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: June 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.
 (Exact name of registrant as specified in its charter)
 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
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
  o þ
  Common stock, $6.25 par value
    
    Outstanding at August 12, 2008:2,422,050 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
    
    
    10ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
    
    
    15ITEM 4  CONTROLS AND PROCEDURES
    
    
    16Part II  Other InformationITEM 1   Legal Proceedings
    
    
    171A  Risk Factors
    
    
    172   Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    173   Defaults upon Senior Securities
    
    
    174   Submission of Matters to a Vote of Security Holders.
    
    
    175   Other Information
    
    
    176   Exhibits
    
    
    18Signatures
    
    
    19




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##### 



June 30,
    
    
    December 31,2008
    
    
    2007ASSETSCash and due from bank
    
    $
    11,350,478
    
    
    $
    12,111,807Interest-earning deposits in other banks
    
    
    181,101
    
    
    
    81,555Federal funds sold
    
    
    11,000,000
    
    
    
    Total cash and cash equivalents
    
    
    22,531,579
    
    
    
    12,193,362Securities available-for-sale, at fair value
    
    
    65,562,619
    
    
    
    71,419,830Restricted stock, at cost
    
    
    3,181,600
    
    
    
    3,105,900Total securities
    
    
    68,744,219
    
    
    
    74,525,730Loans
    
    
    249,542,605
    
    
    
    256,659,059Less allowance for loan losses
    
    
    2,717,912
    
    
    
    2,585,901Net loans
    
    
    246,824,693
    
    
    
    254,073,158Premises and equipment, net
    
    
    7,076,699
    
    
    
    7,273,238Accrued interest receivable and other assets
    
    
    1,926,733
    
    
    
    2,204,257Total Assets
    
    $
    347,103,923
    
    
    $
    350,269,745LIABILITIESDepositsNoninterest-bearing
    
    $
    40,794,649
    
    
    $
    46,038,976Interest-bearing
    
    
    207,381,737
    
    
    
    213,347,066Total deposits
    
    
    248,176,386
    
    
    
    259,386,042Short-term borrowings
    
    
    27,111,134
    
    
    
    27,305,157Other borrowings
    
    
    33,767,797
    
    
    
    26,023,888Accrued interest payable and other liabilities
    
    
    1,471,300
    
    
    
    1,276,610Total liabilities
    
    
    310,526,617
    
    
    
    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
    
    
    6,459,819
    
    
    
    6,452,319Retained earnings
    
    
    18,994,645
    
    
    
    17,990,445Treasury stock at cost: 245,736 shares in 2008 and
220,162 shares in 2007
    
    
    (5,013,535
    )
    
    
    (4,599,282
    )Accumulated other comprehensive loss
    
    
    (537,290
    )
    
    
    (239,101
    )Total shareholders equity
    
    
    36,577,306
    
    
    
    36,278,048Total Liabilities and Shareholders Equity
    
    $
    347,103,923
    
    
    $
    350,269,745
  3.




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##### 



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Interest incomeLoans, including fees
    
    $
    4,017,256
    
    
    $
    4,485,314
    
    
    $
    8,429,960
    
    
    $
    8,799,834Taxable securities
    
    
    772,867
    
    
    
    734,392
    
    
    
    1,577,489
    
    
    
    1,484,449Nontaxable securities
    
    
    55,544
    
    
    
    66,617
    
    
    
    99,422
    
    
    
    135,129Other
    
    
    47,664
    
    
    
    2,186
    
    
    
    69,871
    
    
    
    15,380Total interest income
    
    
    4,893,331
    
    
    
    5,288,509
    
    
    
    10,176,742
    
    
    
    10,434,792Interest expenseDeposits
    
    
    1,166,153
    
    
    
    1,600,736
    
    
    
    2,593,911
    
    
    
    3,154,099Other
    
    
    441,414
    
    
    
    412,420
    
    
    
    917,302
    
    
    
