CSB Bancorp, Inc. Reports Strong Earnings Growth and Improved Profitability in Third Quarter 2025
CSB Bancorp, Inc. delivered another solid quarter of financial performance, reporting substantial growth in net income, improved returns, and continued loan expansion for the third quarter of 2025. The community banking organization demonstrated resilience and efficiency amid a changing economic landscape, underscoring its ability to sustain profitability and balance sheet strength despite ongoing interest rate adjustments and economic uncertainty.
For the quarter ended September 30, 2025, CSB Bancorp reported net income of $4.15 million, or $1.57 per basic and diluted share, marking a strong 32% increase compared to $3.15 million, or $1.18 per share, during the same period in 2024. On a year-to-date basis, the bank achieved net income of $11.49 million, up 49% from $7.69 million for the first nine months of 2024—reflecting both solid loan growth and effective management of interest expenses.
Profitability and Returns Strengthen
The bank’s profitability ratios improved notably during the quarter. Annualized return on average common equity (ROE) reached 13.19%, up from 11.14% in the third quarter of 2024, while return on average assets (ROA) improved to 1.31%, compared to 1.05% in the prior-year quarter. These gains were driven by stronger net interest income, disciplined cost management, and continued expansion in lending activities.
Pre-Provision Net Revenue (PPNR), a non-GAAP measure that reflects earnings before accounting for loan loss provisions, increased by 23% to $5.7 million, up $1.1 million from the same quarter last year. Net interest income rose by 19%, noninterest income grew by 3%, and noninterest expenses increased by 11% compared with the third quarter of 2024.
For the nine-month period ending September 30, 2025, the company maintained a 12.76% ROE and 1.26% ROA, well above 2024 levels of 9.30% and 0.88%, respectively.
CEO Commentary: Economic Shifts and Local Resilience
Eddie Steiner, President and Chief Executive Officer of CSB Bancorp, commented on the broader economic context, noting that while inflation remains elevated, the Federal Reserve’s recent policy adjustments could support lending activity.
The U.S. economy grew during the third quarter, with real GDP estimated to have increased by about 3% on an annualized basis despite inflation still hovering near 3%,” Steiner said. “Employment is slowing, and national unemployment has risen to around 4.5%, prompting the Federal Reserve to begin cutting short-term interest rates in September to support the economy.
He added that while federal spending disruptions—such as the ongoing government shutdown—pose headwinds, the first rate cut has already boosted consumer loan demand and lowered funding costs for banks.
“Locally, the overall economy remains stable,” Steiner continued. “Our total loan balances are up 10% since the beginning of the year, driven largely by construction and business investments, while the cost of deposits has declined five basis points compared to the prior year’s nine-month period.”
Credit Quality and Loan Performance
Provision for credit losses decreased by $199,000 compared to the third quarter of 2024, reflecting ongoing improvement in credit quality and a decline in nonperforming loans.
The allowance for credit losses (ACL) stood at $8.7 million, or 1.08% of total loans, up from $7.2 million, or 1.00%, a year earlier. The allowance for off-balance sheet commitments was $514,000, slightly below the $532,000 recorded in September 2024. CSB reported no allowance for losses related to its investment securities, citing minimal risk of credit impairment.
A single commercial credit of approximately $47,000 remains under court liquidation, with the bank holding a priority lien on the proceeds held by a court receiver.
Nonperforming loans declined sharply to $746,000, or 0.09% of total loans, compared to $3.4 million, or 0.47%, in the prior year. Delinquent loans also improved, representing 0.29% of total loans versus 0.59% a year ago. Net loan charge-offs were minimal at $11,000, underscoring stable asset quality.
Net Interest Margin Expands as Loan Growth Accelerates
CSB Bancorp’s net interest income climbed $1.7 million, or 19%, compared to the third quarter of 2024, fueled by strong loan growth and an improved asset mix. Loan interest income rose 15%, driven by an $80 million increase in average loan volume and a 19 basis-point rise in yield.
The company’s fully taxable equivalent (FTE) net interest margin improved to 3.67%, compared to 3.26% a year earlier, supported by a 27-basis-point increase in asset yields and a 22-basis-point decline in funding costs.
The cost of funding earning assets dropped to 1.27%, from 1.40% in the prior year, as interest expense fell by $200,000, or 5%. Average earning assets grew by $57 million, or 5%, year over year, with notable gains in loan balances and deposits at the Federal Reserve.
Loan Portfolio Highlights
Average commercial loan balances, including commercial real estate, increased by 13%, or $63 million, reflecting demand for construction financing, equipment purchases, and other business investments.
Residential mortgage balances rose 8%, or $14 million, as adjustable-rate mortgages gained favor among borrowers amid higher fixed-rate conditions. Home equity lines of credit grew by $5 million, while consumer loans declined 13%, or $2 million, mainly due to reduced demand for recreational vehicle loans.
Despite national caution over discretionary borrowing, CSB continues to experience steady demand for construction and commercial real estate lending, underscoring confidence in local markets.
Noninterest Income and Expense
Noninterest income increased modestly by 3%, totaling $57,000 in gains year-over-year. Growth was driven by higher debit card interchange fees, trust service income, and credit card fees, as well as increased earnings on bank-owned life insurance. These gains were partly offset by reduced gains from secondary market loan sales and equity securities.
Noninterest expenses rose 11%, or $711,000, as the bank invested in people, technology, and process improvements. Salaries and benefits were up 12%, reflecting higher base pay, medical costs, incentive compensation, and several new positions.
Professional fees increased 28%, mainly from legal and workflow improvement costs, while software expenses rose 18% due to new loan production systems. Occupancy expenses rose 9%, while marketing and public relations costs fell slightly.
Despite these increases, CSB’s efficiency ratio improved to 55.6%, down from 58.2% a year earlier, illustrating continued operational efficiency and revenue scalability.
Deposits, Capital, and Dividends
Average deposits increased by $52 million, or 5%, from the prior year’s quarter. Time deposits and interest-bearing demand accounts led the growth, rising $28 million and $18 million, respectively. Noninterest-bearing accounts declined slightly, while money market and savings accounts rose modestly.
The average cost of deposits decreased to 1.34%, compared to 1.48% in the third quarter of 2024. Average balances of securities sold under repurchase agreements declined by 9%, or $2 million, reflecting stable liquidity management.
Shareholders’ equity stood at $125 million as of September 30, 2025, with 2.6 million common shares outstanding. The average equity-to-assets ratio was a strong 9.96%, maintaining a solid capital foundation. The company declared a third-quarter dividend of $0.41 per share, equating to an annualized yield of 3.3% based on the closing price of $49.50.
Stability and Strategic Focus
Looking ahead, CSB Bancorp remains cautiously optimistic as the Federal Reserve’s easing cycle unfolds. Lower short-term rates could sustain lending momentum and ease funding costs, while disciplined expense management and strong credit quality position the bank for continued growth.
CEO Eddie Steiner emphasized the company’s focus on prudent risk management and local economic engagement
