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CSBB > SEC Filings for CSBB > Form 10-Q on 14-May-2013All Recent SEC Filings

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Quarterly Report



The following management's discussion and analysis focuses on the consolidated financial condition of the Company at March 31, 2013 as compared to December 31, 2012, and the consolidated results of operations for the three months ending March 31, 2013 compared to the same period in 2012. The purpose of this discussion is to provide the reader with a more thorough understanding of the Consolidated Financial Statements. This discussion should be read in conjunction with the interim Consolidated Financial Statements and related footnotes.


Certain statements contained in this Quarterly Report are not historical facts but rather are forward-looking statements that are subject to certain risks and uncertainties. When used herein, the terms "anticipates", "plans", "expects", "believes", and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company's actual results, performance or achievements may materially differ from those expressed or implied in the forward-looking statements. Risks and uncertainties that could cause or contribute to such material differences include, but are not limited to, general economic conditions, interest rate environment, competitive conditions in the financial services industry, changes in law, governmental policies and regulations, and rapidly changing technology affecting financial services. Other factors not currently anticipated may also materially and adversely affect the Company's results of operations, cash flows and financial position. There can be no assurance that future results will meet expectations. While the Company believes that the forward-looking statements in this report are reasonable, the reader should not place undue reliance on any forward-looking statement.

The Company does not undertake, and specifically disclaims any obligation, to publicly revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as may be required by applicable law.


Total assets were $568.9 million at March 31, 2013, compared to $586.9 million at December 31, 2012, representing a decrease of $18 million, or 3%. Cash and cash equivalents decreased $30 million, or 44%, during the three months ending March 31, 2013, primarily as a result of funding decreases in deposits. Securities increased $3 million, or 2%, during the first three months of 2013 as bonds were purchased within the US government agency portfolio and tax exempt bonds.

Net loans increased $9 million, or 2%, during the three months ending March 31, 2013. Commercial loans including commercial real estate loans increased $17 million, or 8%, home equity lines decreased $800 thousand, or 2%, real estate mortgage loans increased $3 million, or 4%, construction and land development loans decreased $10 million, or 44%, and consumer loans increased slightly over December 31, 2012. Consumers continued to refinance their mortgage loans for lower long-term rates. During 2012 and the first quarter of 2013 the Bank originated and retained some fifteen year fixed rate mortgage loans for its portfolio. Residential mortgage originations for the quarter ended March 31, 2013 were $8.6 million as compared to $14.7 million for fourth quarter 2012 and $7.6 million for first quarter 2012. The Bank originates and sells fixed rate thirty year mortgages into the secondary market.

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The allowance for loan losses as a percentage of total loans was 1.29% at March 31, 2013, an increase from 1.26% at December 31, 2012. Outstanding loan balances increased 9% to $373 million at March 31, 2013. Net recoveries of $14 thousand and a provision of $210 thousand increased the allowance for loan losses for the three months ending March 31, 2013.

                                      March 31,        December 31,       March 31,
    (Dollars in thousands)               2013              2012              2012
    Non-performing loans              $    2,187      $        3,337      $    3,261
    Other real estate                          0                  25               5
    Allowance for loan losses              4,804               4,580           4,246
    Total loans                          373,367             364,580         331,353
    Allowance: loans                        1.29 %              1.26 %          1.28 %
    Allowance: non-performing loans         2.2x                1.4x            1.3x

The ratio of gross loans to deposits was 82% at March 31, 2013, compared to 77% at December 31, 2012. The increase in this ratio is the result of loan volume increases and decreases in deposits during the three months ending March 31, 2013.

The Company had net unrealized gains of $2.1 million within its securities portfolio at March 31, 2013, compared to net unrealized gains of $2.8 million at December 31, 2012. The Company has no exposure to government-sponsored enterprise preferred stocks, collateralized debt obligations or trust preferred securities. Management has considered industry analyst reports, sector credit reports and the volatility within the bond market in concluding that the gross unrealized losses of $384 thousand within the total portfolio as of March 31, 2013, were primarily the result of customary and expected fluctuations in the bond market and not necessarily the expected cash flows of the individual securities. As a result, all security impairments detailed above on March 31, 2013, are considered temporary and no impairment loss relating to these securities has been recognized.

Deposits decreased $18 million, or 4% from December 31, 2012 with non-interest bearing deposits decreasing $11 million and interest-bearing deposit accounts decreasing $7 million. Much of the deposit decrease is related to normal seasonal fluctuations experienced during the first quarter. Total deposits as of March 31, 2013 are $7.3 million above March 31, 2012 deposit balances. By deposit type, increases were recognized in statement and passbook savings accounts and money market savings accounts for the period ended March 31, 2013.

Short-term borrowings consisting of overnight repurchase agreements with retail customers decreased $441 thousand from December 31, 2012 and other borrowings decreased $61 thousand as the Company used cash from interest-earning deposits in other banks to repay required maturities and monthly payments on advances from the FHLB.

Total shareholders' equity amounted to $53 million, or 9% of total assets, at March 31, 2013, compared to $52 million, or 9% of total assets, at December 31, 2012. The increase in shareholders' equity during the three months ending March 31, 2013 was due to net income of $1.4 million, which was partially offset by a decrease of $492 thousand in other comprehensive income and dividends declared of $493 thousand. The Company and the Bank met all regulatory capital requirements at March 31, 2013.

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Three months ended March 31, 2013 and 2012

For the quarter ended March 31, 2013, the Company recorded net income of $1.4 million or $0.50 per share, as compared to net income of $1.1 million, or $0.39 per share for the quarter ended March 31, 2012. The $307 thousand increase in net income for the quarter was a result of net interest income increasing $379 thousand and other noninterest income increasing $90 thousand. These gains were partially offset by an increase in noninterest expense of $15 thousand and an increase in the federal income tax provision of $143 thousand. Return on average assets and return on average equity were 0.96% and 10.43%, respectively, for the three month period of 2013, compared to 0.77% and 8.46%, respectively for the same quarter in 2012.

Average Balance Sheets and Net Interest Margin Analysis

                                                         For the three months ended March 31,
                                                         2013                             2012
                                                Average          Average         Average        Average
(Dollars in thousands)                          balance           rate           balance         rate
Interest-earning deposits in other banks      $    34,088            0.29 %     $  66,744           0.23 %
Federal funds sold                                    106            0.16              62           0.01
Taxable securities                                119,432            1.98         113,254           2.59
Tax-exempt securities                              16,378            4.76          13,539           5.04
Loans                                             373,064            4.98         327,203           5.24

Total earning assets                              543,068            4.01 %       520,802           4.02 %
Other assets                                       32,857                          31,605

TOTAL ASSETS                                  $   575,925                       $ 552,407

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