Exhibit 99.1
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
Paula J. Meiler, SVP & CFO
330-763-2873
paula.meiler@csb1.com
CSB BANCORP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands except per share data)
(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
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
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.