##### Table of Contents








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##### Table of Contents



strength, stability
& security
These words are a great comfort when they refer to your community bank.
For 130 years, The Commercial & Savings Bank has understood the importance of community banking and the many roles we play in serving our local communities, which now include Holmes, Tuscarawas, Wayne and Stark counties. By forging long-lasting partnerships and providing honest guidance, CSB continues in its mission to remain a strong and secure community bank.
CSB shareholders and customers can rest easy knowing that your local community bank is strong, stable and secure.




---



##### 



()
  2008 Financial Highlights
    
    
    42008 Letter to Shareholders
    
    
    52008 Financial Review
    
    
    10Report on Managements Assessment of Internal Control over Financial Reporting
    
    
    25Report of Independent Registered Public Accounting Firm
    
    
    26Consolidated Balance Sheets
    
    
    27Consolidated Statements of Income
    
    
    28Consolidated Statements of Shareholders Equity
    
    
    29Consolidated Statements of Cash Flows
    
    
    30Summary of Significant Accounting Policies
    
    
    32Notes to Consolidated Financial Statements
    
    
    38Officers of The Commercial & Savings Bank
    
    
    54General Information
    
    
    55




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##### Table of Contents



2008 Financial Highlights
  Dollars in thousands, except per share data
    
    2008
    
    
    2007
    
    
    % ChangeConsolidated ResultsNet interest income
    
    $
    13,878
    
    
    $
    13,326
    
    
    
    4
    %Net interest income
fully taxable-equivalent (FTE) basis
    
    
    14,009
    
    
    
    13,470
    
    
    
    4Noninterest income
    
    
    3,033
    
    
    
    3,035
    
    
    
    0Provision for loan losses
    
    
    333
    
    
    
    472
    
    
    
    29Noninterest expense
    
    
    11,311
    
    
    
    10,701
    
    
    
    6Net income
    
    
    3,537
    
    
    
    3,514
    
    
    
    1At Year-endLoans, net
    
    $
    312,897
    
    
    $
    254,073
    
    
    
    23
    %Assets
    
    
    424,657
    
    
    
    350,270
    
    
    
    21Deposits
    
    
    305,453
    
    
    
    259,386
    
    
    
    18Shareholders equity
    
    
    43,468
    
    
    
    36,278
    
    
    
    20Cash dividends declared
    
    
    0.72
    
    
    
    0.72
    
    
    
    0Book value
    
    
    15.89
    
    
    
    14.82
    
    
    
    7Tangible book value
    
    
    15.17
    
    
    
    14.82
    
    
    
    2Market price
    
    
    15.00
    
    
    
    17.75
    
    
    
    15Basic earnings per share
    
    
    1.43
    
    
    
    1.42
    
    
    
    1Diluted earnings per share
    
    
    1.43
    
    
    
    1.42
    
    
    
    1Financial PerformanceReturn on average assets
    
    
    .99
    %
    
    
    1.07
    %Return on average equity
    
    
    9.23
    
    
    
    9.82Net interest margin
    
    
    4.09
    
    
    
    4.31Efficiency ratio
    
    
    66.17
    
    
    
    64.90Capital RatiosRisk-based capital:Tier 1
    
    
    14.40
    %
    
    
    15.30
    %Total
    
    
    15.50
    
    
    
    16.40Leverage
    
    
    10.40
    
    
    
    11.00




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##### Table of Contents



2008 Letter to Shareholders
  (CSB LOGO) Dear Fellow Shareholder
  
 Financial Overview




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##### Table of Contents



Indian Village Acquisition
     Headwinds




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##### Table of Contents



Recession
    Looking Ahead




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##### Table of Contents



-s- Eddie L. Steiner
    
    -s- John R. WaltmanEddie L. Steiner
    
    John R. WaltmanPresident and
    
    Chairman,Chief Executive Officer
    
    Board of Directors




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##### Table of Contents



2008 Financial Review
 Introduction
    Forward-Looking Statements




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##### Table of Contents



2008 Financial Review
  (CSB LOGO) Selected Financial Data
  2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(Dollars in thousands, except per share data)Statements of Income:Total interest income
    
    $
    20,621
    
    
    $
    21,231
    
    
    $
    20,045
    
    
    $
    17,358
    
    
    $
    15,074Total interest expense
    
    
    6,743
    
    
    
    7,905
    
    
    
    6,877
    
    
    
    4,812
    
    
    
    3,874Net interest income
    
    
    13,878
    
    
    
    13,326
    
    
    
    13,168
    
    
    
    12,546
    
    
    
    11,200Provision for loan losses
    
    
    333
    
    
    
    472
    
    
    
    302
    
    
    
    283
    
    
    
    423Net interest income after
provision for loan losses
    
    
    13,545
    
    
    
    12,854
    
    
    
    12,866
    
    
    
    12,263
    
    
    
    10,777Noninterest income
    
    
    3,033
    
    
    
    3,035
    
    
    
    2,592
    
    
    
    2,580
    
    
    
    2,680Noninterest expenses
    
    
    11,311
    
    
    
    10,701
    
    
    
    10,915
    
    
    
    10,803
    
    
    
    10,278Income before income taxes
    
    
    5,267
    
    
    
    5,188
    
    
    
    4,543
    
    
    
    4,041
    
    
    
    3,179Income tax provision
    
    
    1,730
    
    
    
    1,674
    
    
    
    1,433
    
    
    
    1,168
    
    
    
    653Net income
    
    $
    3,537
    
    
    $
    3,514
    
    
    $
    3,110
    
    
    $
    2,873
    
    
    $
    2,526Per share of common stock:Basic income per share
    
    $
    1.43
    
    
    $
    1.42
    
    
    $
    1.23
    
    
    $
    1.09
    
    
    $
    0.96Diluted income per share
    
    
    1.43
    
    
    
    1.42
    
    
    
    1.23
    
    
    
    1.09
    
    
    
    0.95Dividends
    
    
    0.72
    
    
    
    0.72
    
    
    
    0.64
    
    
    
    0.56
    
    
    
    0.52Book value
    
    
    15.89
    
    
    
    14.82
    
    
    
    14.03
    
    
    
    13.64
    
    
    
    13.69Average basic common shares
outstanding
    
    
    2,482,335
    
    
    
    2,467,110
    
    
    
    2,526,914
    
    
    
    2,638,697
    
    
    
    2,644,582Average diluted common shares
outstanding
    
    
    2,482,335
    
    
    
    2,467,812
    
    
    
    2,532,592
    
    
    
    2,642,301
    
    
    
    2,650,948Year-end balances:Loans, net
    
    $
    312,897
    
    
    $
    254,073
    
    
    $
    229,825
    
    
    $
    212,574
    
    
    $
    215,510Securities
    
    
    81,888
    
    
    
    74,526
    
    
    
    70,241
    
    
    
    81,220
    
    
    
    76,228Total assets
    
    
    424,657
    
    
    
    350,270
    
    
    
    327,240
    
    
    
    320,989
    
    
    
    317,340Deposits
    
    
    305,453
    
    
    
    259,386
    
    
    
    260,178
    
    
    
    255,403
    
    
    
    247,951Borrowings
    
    
    73,889
    
    
    
    53,329
    
    
    
    30,521
    
    
    
    29,485
    
    
    
    32,062Shareholders equity
    
    
    43,468
    
    
    
    36,278
    
    
    
    35,070
    
    
    
    35,170
    
    
    
    36,208Average balances:Loans, net
    
    $
    260,132
    
    
    $
    239,405
    
    
    $
    222,952
    
    
    $
    218,187
    
    
    $
    214,330Securities
    
    
    70,680
    
    
    
    66,966
    
    
    
    74,994
    
    
    
    71,866
    
    
    
    73,342Total assets
    
    
    357,667
    
    
    
    327,771
    
    
    
    319,749
    
    
    
    316,612
    
    
    
    312,534Deposits
    
    
    257,478
    
    
    
    253,221
    
    
    
    247,543
    
    
    
    249,007
    
    
    
    241,674Borrowings
    
    
    60,472
    
    
    
    37,278
    
    
    
    35,824
    
    
    
    30,083
    
    
    
    34,540Shareholders equity
    
    
    38,308
    
    
    
    35,772
    
    
    
    34,766
    
    
    
    36,290
    
    
    
    35,332Selected ratios:Net interest margin
    
    
    4.09
    %
    
    
    4.31
    %
    
    
    4.38
    %
    
    
    4.23
    %
    
    
    3.83
    %Return on average total assets
    
    
    0.99
    
    
    
    1.07
    
    
    
    0.97
    
    
    
    0.91
    
    
    
    0.81Return on average shareholders equity
    
    
    9.23
    
    
    
    9.82
    
    
    
    8.95
    
    
    
    7.92
    
    
    
    7.15Average shareholders equity
as a percent of average total assets
    
    
    10.71
    
    
    
    10.91
    
    
    
    10.87
    
    
    
    11.46
    
    
    
    11.31Net loan charge-offs (recoveries)
as a percent of average loans
    
    
    (0.01
    )
    
    
    0.20
    
    
    
    0.06
    
    
    
    0.19
    
    
    
    0.14Allowance for loan losses as a percent of
loans at year-end
    
    
    1.07
    
    
    
    1.01
    
    
    
    1.12
    
    
    
    1.14
    
    
    
    1.18Shareholders equity as a percent of
total year-end assets
    
    
    10.24
    
    
    
    10.36
    
    
    
    10.72
    
    
    
    10.96
    
    
    
    11.41Dividend payout ratio
    
    
    50.99
    
    
    
    50.41
    
    
    
    51.89
    
    
    
    51.47
    
    
    
    54.44




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##### Table of Contents



2008 Financial Review
 Results of Operations
 Net Income
   Net Interest Income




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##### Table of Contents



2008 Financial Review
  (CSB LOGO)  Average Balances, Rates and Yields(Dollars in thousands)2008
    
    
    
    2007
    
    
    
    2006Average
    
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    
    AverageBalance(1)
    
    
    Interest
    
    
    Rate
    (2)
    
    
    Balance
    (1)
    
    Interest
    
    
    Rate
    (2)
    
    
    Balance(1)
    
    
    Interest
    
    
    Rate
    (2)Interest-earning assetsFederal funds sold
    
    $
    5,645
    
    
    $
    120
    
    
    
    2.13
    %
    
    
    $
    458
    
    
    $
    25
    
    
    
    5.44
    %
    
    
    $
    250
    
    
    $
    11
    
    
    
    4.28
    %Interest-earning deposits
    
    
    115
    
    
    
    1
    
    
    
    1.13
    
    
    
    
    62
    
    
    
    2
    
    
    
    2.58
    
    
    
    
    18
    
    
    
    1
    
    
    
    9.44Securities:Taxable
    
    
    65,109
    
    
    
    3,252
    
    
    
