CSB Bancorp, Inc. Reports Third Quarter Earnings

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

Third Quarter Highlights

      Quarter Ended       Quarter Ended

September 30, 2015

September 30, 2014

 
Diluted earnings per share $0.57 $0.55
 
Net Income $1,556,000 $1,507,000
 
Return on average common equity 10.27% 10.64%
 
Return on average assets 0.98% 0.98%
 

CSB Bancorp, Inc. (OTC Pink:CSBB) today announced third quarter 2015 net income of $1,556,000 or $.57 per basic and diluted share, as compared to $1,507,000 or $.55 per basic and diluted share for the same period in 2014. For the nine month period ended September 30, 2015 net income totaled $4,415,000, compared to $4,445,000 for the same period last year.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 10.27% and 0.98%, respectively, compared with 10.64% and 0.98% for the third quarter of 2014.

Eddie Steiner, President and CEO stated, “Revenue growth remains somewhat constrained by relatively slow economic expansion in our markets, aggressive competition among lenders, and very low interest rates. Average loan balances declined during the quarter but remained above year-ago levels, and credit quality as indicated by the percentage of nonperforming loans has improved to its best level in seven years.”

Revenue, on a fully-taxable equivalent basis, totaled $6.3 million during the quarter, a 2% increase from the prior-year third quarter. Net interest income improved by $71 thousand as compared to third quarter 2014, while other income increased $42 thousand attributable primarily to an increase in gain on sale of mortgage loans to the secondary market and an increase in debit card interchange fees.

Non-interest expense amounted to $3.9 million during the quarter, an increase of $174 thousand or 5% from third quarter 2014. The Company’s third quarter efficiency ratio amounted to 62.4% as compared to 60.8% for the same quarter in the prior year. Salary and employee benefits rose $99 thousand, or 5%, on a quarter over prior year quarter with increases in base salary, medical and employment taxes.

Net interest margin amounted to 3.43% for the quarter compared to 3.58% from the linked June quarter and 3.53% for the prior year’s third quarter. The margin decrease year over year resulted from a 14 basis point decrease in average yield on earning assets partially offset with a 4 basis point decrease in average interest costs on all liabilities. The sustained low interest rate environment with resultant periodic rate decreases on certain long-term loans with scheduled rate repricing, and deposit growth which has outpaced loan growth over the past year, have contributed to the lower margins year over year. On a linked quarter basis, decreases were recognized in asset yields and loan balances during third quarter 2015, while deposit balances increased and liability costs were unchanged as compared to the quarter ended June 2015.

Federal income tax provision totaled $687 thousand in third quarter 2015, compared to $674 thousand for the same quarter in 2014 reflecting a stable effective tax rate of 31% for the comparable quarters.

Average total assets during the quarter amounted to $633 million, an increase of $25 million or 4% above the same quarter of the prior year. Average loan balances of $408 million were $0.5 million or less than 1% above prior year third quarter, while average securities balances of $148 million increased $10 million or 7% as compared to third quarter 2014.

Average commercial loan balances for the quarter, including commercial real estate, decreased $3 million or 1% from prior year levels. Average residential mortgage balances increased by $3 million or 4% over the prior year’s quarter. The increase of mortgage balances was the result of the bank originating and retaining some 15 year fixed rate mortgages. Average home equity balances decreased $538 thousand or 1% and average consumer credit balances increased $1 million or 16% versus the same quarter of the prior year.

The Company did not fund a loan loss provision during the third quarter 2015 due to declines in delinquent loans and nonperforming assets. Delinquent loan balances as of September 30, 2015 amounted to 0.7% of total loans as compared to 1.5% at September 30, 2014. Nonperforming assets totaled $2.0 million or 0.49% of total loans plus other real estate, a decrease from $4.7 million or 1.14% of total loans plus other real estate at September 30, 2014. The allowance for loan losses amounted to 1.12% of total loans on September 30, 2015.

Net loan charge-offs during third quarter 2015 were $25 thousand compared to third quarter 2014 net loan recoveries of $2 thousand. Annualized net charge-offs equated to 0.02% of average loans in the current quarter.

