Press Release

CSB Bancorp, Inc. Reports Second Quarter Earnings

Company Release - 7/23/2019 9:57 AM ET

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

Second Quarter Highlights

 

Quarter Ended

Quarter Ended

 

June 30, 2019

June 30, 2018

 

 

 

Diluted earnings per share

$

0.94

 

$

0.85

 

Net Income

$

2,586,000

 

$

2,324,000

 

Return on average common equity

 

12.91

%

 

12.94

%

Return on average assets

 

1.39

%

 

1.30

%

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced second quarter 2019 net income of $2,586,000, or $.94 per basic and diluted share, as compared to $2,324,000, or $.85 per basic and diluted share, for the same period in 2018. Income before federal income tax amounted to $3,199,000, an increase of 11% over the same quarter in the prior year. For the six month period ended June 30, 2019 net income totaled $5,126,000 compared to $4,488,000 for the same period last year, an increase of 14%.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 12.91% and 1.39%, respectively, compared with 12.94% and 1.30% for the second quarter of 2018.

Eddie Steiner, President and CEO stated, “We are pleased to report solid mid-year earnings with increases over the prior year. Business loan growth has been at a slower pace for most of 2019, particularly with lower usage needs for operating lines of credit, while home and consumer lending demand has increased as fixed rates on mortgage loans drifted lower and home construction season moved into full swing.”

Net interest income and noninterest income, on a fully-taxable equivalent basis, totaled $8.4 million during the quarter, a 7% increase from the prior-year second quarter. Net interest income increased $419 thousand, or 6%, in the second quarter of 2019 compared to the same period in 2018.

Loan interest income including fees increased $670 thousand during second quarter 2019 as compared to the same quarter in 2018, an increase of 10%. Average total loan balances during the current quarter were $13 million higher than the year ago quarter, an increase of 2%. Loan yields for second quarter 2019 averaged 5.26%, an increase of 37 basis points from the 2018 second quarter average of 4.89%.

The net interest margin was 4.08% compared to 3.98% for second quarter 2018. The tax equivalency effect on the margin dropped to 0.02% from 0.03% a result of the reduction in tax exempt loans and securities in 2019.

Noninterest income increased 12%, compared to second quarter of 2018, driven by growth in debit card fee income, increases in bank owned life insurance values, gain on sale of loans, and service charges on deposit accounts.

Noninterest expense increased 6% from second quarter 2018. Salary and employee benefit costs increased $197 thousand, or 7%, compared to the prior year quarter, as a result of higher wage and 401k retirement expenses. Professional and director’s fees increased by $69 thousand, or 29%, reflecting higher technology investment to further improve network infrastructure in support of company growth. Marketing and public relations increased by $20 thousand, or 17%, reflecting timing of certain electronic and billboard promotional efforts and the opening of a new banking center. The Company’s second quarter efficiency ratio was 58.0% as compared to 58.4% for the same quarter in the prior year.

Federal income tax expense totaled $613 thousand in second quarter 2019, as compared to $553 thousand tax expense for the same quarter in 2018. The effective tax rate was 19% in both periods.

Average total assets during the quarter amounted to $746 million, an increase of $30 million, or 4%, above the same quarter of the prior year. Average loan balances of $548 million increased $13 million, or 2%, from the prior year second quarter while average securities balances of $111 million decreased $8 million, or 7%, as compared to second quarter 2018.

Average commercial loan balances for the quarter, including commercial real estate, decreased $1 million, or less than 1%, from prior year levels. Average residential mortgage balances including home equity lines of credit increased $12 million, or 7%, over the prior year’s quarter. Average consumer credit balances increased $2 million, or 12%, versus the same quarter of the prior year.

Nonperforming assets increased $156 thousand from June 30, 2018 to $4.6 million, or 0.83%, of total loans plus other real estate at June 30, 2019. The increase in nonperforming assets reflects the second quarter 2019 impairment of a commercial facility in liquidation, partially offset by various commercial loans exiting through liquidation. At June 30, 2019, approximately $1.0 million of the non-performing loan total is guaranteed by either USDA or the SBA. Delinquent loan balances as of June 30, 2019 declined to 1.03% of total loans as compared to 1.06% at June 30, 2018.

Net loan losses recognized during second quarter 2019 were $35 thousand, or 0.03% annualized, compared to second quarter 2018 net loan losses of $39 thousand. The allowance for loan losses amounted to 1.19% of total loans at June 30, 2019 as compared to 1.11% at June 30, 2018.

