CSB Bancorp, Inc. (OTC Pink: CSBB):
First Quarter Highlights
Quarter Ended March 31, 2024
Quarter Ended March 31, 2023
Diluted earnings per share
$
1.10
$
1.46
Net Income
$
2,933,000
$
3,934,000
Return on average common equity
10.84
%
16.39
%
Return on average assets
1.02
%
1.39
%
CSB Bancorp, Inc. (OTC Pink: CSBB) today announced first quarter
2024 net income of $2,933,000, or $1.10 per basic and diluted
share, as compared to $3,934,000, or $1.46 per basic and diluted
share, for the same period in 2023.
Annualized returns on average common equity (“ROE”) and average
assets (“ROA”) for the quarter were 10.84% and 1.02%, respectively,
compared with 16.39% and 1.39% for the first quarter of 2023.
Eddie Steiner, President and CEO stated, “Borrowing appetite has
been restrained by the highest interest rate environment in almost
25 years, while depositors are being rewarded with higher earnings
on balances. The Bank has maintained its net interest margin and is
closely monitoring overall credit conditions, which remain
acceptable at the present time. Inflation remains above the Federal
Reserve’s 2% target rate. Overall economic conditions and
employment levels are in relatively good shape, and it appears that
rates will remain elevated through 2024.”
Pre-Provision Net Revenue (“PPNR”) (a non-GAAP measure) totaled
$4.8 million during the quarter, a decrease of $96 thousand, or 2%,
from the prior year’s first quarter. Net interest income increased
$183 thousand, or 2%, noninterest income increased $144 thousand,
or 9%, and noninterest expense increased $423 thousand, or 7%, in
the first quarter of 2024 compared to the same period in 2023.
Provision expense for credit losses on loans increased $571
thousand and the provision for credit losses on off-balance sheet
commitments increased $612 thousand from first quarter 2023. Loan
balances increased $9 million, or 1%, from December 31, 2023 and
$63 million, or 10%, from prior year levels. The allowance for
credit losses amounted to $7.1 million, or 1.0% of total loans, on
March 31, 2024, as compared to $6.3 million or 0.97% of total loans
on March 31, 2023. The allowance for credit losses on off-balance
sheet commitments on March 31, 2024 was $1.3 million, as compared
to a March 31, 2023 balance of $430 thousand. An identified
commercial lending relationship that has experienced credit
deterioration was allocated $1.5 million of the combined total
allowance for credit losses on loans and off-balance sheet
commitments as of March 31, 2024. The relationship remains current
and is performing. CSB recorded no allowance for credit losses
related to debt securities as there is a zero loss expectation on
these securities.
Loan interest income including fees increased $2.2 million, or
28%, during first quarter 2024 as compared to the same quarter in
2023. The increase was mainly due to rate increases as well as a
$68 million increase in average loan volume. Securities interest
income decreased $135 thousand, or 6%, during the first quarter
2024 compared to the same quarter 2023 as the Company continues to
deploy cash flow from investments into loan originations. Loan
yields for first quarter 2024 averaged 5.83%, an increase of 76
basis points from the 2023 first quarter average of 5.07%, while
overnight funds and securities yields for first quarter 2024
averaged 5.36% and 2.21%, respectively, compared to 4.64% and 2.18%
in the first quarter 2023.
Interest expense rose $1.7 million, or 105%, during first
quarter 2024 as compared to first quarter 2023. The increase
follows a period of rapid interest rate increases spurred by the
Federal Reserve during March 2022 through May 2023, followed by
competitive pressures from banks and others to secure adequate
funding. The cost to fund gross earning assets for the first
quarter 2024 was 1.25% as compared to 0.62% for the first quarter
of 2023.
The fully-taxable equivalent (“FTE”) (a non-GAAP measure) net
interest margin was 3.37% compared to 3.37% for the first quarter
2023. Compared to the 2023 first quarter, FTE net interest income
increased $191 thousand, or 2%, reflecting a flat net interest
margin combined with $15 million, or 1%, increase in average
earning assets. The higher interest rate environment coupled with
the continued mix shift into loans from securities primarily drove
the increase in earnings from assets, which was partially offset by
the higher cost of funds. Tax equivalency effect on net interest
margin was 0.02% as compared to 0.01% in first quarter 2024 and
2023.
Noninterest income increased $144 thousand, or 9%, compared to
first quarter of 2023. The increase was primarily the result of a
$136 thousand increase in trust and brokerage fees, a $33 thousand
increase in gain on sale of mortgage loans and a $19 thousand
increase in earnings on bank owned life insurance. Small offsetting
decreases were recognized in credit card fees, an unrealized loss
on equity securities, service charges related to deposit overdraft
fees, and debit card interchange fees.
