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CSB Bancorp, Inc. Reports Fourth Quarter Earnings

CSB Bancorp, Inc. (OTC Pink: CSBB):

Fourth Quarter Highlights

Quarter Ended

Quarter Ended

December 31, 2019

December 31, 2018

Diluted earnings per share

$

0.95

$

0.91

Net Income

$

2,593,000

$

2,492,000

Return on average common equity

12.13

%

13.20

%

Return on average assets

1.27

%

1.36

%

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced fourth quarter 2019 net income of $2,593,000, or $.95 per basic and diluted share, as compared to $2,492,000, or $.91 per basic and diluted share, for the same period in 2018. Income before federal income tax amounted to $3,216,000, an increase of 3% over the same quarter in the prior year. For the twelve-month period ended December 31, 2019 net income totaled $10,414,000 compared to $9,412,000 in the same period last year, an increase of 11%.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 12.13% and 1.27%, respectively, compared with 13.20% and 1.36% for the fourth quarter of 2018.

Eddie Steiner, President and CEO stated, “The business sector has become somewhat more cautious in outlook as uncertainties related to trade policy, slowing global economies, and continued difficulties in retail and agriculture weigh on forward-looking perspectives. The commercial lending environment is very competitive as banks and non-bank lenders vie over softer loan demand and accelerating prepayments. Consumer sentiment remains upbeat given steady job and wage conditions, and attractive interest rates have led to stronger home mortgage loan demand.”

Revenue, calculated as Net interest income and noninterest income on a fully taxable equivalent basis, totaled $8.6 million during the quarter, a 5% increase from the prior-year fourth quarter. Net interest income increased $219 thousand, or 3%, in the fourth quarter of 2019 compared to the same period in 2018.

Loan interest income including fees increased $180 thousand during fourth quarter 2019 as compared to the same quarter in 2018, an increase of 3%. Average total loan balances during the current quarter were $13 million higher than the year ago quarter, an increase of 2%. Loan yields for fourth quarter 2019 averaged 5.05%, an increase of 2 basis points from the 2018 fourth quarter average of 5.03%.

The net interest margin was 3.73% compared to 4.01% for fourth quarter 2018 as the average yield was down 27 basis points on assets while the average cost to fund those assets was up 1 basis point.

Noninterest income increased 14%, compared to fourth quarter of 2018, driven by growth in gain on sale of loans, debit card fee income, increases in bank owned life insurance values, and service charges on deposit accounts.

Noninterest expense increased 7% from fourth quarter 2018. Salary and employee benefit costs increased $178 thousand, or 7% compared to the prior year quarter, as a result of higher wage and 401(k) retirement expenses. Professional and director’s fees increased by $89 thousand, or 32%, reflecting higher technology investment to further improve network infrastructure in support of company growth. Communication system expenses increased by $29 thousand, or 39%, reflecting additional redundant connectivity within the operations center. The Company’s fourth quarter efficiency ratio increased slightly to 58.7% with a slowing of loan growth affecting interest margins as a greater percentage of assets remained in short term investments.

Federal income tax expense totaled $623 thousand in fourth quarter 2019, as compared to $619 thousand tax expense for the same quarter in 2018. The effective tax rate reduced slightly to 19% in 2019.

Average total assets during the quarter amounted to $812 million, an increase of $85 million, or 12%, above the same quarter of the prior year. Average loan balances of $555 million increased $13 million, or 2%, from the prior year fourth quarter while average securities balances of $117 million increased $4 million, or 3%, as compared to fourth quarter 2018. Average overnight funds sold increased $59 million, or 185%, compared to fourth quarter 2018 as average deposits grew by 13%.

Average commercial loan balances for the quarter, including commercial real estate, increased $2 million, or less than 1%, from prior year levels. Average residential mortgage balances including home equity lines of credit increased $10 million, or 6%, over the prior year’s quarter. Average consumer credit balances remained stable in fourth quarter 2019 versus the same quarter of the prior year.

Nonperforming assets increased $1.2 million from December 31, 2018 to $4.7 million, or 0.84%, of total loans plus other real estate at December 31, 2019. The increase in nonperforming assets reflects various commercial loans experiencing economic stress. At December 31, 2019, approximately $1.1 million of the non-performing loan total is guaranteed by either USDA or the SBA. Delinquent loan balances as of December 31, 2019 increased to 1.02% of total loans as compared to 0.84% at December 31, 2018.

Net loan losses recognized during fourth quarter 2019 were $44 thousand, or 0.03% annualized, compared to fourth quarter 2018 net loan losses of $641 thousand. The allowance for loan losses amounted to 1.27% of total loans at December 31, 2019 as compared to 1.08% at December 31, 2018.

