Press Release

CSB Bancorp, Inc. Reports Third Quarter Earnings

Company Release - 10/24/2018 8:00 AM ET

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

       

Third Quarter Highlights

 
Quarter Ended Quarter Ended

September 30, 2018

September 30, 2017

Diluted earnings per share $ 0.88 $ 0.68
Net Income $ 2,432,000 $ 1,866,000

Return on average common equity

13.07

%

10.62

%

Return on average assets

1.34

%

1.05

%

 

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced third quarter 2018 net income of $2,432,000, or $.88 per basic and diluted share, as compared to $1,866,000, or $.68 per basic and diluted share, for the same period in 2017. Income before federal income tax amounted to $3.0 million, an increase of 12% over the same quarter in the prior year.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 13.07% and 1.34%, respectively, compared with 10.62% and 1.05% for the third quarter of 2017.

Eddie Steiner, President and CEO stated, “Average loan balances increased for the twelfth consecutive quarter, while net interest margin improved to 4.00%. Average deposit and loan balances have each increased approximately 6% from year ago levels.”

Net interest income and noninterest income, on a fully-taxable equivalent basis, totaled $8.0 million during the quarter, a 9% increase from the prior-year third quarter. Net interest income increased $597 thousand, or 10%, in the third quarter of 2018 compared to the same period in 2017.

Loan interest income including fees increased $800 thousand during third quarter 2018 as compared to the same quarter in 2017. Average total loan balances during the current quarter were $33 million higher than the year ago quarter.

The net interest margin was 4.00% compared to 3.77% for third quarter 2017. The tax equivalency effect on the margin dropped to 0.03% from 0.06% a result of the reduction in the corporate income tax rate in 2018.

Noninterest income increased by $121 thousand, or 11%, in the third quarter of 2018 compared to 2017. The increase reflects growth in trust and brokerage income, debit card fee income, and service charges on deposit accounts.

Noninterest expense amounted to $4.6 million during the quarter, an increase of $352 thousand, or 8%, from third quarter 2017. Increases are being reported in salary and employee benefits of $274 thousand, or 11%, compared to the prior year quarter with increases in headcount, salary, and the Company’s 401k plan. Marketing and public relations expense increased by $33 thousand, or 36%, on a quarter over quarter basis primarily on expanded channel advertising and increasing community donations. The Company’s third quarter efficiency ratio was 57.5% as compared to 57.9% for the same quarter in the prior year.

Federal income tax provision totaled $582 thousand in third quarter 2018, as compared to $826 thousand tax provision for the same quarter in 2017. The effective tax rate decreased from 31% to 19% a result of the Tax Cuts and Jobs Act enacted December 2017.

Average total assets during the quarter amounted to $720 million, an increase of $18 million, or 3%, above the same quarter of the prior year. Average loan balances of $538 million increased $33 million, or 7%, from the prior year third quarter while average securities balances of $117 million decreased $15 million, or 11%, as compared to third quarter 2017.

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 $10 million, or 9%, over the prior year’s quarter. Average consumer credit balances increased $2 million, or 13%, versus the same quarter of the prior year.

Nonperforming assets increased $411 thousand from September 30, 2017 to $5.3 million, or 1.00%, of total loans plus other real estate at September 30, 2018. The increase in nonperforming assets is the result of various commercial loans both entering through delinquency and exiting through liquidation during 2018. At September 30, 2018, approximately $1.7 million of the non-performing loan total is guaranteed by either USDA or the SBA. Delinquent loan balances as of September 30, 2018 declined to 1.25% of total loans as compared to 1.22% at September 30, 2017.

Net loan losses during third quarter 2018 were $38 thousand, or 0.03% annualized, compared to third quarter 2017 net loan losses of $1.1 million. The allowance for loan losses amounted to 1.16% of total loans at September 30, 2018 as compared to 1.07% at September 30, 2017.

Average deposit balances grew on a year over year comparison by $41 million, or 8%, partially on the strength of customer response to higher rates paid on insured deposits. During the third quarter 2018, increases in average deposit balances over the prior year quarter included interest-bearing demand accounts of $9 million; savings accounts of $10 million; time deposits of $5 million, and non-interest bearing checking accounts of $10 million. The average balance of securities sold under repurchase agreement during the third quarter of 2018 decreased by $7 million, or 13%, 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 September 30, 2018 the new product had balances of $22 million.

