EX-99.1 2 l28306aexv99w1.htm EX-99.1 EX-99.1
 

Exhibit 99.1
(CSB BANCORP, INC. LOGO)
CSB BANCORP, INC. REPORTS INCREASE IN THIRD QUARTER EARNINGS
Third Quarter and Year-to-Date Highlights:
                 
    Three Months Ended   Nine Months Ended
    September 30, 2007   September 30, 2007
Diluted earnings per share
  $ 0.35     $ 1.07  
Net Income
  $ 863,000     $ 2,634,000  
Return on average common equity
    9.55 %     9.92 %
Return on average assets
    1.04 %     1.08 %
Millersburg, Ohio – October 16, 2007 – CSB Bancorp, Inc. (OTCBB: CSBB.ob) today announced third quarter net income of $863 thousand, or $0.35 per basic and diluted share, as compared to $813 thousand, or $0.32 per basic and diluted share for the same period in 2006.
Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 9.55% and 1.04%, respectively, compared with 9.42% and 1.01% for the third quarter of 2006.
For the nine months ended September 30, 2007, the Company reported net income of $2.63 million, or $1.07 per diluted share, up from $2.26 million, or $0.89 per diluted share in 2006. ROE and ROA for the nine-month period were 9.92% and 1.08%, respectively, compared to 8.69% and .95% for the first nine months of 2006.
“We were able to maintain our net interest margin during the past quarter while achieving growth in loan and deposit balances,” commented Eddie Steiner, President and CEO. “We also continued our trend of improved operating efficiencies and the combined result was a solid quarter.”
Revenue, (defined as net interest income on a fully tax-equivalent basis plus non-interest income net of securities transactions), totaled $4.2 million in the third quarter, an increase of $162 thousand or 4.0% over the same period in the prior year. Revenue increased 2.8%, or $336 thousand, in the first nine months of 2007 to $12.3 million, as compared to $12.0 million during the first nine months of 2006.
The Company’s third quarter efficiency ratio, which measures operating expenses as a percentage of revenue, improved to 65.0% as compared to 67.2% in the third quarter of 2006. The year-to-date efficiency ratio of 64.7% also compares favorably to the 69.3% ratio for the first nine months of the prior year.


 

Non-interest expense totaled $2.7 million during the quarter, an increase of $18 thousand, or 0.7%, from third quarter 2006. For the nine months ended September 30, 2007, non-interest expense declined $331 thousand, or 4.0% as compared to the first nine months of 2006. The 2006 year-to-date non-interest expense included a pre-tax charge of $237 thousand from an isolated and nonrecurring cash assets irregularity discovered and recorded during the second quarter of 2006. Excluding the 2006 irregularity, non-interest expenses declined $95 thousand, or 1.2% in the first nine months of 2007 as compared to the same period of the prior year.
Federal income tax expense was $416 thousand for third quarter 2007, compared to $378 thousand for the same quarter in 2006. The effective tax rate for the quarter was 32.5% versus 31.7% in the prior year period. The increase in the effective tax rate was primarily the result of a reduction in the tax-exempt securities portion of the Company’s investment portfolio due to less attractive rates of return available on tax-exempt securities.
Total assets averaged $329 million during the quarter, an increase of $9.0 million, or 2.8% from the same quarter in the prior year. Average loan balances of $245 million reflect an increase of $15.6 million, or 6.8%, over the prior year third quarter, while average securities balances of $66 million declined $6.2 million, or 8.5% as compared to third quarter 2006. The Company has funded a portion of its 2007 loan growth with proceeds from maturities in the investment securities portfolio.
The majority of the Company’s investment portfolio is comprised of U.S. government obligations, corporate bonds and state and municipal securities. Approximately one third of the Company’s investment portfolio is comprised of mortgage-backed securities. The portfolio contains little, if any, embedded sub-prime security exposure and all securities are performing fully to terms.
Average commercial loan balances, including commercial real estate, increased $11.8 million, or 8.9% over the prior year third quarter. Average home mortgage and home equity balances grew $6.0 million, or 7.1% on a comparative quarter basis, while average consumer installment loan and credit card balances declined $2.2 million, or 19.6%.
As of September 30, 2007, nonperforming assets totaled $1.09 million, or .44% of period-end loans and other real estate, compared with $1.47 million, or .64%, at September 30, 2006. Net charge-offs for the quarter totaled $23 thousand, an annualized rate of .04% of average total loans. For the nine months ended September 30, 2007, net charge-offs total $406 thousand or .23% of average total loans as compared to net charge-offs of $130 thousand or .08% for the same period during 2006.
The allowance for loan losses at September 30, 2007 was 1.04% of period end loans and the Company funded $151 thousand in loan loss provision during the third quarter. The ratio of allowance for loan losses to nonperforming loans stood at 234% at September 30, 2007. Commenting on the Company’s credit quality, Mr. Steiner noted, “We experienced a very modest level of loan charge-offs in the third quarter and there has been no appreciable deterioration in the credit quality of our loan portfolio. Our lending practices remain unchanged. We continue to focus on high quality credit relationships and refrain from sub-prime mortgage lending.”


