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

Fourth Quarter Highlights

      Quarter Ended       Quarter Ended

December 31, 2015

December 31, 2014

 
Diluted earnings per share $0.59 $0.53
 
Net Income $1,607,000 $1,439,000
 
Return on average common equity 10.41% 9.99%
 
Return on average assets 0.98% 0.92%
 

CSB Bancorp, Inc. (OTC Pink:CSBB) today announced fourth quarter 2015 net income of $1,607,000 or $.59 per basic and diluted share, as compared to $1,439,000 or $.53 per basic and diluted share for the same period in 2014. For the twelve month period ended December 31, 2015 net income totaled $6,022,000, compared to $5,884,000 for the same period last year.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 10.41% and 0.98%, respectively, compared with 9.99% and 0.92% for the fourth quarter of 2014.

For the full year of 2015, the Company reported net income of $6.0 million or $2.20 per basic and diluted share, as compared to $5.9 million or $2.15 per basic and diluted share in 2014. Full year ROE and ROA were 10.07% and 0.95% respectively, compared to 10.60% and 0.97% in 2014.

Eddie Steiner, President and CEO stated, “Total revenue has now increased for twenty consecutive quarters when compared to the same period in the prior year. Loan demand in our core business sectors and geographic markets appears to be increasing as we head into 2016.”

Revenue, on a fully-taxable equivalent basis, totaled $6.3 million during the quarter, a 3% increase from the prior-year fourth quarter. Net interest income improved by $202 thousand as compared to fourth quarter 2014, while other income increased $10 thousand. Full year revenue of $25.2 million reflects a $720 thousand, or a 3%, increase as compared to full year 2014.

Non-interest expense amounted to $3.9 million during the quarter, an increase of $143 thousand or 4% from fourth quarter 2014. The Company’s fourth quarter efficiency ratio amounted to 61.6% as compared to 61.3% for the same quarter in the prior year. Salary and employee benefits rose $155 thousand, or 8%, on a quarter over prior year quarter with increases in base salary, medical coverage and employment taxes. For the full year ended December 31, 2015, non-interest expense increased $714 thousand or 5% versus 2014, with the majority of the change attributable to increases in salary and benefit expense.

Net interest margin for the quarter amounted to 3.39% compared to 3.43% from the linked September quarter and 3.43% for the prior year’s fourth quarter. The margin decrease year over year resulted from a 7 basis point decrease in average yield on earning assets partially offset with a 3 basis point decrease in average interest costs on all liabilities. The sustained low interest rate environment with resultant periodic rate decreases on certain long-term loans with scheduled rate repricing, along with deposit growth outpacing loan growth in the past year, have contributed to the lower margin trend.

Net interest margin amounted to 3.48% for the full year in 2015 as compared to 3.56% for the prior full year. The margin decrease on a year over year basis was largely attributable to an increase in low yielding overnight funds through the end of the fourth quarter in 2015 as growth in average loan and securities balances during the year was outpaced by growth in average deposit balances. The lower yields on earning assets were partially offset by a 4 basis point decline in liability costs.

Federal income tax provision totaled $707 thousand in fourth quarter 2015, compared to $637 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 $653 million, an increase of $31 million or 5% above the same quarter of the prior year. Average loan balances of $409 million declined $589 thousand, or less than 1%, from the prior year fourth quarter while average securities balances of $163 million increased $18 million or 13% as compared to fourth quarter 2014.

Average commercial loan balances for the quarter, including commercial real estate, decreased $3 million or 1% from prior year levels. Average residential mortgage balances decreased $1 million or 1% over the prior year’s quarter. Average home equity balances increased $1 million or 3% and average consumer credit balances increased $2 million or 21% versus the same quarter of the prior year.

The Company did not fund a loan loss provision during the fourth quarter 2015 due to declines in delinquent loans and nonperforming assets. Delinquent loan balances as of December 31, 2015 amounted to 0.65% of total loans as compared to 1.30% at December 31, 2014. Nonperforming assets totaled $1.7 million or 0.40% of total loans plus other real estate, a decrease from $3.9 million or 0.96% of total loans plus other real estate at December 31, 2014. The allowance for loan losses amounted to 1.10% of total loans on December 31, 2015.

Net loan recoveries during fourth quarter 2015 were $30 thousand (0.03% annualized) compared to fourth quarter 2014 net loan charge-offs of $1 million. Net charge-offs for full year 2015 amounted to $108 thousand or 0.03% of average loans.

