EX-99.1 2 l19658aexv99w1.htm EX-99.1 PRESS RELEASE EX-99.1
 

Exhibit 99.1
(CSB BANCORP, INC. LOGO)
CSB BANCORP, INC. REPORTS INCREASE IN
FIRST QUARTER 2006 EARNINGS PER SHARE
First Quarter 2006 Highlights
    Diluted earnings per share of $0.30
 
    Net income of $774 thousand
 
    Return on average common equity of 8.89%
 
    Return on average assets of 0.99%
Millersburg, Ohio – April 13, 2006 – CSB Bancorp, Inc. (“CSB”) (OTC BB: CSBB.OB) today announced first quarter 2006 net income of $774 thousand, or $0.30 per diluted share, up from $667 thousand, or $0.25 per diluted share, for the same period in 2005. Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 8.89% and 0.99%, respectively, compared with 7.42% and 0.86% for the first quarter of 2005.
“Our first quarter results reflect continued progress in enhancing “other income” generation through the ongoing success of fee-based programs as well as improving our net interest margin,” said Rick L. Ginther, Interim Chief Executive Officer. “Our strategic focus of prudently growing the balance sheet remains unaltered as we have taken steps to increase the volume of earning assets while continuing to grow core deposit relationships. Growth in both assets and core deposits has had a positive effect this quarter despite a challenging interest rate environment. Service charges also increased significantly over the first quarter 2005, a result of our consumer and small business customer use of fee-based products.”
Focusing on CSB’s strong equity position, Mr. Ginther added, “Our capital position, coupled with the Company’s high credit quality and core earnings dependability, has allowed us to increase the shareholder’s current cash dividend declared for the first quarter 2006 to $.16, up $.02 from the first quarter dividend of $0.14 declared in 2005. Additionally, the share repurchase program continues to provide enhancement of earnings per share with the purchase of over 11,000 shares in the first quarter. Even with these purchases, our equity to assets ratio stands at a very strong 10.98%.”
Total revenue, defined as net interest income on a fully-tax equivalent basis plus non-interest income net of securities transactions, was $4.0 million for the first quarter of 2006, compared with $3.6 million in the prior-year first quarter, an increase of 11.1%. The net interest margin increased 43 basis points to 4.57%, while average assets increased $3.1 million to $316.8 million. During the first quarter of 2006, the average balance of securities increased approximately $7.2 million, or 8.8%, compared with the first quarter of 2005, while average loans decreased $6.4 million, or 2.9%, to $216.6 million.
Non-interest income for the first quarter of 2006 totaled $611 thousand, compared with $533 thousand, (net of securities gains of $247 thousand), for the first quarter of 2005, an increase of 14.6%. During the first quarter of 2006, service charges on deposits rose $103 thousand, or 48.2%, compared with the first quarter of 2005. Trust and brokerage fees decreased $25 thousand, or 21.3%, in the first quarter of 2006 compared with the same quarter last year.
Non-interest expense totaled $2.7 million for the first quarter of 2006, an increase of $71 thousand or 2.6% over the first quarter of 2005. The efficiency ratio for the quarter was 69.38%, compared with 70.47% for the year ago quarter.

 


 

