CSBB - CSB Bancorp Inc. Reports Fourth Quarter Earnings

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

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced fourth quarter 2018 net income of $2,492,000, or $.91 per basic and diluted share, as compared to $1,779,000, or $.65 per basic and diluted share, for the same period in 2017. Income before federal income tax amounted to $3.1 million, an increase of 16% over the same quarter in the prior year. For the twelve month period ended December 31, 2018 net income totaled $9,412,000, compared to $7,101,000 for the same period last year, an increase of 33%.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 13.20% and 1.36%, respectively, compared with 10.02% and 0.99% for the fourth quarter of 2017.

Eddie Steiner, President and CEO stated, “We are pleased to report record fourth quarter and full year earnings as we continue to grow and increase market share in our primary counties. Average loan balances increased for the thirteenth consecutive quarter, while net interest margin improved for the sixth consecutive quarter. Year-end loan balances reflect 6% growth during 2018, with deposit balances 4% above prior year end.”

Net interest income and noninterest income, on a fully-taxable equivalent basis, totaled $8.2 million during the quarter, a 7% increase from the prior-year fourth quarter. Net interest income increased $474 thousand, or 7%, in the fourth quarter of 2018 compared to the same period in 2017.

Loan interest income including fees increased $720 thousand during fourth quarter 2018 as compared to the same quarter in 2017, an increase of 12%. Average total loan balances during the current quarter were $30 million higher than the year ago quarter an increase of 6%. Loan yields for fourth quarter 2018 averaged 5.03%, an increase of 25 basis points from the 2017 fourth quarter average of 4.78%.

The net interest margin was 4.01% compared to 3.84% for fourth quarter 2017. The tax equivalency effect on the margin dropped to 0.01% from 0.06% a result of the reduction in the corporate income tax rate in 2018.

Noninterest income increased by $150 thousand, or 13%, in the fourth quarter of 2018 compared to 2017. The increase reflects growth in debit card fee income, trust and brokerage income, and service charges on deposit accounts.

Noninterest expense amounted to $4.7 million during the quarter, an increase of $29 thousand, or less than 1%, from fourth quarter 2017. Salary and employee benefit costs increased $188 thousand, or 7%, compared to the prior year quarter, as a result of higher wage and 401k retirement expenses. Debit card expense increased by $24 thousand, or 19%, on a quarter over quarter basis primarily on expanded channel advertising and increasing community donations. The Company’s fourth quarter efficiency ratio was 57.3% as compared to 61.0% for the same quarter in the prior year.

Federal income tax provision was a $619 thousand expense in fourth quarter 2018, as compared to $901 thousand tax expense provision for the same quarter in 2017. The 2017 fourth quarter tax expense included a $101 thousand expense revaluation of the net deferred tax asset at the lower statutory rate. The effective tax rate, exclusive of the revaluation, decreased from 31% to 20% a result of the Tax Cuts and Jobs Act enacted December 2017.

Average total assets during the quarter amounted to $728 million, an increase of $12 million, or 2%, above the same quarter of the prior year. Average loan balances of $541 million increased $30 million, or 6%, from the prior year fourth quarter while average securities balances of $113 million decreased $14 million, or 11%, as compared to fourth quarter 2017.

Average commercial loan balances for the quarter, including commercial real estate, increased $17 million, or 5%, from prior year levels. Average residential mortgage balances increased $8 million, or 7%, over the prior year’s quarter. Average consumer credit balances increased $5 million, or 8%, versus the same quarter of the prior year.

Nonperforming assets decreased $3.1 million from December 31, 2017 to $3.4 million, or 0.62%, of total loans plus other real estate at December 31, 2018. The decrease in nonperforming assets is the result of various commercial loans exiting through liquidation during 2018. At December 31, 2018, 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, 2018 declined to 0.84% of total loans as compared to 1.53% at December 31, 2017.

Net loan losses during fourth quarter 2018 were $641 thousand, or 0.47% annualized, compared to fourth quarter 2017 net loan losses of $12 thousand. Full year net charge-offs amounted to 0.19% in 2018 as compared to 0.17% in the prior year. The allowance for loan losses amounted to 1.08% of total loans at December 31, 2018 as compared to 1.08% at December 31, 2017.

Average deposit balances grew on a year over year comparison by $36 million, or 7%, partially on the strength of customer response to higher rates paid on insured deposits. For the full year 2018, the average cost of deposits amounted to 0.40%, as compared to 0.24% in 2017. During the fourth quarter 2018, increases in average deposit balances over the prior year quarter included non-interest bearing demand accounts of $13 million and savings accounts of $7 million. The average balance of securities sold under repurchase agreement during the fourth quarter of 2018 decreased by $4 million, or 10%, compared to the average for the same period in the prior year. During 2017, a new corporate overnight cash management product was established within interest-bearing checking and at December 31, 2018 the new product had balances of $23 million.

Shareholders’ equity totaled $76.5 million on December 31, 2018 with 2.7 million common shares outstanding. The tangible equity to assets ratio amounted to 9.9% on December 31, 2018 and 9.3% on December 31, 2017. The Company declared a fourth quarter dividend of $0.26 per share, a $.04 per share increase over fourth quarter 2017, producing an annualized yield of 2.7% based on the December 31, 2018 closing price of $38.50.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $732 million as of December 31, 2018. 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 fifteen 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.

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