    5.00
    
    
    
    
    61,673
    
    
    
    2,928
    
    
    
    4.75
    
    
    
    
    66,951
    
    
    
    3,006
    
    
    
    4.49Tax exempt
    
    
    5,571
    
    
    
    225
    
    
    
    4.01
    
    
    
    
    5,293
    
    
    
    251
    
    
    
    4.75
    
    
    
    
    8,043
    
    
    
    383
    
    
    
    4.76Loans(3)
    
    
    262,933
    
    
    
    17,022
    
    
    
    6.47
    
    
    
    
    241,979
    
    
    
    18,025
    
    
    
    7.45
    
    
    
    
    225,445
    
    
    
    16,644
    
    
    
    7.38Total interest-earning assets
    
    
    339,373
    
    
    
    20,621
    
    
    
    6.08
    %
    
    
    
    309,465
    
    
    
    21,231
    
    
    
    6.86
    %
    
    
    
    300,707
    
    
    
    20,045
    
    
    
    6.67
    %Noninterest-earning assetsCash and due from banks
    
    
    10,523
    
    
    
    
    
    
    
    
    
    
    
    
    10,980
    
    
    
    
    
    
    
    
    
    
    
    
    11,027Bank premises and
equipment, net
    
    
    7,691
    
    
    
    
    
    
    
    
    
    
    
    
    7,719
    
    
    
    
    
    
    
    
    
    
    
    
    7,864Other assets
    
    
    2,881
    
    
    
    
    
    
    
    
    
    
    
    
    2,181
    
    
    
    
    
    
    
    
    
    
    
    
    2,644Allowance for loan losses
    
    
    (2,801
    )
    
    
    
    
    
    
    
    
    
    
    
    (2,574
    )
    
    
    
    
    
    
    
    
    
    
    
    (2,493
    )Total assets
    
    $
    357,667
    
    
    
    
    
    
    
    
    
    
    
    $
    327,771
    
    
    
    
    
    
    
    
    
    
    
    $
    319,749Interest-bearing liabilitiesDemand deposits
    
    $
    45,166
    
    
    
    133
    
    
    
    0.29
    %
    
    
    $
    45,606
    
    
    
    257
    
    
    
    0.56
    %
    
    
    $
    46,096
    
    
    
    232
    
    
    
    0.50
    %Savings deposits
    
    
    45,591
    
    
    
    376
    
    
    
    0.82
    
    
    
    
    41,123
    
    
    
    511
    
    
    
    1.24
    
    
    
    
    41,528
    
    
    
    411
    
    
    
    0.99Time deposits
    
    
    124,123
    
    
    
    4,328
    
    
    
    3.49
    
    
    
    
    124,752
    
    
    
    5,585
    
    
    
    4.48
    
    
    
    
    120,981
    
    
    
    4,775
    
    
    
    3.95Borrowed funds
    
    
    60,472
    
    
    
    1,906
    
    
    
    3.15
    
    
    
    
    37,278
    
    
    
    1,552
    
    
    
    4.16
    
    
    
    
    35,824
    
    
    
    1,459
    
    
    
    4.07Total interest-bearing liabilities
    
    
    275,352
    
    
    
    6,743
    
    
    
    2.45
    %
    
    
    
    248,759
    
    
    
    7,905
    
    
    
    3.18
    %
    
    
    
    244,429
    
    
    
    6,877
    
    
    
    2.81
    %Noninterest-bearing liabilities
and shareholders equityDemand deposits
    
    
    42,598
    
    
    
    
    
    
    
    
    
    
    
    
    41,740
    
    
    
    
    
    
    
    
    
    
    
    
    38,938Other liabilities
    
    
    1,409
    
    
    
    
    
    
    
    
    
    
    
    
    1,500
    
    
    
    
    
    
    
    
    
    
    
    
    1,616Shareholders equity
    
    
    38,308
    
    
    
    
    
    
    
    
    
    
    
    
    35,772
    
    
    
    
    
    
    
    
    
    
    
    
    34,766Total liabilities and equity
    
    $
    357,667
    
    
    
    
    
    
    
    
    
    
    
    $
    327,771
    
    
    
    
    
    
    
    
    
    
    
    $
    319,749Net interest income
    
    
    
    
    
    $
    13,878
    
    
    
    
    
    
    
    
    
    
    
    $
    13,326
    
    
    
    
    
    
    
    
    
    
    
    $
    13,168Net interest margin
    
    
    
    
    
    
    
    
    
    
    4.09
    %
    
    
    
    
    
    
    
    
    
    
    
    4.31
    %
    
    
    
    
    
    
    
    
    
    
    
    4.38
    %Net interest spread
    
    
    
    
    
    
    
    
    
    
    3.63
    %
    
    
    
    
    
    
    
    
    
    
    
    3.68
    %
    
    
    
    
    
    
    
    
    
    
    
    3.86
    %
 
 (1)
    
    Average balances have been computed on an average daily basis.(2)
    
    Average rates have been computed based on the amortized cost of the
corresponding asset or liability.(3)
    
    Average loan balances include nonaccrual loans.




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##### Table of Contents



2008 Financial Review
 Rate/Volume Analysis of Changes in Income and Expense (1)(Dollars in thousands)2008 v. 2007
    
    
    
    2007 v. 2006Change In
    
    
    
    
    
    
    
    
    
    
    
    Change InIncome/
    
    
    Volume
    
    
    Rate
    
    
    
    Income/
    
    
    Volume
    
    
    RateExpense
    
    
    Effect
    
    
    Effect
    
    
    
    Expense
    
    
    Effect
    
    
    EffectInterest IncomeFederal funds sold
    
    $
    95
    
    
    $
    110
    
    
    $
    (15
    )
    
    
    $
    14
    
    
    $
    11
    
    
    $
    3Interest-earning deposits
    
    
    
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    1
    
    
    
    2
    
    
    
    (1
    )Securities:Taxable
    
    
    326
    
    
    
    172
    
    
    
    154
    
    
    
    
    (78
    )
    
    
    (251
    )
    
    
    173Tax exempt
    
    
    (28
    )
    
    
    11
    
    
    
    (39
    )
    
    
    
    (132
    )
    
    
    (131
    )
    
    
    (1
    )Loans
    
    
    (1,003
    )
    
    
    1,357
    
    
    
    (2,360
    )
    
    
    
    1,381
    
    
    
    1,231
    
    
    
    150Total interest income
    
    
    (610
    )
    
    
    1,651
    
    
    
    (2,261
    )
    
    
    
    1,186
    
    
    
    862
    
    
    
    324Interest ExpenseDemand deposits
    
    
    (124
    )
    
    
    (1
    )
    
    
    (123
    )
    
    
    
    25
    
    
    
    (3
    )
    
    
    28Savings deposits
    
    
    (135
    )
    
    
    37
    
    
    
    (172
    )
    
    
    
    100
    
    
    
    (5
    )
    
    
    105Time deposits
    
    
    (1,257
    )
    
    
    (22
    )
    
    
    (1,235
    )
    
    
    
    810
    
    
    
    169
    
    
    
    641Other borrowed funds
    
    
    354
    
    
    
    731
    
    
    
    (377
    )
    
    
    
    93
    
    
    
    61
    
    
    
    32Total interest expense
    
    
    (1,162
    )
    
    
    745
    
    
    
    (1,907
    )
    
    
    
    1,028
    
    
    
    222
    
    
    
    806Net interest income
    
    $
    552
    
    
    $
    906
    
    
    $
    (354
    )
    
    
    $
    158
    
    
    $
    640
    
    
    $
    (482
    )
 
 (1)
    
    Changes attributable to both volume and rate, which cannot be segregated, have been allocated
based on the absolute value of the change due to volume and the change due to rate.  (Dollars in thousands)
    
    2008
    
    
    2007
    
    
    2006Net interest income
    
    $
    13,878
    
    
    $
    13,326
    
    
    $
    13,167Taxable equivalent adjustment (1)
    
    
    131
    
    
    
    144
    
    
    
    210Net interest income 
fully taxable equivalent
    
    $
    14,009
    
    
    $
    13,470
    
    
    $
    13,377Net interest yield
    
    
    4.09
    %
    
    
    4.31
    %
    
    
    4.38
    %Taxable equivalent adjustment (1)
    
    
    .04
    
    
    
    .04
    
    
    
    .07Net interest yield  taxable equivalent
    
    
    4.13
    %
    
    
    4.35
    %
    
    
    4.45
    %
 
 (1)
    
    Taxable equivalent adjustments have been computed assuming a 34% tax rate. Provision for Loan Losses




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##### Table of Contents



2008 Financial Review
  (CSB LOGO) Noninterest Income
 Year Ended December 31(Dollars in thousands)Change from 2007
    
    
    Change from 20062008
    
    
    Amount
    
    
    
    %
    
    
    2007
    
    
    Amount
    
    
    %
    
    
    2006Service charges on deposit accounts
    
    $
    1,273
    
    
    $
    42
    
    
    
    3.4
    %
    
    $
    1,231
    
    
    $
    (48
    )
    
    
    (3.8
    )%
    
    $
    1,279Trust services
    
    
    646
    
    
    
    (85
    )
    
    
    (11.6
    )
    
    
    731
    
    
    
    191
    
    
    
    35.4
    
    
    
    540Debit card interchange fees
    
    
    317
    
    
    
    41
    
    
    
    14.9
    
    
    
    276
    
    
    
    65
    
    
    
    30.8
    
    
    
    211Credit card fee income
    
    
    166
    
    
    
    (96
    )
    
    
    36.6
    
    
    
    262
    
    
    
    (29
    )
    
    
    (10.0
    )
    
    
    291Insurance recovery
    
    
    
    
    
    
    (187
    )
    
    
    N.M.
    
    
    
    187
    
    
    
    187
    
    
    
    N.M.
    
    
    
    Securities gain (loss)
    
    
    (35
    )
    
    
    (52
    )
    
    
    N.M.
    
    
    
    17
    
    
    
    74
    
    
    
    N.M.
    
    
    
    (57
    )Gain on sale of loans
    
    
    288
    
    
    
    270
    
    
    
    N.M.
    
    
    
    18
    
    
    
    6
    
    
    
    50.0
    
    
    
    12Gain (loss) on sale of other real estate
    
    
    3
    
    
    
    4
    
    
    
    N.M.
    
    
    
    (1
    )
    
    
    25
    
    
    
    N.M.
    
