CSB Bancorp, Inc. Reports Fourth Quarter Earnings

Rhea-AI Summary

CSB Bancorp, Inc. (OTC Pink: CSBB) reported fourth quarter 2023 net income of $3,697,000, or $1.38 per basic and diluted share, compared to $3,753,000, or $1.39 per basic and diluted share, for the same period in 2022. For the twelve-month period ended December 31, 2023, net income totaled $14,756,000 compared to $13,313,000 for the same period last year, an increase of 11%. CSB's capital and liquidity levels are strong, with deposit base holding steady at more than $1 billion throughout 2023, and loan balances growing by 12%. The company's return on assets, return on equity, net interest margin, and efficiency ratio all improved from the third quarter to the fourth quarter, with full year 2023 results also showing improvements in each of those key metrics compared to the prior year.

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

Fourth Quarter Highlights

		Quarter Ended December 31, 2023					Quarter Ended December 31, 2022
Diluted earnings per share		$	1.38				$	1.39
Net Income		$	3,697,000				$	3,753,000
Return on average common equity			14.22	%				15.94	%
Return on average assets			1.25	%				1.27	%

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced fourth quarter 2023 net income of $3,697,000, or $1.38 per basic and diluted share, as compared to $3,753,000, or $1.39 per basic and diluted share, for the same period in 2022. For the twelve-month period ended December 31, 2023, net income totaled $14,756,000 compared to $13,313,000 for the same period last year, an increase of 11%.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 14.22% and 1.25%, respectively, compared with 15.94% and 1.27% for the fourth quarter of 2022. For the twelve-month period ended December 31, 2023, ROE and ROA were 14.69% and 1.27% as compared to 14.04% and 1.16% for the comparable period in 2022.

Eddie Steiner, President and CEO stated, “We finished 2023 with CSB’s team delivering another solid quarter, resulting in full-year earnings of $14.8 million, or $5.51 per share. The company’s return on assets, return on equity, net interest margin and efficiency ratio each improved from third quarter to fourth quarter, and full year 2023 results also improved in each of those key metrics compared to the prior year. CSB’s capital and liquidity levels are strong, our deposit base held steady at more than $1 billion throughout 2023, and loan balances grew by 12%.”

Pre-Provision Net Revenue (“PPNR”) (a non-GAAP measure) totaled $4.8 million during the quarter, an increase of $232 thousand, or 5%, from the prior year’s fourth quarter. Net interest income increased $77 thousand, or 1%, noninterest income increased $66 thousand, or 4%, and noninterest expense declined $89 thousand, (a non-GAAP measure) or 1%, in the fourth quarter of 2023 compared to the same period in 2022. For the twelve-month period ended December 31, 2023, PPNR totaled $18.8 million as compared to $15.5 million for the comparable period in 2022.

Loan interest income including fees increased $2.3 million, or 31%, during fourth quarter 2023 as compared to the same quarter in 2022. The increase was mainly due to rate increases as well as a $74 million increase in average loan volume. Securities interest income decreased $22 thousand, or 1%, during the fourth quarter 2023 compared to the same quarter 2022 from volume decreases as cash flow from investments was redeployed to loan origination. Loan yields for fourth quarter 2023 averaged 5.64%, an increase of 82 basis points from the 2022 fourth quarter average of 4.82%, while overnight funds and securities yields for fourth quarter 2023 averaged 5.54% and 2.20%, respectively, compared to 3.74% and 2.07% in the fourth quarter 2022.

Interest expense rose $2.0 million, or 172%, during fourth quarter 2023 as compared to fourth quarter 2022. The increase follows a period of rapid interest rate increases spurred by the Federal Reserve followed by competitive pressures from banks and others to secure adequate funding. The cost to fund gross earning assets for the fourth quarter 2023 was 1.12% as compared to 0.41% for the fourth quarter of 2022. The Federal Reserve has indicated it currently expects that it can begin lowering short-term interest rates later in 2024.

