CSB Bancorp, Inc. Reports Second Quarter Earnings

MILLERSBURG, Ohio--(BUSINESS WIRE)-- CSB Bancorp, Inc. (OTC Pink: CSBB):

Second Quarter Highlights
		Quarter Ended					Quarter Ended
		June 30, 2016					June 30, 2015
Diluted earnings per share		$	0.59				$	0.55
Net Income		$	1,611,000				$	1,517,000
Return on average common equity			10.14	%				10.23	%
Return on average assets			1.00	%				0.97	%

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced second quarter 2016 net income of $1,611,000 or $.59 per basic and diluted share, as compared to $1,517,000 or $.55 per basic and diluted share for the same period in 2015. For the six month period ended June 30, 2016 net income totaled $3,091,000, compared to $2,859,000 for the same period last year an increase of 8%.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 10.14% and 1.00%, respectively, compared with 10.23% and 0.97% for the second quarter of 2015.

Eddie Steiner, President and CEO stated, “We are pleased to report record second quarter earnings on the strength of increased revenue. Demand for consumer and business loans is steady and credit quality remains acceptable.”

Revenue, on a fully-taxable equivalent basis, totaled $6.6 million during the quarter, a 3% increase from the prior-year second quarter. Net interest income increased $271 thousand in the second quarter of 2016 compared to the same period in 2015, driven primarily by growth in average loans outstanding of $30 million and a lower cost of funds. As a result, the net interest margin improved by .07% to 3.65% during the second quarter of 2016 from 3.58% a year earlier.

Noninterest revenue declined by $83 thousand, or 7%, in the second quarter of 2016 compared to 2015. The decline reflects a decrease in service charges on deposit accounts, a $25 thousand loss on fixed asset retirement and reductions in gains on the sale of securities and mortgage loans. These reductions were partially offset by increases in interchange fees.

Noninterest expense amounted to $4 million during the quarter, an increase of $88 thousand or 2% from second quarter 2015. The Company’s second quarter efficiency ratio amounted to 60.8% as compared to 61.5% for the same quarter in the prior year. Salary and employee benefits rose $75 thousand, or 3%, on a quarter over prior year quarter with increases in base salary, healthcare coverage and employment taxes.

Federal income tax provision totaled $705 thousand in second quarter 2016, compared to $669 thousand for the same quarter in 2015 reflecting a slightly improved effective tax rate of 30% for the comparable quarters.

Average total assets during the quarter amounted to $647 million, an increase of $22 million or 3% above the same quarter of the prior year. Average loan balances of $447 million increased $30 million, or 7%, from the prior year second quarter while average securities balances of $151 million increased $3 million or 2% as compared to second quarter 2015.

Average commercial loan balances for the quarter, including commercial real estate, increased $20 million, or 7%, from prior year levels. Average residential mortgage balances increased $4 million, or 4%, over the prior year’s quarter. Average home equity balances increased $3 million, or 8%, and average consumer credit balances increased $3 million, or 36%, versus the same quarter of the prior year.

Delinquent loan balances as of June 30, 2016 amounted to 0.82% of total loans as compared to 1.06% at June 30, 2015. Nonperforming assets totaled $2.8 million, or 0.62%, of total loans plus other real estate, a decrease from $3.1 million, or 0.75%, of total loans plus other real estate at June 30, 2015. The allowance for loan losses amounted to 1.14% of total loans on June 30, 2016.

Net loan charge-offs during second quarter 2016 were $14 thousand, or 0.01% annualized, compared to second quarter 2015 net loan charge-offs of $32 thousand.

