CSBB 10-Q Quarterly Report Sept. 30, 2012

CSB BANCORP INC /OH

10-Ks and 10-Qs

10-Q	Quarter ended Sept. 30, 2025
10-Q	Quarter ended June 30, 2025
10-Q	Quarter ended March 31, 2025
10-K	Fiscal year ended Dec. 31, 2024
10-Q	Quarter ended Sept. 30, 2024
10-Q	Quarter ended June 30, 2024
10-Q	Quarter ended March 31, 2024
10-K	Fiscal year ended Dec. 31, 2023
10-Q	Quarter ended Sept. 30, 2023
10-Q	Quarter ended June 30, 2023
10-Q	Quarter ended March 31, 2023
10-K	Fiscal year ended Dec. 31, 2022
10-Q	Quarter ended Sept. 30, 2022
10-Q	Quarter ended June 30, 2022
10-Q	Quarter ended March 31, 2022
10-K	Fiscal year ended Dec. 31, 2021
10-Q	Quarter ended Sept. 30, 2021
10-Q	Quarter ended June 30, 2021
10-Q	Quarter ended March 31, 2021
10-K	Fiscal year ended Dec. 31, 2020
10-Q	Quarter ended Sept. 30, 2020
10-Q	Quarter ended June 30, 2020
10-Q	Quarter ended March 31, 2020
10-K	Fiscal year ended Dec. 31, 2019
10-Q	Quarter ended Sept. 30, 2019
10-Q	Quarter ended June 30, 2019
10-Q	Quarter ended March 31, 2019
10-K	Fiscal year ended Dec. 31, 2018
10-Q	Quarter ended Sept. 30, 2018
10-Q	Quarter ended June 30, 2018
10-Q	Quarter ended March 31, 2018
10-K	Fiscal year ended Dec. 31, 2017
10-Q	Quarter ended Sept. 30, 2017
10-Q	Quarter ended June 30, 2017
10-Q	Quarter ended March 31, 2017
10-K	Fiscal year ended Dec. 31, 2016
10-Q	Quarter ended Sept. 30, 2016
10-Q	Quarter ended June 30, 2016
10-Q	Quarter ended March 31, 2016
10-K	Fiscal year ended Dec. 31, 2015
10-Q	Quarter ended Sept. 30, 2015
10-Q	Quarter ended June 30, 2015
10-Q	Quarter ended March 31, 2015
10-K	Fiscal year ended Dec. 31, 2014
10-Q	Quarter ended Sept. 30, 2014
10-Q	Quarter ended June 30, 2014
10-Q	Quarter ended March 31, 2014
10-K	Fiscal year ended Dec. 31, 2013
10-Q	Quarter ended Sept. 30, 2013
10-Q	Quarter ended June 30, 2013
10-Q	Quarter ended March 31, 2013
10-K	Fiscal year ended Dec. 31, 2012
10-Q	Quarter ended Sept. 30, 2012
10-Q	Quarter ended June 30, 2012
10-Q	Quarter ended March 31, 2012
10-K	Fiscal year ended Dec. 31, 2011
10-Q	Quarter ended Sept. 30, 2011
10-Q	Quarter ended June 30, 2011
10-Q	Quarter ended March 31, 2011
10-K	Fiscal year ended Dec. 31, 2010
10-Q	Quarter ended Sept. 30, 2010
10-Q	Quarter ended June 30, 2010
10-Q	Quarter ended March 31, 2010
10-K	Fiscal year ended Dec. 31, 2009

PROXIES

DEF 14A	Filed on April 23, 2025
DEF 14A	Filed on March 14, 2025
DEF 14A	Filed on April 24, 2024
DEF 14A	Filed on March 15, 2024
DEF 14A	Filed on April 26, 2023
DEF 14A	Filed on March 16, 2023
DEF 14A	Filed on April 27, 2022
DEF 14A	Filed on March 16, 2022
DEF 14A	Filed on March 16, 2021
DEF 14A	Filed on March 16, 2020
DEF 14A	Filed on March 15, 2019
DEF 14A	Filed on March 16, 2018
DEF 14A	Filed on March 23, 2017
DEF 14A	Filed on March 24, 2016
DEF 14A	Filed on March 23, 2015
DEF 14A	Filed on March 25, 2014
DEF 14A	Filed on March 25, 2013
DEF 14A	Filed on March 26, 2012
DEF 14A	Filed on March 23, 2011
DEF 14A	Filed on March 26, 2010

10-Q 1 d398761d10q.htm FORM 10-Q Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2012

¨	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

(Address of principal executive offices)

(330) 674-9015

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer ¨		Accelerated filer ¨		Non-accelerated filer ¨		Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of the registrant’s common stock, as of the latest practicable date.


Common stock, $6.25 par value		Outstanding at November 13, 2012:
		2,734,799 common shares

CSB BANCORP, INC

FORM 10-Q

QUARTER ENDED September 30, 2012

Table of Contents


		Part I – Financial Information
			Page
ITEM 1	–	FINANCIAL STATEMENTS (Unaudited)
Consolidated Balance Sheets				3
Consolidated Statements of Income				4
Consolidated Statements of Comprehensive Income				5
Condensed Consolidated Statements of Changes in Shareholders’ Equity				6
Condensed Consolidated Statements of Cash Flows				7
Notes to the Consolidated Financial Statements				8
ITEM 2	–	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		24
ITEM 3	–	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		30
ITEM 4	–	CONTROLS AND PROCEDURES		31

		Part II – Other Information

ITEM 1	–	Legal Proceedings.		32
ITEM 1A	–	Risk Factors		32
ITEM 2	–	Unregistered Sales of Equity Securities and Use of Proceeds		32
ITEM 3	–	Defaults upon Senior Securities		32
ITEM 4	–	Mine Safety Disclosures		32
ITEM 5	–	Other Information		32
ITEM 6	–	Exhibits		33
Signatures				34

CSB BANCORP, INC.

PART I – FINANCIAL INFORMATION

ITEM 1. – FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 30, 2012			December 31, 2011
ASSETS
(Dollars in thousands)
Cash and cash equivalents
Cash and due from banks	$	12,913		$	12,519
Interest-earning deposits in other banks		41,762			69,739

Total cash and cash equivalents		54,675			82,258


Securities
Available-for-sale, at fair value		134,889			123,026
Restricted stock, at cost		5,463			5,463

Total securities		140,352			128,489


Loans held for sale		540			0

Loans		352,748			324,182
Less allowance for loan losses		4,661			4,082

Net loans		348,087			320,100


Premises and equipment, net		8,425			8,513
Core deposit intangible		931			1,034
Goodwill		4,728			4,728
Bank-owned life insurance		8,237			3,068
Accrued interest receivable and other assets		2,808			3,043

TOTAL ASSETS	$	568,783		$	551,233


LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES
Deposits
Noninterest-bearing	$	91,022		$	85,890
Interest-bearing		363,277			357,663

Total deposits		454,299			443,553


Short-term borrowings		43,011			37,073
Other borrowings		16,738			19,161
Accrued interest payable and other liabilities		2,634			2,017

Total liabilities		516,682			501,804


SHAREHOLDERS’ EQUITY
Common stock, $6.25 par value. Authorized 9,000,000 shares; issued 2,980,602 shares; outstanding 2,734,799 shares in 2012 and 2011		18,629			18,629
Additional paid-in capital		9,994			9,994
Retained earnings		26,342			24,391
Treasury stock at cost- 245,803 shares in 2012 and 2011		(5,015	)		(5,015	)
Accumulated other comprehensive income		2,151			1,430

Total shareholders’ equity		52,101			49,429

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	568,783		$	551,233

See notes to unaudited consolidated financial statements.

