CSB Bancorp, Inc. Reports Fourth Quarter Earnings

Rhea-AI Summary

CSB Bancorp (OTC Pink: CSBB) reported a net income of $2.679 million for Q4 2020, an increase from $2.593 million in Q4 2019, translating to a diluted EPS of $0.97. Despite a 25% rise in average total assets to $1 billion, return on equity and return on assets saw declines to 11.45% and 1.05%, respectively. The bank experienced a 10% increase in noninterest expense, largely attributed to salary hikes. The efficiency ratio rose to 59.8%. CSB facilitated over $92 million in PPP loans and continues to support borrowing needs despite challenges from the COVID-19 pandemic.

Positive

• Q4 net income increased by 3% YoY.
• Noninterest income rose by 44%, driven by real estate loans and debit card fees.
• Average total loan balances increased by 12% YoY, reflecting strong demand.

Negative

• Return on equity decreased to 11.45% from 12.13% YoY.
• Net interest margin fell to 2.97% from 3.73% YoY.
• Provision for loan losses increased by 33% due to COVID-related factors.

CSB Bancorp, Inc. (OTC Pink: CSBB):

Fourth Quarter Highlights

		Quarter Ended December 31, 2020					Quarter Ended December 31, 2019
Diluted earnings per share		$	0.97				$	0.95
Net Income		$	2,679,000				$	2,593,000
Return on average common equity			11.45	%				12.13	%
Return on average assets			1.05	%				1.27	%

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced fourth quarter 2020 net income of $2,679,000, or $0.97 per basic and diluted share, as compared to $2,593,000, or $0.95 per basic and diluted share, for the same period in 2019. Income before federal income tax amounted to $3,319,000, an increase of 3% over the same quarter in the prior year. For the twelve-month period ended December 31, 2020 net income totaled $10,568,000 compared to $10,414,000 for the same period last year, an increase of 1.5%.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 11.45% and 1.05%, respectively, compared with 12.13% and 1.27% for the fourth quarter of 2019.

Eddie Steiner, President and CEO stated, “Full year net income increased 1.5% from the prior year, with fourth quarter net income 3% above last year’s ending quarter. Factors related to the COVID-19 pandemic, including very low prevailing interest rates and various government stimulus measures have appreciably curtailed business borrowing levels and compressed net interest margins. However, strong demand for home mortgage originations and Paycheck Protection Program (PPP) lending have combined to offset the softer earnings performance in other areas of the bank. CSB is in an excellent position to continue supporting our markets, and we are actively lending in all areas of consumer and business borrowing needs, including the newest round of PPP funding activities.”

Net interest income and noninterest income, on a fully taxable equivalent basis, totaled $9.3 million during the quarter, an increase of $693 thousand from the prior-year fourth quarter. Net interest income increased $55 thousand, or 1%, in the fourth quarter of 2020 compared to the same period in 2019.

Loan interest income including fees increased $152 thousand during fourth quarter 2020 as compared to the same quarter in 2019, an increase of 2%. Average total loan balances during the current quarter were $65 million higher than the year ago quarter, an increase of 12%. Loan yields for fourth quarter 2020 averaged 4.63%, a decrease of 42 basis points from the 2019 fourth quarter average of 5.05%.

The net interest margin was 2.97% compared to 3.73% for fourth quarter 2019. The tax equivalency effect on the margin remained stable at 0.02% in the comparable fourth quarters.

Due to COVID related factors, an increased provision for loan losses of $378 thousand was recognized for the fourth quarter ended December 31, 2020 as compared to $285 thousand for the prior year quarter. Credit quality within the loan portfolio has not been significantly affected by COVID factors to date. However, a significant degree of COVID-related uncertainty remains, and the eventual damage to household and business balance sheets cannot be fully measured at this time.

Noninterest income increased 44%, compared to fourth quarter of 2019, fueled by historic growth in gain on sale of real estate loans into the secondary market, increases in debit card fee income, and bank owned life insurance values. These increases were partially offset by decreases in service charges on deposit accounts as both consumer and business accounts maintained increased deposit balances from government stimulus payments and loans provided by the bank within the PPP.

