Press Release

CSB Bancorp, Inc. Reports First Quarter Earnings

Company Release - 4/21/2020 4:47 PM ET

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

First Quarter Highlights

 

Quarter Ended

Quarter Ended

March 31, 2020

March 31, 2019

 

 

 

Diluted earnings per share

$0.91

 

$0.93

 

Net Income

$2,483,000

 

$2,540,000

 

Return on average common equity

11.47

%

13.20

%

Return on average assets

1.23

%

1.41

%

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced first quarter 2020 net income of $2,483,000, or $.91 per basic and diluted share, as compared to $2,540,000, or $.93 per basic and diluted share, for the same period in 2019. Income before federal income tax amounted to $3,074,000, a decrease of 3% over the same quarter in the prior year.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 11.47% and 1.23%, respectively, compared with 13.20% and 1.41% for the first quarter of 2019.

Eddie Steiner, President and CEO stated, “Revenue declined 3.8% on a linked quarter basis. While 2020 began with increased loan demand and strong employment, the economic picture reversed sharply as coronavirus wreaked havoc and became the lead story by mid-March. A series of emergency health orders for public safety curtailed nonessential activity and had the effect of shutting down vast swaths of Ohio’s economy, resulting in more than 8% of Ohio’s active workforce filing for unemployment during the last two weeks of March alone. We anticipate that second quarter will be very difficult for many small businesses, organizations and households, and are focused on working to address the financial needs within our primary market areas during this extraordinarily challenging health crisis. We will maintain and leverage our financial strength to do all that we can to help borrowers, depositors, and investors through this trying period.”

Net interest income and noninterest income, on a fully taxable equivalent basis, totaled $8.3 million during the quarter, an increase of $23 thousand from the prior-year first quarter. Net interest income decreased $95 thousand, or 1%, in the first quarter of 2020 compared to the same period in 2019.

Loan interest income including fees decreased $222 thousand during first quarter 2020 as compared to the same quarter in 2019, a decrease of 3%. Average total loan balances during the current quarter were $10 million higher than the year ago quarter, an increase of 2%. Loan yields for first quarter 2020 averaged 4.92%, a decrease of 29 basis points from the 2019 first quarter average of 5.21%.

The net interest margin was 3.67% compared to 4.16% for first quarter 2019. The tax equivalency effect on the margin remained stable at 0.02% in the comparable first quarters.

Noninterest income increased 10%, compared to first quarter of 2019, driven by growth in bank owned life insurance values, increases in debit card fee income, and gain on sale of loans.

Noninterest expense increased 5% from first quarter 2019. Salary and employee benefit costs increased $126 thousand, or 4%, compared to the prior year quarter, as a result of higher wages, medical costs, and 401k retirement expenses. The Ohio financial institutions tax increased by $18 thousand, or 12%, as a result of increased capital. Marketing and public relations increased by $10 thousand, or 9%, reflecting timing of certain electronic and billboard promotional efforts and the opening of a new banking center. The Company’s first quarter efficiency ratio increased to 60.1% compared to 57.7%.

Federal income tax expense totaled $591 thousand in first quarter 2020, as compared to $619 thousand tax expense for the same quarter in 2019. The effective tax rate approximated 19% in both periods.

Average total assets during the quarter amounted to $812 million, an increase of $82 million, or 11%, above the same quarter of the prior year. Liquidity increased as average interest-bearing balances with banks increased $49 million during the quarter to $76 million as compared to the first quarter in 2019. Average loan balances of $560 million increased $10 million, or 2%, from the prior year first quarter while average securities balances of $126 million increased $15 million, or 14%, as compared to first quarter 2019.

Average commercial loan balances for the quarter, including commercial real estate, increased $3 million, or less than 1%, from prior year levels. Average residential mortgage balances including home equity lines of credit increased $7 million, or 4%, over the prior year’s quarter. Average consumer credit balances decreased $685 thousand, or -4%, versus the same quarter of the prior year.

Nonperforming assets increased $1.2 million from March 31, 2019 to $4.5 million, or 0.80%, of total loans plus other real estate at March 31, 2020. The increase in nonperforming assets resulted primarily from the addition of one commercial real estate facility of approximately $1.5 million. At March 31, 2020, approximately $1.1 million of the non-performing loan total is guaranteed by either USDA or the SBA. Delinquent loan balances as of March 31, 2020 increased to 0.96% of total loans as compared to 0.70% at March 31, 2019.

Net loan losses recognized during first quarter 2020 were $74 thousand, or 0.05% annualized, compared to first quarter 2019 net loan recoveries of $95 thousand. The allowance for loan losses amounted to 1.28% of total loans at March 31, 2020 as compared to 1.15% at March 31, 2019.

