Business Wire | Jan 25, 2021 04:42PM EST

CSB Bancorp, Inc. Reports Fourth Quarter Earnings

Jan. 25, 2021

MILLERSBURG, Ohio--(BUSINESS WIRE)--Jan. 25, 2021--CSB Bancorp, Inc. (OTC Pink: CSBB):

Fourth Quarter Highlights

Quarter Ended Quarter Ended December 31, 2020 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 inthousands, except 2020 2020 2020 2020 2019 2020 2019per share data)

EARNINGS 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 12 months 12 months

Net interest income $ 7,223 $ 7,077 $ 7,048 $ 6,953 $ 7,168 $ 28,301 $ 28,556 FTE (a)

Provision for loan 378 377 717 178 285 1,650 1,140 losses

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 0.97 1.02 0.95 0.91 0.95 3.85 3.80 share



PERFORMANCE RATIOS

Return on averageassets (ROA), 1.05 % 1.14 % 1.15 % 1.23 % 1.27 % 1.13 % 1.36 %annualized

Return on averagecommon equity (ROE), 11.45 12.19 11.72 11.47 12.13 11.71 12.77 annualized

Net interest margin 2.97 3.04 3.29 3.67 3.73 3.22 3.97 FTE (a)

Efficiency ratio 59.75 56.32 54.05 60.08 58.74 57.55 58.00

Number of full-time 171 169 169 172 171 equivalent employees



MARKET DATA

Book value/common $ 34.23 $ 33.49 $ 32.81 $ 31.95 $ 31.17 share

Period-end common 35.00 30.00 32.00 35.00 40.97 share mkt value

Market as a % of 102.25 % 89.58 % 97.53 % 109.55 % 131.44 % book

Price-to-earnings 9.09 7.83 8.44 9.26 10.78 ratio

Cash dividends/ $ 0.29 $ 0.28 $ 0.28 $ 0.28 $ 0.28 $ 1.13 $ 1.08 common share

Common stockdividend payout 29.90 % 27.45 % 29.47 % 30.77 % 29.47 % 29.35 % 28.42 %ratio

Average basic common 2,742,350 2,742,350 2,742,350 2,742,350 2,742,350 2,742,350 2,742,296 shares

Average diluted 2,742,350 2,742,350 2,742,350 2,742,350 2,742,350 2,742,350 2,742,296 common shares

Period end common 2,742,350 2,742,350 2,742,350 2,742,350 2,742,350 shares outstanding

Common stock market $ 95,982 $ 82,271 $ 87,755 $ 95,982 $ 112,354 capitalization



ASSET QUALITY

Gross charge-offs $ 511 $ 28 $ 17 $ 86 $ 59 $ 642 $ 258

Net charge-offs 459 (143 ) 3 74 44 393 30 (recoveries)

Allowance for loan 8,274 8,355 7,835 7,120 7,017 losses

Nonperforming assets 4,497 4,102 4,481 4,468 4,659 (NPAs)

Net charge-off )(recovery) /average 0.29 % (0.09 % 0.00 % 0.05 % 0.03 % 0.06 % 0.01 %loans ratio

Allowance for loanlosses/period-end 1.36 1.33 1.23 1.28 1.27 loans

NPAs/loans and other 0.74 0.65 0.70 0.80 0.84 real estate

Allowance for loanlosses/nonperforming 183.99 203.71 178.78 162.97 154.55 loans



CAPITAL & LIQUIDITY

Period-end tangible 8.68 % 8.86 % 8.90 % 10.28 % 9.91 % equity to assets

Average equity to 9.13 9.33 9.79 10.72 10.43 assets

Average equity to 15.02 14.39 14.38 15.55 15.29 loans

Average loans to 70.81 76.22 80.95 82.61 81.62 deposits



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. Authorized9,000,000 shares; issued 2,980,602 shares in 18,629 18,629 2020 and 2019

Additional paid-in capital 9,815 9,815

Retained earnings 69,209 61,740

Treasury stock at cost - 238,252 shares in 2020 (4,780 ) (4,780 )and 2019

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/

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