Average deposit balances grew on a year over year comparison by $28 million, or 5%, partially on the strength of customer response to higher rates paid on insured deposits. For the second quarter 2019, the average cost of deposits amounted to 0.60%, as compared to 0.38% for the second quarter 2018. During the second quarter 2019, increases in average deposit balances over the prior year quarter included non-interest bearing demand accounts of $7 million and interest-bearing transaction accounts of $14 million, and time deposits of $7 million. The average balance of securities sold under repurchase agreement during the second quarter of 2019 decreased by $5 million, or 12%, compared to the average for the same period in the prior year.

Shareholders’ equity totaled $81.0 million on June 30, 2019 with 2.7 million common shares outstanding. The tangible equity to assets ratio amounted to 10.3% on June 30, 2019 and 9.4% on June 30, 2018. The Company declared a second quarter dividend of $0.26 per share, a $.02 per share increase over second quarter 2018, producing an annualized yield of 2.6% based on the June 30, 2019 closing price of $40.45.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $750 million as of June 30, 2019. 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)

2019

 

 

2019

 

 

2018

 

 

2018

 

 

2018

 

 

2019

 

 

2018

EARNINGS

2nd Qtr

 

 

1st Qtr

 

 

4th Qtr

 

 

3rd Qtr

 

 

2nd Qtr

 

 

6 months

 

 

6 months

Net interest income FTE (a)

$

7,111

$

7,049

$

6,934

$

6,847

$

6,697

14,160

$

13,133

Provision for loan losses

285

285

344

324

324

570

648

Other income

1,313

1,224

1,270

1,175

1,168

2,537

2,313

Other expenses

4,900

4,791

4,725

4,638

4,619

9,691

9,156

FTE adjustment (a)

40

38

24

46

45

78

92

Net income

2,586

2,540

2,492

2,432

2,324

5,126

4,488

Diluted earnings per share

0.94

0.93

0.91

0.88

0.85

1.87

1.64

 
PERFORMANCE RATIOS
Return on average assets (ROA)

1.39

%

1.41

%

1.36

%

1.34

%

1.30

%

1.40

%

1.28

%

Return on average common equity (ROE)

12.91

%

13.20

%

13.20

%

13.07

%

12.94

%

13.05

%

12.64

%

Net interest margin FTE (a)

4.08

%

4.16

%

4.01

%

4.00

%

3.98

%

4.12

%

3.97

%

Efficiency ratio

57.96

%

57.72

%

57.26

%

57.45

%

58.41

%

57.86

%

58.97

%

Number of full-time equivalent employees

174

174

170

174

174

 
MARKET DATA
Book value/common share

$

29.70

$

28.80

$

27.91

$

26.94

$

26.47

Period-end common share mkt value

40.45

38.75

38.50

40.57

39.00

Market as a % of book

136.20

%

134.55

%

137.94

%

150.59

%

147.34

%

Price-to-earnings ratio

11.05

10.85

11.22

12.80

13.13

Cash dividends/common share

$

0.26

$

0.26

$

0.26

$

0.24

$

0.24

0.52

$

0.48

Common stock dividend payout ratio

27.66

%

27.96

%

28.57

%

27.27

%

28.24

%

27.81

%

29.27

%

Average basic common shares

2,742,350

2,742,242

2,742,242

2,742,242

2,742,242

2,742,296

2,742,242

Average diluted common shares

2,742,350

2,742,242

2,742,242

2,742,242

2,742,242

2,742,296

2,742,242

Period end common shares outstanding

2,742,350

2,742,242

2,742,242

2,742,242

2,742,242

Common shares repurchased

0

0

0

0

0

Common stock market capitalization

$

110,928

$

106,262

$

105,576

$

111,253

$

106,947

 
ASSET QUALITY
Gross charge-offs

$

54

$

70

$

691

$

43

$

45

124

$

348

Net (recoveries) charge-offs

35

(95)

641

38

39

(60)

334

Allowance for loan losses

6,537

6,287

5,907

6,204

5,918

Nonperforming assets (NPAs)

4,555

3,302

3,428

5,341

4,399

Net charge-off (recovery) /average loans ratio

0.03

%

(0.07)

%

0.47

%

0.03

%

0.03

%

(0.02)

