UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: MARCH 31, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission file number: 0-21714
CSB Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Ohio 34-1687530
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
6 W. Jackson Street, P.O. Box 232, Millersburg, Ohio 44654
(Address of principal executive offices)
(330) 674-9015
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the past 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
X Yes No
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
Common stock, $6.25 par value Outstanding at April 16, 1997:
1,301,166 common shares
FORM 10-Q
QUARTER ENDED MARCH 31, 1997
Table of Contents
Part I - Financial Information
ITEM I - FINANCIAL STATEMENTS Page
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Condensed Consolidated Statements of Changes in
Shareholders' Equity 5
Condensed Consolidated Statements of Cash Flows 6
Notes to the Consolidated Financial Statements 7
ITEM II - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 13
Part II - Other Information
Other Information 16
Signatures 17
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
March 31, December 31,
1997 1996
<S> <C> <C>
ASSETS
Cash and noninterest-bearing deposits with banks $ 5,981,402 $ 7,647,790
Interest-bearing deposits with banks 222,342 5,669,966
Federal funds sold 16,350,000 17,000,000
---------- ----------
Total cash and cash equivalents 22,553,744 30,317,756
Time deposits with banks 3,000,000 3,000,000
Securities available for sale, at fair value 28,752,181 14,890,413
Securities held to maturity (Estimated fair values
of $46,085,086 in 1997 and $37,970,342 in 1996) 45,859,180 37,493,467
Total loans 161,942,216 165,151,298
Allowance for loan losses 2,191,322 2,120,845
----------- ------------
Net loans 159,750,894 163,020,453
Premises and equipment, net 2,637,339 2,563,216
Accrued interest receivable and other assets 3,184,292 2,849,875
----------- -----------
Total assets $265,737,630 $254,135,180
=========== ===========
LIABILITIES
Deposits
Noninterest-bearing $ 19,132,711 $ 21,391,610
Interest-bearing 204,029,197 191,947,974
----------- -----------
Total deposits 223,161,908 213,339,584
Securities sold under agreements to repurchase 4,367,636 4,738,173
Federal Home Loan Bank borrowings 12,718,292 11,741,515
Accrued interest payable and other liabilities 971,058 889,428
----------- -----------
Total liabilities 241,218,894 230,708,700
SHAREHOLDERS' EQUITY
Common stock ($6.25 par value; 3,000,000 shares
authorized; 1,304,366 and 1,298,372 shares issued
in 1997 and 1996, respectively) 8,152,289 8,114,826
Additional paid-in capital 4,706,011 4,520,502
Retained earnings 11,772,177 10,818,500
Treasury stock at cost: 3,200 shares (56,000) (56,000)
Unrealized gain (loss) on securities available
for sale, net of tax (55,741) 28,652
----------- ----------
Total shareholders' equity 24,518,736 23,426,480
Total liabilities and shareholders' equity $265,737,630 $254,135,180
=========== ============
</TABLE>
See notes to the consolidated financial statements.<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
Interest income
Interest and fees on loans $4,034,410 $3,927,981
Interest on investment securities
Taxable 607,346 546,957
Nontaxable 277,690 245,612
Other interest income 311,748 91,323
--------- ----------
Total interest income 5,231,194 4,811,873
Interest expense
Interest on deposits 2,277,228 2,100,507
Other interest expense 239,028 84,758
--------- ---------
Total interest expense 2,516,256 2,185,265
--------- ---------
Net interest income 2,714,938 2,626,608
Provision for loan losses 101,688 100,000
--------- ---------
Net interest income after provision
for loan losses 2,613,250 2,526,608
Other income
Service charges on deposit accounts 171,664 148,495
Other operating income 85,905 100,950
Gain on sale of loans 220,200
Loss on call of securities (1,694)
---------- ----------
Total other income 477,769 247,751
Other expense
Salaries and employee benefits 736,842 719,466
Occupancy expense 83,742 96,157
Equipment expense 107,923 105,520
State franchise tax 82,359 65,310
Other operating expense 481,872 429,314
-------- ----------
Total other expense 1,492,738 1,415,767
--------- ---------
Income before federal income taxes 1,598,281 1,358,592
Provision for income taxes 423,700 394,600
--------- ---------
Net income $1,174,581 $ 963,992
========= =========
Earnings per common share $.91 $.75
========= =========
Weighted average shares outstanding 1,296,260 1,285,660
========= =========
</TABLE>
See notes to the consolidated financial statements.<PAGE>
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
Balance at beginning of period $23,426,480 $20,342,763
Net income 1,174,581 963,992
Common stock issued under the dividend
reinvestment program and 401(k) plan 222,972 59,930
Cash dividends ($.170 per share in 1997;
$.125 per share in 1996) (220,904) (160,679)
Change in unrealized gain/loss on
securities available for sale, net of tax (84,393) (32,780)
-------- ---------
