CSB Bancorp, Inc. (OTCBB: CSBB):

Fourth Quarter and Full Year Highlights

  Quarter Ended   Full Year Ended

December 31, 2011

December 31, 2011

 
Diluted earnings per share

$.30

$1.35

 
Net Income

$820,000

$3,687,000

 
Return on average common equity 6.58% 7.57%
 
Return on average assets 0.61% 0.78%
 

CSB Bancorp, Inc. (OTCBB: CSBB) today announced fourth quarter 2011 net income of $820 thousand or $.30 per basic and diluted share, as compared to $956 thousand or $.35 per basic and diluted share for the same period in 2010.

Annualized returns on average common equity ("ROE") and average assets ("ROA") for the quarter were 6.58% and 0.61%, respectively, compared with 7.95% and 0.83% for the fourth quarter of 2010.

For the full year of 2011, the Company reported net income of $3.7 million or $1.35 per basic and diluted share, as compared to $3.5 million or $1.28 per basic and diluted share in 2010. Full year ROE and ROA were 7.57% and 0.78%, respectively, compared to 7.43% and 0.78% in 2010.

Eddie Steiner, President and CEO commented, "During fourth quarter, the Company acquired two branches located in Wooster, Ohio. The transaction added six thousand new customer relationships, $74 million in deposits, $9 million in loans, and involved $3.7 million in purchase premium. Related acquisition expenses were recognized as incurred, including system conversion and operations integration charges totaling $337 thousand. We anticipate the Wooster branch presence will assist our continued growth in that market."

Revenue totaled $5.2 million for the fourth quarter of 2011, a 7% increase from the prior-year fourth quarter. Full year revenue of $20.1 million reflects a $1 million, or 5%, increase as compared to full year 2010.

Non-interest expense amounted to $3.7 million during the quarter, an increase of $585 thousand or 18% from fourth quarter 2010. For the full year ended December 31, 2011, including the nonrecurring expenses related to purchase and assumption of Wooster, Ohio branch operations, non-interest expense increased $1.1 million or 8% versus 2010.

The Company's fourth quarter efficiency ratio amounted to 71.5% as compared to 64.8% for the same quarter in the prior year. Excluding the aforementioned nonrecurring expenses, the fourth quarter efficiency ratio equated to 69.5%. The full year 2011 efficiency ratio of 68.1%, including the nonrecurring acquisition and conversion expenses, compares to 66.0% for the full prior year.

Federal income tax provision was $324 thousand for fourth quarter 2011, compared to $440 thousand for the same quarter in 2010. Full year income tax of $1.6 million for 2011 was 2% higher than prior year and reflects an effective tax rate of 30.3% for current year versus 31.0% in 2010.

Average total assets during the quarter amounted to $530 million, an increase of $75 million or 17% above the same quarter of the prior year. Average loan balances of $320 million were $5 million or 1% above prior year fourth quarter, while average securities balances of $116 million increased $40 million or 53% as compared to fourth quarter 2010.

Total assets amounted to $551 million on December 31, 2011, up $94 million or 21% from December 31, 2010. Net loans increased to $320 million, up $8 million or 3% from the prior year-end, while securities balances of $128 million were $48 million or 59% higher than year ago balances.

Average commercial loan balances for the quarter, including commercial real estate, increased $12 million or 6% above year ago levels. Average residential mortgage balances declined by $11 million or 15% during the year. The decline of in-house mortgage balances was primarily due to customers continuing to select secondary market mortgage products because of the historic low interest rates prevailing in those fixed rate products. Average home equity balances increased $3 million or 10%, and average consumer credit balances increased $81 thousand or 1% versus the same quarter of the prior year.

Net charge-offs for the quarter and the full year were $275 thousand and $900 thousand, respectively. Net charge-offs equated to 0.28% of average loans during 2011 as compared to 0.40% during 2010.

Nonperforming assets totaled $3.5 million or 1.08% of total loans plus other real estate at December 31, 2011, compared to $4.6 million or 1.47% at the prior year-end. Delinquent loan balances as of year-end 2011 amounted to 2.04% of total loans as compared to 2.55% at the end of 2010.

The Company funded $240 thousand in loan loss provision during the fourth quarter and the allowance for loan losses amounted to 1.26% of total loans on December 31, 2011. The ratio of the allowance for loan losses to nonperforming loans stood at 117% at the end of 2011.

Commenting on the Company's credit quality, Steiner noted, "Our level of nonperforming assets remains somewhat elevated, but each quarter of 2011 reflected improvement as compared to the prior year quarter. Early stage delinquencies within the loan portfolio at the end of 2011 are also lower than prior year levels."

Average deposit balances grew by $72 million, or 20%, during the fourth quarter, attributable almost entirely to the Wooster market transaction. Total average deposits of $422 million for the quarter were 22% above the prior year's fourth quarter average.

