CSB Bancorp, Inc. Reports Fourth Quarter Earnings

Rhea-AI Summary

CSB Bancorp (OTC Pink: CSBB) reported a fourth-quarter net income of $2.3 million, or $0.85 per share, down from $2.68 million, or $0.97 per share, a year prior. The annual net income rose 3% to $10.8 million. Key metrics include a return on equity of 9.41%, down from 11.45%, and a return on assets of 0.80%, down from 1.05%. Loan interest income declined by 15%, attributed to a $75 million drop in average total loan balances. Deposit growth was strong, increasing 3.5% to over $1 billion. The company declared a dividend of $0.31 per share, yielding 3.3%.

Positive

• Annual net income increased 3% to $10.8 million.
• Deposit balances rose by 3.5% to over $1 billion.
• Dividend declared at $0.31 per share, yielding 3.3%.

Negative

• Fourth-quarter net income decreased 14% year-over-year.
• Return on equity fell from 11.45% to 9.41%.
• Loan interest income dropped 15% due to a $75 million decline in loan balances.

MILLERSBURG, Ohio--(BUSINESS WIRE)-- CSB Bancorp, Inc. (OTC Pink: CSBB):

Fourth Quarter Highlights

		Quarter Ended December 31, 2021				Quarter Ended December 31, 2020
Diluted earnings per share		$	0.85			$	0.97
Net Income		$	2,306,000			$	2,679,000
Return on average common equity			9.41	%			11.45	%
Return on average assets			0.80	%			1.05	%

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced fourth quarter 2021 net income of $2,306,000, or $0.85 per basic and diluted share, as compared to $2,679,000, or $0.97 per basic and diluted share, for the same period in 2020. Income before federal income tax amounted to $2,840,000, a decrease of 14% over the same quarter in the prior year. For the year ended December 31, 2021 net income totaled $10,837,000 compared to $10,568,000 for the same period last year, an increase of 3%.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 9.41% and 0.80%, respectively, compared with 11.45% and 1.05% for the fourth quarter of 2020.

Eddie Steiner, President and CEO stated, “Residential mortgage applications declined during the quarter, as many homeowners have refinanced to lower rates, housing stock remains in tight supply, mortgage rates have increased modestly, and the holiday season and COVID levels impeded some activity. Business loan demand shows signs of strengthening, although still held somewhat in check by significant borrower liquidity, supply chain disruptions, labor shortages, and inflation uncertainties. Deposit growth has remained strong, with our balances increasing 3.5% during fourth quarter to finish the year above one billion dollars. We are also grateful to report our tenth consecutive year of record net income.”

Net interest income and noninterest income totaled $8.5 million during the quarter, a decrease of $724 thousand from the prior-year fourth quarter. Net interest income decreased $471 thousand, or 7%, in the fourth quarter of 2021 compared to the same period in 2020.

Loan interest income, including fees, decreased $1.1 million, or 15%, during fourth quarter 2021 as compared to the same quarter in 2020. The decrease was mainly due to average total loan balances declining $75 million below the year ago quarter, including average Paycheck Protection Program loans (“PPP”) declining $73 million from the prior year quarter. Loan yields for fourth quarter 2021 averaged 4.47%, a decrease of 16 basis points from the 2020 fourth quarter average of 4.63%, The loan yield decrease partially resulted from PPP loan forgiveness resulting in $394 thousand less in PPP fees recognized in fourth quarter 2021 compared to fourth quarter 2020.

The net interest margin was 2.48% compared to 2.85% for fourth quarter 2020. As discussed above, both loan volume and rate declined, partially offset with volume increases within the securities account, and rate decreases on liabilities. Liquidity continues to play a factor on the margin as the growth of average overnight funds rose $72 million on a quarter over prior year quarter comparison. The tax equivalency effect on the margin was 0.01% in fourth quarter 2021 compared to 0.02% in fourth quarter 2020.

With the decrease in outstanding loan balances and continuing improvement in credit quality, there was no provision for loan losses for the quarter ended December 31, 2021 as compared to $378 thousand loss provision for the prior year fourth quarter when the effect of COVID on future credit losses was not discernable. COVID factors have not significantly affected the Bank’s loan portfolio quality to date, and local businesses are beginning or restarting construction projects previously sidelined by a significant degree of COVID-related uncertainty.

Noninterest income decreased 12%, compared to fourth quarter of 2020. The decrease was primarily the result of a $487 thousand, or 64%, decline in gain on sale of mortgages to the secondary market, as refinancing of mortgages slowed and home purchases were limited by a lack of housing inventory for sale. Offsetting increases were recognized in debit and credit card fee income, earnings from bank owned life insurance values, and brokerage and trust income.

