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Press Release | July 22, 2009
CSB BANCORP, INC. REPORTS EARNINGS FOR SECOND QUARTER 2009
Second Quarter and Year to Date Highlights
Quarter Ended Six Months Ended
June 30, 2009 June 30, 2009
Diluted earnings per share $0.26 $0.59
Net Income $706,000 $1,602,000
Return on average common equity 6.32% 7.24%
Return on average assets 0.67% 0.76%
Millersburg, Ohio – July 22, 2009 – CSB Bancorp, Inc. (OTCBB: CSBB.ob) today announced second quarter 2009 net income of $706 thousand, or $.26 per basic and diluted share, as compared to $878 thousand, or $.36 per basic and diluted share for the same period in 2008.
Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 6.32% and 0.67%, respectively, compared with 9.46% and 1.03% for the second quarter of 2008.
Eddie Steiner, President and CEO stated, “A deep recession continues to suppress economic activity in our markets and shows few signs of significant recovery in the near term. Loan charge-offs and higher FDIC premiums dampened net earnings during the first half of 2009 and we expect similar headwinds for the next six to twelve months while the economy attempts to regain its footing. Core revenue generation remains strong, however, and our high levels of capital and liquidity provide stability and a secure foundation for the future.”
Total revenue amounted to $4.7 million during the quarter, compared with $4.0 million in the second quarter of 2008, an increase of 16.7%. Net interest income of $3.8 million increased $546 thousand or 16.6% over the same quarter of the prior year, while declining $61 thousand or 1.6% from the immediate prior quarter.
Other income of $780 thousand reflects an increase of $101 thousand from the same quarter in the prior year. Gains on sales of mortgage originations account for $110 thousand of the difference, offset partially by a $43 thousand reduction in trust and brokerage revenues due to declines in market valuations and reduced trading volumes.
Non-interest expense totaled $3.2 million during the quarter, an increase of $593 thousand or 22.7% from second quarter 2008. Of the increase, $211 thousand resulted from higher FDIC insurance premiums assessed on all member financial institutions. The majority of the remaining increase in non-interest expense reflects the increased scale of the Company’s operations following the Indian Village acquisition during fourth quarter 2008. That transaction increased the Company’s balance sheet by approximately 20%. The second quarter ratio of operating expenses to revenue increased to 68.8% as compared to 65.5% in the same quarter of 2008. Absent the higher FDIC premiums, the ratio would have declined to 64.3%.
Federal income tax expense was $302 thousand for second quarter 2009, reflecting an effective tax rate of 29.9%, compared to $423 thousand for the same quarter in 2008, or 32.5%. The decrease in the effective tax rate was primarily the result of a higher proportion of tax-exempt securities in the Company’s investment portfolio.
Average asset balances during second quarter 2009 totaled $424 million, an increase of $2.1 million or 0.5% over first quarter 2009. Average gross loan balances of $319 million increased $1.1 million or 0.34% during the quarter. Average commercial loan balances, including commercial real estate, increased $3.3 million or 1.8%, while average balances for residential mortgage and home equity loans declined $1.8 million or 1.4% during the quarter, and installment and other consumer average loan balances decreased $402 thousand, or 4.3%.
As of June 30, 2009, nonperforming assets totaled $4.1 million or 1.29% of period-end loans plus other real estate, compared with $4.2 million or 1.31% at March 31, 2009. Net charge-offs for the quarter totaled $398 thousand, or an annualized rate of 0.50% of average total loans. Steiner remarked, “Nonperforming asset balances stabilized during the second quarter and we are actively working with the credit relationships that are struggling to remain current. We anticipate nonperforming asset levels and net charge-offs will remain somewhat elevated through the remainder of 2009 and likely into 2010.”
The Company’s allowance for loan losses at June 30, 2009 was 1.07% of period end loans and the Company funded $394 thousand in loan loss provision during the quarter. The ratio of allowance for loan losses to nonperforming loans stood at 83% at quarter-end.
Average deposit balances grew $3.9 million, or 1.3% during the quarter to $305 million. Within the deposit category, average balances for non interest-bearing accounts increased $653 thousand or 1.5%, while interest bearing checking, money market and savings average balances increased $838 thousand or 0.8% during the quarter and average time deposit balances increased $2.4 million, or 1.6%.
Short-term and other borrowings amounted to $75.2 million as of June 30, an increase of $4.2 million or 5.9% from March 31, with the increase attributable to repurchase agreement balances maintained with customers of the company.
Shareholders’ equity totaled $44.7 million on June 30, 2009 with 2.7 million common shares outstanding and a tangible equity to assets ratio of 10.16% at quarter-end.
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 $422 million as of June 30, 2009. 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 thirteen banking centers in Holmes, Tuscarawas, Wayne and Stark counties and Trust offices located in Millersburg and Wooster, Ohio. A fourteenth banking center is scheduled to open this fall on West High Street in Orrville, 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