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CSB Bancorp, Inc. (CSBB)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 EPS was $1.18, up sequentially from $0.61 (Q2) but down year over year from $1.30 (Q3’23) as credit costs normalized vs. Q2’s spike but remained above last year; net income was $3.15M vs. $1.62M in Q2 and $3.48M in Q3’23 .
  • Pre-provision net revenue (PPNR) rose 2% YoY to $4.60M on higher net interest and noninterest income; FTE NIM was 3.26% (down 2 bps QoQ, up 5 bps YoY), indicating resilient margin despite higher deposit costs .
  • Credit: the bank charged down a specific $6.4M commercial relationship by $4.1M (previously reserved); net charge-offs were $4.01M, with ACL/loans at 1.00% and NPAs/loans at 0.47% (still elevated vs. prior periods) .
  • Dividend increased to $0.40 per share (from $0.39 in Q2), and book value per share increased to $43.25 (up from $41.43 in Q2) .
  • Wall Street consensus estimates from S&P Global were unavailable at the time of analysis; therefore, beat/miss vs. estimates cannot be determined. Values would be retrieved from S&P Global if available.

What Went Well and What Went Wrong

  • What Went Well

    • PPNR improved YoY (+2% to $4.60M) on a combination of +4% net interest income and +6% noninterest income; management noted “margins and efficiency are holding very close to prior year levels” despite higher deposit rates and inflation .
    • FTE NIM held at 3.26% (vs. 3.21% in Q3’23) supported by a shift into loans and higher asset yields; average loan balances increased YoY by $48M, with loan yields at 5.80% (+41 bps YoY) .
    • Capital and shareholder returns: book value per share rose to $43.25, and the quarterly dividend was raised to $0.40 (annualized yield ~4.2% at 9/30/24 price) .

  • What Went Wrong

    • Credit costs: net charge-offs were $4.01M (2.20% annualized) due to the charge-down of a specific commercial relationship; NPAs/loans rose to 0.47% from 0.04% a year ago (though improved from 0.93% in Q2) .
    • Provision remained elevated vs. last year ($0.70M vs. $0.18M in Q3’23), though sharply lower than Q2’s $2.89M; the specific commercial credit continues through a court-directed liquidation process .
    • Operating efficiency slipped: the efficiency ratio rose to 58.17% (vs. 54.22% in Q2; 56.99% in Q3’23), reflecting higher operating costs and community/marketing spend .

Financial Results

Headline results vs. prior periods

MetricQ3 2023Q1 2024Q2 2024Q3 2024
Total Revenue ($USD Millions)$10.54 $10.92 $10.67 $11.02
Net Interest Income ($USD Millions)$8.84 $9.15 $8.93 $9.21
Noninterest Income ($USD Millions)$1.71 $1.77 $1.74 $1.81
Provision for Credit Losses ($USD Millions)$0.18 $1.15 $2.89 $0.70
Net Income ($USD Millions)$3.48 $2.93 $1.62 $3.15
Diluted EPS ($)$1.30 $1.10 $0.61 $1.18
Net Interest Margin FTE (%)3.21% 3.37% 3.28% 3.26%
Efficiency Ratio (%)56.99% 56.00% 54.22% 58.17%
ROA (annualized, %)1.19% 1.02% 0.56% 1.05%
ROE (annualized, %)13.63% 10.84% 5.89% 11.14%

KPI and balance sheet trends

KPIQ3 2023Q1 2024Q2 2024Q3 2024
Ending Loans ($USD Millions)$680.95 $710.82 $721.92 $719.60
Ending Deposits ($USD Millions)$1,018.08 $1,010.12 $1,023.84 $1,070.53
Loan Yield (avg, %)5.39% 5.83% 5.74% 5.80%
Avg Cost of Deposits (%)1.08% 1.31% 1.38% 1.48%
Cost to Fund Earning Assets (%)1.04% 1.25% 1.31% 1.40%
NPAs / Loans & OREO (%)0.04% 0.05% 0.93% 0.47%
ACL / Period-End Loans (%)0.98% 1.00% 1.47% 1.00%
Net Charge-offs / Avg Loans (annualized, %)(0.07%) 0.04% 0.14% 2.20%
Book Value per Share ($)$37.96 $41.11 $41.43 $43.25
Dividend per Share ($)—$0.39 $0.39 $0.40

Note: “Total Revenue” reflects GAAP net interest income plus noninterest income as presented in the company’s PPNR tables .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ3 2024$0.39 (Q2 declared) $0.40 (Q3 declared) Raised
Financial guidance (revenue, margins, opex, tax, segment)Q4 2024+Not providedNot providedMaintained “no formal guidance” posture

No explicit quantitative forward guidance was issued in the Q3 materials .

