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CSB Bancorp, Inc. Reports Fourth Quarter Earnings

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

Fourth Quarter Highlights

 

 

Quarter Ended

December 31, 2021

 

Quarter Ended

December 31, 2020

Diluted earnings per share

 

$

0.85

 

 

$

0.97

 

Net Income

 

$

2,306,000

 

 

$

2,679,000

 

Return on average common equity

 

 

9.41

%

 

 

11.45

%

Return on average assets

 

 

0.80

%

 

 

1.05

%

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced fourth quarter 2021 net income of $2,306,000, or $0.85 per basic and diluted share, as compared to $2,679,000, or $0.97 per basic and diluted share, for the same period in 2020. Income before federal income tax amounted to $2,840,000, a decrease of 14% over the same quarter in the prior year. For the year ended December 31, 2021 net income totaled $10,837,000 compared to $10,568,000 for the same period last year, an increase of 3%.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 9.41% and 0.80%, respectively, compared with 11.45% and 1.05% for the fourth quarter of 2020.

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, mortgage rates have increased modestly, and the holiday season and COVID levels impeded some activity. Business loan demand shows signs of strengthening, although still 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 3.5% during fourth quarter to finish the year above one billion dollars. We are also grateful to report our tenth consecutive year of record net income.”

Net interest income and noninterest income totaled $8.5 million during the quarter, a decrease of $724 thousand from the prior-year fourth quarter. Net interest income decreased $471 thousand, or 7%, in the fourth quarter of 2021 compared to the same period in 2020.

Loan interest income, including fees, decreased $1.1 million, or 15%, during fourth quarter 2021 as compared to the same quarter in 2020. The decrease was mainly due to average total loan balances declining $75 million below the year ago quarter, including average Paycheck Protection Program loans (“PPP”) declining $73 million from the prior year quarter. Loan yields for fourth quarter 2021 averaged 4.47%, a decrease of 16 basis points from the 2020 fourth quarter average of 4.63%, The loan yield decrease partially resulted from PPP loan forgiveness resulting in $394 thousand less in PPP fees recognized in fourth quarter 2021 compared to fourth quarter 2020.

The net interest margin was 2.48% compared to 2.85% for fourth quarter 2020. As discussed above, both loan volume and rate declined, partially offset with volume increases within the securities account, and rate decreases on liabilities. Liquidity continues to play a factor on the margin as the growth of average overnight funds rose $72 million on a quarter over prior year quarter comparison. The tax equivalency effect on the margin was 0.01% in fourth quarter 2021 compared to 0.02% in fourth quarter 2020.

With the decrease in outstanding loan balances and continuing improvement in credit quality, there was no provision for loan losses for the quarter ended December 31, 2021 as compared to $378 thousand loss provision for the prior year fourth 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 a significant degree of COVID-related uncertainty.

Noninterest income decreased 12%, compared to fourth quarter of 2020. The decrease was primarily the result of a $487 thousand, or 64%, decline in gain on sale of mortgages to the secondary market, as refinancing of mortgages slowed and home purchases were limited by a lack of housing inventory for sale. Offsetting increases were recognized in debit and credit card fee income, earnings from bank owned life insurance values, and brokerage and trust income.

Noninterest expense increased 2% from fourth quarter 2020. Salary and employee benefit costs increased $194 thousand, or 6%, compared to the prior year quarter, primarily resulting from increases in compensation and workman’s compensation as the 2020 credits expired. A recovery was recognized on the provision for unfunded loan commitments of $107 thousand compared to the prior year quarter primarily as commercial loan construction commitments funded in the fourth quarter decreasing the senior/assisted living sector unfunded exposure at December 31, 2021. Marketing and public relations increased by $137 thousand, or 26%, reflecting a return to normalized levels after the pandemic-related curtailment of activities in 2020. Software expense increased by $42 thousand reflecting investment in new platforms. FDIC insurance expense increased $20 thousand above the prior year quarter due to the increase in asset size. Professional and directors’ fees decreased $88 thousand, or 20% primarily reflecting a decline in collection legal fees. The Company’s fourth quarter efficiency ratio increased to 66.4% compared to 59.8%.

