CSB Bancorp, Inc. Reports Fourth Quarter Earnings
01/26/2023 - 04:45 PM
MILLERSBURG, Ohio --(BUSINESS WIRE)--
CSB Bancorp, Inc. (OTC Pink: CSBB):
Fourth Quarter Highlights
Quarter Ended
December 31, 2022
Quarter Ended
December 31, 2021
Diluted earnings per share
$
1.39
$
0.85
Net Income
$
3,753,000
$
2,306,000
Return on average common equity
15.94
%
9.41
%
Return on average assets
1.27
%
0.80
%
CSB Bancorp, Inc. (OTC Pink: CSBB) today announced fourth quarter 2022 net income of $3,753,000 , or $1.39 per basic and diluted share, as compared to $2,306,000 , or $0.85 per basic and diluted share, for the same period in 2021. Income before federal income tax amounted to $4,674,000 , an increase of 65% over the same quarter in the prior year. For the year ended December 31, 2022 , net income totaled $13,313,000 compared to $10,837,000 for the same period last year, an increase of 23% .
Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 15.94% and 1.27% , respectively, compared with 9.41% and 0.80% for the fourth quarter of 2021. For the year ended December 31, 2022 , ROE and ROA equated to 14.04% and 1.16% , as compared to 11.27% and 0.97% for the year ended in 2021.
Eddie Steiner , President and CEO stated, “Loan balances finished the year 14% higher than the prior year, with commercial and home mortgage loans both reflecting double digit increases. The Bank’s liquidity remains strong, with cash and securities available for sale totaling $236 million at year end. Full year net income of $13 million reflects an eleventh consecutive record. Businesses and individuals are generally striking a cautious borrowing posture based on emerging signs and expectations of a slowing economy. High home prices, lack of houses available for sale, and mortgage interest rates are expected to sustain a dampening effect on home mortgage volumes for some months to come. Commercial loan demand, while not robust, continues to be sufficient to maintain a healthy pipeline at the present time.”
Net interest income and noninterest income totaled $10.9 million during the quarter, an increase of $2.3 million from the prior-year fourth quarter. Net interest income increased $2.6 million , or 38% , in the fourth quarter of 2022 compared to the same period in 2021.
Loan interest income including fees increased $1.4 million , or 23% , during fourth quarter 2022 as compared to the same quarter in 2021. The increase was mainly due to average volume and rate increases on loans. Securities interest income increased $1.2 million , or 131% , during the fourth quarter 2022 compared to the same quarter in 2021 from both volume and rate increases. Loan yields for fourth quarter 2022 averaged 4.82% , an increase of 35 basis points from the 2021 fourth quarter average of 4.47% , while securities yields for fourth quarter 2022 averaged 2.07% , compared to 1.36% in the fourth quarter 2021.
The fully taxable equivalent (FTE) net interest margin was 3.33% compared to 2.48% for fourth quarter 2021. Compared to the 2021 fourth quarter, FTE net interest income increased $2.6 million , or 38% , reflecting 85 basis points of net interest margin expansion, and a $29 million , or 3% , increase in average earning assets. The higher interest rate environment drove the increase in yields coupled with loan and security volume growth, partially offset by the higher cost of funds and lower loan fees from the Paycheck Protection Program. The tax equivalency effect on the margin was 0.01% in fourth quarter 2022 and 2021.
Noninterest income decreased 12% , compared to fourth quarter of 2021. The decrease was primarily the result of a $258 thousand , or 94% , 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 service charges on deposit accounts, credit card fee income, and earnings from bank owned life insurance values.
Noninterest expense increased 9% from fourth quarter 2021. Salary and employee benefit costs increased $382 thousand , or 12% , compared to the prior year quarter, primarily resulting from increases in compensation and benefits. Marketing and public relations increased by $52 thousand , or 38% , reflecting a return to normalized levels after the pandemic-related curtailment of activities in 2021. Professional and directors’ fees increased $37 thousand , or 11% primarily reflecting a recovery of legal fees in fourth quarter 2021. FDIC insurance expense decreased $26 thousand below the prior year quarter due to improved credit quality. The Company’s fourth quarter efficiency ratio decreased to 56.8% compared to 66.4% .
Federal income tax expense was $921 thousand in the 2022 fourth quarter compared to $534 thousand in the 2021 fourth quarter. The effective tax rates for the 2022 fourth quarter and 2021 fourth quarter were 19.7% and 18.8% , respectively.
Average earning assets for the 2022 fourth quarter increased $29 million , or 3% , from the year-ago quarter, primarily reflecting a $130 million , or 49% , increase in average securities, a $76 million , or 14% , increase in average loans, and a $177 million , or 66% , decrease in deposits mainly held at the Federal Reserve Bank .
Average commercial loan balances for the quarter, including commercial real estate, increased $54 million , or 15% , from prior year levels. Partially offset by a $10 million decrease in average PPP loan balances, commercial loans increased $64 million year over year as construction loans were drawn and borrowers used term loans to fund equipment and other purchases. Average residential mortgage balances increased $16 million , or 12% , above the prior year’s quarter while home equity lines of credit increased $6 million from the prior year’s quarter as balances were drawn and new loans originated. Average consumer credit balances increased $267 thousand , or 2% , 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.
