CSB Bancorp, Inc. Reports First Quarter Earnings

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

First Quarter Highlights

      Quarter Ended       Quarter Ended

March 31, 2017

March 31, 2016

 
Diluted earnings per share $ 0.63 $ 0.54
Net Income $ 1,730,000 $ 1,480,000
Return on average common equity 10.54 % 9.48 %
Return on average assets 1.05 % 0.93 %
 

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced first quarter 2017 net income of $1,730,000, or $.63 per basic and diluted share, as compared to $1,480,000, or $.54 per basic and diluted share, for the same period in 2016.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 10.54% and 1.05%, respectively, compared with 9.48% and 0.93% for the first quarter of 2016.

Eddie Steiner, President and CEO stated, “We are pleased to report strong first quarter earnings. Demand for business and consumer loans remains steady, resulting in higher loan balances and increased earnings.”

Revenue, on a fully-taxable equivalent basis, totaled $7.1 million during the quarter, an 11% increase from the prior-year first quarter. Net interest income increased $577 thousand, or 11%, in the first quarter of 2017 compared to the same period in 2016. Loan interest income including fees increased $707 thousand during first quarter 2017 as compared to the same quarter in 2016. This increase was driven partially by an increase in average loan volume of $53 million across all categories of loans as well as in increase of 14 basis points in loan yield. The net interest margin of 3.85% compared favorably to 3.57% for first quarter 2016.

Noninterest income increased by $114 thousand, or 11%, in the first quarter of 2017 compared to 2016. The increase reflects growth in cash surrender value of life insurance, increases in debit card fee income, growth in service charges on deposit accounts, and the gain on sale of mortgage loans. During 2016 a write-down of fixed assets of $39 thousand occurred during first quarter which did not recur in 2017. The increases were partially offset by a decrease in trust and brokerage fee income.

Noninterest expense amounted to $4.6 million during the quarter, an increase of $657 thousand, or 16%, from first quarter 2016. This increase is attributable to CSB providing a $540 thousand provision for unfunded loan commitments due to the impairment of a commercial line of credit. Salary and employee benefits rose $132 thousand, or 6%, on a quarter over prior year quarter with increases in salary, healthcare, and employment taxes. The Company’s first quarter efficiency ratio amounted to 65.4% as compared to 62.2% for the same quarter in the prior year.

Federal income tax provision totaled $752 thousand in first quarter 2017, compared to $644 thousand for the same quarter in 2016 reflecting a slightly decreased effective tax rate in 2017 from an increase in nontaxable income.

Average total assets during the quarter amounted to $667 million, an increase of $26 million, or 4%, above the same quarter of the prior year. Average loan balances of $481 million increased $53 million, or 12%, from the prior year first quarter while average securities balances of $133 million decreased $27 million, or 17%, as compared to first quarter 2016.

Average commercial loan balances for the quarter, including commercial real estate, increased $28 million, or 10%, from prior year levels. Average residential mortgage balances increased $16 million, or 19%, over the prior year’s quarter. Average home equity balances increased $4 million, or 9%, and average consumer credit balances increased $4 million, or 41%, versus the same quarter of the prior year.

Delinquent loan balances as of March 31, 2017 amounted to 1.25% of total loans as compared to 0.63% at March 31, 2016. Nonperforming assets totaled $4.9 million, or 1.02%, of total loans plus other real estate, an increase of $3 million over March 31, 2016. The allowance for loan losses amounted to 1.13% of total loans on March 31, 2017 as compared to 1.15% at March 31, 2016.

Net loan recoveries recognized during first quarter 2017 were $323 thousand, or 0.27% annualized, compared to first quarter 2016 net loan recoveries of $179 thousand.

Average deposit balances for first quarter 2017 totaled $531 million, an increase of $19 million, or 4%, from the prior year’s first quarter. Within the deposit category, average noninterest-bearing account balances for the first quarter increased by $24 million, or 17%, above the same period in the prior year. Average interest-bearing checking, money market, and traditional savings balances increased $2 million, or 1%, from year ago levels, while average time deposit balances decreased $7 million, or 6%, from first quarter 2016. In addition to the changes in average deposit balances, the average balance of securities sold under repurchase agreement during the first quarter of 2017 increased by $3 million, or 6%, 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 $66.9 million on March 31, 2017 with 2.7 million common shares outstanding. The tangible equity to assets ratio amounted to 9.2% on March 31, 2017, as compared to 9.1% on March 31, 2016. The Company declared a first quarter dividend of $0.20 per share producing an annualized yield of 2.6% based on the March 31, 2017 closing price of $31.00.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $680 million as of March 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 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 2016 2016 2016 2016
EARNINGS     1st Qtr     4th Qtr     3rd Qtr     2nd Qtr     1st Qtr  
Net interest income FTE (a) $ 5,955

 

$

6,022

 

$

5,597

 

$

5,539

 

$

5,373
Provision for loan losses (160)

-

164 165 164
Other income 1,106 1,112 1,095 1,097 992
Other expenses 4,646 4,210 3,994 4,062 3,989
FTE adjustment (a) 93 91 100 93 88
Net income 1,730 1,953 1,694 1,611 1,480
Diluted earnings per share 0.63 0.72 0.61 0.59 0.54
 
PERFORMANCE RATIOS
Return on average assets (ROA) 1.05 % 1.17 % 1.03 % 1.00 % 0.93 %
Return on average common equity (ROE) 10.54 % 11.76 % 10.29 % 10.14 % 9.48 %
Net interest margin FTE (a) 3.85 % 3.83 % 3.61 % 3.65 % 3.57 %
Efficiency ratio 65.39 % 58.59 % 59.23 % 60.76 % 62.20 %
Number of full-time equivalent employees 164 165 165 166 162
 
