CSB Bancorp, Inc. Reports First Quarter Earnings

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

First Quarter Highlights

 

 

Quarter Ended

March 31, 2021

 

 

 

Quarter Ended

March 31, 2020

 

Diluted earnings per share

 

$

1.05

 

 

 

$

0.91

 

Net Income

 

$

2,885,000

 

 

 

$

2,483,000

 

Return on average common equity

 

 

12.33

%

 

 

 

11.47

%

Return on average assets

 

 

1.10

%

 

 

 

1.23

%

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced first quarter 2021 net income of $2,885,000, or $1.05 per basic and diluted share, as compared to $2,483,000, or $0.91 per basic and diluted share, for the same period in 2020. Income before federal income tax amounted to $3,575,000, an increase of 16% over the same quarter in the prior year.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 12.33% and 1.10%, respectively, compared with 11.47% and 1.23% for the first quarter of 2020.

Eddie Steiner, President and CEO stated, “National and local economies are on the mend from the pandemic’s crippling impact, spurred by widening vaccination levels and robust fiscal and monetary support programs. The new round of Paycheck Protection Program lending that began in January is supporting many small organizations and self-employed individuals. Very low interest rates continue to drive mortgage refinancing, home purchases and construction. Businesses are regaining confidence needed to reinvest and expand as the uncertainty surrounding COVID’s remaining impact diminishes. Job creation has strengthened in recent months. While certain sectors will lag and the pace of improvement may prove uneven, the prevailing economic outlook favors sustained overall progress in healing and expansion through this year and into 2022.”

Net interest income and noninterest income totaled $8.9 million during the quarter, an increase of $627 thousand from the prior-year first quarter. Net interest income increased $92 thousand, or 1%, in the first quarter of 2021 compared to the same period in 2020.

Loan interest income including fees increased $15 thousand during first quarter 2021 as compared to the same quarter in 2020, an increase of less than 1%. Average total loan balances during the current quarter were $36 million higher than the year ago quarter, an increase of 6%. Loan yields for first quarter 2021 averaged 4.67%, a decrease of 25 basis points from the 2020 first quarter average of 4.92%.

The net interest margin was 2.85% compared to 3.67% for first quarter 2020, as yields on loans and securities have declined. The tax equivalency effect on the margin remained stable at 0.02% in the comparable first quarters.

With the continuing application of government stimulus programs for businesses and individuals, a provision for loan losses of $30 thousand was recognized for the first quarter ended March 31, 2021 as compared to $178 thousand for the prior year quarter. Credit quality within the loan portfolio has not been significantly affected by COVID factors to date. However, a significant degree of COVID-related uncertainty remains, and the eventual damage to household and business balance sheets cannot be effectively fully measured at this time.

Noninterest income increased 40%, compared to first quarter of 2020, fueled by historic growth in gain on sale of real estate loans into the secondary market, increases in debit and credit card fee income, and bank owned life insurance values. These increases were partially offset by decreases in service charges on deposit accounts as both consumers and businesses maintained increased deposit balances from government stimulus payments and loans provided by the bank within the Paycheck Protection Program (PPP).

Noninterest expense increased 5% from first quarter 2020. Salary and employee benefit costs increased $61 thousand, or 2%, compared to the prior year quarter, as a result of increases in base compensation and commissions, incentive accruals, and employers FICA expense. FDIC insurance expense increased $108 thousand as the prior year quarter reflected the use of Small Bank Assessment Credits. Software expense increased by $73 thousand reflecting investment in new platforms. Professional and directors’ fees decreased $35 thousand, or 11% primarily reflecting decreases in legal fees for loan collections. Marketing and public relations decreased by $48 thousand, or 38%, reflecting the continuing pandemic-related shut down of activities in first quarter 2021. The Company’s first quarter efficiency ratio decreased to 59.1% compared to 60.1%.

Federal income tax expense totaled $690 thousand in first quarter 2021, as compared to $591 thousand tax expense for the same quarter in 2020. The effective tax rate approximated 19% in both periods.