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended September 30,					Nine Months Ended September 30,
(Dollars in thousands, except per share data)	2012		2011			2012		2011
INTEREST AND DIVIDEND INCOME
Loans, including fees	$	4,357	$	4,233		$	12,881	$	12,745
Taxable securities		638		601			2,074		1,809
Nontaxable securities		120		110			363		310
Other		32		14			112		42

Total interest and dividend income		5,147		4,958			15,430		14,906

INTEREST EXPENSE
Deposits		559		663			1,789		2,154
Short-term borrowings		22		33			71		112
Other borrowings		140		165			434		513

Total interest expense		721		861			2,294		2,779


NET INTEREST INCOME		4,426		4,097			13,136		12,127

PROVISION FOR LOAN LOSSES		206		240			617		710

Net interest income, after provision for loan losses		4,220		3,857			12,519		11,417


NONINTEREST INCOME
Service charges on deposit accounts		345		286			971		810
Trust services		175		154			503		504
Debit card interchange fees		195		154			590		444
Gain on sale of loans, net		169		54			362		153
Securities gains, net		0		237			0		237
Other		189		159			629		441

Total noninterest income		1,073		1,044			3,055		2,589

NONINTEREST EXPENSES
Salaries and employee benefits		1,985		1,856			5,909		5,412
Occupancy expense		280		208			767		631
Equipment expense		154		127			448		370
Professional fees		172		200			621		536
Franchise tax expense		138		135			415		405
FDIC assessment expense		83		36			238		254
Software expense & amortization		94		98			275		284
Marketing and public relations		83		83			235		215
Debit card expense		82		70			230		196
Amortization of intangible assets		37		15			103		46
Net cost of operation of other real estate		0		(51	)		8		(51	)
Other		420		681			1,383		1,563

Total noninterest expenses		3,528		3,458			10,632		9,861

Income before income taxes		1,765		1,443			4,942		4,145
FEDERAL INCOME TAX PROVISION		534		444			1,515		1,278

NET INCOME	$	1,231	$	999		$	3,427	$	2,867


Basic and diluted net income per share	$	0.45	$	0.37		$	1.25	$	1.05

See notes to unaudited consolidated financial statements.

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2012			2011			2012			2011
Net income	$	1,231		$	999		$	3,427		$	2,867


Other comprehensive income, before tax:
Unrealized gains arising during the period		282			458			1,093			1,216
Income tax effect		(96	)		(156	)		(372	)		(413	)

Reclassification adjustment for gains on available for sale securities included in net income		0			(237	)		0			(237	)
Income tax effect		0			81			0			81

Other comprehensive gain		186			146			721			646

Total comprehensive income	$	1,417		$	1,145		$	4,148		$	3,513

See notes to unaudited consolidated financial statements.

CSB BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands, except per share data)	2012			2011			2012			2011
Balance at beginning of period	$	51,176		$	48,538		$	49,429		$	47,154
Comprehensive income:
Net income		1,231			999			3,427			2,867
Other comprehensive income		186			146			721			646

Total comprehensive income		1,417			1,145			4,148			3,513

Common cash dividends declared		(492	)		(492	)		(1,476	)		(1,476	)

Balance at end of period	$	52,101		$	49,191		$	52,101		$	49,191


Common cash dividends declared per share	$	0.18		$	0.18		$	0.54		$	0.54

See notes to unaudited consolidated financial statements.

CSB BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended September 30,
(Dollars in thousands)	2012			2011
NET CASH FROM OPERATING ACTIVITIES	$	4,388		$	3,857

CASH FLOWS FROM INVESTING ACTIVITES
Securities available-for-sale:
Proceeds from maturities and repayments		54,051			27,928
Purchases		(65,222	)		(40,159	)
Proceeds from sale of securities		0			3,244
Loan originations, net of repayments		(28,702	)		248
Proceeds from sale of other real estate owned		26			347
Property, equipment, and software acquisitions		(503	)		(311	)
Purchase of bank-owned life insurance		(5,000	)		0

Net cash used in investing activities		(45,350	)		(8,703	)


CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits		10,849			1,396
Net change in short-term borrowings		5,938			509
Repayments of other borrowings		(2,423	)		(3,576	)
Cash dividends paid		(985	)		(985	)

Net cash provided by (used in) financing activities		13,379			(2,656	)


NET DECREASE IN CASH AND CASH EQUIVALENTS		(27,583	)		(7,502	)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		82,258			48,360


CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	54,675		$	40,858


SUPPLEMENTAL DISCLOSURES
Cash paid during the year for:
Interest	$	2,426		$	2,868
Income taxes		1,170			1,100
Noncash investing activities:
Transfer of loans to other real estate owned		56			764
Noncash financing activities:
Dividends declared		492			492

See notes to unaudited consolidated financial statements.

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying condensed consolidated financial statements include the accounts of CSB Bancorp, Inc. and its wholly-owned subsidiaries, The Commercial and Savings Bank (the “Bank”) and CSB Investment Services, LLC (together referred to as the “Company” or “CSB”). All significant intercompany transactions and balances have been eliminated in consolidation.

The condensed consolidated financial statements have been prepared without audit. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the Company’s financial position at September 30, 2012, and the results of operations and changes in cash flows for the periods presented have been made.

Certain information and footnote disclosures typically included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been omitted. The Annual Report for CSB for the year ended December 31, 2011, contains consolidated financial statements and related footnote disclosures, which should be read in conjunction with the accompanying consolidated financial statements. The results of operations for the period ended September 30, 2012 are not necessarily indicative of the operating results for the full year or any future interim period.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs . The amendments in this Update result in common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs. Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The amendments in this Update are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. For nonpublic entities, the amendments are effective for annual periods beginning after December 15, 2011. Early application by public entities is not permitted. The Company has provided the necessary disclosure in Note 4 and Note 5.

In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income . The amendments in this Update improve the comparability, clarity, consistency, and transparency of financial reporting and increase the prominence of items reported in other comprehensive income. To increase the prominence of items reported in other comprehensive income and to facilitate convergence of U.S. GAAP and IFRS, the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity was eliminated. The amendments require that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. All entities that report items of comprehensive income, in any period presented, will be affected by the changes in this Update. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. For nonpublic entities, the amendments are effective for fiscal years ending after December 15, 2012, and interim and annual periods thereafter. The amendments in this Update should be applied retrospectively, and early adoption is permitted. The Company has provided the necessary disclosure in the Statement of Comprehensive Income.

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In September 2011, the FASB issued ASU 2011-08, Intangibles – Goodwill and Other Topics (Topic 350), Testing Goodwill for Impairment . The objective of this update is to simplify how entities, both public and nonpublic, test goodwill for impairment. The amendments in the Update permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. Under the amendments in this Update, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. The amendments in this Update apply to all entities, both public and nonpublic, that have goodwill reported in their financial statements and are effective for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. This ASU is not expected to have a significant impact on the Company’s financial statements.

In December 2011, the FASB issued ASU 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05 . In order to defer only those changes in Update 2011-05 that relate to the presentation of reclassification adjustments, the paragraphs in this Update supersede certain pending paragraphs in Update 2011-05. Entities should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before Update 2011-05. All other requirements in Update 2011-05 are not affected by this Update, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. Public entities should apply these requirements for fiscal years, and interim periods within those years, beginning after December 15, 2011. Nonpublic entities should begin applying these requirements for fiscal years ending after December 15, 2012, and interim and annual periods thereafter. The Company has provided the necessary disclosure in the Statement of Comprehensive Income.

