CSB Bancorp, Inc. Reports Second Quarter Earnings

MILLERSBURG, Ohio--()--CSB Bancorp, Inc. (OTCBB:CSBB):

Second Quarter Highlights

 
        Quarter Ended     Quarter Ended

June 30, 2014

June 30, 2013

 
Diluted earnings per share $ 0.55 $ 0.45
 
Net Income $ 1,522,000 $ 1,247,000
 
Return on average common equity 11.09 % 9.32 %
 
Return on average assets 1.02 % 0.88 %
 

CSB Bancorp, Inc. (CSBB) today announced second quarter 2014 net income of $1,522,000 or $.55 per basic and diluted share, as compared to $1,247,000 or $.45 per basic and diluted share for the same period in 2013.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 11.09% and 1.02%, respectively, compared with 9.32% and 0.88% for the second quarter of 2013.

Eddie Steiner, President and CEO, commented, “Loan demand has improved as businesses are investing in plant and equipment and signs of improved housing markets are emerging. We continue to focus on expanding customer relationships within our primary markets.”

Revenue, on a fully-taxable equivalent basis, totaled $6.3 million during the quarter, a 9% increase from the prior-year second quarter. Net interest income improved by $453 thousand as compared to second quarter 2013 while other income increased $93 thousand, attributable to a $133 thousand gain on sale of investments during the quarter.

Non-interest expense amounted to $3.8 million during the quarter, an increase of $186 thousand or 5% from second quarter 2013. The Company’s second quarter efficiency ratio amounted to 62.1% as compared to 63.4% for the same quarter in the prior year.

Net interest margin amounted to 3.66% for the quarter compared to 3.49% for the prior year’s second quarter. The margin improvement resulted from the combination of a $47 million increase in average balances of higher earning loans and investments, a $23 million average balance decrease in overnight investments, a $17 million average balance increase in noninterest bearing deposits and a 15 basis point decrease in interest rates paid on interest bearing deposits and borrowings.

Federal income tax provision totaled $683 thousand in second quarter 2014, compared to $538 thousand for the same quarter in 2013 reflecting an effective tax rate of 31% for current quarter versus 30% for the second quarter in 2013.

Average total assets during the quarter amounted to $598 million, an increase of $27 million or 4.6% above the same quarter of the prior year. Average loan balances of $411 million were $36 million or 9.5% above prior year second quarter, while average securities balances of $146 million increased $12 million or 9% as compared to second quarter 2013.

Average commercial loan balances for the quarter, including commercial real estate, increased $30 million or 12% above year ago levels. Average residential mortgage balances increased by $4 million or 5% over the prior year’s quarter. The increase of in-house mortgage balances was the result of the bank originating and retaining some 15 year fixed rate mortgages. Average home equity balances increased $1 million or 3%, and average consumer credit balances increased $300 thousand or 4% versus the same quarter of the prior year.

Net charge-offs during second quarter 2014 were $152 thousand compared to second quarter 2013 net loan charge-offs of $69 thousand. Annualized net charge-offs equated to 0.15% of average loans in the current quarter.

Nonperforming assets totaled $5.0 million or 1.22% of total loans plus other real estate at June 30, 2014, compared to $2.4 million or 0.63% at June 30, 2013. Delinquent loan balances as of June 30, 2014 amounted to 1.50% of total loans as compared to 1.08% at June 30, 2013. During first quarter 2014 a $2.9 million commercial relationship was placed on nonaccrual with an assigned specific reserve.

The Company funded $150 thousand in loan loss provision during the second quarter and the allowance for loan losses amounted to 1.23% of total loans on June 30, 2014. The ratio of the allowance for loan losses to nonperforming loans stood at 100.6% at June 30, 2014.

Average deposit balances grew by $7 million, or 2%, from the prior year’s second quarter. Average deposit balances totaled $469 million at June 30, 2014, reflecting a seasonal decrease of $10 million or 2% from the December 31, 2013 quarter. Within the deposit category, average noninterest-bearing account balances for the second quarter increased by $17 million, or 17% above the same period in the prior year. Average interest-bearing checking, money market and traditional savings balances increased $14 million or 7% from year ago levels, while average time deposit balances decreased $23 million or 15% during the year. In addition to the changes in average deposit balances, the average balance of securities sold under repurchase agreement during the second quarter grew by $5 million or 13% above the average for the same period in the prior year. The repurchase agreements, while considered short-term borrowings, are primarily tied to overnight customer sweep accounts.

