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Press Release | Jaunary 30, 2008
CSB BANCORP, INC. REPORTS 15.4% INCREASE IN 2007 EARNINGS PER SHARE
Fourth Quarter and Calendar Year Highlights
Quarter Ended Full Year Ended
December 31, 2007 December 31, 2007
Diluted earnings per share $.35 $1.42
Net Income $880,000 $3,514,000
Return on average common equity 9.54% 9.82%
Return on average assets 1.05% 1.07%
Millersburg, Ohio – January 29, 2008 – CSB Bancorp, Inc. (OTCBB: CSBB.ob) today announced fourth quarter 2007 net income of $880 thousand, or $.35 per basic and diluted share, as compared to $846 thousand, or $.34 per basic and diluted share for the same period in 2006.
Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 9.54% and 1.05%, respectively, compared with 9.65% and 1.05% for the fourth quarter of 2006.
For the full year of 2007, the Company reported net income of $3.51 million, or $1.42 per diluted share, up from $3.11 million, or $1.23 per diluted share in 2006. Full year ROE and ROA were 9.82% and 1.07%, respectively, compared to 8.95% and .97% in 2006.
“These fourth quarter and year-end results reflect our continued focus on delivering consistently higher returns to our shareholders, said Eddie Steiner, President and CEO. “We continue to grow our balance sheet and earnings while controlling operating expenses in a challenging banking environment and time of general economic uncertainty. Our net interest margin of 4.34% for the quarter and 4.35% for the year has been maintained without shifting to higher credit risk profiles within our investment or loan portfolios.”
Revenue, defined as net interest income on a fully tax-equivalent basis plus non-interest income net of securities transactions, totaled $4.1 million for the fourth quarter of 2007 compared with $4.0 million in the prior-year fourth quarter, an increase of 3.1%. Revenue increased 2.9% for the full year of 2007 to $16.5 million, as compared to $16.0 million in 2006.
The Company’s fourth quarter efficiency ratio, defined as operating expenses divided by revenue, was 65.4% as compared to same quarter results in the prior year of 64.5%. For the full year of 2007, the efficiency ratio declined (improved) to 64.9% versus the prior year’s 68.1%.
Non-interest expense totaled $2.7 million during the quarter, an increase of $117 thousand, or 4.5%, from fourth quarter 2006. For the full year ended December 31, 2007, non-interest expense declined $214 thousand, or 2.0% versus the prior full year. Prior year non-interest expense included a pre-tax charge of $237 thousand from an isolated irregularity regarding cash assets, of which all but $50,000 deductible was recovered under an insurance claim. Without the prior year irregularity charge, current year non-interest expenses would have increased by $23 thousand, or 0.2%.
Federal income tax expense was $420 thousand for fourth quarter 2007, compared to $398 thousand for the same quarter in 2006. Full year income tax of $1.7 million for 2007 reflects an effective tax rate of 32.3% compared to an effective tax rate of 31.5% in 2006. The increase in the effective tax rate for 2007 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 both 2006 and 2007.
Average deposit balances grew by $2.6 million during the fourth quarter,
an increase of 1.0% over third quarter 2007. For the year-ended December
31, 2007, average deposit balances increased $5.7 million or 2.3% above
the prior year average.
Total assets averaged $332.2 million during the quarter, an increase of $11.8 million, or 3.7% from the same quarter in the prior year. Average loan balances of $249.4 million reflect an increase of $19.4 million, or 8.4%, over fourth quarter prior year, while average securities balances decreased $7.8 million, or 10.9% as compared to fourth quarter 2006.
Assets totaled $350 million at year-end, up $23 million, or 7.0% from December 31, 2006. Year-end loans totaled $257 million, up $24 million, or 10.4%, versus the end of 2006. The Company funded some of its loan growth through cash flow from maturing investments, but also increased total investment securities held at year-end through a $15 million matched leverage investment strategy implemented during the fourth quarter. As a result, year-end securities investment balances of $75 million reflect an increase of $4.3 million, or 6.1% over year-end 2006.
Within the loan category, commercial loans including commercial real estate increased $19.7 million, or 14.6% over the prior year-end, residential mortgage balances grew $5.0 million, or 7.5% during the year, and home equity balances increased $1.0 million, or 5.4%. Consumer installment loan and credit card balances declined by $1.7 million, or 15.7% during the year.
As of December 31, 2007, nonperforming assets totaled $.67 million, or .26% of period-end loans plus other real estate, compared with $1.51 million, or .65%, at the prior year-end. Net charge-offs for the quarter totaled $87 thousand, or an annualized rate of .14% of average total loans. For the full year of 2007, net charge-offs totaled $493 thousand or .20% of average total loans as compared to net charge-offs of $140 thousand or .06% during 2006.
The Company’s allowance for loan losses at December 31, 2007 was 1.01% of period end loans and the Company funded $119 thousand in loan loss provision during the fourth quarter. The ratio of allowance for loan losses to nonperforming loans stood at 453% at year-end. Commenting on the Company’s credit quality, Mr. Steiner noted, “While deterioriating credit quality has been a major concern in the broader economy, we have been pleased that no significant degradation in the quality of our loan portfolio has surfaced in the past year. We believe the loan loss reserve is appropriately funded for our current portfolio risk and loan charge-offs remain at modest levels.”
Liabilities totaled $314 million at December 31, 2007, up $21.8 million or 7.5% from the prior year-end. Deposit balances totaled $259 million at year-end, a decrease of $0.8 million, or 0.3% from the prior year-end total. Within the deposit category, non interest-bearing account balances increased $1.6 million, or 3.6%. Total interest-bearing checking, money market and traditional savings balances were virtually identical to year ago levels, while time deposits declined $2.4 million, or 1.9% from the prior year balance. In addition to the changes in year-end deposit balances, securities sold under repurchase agreement were $0.4 million, or 1.8%, below prior year-end balances. These agreements, while considered short-term borrowings, are primarily tied to overnight customer sweep accounts.
Shareholders’ equity totaled $36.3 million on December 31, 2007 with 2.4 million common shares outstanding at year-end. The Company’s capital position remains strong, with tangible equity to assets at 10.4% on December 31, 2007, compared to 10.7% on December 31, 2006. The Company declared a common dividend of $.18 per share during the quarter, a $.02 increase from the prior-year quarter. Total dividends declared during 2007 were $0.72 per share, a 12.5% increase above prior year dividends.
About CSB Bancorp, Inc.
CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $350 million as of December 31, 2007. 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