CSB Bancorp, Inc. Reports Third Quarter Earnings

Rhea-AI Summary

CSB Bancorp, Inc. (OTC Pink: CSBB) reported third quarter 2024 net income of $3,145,000, or $1.18 per basic and diluted share, compared to $3,481,000, or $1.30 per share, for the same period in 2023. For the nine-month period ended September 30, 2024, net income totaled $7,693,000, a 30% decrease from the previous year. The company's annualized ROE and ROA for the quarter were 11.14% and 1.05%, respectively, down from 13.63% and 1.19% in Q3 2023.

Key highlights include:

• Pre-Provision Net Revenue increased by 2% to $4.60 million
• Net interest income rose by 4%
• Noninterest income increased by 6%
• Noninterest expense grew by 6%
• Loan interest income including fees increased by 15%
• Average earning assets grew by 3% to $31 million

The company declared a third quarter dividend of $0.40 per share, yielding 4.2% based on the September 30, 2024 closing price of $38.50.

Positive

• Pre-Provision Net Revenue increased by 2% to $4.60 million
• Net interest income rose by 4% compared to the same quarter in 2023
• Noninterest income increased by 6% compared to Q3 2023
• Loan interest income including fees increased by 15% during Q3 2024
• Average earning assets grew by 3% to $31 million compared to the previous year
• Average loan volume increased by $48 million, or 7%, from the year-ago quarter
• The company declared a third quarter dividend of $0.40 per share, yielding 4.2%

Negative

• Third quarter 2024 net income decreased to $3,145,000 from $3,481,000 in Q3 2023
• Nine-month net income for 2024 decreased by 30% compared to the same period last year
• Annualized ROE decreased to 11.14% from 13.63% in Q3 2023
• Annualized ROA decreased to 1.05% from 1.19% in Q3 2023
• Noninterest expense increased by 6% compared to Q3 2023
• Provision for credit loss expense increased by $523,000 from Q3 2023
• Nonperforming assets increased to $3.4 million, or 0.47% of total loans, compared to $260,000, or 0.04% a year ago
• Net loan charge-offs in Q3 2024 were $4 million, compared to net recoveries of $119,000 in Q3 2023

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

Third Quarter Highlights

		Quarter Ended September 30, 2024					Quarter Ended September 30, 2023
Diluted earnings per share		$	1.18				$	1.30
Net Income		$	3,145,000				$	3,481,000
Return on average common equity			11.14	%				13.63	%
Return on average assets			1.05	%				1.19	%

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced third quarter 2024 net income of $3,145,000, or $1.18 per basic and diluted share, as compared to $3,481,000, or $1.30 per basic and diluted share, for the same period in 2023. For the nine-month period ended September 30, 2024 net income totaled $7,693,000 compared to $11,059,000 for the same period last year, a decrease of 30%.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 11.14% and 1.05%, respectively, compared with 13.63% and 1.19% for the third quarter of 2023. For the nine-month period ended September 30, 2024 ROE and ROA were 9.30% and 0.88% as compared to 14.85% and 1.28% for the comparable period in 2023.

Eddie Steiner, President and CEO stated, “Local economic conditions remain stable with continued low unemployment. Loan demand has been steady, with signs of increasing borrower appetite as interest rates decline. Total revenue is 2% above the prior year’s nine months and net revenue before provision for credit loss and taxes is 1% ahead on a year to date basis. Margins and efficiency are holding very close to prior year levels, even with higher rates paid on deposits and moderate inflation within operating costs. Overall quality within the loan portfolio remains acceptable, and shareholders’ equity and book value per share have increased 7% year to date.”

Pre-Provision Net Revenue (“PPNR”) (a non-GAAP measure) totaled $4.60 million during the quarter, an increase of $93 thousand, or 2%, from the prior year’s third quarter. Net interest income increased $377 thousand, or 4%, noninterest income increased $104 thousand, or 6%, and noninterest expense rose $388 thousand, or 6%, in the third quarter of 2024 compared to the same period in 2023.

