CSB Bancorp, Inc. Reports Second Quarter Earnings

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

Second Quarter Highlights
			Quarter Ended				Quarter Ended
			June 30, 2015				June 30, 2014
Diluted earnings per share			$0.55				$0.55
Net Income			$1,517,000				$1,522,000
Return on average common equity			10.23	%			11.09	%
Return on average assets			0.97	%			1.02	%

CSB Bancorp, Inc. (CSBB) today announced second quarter 2015 net income of $1,517,000 or $.55 per basic and diluted share, as compared to $1,522,000 or $.55 per basic and diluted share for the same period in 2014. For the six month period ended June 30, 2015 net income totaled $2,859,000, compared to $2,938,000 for the same period last year a decrease of 3%.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 10.23% and 0.97%, respectively, compared with 11.09% and 1.02% for the second quarter of 2014.

Eddie Steiner, President and CEO commented, “Home mortgage lending has been strong. Business loan growth has slowed as some owners are exercising a fair amount of caution relative to new debt and funding some expansions through business cash flow. Jobs are fairly plentiful in our market and there are emerging signs of increased payroll dollars, which should further boost confidence and economic expansion.”

Revenue, on a fully-taxable equivalent basis, totaled $6.4 million during the quarter, a 3% increase from the prior-year second quarter. Net interest income improved by $130 thousand as compared to second quarter 2014, while other income increased $21 thousand attributable primarily to an increase in gain on sale of mortgage loans to the secondary market, Trust and brokerage fees and an increase in debit card interchange fees. These increases were partially offset by a decrease of $112 thousand in gain on sale of securities in 2014 that did not recur in 2015.

Non-interest expense amounted to $4.0 million during the quarter, an increase of $125 thousand or 3% from second quarter 2014. The Company’s second quarter efficiency ratio amounted to 61.5% as compared to 62.1% for the same quarter in the prior year. Salary and employee benefits rose $114 thousand, or 5%, on a quarter over prior year quarter with increases in base salary, medical and employment taxes.

Net interest margin amounted to 3.58% for the quarter compared to 3.52% from the linked March quarter and 3.66% for the prior year’s second quarter. The margin decrease year over year resulted from a 12 basis point decrease in total interest yield partially offset with a 4 basis point decrease in interest rates on all liabilities. The low interest rate environment and lower than projected commercial and retail loan growth for the quarter is reflected in the lower margins year over year. On a linked quarter basis, increases were recognized in asset yields during second quarter 2015, while liability costs were unchanged as compared to the quarter ended March 2015.

Federal income tax provision totaled $669 thousand in second quarter 2015, compared to $683 thousand for the same quarter in 2014 reflecting a stable effective tax rate of 31% for the comparable quarters.

Average total assets during the quarter amounted to $625 million, an increase of $27 million or 5% above the same quarter of the prior year. Average loan balances of $417 million were $6 million or 2% above prior year second quarter, while average securities balances of $148 million increased $2 million or 1% as compared to second quarter 2014.

Average commercial loan balances for the quarter, including commercial real estate, decreased $644 thousand or less than 1% from prior year levels. Average residential mortgage balances increased by $6 million or 8% over the prior year’s quarter. The increase of mortgage balances was the result of the bank originating and retaining some 15 year fixed rate mortgages. Average home equity balances decreased $519 thousand or 1% and average consumer credit balances increased $1 million or 19% versus the same quarter of the prior year.

Nonperforming assets totaled $3.1 million or 0.75% of total loans plus other real estate, a decrease from $5.0 million or 1.22% of total loans plus other real estate at June 30, 2014. Delinquent loan balances as of June 30, 2015 amounted to 1.06% of total loans as compared to 1.50% at June 30, 2014.

Net loan charge-offs during second quarter 2015 were $32 thousand compared to second quarter 2014 net loan charge-offs of $152 thousand. Annualized net charge-offs equated to 0.03% of average loans in the current quarter.

The Company funded $195 thousand in loan loss provision during the second quarter and the allowance for loan losses amounted to 1.12% of total loans on June 30, 2015. The ratio of the allowance for loan losses to nonperforming loans increased to 149% at June 30, 2015.

Average deposit balances grew by $30 million, or 6%, from the prior year’s second quarter. Average deposit balances for second quarter 2015 totaled $499 million. Within the deposit category, average noninterest-bearing account balances for the second quarter increased by $21 million, or 18% above the same period in the prior year. Average interest-bearing checking, money market and traditional savings balances increased $11 million or 5% from year ago levels, while average time deposit balances decreased $2 million or 2% from second quarter 2014. In addition to the changes in average deposit balances, the average balance of securities sold under repurchase agreement during the second quarter of 2015 grew by $3 million or 7% above the average for the same period in the prior year. The repurchase agreements, while considered short-term borrowings, are primarily tied to overnight customer sweep accounts.