 

Total deposit balances averaged $253 million during third quarter 2007, an increase of 2.8% or $6.8 million over average deposit balances in third quarter 2006. Within the deposit category, average non interest-bearing account balances increased $4.8 million, or 12.4% as compared to the average in third quarter 2006, while interest-bearing checking, money market and savings average balances decreased $547 thousand, or 0.6% from third quarter year ago averages, and average time deposit balances grew $2.5 million or 2.1%.
Shareholders’ equity totaled $35.9 million on September 30, 2007 with 2.5 million common shares outstanding at quarter-end. The Company’s capital position remains strong, with tangible equity to assets at 10.9% on September 30, 2007 as compared to 10.8% on September 30, 2006. The Company declared a common dividend of $0.18 per share during the quarter, a $0.02 increase from the prior-year quarter. Year-to-date dividends declared during 2007 of $0.54 per share represent a 12.5% increase above prior year-to-date dividends.
About CSB Bancorp, Inc.
CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $330 million as of September 30, 2007. 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 in Millersburg and Wooster, Ohio. CSB can be found on the web at csb1.com.
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.
Contact Information:
Paula J. Meiler, SVP & CFO
330-763-2873
paula.meiler@csb1.com


 

CSB BANCORP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands except per share data)
                                                         
    Quarters   YTD
    2007   2007   2007   2006   2006   2007   2006
EARNINGS   3rd Qtr   2nd Qtr   1st Qtr   4th Qtr   3rd Qtr   9 months   9 months
Net interest income FTE (a)
  $ 3,426     $ 3,313     $ 3,294     $ 3,354     $ 3,346     $ 10,033     $ 10,024  
Provision for loan losses
    151       124       78       80       75       353       222  
Other income
    762       902       646       614       676       2,310       1,979  
Other expenses
    2,722       2,647       2,619       2,596       2,704       7,988       8,320  
FTE adjustment (a)
    36       38       39       48       52       113       163  
Net income
    863       956       815       846       813       2,634       2,264  
Diluted EPS
    0.35       0.39       0.33       0.34       0.32       1.07       0.89  
 
                                                       
PERFORMANCE RATIOS
                                                       
Return on average assets (ROA)
    1.04 %     1.17 %     1.02 %     1.05 %     1.01 %     1.08 %     0.95 %
Return on average common equity (ROE)
    9.55 %     10.85 %     9.37 %     9.65 %     9.42 %     9.92 %     8.69 %
Net interest margin FTE (a)
    4.37 %     4.30 %     4.40 %     4.40 %     4.40 %     4.36 %     4.46 %
Efficiency ratio
    65.00 %     62.80 %     66.47 %     65.42 %     67.23 %     64.72 %     69.32 %
Number of full-time equivalent employees
    135       128       124       126       127                  
 