MARKET DATA
Book value/common share $ 24.41

 

$

23.85

 

$

23.98

 

$

23.49

 

$

22.90
Period-end common share mkt value 31.00 31.00 25.17 25.20 24.25
Market as a % of book 127.00 % 129.98 % 104.96 % 107.28 % 105.90 %
Price-to-earnings ratio 12.16 12.60 10.80 11.00 10.78
Cash dividends/common share $ 0.20

 

$

0.20

 

$

0.20

 

$

0.19

 

$

0.19
Common stock dividend payout ratio 31.75 % 27.78 % 32.79 % 32.20 % 35.19 %
Average basic common shares 2,742,242 2,742,242 2,742,242 2,742,242 2,741,379
Average diluted common shares 2,742,242 2,742,242 2,742,242 2,742,242 2,741,379
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 $ 85,010

 

$

85,010

 

$

69,022

 

$

69,104

 

$

66,499
 
ASSET QUALITY
Gross charge-offs $ 13

 

$

44

 

$

346

 

$

18

 

$

10
Net (recoveries) charge-offs (323) (289) 318 14 (179)
Allowance for loan losses 5,454 5,291 5,002 5,156 5,005
Nonperforming assets (NPAs) 4,909 1,684 2,849 2,806 1,915
Net charge-off (recovery) /average loans ratio (0.27) % (0.25) % 0.27 % 0.01 % (0.17) %
Allowance for loan losses/period-end loans 1.13 1.11 1.08 1.14 1.15
NPAs/loans and other real estate 1.02 0.35 0.62 0.62 0.44
Allowance for loan losses/nonperforming loans 111.10 314.19 177.61 188.59 261.35
 
CAPITAL & LIQUIDITY
Period-end tangible equity to assets 9.17 % 9.07 % 9.34 % 9.19 % 9.11 %
Average equity to assets 9.98 9.95 10.02 9.88 9.77
Average equity to loans 13.85 14.25 14.33 14.29 14.63
Average loans to deposits 90.45 87.15 87.89 86.71 83.55
 
AVERAGE BALANCES
Assets $ 666,650

 

$

664,158

 

$

653,635

 

$

646,642

 

$

640,670
Earning assets 627,520 625,320 616,555 610,138 604,911
Loans 480,656 463,725 456,865 447,009 427,916
Deposits 531,380 532,102 519,828 515,511 512,192
Shareholders' equity 66,560 66,094 65,471 63,877 62,625
 
ENDING BALANCES
Assets $ 679,437

 

$

669,978

 

$

654,391

 

$

649,890

 

$

637,202
Earning assets 640,113 631,069 617,264 610,221 602,306
Loans 480,709 475,449 463,211 450,789 433,453
Deposits 542,180 540,785 522,240 516,497 509,980
Shareholders' equity     66,927     65,415     65,751     64,407     62,796  
 
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) March 31, March 31,
(Dollars in thousands, except per share data) 2017 2016
ASSETS
Cash and cash equivalents
Cash and due from banks $ 13,911 $ 12,527
Interest-earning deposits in other banks 24,476 14,844
Federal Funds Sold   -     -  
Total cash and cash equivalents 38,387 27,371
Securities
Available-for-sale, at fair-value 102,158 122,242
Held-to-maturity 27,892 27,025
Restricted stock, at cost   4,614     4,614  
Total securities 134,664 153,881
Loans held for sale 264 128
Loans 480,709 433,453
Less allowance for loan losses   5,454     5,005  
Net loans 475,255 428,448
 
Goodwill and core deposit intangible 5,082 5,202
Bank owned life insurance 12,959 10,152
Premises and equipment, net 8,656 8,032
Accrued interest receivable and other assets   4,170     3,988  
 
TOTAL ASSETS $ 679,437   $ 637,202  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing $ 171,235 $ 145,967
Interest-bearing   370,945     364,013  
Total deposits 542,180 509,980
 
Short-term borrowings 54,022 48,787
Other borrowings 12,304 13,332
Accrued interest payable and other liabilities   4,004     2,307  
Total liabilities   612,510     574,406  
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 43,810 38,989

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

(4,784 ) (4,784 )
Accumulated other comprehensive (loss) gain   (543 )   147  
Total shareholders' equity   66,927     62,796  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 679,437   $ 637,202  
 
CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
 

Quarter ended

(Unaudited)

March 31,

(Dollars in thousands, except per share data) 2017   2016
Interest and dividend income:
Loans, including fees $ 5,449 $ 4,742
Taxable securities 598 737
Nontaxable securities 165 154
Other   34   28
Total interest and dividend income   6,246   5,661
Interest expense:
Deposits 267 259
Other   117   117
Total interest expense   384   376
Net interest income 5,862 5,285
Provision for loan losses   (160)   164

Net interest income after provision for loan losses

  6,022   5,121
Noninterest income
Service charges on deposits accounts 291 278
Trust services 207 226
Debit card interchange fees 288 262
Gain on sale of loans 42 32
Gain on sale of securities - -
Other   278   194
Total noninterest income   1,106   992
 
Noninterest expenses
Salaries and employee benefits 2,459 2,327
Occupancy expense 210 244
Equipment expense 170 174
Professional and director fees 169 174
Software expense 210 187
Marketing and public relations 78 85
Debit card expense 130 104
Provision for unfunded loan commitments 540 -
Other expenses   680   694
Total noninterest expenses   4,646   3,989
Income before income tax 2,482 2,124
Federal income tax provision   752   644
Net income $ 1,730 $ 1,480
Net income per share:
Basic $ 0.63 $ 0.54
 
Diluted $ 0.63 $ 0.54
 

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