Press Release

CSB Bancorp, Inc. Reports Fourth Quarter Earnings

Company Release - 1/25/2018 4:00 PM ET

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

   
Fourth Quarter Highlights
 
 
Quarter Ended Quarter Ended

December 31, 2017

December 31, 2016

 
Diluted earnings per share $ 0.65 $ 0.72
Net Income $ 1,779,000 $ 1,953,000
Return on average common equity 10.02 % 11.76 %
Return on average assets 0.99 % 1.17 %
 

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced fourth quarter 2017 net income of $1,779,000, or $.65 per basic and diluted share, as compared to $1,953,000, or $.72 per basic and diluted share, for the same period in 2016. The Company recognized a $101,000 impact as a result of the enactment of the Tax Cuts and Jobs Act (“TCJA”) in the fourth quarter of 2017, resulting in a $0.04 per share decrease in earnings. Excluding the impact of the TCJA, net income would have been $1,880,000. For the twelve month period ended December 31, 2017 net income totaled $7,101,000, compared to $6,738,000 for the same period last year an increase of 5%.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 10.02% and 0.99%, respectively, compared with 11.76% and 1.17% for the fourth quarter of 2016.

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

Revenue, on a fully-taxable equivalent basis, totaled $7.7 million during the quarter, a 7% increase from the prior-year fourth quarter. Net interest income increased $505 thousand, or 9%, in the fourth quarter of 2017 compared to the same period in 2016.

Loan interest income including fees increased $629 thousand during fourth quarter 2017 as compared to the same quarter in 2016. The current quarter’s loan interest income was favorably impacted by $196 thousand in interest and late charges attributable to payoffs of several loan relationships that had been on nonaccrual. Fourth quarter 2016 loan interest income had by comparison included several payoff recoveries and net purchase discount recognition totaling $413 thousand. Additionally, average total loan balances during the current quarter were $48 million higher than the year ago quarter.

The net interest margin was 3.84% compared to 3.83% for fourth quarter 2016. Excluding the nonaccrual and purchase discounts the net interest margin for fourth quarter 2017 and 2016 would have been 3.73% and 3.57%, respectively.

Noninterest income increased by $8 thousand, or 1%, in the fourth quarter of 2017 compared to 2016. The increase reflects growth in debit card fee income and gain on sale of loans. The increase in other income was partially offset by a decline in service charges on deposit accounts and an impairment loss on leasehold assets. Trust and brokerage fees stabilized in the fourth quarter following a year-long decline resulting from broker and administrative changes within the unit.

Noninterest expense amounted to $4.7 million during the quarter, an increase of $486 thousand, or 12%, from fourth quarter 2016. Salary and employee benefits rose $138 thousand, or 6%, on a quarter over prior year quarter with increases in salary, healthcare, and employment taxes. Professional fees increased by $55 thousand, or 22%, resulting from increased internal audit fees, retained search fees, director fees, and legal fees for loan collection. Marketing and public relations expense increased by $49 thousand, or 53%, on a quarter over quarter basis with expanded channel advertising and increasing community donations. The Company’s fourth quarter efficiency ratio was 61.0% as compared to 58.6% for the same quarter in the prior year.

Federal income tax provision totaled $901 thousand in fourth quarter 2017, including the TCJA income tax increase adjustment of $101 thousand, as compared to $880 thousand tax provision for the same quarter in 2016.

Average total assets during the quarter amounted to $716 million, an increase of $52 million, or 8%, above the same quarter of the prior year. Average loan balances of $512 million increased $48 million, or 10%, from the prior year fourth quarter while average securities balances of $128 million decreased $7 million, or 5%, as compared to fourth quarter 2016.

Average commercial loan balances for the quarter, including commercial real estate, increased $30 million, or 10%, from prior year levels. Average residential mortgage balances increased $14 million, or 14%, over the prior year’s quarter. Average consumer credit balances increased $3 million, or 26%, versus the same quarter of the prior year.

Delinquent loan balances as of December 31, 2017 amounted to 1.53% of total loans as compared to 0.68% at December 31, 2016. Nonperforming assets totaled $6.5 million, or 1.26%, of total loans plus other real estate, an increase of $5 million over December 31, 2016. Approximately $2.9 million of the non-performing loan total is guaranteed by either USDA or the SBA. The increase in nonperforming loans year over year is primarily due to three lending relationships comprised of several loans. All nonperforming loans have been reviewed for impairment, or additional charge-down if collateral dependent, at December 31, 2017. Current impairment on these loans approximates $220 thousand. The allowance for loan losses amounted to 1.08% of total loans on December 31, 2017 as compared to 1.11% at December 31, 2016.