Balance at end of period $24,518,736 $21,173,226
=========== ===========
</TABLE>
See notes to the consolidated financial statements.<PAGE>
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
Net cash from operating activities $ 922,761 $ 1,288,832
Investing activities
Securities available for sale
Proceeds from maturities 2,000,000 3,000,000
Purchases (15,958,800) (271,000)
Securities held to maturity
Proceeds from maturities, calls
and repayments 3,406,150 3,494,971
Purchases (11,765,424) (988,392)
Net increase in loans (7,382,259) (2,984,919)
Loan sale proceeds 10,766,167
Purchase of premises and
equipment, net (183,239) (193,998)
------------ -----------
Net cash used by investing
activities (19,117,405) 2,056,662
------------ -----------
Financing activities
Net increase (decrease) in deposits 9,822,324 (7,273,900)
Net decrease in repurchase agreements (370,537) (1,275,743)
Net increase in FHLB advances 976,777 3,663,631
Cash dividends paid (160,835) (119,545)
Shares issued for 401(k) plan 162,903 18,796
---------- -----------
Net cash used by financing activities 10,430,632 (4,986,761)
---------- ------------
Decrease in cash and cash equivalents (7,764,012) (1,641,267)
Cash and cash equivalents at beginning
of period 30,317,756 22,049,697
---------- ----------
Cash and cash equivalents at end
of period $ 22,553,744 $20,408,430
=========== ==========
Supplemental disclosures
Cash paid for interest $ 2,492,764 $ 2,188,006
Cash paid for income taxes 50,866
</TABLE>
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements include the accounts of CSB
Bancorp, Inc. ("CSB") and its wholly owned subsidiary, The Commercial and
Savings Bank (the "Bank"). All significant intercompany transactions and
balances have been eliminated.
These interim financial statements are prepared without audit and reflect all
adjustments of a normal recurring nature which, in the opinion of management,
are necessary to present fairly the consolidated financial position of CSB at
March 31, 1997, and its results of operations and cash flows for the periods
presented. The accompanying consolidated financial statements do not contain
all financial disclosures required by generally accepted accounting principles
that might otherwise be necessary in the circumstances. The Annual Report for
CSB for the year ended December 31, 1996, contains consolidated financial
statements and related notes which should be read in conjunction with the
accompanying consolidated financial statements.
Allowance for Loan Losses: Allowances for losses on impaired loans are
determined by calculating the present value of estimated future cash flows,
discounted using the loan's effective interest yield. Allowances for losses
on impaired loans that are collateral dependent are generally determined based
on the estimated fair value of the underlying collateral. A loan is impaired
when it is probable that a creditor will be unable to collect all amounts due
according to the contractual terms of the loan agreement.
Smaller-balance homogeneous loans are evaluated for impairment in total. Such
loans include residential first mortgage loans secured by one- to four-family
residences, residential construction loans and automobile, home equity and
second mortgage loans. Commercial loans and mortgage loans secured by other
properties are evaluated individually for impairment. When analysis of
borrower operating results and financial condition indicates that underlying
cash flows of the borrower's business are not adequate to meet its debt
service requirements, the loan is evaluated for impairment. Often this is
associated with a delay or shortfall in payments of 30 days or more. Loans
are generally moved to nonaccrual status when 90 days or more past due. These
loans are often also considered impaired. Impaired loans, or portions
thereof, are charged off when deemed uncollectible. The nature of disclosures
for impaired loans is considered generally comparable to prior nonaccrual and
renegotiated loans and nonperforming and past due asset disclosures.
The carrying value of impaired loans is periodically adjusted to reflect cash
payments, revised estimates of future cash flows, and increases in the present
value of expected cash flows due to the passage of time. Cash payments
representing interest income are reported as such and other cash payments are
reported as reductions in carrying value. Increases or decreases in carrying
value due to changes in estimates of future payments or the passage of time
are reported as reductions or increases in bad debt expense.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounting Pronouncements: Statement of Financial Accounting Standards (SFAS)
No. 125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities", revises accounting treatment for transfers of
financial assets, such as loans and securities, and for distinguishing between
sales and secured borrowings. SFAS No. 125 did not materially impact the
Company's financial statements for the first quarter of 1997.
