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CSBB > SEC Filings for CSBB > Form 10-Q on 13-Nov-2012All Recent SEC Filings

Show all filings for CSB BANCORP INC /OH



Quarterly Report




The following management's discussion and analysis focuses on the consolidated financial condition of the Company at September 30, 2012 as compared to December 31, 2011, and the consolidated results of operations for the three and nine month periods ended September 30, 2012 compared to the same periods in 2011. 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 $569 million at September 30, 2012, compared to $551 million at December 31, 2011, representing an increase of $18 million, or 3%. Cash and cash equivalents decreased $28 million, or 33%, during the nine month period ended September 30, 2012, primarily as a result of funding increases in loans and securities and repayment of advances from the FHLB. Securities increased $12 million, or 9%, during the first nine months of 2012 as bonds were purchased within the US government agency portfolio.

Net loans increased $28 million, or 9%, during the nine month period ended September 30, 2012. Commercial loans including commercial real estate loans increased $20 million, or 10%, home equity lines increased $1 million, or 3%, real estate mortgage loans increased $4 million, or 6%, construction and land development loans increased $3 million, or 19%, and consumer loans remained stable over December 31, 2011. Consumers continued to refinance their mortgage loans for lower long-term rates. During the fourth quarter 2011 and first nine months of 2012 the bank originated and retained fifteen year fixed rate mortgage loans for its portfolio. 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 1.32% at September 30, 2012, an increase from 1.26% at December 31, 2011. Outstanding loan balances increased 9% to $353 million at September 30, 2012 while net charge-offs of $38 thousand were offset by a provision of $617 thousand to the allowance for loan losses for the nine months ended September 30, 2012. Non-performing loans increased $173 thousand or 5% from December 31, 2011.

                                            September 30,          December 31,          September 30,
(Dollars in thousands)                          2012                   2011                  2011
Non-performing loans                       $         3,662        $        3,489        $         3,495
Other real estate                                       51                    10                    505
Allowance for loan losses                            4,661                 4,082                  4,116
Total loans                                        352,748               324,182                313,980
Allowance: loans                                      1.32 %                1.26 %                 1.31 %
Allowance: non-performing loans                        1.3 x                 1.2 x                  1.2 x

The ratio of gross loans to deposits was 78% at September 30, 2012, compared to 73% at December 31, 2011. The increase in this ratio is the result of loan volume increases outpacing increases in deposits during the nine months ended September 30, 2012.

The Company had net unrealized gains of $3 million within its securities portfolio at September 30, 2012, compared to net unrealized gains of $2 million at December 31, 2011. 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 $139 thousand within the total portfolio as of September 30, 2012, 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 September 30, 2012, are considered temporary and no impairment loss relating to these securities has been recognized.

Bank-owned life insurance of $5 million was purchased on the lives of senior management during first quarter of 2012.

Deposits increased $11 million, or 2% from December 31, 2011 with non-interest bearing deposits increasing $5 million and interest-bearing deposit accounts increasing $6 million. By deposit type, increases were recognized in statement and passbook savings accounts and money market savings accounts for the period ended September 30, 2012.

Short-term borrowings consisting of overnight repurchase agreements with retail customers increased $6 million from December 31, 2011 and other borrowings decreased $2 million 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 $52 million, or 9% of total assets, at September 30, 2012, compared to $49 million, or 9% of total assets, at December 31, 2011. The increase in shareholders' equity during the nine months ended September 30, 2012 was due to net income of $3.4 million, an increase of $721 thousand in other comprehensive income and dividends declared of $1.5 million which partially offset the above increases. The Company and its subsidiary bank met all regulatory capital requirements at September 30, 2012.

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Three months ended September 30, 2012 and 2011

For the quarter ended September 30, 2012, the Company recorded net income of $1.2 million or $0.45 per share, as compared to net income of $999 thousand, or $0.37 per share for the quarter ended September 30, 2011. The $232 thousand increase in net income for the quarter was a result of net interest income increasing $329 thousand and other noninterest income increasing $29 thousand. These gains were partially offset by an increase in noninterest expense of $70 thousand and an increase in the federal income tax provision of $90 thousand. Return on average assets and return on average equity were 0.86% and 9.41%, respectively, for the three month period of 2012, compared to 0.87% and 8.04%, respectively for 2011.

Average Balance Sheets and Net Interest Margin Analysis

                                                         For the three months ended September 30,
                                                            2012                             2011
                                                  Average           Average         Average        Average
(Dollars in thousands)                            balance            rate           balance         rate
Interest-earning deposits in other banks        $     49,930            0.25 %     $  28,194           0.21 %
Federal funds sold                                       241            0.00             101           0.03
Taxable securities                                   123,565            2.05          74,486           3.20
Tax-exempt securities                                 14,675            4.93          12,740           5.15
Loans                                                347,682            5.00         315,750           5.33

Total earning assets                                 536,093            3.87 %       431,271           4.62 %
Other assets                                          33,049                          23,414

TOTAL ASSETS                                    $    569,142                       $ 454,685

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