##### Table of Contents



CSB BANCORP, INC.
 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended: September 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number: 0-21714
 CSB Bancorp, Inc.
  Ohio
    
    34-1687530(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification Number)
 91 North Clay, P.O. Box 232, Millersburg, Ohio 44654
   (Registrants telephone number)
  þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
  o þ
  Common stock, $6.25 par value
    
    Outstanding at November 14, 2008:2,734,932 common shares




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##### 



PagePart I  Financial InformationITEM 1  FINANCIAL STATEMENTS (Unaudited)Consolidated Balance Sheets
    
    
    3Consolidated Statements of Income
    
    
    4Consolidated Statements of Changes in Shareholders Equity
    
    
    5Condensed Consolidated Statements of Cash Flows
    
    
    6Notes to the Consolidated Financial Statements
    
    
    7ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    11ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
    
    
    16ITEM 4  CONTROLS AND PROCEDURES
    
    
    17Part II  Other InformationITEM 1  Legal Proceedings
    
    
    181A  Risk Factors
    
    
    182  Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    193  Defaults upon Senior Securities
    
    
    194  Submission of Matters to a Vote of Security Holders.
    
    
    195  Other Information
    
    
    196  Exhibits
    
    
    20Signatures
    
    
    21EX-11EX-31.1EX-31.2EX-32.1EX-32.2




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September 30,
    
    
    December 31,2008
    
    
    2007ASSETSCash and due from bank
    
    $
    8,592,417
    
    
    $
    12,111,807Interest-earning deposits in other banks
    
    
    30,835
    
    
    
    81,555Federal funds sold
    
    
    1,800,000
    
    
    
    Total cash and cash equivalents
    
    
    10,423,252
    
    
    
    12,193,362Securities available-for-sale, at fair value
    
    
    67,417,273
    
    
    
    71,419,830Restricted stock, at cost
    
    
    3,220,800
    
    
    
    3,105,900Total securities
    
    
    70,638,073
    
    
    
    74,525,730Loans
    
    
    256,343,002
    
    
    
    256,659,059Less allowance for loan losses
    
    
    2,780,578
    
    
    
    2,585,901Net loans
    
    
    253,562,424
    
    
    
    254,073,158Premises and equipment, net
    
    
    7,073,444
    
    
    
    7,273,238Accrued interest receivable and other assets
    
    
    2,045,872
    
    
    
    2,204,257Total Assets
    
    $
    343,743,065
    
    
    $
    350,269,745LIABILITIESDepositsNoninterest-bearing
    
    $
    44,217,085
    
    
    $
    46,038,976Interest-bearing
    
    
    201,735,720
    
    
    
    213,347,066Total deposits
    
    
    245,952,805
    
    
    
    259,386,042Short-term borrowings
    
    
    24,756,834
    
    
    
    27,305,157Other borrowings
    
    
    33,681,998
    
    
    
    26,023,888Accrued interest payable and other liabilities
    
    
    1,839,484
    
    
    
    1,276,610Total liabilities
    
    
    306,231,121
    
    
    
    313,991,697SHAREHOLDERS EQUITYCommon stock, $6.25 par value: Authorized 9,000,000
shares; issued 2,667,786 shares
    
    
    16,673,667
    
    
    
    16,673,667Additional paid-in capital
    
    
    6,463,569
    
    
    
    6,452,319Retained earnings
    
    
    19,449,252
    
    
    
    17,990,445Treasury stock at cost: 245,803 shares in 2008 and
220,162 shares in 2007
    
    
    (5,014,541
    )
    
    
    (4,599,282
    )Accumulated other comprehensive loss
    
    
    (60,003
    )
    
    
    (239,101
    )Total shareholders equity
    
    
    37,511,944
    
    
    
    36,278,048Total Liabilities and Shareholders Equity
    
    $
    343,743,065
    
    
    $
    350,269,745
  3.