Noninterest expense increased 2% from fourth quarter 2020. Salary and employee benefit costs increased $194 thousand, or 6%, compared to the prior year quarter, primarily resulting from increases in compensation and workman’s compensation as the 2020 credits expired. A recovery was recognized on the provision for unfunded loan commitments of $107 thousand compared to the prior year quarter primarily as commercial loan construction commitments funded in the fourth quarter decreasing the senior/assisted living sector unfunded exposure at December 31, 2021. Marketing and public relations increased by $137 thousand, or 26%, reflecting a return to normalized levels after the pandemic-related curtailment of activities in 2020. Software expense increased by $42 thousand reflecting investment in new platforms. FDIC insurance expense increased $20 thousand above the prior year quarter due to the increase in asset size. Professional and directors’ fees decreased $88 thousand, or 20% primarily reflecting a decline in collection legal fees. The Company’s fourth quarter efficiency ratio increased to 66.4% compared to 59.8%.

Federal income tax expense totaled $534 thousand in fourth quarter 2021, as compared to $640 thousand tax expense for the same quarter in 2020. The effective tax rate approximated 19% in both periods.

Average total assets during the quarter rose to $1.14 billion, an increase of $120 million, or 12%, above the same quarter of the prior year. Liquidity increased as the Company’s average interest-bearing balances with banks increased $72 million, to $266 million, as compared to the fourth quarter in 2020. Average loan balances of $544 million decreased $75 million, or 12%, from the prior year fourth quarter while average securities balances of $234 million increased $116 million, or 76%, as compared to fourth quarter 2020.

Average commercial loan balances for the quarter, including commercial real estate, decreased $64 million, or 15%, from prior year levels. Excluding a $73 million decrease in average PPP loan balances, commercial loans increased $9 million year over year as construction loans were drawn and borrowers used term loans to fund equipment and other purchases. Average residential mortgage balances decreased $3 million, or 3%, below the prior year’s quarter while home equity lines of credit decreased $6 million from the prior year’s quarter as balances were paid down or refinanced into low-rate term mortgages. Average consumer credit balances decreased $2 million, or 9%, versus the same quarter of the prior year. Increased organic loan demand continues to be largely dependent on the pace at which excess liquidity is absorbed by businesses and households and restoration of borrower confidence as pandemic uncertainty diminishes.

Nonperforming assets decreased $3.4 million from December 31, 2020 to $1.1 million, or 0.20%, of total loans plus other real estate on December 31, 2021, primarily the result of payoffs of $2.1 million. Delinquent loan balances as of December 31, 2021 decreased to 0.27% of total loans as compared to 0.88% on December 31, 2020.

Net loan charge-offs recognized during fourth quarter 2021 were $27 thousand, or 0.02% annualized, compared to fourth quarter 2020 net loan losses of $459 thousand. The allowance for loan losses amounted to 1.39% of total loans on December 31, 2021 as compared to 1.36% on December 31, 2020.

Average deposit balances grew on a quarter over prior year quarter comparison by $122 million, or 14%. For the fourth quarter 2021, the average cost of deposits amounted to 0.15%, as compared to 0.27% for the fourth quarter 2020. During the fourth quarter 2021, increases in average deposit balances over the prior year quarter included noninterest-bearing demand accounts of $62 million and interest-bearing demand and savings accounts of $61 million, while time deposits decreased $1 million. The average balance of securities sold under repurchase agreement during the fourth quarter of 2021 decreased by $4 million, or 9%, compared to the average for the same period in the prior year.

Shareholders’ equity totaled $97.3 million on December 31, 2021 with 2.7 million common shares outstanding. The average equity to assets ratio amounted to 8.54% on December 31, 2021 and 9.13% on December 31, 2020. The Company declared a fourth quarter dividend of $0.31 per share, producing an annualized yield of 3.3% based on the December 31, 2021 closing price of $37.75.

Cares Act and related events

CSB facilitated and funded $129 million of SBA emergency PPP loans in 2020 and 2021. As of December 31, 2021, $125 million has been received from the SBA in forgiveness. and approximately $181 thousand remains in unearned fees at December 31, 2021. All loans modified to businesses and consumers to deal with the uncertainty of the economy during 2020 and 2021 have entered repayment.

During fourth quarter 2021, the available for sale investment securities were reviewed for price volatility with $78.3 million book value securities transferred from available for sale to held to maturity at $76.3 million market value to protect additional declines to tangible book value with the projected increases in market interest rates in 2022 and 2023.