%

0.13

%

Allowance for loan losses/period-end loans

1.19

1.15

1.08

1.16

1.11

NPAs/loans and other real estate

0.83

0.60

0.62

1.00

0.82

Allowance for loan losses/nonperforming loans

146.70

197.23

177.45

116.16

134.52

 
CAPITAL & LIQUIDITY
Period-end tangible equity to assets

10.28

%

10.15

%

9.86

%

9.77

%

9.41

%

Average equity to assets

10.77

10.69

10.29

10.25

10.06

Average equity to loans

14.66

14.18

13.83

13.72

13.47

Average loans to deposits

88.73

91.16

89.88

90.80

90.77

 
AVERAGE BALANCES
Assets

$

745,658

$

730,181

$

727,962

$

720,372

$

715,902

$

738,002

$

708,198

Earning assets

699,229

687,515

686,807

679,281

674,699

693,404

667,777

Loans

547,981

550,483

541,482

538,182

534,852

549,225

531,107

Deposits

617,558

603,839

602,434

592,738

589,211

610,736

581,576

Shareholders' equity

80,338

78,038

74,900

73,844

72,039

79,194

71,608

 
ENDING BALANCES
Assets

$

750,252

$

734,845

$

731,722

$

710,815

$

723,299

Earning assets

704,738

688,792

682,345

668,468

681,200

Loans

550,612

548,220

548,974

535,424

535,427

Deposits

623,328

607,342

606,498

587,531

595,073

Shareholders' equity

81,458

78,967

76,536

73,877

72,578

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)

2019

 

 

2018

ASSETS
Cash and cash equivalents
Cash and due from banks

$

15,214

$

14,956

Interest-earning deposits in other banks

42,063

28,275

Total cash and cash equivalents

57,277

43,231

Securities
Available-for-sale, at fair-value

86,297

90,808

Held-to-maturity

19,657

21,882

Equity securities

87

94

Restricted stock, at cost

4,614

4,614

Total securities

110,655

117,398

Loans held for sale

409

100

Loans

550,612

535,427

Less allowance for loan losses

6,537

5,918

Net loans

544,075

529,509

 
Premises and equipment, net

11,638

9,563

Goodwill and core deposit intangible

4,863

4,945

Bank owned life insurance

16,760

13,384

Accrued interest receivable and other assets

4,575

5,169

 
TOTAL ASSETS

$

750,252

$

723,299

 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing

$

180,766

$

178,343

Interest-bearing

442,562

416,730

Total deposits

623,328

595,073

 
Short-term borrowings

35,474

44,155

Other borrowings

6,576

8,827

Accrued interest payable and other liabilities

3,416

2,666

Total liabilities

668,794

650,721

Shareholders' equity
Common stock, $6.25 par value. Authorized
9,000,000 shares; issued 2,980,602 shares
in 2019 and 2018

18,629

18,629

Additional paid-in capital

9,815

9,815

Retained earnings

57,988

50,736

Treasury stock at cost - 238,252 shares in 2019
and 238,360 in 2018

(4,780)

(4,784)

Accumulated other comprehensive loss

(194)

(1,818)

Total shareholders' equity

81,458

72,578

 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

750,252

$

723,299

 
CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
Quarter ended Six months ended
(Unaudited) June 30, June 30,
(Dollars in thousands, except per share data)

2019

 

 

2018

 

 

2019

 

 

2018

Interest and dividend income:
Loans, including fees

$

7,185

$

6,515

$

14,257

$

12,654

Taxable securities

584

594

1,171

1,197

Nontaxable securities

134

152

268

313

Other

218

83

393

129

Total interest and dividend income

8,121

7,344

16,089

14,293

Interest expense:
Deposits

921

560

1,746

1,014

Other

129

132

261

238

Total interest expense

1,050

692

2,007

1,252

Net interest income

7,071

6,652

14,082

13,041

Provision for loan losses

285

324

570

648

Net interest income after provision
for loan losses

6,786

6,328

13,512

12,393

Noninterest income
Service charges on deposits accounts

313

300

605

584

Trust services

212

217

436

436

Debit card interchange fees

369

323

716

636

Gain on sale of loans

76

60

155

137

Market value change in equity securities

(2)

-

4

4

Other

345

268

621

516

Total noninterest income

1,313

1,168

2,537

2,313

 
Noninterest expenses
Salaries and employee benefits

2,915

2,718

5,757

5,355

Occupancy expense

205

214

409

434

Equipment expense

143

160

280

316

Professional and director fees

308

239

647

551

Software expense

232

221

450

434

Marketing and public relations

139

119

256

239

Debit card expense

132

126

259

242

Other expenses

826

822

1,633

1,585

Total noninterest expenses

4,900

4,619

9,691

9,156

Income before income tax

3,199

2,877

6,358

5,550

Federal income tax provision

613

553

1,232

1,062

Net income

$

2,586

$

2,324

$

5,126

$

4,488

Net income per share:
Basic

$

0.94

$

0.85

$

1.87

$

1.64

 
Diluted

$

0.94

$

0.85

$

1.87

$

1.64

 

 

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

Source: CSB Bancorp, Inc.