    
    
    (26
    )Other
    
    
    375
    
    
    
    61
    
    
    
    19.4
    
    
    
    314
    
    
    
    (28
    )
    
    
    (8.2
    )
    
    
    342Total noninterest income
    
    $
    3,033
    
    
    
    (2
    )
    
    
    (0.1
    )%
    
    $
    3,035
    
    
    
    443
    
    
    
    17.1
    %
    
    $
    2,592
 
    Noninterest Expenses
 Year Ended December 31(Dollars in thousands)Change from 2007
    
    
    Change from 20062008
    
    
    Amount
    
    
    %
    
    
    2007
    
    
    Amount
    
    
    %
    
    
    2006Salaries and employee benefits
    
    $
    6,261
    
    
    $
    407
    
    
    
    7.0
    %
    
    $
    5,854
    
    
    $
    (32
    )
    
    
    0.5
    %
    
    $
    5,886Occupancy expense
    
    
    1,034
    
    
    
    301
    
    
    
    41.1
    
    
    
    733
    
    
    
    47
    
    
    
    6.9
    
    
    
    686Equipment expense
    
    
    520
    
    
    
    16
    
    
    
    3.2
    
    
    
    504
    
    
    
    6
    
    
    
    1.2
    
    
    
    498Professional and directors fees
    
    
    512
    
    
    
    (68
    )
    
    
    11.7
    
    
    
    580
    
    
    
    (79
    )
    
    
    (12.0
    )
    
    
    659Franchise tax expense
    
    
    437
    
    
    
    20
    
    
    
    4.8
    
    
    
    417
    
    
    
    (13
    )
    
    
    3.0
    
    
    
    430Marketing and public relations
    
    
    364
    
    
    
    (9
    )
    
    
    (2.5
    )
    
    
    373
    
    
    
    39
    
    
    
    11.7
    
    
    
    334Telecommunications
    
    
    221
    
    
    
    (4
    )
    
    
    (1.8
    )
    
    
    225
    
    
    
    4
    
    
    
    1.8
    
    
    
    221Cash irregularity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (237
    )
    
    
    N.M.
    
    
    
    237Amortization of intangible assets
    
    
    11
    
    
    
    11
    
    
    
    N.M.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    1,951
    
    
    
    (64
    )
    
    
    (3.2
    )
    
    
    2,015
    
    
    
    51
    
    
    
    2.6
    
    
    
    1,964Total noninterest expenses
    
    $
    11,311
    
    
    $
    610
    
    
    
    5.7
    %
    
    $
    10,701
    
    
    $
    (214
    )
    
    
    (2.0
    )%
    
    $
    10,915




---



##### Table of Contents



2008 Financial Review
   Income Taxes
  Financial Condition
  Securities




---



##### Table of Contents



2008 Financial Review
  (CSB LOGO)   Loans
    Allowance for Loan Losses




---



##### Table of Contents



2008 Financial Review
    Other Assets
   Deposits
  Other Funding Sources




---



##### Table of Contents



2008 Financial Review
  (CSB LOGO) Capital Resources
    Liquidity




---



##### Table of Contents



2008 Financial Review
 Quantitative and Qualitative Disclosures about Market Risk
    Net Interest Income at RiskDecember 31, 2008Change in
    
    
    
    Net Interest
    
    DollarInterest Rates
    
    
    
    Income
    
    Change
    
    Percentage
    
    Board Policy(basis points)
    
    
    
    (Dollars in Thousands)
    
    Change
    
    Limits+200
    
    
    
    
    $
    16,084
    
    
    $
    651
    
    
    
    4.2
    %
    
    
    ±15.0
    %+100
    
    
    
    
    
    15,786
    
    
    
    353
    
    
    
    2.3
    
    
    
    ±10.00
    
    
    
    
    
    15,433
    
    
    
    
    
    
    
    -100
    
    
    
    
    
    15,532
    
    
    
    99
    
    
    
    0.6
    
    
    
    ±10.0-200
    
    
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    ±15.0
 Net Interest Income at RiskDecember 31, 2007Change in
    
    
    
    Net Interest
    
    DollarInterest Rates
    
    
    
    Income
    
    Change
    
    Percentage
    
    Board Policy(basis points)
    
    
    
    (Dollars in Thousands)
    
    Change
    
    Limits+200
    
    
    
    
    $
    14,682
    
    
    $
    506
    
    
    
    3.6
    %
    
    
    ± 15.0
    %+100
    
    
    
    
    
    14,457
    
    
    
    281
    
    
    
    2.0
    
    
    
    ± 10.00
    
    
    
    
    
    14,176
    
    
    
    
    
    
    
    -100
    
    
    
    
    
    13,988
    
    
    
    (188
    )
    
    
    (1.3
    )
    
    
    ± 10.0-200
    
    
    
    
    
    13,646
    
    
    
    (530
    )
    
    
    (3.7
    )
    
    
    ± 15.0




---



##### Table of Contents



2008 Financial Review
    
    (CSB LOGO)
 Economic
Value of Equity at Risk
 Change in Interest Rates (basis points)
    
    Percentage Change
    
    Board policy limitsDecember 31, 2008+200
    
    
    -18.1
    %
    
    
    ±20
    %+100
    
    
    -6.8
    
    
    
    ±15-100
    
    
    N/A
    
    
    
    ±15-200
    
    
    N/A
    
    
    
    ±20December 31, 2007+200
    
    
    -17.3
    %
    
    
    ±20
    %+100
    
    
    -5.6
    
    
    
    ±15-100
    
    
    +3.1
    
    
    
    ±15-200
    
    
    +5.2
    
    
    
    ±20
  Significant Assumptions and Other Considerations
   Fair Value Measurements




---



##### Table of Contents



(CSB LOGO)
  
  2008 Financial Review Off-Balance Sheet Arrangements, Contractual Obligations, and Contingent
Liabilities and Commitments
  Amount of Commitment to Expire Per Period(Dollars In Thousands)Total
    
    
    Less Than 1
    
    
    13
    
    
    45
    
    
    Over 5Type of Commitment
    
    Amount
    
    
    Year
    
    
    Years
    
    
    Years
    
    
    YearsCommercial lines-of-credit
    
    $
    33,059
    
    
    $
    30,299
    
    
    $
    2,571
    
    
    $
    25
    
    
    $
    164Real estate lines-of-credit
    
    
    21,193
    
    
    
    176
    
    
    
    623
    
    
    
    3,708
    
    
    
    16,686Consumer lines-of-credit
    
    
    1,000
    
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    Overdraft Privilege
    
    
    5,767
    
    
    
    5,767
    
    
    
    
    
    
    
    
    
    
    
    Letters of credit
    
    
    772
    
    
    
    753
    
    
    
    19
    
    
    
    
    
    
    
    Total Commitments
    
    $
    61,791
    
    
    $
    37,995
    
    
    $
    3,213
    
    
    $
    3,733
    
    
    $
    16,850
   Payment Due by Period(Dollars In Thousands)Total
    
    
    Less Than 1
    
    
    13
    
    
    45
    
    
    Over 5Contractual Obligations
    
    Amount
    
    
    Year
    
    
    Years
    
    
    Years
    
    
    YearsTotal time deposits
    
    $
    154,225
    
    
    $
    94,226
    
    
    $
    50,531
    
    
    $
    8,812
    
    
    $
    656Short-term borrowings
    
    
    22,892
    
    
    
    22,892
    
    
    
    
    
    
    
    
    
    
    
    Other borrowings
    
    
    50,998
    
    
    
    9,643
    
    
    
    26,195
    
    
    
    2,703
    
    
    
    12,457Operating leases
    
    
    396
    
    
    
    120
    
    
    
    239
    
    
    
    37
    
    
    
    Total Obligations
    
    $
    228,511
    
    
    $
    126,881
    
    
    $
    76,965
    
    
    $
    11,552
    
    
    $
    13,113




---



##### Table of Contents



2008 Financial Review
    
    (CSB LOGO)
 Accounting Developments
 Determination of the Useful Life
of Intangible Assets Goodwill and Other Intangible Assets.
 Accounting for Transfers of Financial
Assets and Repurchase Financing Transactions.
 Business Combinations
 Fair Value Measurements, Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements
That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under
Statement 13, Partial Deferral of the Effective Date of Statement 157,




---



##### Table of Contents



(CSB LOGO)
  
  2008 Financial Review Critical Accounting Policies
     Impact of Inflation and Changing Prices




---



##### Table of Contents



2008 Financial Review
    
    (CSB LOGO)
 Common Stock and Shareholder Information
  DividendsQuarter Ended
    
    High
    
    
    Low
    
    
    DeclaredMarch 31, 2008
    
    $
    17.90
    
    
    $
    15.75
    
    
    $
    439,353June 30, 2008
    
    
    18.00
    
    
    
    15.75
    
    
    
    435,969September 30, 2008
    
    
    16.25
    
    
    
    14.40
    
    
    
    435,957December 31, 2008
    
    
    16.00
    
    
    
    14.00
    
    
    
    492,264March 31, 2007
    
    $
    19.05
    
    
    $
    17.50
    
    
    $
    443,320June 30, 2007
    
    
    18.25
    
    
    
    17.42
    
    
    
    443,320September 30, 2007
    
    
    19.00
    
    
    
    15.95
    
    
    
    443,320December 31, 2007
    
    
    17.75
    
    
    
    15.40
    
    
    
    441,531
  
 Report on Managements Assessment of Internal Control over Financial Reporting
     -s- Eddie L. Steiner
    
    -s- Paula J. MeilerEddie L. Steiner
    
    Paula J. MeilerPresident and CEO
    
    Senior Vice President and Chief Financial Officer




---



##### Table of Contents



(CSB LOGO)
  
  Report of Independent Registered Public Accounting Firm 
 The Board of Directors and Shareholders
CSB Bancorp, Inc.
    Fair Value Measurements.
 Report on Managements Assessment of Internal Control over Financial Reporting
 Wexford, Pennsylvania
March 9, 2009




---



##### Table of Contents



Consolidated Balance Sheets
    
    (CSB LOGO)
  2008
    
    
    2007AssetsCash and cash equivalentsCash and due from banks
    
    $
    8,698,917
    
    
    $
    12,111,807Interest-earning deposits in other banks
    
    
    2,961,153
    
    
    
    81,555Federal funds sold
    
    
    1,086,000
    
    
    
    Total cash and cash equivalents
    
    
    12,746,070
    
    
    
    12,193,362SecuritiesAvailable-for-sale, at fair value
    
    
    76,655,816
    
    
    
    71,419,830Restricted stock, at cost
    
    
    5,231,800
    
    
    
    3,105,900Total securities
    
    
    81,887,616
    
    
    
    74,525,730Loans
    
    
    316,290,412
    
    
    
    256,659,059Less allowance for loan losses
    
    
    3,393,685
    
    
    
    2,585,901Net loans
    
    
    312,896,727
    
    
    
    254,073,158Premises and equipment, net
    
    
    8,470,855
    
    
    
    7,273,238Other intangible assets
    
    
    597,014
    
    
    
    14,962Goodwill
    
    
    1,448,029
    
    
    
    Bank-owned life insurance
    
    
    2,748,909
    
    
    
