Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

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 on June 30, 2026 as compared to December 31, 2025, and the consolidated results of operations for the three and six months ended June 30, 2026 compared to the same periods in 2025. The purpose of this discussion is to provide the reader with a more thorough understanding of the Consolidated Financial Statements. This discussion should be read in conjunction with the interim condensed Consolidated Financial Statements and related footnotes contained in Part I, Item 1 of this Quarterly Report.

FORWARD-LOOKING STATEMENTS

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

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

FINANCIAL CONDITION

Total assets remain steady at $1.29 billion at June 30, 2026 and December 31, 2025. During the six months ended June 30, 2026, securities decreased $20 million, net loans increased $39 million, and cash and cash equivalents decreased $18 million. Deposits and short-term borrowings decreased $4 million.

Net loans increased $39 million, or 5%, as commercial and commercial real estate loans increased $21 million, or 4%, compared to December 31, 2025 and residential real estate loans increased $5 million, or 2%, from December 31, 2025. Construction loans increased $8 million, or 17%, from December 31, 2025. Consumer refinance activity remains slow on mortgage loans, while home construction activity rose as well as home equity line origination increases of $21 million. Residential mortgage loan originations, including home equity lines, for the six months ended June 30, 2026 totaled $40 million, an increase from $32 million in mortgage originations during the six months ended June 30, 2025. Mortgage loan originations sold into the secondary market remained stable at $4 million, during the six months ended June 30, 2026 and June 30, 2025 respectively. The Bank originates and sells primarily fixed rate thirty-year mortgages into the secondary market.

The allowance for credit losses for loans increased $1 million from December 31, 2025 to $13.5 million. The increase in the allowance was due to one individually evaluated loan relationship, an increase in loan volume, and an increase in risk forecast within the home equity line portfolio. Net charge-offs were $35 thousand, or an annualized 0.01% of average loans, in the current six-month period compared to net charge-offs of $391 thousand, or 0.10% of average loans in the year-ago six-month period. At June 30, 2026, the allowance for credit losses to total loans was 1.56%. We believe the allowance level is appropriate given the level of problem loans and composition of the overall loan portfolio in the current economic environment.

CSB BANCORP, INC.

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

Nonperforming loans increased $6.6 million to $7.3 million, or 0.84%, of total loans from $652 thousand, or 0.08% of total loans, on December 31, 2025. For the six months ended June 30, 2026, $6.7 million in loans were placed on nonaccrual status, $93 thousand in paydowns were received, and no nonperforming loans were charged-off due to non-payment.

The ratio of gross loans to deposits was 77% and 74% at June 30, 2026 and December 31, 2025.

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 $29 million within the available-for-sale and held-to-maturity portfolios as of June 30, 2026, 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, 2026, are considered temporary and no allowance for credit loss is necessary.

The weighted average life of total debt securities was 5.10 years at June 30, 2026 as compared to 5.12 years at December 31, 2025. If interest rates declined 100 basis points, the weighted average life was estimated to fall to 4.57 years at June 30, 2026. If interest rates rose 100 basis points the weighted average life would be expected to increase to 5.57 years at June 30, 2026.

Deposits increased $5 million, or 0.5%, from December 31, 2025 with noninterest-bearing deposits decreasing approximately $1.8 million, or 0.6%, and interest-bearing deposit accounts increasing approximately $7 million, or 0.9%. Total deposits as of June 30, 2026 are $1.1 billion, or 4%, above June 30, 2025 deposit balances. On a year over year comparison, increases were recognized in interest bearing demand accounts of $11 million, time deposits of $27 million noninterest-bearing demand deposits of $4 million, and savings accounts of $3 million. Decreases were recognized in money market accounts of $378 thousand. Deposits have increased as customers move funds into interest bearing demand accounts and time certificates of deposit to take advantage of higher interest rates in those products. The estimated amount of uninsured deposits was $272 million, $281 million, and $266 million as of June 30, 2026, December 31, 2025, and June 30, 2025, respectively.

Short-term borrowings consisting of overnight repurchase agreements with retail customers decreased $10 million, or 30%, to $22 million at June 30, 2026 as compared to December 31, 2025. These balances have returned to a more typical amount and are even with June 30, 2025. Other borrowings decreased $223 thousand as the Company repaid FHLB advances.