Provision for credit loss expense for the quarter increased $523 thousand from third quarter 2023 and $4.5 million for the comparable nine-month period. As previously identified, while continuing to pursue liquidation of a commercial lending relationship originally totaling $6.4 million, the credit was charged down in third quarter 2024 by the previously held specific reserve of $4.1 million. The court appointed receiver has obtained auction values of the premises and equipment in possession and the bank continues to move through the court system to schedule liquidation of the assets or sale of company.

The allowance for expected credit losses on loans amounted to $7.2 million, or 1.00% of total loans, on September 30, 2024, as compared to $6.7 million or 0.98% of total loans on September 30, 2023. The allowance for credit losses on off-balance sheet commitments on September 30, 2024 was $532 thousand, as compared to a September 30, 2023 balance of $492 thousand. CSB recorded no allowance for credit losses related to AFS or HTM debt securities as there is a zero loss expectation on these securities.

Loan interest income including fees increased $1.4 million, or 15%, during third quarter 2024 as compared to the same quarter in 2023. The increase was almost evenly divided between volume and rate increases with a $48 million increase in average loan volume and a 41bp increase in quarter over prior quarter yield. Securities interest income decreased $142 thousand, or 7%, during the third quarter 2024 compared to the same quarter 2023 as the Company continues to deploy cash flow from investments into loan originations. Loan yields for third quarter 2024 averaged 5.80%, an increase of 41 basis points from the 2023 third quarter average of 5.39%, while overnight funds and securities yields for third quarter 2024 averaged 5.41% and 2.17%, respectively, compared to 5.45% and 2.11% in the third quarter 2023.

Interest expense rose $1.1 million, or 38%, during third quarter 2024 as compared to third quarter 2023. The increase follows a period of rapid interest rate increases spurred by the Federal Reserve during March 2022 through July 2023, followed by competitive pressures from banks and others to secure adequate funding. The cost to fund gross earning assets for the third quarter 2024 was 1.40% as compared to 1.04% for the third quarter of 2023.

The fully-taxable equivalent (“FTE”) (a non-GAAP measure) net interest margin was 3.26% compared to 3.21% for the third quarter 2023. Compared to the 2023 third quarter, FTE net interest income increased $377 thousand, or 4%, reflecting increasing interest income with a $31 million increase in average earning assets as well as a 42 bp increase in the yield on 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 higher average interest-bearing liabilities and a 48 bp higher cost of funds. Tax equivalency effect on net interest margin was 0.01% in third quarter 2024 and 2023.

Noninterest income increased $104 thousand, or 6%, compared to third quarter of 2023. The increase was primarily the result of a $59 thousand increase in gain on sale of mortgage loans to the secondary market, a $28 thousand increase in the unrealized gain or loss on equity securities, a $24 thousand increase in earnings on bank owned life insurance, and a $15 thousand increase in trust and brokerage fees. Offsetting decreases were recognized in service charges related to deposit overdraft fees and credit card fees.

Noninterest expense increased $388 thousand, or 6%, from third quarter 2023. Salary and employee benefit costs increased $227 thousand, or 7%, compared to the prior year quarter with increases in base salary, insurance, and social security taxes. Marketing and public relation costs increased $38 thousand, or 31%, with increases in community related activities. Professional and directors’ fees increased $25 thousand, or 7%, state financial institutions tax increased $24 thousand, or 13%, due to the increase in capital. Debit card expenses increased $7 thousand, or 4%, primarily with increases in processing. Software expense increased $13 thousand, or 3%. Equipment expense increased $25 thousand, or 13%, with increasing costs of maintenance contracts and repairs. The Company’s third quarter efficiency ratio increased to 58.2% compared to 57.0% in the prior year.

Federal income tax expense was $756 thousand in the 2024 third quarter compared to $850 thousand in the 2023 third quarter. The effective tax rates for the 2024 and 2023 third quarters were 19% and 20%, respectively.

Average earning assets for the 2024 third quarter increased $31 million, or 3%, from the year-ago quarter, primarily reflecting a $48 million, or 7%, increase in average loans, a $36 million, or 10%, decrease in average securities, and a $19 million, or 50%, increase 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 $36 million, or 8%, 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 $10 million, or 6%, 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 increased $3 million from the prior year’s quarter as balances were drawn for expenses and to maintain the low interest rate on the first mortgage. Average consumer credit balances decreased $839 thousand, or 5%, versus the same quarter of the prior year. Commercial loan demand softened to somewhat muted levels during third quarter, with households and businesses alike preferring to limit borrowing until the election provides some clarity as to tax rates and inflation.

