Press Release | July 26, 2011
CSB BANCORP, INC. REPORTS SECOND QUARTER EARNINGSSecond Quarter Highlights
Quarter Ended Quarter Ended
June 30, 2011 June 30, 2010
Diluted earnings per share $.35 $.34
Net Income $972,000 $921,000
Return on average common equity 8.06% 7.90%
Return on average assets 0.87% 0.85%
Millersburg, Ohio – July 26, 2011 – CSB Bancorp, Inc. (OTCBB: CSBB.ob) today announced second quarter 2011 net income of $972 thousand or $.35 per basic and diluted share, as compared to $921 thousand or $.34 per basic and diluted share for the same period in 2010.
Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 8.06% and 0.87%, respectively, compared with 7.90% and 0.85% for the second quarter of 2010.
Eddie Steiner, President and CEO commented, “Year-to-date earnings are ahead of last year largely because of declining interest expenses. The economy in our market area is improving gradually, while borrowers continue to pay down debt and new loan demand remains relatively soft.”
Revenue totaled $4.9 million for the second quarter of 2011, an increase of 3.5% from second quarter of the prior year. The increase in revenue was primarily attributable to lower interest expense, resulting in a 7% increase in net interest income to $4.2 million for the quarter. Noninterest income totaled $784 thousand, an 11.8% decline from the second quarter 2010. Prior year second quarter noninterest income included a gain of $148 thousand from the sale of investment securities. Excluding this prior year sales gain, current period noninterest income reflected an increase of $43 thousand or 5.8% over the same period of the prior year.
Non-interest expense amounted to $3.3 million during the quarter, an increase of $133 thousand or 4.2% from second quarter 2010. The largest portion of the increase was attributable to increased compensation expense. The Company’s second quarter efficiency ratio was 66.1%, improving from 67.7% for the same quarter in the prior year.
Federal income tax provision totaled $435 thousand for second quarter 2011, compared to $412 thousand for the same quarter in 2010. The quarterly provisions reflect effective tax rates of 30.9% for each of the comparative periods.
Total assets amounted to $450 million on June 30, 2011, down $8 million or 1.6% from December 31, 2010. Total loan balances of $317 million, were 0.3% above the prior year-end, while securities balances of $87 million were up $6.8 million or 8.4% from the prior year-end.
Average total assets during the quarter amounted to $448 million, a decrease of $3 million or 0.8% during the quarter. Average loan balances of $320 million and average securities balances of $86 million were basically unchanged from the immediately preceding quarter.
Average commercial loan balances, including commercial real estate, increased $2 million or 1.0% during the quarter, while average residential mortgage balances declined $3 million or 3.8% during the quarter. The decline of in-house mortgage balances reflects a continuation of slow housing activity and customers selecting secondary market mortgage products because of low prevailing long-term interest rates in those products. Average home equity balances increased $0.7 million or 1.9% during the quarter, while average consumer credit balances increased $0.5 million or 7.4% in second quarter.
Net charge-offs for the quarter totaled $164 thousand as compared to a net recovery of $14 thousand during second quarter 2010. Net charge-offs for the first six months of the year equated to 0.28% of average loans as compared to 0.14% during the same period of the prior year.
Nonperforming assets totaled $4.0 million or 1.3% of total loans plus other real estate at June 30, 2011, compared to $6.3 million or 2.0% at June 30, 2010. Delinquent loan balances as of June 30, 2011 amounted to 1.7% of total loans as compared to 2.4% at June 30, 2010.
The Company funded $190 thousand in loan loss provision during the second quarter and the allowance for loan losses amounted to 1.28% of total loans on June 30, 2011. The ratio of the allowance for loan losses to nonperforming loans stood at 115% on June 30, 2011 as compared to 103% at the end of the prior quarter and 76% as of June 30, 2010.
Average deposit balances declined by $1.0 million during the second quarter, or 0.3%. Total average deposits of $349 million for the quarter were 6.5% above the prior year’s second quarter average.
Within the deposit category, average non-interest-bearing balances were mostly unchanged from the immediate prior quarter. Average interest-bearing checking, money market and traditional savings balances increased $3 million or 2.2% during the quarter, while average time deposit balances decreased $4 million or 2.7%.
The average balance of securities sold under repurchase agreement declined by $0.5 million or 1.6% during the quarter. These repurchase agreements, while considered short-term borrowings, are primarily tied to overnight customer sweep accounts. Average borrowings from the Federal Home Loan Bank (“FHLB”) decreased $3 million or 12.2% during the quarter as maturing advances were paid down.
Shareholders’ equity totaled $48.5 million on June 30, 2011 with 2.7 million common shares outstanding at quarter-end. Tangible equity to assets approximated 10.4% on June 30, 2011 as compared to 9.9% at December 31, 2010. The Company declared a common dividend of $.18 per share during the quarter. Based on the June 30, 2011 closing stock price of $15.50 per share, the Company’s annual dividend yield approximates 4.6%. Commenting on the company’s growth plans, Steiner noted, “On June 24, 2011, we announced an agreement to purchase two branch offices in Wooster, Ohio. Subject to regulatory approval and customary closing conditions, we anticipate the transaction will be consummated during fourth quarter 2011. The two additional Wooster locations will be operated as CSB branches and will supplement CSB’s existing commercial banking and trust activities in the Wooster market.”
About CSB Bancorp, Inc.
CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $450 million as of June 30, 2011. 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 fourteen banking centers in Holmes, Tuscarawas, Wayne and Stark 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