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Section 1: 8-K (FORM 8-K)

Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

Current Report

Pursuant to Section 13 or 15 (d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) July 23, 2019

 

 

CSB Bancorp, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Ohio   0-21714   34-1687530

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification Number)

 

91 North Clay Street, P.O. Box 232,

Millersburg, Ohio

  44654
(Address of Principal Executive Offices)   (Zip Code)

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

Not Applicable

(Former Name or former address if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, par value $6.25 per share   CSBB   OTC-PINK

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

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

 

 

 


ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On July 23, 2019, CSB Bancorp, Inc. issued a press release announcing its earnings for the three month period ended June 30, 2019. A copy of this press release and related financial tables are furnished herein as Exhibit 99.1.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

 

  (c)

Exhibits

 

99.1    Press release and Quarterly Report for CSB Bancorp, Inc. for the quarter ended June 30, 2019.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

   

CSB Bancorp, Inc.

   

By:

 

/s/ Paula J. Meiler

     

Paula J. Meiler

Date: July 23, 2019

     

Senior Vice President and Chief

Financial Officer

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Section 2: EX-99.1 (EX-99.1)

EX-99.1

Exhibit 99.1

 

LOGO

CSB BANCORP, INC. REPORTS SECOND QUARTER EARNINGS

Second Quarter Highlights

 

     Quarter Ended
June 30, 2019
    Quarter Ended
June 30, 2018
 

Diluted earnings per share

   $ 0.94     $ 0.85  

Net Income

   $ 2,586,000     $ 2,324,000  

Return on average common equity

     12.91     12.94

Return on average assets

     1.39     1.30

Millersburg, Ohio – July 23, 2019 – CSB Bancorp, Inc. (OTC Pink: CSBB) today announced second quarter 2019 net income of $2,586,000, or $.94 per basic and diluted share, as compared to $2,324,000, or $.85 per basic and diluted share, for the same period in 2018. Income before federal income tax amounted to $3,199,000, an increase of 11% over the same quarter in the prior year. For the six month period ended June 30, 2019 net income totaled $5,126,000 compared to $4,488,000 for the same period last year, an increase of 14%.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 12.91% and 1.39%, respectively, compared with 12.94% and 1.30% for the second quarter of 2018.

Eddie Steiner, President and CEO stated, “We are pleased to report solid mid-year earnings with increases over the prior year. Business loan growth has been at a slower pace for most of 2019, particularly with lower usage needs for operating lines of credit, while home and consumer lending demand has increased as fixed rates on mortgage loans drifted lower and home construction season moved into full swing.”

Net interest income and noninterest income, on a fully-taxable equivalent basis, totaled $8.4 million during the quarter, a 7% increase from the prior-year second quarter. Net interest income increased $419 thousand, or 6%, in the second quarter of 2019 compared to the same period in 2018.

Loan interest income including fees increased $670 thousand during second quarter 2019 as compared to the same quarter in 2018, an increase of 10%. Average total loan balances during the current quarter were $13 million higher than the year ago quarter, an increase of 2%. Loan yields for second quarter 2019 averaged 5.26%, an increase of 37 basis points from the 2018 second quarter average of 4.89%.


The net interest margin was 4.08% compared to 3.98% for second quarter 2018. The tax equivalency effect on the margin dropped to 0.02% from 0.03% a result of the reduction in tax exempt loans and securities in 2019.

Noninterest income increased 12%, compared to second quarter of 2018, driven by growth in debit card fee income, increases in bank owned life insurance values, gain on sale of loans, and service charges on deposit accounts.

Noninterest expense increased 6% from second quarter 2018. Salary and employee benefit costs increased $197 thousand, or 7%, compared to the prior year quarter, as a result of higher wage and 401k retirement expenses. Professional and director’s fees increased by $69 thousand, or 29%, reflecting higher technology investment to further improve network infrastructure in support of company growth. Marketing and public relations increased by $20 thousand, or 17%, reflecting timing of certain electronic and billboard promotional efforts and the opening of a new banking center. The Company’s second quarter efficiency ratio was 58.0% as compared to 58.4% for the same quarter in the prior year.

Federal income tax expense totaled $613 thousand in second quarter 2019, as compared to $553 thousand tax expense for the same quarter in 2018. The effective tax rate was 19% in both periods.

Average total assets during the quarter amounted to $746 million, an increase of $30 million, or 4%, above the same quarter of the prior year. Average loan balances of $548 million increased $13 million, or 2%, from the prior year second quarter while average securities balances of $111 million decreased $8 million, or 7%, as compared to second quarter 2018.