Following the rise in market interest rates during the first weeks of January 2022, approximately $60 million in investment securities were purchased and added to the investment portfolio, reducing overnight cash. Purchased investments included mortgage-backed instruments and short-term corporate and US treasury notes.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $1.1 billion as of December 31, 2021. 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

The Private Securities Litigation Reform Act of 1995 contains safe harbor provisions regarding forward-looking statements. 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)		2021				2021				2021				2021				2020				2021				2020
EARNINGS		4th Qtr				3rd Qtr				2nd Qtr				1st Qtr				4th Qtr				12 months				12 months
Net interest income FTE (a)		$	6,752			$	7,364			$	6,509			$	7,046			$	7,223			$	27,671			$	28,301
Provision for (recovery of) loan losses			-				(210	)			(475	)			30				378				(655	)			1,650
Other income			1,836				1,768				1,843				1,878				2,089				7,325				6,935
Other expenses			5,709				5,713				5,390				5,281				5,576				22,093				20,342
FTE adjustment (a)			39				39				38				38				39				154				148
Net income			2,306				2,901				2,745				2,885				2,679				10,837				10,568
Diluted earnings per share			0.85				1.06				1.00				1.05				0.97				3.97				3.85
PERFORMANCE RATIOS
Return on average assets (ROA), annualized			0.80	%			1.03	%			0.97	%			1.10	%			1.05	%			0.97	%			1.13	%
Return on average common equity (ROE), annualized			9.41				11.79				11.62				12.33				11.45				11.27				11.71
Net interest margin FTE (a)			2.48				2.77				2.43				2.85				2.97				2.63				3.22
Efficiency ratio			66.41				62.49				64.40				59.14				59.75				63.05				57.55
Number of full-time equivalent employees			171				178				174				170				171
MARKET DATA
Book value/common share		$	35.80			$	35.62			$	35.11			$	33.94			$	34.23
Period-end common share mkt value			37.75				39.25				38.00				37.50				35.00
Market as a % of book			105.45	%			110.19	%			108.23	%			110.49	%			102.25	%
Price-to-earnings ratio			9.51				9.62				9.41				9.40				9.09
Cash dividends/common share		$	0.31			$	0.31			$	0.30			$	0.30			$	0.29			$	1.22			$	1.13
Common stock dividend payout ratio			36.47	%			29.25	%			30.00	%			28.57	%			29.90	%			30.73	%			29.35	%
Average basic common shares			2,720,633				2,729,410				2,740,390				2,742,350				2,742,350				2,733,126				2,742,350
Average diluted common shares			2,720,633				2,729,410				2,740,390				2,742,350				2,742,350				2,733,126				2,742,350
Period end common shares outstanding			2,718,024				2,725,524				2,734,244				2,742,350				2,742,350
Common stock market capitalization		$	102,605			$	106,977			$	103,901			$	102,838			$	95,982
ASSET QUALITY
Gross charge-offs		$	66			$	39			$	20			$	5			$	511			$	130			$	642
Net charge-offs (recoveries)			27				20				(12	)			(34	)			459				1				393
Allowance for loan losses			7,618				7,645				7,875				8,338				8,274
Nonperforming assets (NPAs)			1,088				1,320				2,786				3,089				4,497
Net charge-off (recovery) / average loans ratio			0.02	%			0.01	%			(0.01	)%			(0.02	)%			0.29	%			0.00	%			0.06	%
Allowance for loan losses / period-end loans			1.39				1.40				1.43				1.43				1.36
NPAs/loans and other real estate			0.20				0.24				0.50				0.53				0.74
Allowance for loan losses/nonperforming loans			699.86				579.07				282.61				269.92				183.99
CAPITAL & LIQUIDITY
Period-end tangible equity to assets			8.13	%			8.34	%			8.12	%			7.99	%			8.68	%
Average equity to assets			8.54				8.75				8.38				8.95				9.13
Average equity to loans			17.86				17.89				16.78				15.92				15.02
Average loans to deposits			54.62				56.09				57.18				64.95				70.81
AVERAGE BALANCES
Assets		$	1,138,690			$	1,115,814			$	1,131,251			$	1,060,485			$	1,018,770			$	1,111,808			$	931,330
Earning assets			1,079,002				1,056,424				1,073,865				1,004,521				966,304				1,053,666				879,153
Loans			544,389				545,420				564,998				596,319				619,455				562,592				609,207
Deposits			996,646				972,409				988,017				918,063				874,820				969,009				788,904
Shareholders' equity			97,241				97,584				94,786				94,929				93,042				96,145				90,247
ENDING BALANCES
Assets		$	1,144,239			$	1,111,696			$	1,128,922			$	1,110,157			$	1,031,632
Earning assets			1,084,744				1,054,141				1,072,286				1,043,016				977,092
Loans			549,154				546,095				552,030				582,714				609,159
Deposits			1,002,747				968,629				986,668				968,569				891,562
Shareholders' equity			97,315				97,089				96,012				93,085				93,859

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.

