Press Release

CSB Bancorp, Inc. Reports Fourth Quarter Earnings

Company Release - 1/25/2017 8:30 AM ET

MILLERSBURG, Ohio--(BUSINESS WIRE)-- CSB Bancorp, Inc. (OTC Pink: CSBB):

Fourth Quarter Highlights

       
Quarter Ended Quarter Ended

December 31, 2016

December 31, 2015

 
Diluted earnings per share $0.72 $0.59
Net Income $1,953,000 $1,607,000
Return on average common equity 11.76 % 10.41 %
Return on average assets 1.17 % 0.98 %

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced fourth quarter 2016 net income of $1,953,000, or $.72 per basic and diluted share, as compared to $1,607,000, or $.59 per basic and diluted share, for the same period in 2015. For the twelve month period ended December 31, 2016 net income totaled $6,738,000, compared to $6,022,000 for the same period last year, an increase of 12%.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 11.76% and 1.17%, respectively, compared with 10.41% and 0.98% for the fourth quarter of 2015. ROE and ROA for the full year of 2016 were 10.44% and 1.03%, respectively, compared with 10.07% and 0.95% for the same period in 2015.

Eddie Steiner, President and CEO stated, “We are pleased to report strong fourth quarter earnings. Demand for business and consumer loans in our markets has improved for several quarters as compared to prior year levels, resulting in a higher level of earning assets.”

Revenue, on a fully-taxable equivalent basis, totaled $7.1 million during the quarter, a 13% increase from the prior-year fourth quarter. Net interest income increased $758 thousand, or 15%, in the fourth quarter of 2016 compared to the same period in 2015. Loan interest income including fees increased $910 thousand during fourth quarter 2016 as compared to the same quarter in 2015. This increase was driven partially by $418 thousand of one-time loan interest recovery, purchase discount, and premium recognition on loans being paid off as well as an increase in average loan volume of $55 million across all categories of loans. The net interest margin of 3.83% compared favorably to 3.39% for fourth quarter 2015. Excluding the one-time events of $418 thousand, fourth quarter 2016 net interest margin would have been 3.57%.

Noninterest revenue increased by $41 thousand, or 4%, in the fourth quarter of 2016 compared to 2015. The increase reflects growth in the gain on sale of mortgage loans, increases in debit card fee income, and service charges on deposit accounts. The increases were partially offset by a decrease in trust and brokerage fee income.

Noninterest expense amounted to $4 million during the quarter, an increase of $280 thousand, or 7%, from fourth quarter 2015. The Company’s fourth quarter efficiency ratio amounted to 58.6% as compared to 61.6% for the same quarter in the prior year. Salary and employee benefits rose $186 thousand, or 8%, on a quarter over prior year quarter with increases in salary, healthcare, and employment taxes.

Federal income tax provision totaled $880 thousand in fourth quarter 2016, compared to $707 thousand for the same quarter in 2015 reflecting a slightly increased effective tax rate in 2016 for increased taxable income.

Average total assets during the quarter amounted to $664 million, an increase of $11 million, or 2%, above the same quarter of the prior year. Average loan balances of $464 million increased $55 million, or 14%, from the prior year fourth quarter while average securities balances of $134 million decreased $28 million, or 17%, as compared to fourth quarter 2015.

Average commercial loan balances for the quarter, including commercial real estate, increased $32 million, or 12%, from prior year levels. Average residential mortgage balances increased $15 million, or 19%, over the prior year’s quarter. Average home equity balances increased $4 million, or 10%, and average consumer credit balances increased $4 million, or 42%, versus the same quarter of the prior year.

Delinquent loan balances as of December 31, 2016 amounted to 0.68% of total loans as compared to 0.67% at December 31, 2015. Nonperforming assets totaled $1.7 million, or 0.35%, of total loans plus other real estate, an increase of $3 thousand over total loans plus other real estate at December 31, 2015. The allowance for loan losses amounted to 1.11% of total loans on December 31, 2016 as compared to 1.10% at December 31, 2015.

Net loan recoveries recognized during fourth quarter 2016 were $289 thousand, or (0.25)% annualized, compared to fourth quarter 2015 net loan recoveries of $30 thousand.

Average deposit balances for fourth quarter 2016 totaled $532 million, an increase of $8 million, or 2%, from the prior year’s fourth quarter. Within the deposit category, average noninterest-bearing account balances for the fourth quarter increased by $11 million, or 7%, above the same period in the prior year. Average interest-bearing checking, money market, and traditional savings balances increased $5 million, or 2%, from year ago levels, while average time deposit balances decreased $8 million, or 6%, from fourth quarter 2015. In addition to the changes in average deposit balances, the average balance of securities sold under repurchase agreement during the fourth quarter of 2016 decreased by $1 million, or 2%, compared to the average for the same period in the prior year. Repurchase agreements, while considered short-term borrowings, are primarily tied to overnight customer sweep accounts.