Federal income tax expense was $351 thousand and $259 thousand for the quarters ended March 31, 2006 and 2005, respectively. The effective tax rate for the first quarter 2006 was 31.2% compared to 28.0% for the same quarter in 2005. The increase in the effective tax rate for first quarter 2006 reflects a decline in tax-free interest income, primarily resulting from the sale and maturity of bonds within the tax-free investment portfolio.
As of March 31, 2006, nonperforming assets were $1.1 million, or 0.48% of period-end loans plus other real estate, compared with $1.2 million, or 0.58%, as of December 31, 2005, and $1.4 million or 0.64%, as of March 31, 2005. Net charge-offs for the first quarter of 2006 totaled $7 thousand, compared with net charge-offs of $271 thousand for the first quarter of 2005. Commenting on the Company’s credit quality Ginther said, “At March 31, 2006, our delinquency rate stood at 0.58% versus 0.84% on March 31, 2005. Coupled with the low nonperforming assets and declining charge-off rates, we remain optimistic about our ability to manage credit deterioration that could be expected to result from a slowdown in the economy.”
The Company recorded a $32 thousand loan loss provision in the first quarter of 2006, as compared to $106 thousand in the first quarter of 2005. The decrease in loan loss provision for the first quarter 2006 from the first quarter 2005 reflects the increase in the Company’s level of allowance for loan losses as a percentage of nonperforming loans.
During the first quarter of 2006, the level of nonperforming loans improved from the prior quarter. This improvement, combined with a declining historical charge-off history, has factored into the Company’s reserve methodology. The allowance for loan losses at March 31, 2006, was 1.12% of period-end loans, compared with 1.14% on December 31, 2005, and 1.08% on March 31, 2005. The March 31, 2006, ratio of allowance for loan losses to nonperforming loans stood at 369%.
Assets at March 31, 2006, totaled $319 million, up 1.95% from March 31, 2005. Period-end loans were $221.4 million, declining $2.7 million or 1.2%, driven by a $3.9 million decline in mortgage loans coupled with a $3.0 million reduction in commercial participation loans that were primarily repurchased by the originating bank. These reductions in loan balances were partially offset by home equity loans increasing $3.5 million or 22.4%, and consumer installment loans increasing approximately $500 thousand. Investment securities increased $9.2 million, or 13.2%, over the March 31, 2005 balance.
Deposits totaled $247 million at March 31, 2006, compared with $244 million on March 31, 2005. Year-over-year, average checking account balances have decreased approximately $500 thousand. Over those same time periods, money market accounts increased $2 million, as a result of a new product offering, while average traditional savings accounts declined $2 million. As the period represented a time of rising short-term interest rates, time deposits of less than $100 thousand grew an average $3.4 million from first quarter 2005 to first quarter 2006, while time deposits greater than $100 thousand remained virtually unchanged.
Shareholders’ equity was $35.0 million on March 31, 2006. The Company’s capital position remains strong, as tangible equity to assets was 10.98%, compared with 11.44% on March 31, 2005. The common dividend declared during the quarter was $0.16 per share, a $0.02 increase from the prior-year quarter. During the first quarter of 2006 the Company repurchased 11,094 common shares. Period-end common shares outstanding totaled 2.567 million.
About CSB Bancorp, Inc.
CSB is a financial services holding company headquartered in Millersburg, Ohio, with approximate assets of $319 million as of March 31, 2006. 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 nine banking centers in Holmes, Tuscarawas and Wayne counties and a Trust office in 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)
(Dollars in thousands except per share data)
                                         
    Quarters
    2006   2005   2005   2005   2005
EARNINGS   1st Qtr   4th Qtr   3rd Qtr   2nd Qtr   1st Qtr
 
Net interest income FTE (a)
  $ 3,350     $ 3,449     $ 3,299     $ 3,112     $ 3,019  
Provision for loan losses
    32             71       106       106  
Other income
    611       707       539       554       780  
Other expenses
    2,748       2,783       2,709       2,634       2,677  
FTE adjustment (a)
    56       74       85       84       90  
Net income
    774       903       690       613       667  
Diluted EPS
    0.30       0.35       0.26       0.23       0.25  
 
                                       
PERFORMANCE RATIOS
                                       
Return on average assets (ROA)
    0.99 %     1.12 %     0.87 %     0.79 %     0.86 %
Return on average common equity (ROE)
    8.89 %     9.93 %     7.49 %     6.78 %     7.42 %
Net interest margin FTE (a)
    4.57 %     4.54 %     4.43 %     4.26 %     4.14 %
Efficiency ratio
    69.38 %     66.96 %     70.58 %     71.85 %     70.47 %
Number of full-time equivalent employees
    122       127       127       130       125  
 