Nonperforming assets were $3.4 million, or 0.47%, of total loans on September 30, 2024, compared to $260 thousand, or 0.04% of total loans, a year ago. The identified commercial relationship mentioned above accounts for $2.8 million of the $3.4 million total nonperforming loans at September 30, 2024. Delinquent loan balances as of September 30, 2024, increased to 0.59% of total loans as compared to 0.23% on September 30, 2023. Net loan charge-offs recognized during third quarter 2024 were $4 million, or 2.2% of average loans annualized, compared to third quarter 2023 net loan recoveries of $119 thousand.

Average deposit balances increased on a quarter over prior year quarter comparison by $28 million, or 3%. For the third quarter 2024, the average cost of deposits amounted to 1.48%, as compared to 1.08% for the third quarter 2023. Third quarter 2024 increases in average deposit balances over the prior year quarter included money market accounts of $28 million and time deposits of $62 million. Noninterest-bearing accounts decreased $22 million from the prior year’s third quarter while savings and interest-bearing demand accounts declined $40 million. The average balance of short-term borrowings, which are customer repurchase agreements, decreased during the third quarter of 2024 by $9 million, or 28%, compared to the average for the same period in the prior year.

Shareholders’ equity totaled $115 million on September 30, 2024, with 2.7 million common shares outstanding. The average equity to assets ratio amounted to 9.43% for the quarter ended September 30, 2024, and 8.72% for the quarter ended September 30, 2023. The Company declared a third quarter dividend of $0.40 per share, producing an annualized yield of 4.2% based on September 30, 2024 closing price of $38.50.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $1.2 billion as of September 30, 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				2024				2024				2023				2023				2024				2023
EARNINGS		3rd Qtr				2nd Qtr				1st Qtr				4th Qtr				3rd Qtr				9 months				9 months
Net interest income FTE (a)	$		9,248		$		8,959		$		9,190		$		9,377		$		8,871		$		27,397		$		26,897
Provision for credit loss expense			700				2,889				1,152				156				177				4,741				286
Noninterest income			1,809				1,741				1,772				1,678				1,705				5,322				5,066
Noninterest expenses			6,422				5,814				6,142				6,258				6,034				18,378				17,802
FTE adjustment(a)			34				34				42				32				34				110				101
Net income			3,145				1,615				2,933				3,697				3,481				7,693				11,059
Basic and Diluted earnings per share			1.18				0.61				1.10				1.38				1.30				2.89				4.12
PERFORMANCE RATIOS
Return on average assets (ROA), annualized			1.05		%		0.56		%		1.02		%		1.25		%		1.19		%		0.88		%		1.28		%
Return on average common equity (ROE), annualized			11.14				5.89				10.84				14.22				13.63				9.30				14.85
Net interest margin FTE(a)			3.26				3.28				3.37				3.36				3.21				3.30				3.30
Efficiency ratio			58.17				54.22				56.00				56.67				56.99				56.15				55.70
Number of full-time equivalent employees			175				173				172				168				178
MARKET DATA
Book value per common share	$		43.25		$		41.43		$		41.11		$		40.43		$		37.96
Period-end common share market value			38.50				39.00				40.00				37.54				37.75
Market as a % of book			89.02		%		94.14		%		97.30		%		92.85		%		99.45		%
Price-to-earnings ratio			9.02				8.88				7.78				6.81				6.85
Average basic common shares outstanding			2,661,474				2,664,485				2,665,277				2,671,086				2,675,967				2,663,737				2,682,872
Average diluted common shares outstanding			2,661,474				2,664,485				2,665,277				2,671,086				2,675,967				2,663,737				2,682,872
Period end common shares outstanding			2,659,324				2,663,924				2,664,683				2,669,938				2,671,313
Common stock market capitalization	$		102,384		$		103,893		$		106,587		$		100,229		$		100,842
ASSET QUALITY
Gross charge-offs	$		4,095		$		274		$		88		$		15		$		43		$		4,457		$		97
Net (recoveries) charge-offs			4,008				246				74				(5	)			(119	)			4,328				(125	)
Allowance for credit losses			7,224				10,587				7,136				6,607				6,691
Nonperforming assets (NPAs)			3,371				6,683				361				396				260
Net charge-off (recovery) / average loans ratio			2.20		%		0.14		%		0.04		%		0.00		%		(0.07	)	%		0.81		%		(0.03	)	%
Allowance for credit losses / period-end loans			1.00				1.47				1.00				0.94				0.98
NPAs/loans and other real estate			0.47				0.93				0.05				0.06				0.04
Allowance for credit losses / nonperforming loans			214				158				1,979				1,667				2,576
CAPITAL & LIQUIDITY
Period-end tangible equity to assets(b)			9.16		%		9.09		%		9.10		%		8.79		%		8.39		%
Average equity to assets			9.43				9.49				9.38				8.80				8.72
Average equity to loans			15.54				15.37				15.43				14.87				15.00
Average loans to deposits			68.99				70.54				69.78				67.47				66.20
AVERAGE BALANCES
Assets	$		1,191,037		$		1,161,533		$		1,160,661		$		1,172,324		$		1,162,029		$		1,171,156		$		1,153,549
Earning assets			1,127,405				1,097,706				1,097,704				1,107,002				1,096,679				1,107,678				1,088,525
Loans			723,129				717,105				705,294				693,779				675,283				715,205				657,698
Deposits			1,048,214				1,016,569				1,010,745				1,028,207				1,020,135				1,025,260				1,014,537
Shareholders' equity			112,352				110,219				108,837				103,164				101,294				110,476				99,538
ENDING BALANCES
Assets	$		1,209,181		$		1,167,315		$		1,156,245		$		1,178,689		$		1,156,598
Earning assets			1,134,786				1,104,404				1,097,703				1,109,171				1,087,591
Loans			719,602				721,916				710,822				701,404				680,949
Deposits			1,070,531				1,023,835				1,010,115				1,027,427				1,018,075
Shareholders' equity			115,008				110,368				109,555				107,939				101,410