Average deposit balances grew on a quarter over prior year quarter comparison by $74 million, or 12%. For the first quarter 2020, the average cost of deposits amounted to 0.49%, as compared to 0.55% for the first quarter 2019. During the first quarter 2020, increases in average deposit balances over the prior year quarter included non-interest bearing demand accounts of $11 million, interest-bearing transaction accounts of $55 million, and time deposits of $8 million. The average balance of securities sold under repurchase agreement during the first quarter of 2020 increased by $293 thousand, or 1%, compared to the average for the same period in the prior year.

Shareholders’ equity totaled $87.6 million on March 31, 2020 with 2.7 million common shares outstanding. The tangible equity to assets ratio amounted to 10.3% on March 31, 2020 and 10.2% on March 31, 2019. The Company declared a first quarter dividend of $0.28 per share, a $.02 per share increase over first quarter 2019, producing an annualized yield of 3.2% based on the March 31, 2020 closing price of $35.00.

Cares Act and subsequent events

On March 27, 2020 the Cares Act, a $2.3 trillion emergency federal relief bill, was signed into law. The relief effort included an SBA program for qualifying businesses known as the Paycheck Protection Program (“PPP”). At the time of this release, we have facilitated more than 450 of these government assistance loans, aggregating in excess of $81 million, with over 75% of the approved monies already in the hands of qualifying borrowers. Additionally, we have offered loan modifications to our commercial and consumer loan customers to deal with the uncertainty of the economy. A customer can request relief from their total payment or place their obligation on interest only for a period of 3-4 months. On the date of this writing we have modified $50 million of term commercial loans and $3 million of consumer loans.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $810 million as of March 31, 2020. 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)

2020

2019

2019

2019

2019

EARNINGS

1st Qtr

4th Qtr

3rd Qtr

2nd Qtr

1st Qtr

Net interest income FTE (a)

$

6,953

$

7,168

$

7,228

$

7,111

$

7,049

Provision for loan losses

178

285

285

285

285

Other income

1,343

1,451

1,440

1,313

1,224

Other expenses

5,007

5,079

4,999

4,900

4,791

FTE adjustment (a)

37

39

40

40

38

Net income

2,483

2,593

2,695

2,586

2,540

Diluted earnings per share

0.91

0.95

0.98

0.94

0.93

 
PERFORMANCE RATIOS
Return on average assets (ROA)

1.23

%

1.27

%

1.38

%

1.39

%

1.41

%

Return on average common equity (ROE)

11.47

12.13

12.89

12.91

13.20

Net interest margin FTE (a)

3.67

3.73

3.95

4.08

4.16

Efficiency ratio

60.08

58.74

57.52

57.96

57.72

Number of full-time equivalent employees

172

171

175

174

174

 
MARKET DATA
Book value /common share

$

31.95

$

31.17

$

30.49

$

29.70

$

28.80

Period-end common share mkt value

35.00

40.97

38.67

40.45

38.75

Market as a % of book

109.55

%

131.44

%

126.83

%

136.20

%

134.55

%

Price-to-earnings ratio

9.26

10.78

10.28

11.05

10.85

Cash dividends /common share

$

0.28

$

0.28

$

0.28

$

0.26

$

0.26

Common stock dividend payout ratio

30.77

%

29.47

%

28.57

%

27.66

%

27.96

%

Average basic common shares

2,742,350

2,742,350

2,742,350

2,742,350

2,742,242

Average diluted common shares

2,742,350

2,742,350

2,742,350

2,742,350

2,742,242

Period end common shares outstanding

2,742,350

2,742,350

2,742,350

2,742,350

2,742,242

Common shares repurchased

-

-

-

-

-

Common stock market capitalization

$

95,982

$

112,354

$

106,047

$

110,928

$

106,262

 
ASSET QUALITY
Gross charge-offs

$

86

$

59

$

75

$

54

$

70

Net charge-offs (recoveries)

74

44

46

35

(95)

Allowance for loan losses

7,120

7,017

6,776

6,537

6,287

Nonperforming assets (NPAs)

4,468

4,659

4,518

4,555

3,302

Net charge-off (recovery) /average loans ratio

0.05

%

0.03

%

0.03

%

0.03

%

(0.07)

