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

Fourth Quarter Highlights

    
Quarter Ended Quarter Ended
December 31, 2018 December 31, 2017
Diluted earnings per share $ 0.91 $ 0.65
Net Income $ 2,492,000 $ 1,779,000
Return on average common equity 13.20 % 10.02 %
Return on average assets 1.36 % 0.99 %
 

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced fourth quarter 2018 net income of $2,492,000, or $.91 per basic and diluted share, as compared to $1,779,000, or $.65 per basic and diluted share, for the same period in 2017. Income before federal income tax amounted to $3.1 million, an increase of 16% over the same quarter in the prior year. For the twelve month period ended December 31, 2018 net income totaled $9,412,000, compared to $7,101,000 for the same period last year, an increase of 33%.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 13.20% and 1.36%, respectively, compared with 10.02% and 0.99% for the fourth quarter of 2017.

Eddie Steiner, President and CEO stated, “We are pleased to report record fourth quarter and full year earnings as we continue to grow and increase market share in our primary counties. Average loan balances increased for the thirteenth consecutive quarter, while net interest margin improved for the sixth consecutive quarter. Year-end loan balances reflect 6% growth during 2018, with deposit balances 4% above prior year end.”

Net interest income and noninterest income, on a fully-taxable equivalent basis, totaled $8.2 million during the quarter, a 7% increase from the prior-year fourth quarter. Net interest income increased $474 thousand, or 7%, in the fourth quarter of 2018 compared to the same period in 2017.

Loan interest income including fees increased $720 thousand during fourth quarter 2018 as compared to the same quarter in 2017, an increase of 12%. Average total loan balances during the current quarter were $30 million higher than the year ago quarter an increase of 6%. Loan yields for fourth quarter 2018 averaged 5.03%, an increase of 25 basis points from the 2017 fourth quarter average of 4.78%.

The net interest margin was 4.01% compared to 3.84% for fourth quarter 2017. The tax equivalency effect on the margin dropped to 0.01% from 0.06% a result of the reduction in the corporate income tax rate in 2018.

Noninterest income increased by $150 thousand, or 13%, in the fourth quarter of 2018 compared to 2017. The increase reflects growth in debit card fee income, trust and brokerage income, and service charges on deposit accounts.

Noninterest expense amounted to $4.7 million during the quarter, an increase of $29 thousand, or less than 1%, from fourth quarter 2017. Salary and employee benefit costs increased $188 thousand, or 7%, compared to the prior year quarter, as a result of higher wage and 401k retirement expenses. Debit card expense increased by $24 thousand, or 19%, on a quarter over quarter basis primarily on expanded channel advertising and increasing community donations. The Company’s fourth quarter efficiency ratio was 57.3% as compared to 61.0% for the same quarter in the prior year.

Federal income tax provision was a $619 thousand expense in fourth quarter 2018, as compared to $901 thousand tax expense provision for the same quarter in 2017. The 2017 fourth quarter tax expense included a $101 thousand expense revaluation of the net deferred tax asset at the lower statutory rate. The effective tax rate, exclusive of the revaluation, decreased from 31% to 20% a result of the Tax Cuts and Jobs Act enacted December 2017.

Average total assets during the quarter amounted to $728 million, an increase of $12 million, or 2%, above the same quarter of the prior year. Average loan balances of $541 million increased $30 million, or 6%, from the prior year fourth quarter while average securities balances of $113 million decreased $14 million, or 11%, as compared to fourth quarter 2017.

Average commercial loan balances for the quarter, including commercial real estate, increased $17 million, or 5%, from prior year levels. Average residential mortgage balances increased $8 million, or 7%, over the prior year’s quarter. Average consumer credit balances increased $5 million, or 8%, versus the same quarter of the prior year.

Nonperforming assets decreased $3.1 million from December 31, 2017 to $3.4 million, or 0.62%, of total loans plus other real estate at December 31, 2018. The decrease in nonperforming assets is the result of various commercial loans exiting through liquidation during 2018. At December 31, 2018, 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, 2018 declined to 0.84% of total loans as compared to 1.53% at December 31, 2017.

Net loan losses during fourth quarter 2018 were $641 thousand, or 0.47% annualized, compared to fourth quarter 2017 net loan losses of $12 thousand. Full year net charge-offs amounted to 0.19% in 2018 as compared to 0.17% in the prior year. The allowance for loan losses amounted to 1.08% of total loans at December 31, 2018 as compared to 1.08% at December 31, 2017.