Average deposit balances for third quarter 2015 totaled $503 million, an increase of $21 million, or 4%, from the prior year’s third quarter. Within the deposit category, average noninterest-bearing account balances for the third quarter increased by $18 million, or 14% above the same period in the prior year. Average interest-bearing checking, money market and traditional savings balances increased $9 million or 4% from year ago levels, while average time deposit balances decreased $5 million or 4% from third quarter 2014. In addition to the changes in average deposit balances, the average balance of securities sold under repurchase agreement during the third quarter of 2015 grew by $3 million or 6% 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 $60.5 million on September 30, 2015 with 2.7 million common shares outstanding. The tangible equity to assets ratio amounted to 8.8% on September 30, 2015, as compared to 8.4% on September 30, 2014. The Company declared a common dividend of $.19 per share during the quarter. Based on the September 30, 2015 closing stock price of $24.20 per share, the Company’s annual dividend yield approximates 3.1%.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $632 million as of September 30, 2015. 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) Quarters
(Dollars in thousands, except per share data) 2015 2015 2015 2014 2014 2015 2014
EARNINGS   3rd Qtr   2nd Qtr   1st Qtr   4th Qtr   3rd Qtr   9 months   9 months
Net interest income FTE (a) $ 5,150 $ 5,255 $ 5,091 $ 5,060 $ 5,068 $ 15,496 $ 15,152
Provision for loan losses - 195 194 185 123 389 458
Other income 1,119 1,180 1,054 1,061 1,077 3,353 3,189
Other expenses 3,944 3,974 3,948 3,787 3,770 11,866 11,295
FTE adjustment (a) 82 80 77 73 71 239 212
Net income 1,556 1,517 1,342 1,439 1,507 4,415 4,445
Diluted earnings per share 0.57 0.55 0.49 0.53 0.55 1.61 1.62
 
PERFORMANCE RATIOS
Return on average assets (ROA) 0.98

%

 

0.97

%

 

0.87

%

 

0.92

%

 

0.98

%

 

0.94

%

 

0.99 %
Return on average common equity (ROE) 10.27

%

 

10.23

%

 

9.33

%

 

9.99

%

 

10.64

%

 

9.95

%

 

10.81 %
Net interest margin FTE (a) 3.43

%

 

3.58

%

 

3.52

%

 

3.43

%

 

3.53

%

 

3.51

%

 

3.60 %
Efficiency ratio 62.42

%

 

61.47

%

 

64.09

%

 

61.34

%

 

60.81

%

 

62.64

%

 

61.50 %
Number of full-time equivalent employees 161 163 165 167 168
 
MARKET DATA
Book value/common share $ 22.09 $ 21.53 $ 21.46 $ 20.97 $ 20.55
Period-end common share mkt value 24.20 25.00 23.00 22.00 20.01
Market as a % of book 109.55

%

 

116.12

%

 

107.18

%

 

104.91

%

 

97.37

%

 

Price-to-earnings ratio 11.31 11.79 10.85 10.23 9.67
Cash dividends/common share $ 0.19

 

$ 0.19 $ 0.19 $ 0.19 $ 0.19 $ 0.57 $ 0.55
Common stock dividend payout ratio 33.33

%

 

34.54

%

 

38.78

%

 

35.85

%

 

34.55

%

 

35.40

%

 

33.95 %
Average basic common shares 2,739,405 2,739,405 2,739,405 2,738,869 2,737,927 2,739,405 2,737,220
Average diluted common shares 2,742,455 2,742,738 2,741,993 2,741,033 2,739,721 2,742,407 2,738,981
Period end common shares outstanding 2,739,405 2,739,405 2,739,405 2,739,405 2,738,355
Common shares repurchased 0 0 0 0 0
Common stock market capitalization $ 66,294 $ 68,485 $ 63,006 $ 60,267 $ 54,794
 
ASSET QUALITY
Gross charge-offs $ 95 $ 39 $ 110 $ 1,033 $ 9 $ 244 $ 389
Net (recoveries) charge-offs 25 32 81 992 (2) 138 355
Allowance for loan losses 4,632 4,656 4,494 4,381 5,188
Nonperforming assets (NPAs) 2,018 3,117 3,685 3,949 4,682
Net charge-off/average loans ratio 0.02

%

 

0.03

%

 

0.08

%

 

0.96

%

 

0.00

%

 

0.04

%

 

0.12 %
Allowance for loan losses/period-end loans 1.12 1.12 1.07 1.07 1.27
NPAs/loans and other real estate 0.49 0.75 0.88 0.96 1.14
Allowance for loan losses/nonperforming loans 229.54 149.38 121.96 110.93 110.80
 
CAPITAL & LIQUIDITY
Period-end tangible equity to assets 8.81

%

 

8.69

%

 

8.63

%

 

8.46

%

 

8.40

%

 

Average equity to assets 9.50 9.52 9.37 9.19 9.25
Average equity to loans 14.73 14.25 14.07 13.97 13.79
Average loans to deposits 81.21 83.61 83.34 82.37 84.73
 