Nonperforming assets were $256 thousand , or 0.04% , of total loans on December 31, 2022 , compared to $1.1 million , or 0.20% of total loans, a year ago. Delinquent loan balances as of December 31, 2022 , decreased to 0.13% of total loans as compared to 0.27% on December 31, 2021 . With the continuing improvement in credit quality, there was no provision for loan losses for the quarter ended December 31, 2022 , or 2021.
Net loan charge-offs recognized during fourth quarter 2022 were $170 thousand , or 0.11% annualized, compared to fourth quarter 2021 net loan losses of $27 thousand . The allowance for loan losses amounted to 1.09% of total loans on December 31, 2022 , as compared to 1.39% on December 31, 2021 .
Average deposit balances grew on a quarter over prior year quarter comparison by $40 million , or 4% . For the fourth quarter 2022, the average cost of deposits amounted to 0.41% , as compared to 0.15% for the fourth quarter 2021. During the fourth quarter 2022, increases in average deposit balances over the prior year quarter included noninterest-bearing demand accounts of $23 million and interest-bearing demand and savings accounts of $22 million , while time deposits decreased $5 million . The average balance of securities sold under repurchase agreement during the fourth quarter of 2022 decreased by $1 million , or 4% , compared to the average for the same period in the prior year.
Shareholders’ equity totaled $95.9 million on December 31, 2022 , with 2.7 million common shares outstanding. The average equity to assets ratio amounted to 7.96% on December 31, 2022 , and 8.54% on December 31, 2021 . The Company declared a fourth quarter dividend of $0.35 per share, producing an annualized yield of 3.6% based on the December 31, 2022 closing price of $38.50 .
About CSB Bancorp, Inc.
CSB is a financial holding company headquartered in Millersburg, Ohio , with approximate assets of $1.2 billion as of December 31, 2022 . 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 in thousands, except per share data)
2022
2022
2022
2022
2021
2022
2021
EARNINGS
4th Qtr
3rd Qtr
2nd Qtr
1st Qtr
4th Qtr
12 months
12 months
Net interest income FTE (a)
$
9,304
$
8,596
$
7,666
$
6,902
$
6,752
$
32,468
$
27,671
Provision (recovery) for loan losses
-
(250
)
(345
)
(300
)
-
(895
)
(655
)
Other income
1,612
1,675
1,782
1,642
1,836
6,711
7,325
Other expenses
6,206
5,945
5,774
5,468
5,709
23,393
22,093
FTE adjustment (a)
36
36
36
37
39
145
154
Net income
3,753
3,650
3,209
2,701
2,306
13,313
10,837
Basic and Diluted earnings per share
1.39
1.35
1.18
0.99
0.85
4.91
3.97
PERFORMANCE RATIOS
Return on average assets (ROA), annualized
1.27
%
1.25
%
1.13
%
0.96
%
0.80
%
1.16
%
0.97
%
Return on average common equity (ROE), annualized
15.94
15.24
13.73
11.26
9.41
14.04
11.27
Net interest margin FTE (a)
3.33
3.12
2.87
2.60
2.48
2.98
2.63
Efficiency ratio
56.83
57.87
61.13
64.01
66.41
59.70
63.05
Number of full-time equivalent employees
172
172
171
172
171
MARKET DATA
Book value/common share
$
35.43
$
33.97
$
34.46
$
34.93
$
35.80
Period-end common share market value
38.50
39.00
38.00
39.60
37.75
Market as a % of book
108.66
%
114.81
%
110.27
%
113.37
%
105.45
%
Price-to-earnings ratio
7.84
8.92
9.31
10.15
9.51
Average basic common shares
2,707,576
2,712,686
2,718,024
2,718,024
2,720,633
2,714,045
2,733,126
Average diluted common shares
2,707,576
2,712,686
2,718,024
2,718,024
2,720,633
2,714,045
2,733,126
Period end common shares outstanding
2,707,576
2,707,576
2,718,024
2,718,024
2,718,024
Common stock market capitalization
$
104,242
$
105,595
$
103,285
$
107,634
$
102,605
ASSET QUALITY
Gross charge-offs
$
217
$
29
$
11
$
31
$
66
$
288
$
130
Net charge-offs (recoveries)
170
10
(308
)
13
27
(115
)
1
Allowance for loan losses
6,838
7,008
7,268
7,305
7,618
Nonperforming assets (NPAs)
256
685
690
1,181
1,088
Net charge-off (recovery) / average loans ratio
0.11
%
0.01
%
(0.21
)
%
0.01
%
0.02
%
(0.02
)
%
0.00
%
Allowance for loan losses / period-end loans
1.09
1.15
1.25
1.29
1.39
NPAs/loans and other real estate
0.04
0.11
0.12
0.21
0.20
Allowance for loan losses/nonperforming loans
2,667.09
1,022.02
1,053.53
618.54
699.86
CAPITAL & LIQUIDITY
Period-end tangible equity to assets
7.90
%
7.54
%
7.93
%
7.98
%
8.13
%