Earnings Call Themes & Trends

No Q3 2024 earnings call transcript was available in our document set; themes below reflect management commentary across Q1–Q3 press releases.

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Credit event – specific commercial relationshipQ1: $1.5M of ACL/commitment allowance allocated; relationship current and performing at quarter-end . Q2: relationship placed on nonaccrual; borrower ceased operations; $4.1M specific reserve established .Q3: charged down by previously held $4.1M specific reserve; liquidation process via court-appointed receiver continues .Resolving; NCO spike in Q3, NPAs down vs. Q2
Net interest marginQ1 NIM FTE 3.37% (flat YoY); funding costs up . Q2 NIM FTE 3.28% (down 5 bps YoY) .Q3 NIM FTE 3.26%; stable YoY up 5 bps; asset yields higher with loan mix shift .Slightly lower QoQ; modestly better YoY
Loan demandQ1: Borrowing appetite restrained by high rates . Q2: Demand softened; awaiting rate cuts .Q3: “Loan demand has been steady, with signs of increasing borrower appetite as interest rates decline.” Improving if rates ease
Deposit mix and costQ1 deposit cost 1.31% (up sharply YoY); NBDA down YoY . Q2 cost 1.38% .Q3 cost 1.48%; time/money market up, noninterest-bearing down YoY .Costs still rising; mix shift continues
Noninterest incomeQ1 +9% YoY; trust and mortgage gains stronger . Q2 flat YoY .Q3 +6% YoY; higher mortgage gains, BOLI, trust/brokerage fees .Gradual improvement

Management Commentary

  • “Local economic conditions remain stable with continued low unemployment. Loan demand has been steady, with signs of increasing borrower appetite as interest rates decline.” — Eddie Steiner, President & CEO .
  • “Margins and efficiency are holding very close to prior year levels, even with higher rates paid on deposits and moderate inflation within operating costs.” .
  • On the specific commercial credit: the bank “charged down in third quarter 2024 by the previously held specific reserve of $4.1 million” and continues to pursue liquidation through the court process .

Q&A Highlights

  • No earnings call transcript was available; therefore, there are no Q&A disclosures to summarize for Q3 2024 within our document set [ListDocuments shows no transcript].

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2024 EPS and revenue was unavailable at the time of this analysis, so we cannot determine a beat/miss versus estimates. If coverage and access permit, we will update with S&P Global consensus and compare actuals accordingly. Values would be retrieved from S&P Global.

Key Takeaways for Investors

  • Core earnings power intact: PPNR grew to $4.60M (+2% YoY) on higher net interest and fee income, while FTE NIM held at 3.26% despite higher funding costs .
  • Credit resolution in focus: the $6.4M commercial credit was charged down by the $4.1M reserve; Q3 net charge-offs spiked to 2.20% annualized, but NPAs fell to 0.47% from 0.93% in Q2 as the issue progresses toward liquidation .
  • Sequential EPS rebound: EPS recovered to $1.18 (from $0.61 in Q2) as provision normalized vs. Q2’s elevated level; YoY EPS remained below $1.30 given higher credit costs and operating expense growth .
  • Deposit and funding costs still rising: average deposit cost rose to 1.48% (from 1.38% in Q2 and 1.08% in Q3’23), reflecting persistent competitive pressure; watch for relief if rate cuts materialize .
  • Capital and shareholder returns strengthening: book value per share increased to $43.25 and the dividend was raised to $0.40; tangible equity improved YTD .
  • Near-term stock catalysts: clarity and recovery proceeds from the commercial credit liquidation, NIM stabilization amid any rate cuts, and sustained fee income momentum (mortgage gain-on-sale, trust) could influence sentiment .
  • Risk checks: monitor any follow-on credit migration (delinquencies rose YoY) and operating efficiency (58.17% in Q3) as the bank balances growth, technology spend, and community initiatives .