Average deposit balances for second quarter 2016 totaled $516 million, an increase of $16 million, or 3%, from the prior year’s second quarter. Within the deposit category, average noninterest-bearing account balances for the second quarter increased by $14 million, or 11%, 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 $9 million, or 7%, from second quarter 2015. In addition to the changes in average deposit balances, the average balance of securities sold under repurchase agreement during the second quarter of 2016 increased by $1 million, or 2%, 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 $64.4 million on June 30, 2016 with 2.7 million common shares outstanding. The tangible equity to assets ratio amounted to 9.2% on June 30, 2016, as compared to 8.7% on June 30, 2015. The Company declared a second quarter dividend of $0.19 per share producing a yield of 3.0% based on the June 30, 2016 closing price of $25.20.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $650 million as of June 30, 2016. 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)			2016			2016				2015				2015			2015			2016				2015
EARNINGS			2nd Qtr			1st Qtr				4th Qtr				3rd Qtr			2nd Qtr			6 months				6 months
Net interest income FTE (a)		$	5,539		$	5,373			$	5,262			$	5,150		$	5,255		$	10,912			$	10,346
Provision for loan losses			165			164				-				-			195			329				389
Other income			1,097			992				1,071				1,119			1,180			2,089				2,234
Other expenses			4,062			3,989				3,930				3,944			3,974			8,051				7,922
FTE adjustment (a)			93			88				89				82			80			181				157
Net income			1,611			1,480				1,607				1,556			1,517			3,091				2,859
Diluted earnings per share			0.59			0.54				0.59				0.57			0.55			1.13				1.04
PERFORMANCE RATIOS
Return on average assets (ROA)			1.00	%		0.93		%		0.98		%		0.98	%		0.97	%		0.97		%		0.92	%
Return on average common equity (ROE)			10.14	%		9.48		%		10.41		%		10.27	%		10.23	%		9.83		%		9.79	%
Net interest margin FTE (a)			3.65	%		3.57		%		3.39		%		3.43	%		3.58	%		3.61		%		3.55	%
Efficiency ratio			60.76	%		62.20		%		61.55		%		62.42	%		61.47	%		61.46		%		62.76	%
Number of full-time equivalent employees			166			162				161				161			163
MARKET DATA
Book value/common share		$	23.49		$	22.90			$	22.35			$	22.09		$	21.53
Period-end common share mkt value			25.20			24.25				24.50				24.20			25.00
Market as a % of book			107.28	%		105.90		%		109.62		%		109.55	%		116.12	%
Price-to-earnings ratio			11.00			10.78				11.14				11.31			11.79
Cash dividends/common share		$	0.19		$	0.19			$	0.19			$	0.19		$	0.19		$	0.38			$	0.38
Common stock dividend payout ratio			32.20	%		35.19		%		32.20		%		33.33	%		34.54	%		33.63		%		36.54	%
Average basic common shares			2,742,242			2,741,379				2,739,664				2,739,405			2,739,405			2,741,811				2,739,405
Average diluted common shares			2,742,242			2,741,379				2,741,243				2,742,455			2,742,738			2,741,811				2,742,381
Period end common shares outstanding			2,742,242			2,742,242				2,740,996				2,739,405			2,739,405
Common shares repurchased			0			0				0				0			0
Common stock market capitalization		$	69,104		$	66,499			$	67,154			$	66,294		$	68,485
ASSET QUALITY
Gross charge-offs		$	18		$	10			$	104			$	95		$	39	$		28			$	149
Net (recoveries) charge-offs			14			(179	)			(30	)			25			32			(165	)			113
Allowance for loan losses			5,156			5,005				4,662				4,632			4,656
Nonperforming assets (NPAs)			2,806			1,915				1,681				2,018			3,117
Net charge-off (recovery) /average loans ratio			0.01	%		(0.17	)	%		(0.03	)	%		0.02	%		0.03	%		(0.08	)	%		0.05	%
Allowance for loan losses/period-end loans			1.14			1.15				1.10				1.12			1.12
NPAs/loans and other real estate			0.62			0.44				0.40				0.49			0.75
Allowance for loan losses/nonperforming loans			188.59			261.35				277.35				229.54			149.38
CAPITAL & LIQUIDITY
Period-end tangible equity to assets			9.19	%		9.11		%		8.69		%		8.81	%		8.69	%
Average equity to assets			9.88			9.77				9.38				9.50			9.52
Average equity to loans			14.29			14.63				14.99				14.73			14.25
Average loans to deposits			86.71			83.55				77.95				81.21			83.61
AVERAGE BALANCES
Assets		$	646,642		$	640,670			$	652,725			$	632,539		$	625,032		$	643,656			$	623,800
Earning assets			610,138			604,911				615,725				595,806			588,464			607,524				587,475
Loans			447,009			427,916				408,524				408,069			417,347			437,462				416,062
Deposits			515,511			512,192				524,078				502,514			499,157			513,851				498,407
Shareholders' equity			63,877			62,625				61,230				60,112			59,473			63,251				58,912
ENDING BALANCES
Assets		$	649,890		$	637,202			$	650,314			$	632,381		$	622,956
Earning assets			610,221			602,306				610,251				597,476			584,510
Loans			450,789			433,453				422,871				412,974			415,198
Deposits			516,497			509,980				525,042				505,088			496,404
Shareholders' equity			64,407			62,796				61,266				60,504			58,966