    750,048Total interest expense
    
    
    1,607,567
    
    
    
    2,013,156
    
    
    
    3,511,213
    
    
    
    3,904,147Net interest income
    
    
    3,285,764
    
    
    
    3,275,353
    
    
    
    6,665,529
    
    
    
    6,530,645Provision for loan losses
    
    
    47,677
    
    
    
    124,271
    
    
    
    154,709
    
    
    
    202,276Net interest income after provision
for loan losses
    
    
    3,238,087
    
    
    
    3,151,082
    
    
    
    6,510,820
    
    
    
    6,328,369Non-interest incomeService charges on deposit accounts
    
    
    339,256
    
    
    
    316,887
    
    
    
    626,408
    
    
    
    592,359Trust and financial services
    
    
    162,568
    
    
    
    186,638
    
    
    
    351,232
    
    
    
    356,275Debit card interchange fees
    
    
    80,370
    
    
    
    61,911
    
    
    
    151,190
    
    
    
    115,803Credit card fee income
    
    
    12,379
    
    
    
    65,358
    
    
    
    76,431
    
    
    
    128,805Gain on sale of loans
    
    
    7,176
    
    
    
    1,946
    
    
    
    271,835
    
    
    
    4,690Other income
    
    
    78,197
    
    
    
    77,196
    
    
    
    158,336
    
    
    
    158,105Insurance recovery
    
    
    
    
    
    
    186,526
    
    
    
    
    
    
    
    186,526Securities gains
    
    
    
    
    
    
    5,430
    
    
    
    
    
    
    
    5,430Total non-interest income
    
    
    679,946
    
    
    
    901,892
    
    
    
    1,635,432
    
    
    
    1,547,993Non-interest expensesSalaries and employee benefits
    
    
    1,527,162
    
    
    
    1,434,823
    
    
    
    3,064,065
    
    
    
    2,842,003Occupancy expense
    
    
    184,915
    
    
    
    181,720
    
    
    
    382,796
    
    
    
    366,273Equipment expense
    
    
    119,320
    
    
    
    125,214
    
    
    
    244,770
    
    
    
    241,132State franchise tax
    
    
    107,380
    
    
    
    104,741
    
    
    
    214,810
    
    
    
    206,079Professional and director fees
    
    
    140,343
    
    
    
    164,760
    
    
    
    279,899
    
    
    
    306,142Telephone expense
    
    
    46,877
    
    
    
    55,305
    
    
    
    104,544
    
    
    
    119,970Other expenses
    
    
    491,274
    
    
    
    579,944
    
    
    
    1,054,846
    
    
    
    1,184,784Total non-interest expenses
    
    
    2,617,271
    
    
    
    2,646,507
    
    
    
    5,345,730
    
    
    
    5,266,383Income before income taxes
    
    
    1,300,762
    
    
    
    1,406,467
    
    
    
    2,800,522
    
    
    
    2,609,979Federal income tax provision
    
    
    423,000
    
    
    
    450,000
    
    
    
    921,000
    
    
    
    839,000Net income
    
    $
    877,762
    
    
    $
    956,467
    
    
    $
    1,879,522
    
    
    $
    1,770,979Basic and diluted earnings per share
    
    $
    0.36
    
    
    $
    0.39
    
    
    $
    0.77
    
    
    $
    0.72
  4.




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##### 



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Balance at beginning of period
    
    $
    37,147,621
    
    
    $
    34,915,226
    
    
    $
    36,278,048
    
    
    $
    35,070,320Comprehensive income :Net income
    
    
    877,762
    
    
    
    956,467
    
    
    
    1,879,522
    
    
    
    1,770,979Change in net unrealized
loss, net of reclassification
adjustments and related
income taxes $(368,492),
$(158,912), $(153,612), and
$(99,646), respectively
    
    
    (715,308
    )
    
    
    (308,477
    )
    
    
    (298,189
    )
    