Shareholders’ equity totaled $55.2 million on June 30, 2014 with 2.7 million common shares outstanding. The tangible equity to assets ratio amounted to 8.3% on June 30, 2014, as compared to 8.1% on June 30, 2013. The Company declared a common dividend of $.18 per share during the quarter. Based on the June 30, 2014 closing stock price of $20.23 per share, the Company’s annual dividend yield approximates 3.6%.

About CSB Bancorp, Inc.
CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $609 million as of June 30, 2014. 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 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)
(Dollars in thousands except per share data)
 
Quarters
2014 2014 2013 2013 2013 2014 2013
EARNINGS         2nd Qtr   1st Qtr   4th Qtr   3rd Qtr   2nd Qtr 6 months 6 months
Net interest income FTE (a) $ 5,115 $ 4,969 $ 5,000 $ 4,755 $ 4,668 $ 10,084 $ 9,435
Provision for loan losses 150 185 210 210 210 335 420
Other income 1,159 953 1,024 1,190 1,066 2,112 2,104
Other expenses 3,849 3,677 3,992 3,634 3,663 7,526 7,222
FTE adjustment (a) 70 71 78 78 76 141 151
Net income 1,522 1,416 1,224 1,407 1,247 2,938 2,609
Diluted earnings per share 0.55 0.52 0.45 0.51 0.45 1.07 0.95
 
PERFORMANCE RATIOS
Return on average assets (ROA) 1.02 % 0.97 % 0.82 % 0.96 % 0.88 % 1.00 % 0.92 %
Return on average common equity (ROE) 11.09 % 10.70 % 9.19 % 10.79 % 9.32 % 10.90 % 9.87 %
Net interest margin FTE (a) 3.66 % 3.63 % 3.55 % 3.46 % 3.49 % 3.64 % 3.53 %
Efficiency ratio 62.14 % 61.55 % 65.70 % 62.11 % 63.40 % 61.85 % 62.05 %
Number of full-time equivalent employees 161 160 157 165 159
 
MARKET DATA
Book value/common share $ 20.18 $ 19.69 $ 19.15 $ 19.06 $ 18.78
Period-end common share mkt value 20.23 19.67 19.00 19.15 19.25
Market as a % of book 100.25 % 99.90 % 99.22 % 100.47 % 102.50 %
Price-to-earnings ratio 9.97 10.19 9.90 10.19 10.64
Cash dividends/common share $ 0.18 $ 0.18 $ 0.18 $ 0.18 $ 0.18 0.36 $ 0.36
Common stock dividend payout ratio 32.72 % 34.62 % 37.50 % 34.62 % 40.00 % 33.64 % 37.89 %
Average basic common shares 2,737,085 2,736,634 2,736,634 2,736,634 2,736,555 2,736,861 2,736,309
Average diluted common shares 2,739,968 2,739,542 2,738,411 2,738,638 2,738,708 2,739,436 2,738,432
Period end common shares outstanding 2,737,085 2,736,634 2,736,634 2,736,634 2,736,634
Common shares repurchased 0 0 0 0 0
Common stock market capitalization $ 55,371 $ 53,830 $ 51,996 $ 52,407 $ 52,680
 
ASSET QUALITY
Gross charge-offs $ 163 $ 217 $ 226 $ 91 $ 95 $ 380 $ 111
Net charge-offs 152 205 202 78 69 357 55
Allowance for loan losses 5,063 5,065 5,085 5,077 4,945
Nonperforming assets (NPAs) 5,031 5,291 3,270 2,368 2,394
Net charge-off/average loans ratio 0.15 % 0.21 % 0.21 % 0.08 % 0.07 % 0.18 % 0.03 %
Allowance for loan losses/period-end loans 1.23 1.24 1.34 1.35 1.31
NPAs/loans and other real estate 1.22 1.30 0.86 0.63 0.63
Allowance for loan losses/nonperforming loans 100.64 95.72 155.50 214.38 206.60
 
CAPITAL & LIQUIDITY
Period-end tangible equity to assets 8.26 % 8.12 % 7.94 % 7.92 % 8.11 %
Average equity to assets 9.20 9.08 8.89 8.89 9.39
Average equity to loans 13.39 13.55 14.05 13.81 14.30
Average loans to deposits 87.67 84.17 78.50 79.81 81.36
 