SFAS No. 128, "Earnings Per Share," is effective for financial statements
issued after December 15, 1997, and simplifies the calculation of earnings per
share (EPS) by replacing primary EPS with basic EPS. SFAS No. 128 will not
impact the Company's EPS calculations.
Income Taxes: The provision for income taxes is based upon the effective
income tax rate expected to be applicable for the entire year.
NOTE 2 - SECURITIES
The amortized cost, gross unrealized gains and losses and estimated fair
values of securities, as presented in the consolidated balance sheet are as
follows:
<PAGE>
<TABLE>
<CAPTION>
March 31, 1997
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Available for sale
Debt securities
U.S. Treasury securities $22,003,831 $ 16,539 $ (53,495) $21,966,875
Obligations of U.S. government
corporations and agencies 4,983,906 (47,500) 4,936,406
----------- ------- -------- -----------
Total debt securities available
for sale 26,987,737 16,539 (100,995) 26,903,281
Other securities 1,848,900 1,848,900
----------- ------- --------- ----------
Total securities available
for sale $28,836,637 $ 16,539 $(100,995) $28,752,181
=========== ======= ========= ==========
Held to maturity
U.S. Treasury securities $14,043,955 $ 69,758 $ (48,182) $14,065,531
Obligations of U.S. government
corporations and agencies 8,559,018 650 (22,443) 8,537,225
Obligations of states and
political subdivisions 23,256,207 421,535 (195,412) 23,482,330
---------- -------- --------- ----------
Total debt securities
held to maturity $45,859,180 $ 491,943 $(266,037) $46,085,086
========== ========= ========= ============
</TABLE>
NOTE 2 - SECURITIES (Continued)
<TABLE>
<CAPTION>
December 31, 1996
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Available for sale
Debt securities
U.S. Treasury securities $11,025,400 $ 47,599 $ (186) $11,072,813
Obligations of U.S. government
corporations and agencies 2,000,000 (4,000) 1,996,000
Total debt securities available
for sale 13,025,400 47,599 (4,186) 13,068,813
Other securities 1,821,600 1,821,600
---------- ------ --------- -----------
Total securities available
for sale $14,847,000 $ 47,599 $ (4,186) $14,890,413
=========== ======= ========= ===========
Held to maturity
U.S. Treasury securities $11,030,882 $116,799 $ (9,947) $11,137,734
Obligations of U.S. government
corporations and agencies 7,011,135 4,413 (6,361) 7,009,187
Obligations of states and
political subdivisions 19,440,275 499,363 (127,342) 19,812,296
Mortgage-backed securities 11,175 (50) 11,125
----------- --------- --------- -----------
Total debt securities
held to maturity $37,493,467 $620,575 $(143,700) $37,970,342
========== ======== ========= ============
</TABLE>
<PAGE>
One agency security of $1,000,000 was transferred from the available for sale
category to held to maturity during the first quarter of 1996. The transfer
into held to maturity occurred at the fair value of the security on the date
of the transfer, which approximated amortized cost.
There were no sales of investment securities during the first three months of
1997 or 1996. Losses on calls of securities held to maturity were $1,694
during the three months ended March 31, 1996.
The amortized cost and estimated fair values of investments in debt securities
at March 31, 1997, by contractual maturity, are shown below. Actual
maturities may differ from contractual maturities because certain borrowers
may have the right to call or prepay the debt obligations prior to their
contractual maturities.
NOTE 2 - SECURITIES (Continued)
Estimated
Amortized Fair
Cost Value
Available for sale
Due in one year or less $ 9,976,686 $ 9,871,563
Due in one to five years 16,011,051 16,049,843
Due in five to ten years 1,000,000 981,875
----------- ----------
Total debt securities available
for sale $26,987,737 $26,903,281
Held to maturity
Due in one year or less $ 9,881,080 $ 9,914,126
Due in one to five years 18,470,625 18,609,589
Due in five to ten years 12,799,373 12,917,680
Due after ten years 4,708,102 4,643,691
---------- ----------
Total debt securities held
to maturity $45,859,180 $46,085,086
========== ==========
NOTE 3 - LOANS
Total loans as presented on the balance sheet are comprised of the following
classifications:
March 31, 1997 December 31, 1996
Commercial $ 78,228,293 $ 73,404,483
Commercial real estate 23,783,929 22,991,254
Residential real estate 40,833,537 49,254,612
Installment and credit
card 17,244,321 16,730,089
Construction 1,852,136 2,760,860
---------- ------------
Total loans $161,942,216 $165,141,298
=========== ============
During the first three months of 1997, the Bank received $10,776,167 in
proceeds from mortgage loan sales. A gain of $220,200 was recognized on this
sale. No loans were sold during the first three months of 1996.