%

Allowance for loan losses /period-end loans

1.28

1.27

1.20

1.19

1.15

NPAs /loans and other real estate

0.80

0.84

0.80

0.83

0.60

Allowance for loan losses /nonperforming loans

162.97

154.55

153.35

146.70

197.23

 
CAPITAL & LIQUIDITY
Period-end tangible equity to assets

10.28

%

9.91

%

10.07

%

10.28

%

10.15

%

Average equity to assets

10.72

10.43

10.72

10.77

10.69

Average equity to loans

15.55

15.29

14.95

14.66

14.18

Average loans to deposits

82.61

81.62

86.18

88.73

91.16

 
AVERAGE BALANCES
Assets

$

812,409

$

812,481

$

773,481

$

745,658

$

730,181

Earning assets

761,619

763,244

725,615

699,229

687,515

Loans

560,142

554,556

554,956

547,981

550,483

Deposits

678,090

679,473

643,981

617,558

603,839

Shareholders' equity

87,090

84,777

82,948

80,338

78,038

 
ENDING BALANCES
Assets

$

810,041

$

818,683

$

786,792

$

750,252

$

734,845

Earning assets

757,769

767,345

734,859

704,738

688,792

Loans

555,320

551,633

566,213

550,612

548,220

Deposits

671,162

683,546

658,119

623,328

607,342

Shareholders' equity

87,629

85,476

83,614

81,458

78,967

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)

2020

2019

ASSETS
Cash and cash equivalents
Cash and due from banks

$

18,277

 

$

15,110

 

Interest-earning deposits in other banks

77,995

 

29,133

 

Total cash and cash equivalents

96,272

 

44,243

 

Securities
Available-for-sale, at fair-value

108,263

 

86,378

 

Held-to-maturity

11,242

 

20,218

 

Equity securities

79

 

89

 

Restricted stock, at cost

4,614

 

4,614

 

Total securities

124,198

 

111,299

 

Loans held for sale

256

 

140

 

Loans

555,320

 

548,220

 

Less allowance for loan losses

7,120

 

6,287

 

Net loans

548,200

 

541,933

 

 
Premises and equipment, net

12,387

 

10,800

 

Goodwill and core deposit intangible

4,817

 

4,879

 

Bank owned life insurance

19,023

 

16,638

 

Accrued interest receivable and other assets

4,888

 

4,913

 

 
TOTAL ASSETS

$

810,041

 

$

734,845

 

 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing

$

188,137

 

$

177,404

 

Interest-bearing

483,025

 

429,938

 

Total deposits

671,162

 

607,342

 

 
Short-term borrowings

40,605

 

36,324

 

Other borrowings

6,206

 

8,373

 

Accrued interest payable and other liabilities

4,439

 

3,839

 

Total liabilities

722,412

 

655,878

 

Shareholders' equity
Common stock, $6.25 par value. Authorized
9,000,000 shares; issued 2,980,602 shares
in 2020 and 2019

18,629

 

18,629

 

Additional paid-in capital

9,815

 

9,815

 

Retained earnings

63,455

 

56,115

 

Treasury stock at cost - 238,252 shares in 2020
and 238,360 in 2019

(4,780

)

(4,784

)

Accumulated other comprehensive income (loss)

510

 

(808

)

Total shareholders' equity

87,629

 

78,967

 

 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

810,041

 

$

734,845

 

 
CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME

Quarter ended

(Unaudited)

March 31,

(Dollars in thousands, except per share data)

2020

2019

Interest and dividend income:
Loans, including fees

$

6,850

 

$

7,072

Taxable securities

609

 

587

Nontaxable securities

119

 

134

Other

239

 

175

Total interest and dividend income

7,817

 

7,968

Interest expense:
Deposits

831

 

825

Other

70

 

132

Total interest expense

901

 

957

Net interest income

6,916

 

7,011

Provision for loan losses

178

 

285

Net interest income after provision
for loan losses

6,738

 

6,726

Noninterest income
Service charges on deposits accounts

291

 

292

Trust services

230

 

224

Debit card interchange fees

375

 

347

Gain on sale of loans

114

 

79

Market value change in equity securities

(13

)

6

Other

346

 

276

Total noninterest income

1,343

 

1,224

 
Noninterest expenses
Salaries and employee benefits

2,968

 

2,842

Occupancy expense

220

 

204

Equipment expense

135

 

137

Professional and director fees

330

 

339

Software expense

227

 

218

Marketing and public relations

127

 

117

Debit card expense

140

 

127

Other expenses

860

 

807

Total noninterest expenses

5,007

 

4,791

Income before income tax

3,074

 

3,159

Federal income tax provision

591

 

619

Net income

$

2,483

 

$

2,540

Net income per share:
Basic

$

0.91

 

$

0.93

 
Diluted

$

0.91

 

$

0.93

 

 

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

Source: CSB Bancorp, Inc.