CSB Bancorp (CSBB) 8-K CSB Bancorp, Inc. Reports Fourth Quarter Earnings

Exhibit 99.1

CSB BANCORP, INC. REPORTS FOURTH QUARTER EARNINGS

Fourth Quarter Highlights

	Quarter Ended December 31, 2019			Quarter Ended December 31, 2018
Diluted earnings per share	$	0.95		$	0.91
Net Income	$	2,593,000		$	2,492,000
Return on average common equity		12.13	%		13.20	%
Return on average assets		1.27	%		1.36	%

Millersburg, Ohio – January 24, 2020 – CSB Bancorp, Inc. (OTC Pink: CSBB) today announced fourth quarter 2019 net income of $2,593,000, or $.95 per basic and diluted share, as compared to $2,492,000, or $.91 per basic and diluted share, for the same period in 2018. Income before federal income tax amounted to $3,216,000, an increase of 3% over the same quarter in the prior year. For the twelve-month period ended December 31, 2019 net income totaled $10,414,000 compared to $9,412,000 in the same period last year, an increase of 11%.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 12.13% and 1.27%, respectively, compared with 13.20% and 1.36% for the fourth quarter of 2018.

Eddie Steiner, President and CEO stated, “The business sector has become somewhat more cautious in outlook as uncertainties related to trade policy, slowing global economies, and continued difficulties in retail and agriculture weigh on forward-looking perspectives. The commercial lending environment is very competitive as banks and non-bank lenders vie over softer loan demand and accelerating prepayments.  Consumer sentiment remains upbeat given steady job and wage conditions, and attractive interest rates have led to stronger home mortgage loan demand.”  

Revenue, calculated as Net interest income and noninterest income on a fully taxable equivalent basis, totaled $8.6 million during the quarter, a 5% increase from the prior-year fourth quarter.   Net interest income increased $219 thousand, or 3%, in the fourth quarter of 2019 compared to the same period in 2018.

Loan interest income including fees increased $180 thousand during fourth quarter 2019 as compared to the same quarter in 2018, an increase of 3%. Average total loan balances during the current quarter were $13 million higher than the year ago quarter, an increase of 2%.  Loan yields for fourth quarter 2019 averaged 5.05%, an increase of 2 basis points from the 2018 fourth quarter average of 5.03%.

The net interest margin was 3.73% compared to 4.01% for fourth quarter 2018 as the average yield was down 27 basis points on assets while the average cost to fund those assets was up 1 basis point.

Noninterest income increased 14%, compared to fourth quarter of 2018, driven by growth in gain on sale of loans, debit card fee income, increases in bank owned life insurance values, and service charges on deposit accounts.

Noninterest expense increased 7% from fourth quarter 2018. Salary and employee benefit costs increased $178 thousand, or 7% compared to the prior year quarter, as a result of higher wage and 401(k) retirement expenses. Professional and director’s fees increased by $89 thousand, or 32%, reflecting higher technology investment to further improve network infrastructure in support of company growth.  Communication system expenses increased by $29 thousand, or 39%, reflecting additional redundant connectivity within the operations center. The Company’s fourth quarter efficiency ratio increased slightly to 58.7% with a slowing of loan growth affecting interest margins as a greater percentage of assets remained in short term investments.

Federal income tax expense totaled $623 thousand in fourth quarter 2019, as compared to $619 thousand tax expense for the same quarter in 2018. The effective tax rate reduced slightly to 19% in 2019.

Average total assets during the quarter amounted to $812 million, an increase of $85 million, or 12%, above the same quarter of the prior year.  Average loan balances of $555 million increased $13 million, or 2%, from the prior year fourth quarter while average securities balances of $117 million increased$4 million, or 3%, as compared to fourth quarter 2018.  Average overnight funds sold increased $59 million, or 185%, compared to fourth quarter 2018 as average deposits grew by 13%.  

Average commercial loan balances for the quarter, including commercial real estate, increased $2 million, or less than 1%, from prior year levels.  Average residential mortgage balances including home equity lines of credit increased $10 million, or 6%, over the prior year’s quarter.  Average consumer credit balances remained stable in fourth quarter 2019 versus the same quarter of the prior year.  

Nonperforming assets increased $1.2 million from December 31, 2018 to $4.7 million, or 0.84%, of total loans plus other real estate at December 31, 2019. The increase in nonperforming assets reflects various commercial loans experiencing economic stress. At December 31, 2019, 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, 2019 increased to 1.02% of total loans as compared to 0.84% at December 31, 2018.

Net loan losses recognized during fourth quarter 2019 were $44 thousand, or 0.03% annualized, compared to fourth quarter 2018 net loan losses of $641 thousand. The allowance for loan losses amounted to 1.27% of total loans at December 31, 2019 as compared to 1.08% at December 31, 2018.