Net loan losses recognized during fourth quarter 2017 were $12 thousand, or 0.01% annualized, compared to fourth quarter 2016 net loan recoveries of $289 thousand.

Average deposit balances for fourth quarter 2017 totaled $579 million, an increase of $47 million, or 9%, from the prior year’s fourth quarter. Within the deposit category, average noninterest-bearing account balances for the fourth quarter increased by $1 million, or 1%, above the same period in the prior year. Average interest-bearing checking, money market, and traditional savings balances increased $48 million, or 20%, from year ago levels, while average time deposit balances decreased $2 million, or 2%, from fourth quarter 2016. In addition to the changes in average deposit balances, the average balance of securities sold under repurchase agreement during the fourth quarter of 2017 decreased by $8 million, or 15%, compared to the average for the same period in the prior year. During 2017, a new corporate overnight cash management product was established within interest-bearing checking and at December 31, 2017 the new product had balances of $21.8 million.

Shareholders’ equity totaled $70.5 million on December 31, 2017 with 2.7 million common shares outstanding. The tangible equity to assets ratio amounted to 9.3% on December 31, 2017 and 9.1% on December 31, 2016. The Company declared a fourth quarter dividend of $0.22 per share producing an annualized yield of 2.7% based on the December 31, 2017 closing price of $33.11.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $707 million as of December 31, 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 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.

CSB BANCORP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
 
(Unaudited) Quarters
(Dollars in thousands, except per share data) 2017 2017 2017 2017 2016 2017 2016
EARNINGS   4th Qtr     3rd Qtr     2nd Qtr     1st Qtr     4th Qtr     12 months   12 months  
Net interest income FTE (a) $ 6,532 $ 6,300 $ 6,046 $ 5,955 $ 6,022 $ 24,833 $ 22,531
Provision for loan losses 180 280 845 (160) - 1,145 493
Other income 1,120 1,054 1,060 1,106 1,112 4,340 4,296
Other expenses 4,696 4,286 3,688 4,646 4,210 17,316 16,255
FTE adjustment (a) 96 96 96 93 91 381 372
Net income 1,779 1,866 1,726 1,730 1,953 7,101 6,738
Diluted earnings per share 0.65 0.68 0.63 0.63 0.72 2.59 2.46
 
PERFORMANCE RATIOS
Return on average assets (ROA) 0.99 % 1.05 % 1.01 % 1.05 % 1.17 % 1.02 % 1.03 %
Return on average common equity (ROE) 10.02 % 10.62 % 10.15 % 10.54 % 11.76 % 10.33 % 10.44 %
Net interest margin FTE (a) 3.84 % 3.77 % 3.75 % 3.85 % 3.83 % 3.80 % 3.67 %
Efficiency ratio 60.99 % 57.89 % 51.49 % 65.39 % 58.59 % 58.96 % 60.14 %
Number of full-time equivalent employees 174 169 169 164 165
 
MARKET DATA
Book value/common share $ 25.72 $ 25.47 $ 25.06 $ 24.41 $ 23.85
Period-end common share mkt value 33.11 30.50 30.60 31.00 31.00
Market as a % of book 128.73 % 119.75 % 122.11 % 127.00 % 129.98 %
Price-to-earnings ratio 12.78 11.47 11.81 12.16 12.60
Cash dividends/common share $ 0.22 $ 0.22 $ 0.20 $ 0.20 $ 0.20 $ 0.84 $ 0.78
Common stock dividend payout ratio 33.85 % 32.35 % 31.75 % 31.75 % 27.78 % 32.43 % 31.71 %
Average basic common shares 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242 2,742,028
Average diluted common shares 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242 2,742,028
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 $ 90,796 $ 83,638 $ 83,913 $ 85,010 $ 85,010
 
ASSET QUALITY
Gross charge-offs $ 19 $ 1,138 $ 34 $ 13 $ 44 $ 1,204 $ 418
Net charge-offs (recoveries) 12 1,133 10 (323) (289) 832 (136)
Allowance for loan losses 5,604 5,436 6,289 5,454 5,291
Nonperforming assets (NPAs) 6,522 4,930 6,036 4,909 1,684
Net charge-off (recovery)/average loans ratio 0.01 % 0.89 % 0.01 % (0.27) % (0.25) % 0.17 % (0.03) %
Allowance for loan losses/period-end loans 1.08 1.07 1.26 1.13 1.11
NPAs/loans and other real estate 1.26 0.97 1.21 1.02 0.35
Allowance for loan losses/nonperforming loans 85.93 110.27 104.19 111.10 314.19
 