The fully-taxable equivalent (“FTE”) (a non-GAAP measure) net interest margin was 3.36% compared to 3.33% for the fourth quarter 2022. Compared to the 2022 fourth quarter, FTE net interest income increased $73 thousand, or 1%, reflecting 3 basis points of net interest margin expansion, and a $1.2 million, or less than 1%, decrease in average earning assets. The higher interest rate environment drove the increase in yields coupled with loan volume growth, partially offset by the higher cost of funds. The tax equivalency effect on the margin was 0.01% in fourth quarter 2023 and 2022.

Noninterest income increased $66 thousand, or 4%, compared to fourth quarter of 2022. The increase was primarily the result of a $38 thousand increase in gain on sale of mortgage loans, a $23 thousand increase in trust and brokerage fees, and an $18 thousand increase in unrealized gains in equity securities. Small offsetting decreases were recognized in service charges on deposit accounts with decreasing overdraft fees and debit card interchange fees.

Noninterest expense increased 1% from fourth quarter 2022. Salary and employee benefit costs decreased $119 thousand, or 3%, compared to the prior year quarter, primarily resulting from the decreases in base salaries and benefits due to timing of turnover in fourth quarter 2023. Software expense increased $50 thousand, or 13%, with the deployment of new reporting software and upgrades. FDIC assessment increased $40 thousand or 43% on the increase in rate in 2023. Equipment expense increased $20 thousand, or 11% while occupancy expense increased $17 thousand, or 6%, related to building repairs. Marketing and public relations decreased by $23 thousand, or 12%, reflecting a return to normalized levels. A recovery of provision for unfunded loan commitments of $141 thousand was recognized through other noninterest expense in fourth quarter 2022 and did not recur in 2023 due to the adoption of ASU 2016-13, see discussion below. The Company’s fourth quarter efficiency ratio decreased to 56.7% compared to 56.8% in the prior year.

Federal income tax expense was $912 thousand in the 2023 fourth quarter compared to $921 thousand in the 2022 fourth quarter. The effective tax rate for the 2023 and 2022 fourth quarters stabilized at 19.8-19.7%.

Average earning assets for the 2023 fourth quarter decreased $1.2 million, or less than 1%, from the year-ago quarter, primarily reflecting a $74 million, or 12%, increase in average loans, a $28 million, or 7%, decrease in average securities, and a $47 million, or 53%, 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 14%, 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 $20 million, or 14%, above the prior year’s quarter as borrowers have been favoring adjustable-rate mortgages during this period of higher interest rates. Home equity lines of credit decreased $3 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 $200 thousand, or 1%, versus the same quarter of the prior year. Commercial loan demand continues while household confidence appears to be waiting for the Fed to reverse course and begin to lower rates.

Nonperforming assets were $396 thousand, or 0.06%, of total loans on December 31, 2023, compared to $256 thousand, or 0.04% of total loans, a year ago. Delinquent loan balances as of December 31, 2023, were up slightly at 0.22% of total loans as compared to 0.13% on December 31, 2022. Net loan recoveries recognized during fourth quarter 2023 were $5 thousand, or less than 1% of average loans annualized, compared to fourth quarter 2022 net loan losses of $170 thousand.

On January 1, 2023, CSB adopted ASU 2016-13 known as current expected credit losses or “CECL”. The allowance for expected credit losses amounted to $6.6 million, or 0.94% of total loans, on December 31, 2023, as compared to 1.09% on December 31, 2022. The allowance for credit losses on off-balance sheet commitments on December 31, 2023, was $736 thousand, largely tied to construction loans as compared to a December 31, 2022, balance of zero. CSB recorded no allowance for credit losses related to AFS or HTM debt securities as there is a zero loss expectation on these securities.

Average deposit balances declined on a quarter over prior year quarter comparison by $8.4 million, or less than 1%. For the fourth quarter 2023, the average cost of deposits amounted to 1.16%, as compared to 0.41% for the fourth quarter 2022. During the fourth quarter 2023, increases in average deposit balances over the prior year quarter included interest-bearing demand accounts of $19 million and time deposits of $66 million. Noninterest-bearing accounts decreased $47 million from the prior year’s fourth quarter while savings and money market accounts declined $46 million. The average balance of securities sold under repurchase agreement during the fourth quarter of 2023 decreased by $2 million, or 5%, compared to the average for the same period in the prior year.