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 2 – SECURITIES

Securities consist of the following at September 30, 2012 and December 31, 2011:


(Dollars in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value
September 30, 2012
Available-for-sale:
U.S. Treasury security	$	100	$	0	$	0	$	100
Obligations of U.S. Government corporations and agencies		34,874		52		52		34,874
Mortgage-backed securities in government sponsored entities		76,875		2,491		38		79,328
Obligations of states and political subdivisions		15,402		740		4		16,138
Corporate bonds		4,310		109		36		4,383

Total debt securities		131,561		3,392		130		134,823
Equity securities in financial institutions		69		6		9		66

Total available-for-sale		131,630		3,398		139		134,889
Restricted stock		5,463		0		0		5,463

Total securities	$	137,093	$	3,398	$	139	$	140,352


December 31, 2011
Available-for-sale:
U.S. Treasury security	$	100	$	0	$	0	$	100
Obligations of U.S. Government corporations and agencies		28,263		83		23		28,323
Mortgage-backed securities in government sponsored entities		74,834		1,562		64		76,332
Obligations of states and political subdivisions		14,148		732		0		14,880
Corporate bonds		3,445		6		121		3,330

Total debt securities		120,790		2,383		208		122,965
Equity securities in financial institutions		69		3		11		61

Total available-for-sale		120,859		2,386		219		123,026
Restricted stock		5,463		0		0		5,463

Total securities	$	126,322	$	2,386	$	219	$	128,489

The amortized cost and fair value of debt securities at September 30, 2012, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 2 – SECURITIES (CONTINUED)


(Dollars in thousands)	Amortized cost		Fair value
Available-for-sale:
Due in one year or less	$	280	$	280
Due after one through five years		13,172		13,551
Due after five through ten years		20,428		20,899
Due after ten years		97,681		100,093

Total debt securities available-for-sale	$	131,561	$	134,823

Realized Gains and Losses

There were no sales of available-for-sale securities for the three month or nine month periods ending September 30, 2012. Proceeds of $3.2 million from sales of available-for-sale securities and gross realized gains of $237 thousand were included in earnings for both the three month and nine month periods ending September 30, 2011. Gains or losses on the sales of available-for-sale securities are recognized upon sale and are determined by the specific identification method.

The following table presents gross unrealized losses and fair value of securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2012 and December 31, 2011:


	Securities in a continuous unrealized loss position
	Less than 12 months				12 months or more				Total
(Dollars in thousands)	Gross unrealized losses		Fair value		Gross unrealized losses		Fair value		Gross unrealized losses		Fair value
September 30, 2012
Obligations of U.S. Corporations and agencies	$	52	$	13,945	$	0	$	0	$	52	$	13,945
Mortgage-backed securities in government sponsored entities		38	$	2,249		0		0		38		2,249
Obligations of state and political subdivisions		4		610		0		0		4		610
Corporate bonds		5		367		31		969		36		1,336

Total debt securities		99		17,171		31		969		130		18,140
Equity securities in financial institutions		0		0		9		45		9		45

Total temporarily impaired securities	$	99	$	17,171	$	40	$	1,014	$	139	$	18,185


December 31, 2011
Obligations of U.S. Corporations and agencies	$	23	$	6,974	$	0	$	0	$	23	$	6,974
Mortgage-backed securities in government sponsored entities		63		16,794		1		192		64		16,986
Corporate bonds		49		2,397		72		428		121		2,825

Total debt securities		135		26,165		73		620		208		26,785
Equity securities in financial institutions		0		0		11		43		11		43

Total temporarily impaired securities	$	135	$	26,165	$	84	$	663	$	219	$	26,828

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 2 – SECURITIES (CONTINUED)

There were sixteen (16) securities in an unrealized loss position at September 30, 2012, four (4) of which were in a continuous loss position for twelve months or more. There were seventeen (17) securities in an unrealized loss position at December 31, 2011, two (2) of which were in a continuous loss position for twelve months or more.

At least quarterly, the Company conducts a comprehensive security-level impairment assessment. The assessments are based on the nature of the securities, the extent and duration of the securities in an unrealized loss position, the extent and duration of the loss and management’s intent to sell or if it is more likely than not that management will be required to sell a security before recovery of its amortized cost basis, which may be maturity. Management believes the Company will fully recover the cost of these securities and it does not intend to sell these securities and likely will not be required to sell them before the anticipated recovery of the remaining amortized cost basis, which may be maturity. As a result, management concluded that these securities were not other-than-temporarily impaired at September 30, 2012 and has recognized the total amount of the impairment in other comprehensive income, net of tax.

NOTE 3 – LOANS

Loans consist of the following:


(Dollars in thousands)	September 30, 2012		December 31, 2011
Commercial	$	97,983	$	89,828
Commercial real estate		118,287		106,332
Residential real estate		108,450		103,518
Construction & Land Development		21,462		18,061
Consumer		6,298		6,216

Total loans before deferred costs		352,480		323,955
Deferred loan costs		268		227

Total Loans	$	352,748	$	324,182

Loan Origination/Risk Management

The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.

Commercial and industrial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. Underwriting standards are designed to promote relationship banking rather than transactional banking. The Company’s management examines current and occasionally projected cash flows to determine the ability of the borrower to repay their obligations. Commercial and industrial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial and industrial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and usually incorporate the personal guarantees of business owners; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans, in addition to those of real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type which helps reduce the Company’s exposure to adverse economic events that affect any single market or industry. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans. At September 30, 2012 approximately 82% of the outstanding principal balances of the Company’s commercial real estate loans were secured by owner-occupied properties.

With respect to loans to developers and builders that are secured by non-owner occupied properties, the Company generally requires the borrower to have had an existing relationship with the Company and have a proven financial record. Construction and land development loans are underwritten utilizing independent appraisal reviews, sensitivity analysis of absorption and lease rates and financial analysis of the developers and property owners. Construction and land development loans are generally based upon estimates of costs and value associated with the completed project. These estimates may be inaccurate. Construction and land development loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources or repayment for these types of loans may be pre-committed permanent loans from the Company or other approved long-term lenders, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing.

The Company originates consumer loans utilizing a judgmental underwriting process. To monitor and manage consumer loan risk, policies and procedures are developed and modified, as needed, jointly by lenders and loan support personnel. This activity, coupled with relatively small loan amounts spread across many individual borrowers, minimizes risk.

The Company utilizes an independent loan review vendor that reviews and validates the credit risk program on a periodic basis. Results of these reviews are presented to management and the Audit Committee of the Board of Directors. The loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit personnel, as well as the Company’s policies and procedures.

Concentrations of Credit

Nearly all of the Company’s lending activity occurs within the State of Ohio, including the four counties of Holmes, Stark, Tuscarawas and Wayne, as well as other markets. The majority of the Company’s loan portfolio consists of owner occupied commercial real estate and commercial loans. As of September 30, 2012 and December 31, 2011 there were no concentrations of loans related to any single industry.

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

The following table details activity in the allowance for loan losses by portfolio segment for the three and nine month periods ended September 30, 2012 and 2011. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.


(Dollars in thousands)	Commercial			Commercial Real Estate			Residential Real Estate			Construction & Land Development			Consumer			Unallocated			Total
Three months ended September 30, 2012
Beginning balance, July 1, 2012	$	896		$	1,927		$	1,051		$	217		$	64		$	316		$	4,471
Provision for possible loan losses		94			108			(45	)		85			46			(82	)		206
Charge-offs		0			0			0			0			(39	)					(39	)
Recoveries		2			0			10			0			11						23

Net charge-offs		2			0			10			0			(28	)					(16	)

Ending balance	$	992		$	2,035		$	1,016		$	302		$	82		$	234		$	4,661

(Dollars in thousands)	Commercial			Commercial Real Estate			Residential Real Estate			Construction & Land Development			Consumer			Unallocated			Total
Nine months ended September 30, 2012
Beginning balance, January 1, 2012	$	1,024		$	1,673		$	894		$	180		$	78		$	233		$	4,082
Provision for possible loan losses		(33	)		376			127			122			24			1			617
Charge-offs		(15	)		(14	)		(104	)		0			(70	)					(203	)
Recoveries		16			0			99			0			50						165

Net charge-offs		1			(14	)		(5	)		0			(20	)					(38	)

Ending balance	$	992		$	2,035		$	1,016		$	302		$	82		$	234		$	4,661

(Dollars in thousands)	Commercial			Commercial Real Estate			Residential Real Estate			Construction & Land Development			Consumer			Unallocated			Total
Three months ended September 30, 2011
Beginning balance, July 1, 2011	$	1,012		$	1,558		$	776		$	272		$	81		$	355		$	4,054
Provision for possible loan losses		(9	)		(59	)		304			4			2			(2	)		240
Charge-offs		(36	)		(25	)		(72	)		(41	)		(18	)					(192	)
Recoveries		1			0			0			0			13						14