Shareholders’ equity totaled $59.0 million on June 30, 2015 with 2.7 million common shares outstanding. The tangible equity to assets ratio amounted to 8.7% on June 30, 2015, as compared to 8.3% on June 30, 2014. The Company declared a common dividend of $.19 per share during the quarter. Based on the June 30, 2015 closing stock price of $25.00 per share, the Company’s annual dividend yield approximates 3.0%.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $623 million as of June 30, 2015. 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 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)			2015			2015			2014			2014			2014			2015			2014
EARNINGS			2nd Qtr			1st Qtr			4th Qtr			3rd Qtr			2nd Qtr			6 months			6 months
Net interest income FTE (a)		$	5,255		$	5,091		$	5,060		$	5,068		$	5,115		$	10,346		$	10,084
Provision for loan losses			195			194			185			123			150			389			335
Other income			1,180			1,054			1,061			1,077			1,159			2,234			2,112
Other expenses			3,974			3,948			3,787			3,770			3,849			7,922			7,526
FTE adjustment (a)			80			77			73			71			70			157			141
Net income			1,517			1,342			1,439			1,507			1,522			2,859			2,938
Diluted earnings per share			0.55			0.49			0.53			0.55			0.55			1.04			1.07
PERFORMANCE RATIOS
Return on average assets (ROA)			0.97		%	0.87		%	0.92		%	0.98		%	1.02		%	0.92		%	1.00	%
Return on average common equity (ROE)			10.23		%	9.33		%	9.99		%	10.64		%	11.09		%	9.79		%	10.90	%
Net interest margin FTE (a)			3.58		%	3.52		%	3.43		%	3.53		%	3.66		%	3.55		%	3.64	%
Efficiency ratio			61.47		%	64.09		%	61.34		%	60.81		%	62.14		%	62.76		%	61.85	%
Number of full-time equivalent employees			163			165			167			168			161
MARKET DATA
Book value/common share		$	21.53		$	21.46		$	20.97		$	20.55		$	20.18
Period-end common share mkt value			25.00			23.00			22.00			20.01			20.23
Market as a % of book			116.12		%	107.18		%	104.91		%	97.37		%	100.25		%
Price-to-earnings ratio			11.79			10.85			10.23			9.67			9.97
Cash dividends/common share		$	0.19		$	0.19		$	0.19		$	0.19		$	0.18		$	0.38		$	0.36
Common stock dividend payout ratio			34.54		%	38.78		%	35.85		%	34.55		%	32.72		%	36.54		%	33.64	%
Average basic common shares			2,739,405			2,739,405			2,738,869			2,737,927			2,737,085			2,739,405			2,736,861
Average diluted common shares			2,742,738			2,741,993			2,741,033			2,739,721			2,739,968			2,742,381			2,739,436
Period end common shares outstanding			2,739,405			2,739,405			2,739,405			2,738,355			2,737,085
Common shares repurchased			0			0			0			0			0
Common stock market capitalization		$	68,485		$	63,006		$	60,267		$	54,794		$	55,371
ASSET QUALITY
Gross charge-offs		$	39		$	110		$	1,033		$	9		$	163		$	149		$	380
Net (recoveries) charge-offs			32			81			992			(2)			152			113			357
Allowance for loan losses			4,656			4,494			4,381			5,188			5,063
Nonperforming assets (NPAs)			3,117			3,685			3,949			4,682			5,031
Net charge-off/average loans ratio			0.03		%	0.08		%	0.96		%	0.00		%	0.15		%	0.05		%	0.18	%
Allowance for loan losses/period-end loans			1.12			1.07			1.07			1.27			1.23
NPAs/loans and other real estate			0.75			0.88			0.96			1.14			1.22
Allowance for loan losses/nonperforming loans			149.37			121.96			110.94			110.81			100.64
CAPITAL & LIQUIDITY
Period-end tangible equity to assets			8.69		%	8.63		%	8.46		%	8.40		%	8.26		%
Average equity to assets			9.52			9.37			9.19			9.25			9.20
Average equity to loans			14.25			14.07			13.97			13.79			13.39
Average loans to deposits			83.61			83.34			82.37			84.73			87.67
AVERAGE BALANCES
Assets		$	625,032		$	622,628		$	621,536		$	607,445		$	598,093		$	623,800		$	594,555
Earning assets			588,464			586,464			584,536			570,319			561,063			587,475			558,293
Loans			417,347			414,761			409,113			407,571			411,016			416,062			403,563
Deposits			499,157			497,646			496,670			481,017			468,838			498,407			469,658
Shareholders' equity			59,473			58,351			57,134			56,203			55,052			58,912			54,371
ENDING BALANCES
Assets		$	622,956		$	625,088		$	620,981		$	610,982		$	608,892
Earning assets			584,510			588,174			582,629			573,701			564,348
Loans			415,198			420,861			410,903			409,908			411,930
Deposits			496,404			497,333			500,075			486,521			483,672
Shareholders' equity			58,966			58,791			57,450			56,270			55,239