Average deposit balances grew on a year over year comparison by $36 million, or 7%, partially on the strength of customer response to higher rates paid on insured deposits. For the full year 2018, the average cost of deposits amounted to 0.40%, as compared to 0.24% in 2017. During the fourth quarter 2018, increases in average deposit balances over the prior year quarter included non-interest bearing demand accounts of $13 million and savings accounts of $7 million. The average balance of securities sold under repurchase agreement during the fourth quarter of 2018 decreased by $4 million, or 10%, compared to the average for the same period in the prior year. During 2017, a new corporate overnight cash management product was established within interest-bearing checking and at December 31, 2018 the new product had balances of $23 million.

Shareholders’ equity totaled $76.5 million on December 31, 2018 with 2.7 million common shares outstanding. The tangible equity to assets ratio amounted to 9.9% on December 31, 2018 and 9.3% on December 31, 2017. The Company declared a fourth quarter dividend of $0.26 per share, a $.04 per share increase over fourth quarter 2017, producing an annualized yield of 2.7% based on the December 31, 2018 closing price of $38.50.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $732 million as of December 31, 2018. 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) 2018 2018 2018 2018 2017 2018 2017
EARNINGS   4th Qtr   3rd Qtr   2nd Qtr   1st Qtr   4th Qtr   12 months   12 months
Net interest income FTE (a) $ 6,934 $ 6,847 $ 6,697 $ 6,436 $ 6,532 $ 26,913 $ 24,833
Provision for loan losses 344 324 324 324 180 1,316 1,145
Other income 1,270 1,175 1,168 1,145 1,120 4,758 4,340
Other expenses 4,725 4,638 4,619 4,537 4,696 18,518 17,316
FTE adjustment (a) 24 46 45 47 96 162 381
Net income 2,492 2,432 2,324 2,164 1,779 9,412 7,101
Diluted earnings per share 0.91 0.88 0.85 0.79 0.65 3.43 2.59
 
PERFORMANCE RATIOS
Return on average assets (ROA) 1.36 % 1.34 % 1.30 % 1.25 % 0.99 % 1.31 % 1.02 %
Return on average common equity (ROE) 13.20 % 13.07 % 12.94 % 12.33 % 10.02 % 12.89 % 10.33 %
Net interest margin FTE (a) 4.01 % 4.00 % 3.98 % 3.95 % 3.84 % 3.98 % 3.80 %
Efficiency ratio 57.26 % 57.45 % 58.41 % 59.52 % 60.99 % 58.14 % 58.96 %
Number of full-time equivalent employees 170 174 174 171 174
 
MARKET DATA
Book value/common share $ 27.91 $ 26.94 $ 26.47 $ 25.90 $ 25.72
Period-end common share mkt value 38.50 40.57 39.00 35.95 33.11
Market as a % of book 137.94 % 150.59 % 147.34 % 138.80 % 128.73 %
Price-to-earnings ratio 11.22 12.80 13.13 13.07 12.78
Cash dividends/common share $ 0.26 $ 0.24 $ 0.24 $ 0.24 $ 0.22 $ 0.98 $ 0.84
Common stock dividend payout ratio 28.57 % 27.27 % 28.24 % 30.38 % 33.85 % 28.57 % 32.43 %
Average basic common shares 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242
Average diluted common shares 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242
Period end common shares outstanding 2,742,242 2,742,242 2,742,242 2,742,242 2,742,242
Common shares repurchased 0 0 0 0 0
Common stock market capitalization $ 105,576 $ 111,253 $ 106,947 $ 98,584 $ 90,796
 
ASSET QUALITY
Gross charge-offs $ 691 $ 43 $ 45 $ 303 $ 19 $ 1,082 $ 1,204
Net (recoveries) charge-offs 641 38 39 295 12 1,013 832
Allowance for loan losses 5,907 6,204 5,918 5,633 5,604
Nonperforming assets (NPAs) 3,428 5,341 4,399 4,622 6,522
Net charge-off (recovery) /average loans ratio 0.47 % 0.03 % 0.03 % 0.23 % 0.01 % 0.19 % 0.17 %
Allowance for loan losses/period-end loans 1.08 1.16 1.11 1.06 1.08
NPAs/loans and other real estate 0.62 1.00 0.82 0.87 1.26
Allowance for loan losses/nonperforming loans 177.45 116.16 134.52 122.40 85.93
 
CAPITAL & LIQUIDITY
Period-end tangible equity to assets 9.86 % 9.77 % 9.41 % 9.50 % 9.33 %
Average equity to assets 10.29 10.25 10.06 10.16 9.84
Average equity to loans 13.83 13.72 13.47 13.50 13.76
Average loans to deposits 89.88 90.80 90.77 91.89 88.33
 