Net charge-offs		(35	)		(25	)		(72	)		(41	)		(5	)					(178	)

Ending balance	$	968		$	1,474		$	1,008		$	235		$	78		$	353		$	4,116

(Dollars in thousands)	Commercial			Commercial Real Estate			Residential Real Estate			Construction & Land Development			Consumer			Unallocated			Total
Nine months ended September 30, 2011
Beginning balance, January 1, 2011	$	1,179		$	1,183		$	1,057		$	213		$	80		$	319		$	4,031
Provision for possible loan losses		120			359			98			63			36			34			710
Charge-offs		(343	)		(68	)		(156	)		(41	)		(78	)					(686	)
Recoveries		12			0			9			0			40						61

Net charge-offs		(331	)		(68	)		(147	)		(41	)		(38	)					(625	)

Ending balance	$	968		$	1,474		$	1,008		$	235		$	78		$	353		$	4,116

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

The following table presents the balance in the allowance for loan losses and the ending loan balances by portfolio segment and based on the impairment method as of September 30, 2012 and December 31,2011:


(Dollars in thousands)	Commercial		Commercial Real Estate		Residential Real Estate		Construction & Land Development		Consumer		Unallocated		Total
September 30, 2012
Allowance for loan losses:
Ending allowance balances attributable to loans:
Individually evaluated for impairment	$	86	$	688	$	57	$	61	$	0	$	0	$	892
Collectively evaluated for impairment		906		1,347		959		241		82		234		3,769

Total ending allowance balance	$	992	$	2,035	$	1,016	$	302	$	82	$	234	$	4,661

Loans:
Loans individually evaluated for impairment	$	3,915	$	4,911	$	1,151	$	166	$	0			$	10,143
Loans collectively evaluated for impairment		94,068		113,376		107,299		21,296		6,298				342,337

Total ending loans balance	$	97,983	$	118,287	$	108,450	$	21,462	$	6,298			$	352,480

December 31, 2011
Allowance for loan losses:
Ending allowance balances attributable to loans:
Individually evaluated for impairment	$	165	$	304	$	53	$	0	$	0	$	0	$	522
Collectively evaluated for impairment		859		1,369		841		180		78		233		3,560

Total ending allowance balance	$	1,024	$	1,673	$	894	$	180	$	78	$	233	$	4,082

Loans:
Loans individually evaluated for impairment	$	4,605	$	2,476	$	182	$	0	$	0			$	7,263
Loans collectively evaluated for impairment		85,223		103,856		103,336		18,061		6,216				316,692

Total ending loans balance	$	89,828	$	106,332	$	103,518	$	18,061	$	6,216			$	323,955

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

The following table presents loans individually evaluated for impairment by class of loans as of September 30, 2012 and December 31, 2011:


(Dollars in thousands)	Unpaid Principal Balance		Recorded Investment with no Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
September 30, 2012
Commercial	$	3,915	$	0	$	3,928	$	3,928	$	86	$	4,243
Commercial real estate		4,950		1,263		3,641		4,904		689		4,160
Residential real estate		1,229		88		1,066		1,154		57		646
Construction & land development		173		0		166		166		61		166

Total impaired loans	$	10,267	$	1,351	$	8,801	$	10,152	$	893	$	9,215


December 31, 2011
Commercial	$	4,605	$	0	$	4,605	$	4,605	$	165	$	2,890
Commercial real estate		2,621		0		2,476		2,476		304		2,924
Residential real estate		182		0		182		182		53		103

Total impaired loans	$	7,408	$	0	$	7,263	$	7,263	$	522	$	5,917

The following table presents the aging of past due and nonaccrual loans as of September 30, 2012 and December 31, 2011 by class of loans:


(Dollars in thousands)	Current		30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days + Past Due		Non- Accrual		Total Past Due and Non- Accrual		Total Loans
September 30, 2012
Commercial	$	97,782	$	123	$	21	$	0	$	57	$	201	$	97,983
Commercial real estate		115,390		257		0		11		2,629		2,897		118,287
Residential		106,318		1,097		243		141		651		2,132		108,450
Construction		20,621		668		0		0		173		841		21,462
Consumer		6,124		111		63		0		0		174		6,298

Total Loans	$	346,235	$	2,256	$	327	$	152	$	3,510	$	6,245	$	352,480


December 31, 2011
Commercial	$	89,365	$	272	$	28	$	150	$	13	$	463	$	89,828
Commercial real estate		103,828		587		250		141		1,526		2,504		106,332
Residential		100,297		1,443		303		282		1,193		3,221		103,518
Construction		17,885		0		0		0		176		176		18,061
Consumer		5,985		194		29		8		0		231		6,216

Total Loans	$	317,360	$	2,496	$	610	$	581	$	2,908	$	6,595	$	323,955

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

Troubled Debt Restructurings

The Company has troubled debt restructurings of $8.3 million as of September 30, 2012, and $8.5 million as of December 31, 2011, with $600 thousand and $516 thousand of specific reserves allocated as of September 30, 2012 and December 31, 2011 respectively to customers whose loan terms have been modified in troubled debt restructurings. At September 30, 2012, $7.6 million of the loans classified as troubled debt restructurings were performing to modified terms. The remaining $631 thousand were in nonaccrual status.

Loan modifications that are considered troubled debt restructurings completed during the three and nine month periods ended September 30, 2012 and 2011 were as follows:


	For the Three Months Ended September 30, 2012
(Dollars in thousands)	Number of loans restructured		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Commercial real estate		0	$	0	$	0
Residential real estate		1		206		206

Total Restructured Loans		1	$	206	$	206

Subsequently Defaulted		0	$	0


	For the Nine Months Ended September 30, 2012
(Dollars in thousands)	Number of loans restructured		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Commercial real estate		1	$	140	$	140
Residential real estate		8		694		694

Total Restructured Loans		9	$	834	$	834

Subsequently Defaulted		1	$	60


	For the Three Months Ended September 30, 2011
(Dollars in thousands)	Number of loans restructured		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Commercial real estate		1	$	298	$	298
Residential real estate		0		0		0

Total Restructured Loans		1	$	298	$	298

Subsequently Defaulted		0	$	0


	For the Nine Months Ended September 30, 2011
(Dollars in thousands)	Number of loans restructured		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Commercial		3	$	4,465	$	4,465
Commercial real estate		2		518		518
Residential real estate		5		285		285

Total Restructured Loans		10	$	5,268	$	5,268

Subsequently Defaulted		1	$	90

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

The loans restructured during the three and nine month periods ending September 30, 2012 and 2011 were modified by changing the monthly payment to interest only. No principal reductions were made. The loan that subsequently defaulted in 2012 was a residential real estate loan.

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes commercial loans individually by classifying the loans as to credit risk. This analysis includes commercial loans with an outstanding balance greater than $275 thousand and is performed on an annual basis.

The Company uses the following definitions for risk ratings:

Pass . Loans classified as pass (Acceptable, Low Acceptable or Pass Watch) may exhibit a wide array of characteristics but at minimum represent an acceptable risk to the Bank. Borrowers in this rating may have leveraged but acceptable balance sheet positions, satisfactory asset quality, and stable to favorable sales and earnings trends, acceptable liquidity and adequate cash flow. Loans are considered fully collectible and require an average amount of administration. While generally adhering to credit policy, these loans may exhibit occasional exceptions that do not result in undue risk to the Bank. Borrowers are generally capable of absorbing setbacks, financial and otherwise, without the threat of failure.

Special Mention . Loans classified as special mention have material weaknesses that deserve management’s close attention. If left uncorrected, these weaknesses may result in deterioration of the repayment prospects for the loan at some future date.