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)		September 30,					September 30,
(Dollars in thousands, except per share data)		2024					2023
ASSETS
Cash and cash equivalents
Cash and due from banks	$		26,108			$		20,409
Interest-bearing deposits with banks			69,535					29,000
Total cash and cash equivalents			95,643					49,409
Securities
Available-for-sale, at fair-value			131,718					145,330
Held-to-maturity			211,655					230,505
Equity securities			247					246
Restricted stock, at cost			1,520					1,561
Total securities			345,140					377,642
Loans held for sale			509					-
Loans			719,602					680,949
Less allowance for credit losses			7,224					6,691
Net loans			712,378					674,258
Premises and equipment, net			13,994					13,105
Goodwill			4,728					4,728
Bank owned life insurance			27,996					25,229
Accrued interest receivable and other assets			8,793					12,227
TOTAL ASSETS	$		1,209,181			$		1,156,598
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing	$		286,525			$		300,018
Interest-bearing			784,006					718,057
Total deposits			1,070,531					1,018,075
Short-term borrowings			19,224					30,734
Other borrowings			1,296					1,808
Accrued interest payable and other liabilities			3,122					4,571
TOTAL LIABILITIES			1,094,173					1,055,188
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			101,847					94,614
Treasury stock at cost - 321,278 shares in 2024
and 309,289 shares in 2023			(7,929	)				(7,481	)
Accumulated other comprehensive loss			(7,354	)				(14,167	)
TOTAL SHAREHOLDERS' EQUITY			115,008					101,410
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$		1,209,181			$		1,156,598

