Press Release

CSB Bancorp, Inc. Reports Second Quarter Earnings

Company Release - 7/25/2017 4:20 PM ET

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

Second Quarter Highlights

      Quarter Ended       Quarter Ended

June 30, 2017

June 30, 2016

 
Diluted earnings per share $ 0.63 $ 0.59
Net Income $ 1,726,000 $ 1,611,000
Return on average common equity 10.15 % 10.14 %
Return on average assets 1.01 % 1.00 %
 

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced second quarter 2017 net income of $1,726,000, or $.63 per basic and diluted share, as compared to $1,611,000, or $.59 per basic and diluted share, for the same period in 2016. For the six month period ended June 30, 2017 net income totaled $3,456,000, compared to $3,091,000 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 10.15% and 1.01%, respectively, compared with 10.14% and 1.00% for the second quarter of 2016.

Eddie Steiner, President and CEO stated, “Six month revenue is 9% ahead of last year’s midpoint on the strength of 11% growth in average loan balances and an increase in net interest margin. Business, homeowner and consumer lending platforms are all contributing to this loan growth.”

Revenue, on a fully-taxable equivalent basis, totaled $7.1 million during the quarter, a 7% increase from the prior-year second quarter. Net interest income increased $504 thousand, or 9%, in the second quarter of 2017 compared to the same period in 2016. Loan interest income including fees increased $618 thousand during second quarter 2017 as compared to the same quarter in 2016. This increase was driven partially by an increase in average loan volume of $43 million across all categories of loans as well as in increase of 9 basis points in loan yield. The net interest margin of 3.75% compared favorably to 3.65% for second quarter 2016.

Noninterest income declined by $37 thousand, or 3%, in the second quarter of 2017 compared to 2016. The decrease reflects a $66 thousand drop in trust and brokerage fees a result of broker and administrative changes within the unit which have been completed late in second quarter 2017. The decrease in other income was partially offset by growth in cash surrender value of life insurance and increases in debit card fee income. During 2016 a write-down of fixed assets of $25 thousand occurred during second quarter which did not recur in 2017.

Noninterest expense amounted to $3.7 million during the quarter, a decrease of $374 thousand, or 9%, from second quarter 2016. This decrease primarily results from CSB reversing a $540 thousand provision for unfunded loan commitments as a previously impaired commercial line of credit is currently drawn. Salary and employee benefits rose $173 thousand, or 8%, on a quarter over prior year quarter with increases in salary, healthcare, and employment taxes. The Company’s second quarter efficiency ratio amounted to 51.5% as compared to 60.8% for the same quarter in the prior year and improved to 58.4% for the current six month period as compared to 61.5% in the first six months of 2016.

Federal income tax provision totaled $751 thousand in second quarter 2017, compared to $705 thousand for the same quarter in 2016 reflecting a slightly decreased effective tax rate in 2017 from an increase in nontaxable income.

Average total assets during the quarter amounted to $686 million, an increase of $40 million, or 6%, above the same quarter of the prior year. Average loan balances of $490 million increased $43 million, or 10%, from the prior year second quarter while average securities balances of $133 million decreased $17 million, or 12%, as compared to second quarter 2016.

Average commercial loan balances for the quarter, including commercial real estate, increased $19 million, or 6%, from prior year levels. Average residential mortgage balances increased $18 million, or 21%, over the prior year’s quarter. Average home equity balances increased $2 million, or 4%, and average consumer credit balances increased $4 million, or 36%, versus the same quarter of the prior year.

Delinquent loan balances as of June 30, 2017 amounted to 1.31% of total loans as compared to 0.82% at June 30, 2016. Nonperforming assets totaled $6.0 million, or 1.21%, of total loans plus other real estate, an increase of $3 million over June 30, 2016. The allowance for loan losses amounted to 1.26% of total loans on June 30, 2017 as compared to 1.14% at June 30, 2016.

Net loan losses recognized during second quarter 2017 were $10 thousand, or 0.01% annualized, compared to second quarter 2016 net loan losses of $14 thousand.