Shareholders’ equity totaled $73.9 million on September 30, 2018 with 2.7 million common shares outstanding. The tangible equity to assets ratio amounted to 9.8% on September 30, 2018 and 9.2% on September 30, 2017. The Company declared a third quarter dividend of $0.24 per share, a $.02 per share increase over third quarter 2017, producing an annualized yield of 2.4% based on the September 30, 2018 closing price of $40.57.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $711 million as of September 30, 2018. 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) 2018   2018   2018   2017   2017 2018   2017
EARNINGS   3rd Qtr   2nd Qtr   1st Qtr   4th Qtr   3rd Qtr   9 months   9 months
Net interest income FTE (a) $ 6,847 $ 6,697 $ 6,436 $ 6,532 $ 6,300 $ 19,980 $ 18,301
Provision for loan losses 324 324 324 180 280 972 965
Other income 1,175 1,168 1,145 1,120 1,054 3,488 3,220
Other expenses 4,638 4,619 4,537 4,696 4,286 13,794 12,620
FTE adjustment (a) 46 45 47 96 96 138 285
Net income 2,432 2,324 2,164 1,779 1,866 6,920 5,322
Diluted earnings per share 0.88 0.85 0.79 0.65 0.68 2.52 1.94
 
PERFORMANCE RATIOS
Return on average assets (ROA) 1.34 % 1.30 % 1.25 % 0.99 % 1.05 % 1.30 % 1.04 %
Return on average common equity (ROE) 13.07 % 12.94 % 12.33 % 10.02 % 10.62 % 12.79 % 10.44 %
Net interest margin FTE (a) 4.00 % 3.98 % 3.95 % 3.84 % 3.77 % 3.98 % 3.79 %
Efficiency ratio 57.45 % 58.41 % 59.52 % 60.99 % 57.89 % 58.45 % 58.24 %
Number of full-time equivalent employees 174 174 171 174 169
 
MARKET DATA
Book value/common share $ 26.94 $ 26.47 $ 25.90 $ 25.72 $ 25.47
Period-end common share mkt value 40.57 39.00 35.95 33.11 30.50
Market as a % of book 150.59 % 147.34 % 138.80 % 128.73 % 119.75 %
Price-to-earnings ratio 12.80 13.13 13.07 12.78 11.47
Cash dividends/common share $ 0.24 $ 0.24 $ 0.24 $ 0.22 $ 0.22 $ 0.72 $ 0.62
Common stock dividend payout ratio 27.27 % 28.24 % 30.38 % 33.85 % 32.35 % 28.57 % 31.96 %
Average basic common shares 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242
Average diluted common shares 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242
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 $ 111,253 $ 106,947 $ 98,584 $ 90,796 $ 83,638
 
ASSET QUALITY
Gross charge-offs $ 43 $ 45 $ 303 $ 19 $ 1,138 $ 391 $ 1,185
Net (recoveries) charge-offs 38 39 295 12 1,133 372 820
Allowance for loan losses 6,204 5,918 5,633 5,604 5,436
Nonperforming assets (NPAs) 5,341 4,399 4,622 6,522 4,930
Net charge-off (recovery) /average loans ratio 0.03 % 0.03 % 0.23 % 0.01 % 0.89 % 0.09 % 0.22 %
Allowance for loan losses/period-end loans 1.16 1.11 1.06 1.08 1.07
NPAs/loans and other real estate 1.00 0.82 0.87 1.26 0.97
Allowance for loan losses/nonperforming loans 116.16 134.52 122.40 85.93 110.27
 
CAPITAL & LIQUIDITY
Period-end tangible equity to assets 9.77 % 9.41 % 9.50 % 9.33 % 9.18 %
Average equity to assets 10.25 10.06 10.16 9.84 9.93
Average equity to loans 13.72 13.47 13.50 13.76 13.81
Average loans to deposits 90.80 90.77 91.89 88.33 90.30
 
AVERAGE BALANCES
Assets $ 720,372 $ 715,902 $ 700,394 $ 715,799 $ 702,040 $ 712,288 $ 685,210
Earning assets 679,281 674,699 660,772 674,234 662,432 671,654 645,732
Loans 538,182 534,852 527,315 511,805 504,943 533,492 492,075
Deposits 592,738 589,211 573,855 579,433 559,195 585,337 544,397
Shareholders' equity 73,844 72,039 71,173 70,419 69,737 72,362 68,172
 