Average deposit balances grew on a quarter over prior year quarter comparison by $77 million, or 13%, partially on the strength of customer response to higher rates paid on deposits. For the fourth quarter 2019, the average cost of deposits amounted to 0.52%, as compared to 0.48% for the fourth quarter 2018. During the fourth quarter 2019, increases in average deposit balances over the prior year quarter included non-interest-bearing demand accounts of $22 million, interest-bearing transaction accounts of $45 million, and time deposits of $15 million. The average balance of securities sold under repurchase agreement during the fourth quarter of 2019 decreased by less than $1 million, or 2%, compared to the average for the same period in the prior year.

Shareholders’ equity totaled $85.5 million on December 31, 2019 with 2.7 million common shares outstanding. The tangible equity to assets ratio amounted to 9.9% on December 31, 2019 and 9.9% on December 31, 2018. The Company declared a fourth quarter dividend of $0.28 per share, a $.02 per share increase over fourth quarter 2018, producing an annualized yield of 2.7% based on the December 31, 2019 closing price of $40.97.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $819 million as of December 31, 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 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)

2019

2019

2019

2019

2018

2019

2018

EARNINGS

4th Qtr

3rd Qtr

2nd Qtr

1st Qtr

4th Qtr

12 months

12 months

Net interest income FTE (a)

$

7,168

$

7,228

$

7,111

$

7,049

$

6,934

$

28,556

$

26,913

Provision for loan losses

285

285

285

285

344

1,140

1,316

Other income

1,451

1,440

1,313

1,224

1,270

5,428

4,758

Other expenses

5,079

4,999

4,900

4,791

4,725

19,769

18,518

FTE adjustment (a)

39

40

40

38

24

157

162

Net income

2,593

2,695

2,586

2,540

2,492

10,414

9,412

Diluted earnings per share

0.95

0.98

0.94

0.93

0.91

3.80

3.43

 
PERFORMANCE RATIOS
Return on average assets (ROA)

1.27

%

1.38

%

1.39

%

1.41

%

1.36

%

1.36

%

1.31

%

Return on average common equity (ROE)

12.13

12.89

12.91

13.20

13.20

12.77

12.89

Net interest margin FTE (a)

3.73

3.95

4.08

4.16

4.01

3.97

3.98

Efficiency ratio

58.74

57.52

57.96

57.72

57.26

58.00

58.14

Number of full-time equivalent employees

171

175

174

174

170

 
MARKET DATA
Book value/common share

$

31.17

$

30.49

$

29.70

$

28.80

$

27.91

Period-end common share mkt value

40.97

38.67

40.45

38.75

38.50

Market as a % of book

131.44

%

126.83

%

136.20

%

134.55

%

137.94

%

Price-to-earnings ratio

10.78

10.28

11.05

10.85

11.22

Cash dividends/common share

$

0.28

$

0.28

$

0.26

$

0.26

$

0.26

$

1.08

$

0.98

Common stock dividend payout ratio

29.47

%

28.57

%

27.66

%

27.96

%

28.57

%

28.42

%

28.57

%

Average basic common shares

2,742,350

2,742,350

2,742,350

2,742,242

2,742,242

2,742,296

2,742,242

Average diluted common shares

2,742,350

2,742,350

2,742,350

2,742,242

2,742,242

2,742,296

2,742,242

Period end common shares outstanding

2,742,350

2,742,350

2,742,350

2,742,242

2,742,242

Common shares repurchased

0

0

0

0

0

Common stock market capitalization

$

112,354

$

106,047

$

110,928

$

106,262

$

105,576

 
ASSET QUALITY
Gross charge-offs

$

59

$

75

$

54

$

70

$

691

$

258

$

1,082

Net (recoveries) charge-offs

44

46

35

(95

)

641

30

1,013

Allowance for loan losses

7,017

6,776

6,537

6,287

5,907

Nonperforming assets (NPAs)