Deposit balances totaled $444 million at year-end, an increase of $90 million or 25% from the prior year-end. Within the deposit category, average non interest-bearing account balances for the fourth quarter increased by $16 million, or 23% above the same period in the prior year. Average interest-bearing checking, money market and traditional savings balances increased $42 million or 33% from year ago levels, while average time deposit balances grew by $18 million or 12% during the year. In addition to the changes in average deposit balances, the average balance of securities sold under repurchase agreement during the fourth quarter grew by $4 million or 13% above the average for the same period in the prior year. Repurchase agreements, while considered short-term borrowings, are primarily tied to overnight customer sweep accounts.

Shareholders' equity totaled $49.4 million on December 31, 2011 with 2.7 million common shares outstanding. The tangible equity to assets ratio amounted to 8.0% on December 31, 2011, as compared to 9.9% on December 31, 2010. The Company declared a common dividend of $.18 per share during the quarter. Based on the December 31, 2011 closing stock price of $16.75 per share, the Company's annual dividend yield approximates 4.3%.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $551 million as of December 31, 2011. 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)
(Dollars in thousands except per share data)
Quarters
2011 2011 2011 2011 2010 2011 2010
EARNINGS     4th Qtr   3rd Qtr   2nd Qtr   1st Qtr   4th Qtr 12 months 12 months
Net interest income FTE (a) $ 4,280

 

$

4,163

 

$

4,158

 

$

3,995

 

$

3,959

 

$

16,596

 

$

15,796
Provision for loan losses 240 240 190 280 239 950 1,235
Other income 920 1,045 784 759 898 3,508 3,275
Other expenses 3,748 3,460 3,283 3,118 3,163 13,609 12,546
FTE adjustment (a) 67 66 62 61 60 256 226
Net income 820 999 972 896 956 3,687 3,496
Diluted earnings per share 0.30 0.37 0.35 0.33 0.35 1.35 1.28
 
PERFORMANCE RATIOS
Return on average assets (ROA) 0.61 % 0.87 % 0.87 % 0.80 % 0.83 % 0.78 % 0.78 %
Return on average common equity (ROE) 6.58 % 8.04 % 8.06 % 7.67 % 7.95 % 7.57 % 7.43 %
Net interest margin FTE (a) 3.38 % 3.83 % 3.93 % 3.78 % 3.64 % 3.71 % 3.73 %
Efficiency ratio 71.47 % 69.60 % 66.13 % 65.29 % 64.80 % 68.11 % 65.96 %
Number of full-time equivalent employees 154 144 143 142 140
 
MARKET DATA
Book value/common share $ 18.07

 

$

17.99

 

$

17.75

 

$

17.35

 

$

17.24
Period-end common share mkt value 16.75 15.00 15.50 15.20 15.57
Market as a % of book 92.70 % 83.38 % 87.32 % 87.61 % 90.31 %
Price-to-earnings ratio 12.41 10.71 11.48 11.34 12.16
Cash dividends/common share $ 0.18

 

$

0.18

 

$

0.18

 

$

0.18

 

$

0.18

 

$

0.72

 

$

0.72
Common stock dividend payout ratio 60.00 % 48.65 % 51.43 % 54.55 % 51.43 %
Average basic common shares 2,734,799 2,734,799 2,734,799 2,734,799 2,734,799 2,734,799 2,734,799
Average diluted common shares 2,735,229 2,734,799 2,734,831 2,734,812 2,734,836 2,734,838 2,734,799
Period end common shares outstanding 2,734,799 2,734,799 2,734,799 2,734,799 2,734,799
Common shares repurchased 0 0 0 0 0 0 0
Common stock market capitalization $ 45,808

 

$

41,022

 

$

42,389

 

$

41,569

 

$

42,581
 
ASSET QUALITY
Gross charge-offs $ 328

 

$

192

 

$

178

 

$

316

 

$

621

 

$

1,014

 

$

1,389
Net charge-offs (recoveries) 275 178 164 283 615 900 1,264
Allowance for loan losses 4,082 4,116 4,054 4,028 4,031
Nonperforming assets (NPAs) 3,500 4,000 3,974 3,943 4,626
Net charge-off/average loans ratio 0.34 % 0.22 % 0.21 % 0.36 % 0.77 % 0.28 % 0.40 %
Allowance for loan losses/period-end loans 1.26 1.31 1.28 1.25 1.28
NPAs/loans and other real estate 1.08 1.27 1.25 1.22 1.47
Allowance for loan losses/nonperforming loans 116.96 117.77 115.30 102.93 87.84
 
CAPITAL & LIQUIDITY
Period-end tangible equity to assets 8.01 % 10.33 % 10.38 % 10.23 % 9.90 %
Average equity to assets 9.33 10.84 10.80 10.49 10.49
Average equity to loans 15.46 15.60 15.13 14.82 15.13
Average loans to deposits 75.78 90.07 91.77 91.44 91.15
 
AVERAGE BALANCES
Assets $ 530,049

 

$

454,685

 

$

448,205

 

$

451,666

 

$

454,657

 

$

471,329

 

$

445,649
Earning assets 502,198 431,271 424,925 428,686 431,661 446,929 422,996
Loans 319,852 315,750 319,906 319,646 315,348 318,781 313,549
Deposits 422,094 350,577 348,601 349,574 345,962 367,865 334,073
Shareholders' equity 49,454 49,265 48,389 47,387 47,703 48,674 47,081
 
ENDING BALANCES
Assets $ 551,233

 

$

457,849

 

$

449,552

 

$

445,361

 

$

457,056
Earning assets 522,410 435,806 427,281 422,793 434,876
Loans 324,182 313,980 316,581 322,017 315,647
Deposits 443,553 354,856 347,258 348,209 353,491
Shareholders' equity 49,429 49,191 48,538 47,457 47,154
                                                           
 

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)
dollars in thousands, except per share data
December 31, December 31,
2011 2010
ASSETS
Cash and cash equivalents
Cash and due from banks $ 12,519 $ 9,798
Interest-earning deposits in other banks 69,739 38,497
Federal funds sold   -   65
Total cash and cash equivalents 82,258 48,360
Securities
Available-for-sale, at fair-value 123,026 75,204
Restricted stock, at cost   5,463   5,463
Total securities 128,489 80,667
Loans held for sale - -
Loans 324,182 315,647
Less allowance for loan losses   4,082   4,031
Net loans 320,100 311,616
 
Goodwill and core deposit intangible 5,762 2,131
Bank owned life insurance 3,068 2,961
Premises and equipment, net 8,513 7,878
Accrued interest receivable and other assets   3,043   3,443
 
TOTAL ASSETS $ 551,233 $ 457,056
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing $ 85,890 $ 69,151
Interest-bearing   357,663   284,340
Total deposits 443,553 353,491
 
Short-term borrowings 37,073 32,018
Other borrowings 19,161 22,909
Accrued interest payable and other liabilities   2,017   1,484
Total liabilities   501,804   409,902
Shareholders' equity
Common stock, $6.25 par value. Authorized
9,000,000 shares; issued 2,980,602 shares
in 2011 and 2010 18,629 18,629
Additional paid-in capital 9,994 9,994
Retained earnings 24,391 22,673

Treasury stock at cost - 245,803 shares in 2011 and 2010

(5,015) (5,015)
Accumulated other comprehensive income   1,430   873
Total shareholders' equity   49,429   47,154
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 551,233 $ 457,056
 
                 
CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
 
(Unaudited)
dollars in thousands, except per share data

Quarter ended

Year ended

December 31,

December 31,

2011 2010 2011 2010
Interest and dividend income:
Loans, including fees $ 4,232 $ 4,340 $ 16,977 $ 17,311
Taxable securities 729 585 2,538 2,648
Nontaxable securities 111 97 421 354
Other   39   25   82   77
Total interest and dividend income   5,111   5,047   20,018   20,390
Interest expense:
Deposits 710 868 2,864 3,509
Other   189   279   814   1,311
Total interest expense   899   1,147   3,678   4,820
 
Net interest income 4,212 3,900 16,340 15,570
Provision for loan losses   240   239   950   1,235
Net interest income after provision
for loan losses   3,972   3,661   15,390   14,335
Non-interest income
Service charges on deposits accounts 324 276 1,134 1,126
Trust services 173 253 677 655
Securities gains (losses), net 0 0 237 148
Gain on sale of loans 65 89 219 242
Other   358   280   1,241   1,104
Total non-interest income   920   898   3,508   3,275
Non-interest expenses
Salaries and employee benefits 2,047 1,780 7,459 6,880
Occupancy expense 259 199 890 808
Equipment expense 154 121 524 497
Franchise tax expense 145 131 550 536
Professional and director fees 176 174 713 631
Federal deposit insurance 99 69 352 486
Amortization of intangible assets 33 16 78 63
Other expenses   835   673   3,043   2,645
Total non-interest expenses   3,748   3,163   13,609   12,546
Income before income tax 1,144 1,396 5,289 5,064
Federal income tax provision   324   440   1,602   1,568
 
Net income $ 820 $ 956 $ 3,687 $ 3,496
Net income per share:
Basic $ 0.30 $ 0.35 $ 1.35 $ 1.28
 
Diluted $ 0.30 $ 0.35 $ 1.35 $ 1.28
 

Note: Certain prior year balances have been reclassified to conform to the current year presentation.

CSB Bancorp, Inc.
Paula J. Meiler, SVP & CFO, 330-763-2873
paula.meiler@csb1.com