CSB BANCORP, INC.
CONSOLIDATED BALANCE SHEETS

(Unaudited)		December 31,				December 31,
(Dollars in thousands, except per share data)		2021				2020
ASSETS
Cash and cash equivalents
Cash and due from banks		$	19,543			$	19,281
Interest-earning deposits in other banks			224,114				162,371
Total cash and cash equivalents			243,657				181,652
Securities
Available-for-sale, at fair-value			131,708				190,438
Held-to-maturity			174,808				9,045
Equity securities			115				87
Restricted stock, at cost			4,614				4,614
Total securities			311,245				204,184
Loans held for sale			231				1,378
Loans			549,154				609,159
Less allowance for loan losses			7,618				8,274
Net loans			541,536				600,885
Premises and equipment, net			13,866				12,633
Goodwill and core deposit intangible			4,728				4,772
Bank owned life insurance			24,035				21,416
Accrued interest receivable and other assets			4,941				4,712
TOTAL ASSETS		$	1,144,239			$	1,031,632
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing		$	334,346			$	272,051
Interest-bearing			668,401				619,511
Total deposits			1,002,747				891,562
Short-term borrowings			36,530				37,215
Other borrowings			3,407				4,664
Accrued interest payable and other liabilities			4,240				4,332
Total liabilities			1,046,924				937,773
Shareholders' equity
Common stock, $6.25 par value. Authorized 9,000,000 shares; issued 2,980,602 shares in 2021 and 2020			18,629				18,629
Additional paid-in capital			9,815				9,815
Retained earnings			76,715				69,209
Treasury stock at cost - 262,578 shares in 2021 and 238,252 shares in 2020			(5,719	)			(4,780	)
Accumulated other comprehensive (loss) income			(2,125	)			986
Total shareholders' equity			97,315				93,859
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	1,144,239			$	1,031,632

CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME

		Quarter ended								Twelve months ended
(Unaudited)		December 31,								December 31,
(Dollars in thousands, except per share data)		2021				2020				2021				2020
Interest and dividend income:
Loans, including fees		$	6,131			$	7,209			$	26,124			$	28,354
Taxable securities			773				421				2,613				1,882
Nontaxable securities			116				121				455				464
Other			109				53				337				366
Total interest and dividend income			7,129				7,804				29,529				31,066
Interest expense:
Deposits			388				584				1,884				2,723
Other			28				36				128				190
Total interest expense			416				620				2,012				2,913
Net interest income			6,713				7,184				27,517				28,153
Provision for (recovery of) loan losses			-				378				(655	)			1,650
Net interest income, after provision for (recovery of) loan losses			6,713				6,806				28,172				26,503
Noninterest income
Service charges on deposits accounts			263				250				939				1,003
Trust services			261				234				1,059				896
Debit card interchange fees			538				453				2,050				1,661
Gain on sale of loans			275				762				1,449				1,951
Market value change in equity securities			8				5				28				(4	)
Other			491				385				1,800				1,428
Total noninterest income			1,836				2,089				7,325				6,935
Noninterest expenses
Salaries and employee benefits			3,298				3,104				12,599				11,707
Occupancy expense			262				242				1,033				953
Equipment expense			195				151				714				657
Professional and director fees			353				441				1,184				1,284
Software expense			388				346				1,342				1,101
Marketing and public relations			137				109				461				398
Debit card expense			186				171				710				621
Other expenses			890				1,012				4,050				3,621
Total noninterest expenses			5,709				5,576				22,093				20,342
Income before income tax			2,840				3,319				13,404				13,096
Federal income tax provision			534				640				2,567				2,528
Net income		$	2,306			$	2,679			$	10,837			$	10,568
Net income per share:
Basic and diluted		$	0.85			$	0.97			$	3.97			$	3.85

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220126005970/en/

Paula J. Meiler, SVP & CFO

330.763.2873

paula.meiler@csb1.com

Source: CSB Bancorp, Inc.

FAQ

What were the earnings per share for CSBB in the fourth quarter of 2021?

CSB Bancorp reported diluted earnings per share of $0.85 for the fourth quarter of 2021.

How did CSBB's net income in Q4 2021 compare to Q4 2020?

CSB Bancorp's net income in Q4 2021 was $2.3 million, down from $2.68 million in Q4 2020.

What is the dividend yield for CSBB based on the fourth quarter of 2021?

The dividend yield for CSB Bancorp based on the fourth quarter of 2021 is 3.3%.

What were the key financial metrics for CSBB in Q4 2021?

Key metrics for CSB Bancorp in Q4 2021 include a return on equity of 9.41% and a return on assets of 0.80%.

How did loan interest income change for CSBB in Q4 2021?

Loan interest income for CSB Bancorp decreased by 15% in Q4 2021 compared to the same quarter in 2020.