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Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Interest incomeLoans, including fees
    
    $
    4,073,175
    
    
    $
    4,633,268
    
    
    $
    12,503,136
    
    
    $
    13,433,102Taxable securities
    
    
    800,062
    
    
    
    720,952
    
    
    
    2,377,551
    
    
    
    2,205,401Nontaxable securities
    
    
    60,088
    
    
    
    62,931
    
    
    
    159,510
    
    
    
    198,060Other
    
    
    32,992
    
    
    
    944
    
    
    
    102,863
    
    
    
    16,324Total interest income
    
    
    4,966,317
    
    
    
    5,418,095
    
    
    
    15,143,060
    
    
    
    15,852,887Interest expenseDeposits
    
    
    1,068,797
    
    
    
    1,608,916
    
    
    
    3,662,709
    
    
    
    4,763,015Other
    
    
    457,693
    
    
    
    419,497
    
    
    
    1,374,994
    
    
    
    1,169,545Total interest expense
    
    
    1,526,490
    
    
    
    2,028,413
    
    
    
    5,037,703
    
    
    
    5,932,560Net interest income
    
    
    3,439,827
    
    
    
    3,389,682
    
    
    
    10,105,357
    
    
    
    9,920,327Provision for loan losses
    
    
    107,031
    
    
    
    151,264
    
    
    
    261,740
    
    
    
    353,540Net interest income after provision
for loan losses
    
    
    3,332,796
    
    
    
    3,238,418
    
    
    
    9,843,617
    
    
    
    9,566,787Non-interest incomeService charges on deposit accounts
    
    
    326,006
    
    
    
    335,536
    
    
    
    952,414
    
    
    
    927,894Trust and financial services
    
    
    138,128
    
    
    
    188,598
    
    
    
    489,360
    
    
    
    544,873Debit card interchange fees
    
    
    81,805
    
    
    
    85,551
    
    
    
    232,995
    
    
    
    201,354Credit card fee income
    
    
    53,393
    
    
    
    63,818
    
    
    
    129,824
    
    
    
    192,623Gain on sale of loans
    
    
    9,475
    
    
    
    10,115
    
    
    
    281,309
    
    
    
    14,805Other income
    
    
    99,805
    
    
    
    78,663
    
    
    
    258,142
    
    
    
    236,768Insurance recovery
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    186,526Securities gains (losses)
    
    
    (35,000
    )
    
    
    
    
    
    
    (35,000
    )
    
    
    5,430Total non-interest income
    
    
    673,612
    
    
    
    762,281
    
    
    
    2,309,044
    
    
    
    2,310,273Non-interest expensesSalaries and employee benefits
    
    
    1,532,758
    
    
    
    1,485,842
    
    
    
    4,596,823
    
    
    
    4,327,845Occupancy expense
    
    
    183,735
    
    
    
    188,167
    
    
    
    566,531
    
    
    
    554,439Equipment expense
    
    
    122,541
    
    
    
    131,192
    
    
    
    367,312
    
    
    
    372,324State franchise tax
    
    
    108,560
    
    
    
    105,892
    
    
    
    323,370
    
    
    
    311,971Professional and director fees
    
    
    95,454
    
    
    
    147,009
    
    
    
    375,353
    
    
    
    453,151Telephone expense
    
    
    47,064
    
    
    
    54,850
    
    
    
    151,609
    
    
    
    174,821Other expenses
    
    
    571,732
    
    
    
    609,157
    
    
    
    1,626,578
    
    
    
    1,793,941Total non-interest expenses
    
    
    2,661,844
    
    
    
    2,722,109
    
    
    
    8,007,575
    
    
    
    7,988,492Income before income taxes
    
    
    1,344,564
    
    
    
    1,278,590
    
    
    
    4,145,086
    
    
    
    3,888,568Federal income tax provision
    
    
    454,000
    
    
    
    415,500
    
    
    
    1,375,000
    
    
    
    1,254,500Net income
    
    $
    890,564
    
    
    $
    863,090
    
    
    $
    2,770,086
    
    
    $
    2,634,068Basic and diluted earnings per share
    
    $
    0.37
    
    
    $
    0.35
    
    
    $
    1.14
    
    
    $
    1.07
  4.




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Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Balance at beginning of period
    
    $
    36,577,306
    
    
    $
    35,119,135
    
    
    $
    36,278,048
    
    
    $
    35,070,320Comprehensive income:Net income
    
    
    890,564
    
    
    
    863,090
    
    
    
    2,770,086
    
    
    
    2,634,068Change in net unrealized
loss, net of reclassification
adjustments and related
income taxes $245,875,
$207,216, $92,262, and
$107,570, respectively
    
    
    477,287
    
    
    
    402,244
    
    
    
    179,098
    
    
    
    208,812Total comprehensive income
    
    
    1,367,851
    
    
    
    1,265,334
    
    
    
    2,949,184
    
    
    