Total shareholders' equity amounted to $133 million, or 10%, of total assets at June 30, 2026, an increase of $6.3 million, or 5%, from $126 million at December 31, 2025. The increase in shareholders' equity during the six months ended June 30, 2026 was due to net income of $9.2 million, net of other comprehensive loss of $570 thousand and cash dividends of $2.3 million. Total accumulated other comprehensive loss ("AOCL") increased during the six months ended June 30, 2026 due to higher U.S. Treasury rates and decreased prices in government agency and corporate bonds as AFS securities are marked to fair value. This remaining 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, 2026 as shown in the Capital Resources section of this report.

RESULTS OF OPERATIONS

Three months ended June 30, 2026 and 2025

For the quarters ended June 30, 2026 and 2025, the Company recorded net income of $4.7 million and $3.7 million and $1.80 and $1.41 per share, respectively. The $1 million increase in net income for the period

CSB BANCORP, INC.

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

was primarily the result of an increase of $1.5 million in net interest income, a $175 thousand increase in non interest income, and a decrease in the provision for credit losses and off-balance sheet commitments of $29 thousand. The noninterest expense increase of $465 thousand partially offset the revenue increases. The federal income tax provision increased $262 thousand. Pre-provision net revenue ("PPNR"), (a non-GAAP measure), totaled $6 million for the quarter ended June 30, 2026, an increase of $1.2 million, or 24%, from the prior year's second quarter.

Return on average assets and return on average equity were 1.48% and 14.48%, respectively, for the three-month period of 2026, compared to 1.23% and 12.48%, respectively for the same quarter in 2025.

Average Balance Sheets and Net Interest Margin Analysis

1 Average balances have been computed on an average daily basis.

2 Average rates have been computed based on the amortized cost of the corresponding asset or liability.

3 Average loan balances include nonaccrual loans.

4 Taxable equivalent adjustments have been computed assuming a 21% tax rate in 2026 and 2025 (non-GAAP).

CSB BANCORP, INC.

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

Interest income for the quarter ended June 30, 2026, was $15 million representing a $1.5 million, or 11% increase, compared to the same period in 2025. This increase was primarily due to the higher average balances of loans of $83 million. These increases were partially offset by volume decreases in securities and interest-earning deposits in other banks of $18 million over the comparable period. Rates on average interest-earning deposits in other banks decreased 76 basis points, while loan rates increased 13 basis points, and securities' interest rates increased 32 basis points for the quarter ended June 30, 2026 as compared to the same period in 2025. Interest expense for the quarter ended June 30, 2026 was $3.5 million, a decrease of $35 thousand, or 1%, from the same quarter in 2025. The decrease in interest expense occurred primarily due to rate decreases in time deposit accounts during the quarter ended June 30, 2026.

For the quarter ended June 30, 2026, the bank recognized net charge-offs of $28 thousand, compared to $362 thousand net charge-offs for the same quarter in 2025. The provision for credit losses on loans in the current quarter of $609 thousand, compared to a provision of $639 thousand in the same quarter ended 2025. The Company recorded a $24 thousand recovery for credit loss expense on off-balance commitments in the second quarter 2026 compared to a $25 thousand recovery in the same quarter of 2025. The provision for credit losses is determined based on management's calculation of the adequacy of the allowance for credit 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 increased $175 thousand, or 10%, compared to the second quarter of 2025. The increase was primarily the result of a $49 thousand increase in debit card interchange fees, a $42 thousand increase in credit card fees, $37 thousand increase in earnings on bank owned life insurance, $28 thousand increase in service charges on deposits.

Noninterest expense increased $465 thousand, or 7%, from the second quarter 2025. Salary and employee benefit costs increased $328 thousand, or 8%, compared to the prior year quarter with an increase in the number of full time equivalent employees from 175 in 2025 to 185 in 2026 as vacant positions were filled. Software expense increased $83 thousand, or 19%, debit card expense increased $23 thousand or 12%. Occupancy expense decreased $16 thousand, or 5%. The Company's second quarter efficiency ratio decreased to 53.1% compared to 56.6% in the prior year.