Noninterest expense increased 10% from fourth quarter 2019. Salary and employee benefit costs increased $191 thousand, or 7%, compared to the prior year quarter, as a result of increases in base compensation and commissions, incentive accruals, medical insurance costs and employers FICA expense. FDIC insurance expense increased $100 thousand as the prior year quarter reflected the use of Small Bank Assessment Credits. Software increased by $82 thousand reflecting investment in new platforms. Professional and directors’ fees increased $72 thousand, or 20%, reflecting increases in outside service fees. Marketing and public relations decreased by $21 thousand, or 16%, reflecting the continuing pandemic-related shut down of activities in fourth quarter 2020. The Company’s fourth quarter efficiency ratio increased to 59.8% compared to 58.7%.

Federal income tax expense totaled $640 thousand in fourth quarter 2020, as compared to $623 thousand tax expense for the same quarter in 2019. The effective tax rate approximated 19% in both periods.

Average total assets during the quarter rose to $1 billion, an increase of $206 million, or 25%, above the same quarter of the prior year. Liquidity increased as the Company’s average interest-bearing balances with banks increased $103 million during the quarter to $194 million as compared to the fourth quarter in 2019. Average loan balances of $619 million increased $65 million, or 12%, from the prior year fourth quarter while average securities balances of $153 million increased $36 million, or 30%, as compared to fourth quarter 2019.

Average commercial loan balances for the quarter, including commercial real estate, increased $64 million, or 18%, from prior year levels. This amount includes $84 million in average PPP loan balances originated in 2020. Excluding average PPP loan balances, commercial loans decreased year over year as borrowers reduced outstanding commercial line balances during the pandemic-related contraction in economic activity. Average residential mortgage balances increased $9 million, or 8%, over the prior year’s quarter while home equity lines of credit decreased $7 million over the prior year’s quarter as they were refinanced into low-rate term mortgages. Average consumer credit balances decreased $2 million, or 9%, versus the same quarter of the prior year.

Nonperforming assets decreased $162 thousand from December 31, 2019 to $4.5 million, or 0.74%, of total loans plus other real estate on December 31, 2020. On December 31, 2020, approximately $1.1 million of the non-performing loan total is guaranteed by either USDA or the SBA. Delinquent loan balances as of December 31, 2020 decreased to 0.88% of total loans as compared to 1.02% on December 31, 2019.

Net loan charge-offs recognized during fourth quarter 2020 were $459 thousand, or 0.29% annualized, compared to fourth quarter 2019 net loan losses of $45 thousand. The allowance for loan losses amounted to 1.36% of total loans on December 31, 2020 as compared to 1.27% on December 31, 2019.

Average deposit balances grew on a quarter over prior year quarter comparison by $195 million, or 29%. For the fourth quarter 2020, the average cost of deposits amounted to 0.27%, as compared to 0.52% for the fourth quarter 2019. During the fourth quarter 2020, increases in average deposit balances over the prior year quarter included noninterest-bearing demand accounts of $58 million and interest-bearing demand and savings accounts of $140 million. The average balance of securities sold under repurchase agreement during the fourth quarter of 2020 increased by $2 million, or 6%, compared to the average for the same period in the prior year.

Shareholders’ equity totaled $93.9 million on December 31, 2020 with 2.7 million common shares outstanding. The average equity to assets ratio amounted to 9.1% on December 31, 2020 and 10.4% on December 31, 2019. The Company declared a fourth quarter dividend of $0.29, producing an annualized yield of 3.3% based on the December 31, 2020 closing price of $35.00.

Cares Act and related events

A second stimulus bill was signed into law on December 27, 2020 adding additional emergency relief to the March 2020 Cares Act. The December relief effort includes a second round of SBA’s PPP for qualifying businesses as well as additional emergency relief programs. We facilitated and funded more than 750 of these government assistance loans totaling approximately $92 million in the first round. As of December 31, 2020, $22 million has been received from the SBA in forgiveness and we expect the majority of the PPP loan dollars will ultimately qualify for borrower forgiveness under the guidelines of the SBA program. We have begun to originate second round PPP loans in January 2021 and have underwritten over $18 million in additional applications during the first few days of the program.

During the year we also extended loan modifications to qualifying commercial and consumer loan customers to deal with the uncertainty of the economy. Customers could request relief from their total payment or place their obligation on interest only for a period of 3-4 months, with maturities extended on these modified loans. As of December 31, 2020, loans which have not reentered regular payment include $12 million of term commercial loans and $475 thousand of consumer loans.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $1 billion as of December 31, 2020. 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.

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.