Substandard . Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful . Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans that do not meet the criteria for special mention, substandard or doubtful classification, when analyzed individually as part of the above described process are considered to be pass rated loans. As of September 30, 2012 and December 31, 2011, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 3 – Loans (CONTINUED)


(Dollars in thousands)	Pass		Special Mention		Substandard		Doubtful		Not Rated		Total
September 30, 2012
Commercial	$	86,829	$	4,905	$	6,075	$	0	$	174	$	97,983
Commercial real estate		100,725		5,369		9,081		0		3,112		118,287
Residential real estate		204		0		55		0		108,191		108,450
Construction & land development		15,505		3,369		1,214		0		1,374		21,462
Consumer		0		0		0		0		6,298		6,298

Total	$	203,263	$	13,643	$	16,425	$	0	$	119,149	$	352,480


December 31, 2011
Commercial	$	76,216	$	5,147	$	7,710	$	0	$	755	$	89,828
Commercial real estate		84,846		10,385		8,686		0		2,415		106,332
Residential real estate		1,151		0		61		0		102,306		103,518
Construction & land development		12,695		4,340		168		0		858		18,061
Consumer		0		0		0		0		6,216		6,216

Total	$	174,908	$	19,872	$	16,625	$	0	$	112,550	$	323,955

Loans listed as not rated are either less than $275 thousand or are included in groups of homogeneous loans. The following table presents loans that are not rated by class of loans as of September 30, 2012 and December 31, 2011. Non-performing loans include loans past due 90 days and greater and loans on nonaccrual of interest.


(Dollars in thousands)	Performing		Non-Performing		Total
September 30, 2012
Commercial	$	174	$	0	$	174
Commercial real estate		3,112		0		3,112
Residential real estate		107,454		737		108,191
Construction & land development		1,367		7		1,374
Consumer		6,298		0		6,298

Total	$	118,405	$	744	$	119,149


December 31, 2011
Commercial	$	755	$	0	$	755
Commercial real estate		2,415		0		2,415
Residential real estate		100,892		1,414		102,306
Construction & land development		850		8		858
Consumer		6,208		8		6,216

Total	$	111,120	$	1,430	$	112,550

Loans serviced for others approximated $56 million and $50 million at September 30, 2012 and December 31, 2011, respectively.

NOTE 4 – FAIR VALUE MEASUREMENTS

The Company provides disclosures about assets and liabilities carried at fair value. The framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and lowest priority to unobservable inputs. The three broad levels of the fair value hierarchy are described below:

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 4 – FAIR VALUE MEASUREMENTS (CONTINUED)


LevelI:		Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.
Level II:		Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; inputs that are derived principally from or corroborated by observable market data by corroborated or other means. If the asset or liability has a specified (contractual) term, the Level II input must be observable for substantially the full term of the asset or liability.
Level III:		Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The following table presents the assets reported on the Consolidated Balance Sheets at their fair value on a recurring basis as of September 30, 2012 and December 31, 2011, by level within the fair value hierarchy. No liabilities are carried at fair value. As required by the applicable accounting standards, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Equity securities and U.S. Treasury Notes are valued at the closing price reported on the active market on which the individual securities are traded. Obligations of U.S. government corporations and agencies, mortgage-backed securities, corporate bonds and obligations of states and political subdivisions are valued at observable market data for similar assets.


(Dollars in thousands)	Level I		Level II		Level III		Total
	September 30, 2012
Assets:
Securities available-for-sale
U.S. Treasury security	$	100	$	0	$	0	$	100
Obligations of U.S. government corporations and agencies		0		34,874		0		34,874
Mortgage-backed securities in government sponsored entities		0		79,328		0		79,328
Obligations of states and political subdivisions		0		16,138		0		16,138
Corporate bonds		0		4,383		0		4,383

Total debt securities		100		134,723		0		134,823
Equity securities in financial institutions		66		0		0		66
Loans held for sale		540		0		0		540

Total Assets	$	706	$	134,723	$	0	$	135,429


	December 31, 2011
Assets:
Securities available-for-sale
U.S. Treasury security	$	100	$	0	$	0	$	100
Obligations of U.S. government corporations and agencies		0		28,323		0		28,323
Mortgage-backed securities in government sponsored entities		0		76,332		0		76,332
Obligations of states and political subdivisions		0		14,880		0		14,880
Corporate bonds		0		3,330		0		3,330

Total debt securities		100		122,865		0		122,965
Equity securities in financial institutions		61		0		0		61

Total Assets	$	161	$	122,865	$	0	$	123,026

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 4 – FAIR VALUE MEASUREMENTS (CONTINUED)

The following table presents the assets measured on a nonrecurring basis on the Consolidated Balance Sheets at their fair value as of September 30, 2012, and December 31, 2011, by level within the fair value hierarchy. The fair value of mortgage servicing rights is based on a valuation model that calculates the present value of estimated net servicing income. As a result, these rights are measured at fair value on a nonrecurring basis and are classified within level III of the fair value hierarchy. Impaired loans measured using a discounted cash flow model, calculate the present value of future loan payments. The valuation models incorporate assumptions based on management’s best judgment that are significant inputs to the discounting calculations. Techniques used to value the collateral that secure the impaired loans and other real estate owned include: quoted market prices for identical assets classified as Level I inputs, and observable inputs employed by certified appraisers for similar assets classified as Level II inputs. In cases where valuation techniques included inputs that are unobservable and are based on estimates and assumptions developed by management based on the best information available under each circumstance, the asset valuation is classified as Level III inputs.


(Dollars in thousands)	Level I		Level II		Level III		Total
	September 30, 2012
Assets measured on a nonrecurring basis:
Impaired loans	$	0	$	0	$	9,250	$	9,250
Other real estate owned		0		0		51		51
Mortgage servicing rights		0		0		192		192

	December 31, 2011
Impaired loans	$	0	$	0	$	6,741	$	6,741
Other real estate owned		0		0		10		10
Mortgage servicing rights		0		0		167		167

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Company has utilized Level 3 inputs to determine fair value:


	Fair value estimate	Valuation techniques	Unobservable input	Range
(Dollars in thousands)	September 30, 2012
		Discounted	Remaining term	17 mos to 30 yrs
		cash flow	Discount rate	3.75% to 8%
		Appraisal of	Appraisal adjustments ⁽²⁾	0% to -50%
Impaired loans	$9,250	collateral ⁽¹⁾ , ^(3 )	Liquidation expense ⁽²⁾	0% to -10%
		Appraisal of	Management discount
Other real estate owned	51	collateral ⁽¹⁾ ^, ^{(3 )}	for property type	0% to -32%
		Discounted	Remaining term	8 mos to 30 yrs
Mortgage servicing rights	192	cash flow	Discount rate	2.1%

(1)	Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various inputs which are not identifiable.

(2)	Appraisals may be adjusted by management for qualitative factors such as estimated liquidation expenses. The range of liquidation expenses and other appraisals adjustments are presented as a percent of the appraisal.

(3)	Includes qualitative adjustments by management and estimated liquidation expenses.

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 5 – FAIR VALUES OF FINANCIAL INSTRUMENTS

The estimated fair values of recognized financial instruments as of September 30, 2012 and December 31, 2011 are as follows:


	September 30, 2012
(Dollars in thousands)	Carrying Value		Level 1		Level II		Level III		Total Fair Value
Financial assets:
Cash and cash equivalents	$	54,675	$	54,675	$	0	$	0	$	54,675
Securities		134,889		166		134,723		0		134,889
Loans held for sale		540		540		0		0		540
Net loans		348,087		0		0		353,559		353,559
Bank-owned life insurance		8,237		8,237		0		0		8,237
Regulatory stock		5,463		0		5,463		0		5,463
Accrued interest receivable		1,463		1,463		0		0		1,463
Financial liabilities:
Deposits	$	454,299	$	293,229	$	0	$	162,577	$	455,806
Short-term borrowings		43,011		43,011		0		0		43,011
Federal Home Loan Bank advances		16,738		0		0		17,969		17,969
Accrued interest payable		153		153		0		0		153


	December 31, 2011
(Dollars in thousands)	Carrying value		Fair value
Financial assets:
Cash and cash equivalents	$	82,258	$	82,258
Securities available for sale		123,026		123,026
Net loans		320,100		327,138
Bank-owned life insurance		3,068		3,068
Regulatory stock		5,463		5,463
Accrued interest receivable		1,349		1,349
Financial liabilities:
Deposits	$	443,553	$	445,587
Short-term borrowings		37,073		37,073
Federal Home Loan Bank advances		19,161		20,087
Accrued interest payable		182		182

For purposes of the above disclosures of estimated fair value, the following assumptions are used:

Cash and cash equivalents; Loans held for sale; Accrued interest receivable; Short-term borrowings, and Accrued interest payable

The fair value of the above instruments is considered to be carrying value. Classified as Level I in the fair value hierarchy.