Average equity to assets
7.96
8.20
8.25
8.54
8.54
Average equity to loans
15.06
15.98
16.31
17.35
17.86
Average loans to deposits
59.84
58.15
57.65
56.42
54.62
AVERAGE BALANCES
Assets
$
1,172,785
$
1,159,523
$
1,136,318
$
1,138,598
$
1,138,690
$
1,151,925
$
1,111,808
Earning assets
1,108,231
1,094,197
1,072,376
1,078,269
1,079,002
1,088,367
1,053,666
Loans
620,243
594,820
574,824
560,440
544,389
587,765
562,592
Deposits
1,036,559
1,022,851
997,108
993,411
996,646
1,012,629
969,009
Shareholders' equity
93,404
95,043
93,750
97,242
97,241
94,850
96,145
ENDING BALANCES
Assets
$
1,159,108
$
1,161,830
$
1,126,778
$
1,135,003
$
1,144,239
Earning assets
1,094,876
1,096,302
1,064,770
1,073,565
1,084,744
Loans
627,171
609,971
582,185
567,375
549,154
Deposits
1,023,417
1,029,274
993,113
994,939
1,002,747
Shareholders' equity
95,920
91,981
93,662
94,928
97,315
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)
2022
2021
ASSETS
Cash and cash equivalents
Cash and due from banks
$
19,911
$
19,543
Interest-earning deposits in other banks
66,509
224,114
Total cash and cash equivalents
86,420
243,657
Securities
Available-for-sale, at fair-value
150,069
131,708
Held-to-maturity
247,401
174,808
Equity securities
244
115
Restricted stock, at cost
3,430
4,614
Total securities
401,144
311,245
Loans held for sale
52
231
Loans
627,171
549,154
Less allowance for loan losses
6,838
7,618
Net loans
620,333
541,536
Premises and equipment, net
13,414
13,866
Goodwill
4,728
4,728
Bank owned life insurance
24,709
24,035
Accrued interest receivable and other assets
8,308
4,941
TOTAL ASSETS
$
1,159,108
$
1,144,239
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing
$
350,283
$
334,346
Interest-bearing
673,134
668,401
Total deposits
1,023,417
1,002,747
Short-term borrowings
32,550
36,530
Other borrowings
2,461
3,407
Accrued interest payable and other liabilities
4,760
4,240
Total liabilities
1,063,188
1,046,924
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
86,502
76,715
Treasury stock at cost - 273,026 shares in 2022
and 262,578 shares in 2021
(6,107
)
(5,719
)
Accumulated other comprehensive loss
(12,919
)
(2,125
)
Total shareholders' equity
95,920
97,315
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
1,159,108
$
1,144,239
CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
Quarter ended
Twelve months ended
(Unaudited)
December 31 ,
December 31 ,
(Dollars in thousands, except per share data)
2022
2021
2022
2021
Interest and dividend income:
Loans, including fees
$
7,526
$
6,131
$
26,015
$
26,124
Taxable securities
1,944
773
6,665
2,613
Nontaxable securities
108
116
436
455
Other
840
109
1,703
337
Total interest and dividend income
10,418
7,129
34,819
29,529
Interest expense:
Deposits
1,083
388
2,335
1,884
Other
67
28
161
128
Total interest expense
1,150
416
2,496
2,012
Net interest income
9,268
6,713
32,323
27,517
Provision (recovery) for loan losses
-
-
(895
)
(655
)
Net interest income, after provision
for (recovery of) loan losses
9,268
6,713
33,218
28,172
Noninterest income
Service charges on deposits accounts
299
263
1,174
939
Trust services
221
261
954
1,059
Debit card interchange fees
537
538
2,105
2,050
Credit card fees
162
141
677
482
Earnings on bank owned life insurance
170
162
674
619
Gain on sale of loans
17
275
331
1,449
Market value change in equity securities
(5
)
8
(3
)
28
Other
211
188
799
699
Total noninterest income
1,612
1,836
6,711
7,325
Noninterest expenses
Salaries and employee benefits
3,680
3,298
13,446
12,599
Occupancy expense
265
262
1,085
1,033
Equipment expense
177
195
781
714
Professional and director fees
390
353
1,551
1,184
Software expense
373
388
1,429
1,342
Marketing and public relations
189
137
551
461
Debit card expense
184
186
734
710
Financial institutions tax
195
202
779
765
Other expenses
753
688
3,037
3,285
Total noninterest expenses
6,206
5,709
23,393
22,093
Income before income tax
4,674
2,840
16,536
13,404
Federal income tax provision
921
534
3,223
2,567
Net income
$
3,753
$
2,306
$
13,313
$
10,837
Net income per share:
Basic and diluted
$
1.39
$
0.85
$
4.91
$
3.97
View source version on businesswire.com : https://www.businesswire.com/news/home/20230126005939/en/
Paula J. Meiler , SVP & CFO
330.763.2873
paula.meiler@csb1.com
Source: CSB Bancorp, Inc.