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CSB Bancorp, Inc. Reports First Quarter Earnings

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

First Quarter Highlights

Quarter Ended

March 31, 2021

Quarter Ended

March 31, 2020

Diluted earnings per share

$

1.05

$

0.91

Net Income

$

2,885,000

$

2,483,000

Return on average common equity

12.33

%

11.47

%

Return on average assets

1.10

%

1.23

%

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced first quarter 2021 net income of $2,885,000, or $1.05 per basic and diluted share, as compared to $2,483,000, or $0.91 per basic and diluted share, for the same period in 2020. Income before federal income tax amounted to $3,575,000, an increase of 16% over the same quarter in the prior year.

Annualized returns on average common equity ("ROE") and average assets ("ROA") for the quarter were 12.33% and 1.10%, respectively, compared with 11.47% and 1.23% for the first quarter of 2020.

Eddie Steiner, President and CEO stated, "National and local economies are on the mend from the pandemic’s crippling impact, spurred by widening vaccination levels and robust fiscal and monetary support programs. The new round of Paycheck Protection Program lending that began in January is supporting many small organizations and self-employed individuals. Very low interest rates continue to drive mortgage refinancing, home purchases and construction. Businesses are regaining confidence needed to reinvest and expand as the uncertainty surrounding COVID’s remaining impact diminishes. Job creation has strengthened in recent months. While certain sectors will lag and the pace of improvement may prove uneven, the prevailing economic outlook favors sustained overall progress in healing and expansion through this year and into 2022."

Net interest income and noninterest income totaled $8.9 million during the quarter, an increase of $627 thousand from the prior-year first quarter. Net interest income increased $92 thousand, or 1%, in the first quarter of 2021 compared to the same period in 2020.

Loan interest income including fees increased $15 thousand during first quarter 2021 as compared to the same quarter in 2020, an increase of less than 1%. Average total loan balances during the current quarter were $36 million higher than the year ago quarter, an increase of 6%. Loan yields for first quarter 2021 averaged 4.67%, a decrease of 25 basis points from the 2020 first quarter average of 4.92%.

The net interest margin was 2.85% compared to 3.67% for first quarter 2020, as yields on loans and securities have declined. The tax equivalency effect on the margin remained stable at 0.02% in the comparable first quarters.

With the continuing application of government stimulus programs for businesses and individuals, a provision for loan losses of $30 thousand was recognized for the first quarter ended March 31, 2021 as compared to $178 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 effectively fully measured at this time.

Noninterest income increased 40%, compared to first quarter of 2020, fueled by historic growth in gain on sale of real estate loans into the secondary market, increases in debit and credit card fee income, and bank owned life insurance values. These increases were partially offset by decreases in service charges on deposit accounts as both consumers and businesses maintained increased deposit balances from government stimulus payments and loans provided by the bank within the Paycheck Protection Program (PPP).

Noninterest expense increased 5% from first quarter 2020. Salary and employee benefit costs increased $61 thousand, or 2%, compared to the prior year quarter, as a result of increases in base compensation and commissions, incentive accruals, and employers FICA expense. FDIC insurance expense increased $108 thousand as the prior year quarter reflected the use of Small Bank Assessment Credits. Software expense increased by $73 thousand reflecting investment in new platforms. Professional and directors’ fees decreased $35 thousand, or 11% primarily reflecting decreases in legal fees for loan collections. Marketing and public relations decreased by $48 thousand, or 38%, reflecting the continuing pandemic-related shut down of activities in first quarter 2021. The Company’s first quarter efficiency ratio decreased to 59.1% compared to 60.1%.

Federal income tax expense totaled $690 thousand in first quarter 2021, as compared to $591 thousand tax expense for the same quarter in 2020. The effective tax rate approximated 19% in both periods.

Average total assets during the quarter rose to $1.06 billion, an increase of $248 million, or 31%, above the same quarter of the prior year. Liquidity increased as the Company’s average interest-bearing balances with banks increased $127 million to $203 million as compared to the first quarter in 2020. Average loan balances of $596 million increased $36 million, or 6%, from the prior year first quarter while average securities balances of $205 million increased $79 million, or 63%, as compared to first quarter 2020.

Average commercial loan balances for the quarter, including commercial real estate, increased $36 million, or 10%, from prior year levels. This amount includes $64 million in average PPP loan balances. 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 $10 million, or 8%, over the prior year’s quarter while home equity lines of credit decreased $9 million over the prior year’s quarter as they were paid down or refinanced into low-rate term mortgages. Average consumer credit balances decreased $1 million, or 5%, versus the same quarter of the prior year. Increased organic loan demand will be somewhat dependent on the pace at which excess liquidity is absorbed by businesses and households.