Average total assets during the quarter rose to $1.06 billion, an increase of $248 million, or 31%, above the same quarter of the prior year. Liquidity increased as the Company’s average interest-bearing balances with banks increased $127 million to $203 million as compared to the first quarter in 2020. Average loan balances of $596 million increased $36 million, or 6%, from the prior year first quarter while average securities balances of $205 million increased $79 million, or 63%, as compared to first quarter 2020.

Average commercial loan balances for the quarter, including commercial real estate, increased $36 million, or 10%, from prior year levels. This amount includes $64 million in average PPP loan balances. Excluding average PPP loan balances, commercial loans decreased year over year as borrowers reduced outstanding commercial line balances during the pandemic-related contraction in economic activity. Average residential mortgage balances increased $10 million, or 8%, over the prior year’s quarter while home equity lines of credit decreased $9 million over the prior year’s quarter as they were paid down or refinanced into low-rate term mortgages. Average consumer credit balances decreased $1 million, or 5%, versus the same quarter of the prior year. Increased organic loan demand will be somewhat dependent on the pace at which excess liquidity is absorbed by businesses and households.

Nonperforming assets decreased $1.4 million from March 31, 2020 to $3.1 million, or 0.53%, of total loans plus other real estate on March 31, 2021. Approximately $67 thousand of the non-performing loan total is guaranteed by either USDA or the SBA. Delinquent loan balances as of March 31, 2021 decreased to 0.57% of total loans as compared to 0.96% on March 31, 2020.

Net loan recoveries recognized during first quarter 2021 were $34 thousand, or 0.02% annualized, compared to first quarter 2020 net loan losses of $75 thousand. The allowance for loan losses amounted to 1.43% of total loans on March 31, 2021 as compared to 1.28% on March 31, 2020.

Average deposit balances grew on a quarter over prior year quarter comparison by $240 million, or 35%. For the first quarter 2021, the average cost of deposits amounted to 0.24%, as compared to 0.49% for the first quarter 2020. During the first quarter 2021, increases in average deposit balances over the prior year quarter included noninterest-bearing demand accounts of $92 million and interest-bearing demand and savings accounts of $153 million, while time deposits decreased $4 million. The average balance of securities sold under repurchase agreement during the first quarter of 2021 increased by $1 million, or 4%, compared to the average for the same period in the prior year.

Shareholders’ equity totaled $93.1 million on March 31, 2021 with 2.7 million common shares outstanding. The average equity to assets ratio amounted to 8.95% on March 31, 2021 and 10.72% on March 31, 2020. The Company declared a first quarter dividend of $0.30 per share, producing an annualized yield of 3.2% based on the March 31, 2021 closing price of $37.50.

Cares Act and related events

A third stimulus bill was signed into law on March 11, 2021 adding additional emergency relief to the March 2020 Cares Act and to the Consolidated Appropriations Act, 2021. The American Rescue Plan Act of 2021 expanded eligibility and added an additional $7 billion in funds to the SBA’s PPP emergency relief programs. We facilitated and funded more than 750 of these government assistance loans totaling approximately $92 million in 2020 during the first round. As of March 31, 2021, $62 million has been received from the SBA in forgiveness and we expect the majority of the PPP loan dollars will ultimately qualify for borrower forgiveness under the guidelines of the SBA program. We have underwritten an additional $33 million in PPP applications during the first quarter of 2021.

During 2020, we also extended loan modifications to qualifying commercial and consumer loan customers to deal with the uncertainty of the economy. Customers could request relief from their total payment or place their obligation on interest-only for a period of 3-4 months, with maturities extended on these modified loans. As of March 31, 2021, no loans granted relief during 2020 remain on modification. Three consumer loans were granted loan modifications during the quarter ended March 31, 2021.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $1.1 billion as of March 31, 2021. 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)

 

2021

 

 

2020

 

 

2020

 

 

2020

 

 

2020

 

 

EARNINGS

 

1st Qtr

 

 

4th Qtr

 

 

3rd Qtr

 

 

2nd Qtr

 

 

1st Qtr

 

 

Net interest income FTE (a)

$

 

7,046

 

$

 

7,223

 

$

 

7,077

 

$

 

7,048

 

$

 

6,953

 

 

Provision for loan losses

 