    Accrued interest receivable and other assets
    
    
    3,861,962
    
    
    
    2,189,295Total Assets
    
    $
    424,657,182
    
    
    $
    350,269,745Liabilities and Shareholders EquityLiabilitiesDepositsNoninterest-bearing
    
    $
    49,058,592
    
    
    $
    46,038,976Interest-bearing
    
    
    256,394,147
    
    
    
    213,347,066Total deposits
    
    
    305,452,739
    
    
    
    259,386,042Short-term borrowings
    
    
    22,891,593
    
    
    
    27,305,157Other borrowings
    
    
    50,997,537
    
    
    
    26,023,888Accrued interest payable and other liabilities
    
    
    1,846,841
    
    
    
    1,276,610Total liabilities
    
    
    381,188,710
    
    
    
    313,991,697Shareholders EquityCommon stock, $6.25 par value. Authorized 9,000,000 shares;
issued 2,980,602 shares in 2008 and 2,667,786 in 2007
    
    
    18,628,767
    
    
    
    16,673,667Additional paid-in capital
    
    
    9,986,499
    
    
    
    6,452,319Retained earnings
    
    
    19,723,972
    
    
    
    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 income (loss)
    
    
    143,775
    
    
    
    (239,101
    )Total shareholders equity
    
    
    43,468,472
    
    
    
    36,278,048Total Liabilities and Shareholders Equity
    
    $
    424,657,182
    
    
    $
    350,269,745




---



##### Table of Contents



(CSB LOGO)
    
    Consolidated Statements of Income
  2008
    
    
    2007
    
    
    2006Interest and Dividend IncomeLoans, including fees
    
    $
    17,021,867
    
    
    $
    18,025,190
    
    
    $
    16,643,728Taxable securities
    
    
    3,252,073
    
    
    
    2,927,840
    
    
    
    3,006,055Nontaxable securities
    
    
    225,287
    
    
    
    251,551
    
    
    
    382,479Other
    
    
    121,499
    
    
    
    26,540
    
    
    
    12,490Total interest and dividend income
    
    
    20,620,726
    
    
    
    21,231,121
    
    
    
    20,044,752Interest ExpenseDeposits
    
    
    4,836,598
    
    
    
    6,352,732
    
    
    
    5,418,616Short-term borrowings
    
    
    569,854
    
    
    
    1,185,377
    
    
    
    1,265,850Other borrowings
    
    
    1,336,365
    
    
    
    366,630
    
    
    
    192,825Total interest expense
    
    
    6,742,817
    
    
    
    7,904,739
    
    
    
    6,877,291Net Interest Income
    
    
    13,877,909
    
    
    
    13,326,382
    
    
    
    13,167,461Provision for Loan Losses
    
    
    333,094
    
    
    
    472,100
    
    
    
    301,667Net interest income, after provision
for loan losses
    
    
    13,544,815
    
    
    
    12,854,282
    
    
    
    12,865,794Noninterest IncomeService charges on deposit accounts
    
    
    1,273,094
    
    
    
    1,231,020
    
    
    
    1,278,842Trust services
    
    
    645,941
    
    
    
    730,715
    
    
    
    540,299Debit card interchange fees
    
    
    317,392
    
    
    
    276,467
    
    
    
    210,615Credit card, other fee income
    
    
    165,727
    
    
    
    261,784
    
    
    
    290,778Insurance recovery
    
    
    
    
    
    
    186,526
    
    
    
    Securities gain (loss)
    
    
    (35,000
    )
    
    
    16,830
    
    
    
    (56,800
    )Gain on sale of loans, net
    
    
    287,902
    
    
    
    18,348
    
    
    
    12,078Gain (loss) on sale of other real estate owned, net
    
    
    3,300
    
    
    
    (994
    )
    
    
    (25,640
    )Other
    
    
    374,531
    
    
    
    313,929
    
    
    
    341,754Total noninterest income
    
    
    3,032,887
    
    
    
    3,034,625
    
    
    
    2,591,926Noninterest ExpensesSalaries and employee benefits
    
    
    6,261,348
    
    
    
    5,853,523
    
    
    
    5,885,857Occupancy expense
    
    
    1,033,780
    
    
    
    732,850
    
    
    
    685,728Equipment expense
    
    
    520,596
    
    
    
    504,356
    
    
    
    498,517Professional and director fees
    
    
    511,768
    
    
    
    579,923
    
    
    
    658,843Franchise tax expense
    
    
    437,250
    
    
    
    416,712
    
    
    
    430,050Marketing and public relations
    
    
    363,891
    
    
    
    372,902
    
    
    
    333,753Cash irregularity
    
    
    
    
    
    
    
    
    
    
    236,547Telecommunications
    
    
    220,663
    
    
    
    225,284
    
    
    
    221,223Amortization of intangible assets
    
    
    11,000
    
    
    
    
    
    
    
    Other expenses
    
    
    1,950,936
    
    
    
    2,015,243
    
    
    
    1,964,097Total noninterest expenses
    
    
    11,311,232
    
    
    
    10,700,793
    
    
    
    10,914,615Income before income taxes
    
    
    5,266,470
    
    
    
    5,188,114
    
    
    
    4,543,105Federal Income Tax Provision
    
    
    1,729,400
    
    
    
    1,674,200
    
    
    
    1,433,000Net Income
    
    $
    3,537,070
    
    
    $
    3,513,914
    
    
    $
    3,110,105Net Income Per ShareBasic
    
    $
    1.43
    
    
    $
    1.42
    
    
    $
    1.23Diluted
    
    $
    1.43
    
    
    $
    1.42
    
    
    $
    1.23




---



##### Table of Contents



Consolidated Statements of Shareholders Equity
    
    (CSB LOGO)
  Additional
    
    
    
    
    
    
    
    
    
    
    Accumulated OtherCommon
    
    
    Paid-In
    
    
    Retained
    
    
    Treasury
    
    
    ComprehensiveStock
    
    
    Capital
    
    
    Earnings
    
    
    Stock
    
    
    Income (Loss)
    
    
    TotalBalance at
December 31, 2005
    
    $
    16,673,667
    
    
    $
    6,413,915
    
    
    $
    14,752,250
    
    
    $
    (2,086,686
    )
    
    $
    (582,887
    )
    
    $
    35,170,259Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    3,110,105
    
    
    
    
    
    
    
    
    
    
    
    3,110,105Change in net unrealized loss,
net of reclassification
adjustments and related
income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (731
    )
    
    
    (731
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,109,374Stock-based compensation expense
    
    
    
    
    
    
    13,850
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,850Purchase of 79,318 treasury shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,609,416
    )
    
    
    
    
    
    
    (1,609,416
    )Cash dividends declared,
$.64 per share
    
    
    
    
    
    
    
    
    
    
    (1,613,747
    )
    
    
    
    
    
    
    
    
    
    
    (1,613,747
    )Balance at
December 31, 2006
    
    
    16,673,667
    
    
    
    6,427,765
    
    
    
    16,248,608
    
    
    
    (3,696,102
    )
    
    
    (583,618
    )
    
    
    35,070,320Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    3,513,914
    
    
    
    
    
    
    
    
    
    
    
    3,513,914Change in net unrealized gain,
net of reclassification
adjustments and related
income tax provision
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    344,517
    
    
    
    344,517Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,858,431Stock-based compensation expense
    
    
    
    
    
    
    24,554
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,554Issuance of 40 shares from treasury
    
    
    
    
    
    
    
    
    
    
    (586
    )
    
    
    1,230
    
    
    
    
    
    
    
    644Purchase of 51,597 treasury shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (904,410
    )
    
    
    
    
    
    
    (904,410
    )Cash dividends declared,
$.72 per share
    
    
    
    
    
    
    
    
    
    
    (1,771,491
    )
    
    
    
    
    
    
    
    
    
    
    (1,771,491
    )Balance at
December 31, 2007
    
    
    16,673,667
    
    
    
    6,452,319
    
    
    
    17,990,445
    
    
    
    (4,599,282
    )
    
    
    (239,101
    )
    
    
    36,278,048Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    3,537,070
    
    
    
    
    
    
    
    
    
    
    
    3,537,070Change in net unrealized gain,
net of reclassification
adjustments and related
income tax provision
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    382,876
    
    
    
    382,876Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,919,946Stock-based compensation expense
    
    
    
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000Issuance of 312,816 shares
for acquisition
    
    
    1,955,100
    
    
    
    3,519,180
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,474,280Purchase of 25,641 treasury shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (415,259
    )
    
    
    
    
    
    
    (415,259
    )Cash dividends declared,
$.72 per share
    
    
    
    
    
    
    
    
    
    
    (1,803,543
    )
    
    
    
    
    
    
    
    
    
    
    (1,803,543
    )Balance at
December 31, 2008
    
    $
    18,628,767
    
    
    $
    9,986,499
    
    
    $
    19,723,972
    
    
    $
    (5,014,541
    )
    
    $
    143,775
    
    
    $
    43,468,472




---



##### Table of Contents



(CSB LOGO)
    
    Consolidated Statements of Cash Flows
  2008
    
    
    2007
    
    
    2006Cash Flows from Operating ActivitiesNet income
    
    $
    3,537,070
    
    
    $
    3,513,914
    
    
    $
    3,110,105Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization of
premises, equipment and software
    
    
    734,053
    
    
    
    685,832
    
    
    
    692,461Building impairment
    
    
    250,000
    
    
    
    
    
    
    
    Deferred income taxes
    
    
    (46,900
    )
    
    
    (113,050
    )
    
    
    198,675Provision for loan losses
    
    
    333,094
    
    
    
    472,100
    
    
    
    301,667Gain on sale of loans, net
    
    
    (287,902
    )
    
    
    (18,348
    )
    
    
    (12,078
    )Securities (gain) loss
    
    
    
    
    
    
    (16,830
    )
    
    
    56,800(Gain) loss on sale of other real estate owned, net
    
    
    (3,300
    )
    
    
    994
    
    
    
    25,640Security amortization, net of accretion
    
    
    104,901
    
    
    
    26,141
    
    
    
    47,328Other-than-temporary impairment of investments
    
    
    35,000
    
    
    
    
    
    
    
    Federal Home Loan Bank stock dividends
    
    
    
    
    
    
    
    
    
    
    (158,900
    )Secondary market loan sale proceeds
    
    
    2,152,806
    
    
    
    1,474,148
    
    
    
    1,231,578Originations of secondary market loans
held-for-sale
    
    
    (2,132,362
    )
    
    
    (1,455,800
    )
    
    
    (1,219,500
    )Stock compensation expense
    
    
    15,000
    
    
    
    24,554
    
    
    
    13,850Effects of changes in operating assets
and liabilities:Net deferred loan (fees) costs
    
    
    41,916
    
    
    
    7,495
    
    
    
    21,130Accrued interest receivable
    
    
    370,772
    
    
    