Nonperforming assets decreased $1.4 million from March 31, 2020 to $3.1 million, or 0.53%, of total loans plus other real estate on March 31, 2021. Approximately $67 thousand of the non-performing loan total is guaranteed by either USDA or the SBA. Delinquent loan balances as of March 31, 2021 decreased to 0.57% of total loans as compared to 0.96% on March 31, 2020.

Net loan recoveries recognized during first quarter 2021 were $34 thousand, or 0.02% annualized, compared to first quarter 2020 net loan losses of $75 thousand. The allowance for loan losses amounted to 1.43% of total loans on March 31, 2021 as compared to 1.28% on March 31, 2020.

Average deposit balances grew on a quarter over prior year quarter comparison by $240 million, or 35%. For the first quarter 2021, the average cost of deposits amounted to 0.24%, as compared to 0.49% for the first quarter 2020. During the first quarter 2021, increases in average deposit balances over the prior year quarter included noninterest-bearing demand accounts of $92 million and interest-bearing demand and savings accounts of $153 million, while time deposits decreased $4 million. The average balance of securities sold under repurchase agreement during the first quarter of 2021 increased by $1 million, or 4%, compared to the average for the same period in the prior year.

Shareholders’ equity totaled $93.1 million on March 31, 2021 with 2.7 million common shares outstanding. The average equity to assets ratio amounted to 8.95% on March 31, 2021 and 10.72% on March 31, 2020. The Company declared a first quarter dividend of $0.30 per share, producing an annualized yield of 3.2% based on the March 31, 2021 closing price of $37.50.

Cares Act and related events

A third stimulus bill was signed into law on March 11, 2021 adding additional emergency relief to the March 2020 Cares Act and to the Consolidated Appropriations Act, 2021. The American Rescue Plan Act of 2021 expanded eligibility and added an additional $7 billion in funds to the SBA’s PPP emergency relief programs. We facilitated and funded more than 750 of these government assistance loans totaling approximately $92 million in 2020 during the first round. As of March 31, 2021, $62 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 underwritten an additional $33 million in PPP applications during the first quarter of 2021.

During 2020, 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 March 31, 2021, no loans granted relief during 2020 remain on modification. Three consumer loans were granted loan modifications during the quarter ended March 31, 2021.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $1.1 billion as of March 31, 2021. 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)

2021

2020

2020

2020

2020

EARNINGS

1st Qtr

4th Qtr

3rd Qtr

2nd Qtr

1st Qtr

Net interest income FTE (a)

$

7,046

$

7,223

$

7,077

$

7,048

$

6,953

Provision for loan losses

30

378

377

717

178

Other income

1,878

2,089

1,862

1,641

1,343

Other expenses

5,281

5,576

5,050

4,709

5,007

FTE adjustment (a)

38

39

36

36

37

Net income

2,885

2,679

2,800

2,606

2,483

Diluted earnings per share

1.05

0.97

1.02

0.95

0.91

PERFORMANCE RATIOS

Return on average assets (ROA), annualized

1.10

%

1.05

%

1.14

%

1.15

%

1.23

%

Return on average common equity (ROE), annualized

12.33

11.45

12.19

11.72

11.47

Net interest margin FTE (a)

2.85

2.97

3.04

3.29

3.67

Efficiency ratio

59.14

59.75

56.32

54.05

60.08

Number of full-time equivalent employees

170

171

169

169

172

MARKET DATA

Book value/common share

$

33.94

$

34.23

$

33.49

$

32.81

$

31.95

Period-end common share mkt value

37.50

35.00

30.00

32.00

35.00

Market as a % of book

110.49

%

102.25

%

89.58

%

97.53

%

109.55

%

Price-to-earnings ratio

9.40

9.09

7.83

8.44

9.26

Cash dividends/common share

$

0.30

$

0.29

$

0.28

$

0.28

$

0.28

Common stock dividend payout ratio

28.57

%

29.90

%

27.45

%

29.47

%

30.77

%

Average basic common shares

2,742,350

2,742,350

2,742,350

2,742,350

2,742,350

Average diluted common shares

2,742,350

2,742,350

2,742,350

2,742,350

2,742,350

Period end common shares outstanding

2,742,350

2,742,350

2,742,350

2,742,350

2,742,350

Common stock market capitalization

$

102,838

$

95,982

$

82,271

$

87,755

$

95,982

ASSET QUALITY

Gross charge-offs

$

5

$

511

$

28

$

17

$

86

Net charge-offs (recoveries)

(34

)

459

(143

)

3

75

Allowance for loan losses

8,338

8,274

8,355

7,835

7,120

Nonperforming assets (NPAs)

3,089

4,497

4,102

4,481

4,468

Net charge-off (recovery) /average loans ratio

(0.02

)