Average deposit balances for fourth quarter 2015 totaled $524 million, an increase of $27 million, or 6%, from the prior year’s fourth quarter. Within the deposit category, average noninterest-bearing account balances for the fourth quarter increased by $19 million, or 14% above the same period in the prior year. Average interest-bearing checking, money market and traditional savings balances increased $14 million or 6% from year ago levels, while average time deposit balances decreased $6 million or 5% from fourth quarter 2014. In addition to the changes in average deposit balances, the average balance of securities sold under repurchase agreement during the fourth quarter of 2015 increased by $2 million or 4% 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 $61.3 million on December 31, 2015 with 2.7 million common shares outstanding. The tangible equity to assets ratio amounted to 8.7% on December 31, 2015, as compared to 8.5% on December 31, 2014. The Company declared a common dividend of $.19 per share during the quarter. Based on the December 31, 2015 closing stock price of $24.50 per share, the Company’s annual dividend yield approximates 3.1%.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $650 million as of December 31, 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 2015 2014 2014 2015 2014
EARNINGS   4th Qtr   3rd Qtr   2nd Qtr   1st Qtr   4th Qtr   12 months   12 months
Net interest income FTE (a) $ 5,262 $ 5,150 $ 5,255 $ 5,091 $ 5,060 $ 20,758 $ 20,212
Provision for loan losses - - 195 194 185 389 643
Other income 1,071 1,119 1,180 1,054 1,061 4,424 4,250
Other expenses 3,930 3,944 3,974 3,948 3,787 15,796 15,082
FTE adjustment (a) 89 82 80 77 73 328 285
Net income 1,607 1,556 1,517 1,342 1,439 6,022 5,884
Diluted earnings per share 0.59 0.57 0.55 0.49 0.53 2.20 2.15
 
PERFORMANCE RATIOS
Return on average assets (ROA) 0.98

%

 

0.98

%

 

0.97

%

 

0.87

%

 

0.92

%

 

0.95

%

 

0.97 %
Return on average common equity (ROE) 10.41

%

 

10.27

%

 

10.23

%

 

9.33

%

 

9.99

%

 

10.07

%

 

10.60 %
Net interest margin FTE (a) 3.39

%

 

3.43

%

 

3.58

%

 

3.52

%

 

3.43

%

 

3.48

%

 

3.56 %
Efficiency ratio 61.55

%

 

62.42

%

 

61.47

%

 

64.09

%

 

61.34

%

 

62.37

%

 

61.46 %
Number of full-time equivalent employees 161 161 163 165 167
 
MARKET DATA
Book value/common share $ 22.35 $ 22.09 $ 21.53 $ 21.46 $ 20.97
Period-end common share mkt value 24.50 24.20 25.00 23.00 22.00
Market as a % of book 109.62

%

 

109.55

%

 

116.12

%

 

107.18

%

 

104.91

%

 

Price-to-earnings ratio 11.14 11.31 11.79 10.85 10.23
Cash dividends/common share $ 0.19 $ 0.19 $ 0.19 $ 0.19 $ 0.19 $ 0.76 $ 0.74
Common stock dividend payout ratio 32.20

%

 

33.33

%

 

34.54

%

 

38.78

%

 

35.85

%

 

34.55

%

 

34.42 %
Average basic common shares 2,739,664 2,739,405 2,739,405 2,739,405 2,738,869 2,739,470 2,737,636
Average diluted common shares 2,741,243 2,742,455 2,742,738 2,741,993 2,741,033 2,742,108 2,739,078
Period end common shares outstanding 2,740,996 2,739,405 2,739,405 2,739,405 2,739,405
Common shares repurchased 0 0 0 0 0 0 0
Common stock market capitalization $ 67,154 $ 66,294 $ 68,485 $ 63,006 $ 60,267
 
ASSET QUALITY
Gross charge-offs $ 104 $ 95 $ 39 $ 110 $ 1,033 $ 348 $ 1,422
Net (recoveries) charge-offs (30) 25 32 81 992 108 1,347
Allowance for loan losses 4,662 4,632 4,656 4,494 4,381
Nonperforming assets (NPAs) 1,681 2,018 3,117 3,685 3,949
Net charge-off (recovery) /average loans ratio (0.03)

%

 

0.02

%

 

0.03

%

 

0.08

%

 

0.96

%

 

0.03

%

 

0.33 %
Allowance for loan losses/period-end loans 1.10 1.12 1.12 1.07 1.07
NPAs/loans and other real estate 0.40 0.49 0.75 0.88 0.96
Allowance for loan losses/nonperforming loans 277.35 229.54 149.38 121.96 110.93
 
CAPITAL & LIQUIDITY
Period-end tangible equity to assets 8.69

%

 

8.81

%

 

