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8-K - FORM 8-K - CSB BANCORP INC /OHd50425d8k.htm

Exhibit 99.1

 

LOGO

CSB BANCORP, INC. REPORTS SECOND QUARTER EARNINGS

Second Quarter Highlights

 

     Quarter Ended
June 30, 2015
    Quarter Ended
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

Millersburg, Ohio – July 21, 2015 – 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.

Contact Information:

Paula J. Meiler, SVP & CFO

330-763-2873

paula.meiler@csb1.com


CSB BANCORP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

 

     Quarters              

(Unaudited)

(Dollars in thousands, except per share data)

   2015
2nd Qtr
    2015
1st Qtr
    2014
4th Qtr
    2014
3rd Qtr
    2014
2nd Qtr
    2015
6 months
    2014
6 months
 

EARNINGS

              

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,
2015
    June 30,
2014
 
(Dollars in thousands, except per share data)     

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

 

(Unaudited)    Quarter ended
June 30,
     Six months ended
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