Shareholders’ equity totaled $65.4 million on December 31, 2016 with 2.7 million common shares outstanding. The tangible equity to assets ratio amounted to 9.1% on December 31, 2016, as compared to 8.7% on December 31, 2015. The Company declared a fourth quarter dividend of $0.20 per share producing an annualized yield of 2.6% based on the December 31, 2016 closing price of $31.00.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $670 million as of December 31, 2016. 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 sixteen 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.

CSB BANCORP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
 
(Unaudited) Quarters
(Dollars in thousands, except per share data) 2016 2016 2016 2016 2015 2016 2015
EARNINGS   4th Qtr   3rd Qtr   2nd Qtr   1st Qtr   4th Qtr   12 months   12 months
Net interest income FTE (a) $ 6,022 $ 5,597 $ 5,539 $ 5,373 $ 5,262 $ 22,531 $ 20,758
Provision for loan losses - 164 165 164 - 493 389
Other income 1,112 1,095 1,097 992 1,071 4,296 4,424
Other expenses 4,210 3,994 4,062 3,989 3,930 16,255 15,796
FTE adjustment (a) 91 100 93 88 89 372 328
Net income 1,953 1,694 1,611 1,480 1,607 6,738 6,022
Diluted earnings per share 0.72 0.61 0.59 0.54 0.59 2.46 2.20
 
PERFORMANCE RATIOS
Return on average assets (ROA) 1.17 % 1.03 % 1.00 % 0.93 % 0.98 % 1.03 % 0.95 %
Return on average common equity (ROE) 11.76 % 10.29 % 10.14 % 9.48 % 10.41 % 10.44 % 10.07 %
Net interest margin FTE (a) 3.83 % 3.61 % 3.65 % 3.57 % 3.39 % 3.67 % 3.48 %
Efficiency ratio 58.59 % 59.23 % 60.76 % 62.20 % 61.55 % 60.14 % 62.37 %
Number of full-time equivalent employees 165 165 166 162 161
 
MARKET DATA
Book value/common share $ 23.85 $ 23.98 $ 23.49 $ 22.90 $ 22.35
Period-end common share mkt value 31.00 25.17 25.20 24.25 24.50
Market as a % of book 129.98 % 104.96 % 107.28 % 105.90 % 109.62 %
Price-to-earnings ratio 12.60 10.80 11.00 10.78 11.14
Cash dividends/common share $ 0.20 $ 0.20 $ 0.19 $ 0.19 $ 0.19 $ 0.78 $ 0.76
Common stock dividend payout ratio 27.78 % 32.79 % 32.20 % 35.19 % 32.20 % 31.71 % 34.55 %
Average basic common shares 2,742,242 2,742,242 2,742,242 2,741,379 2,739,664 2,742,028 2,739,470
Average diluted common shares 2,742,242 2,742,242 2,742,242 2,741,379 2,741,243 2,742,028 2,742,108
Period end common shares outstanding 2,742,242 2,742,242 2,742,242 2,742,242 2,740,996
Common shares repurchased 0 0 0 0 0
Common stock market capitalization $ 85,010 $ 69,022 $ 69,104 $ 66,499 $ 67,154
 
ASSET QUALITY
Gross charge-offs $ 44 $ 346 $ 18 $ 10 $ 104 $ 418 $ 348
Net (recoveries) charge-offs (289) 318 14 (179) (30) (136) 108
Allowance for loan losses 5,291 5,002 5,156 5,005 4,662
Nonperforming assets (NPAs) 1,684 2,849 2,806 1,915 1,681
Net charge-off (recovery) /average loans ratio (0.25) % 0.27 % 0.01 % (0.17) % (0.03) % (0.03) % 0.03 %
Allowance for loan losses/period-end loans 1.11 1.08 1.14 1.15 1.10
NPAs/loans and other real estate 0.35 0.62 0.62 0.44 0.40
Allowance for loan losses/nonperforming loans 314.19 177.61 188.59 261.35 277.35
 
CAPITAL & LIQUIDITY
Period-end tangible equity to assets 9.07 % 9.34 % 9.19 % 9.11 % 8.69 %
Average equity to assets 9.95 10.02 9.88 9.77 9.38
Average equity to loans 14.25 14.33 14.29 14.63 14.99
Average loans to deposits 87.15 87.89 86.71 83.55 77.95
 
