On July 26, 2024, CSB Bancorp Inc (CSBB, Financial) released its 8-K filing detailing the company's financial performance for the second quarter of 2024. The report highlights a significant decline in net income compared to the same period last year.
Company Overview
CSB Bancorp Inc is a registered financial holding company that operates through the Bank and CSB Investment Services LLC, providing a wide range of banking, trust, financial, and brokerage services to corporate, institutional, and individual customers throughout northeast Ohio. The Bank offers retail and commercial banking services, including checking and savings accounts, time deposits, IRAs, personal loans, commercial loans, real estate mortgage loans, installment loans, brokerage, and trust services.
Second Quarter Financial Performance
CSB Bancorp Inc reported a net income of $1.615 million, or $0.61 per share, for the second quarter of 2024, a sharp decline from $3.644 million, or $1.36 per share, in the same period of 2023. This represents a 56% decrease in net income year-over-year.
Annualized returns on average common equity (ROE) and average assets (ROA) also saw significant declines, with ROE dropping to 5.89% from 14.62% and ROA falling to 0.56% from 1.27% compared to the second quarter of 2023.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Diluted Earnings Per Share | $0.61 | $1.36 |
| Net Income | $1,615,000 | $3,644,000 |
| Return on Average Common Equity | 5.89% | 14.62% |
| Return on Average Assets | 0.56% | 1.27% |
Challenges and Achievements
CSB Bancorp Inc faced several challenges during the second quarter, including increased credit loss provisions and rising interest expenses. The provision for credit loss expense surged to $2.889 million from $140,000 in the same quarter of 2023. This increase was primarily due to a significant loss reserve established for a deteriorating commercial lending relationship.
Interest expense rose by 62% to $3.578 million, driven by the Federal Reserve's rapid interest rate increases and competitive pressures to secure adequate funding. Despite these challenges, the company managed to maintain a steady deposit balance and saw a 17% increase in loan interest income, which was attributed to rate increases and a $57 million rise in average loan volume.
Income Statement Highlights
Net interest income for the quarter was $8.925 million, slightly down from $8.994 million in the same period last year. Noninterest income saw a marginal increase of $8,000, primarily due to higher trust and brokerage fees, earnings on bank-owned life insurance, and gains on the sale of mortgage loans.
Noninterest expenses decreased by 4% to $5.814 million, with notable reductions in salary and employee benefit costs. The company's efficiency ratio improved to 54.2% from 56.2% in the prior year.
Balance Sheet and Cash Flow
As of June 30, 2024, CSB Bancorp Inc's total assets stood at $1.167 billion, with total deposits amounting to $1.024 billion. The allowance for expected credit losses increased to $10.6 million, or 1.47% of total loans, compared to $6.6 million, or 0.99% of total loans, a year ago.
Shareholders' equity totaled $110 million, with an average equity to assets ratio of 9.49% for the quarter. The company declared a second-quarter dividend of $0.39 per share, yielding an annualized return of 4% based on the June 30, 2024, closing price of $39.00.
Analysis and Outlook
The significant decline in net income and ROE indicates that CSB Bancorp Inc is facing considerable headwinds, primarily due to increased credit loss provisions and rising interest expenses. However, the company's ability to maintain steady deposit balances and increase loan interest income demonstrates resilience in a challenging economic environment.
Overall, while CSB Bancorp Inc's financial performance in the second quarter of 2024 reflects the broader economic challenges, the company's strategic focus on maintaining asset quality and managing expenses could position it well for future growth.
Explore the complete 8-K earnings release (here) from CSB Bancorp Inc for further details.