CAPITAL & LIQUIDITY
Period-end tangible equity to assets 9.33 % 9.18 % 9.20 % 9.17 % 9.07 %
Average equity to assets 9.84 9.93 9.93 9.98 9.95
Average equity to loans 13.76 13.81 13.90 13.85 14.25
Average loans to deposits 88.33 90.30 90.42 90.45 87.15
 
AVERAGE BALANCES
Assets $ 715,799 $ 702,040 $ 686,403 $ 666,650 $ 664,158 $ 692,859 $ 651,318
Earning assets 674,234 662,432 646,859 627,520 625,320 652,916 614,268
Loans 511,805 504,943 490,359 480,656 463,725 497,048 448,941
Deposits 579,433 559,195 542,308 531,380 532,102 553,228 519,941
Shareholders' equity 70,419 69,737 68,184 66,560 66,094 68,738 64,524
 
ENDING BALANCES
Assets $ 707,063 $ 710,824 $ 696,891 $ 679,437 $ 669,978
Earning assets 664,365 669,483 657,249 640,113 631,069
Loans 516,830 509,458 498,625 480,709 475,449
Deposits 583,259 571,626 547,104 542,180 540,785
Shareholders' equity   70,532     69,838     68,726     66,927     65,415              
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) 2017 2016
ASSETS
Cash and cash equivalents
Cash and due from banks $ 17,255 $ 13,590
Interest-earning deposits in other banks 19,165 23,248
Federal Funds Sold   -     -  
Total cash and cash equivalents 36,420 36,838
Securities
Available-for-sale, at fair-value 97,752 103,875
Held-to-maturity 25,758 23,883
Restricted stock, at cost   4,614     4,614  
Total securities 128,124 132,372
Loans held for sale 246 -
Loans 516,830 475,449
Less allowance for loan losses   5,604     5,291  
Net loans 511,226 470,158
 
Goodwill and core deposit intangible 4,996 5,111
Bank owned life insurance 13,218 10,361
Premises and equipment, net 9,244 8,749
Accrued interest receivable and other assets   3,589     6,389  
 
TOTAL ASSETS $ 707,063   $ 669,978  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing $ 173,671 $ 167,824
Interest-bearing   409,588     372,961  
Total deposits 583,259 540,785
 
Short-term borrowings 39,480 48,742
Other borrowings 11,409 12,385
Accrued interest payable and other liabilities   2,383     2,651  
Total liabilities   636,531     604,563  
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 47,535 42,629

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

(4,784 ) (4,784 )
Accumulated other comprehensive (loss)   (663 )   (874 )
Total shareholders' equity   70,532     65,415  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 707,063   $ 669,978  
 
       
CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
 

Quarter ended

Twelve months ended

(Unaudited)

December 31,

December 31,

(Dollars in thousands, except per share data) 2017 2016 2017 2016
Interest and dividend income:
Loans, including fees $ 6,157 $ 5,528 $ 23,097 $ 20,278
Taxable securities 578 566 2,374 2,598
Nontaxable securities 171 163 680 646
Other   108   38   289 110
Total interest and dividend income   7,014   6,295   26,440 23,632
Interest expense:
Deposits 402 248 1,344 1,006
Other   176   116   644 467
Total interest expense   578   364   1,988 1,473
Net interest income 6,436 5,931 24,452 22,159
Provision for loan losses   180   -   1,145 493

Net interest income after provision for loan losses

  6,256   5,931   23,307 21,666
Noninterest income
Service charges on deposits accounts 287 299 1,133 1,166
Trust services 207 205 687 861
Debit card interchange fees 311 284 1,193 1,087
Gain on sale of loans 99 88 296 309
Gain on sale of securities - - - 1
Other   216   236   1,031 872
Total noninterest income   1,120   1,112   4,340 4,296
 
Noninterest expenses
Salaries and employee benefits 2,547 2,409 10,009 9,354
Occupancy expense 209 266 869 973
Equipment expense 180 165 665 679
Professional and director fees 303 248 963 832
Software expense 246 212 879 799
Marketing and public relations 142 93 401 415
Debit card expense 126 107 536 445
Other expenses   943   710   2,994   2,758
Total noninterest expenses   4,696   4,210   17,316   16,255
Income before income tax 2,680 2,833 10,331 9,707
Federal income tax provision   901   880   3,230   2,969
Net income $ 1,779 $ 1,953 $ 7,101 $ 6,738
 
Net income per share:
Basic $ 0.65 $ 0.72 $ 2.59 $ 2.46
 
Diluted $ 0.65 $ 0.72 $ 2.59 $ 2.46
 

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

Source: CSB Bancorp, Inc.