                                                       
MARKET DATA
                                                       
Book value/common share
  $ 14.60     $ 14.26     $ 14.18     $ 14.03     $ 13.82                  
Period-end common share mkt value
    17.00       17.75       17.57       19.00       19.00                  
Market as a % of book
    117.42 %     124.48 %     123.94 %     135.52 %     137.48 %                
PE ratio
    12.14       11.38       13.31       13.97       14.84                  
Cash dividends/common share
  $ 0.18     $ 0.18     $ 0.18     $ 0.16     $ 0.16     $ 0.54     $ 0.48  
Common stock dividend payout ratio
    51.43 %     46.15 %     54.55 %     47.06 %     50.00 %                
Average basic common shares
    2,462,885       2,461,918       2,487,087       2,499,356       2,505,785       2,470,875       2,536,201  
Average diluted common shares
    2,462,885       2,463,240       2,487,087       2,503,056       2,507,934       2,470,875       2,539,413  
Period end common shares outstanding
    2,462,880       2,462,888       2,462,931       2,499,181       2,499,476                  
Common shares repurchased
    8       43       36,290       295       20,258       36,341       79,024  
Common stock market capitalization
  $ 42,209     $ 43,716     $ 43,274     $ 47,484     $ 47,490                  
 
                                                       
ASSET QUALITY
                                                       
Gross charge-offs
  $ 33     $ 379     $ 47     $ 107     $ 23     $ 459     $ 203  
Net charge-offs
    23       353       30       10       5       406       130  
Allowance for loan losses
    2,554       2,426       2,655       2,607       2,537                  
Nonperforming assets (NPAs)
    1,092       1,635       1,585       1,509       1,471                  
Net charge-off/average loans ratio
    0.04 %     0.59 %     0.05 %     0.02 %     0.01 %     0.23 %     0.08 %
Allowance for loan losses/period-end loans
    1.04       1.00       1.13       1.12       1.10                  
NPAs/loans and other real estate
    0.44       0.67       0.67       0.65       0.64                  
Allowance for loan losses/nonperforming loans
    233.80       152.99       172.89       172.81       177.26                  
 
                                                       
CAPITAL & LIQUIDITY
                                                       
Period-end tangible equity to assets
    10.89 %     10.72 %     10.83 %     10.72 %     10.79 %                
Average equity to assets
    10.88       10.82       10.91       10.86       10.70                  
Average equity to loans
    14.65       14.72       15.11       15.13       14.97                  
Average loans to deposits
    96.68       95.45       92.12       91.32       93.01                  
 
                                                       
AVERAGE BALANCES
                                                       
Assets
  $ 329,448     $ 326,665     $ 323,327     $ 320,407     $ 320,477     $ 326,236     $ 319,526  
Earning assets
    310,884       308,703       303,899       302,226       301,395       307,856       300,193  
Loans
    244,675       240,208       233,434       230,004       229,042       239,480       223,909  
Deposits
    253,073       251,660       253,398       251,875       246,258       252,377       246,077  
Shareholders’ equity
    35,852       35,348       35,269       34,789       34,298       35,497       34,816  
 
                                                       
ENDING BALANCES
                                                       
Assets
  $ 330,121     $ 327,465     $ 322,358     $ 327,240     $ 320,227                  
Earning assets
    311,860       309,484       305,129       307,682       302,362                  
Loans
    245,626       242,485       235,818       232,432       229,832                  
Deposits
    253,594       250,365       253,531       260,178       249,605                  
Shareholders’ equity
    35,948       35,119       34,915       35,070       34,553                  
 
NOTES:
(a)   - Net Interest income on a fully tax-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 is not an accounting principle generally accepted in the United States of America.


 

CSB BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
                 
    September 30,     September 30,  
    2007     2006  
ASSETS
               
Cash and cash equivalents
               
Cash and due from banks
  $ 11,197,845     $ 10,493,565  
Interest-earning deposits in other banks
    75,179       53,570  
Federal funds sold
    0       0  
 
           
Total cash and cash equivalents
    11,273,024       10,547,135  
Securities
               
Available-for-sale, at fair-value
    63,052,850       69,412,444  
Restricted stock, at cost
    3,105,900       3,063,700  
 
           
Total securities
    66,158,750       72,476,144  
Loans
    245,626,368       229,832,402  
Less allowance for loan losses
    2,554,489       2,536,827  
 