Federal income tax expense increased $262 thousand, or 29%, for the quarter ended June 30, 2026 as compared to the second quarter 2025. The provision for income taxes was $1.2 million (effective rate of 19.8%) for the quarter ended June 30, 2026, compared to $903 thousand (effective rate of 19.5%) for the same quarter ended 2025.

RESULTS OF OPERATIONS

Six months ended June 30, 2026, and 2025

For the six months ended June 30, 2026, and 2025, the Company recorded net income of $9.2 million and $7.3 million and $3.49 and $2.78 per share, respectively. The $2 million increase in net income for the six-month period was primarily the result of $3 million increase to net interest income. The increase to net income was partially offset by an increase in noninterest expense of $1 million.

The federal income tax provision was $477 thousand higher during the six-month period in 2026 than in 2025. Return on average assets and return on average equity were 1.45% and 14.26%, respectively, for the six months ended June 30, 2026, compared to 1.22% and 12.53%, respectively for the same period in 2025.

CSB BANCORP, INC.

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

1 Average balances have been computed on an average daily basis.

2 Average rates have been computed based on the amortized cost of the corresponding asset or liability.

3 Average loan balances include nonaccrual loans.

4 Taxable equivalent adjustments have been computed assuming a 21% tax rate in 2026 and 2025 (non-GAAP).

Interest income for the six months ended June 30, 2026, was $30 million representing a $3 million increase, or 12%, compared to the same period in 2025. This increase was primarily due to volume and yield increases on loans for the period ended June 30, 2026, as compared to the same period in 2025. Interest expense for the six months ended June 30, 2026, was $7 million, a decrease of $130 thousand, or 2%, from the same period in 2025.

For the six months ended June 30, 2026, the provision for credit losses and off-balance sheet commitments was $1 million stable with 2025. For more discussion see Results of Operations, three months. The provision for credit losses is determined based on management's calculation of the adequacy of the allowance for credit 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 six months ended June 30, 2026, was $3.8 million, an increase of $351 thousand, or 10%, compared to the same period in 2025. Credit card fees increased $83 thousand, debit card interchange fee increased $77 thousand, and earnings on bank owned life insurance policies increased $76 thousand for the period. Trust services increased $61 thousand or 11%.

CSB BANCORP, INC.

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

Noninterest expenses for the six months ended June 30, 2026, increased $1.3 million, or 10%, compared to the same period in 2025. Salaries and employee benefits increased $864 thousand, or 11%, a result of increases in base salaries and benefits, partially due to increased headcount as the company was able to reduce vacancies and add several new positions supporting growth. Software expense increased $201 thousand, or 24%, primarily due to new loan production software.

The provision for income taxes was $2.3 million (effective rate of 19.7%) for the six months ended June 30, 2026, compared to $1.8 million (effective rate of 19.5%) for the same period ended 2025.

CAPITAL RESOURCES

The Company maintained a strong capital position with tangible common equity to tangible assets (a non-GAAP measure) of 9.9% at June 30, 2026 compared with 9.4% at December 31, 2025.

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 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, 2025. As of June 30, 2026, the Company and the Bank met all capital adequacy requirements to which they were subject.

CSB BANCORP, INC.

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

LIQUIDITY

Liquidity refers to the Company's ability to generate sufficient cash to fund current loan demand, meet deposit withdrawals, pay operating expenses, and meet other obligations. Liquidity is monitored by the Company's Asset Liability Committee. Other sources of liquidity include, but are not limited to, purchases of federal funds, advances from the FHLB, adjustments of interest rates to attract deposits, brokered deposits, and borrowing at the Federal Reserve discount window. Additionally, the Company could sell all of its AFS securities and the loss would not cause a change in the capital adequacy classification. Management believes its sources of liquidity are adequate to meet cash flow obligations for the foreseeable future.

Off-Balance Sheet Arrangements

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

PER SHARE DATA

Earnings per share is computed based on the weighted average number of shares of common stock outstanding during each year. The company currently maintains a simple capital structure, thus, there are no dilutive effects on earnings per share.

The weighted average number of common shares outstanding for earnings per share computations was as follows:

CSB BANCORP, INC.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK