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CSB Bancorp, Inc. Reports Fourth Quarter Earnings

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

Fourth Quarter Highlights

Quarter Ended
December 31, 2020

Quarter Ended
December 31, 2019

Diluted earnings per share

$

0.97

$

0.95

Net Income

$

2,679,000

$

2,593,000

Return on average common equity

11.45

%

12.13

%

Return on average assets

1.05

%

1.27

%

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced fourth quarter 2020 net income of $2,679,000, or $0.97 per basic and diluted share, as compared to $2,593,000, or $0.95 per basic and diluted share, for the same period in 2019. Income before federal income tax amounted to $3,319,000, an increase of 3% over the same quarter in the prior year. For the twelve-month period ended December 31, 2020 net income totaled $10,568,000 compared to $10,414,000 for the same period last year, an increase of 1.5%.

Annualized returns on average common equity ("ROE") and average assets ("ROA") for the quarter were 11.45% and 1.05%, respectively, compared with 12.13% and 1.27% for the fourth quarter of 2019.

Eddie Steiner, President and CEO stated, "Full year net income increased 1.5% from the prior year, with fourth quarter net income 3% above last year’s ending quarter. Factors related to the COVID-19 pandemic, including very low prevailing interest rates and various government stimulus measures have appreciably curtailed business borrowing levels and compressed net interest margins. However, strong demand for home mortgage originations and Paycheck Protection Program (PPP) lending have combined to offset the softer earnings performance in other areas of the bank. CSB is in an excellent position to continue supporting our markets, and we are actively lending in all areas of consumer and business borrowing needs, including the newest round of PPP funding activities."

Net interest income and noninterest income, on a fully taxable equivalent basis, totaled $9.3 million during the quarter, an increase of $693 thousand from the prior-year fourth quarter. Net interest income increased $55 thousand, or 1%, in the fourth quarter of 2020 compared to the same period in 2019.

Loan interest income including fees increased $152 thousand during fourth quarter 2020 as compared to the same quarter in 2019, an increase of 2%. Average total loan balances during the current quarter were $65 million higher than the year ago quarter, an increase of 12%. Loan yields for fourth quarter 2020 averaged 4.63%, a decrease of 42 basis points from the 2019 fourth quarter average of 5.05%.

The net interest margin was 2.97% compared to 3.73% for fourth quarter 2019. The tax equivalency effect on the margin remained stable at 0.02% in the comparable fourth quarters.

Due to COVID related factors, an increased provision for loan losses of $378 thousand was recognized for the fourth quarter ended December 31, 2020 as compared to $285 thousand for the prior year quarter. Credit quality within the loan portfolio has not been significantly affected by COVID factors to date. However, a significant degree of COVID-related uncertainty remains, and the eventual damage to household and business balance sheets cannot be fully measured at this time.

Noninterest income increased 44%, compared to fourth quarter of 2019, fueled by historic growth in gain on sale of real estate loans into the secondary market, increases in debit card fee income, and bank owned life insurance values. These increases were partially offset by decreases in service charges on deposit accounts as both consumer and business accounts maintained increased deposit balances from government stimulus payments and loans provided by the bank within the PPP.

Noninterest expense increased 10% from fourth quarter 2019. Salary and employee benefit costs increased $191 thousand, or 7%, compared to the prior year quarter, as a result of increases in base compensation and commissions, incentive accruals, medical insurance costs and employers FICA expense. FDIC insurance expense increased $100 thousand as the prior year quarter reflected the use of Small Bank Assessment Credits. Software increased by $82 thousand reflecting investment in new platforms. Professional and directors’ fees increased $72 thousand, or 20%, reflecting increases in outside service fees. Marketing and public relations decreased by $21 thousand, or 16%, reflecting the continuing pandemic-related shut down of activities in fourth quarter 2020. The Company’s fourth quarter efficiency ratio increased to 59.8% compared to 58.7%.

Federal income tax expense totaled $640 thousand in fourth quarter 2020, as compared to $623 thousand tax expense for the same quarter in 2019. The effective tax rate approximated 19% in both periods.

Average total assets during the quarter rose to $1 billion, an increase of $206 million, or 25%, above the same quarter of the prior year. Liquidity increased as the Company’s average interest-bearing balances with banks increased $103 million during the quarter to $194 million as compared to the fourth quarter in 2019. Average loan balances of $619 million increased $65 million, or 12%, from the prior year fourth quarter while average securities balances of $153 million increased $36 million, or 30%, as compared to fourth quarter 2019.

Average commercial loan balances for the quarter, including commercial real estate, increased $64 million, or 18%, from prior year levels. This amount includes $84 million in average PPP loan balances originated in 2020. Excluding average PPP loan balances, commercial loans decreased year over year as borrowers reduced outstanding commercial line balances during the pandemic-related contraction in economic activity. Average residential mortgage balances increased $9 million, or 8%, over the prior year’s quarter while home equity lines of credit decreased $7 million over the prior year’s quarter as they were refinanced into low-rate term mortgages. Average consumer credit balances decreased $2 million, or 9%, versus the same quarter of the prior year.

Nonperforming assets decreased $162 thousand from December 31, 2019 to $4.5 million, or 0.74%, of total loans plus other real estate on December 31, 2020. On December 31, 2020, 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, 2020 decreased to 0.88% of total loans as compared to 1.02% on December 31, 2019.

Net loan charge-offs recognized during fourth quarter 2020 were $459 thousand, or 0.29% annualized, compared to fourth quarter 2019 net loan losses of $45 thousand. The allowance for loan losses amounted to 1.36% of total loans on December 31, 2020 as compared to 1.27% on December 31, 2019.

Average deposit balances grew on a quarter over prior year quarter comparison by $195 million, or 29%. For the fourth quarter 2020, the average cost of deposits amounted to 0.27%, as compared to 0.52% for the fourth quarter 2019. During the fourth quarter 2020, increases in average deposit balances over the prior year quarter included noninterest-bearing demand accounts of $58 million and interest-bearing demand and savings accounts of $140 million. The average balance of securities sold under repurchase agreement during the fourth quarter of 2020 increased by $2 million, or 6%, compared to the average for the same period in the prior year.

Shareholders’ equity totaled $93.9 million on December 31, 2020 with 2.7 million common shares outstanding. The average equity to assets ratio amounted to 9.1% on December 31, 2020 and 10.4% on December 31, 2019. The Company declared a fourth quarter dividend of $0.29, producing an annualized yield of 3.3% based on the December 31, 2020 closing price of $35.00.

Cares Act and related events

A second stimulus bill was signed into law on December 27, 2020 adding additional emergency relief to the March 2020 Cares Act. The December relief effort includes a second round of SBA’s PPP for qualifying businesses as well as additional emergency relief programs. We facilitated and funded more than 750 of these government assistance loans totaling approximately $92 million in the first round. As of December 31, 2020, $22 million has been received from the SBA in forgiveness and we expect the majority of the PPP loan dollars will ultimately qualify for borrower forgiveness under the guidelines of the SBA program. We have begun to originate second round PPP loans in January 2021 and have underwritten over $18 million in additional applications during the first few days of the program.

During the year we also extended loan modifications to qualifying commercial and consumer loan customers to deal with the uncertainty of the economy. Customers could request relief from their total payment or place their obligation on interest only for a period of 3-4 months, with maturities extended on these modified loans. As of December 31, 2020, loans which have not reentered regular payment include $12 million of term commercial loans and $475 thousand of consumer loans.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $1 billion as of December 31, 2020. 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)

2020

2020

2020

2020

2019

2020

2019

EARNINGS

4th Qtr

3rd Qtr

2nd Qtr

1st Qtr

4th Qtr

12 months

12 months

Net interest income FTE (a)

$

7,223

$

7,077

$

7,048

$

6,953

$

7,168

$

28,301

$

28,556

Provision for loan losses

378

377

717

178

285

1,650

1,140

Other income

2,089

1,862

1,641

1,343

1,451

6,935

5,428

Other expenses

5,576

5,050

4,709

5,007

5,079

20,342

19,769

FTE adjustment (a)

39

36

36

37

39

148

157

Net income

2,679

2,800

2,606

2,483

2,593

10,568

10,414

Diluted earnings per share

0.97

1.02

0.95

0.91

0.95

3.85

3.80

PERFORMANCE RATIOS

Return on average assets (ROA), annualized

1.05

%

1.14

%

1.15

%

1.23

%

1.27

%

1.13

%

1.36

%

Return on average common equity (ROE), annualized

11.45

12.19

11.72

11.47

12.13

11.71

12.77

Net interest margin FTE (a)

2.97

3.04

3.29

3.67

3.73

3.22

3.97

Efficiency ratio

59.75

56.32

54.05

60.08

58.74

57.55

58.00

Number of full-time equivalent employees

171

169

169

172

171

MARKET DATA

Book value/common share

$

34.23

$

33.49

$

32.81

$

31.95

$

31.17

Period-end common share mkt value

35.00

30.00

32.00

35.00

40.97

Market as a % of book

102.25

%

89.58

%

97.53

%

109.55

%

131.44

%

Price-to-earnings ratio

9.09

7.83

8.44

9.26

10.78

Cash dividends/common share

$

0.29

$

0.28

$

0.28

$

0.28

$

0.28

$

1.13

$

1.08

Common stock dividend payout ratio

29.90

%

27.45

%

29.47

%

30.77

%

29.47

%

29.35

%

28.42

%

Average basic common shares

2,742,350

2,742,350

2,742,350

2,742,350

2,742,350

2,742,350

2,742,296

Average diluted common shares

2,742,350

2,742,350

2,742,350

2,742,350

2,742,350

2,742,350

2,742,296

Period end common shares outstanding

2,742,350

2,742,350

2,742,350

2,742,350

2,742,350

Common stock market capitalization

$

95,982

$

82,271

$

87,755

$

95,982

$

112,354

ASSET QUALITY

Gross charge-offs

$

511

$

28

$

17

$

86

$

59

$

642

$

258

Net charge-offs (recoveries)

459

(143

)

3

74

44

393

30

Allowance for loan losses

8,274

8,355

7,835

7,120

7,017

Nonperforming assets (NPAs)

4,497

4,102

4,481

4,468

4,659

Net charge-off (recovery) /average loans ratio

0.29

%

(0.09

)%

0.00

%

0.05

%

0.03

%

0.06

%

0.01

%

Allowance for loan losses/period-end loans

1.36

1.33

1.23

1.28

1.27

NPAs/loans and other real estate

0.74

0.65

0.70

0.80

0.84

Allowance for loan losses/nonperforming loans

183.99

203.71

178.78

162.97

154.55

CAPITAL & LIQUIDITY

Period-end tangible equity to assets

8.68

%

8.86

%

8.90

%

10.28

%

9.91

%

Average equity to assets

9.13

9.33

9.79

10.72

10.43

Average equity to loans

15.02

14.39

14.38

15.55

15.29

Average loans to deposits

70.81

76.22

80.95

82.61

81.62

AVERAGE BALANCES

Assets

$

1,018,770

$

979,806

$

912,875

$

812,409

$

812,481

$

931,330

$

765,722

Earning assets

966,304

926,377

860,838

761,619

763,244

879,153

719,127

Loans

619,455

635,124

621,710

560,142

554,556

609,207

552,014

Deposits

874,820

833,288

767,988

678,090

679,473

788,904

636,441

Shareholders' equity

93,042

91,409

89,404

87,090

84,777

90,247

81,547

ENDING BALANCES

Assets

$

1,031,632

$

987,978

$

965,179

$

810,041

$

818,683

Earning assets

977,092

936,323

913,813

757,769

767,345

Loans

609,159

628,084

636,799

555,320

551,633

Deposits

891,562

840,656

815,961

671,162

683,546

Shareholders' equity

93,859

91,853

89,967

87,629

85,476

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, and is considered a non-GAAP measure.

CSB BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

December 31,

December 31,

(Dollars in thousands, except per share data)

2020

2019

ASSETS

Cash and cash equivalents

Cash and due from banks

$

19,281

$

17,648

Interest-earning deposits in other banks

162,371

84,369

Total cash and cash equivalents

181,652

102,017

Securities

Available-for-sale, at fair-value

190,438

112,146

Held-to-maturity

9,045

13,869

Equity securities

87

92

Restricted stock, at cost

4,614

4,614

Total securities

204,184

130,721

Loans held for sale

1,378

622

Loans

609,159

551,633

Less allowance for loan losses

8,274

7,017

Net loans

600,885

544,616

Premises and equipment, net

12,633

12,040

Goodwill and core deposit intangible

4,772

4,831

Bank owned life insurance

21,416

18,894

Accrued interest receivable and other assets

4,712

4,942

TOTAL ASSETS

$

1,031,632

$

818,683

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities

Deposits:

Noninterest-bearing

$

272,051

$

193,425

Interest-bearing

619,511

490,121

Total deposits

891,562

683,546

Short-term borrowings

37,215

38,889

Other borrowings

4,664

6,330

Accrued interest payable and other liabilities

4,332

4,442

Total liabilities

937,773

733,207

Shareholders' equity

Common stock, $6.25 par value. Authorized 9,000,000 shares; issued 2,980,602 shares in 2020 and 2019

18,629

18,629

Additional paid-in capital

9,815

9,815

Retained earnings

69,209

61,740

Treasury stock at cost - 238,252 shares in 2020 and 2019

(4,780

)

(4,780

)

Accumulated other comprehensive income

986

72

Total shareholders' equity

93,859

85,476

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,031,632

$

818,683

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

Quarter ended

Twelve months ended

(Unaudited)

December 30,

December 30,

(Dollars in thousands, except per share data)

2020

2019

2020

2019

Interest and dividend income:

Loans, including fees

$

7,209

$

7,057

$

28,354

$

28,553

Taxable securities

421

542

1,882

2,247

Nontaxable securities

121

130

464

532

Other

53

381

366

1,129

Total interest and dividend income

7,804

8,110

31,066

32,461

Interest expense:

Deposits

584

898

2,723

3,609

Short-term and other borrowings

36

83

190

453

Total interest expense

620

981

2,913

4,062

Net interest income

7,184

7,129

28,153

28,399

Provision for loan losses

378

285

1,650

1,140

Net interest income after provision for loan losses

6,806

6,844

26,503

27,259

Noninterest income

Service charges on deposits accounts

250

313

1,003

1,252

Trust services

234

229

896

899

Debit card interchange fees

453

389

1,661

1,481

Gain on sale of loans

762

174

1,951

462

Market value change in equity securities

5

-

(4

)

9

Other

385

346

1,428

1,325

Total noninterest income

2,089

1,451

6,935

5,428

Noninterest expenses

Salaries and employee benefits

3,104

2,913

11,707

11,663

Occupancy expense

242

215

953

832

Equipment expense

151

163

657

571

Professional and director fees

441

369

1,284

1,332

Software expense

346

264

1,101

938

Marketing and public relations

109

130

398

535

Debit card expense

171

153

621

554

Other expenses

1,012

872

3,621

3,344

Total noninterest expenses

5,576

5,079

20,342

19,769

Income before income tax

3,319

3,216

13,096

12,918

Federal income tax provision

640

623

2,528

2,504

Net income

$

2,679

$

2,593

$

10,568

$

10,414

Net income per share:

Basic

$

0.97

$

0.95

$

3.85

$

3.80

Diluted

$

0.97

$

0.95

$

3.85

$

3.80

View source version on businesswire.com: https://www.businesswire.com/news/home/20210125005884/en/

Contacts

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