CSB Bancorp, Inc. Reports Third Quarter Earnings

CSB Bancorp, Inc. (OTCBB:CSBB):

CSB Bancorp, Inc. (CSBB) today announced third quarter 2014 net income of $1,507,000 or $.55 per basic and diluted share, as compared to $1,407,000 or $.52 per basic and diluted share for the same period in 2013.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 10.64% and 0.98%, respectively, compared with 10.79% and 0.96% for the third quarter of 2013.

Eddie Steiner, President and CEO commented, “Economic conditions continue to improve across the markets we serve. Loan demand has increased as compared to recent years although margins remain tight due to the very low interest rate environment.”

Revenue, on a fully-taxable equivalent basis, totaled $6.1 million during the quarter, a 3% increase from the prior-year third quarter. Net interest income improved by $320 thousand as compared to third quarter 2013, while other income decreased $113 thousand attributable to a $149 thousand gain on sale of investments during the quarter in 2013 that did not recur in 2014.

Non-interest expense amounted to $3.8 million during the quarter, an increase of $136 thousand or 4% from third quarter 2013. The Company’s third quarter efficiency ratio amounted to 60.8% as compared to 62.1% for the same quarter in the prior year.

Net interest margin amounted to 3.53% for the quarter compared to 3.46% for the prior year’s third quarter. The margin improvement resulted from the combination of a $32 million increase in average balances of loans and investments, an $8 million average balance decrease in lower yielding overnight investments, an $18 million average balance increase in noninterest bearing deposits and a 12 basis point decrease in interest rates paid on interest bearing deposits and borrowings.

Federal income tax provision totaled $674 thousand in third quarter 2014, compared to $616 thousand for the same quarter in 2013 reflecting an effective tax rate of 31% for current quarter versus 30% for the third quarter in 2013.

Average total assets during the quarter amounted to $607 million, an increase of $25 million or 4.3% above the same quarter of the prior year. Average loan balances of $408 million were $33 million or 8.8% above prior year third quarter, while average securities balances of $138 million decreased $600 thousand or less than 1% as compared to third quarter 2013.

Average commercial loan balances for the quarter, including commercial real estate, increased $24 million or 10% above year ago levels. Average residential mortgage balances increased by $7 million or 10% over the prior year’s quarter. The increase of in-house mortgage balances was the result of the bank originating and retaining some 15 year fixed rate mortgages. Average home equity balances increased $1 million or 2%, and average consumer credit balances increased $1 million or 10% versus the same quarter of the prior year.

Net loan recoveries during third quarter 2014 were $2 thousand compared to third quarter 2013 net loan charge-offs of $78 thousand. Net charge-offs for the nine month period in 2014 were 0.12% as compared to 0.05% of average loans for the nine month period in 2013.

Nonperforming assets totaled $4.7 million or 1.14% of total loans plus other real estate at September 30, 2014, compared to $2.4 million or 0.63% at September 30, 2013. During first quarter 2014 a $2.9 million commercial relationship was placed on nonaccrual with an assigned specific reserve. Delinquent loan balances as of September 30, 2014 amounted to 1.53% of total loans as compared to 1.44% at September 30, 2013.

The Company funded $123 thousand in loan loss provision during the third quarter and the allowance for loan losses amounted to 1.27% of total loans on September 30, 2014. The ratio of the allowance for loan losses to nonperforming loans stood at 110.8% at September 30, 2014.

Average deposit balances grew by $12 million, or 2%, from the prior year’s third quarter. Average deposit balances totaled $481 million at September 30, 2014. Within the deposit category, average noninterest-bearing account balances for the third quarter increased by $18 million, or 17% above the same period in the prior year. Average interest-bearing checking, money market and traditional savings balances increased $12 million or 6% from year ago levels, while average time deposit balances decreased $18 million or 12% during the year. In addition to the changes in average deposit balances, the average balance of securities sold under repurchase agreement during the third quarter grew by $4 million or 10% 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 $56.3 million on September 30, 2014 with 2.7 million common shares outstanding. The tangible equity to assets ratio amounted to 8.4% on September 30, 2014, as compared to 7.9% on September 30, 2013. The Company declared a common dividend of $.19 per share during the quarter. Based on the September 30, 2014 closing stock price of $20.01 per share, the Company’s annual dividend yield approximates 3.8%.

About CSB Bancorp, Inc.
CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $611 million as of September 30, 2014. 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.