Press Release | October 15, 2008
CSB Bancorp, Inc. Reports Third Quarter Earnings
Third Quarter and Year to Date Highlights
Quarter Ended Nine Months Ended
September 30, 2008 September 30, 2008
Diluted earnings per share $0.37 $1.14
Net Income $890,000 $2,770,000
Return on average common equity 9.46% 9.91%
Return on average assets 1.02% 1.08%
Millersburg, Ohio – October 15, 2008 – CSB Bancorp, Inc. (OTCBB: CSBB.ob) today announced third quarter 2008 net income of $890 thousand, or $.37 per basic and diluted share, as compared to $863 thousand, or $.35 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 1.02%, respectively, compared with 9.55% and 1.04% for the third quarter of 2007.
For the nine months ended September 30, 2008, the Company reported net income of $2.77 million, or $1.14 per diluted share, up from $2.63 million, or $1.07 per diluted share for the same period of the prior year. ROE and ROA were 9.91% and 1.08% respectively for the nine-month period, virtually unchanged from 9.92% and 1.08% for the comparable period in 2007.
Eddie Steiner, President and CEO stated, “We are pleased to report continued solid financial performance despite the turmoil in global credit and financial markets. Net income, and average total balances of deposits and loans all increased this quarter. Earnings and average total assets are about 5% ahead of last year at this time.”
Third quarter net interest income on a fully tax-equivalent basis totaled $3.5 million, an increase of $47 thousand or 1.4% over the same quarter in the prior year, while rising $155 thousand or 4.7% from the immediate prior quarter. The Company’s net interest margin was 4.19% for the quarter.
Revenue (defined as net interest income on a fully tax-equivalent basis plus non-interest income net of securities transactions) totaled $4.1 million for third quarter 2008, a decrease of $41 thousand, or 1.0%, versus the prior year quarter. The revenue reduction is primarily attributable to a $50 thousand decline in asset-based fee income from the Company’s trust operations and $35 thousand in realized securities losses, partially offset by the increase in net interest income. On a year-to-date basis, core revenue is $350 thousand, or 2.9% above the prior year after excluding a $187 pretax insurance recovery in 2007.
Non-interest expense totaled $2.7 million during the quarter, a decrease of $60 thousand, or 2.2%, from third quarter 2007. The Company’s year-to-date efficiency ratio (defined as operating expenses divided by revenue) of 64.0% compares favorably to the 64.7% of the first nine months of the prior year.
Federal income tax expense was $454 thousand for the quarter, reflecting an effective tax rate of 33.8%, compared to $416 thousand for the same quarter in 2007, or 32.5%. The increase in the effective tax rate was primarily the result of comparatively lower tax-free interest income due to maturities of bonds within the Company’s tax-free investment portfolio during 2007 and 2008.
Total assets averaged $345 million during the quarter, an increase of $16 million, or 4.9% above the same quarter in the prior year. Average loan balances of $254 million reflect an increase of $9 million, or 3.9%, over third quarter of the prior year, while average securities balances of $70 million increased $3 million, or 5.2% as compared to third quarter 2007.
At September 30, 2008, assets totaled $344 million, up $14 million, or 4.1% from September 30, 2007. Quarter-end loans of $256 million were $11 million, or 4.4%, above total loans at the end of the same quarter in 2007. Quarter-end securities balances of $71 million reflect an increase of $4 million, or 6.8% from the same quarter of the prior year.
The Company’s investment portfolio has contained no Fannie Mae or Freddie Mac equities, and no sub prime credits, credit default swaps, or other “toxic” assets during any portion of 2007 or 2008.
Average balances for commercial loans, including commercial real estate, increased $3.7 million or 2.5% during the quarter, average residential mortgage and home equity balances increased $1.1 million or 1.1%, while consumer installment, credit card and other average loan balances declined by $22 thousand, or 0.3%.
As of September 30, 2008, nonperforming assets totaled $577 thousand, or 0.23% of period-end loans plus other real estate, compared with $615 thousand, or 0.25%, at June 30, 2008. Net charge-offs for the quarter totaled $44 thousand, or an annualized rate of 0.07% of average total loans.
The Company’s allowance for loan losses at September 30, 2008 was 1.08% of period end loans and the Company funded $107 thousand in loan loss provision during the third quarter. The ratio of allowance for loan losses to nonperforming loans stood at 482% at September 30, 2008.
Deposit balances totaled $246 million at September 30, 2008, a decrease of $2.2 million, or 0.9% from the prior quarter-end. Short-term and other borrowings amounted to $58 million at September 30, 2008, a decrease of $2.4 million or 4.0% for the quarter.
Average deposit balances of $247 million increased $1.3 million during the quarter, or 0.5%. Within the deposit category, average non interest-bearing account balances increased $3.2 million, or 8.4%. Average balances for interest bearing checking, money market and savings accounts increased a total of $3.4 million, or 3.9%, while average time deposit balances declined $5.4 million, or 4.5% during the quarter. Steiner noted the Company continues to focus on expanding core deposits as part of its customer relationship building strategy.
Shareholders’ equity totaled $37 million on September 30, 2008 with 2.4 million common shares outstanding at quarter-end. CSB’s capital position remains strong, with tangible equity to assets at 10.9% on September 30, 2008, compared to 10.4% on December 31, 2007.
The Company expects to close its pending acquisition of Indian Village Bancorp, Inc. and its wholly owned subsidiary Indian Village Community Bank on October 31, 2008, with banking centers in New Philadelphia, North Canton and Gnadenhutten opening as Commercial & Savings Bank locations on November 1.
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 assets of $344 million as of September 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.