    2,842,880Issuance of 40 shares from treasury
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    641Stock-based compensation expense
    
    
    3,750
    
    
    
    7,165
    
    
    
    11,250
    
    
    
    18,415Purchase of treasury shares
    
    
    (1,006
    )
    
    
    (131
    )
    
    
    (415,259
    )
    
    
    (654,114
    )Cash dividends declared
($0.18 and $0.54 per share in
2008 and 2007)
    
    
    (435,957
    )
    
    
    (443,320
    )
    
    
    (1,311,279
    )
    
    
    (1,329,959
    )Balance at end of period
    
    $
    37,511,944
    
    
    $
    35,948,183
    
    
    $
    37,511,944
    
    
    $
    35,948,183
  5.




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##### Table of Contents



Nine Months EndedSeptember 30,2008
    
    
    2007Net cash from operating activities
    
    $
    3,384,940
    
    
    $
    3,067,230Cash flows from investing activitiesSecurities available-for-sale:Proceeds from maturities, calls and repayments
    
    
    17,869,675
    
    
    
    6,529,688Purchases
    
    
    (13,611,007
    )
    
    
    (2,156,064
    )Purchase of FHLB stock
    
    
    (114,900
    )
    
    
    Proceeds from sale of other real estate
    
    
    105,000
    
    
    
    59,096Loan originations, net of repayments
    
    
    (1,983,166
    )
    
    
    (13,664,910
    )Proceeds from sale of credit cards
    
    
    2,513,671
    
    
    
    Premises and equipment expenditures, net
    
    
    (320,292
    )
    
    
    (461,715
    )Net cash provided by (used for) investing activities
    
    
    4,458,981
    
    
    
    (9,693,905
    )Cash flows from financing activitiesNet change in deposits
    
    
    (13,433,237
    )
    
    
    (6,583,339
    )Net change in short-term borrowings
    
    
    (2,548,323
    )
    
    
    3,761,849Proceeds from other borrowings
    
    
    8,000,000
    
    
    
    5,000,000Repayment of other borrowings
    
    
    (341,890
    )
    
    
    (391,888
    )Purchase of treasury shares
    
    
    (415,259
    )
    
    
    (654,113
    )Issuance of treasury shares
    
    
    
    
    
    
    641Cash dividends paid
    
    
    (875,322
    )
    
    
    (886,639
    )Net cash used for financing activities
    
    
    (9,614,031
    )
    
    
    246,511Net change in cash and cash equivalents
    
    
    (1,770,110
    )
    
    
    (6,380,164
    )Cash and cash equivalents at beginning of period
    
    
    12,193,362
    
    
    
    17,653,188Cash and cash equivalents at end of period
    
    $
    10,423,252
    
    
    $
    11,273,024Supplemental disclosuresInterest paid
    
    $
    5,120,995
    
    
    $
    5,816,914Income taxes paid
    
    
    1,326,000
    
    
    
    1,560,000
  6.




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NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
    RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115
 Determination of the Useful Life of
Intangible Assets , Goodwill and Other Intangible Assets Determining the Fair Value of a Financial Asset When the Market for
That Asset Fair Value Measurements Accounting Changes and Error Corrections
 7.




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NOTE 2  SECURITIES
  September 30, 2008
 Gross
    
    
    GrossAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    FairCost
    
    
    gains
    
    
    losses
    
    
    ValueAvailable-for-sale:U.S. Treasury security
    
    $
    99,971
    
    
    $
    1,396
    
    
    $
    
    
    
    $
    101,367Obligations of U.S.
government
corporations and agencies
    
    
    12,406,349
    
    
    
    39,783
    
    
    
    11,880
    
    
    
    12,434,252Mortgage-backed securities
    
    
    48,436,341
    
    
    
    159,897
    
    
    
    144,981
    
    
    
    48,451,257Obligations of states and
political subdivisions
    
    
    6,191,404
    
    
    
    42,227
    
    
    
    90,896
    
    
    
    6,142,735Total debt securities
    
    
    67,134,065
    
    
    
    243,303
    
    
    
    247,757
    
    
    
    67,129,611Equity Securities
    
    
    374,123
    
    
    
    437
    
    
    
    86,898
    
    
    
    287,662Total available-for-sale
    
    
    67,508,188
    
    
    
    243,740
    
    
    
    334,655
    
    
    
    67,417,273Restricted stock
    
    
    3,220,800
    
    
    
    
    
    
    
    
    