Average commercial loan balances for the quarter, including commercial real estate, decreased $1 million, or less than 1%, from prior year levels. Average residential mortgage balances including home equity lines of credit increased $12 million, or 7%, over the prior year’s quarter. Average consumer credit balances increased $2 million, or 12%, versus the same quarter of the prior year.

Nonperforming assets increased $156 thousand from June 30, 2018 to $4.6 million, or 0.83%, of total loans plus other real estate at June 30, 2019. The increase in nonperforming assets reflects the second quarter 2019 impairment of a commercial facility in liquidation, partially offset by various commercial loans exiting through liquidation. At June 30, 2019, approximately $1.0 million of the non-performing loan total is guaranteed by either USDA or the SBA. Delinquent loan balances as of June 30, 2019 declined to 1.03% of total loans as compared to 1.06% at June 30, 2018.

Net loan losses recognized during second quarter 2019 were $35 thousand, or 0.03% annualized, compared to second quarter 2018 net loan losses of $39 thousand. The allowance for loan losses amounted to 1.19% of total loans at June 30, 2019 as compared to 1.11% at June 30, 2018.

Average deposit balances grew on a year over year comparison by $28 million, or 5%, partially on the strength of customer response to higher rates paid on insured deposits. For the second quarter 2019, the average cost of deposits amounted to 0.60%, as compared to 0.38% for the second quarter 2018. During the second quarter 2019, increases in average deposit balances over


the prior year quarter included non-interest bearing demand accounts of $7 million and interest-bearing transaction accounts of $14 million, and time deposits of $7 million. The average balance of securities sold under repurchase agreement during the second quarter of 2019 decreased by $5 million, or 12%, compared to the average for the same period in the prior year.

Shareholders’ equity totaled $81.0 million on June 30, 2019 with 2.7 million common shares outstanding. The tangible equity to assets ratio amounted to 10.3% on June 30, 2019 and 9.4% on June 30, 2018. The Company declared a second quarter dividend of $0.26 per share, a $.02 per share increase over second quarter 2018, producing an annualized yield of 2.6% based on the June 30, 2019 closing price of $40.45.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $750 million as of June 30, 2019. CSB provides a complete range of banking and other financial services to consumers and businesses through its wholly owned subsidiary, The Commercial and Savings Bank, with fifteen banking centers in Holmes, Wayne, Tuscarawas, and Stark counties and Trust offices located in Millersburg, North Canton, and Wooster, Ohio.

Forward-Looking Statement

This release contains forward-looking statements relating to present or future trends or factors affecting the banking industry, and specifically the financial condition and results of operations, including without limitation, statements relating to the earnings outlook of the Company, as well as its operations, markets and products. Actual results could differ materially from those indicated. Among the important factors that could cause results to differ materially are interest rate changes, softening in the economy, which could materially impact credit quality trends and the ability to generate loans, changes in the mix of the Company’s business, competitive pressures, changes in accounting, tax or regulatory practices or requirements and those risk factors detailed in the Company’s periodic reports and registration statements filed with the Securities and Exchange Commission. The Company undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this release.

Contact Information:

Paula J. Meiler, SVP & CFO

330.763.2873

[email protected]


CSB BANCORP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

 

(Unaudited)    Quarters              
(Dollars in thousands, except per share data)    2019     2019     2018     2018     2018     2019     2018  

EARNINGS

   2nd Qtr     1st Qtr     4th Qtr     3rd Qtr     2nd Qtr     6 months     6 months  

Net interest income FTE (a)

   $ 7,111     $ 7,049     $ 6,934     $ 6,847     $ 6,697       14,160     $ 13,133  

Provision for loan losses

     285       285       344       324       324       570       648  

Other income

     1,313       1,224       1,270       1,175       1,168       2,537       2,313  

Other expenses

     4,900       4,791       4,725       4,638       4,619       9,691       9,156  

FTE adjustment (a)

     40       38       24       46       45       78       92  

Net income

     2,586       2,540       2,492       2,432       2,324       5,126       4,488  

Diluted earnings per share

     0.94       0.93       0.91       0.88       0.85       1.87       1.64  

PERFORMANCE RATIOS

              

Return on average assets (ROA)

     1.39     1.41     1.36     1.34     1.30     1.40     1.28

Return on average common equity (ROE)

     12.91     13.20     13.20     13.07     12.94     13.05     12.64

Net interest margin FTE (a)