NOTE 4 - ALLOWANCE FOR LOAN LOSSES
A summary of activity in the allowance for loan losses for the three months
ended March 31, 1997 and 1996 is as follows:
1997 1996
Balance - January 1 $2,120,845 $1,830,250
Loans charged off (47,473) (21,057)
Recoveries 16,262 9,385
Provision for loan losses 101,688 100,000
--------- -----------
Balance - March 31 $2,191,322 $1,918,578
Information regarding impaired loans at March 31, 1997 and December 31, 1996
is as follows:
March 31, December 31,
1997 1996
Balance of impaired loans, end of period $1,106,000 $961,000
Portion of allowance for loan losses
allocated to the impaired loan balance 412,000 336,000
Information regarding impaired loans for the quarter ended March 31, 1997 and
1996, is as follows:
1997 1996
Average investment in impaired loans
for the quarter 1,034,000 228,000
Interest income recognized on impaired loans
including interest income recognized on cash
basis during the quarter 18,000 None
Interest income recognized on impaired loans on
cash basis during the quarter 13,000 None
NOTE 5 - FEDERAL HOME LOAN BANK BORROWINGS
At March 31, 1997, the Bank had 188 outstanding borrowings from the Federal
Home Loan Bank (FHLB). These borrowings carry fixed interest rates ranging
from 5.60% to 7.15% and maturities of 10, 15, and 20 years. Monthly principal
and interest payments are due on the borrowings. In addition, a principal
curtailment of 10% of the outstanding principal balance is due on the
anniversary date of each borrowing. FHLB borrowings are collateralized by the
Company's FHLB stock and a blanket pledge on $19,078,000 of qualifying
mortgage loans at March 31, 1997.
NOTE 6 - CONCENTRATIONS OF CREDIT RISK AND FINANCIAL INSTRUMENTS
WITH OFF-BALANCE SHEET RISK
The Bank grants residential, consumer, and commercial loans to customers
located primarily in Holmes and surrounding counties in Ohio. Most loans are
secured by specific items of collateral including business assets, consumer
assets and residences.
The Bank is a party to financial instruments with off-balance sheet risk in
the normal course of business to meet financing needs of its customers. The
contract amount of these instruments are not included in the consolidated
financial statements. At March 31, 1997 and December 31, 1996, the contract
amount of these instruments, which primarily include commitments to extend
credit and unused credit lines, totaled approximately $28,796,000 and
$30,111,000 respectively, substantially all of which carry adjustable rates of
interest. Since many commitments to make loans expire without being used, the
amount does not represent future cash commitments.
The exposure to credit loss in the event of nonperformance by the other party
to the financial instrument for commitments to make loans and lines and
letters of credit is represented by the contractual amount of those
instruments. CSB follows the same credit policy to make such commitments as
is followed for those loans recorded in the financial statements. In
management's opinion, these commitments represent normal banking transactions
and no material losses are expected to result therefrom. Collateral obtained
upon exercise of the commitments is determined using management's credit
evaluations of the borrower and may include real estate and/or business or
consumer assets.
Occasionally, various contingent liabilities arise that are not recorded in
the financial statements, including claims and legal actions arising in the
ordinary course of business. In the opinion of management, after consultation
with legal counsel, the ultimate disposition of these matters is not expected
to have a material affect on financial condition or results of operations.
CSB BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
ITEM II - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion focuses on the consolidated financial condition of
CSB Bancorp, Inc. (the Company) at March 31, 1997, compared to December 31,
1996, and the consolidated results of operations for the quarterly period
ending March 31, 1997 compared to the same period in 1996. 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.
Forward-looking statements contained in this discussion involve risks and
uncertainties and are subject to change based on various important factors.
Actual results could differ from those expressed or implied. The registrant
is not aware of any trends, events or uncertainties that will have or are
reasonably likely to have a material effect on the liquidity, capital
resources or operations except as discussed herein. Also, the Registrant is
not aware of any current recommendations by regulatory authorities that would
have such effect if implemented.