Federal income tax expense totaled $534 thousand in fourth quarter 2021, as compared to $640 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 $1.14 billion, an increase of $120 million, or 12%, above the same quarter of the prior year. Liquidity increased as the Company’s average interest-bearing balances with banks increased $72 million, to $266 million, as compared to the fourth quarter in 2020. Average loan balances of $544 million decreased $75 million, or 12%, from the prior year fourth quarter while average securities balances of $234 million increased $116 million, or 76%, as compared to fourth quarter 2020.

Average commercial loan balances for the quarter, including commercial real estate, decreased $64 million, or 15%, from prior year levels. Excluding a $73 million decrease in average PPP loan balances, commercial loans increased $9 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 $3 million, or 3%, below the prior year’s quarter while home equity lines of credit decreased $6 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 9%, 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 and restoration of borrower confidence as pandemic uncertainty diminishes.

Nonperforming assets decreased $3.4 million from December 31, 2020 to $1.1 million, or 0.20%, of total loans plus other real estate on December 31, 2021, primarily the result of payoffs of $2.1 million. Delinquent loan balances as of December 31, 2021 decreased to 0.27% of total loans as compared to 0.88% on December 31, 2020.

Net loan charge-offs recognized during fourth quarter 2021 were $27 thousand, or 0.02% annualized, compared to fourth quarter 2020 net loan losses of $459 thousand. The allowance for loan losses amounted to 1.39% of total loans on December 31, 2021 as compared to 1.36% on December 31, 2020.

Average deposit balances grew on a quarter over prior year quarter comparison by $122 million, or 14%. For the fourth quarter 2021, the average cost of deposits amounted to 0.15%, as compared to 0.27% for the fourth quarter 2020. During the fourth quarter 2021, increases in average deposit balances over the prior year quarter included noninterest-bearing demand accounts of $62 million and interest-bearing demand and savings accounts of $61 million, while time deposits decreased $1 million. The average balance of securities sold under repurchase agreement during the fourth quarter of 2021 decreased by $4 million, or 9%, compared to the average for the same period in the prior year.

Shareholders’ equity totaled $97.3 million on December 31, 2021 with 2.7 million common shares outstanding. The average equity to assets ratio amounted to 8.54% on December 31, 2021 and 9.13% on December 31, 2020. The Company declared a fourth quarter dividend of $0.31 per share, producing an annualized yield of 3.3% based on the December 31, 2021 closing price of $37.75.

Cares Act and related events

CSB facilitated and funded $129 million of SBA emergency PPP loans in 2020 and 2021. As of December 31, 2021, $125 million has been received from the SBA in forgiveness. and approximately $181 thousand remains in unearned fees at December 31, 2021. All loans modified to businesses and consumers to deal with the uncertainty of the economy during 2020 and 2021 have entered repayment.

During fourth quarter 2021, the available for sale investment securities were reviewed for price volatility with $78.3 million book value securities transferred from available for sale to held to maturity at $76.3 million market value to protect additional declines to tangible book value with the projected increases in market interest rates in 2022 and 2023.

Following the rise in market interest rates during the first weeks of January 2022, approximately $60 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 US treasury notes.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $1.1 billion as of December 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

The Private Securities Litigation Reform Act of 1995 contains safe harbor provisions regarding forward-looking statements. 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

 

2021

 

2021

 

2021

 

2020

 

2021

 

2020

EARNINGS

4th Qtr

 

3rd Qtr

 

2nd Qtr

 

1st Qtr

 

4th Qtr

 

12 months

 

12 months

Net interest income FTE (a)

$

6,752

 

$

7,364

 

$

6,509

 

$

7,046

 

$

7,223

 

$

27,671

 

$

28,301

 

Provision for (recovery of) loan losses

 

-

 

 

(210

)

 

(475

)

 

30

 

 

378

 

 

(655

)

 

1,650

 

Other income

 

1,836

 

 

1,768

 

 

1,843

 

 

1,878

 

 

2,089

 

 

7,325

 

 

6,935

 

Other expenses

 

5,709

 

 

5,713

 

 

5,390

 

 

5,281

 

 

5,576

 

 

22,093

 

 

20,342

 

FTE adjustment (a)

 

39

 

 

39

 

 

38

 

 

38

 

 

39

 

 

