CSB Bancorp, Inc. Reports First Quarter Earnings
CSB Bancorp, Inc. Reports First Quarter Earnings

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

First Quarter Highlights

 

 

Quarter Ended

March 31, 2022

 

 

 

Quarter Ended

March 31, 2021

 

Diluted earnings per share

 

$

0.99

 

 

 

$

1.05

 

Net Income

 

$

2,701,000

 

 

 

$

2,885,000

 

Return on average common equity

 

 

11.26

%

 

 

 

12.33

%

Return on average assets

 

 

0.96

%

 

 

 

1.10

%

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced first quarter 2022 net income of $2,701,000, or $0.99 per basic and diluted share, as compared to $2,885,000, or $1.05 per basic and diluted share, for the same period in 2021. Income before federal income tax amounted to $3,339,000, a decrease of 7% over the same quarter in the prior year.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 11.26% and 0.96%, respectively, compared with 12.33% and 1.10% for the first quarter of 2021.

Eddie Steiner, President, and CEO stated, “Residential mortgage applications declined during the quarter, as many homeowners have refinanced to lower rates, housing stock remains in tight supply, and fixed rate thirty-year mortgage rates have increased from 3.25% at December 31, 2021 to 4.75% at March 31, 2022. Business loan demand shows signs of strengthening, though held somewhat in check by significant borrower liquidity, supply chain disruptions, labor shortages, and inflation uncertainties. Deposit growth has remained strong, with our balances increasing 3% year over year.”

Net interest income and noninterest income totaled $8.5 million during the quarter, a decrease of $379 thousand, or 4% from the prior-year first quarter. Net interest income decreased $143 thousand, or 2%, in the first quarter of 2022 compared to the same period in 2021.

Loan interest income including fees decreased $1.1 million, or 16%, during first quarter 2022 as compared to the same quarter in 2021. The decrease was mainly due to average total loan balances declining $36 million below the year ago quarter including average Paycheck Protection Program loans (“PPP”) declining $61 million from the prior year quarter. Loan yields for first quarter 2022 averaged 4.19%, a decrease of 48 basis points (“bps”) from the 2021 first quarter average of 4.67%, PPP loan interest and fees contributed 10 bps to the first quarter 2022 loan yield while contributing 72 bps to the prior year’s first quarter. PPP loan fees recognized as interest income declined $771 thousand in first quarter 2022 compared to first quarter 2021.

The net interest margin was 2.60% compared to 2.48% for the linked fourth quarter 2021 and 2.85% for first quarter 2021. As discussed above, both loan volume and rate declined, partially offset with volume and yield increases within the securities account during first quarter 2022, and rate decreases on liabilities. Liquidity continues to play a factor on the margin, although average overnight funds declined $45 million on a quarter over prior year quarter comparison as we continue to deploy excess funds into marketable securities. The tax equivalency effect on the margin was 0.02% in first quarter 2022 and 2021.

With continuing improvement in credit quality, a $300 thousand negative provision for loan losses was recognized for the quarter ended March 31, 2022, as compared to $30 thousand loss provision for the prior year first quarter when the effect of Covid on future credit losses was not discernable. COVID factors have not significantly affected the Bank’s loan portfolio quality to date, and local businesses are beginning or restarting construction projects previously sidelined by COVID-related uncertainty.

Noninterest income decreased 13% compared to first quarter of 2021. The decrease was primarily the result of a $369 thousand, or 76%, decline in gain on sale of mortgages to the secondary market as refinancing of mortgages slowed significantly on rising mortgage rates, and home purchases were limited by a lack of housing inventory for sale. Increases in service charges on deposit accounts, debit and credit card fee income, and earnings from bank owned life insurance values partially offset the decline in mortgage fee and sale income.