CSB BANCORP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)		Quarters
(Dollars in thousands, except per share data)		2020				2020				2020				2020				2019				2020				2019
EARNINGS		4th Qtr				3rd Qtr				2nd Qtr				1st Qtr				4th Qtr				12 months				12 months
Net interest income FTE (a)		$	7,223			$	7,077			$	7,048			$	6,953			$	7,168			$	28,301			$	28,556
Provision for loan losses			378				377				717				178				285				1,650				1,140
Other income			2,089				1,862				1,641				1,343				1,451				6,935				5,428
Other expenses			5,576				5,050				4,709				5,007				5,079				20,342				19,769
FTE adjustment (a)			39				36				36				37				39				148				157
Net income			2,679				2,800				2,606				2,483				2,593				10,568				10,414
Diluted earnings per share			0.97				1.02				0.95				0.91				0.95				3.85				3.80
PERFORMANCE RATIOS
Return on average assets (ROA), annualized			1.05	%			1.14	%			1.15	%			1.23	%			1.27	%			1.13	%			1.36	%
Return on average common equity (ROE), annualized			11.45				12.19				11.72				11.47				12.13				11.71				12.77
Net interest margin FTE (a)			2.97				3.04				3.29				3.67				3.73				3.22				3.97
Efficiency ratio			59.75				56.32				54.05				60.08				58.74				57.55				58.00
Number of full-time equivalent employees			171				169				169				172				171
MARKET DATA
Book value/common share		$	34.23			$	33.49			$	32.81			$	31.95			$	31.17
Period-end common share mkt value			35.00				30.00				32.00				35.00				40.97
Market as a % of book			102.25	%			89.58	%			97.53	%			109.55	%			131.44	%
Price-to-earnings ratio			9.09				7.83				8.44				9.26				10.78
Cash dividends/common share		$	0.29			$	0.28			$	0.28			$	0.28			$	0.28			$	1.13			$	1.08
Common stock dividend payout ratio			29.90	%			27.45	%			29.47	%			30.77	%			29.47	%			29.35	%			28.42	%
Average basic common shares			2,742,350				2,742,350				2,742,350				2,742,350				2,742,350				2,742,350				2,742,296
Average diluted common shares			2,742,350				2,742,350				2,742,350				2,742,350				2,742,350				2,742,350				2,742,296
Period end common shares outstanding			2,742,350				2,742,350				2,742,350				2,742,350				2,742,350
Common stock market capitalization		$	95,982			$	82,271			$	87,755			$	95,982			$	112,354
ASSET QUALITY
Gross charge-offs		$	511			$	28			$	17			$	86			$	59			$	642			$	258
Net charge-offs (recoveries)			459				(143	)			3				74				44				393				30
Allowance for loan losses			8,274				8,355				7,835				7,120				7,017
Nonperforming assets (NPAs)			4,497				4,102				4,481				4,468				4,659
Net charge-off (recovery) /average loans ratio			0.29	%			(0.09	)%			0.00	%			0.05	%			0.03	%			0.06	%			0.01	%
Allowance for loan losses/period-end loans			1.36				1.33				1.23				1.28				1.27
NPAs/loans and other real estate			0.74				0.65				0.70				0.80				0.84
Allowance for loan losses/nonperforming loans			183.99				203.71				178.78				162.97				154.55
CAPITAL & LIQUIDITY
Period-end tangible equity to assets			8.68	%			8.86	%			8.90	%			10.28	%			9.91	%
Average equity to assets			9.13				9.33				9.79				10.72				10.43
Average equity to loans			15.02				14.39				14.38				15.55				15.29
Average loans to deposits			70.81				76.22				80.95				82.61				81.62
AVERAGE BALANCES
Assets		$	1,018,770			$	979,806			$	912,875			$	812,409			$	812,481			$	931,330			$	765,722
Earning assets			966,304				926,377				860,838				761,619				763,244				879,153				719,127
Loans			619,455				635,124				621,710				560,142				554,556				609,207				552,014
Deposits			874,820				833,288				767,988				678,090				679,473				788,904				636,441
Shareholders' equity			93,042				91,409				89,404				87,090				84,777				90,247				81,547
ENDING BALANCES
Assets		$	1,031,632			$	987,978			$	965,179			$	810,041			$	818,683
Earning assets			977,092				936,323				913,813				757,769				767,345
Loans			609,159				628,084				636,799				555,320				551,633
Deposits			891,562				840,656				815,961				671,162				683,546
Shareholders' equity			93,859				91,853				89,967				87,629				85,476

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 differs from net interest income under U.S. Generally Accepted Accounting Principles, and is considered a non-GAAP measure.