Average deposit balances for second quarter 2017 totaled $542 million, an increase of $27 million, or 5%, from the prior year’s second quarter. Within the deposit category, average noninterest-bearing account balances for the second quarter increased by $18 million, or 12%, above the same period in the prior year. Average interest-bearing checking, money market, and traditional savings balances increased $15 million, or 6%, from year ago levels, while average time deposit balances decreased $6 million, or 5%, from second quarter 2016. In addition to the changes in average deposit balances, the average balance of securities sold under repurchase agreement during the second quarter of 2017 increased by $4 million, or 8%, 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 $68.7 million on June 30, 2017 with 2.7 million common shares outstanding. The tangible equity to assets ratio amounted to 9.2% on June 30, 2017 and June 30, 2016. The Company declared a second quarter dividend of $0.20 per share producing an annualized yield of 2.6% based on the June 30, 2017 closing price of $30.60.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $697 million as of June 30, 2017. 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) 2017 2017 2016 2016 2016 2017 2016
EARNINGS     2nd Qtr       1st Qtr       4th Qtr       3rd Qtr       2nd Qtr       6 months       6 months  
Net interest income FTE (a) $ 6,046 $ 5,955 $ 6,022 $ 5,597 $ 5,539 $ 12,001 $ 10,912
Provision for loan losses 845 (160) - 164 165 685 329
Other income 1,060 1,106 1,112 1,095 1,097 2,166 2,089
Other expenses 3,688 4,646 4,210 3,994 4,062 8,334 8,051
FTE adjustment (a) 96 93 91 100 93 189 181
Net income 1,726 1,730 1,953 1,694 1,611 3,456 3,091
Diluted earnings per share 0.63 0.63 0.72 0.61 0.59 1.26 1.13
 
PERFORMANCE RATIOS
Return on average assets (ROA) 1.01

%

 

1.05

%

 

1.17

%

 

1.03

%

 

1.00

%

 

1.03

%

 

0.97 %
Return on average common equity (ROE) 10.15

%

 

10.54

%

 

11.76

%

 

10.29

%

 

10.14

%

 

10.34

%

 

9.83 %
Net interest margin FTE (a) 3.75

%

 

3.85

%

 

3.83

%

 

3.61

%

 

3.65

%

 

3.80

%

 

3.61 %
Efficiency ratio 51.49

%

 

65.39

%

 

58.59

%

 

59.23

%

 

60.76

%

 

58.42

%

 

61.46 %
Number of full-time equivalent employees

169

164 165 165 166
 
MARKET DATA
Book value/common share $ 25.06 $ 24.41 $ 23.85 $ 23.98 $ 23.49
Period-end common share mkt value 30.60 31.00 31.00 25.17 25.20
Market as a % of book 122.11

%

 

127.00

%

 

129.98

%

 

104.96

%

 

107.28

%

 

Price-to-earnings ratio 11.81 12.16 12.60 10.80 11.00
Cash dividends/common share $ 0.20 $ 0.20 $ 0.20 $ 0.20 $ 0.19 $ 0.40 $ 0.38
Common stock dividend payout ratio 31.75

%

 

31.75

%

 

27.78

%

 

32.79

%

 

32.20

%

 

31.75

%

 

33.63 %
Average basic common shares 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242 2,741,811
Average diluted common shares 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242 2,741,811
Period end common shares outstanding 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242
Common shares repurchased 0 0 0 0 0
Common stock market capitalization $ 83,913 $ 85,010 $ 85,010 $ 69,022 $ 69,104
 
ASSET QUALITY
Gross charge-offs $ 34 $ 13 $ 44 $ 346 $ 18 $ 47 $ 28
Net charge-offs (recoveries) 10 (323) (289) 318 14 (313) (165)
Allowance for loan losses 6,289 5,454 5,291 5,002 5,156
Nonperforming assets (NPAs) 6,036 4,909 1,684 2,849 2,806

Net charge-off (recovery)/average loans ratio

0.01

%

 

(0.27)

%

 

(0.25)

%

 

0.27

%

 

0.01

%

 

(0.13)

%

 

(0.08) %
Allowance for loan losses/period-end loans 1.26 1.13 1.11 1.08 1.14
NPAs/loans and other real estate 1.21 1.02 0.35 0.62 0.62
Allowance for loan losses/nonperforming loans 104.19 111.10 314.19 177.61 188.59
 
CAPITAL & LIQUIDITY
Period-end tangible equity to assets 9.20

%

 

9.17

%

 

9.07

%

 

9.34

%

 

9.19

%

 

Average equity to assets 9.93 9.98 9.95 10.02 9.88
Average equity to loans 13.90 13.85 14.25 14.33 14.29
Average loans to deposits 90.42 90.45 87.15 87.89 86.71
 