                                       
MARKET DATA
                                       
Book value/common share
  $ 13.63     $ 13.64     $ 13.76     $ 13.79     $ 13.52  
Period-end common share mkt value
    20.90       21.00       22.35       20.50       20.25  
Market as a % of book
    153.34 %     153.96 %     162.43 %     148.66 %     149.67 %
PE ratio
    17.42       15.00       21.49       22.28       20.25  
Cash dividends/common share
  $ 0.16     $ 0.14     $ 0.14     $ 0.14     $ 0.14  
Common stock dividend payout ratio
    53.33 %     40.00       53.85       60.87       56.00  
Average basic common shares
    2,572,089       2,620,102       2,644,957       2,644,968       2,644,965  
Average diluted common shares
    2,576,094       2,623,684       2,649,890       2,648,286       2,653,762  
Period end common shares outstanding
    2,567,405       2,578,499       2,644,952       2,644,966       2,644,968  
Common shares repurchased
    11,094       66,439       28       2        
Common stock market capitalization
  $ 53,659     $ 54,148     $ 59,115     $ 54,222     $ 53,561  

 


 

                                         
    Quarters
    2006   2005   2005   2005   2005
EARNINGS   1st Qtr   4th Qtr   3rd Qtr   2nd Qtr   1st Qtr
 
ASSET QUALITY
                                       
Gross charge-offs
  $ 35     $ 35     $ 25     $ 213     $ 303  
Net charge-offs
    7       -1       4       139       271  
Allowance for loan losses
    2,471       2,445       2,444       2,377       2,410  
Nonperforming assets (NPAs)
    1,070       1,241       1,408       1,391       1,431  
Net charge-off/average loans ratio
    0.01 %     0.00 %     0.01 %     0.25 %     0.49 %
Allowance for loan losses/period-end loans
    1.12 %     1.14 %     1.12 %     1.06 %     1.08 %
NPAs/loans and other real estate
    0.48 %     0.58 %     0.64 %     0.62 %     0.64 %
Allowance for loan losses/nonperforming loans
    368.80 %     305.13 %     312.30 %     310.21 %     168.40 %
 
                                       
CAPITAL & LIQUIDITY
                                       
Period-end tangible equity to assets
    10.98 %     10.96 %     11.39 %     11.72 %     11.44 %
Average equity to assets
    11.15 %     11.23 %     11.61 %     11.65 %     11.62 %
Average equity to loans
    16.30 %     16.75 %     16.54 %     16.25 %     16.36 %
Average loans to deposits
    87.36 %     83.60 %     87.90 %     91.45 %     91.86 %
 
                                       
AVERAGE BALANCES
                                       
Assets
  $ 316,806     $ 321,205     $ 315,021     $ 311,447     $ 313,744  
Earning assets
    297,178       301,615       295,342       292,872       295,731  
Loans
    216,609       215,379       221,096       223,252       222,970  
Deposits
    247,944       257,623       251,531       244,118       242,728  
Shareholders’ equity
    35,311       36,078       36,562       36,282       36,470  
 
                                       
ENDING BALANCES
                                       
Assets
  $ 318,777     $ 320,989     $ 319,412     $ 311,171     $ 312,665  
Earning assets
    300,254       298,105       298,916       292,762       293,773  
Loans
    221,365       215,020       218,577       223,442       224,108  
Deposits
    247,044       255,403       255,745       245,394       243,723  
Shareholders’ equity
    34,992       35,177       36,392       36,469       35,769  
 
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
(Unaudited)
                 
    March 31,     March 31,  
    2006     2005  
ASSETS
               
Cash and cash equivalents
               
Cash and due from banks
  $ 10,267,739     $ 10,515,412  
Interest-earning deposits in other banks
    47,167       9,619  
Federal funds sold
    0       0  
 