 

30

 

 

 

378

 

 

 

377

 

 

 

717

 

 

 

178

 

 

Other income

 

 

1,878

 

 

 

2,089

 

 

 

1,862

 

 

 

1,641

 

 

 

1,343

 

 

Other expenses

 

 

5,281

 

 

 

5,576

 

 

 

5,050

 

 

 

4,709

 

 

 

5,007

 

 

FTE adjustment (a)

 

 

38

 

 

 

39

 

 

 

36

 

 

 

36

 

 

 

37

 

 

Net income

 

 

2,885

 

 

 

2,679

 

 

 

2,800

 

 

 

2,606

 

 

 

2,483

 

 

Diluted earnings per share

 

 

1.05

 

 

 

0.97

 

 

 

1.02

 

 

 

0.95

 

 

 

0.91

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PERFORMANCE RATIOS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (ROA), annualized

 

 

1.10

 

%

 

1.05

 

%

 

1.14

 

%

 

1.15

 

%

 

1.23

 

%

Return on average common equity (ROE), annualized

 

 

12.33

 

 

 

11.45

 

 

 

12.19

 

 

 

11.72

 

 

 

11.47

 

 

Net interest margin FTE (a)

 

 

2.85

 

 

 

2.97

 

 

 

3.04

 

 

 

3.29

 

 

 

3.67

 

 

Efficiency ratio

 

 

59.14

 

 

 

59.75

 

 

 

56.32

 

 

 

54.05

 

 

 

60.08

 

 

Number of full-time equivalent employees

 

 

170

 

 

 

171

 

 

 

169

 

 

 

169

 

 

 

172

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MARKET DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value/common share

$

 

33.94

 

$

 

34.23

 

$

 

33.49

 

$

 

32.81

 

$

 

31.95

 

 

Period-end common share mkt value

 

 

37.50

 

 

 

35.00

 

 

 

30.00

 

 

 

32.00

 

 

 

35.00

 

 

Market as a % of book

 

 

110.49

 

%

 

102.25

 

%

 

89.58

 

%

 

97.53

 

%

 

109.55

 

%

Price-to-earnings ratio

 

 

9.40

 

 

 

9.09

 

 

 

7.83

 

 

 

8.44

 

 

 

9.26

 

 

Cash dividends/common share

$

 

0.30

 

$

 

0.29

 

$

 

0.28

 

$

 

0.28

 

$

 

0.28

 

 

Common stock dividend payout ratio

 

 

28.57

 

%

 

29.90

 

%

 

27.45

 

%

 

29.47

 

%

 

30.77

 

%

Average basic common shares

 

 

2,742,350

 

 

 

2,742,350

 

 

 

2,742,350

 

 

 

2,742,350

 

 

 

2,742,350

 

 

Average diluted common shares

 

 

2,742,350

 

 

 

2,742,350

 

 

 

2,742,350

 

 

 

2,742,350

 

 

 

2,742,350

 

 

Period end common shares outstanding

 

 

2,742,350

 

 

 

2,742,350

 

 

 

2,742,350

 

 

 

2,742,350

 

 

 

2,742,350

 

 

Common stock market capitalization

$

 

102,838

 

$

 

95,982

 

$

 

82,271

 

$

 

87,755

 

$

 

95,982

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSET QUALITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross charge-offs

$

 

5

 

$

 

511

 

$

 

28

 

$

 

17

 

$

 

86

 

 

Net charge-offs (recoveries)

 

 

(34

)

 

 

459

 

 

 

(143

)

 

 

3

 

 

 

75

 

 

Allowance for loan losses

 

 

8,338

 

 

 

8,274

 

 

 

8,355

 

 

 

7,835

 

 

 

7,120

 

 

Nonperforming assets (NPAs)

 

 

3,089

 

 

 

4,497

 

 

 

4,102

 

 

 

4,481

 

 

 

4,468

 

 

Net charge-off (recovery) /average loans ratio

 

 

(0.02

)

%

 

0.29

 

%

 

(0.09

)

%

 

0.00

 

%

 

0.05

 

%

Allowance for loan losses/period-end loans

 

 

1.43

 