AVERAGE BALANCES
Assets $ 727,962 $ 720,372 $ 715,902 $ 700,394 $ 715,799 $ 716,243 $ 692,859
Earning assets 686,807 679,281 674,699 660,772 674,234 675,474 652,916
Loans 541,482 538,182 534,852 527,315 511,805 535,506 497,048
Deposits 602,434 592,738 589,211 573,855 579,433 589,646 553,228
Shareholders' equity 74,900 73,844 72,039 71,173 70,419 73,002 68,738
 
ENDING BALANCES
Assets $ 731,722 $ 710,815 $ 723,299 $ 699,967 $ 707,063
Earning assets 682,345 668,468 681,200 662,779 664,365
Loans 548,974 535,424 535,427 530,395 516,830
Deposits 606,498 587,531 595,073 576,418 583,259
Shareholders' equity     76,536       73,877       72,578       71,019       70,532                  
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) 2018 2017
ASSETS
Cash and cash equivalents
Cash and due from banks $ 23,214 $ 17,255
Interest-earning deposits in other banks   22,350     19,165  
Total cash and cash equivalents 45,564 36,420
Securities
Available-for-sale, at fair-value 85,528 97,663
Held-to-maturity 20,688 25,758
Equity securities 83 89
Restricted stock, at cost   4,614     4,614  
Total securities 110,913 128,124
Loans held for sale 108 246
Loans 548,974 516,830
Less allowance for loan losses   5,907     5,604  
Net loans 543,067 511,226
 
Premises and equipment, net 9,961 9,244
Goodwill and core deposit intangible 4,895 4,996
Bank owned life insurance 13,554 13,218
Accrued interest receivable and other assets   3,660     3,589  
 
TOTAL ASSETS $ 731,722   $ 707,063  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:

Noninterest-bearing

$ 185,871 $ 173,671
Interest-bearing   420,627     409,588  
Total deposits 606,498 583,259
 
Short-term borrowings 37,415 39,480
Other borrowings 8,525 11,409
Accrued interest payable and other liabilities   2,748     2,383  
Total liabilities   655,186     636,531  
Shareholders' equity

Common stock, $6.25 par value. Authorized 9,000,000 shares; issued 2,980,602 shares in 2018 and 2017

18,629 18,629
Additional paid-in capital 9,815 9,815
Retained earnings 54,288 47,535

Treasury stock at cost - 238,360 shares in 2018 and 2017

(4,784 ) (4,784 )
Accumulated other comprehensive loss   (1,412 )   (663 )
Total shareholders' equity   76,536     70,532  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 731,722   $ 707,063  
 
     
CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME

Quarter ended

Twelve months ended

(Unaudited)

December 31,

December 31,

(Dollars in thousands, except per share data) 2018 2017 2018 2017
Interest and dividend income:
Loans, including fees $ 6,877 $ 6,157 $ 26,237 $ 23,097
Taxable securities 587 578 2,371 2,374
Nontaxable securities 144 171 608 680
Other   164     108   421   289
Total interest and dividend income   7,772     7,014   29,637   26,440
Interest expense:
Deposits 724 402 2,372 1,344
Other   138     176   514   644
Total interest expense   862     578   2,886   1,988
Net interest income 6,910 6,436 26,751 24,452
Provision for loan losses   344     180   1,316   1,145

Net interest income after provision for loan losses

  6,566     6,256   25,435   23,307
Noninterest income
Service charges on deposits accounts 296 287 1,182 1,133
Trust services 223 207 863 687
Debit card interchange fees 351 311 1,316 1,193
Gain on sale of loans 107 99 307 296
Market value change in equity securities (4 ) - (6 ) -
Other   297     216   1,096   1,031
Total noninterest income   1,270     1,120   4,758   4,340
 
Noninterest expenses
Salaries and employee benefits 2,735 2,547 10,895 10,009
Occupancy expense 205 209 833 869
Equipment expense 137 180 597 665
Professional and director fees 280 303 1,029 963
Software expense 238 246 893 879
Marketing and public relations 145 142 508 401
Debit card expense 150 126 537 536
Other expenses   835     943   3,226     2,994
Total noninterest expenses   4,725     4,696   18,518     17,316
Income before income tax 3,111 2,680 11,675 10,331
Federal income tax provision   619     901   2,263     3,230
Net income $ 2,492   $ 1,779 $ 9,412   $ 7,101
Net income per share:
Basic $ 0.91   $ 0.65 $ 3.43   $ 2.59
 
Diluted $ 0.91   $ 0.65 $ 3.43   $ 2.59