%

0.29

%

(0.09

)

%

0.00

%

0.05

%

Allowance for loan losses/period-end loans

1.43

1.36

1.33

1.23

1.28

NPAs/loans and other real estate

0.53

0.74

0.65

0.70

0.80

Allowance for loan losses/nonperforming loans

269.92

183.99

203.71

178.78

162.97

CAPITAL & LIQUIDITY

Period-end tangible equity to assets

7.99

%

8.68

%

8.86

%

8.90

%

10.28

%

Average equity to assets

8.95

9.13

9.33

9.79

10.72

Average equity to loans

15.92

15.02

14.39

14.38

15.55

Average loans to deposits

64.95

70.81

76.22

80.95

82.61

AVERAGE BALANCES

Assets

$

1,060,485

$

1,018,770

$

979,806

$

912,875

$

812,409

Earning assets

1,004,521

966,304

926,377

860,838

761,619

Loans

596,319

619,455

635,124

621,710

560,142

Deposits

918,063

874,820

833,288

767,988

678,090

Shareholders' equity

94,929

93,042

91,409

89,404

87,090

ENDING BALANCES

Assets

$

1,110,157

$

1,031,632

$

987,978

$

965,179

$

810,041

Earning assets

1,043,016

977,092

936,323

913,813

757,769

Loans

582,714

609,159

628,084

636,799

555,320

Deposits

968,569

891,562

840,656

815,961

671,162

Shareholders' equity

93,085

93,859

91,853

89,967

87,629

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)

March 31,

March 31,

(Dollars in thousands, except per share data)

2021

2020

ASSETS

Cash and cash equivalents

Cash and due from banks

$

22,174

$

18,277

Interest-earning deposits in other banks

256,736

77,995

Total cash and cash equivalents

278,910

96,272

Securities

Available-for-sale, at fair-value

197,470

108,263

Held-to-maturity

8,270

11,242

Equity securities

100

79

Restricted stock, at cost

4,614

4,614

Total securities

210,454

124,198

Loans held for sale

1,450

256

Loans

582,714

555,320

Less allowance for loan losses

8,338

7,120

Net loans

574,376

548,200

Premises and equipment, net

12,968

12,387

Goodwill and core deposit intangible

4,761

4,817

Bank owned life insurance

21,566

19,023

Accrued interest receivable and other assets

5,672

4,888

TOTAL ASSETS

$

1,110,157

$

810,041

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities

Deposits:

Noninterest-bearing

$

303,803

$

188,137

Interest-bearing

664,766

483,025

Total deposits

968,569

671,162

Short-term borrowings

39,665

40,605

Other borrowings

4,564

6,206

Accrued interest payable and other liabilities

4,274

4,439

Total liabilities

1,017,072

722,412

Shareholders' equity

Common stock, $6.25 par value. Authorized

9,000,000 shares; issued 2,980,602 shares

in 2021 and 2020

18,629

18,629

Additional paid-in capital

9,815

9,815

Retained earnings

71,271

63,455

Treasury stock at cost - 238,252 shares in 2021

and 2020

(4,780

)

(4,780

)

Accumulated other comprehensive income

(1,850

)

510

Total shareholders' equity

93,085

87,629

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,110,157

$

810,041

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

Quarter ended

(Unaudited)

March 31,

(Dollars in thousands, except per share data)

2021

2020

Interest and dividend income:

Loans, including fees

$

6,865

$

6,850

Taxable securities

559

609

Nontaxable securities

111

119

Other

46

239

Total interest and dividend income

7,581

7,817

Interest expense:

Deposits

538

831

Other

35

70

Total interest expense

573

901

Net interest income

7,008

6,916

Provision for loan losses

30

178

Net interest income after provision

for loan losses

6,978

6,738

Noninterest income

Service charges on deposits accounts

207

291

Trust services

282

230

Debit card interchange fees

471

375

Gain on sale of loans

487

114

Earnings on bank owned life insurance

150

129

Unrealized gain (loss) on equity securities

13

(13

)

Other income

268

217

Total noninterest income

1,878

1,343

Noninterest expenses

Salaries and employee benefits

3,029

2,968

Occupancy expense

254

220

Equipment expense

177

135

Professional and director fees

295

330

Software expense

300

227

Marketing and public relations

79

127

Debit card expense

171

140

Other expenses

976

860

Total noninterest expenses

5,281

5,007

Income before income tax

3,575

3,074

Federal income tax provision

690

591

Net income

$

2,885

$

2,483

Net income per share:

Basic and diluted

$

1.05

$

0.91

View source version on businesswire.com: https://www.businesswire.com/news/home/20210421006026/en/

Contacts

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