FINANCIAL CONDITION
Total assets were $265.7 million at March 31, 1997, compared to $254.1 million
at December 31, 1996, representing a increase of $11.6 million or 4.6%. Total
securities increased approximately $22.2 million during the quarter as a
result of deposit growth and loan sales, as discussed below. Most of the
securities purchased were short-term U.S. Treasury notes and obligations of
U.S. Government corporations and agencies. Since one of the primary functions
of the securities portfolio is to provide a source of liquidity, it is
structured such that security maturities and cash flows satisfy the Company's
liquidity needs and asset-liability management requirements. At March 31,
1997, approximately 27% of the securities portfolio matures within one year.
Commercial loans increased $4,824,000, or 6.6%, during the quarter. This
increase was primarily a result of increased loan demand in our service area
as the local economy remains strong. In late 1995, the Company began to
originate fixed rate one- to four- family mortgage loans, utilizing a matched
funds program using FHLB advances of similar maturity to establish an interest
rate spread for the estimated duration of the loans. During the first quarter
of 1997, management elected to sell approximately $11 million of fixed rate
loans. A gain of $220,000 was realized on the sale. The funds were invested
in short term U.S. Treasury and Government Agency securities. The Bank
retained its fixed-rate borrowings to facilitate future fixed rate lending.
Management will continue to originate fixed rate loans, but does not
anticipate new borrowings will be necessary to fund such originations. At
March 31, 1997, there were no loans held for sale. Exclusive of this sale,
loans increased approximately $7.3 million or 4.4% during the quarter.
As a percentage of loans, the allowance for loan losses was 1.35% at March 31,
1997 and 1.28% at December 31, 1996. Loans past due more than 90 days and
loans placed on nonaccrual status, were approximately $1,190,000, or .74% of
total loans at March 31, 1997, compared to $747,000, or .45% of loans at
December 31, 1996. These credits are considered in management's analysis of
the allowance for loan losses.
The Company made minor investments in premises and equipment during the first
quarter of 1997. However. the Company has contracted to purchase a tract of
land with the intent to construct another branch office in Wayne County in
late 1997. The Company has also acquired $120,000 of land in 1995 to build
an operation center in 1998. Beyond these land purchases, no commitments have
been entered into relative to these projects.
At March 31, 1997, the ratio of loans to deposits was 72.6%, compared to 77.4%
at the end of 1996 as total deposits increased approximately $9.8 million, or
4.6%, during the first three months on 1997. Historically, the Bank has
experienced a decline in overall deposit balances during the first quarter of
the year. However, in 1997 the Bank received approximately $8.0 million of
deposits as a result of a successful bond issue for a local school district.
These funds are in a savings account that is expected to deplete gradually
over the next two years.
Total shareholders' equity was increased in part by year-to-date net income of
$1.2 million, less $220,000 of cash dividends declared. The cash dividend
represents 20.0% of net income for the first quarter of 1997. Also
contributing to capital was the dividend reinvestment program and the purchase
of stock by the Company's 401(k) retirement plan. As a result of these
programs, equity increased approximately $223,000 during the first quarter of
1997.
The Company and its subsidiary meet all regulatory capital requirements at
March 31, 1997. The Company's ratio of total capital to risk-weighted assets
was 16.73% at March 31, 1997, while Tier 1 risk-based capital ratio was
15.48%. Regulatory minimums call for a total risk-based capital ratio of 8%,
at least one-half of which must be Tier 1 capital. The Company's leverage
ratio was 9.25% at March 31, 1997, which exceeds the regulatory minimum of 3%
to 5%.
RESULTS OF OPERATIONS
Net income for the quarter ending March 31, 1997 was $1,175,000, or $0.91 per
share, as compared to $964,000, or $0.75 per share earned during the same
period last year, an increase of $211,000, or 21.9%. The primary factors
contributing to this increase were increases in net interest income and other
income.
Net interest income for the quarter ended March 31, 1997 was $2,715,000, a
3.4% increase from the first quarter of 1996. Interest and fees on loans
increased $106,000, or 2.7%, which resulted primarily from a higher rate
environment and somewhat from a higher volume of loans as the loan sale was
not consummated until late March 1997. Also, as deposit funds were invested
in securities and federal funds sold, interest on securities increased $92,000
and other interest income increased $220,000 for the first quarter of 1997,
compared to the first quarter of 1996. Management anticipates using these
liquid funds, primarily from federal funds sold and maturities of short-term
investments, to fund higher yielding loans.