Securities

The fair value of securities available-for-sale which are measured on a recurring basis are determined primarily by obtaining quoted prices on nationally recognized securities exchanges or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on securities’ relationship to other similar securities. Classified as Level I or Level II in the fair value hierarchy

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 5 – FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)

Net Loans

The fair value for loans is estimated by discounting future cash flows using current market inputs at which loans with similar terms and qualities would be made to borrowers of similar credit quality. Where quoted market prices were available, primarily for certain residential mortgage loans, such market rates were utilized as estimates for fair value. Fair value of non-accrual loans is based on carrying value, classified as Level III.

Bank-owned Life Insurance

The carrying amount of bank-owned life insurance is based on the cash surrender value of the policies and is a reasonable estimate of fair value, classified as Level I.

Regulatory stock

Regulatory stock includes Federal Home Loan Bank Stock and Federal Reserve Bank Stock. It is not practicable to determine the fair value of regulatory equity securities due to restrictions placed on their transferability. Fair value is based on carrying value, classified as Level II.

Deposits

The fair value of certificates of deposit is based on the discounted value of contractual cash flows. The discount rates are estimated using market rates currently offered for similar instruments with similar remaining maturities, resulting in a Level III classification. Demand, savings, and money market deposit accounts are valued at the amount payable on demand as of quarter end, resulting in a Level I classification.

Federal Home Loan Bank advances

The fair value of Federal Home Loan Bank advances are estimated using a discounted cash flow analysis based on the current borrowing rates for similar types of borrowings, resulting in a Level III classification.

The Company also has unrecognized financial instruments at September 30, 2012 and December 31, 2011. These financial instruments relate to commitments to extend credit and letters of credit. The aggregated contract amount of such financial instruments was approximately $105 million at September 30, 2012 and $92 million at December 31, 2011. Such amounts are also considered to be the estimated fair values.

The fair value estimates of financial instruments are made at a specific point in time based on relevant market information. These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings of a particular financial instrument over the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Since no ready market exists for a significant portion of the financial instruments, fair value estimates are largely based on judgments after considering such factors as future expected credit losses, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis focuses on the consolidated financial condition of the Company at September 30, 2012 as compared to December 31, 2011, and the consolidated results of operations for the three and nine month periods ended September 30, 2012 compared to the same periods in 2011. The purpose of this discussion is to provide the reader with a more thorough understanding of the Consolidated Financial Statements. This discussion should be read in conjunction with the interim Consolidated Financial Statements and related footnotes.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report are not historical facts but rather are forward-looking statements that are subject to certain risks and uncertainties. When used herein, the terms “anticipates”, “plans”, “expects”, “believes”, and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company’s actual results, performance or achievements may materially differ from those expressed or implied in the forward-looking statements. Risks and uncertainties that could cause or contribute to such material differences include, but are not limited to, general economic conditions, interest rate environment, competitive conditions in the financial services industry, changes in law, governmental policies and regulations, and rapidly changing technology affecting financial services. Other factors not currently anticipated may also materially and adversely affect the Company’s results of operations, cash flows and financial position. There can be no assurance that future results will meet expectations. While the Company believes that the forward-looking statements in this report are reasonable, the reader should not place undue reliance on any forward-looking statement.

The Company does not undertake, and specifically disclaims any obligation, to publicly revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as may be required by applicable law.

FINANCIAL CONDITION

Total assets were $569 million at September 30, 2012, compared to $551 million at December 31, 2011, representing an increase of $18 million, or 3%. Cash and cash equivalents decreased $28 million, or 33%, during the nine month period ended September 30, 2012, primarily as a result of funding increases in loans and securities and repayment of advances from the FHLB. Securities increased $12 million, or 9%, during the first nine months of 2012 as bonds were purchased within the US government agency portfolio.

Net loans increased $28 million, or 9%, during the nine month period ended September 30, 2012. Commercial loans including commercial real estate loans increased $20 million, or 10%, home equity lines increased $1 million, or 3%, real estate mortgage loans increased $4 million, or 6%, construction and land development loans increased $3 million, or 19%, and consumer loans remained stable over December 31, 2011. Consumers continued to refinance their mortgage loans for lower long-term rates. During the fourth quarter 2011 and first nine months of 2012 the bank originated and retained fifteen year fixed rate mortgage loans for its portfolio. The bank originates and sells fixed rate thirty year mortgages into the secondary market.

CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The allowance for loan losses as a percentage of total loans was 1.32% at September 30, 2012, an increase from 1.26% at December 31, 2011. Outstanding loan balances increased 9% to $353 million at September 30, 2012 while net charge-offs of $38 thousand were offset by a provision of $617 thousand to the allowance for loan losses for the nine months ended September 30, 2012. Non-performing loans increased $173 thousand or 5% from December 31, 2011.


(Dollars in thousands)	September 30, 2012			December 31, 2011			September 30, 2011
Non-performing loans	$	3,662		$	3,489		$	3,495
Other real estate		51			10			505
Allowance for loan losses		4,661			4,082			4,116
Total loans		352,748			324,182			313,980
Allowance: loans		1.32	%		1.26	%		1.31	%
Allowance: non-performing loans		1.3	x		1.2	x		1.2	x

The ratio of gross loans to deposits was 78% at September 30, 2012, compared to 73% at December 31, 2011. The increase in this ratio is the result of loan volume increases outpacing increases in deposits during the nine months ended September 30, 2012.

The Company had net unrealized gains of $3 million within its securities portfolio at September 30, 2012, compared to net unrealized gains of $2 million at December 31, 2011. The Company has no exposure to government-sponsored enterprise preferred stocks, collateralized debt obligations or trust preferred securities. Management has considered industry analyst reports, sector credit reports and the volatility within the bond market in concluding that the gross unrealized losses of $139 thousand within the total portfolio as of September 30, 2012, were primarily the result of customary and expected fluctuations in the bond market and not necessarily the expected cash flows of the individual securities. As a result, all security impairments detailed above on September 30, 2012, are considered temporary and no impairment loss relating to these securities has been recognized.

Bank–owned life insurance of $5 million was purchased on the lives of senior management during first quarter of 2012.

Deposits increased $11 million, or 2% from December 31, 2011 with non-interest bearing deposits increasing $5 million and interest-bearing deposit accounts increasing $6 million. By deposit type, increases were recognized in statement and passbook savings accounts and money market savings accounts for the period ended September 30, 2012.

Short-term borrowings consisting of overnight repurchase agreements with retail customers increased $6 million from December 31, 2011 and other borrowings decreased $2 million as the Company used cash from interest-earning deposits in other banks to repay required maturities and monthly payments on advances from the FHLB.

Total shareholders’ equity amounted to $52 million, or 9% of total assets, at September 30, 2012, compared to $49 million, or 9% of total assets, at December 31, 2011. The increase in shareholders’ equity during the nine months ended September 30, 2012 was due to net income of $3.4 million, an increase of $721 thousand in other comprehensive income and dividends declared of $1.5 million which partially offset the above increases. The Company and its subsidiary bank met all regulatory capital requirements at September 30, 2012.

CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Three months ended September 30, 2012 and 2011

For the quarter ended September 30, 2012, the Company recorded net income of $1.2 million or $0.45 per share, as compared to net income of $999 thousand, or $0.37 per share for the quarter ended September 30, 2011. The $232 thousand increase in net income for the quarter was a result of net interest income increasing $329 thousand and other noninterest income increasing $29 thousand. These gains were partially offset by an increase in noninterest expense of $70 thousand and an increase in the federal income tax provision of $90 thousand. Return on average assets and return on average equity were 0.86% and 9.41%, respectively, for the three month period of 2012, compared to 0.87% and 8.04%, respectively for 2011.