    
    (193,432
    )Total comprehensive income
    
    
    162,454
    
    
    
    649,990
    
    
    
    1,581,333
    
    
    
    1,577,547Issuance of 40 shares from treasury
    
    
    
    
    
    
    
    
    
    
    

    
    
    
    641Stock-based compensation expense
    
    
    4,000
    
    
    
    
    
    
    
    7,500
    
    
    
    11,250Purchase of treasury shares
    
    
    (300,800
    )
    
    
    (761
    )
    
    
    (414,253
    )
    
    
    (653,983
    )Cash dividends declared
($0.18 and $0.36 per share in
2008 and 2007)
    
    
    (435,969
    )
    
    
    (443,320
    )
    
    
    (875,322
    )
    
    
    (886,640
    )Balance at end of period
    
    $
    36,577,306
    
    
    $
    35,119,135
    
    
    $
    36,577,306
    
    
    $
    35,119,135
  5.




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##### 



Six Months EndedJune 30,2008
    
    
    2007Net cash from operating activities
    
    $
    2,229,326
    
    
    $
    1,564,951Cash flows from investing activitiesSecurities available-for-sale:Proceeds from maturities, calls and repayments
    
    
    27,083,212
    
    
    
    3,232,451Purchases
    
    
    (21,730,677
    )
    
    
    (167,061
    )Purchase of FHLB stock
    
    
    (75,700
    )
    
    
    Proceeds from sale of other real estate
    
    
    105,000
    
    
    
    10,000Loan originations, net of repayments
    
    
    4,858,189
    
    
    
    (10,496,202
    )Proceeds from sale of credit cards
    
    
    2,513,671
    
    
    
    Premises and equipment expenditures, net
    
    
    (131,428
    )
    
    
    (436,157
    )Net cash provided by (used for) investing activities
    
    
    12,622,267
    
    
    
    (7,856,969
    )Cash flows from financing activitiesNet change in deposits
    
    
    (11,209,656
    )
    
    
    (9,813,169
    )Net change in short-term borrowings
    
    
    (194,023
    )
    
    
    5,234,970Proceeds from other borrowings
    
    
    8,000,000
    
    
    
    5,000,000Repayment of other borrowings
    
    
    (256,091
    )
    
    
    (296,480
    )Purchase of treasury shares
    
    
    (414,253
    )
    
    
    (653,983
    )Issuance of treasury shares
    
    
    
    
    
    
    641Cash dividends paid
    
    
    (439,353
    )
    
    
    (443,320
    )Net cash used for financing activities
    
    
    (4,513,376
    )
    
    
    (971,341
    )Net change in cash and cash equivalents
    
    
    10,338,217
    
    
    
    (7,263,359
    )Cash and cash equivalents at beginning of period
    
    
    12,193,362
    
    
    
    17,653,188Cash and cash equivalents at end of period
    
    $
    22,531,579
    
    
    $
    10,389,829Supplemental disclosuresInterest paid
    
    $
    3,543,249
    
    
    $
    3,880,531Income taxes paid
    
    
    926,000
    
    
    
    1,010,000Non-cash investing activity-transfer of loans to OREO
    
    
    
    
    
    
    59,096
  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
 7.




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##### 



NOTE 2  SECURITIES
  June 30, 2008
 Gross
    
    
    GrossAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    FairCost
    
    
    gains
    
    
    losses
    
    
    ValueAvailable-for-sale:U.S. Treasury security
    
    $
    99,968
    
    
    $
    1,579
    
    
    $
    
    
    
    $
    101,547Obligations of U.S.
government
corporations and agencies
    
    
    11,417,400
    
    
    
    24,690
    
    
    
    55,984
    
    
    
    11,386,106Mortgage-backed securities
    
    
    48,257,199
    
    
    
    25,766
    
    
    
    698,354
    
    
    
    47,584,611Obligations of states and
political subdivisions
    
    
    6,193,006
    
    
    
    58,417
    
    
    