Noninterest expense increased 4% from first quarter 2021. Salary and employee benefit costs increased $126 thousand, or 4%, compared to the prior year quarter, primarily resulting from increases in compensation and reduced capitalization of deferred loan costs with less loan volume originated in first quarter 2022 as compared to first quarter 2021. Occupancy and equipment expense increased $55 thousand, or 13%, from 2021 primarily due to depreciation expense and increasing maintenance contracts. Marketing and public relations increased by $32 thousand, or 41%, reflecting a return to normalized levels after pandemic-related curtailment of activities in 2020-2021. Telephone expense decreased $39 thousand compared to the prior year quarter due to a renegotiation of data line contracts. FDIC insurance expense decreased $25 thousand from the prior year quarter. Professional and directors’ fees decreased $19 thousand, primarily reflecting a decline in collection legal fees. The Company’s first quarter efficiency ratio increased to 64.0% compared to 59.1%, in the same period of the prior year.

Federal income tax expense totaled $638 thousand in first quarter 2022, as compared to $690 thousand tax expense for the same quarter in 2021. The effective tax rate approximated 19% in both periods.

Average total assets during the quarter rose to $1.14 billion, an increase of $78 million, or 7%, above the same quarter of the prior year. Liquidity decreased as the Company’s average interest-bearing balances with banks decreased $45 million, to $158 million, as compared to the first quarter in 2021. Average loan balances of $560 million decreased $36 million, or 6%, from the prior year first quarter while average securities balances of $360 million increased $155 million, or 75%, as compared to first quarter 2021. Concurrent with the rise in market interest rates during first quarter 2022, approximately $100 million in investment securities were purchased and added to the investment portfolio, reducing overnight cash. Purchased investments included mortgage-backed instruments and short-term corporate and U.S. Treasury notes.

Average commercial loan balances for the quarter, including commercial real estate, decreased $27 million, or 7%, from prior year levels. Excluding a $61 million decrease in average PPP loan balances, commercial loans increased $34 million year over year as construction loans were drawn and borrowers used term loans to fund equipment and other purchases. Average residential mortgage balances decreased $5 million, or 3%, below the prior year’s quarter while home equity lines of credit decreased $3 million from the prior year’s quarter as balances were paid down or refinanced into low-rate term mortgages. Average consumer credit balances decreased $2 million, or 12%, versus the same quarter of the prior year. Increased organic loan demand continues to be largely dependent on the pace at which excess liquidity is absorbed by businesses and households, dependent in large part on restoration of borrower confidence as pandemic uncertainty diminishes, as well as impacts of continuing inflation.

Nonperforming assets decreased from $3.1 million on March 31, 2021, to $1.2 million, or 0.21%, of total loans plus other real estate on March 31, 2022. Delinquent loan balances as of March 31, 2022, decreased to 0.24% of total loans as compared to 0.57% on March 31, 2021.

Net loan charge-offs recognized during first quarter 2022 were $13 thousand, or 0.01% of average loans annualized, compared to first quarter 2021 net loan recoveries of $34 thousand. The allowance for loan losses amounted to 1.29% of total loans on March 31, 2022, as compared to 1.43% on March 31, 2021.

Average deposit balances grew on a quarter over prior year quarter comparison by $75 million, or 8%. For the first quarter 2022, the average cost of deposits amounted to 0.14%, as compared to 0.24% for the first quarter 2021. During the first quarter 2022, increases in average deposit balances over the prior year quarter included noninterest-bearing demand accounts of $46 million and interest-bearing demand and savings accounts of $32 million, while time deposits decreased $3 million. The average balance of securities sold under repurchase agreement during the first quarter of 2022 increased by $2 million, or 5%, compared to the average for the same period in the prior year.

Shareholders’ equity totaled $94.9 million on March 31, 2022, with 2.7 million common shares outstanding. The average equity to assets ratio amounted to 8.54% on March 31, 2022, and 8.95% on March 31, 2021. The Company declared a quarterly dividend of $0.31 per share on April 6, 2022, payable April 26, 2022, producing an annualized yield of 3.1% based on the March 31, 2022, closing price of $39.60.

Cares Act and related events

CSB facilitated and funded $129 million of SBA emergency PPP loans in 2020 and 2021. As of March 31, 2022, $127 million has been received from the SBA in forgiveness. and approximately $49 thousand remains in unearned fees at March 31, 2022. All loans modified to businesses and consumers to deal with the uncertainty of the economy during 2020 and 2021 have entered repayment.