154

 

 

148

 

Net income

 

2,306

 

 

2,901

 

 

2,745

 

 

2,885

 

 

2,679

 

 

10,837

 

 

10,568

 

Diluted earnings per share

 

0.85

 

 

1.06

 

 

1.00

 

 

1.05

 

 

0.97

 

 

3.97

 

 

3.85

 

 

 

 

 

 

 

 

 

PERFORMANCE RATIOS

 

 

 

 

 

 

 

Return on average assets (ROA), annualized

 

0.80

%

 

1.03

%

 

0.97

%

 

1.10

%

 

1.05

%

 

0.97

%

 

1.13

%

Return on average common equity (ROE), annualized

 

9.41

 

 

11.79

 

 

11.62

 

 

12.33

 

 

11.45

 

 

11.27

 

 

11.71

 

Net interest margin FTE (a)

 

2.48

 

 

2.77

 

 

2.43

 

 

2.85

 

 

2.97

 

 

2.63

 

 

3.22

 

Efficiency ratio

 

66.41

 

 

62.49

 

 

64.40

 

 

59.14

 

 

59.75

 

 

63.05

 

 

57.55

 

Number of full-time equivalent employees

 

171

 

 

178

 

 

174

 

 

170

 

 

171

 

 

 

 

 

 

 

 

 

 

 

MARKET DATA

 

 

 

 

 

 

 

Book value/common share

$

35.80

 

$

35.62

 

$

35.11

 

$

33.94

 

$

34.23

 

 

 

Period-end common share mkt value

 

37.75

 

 

39.25

 

 

38.00

 

 

37.50

 

 

35.00

 

 

 

Market as a % of book

 

105.45

%

 

110.19

%

 

108.23

%

 

110.49

%

 

102.25

%

 

 

Price-to-earnings ratio

 

9.51

 

 

9.62

 

 

9.41

 

 

9.40

 

 

9.09

 

 

 

Cash dividends/common share

$

0.31

 

$

0.31

 

$

0.30

 

$

0.30

 

$

0.29

 

$

1.22

 

$

1.13

 

Common stock dividend payout ratio

 

36.47

%

 

29.25

%

 

30.00

%

 

28.57

%

 

29.90

%

 

30.73

%

 

29.35

%

Average basic common shares

 

2,720,633

 

 

2,729,410

 

 

2,740,390

 

 

2,742,350

 

 

2,742,350

 

 

2,733,126

 

 

2,742,350

 

Average diluted common shares

 

2,720,633

 

 

2,729,410

 

 

2,740,390

 

 

2,742,350

 

 

2,742,350

 

 

2,733,126

 

 

2,742,350

 

Period end common shares outstanding

 

2,718,024

 

 

2,725,524

 

 

2,734,244

 

 

2,742,350

 

 

2,742,350

 

 

 

Common stock market capitalization

$

102,605

 

$

106,977

 

$

103,901

 

$

102,838

 

$

95,982

 

 

 

 

 

 

 

 

 

 

 

ASSET QUALITY

 

 

 

 

 

 

 

Gross charge-offs

$

66

 

$

39

 

$

20

 

$

5

 

$

511

 

$

130

 

$

642

 

Net charge-offs (recoveries)

 

27

 

 

20

 

 

(12

)

 

(34

)

 

459

 

 

1

 

 

393

 

Allowance for loan losses

 

7,618

 

 

7,645

 

 

7,875

 

 

8,338

 

 

8,274

 

 

 

Nonperforming assets (NPAs)

 

1,088

 

 

1,320

 

 

2,786

 

 

3,089

 

 

4,497

 

 

 

Net charge-off (recovery) / average loans ratio

 

0.02

%

 

0.01

%

 

(0.01

)%

 

(0.02

)%

 

0.29

%

 

0.00

%

 

0.06

%

Allowance for loan losses / period-end loans

 

1.39

 

 

1.40

 

 

1.43

 

 

1.43

 

 

1.36

 

 

 

NPAs/loans and other real estate

 

0.20

 

 

0.24

 

 

0.50

 

 

0.53

 

 

0.74

 

 

 

Allowance for loan losses/nonperforming loans

 

699.86

 

 

579.07

 

 

282.61

 