Average deposit balances grew on a quarter over prior year quarter comparison by $77 million, or 13%, partially on the strength of customer response to higher rates paid on deposits. For the fourth quarter 2019, the average cost of deposits amounted to 0.52%, as compared to 0.48% for the fourth quarter 2018. During the fourth quarter 2019, increases in average deposit balances over the prior year quarter included non-interest-bearing demand accounts of $22 million, interest-bearing transaction accounts of $45 million, and time deposits of $15 million. The average balance of securities sold under repurchase agreement during the fourth quarter of 2019 decreased by less than $1 million, or 2%, compared to the average for the same period in the prior year.

Shareholders’ equity totaled $85.5 million on December 31, 2019 with 2.7 million common shares outstanding.  The tangible equity to assets ratio amounted to 9.9% on December 31, 2019 and 9.9% on December 31, 2018.  The Company declared a fourth quarter dividend of $0.28 per share, a $.02 per share increase over fourth quarter 2018, producing an annualized yield of 2.7% based on the December 31, 2019 closing price of $40.97.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $819 million as of December 31, 2019. 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.

Contact Information:

Paula J. Meiler, SVP & CFO

330.763.2873

paula.meiler@csb1.com

CSB BANCORP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)		Quarters
(Dollars in thousands, except per share data)		2019			2019			2019			2019			2018			2019			2018
EARNINGS		4th Qtr			3rd Qtr			2nd Qtr			1st Qtr			4th Qtr			12 months			12 months
Net interest income FTE (a)	$		7,168	$		7,228	$		7,111	$		7,049	$		6,934	$		28,556	$		26,913
Provision for loan losses			285			285			285			285			344			1,140			1,316
Other income			1,451			1,440			1,313			1,224			1,270			5,428			4,758
Other expenses			5,079			4,999			4,900			4,791			4,725			19,769			18,518
FTE adjustment (a)			39			40			40			38			24			157			162
Net income			2,593			2,695			2,586			2,540			2,492			10,414			9,412
Diluted earnings per share			0.95			0.98			0.94			0.93			0.91			3.80			3.43
PERFORMANCE RATIOS
Return on average assets (ROA)			1.27	%		1.38	%		1.39	%		1.41	%		1.36	%		1.36	%		1.31	%
Return on average common equity (ROE)			12.13			12.89			12.91			13.20			13.20			12.77			12.89
Net interest margin FTE (a)			3.73			3.95			4.08			4.16			4.01			3.97			3.98
Efficiency ratio			58.74			57.52			57.96			57.72			57.26			58.00			58.14
Number of full-time equivalent employees			171			175			174			174			170
MARKET DATA
Book value/common share	$		31.17	$		30.49	$		29.70	$		28.80	$		27.91
Period-end common share mkt value			40.97			38.67			40.45			38.75			38.50
Market as a % of book			131.44	%		126.83	%		136.20	%		134.55	%		137.94	%
Price-to-earnings ratio			10.78			10.28			11.05			10.85			11.22
Cash dividends/common share	$		0.28	$		0.28	$		0.26	$		0.26	$		0.26	$		1.08	$		0.98
Common stock dividend payout ratio			29.47	%		28.57	%		27.66	%		27.96	%		28.57	%		28.42	%		28.57	%
Average basic common shares			2,742,350			2,742,350			2,742,350			2,742,242			2,742,242			2,742,296			2,742,242
Average diluted common shares			2,742,350			2,742,350			2,742,350			2,742,242			2,742,242			2,742,296			2,742,242
Period end common shares outstanding			2,742,350			2,742,350			2,742,350			2,742,242			2,742,242
Common shares repurchased			0			0			0			0			0
Common stock market capitalization	$		112,354	$		106,047	$		110,928	$		106,262	$		105,576
ASSET QUALITY
Gross charge-offs	$		59	$		75	$		54	$		70	$		691	$		258	$		1,082
Net (recoveries) charge-offs			44			46			35			-95			641			30			1,013
Allowance for loan losses			7,017			6,776			6,537			6,287			5,907
Nonperforming assets (NPAs)			4,659			4,518			4,555			3,302			3,428
Net charge-off (recovery) /average loans ratio			0.03	%		0.03	%		0.03	%		-0.07	%		0.47	%		0.01	%		0.19	%
Allowance for loan losses/period-end loans			1.27			1.20			1.19			1.15			1.08
NPAs/loans and other real estate			0.84			0.80			0.83			0.60			0.62
Allowance for loan losses/nonperforming loans			154.55			153.35			146.70			197.23			177.45
CAPITAL & LIQUIDITY
Period-end tangible equity to assets			9.91	%		10.07	%		10.28	%		10.15	%		9.86	%
Average equity to assets			10.43			10.72			10.77			10.69			10.29
Average equity to loans			15.29			14.95			14.66			14.18			13.83
Average loans to deposits			81.62			86.18			88.73			91.16			89.88
AVERAGE BALANCES
Assets	$		812,481	$		773,481	$		745,658	$		730,181	$		727,962	$		765,722	$		716,243
Earning assets			763,244			725,615			699,229			687,515			686,807			719,127			675,474
Loans			554,556			554,956			547,981			550,483			541,482			552,014			535,506
Deposits			679,473			643,981			617,558			603,839			602,434			636,441			589,646
Shareholders' equity			84,777			82,948			80,338			78,038			74,900			81,548			73,002
ENDING BALANCES
Assets	$		818,683	$		786,792	$		750,252	$		734,845	$		731,722
Earning assets			767,345			734,859			704,738			688,792			682,345
Loans			551,633			566,213			550,612			548,220			548,974
Deposits			683,546			658,119			623,328			607,342			606,498
Shareholders' equity			85,476			83,614			81,458			78,967			76,536