    
    
    3,220,800Total securities
    
    $
    70,728,988
    
    
    $
    243,740
    
    
    $
    334,655
    
    
    $
    70,638,073
 December 31, 2007
 Gross
    
    
    GrossAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    FairCost
    
    
    gains
    
    
    losses
    
    
    ValueAvailable-for-sale:U.S. Treasury security
    
    $
    99,944
    
    
    $
    1,704
    
    
    $
    
    
    
    $
    101,648Obligations of U.S.
government
corporations and agencies
    
    
    25,498,979
    
    
    
    18,190
    
    
    
    7,904
    
    
    
    25,509,265Mortgage-backed securities
    
    
    42,682,972
    
    
    
    15,639
    
    
    
    333,666
    
    
    
    42,364,945Obligations of states and
political subdivisions
    
    
    3,098,457
    
    
    
    60,088
    
    
    
    
    
    
    
    3,158,545Total debt securities
    
    
    71,380,352
    
    
    
    95,621
    
    
    
    341,570
    
    
    
    71,134,403Equity Securities
    
    
    401,752
    
    
    
    665
    
    
    
    116,990
    
    
    
    285,427Total available-for-sale
    
    
    71,782,104
    
    
    
    96,286
    
    
    
    458,560
    
    
    
    71,419,830Restricted stock
    
    
    3,105,900
    
    
    
    
    
    
    
    
    
    
    
    3,105,900Total securities
    
    $
    74,888,004
    
    
    $
    96,286
    
    
    $
    458,560
    
    
    $
    74,525,730
 8.




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NOTE 3  FAIR VALUE MEASUREMENTS (FAS NO. 157)
  Level I:
    
    Quoted prices are available in active markets for identical
assets or liabilities as of the reported date.Level II:
    
    Pricing inputs are other than quoted prices in active markets,
which are either directly or indirectly observable as of the
reported date. The nature of these assets and liabilities
include items for which quoted prices are available but traded
less frequently, and items that are fair valued using other
financial instruments, the parameters of which can be directly
observed.Level III:
    
    Assets and liabilities that have little to no pricing
observability as of the reported date. These items do not have
two-way markets and are measured using managements best
estimate of fair value, where the inputs into the determination
of fair value require significant management judgment or
estimation.
  September 30, 2008Level I
    
    Level II
    
    Level III
    
    TotalAssets:Securities available for sale
    
    $
    287,662
    
    
    $
    67,129,611
    
    
    $
    
    
    
    $
    67,417,273
 NOTE 4  ACQUISITION
   9.




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NOTE 4  ACQUISITION-(continued)
 October 31, 2008(dollars in thousands)
    
    UnauditedAssetsCash and cash equivalents
    
    $
    9,029Securities
    
    
    9,383Other investments
    
    
    2,019Loans, net of allowance of $458
    
    
    56,119Premises and equipment
    
    
    1,672Other assets
    
    
    4,422Total assets acquired
    
    $
    82,644LiabilitiesDeposits
    
    $
    58,021Borrowings
    
    
    16,941Other liabilities
    
    
    1,313Total liabilities assumed
    
    
    76,275Net assets acquired
    
    $
    6,369
 10.




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ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  FORWARD-LOOKING STATEMENTS
   FINANCIAL CONDITION
   11.




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(dollars in thousands)
    
    September 30, 2008
    
    December 31, 2007
    
    September 30, 2007Non-performing loans
    
    
    577
    
    
    
    571
    
    
    
    1,092Other real estate
    
    
    0
    
    
    
    101
    
    
    
    0Allowance for loan losses
    
    
    2,781
    
    
    
    2,586
    
    
    
    2,555Total loans
    
    
    256,343
    
    
    
    256,659
    
    
    
    245,626Allowance: loans
    
    
    1.08
    %
    
    
    1.01
    %
    
    
    1.04
    %Allowance: non-performing loans
    
    
    4.9
    x
    
    
    4.5
    x
    
    
    2.3
    x
      12.




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RESULTS OF OPERATIONS
 Three months ended September 30, 2008 and 2007
      13.




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Nine months ended September 30, 2008 and 2007
       14.




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CAPITAL RESOURCES
  LIQUIDITY
  OFF-BALANCE SHEET ARRANGEMENTS
  15.