 

 

1.36

 

 

 

1.33

 

 

 

1.23

 

 

 

1.28

 

 

NPAs/loans and other real estate

 

 

0.53

 

 

 

0.74

 

 

 

0.65

 

 

 

0.70

 

 

 

0.80

 

 

Allowance for loan losses/nonperforming loans

 

 

269.92

 

 

 

183.99

 

 

 

203.71

 

 

 

178.78

 

 

 

162.97

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CAPITAL & LIQUIDITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-end tangible equity to assets

 

 

7.99

 

%

 

8.68

 

%

 

8.86

 

%

 

8.90

 

%

 

10.28

 

%

Average equity to assets

 

 

8.95

 

 

 

9.13

 

 

 

9.33

 

 

 

9.79

 

 

 

10.72

 

 

Average equity to loans

 

 

15.92

 

 

 

15.02

 

 

 

14.39

 

 

 

14.38

 

 

 

15.55

 

 

Average loans to deposits

 

 

64.95

 

 

 

70.81

 

 

 

76.22

 

 

 

80.95

 

 

 

82.61

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

$

 

1,060,485

 

$

 

1,018,770

 

$

 

979,806

 

$

 

912,875

 

$

 

812,409

 

 

Earning assets

 

 

1,004,521

 

 

 

966,304

 

 

 

926,377

 

 

 

860,838

 

 

 

761,619

 

 

Loans

 

 

596,319

 

 

 

619,455

 

 

 

635,124

 

 

 

621,710

 

 

 

560,142

 

 

Deposits

 

 

918,063

 

 

 

874,820

 

 

 

833,288

 

 

 

767,988

 

 

 

678,090

 

 

Shareholders' equity

 

 

94,929

 

 

 

93,042

 

 

 

91,409

 

 

 

89,404

 

 

 

87,090

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ENDING BALANCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

$

 

1,110,157

 

$

 

1,031,632

 

$

 

987,978

 

$

 

965,179

 

$

 

810,041

 

 

Earning assets

 

 

1,043,016

 

 

 

977,092

 

 

 

936,323

 

 

 

913,813

 

 

 

757,769

 

 

Loans

 

 

582,714

 

 

 

609,159

 

 

 

628,084

 

 

 

636,799

 

 

 

555,320

 

 

Deposits

 

 

968,569

 

 

 

891,562

 

 

 

840,656

 

 

 

815,961

 

 

 

671,162

 

 

Shareholders' equity

 

 

93,085

 

 

 

93,859

 

 

 

91,853

 

 

 

89,967

 

 

 

87,629

 

 

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)

2021

 

2020

ASSETS

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

 

22,174

 

 

$

 

18,277

 

Interest-earning deposits in other banks

 

 

256,736

 

 

 

 

77,995

 

Total cash and cash equivalents

 

 

278,910

 

 

 

 

96,272

 

Securities

 

 

 

 

 

 

 

 

 

Available-for-sale, at fair-value

 

 

197,470

 

 

 

 

108,263

 

Held-to-maturity

 

 

8,270

 

 

 

 

11,242

 

Equity securities

 

 

100

 

 

 

 

79

 

Restricted stock, at cost

 

 

4,614

 

 

 

 

4,614

 

Total securities

 

 

210,454

 

 

 

 

124,198

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

 

1,450

 

 

 

 

256

 

Loans

 

 

582,714

 

 

 

 

555,320

 

Less allowance for loan losses

 

 

8,338

 

 

 

 

7,120

 

Net loans

 

 

574,376

 

 

 

 

548,200

 

 

 

 

 

 

 

 

 

 

 

Premises and equipment, net

 

 

12,968

 

 

 

 

12,387

 

Goodwill and core deposit intangible

 

 

4,761

 

 

 

 

4,817

 

Bank owned life insurance

 

 

21,566

 

 

 

 

19,023

 

Accrued interest receivable and other assets

 

 

5,672

 

 

 

 

4,888

 

TOTAL ASSETS

$

 

1,110,157

 

 

$

 

810,041

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Noninterest-bearing

$

 

303,803

 

 

$

 

188,137

 

Interest-bearing

 

 

664,766

 

 

 

 

483,025

 

Total deposits

 

 

968,569

 

 

 

 

671,162

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

 

39,665

 

 

 

 

40,605

 

Other borrowings

 

 

4,564

 

 

 

 

6,206

 

Accrued interest payable and other liabilities

 

 

4,274

 

 

 

 

4,439

 

Total liabilities

 

 

1,017,072

 

 

 

 

722,412

 

Shareholders' equity

 

 

 

 

 

 

 

 

 

Common stock, $6.25 par value. Authorized

 

 

 

 

 

 

 

 

 

9,000,000 shares; issued 2,980,602 shares

 

 

 

 

 

 

 

 

 

in 2021 and 2020

 

 

18,629

 

 

 

 

18,629

 

Additional paid-in capital

 

 

9,815

 

 

 

 

9,815

 

Retained earnings

 

 

71,271

 

 

 

 

63,455

 

Treasury stock at cost - 238,252 shares in 2021

 

 

 

 

 

 

 

 

 

and 2020

 

 

(4,780

)

 

 

 

(4,780

)

Accumulated other comprehensive income

 

 

(1,850

)

 

 

 

510

 

Total shareholders' equity

 

 

93,085

 

 

 

 

87,629

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

 

1,110,157

 

 

$

 

810,041

 

 
CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

 

Quarter ended

(Unaudited)

March 31,

(Dollars in thousands, except per share data)

2021

 

2020

Interest and dividend income:

 

 

 

 

 

 

 

 

 

Loans, including fees

$

 

6,865

 

 

$

 

6,850

 

Taxable securities

 

 

559

 

 

 

 

609

 

Nontaxable securities

 

 

111

 

 

 

 

119

 

Other

 

 

46

 

 

 

 

239

 

Total interest and dividend income

 

 

7,581

 

 

 

 

7,817

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

 

538

 

 

 

 

831

 

Other

 

 

35

 

 

 

 

70

 

Total interest expense

 

 

573

 

 

 

 

901

 

Net interest income

 

 

7,008

 

 

 

 

6,916

 

Provision for loan losses

 

 

30

 

 

 

 

178

 

Net interest income after provision

 

 

 

 

 

 

 

 

 

for loan losses

 

 

6,978

 

 

 

 

6,738

 

Noninterest income

 

 

 

 

 

 

 

 

 

Service charges on deposits accounts

 

 

207

 

 

 

 

291

 

Trust services

 

 

282

 

 

 

 

230

 

Debit card interchange fees

 

 

471

 

 

 

 

375

 

Gain on sale of loans

 

 

487

 

 

 

 

114

 

Earnings on bank owned life insurance

 

 

150

 

 

 

 

129

 

Unrealized gain (loss) on equity securities

 

 

13

 

 

 

 

(13

)

Other income

 

 

268

 

 

 

 

217

 

Total noninterest income

 

 

1,878

 

 

 

 

1,343

 

 

 

 

 

 

 

 

 

 

 

Noninterest expenses

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

3,029

 

 

 

 

2,968

 

Occupancy expense

 

 

254

 

 

 

 

220

 

Equipment expense

 

 

177

 

 

 

 

135

 

Professional and director fees

 

 

295

 

 

 

 

330

 

Software expense

 

 

300

 

 

 

 

227

 

Marketing and public relations

 

 

79

 

 

 

 

127

 

Debit card expense

 

 

171

 

 

 

 

140

 

Other expenses

 

 

976

 

 

 

 

860

 

Total noninterest expenses

 

 

5,281

 

 

 

 

5,007

 

Income before income tax

 

 

3,575

 

 

 

 

3,074

 

Federal income tax provision

 

 

690

 

 

 

 

591

 

Net income

$

 

2,885

 

 

$

 

2,483

 

Net income per share:

 

 

 

 

 

 

 

 

 

Basic and diluted

$

 

1.05

 

 

$

 

0.91

 

 

Contacts

Paula J. Meiler, SVP & CFO
330.763.2873
paula.meiler@csb1.com

Contacts

Paula J. Meiler, SVP & CFO
330.763.2873
paula.meiler@csb1.com