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CSB Bancorp, Inc. Reports Second Quarter Earnings

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CSB Bancorp, Inc. (OTC:CSBB):

   

Second Quarter Highlights

Quarter Ended Quarter Ended
 
June 30, 2018 June 30, 2017
Diluted earnings per share $ 0.85 $ 0.63
Net Income $ 2,324,000 $ 1,726,000
Return on average common equity 12.94 % 10.15 %
Return on average assets 1.30 % 1.01 %
 

CSB Bancorp, Inc. (OTC:CSBB) today announced second quarter 2018
net income of $2,324,000, or $.85 per basic and diluted share, as
compared to $1,726,000, or $.63 per basic and diluted share, for the
same period in 2017. Income before federal income tax amounted to $2.9
million, an increase of 16.1% over the same quarter in the prior year.

Annualized returns on average common equity ("ROE") and average assets
("ROA") for the quarter were 12.94% and 1.30%, respectively, compared
with 10.15% and 1.01% for the second quarter of 2017.

Eddie Steiner, President and CEO stated, "Average loan balances
increased for the eleventh consecutive quarter, while net interest
margin improved to 3.98%. Average deposit and loan balances have each
increased approximately 9% from year ago levels."

Net interest income and noninterest income, on a fully-taxable
equivalent basis, totaled $7.9 million during the quarter, an 11%
increase from the prior-year second quarter. Net interest income
increased $702 thousand, or 12%, in the second quarter of 2018 compared
to the same period in 2017.

Loan interest income including fees increased $931 thousand during
second quarter 2018 as compared to the same quarter in 2017. Average
total loan balances during the current quarter were $44 million higher
than the year ago quarter.

The net interest margin was 3.98% compared to 3.75% for second 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 $108 thousand, or 10%, in the second
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 $931 thousand, or 25%, from second quarter 2017. More than
half of the comparative increase stems from second quarter 2017 reversal
of a $540 thousand provision for unfunded loan commitments due to the
impairment of a commercial line of credit. In other categories, salary
and employee benefits rose $246 thousand, or 10%, compared to the prior
year quarter with increases in headcount, salary, and employment taxes.
Marketing and public relations expense increased by $30 thousand, or
34%, on a quarter over quarter basis primarily on expanded channel
advertising and increasing community donations. The Company's second
quarter efficiency ratio was 58.4% as compared to 51.5% for the same
quarter in the prior year.

Federal income tax provision totaled $553 thousand in second quarter
2018, as compared to $751 thousand tax provision for the same quarter in
2017. The effective tax rate decreased from 30% to 19% a result of the
Tax Cuts and Jobs Act enacted on December 22, 2017.

Average total assets during the quarter amounted to $716 million, an
increase of $29 million, or 4%, above the same quarter of the prior
year. Average loan balances of $535 million increased $44 million, or
9%, from the prior year second quarter while average securities balances
of $119 million decreased $14 million, or 10%, as compared to second
quarter 2017.

Average commercial loan balances for the quarter, including commercial
real estate, increased $32 million, or 9%, from prior year levels.
Average residential mortgage balances increased $11 million, or 7%, over
the prior year's quarter. Average consumer credit balances increased $2
million, or 11%, versus the same quarter of the prior year.

Nonperforming assets decreased $2 million from December 31, 2017 to $4.4
million, or 0.82%, of total loans plus other real estate at June 30,
2018. The decrease in nonperforming loans is the result of the
liquidation of a $1.7 million credit facility during first quarter 2018.
At June 30, 2018, approximately $1.8 million of the non-performing loan
total is guaranteed by either USDA or the SBA. Delinquent loan balances
as of June 30, 2018 declined to 1.06% of total loans as compared to
1.53% at December 31, 2017 and 1.31% at June 30, 2017.

Net loan losses during second quarter 2018 were $39 thousand, or 0.03%
annualized, compared to second quarter 2017 net loan losses of $10
thousand. The allowance for loan losses amounted to 1.11% of total loans
at June 30, 2018 as compared to 1.08% of total loans on December 31,
2017 and 1.26% at June 30, 2017.