Interest expense increased $331,000, to $2.5 million for the quarter ended
March 31, 1997, compared to $2.2 million for the quarter ended March 31, 1996.
This increase was the result of increased volumes on interest-bearing accounts
and slightly higher rates. Included in this increase was an increase of
$154,000 in other interest expense, resulting from new borrowings from FHLB.
The impact of an increasing interest rate environment should impact the
Company's interest expense to a lesser extent in 1997 compared to 1996 due to
the fixed rate long-term leverage provided by the borrowings.
The provision for loan losses was $102,000 during the first quarter of 1997,
which was near the $100,000 provision in the first quarter of 1996. This
provision was made in recognition of continued loan origination volume,
primarily in the commercial loan portfolio which typically carries a higher
risk of loan loss.
Other income increased approximately $230,000 primarily as a result of the
gain on the sale of loans discussed above and increased deposit service charge
income.
Other expenses increased only $77,000, or 5.4%, for the three months ended
March 31, 1997, compared to the same period in 1996, as management continues
to monitor the Bank's efficiency ratio by maintaining increases in other
operating costs at low levels. Salaries and employee benefits increased by
$17,000 or 2.4%, and state franchise taxes increased $17,000 or 26.1% as a
result of earnings retention in 1996. Ohio's state franchise tax for
financial institutions is based on the level of capital at the previous
year-end. The $53,000, or 12.2%, increase in other operating expenses from the
previous year resulted from small increases in a number of areas. The
provision for income taxes of $424,000 during the first quarter of 1997
reflected an effective rate of 26.5%, which is slightly below 29.0%, the rate
in the first quarter of 1996.
FORM 10-Q
Quarter ended March 31, 1997
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings:
There are no matters required to be reported under this item.
Item 2 - Changes in Securities:
There are no matters required to be reported under this item.
Item 3 - Defaults Upon Senior Securities:
There are no matters required to be reported under this item.
Item 4 - Submission of Matters to a Vote of Security Holders:
There are no matters required to be reported under this item.
Item 5 - Other Information:
There are no matters required to be reported under this item.
Item 6 - Exhibits and Reports on Form 8-K:
(a) Exhibits:
Exhibit
Number Description of Document
3.1 Amended Articles of Incorporation of CSB Bancorp, Inc.
(incorporated by reference to Registrant's 1994 Form 10-KSB).
3.2 Code of Regulations of CSB Bancorp, Inc. (incorporated by
reference to Registrant's Form 10-SB).
4 Form of Certificate of Common Shares of CSB Bancorp, Inc.
(incorporated by reference to Registrant's Form 10-SB).
10 Leases for the Clinton Commons, Berlin and Charm Branch Offices of
The Commercial and Savings Bank (incorporated by reference to Registrant's
Form 10-SB).
11 Statement Regarding Computation of Per Share Earnings (reference is
hereby made to Consolidated Statements of Income on page 4 hereof.)
27 Financial Data Schedule.
(b) Reports on Form 8-K: No reports on Form 8-K were filed during the
quarter for which this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CSB BANCORP, INC.
(Registrant)
Date: May 13, 1997 /s/ Douglas D. Akins
(Signature)
Douglas D. Akins
President and Principal Executive Officer
Date: May 13, 1997 /s/ Pamela S. Basinger
(Signature)
Pamela S. Basinger
Financial Officer and Principal
Accounting Officer
Index to Exhibits
Exhibit Sequential
Number Description of Document Page
3.1 Amended Articles of Incorporation of CSB
Bancorp, Inc. (incorporated by reference to
Registrant's 1994 Form 10-KSB). N/A
3.2 Code of Regulations of CSB Bancorp, Inc.
(incorporated by reference to Registrant's Form 10-SB). N/A
4 Form of Certificate of Common Shares of CSB
Bancorp, Inc. (incorporated by reference to
Registrant's Form 10-SB). N/A
10 Leases for the Clinton Commons, Berlin
and Charm Branch Offices of The Commercial
and Savings Bank (incorporated by reference
to Registrant's Form 10-SB). N/A
11 Statement Regarding Computation of Per Share
Earnings (reference is hereby made to Consolidated
Statements of Income on page 4 hereof.) N/A
27 Financial Data Schedule 19
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