Shareholders’ equity totaled $108 million on December 31, 2023, with 2.7 million common shares outstanding. The average equity to assets ratio amounted to 8.80% for the quarter ended December 31, 2023, and 7.96% for the quarter ended December 31, 2022. The Company declared a fourth quarter dividend of $0.38 per share, producing an annualized yield of 4.0% based on the December 31, 2023, closing price of $37.54.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $1.2 billion as of December 31, 2023. 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. 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)		2023				2023				2023				2023				2022				2023				2022
EARNINGS		4th Qtr				3rd Qtr				2nd Qtr				1st Qtr				4th Qtr				12 months				12 months
Net interest income FTE (a)	$		9,377		$		8,871		$		9,027		$		8,999		$		9,304		$		36,274		$		32,468
Provision (Recovery) of credit losses			156				177				140				(31	)			-				442				(895	)
Other income			1,678				1,705				1,733				1,628				1,612				6,744				6,711
Other expenses			6,258				6,034				6,049				5,719				6,206				24,060				23,393
FTE adjustment(a)			32				34				33				34				36				133				145
Net income			3,697				3,481				3,644				3,934				3,753				14,756				13,313
Basic and Diluted earnings per share			1.38				1.30				1.36				1.46				1.39				5.51				4.91
PERFORMANCE RATIOS
Return on average assets (ROA), annualized			1.25		%		1.19		%		1.27		%		1.39		%		1.27		%		1.27		%		1.16		%
Return on average common equity (ROE), annualized			14.22				13.63				14.62				16.39				15.94				14.69				14.04
Net interest margin FTE(a)			3.36				3.21				3.33				3.37				3.33				3.32				2.98
Efficiency ratio			56.67				56.99				56.24				53.86				56.83				55.95				59.70
Number of full-time equivalent employees			168				178				172				170				172
MARKET DATA
Book value per common share	$		40.43		$		37.96		$		37.36		$		36.93		$		35.43
Period-end common share market value			37.54				37.75				38.88				38.00				38.50
Market as a % of book			92.85		%		99.45		%		104.07		%		102.90		%		108.66		%
Price-to-earnings ratio			6.81				6.85				6.99				7.06				7.84
Average basic common shares outstanding			2,671,086				2,675,967				2,680,526				2,692,304				2,707,576				2,679,902				2,714,045
Average diluted common shares outstanding			2,671,086				2,675,967				2,680,526				2,692,304				2,707,576				2,679,902				2,714,045
Period end common shares outstanding			2,669,938				2,671,313				2,680,325				2,680,625				2,707,576
Common stock market capitalization	$		100,229		$		100,842		$		104,211		$		101,864		$		104,242
ASSET QUALITY
Gross charge-offs	$		15		$		43		$		15		$		39		$		217		$		112		$		288
Net (recoveries) charge-offs			(5	)			(119	)			(10	)			4				170				(130	)			(115	)
Allowance for credit losses			6,607				6,691				6,559				6,307				6,838
Nonperforming assets (NPAs)			396				260				255				218				256
Net charge-off (recovery) / average loans ratio			0.00		%		(0.07	)	%		(0.01	)	%		0.00		%		0.11		%		(0.02	)	%		(0.02	)	%
Allowance for credit losses / period-end loans			0.94				0.98				0.99				0.97				1.09
NPAs/loans and other real estate			0.06				0.04				0.04				0.03				0.04
Allowance for credit losses / nonperforming loans			1,667				2,576				2,577				2,893				2,667
CAPITAL & LIQUIDITY
Period-end tangible equity to assets(b)			8.79		%		8.39		%		8.29		%		8.28		%		7.90		%
Average equity to assets			8.80				8.72				8.68				8.48				7.96
Average equity to loans			14.87				15.00				15.15				15.27				15.06
Average loans to deposits			67.47				66.20				65.05				63.19				59.84
AVERAGE BALANCES
Assets	$		1,172,324		$		1,162,029		$		1,151,403		$		1,147,033		$		1,172,785		$		1,158,286		$		1,151,925
Earning assets			1,107,002				1,096,679				1,085,751				1,082,996				1,108,231				1,093,182				1,088,367
Loans			693,779				675,283				660,004				637,392				620,243				666,793				587,765
Deposits			1,028,207				1,020,135				1,014,631				1,008,721				1,036,559				1,017,983				1,012,629
Shareholders' equity			103,164				101,294				99,958				97,319				93,404				100,452				94,850
ENDING BALANCES
Assets	$		1,178,689		$		1,156,598		$		1,156,157		$		1,143,394		$		1,159,108
Earning assets			1,109,171				1,087,591				1,088,561				1,080,939				1,094,876
Loans			701,404				680,949				664,605				647,773				627,171
Deposits			1,027,427				1,018,075				1,021,671				1,007,507				1,023,417
Shareholders' equity			107,939				101,410				100,140				99,007				95,920

