Press Release

CSB Bancorp, Inc. Reports Third Quarter Earnings

Company Release - 10/23/2017 4:00 PM ET

Third Quarter Highlights

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

   
Quarter Ended Quarter Ended

September 30, 2017

September 30, 2016

 
Diluted earnings per share $0.68 $0.61
Net Income $1,866,000 $1,694,000
Return on average common equity 10.62% 10.29%
Return on average assets 1.05% 1.03%
 

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced third quarter 2017 net income of $1,866,000, or $.68 per basic and diluted share, as compared to $1,694,000, or $.61 per basic and diluted share, for the same period in 2016. For the nine month period ended June 30, 2017 net income totaled $5,322,000, compared to $4,785,000 for the same period last year an increase of 11%.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 10.62% and 1.05%, respectively, compared with 10.29% and 1.03% for the third quarter of 2016.

Eddie Steiner, President and CEO stated, “Loan and deposit balances continued to grow at a fairly steady pace through the third quarter. Net interest margin, compared to the same quarter in the prior year, improved for the seventh consecutive quarter.”

Revenue, on a fully-taxable equivalent basis, totaled $7.4 million during the quarter, a 10% increase from the prior-year third quarter. Net interest income increased $707 thousand, or 13%, in the third quarter of 2017 compared to the same period in 2016. Loan interest income including fees increased $865 thousand during third quarter 2017 as compared to the same quarter in 2016. This increase was driven partially by an increase in average loan volume of $48 million across all categories of loans as well as in increase of 25 basis points in loan yield. The net interest margin of 3.77% compared favorably to 3.61% for third quarter 2016.

Noninterest income declined by $41 thousand, or 4%, in the third quarter of 2017 compared to 2016. The decrease reflects a $91 thousand drop in trust and brokerage fees a result of broker and administrative changes within the unit. The decrease in other income was partially offset by growth in cash surrender value of life insurance, debit card fee income, and gain on sale of loans.

Noninterest expense amounted to $4.3 million during the quarter, an increase of $292 thousand, or 7%, from third quarter 2016. Salary and employee benefits rose $212 thousand, or 9%, on a quarter over prior year quarter with increases in salary, healthcare, and employment taxes. The Company’s third quarter efficiency ratio was 57.9% as compared to 59.2% for the same quarter in the prior year.

Federal income tax provision totaled $826 thousand in third quarter 2017, compared to $740 thousand for the same quarter in 2016 reflecting an increased effective tax rate in 2017 from an increase in taxable income.

Average total assets during the quarter amounted to $702 million, an increase of $48 million, or 7%, above the same quarter of the prior year. Average loan balances of $505 million increased $48 million, or 11%, from the prior year third quarter while average securities balances of $132 million decreased $13 million, or 9%, as compared to third quarter 2016.

Average commercial loan balances for the quarter, including commercial real estate, increased $28 million, or 9%, from prior year levels. Average residential mortgage balances increased $15 million, or 16%, over the prior year’s quarter. Average home equity balances increased $1 million, or 3%, and average consumer credit balances increased $4 million, or 28%, versus the same quarter of the prior year.

Delinquent loan balances as of September 30, 2017 amounted to 1.22% of total loans as compared to 0.82% at September 30, 2016. Nonperforming assets totaled $4.9 million, or 0.97%, of total loans plus other real estate, an increase of $2 million over September 30, 2016. The increase in nonperforming loans year over year is primarily due to two lending relationships comprised of several loans. The allowance for loan losses amounted to 1.07% of total loans on September 30, 2017 as compared to 1.08% at September 30, 2016.

Net loan losses recognized during third quarter 2017 were $1.1 million, or 0.89% annualized, compared to third quarter 2016 net loan losses of $318 thousand.