Average deposit balances grew on a year over year comparison by $47
million, or 9%, partially on the strength of customer response to higher
rates paid on insured deposits. During the second quarter 2018,
increases in average deposit balances over the prior year quarter
included interest-bearing demand accounts of $28 million; savings
accounts of $11 million; time deposits of $5 million, and non-interest
bearing checking accounts of $3 million. The average balance of
securities sold under repurchase agreement during the second quarter of
2018 decreased by $14 million, or 25%, 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 June 30, 2018 the new product had balances of $17 million.

Shareholders' equity totaled $72.6 million on June 30, 2018 with 2.7
million common shares outstanding. The tangible equity to assets ratio
amounted to 9.4% on June 30, 2018 and 9.2% on June 30, 2017. The Company
declared a second quarter dividend of $0.24 per share, a $.04 per share
increase over second quarter 2017, producing an annualized yield of 2.5%
based on the June 30, 2018 closing price of $39.00.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio,
with approximate assets of $723 million as of June 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 2017 2017 2017 2018 2017
EARNINGS   2nd Qtr   1st Qtr   4th Qtr  

3rd Qtr

  2nd Qtr   6 months   6 months
Net interest income FTE (a) $ 6,697 $ 6,436 $ 6,532

 

$

6,300 $ 6,046 $ 13,133 $ 12,001
Provision for loan losses 324 324 180 280 845 648 685
Other income 1,168 1,145 1,120 1,054 1,060 2,313 2,166
Other expenses 4,619 4,537 4,696 4,286 3,688 9,156 8,334
FTE adjustment (a) 45 47 96 96 96 92 189
Net income 2,324 2,164 1,779 1,866 1,726 4,488 3,456
Diluted earnings per share 0.85 0.79 0.65 0.68 0.63 1.64 1.26
 
PERFORMANCE RATIOS
Return on average assets (ROA) 1.30 % 1.25 % 0.99 % 1.05 % 1.01 % 1.28 % 1.03 %
Return on average common equity (ROE) 12.94 % 12.33 % 10.02 % 10.62 % 10.15 % 12.64 % 10.34 %
Net interest margin FTE (a) 3.98 % 3.95 % 3.84 % 3.77 % 3.75 % 3.97 % 3.80 %
Efficiency ratio 58.41 % 59.52 % 60.99 % 57.89 % 51.49 % 58.97 % 58.42 %
Number of full-time equivalent employees 174 171 174 169 169
 
MARKET DATA
Book value/common share $ 26.47 $ 25.90 $ 25.72

 

$

25.47 $ 25.06
Period-end common share mkt value 39.00 35.95 33.11 30.50 30.60
Market as a % of book 147.34 % 138.80 % 128.73 % 119.75 % 122.11 %
Price-to-earnings ratio 13.13 13.07 12.78 11.47 11.81
Cash dividends/common share $ 0.24 $ 0.24 $ 0.22

 

$

0.22 $ 0.20 $ 0.48 $ 0.40
Common stock dividend payout ratio 28.24 % 30.38 % 33.85 % 32.35 % 31.75 % 29.27 % 31.75 %
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 $ 106,947 $ 98,584 $ 90,796

 

$

83,638 $ 83,913

 

 
ASSET QUALITY
Gross charge-offs $ 45 $ 303 $ 19

 

$

1,138 $ 34 $ 348 $ 47
Net (recoveries) charge-offs 39 295 12 1,133 10 334

(313

)

Allowance for loan losses 5,918 5,633 5,604 5,436 6,289
Nonperforming assets (NPAs) 4,399 4,622 6,522 4,930 6,036
Net charge-off (recovery) /average loans ratio 0.03 % 0.23 % 0.01 % 0.89 % 0.01 % 0.13 %

(0.13

)%

Allowance for loan losses/period-end loans 1.11 1.06 1.08 1.07 1.26
NPAs/loans and other real estate 0.82 0.87 1.26 0.97 1.21
Allowance for loan losses/nonperforming loans 134.52 122.40 85.93 110.27 104.19
 
CAPITAL & LIQUIDITY
Period-end tangible equity to assets 9.41 % 9.50 % 9.33 % 9.18 % 9.20 %
Average equity to assets 10.06 10.16 9.84 9.93 9.93
Average equity to loans 13.47 13.50 13.76 13.81 13.90
Average loans to deposits 90.77 91.89 88.33 90.30 90.42
 
AVERAGE BALANCES
Assets $ 715,902 $ 700,394 $ 715,799

 