           
Net loans
    243,071,879       227,295,575  
Loans held for sale
    0       0  
Premises and equipment, net
    7,397,612       7,432,171  
Accrued interest receivable and other assets
    2,219,472       2,476,297  
 
           
 
               
TOTAL ASSETS
  $ 330,120,737     $ 320,227,322  
 
           
 
               
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Liabilities
               
Deposits:
               
Nontinterest-bearing
  $ 42,329,684     $ 37,502,503  
Interest-bearing
    211,264,649       212,102,561  
 
           
Total deposits
    253,594,333       249,605,064  
 
               
Short-term borrowings
    31,783,926       31,421,981  
Other borrowings
    7,107,511       2,594,067  
Accrued interest payable and other liabilities
    1,686,784       2,052,890  
 
           
Total liabilities
    294,172,554       285,674,002  
 
           
Shareholders’ equity
               
Common stock, $6.25 par value. Authorized 9,000,000 shares; issued 2,667,786 shares
    16,673,667       16,673,667  
Additional paid-in capital
    6,446,180       6,421,490  
Retained earnings
    17,552,129       15,802,515  
Treasury stock at cost - 204,906 shares in 2007 and 168,311 shares in 2006
    (4,348,987 )     ( 3,690,576 )
Accumulated other comprehensive loss
    (374,806 )     ( 653,776 )
 
           
Total shareholders’ equity
    35,948,183       34,553,320  
 
           
 
               
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
  $ 330,120,737     $ 320,227,322  
 
           


 

CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
                                 
    Quarter ended     Nine months  
    September 30,     September 30,  
    2007     2006     2007     2006  
Interest and dividend income:    
                                   
Loans, including fees
  $ 4,633,268     $ 4,325,203     $ 13,433,102     $ 12,294,678  
Taxable securities
    720,952       735,071       2,205,401       2,272,037  
Nontaxable securities
    62,931       95,495       198,060       297,011  
Other
    944       297       16,324       7,136  
 
                       
Total interest and dividend income
    5,418,095       5,156,066       15,852,887       14,870,862  
Interest expense:
                               
Deposits
    1,608,916       1,440,410       4,763,015       3,880,245  
Other
    419,497       421,566       1,169,545       1,129,321  
 
                       
Total interest expense
    2,028,413       1,861,976       5,932,560       5,009,566  
 
                               
Net interest income
    3,389,682       3,294,090       9,920,327       9,861,296  
Provision for loan losses
    151,264       75,000       353,540       221,667  
 
                       
Net interest income after provision for loan losses
    3,238,418       3,219,090       9,566,787       9,639,629  
 
                       
Non-interest income
                               
Service charges on deposits accounts
    335,536       325,029       927,894       977,755  
Trust services
    188,598       135,904       544,873       392,495  
Securities gains
    0               5,430          
Other
    238,147       215,409       832,076       608,742  
 
                       
Total non-interest income
    762,281       676,342       2,310,273       1,978,992  
Non-interest expenses
                               
Salaries and employee benefits
    1,485,842       1,538,491       4,327,845       4,459,994  
Occupancy expense
    188,166       176,360       554,439       515,104  
Equipment expense
    131,192       118,813       372,324       376,326  
Franchise tax expense
    105,892       113,425       311,971       334,817  
Professional and director fees
    147,009       171,042       453,151       519,494  
Other expenses
    664,008       585,737       1,968,762       2,114,063  
 
                       
Total non-interest expenses
    2,722,109       2,703,868       7,988,492       8,319,798  
 
                       
Income before income tax
    1,278,590       1,191,564       3,888,568       3,298,823  
Federal income tax provision
    415,500       378,000       1,254,500       1,034,700  
 
                       
 
                               
Net income
  $ 863,090     $ 813,564     $ 2,634,068     $ 2,264,123  
 
                       
Net income per share
                               
Basic
  $ 0.35     $ 0.32     $ 1.07     $ 0.89  
 
                       
 
                               
Diluted
  $ 0.35     $ 0.32     $ 1.07     $ 0.89  
Note: Certain prior year balances have been reclassified to conform to the current year presentation.