facility improvements and increased cost of building and equipment repairs and maintenance.

Professional and director fees increased $375 thousand, or 208%, for the quarter ended September 30, 2022 as compared to the third quarter 2021, primarily due to consulting fees to renegotiate the renewal of the core data processing software contract, loan legal and collection expenses as compared to a recovery of loan collection expenses in 2021, and an increase in audit fees.

Software expense increased $79 thousand due to additional software purchases.

The Ohio Financial institutions tax increased $7 thousand, or 4%, in the third quarter due to the Company’s increased capital base .

FDIC assessment amounted to $93 thousand as compared to $130 thousand in the third quarter 2021 due to improvement within nonperforming loans .

Marketing and public relations expense declined $6 thousand, or 4%.

Federal income tax expense increased $201 thousand, or 29%, for the quarter ended September 30, 2022 as compared to the third quarter 2021 .

The provision for income taxes was $890 thousand (effective rate of 19.6%) for the quarter ended September 30, 2022, compared to $689 thousand (effective rate of 19.2%) for the same quarter ended 2021.

RESULTS OF OPERATIONS

Six months ended June 30, 2022, and 2021

For the six months ended June 30, 2022, and 2021, the Company recorded net income of $5.9 million and $5.6 million and $2.17 and $2.05 per share, respectively.

The $280 thousand increase in net income for the six-month period was primarily the result of an increase in net interest income of $1.0 million, which was partially offset by a reduction in noninterest income of $297 thousand and an increase in noninterest expenses of $571 thousand.

A negative loan loss provision of $645 thousand for the period as compared to a smaller negative loss provision of $445 thousand for the same period in 2021 also contributed to increased net income for the six months.

The federal income tax provision was $68 thousand higher during the six-month period in 2022.

Return on average assets and return on average equity were 1.05% and 12.48%, respectively, for the six months ended June 30, 2022, compared to 1.04% and 11.97%, respectively for the same period in 2021.

Nine months ended September 30, 2022, and 2021

For the nine months ended September 30, 2022, and 2021, the Company recorded net income of $9.6 million and $8.5 million and $3.52 and $3.12 per share, respectively.

The $1.0 million increase in net income for the nine-month period was primarily the result of an increase in net interest income of $2.3 million, which was partially offset by a reduction in noninterest income of $390 thousand and an increase in noninterest expenses of $803 thousand.

A negative loan loss provision of $895 thousand for the period as compared to a smaller negative loss provision of $655 thousand for the same period in 2021 also contributed to increased net income for the nine months.

The federal income tax provision was $269 thousand higher during the nine-month period in 2022.

Return on average assets and return on average equity were 1.12% and 13.41%, respectively, for the nine months ended September 30, 2022, compared to 1.03% and 11.91%, respectively for the same period in 2021.

CSB BANCORP, INC.

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

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

(Dollars in thousands)

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

Interest income for the six months ended June 30, 2022, was $15.2 million representing a $650 thousand increase, or 4%, compared to the same period in 2021.

This increase was primarily due to volume and yield increases on taxable securities along with yield increases on overnight deposits in other banks for the period ended June 30, 2022, as compared to the same period in 2021.

Offsetting these increases was the decrease in average loan balances and the average interest earned on loans, primarily from PPP fees declining from $1.5 million in 2021 to $150 thousand in 2022.

Average PPP loan balances decreased from $39 million at June 30 2021 to $1.6 million on June 30, 2022 as loans were forgiven by the SBA.

Interest expense for the six months ended June 30, 2022, was $750 thousand, a decrease of $366 thousand, or 33%, from the same period in 2021.

The decrease in interest expense occurred primarily due to a decrease in rates on all interest-bearing liabilities for the six months ended June 30, 2022, partially offset by an increase in the average balances of savings deposits in 2022.

For the six months ended June 30, 2022, the provision for loan losses was a credit (reversal) of provision of $645 thousand, compared to a smaller credit provision of $445 thousand for the same period in 2021.

Interest income for the nine months ended September 30, 2022, was $24.4 million representing a $2.0 million thousand increase, or 9%, compared to the same period in 2021.

This increase was primarily due to volume and yield increases on taxable securities, yield increases on overnight deposits in other banks, and volume increases in average loan balances for the period ended September 30, 2022, as compared to the same period in 2021 .

Offsetting these increases was a yield decrease on loans, primarily from PPP fees declining from $2.4 million in 2021 to $173 thousand in 2022.

Year-to-date average PPP loan balances decreased from $26 million on September 30, 2021, to $1.8 million on September 30, 2022 , as loans were forgiven by the SBA.

Interest expense for the nine months ended September 30, 2022, was $1.3 million, a decrease of $250 thousand, or 16%, from the same period in 2021.

The decrease in interest expense occurred primarily due to a decrease in rates on time deposits for the nine months ended September 30, 2022, partially offset by an increase in the average balances and rates on savings deposits in 2022.

For the nine months ended September 30, 2022, the provision for loan losses was a credit (reversal) of provision of $895 thousand, compared to a smaller credit provision of $655 thousand for the same period in 2021.

For more discussion see Results of Operations, three months.

Noninterest income for the six months ended June 30, 2022, was $3.4 million, a decrease of $297 thousand, or 8%, compared to the same period in 2021.