    4,717
    
    
    
    (82,270
    )Accrued interest payable
    
    
    (212,800
    )
    
    
    24,910
    
    
    
    106,691Other assets and liabilities
    
    
    (324,806
    )
    
    
    (335,783
    )
    
    
    485,802Net cash provided by operating activities
    
    $
    4,566,542
    
    
    $
    4,294,994
    
    
    $
    4,818,979Cash Flows from Investing ActivitiesSecurities available-for-sale:Proceeds from maturities and repayments
    
    $
    35,582,233
    
    
    $
    15,634,028
    
    
    $
    12,867,830Proceeds from sale
    
    
    
    
    
    
    
    
    
    
    3,943,200Purchases
    
    
    (31,641,213
    )
    
    
    (19,406,047
    )
    
    
    (5,778,145
    )Purchase of FHLB stock
    
    
    (114,900
    )
    
    
    
    
    
    
    Loan originations, net of repayments
    
    
    (4,743,118
    )
    
    
    (25,027,508
    )
    
    
    (17,606,716
    )Net cash from acquisition
    
    
    6,762,056
    
    
    
    
    
    
    
    Proceeds from sale of credit cards
    
    
    2,513,671
    
    
    
    
    
    
    
    Proceeds from sale of other real estate
    
    
    105,000
    
    
    
    196,881
    
    
    
    454,000Property, equipment and software acquisitions
    
    
    (513,633
    )
    
    
    (492,856
    )
    
    
    (283,749
    )Net cash provided by (used in) investing activities
    
    $
    7,950,096
    
    
    $
    (29,095,502
    )
    
    $
    (6,403,580
    )




---



##### Table of Contents



Consolidated Statements of Cash Flows
    
    (CSB LOGO)
  2008
    
    
    2007
    
    
    2006Cash Flows from Financing ActivitiesNet change in deposits
    
    $
    (12,759,396
    )
    
    $
    (791,630
    )
    
    $
    4,774,955Net change in short-term borrowings
    
    
    (2,700,000
    )
    
    
    (300,000
    )
    
    
    Net change in securities sold under
repurchase agreements
    
    
    (1,713,564
    )
    
    
    (416,920
    )
    
    
    6,604,461Federal Home Loan Bank borrowings:Proceeds
    
    
    8,000,000
    
    
    
    24,000,000
    
    
    
    Repayments
    
    
    (572,168
    )
    
    
    (475,511
    )
    
    
    (5,568,441
    )Purchase of treasury shares
    
    
    (415,259
    )
    
    
    (904,410
    )
    
    
    (1,609,416
    )Issuance of treasury shares
    
    
    
    
    
    
    644
    
    
    
    Cash dividends paid
    
    
    (1,803,543
    )
    
    
    (1,771,491
    )
    
    
    (1,613,747
    )Net cash provided by (used in)
financing activities
    
    $
    (11,963,930
    )
    
    $
    19,340,682
    
    
    $
    2,587,812Net Increase (Decrease) in Cash
and Cash Equivalents
    
    
    552,708
    
    
    
    (5,459,826
    )
    
    
    1,003,212Cash and Cash Equivalents at
Beginning of Year
    
    
    12,193,362
    
    
    
    17,653,188
    
    
    
    16,649,976Cash and Cash Equivalents at
End of Year
    
    $
    12,746,070
    
    
    $
    12,193,362
    
    
    $
    17,653,188Supplemental DisclosuresCash paid during the year for:Interest
    
    $
    6,700,616
    
    
    $
    7,879,829
    
    
    $
    6,770,600Income taxes
    
    
    1,786,000
    
    
    
    2,065,000
    
    
    
    965,000Noncash investing activities:Transfer of loans to other real estate owned
    
    $
    20,000
    
    
    $
    299,575
    
    
    $
    39,640Summary of Business AcquisitionFair value of tangible assets acquired
    
    $
    81,829,000
    
    
    $
    
    
    
    $
    Fair value of core deposit intangible acquired
    
    
    545,000
    
    
    
    
    
    
    
    Fair value of liabilities assumed
    
    
    (77,810,000
    )
    
    
    
    
    
    
    Stock issued for the purchase of acquired companys
common stock
    
    
    (5,474,000
    )
    
    
    
    
    
    
    Cash paid in the acquisition
    
    
    (2,232,000
    )
    
    
    
    
    
    
    Deferred tax asset
    
    
    1,694,000
    
    
    
    
    
    
    
    Goodwill recognized
    
    $
    (1,448,000
    )
    
    
    
    
    
    
    




---



##### Table of Contents



(CSB LOGO)
  
  Summary of Significant Accounting Policies    Use of Estimates in Preparing Financial Statements
  Principles of Consolidation
   Cash and Cash Equivalents
  Cash Reserve Requirements
  Securities




---



##### Table of Contents



Summary of Significant Accounting Policies
  (CSB LOGO)  Loans
   Allowance for Loan Losses




---



##### Table of Contents



Summary of Significant Accounting Policies
 Other Real Estate Owned
  Premises and Equipment
  Goodwill and Other Intangible Assets
   Bank-Owned Life Insurance
  Repurchase Agreements
  Advertising Costs
  Federal Income Taxes




---



##### Table of Contents



Summary of Significant Accounting Policies
  (CSB BANCORP INC. LOGO) Stock-Based Compensation
   2008
    
    2007
    
    2006Risk-free interest rate
    
    
    3.52
    %
    
    
    N/A
    
    
    
    4.57
    %Dividend yield
    
    
    4.47
    %
    
    
    
    
    
    
    3.56
    %Volatility
    
    
    12
    %
    
    
    
    
    
    
    9
    %Expected option life
    
    5.0
    yrs.
    
    
    
    
    
    3.0
    yrs.
    Comprehensive Income
  Transfers of Financial Assets




---



##### Table of Contents



Summary of Significant Accounting Policies
 Per Share Data
   2008
    
    2007
    
    2006Weighted average common shares
outstanding
    
    
    2,719,922
    
    
    
    2,667,786
    
    
    
    2,667,786Average treasury shares
    
    
    (237,587
    )
    
    
    (200,676
    )
    
    
    (140,872
    )Total weighted average common
shares outstanding (basic)
    
    
    2,482,335
    
    
    
    2,467,110
    
    
    
    2,526,914Dilutive effect of assumed exercise
of stock options
    
    
    
    
    
    
    702
    
    
    
    5,678Weighted average common shares
outstanding (diluted)
    
    
    2,482,335
    
    
    
    2,467,812
    
    
    
    2,532,592
   Accounting Developments
 Determination of the
Useful Life of Intangible Assets Goodwill and Other
Intangible Assets.
 Accounting for Transfers of
Financial Assets and Repurchase Financing Transactions.
 Business Combinations




---



##### Table of Contents



Summary of Significant Accounting Policies
  (CSB BANCORP INC. LOGO) Fair Value Measurements, Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements
That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under
Statement 13, Partial Deferral of the Effective Date of Statement 157,
 Reclassification of Comparative Amounts




---



##### Table of Contents



Notes to Consolidated Financial Statements
 Note 1
 Securities
  Gross
    
    
    GrossUnrealized
    
    
    Unrealized
    
    
    FairAmortized Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueDecember 31, 2008Available-for-sale:U.S. Treasury security
    
    $
    99,988
    
    
    $
    473
    
    
    $
    
    
    
    $
    100,461Obligations of U.S. Government
corporations and agencies
    
    
    12,447,301
    
    
    
    93,055
    
    
    
    
    
    
    
    12,540,356Mortgage-backed securities
    
    
    56,697,763
    
    
    
    618,677
    
    
    
    417,495
    
    
    
    56,898,945Obligations of states and
political subdivisions
    
    
    7,045,468
    
    
    
    77,901
    
    
    
    83,073
    
    
    
    7,040,296Total debt securities
    
    
    76,290,520
    
    
    
    790,106
    
    
    
    500,568
    
    
    
    76,580,058Equity securities
    
    
    147,458
    
    
    
    645
    
    
    
    72,345
    
    
    
    75,758Total available-for-sale
    
    
    76,437,978
    
    
    
    790,751
    
    
    
    572,913
    
    
    
    76,655,816Restricted stock
    
    
    5,231,800
    
    
    
    
    
    
    
    
    
    
    
    5,231,800Total securities
    
    $
    81,669,778
    
    
    $
    790,751
    
    
    $
    572,913
    
    
    $
    81,887,616December 31, 2007Available-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
  Amortized
    
    
    FairCost
    
    
    ValueAvailable-for-sale:Due in one year or less
    
    $
    5,971,263
    
    
    $
    6,013,843Due after one through five years
    
    
    8,959,619
    
    
    
    9,052,048Due after five years through ten years
    
    
    7,285,353
    
    
    
    7,365,909Due after ten years
    
    
    54,074,285
    
    
    
    54,148,258Total debt securities available-for-sale
    
    $
    76,290,520
    
    
    $
    76,580,058




---



##### Table of Contents



Notes to Consolidated Financial Statements
  (CSB BANCORP INC. LOGO) Note 1
 Securities, (continued)
     Securities in a Continuous Unrealized Loss PositionLess Than 12 Months
    
    
    12 Months or More
    
    
    TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossUnrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    FairLosses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value2008Mortgage-backed securities
    
    $
    312,520
    
    
    $
    9,327,561
    
    
    $
    104,975
    
    
    $
    1,101,425
    
    
    $
    417,495
    
    
    $
    10,428,986Obligations of state & political
subdivisions
    
    
    83,073
    
    
    
    4,291,747
    
    
    
    
    
    
    
    
    
    
    
    83,073
    
    
    
    4,291,747Total debt securities
    
    
    395,593
    
    
    
    13,619,308
    
    
    
    104,975
    
    
    
    1,101,425
    
    
    
    500,568
    
    
    
    14,720,733Equity securities
    
    
    
    
    
    
    
    
    
    
    72,345
    
    
    
    64,038
    
    
    
    72,345
    
    
    
    64,038Total temporarily
impaired securities
    
    $
    395,593
    
    
    $
    13,619,308
    
    
    $
    177,320
    
    
    $
    1,165,463
    
    
    $
    572,913
    
    
    $
    14,784,7712007Obligations of U.S. Government
corporations and agencies
    
    $
    
    
    
    $
    
    
    
    $
    7,904
    
    
    $
    14,491,455
    
    
    $
    7,904
    
    
    $
    14,491,455Mortgage-backed securities
    
    
    112,399
    
    
    
    21,664,006
    
    
    
    221,267
    
    
    
    15,868,261
    
    
    
    333,666
    
    
    
    37,532,267Total debt securities
    
    
    112,339
    
    
    
    21,664,006
    
    
    
    229,171
    
    
    
    30,359,716
    
    
    
    341,570
    
    
    
    52,023,722Equity securities
    
    
    54,790
    
    
    