Noninterest expense increased $423 thousand, or 7%, from first
quarter 2023. Salary and employee benefit costs increased $175
thousand, or 5%, compared to the prior year quarter, primarily
resulting from the increases in base salaries and FICA taxes due to
base increases and added employees. FDIC assessment increased $64
thousand primarily due to the 67% rate increase effective June
2023. Debit card expense increased $43 thousand or 30%. Software
expense increased $29 thousand, or 7%, with the deployment of new
reporting software and upgrades. State of Ohio Financial
Institutions Tax increased $24 thousand, or 13%, due to the
increase in capital. Equipment expense increased $17 thousand, or
8%. The Company’s first quarter efficiency ratio increased to 56.0%
compared to 53.9% in the prior year.
Federal income tax expense was $693 thousand in the 2024 first
quarter compared to $971 thousand in the 2023 first quarter. The
effective tax rate for the 2024 and 2023 first quarter was 19% and
20%, respectively.
Average earning assets for the 2024 first quarter increased $15
million, or 1%, from the year-ago quarter, primarily reflecting a
$68 million, or 11%, increase in average loans, a $33 million, or
8%, decrease in average securities, and a $20 million, or 43%,
decrease in interest-earning deposits in other banks, held mainly
at the Federal Reserve Bank.
Average commercial loan balances for the quarter, including
commercial real estate, increased $55 million, or 13%, from prior
year levels, as construction loans were drawn, and borrowers used
term loans to fund equipment and other purchases. Average
residential mortgage balances increased $13 million, or 9%, above
the prior year’s quarter as borrowers have been favoring
adjustable-rate mortgages during this period of higher interest
rates. The Bank does not sell adjustable-rate mortgages to the
secondary market. Home equity lines of credit decreased $1 million
from the prior year’s quarter as balances were paid down due to
rate increases as these loans are tied to Prime Rate. Average
consumer credit balances increased $114 thousand, or 1%, versus the
same quarter of the prior year. Commercial loan demand continued
during first quarter, albeit with a softening trend. Household
confidence and borrowing appetite appear to be waiting for the Fed
to reverse course and begin to lower rates.
Nonperforming assets were $361 thousand, or 0.05%, of total
loans on March 31, 2024, compared to $218 thousand, or 0.03% of
total loans, a year ago. Delinquent loan balances as of March 31,
2024, increased to 0.30% of total loans as compared to 0.13% on
March 31, 2023. Net loan charge-offs recognized during first
quarter 2024 were $74 thousand, or less than 1% of average loans
annualized, compared to first quarter 2023 net loan losses of $4
thousand.
Average deposit balances increased on a quarter over prior year
quarter comparison by $2 million, or less than 1%. For the first
quarter 2024, the average cost of deposits amounted to 1.31%, as
compared to 0.64% for the first quarter 2023. First quarter 2024
increases in average deposit balances over the prior year quarter
included money market accounts of $9 million and time deposits of
$80 million. Noninterest-bearing accounts decreased $52 million
from the prior year’s first quarter while savings and
interest-bearing demand accounts declined $35 million. The average
balance of securities sold under repurchase agreement during the
first quarter of 2024 increased by $235 thousand, or less than 1%,
compared to the average for the same period in the prior year.
Shareholders’ equity totaled $110 million on March 31, 2024,
with 2.7 million common shares outstanding. The average equity to
assets ratio amounted to 9.38% for the quarter ended March 31,
2024, and 8.48% for the quarter ended March 31, 2023. The Company
declared a first quarter dividend of $0.39 per share, producing an
annualized yield of 3.9% based on March 31, 2024, closing price of
$40.00.
About CSB Bancorp, Inc.
CSB is a financial holding company headquartered in Millersburg,
Ohio, with approximate assets of $1.2 billion as of March 31, 2024.
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 sixteen banking
centers in Holmes, Wayne, Tuscarawas, and Stark counties and Trust
offices located in Millersburg, North Canton, and Wooster, Ohio. A
loan production office was opened in Medina, Ohio on March 20,
2024.
Forward-Looking Statement
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. See the non-GAAP disclosures at the end
of this release for a reconciliation of GAAP and non-GAAP
measures.
CSB BANCORP, INC.