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,				June 30,
(Dollars in thousands, except per share data)		2016				2015
ASSETS
Cash and cash equivalents
Cash and due from banks	$	16,859			$	15,244
Interest-earning deposits in other banks		11,268				23,672
Federal Funds Sold		-				-
Total cash and cash equivalents		28,127				38,916
Securities
Available-for-sale, at fair-value		119,355				107,409
Held-to-maturity		23,845				33,554
Restricted stock, at cost		4,614				4,614
Total securities		147,814				145,577
Loans held for sale		350				63
Loans		450,789				415,198
Less allowance for loan losses		5,156				4,656
Net loans		445,633				410,542
Goodwill and core deposit intangible		5,172				5,295
Bank owned life insurance		10,222				9,948
Premises and equipment, net		8,660				8,374
Accrued interest receivable and other assets		3,912				4,241
TOTAL ASSETS	$	649,890			$	622,956
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing	$	156,365			$	139,603
Interest-bearing		360,132				356,801
Total deposits		516,497				496,404
Short-term borrowings		54,125				51,702
Other borrowings		12,574				13,738
Accrued interest payable and other liabilities		2,287				2,146
Total liabilities		585,483				563,990
Shareholders' equity
Common stock, $6.25 par value. Authorized 9,000,000 shares; issued 2,980,602 shares in 2016 and 2015		18,629				18,629
Additional paid-in capital		9,815				9,884
Retained earnings		40,079				35,908
Treasury stock at cost - 238,360 shares in 2016 and 241,197 in 2015		(4,784	)			(4,871	)
Accumulated other comprehensive gain (loss)		668				(584	)
Total shareholders' equity		64,407				58,966
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	649,890			$	622,956

CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
		Quarter ended						Six months ended
(Unaudited)		June 30,						June 30,
(Dollars in thousands, except per share data)		2016			2015			2016			2015
Interest and dividend income:
Loans, including fees	$	4,966		$	4,744		$	9,708		$	9,318
Taxable securities		662			670			1,398			1,357
Nontaxable securities		165			137			319			267
Other		20			17			49			33
Total interest and dividend income		5,813			5,568			11,474			10,975
Interest expense:
Deposits		250			272			509			544
Other		117			121			234			242
Total interest expense		367			393			743			786
Net interest income		5,446			5,175			10,731			10,189
Provision for loan losses		165			195			329			389
Net interest income after provision for loan losses		5,281			4,980			10,402			9,800
Noninterest income
Service charges on deposits accounts		288			315			566			601
Trust services		218			243			444			445
Debit card interchange fees		271			246			533			473
Gain on sale of loans		118			122			150			192
Gain on sale of securities		-			21			-			56
Other		202			233			396			467
Total noninterest income		1,097			1,180			2,089			2,234
Noninterest expenses
Salaries and employee benefits		2,299			2,224			4,626			4,374
Occupancy expense		233			258			477			525
Equipment expense		169			165			343			331
Professional and director fees		189			202			363			492
Software expense		198			213			384			402
Marketing and public relations		143			99			228			175
Debit card expense		114			108			218			208
Other expenses		717			705			1,412			1,415
Total noninterest expenses		4,062			3,974			8,051			7,922
Income before income tax		2,316			2,186			4,440			4,112
Federal income tax provision		705			669			1,349			1,253
Net income	$	1,611		$	1,517		$	3,091		$	2,859
Net income per share:
Basic	$	0.59		$	0.55		$	1.13		$	1.04
Diluted	$	0.59		$	0.55		$	1.13		$	1.04

View source version on businesswire.com: http://www.businesswire.com/news/home/20160726006428/en/

CSB Bancorp, Inc.
Paula J. Meiler, 330-763-2873
SVP & CFO
[email protected]

Source: CSB Bancorp, Inc.

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