Average deposit balances for third quarter 2017 totaled $559 million, an increase of $39 million, or 8%, from the prior year’s third quarter. Within the deposit category, average noninterest-bearing account balances for the third quarter increased by $39 million, or 8%, above the same period in the prior year. Average interest-bearing checking, money market, and traditional savings balances increased $11 million, or 7%, from year ago levels, while average time deposit balances decreased $4 million, or 4%, from third quarter 2016. In addition to the changes in average deposit balances, the average balance of securities sold under repurchase agreement during the third quarter of 2017 decreased 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 $69.8 million on September 30, 2017 with 2.7 million common shares outstanding. The tangible equity to assets ratio amounted to 9.2% on September 30, 2017 and 9.3% on September 30, 2016. The Company declared a third quarter dividend of $0.22 per share producing an annualized yield of 2.9% based on the September 30, 2017 closing price of $30.50.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $711 million as of September 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 2017 2016 2016 2017 2016
EARNINGS   3rd Qtr     2nd Qtr     1st Qtr     4th Qtr     3rd Qtr     9 months 9 months
Net interest income FTE (a) $ 6,300 $ 6,046 $ 5,955 $ 6,022 $ 5,597 $ 18,301 $ 16,509
Provision for loan losses 280 845 (160) - 164 965 493
Other income 1,054 1,060 1,106 1,112 1,095 3,220 3,184
Other expenses 4,286 3,688 4,646 4,210 3,994 12,620 12,045
FTE adjustment (a) 96 96 93 91 100 285 281
Net income 1,866 1,726 1,730 1,953 1,694 5,322 4,785
Diluted earnings per share 0.68 0.63 0.63 0.72 0.61 1.94 1.74
 
PERFORMANCE RATIOS
Return on average assets (ROA) 1.05 % 1.01 % 1.05 % 1.17 % 1.03 % 1.04 % 0.99 %
Return on average common equity (ROE) 10.62 % 10.15 % 10.54 % 11.76 % 10.29 % 10.44 % 9.99 %
Net interest margin FTE (a) 3.77 % 3.75 % 3.85 % 3.83 % 3.61 % 3.79 % 3.61 %
Efficiency ratio 57.89 % 51.49 % 65.39 % 58.59 % 59.23 % 58.24 % 60.70 %
Number of full-time equivalent employees 169 169 164 165 165
 
MARKET DATA
Book value/common share $ 25.47 $ 25.06 $ 24.41 $ 23.85 $ 23.98
Period-end common share mkt value 30.50 30.60 31.00 31.00 25.17
Market as a % of book 119.75 % 122.11 % 127.00 % 129.98 % 104.96 %
Price-to-earnings ratio 11.47 11.81 12.16 12.60 10.80
Cash dividends/common share $ 0.22 $ 0.20 $ 0.20 $ 0.20 $ 0.20 $ 0.62 $ 0.58
Common stock dividend payout ratio 32.35 % 31.75 % 31.75 % 27.78 % 32.79 % 31.96 % 33.33 %
Average basic common shares 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242 2,741,956
Average diluted common shares 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242 2,741,956
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 $ 83,638 $ 83,913 $ 85,010 $ 85,010 $ 69,022
 
ASSET QUALITY
Gross charge-offs $ 1,138 $ 34 $ 13 $ 44 $ 346 $ 1,185 $ 374
Net charge-offs (recoveries) 1,133 10 (323) (289) 318 820 153
Allowance for loan losses 5,436 6,289 5,454 5,291 5,002
Nonperforming assets (NPAs) 4,930 6,036 4,909 1,684 2,849
Net charge-off (recovery) /average loans ratio 0.89 % 0.01 % (0.27) % (0.25) % 0.27 % 0.22 % 0.05 %
Allowance for loan losses/period-end loans 1.07 1.26 1.13 1.11 1.08
NPAs/loans and other real estate 0.97 1.21 1.02 0.35 0.62
Allowance for loan losses/nonperforming loans 110.27 104.19 111.10 314.19 177.61
 
CAPITAL & LIQUIDITY
Period-end tangible equity to assets 9.18 % 9.20 % 9.17 % 9.07 % 9.34 %
Average equity to assets 9.93 9.93 9.98 9.95 10.02
Average equity to loans 13.81 13.90 13.85 14.25 14.33
Average loans to deposits 90.30 90.42 90.45 87.15 87.89
 