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, 2022. CSB provides a wide 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)

 

2022

 

 

2021

 

 

2021

 

 

2021

 

 

2021

 

EARNINGS

 

1st Qtr

 

 

4th Qtr

 

 

3rd Qtr

 

 

2nd Qtr

 

 

1st Qtr

 

Net interest income FTE (a)

$

 

6,902

 

$

 

6,752

 

$

 

7,364

 

$

 

6,509

 

$

 

7,046

 

Provision for (recovery of) loan losses

 

 

(300

)

 

 

 

 

 

(210

)

 

 

(475

)

 

 

30

 

Other income

 

 

1,642

 

 

 

1,836

 

 

 

1,768

 

 

 

1,843

 

 

 

1,878

 

Other expenses

 

 

5,468

 

 

 

5,709

 

 

 

5,713

 

 

 

5,390

 

 

 

5,281

 

FTE adjustment (a)

 

 

37

 

 

 

39

 

 

 

39

 

 

 

38

 

 

 

38

 

Net income

 

 

2,701

 

 

 

2,306

 

 

 

2,901

 

 

 

2,745

 

 

 

2,885

 

Diluted earnings per share

 

 

0.99

 

 

 

0.85

 

 

 

1.06

 

 

 

1.00

 

 

 

1.05

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PERFORMANCE RATIOS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (ROA), annualized

 

 

0.96

 

%

 

0.80

 

%

 

1.03

 

%

 

0.97

 

%

 

1.10

 

Return on average common equity (ROE), annualized

 

 

11.26

 

 

 

9.41

 

 

 

11.79

 

 

 

11.62

 

 

 

12.33

 

Net interest margin FTE (a)

 

 

2.60

 

 

 

2.48

 

 

 

2.77

 

 

 

2.43

 

 

 

2.85

 

Efficiency ratio

 

 

64.01

 

 

 

66.41

 

 

 

62.49

 

 

 

64.40

 

 

 

59.14

 

Number of full-time equivalent employees

 

 

172

 

 

 

171

 

 

 

178

 

 

 

174

 

 

 

170

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MARKET DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value/common share

$

 

34.93

 

$

 

35.80

 

$

 

35.62

 

$

 

35.11

 

$

 

33.94

 

Period-end common share mkt value

 

 

39.60

 

 

 

37.75

 

 

 

39.25

 

 

 

38.00

 

 

 

37.50

 

Market as a % of book

 

 

113.37

 

%

 

105.45

 

%

 

110.19

 

%

 

108.23

 

%

 

110.49

 

Price-to-earnings ratio

 

 

10.15

 

 

 

9.51

 

 

 

9.62

 

 

 

9.41

 

 

 

9.40

 

Average basic common shares

 

 

2,718,024

 

 

 

2,720,633

 

 

 

2,729,410

 

 

 

2,740,390

 

 

 

2,742,350

 

Average diluted common shares

 

 

2,718,024

 

 

 

2,720,633

 

 

 

2,729,410

 

 

 

2,740,390

 

 

 

2,742,350

 

Period end common shares outstanding

 

 

2,718,024

 

 

 

2,718,024

 

 

 

2,725,524

 

 

 

2,734,244

 

 

 

2,742,350

 

Common stock market capitalization

$

 

107,634

 

$

 

102,605

 

$

 

106,977

 

$

 

103,901

 

$

 

102,838

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSET QUALITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross charge-offs

$

 

31

 

$

 

66

 

$

 

39

 

$

 

20

 

$

 

5

 

Net charge-offs (recoveries)

 

 

13

 

 

 

27

 

 

 

20

 

 

 

(12

)

 

 

(34

)

Allowance for loan losses

 

 

7,305

 

 

 

7,618

 

 

 

7,645

 

 

 

7,875

 

 

 

8,338

 

Nonperforming assets (NPAs)

 

 

1,181

 

 

 

1,088

 

 

 

1,320

 

 

 

2,786

 

 

 

3,089

 

Net charge-off (recovery) / average loans ratio

 

 