4,659

4,518

4,555

3,302

3,428

Net charge-off (recovery) /average loans ratio

0.03

%

0.03

%

0.03

%

(0.07

)%

0.47

%

0.01

%

0.19

%

Allowance for loan losses/period-end loans

1.27

1.20

1.19

1.15

1.08

NPAs/loans and other real estate

0.84

0.80

0.83

0.60

0.62

Allowance for loan losses/nonperforming loans

154.55

153.35

146.70

197.23

177.45

 
CAPITAL & LIQUIDITY
Period-end tangible equity to assets

9.91

%

10.07

%

10.28

%

10.15

%

9.86

%

Average equity to assets

10.43

10.72

10.77

10.69

10.29

Average equity to loans

15.29

14.95

14.66

14.18

13.83

Average loans to deposits

81.62

86.18

88.73

91.16

89.88

 
AVERAGE BALANCES
Assets

$

812,481

$

773,481

$

745,658

$

730,181

$

727,962

$

765,722

$

716,243

Earning assets

763,244

725,615

699,229

687,515

686,807

719,127

675,474

Loans

554,556

554,956

547,981

550,483

541,482

552,014

535,506

Deposits

679,473

643,981

617,558

603,839

602,434

636,441

589,646

Shareholders' equity

84,777

82,948

80,338

78,038

74,900

81,548

73,002

 
ENDING BALANCES
Assets

$

818,683

$

786,792

$

750,252

$

734,845

$

731,722

Earning assets

767,345

734,859

704,738

688,792

682,345

Loans

551,633

566,213

550,612

548,220

548,974

Deposits

683,546

658,119

623,328

607,342

606,498

Shareholders' equity

85,476

83,614

81,458

78,967

76,536

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)

December 31,

December 31,

(Dollars in thousands, except per share data)

2019

2018

ASSETS
Cash and cash equivalents
Cash and due from banks

$

17,648

$

23,214

Interest-earning deposits in other banks

84,369

22,350

Total cash and cash equivalents

102,017

45,564

Securities
Available-for-sale, at fair-value

112,146

85,528

Held-to-maturity

13,869

20,688

Equity securities

92

83

Restricted stock, at cost

4,614

4,614

Total securities

130,721

110,913

Loans held for sale

622

108

Loans

551,633

548,974

Less allowance for loan losses

7,017

5,907

Net loans

544,616

543,067

 
Premises and equipment, net

12,040

9,961

Goodwill and core deposit intangible

4,831

4,895

Bank owned life insurance

18,894

13,554

Accrued interest receivable and other assets

4,942

3,660

 
TOTAL ASSETS

$

818,683

$

731,722

 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing

$

193,425

$

185,871

Interest-bearing

490,121

420,627

Total deposits

683,546

606,498

 
Short-term borrowings

38,889

37,415

Other borrowings

6,330

8,525

Accrued interest payable and other liabilities

4,442

2,748

Total liabilities

733,207

655,186

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

61,740

54,288

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

(4,780

)

(4,784

)

Accumulated other comprehensive income (loss)

72

(1,412

)

Total shareholders' equity

85,476

76,536

 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

818,683

$

731,722

CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME

Quarter ended

Twelve months ended

(Unaudited)

December 31,

December 31,

(Dollars in thousands, except per share data)

2019

2018

2019

2018

Interest and dividend income:
Loans, including fees

$

7,057

$

6,877

$

28,553

$

26,237

Taxable securities

542

587

2,247

2,371

Nontaxable securities

130

144

532

608

Other

381

164

1,129

421

Total interest and dividend income

8,110

7,772

32,461

29,637

Interest expense:
Deposits

898

724

3,609

2,372

Other

83

138

453

514

Total interest expense

981

862

4,062

2,886

Net interest income

7,129

6,910

28,399

26,751

Provision for loan losses

285

344

1,140

1,316

Net interest income after provision for loan losses

6,844

6,566

27,259

25,435

Noninterest income
Service charges on deposits accounts

313

296

1,252

1,182

Trust services

229

223

899

863

Debit card interchange fees

389

351

1,481

1,316

Gain on sale of loans

174

107

462

307

Market value change in equity securities

-

(4

)

9

(6

)

Other

346

297

1,325

1,096

Total noninterest income

1,451

1,270

5,428

4,758

 
Noninterest expenses
Salaries and employee benefits

2,913

2,735

11,663

10,895

Occupancy expense

215

205

832

833

Equipment expense

163

137

571

597

Professional and director fees

369

280

1,332

1,029

Software expense

264

238

938

893

Marketing and public relations

130

145

535

508

Debit card expense

153

150

554

537

Other expenses

872

835

3,344

3,226

Total noninterest expenses

5,079

4,725

19,769

18,518

Income before income tax

3,216

3,111

12,918

11,675

Federal income tax provision

623

619

2,504

2,263

Net income

$

2,593

$

2,492

$

10,414

$

9,412

Net income per share:
Basic

$

0.95

$

0.91

$

3.80

$

3.43

 
Diluted

$

0.95

$

0.91

$

3.80

$

3.43

Contacts:

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

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