AVERAGE BALANCES
Assets $ 664,158 $ 653,635 $ 646,642 $ 640,670 $ 652,725 $ 651,318 $ 633,298
Earning assets 625,320 616,555 610,138 604,911 615,725 614,268 596,705
Loans 463,725 456,865 447,009 427,916 408,524 448,941 412,147
Deposits 532,102 519,828 515,511 512,192 524,078 519,941 505,913
Shareholders' equity 66,094 65,471 63,877 62,625 61,230 64,524 59,799
 
ENDING BALANCES
Assets $ 669,978 $ 654,391 $ 649,890 $ 637,202 $ 650,314
Earning assets 631,069 617,264 610,221 602,306 610,251
Loans 475,449 463,211 450,789 433,453 422,871
Deposits 540,785 522,240 516,497 509,980 525,042
Shareholders' equity   65,415   65,751   64,407   62,796   61,266          
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) December 31, December 31,
(Dollars in thousands, except per share data) 2016 2015
ASSETS
Cash and cash equivalents
Cash and due from banks $ 13,590 $ 17,341
Interest-earning deposits in other banks 23,248 20,931
Federal Funds Sold   -     -  
Total cash and cash equivalents 36,838 38,272
Securities
Available-for-sale, at fair-value 103,875 127,969
Held-to-maturity 23,883 33,819
Restricted stock, at cost   4,614     4,614  
Total securities 132,372 166,402
Loans held for sale - 47
Loans 475,449 422,871
Less allowance for loan losses   5,291     4,662  
Net loans 470,158 418,209
 
Goodwill and core deposit intangible 5,111 5,232
Bank owned life insurance 10,361 10,085
Premises and equipment, net 8,749 8,209
Accrued interest receivable and other assets   6,389     3,858  
 
TOTAL ASSETS $ 669,978   $ 650,314  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing $ 167,824 $ 151,549
Interest-bearing   372,961     373,493  
Total deposits 540,785 525,042
 
Short-term borrowings 48,742 48,598
Other borrowings 12,385 13,465
Accrued interest payable and other liabilities   2,651     1,943  
Total liabilities   604,563     589,048  
Shareholders' equity
Common stock, $6.25 par value. Authorized
9,000,000 shares; issued 2,980,602 shares
in 2016 and 2015 18,629 18,629
Additional paid-in capital 9,815 9,846
Retained earnings 42,629 38,030
Treasury stock at cost - 238,360 shares in 2016
and 239,606 in 2015 (4,784 ) (4,822 )
Accumulated other comprehensive loss   (874 )   (417 )
Total shareholders' equity   65,415     61,266  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 669,978   $ 650,314  
       
CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME

Quarter ended

Twelve months ended

(Unaudited)

December 31,

December 31,

(Dollars in thousands, except per share data) 2016 2015 2016 2015
Interest and dividend income:
Loans, including fees $ 5,528 $ 4,618 $ 20,278 $ 18,548
Taxable securities 566 749 2,598 2,790
Nontaxable securities 163 154 646 563
Other   38   38   110 96
Total interest and dividend income   6,295   5,559   23,632 21,997
Interest expense:
Deposits 248 266 1,006 1,081
Other   116   120   467 486
Total interest expense   364   386   1,473 1,567
Net interest income 5,931 5,173 22,159 20,430
Provision for loan losses   -   -   493 389
Net interest income after provision
for loan losses   5,931   5,173   21,666 20,041
Noninterest income
Service charges on deposits accounts 299 287 1,166 1,203
Trust services 205 217 861 860
Debit card interchange fees 284 265 1,087 988
Gain on sale of loans 88 57 309 363
Gain on sale of securities - - 1 56
Other   236   245   872 954
Total noninterest income   1,112   1,071   4,296 4,424
 
Noninterest expenses
Salaries and employee benefits 2,409 2,223 9,354 8,819
Occupancy expense 266 251 973 1,027
Equipment expense 165 166 679 663
Professional and director fees 248 165 832 830
Software expense 212 202 799 801
Marketing and public relations 93 133 415 419
Debit card expense 107 103 445 413
Other expenses   710   687   2,758 2,824
Total noninterest expenses   4,210   3,930   16,255 15,796
Income before income tax 2,833 2,314 9,707 8,669
Federal income tax provision   880   707   2,969 2,647
 
Net income $ 1,953 $ 1,607 $ 6,738 $ 6,022
Net income per share:
Basic $ 0.72 $ 0.59 $ 2.46 $ 2.20
 
Diluted $ 0.72 $ 0.59 $ 2.46 $ 2.20

CSB Bancorp, Inc.
Paula J. Meiler, SVP & CFO, 330-763-2873
[email protected]

Source: CSB Bancorp, Inc.