AVERAGE BALANCES
Assets $ 702,040 $ 686,403 $ 666,650 $ 664,158 $ 653,635 $ 685,210 $ 647,007
Earning assets 662,432 646,859 627,520 625,320 616,555 645,732 610,556
Loans 504,943 490,359 480,656 463,725 456,865 492,075 443,977
Deposits 559,195 542,308 531,380 532,102 519,828 544,397 515,858
Shareholders' equity 69,737 68,184 66,560 66,094 65,471 68,172 63,996
 
ENDING BALANCES
Assets $ 710,824 $ 696,891 $ 679,437 $ 669,978 $ 654,391
Earning assets 669,483 657,249 640,113 631,069 617,264
Loans 509,458 498,625 480,709 475,449 463,211
Deposits 571,626 547,104 542,180 540,785 522,240
Shareholders' equity   69,838     68,726     66,927     65,415     65,751              
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) September 30, September 30,
(Dollars in thousands, except per share data) 2017 2016
ASSETS
Cash and cash equivalents
Cash and due from banks $ 15,592 $ 14,396
Interest-earning deposits in other banks 29,780 13,308
Federal Funds Sold   -   -
Total cash and cash equivalents 45,372 27,704
Securities
Available-for-sale, at fair-value 98,048 112,924
Held-to-maturity 26,475 22,964
Restricted stock, at cost   4,614   4,614
Total securities 129,137 140,502
Loans held for sale 1,108 243
Loans 509,458 463,211
Less allowance for loan losses   5,436   5,002
Net loans 504,022 458,209
 
Goodwill and core deposit intangible 5,024 5,141
Bank owned life insurance 13,131 10,292
Premises and equipment, net 8,906 8,561
Accrued interest receivable and other assets   4,124   3,739
 
TOTAL ASSETS $ 710,824 $ 654,391
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing $ 167,563 $ 160,947
Interest-bearing   404,063   361,293
Total deposits 571,626 522,240
 
Short-term borrowings 45,057 50,967
Other borrowings 21,596 12,476
Accrued interest payable and other liabilities   2,707   2,957
Total liabilities   640,986   588,640
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 46,250 41,224

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

(4,784) (4,784)
Accumulated other comprehensive (loss) income   (72)   867
Total shareholders' equity   69,838   65,751
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 710,824 $ 654,391
 
 
CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
 

Quarter ended

   

Nine months ended

(Unaudited)

September 30,

September 30,

(Dollars in thousands, except per share data) 2017     2016 2017     2016
Interest and dividend income:
Loans, including fees $ 5,907 $ 5,042 $ 16,940 $ 14,750
Taxable securities 599 634 1,796 2,032
Nontaxable securities 171 163 509 482
Other   89   24   180 73
Total interest and dividend income   6,766   5,863   19,425 17,337
Interest expense:
Deposits 368 249 942 758
Other   194   117   467 351
Total interest expense   562   366   1,409 1,109
Net interest income 6,204 5,497 18,016 16,228
Provision for loan losses   280   165   965 493

Net interest income after provision for loan losses

  5,924   5,333   17,051 15,735
Noninterest income
Service charges on deposits accounts 287 301 847 867
Trust services 122 213 481 657
Debit card interchange fees 298 270 882 803
Gain on sale of loans 94 71 197 221
Gain on sale of securities - 1 - 1
Other   253   239   813 635
Total noninterest income   1,054   1,095   3,220 3,184
 
Noninterest expenses
Salaries and employee benefits 2,531 2,319 7,462 6,945
Occupancy expense 236 229 660 707
Equipment expense 143 170 485 513
Professional and director fees 257 221 660 584
Software expense 219 203 633 587
Marketing and public relations 91 94 259 322
Debit card expense 139 120 410 338
Other expenses   670   638   2,051   2,049
Total noninterest expenses   4,286   3,994   12,620   12,045
Income before income tax 2,692 2,434 7,651 6,874
Federal income tax provision   826   740   2,329   2,089
Net income $ 1,866 $ 1,694 $ 5,322 $ 4,785
Net income per share:
Basic $ 0.68 $ 0.61 $ 1.94 $ 1.74
 
Diluted $ 0.68 $ 0.61 $ 1.94 $ 1.74
 

CSB Bancorp, Inc.
Paula J. Meiler, 330-763-2873
SVP & CFO
paula.meiler@csb1.com

Source: CSB Bancorp, Inc.