CSB BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME
		Quarters ended										Nine months ended
(Unaudited)		September 30,										September 30,
(Dollars in thousands, except per share data)		2024					2023					2024					2023
Interest and dividend income:
Loans, including fees	$		10,531			$		9,175			$		30,959			$		25,855
Taxable securities			1,782					1,910					5,489					5,867
Nontaxable securities			88					102					264					305
Other			789					531					1,537					1,520
Total interest and dividend income			13,190					11,718					38,249					33,547
Interest expense:
Deposits			3,898					2,772					10,687					6,484
Other			78					109					275					267
Total interest expense			3,976					2,881					10,962					6,751
Net interest income			9,214					8,837					27,287					26,796
Provision for credit loss expense			700					177					4,741					286
Net interest income, after provision
for credit loss expense			8,514					8,660					22,546					26,510
Noninterest income
Service charges on deposit accounts			301					332					872					924
Trust services			274					259					951					769
Debit card interchange fees			535					525					1,570					1,579
Credit card fees			162					166					484					535
Earnings on bank owned life insurance			203					179					585					520
Gain on sale of loans			106					47					215					106
Unrealized gain (loss) on equity securities			17					(11	)				(12	)				2
Other			211					208					657					631
Total noninterest income			1,809					1,705					5,322					5,066
Noninterest expenses
Salaries and employee benefits			3,656					3,429					10,181					10,112
Occupancy expense			295					290					872					856
Equipment expense			224					199					649					595
Professional and director fees			391					366					1,160					1,073
Software expense			421					408					1,263					1,228
Marketing and public relations			162					124					432					383
Debit card expense			186					179					568					494
Financial institutions tax			216					192					648					576
FDIC insurance expense			132					131					396					380
Other expenses			739					716					2,209					2,105
Total noninterest expenses			6,422					6,034					18,378					17,802
Income before income taxes			3,901					4,331					9,490					13,774
Federal income tax provision			756					850					1,797					2,715
Net income	$		3,145			$		3,481			$		7,693			$		11,059
Net income per share:
Basic and diluted	$		1.18			$		1.30			$		2.89			$		4.12

CSB BANCORP, INC. NON-GAAP DISCLOSURES   NET INTEREST INCOME, FULLY-TAXABLE EQUIVALENT
		Quarters ended
(Unaudited)		September 30,
(Dollars in thousands)		2024					2023
Net interest income	$		9,214			$		8,837
Taxable equivalent adjustment1			34					34
Net interest income, FTE	$		9,248			$		8,871
Net interest margin			3.25		%			3.20		%
Taxable equivalent adjustment1			0.01					0.01
Net interest margin, FTE			3.26		%			3.21		%

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)		September 30,
(Dollars in thousands)		2024					2023
Pre-Provision Net Revenue (PPNR)
Net interest income	$		9,214			$		8,837
Total noninterest income			1,809					1,705
Total revenue			11,023					10,542
Less: Noninterest expense			6,422					6,034
PPNR	$		4,601			$		4,508

TANGIBLE EQUITY
(Unaudited)		Sept 30,					Sept 30,
(Dollars in thousands)		2024					2023
Total Shareholders' Equity	$		115,008			$		101,410
Less: Goodwill			4,728					4,728
Tangible Shareholders' Equity	$		110,280			$		96,682

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241022551047/en/

Paula J. Meiler, SVP & CFO

330.763.2873

paula.meiler@csb1.com

Source: CSB Bancorp, Inc.

FAQ

What was CSB Bancorp's (CSBB) net income for Q3 2024?

CSB Bancorp (CSBB) reported a net income of $3,145,000 for the third quarter of 2024.

How did CSB Bancorp's (CSBB) Q3 2024 earnings compare to Q3 2023?

CSB Bancorp's Q3 2024 net income of $3,145,000 was lower compared to $3,481,000 in Q3 2023, representing a decrease in earnings.

What was CSB Bancorp's (CSBB) earnings per share for Q3 2024?

CSB Bancorp (CSBB) reported earnings of $1.18 per basic and diluted share for the third quarter of 2024.

How much did CSB Bancorp's (CSBB) loan interest income increase in Q3 2024?

CSB Bancorp's loan interest income, including fees, increased by 15% during the third quarter of 2024 compared to the same quarter in 2023.

What dividend did CSB Bancorp (CSBB) declare for Q3 2024?

CSB Bancorp (CSBB) declared a third quarter dividend of $0.40 per share, yielding 4.2% based on the September 30, 2024 closing price.