Average Balance Sheets and Net Interest Margin Analysis


	For the three months ended September 30,
	2012					2011
(Dollars in thousands)	Average balance		Average rate			Average balance		Average rate
ASSETS
Interest-earning deposits in other banks	$	49,930		0.25	%	$	28,194		0.21	%
Federal funds sold		241		0.00			101		0.03
Taxable securities		123,565		2.05			74,486		3.20
Tax-exempt securities		14,675		4.93			12,740		5.15
Loans		347,682		5.00			315,750		5.33

Total earning assets		536,093		3.87	%		431,271		4.62	%
Other assets		33,049					23,414

TOTAL ASSETS	$	569,142				$	454,685


LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing demand deposits	$	63,263		0.07	%	$	52,662		0.08	%
Savings deposits		138,415		0.16			84,903		0.24
Time deposits		161,998		1.21			144,326		1.65
Other borrowed funds		59,198		1.08			53,088		1.47
Total interest bearing liabilities		422,874		0.68	%		334,979		1.02	%
Non-interest bearing demand deposits		91,815					68,686
Other liabilities		2,390					1,755
Shareholders’ Equity		52,063					49,265

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	569,142				$	454,685


Taxable equivalent net interest spread				3.19	%				3.60	%
Taxable equivalent net interest margin				3.34	%				3.83	%

Interest income for the quarter ended September 30, 2012, was $5.1 million representing a $189 thousand increase, or a 3.8% improvement, compared to the same period in 2011. This increase was primarily due to average loan volume increasing $32 million for the quarter ended September 30, 2012 as compared to the third quarter 2011. Interest expense for the quarter ended September 30, 2012 was $721 thousand, a decrease of $140 thousand or 16.3%, from the same period in 2011. The decrease in interest expense occurred primarily due to a decrease of 0.32% in interest rates paid on interest-bearing deposits which decreased from 0.93% in 2011 to 0.61% in 2012 and a rate decrease of 0.39% on all other borrowings which declined from 1.47% in 2011 to 1.08% for the quarter ended September 30, 2012.

CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The provision for loan losses for the quarter ended September 30, 2012 was $206 thousand, compared to a $240 thousand provision for the same quarter in 2011. The provision for loan losses is determined based on management’s calculation of the adequacy of the allowance for loan losses, which includes provisions for classified loans as well as for the remainder of the portfolio based on historical data, including past charge-offs and current economic trends.

Noninterest income for the quarter ended September 30, 2012, was $1.1 million, an increase of $29 thousand, or 3%, compared to the same quarter in 2011. Service charges on deposit accounts increased $59 thousand or 21% compared to the same quarter in 2011 reflecting the increase in fees generated from deposits acquired during October 2011 from the branch acquisition. Debit card interchange income rose $41 thousand, or 27%, due to volume increases from new accounts as consumers increased their usage of the product. Fees from trust and brokerage services increased $21 thousand to $175 thousand for third quarter 2012 as compared to the same quarter in 2011. The gain on the sale of mortgage loans to the secondary market increased to $169 thousand for the three month period ended September 30, 2012, from $54 thousand in the three month period ended September 30, 2011. Mortgage origination increased during the quarter as secondary market mortgage interest rates reached new lows for the year. Gains on securities sold decreased during the third quarter 2012 as securities gains of $237 thousand recognized in the third quarter of 2011 did not reoccur during the third quarter of 2012.

Noninterest expenses for the quarter ended September 30, 2012 increased $70 thousand, or 2%, compared to the third quarter of 2011. Salaries and employee benefits increased $129 thousand, or 7%. Occupancy and equipment expenses increased $99 thousand in 2012 over the third quarter of 2011. Other expenses decreased $261 thousand, or 38%, compared to the third quarter 2011. Increases in non-interest expense in salaries and employee benefits, occupancy and equipment and some other expenses are the direct result of acquiring two branches in Wooster, Ohio during fourth quarter 2011. The FDIC deposit premium expense increase for the quarter of $47 thousand reflected an accrual adjustment based on a change in the assessment calculation.

Federal income tax expense increased $90 thousand, or 20%, for the quarter ended September 30, 2012 as compared to the third quarter of 2011. The provision for income taxes was $534 thousand (effective rate of 30%) for the quarter ended September 30, 2012, compared to $444 thousand (effective rate of 31%) for the quarter ended September 30, 2011. The increase in the expense resulted from improved income.

RESULTS OF OPERATIONS

Nine months ended September 30, 2012 and 2011

Net income for the nine months ending September 30, 2012, was $3.4 million or $1.25 per share, as compared to $2.9 million or $1.05 per share during the same period in 2011. Return on average assets and return on average equity were 0.82% and 8.95%, respectively, for the nine month period of 2012, compared to 0.85% and 7.92%, respectively for 2011.

Comparative net income increased as net interest income improved to $13.1 million for the nine months ended September 30, 2012, an increase of $1 million or 8% from the same period last year. Total noninterest income rose $466 thousand or 18% to $3.1 million. The provision for loan losses decreased $93 thousand or 13% during the same comparative period. These improvements were partially offset by higher noninterest expenses for the nine month period ending in 2012 as compared to 2011.

Interest income on loans increased $136 thousand, or 1%, for the nine months ended September 30, 2012, as compared to the same period in 2011. This increase was primarily due to an average volume increase of $20 million for the comparable nine month periods. Interest income on securities increased $318 thousand, or 15%, as the average volume of securities increased $46 million for the comparable nine month periods. Interest income on fed funds sold and interest bearing deposits increased $70 thousand for the nine months ended September 30, 2012 as the average fed funds sold and due from banks interest bearing balances increased $34 million, compared to the same period in 2011.

CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Average Balance Sheet and Net Interest Margin Analysis


	For the nine months ended September 30,
	2012					2011
(Dollars in thousands)	Average balance		Average rate			Average balance		Average rate
ASSETS
Due from banks -interest bearing	$	57,898		0.26	%	$	23,531		0.24	%
Federal funds sold		150		0.00			93		0.06
Taxable securities		118,200		2.34			74,050		3.26
Tax-exempt securities		14,078		5.22			12,209		5.14
Loans		338,272		5.10			318,420		5.36

Total earning assets		528,598		3.95	%		428,303		4.71	%
Other assets		32,712					23,220

TOTAL ASSETS	$	561,310				$	451,523


LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest bearing demand deposits	$	62,054		0.08	%	$	52,541		0.08	%
Savings deposits		133,585		0.18			84,014		0.25
Time deposits		165,725		1.27			146,661		1.79
Other borrowed funds		58,122		1.16			52,020		1.61

Total interest bearing liabilities		419,486		0.73	%		335,236		1.11	%
Non-interest bearing demand deposits		88,693					66,374
Other liabilities		2,007					1,542
Shareholders’ Equity		51,124					48,371

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	561,310				$	451,523


Taxable equivalent net interest spread				3.22	%				3.60	%
Taxable equivalent net interest margin				3.37	%				3.85	%

Interest expense decreased $485 thousand to $2.3 million for the nine months ended September 30, 2012, compared to the nine months ended September 30, 2011. Interest expense on deposits decreased $365 thousand, or 17%, from the same period as last year, while interest expense on short-term and other borrowings decreased $120 thousand or 19%. The decrease in interest expense has been caused by lower interest rates being paid across the board on interest-bearing deposit accounts and borrowings. Additionally, during the comparable nine month periods, the Company grew non-interest bearing deposits in 2012. Time deposits continue to renew at lower interest rates, and some depositors have moved monies to savings instruments anticipating higher rates than time deposits. Competition for deposits appears to be decreasing from a year ago with larger money center banks reducing the premium paid for term deposits. The net interest margin decreased by 48 basis points for the nine month period ended September 30, 2012, to 3.37%, from 3.85% for the same period in 2011. This margin decrease is primarily the result of $74 million in deposit growth acquired with two branches in Wooster, Ohio combined with deposit growth in the core bank which has been temporarily invested in lower earning assets.