CSB BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)		December 31,				December 31,
(Dollars in thousands, except per share data)		2020				2019
ASSETS
Cash and cash equivalents
Cash and due from banks		$	19,281			$		17,648
Interest-earning deposits in other banks			162,371					84,369
Total cash and cash equivalents			181,652					102,017
Securities
Available-for-sale, at fair-value			190,438					112,146
Held-to-maturity			9,045					13,869
Equity securities			87					92
Restricted stock, at cost			4,614					4,614
Total securities			204,184					130,721
Loans held for sale			1,378					622
Loans			609,159					551,633
Less allowance for loan losses			8,274					7,017
Net loans			600,885					544,616
Premises and equipment, net			12,633					12,040
Goodwill and core deposit intangible			4,772					4,831
Bank owned life insurance			21,416					18,894
Accrued interest receivable and other assets			4,712					4,942
TOTAL ASSETS		$	1,031,632			$		818,683
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing		$	272,051			$		193,425
Interest-bearing			619,511					490,121
Total deposits			891,562					683,546
Short-term borrowings			37,215					38,889
Other borrowings			4,664					6,330
Accrued interest payable and other liabilities			4,332					4,442
Total liabilities			937,773					733,207
Shareholders' equity
Common stock, $6.25 par value. Authorized 9,000,000 shares; issued 2,980,602 shares in 2020 and 2019			18,629					18,629
Additional paid-in capital			9,815					9,815
Retained earnings			69,209					61,740
Treasury stock at cost - 238,252 shares in 2020 and 2019			(4,780	)				(4,780	)
Accumulated other comprehensive income			986					72
Total shareholders' equity			93,859					85,476
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	1,031,632			$		818,683

CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
	Quarter ended								Twelve months ended
(Unaudited)	December 30,								December 30,
(Dollars in thousands, except per share data)	2020				2019				2020				2019
Interest and dividend income:
Loans, including fees	$	7,209			$	7,057			$	28,354			$	28,553
Taxable securities		421				542				1,882				2,247
Nontaxable securities		121				130				464				532
Other		53				381				366				1,129
Total interest and dividend income		7,804				8,110				31,066				32,461
Interest expense:
Deposits		584				898				2,723				3,609
Short-term and other borrowings		36				83				190				453
Total interest expense		620				981				2,913				4,062
Net interest income		7,184				7,129				28,153				28,399
Provision for loan losses		378				285				1,650				1,140
Net interest income after provision for loan losses		6,806				6,844				26,503				27,259
Noninterest income
Service charges on deposits accounts		250				313				1,003				1,252
Trust services		234				229				896				899
Debit card interchange fees		453				389				1,661				1,481
Gain on sale of loans		762				174				1,951				462
Market value change in equity securities		5				-				(4	)			9
Other		385				346				1,428				1,325
Total noninterest income		2,089				1,451				6,935				5,428
Noninterest expenses
Salaries and employee benefits		3,104				2,913				11,707				11,663
Occupancy expense		242				215				953				832
Equipment expense		151				163				657				571
Professional and director fees		441				369				1,284				1,332
Software expense		346				264				1,101				938
Marketing and public relations		109				130				398				535
Debit card expense		171				153				621				554
Other expenses		1,012				872				3,621				3,344
Total noninterest expenses		5,576				5,079				20,342				19,769
Income before income tax		3,319				3,216				13,096				12,918
Federal income tax provision		640				623				2,528				2,504
Net income	$	2,679			$	2,593			$	10,568			$	10,414
Net income per share:
Basic	$	0.97			$	0.95			$	3.85			$	3.80
Diluted	$	0.97			$	0.95			$	3.85			$	3.80

 

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FAQ

What were CSB Bancorp's Q4 earnings for 2020?

CSB Bancorp reported Q4 2020 earnings of $2.679 million, or $0.97 per diluted share.

How did CSB Bancorp's net income change in 2020?

Net income for the full year 2020 totaled $10.568 million, an increase of 1.5% from 2019.

What impact did COVID-19 have on CSB Bancorp's financial performance?

COVID-19 led to lower business borrowing levels and net interest margin compression but increased demand for home mortgages and PPP lending.

What is the dividend payout for CSB Bancorp in Q4 2020?

CSB Bancorp declared a Q4 dividend of $0.29, resulting in an annualized yield of 3.3%.

How did CSB Bancorp's asset levels change in Q4 2020?

Average total assets increased by $206 million, or 25%, year-over-year to $1 billion.