    171,875
    
    
    
    62,200
    
    
    
    109,183
    
    
    
    116,990
    
    
    
    281,058Total temporarily
impaired securities
    
    $
    167,189
    
    
    $
    21,835,881
    
    
    $
    291,371
    
    
    $
    30,468,899
    
    
    $
    458,560
    
    
    $
    52,304,780




---



##### Table of Contents



Notes to Consolidated Financial Statements
 Note 2  Loans
  2008
    
    
    2007Commercial
    
    $
    61,859,176
    
    
    $
    46,000,089Commercial real estate
    
    
    109,284,157
    
    
    
    97,984,830Residential real estate
    
    
    125,148,884
    
    
    
    92,084,807Installment and credit card
    
    
    8,676,948
    
    
    
    8,862,456Construction
    
    
    11,238,597
    
    
    
    11,700,889Deferred loan costs
    
    
    82,650
    
    
    
    25,988Total Loans
    
    $
    316,290,412
    
    
    $
    256,659,059
  2008
    
    
    2007
    
    
    2006Beginning balance
    
    $
    2,585,901
    
    
    $
    2,607,118
    
    
    $
    2,445,494Provision for loan losses
    
    
    333,094
    
    
    
    472,100
    
    
    
    301,667Loans charged-off
    
    
    (154,299
    )
    
    
    (612,723
    )
    
    
    (309,644
    )Recoveries
    
    
    170,850
    
    
    
    119,406
    
    
    
    169,601Addition from acquisition
    
    
    458,139
    
    
    
    
    
    
    
    Ending balance
    
    $
    3,393,685
    
    
    $
    2,585,901
    
    
    $
    2,607,118
  2008
    
    2007Year-end
loans accounted for under SOP 03-3
    
    $
    816,270
    
    
    $
    Year-end loans with no allowance for
loan losses allocated
    
    
    20,381
    
    
    
    Year-end loans with allowance for loan
losses allocated
    
    
    1,568,393
    
    
    
    198,286Amount of the allowance allocated
    
    
    335,492
    
    
    
    42,773
 2008
    
    2007
    
    2006Average of impaired loans during the year
    
    $
    469,712
    
    
    $
    729,699
    
    
    $
    700,202Interest income recognized during impairment
    
    
    8,439
    
    
    
    25,876
    
    
    
    25,717Cash-basis interest income recognized
    
    
    7,890
    
    
    
    25,674
    
    
    
    24,762Accrued interest not recognized
    
    
    24,937
    
    
    
    35,166
    
    
    
    33,188
  2008
    
    2007Loans past due over 90 days still accruing interest
    
    $
    415,861
    
    
    $
    144,339Nonaccrual loans
    
    
    2,226,867
    
    
    
    426,706




---



##### Table of Contents



Notes to Consolidated Financial Statements
  (CSB LOGO) Note 3
 Business Combination
    Fair Value of Net(in thousands)
    
    Assets AcquiredLoans
    
    $
    56,732Other tangible assets
    
    
    27,213Goodwill
    
    
    1,448Core deposit intangible
    
    
    545Deposits
    
    
    (58,880
    )Borrowings
    
    
    (17,616
    )Other liabilities
    
    
    (1,314
    )Total purchase price
    
    $
    8,128
   (in thousands, except per share amounts)
    
    2008
    
    
    2007Net interest income
    
    $
    15,858
    
    
    $
    15,854Provision for loan losses
    
    
    1,130
    
    
    
    1,018Net interest income after provision for loan losses
    
    
    14,728
    
    
    
    14,836Noninterest income
    
    
    3,188
    
    
    
    3,280Noninterest expense
    
    
    14,310
    
    
    
    12,983Income before income taxes
    
    
    3,606
    
    
    
    5,133Federal income tax provision
    
    
    1,219
    
    
    
    1,690Net income
    
    $
    2,387
    
    
    $
    3,443Net income per common shareBasic
    
    $
    0.87
    
    
    $
    1.24Diluted
    
    $
    0.87
    
    
    $
    1.24Average common shares outstandingBasic
    
    
    2,743,015
    
    
    
    2,779,926Diluted
    
    
    2,743,015
    
    
    
    2,780,628




---



##### Table of Contents



Notes to Consolidated Financial Statements
 Note 3
 Business Combination, (continued)
  Note 4
 Premises and Equipment
  2008
    
    
    2007Land and improvements
    
    $
    1,267,762
    
    
    $
    1,007,927Buildings and improvements
    
    
    9,009,325
    
    
    
    8,499,044Furniture and equipment
    
    
    6,023,404
    
    
    
    4,753,393Leasehold improvements
    
    
    675,484
    
    
    
    172,48316,975,975
    
    
    
    14,432,847Accumulated depreciation
    
    
    8,505,120
    
    
    
    7,159,609Premises and equipment, net
    
    $
    8,470,855
    
    
    $
    7,273,238
   Note 5
 Goodwill and Other Intangible Assets
 Goodwill
  Core Deposit Intangible
  Core deposit(dollars in thousands)
    

amortization2009
    
    $
    652010
    
    
    632011
    
    
    612012
    
    
    592013
    
    
    56Thereafter
    
    
    230$
    534




---



##### Table of Contents



Notes to Consolidated Financial Statements
  (CSB LOGO) Note 5
 Goodwill and Other Intangible Assets (continued)
 Mortgage Servicing Rights
  Note 6
 Interest-Bearing Deposits
  2008
    
    
    2007Demand
    
    $
    47,515,178
    
    
    $
    48,922,949Savings
    
    
    54,654,402
    
    
    
    41,027,057Time deposits:In excess of $100,000
    
    
    48,458,513
    
    
    
    34,282,194Other
    
    
    105,766,054
    
    
    
    89,114,866Total interest-bearing deposits
    
    $
    256,394,147
    
    
    $
    213,347,066
  2009
    
    $
    94,225,6132010
    
    
    18,859,2172011
    
    
    31,671,6592012
    
    
    5,028,1312013
    
    
    3,783,7382014 and beyond
    
    
    656,209Total
    
    $
    154,224,567
 Note 7
 Borrowings
 Short-term borrowings
  2008
    
    2007Balance at year-end
    
    $
    22,891,593
    
    
    $
    27,305,157Average balance outstanding
    
    
    25,761,283
    
    
    
    29,950,025Maximum month-end balance
    
    
    28,826,290
    
    
    
    34,371,093Weighted-average rate at year-end
    
    
    1.52
    %
    
    
    3.49
    %Weighted-average rate during the year
    
    
    2.23
    
    
    
    3.96
  Other borrowings
  Maturity Range
    
    
    Weighted Average
    
    
    Stated Interest Rate
    
    
    At December 31,Description
    
    From
    
    
    To
    
    
    Interest Rate
    
    
    From
    
    
    To
    
    
    2008
    
    
    2007Fixed rate
    
    
    10/26/09
    
    
    
    12/21/17
    
    
    
    4.29
    %
    
    
    2.48
    %
    
    
    6.23
    %
    
    $
    47,104,719
    
    
    $
    24,000,000Fixed rate amortizing
    
    
    3/01/09
    
    
    
    3/01/17
    
    
    
    4.92
    %
    
    
    2.50
    %
    
    
    7.15
    %
    
    
    3,892,818
    
    
    
    2,023,888$
    50,997,537
    
    
    $
    26,023,888




---



##### Table of Contents



Notes to Consolidated Financial Statements
 Note 7
 Borrowings, (continued)
  Year Ending December 31,
    
    Amount
    
    
    Weighted-Average Rate2009
    
    $
    9,643,090
    
    
    
    3.76
    %2010
    
    
    22,446,802
    
    
    
    3.382011
    
    
    3,747,602
    
    
    
    3.362012
    
    
    2,490,196
    
    
    
    3.732013
    
    
    212,962
    
    
    
    6.062014 and beyond
    
    
    12,456,885
    
    
    
    3.71$
    50,997,537
    
    
    
    3.56
    %
  Note 8
 Income Taxes
  2008
    
    
    2007
    
    
    2006Current
    
    $
    1,776,300
    
    
    $
    1,787,250
    
    
    $
    1,234,325Deferred
    
    
    (46,900
    )
    
    
    (113,050
    )
    
    
    198,675Total income tax provision
    
    $
    1,729,400
    
    
    $
    1,674,200
    
    
    $
    1,433,000
  2008
    
    
    2007
    
    
    2006Expected provision using statutory
federal income tax rate
    
    $
    1,790,600
    
    
    $
    1,763,900
    
    
    $
    1,544,700Tax-exempt income on state and municipal
securities and political subdivision loans
    
    
    (86,100
    )
    
    
    (94,760
    )
    
    
    (138,600
    )Interest expense associated with carrying
certain state and municipal securities
and political subdivision loans
    
    
    7,900
    
    
    
    9,400
    
    
    
    11,800Other
    
    
    17,000
    
    
    
    (4,340
    )
    
    
    15,100Total income tax provision
    
    $
    1,729,400
    
    
    $
    1,674,200
    
    
    $
    1,433,000




---



##### Table of Contents



Notes
to Consolidated Financial Statements
 Note 8
 Income Taxes, (continued)
  2008
    
    
    2007Allowance for loan losses
    
    $
    1,274,500
    
    
    $
    722,900Net operating loss carryforward
    
    
    1,087,800
    
    
    
    Unrealized loss on securities available-for-sale
    
    
    
    
    
    
    123,200Purchase accounting adjustments
    
    
    295,300
    
    
    
    Capital loss carryforward
    
    
    93,200
    
    
    
    Other
    
    
    65,300
    
    
    
    15,9002,816,100
    
    
    
    862,000Valuation allowance on deferred tax assets
    
    
    (93,200
    )
    
    
    Deferred tax assets
    
    
    2,722,900
    
    
    
    862,000Depreciation of premises and equipment
    
    
    (210,500
    )
    
    
    (309,300
    )Federal Home Loan Bank stock dividends
    
    
    (736,200
    )
    
    
    (459,600
    )Deferred loan fees
    
    
    (77,700
    )
    
    
    (80,500
    )Unrealized gain on securities available for sale
    
    
    (74,100
    )
    
    
    Other
    
    
    (123,600
    )
    
    
    (66,500
    )Deferred tax liabilities
    
    
    (1,222,100
    )
    
    
    (915,900
    )Net deferred tax (liability) asset
    
    $
    1,500,800
    
    
    $
    (53,900
    )
   Accounting for Uncertainty in Income Taxes,
an interpretation of FASB Statement 109,
 |




---



##### Table of Contents



Notes to Consolidated Financial Statements
 Note 9
 Employee Benefits
    2008
    
    
    2007
    
    
    2006Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding at beginning of year
    
    
    50,840
    
    
    $
    17.64
    
    
    
    51,245
    
    
    $
    17.63
    
    
    