CONSOLIDATED FINANCIAL
HIGHLIGHTS
(Unaudited)
Quarters
(Dollars in thousands, except per share
data)
2024
2023
2023
2023
2023
EARNINGS
1st Qtr
4th Qtr
3rd Qtr
2nd Qtr
1st Qtr
Net interest income FTE (a)
$
9,190
$
9,377
$
8,871
$
9,027
$
8,999
Provision (recovery) of credit loss
expense
1,152
156
177
140
(31
)
Other income
1,772
1,678
1,705
1,733
1,628
Other expenses
6,142
6,258
6,034
6,049
5,719
FTE adjustment(a)
42
32
34
33
34
Net income
2,933
3,697
3,481
3,644
3,934
Basic and Diluted earnings per share
1.10
1.38
1.30
1.36
1.46
PERFORMANCE RATIOS
Return on average assets (ROA),
annualized
1.02
%
1.25
%
1.19
%
1.27
%
1.39
%
Return on average common equity (ROE),
annualized
10.84
14.22
13.63
14.62
16.39
Net interest margin FTE(a)
3.37
3.36
3.21
3.33
3.37
Efficiency ratio
56.00
56.67
56.99
56.24
53.86
Number of full-time equivalent
employees
172
168
178
172
170
MARKET DATA
Book value per common share
$
41.11
$
40.43
$
37.96
$
37.36
$
36.93
Period-end common share market value
40.00
37.54
37.75
38.88
38.00
Market as a % of book
97.30
%
92.85
%
99.45
%
104.07
%
102.90
%
Price-to-earnings ratio
7.78
6.81
6.85
6.99
7.06
Average basic common shares
outstanding
2,665,277
2,671,086
2,675,967
2,680,526
2,692,304
Average diluted common shares
outstanding
2,665,277
2,671,086
2,675,967
2,680,526
2,692,304
Period end common shares outstanding
2,664,683
2,669,938
2,671,313
2,680,325
2,680,625
Common stock market capitalization
$
106,587
$
100,229
$
100,842
$
104,211
$
101,864
ASSET QUALITY
Gross charge-offs
$
88
$
15
$
43
$
15
$
39
Net (recoveries) charge-offs
74
(5
)
(119
)
(10
)
4
Allowance for credit losses
7,136
6,607
6,691
6,559
6,307
Nonperforming assets (NPAs)
361
396
260
255
218
Net charge-off (recovery) / average loans
ratio
0.04
%
0.00
%
(0.07
)%
(0.01
)%
0.00
%
Allowance for credit losses / period-end
loans
1.00
0.94
0.98
0.99
0.97
NPAs/loans and other real estate
0.05
0.06
0.04
0.04
0.03
Allowance for credit losses /
nonperforming loans
1,979
1,667
2,576
2,577
2,893
CAPITAL & LIQUIDITY
Period-end tangible equity to
assets(b)
9.10
%
8.79
%
8.39
%
8.29
%
8.28
%
Average equity to assets
9.38
8.80
8.72
8.68
8.48
Average equity to loans
15.43
14.87
15.00
15.15
15.27
Average loans to deposits
69.78
67.47
66.20
65.05
63.19
AVERAGE BALANCES
Assets
$
1,160,661
$
1,172,324
$
1,162,029
$
1,151,403
$
1,147,033
Earning assets
1,097,704
1,107,002
1,096,679
1,085,751
1,082,996
Loans
705,294
693,779
675,283
660,004
637,392
Deposits
1,010,745
1,028,207
1,020,135
1,014,631
1,008,721
Shareholders' equity
108,837
103,164
101,294
99,958
97,319
ENDING BALANCES
Assets
$
1,156,245
$
1,178,689
$
1,156,598
$
1,156,157
$
1,143,394
Earning assets
1,097,703
1,109,171
1,087,591
1,088,561
1,080,939
Loans
710,822
701,404
680,949
664,605
647,773
Deposits
1,010,115
1,027,427
1,018,075
1,021,671
1,007,507
Shareholders' equity
109,555
107,939
101,410
100,140
99,007
Notes:
(a) - Net interest income on a
fully-taxable equivalent ("FTE") basis, restates interest on
tax-exempt securities and loans as if such interest were subject to
federal income tax at the statutory rate. Net interest income on an
FTE basis differs from net interest income under U.S. Generally
Accepted Accounting Principles, and is considered a non-GAAP
measure.
(b) - Tangible equity is a non-GAAP
measure, which is shareholders' equity net of goodwill.