 

269.92

 

 

183.99

 

 

 

 

 

 

 

 

 

 

 

CAPITAL & LIQUIDITY

 

 

 

 

 

 

 

Period-end tangible equity to assets

 

8.13

%

 

8.34

%

 

8.12

%

 

7.99

%

 

8.68

%

 

 

Average equity to assets

 

8.54

 

 

8.75

 

 

8.38

 

 

8.95

 

 

9.13

 

 

 

Average equity to loans

 

17.86

 

 

17.89

 

 

16.78

 

 

15.92

 

 

15.02

 

 

 

Average loans to deposits

 

54.62

 

 

56.09

 

 

57.18

 

 

64.95

 

 

70.81

 

 

 

 

 

 

 

 

 

 

 

AVERAGE BALANCES

 

 

 

 

 

 

 

Assets

$

1,138,690

 

$

1,115,814

 

$

1,131,251

 

$

1,060,485

 

$

1,018,770

 

$

1,111,808

 

$

931,330

 

Earning assets

 

1,079,002

 

 

1,056,424

 

 

1,073,865

 

 

1,004,521

 

 

966,304

 

 

1,053,666

 

 

879,153

 

Loans

 

544,389

 

 

545,420

 

 

564,998

 

 

596,319

 

 

619,455

 

 

562,592

 

 

609,207

 

Deposits

 

996,646

 

 

972,409

 

 

988,017

 

 

918,063

 

 

874,820

 

 

969,009

 

 

788,904

 

Shareholders' equity

 

97,241

 

 

97,584

 

 

94,786

 

 

94,929

 

 

93,042

 

 

96,145

 

 

90,247

 

 

 

 

 

 

 

 

 

ENDING BALANCES

 

 

 

 

 

 

 

Assets

$

1,144,239

 

$

1,111,696

 

$

1,128,922

 

$

1,110,157

 

$

1,031,632

 

 

 

Earning assets

 

1,084,744

 

 

1,054,141

 

 

1,072,286

 

 

1,043,016

 

 

977,092

 

 

 

Loans

 

549,154

 

 

546,095

 

 

552,030

 

 

582,714

 

 

609,159

 

 

 

Deposits

 

1,002,747

 

 

968,629

 

 

986,668

 

 

968,569

 

 

891,562

 

 

 

Shareholders' equity

 

97,315

 

 

97,089

 

 

96,012

 

 

93,085

 

 

93,859

 

 

 

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)

December 31,

 

December 31,

(Dollars in thousands, except per share data)

2021

 

2020

ASSETS

 

 

Cash and cash equivalents

 

 

Cash and due from banks

$

19,543

 

$

19,281

 

Interest-earning deposits in other banks

 

224,114

 

 

162,371

 

Total cash and cash equivalents

 

243,657

 

 

181,652

 

Securities

 

 

Available-for-sale, at fair-value

 

131,708

 

 

190,438

 

Held-to-maturity

 

174,808

 

 

9,045

 

Equity securities

 

115

 

 

87

 

Restricted stock, at cost

 

4,614

 

 

4,614

 

Total securities

 

311,245

 

 

204,184

 

 

 

 

Loans held for sale

 

231

 

 

1,378

 

Loans

 

549,154

 

 

609,159

 

Less allowance for loan losses

 

7,618

 

 

8,274

 

Net loans

 

541,536

 

 

600,885

 

 

 

 

Premises and equipment, net

 

13,866

 

 

12,633

 

Goodwill and core deposit intangible

 

4,728

 

 

4,772

 

Bank owned life insurance

 

24,035

 

 

21,416

 

Accrued interest receivable and other assets

 

4,941

 

 

4,712

 

TOTAL ASSETS

$

1,144,239

 

$

1,031,632

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

Liabilities

 

 

Deposits:

 

 

Noninterest-bearing

$

334,346

 

$

272,051

 

Interest-bearing

 

668,401

 

 

619,511

 

Total deposits

 

1,002,747

 

 

891,562

 

 

 

 

Short-term borrowings

 

36,530

 

 

37,215

 

Other borrowings

 

3,407

 

 

4,664

 

Accrued interest payable and other liabilities

 

4,240

 

 

4,332

 

Total liabilities

 

