Press Release | April 22, 2008
CSB BANCORP, INC. REPORTS INCREASED EARNINGS IN FIRST QUARTER 2008
First Quarter Highlights
• Net Income of $1,002,000
• Diluted earnings per share of $0.41
• Return on average common equity of 10.89%
• Return on average assets of 1.17%
Millersburg, Ohio – April 22, 2008 – CSB Bancorp, Inc. (OTCBB: CSBB.ob) today announced first quarter 2008 net income of $1.0 million, or $.41 per basic and diluted share, as compared to $815 thousand, or $.33 per basic and diluted share for the same period in 2007.
Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 10.89% and 1.17%, respectively, compared with 9.37% and 1.02% for the first quarter of 2007.
Net interest income of $3.4 million increased $124 thousand or 3.8% over the same quarter in the prior year, while declining by $26 thousand or 0.8% from the immediate prior quarter.
Revenue (defined as net interest income on a fully tax-equivalent basis plus non-interest income net of securities transactions) totaled $4.3 million for the first quarter of 2008, compared with $3.9 million in the prior-year first quarter, an increase of 10.7%.
Eddie Steiner, President and CEO stated, “We have maintained earnings momentum through active management of our balance sheet. During the past quarter we sold our credit card portfolio, which represented less than 1% of total loans outstanding and was yielding unacceptably low returns for the associated risks. We continue to avoid sub-prime exposure and our net interest margin of 4.19% was accomplished without adding undue risk to the investment or loan portfolios.”
Non-interest expense totaled $2.7 million during the quarter, an increase of $109 thousand, or 4.1%, from first quarter 2007. The Company’s first quarter efficiency ratio (defined as operating expenses divided by revenue) improved to 62.6% as compared to same quarter results in the prior year of 66.5%.
Federal income tax expense was $498 thousand for first quarter 2008, reflecting an effective tax rate of 33.2%, compared to $389 thousand for the same quarter in 2007, or 32.3%. The increase in the effective tax rate was primarily the result of comparatively lower tax-free interest income due to sales and maturities of bonds within the Company’s tax-free investment portfolio during 2007 and 2008.
Total assets averaged $343 million during the quarter, an increase of $20 million, or 6.1% above the same quarter in the prior year. Average loan balances of $254 million reflect an increase of $21 million, or 8.9%, over first quarter of the prior year, while average securities balances declined $692 thousand, or 1.0% as compared to first quarter 2007.
At March 31, 2008, assets totaled $345 million, up $22 million, or 6.9% from March 31, 2007. Quarter-end loans of $247 million were $11 million, or 4.7%, above total loans at the end of the same quarter in 2007. Quarter-end securities investment balances of $66 million reflect a decrease of $3 million, or 4.2% from the same quarter of the prior year.
Average commercial loans, including commercial real estate, increased $5.4 million or 3.6% during the quarter, residential mortgage and home equity average balances grew $75 thousand, or 0.1% during the quarter, while consumer installment, credit card and other average loan balances declined by $565 thousand, or 6.3% primarily due to the sale of the Company’s $2.0 million credit card portfolio.
As of March 31, 2008, nonperforming assets totaled $432 thousand, or .17% of period-end loans plus other real estate, compared with $673 thousand, or .26%, at the prior quarter-end. Net charge-offs for the quarter totaled $2 thousand, or an annualized rate of .00% of average total loans. Steiner continued, “Nonperforming assets have declined in each of the past three quarters and, combined with very modest charge-offs, continue to provide earnings stability and financial strength to the Company during this period of lagging economic conditions.”
The Company’s allowance for loan losses at March 31, 2008 was 1.09% of period end loans and the Company funded $107 thousand in loan loss provision during the first quarter. The ratio of allowance for loan losses to nonperforming loans stood at 624% at quarter-end.
Liabilities totaled $308 million at March 31, 2008, down $6 million or 2.0% from the prior quarter-end. Deposit balances totaled $247 million at quarter-end, a decrease of $12 million, or 4.8% from the prior quarter-end. Short-term and other borrowings amounted to $58 million as of March 31, an increase of $5 million or 9.7% for the quarter as the company took advantage of favorable borrowing rates to lower its total cost of funds.
Average deposit balances of $251 million declined $5 million during the quarter, or 1.8%. Within the deposit category, average non interest-bearing account balances decreased $3.4 million, or 7.8%. Average balances for interest bearing checking, money market and savings accounts declined a total of $0.8 million, or 0.9%, while average time deposit balances declined $.4 million, or 0.3% during the quarter.
Shareholders’ equity totaled $37 million on March 31, 2008 with 2.4 million common shares outstanding at quarter-end. CSB’s capital position remains strong, with tangible equity to assets at 10.8% on March 31, 2008, compared to 10.4% on December 31, 2007. Commenting on the current economic environment, Steiner noted, “We expect volatile interest rates, soft housing demand, and general economic difficulties to continue through much of 2008. We remain vigilant, and are actively exploring opportunities to strategically leverage our strong capital position into expanded presence in current and nearby markets.”
The Company declared a common dividend of $.18 per share during the quarter.
About CSB Bancorp, Inc.
CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $340 million as of March 31, 2008. 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 ten banking centers in Holmes, Tuscarawas and Wayne counties and Trust offices located in Millersburg and Wooster, Ohio.
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.
Paula J. Meiler, SVP & CFO