[April 25, 2018]

CSB Bancorp, Inc. Reports First Quarter Earnings

CSB Bancorp, Inc. (OTC Pink: CSBB):

First Quarter Highlights

CSB Bancorp, Inc. (OTC Pink: CSBB) today announced first quarter 2018 net income of $2,164,000, or $.79 per basic and diluted share, as compared to $1,730,000, or $.63 per basic and diluted share, for the same period in 2017. Income before federal income tax amounted to $2.7 million, an increase of 7.7% over the same quarter in the prior year.

Annualized returns on average common equity ("ROE") and average assets ("ROA") for the quarter were 12.33% and 1.25%, respectively, compared with 10.54% and 1.05% for the first quarter of 2017.

Eddie Steiner, President and CEO stated, "Average loan balances increased for the tenth consecutive quarter, while net interest margin improved to an eight year high at 3.95%. With the sustained rising interest rate environment, we've also been able to increase the average rate we pay depositors on interest bearing deposits by more than 50% over the past year.

Net interest income and noninterest income, on a fully-taxable equivalent basis, totaled $7.6 million during the quarter, a 7% increase from the prior-year first quarter. Net interest income increased $527 thousand, or 9%, in the first quarter of 2018 compared to the same period in 2017.

Loan interest income including fees increased $691 thousand during first quarter 2018 as compared to the same quarter in 2017. First quarter 2017 loan interest income included several payoff recoveries on nonaccrual loans totaling $175 thousand that did not reoccur in 2018. Additionally, average total loan balances during the current quarter were $47 million higher than the year ago quarter.

The net interest margin was 3.95% compared to 3.85% for first quarter 2017. The tax equivalency effect on the margin dropped to 0.03% from 0.06% a result of the reduction in the corporate income tax rate in 2018. Excluding the recovery on nonaccrual loans in first quarter 2017, the first quarter 2017 net interest margin would have been 3.74% as compared to 3.85%.

Noninterest income increased by $39 thousand, or 4%, in the first quarter of 2018 compared to 2017. The increase reflects growth in debit card fee income, gain on sale of loans, and trust and brokerage income. The increase in other income was partially offset by a decline in service charges on deposit accounts.

Noninterest expense amounted to $4.5 million during the quarter, a decrease of $109 thousand, or 2%, from first quarter 2017. During 2017 CSB provided a $540 thousand provision for unfunded loan commitments due to the impairment of a commercial line of credit which in turn reduced the provision for loan losses as an impaired line of credit was paid down at March 31, 2017. Salary and employee benefits rose $178 thousand, or 7%, on a quarter over prior year quarter with increases in headcount, salary, and employment taxes. Professional fees increased by $142 thousand, or 84%, resulting from increased legal fees for loan collection of $102 thousand, internal audit fees of $21 thousand, and director fees of $19 thousand. Marketing and public relations expense increased by $42 thousand, or 54%, on a quarter over quarter basis primarily on expanded channel advertising and increasing community donations. The Company's first quarter efficiency ratio was 59.5% as compared to 65.4% for the same quarter in the prior year.

Federal income tax provision totaled $509 thousand in first quarter 2018, as compared to $752 thousand tax provision for the same quarter in 2017. Our effective tax rate decreased from 30.3% to 19% a result of the Tax Cuts and Jobs Act enacted on December 22, 2017.

Average total assets during the quarter amounted to $700 million, an increase of $34 million, or 5%, above the same quarter of the prior year. Average loan balances of $527 million increased $47 million, or 10%, from the prior year first quarter while average securities balances of $124 million decreased $9 million, or 7%, as compared to first quarter 2017.

Average commercial loan balances for the quarter, including commercial real estate, increased $33 million, or 10%, from prior year levels. Average residential mortgage balances increased $11 million, or 11%, over the prior year's quarter. Average consumer credit balances increased $3 million, or 19%, versus the same quarter of the prior year.

Nonperforming assets decreased $2 million from December 31, 2017 to $4.6 million, or 0.87%, of total loans plus other real estate at March 31, 2018. The decrease in nonperforming loans is the result of the liquidation of a $1.7 million credit facility during first quarter 2018. At March 31, 2018, approximately $1.8 million of the non-performing loan total is guaranteed by either USDA or the SBA. Delinquent loan balances as of March 31, 2018 declined to 1.05% of total loans as compared to 1.53% at December 31, 2017 and 1.25% at March 31, 2017.

Net loan losses during first quarter 2018 were $295 thousand, or 0.23% annualized, compared to first quarter 2017 net loan recoveries of $323 thousand. The allowance for loan losses amounted to 1.06% of total loans at March 31, 2018 as compared to 1.08% of total loans on December 31, 2017 and 1.13% at March 31, 2017.

Average deposit balances grew on a year over year comparison by $42 million, or 8%, partially on the strength of customer response to higher rates paid on insured deposits. Time deposits on a quarter over prior year quarter increased slightly as rates have begun to increase and balances are renewing. The average balance of securities sold under repurchase agreement during the first quarter of 2018 decreased by $12 million, or 23%, compared to the average for the same period in the prior year. During 2017, a new corporate overnight cash management product was established within interest-bearing checking and at March 31, 2018 the new product had balances of $20.3 million.

Shareholders' equity totaled $71 million on March 31, 2018 with 2.7 million common shares outstanding. The tangible equity to assets ratio amounted to 9.5% on March 31, 2018 and 9.2% on March 31, 2017. The Company declared a first quarter dividend of $0.24 per share, a $.04 per share increase over first quarter 2017, producing an annualized yield of 2.7% based on the March 31, 2018 closing price of $35.95.

About CSB Bancorp, Inc.

CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $700 million as of March 31, 2018. CSB provides a complete range of banking and other financial services to consumers and businesses through its wholly owned subsidiary, The Commercial and Savings Bank, with fifteen banking centers in Holmes, Wayne, Tuscarawas, and Stark counties and Trust offices located in Millersburg, North Canton, and Wooster, Ohio.

Forward-Looking Statement

This release contains forward-looking statements relating to present or future trends or factors affecting the banking industry, and specifically the financial condition and results of operations, including without limitation, statements relating to the earnings outlook of the Company, as well as its operations, markets and products. Actual results could differ materially from those indicated. Among the important factors that could cause results to differ materially are interest rate changes, softening in the economy, which could materially impact credit quality trends and the ability to generate loans, changes in the mix of the Company's business, competitive pressures, changes in accounting, tax or regulatory practices or requirements and those risk factors detailed in the Company's periodic reports and registration statements filed with the Securities and Exchange Commission. The Company undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this release.

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