The gain on the sale of mortgage loans to the secondary market decreased $639 thousand to $265 thousand for the six months ended June 30, 2022, as increases in interest rates slowed mortgage loan refinancing.

Noninterest income for the nine months ended September 30, 2022, was $5.1 million, a decrease of $390 thousand, or 7%, compared to the same period in 2021.

The gain on the sale of mortgage loans to the secondary market decreased $860 thousand, or 73%, to $314 thousand for the nine months ended September 30, 2022, as increases in interest rates slowed mortgage loan refinancing.

Debit card interchange income increased $56 thousand, or 4%.

Earnings on bank owned life insurance policies increased $40 thousand for the period.

Earnings on bank owned life insurance policies increased $47 thousand, or 10%, for the period.

Service charges on deposit accounts increased $199 thousand, or 29%, compared to the same period in 2021 primarily from increases in overdraft fees, as well as increases in business service charges on deposit accounts.

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Fees from trust and brokerage services decreased $65 thousand for the period.

Noninterest expenses for the six months ended June 30, 2022, increased $571 thousand, or 5%, compared to the same period in 2021.

Salaries and employee benefits increased $494 thousand, or 8%, a result of increased salaries, with additions to lending staff, and reduced credits on deferred loan costs with less volume originated in commercial loans.

Marketing and public relations expense increased $44 thousand, or 25%, with marketing, brand recognition initiatives, and community support in the company’s market slowly increasing in volume due to increasing opportunities presenting after previous cancellations due to COVID-19.

Noninterest expenses for the nine months ended September 30, 2022, increased $803 thousand, or 5%, compared to the same period in 2021.

Salaries and employee benefits increased $465 thousand, or 5%, a result of increased salaries, with additions to lending staff, and reduced credits on deferred loan costs with less volume originated in commercial and mortgage loans.

Occupancy and equipment expenses increased $134 thousand over the same period in 2021 with an increase in depreciation and maintenance expense.

Professional and director fees decreased $45 thousand for the six months ended June 30, 2022, as compared to the same period in 2021.

Federal income tax expense increased $68 thousand, or 5%, for the six months ended June 30, 2022, as compared to the same period in 2021.

The provision for income taxes was $1.4 million (effective rate of 19.3%) for the six months ended June 30, 2022, compared to $1.3 million (effective rate of 19.3%) for the same period ended 2021.

Professional and director fees increased $330 thousand, or 40%, for the nine months ended September 30, 2022, as compared to the same period in 2021, see three months ended results of operation.

Software expense rose, $102 thousand, or 11%, with the addition of software.

Marketing and public relations expense increased $38 thousand, or 12%, with marketing, brand recognition initiatives, and community support in the company’s market slowly increasing in volume due to increasing opportunities presenting after previous cancellations due to COVID-19.

Federal income tax expense increased $269 thousand, or 13%, for the nine months ended September 30, 2022, as compared to the same period in 2021.

The provision for income taxes was $2.3 million (effective rate of 19.4%) for the nine months ended September 30, 2022, compared to $2.0 million (effective rate of 19.2%) for the same period ended 2021.

CAPITAL RESOURCES

The Company maintained a strong capital position with tangible common equity to tangible assets of 7.9% at June 30, 2022 compared with 8.1% at December 31, 2021.

The Company maintained a strong capital position with tangible common equity to tangible assets of 7.5% at September 30, 2022 compared with 8.1% at December 31, 2021.

Consistent with the Board of Director’s commitment to public confidence and safe and sound banking operations, capital targets and minimum risk-based capital ratios for CSB were established to maintain excess capital to well-capitalized standards.

To be considered well-capitalized, an institution must have a total risk-based capital ratio of at least 10%, a tier 1 capital ratio of at least 8%, a leverage capital ratio of at least 5%, a common equity tier 1 (“CET1”) ratio of at least 6.5% and must not be subject to any order or directive requiring the institution to improve its capital level.

An adequately capitalized institution has a total risk-based capital

To be considered well-capitalized, an institution must have a total risk-based capital ratio of at least 10%, a tier 1 capital ratio of at least 8%, a leverage capital ratio of at least 5%, a

CSB BANCORP, INC.

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

ratio of at least 8%, a tier 1 capital ratio of at least 6%, a CET1 ratio of at least 4.5%, and a leverage ratio of at least 4%.

common equity tier 1 (“ CET1 ”) ratio of at least 6.5% and must not be subject to any order or directive requiring the institution to improve its capital level.

An adequately capitalized institution has a total risk-based capital ratio of at least 8%, a tier 1 capital ratio of at least 6%, a CET1 ratio of at least 4.5%, and a leverage ratio of at least 4%.

Failure to meet specified minimum capital requirements could result in regulatory actions by the Federal Reserve or Ohio Division of Financial Institutions that could have a material effect on the Company’s financial condition or results of operations.

Management believes there were no material changes to capital resources as presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

As of June 30, 2022, the Company and the Bank met all capital adequacy requirements to which they were subject.

As of September 30, 2022, the Company and the Bank met all capital adequacy requirements to which they were subject.

Capital Ratios

September 30,

Common Equity Tier 1 Capital To Risk Weighted Assets

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(Dollars in thousands)

September 30,

Cash and cash equivalents

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(Dollars in thousands, except per share data)

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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-Q

Item 2. Management’s Discussion and Analysis