1,046,924

 

 

937,773

 

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

 

76,715

 

 

69,209

 

Treasury stock at cost - 262,578 shares in 2021 and 238,252 shares in 2020

 

(5,719

)

 

(4,780

)

Accumulated other comprehensive (loss) income

 

(2,125

)

 

986

 

Total shareholders' equity

 

97,315

 

 

93,859

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,144,239

 

$

1,031,632

 

 

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

 

Quarter ended

 

Twelve months ended

(Unaudited)

December 31,

 

December 31,

(Dollars in thousands, except per share data)

2021

 

2020

 

2021

 

2020

Interest and dividend income:

 

 

 

 

Loans, including fees

$

6,131

 

$

7,209

 

$

26,124

 

 

$

28,354

 

Taxable securities

 

773

 

 

 

421

 

 

 

2,613

 

 

 

1,882

 

Nontaxable securities

 

116

 

 

 

121

 

 

 

455

 

 

 

464

 

Other

 

109

 

 

 

53

 

 

 

337

 

 

 

366

 

Total interest and dividend income

 

7,129

 

 

 

7,804

 

 

 

29,529

 

 

 

31,066

 

Interest expense:

 

 

 

 

 

 

 

Deposits

 

388

 

 

 

584

 

 

 

1,884

 

 

 

2,723

 

Other

 

28

 

 

 

36

 

 

 

128

 

 

 

190

 

Total interest expense

 

416

 

 

 

620

 

 

 

2,012

 

 

 

2,913

 

Net interest income

 

6,713

 

 

 

7,184

 

 

 

27,517

 

 

 

28,153

 

Provision for (recovery of) loan losses

 

-

 

 

 

378

 

 

 

(655

)

 

 

1,650

 

Net interest income, after provision for (recovery of) loan losses

 

6,713

 

 

 

6,806

 

 

 

28,172

 

 

 

26,503

 

Noninterest income

 

 

 

 

 

 

 

Service charges on deposits accounts

 

263

 

 

 

250

 

 

 

939

 

 

 

1,003

 

Trust services

 

261

 

 

 

234

 

 

 

1,059

 

 

 

896

 

Debit card interchange fees

 

538

 

 

 

453

 

 

 

2,050

 

 

 

1,661

 

Gain on sale of loans

 

275

 

 

 

762

 

 

 

1,449

 

 

 

1,951

 

Market value change in equity securities

 

8

 

 

 

5

 

 

 

28

 

 

 

(4

)

Other

 

491

 

 

 

385

 

 

 

1,800

 

 

 

1,428

 

Total noninterest income

 

1,836

 

 

 

2,089

 

 

 

7,325

 

 

 

6,935

 

 

 

 

 

 

 

 

 

Noninterest expenses

 

 

 

 

 

 

 

Salaries and employee benefits

 

3,298

 

 

 

3,104

 

 

 

12,599

 

 

 

11,707

 

Occupancy expense

 

262

 

 

 

242

 

 

 

1,033

 

 

 

953

 

Equipment expense

 

195

 

 

 

151

 

 

 

714

 

 

 

657

 

Professional and director fees

 

353

 

 

 

441

 

 

 

1,184

 

 

 

1,284

 

Software expense

 

388

 

 

 

346

 

 

 

1,342

 

 

 

1,101

 

Marketing and public relations

 

137

 

 

 

109

 

 

 

461

 

 

 

398

 

Debit card expense

 

186

 

 

 

171

 

 

 

710

 

 

 

621

 

Other expenses

 

890

 

 

 

1,012

 

 

 

4,050

 

 

 

3,621

 

Total noninterest expenses

 

5,709

 

 

 

5,576

 

 

 

22,093

 

 

 

20,342

 

Income before income tax

 

2,840

 

 

 

3,319

 

 

 

13,404

 

 

 

13,096

 

Federal income tax provision

 

534

 

 

 

640

 

 

 

2,567

 

 

 

2,528

 

Net income

$

2,306

 

 

$

2,679

 

 

$

10,837

 

 

$

10,568

 

Net income per share:

 

 

 

 

 

 

 

Basic and diluted

$

0.85

 

 

$

0.97

 

 

$

3.97

 

 

$

3.85

 

 

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