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)			2015				2014
ASSETS
Cash and cash equivalents
Cash and due from banks		$	15,244			$	21,446
Interest-earning deposits in other banks			23,672				14,908
Federal Funds Sold			-				-
Total cash and cash equivalents			38,916				36,354
Securities
Available-for-sale, at fair-value			107,409				93,389
Held-to-maturity			33,554				38,946
Restricted stock, at cost			4,614				4,613
Total securities			145,577				136,948
Loans held for sale			63				562
Loans			415,198				411,930
Less allowance for loan losses			4,656				5,063
Net loans			410,542				406,867
Goodwill and core deposit intangible			5,295				5,422
Bank owned life insurance			9,948				9,681
Premises and equipment, net			8,374				8,503
Accrued interest receivable and other assets			4,241				4,555
TOTAL ASSETS		$	622,956			$	608,892
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing		$	139,603			$	124,768
Interest-bearing			356,801				358,904
Total deposits			496,404				483,672
Short-term borrowings			51,702				50,523
Other borrowings			13,738				17,280
Accrued interest payable and other liabilities			2,146				2,178
Total liabilities			563,990				553,653
Shareholders' equity
Common stock, $6.25 par value. Authorized
9,000,000 shares; issued 2,980,602 shares
in 2015 and 2014			18,629				18,629
Additional paid-in capital			9,884				9,950
Retained earnings			35,908				32,184
Treasury stock at cost - 241,197 shares in 2015
and 243,517 in 2014			(4,871	)			(4,944	)
Accumulated other comprehensive loss			(584	)			(580	)
Total shareholders' equity			58,966				55,239
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	622,956			$	608,892

CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
			Quarter ended						Six months ended
(Unaudited)			June 30,						June 30,
(Dollars in thousands, except per share data)			2015			2014			2015			2014
Interest and dividend income:
Loans, including fees		$	4,744		$	4,631		$	9,318		$	9,060
Taxable securities			670			736			1,358			1,522
Nontaxable securities			137			115			266			230
Other			17			2			33			8
Total interest and dividend income			5,568			5,484			10,975			10,820
Interest expense:
Deposits			272			289			544			593
Other			121			150			242			284
Total interest expense			393			439			786			877
Net interest income			5,175			5,045			10,189			9,943
Provision for loan losses			195			150			389			335
Net interest income after provision
for loan losses			4,980			4,895			9,800			9,608
Noninterest income
Service charges on deposits accounts			315			316			601			613
Trust services			243			202			445			418
Debit card interchange fees			246			233			473			431
Gain on sale of loans			122			44			192			68
Gain on sale of securities			21			133			56			133
Other			233			231			467			449
Total noninterest income			1,180			1,159			2,234			2,112
Noninterest expenses
Salaries and employee benefits			2,224			2,110			4,374			4,129
Occupancy expense			258			240			525			506
Equipment expense			165			188			331			369
Franchise tax expense			100			106			199			213
Professional and director fees			202			214			492			396
Federal deposit insurance			90			91			182			177
Amortization of intangible assets			31			33			63			65
Other expenses			904			867			1,756			1,671
Total noninterest expenses			3,974			3,849			7,922			7,526
Income before income tax			2,186			2,205			4,112			4,194
Federal income tax provision			669			683			1,253			1,256
Net income		$	1,517		$	1,522		$	2,859		$	2,938
Net income per share:
Basic		$	0.55		$	0.55		$	1.04		$	1.07
Diluted		$	0.55		$	0.55		$	1.04		$	1.07

View source version on businesswire.com: http://www.businesswire.com/news/home/20150721006595/en/

CSB Bancorp, Inc.
Paula J. Meiler, SVP & CFO, 330-763-2873
[email protected]

Source: CSB Bancorp, Inc.

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