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)		December 31,					December 31,
(Dollars in thousands, except per share data)		2023					2022
ASSETS
Cash and cash equivalents
Cash and due from banks	$		24,463			$		19,911
Interest-earning deposits in other banks			39,614					66,509
Total cash and cash equivalents			64,077					86,420
Securities
Available-for-sale, at fair-value			140,080					150,069
Held-to-maturity			226,279					247,401
Equity securities			259					244
Restricted stock, at cost			1,535					3,430
Total securities			368,153					401,144
Loans held for sale			-					52
Loans			701,404					627,171
Less allowance for credit losses			6,607					6,838
Net loans			694,797					620,333
Premises and equipment, net			13,002					13,414
Goodwill			4,728					4,728
Bank owned life insurance			25,410					24,709
Accrued interest receivable and other assets			8,522					8,308
TOTAL ASSETS	$		1,178,689			$		1,159,108
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing	$		301,697			$		350,283
Interest-bearing			725,730					673,134
Total deposits			1,027,427					1,023,417
Short-term borrowings			35,843					32,550
Other borrowings			1,754					2,461
Accrued interest payable and other liabilities			5,726					4,760
TOTAL LIABILITIES			1,070,750					1,063,188
SHAREHOLDERS' EQUITY
Common stock, $6.25 par value. Authorized 9,000,000 shares;
issued 2,980,602 shares in 2023 and 2022			18,629					18,629
Additional paid-in capital			9,815					9,815
Retained earnings			97,297					86,502
Treasury stock at cost - 310,664 shares in 2023
and 273,026 shares in 2022			(7,532	)				(6,107	)
Accumulated other comprehensive loss			(10,270	)				(12,919	)
TOTAL SHAREHOLDERS' EQUITY			107,939					95,920
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$		1,178,689			$		1,159,108

CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME

		Quarter ended										Years ended
(Unaudited)		December 31,										December 31,
(Dollars in thousands, except per share data)		2023					2022					2023					2022
Interest and dividend income:
Loans, including fees	$		9,852			$		7,526			$		35,707			$		26,015
Taxable securities			1,936					1,944					7,803					6,665
Nontaxable securities			94					108					399					436
Other			587					840					2,107					1,703
Total interest and dividend income			12,469					10,418					46,016					34,819
Interest expense:
Deposits			3,015					1,083					9,499					2,335
Other			109					67					376					161
Total interest expense			3,124					1,150					9,875					2,496
Net interest income			9,345					9,268					36,141					32,323
Provision (Recovery) for credit losses			156					-					442					(895	)
Net interest income, after provision
(recovery) for credit losses			9,189					9,268					35,699					33,218
Noninterest income
Service charges on deposit accounts			285					299					1,209					1,174
Trust services			244					221					1,013					954
Debit card interchange fees			528					537					2,107					2,105
Credit card fees			166					162					701					677
Earnings on bank owned life insurance			182					170					702					674
Gain on sale of loans			55					17					161					331
Unrealized (loss) gain on equity securities			13					(5	)				15					(3	)
Other			205					211					836					799
Total noninterest income			1,678					1,612					6,744					6,711
Noninterest expenses
Salaries and employee benefits			3,561					3,680					13,673					13,446
Occupancy expense			282					265					1,138					1,085
Equipment expense			197					177					792					781
Professional and director fees			398					390					1,471					1,551
Software expense			423					373					1,651					1,429
Marketing and public relations			166					189					549					551
Debit card expense			188					184					682					734
Financial institutions tax			191					195					767					779
FDIC insurance expense			134					94					514					345
Other expenses			718					659					2,823					2,692
Total noninterest expenses			6,258					6,206					24,060					23,393
Income before income taxes			4,609					4,674					18,383					16,536
Federal income tax provision			912					921					3,627					3,223
Net income	$		3,697			$		3,753			$		14,756			$		13,313
Net income per share:
Basic and diluted	$		1.38			$		1.39			$		5.51			$		4.91

CSB BANCORP, INC.
NON-GAAP DISCLOSURES

NET INTEREST INCOME, FULLY-TAXABLE EQUIVALENT

		Quarter ended										Year ended
(Unaudited)		Dec 31,										Dec 31,
(Dollars in thousands)		2023					2022					2023					2022
Net interest income	$		9,345			$		9,268			$		36,141			$		32,323
Taxable equivalent adjustment1			32					36					133					145
Net interest income, FTE	$		9,377			$		9,304			$		36,274			$		32,468
Net interest margin			3.35		%			3.32		%			3.31		%			2.97		%
Taxable equivalent adjustment1			0.01					0.01					0.01					0.01
Net interest margin, FTE			3.36		%			3.33		%			3.32		%			2.98		%

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

		Quarter ended									Years ended
(Unaudited)		Dec 31,									Dec 31,
(Dollars in thousands)		2023					2022				2023					2022
Pre-Provision Net Revenue (PPNR)
Net interest income	$		9,345			$		9,268		$		36,141			$		32,323
Total noninterest income			1,678					1,612				6,744					6,711
Total revenue			11,023					10,880				42,885					39,034
Adjust unfunded loan commitment expense			-					(141	)			-					(128	)
Less: Noninterest expense as reported			6,258					6,206				24,060					23,393
Adjusted noninterest expense			6,258					6,347				24,060					23,534
PPNR	$		4,765			$		4,533		$		18,825			$		15,500

TANGIBLE EQUITY

(Unaudited)		Dec 31,					Dec 31,
(Dollars in thousands)		2023					2022
Total Shareholders' Equity	$		107,939			$		95,920
Less: Goodwill			4,728					4,728
Tangible Shareholders' Equity	$		103,211			$		91,192

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240123444242/en/

Paula J. Meiler, SVP & CFO

330.763.2873

paula.meiler@csb1.com

Source: CSB Bancorp, Inc.

FAQ

What was CSB Bancorp's net income for the fourth quarter of 2023?

CSB Bancorp's net income for the fourth quarter of 2023 was $3,697,000.

How did CSB Bancorp's net income for the twelve-month period ended December 31, 2023, compare to the previous year?

For the twelve-month period ended December 31, 2023, CSB Bancorp's net income totaled $14,756,000 compared to $13,313,000 for the same period last year, an increase of 11%.

What was the return on average assets for CSB Bancorp in the fourth quarter of 2023?

The return on average assets for CSB Bancorp in the fourth quarter of 2023 was 1.25%.

What was the return on average common equity for CSB Bancorp in the fourth quarter of 2023?

The return on average common equity for CSB Bancorp in the fourth quarter of 2023 was 14.22%.

How much did CSB Bancorp's loan interest income including fees increase during the fourth quarter of 2023?

CSB Bancorp's loan interest income including fees increased $2.3 million, or 31%, during the fourth quarter of 2023 as compared to the same quarter in 2022.