     4.08     4.16     4.01     4.00     3.98     4.12     3.97

Efficiency ratio

     57.96     57.72     57.26     57.45     58.41     57.86     58.97

Number of full-time equivalent employees

     174       174       170       174       174      

MARKET DATA

              

Book value/common share

   $ 29.70     $ 28.80     $ 27.91     $ 26.94     $ 26.47      

Period-end common share mkt value

     40.45       38.75       38.50       40.57       39.00      

Market as a % of book

     136.20     134.55     137.94     150.59     147.34    

Price-to-earnings ratio

     11.05       10.85       11.22       12.80       13.13      

Cash dividends/common share

   $ 0.26     $ 0.26     $ 0.26     $ 0.24     $ 0.24       0.52     $ 0.48  

Common stock dividend payout ratio

     27.66     27.96     28.57     27.27     28.24     27.81     29.27

Average basic common shares

     2,742,350       2,742,242       2,742,242       2,742,242       2,742,242       2,742,296       2,742,242  

Average diluted common shares

     2,742,350       2,742,242       2,742,242       2,742,242       2,742,242       2,742,296       2,742,242  

Period end common shares outstanding

     2,742,350       2,742,242       2,742,242       2,742,242       2,742,242      

Common shares repurchased

     0       0       0       0       0      

Common stock market capitalization

   $ 110,928     $ 106,262     $ 105,576     $ 111,253     $ 106,947      

ASSET QUALITY

              

Gross charge-offs

   $ 54     $ 70     $ 691     $ 43     $ 45       124     $ 348  

Net (recoveries) charge-offs

     35       (95     641       38       39       (60     334  

Allowance for loan losses

     6,537       6,287       5,907       6,204       5,918      

Nonperforming assets (NPAs)

     4,555       3,302       3,428       5,341       4,399      

Net charge-off (recovery) /average loans ratio

     0.03     (0.07 )%      0.47     0.03     0.03     (0.02 )%      0.13

Allowance for loan losses/period-end loans

     1.19       1.15       1.08       1.16       1.11      

NPAs/loans and other real estate

     0.83       0.60       0.62       1.00       0.82      

Allowance for loan losses/nonperforming loans

     146.70       197.23       177.45       116.16       134.52      

CAPITAL & LIQUIDITY

              

Period-end tangible equity to assets

     10.28     10.15     9.86     9.77     9.41    

Average equity to assets

     10.77       10.69       10.29       10.25       10.06      

Average equity to loans

     14.66       14.18       13.83       13.72       13.47      

Average loans to deposits

     88.73       91.16       89.88       90.80       90.77      

AVERAGE BALANCES

              

Assets

   $ 745,658     $ 730,181     $ 727,962     $ 720,372     $ 715,902     $ 738,002     $ 708,198  

Earning assets

     699,229       687,515       686,807       679,281       674,699       693,404       667,777  

Loans

     547,981       550,483       541,482       538,182       534,852       549,225       531,107  

Deposits

     617,558       603,839       602,434       592,738       589,211       610,736       581,576  

Shareholders’ equity

     80,338       78,038       74,900       73,844       72,039       79,194       71,608  

ENDING BALANCES

              

Assets

   $ 750,252     $ 734,845     $ 731,722     $ 710,815     $ 723,299      

Earning assets

     704,738       688,792       682,345       668,468       681,200      

Loans

     550,612       548,220       548,974       535,424       535,427      

Deposits

     623,328       607,342       606,498       587,531       595,073      

Shareholders’ equity

     81,458       78,967       76,536       73,877       72,578      

 

NOTES:

(a) – Net Interest income on a fully tax-equivalent (“FTE”) basis restates interest on tax-exempt securities and loans as if such interest were subject to federal income tax at the statutory rate. Net interest income on an FTE basis differs from net interest income under U.S. generally accepted accounting principles.


CSB BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

 

(Unaudited)    June 30,     June 30,  
(Dollars in thousands, except per share data)          2019                 2018        

ASSETS

    

Cash and cash equivalents

    

Cash and due from banks

   $ 15,214     $ 14,956  

Interest-earning deposits in other banks

     42,063       28,275  
  

 

 

   

 

 

 

Total cash and cash equivalents

     57,277       43,231  

Securities

    

Available-for-sale, at fair-value

     86,297       90,808  

Held-to-maturity

     19,657       21,882  

Equity securities

     87       94  

Restricted stock, at cost

     4,614       4,614  
  

 

 

   

 

 

 

Total securities

     110,655       117,398  

Loans held for sale

     409       100  

Loans

     550,612       535,427  

Less allowance for loan losses

     6,537       5,918  
  

 