    21,970
    
    
    $
    17.09Granted
    
    
    2,000
    
    
    
    16.10
    
    
    
    
    
    
    
    
    
    
    
    29,760
    
    
    
    18.00Exercised
    
    
    
    
    
    
    
    
    
    
    (40
    )
    
    
    (16.05
    )
    
    
    
    
    
    
    Forfeited
    
    
    (12,120
    )
    
    
    (17.77
    )
    
    
    (365
    )
    
    
    (16.05
    )
    
    
    (485
    )
    
    
    (16.05
    )Outstanding at end of year
    
    
    40,720
    
    
    $
    17.55
    
    
    
    50,840
    
    
    $
    17.64
    
    
    
    51,245
    
    
    $
    17.63Options exercisable at year-end
    
    
    34,768
    
    
    $
    17.47
    
    
    
    32,984
    
    
    $
    17.45
    
    
    
    19,788
    
    
    $
    17.20Weighted-average fair value of
options granted during year
    
    
    
    
    
    $
    1.09
    
    
    
    
    
    
    
    N/A
    
    
    
    
    
    
    $
    1.26
  Outstanding
    
    
    ExercisableWeighted Average
    
    
    
    
    
    
    WeightedRemaining
    
    
    
    
    
    
    AverageRange of
    
    
    
    
    
    
    Contractual Life
    
    
    
    
    
    
    ExerciseExercisable Prices
    
    
    Number
    
    
    (Years)
    
    
    Number
    
    
    Price$
    16.05
    
    
    
    7,960
    
    
    
    3.95
    
    
    
    7,960
    
    
    $
    16.0516.10
    
    
    
    2,000
    
    
    
    4.52
    
    
    
    2,000
    
    
    
    16.1017.50
    
    
    
    2,000
    
    
    
    4.50
    
    
    
    2,000
    
    
    
    17.5018.00
    
    
    
    27,760
    
    
    
    7.15
    
    
    
    21,808
    
    
    
    18.0019.00
    
    
    
    1,000
    
    
    
    .60
    
    
    
    1,000
    
    
    
    19.00Outstanding at year-end
    
    
    
    
    
    
    40,720
    
    
    
    6.23
    
    
    
    34,768
    
    
    $
    17.47




---



##### Table of Contents



Notes
to Consolidated Financial Statements
 Note 10
 Financial Instruments with Off-Balance Sheet Risk
    Contract Amount2008
    
    
    2007Commitments to extend credit
    
    $
    61,019,000
    
    
    $
    63,849,000Letters of credit
    
    $
    772,000
    
    
    $
    1,310,000
   Note
11  Related-Party Transactions
  2008Balance at beginning of year
    
    $
    5,954,891New loans and advances
    
    
    544,562Repayments, including loans sold
    
    
    (901,804
    )Balance at end of year
    
    $
    5,597,649




---



##### Table of Contents



Notes to Consolidated Financial Statements
 Note
12  Regulatory Matters
     Minimum RequiredMinimum Required
    
    To Be Well-Capitalizedfor Capital
    
    Under Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action RegulationsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioAs of December 31, 2008Total capital (to risk-weighted assets)Consolidated
    
    $
    44,683
    
    
    
    15.5
    %
    
    $
    23,011
    
    
    
    8.0
    %
    
    $
    28,764
    
    
    
    10.0
    %Bank
    
    
    43,600
    
    
    
    15.2
    
    
    
    22,968
    
    
    
    8.0
    
    
    
    28,711
    
    
    
    10.0Tier I capital (to risk-weighted assets)Consolidated
    
    
    41,289
    
    
    
    14.4
    
    
    
    11,505
    
    
    
    4.0
    
    
    
    17,258
    
    
    
    6.0Bank
    
    
    40,206
    
    
    
    14.0
    
    
    
    11,484
    
    
    
    4.0
    
    
    
    17,226
    
    
    
    6.0Tier I capital (to average assets)Consolidated
    
    
    41,289
    
    
    
    10.4
    
    
    
    15,955
    
    
    
    4.0
    
    
    
    19,944
    
    
    
    5.0Bank
    
    
    40,206
    
    
    
    10.1
    
    
    
    15,929
    
    
    
    4.0
    
    
    
    19,912
    
    
    
    5.0As of December 31, 2007Total capital (to risk-weighted assets)Consolidated
    
    $
    39,101
    
    
    
    16.4
    %
    
    $
    19,069
    
    
    
    8.0
    %
    
    $
    23,836
    
    
    
    10.0
    %Bank
    
    
    36,736
    
    
    
    15.4
    
    
    
    19,041
    
    
    
    8.0
    
    
    
    23,801
    
    
    
    10.0Tier I capital (to risk-weighted assets)Consolidated
    
    
    36,515
    
    
    
    15.3
    
    
    
    9,534
    
    
    
    4.0
    
    
    
    14,301
    
    
    
    6.0Bank
    
    
    34,150
    
    
    
    14.4
    
    
    
    9,520
    
    
    
    4.0
    
    
    
    14,280
    
    
    
    6.0Tier I capital (to average assets)Consolidated
    
    
    36,515
    
    
    
    11.0
    
    
    
    13,290
    
    
    
    4.0
    
    
    
    16,612
    
    
    
    5.0Bank
    
    
    34,150
    
    
    
    10.3
    
    
    
    13,271
    
    
    
    4.0
    
    
    
    16,589
    
    
    
    5.0




---



##### Table of Contents



Notes
to Consolidated Financial Statements
 Note
12  Regulatory Matters, (continued)
  Note
13  Condensed Parent Company Financial Information
  Condensed Balance Sheets
 2008
    
    
    2007AssetsCash deposited with subsidiary bank
    
    $
    601,525
    
    
    $
    1,748,248Investment in subsidiary bank
    
    
    42,384,823
    
    
    
    33,990,029Securities available-for-sale
    
    
    75,758
    
    
    
    285,427Other assets
    
    
    589,094
    
    
    
    261,769Total assets
    
    $
    43,651,200
    
    
    $
    36,285,473Liabilities and Shareholders EquityLiabilities:Other liabilities
    
    $
    182,728
    
    
    $
    7,425Total shareholders equity
    
    
    43,468,472
    
    
    
    36,278,048Total liabilities and shareholders equity
    
    $
    43,651,200
    
    
    $
    36,285,473
 Condensed Statements of Income
 2008
    
    
    2007
    
    
    2006Interest on securities
    
    $
    2,084
    
    
    $
    11,242
    
    
    $
    27,230Other income
    
    
    24,072
    
    
    
    
    
    
    
    Dividends from subsidiary
    
    
    3,500,000
    
    
    
    2,500,000
    
    
    
    3,600,000Securities gains (loss)
    
    
    (35,000
    )
    
    
    5,430
    
    
    
    Total income
    
    
    3,491,156
    
    
    
    2,516,672
    
    
    
    3,627,230Operating expenses
    
    
    421,797
    
    
    
    450,030
    
    
    
    377,769Income before taxes and undistributed
equity income of subsidiary
    
    
    3,069,359
    
    
    
    2,066,642
    
    
    
    3,249,461Income tax benefit
    
    
    (135,000
    )
    
    
    (150,000
    )
    
    
    (125,000
    )Equity earnings in subsidiary, net of dividends
    
    
    332,711
    
    
    
    1,297,272
    
    
    
    (264,356
    )Net income
    
    $
    3,537,070
    
    
    $
    3,513,914
    
    
    $
    3,110,105




---



##### Table of Contents



(CSB LOGO)
  
  Notes to Consolidated Financial Statements Note 13  Condensed Parent Company Financial Information, (continued)
 Condensed Statements of Cash Flows
 2008
    
    
    2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    3,537,070
    
    
    $
    3,513,914
    
    
    $
    3,110,105Adjustments to reconcile net income to
cash provided by operations:Security accretion
    
    
    
    
    
    
    (508
    )
    
    
    (187
    )Securities gain
    
    
    
    
    
    
    (5,430
    )
    
    
    Other-than-temporary impairment
of investments
    
    
    35,000
    
    
    
    
    
    
    
    Software amortization
    
    
    1,667
    
    
    
    6,667
    
    
    
    6,667Equity earnings in subsidiary,
net of dividends
    
    
    (332,711
    )
    
    
    (1,297,272
    )
    
    
    264,356Stock compensation expense
    
    
    15,000
    
    
    
    24,554
    
    
    
    13,850Change in other assets, liabilities
    
    
    (187,022
    )
    
    
    (21,451
    )
    
    
    3,000Net cash provided by operating activities
    
    
    3,069,004
    
    
    
    2,220,474
    
    
    
    3,397,791Cash flows from investing activities:Purchase of investment securities
    
    
    (7,370
    )
    
    
    (95,787
    )
    
    
    (1,590
    )Maturities, calls of investment securities
    
    
    
    
    
    
    504,985
    
    
    
    Acquisition of Indian Village
    
    
    (1,989,555
    )
    
    
    
    
    
    
    Net cash provided by (used in)
investing activities
    
    
    (1,996,925
    )
    
    
    409,198
    
    
    
    (1,590
    )Cash flows from financing activities:Purchase of treasury shares
    
    
    (415,259
    )
    
    
    (904,410
    )
    
    
    (1,609,416
    )Issuance of treasury shares
    
    
    
    
    
    
    644
    
    
    
    Cash dividends paid
    
    
    (1,803,543
    )
    
    
    (1,771,491
    )
    
    
    (1,613,747
    )Net cash used in financing activities
    
    
    (2,218,802
    )
    
    
    (2,675,257
    )
    
    
    (3,223,163
    )Net change in cash
    
    
    (1,146,723
    )
    
    
    (45,585
    )
    
    
    173,038Cash at beginning of year
    
    
    1,748,248
    
    
    
    1,793,833
    
    
    
    1,620,795Cash at end of year
    
    $
    601,525
    
    
    $
    1,748,248
    
    
    $
    1,793,833
 Note 14  Other Comprehensive Income (Loss)
  2008
    
    
    2007
    
    
    2006Unrealized holding (losses) gain on
available-for-sale securities
    
    $
    545,115
    
    
    $
    538,825
    
    
    $
    (57,908
    )Less reclassification adjustment for securities
losses (gains) recognized in income
    
    
    35,000
    
    
    
    (16,830
    )
    
    
    56,800Net unrealized holding gains (losses)
    
    
    580,115
    
    
    
    521,995
    
    
    
    (1,108
    )Federal income tax provision (benefit)
    
    
    197,239
    
    
    
    177,478
    
    
    
    (377
    )Other comprehensive income (loss)
    
    $
    382,876
    
    
    $
    344,517
    
    
    $
    (731
    )