           
Total cash and cash equivalents
    10,314,906       10,525,031  
Securities
               
Available-for-sale, at fair-value
    75,856,687       66,838,272  
Restricted stock, at cost
    2,984,900       2,817,300  
 
           
Total securities
    78,841,587       69,655,572  
Loans
    221,123,243       224,107,821  
Less allowance for loan losses
    2,470,768       2,410,053  
 
           
Net loans
    218,652,475       221,697,768  
Loans held for sale
    242,212       0  
Premises and equipment, net
    7,587,163       7,875,469  
Accrued interest receivable and other assets
    3,138,328       2,911,552  
 
               
TOTAL ASSETS
  $ 318,776,671     $ 312,665,392  
 
           
 
               
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Liabilities
               
Deposits:
               
Nontinterest-bearing
  $ 36,938,182     $ 34,951,634  
Interest-bearing
    210,106,032       208,771,128  
 
           
Total deposits
    247,044,214       243,722,762  
 
               
Securities sold under repurchase agreements
    15,307,224       10,944,852  
Federal Home Loan Bank borrowings
    19,852,923       20,793,057  
Accrued interest payable and other liabilities
    1,580,626       1,435,227  
 
           
Total liabilities
    283,784,987       276,895,898  
 
           
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
    6,416,440       6,413,915  
Retained earnings
    15,115,371       13,654,775  
Treasury stock at cost - 100,381 shares in 2006 and 22,818 shares in 2005
    (2,322,410 )     (626,934 )
Accumulated other comprehensive loss
    (891,384 )     (345,929 )
 
           
Total shareholders’ equity
    34,991,684       35,769,494  
 
           
 
               
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
  $ 318,776,671     $ 312,665,392  
 
           

 


 

CSB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
                         
    Three Months Ended March 31  
    2006     2005     2004  
Interest and dividend income:
                       
Loans, including fees
  $ 3,822,504     $ 3,285,392     $ 2,992,946  
Taxable securities
    777,800       519,329       271,471  
Nontaxable securities
    101,823       168,788       400,618  
Other
    6,592       670       2,998  
 
                 
Total interest and dividend income
    4,708,719       3,974,179       3,668,033  
Interest expense:
                       
Deposits
    1,166,920       868,997       834,830  
Other
    247,525       176,478       137,418  
 
                 
Total interest expense
    1,414,445       1,045,475       972,248  
 
                       
Net interest income
    3,294,274       2,928,704       2,695,785  
Provision for loan losses
    32,000       105,999       94,000  
 
                 
Net interest income after provision for loan losses
    3,262,274       2,822,705       2,601,785  
 
                 
Non-interest income
                       
Service charges on deposits accounts
    315,086       212,555       182,415  
Merchant fees
    6,546       3,302       42,574  
Trust services
    92,242       117,151       93,642  
Securities gains
    0       247,047       25,860  
Gain on sale of loans
    1,586       4,113       1,971  
Other
    194,983       196,089       152,572  
 
                 
Total non-interest income
    610,443       780,257       499,034  
 
                 
Non-interest expenses
                       
Salaries and employee benefits
    1,491,005       1,402,464       1,259,139  
Occupancy expense
    171,213       158,778       162,178  
Equipment expense
    136,136       123,488       125,640  
Franchise tax expense
    109,200       104,923       101,856  
Professional and director fees
    174,021       156,475       186,331  
Other expenses
    666,236       731,021       679,224  
 
                 
Total non-interest expenses
    2,747,811       2,677,149       2,514,368  
 
                 
Income before income tax
    1,124,906       925,813       586,451  
Federal income tax provision
    351,000       259,000       65,000  
 
                 
 
                       
Net income
  $ 773,906     $ 666,813     $ 521,451  
 
                 
Net income per share
                       
 
                       
Basic
  $ 0.30     $ 0.25     $ 0.20  
 
                 
Diluted
  $ 0.30     $ 0.25     $ 0.20  
 
                 
Note: Certain prior year balances have been reclassified to conform to the current year presentation.