 

   

 

 

 

Net loans

     544,075       529,509  

Premises and equipment, net

     11,638       9,563  

Goodwill and core deposit intangible

     4,863       4,945  

Bank owned life insurance

     16,760       13,384  

Accrued interest receivable and other assets

     4,575       5,169  
  

 

 

   

 

 

 

TOTAL ASSETS

   $ 750,252     $ 723,299  
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Liabilities

    

Deposits:

    

Noninterest-bearing

   $ 180,766     $ 178,343  

Interest-bearing

     442,562       416,730  
  

 

 

   

 

 

 

Total deposits

     623,328       595,073  

Short-term borrowings

     35,474       44,155  

Other borrowings

     6,576       8,827  

Accrued interest payable and other liabilities

     3,416       2,666  
  

 

 

   

 

 

 

Total liabilities

     668,794       650,721  
  

 

 

   

 

 

 

Shareholders’ equity

    

Common stock, $6.25 par value. Authorized 9,000,000 shares; issued 2,980,602 shares in 2019 and 2018

     18,629       18,629  

Additional paid-in capital

     9,815       9,815  

Retained earnings

     57,988       50,736  

Treasury stock at cost—238,252 shares in 2019 and 238,360 in 2018

     (4,780     (4,784

Accumulated other comprehensive loss

     (194     (1,818
  

 

 

   

 

 

 

Total shareholders’ equity

     81,458       72,578  
  

 

 

   

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

   $ 750,252     $ 723,299  
  

 

 

   

 

 

 


CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

 

(Unaudited)    Quarter ended
June 30,
     Six months ended
June 30,
 
(Dollars in thousands, except per share data)    2019     2018      2019      2018  

Interest and dividend income:

          

Loans, including fees

   $ 7,185     $ 6,515      $ 14,257      $ 12,654  

Taxable securities

     584       594        1,171        1,197  

Nontaxable securities

     134       152        268        313  

Other

     218       83        393        129  
  

 

 

   

 

 

    

 

 

    

 

 

 

Total interest and dividend income

     8,121       7,344        16,089        14,293  
  

 

 

   

 

 

    

 

 

    

 

 

 

Interest expense:

          

Deposits

     921       560        1,746        1,014  

Other

     129       132        261        238  
  

 

 

   

 

 

    

 

 

    

 

 

 

Total interest expense

     1,050       692        2,007        1,252  
  

 

 

   

 

 

    

 

 

    

 

 

 

Net interest income

     7,071       6,652        14,082        13,041  

Provision for loan losses

     285       324        570        648  
  

 

 

   

 

 

    

 

 

    

 

 

 

Net interest income after provision for loan losses

     6,786       6,328        13,512        12,393  
  

 

 

   

 

 

    

 

 

    

 

 

 

Noninterest income

          

Service charges on deposits accounts

     313       300        605        584  

Trust services

     212       217        436        436  

Debit card interchange fees

     369       323        716        636  

Gain on sale of loans

     76       60        155        137  

Market value change in equity securities

     (2     —          4        4  

Other

     345       268        621        516  
  

 

 

   

 

 

    

 

 

    

 

 

 

Total noninterest income

     1,313       1,168        2,537        2,313  
  

 

 

   

 

 

    

 

 

    

 

 

 

Noninterest expenses

          

Salaries and employee benefits

     2,915       2,718        5,757        5,355  

Occupancy expense

     205       214        409        434  

Equipment expense

     143       160        280        316  

Professional and director fees

     308       239        647        551  

Software expense

     232       221        450        434  

Marketing and public relations

     139       119        256        239  

Debit card expense

     132       126        259        242  

Other expenses

     826       822        1,633        1,585  
  

 

 

   

 

 

    

 

 

    

 

 

 

Total noninterest expenses

     4,900       4,619        9,691        9,156  
  

 

 

   

 

 

    

 

 

    

 

 

 

Income before income tax

     3,199       2,877        6,358        5,550  

Federal income tax provision

     613       553        1,232        1,062  
  

 

 

   

 

 

    

 

 

    

 

 

 

Net income

   $ 2,586     $ 2,324      $ 5,126      $ 4,488  
  

 

 

   

 

 

    

 

 

    

 

 

 

Net income per share:

          

Basic

   $ 0.94     $ 0.85      $ 1.87      $ 1.64  
  

 

 

   

 

 

    

 

 

    

 

 

 

Diluted

   $ 0.94     $ 0.85      $ 1.87      $ 1.64  
  

 

 

   

 

 

    

 

 

    

 

 

 
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