---



##### Table of Contents



Notes
to Consolidated Financial Statements
    
    (CSB LOGO)
 Note
15  Fair Value Measurements (Fas No. 157)
 Fair Value
Measurements, Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements
That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under
Statement 13, Partial
Deferral of the Effective Date of Statement 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.
  December 31, 2008Level I
    
    Level II
    
    Level III
    
    TotalAssets:Securities available for sale
    
    $
    176,219
    
    
    $
    76,479,597
    
    
    $
    
    
    
    $
    76,655,816




---



##### Table of Contents



(CSB LOGO)
  
  Notes to Consolidated Financial Statements Note 15
 Fair Value Measurements (Fas No. 157), (continued)
 December 31, 2008Level I
    
    Level II
    
    Level III
    
    TotalAssets Measured on a Nonrecurring Basis:Impaired loans
    
    
    
    
    
    $
    2,049,171
    
    
    
    
    
    
    $
    2,049,171
  Note
16  Fair Values of Financial Instruments (Fas No. 107)
  2008
    
    2007(Dollars In Thousands)Carrying
    
    Fair
    
    Carrying
    
    Fairvalue
    
    value
    
    value
    
    valueFinancial assets:Cash and cash equivalents
    
    $
    12,746
    
    
    $
    12,746
    
    
    $
    12,193
    
    
    $
    12,193Securities
    
    
    81,888
    
    
    
    81,888
    
    
    
    74,526
    
    
    
    74,526Loans, net
    
    
    312,897
    
    
    
    321,924
    
    
    
    254,073
    
    
    
    254,623Accrued Interest Receivable
    
    
    1,386
    
    
    
    1,386
    
    
    
    1,409
    
    
    
    1,409Financial liabilities:Deposits
    
    $
    305,453
    
    
    $
    308,213
    
    
    $
    259,386
    
    
    $
    259,612Short-term borrowings
    
    
    22,892
    
    
    
    22,892
    
    
    
    27,305
    
    
    
    27,305Other borrowings
    
    
    50,998
    
    
    
    53,073
    
    
    
    26,024
    
    
    
    25,915Accrued Interest Payable
    
    
    417
    
    
    
    417
    
    
    
    375
    
    
    
    375
  Cash and Cash Equivalents, Accrued Interest Receivable, Short-Term Borrowings, Accrued Interest Payable
  Securities
  Loans
  Deposits and Other Borrowed Funds




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##### Table of Contents



Notes
to Consolidated Financial Statements
    
    (CSB LOGO)
 Note
16  Fair Values of Financial Instruments (Fas No. 107), (continued)
   Note
17  Contingent Liabilities
   Note
18  Quarterly Financial Data (Unaudited)
  Basic
    
    DilutedInterest
    
    Net Interest
    
    Net
    
    Earnings
    
    EarningsIncome
    
    Income
    
    Income
    
    Per Share
    
    Per Share2008First quarter
    
    $
    5,283,411
    
    
    $
    3,379,765
    
    
    $
    1,001,760
    
    
    $
    .41
    
    
    $
    .41Second quarter
    
    
    4,893,331
    
    
    
    3,285,764
    
    
    
    877,762
    
    
    
    .36
    
    
    
    .36Third quarter
    
    
    4,966,317
    
    
    
    3,439,827
    
    
    
    890,564
    
    
    
    .37
    
    
    
    .37Fourth quarter
    
    
    5,477,667
    
    
    
    3,772,553
    
    
    
    766,984
    
    
    
    .29
    
    
    
    .292007First quarter
    
    $
    5,146,282
    
    
    $
    3,255,292
    
    
    $
    814,512
    
    
    $
    .33
    
    
    $
    .33Second quarter
    
    
    5,288,509
    
    
    
    3,275,353
    
    
    
    956,467
    
    
    
    .39
    
    
    
    .39Third quarter
    
    
    5,418,095
    
    
    
    3,389,682
    
    
    
    863,090
    
    
    
    .35
    
    
    
    .35Fourth quarter
    
    
    5,378,235
    
    
    
    3,406,055
    
    
    
    879,845
    
    
    
    .35
    
    
    
    .35




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##### Table of Contents



(CSB LOGO)
  
  Officers of The Commercial & Savings Bank Linda C. Amos
    
    Eric R. Giauque
    
    Lisa M. NelsonAssistant Vice President,
    
    Assistant Vice President,
    
    Assistant Vice President,Mortgage Underwriter
    
    Banking Center Manager
    
    Banking Center ManagerRebecca A. Baker
    
    Rick L. Ginther
    
    Shawn E. OswaldAssistant Vice President,
    
    President/Chief Executive Officer,
    
    Vice President,Banking Center Manager
    
    The Commercial & Savings Bank
    
    Information System DirectorPamela S. Basinger
    
    Loretta Gray
    
    Amy R. PattersonVice President, Financial Officer
    
    Assistant Cashier,
    
    Assistant Vice President,Assistant Banking Center Manager
    
    Personal LenderDeborah S. BernerVice President,
    
    Paul D. Greig
    
    Christopher S. RicklyMarketing & Public Relations
    
    Senior Vice President,
    
    Vice President,Chief Operation/Information Officer
    
    Commercial LenderPamela L. BromundAssistant Vice President,
    
    Jason B. Hummel
    
    Thomas S. RumbaughLoan Operations Supervisor
    
    Assistant Vice President,
    
    Vice President, Trust OfficerCommercial LenderWendy D. Brown
    
    
    
    Rebecca J. ShultzAssistant Vice President,
    
    Julie A. Jones
    
    Assistant Vice President,Cash Management Services
    
    Vice President,
    
    Loan OfficerDirector of Human ResourcesC. Dawn Butler
    
    
    
    Melissa F. SprangVice President,
    
    Stephen K. Kilpatrick
    
    Assistant Cashier,Banking Center Manager
    
    First Vice President,
    
    Banking Center ManagerSenior Credit OfficerBeverly A. Carr
    
    
    
    Scott A. StallmanOperations Officer,
    
    Larry S. Kutcher
    
    Operations OfficerDeposit Processing
    
    Assistant Vice President,Small Business Development
    
    Harland L. Stebbins, IIIColby M. Chamberlin
    
    
    
    First Vice President,Vice President,
    
    Betty C. Lyon
    
    Senior Loan OfficerBusiness Development Officer,
    
    Assistant Vice President,Commercial Lender
    
    Banking Center Manager
    
    Eddie L. SteinerPresident/Chief Executive Officer,Dale J. Clinton
    
    Kevin J. McAllister
    
    CSB Bancorp, IncVice President, Internal Auditor
    
    Assistant Vice President, Trust OfficerEric D. StrouseG. Gail Cochran
    
    Jason R. McCulloch
    
    Vice President,Assistant Vice President,
    
    Assistant Vice President,
    
    Commercial LenderExecutive Loan Secretary
    
    Brokerage ManagerElaine A. TedrowPeggy L. Conn
    
    Sherry A. McRobie
    
    Assistant Vice President,Corporate Secretary
    
    Assistant Cashier,
    
    Banking Center ManagerBanking Center ManagerMarianne Davis
    
    
    
    Jennifer M. ThorpeAssistant Cashier,
    
    Paula J. Meiler
    
    Assistant Vice President,Banking Center Manager
    
    Senior Vice President,
    
    Senior Credit AnalystChief Financial OfficerPaula S. Foy
    
    
    
    William R. TinlinVice President,
    
    A. Lee Miller
    
    Vice President,Compliance Officer
    
    Vice President,
    
    Recovery/SecurityCash Management & Special ProjectsLori S. Frantz
    
    
    
    Brian D. TroyerAssistant Vice President,
    
    Edward J. Miller
    
    Assistant Vice President,Banking Center Manager
    
    Vice President,
    
    Trust OperationsBanking Center ServicesCarrie A. Gerber
    
    
    
    Jane C. WhitmerCredit Officer
    
    Daniel L. Muse
    
    Assistant Cashier,Operations Officer
    
    Assistant Banking Center Manager




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##### Table of Contents



General
Information
    
    (CSB LOGO)
 The Commercial & Savings Bank
 Information & Customer Service
    
    330-674-9015 or 1-800-654-901524 Hour Xpress Phone Banking
    
    330-674-2720 or 1-888-438-2720Loan Services91 N. Clay, Millersburg
    
    Personal Loans330-763-2823Business Loans330-763-2822Trust & Investment Services91 N. Clay, Millersburg
    
    Holmes, Stark & Tuscarawas County 330-674-2397Trust & Investment Services146 E. Liberty, Suite 230, Wooster
    
    Wayne County330-264-033424 Hour Xpress Net Banking & BillPay
    
    www.csb1.comCSB Banking CentersClinton Commons Banking
Center 2102 Glen Dr., Millersburg (Drive-Up ATM)
    
    330-674-2265South Clay Banking Center91 S. Clay St., Millersburg (Drive-Up ATM)
    
    330-674-0687Berlin Banking Center4587 S.R. 39, Berlin (Drive-Up ATM)
    
    330-893-3565Charm Banking Center4440 C.R. 70, Charm (Walk-Up ATM)
    
    330-893-3323Gnadenhutten Banking Center100 S. Walnut St., Gnadenhutten
    
    740-254-4313New Philadelphia Banking Center635 W. High Ave., New Philadelphia (Drive-Up ATM)
    
    330-308-4867North Canton Banking Center1210 North Main St., North Canton (Drive-Up ATM)
    
    330-497-0839Orrville Area Banking Center461 Wadsworth Road, Orrville (Drive-Up ATM)
    
    330-682-8000Shreve Banking Center333 W. South St., Shreve (Drive-Up ATM)
    
    330-567-2226Sugarcreek Banking Center127 S. Broadway, Sugarcreek (Drive-Up ATM)
    
    330-852-4444Walnut Creek Banking Center4980 Olde Pump St., Walnut Creek (Walk-Up ATM)
    
    330-893-2961Winesburg Banking Center2225 U.S. 62, Winesburg (Drive-Up ATM)
    
    330-359-5543Shareholder & General Inquiries
    
    Stock Listing Common Symbol: CSBB.OBCorporate Office91 N. Clay, Millersburg
    
    330-674-9015
  If you have questions regarding your CSB Bancorp, Inc. stock, please contact:
 Registrar and Transfer Company
 Legal Counsel
 If you are interested in purchasing shares of CSB Bancorp, Inc., you may contact your local broker
or one of the following:
 Jay McCulloch    Located at     
 George Geissbuhler
 Linda Reall
 CSB Bancorp, Inc. is required to file an annual report on Form 10-K annually with the Securities
and Exchange Commission. Copies of the Form 10-K annual report and the Companys quarterly reports
may be obtained without charge by contacting:
 Paula J. Meiler      
 The annual meeting of shareholders is currently scheduled to be held on Wednesday, April 22, 2009
at 7:00 pm, at the Carlisle Inn in Walnut Creek, Ohio.
   (FDIC LOGO)
    
    (LENDER LOGO)




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