0.01

 

%

 

0.02

 

%

 

0.01

 

%

 

(0.01

)

%

 

(0.02

)

Allowance for loan losses / period-end loans

 

 

1.29

 

 

 

1.39

 

 

 

1.40

 

 

 

1.43

 

 

 

1.43

 

NPAs/loans and other real estate

 

 

0.21

 

 

 

0.20

 

 

 

0.24

 

 

 

0.50

 

 

 

0.53

 

Allowance for loan losses/nonperforming loans

 

 

618.54

 

 

 

699.86

 

 

 

579.07

 

 

 

282.61

 

 

 

269.92

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CAPITAL & LIQUIDITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-end tangible equity to assets

 

 

7.98

 

%

 

8.13

 

%

 

8.34

 

%

 

8.12

 

%

 

7.99

 

Average equity to assets

 

 

8.54

 

 

 

8.54

 

 

 

8.75

 

 

 

8.38

 

 

 

8.95

 

Average equity to loans

 

 

17.35

 

 

 

17.86

 

 

 

17.89

 

 

 

16.78

 

 

 

15.92

 

Average loans to deposits

 

 

56.42

 

 

 

54.62

 

 

 

56.09

 

 

 

57.18

 

 

 

64.95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

$

 

1,138,598

 

$

 

1,138,690

 

$

 

1,115,814

 

$

 

1,131,251

 

$

 

1,060,485

 

Earning assets

 

 

1,078,269

 

 

 

1,079,002

 

 

 

1,056,424

 

 

 

1,073,865

 

 

 

1,004,521

 

Loans

 

 

560,440

 

 

 

544,389

 

 

 

545,420

 

 

 

564,998

 

 

 

596,319

 

Deposits

 

 

993,411

 

 

 

996,646

 

 

 

972,409

 

 

 

988,017

 

 

 

918,063

 

Shareholders’ equity

 

 

97,242

 

 

 

97,241

 

 

 

97,584

 

 

 

94,786

 

 

 

94,929

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ENDING BALANCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

$

 

1,135,003

 

$

 

1,144,239

 

$

 

1,111,696

 

$

 

1,128,922

 

$

 

1,110,157

 

Earning assets

 

 

1,073,565

 

 

 

1,084,744

 

 

 

1,054,141

 

 

 

1,072,286

 

 

 

1,043,016

 

Loans

 

 

567,375

 

 

 

549,154

 

 

 

546,095

 

 

 

552,030

 

 

 

582,714

 

Deposits

 

 

994,939

 

 

 

1,002,747

 

 

 

968,629

 

 

 

986,668

 

 

 

968,569

 

Shareholders’ equity

 

 

94,928

 

 

 

97,315

 

 

 

97,089

 

 

 

96,012

 

 

 

93,085

 

 

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)

 

2022

 

 

 

2021

 

ASSETS

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

 

18,963

 

 

$

 

22,174

 

Interest-earning deposits in other banks

 

 

111,274

 

 

 

 

256,736

 

Total cash and cash equivalents

 

 

130,237

 

 

 

 

278,910

 

Securities

 

 

 

 

 

 

 

 

 

Available-for-sale, at fair-value

 

 

143,322

 

 

 

 

197,470

 

Held-to-maturity

 

 

246,301

 

 

 

 

8,270

 

Equity securities

 

 

248

 

 

 

 

100

 

Restricted stock, at cost

 

 

4,614

 

 

 

 

4,614

 

Total securities

 

 

394,485

 

 

 

 

210,454

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

 

431

 

 

 

 

1,450

 

Loans

 

 

567,375

 

 

 

 

582,714

 

Less allowance for loan losses

 

 

7,305

 

 

 

 

8,338

 

Net loans

 

 

560,070

 

 

 

 

574,376

 

 

 

 

 

 

 

 

 

 

 

Premises and equipment, net

 

 

13,730

 

 

 

 

12,968

 

Goodwill and core deposit intangible

 

 

4,728

 

 

 

 

4,761

 

Bank owned life insurance

 

 

24,201

 

 

 

 

21,566

 