    58,136
    
    
    
    6,193,287Total debt securities
    
    
    65,967,573
    
    
    
    110,452
    
    
    
    812,474
    
    
    
    65,265,551Equity Securities
    
    
    409,122
    
    
    
    779
    
    
    
    112,833
    
    
    
    297,068Total available-for-sale
    
    
    66,376,695
    
    
    
    111,231
    
    
    
    925,307
    
    
    
    65,562,619Restricted stock
    
    
    3,181,600
    
    
    
    
    
    
    
    
    
    
    
    3,181,600Total securities
    
    $
    69,558,295
    
    
    $
    111,231
    
    
    $
    925,307
    
    
    $
    68,744,219
 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.
  June 30, 2008Level I
    
    Level II
    
    Level III
    
    TotalAssets:Securities available for sale
    
    $
    297,068
    
    
    $
    65,265,551
    
    
    $
    
    
    
    $
    65,562,619
 NOTE 4  PENDING ACQUISITION
  9.




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##### 



ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  FORWARD-LOOKING STATEMENTS
   FINANCIAL CONDITION
   10.




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##### 



June 30, 2008
    
    December 31, 2007
    
    June 30, 2007Non-performing loans
    
    
    615,000
    
    
    
    571,000
    
    
    
    1,586,000Other real estate
    
    
    
    
    
    
    101,700
    
    
    
    49,000Allowance for loan losses
    
    
    2,718,000
    
    
    
    2,585,900
    
    
    
    2,426,000Total loans
    
    
    249,543,000
    
    
    
    256,659,100
    
    
    
    242,485,000Allowance: loans
    
    
    1.09
    %
    
    
    1.01
    %
    
    
    1.00
    %Allowance: non-performing loans
    
    
    4.4x
    
    
    
    4.5x
    
    
    
    1.5x
      11.




---



##### 



RESULTS
OF OPERATIONS
 Three months ended June 30, 2008 and 2007
      12.




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##### 



Six months ended June 30, 2008 and 2007
       13.




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##### 



CAPITAL RESOURCES
  LIQUIDITY
  OFF-BALANCE SHEET ARRANGEMENTS
  14.




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##### 



QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
 
 ITEM 3 QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
   June 30 2008
 Changes inInterest Rates
    
    Net Interest
    
    Dollar
    
    Percentage(basis points)
    
    Income
    
    Change
    
    Change(Dollars in Thousands)+200
    
    $
    13,929
    
    
    $
    864
    
    
    
    6.6
    %+100
    
    
    13,493
    
    
    
    428
    
    
    
    3.30
    
    
    13,065
    
    
    
    0
    
    
    
    0.0-100
    
    
    12,708
    
    
    
    (357
    )
    
    
    (2.7
    )-200
    
    
    12,243
    
    
    
    (822
    )
    
    
    (6.3
    )
 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
    )
 15.




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##### 



ITEM 4  CONTROLS AND PROCEDURES
     CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
  16.




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##### 



ITEM 1  LEGAL PROCEEDINGS
  ITEM 1A   RISK FACTORS
  
 ITEM 2  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  Issuer
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 PlanApril 1, 2008 to
April 30, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60,337May 1, 2008 to
May 31, 2008
    
    
    18,800
    
    
    $
    16.00
    
    
    
    18,800
    
    
    
    41,537June 1, 2008 to
June 30, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,537
  
 Item 3  Defaults Upon Senior Securities:
  
 Item 4  Submission of Matters to a Vote of Security Holders
  
 Item 5  Other Information:
  17.




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##### 



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
 18.




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##### 



CSB
BANCORP, INC.
(Registrant)Date: August 12, 2008
    /s/ Eddie L. SteinerEddie L. SteinerPresident
Chief Executive OfficerDate: August 12, 2008
    /s/ Paula J. MeilerPaula J. MeilerSenior Vice President
Chief Financial Officer 19.




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##### 



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.