AVERAGE BALANCES
Assets $ 632,539 $ 625,032 $ 622,628 $ 621,536 $ 607,445 $ 626,745 $ 598,899
Earning assets 595,806 588,464 586,464 584,536 570,319 590,279 562,346
Loans 408,069 417,347 414,761 409,113 407,571 413,368 404,914
Deposits 502,514 499,157 497,646 496,670 481,017 499,791 473,486
Shareholders' equity 60,112 59,473 58,351 57,134 56,203 59,316 54,988
 
ENDING BALANCES
Assets $ 632,381 $ 622,956 $ 625,088 $ 620,981 $ 610,982
Earning assets 597,476 584,510 588,174 582,629 573,701
Loans 412,974 415,198 420,861 410,903 409,908
Deposits 505,088 496,404 497,333 500,075 486,521
Shareholders' equity     60,504       58,966       58,791       57,450       56,270                  
 
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) 2015 2014
ASSETS
Cash and cash equivalents
Cash and due from banks $ 11,940 $ 14,578
Interest-earning deposits in other banks 27,896 22,232
Federal Funds Sold   -     -  
Total cash and cash equivalents 39,836 36,810
Securities
Available-for-sale, at fair-value 115,231 98,836
Held-to-maturity 36,621 38,110
Restricted stock, at cost   4,614     4,614  
Total securities 156,466 141,560
Loans held for sale 140 -
Loans 412,974 409,908
Less allowance for loan losses   4,632     5,188  
Net loans 408,342 404,720
 
Goodwill and core deposit intangible 5,263 5,390
Bank owned life insurance 10,016 9,748
Premises and equipment, net 8,290 8,395
Accrued interest receivable and other assets   4,028     4,359  
 
TOTAL ASSETS $ 632,381   $ 610,982  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing $ 146,001 $ 131,498
Interest-bearing   359,087     355,023  
Total deposits 505,088 486,521
 
Short-term borrowings 50,823 48,713
Other borrowings 13,602 17,118
Accrued interest payable and other liabilities   2,364     2,360  
Total liabilities   571,877     554,712  
Shareholders' equity

Common stock, $6.25 par value. Authorized 9,000,000 shares; issued 2,980,602 shares in 2015 and 2014

18,629 18,629
Additional paid-in capital 9,884 9,918
Retained earnings 36,944 33,171

Treasury stock at cost - 241,197 shares in 2015 and 242,247 in 2014

(4,871 ) (4,905 )
Accumulated other comprehensive loss   (82 )   (543 )
Total shareholders' equity   60,504     56,270  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 632,381   $ 610,982  
 
CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
 

Quarter ended

 

Nine months ended

(Unaudited)

Sept 30,

Sept 30,

(Dollars in thousands, except per share data) 2015   2014 2015   2014
Interest and dividend income:
Loans, including fees $ 4,612 $ 4,645 $ 13,930 $ 13,705
Taxable securities 683 661 2,041 2,182
Nontaxable securities 142 115 408 345
Other   25   14   58 23
Total interest and dividend income   5,462   5,435   16,437 16,255
Interest expense:
Deposits 271 291 815 884
Other   123   147   365 431
Total interest expense   394   438   1,180 1,315
Net interest income 5,068 4,997 15,257 14,940
Provision for loan losses   -   123   389 458

Net interest income after provision for loan losses

  5,068   4,874   14,868 14,482
Noninterest income
Service charges on deposits accounts 315 324 916 937
Trust services 198 199 643 617
Debit card interchange fees 250 236 723 667
Gain on sale of loans 114 77 306 145
Gain on sale of securities - - 56 133
Other   242   241   709 690
Total noninterest income   1,119   1,077   3,353 3,189
 
Noninterest expenses
Salaries and employee benefits 2,222 2,123 6,596 6,253
Occupancy expense 252 255 777 761
Equipment expense 166 180 497 549
Franchise tax expense 106 107 305 320
Professional and director fees 173 132 665 528
Federal deposit insurance 90 90 272 267
Amortization of intangible assets 31 32 94 97
Other expenses   904   851   2,660 2,520
Total noninterest expenses   3,944   3,770   11,866 11,295
Income before income tax 2,243 2,181 6,355 6,376
Federal income tax provision   687   674   1,940 1,931
 
Net income $ 1,556 $ 1,507 $ 4,415 $ 4,445
Net income per share:
Basic $ 0.57 $ 0.55 $ 1.61 $ 1.62
 
Diluted $ 0.57 $ 0.55 $ 1.61 $ 1.62

Contacts

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

Contacts

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