AVERAGE BALANCES
Assets $ 598,093 $ 590,977 $ 594,736 $ 582,200 $ 571,569 594,555 $ 573,712
Earning assets 561,063 555,492 558,155 545,907 537,165 558,293 539,740
Loans 411,016 396,028 376,164 374,579 375,447 403,563 374,263
Deposits 468,838 470,487 479,174 469,353 461,488 469,658 462,246
Shareholders' equity 55,052 53,681 52,861 51,745 53,677 54,371 53,320
 
ENDING BALANCES
Assets $ 608,892 $ 601,978 $ 596,465 $ 593,895 $ 571,068
Earning assets 564,348 559,657 557,482 554,165 534,806
Loans 411,930 407,770 379,125 377,434 378,191
Deposits 483,672 466,573 480,933 480,861 462,845
Shareholders' equity 55,239 53,879 52,411 52,149 51,391
                             
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)
dollars in thousands, except per share data
 
June 30, June 30,
2014 2013
ASSETS
Cash and cash equivalents

Cash and due from banks

$ 21,446 $ 13,532
Interest-earning deposits in other banks 14,908 23,534
Federal funds sold   -     -  
Total cash and cash equivalents 36,354 37,066
Securities
Available-for-sale, at fair-value 93,389 127,515
Held-to-maturity 38,946 -
Restricted stock, at cost   4,613     5,463  
Total securities 136,948 132,978
Loans held for sale 562 103
Loans 411,930 378,191
Less allowance for loan losses   5,063     4,945  
Net loans 406,867 373,246
 
Goodwill and core deposit intangible 5,422 5,554
Bank owned life insurance 9,681 9,419
Premises and equipment, net 8,503 8,326
Accrued interest receivable and other assets   4,555     4,376  
 
TOTAL ASSETS $ 608,892   $ 571,068  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing $ 124,768 $ 101,644
Interest-bearing   358,904     361,201  
Total deposits 483,672 462,845
 
Short-term borrowings 50,523 41,851
Other borrowings 17,280 12,558
Accrued interest payable and other liabilities   2,178     2,423  
Total liabilities   553,653     519,677  
Shareholders' equity

Common stock, $6.25 par value. Authorized 9,000,000 shares; issued 2,980,602 shares in 2014 and 2013

18,629 18,629
Additional paid-in capital 9,950 9,964
Retained earnings 32,184 28,586

Treasury stock at cost - 243,517 shares in 2014 and 243,968 in 2013

(4,944 ) (4,958 )
Accumulated other comprehensive loss   (580 )   (830 )
Total shareholders' equity   55,239     51,391  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 608,892   $ 571,068  
 
               
 
CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
 
(Unaudited)

dollars in thousands, except per share data

 

 

Quarter ended

Six months ended

June 30,

June 30,

2014 2013 2014 2013
Interest and dividend income:
Loans, including fees $ 4,631 $ 4,441 $ 9,060 $ 9,008
Taxable securities 736 585 1,522 1,167
Nontaxable securities 115 128 230 255
Other   2   19   8  

43

Total interest and dividend income   5,484   5,173   10,820   10,473
Interest expense:
Deposits 289 448 593 923
Other   150   133   284   266
Total interest expense   439   581   877   1,189
Net interest income 5,045 4,592 9,943 9,284
Provision for loan losses   150   210   335   420

Net interest income after provision for loan losses

  4,895   4,382   9,608   8,864
Noninterest income
Service charges on deposits accounts 316 333 613 648
Trust services 202 226 418 440
Debit card interchange fees 233 190 431 368
Gain on sale of loans 44 102 68 216
Other   364   215   582   432
Total noninterest income   1,159   1,066   2,112   2,104
 
Noninterest expenses
Salaries and employee benefits 2,110 2,042 4,129 4,092
Occupancy expense 240 255 506 513
Equipment expense 188 177 369 342
Franchise tax expense 106 147 213 294
Professional and director fees 214 174 396 291
Federal deposit insurance 91 84 177 172
Amortization of intangible assets 33 34 65 68
Other expenses   867   750   1,671   1,450
Total noninterest expenses   3,849   3,663   7,526   7,222
Income before income tax 2,205 1,785 4,194 3,746
Federal income tax provision   683   538   1,256   1,137
 
Net income $ 1,522 $ 1,247 $ 2,938 $ 2,609
Net income per share:
Basic $ 0.55 $ 0.45 $ 1.07 $ 0.95
 
Diluted $ 0.55 $ 0.45 $ 1.07 $ 0.95

 

Note: Certain prior year balances have been reclassified to conform to the current year presentation.

Contacts

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

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Contacts

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