$

702,040 $ 686,403 $ 708,198 $ 676,655
Earning assets 674,699 660,772 674,234 662,432 646,859 667,777 637,242
Loans 534,852 527,315 511,805 504,943 490,359 531,107 485,534
Deposits 589,211 573,855 579,433 559,195 542,308 581,576 531,380
Shareholders' equity 72,039 71,173 70,419 69,737 68,184 71,608 67,377
 
ENDING BALANCES
Assets $ 723,299 $ 699,967 $ 707,063

 

$

710,824 $ 696,891
Earning assets 681,200 662,779 664,365 669,483 657,249
Loans 535,427 530,395 516,830 509,458 498,625
Deposits 595,073 576,418 583,259 571,626 547,104
Shareholders' equity     72,578       71,019       70,532       69,838       68,726                  
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) June 30, June 30,
(Dollars in thousands, except per share data) 2018 2017
ASSETS
Cash and cash equivalents
Cash and due from banks $ 14,956 $ 15,445
Interest-earning deposits in other banks 28,275 23,351
Federal Funds Sold   -     -  
Total cash and cash equivalents 43,231 38,796
Securities
Available-for-sale, at fair-value 90,808 102,974
Held-to-maturity 21,882 27,169
Equity securities 94 84
Restricted stock, at cost   4,614     4,614  
Total securities 117,398 134,841
Loans held for sale 100 432
Loans 535,427 498,625
Less allowance for loan losses   5,918     6,289  
Net loans 529,509 492,336
 
Premises and equipment, net 9,563 8,633
Goodwill and core deposit intangible 4,945 5,053
Bank owned life insurance 13,384 13,045
Accrued interest receivable and other assets   5,169     3,755  
 
TOTAL ASSETS $ 723,299   $ 696,891  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing $ 178,343 $ 169,241
Interest-bearing   416,730     377,863  
Total deposits 595,073 547,104
 
Short-term borrowings 44,155 56,932
Other borrowings 8,827 21,781
Accrued interest payable and other liabilities   2,666     2,348  
Total liabilities   650,721     628,165  
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 50,736 44,987

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

(4,784 ) (4,784 )
Accumulated other comprehensive (loss) income   (1,818 )   79  
Total shareholders' equity   72,578     68,726  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 723,299   $ 696,891  
 
       
CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME

Quarter ended

Six months ended

(Unaudited) June 30, Sept 30, June 30,   Sept 30,
(Dollars in thousands, except per share data) 2018 2017 2018 2017
Interest and dividend income:
Loans, including fees $ 6,515 $ 5,584 $ 12,654 $ 11,033
Taxable securities 594 598 1,197 1,196
Nontaxable securities 152 174 313 339
Other   83   57     129 91
Total interest and dividend income   7,344   6,413     14,293 12,659
Interest expense:
Deposits 560 307 1,014 574
Other   132   156     238 273
Total interest expense   692   463     1,252 847
Net interest income 6,652 5,950 13,041 11,812
Provision for loan losses   324   845     648 685

Net interest income after provision for loan losses

  6,328   5,105     12,393 11,127
Noninterest income
Service charges on deposit accounts 300 268 584 559
Trust services 217 152 436 359
Debit card interchange fees 323 296 636 584
Gain on sale of loans 60 61 137 103
Gain on sale of securities - - 4 -
Other   268   283     516 561
Total noninterest income   1,168   1,060     2,313 2,166
 
Noninterest expenses
Salaries and employee benefits 2,718 2,472 5,355 4,931
Occupancy expense 214 214 434 424
Equipment expense 160 171 316 341
Professional and director fees 239 234 551 403
Marketing and public relations 119 89 239 167
Software expense 221 203 434 413
Debit card expense 126 141 242 271
Provision for unfunded loan commitments - (540 ) - -
Other expenses   822   704     1,585   1,384
Total noninterest expenses   4,619   3,688     9,156   8,334
Income before income tax 2,877 2,477 5,550 4,959
Federal income tax provision   553   751     1,062   1,503
Net income $ 2,324 $ 1,726   $ 4,488 $ 3,456
Net income per share:
Basic $ 0.85 $ 0.63   $ 1.64 $ 1.26
 
Diluted $ 0.85 $ 0.63   $ 1.64 $ 1.26
 

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