8.69

%

 

8.63

%

 

8.46

%

 

Average equity to assets 9.38 9.50 9.52 9.37 9.19
Average equity to loans 14.99 14.73 14.25 14.07 13.97
Average loans to deposits 77.95 81.21 83.61 83.34 82.37
 
AVERAGE BALANCES
Assets $ 652,725 $ 632,539 $ 625,032 $ 622,628 $ 621,536 $ 633,298 $ 604,605
Earning assets 615,725 595,806 588,464 586,464 584,536 596,705 567,940
Loans 408,524 408,069 417,347 414,761 409,113 412,147 405,973
Deposits 524,078 502,514 499,157 497,646 496,670 505,913 479,330
Shareholders' equity 61,230 60,112 59,473 58,351 57,134 59,799 55,529
 
ENDING BALANCES
Assets $ 650,314 $ 632,381 $ 622,956 $ 625,088 $ 620,981
Earning assets 610,251 597,476 584,510 588,174 582,629
Loans 422,871 412,974 415,198 420,861 410,903
Deposits 525,042 505,088 496,404 497,333 500,075
Shareholders' equity     61,266       60,504       58,966       58,791       57,450                  
 
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) 2015 2014
ASSETS
Cash and cash equivalents
Cash and due from banks $ 17,341 $ 15,310
Interest-earning deposits in other banks 20,931 28,613
Federal Funds Sold   -   -
Total cash and cash equivalents 38,272 43,923
Securities
Available-for-sale, at fair-value 127,969 100,108
Held-to-maturity 33,819 38,316
Restricted stock, at cost   4,614   4,614
Total securities 166,402 143,038
Loans held for sale 47 75
Loans 422,871 410,903
Less allowance for loan losses   4,662   4,381
Net loans 418,209 406,522
 
Goodwill and core deposit intangible 5,232 5,357
Bank owned life insurance 10,085 9,815
Premises and equipment, net 8,209 8,286
Accrued interest receivable and other assets   3,858   3,965
 
TOTAL ASSETS $ 650,314 $ 620,981
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing $ 151,549 $ 139,251
Interest-bearing   373,493   360,824
Total deposits 525,042 500,075
 
Short-term borrowings 48,598 46,627
Other borrowings 13,465 14,953
Accrued interest payable and other liabilities   1,943   1,876
Total liabilities   589,048   563,531
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 9,846 9,884
Retained earnings 38,030 34,090

Treasury stock at cost - 239,606 shares in 2015 and 241,197 in 2014

(4,822) (4,871)
Accumulated other comprehensive loss   (417)   (282)
Total shareholders' equity   61,266   57,450
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 650,314 $ 620,981
 
CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
 

Quarter ended

Twelve months ended

(Unaudited)

Dec 31,

  

Dec 31,

(Dollars in thousands, except per share data) 2015   2014 2015   2014
Interest and dividend income:

 

Loans, including fees $ 4,618 $ 4,585 $ 18,548 $ 18,290
Taxable securities 749 675 2,790 2,857
Nontaxable securities 154 121 563 466
Other   38   20   96 43
Total interest and dividend income   5,559   5,401   21,997 21,656
Interest expense:
Deposits 266 282 1,081 1,166
Other   120   132   486 563
Total interest expense   386   414   1,567 1,729
Net interest income 5,173 4,987 20,430 19,927
Provision for loan losses   -   185   389 643

Net interest income after provision for loan losses

  5,173   4,802   20,041   19,284
Noninterest income
Service charges on deposits accounts 287 332 1,203 1,269
Trust services 217 193 860 811
Debit card interchange fees 265 242 988 910
Gain on sale of loans 57 53 363 198
Gain on sale of securities - - 56 133
Other   245   241   954 929
Total noninterest income   1,071   1,061   4,424 4,250
 
Noninterest expenses
Salaries and employee benefits 2,223 2,068 8,819 8,321
Occupancy expense 251 252 1,027 1,014
Equipment expense 166 166 663 715
Professional and director fees 165 197 830 725
Software expense 202 216 801 727
Marketing and public relations 133 111 419 378
Debit card expense 103 125 413 421
Other expenses   687   652   2,824 2,781
Total noninterest expenses   3,930   3,787   15,796 15,082
Income before income tax 2,314 2,076 8,669 8,452
Federal income tax provision   707   637   2,647 2,568
 
Net income $ 1,607 $ 1,439 $ 6,022 $ 5,884
Net income per share:
Basic $ 0.59 $ 0.53 $ 2.20 $ 2.15
 
Diluted $ 0.59 $ 0.53 $ 2.20 $ 2.15