CSB BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31,
March 31,
(Dollars in thousands, except per share
data)
2024
2023
ASSETS
Cash and cash equivalents
Cash and due from banks
$
11,447
$
16,965
Interest-bearing deposits with banks
27,972
38,550
Total cash and cash equivalents
39,419
55,515
Securities
Available-for-sale, at fair-value
134,926
149,269
Held-to-maturity
222,095
243,334
Equity securities
253
253
Restricted stock, at cost
1,530
1,760
Total securities
358,804
394,616
Loans held for sale
105
-
Loans
710,822
647,773
Less allowance for credit losses
7,136
6,307
Net loans
703,686
641,466
Premises and equipment, net
12,936
13,240
Goodwill
4,728
4,728
Bank owned life insurance
25,599
24,878
Accrued interest receivable and other
assets
10,968
8,951
TOTAL ASSETS
$
1,156,245
$
1,143,394
LIABILITIES AND SHAREHOLDERS'
EQUITY
LIABILITIES
Deposits:
Noninterest-bearing
$
277,898
$
329,500
Interest-bearing
732,217
678,007
Total deposits
1,010,115
1,007,507
Short-term borrowings
29,484
29,813
Other borrowings
1,700
2,394
Accrued interest payable and other
liabilities
5,391
4,673
TOTAL LIABILITIES
1,046,690
1,044,387
SHAREHOLDERS' EQUITY
Common stock, $6.25 par value. Authorized
9,000,000 shares;
issued 2,980,602 shares in 2024 and
2023
18,629
18,629
Additional paid-in capital
9,815
9,815
Retained earnings
99,191
89,524
Treasury stock at cost - 315,919 shares in
2024
and 299,977 shares in 2023
(7,729
)
(7,126
)
Accumulated other comprehensive loss
(10,351
)
(11,835
)
TOTAL SHAREHOLDERS' EQUITY
109,555
99,007
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY
$
1,156,245
$
1,143,394
CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF
INCOME
Quarters ended
(Unaudited)
March 31,
(Dollars in thousands, except per share
data)
2024
2023
Interest and dividend income:
Loans, including fees
$
10,209
$
7,969
Taxable securities
1,890
2,012
Nontaxable securities
88
101
Other
369
545
Total interest and dividend income
12,556
10,627
Interest expense:
Deposits
3,300
1,584
Other
108
78
Total interest expense
3,408
1,662
Net interest income
9,148
8,965
Provision (recovery) for credit loss
expense
1,152
(31
)
Net interest income, after provision
(recovery) for credit loss expense
7,996
8,996
Noninterest income
Service charges on deposit accounts
280
292
Trust services
394
258
Debit card interchange fees
507
521
Credit card fees
157
177
Earnings on bank owned life insurance
188
169
Gain on sale of loans
36
3
Unrealized (loss) gain on equity
securities
(6
)
9
Other
216
199
Total noninterest income
1,772
1,628
Noninterest expenses
Salaries and employee benefits
3,469
3,294
Occupancy expense
283
282
Equipment expense
224
207
Professional and director fees
332
321
Software expense
428
399
Marketing and public relations
128
123
Debit card expense
189
146
Financial institutions tax
216
192
FDIC insurance expense
135
71
Other expenses
738
684
Total noninterest expenses
6,142
5,719
Income before income taxes
3,626
4,905
Federal income tax provision
693
971
Net income
$
2,933
$
3,934
Net income per share:
Basic and diluted
$
1.10
$
1.46
CSB BANCORP, INC.
NON-GAAP DISCLOSURES
NET INTEREST INCOME, FULLY-TAXABLE
EQUIVALENT
Quarters ended
(Unaudited)
March 31,
(Dollars in thousands)
2024
2023
Net interest income
$
9,148
$
8,965
Taxable equivalent adjustment1
42
34
Net interest income, FTE
$
9,190
$
8,999
Net interest margin
3.35
%
3.36
%
Taxable equivalent adjustment1
0.02
0.01
Net interest margin, FTE
3.37
%
3.37
%
1 Net interest income on a fully-taxable
equivalent ("FTE") basis, restates interest on tax-exempt
securities and loans as if such interest were subject to federal
income tax at the statutory rate. Net interest income on an FTE
basis differs from net interest income under U.S. Generally
Accepted Accounting Principles, and is considered a non-GAAP
measure.
PRE-PROVISION NET REVENUE
Quarters ended
(Unaudited)
March 31,
(Dollars in thousands)
2024
2023
Pre-Provision Net Revenue
(PPNR)
Net interest income
$
9,148
$
8,965
Total noninterest income
1,772
1,628
Total revenue
10,920
10,593
Less: Noninterest expense as reported
6,142
5,719
Adjusted noninterest expense
6,142
5,719
PPNR
$
4,778
$
4,874
TANGIBLE EQUITY
(Unaudited)
March 31,
March 31,
(Dollars in thousands)
2024
2023
Total Shareholders' Equity
$
109,555
$
99,007
Less: Goodwill
4,728
4,728
Tangible Shareholders' Equity
$
104,827
$
94,279
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version on businesswire.com: https://www.businesswire.com/news/home/20240423025575/en/
Paula J. Meiler, SVP & CFO 330.763.2873
paula.meiler@csb1.com