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QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
 
 ITEM 3  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
   September 30 2008
 Changes inInterest Rates
    
    Net Interest
    
    Dollar
    
    Percentage(basis points)
    
    Income
    
    Change
    
    Change(Dollars in Thousands)+200
    
    $14,700
    
    $900
    
    6.5%+100
    
    14,224
    
    424
    
    3.10
    
    13,800
    
    0
    
    0.0-100
    
    13,307
    
    (493)
    
    (3.6)-200
    
    12,873
    
    (927)
    
    (6.7)
 December 31, 2007
 Changes inInterest Rates
    
    Net Interest
    
    Dollar
    
    Percentage(basis points)
    
    Income
    
    Change
    
    Change(Dollars in Thousands)+200
    
    $14,682
    
    $506
    
    3.6%+100
    
    14,457
    
    281
    
    2.00
    
    14,176
    
    0
    
    0.0-100
    
    13,988
    
    (188)
    
    (1.3)-200
    
    13,646
    
    (530)
    
    (3.7)
 16.




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ITEM 4  CONTROLS AND PROCEDURES
     CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
  17.




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##### Table of Contents



ITEM 1  LEGAL PROCEEDINGS
  
 ITEM 1A   RISK FACTORS
  The Company may fail to realize the anticipated benefits of the
acquisition of Indian Village Bancorp, Inc.
  The Banks ability to pay dividends is subject to regulatory
limitations which, to the extent the Company requires such
dividends in the future, may affect its ability to pay dividends
or repurchase its stock.
  18.




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ITEM 2  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  ssuer Purchase of Equity Securities
 MaximumTotal Number of
    
    Number of SharesTotal Number
    
    Average
    
    Shares Purchased
    
    that May Yet beof Shares
    
    Price Paid
    
    as Part of Publicly
    
    Purchased UnderPeriod
    
    Purchased
    
    Per Share
    
    Announced Plans
    
    the PlanJuly 1, 2008 to
July 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,538August 1, 2008 to
August 31, 2008
    
    
    67
    
    
    $
    15.05
    
    
    
    67
    
    
    
    41,471September 1, 2008 to
September 30, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,471
  
 Item 3  Defaults Upon Senior Securities:
  
 Item 4  Submission of Matters to a Vote of Security Holders
  
 Item 5  Other Information:
  19.




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##### Table of Contents



Item 6  Exhibits:
 ExhibitNumber
    
    Description of Document3.1
    
    Amended Articles of Incorporation of CSB Bancorp, Inc.
(incorporated by reference to Registrants Form 10-KSB for the Fiscal Year
ended December 31, 1994)3.1.1
    
    Amended form of Article Fourth of Amended Articles of
Incorporation, as effective April 9, 1998 (incorporated by reference to
Registrants Form 10-K for the Fiscal Year ended December 31, 1998)3.2
    
    Code of Regulations of CSB Bancorp, Inc. (incorporated by
reference to Registrants Form 10-SB)4
    
    Specimen stock certificate (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.)31.1
    
    Rule 13a-14(a)/15d-14(a) CEOs Certification31.2
    
    Rule 13a-14(a)/15d-14(a) CFOs Certification32.1
    
    Section 1350 CEOs Certification32.2
    
    Section 1350 CFOs Certification
 20.




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##### Table of Contents



CSB BANCORP, INC.(Registrant)Date: November 14, 2008
    
    /s/ Eddie L. SteinerEddie L. SteinerPresidentChief Executive OfficerDate: November 14, 2008
    
    /s/ Paula J. MeilerPaula J. MeilerSenior Vice PresidentChief Financial Officer
 21.




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##### Table of Contents



ExhibitNumber
    
    Description of Document3.1
    
    Amended Articles of Incorporation of CSB Bancorp, Inc.
(incorporated by reference to Registrants Form 10-KSB
for the Fiscal Year ended December 31, 1994)3.1.1
    
    Amended form of Article Fourth of Amended
Articles of Incorporation, as effective April 9, 1998
(incorporated by reference to Registrants Form 10-k for the
Fiscal Year ended December 31, 1998)3.2
    
    Code of Regulations of CSB Bancorp, Inc.
(incorporated by reference to Registrants Form 10-SB)4
    
    Specimen stock certificate
(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.)31.1
    
    Rule 13a-14(a)/15d-14(a) CEOs Certification31.2
    
    Rule 13a-14(a)/15d-14(a) CFOs Certification32.1
    
    Section 1350 CEOs Certification32.2
    
    Section 1350 CFOs Certification
 22.