Press Release | July 22, 2008
CSB BANCORP, INC. REPORTS SECOND QUARTER EARNINGS
Second Quarter and Year to Date Highlights
Quarter Ended Six Months Ended
June 30, 2008 June 30, 2008
Diluted earnings per share $0.36 $0.77
Net Income $878,000 $1,880,000
Return on average common equity 9.46% 10.14%
Return on average assets 1.03% 1.11%
Millersburg, Ohio – July 22, 2008 – CSB Bancorp, Inc. (OTCBB: CSBB.ob) today announced second quarter 2008 net income of $878 thousand, or $.36 per basic and diluted share, as compared to $956 thousand, or $.39 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 9.46% and 1.03%, respectively, compared with 10.85% and 1.17% for the second quarter of 2007.
For the six months ended June 30, 2008, the Company reported net income of $1.88 million, or $0.77 per diluted share, up from $1.77 million, or $0.72 per diluted share for the same period of the prior year. ROE and ROA were 10.14% and 1.11% respectively for the six-month period, compared to 10.11% and 1.10% for the comparable period in 2007.
Eddie Steiner, President and CEO stated, “We are pleased to report that core earnings for the quarter were 5.8% above second quarter of the prior year. Difficult economic conditions continue to dampen some local business activity, but our year-to-date performance is about 6% ahead of last year on an income and earnings per share basis, and we’ve been able to continue modest growth of our balance sheet.”
Net interest income on a fully taxable equivalent basis totaled $3.3 million, an increase of $5 thousand or 0.2% over the same quarter in the prior year, while declining by $88 thousand or 2.6% from the immediate prior quarter. The Company’s net interest margin was 4.09% for the quarter.
Revenue (defined as net interest income on a fully tax-equivalent basis plus non-interest income net of securities transactions) totaled $4.0 million for second quarter 2008, compared with $4.2 million in the prior-year second quarter, a decrease of 5.0%. Core revenue declined $30 thousand, or 0.8%, after accounting for a one-time insurance recovery received in the prior year’s second quarter. On a year-to-date basis, core revenue is $121 thousand, or 1.5% ahead of the prior year.
Non-interest expense totaled $2.6 million during the quarter, a decrease of $30 thousand, or 1.1%, from second quarter 2007. The Company’s year-to-date efficiency ratio (defined as operating expenses divided by revenue) improved to 63.95% as compared to 64.57% for the first six months of the prior year.
Federal income tax expense was $423 thousand for the quarter, reflecting an effective tax rate of 32.5%, compared to $450 thousand for the same quarter in 2007, or 32.0%. 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 $341 million during the quarter, an increase of $15 million, or 4.5% above the same quarter in the prior year. Average loan balances of $249 million reflect an increase of $9 million, or 3.8%, over second quarter of the prior year, while average securities balances of $69 million declined $908 thousand, or 1.3% as compared to second quarter 2007.
At June 30, 2008, assets totaled $347 million, up $20 million, or 6.0% from June 30, 2007. Quarter-end loans of $250 million were $7 million, or 2.9%, above total loans at the end of the same quarter in 2007. Quarter-end securities balances of $69 million reflect an increase of $2 million, or 2.8% from the same quarter of the prior year.
Average balances for commercial loans, including commercial real estate, decreased $2.8 million or 1.8% during the quarter, average residential mortgage and home equity balances declined $4 thousand, while consumer installment, credit card and other average loan balances declined by $2.1 million, or 24.4% primarily due to the sale of the Company’s $2.0 million credit card portfolio at the end of the prior quarter.
As of June 30, 2008, nonperforming assets totaled $615 thousand, or 0.25% of period-end loans plus other real estate, compared with $431 thousand, or 0.17%, at March 31, 2008. Net charge-offs for the quarter totaled $21 thousand, or an annualized rate of 0.03% of average total loans. Steiner continued, “Nonperforming assets have remained below one half of one percent for each of the past four quarters. We remain watchful for any signs of deterioration in the quality or performance of our loan and securities portfolios. We believe we are appropriately reserved for any embedded risk in our loan portfolio and continue to avoid lending or investment in the sub-prime credit arena.”
The Company’s allowance for loan losses at June 30, 2008 was 1.09% of period end loans and the Company funded $48 thousand in loan loss provision during the second quarter. The ratio of allowance for loan losses to nonperforming loans stood at 442% at June 30, 2008.
Deposit balances totaled $248 million at June 30, 2008, an increase of $1.1 million, or 0.5% from the prior quarter-end. Short-term and other borrowings amounted to $61 million at June 30, 2008, an increase of $2.4 million or 4.1% for the quarter as the company took advantage of favorable borrowing rates to lower its total cost of funds.
Average deposit balances of $246 million declined $5.3 million during the quarter, or 2.1%. Within the deposit category, average non interest-bearing account balances decreased $1.6 million, or 3.9%. Average balances for interest bearing checking, money market and savings accounts declined a total of $1.5 million, or 1.7%, while average time deposit balances declined $2.2 million, or 1.8% during the quarter.
Shareholders’ equity totaled $37 million on June 30, 2008 with 2.4 million common shares outstanding at quarter-end. CSB’s capital position remains strong, with tangible equity to assets at 10.5% on June 30, 2008, compared to 10.4% on December 31, 2007. Commenting on the company’s growth plans, Steiner noted, “On May 14, 2008, we announced the pending acquisition of Indian Village Bancorp, Inc. and its wholly owned subsidiary Indian Village Community Bank. Subject to regulatory and Indian Village shareholder approvals and customary closing conditions, we anticipate merging Indian Village into CSB during October, with integration of systems and banking operations completed in the fourth quarter.”
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 June 30, 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