AVERAGE BALANCES
Assets $ 686,403 $ 666,650 $ 664,158 $ 653,635 $ 646,642 $ 676,655 $ 643,656
Earning assets 646,859 627,520 625,320 616,555 610,138 637,242 607,524
Loans 490,359 480,656 463,725 456,865 447,009 485,534 437,462
Deposits 542,308 531,380 532,102 519,828 515,511 531,380 513,851
Shareholders' equity 68,184 66,560 66,094 65,471 63,877 67,377 63,251
 
ENDING BALANCES
Assets $ 696,891 $ 679,437 $ 669,978 $ 654,391 $ 649,890
Earning assets 657,249 640,113 631,069 617,264 610,221
Loans 498,625 480,709 475,449 463,211 450,789
Deposits 547,104 542,180 540,785 522,240 516,497
Shareholders' equity     68,726       66,927       65,415       65,751       64,407                  
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) 2017 2016
ASSETS
Cash and cash equivalents
Cash and due from banks $ 15,445 $ 16,859
Interest-earning deposits in other banks 23,351 11,268
Federal Funds Sold   -     -  
Total cash and cash equivalents 38,796 28,127
Securities
Available-for-sale, at fair-value 103,058 119,355
Held-to-maturity 27,169 23,845
Restricted stock, at cost   4,614     4,614  
Total securities 134,841 147,814
Loans held for sale 432 350
Loans 498,625 450,789
Less allowance for loan losses   6,289     5,156  
Net loans 492,336 445,633
 
Goodwill and core deposit intangible 5,053 5,172
Bank owned life insurance 13,045 10,222
Premises and equipment, net 8,633 8,660
Accrued interest receivable and other assets   3,755     3,912  
 
TOTAL ASSETS $ 696,891   $ 649,890  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing $ 169,241 $ 156,365
Interest-bearing   377,863     360,132  
Total deposits 547,104 516,497
 
Short-term borrowings 56,932 54,125
Other borrowings 21,781 12,574
Accrued interest payable and other liabilities   2,348     2,287  
Total liabilities   628,165     585,483  
Shareholders' equity

Common stock, $6.25 par value. Authorized 9,000,000 shares; issued 2,980,602 shares in 2017 and 2016

18,629 18,629
Additional paid-in capital 9,815 9,815
Retained earnings 44,987 40,079

Treasury stock at cost - 238,360 shares in 2017 and 2016

(4,784 ) (4,784 )
Accumulated other comprehensive income   79     668  
Total shareholders' equity   68,726     64,407  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 696,891   $ 649,890  
 
CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
   

Quarter ended

Year ended

(Unaudited)

June 30,

June 30,

(Dollars in thousands, except per share data) 2017   2016 2017   2016
Interest and dividend income:
Loans, including fees $ 5,584 $ 4,966 $ 11,033 $ 9,708
Taxable securities 598 662 1,196 1,398
Nontaxable securities 174 165 339 319
Other   57     20   91 49
Total interest and dividend income   6,413     5,813   12,659 11,474
Interest expense:
Deposits 307 250 574 509
Other   156     117   273 234
Total interest expense   463     367   847 743
Net interest income 5,950 5,446 11,812 10,731
Provision for loan losses   845     165   685 329

Net interest income after provision for loan losses

  5,105     5,281   11,127 10,402
Noninterest income
Service charges on deposits accounts 268 288 559 566
Trust services 152 218 359 444
Debit card interchange fees 296 271 584 533
Gain on sale of loans 61 118 103 150
Gain on sale of securities - - - -
Other   283     202   561 396
Total noninterest income   1,060     1,097   2,166 2,089
 
Noninterest expenses
Salaries and employee benefits 2,472 2,299 4,931 4,626
Occupancy expense 214 233 424 477
Equipment expense 171 169 341 343
Professional and director fees 234 189 403 363
Software expense 203 198 413 384
Marketing and public relations 89 143 167 228
Debit card expense 141 114 271 218
Provision for unfunded loan commitments (540 ) - - -
Other expenses   704     717   1,384   1,412
Total noninterest expenses   3,688     4,062   8,334   8,051
Income before income tax 2,477 2,316 4,959 4,440
Federal income tax provision   751     705   1,503   1,349
Net income $ 1,726   $ 1,611 $ 3,456 $ 3,091
Net income per share:
Basic $ 0.63   $ 0.59 $ 1.26 $ 1.13
 
Diluted $ 0.63   $ 0.59 $ 1.26 $ 1.13

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

Source: CSB Bancorp, Inc.