Accrued interest receivable and other assets

 

 

7,121

 

 

 

 

5,672

 

TOTAL ASSETS

$

 

1,135,003

 

 

$

 

1,110,157

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Noninterest-bearing

$

 

335,974

 

 

$

 

303,803

 

Interest-bearing

 

 

658,965

 

 

 

 

664,766

 

Total deposits

 

 

994,939

 

 

 

 

968,569

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

 

38,893

 

 

 

 

39,665

 

Other borrowings

 

 

3,325

 

 

 

 

4,564

 

Accrued interest payable and other liabilities

 

 

2,918

 

 

 

 

4,274

 

Total liabilities

 

 

1,040,075

 

 

 

 

1,017,072

 

Shareholders’ equity

 

 

 

 

 

 

 

 

 

Common stock, $6.25 par value. Authorized

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

in 2022 and 2021

 

 

18,629

 

 

 

 

18,629

 

Additional paid-in capital

 

 

9,815

 

 

 

 

9,815

 

Retained earnings

 

 

79,416

 

 

 

 

71,271

 

Treasury stock at cost – 262,578 shares in 2022

 

 

 

 

 

 

 

 

 

and 238,252 shares in 2021

 

 

(5,719

)

 

 

 

(4,780

)

Accumulated other comprehensive (loss) income

 

 

(7,213

)

 

 

 

(1,850

)

Total shareholders’ equity

 

 

94,928

 

 

 

 

93,085

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

 

1,135,003

 

 

$

 

1,110,157

 

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

 

 

 

Quarter ended

 

(Unaudited)

 

March 31,

 

(Dollars in thousands, except per share data)

 

2022

 

 

 

2021

 

Interest and dividend income:

 

 

 

 

 

 

 

 

 

Loans, including fees

$

 

5,777

 

 

$

 

6,865

 

Taxable securities

 

 

1,281

 

 

 

 

559

 

Nontaxable securities

 

 

110

 

 

 

 

111

 

Other

 

 

74

 

 

 

 

46

 

Total interest and dividend income

 

 

7,242

 

 

 

 

7,581

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

 

349

 

 

 

 

538

 

Other

 

 

28

 

 

 

 

35

 

Total interest expense

 

 

377

 

 

 

 

573

 

Net interest income

 

 

6,865

 

 

 

 

7,008

 

Provision for (recovery of) loan losses

 

 

(300

)

 

 

 

30

 

Net interest income, after provision

 

 

 

 

 

 

 

 

 

for (recovery of) loan losses

 

 

7,165

 

 

 

 

6,978

 

Noninterest income

 

 

 

 

 

 

 

 

 

Service charges on deposits accounts

 

 

265

 

 

 

 

207

 

Trust services

 

 

264

 

 

 

 

282

 

Debit card interchange fees

 

 

495

 

 

 

 

471

 

Gain on sale of loans

 

 

118

 

 

 

 

487

 

Market value change in equity securities

 

 

1

 

 

 

 

13

 

Other

 

 

499

 

 

 

 

418

 

Total noninterest income

 

 

1,642

 

 

 

 

1,878

 

 

 

 

 

 

 

 

 

 

 

Noninterest expenses

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

3,155

 

 

 

 

3,029

 

Occupancy expense

 

 

272

 

 

 

 

254

 

Equipment expense

 

 

214

 

 

 

 

177

 

Professional and director fees

 

 

276

 

 

 

 

295

 

Software expense

 

 

333

 

 

 

 

300

 

Marketing and public relations

 

 

111

 

 

 

 

79

 

Debit card expense

 

 

164

 

 

 

 

171

 

Other expenses

 

 

943

 

 

 

 

976

 

Total noninterest expenses

 

 

5,468

 

 

 

 

5,281

 

Income before income tax

 

 

3,339

 

 

 

 

3,575

 

Federal income tax provision

 

 

638

 

 

 

 

690

 

Net income

$

 

2,701

 

 

$

 

2,885

 

Net income per share:

 

 

 

 

 

 

 

 

 

Basic and diluted

$

 

0.99

 

 

$

 

1.05

 

 

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