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)		2019				2018
ASSETS
Cash and cash equivalents
Cash and due from banks	$		17,648		$		23,214
Interest-earning deposits in other banks			84,369				22,350
Total cash and cash equivalents			102,017				45,564
Securities
Available-for-sale, at fair-value			112,146				85,528
Held-to-maturity			13,869				20,688
Equity securities			92				83
Restricted stock, at cost			4,614				4,614
Total securities			130,721				110,913
Loans held for sale			622				108
Loans			551,633				548,974
Less allowance for loan losses			7,017				5,907
Net loans			544,616				543,067
Premises and equipment, net			12,040				9,961
Goodwill and core deposit intangible			4,831				4,895
Bank owned life insurance			18,894				13,554
Accrued interest receivable and other assets			4,942				3,660
TOTAL ASSETS	$		818,683		$		731,722
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing	$		193,425		$		185,871
Interest-bearing			490,121				420,627
Total deposits			683,546				606,498
Short-term borrowings			38,889				37,415
Other borrowings			6,330				8,525
Accrued interest payable and other liabilities			4,442				2,748
Total liabilities			733,207				655,186
Shareholders' equity
Common stock, $6.25 par value. Authorized
9,000,000 shares; issued 2,980,602 shares
in 2019 and 2018			18,629				18,629
Additional paid-in capital			9,815				9,815
Retained earnings			61,740				54,288
Treasury stock at cost - 238,252 shares in 2019
and 238,360 in 2018			(4,780	)			(4,784	)
Accumulated other comprehensive income (loss)			72				(1,412	)
Total shareholders' equity			85,476				76,536
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$		818,683		$		731,722

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

		Quarter ended							Twelve months ended
(Unaudited)		December 31,							December 31,
(Dollars in thousands, except per share data)		2019			2018				2019			2018
Interest and dividend income:
Loans, including fees	$		7,057	$		6,877		$		28,553	$		26,237
Taxable securities			542			587				2,247			2,371
Nontaxable securities			130			144				532			608
Other			381			164				1,129			421
Total interest and dividend income			8,110			7,772				32,461			29,637
Interest expense:
Deposits			898			724				3,609			2,372
Other			83			138				453			514
Total interest expense			981			862				4,062			2,886
Net interest income			7,129			6,910				28,399			26,751
Provision for loan losses			285			344				1,140			1,316
Net interest income after provision
for loan losses			6,844			6,566				27,259			25,435
Noninterest income
Service charges on deposits accounts			313			296				1,252			1,182
Trust services			229			223				899			863
Debit card interchange fees			389			351				1,481			1,316
Gain on sale of loans			174			107				462			307
Market value change in equity securities			-			(4	)			9			(6	)
Other			346			297				1,325			1,096
Total noninterest income			1,451			1,270				5,428			4,758
Noninterest expenses
Salaries and employee benefits			2,913			2,735				11,663			10,895
Occupancy expense			215			205				832			833
Equipment expense			163			137				571			597
Professional and director fees			369			280				1,332			1,029
Software expense			264			238				938			893
Marketing and public relations			130			145				535			508
Debit card expense			153			150				554			537
Other expenses			872			835				3,344			3,226
Total noninterest expenses			5,079			4,725				19,769			18,518
Income before income tax			3,216			3,111				12,918			11,675
Federal income tax provision			623			619				2,504			2,263
Net income	$		2,593	$		2,492		$		10,414	$		9,412
Net income per share:
Basic	$		0.95	$		0.91		$		3.80	$		3.43
Diluted	$		0.95	$		0.91		$		3.80	$		3.43