ENDING BALANCES
Assets $ 710,815 $ 723,299 $ 699,967 $ 707,063 $ 710,824
Earning assets 668,468 681,200 662,779 664,365 669,483
Loans 535,424 535,427 530,395 516,830 509,458
Deposits 587,531 595,073 576,418 583,259 571,626
Shareholders' equity     73,877       72,578       71,019       70,532       69,838                  

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)

2018 2017
ASSETS
Cash and cash equivalents
Cash and due from banks $ 15,865 $ 15,592
Interest-earning deposits in other banks 17,384 29,780
Federal Funds Sold   -     -  
Total cash and cash equivalents 33,249 45,372
Securities
Available-for-sale, at fair-value 89,507 98,048
Held-to-maturity 21,260 26,475
Equity securities 87 -
Restricted stock, at cost   4,614     4,614  
Total securities 115,468 129,137
Loans held for sale 192 1,108
Loans 535,424 509,458
Less allowance for loan losses   6,204     5,436  
Net loans 529,220 504,022
 
Premises and equipment, net 9,605 8,906
Goodwill and core deposit intangible 4,920 5,024
Bank owned life insurance 13,470 13,131
Accrued interest receivable and other assets   4,691     4,124  
 
TOTAL ASSETS $ 710,815   $ 710,824  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing $ 177,203 $ 167,563

Interest-bearing

  410,328     404,063  
Total deposits 587,531 571,626
 
Short-term borrowings 37,465 45,057
Other borrowings 8,676 21,596
Accrued interest payable and other liabilities   3,266     2,707  
Total liabilities   636,938     640,986  
Shareholders' equity

Common stock, $6.25 par value. Authorized 9,000,000 shares; issued 2,980,602 shares in 2018 and 2017

18,629 18,629
Additional paid-in capital 9,815 9,815
Retained earnings 52,510 46,250

Treasury stock at cost - 238,360 shares in 2018 and 2017

(4,784 ) (4,784 )
Accumulated other comprehensive (loss) income   (2,293 )   (72 )
Total shareholders' equity   73,877     69,838  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 710,815   $ 710,824  
 
   

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

 

Quarter ended

Nine months ended

(Unaudited)

September 30,

September 30,

(Dollars in thousands, except per share data) 2018   2017 2018   2017
Interest and dividend income:
Loans, including fees $ 6,707 $ 5,907 $ 19,361 $ 16,940
Taxable securities 586 599 1,784 1,796
Nontaxable securities 152 171 464 509
Other   127     89   256   180
Total interest and dividend income   7,572     6,766   21,865   19,425
Interest expense:
Deposits 633 368 1,647 942
Other   138     194   376   467
Total interest expense   771     562   2,023   1,409
Net interest income 6,801 6,204 19,842 18,016
Provision for loan losses   324     280   972   965

Net interest income after provision for loan losses

 

6,477

   

5,924

 

18,870

 

17,051

Noninterest income
Service charges on deposits accounts 301 287 885 847
Trust services 204 122 641 481
Debit card interchange fees 330 298 966 882
Gain on sale of loans 63 94 200 197
Gain on sale of securities (6 ) - (2 ) -
Other   283     253   798   813
Total noninterest income   1,175     1,054   3,488   3,220
 
Noninterest expenses
Salaries and employee benefits 2,805 2,531 8,160 7,462
Occupancy expense 194 236 628 660
Equipment expense 145 143 461 485
Professional and director fees 199 257 749 660
Software expense 221 219 655 633
Marketing and public relations 124 91 363 259
Debit card expense 144 139 386 410
Other expenses   806     670   2,392     2,051
Total noninterest expenses   4,638     4,286   13,794     12,620
Income before income tax 3,014 2,692 8,564 7,651
Federal income tax provision   582     826   1,644     2,329
Net income $ 2,432   $ 1,866 $ 6,920   $ 5,322
Net income per share:
Basic $ 0.88   $ 0.68 $ 2.52   $ 1.94
 
Diluted $ 0.88   $ 0.68 $ 2.52   $ 1.94
 

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

Source: CSB Bancorp, Inc.