The provision for loan losses was $617 thousand during the nine months of 2012, compared to $710 thousand in the same nine month period of 2011. The provision or credit for loan losses is determined based on management’s calculation of the adequacy of the allowance for loan losses, which includes provisions for classified loans as well as for the remainder of the portfolio based on historical data including past charge-offs and current economic trends.

CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Non-interest income increased $466 thousand, or 18%, during the nine months ended September 30, 2012, as compared to the same period in 2011. Debit card interchange income increased $146 thousand or 33% as a result of increased customers and card usage in 2012. Service charges on deposits increased $161 thousand from the same period in 2011 reflecting the increase in accounts following the fourth quarter 2011 branch acquisition.

Increases were recognized in gains on mortgage loans sold in the secondary market for the first nine months of 2012 as refinancing activity increased during a period of historically low mortgage rates.

Non-interest expenses increased $771 thousand, or 8%, for the nine months ended September 30, 2012, compared to the same period in 2011. The bank’s FDIC deposit premium decreased $16 thousand to $238 thousand for the nine months ended 2011 reflecting a decrease in rate and accrual for the nine months ended September 30, 2012 as compared to 2011. Salaries and employee benefits increased $497 thousand, or 9%, primarily the result of additional branch personnel, benefit increases and increased personnel to run a larger institution. Professional fees increased $85 thousand, or 16%, reflecting employment search fees for the Chief Operating Officer and commercial lending positions as well as fees spent to review the Company’s computer operating system. Occupancy and equipment expense increased $214 thousand, or 21% reflecting the increase in the number of branches as compared to 2011. Decreases were recognized in other expenses, primarily the result of 2011 branch conversion expenses that did not recur in 2012.

The provision for income taxes was $1.5 million (effective rate of 31%) for the nine months ended September 30, 2012, compared to $1.3 million (effective rate of 31%) for the nine months ended September 30, 2011.

CAPITAL RESOURCES

The Board of Governors of the Federal Reserve System (the “Federal Reserve”) has established risk-based capital guidelines that must be observed by financial holding companies and banks. Failure to meet specified minimum capital requirements could result in regulatory actions by the Federal Reserve or Ohio Division of Financial Institutions that could have a material effect on the Company’s financial condition or results of operations. Management believes there were no material changes to capital resources as presented in the Company’s annual report on Form 10-K for the year ended December 31, 2011, and as of September 30, 2012 the Company and the Bank meet all capital adequacy requirements to which they are subject.

LIQUIDITY

Liquidity refers to the Company’s ability to generate sufficient cash to fund current loan demand, meet deposit withdrawals, pay operating expenses and meet other obligations. The Company’s primary sources of liquidity are cash and cash equivalents, which totaled $55 million at September 30, 2012, a decrease of $27 million from $82 million at December 31, 2011. Net income, securities available-for-sale, and loan repayments also serve as sources of liquidity. Cash and cash equivalents and estimated principal cash flow and maturities on investments maturing within one year represent 16% of total assets as of September 30, 2012 compared to 13% of total assets at year-end 2011. Other sources of liquidity include, but are not limited to, purchase of federal funds, advances from the FHLB, adjustments of interest rates to attract deposits, and borrowing at the Federal Reserve discount window. Management believes that its sources of liquidity are adequate to meet cash flow obligations for the foreseeable future.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements (as such term is defined in applicable Securities and Exchange Commission (the “Commission”) rules) that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

CSB BANCORP, INC.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the quantitative and qualitative disclosures about market risks as of September 30, 2012, from that presented in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011. Management performs a quarterly analysis over a twenty-four month horizon of the Company’s interest rate risk. The analysis includes two balance sheet models, one based on a static balance sheet and one on a dynamic balance sheet with projected growth in assets and liabilities. All positions are currently within the Company’s board-approved policy under a dynamic balance sheet. Board set limits are minimally exceeded under a static balance sheet due to the volume of liquidity held by the bank on September 30, 2012.

The following table presents an analysis of the estimated sensitivity of the Company’s annual net interest income to sudden and sustained 100 through 400 basis point changes, in 100 basis point changes, in market interest rates at September 30, 2012 and December 31, 2011. The net interest income reflected is for the first twelve months of the modeled twenty-four month period. Due to the current low interest rate environment, particularly for short-term rates, the decreasing change is not calculated.


(Dollars in thousands)
			September 30, 2012
	Change in interest rates (basis points)		Net interest income		Dollar change		Percentage change
+		400	$	17,672	$	866		5.2	%
+		300		17,474		668		4.0
+		200		17,286		480		2.9
+		100		17,098		292		1.7
		0		16,806		0		0.0
–		100		N/A		N/A		N/A
–		200		N/A		N/A		N/A

			December 31, 2011
	Change in interest rates (basis points)		Net interest income		Dollar change		Percentage change
+		400	$	17,500	$	818		4.9	%
+		300		17,241		559		3.4
+		200		17,028		346		2.1
+		100		16,857		17		1.0
		0		16,682		0		0.0
–		100		N/A		N/A		N/A
–		200		N/A		N/A		N/A

CSB BANCORP, INC.

CONTROLS AND PROCEDURES

ITEM 4T – CONTROLS AND PROCEDURES

With the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that:

(a)

information required to be disclosed by the Company in this Quarterly Report on Form 10-Q would be accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure;

(b)

information required to be disclosed by the Company in this Quarterly Report on Form 10-Q would be recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and

(c)

the Company’s disclosure controls and procedures are effective as of the end of the period covered by this Quarterly Report on Form 10-Q to ensure that material information relating to the Company and its consolidated subsidiary is made known to them, particularly during the period for which the Company’s periodic reports, including this Quarterly Report on Form 10-Q, are being prepared.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes during the period covered by this Quarterly Report on Form 10-Q in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

CSB BANCORP, INC.

FORM 10-Q

Quarter ended September 30, 2012

PART II – OTHER INFORMATION

ITEM 1 –

LEGAL PROCEEDINGS.

In the opinion of management there are no outstanding legal actions that will have a material adverse effect on the company’s financial condition or results of operations.

ITEM 1A –

RISK FACTORS.

There have been no material changes to the Company’s risk factors from those disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

ITEM 2 –

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On July 7, 2005 CSB Bancorp, Inc. filed Form 8-k with the Securities and Exchange Commission announcing that its Board of Directors approved a Stock Repurchase Program authorizing the repurchase of up to 10% of the Company’s common shares then outstanding. Repurchases will be made from time to time as market and business conditions warrant, in the open market, through block purchases and in negotiated private transactions.

ITEM 3 –

DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4 –

MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5 –

OTHER INFORMATION.

Not applicable.

CSB BANCORP, INC.

FORM 10-Q

Quarter ended September 30, 2012

PART II – OTHER INFORMATION

ITEM 6 –

Exhibits.


Exhibit Number		Description of Document

3.1		Amended Articles of Incorporation of CSB Bancorp, Inc. (incorporated by reference to the Company’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 the Company’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 the Company’s Form 10-SB).

3.2.1		Amended Article VIII Code of Regulations of CSB Bancorp, Inc. (incorporated by reference to Registrant’s Form DEF 14a for the fiscal year ended December 31, 2008).

4.0		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 Certification (filed herewith).

31.2		Rule 13a-14(a)/15d-14(a) CFO’s Certification (filed herewith).

32.1		Section 1350 CEO’s Certification (filed herewith).

32.2		Section 1350 CFO’s Certification (filed herewith).

101		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets: (ii) Consolidated Statements of Income: (iii) Consolidated Statements of Comprehensive Income: (iv) Condensed Consolidated Statements of Changes in Shareholders’ Equity: (v) Condensed Consolidated Statements of Cash Flows: and (vi) Notes to Consolidated Financial Statements.

CSB BANCORP, INC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


				CSB BANCORP, INC. (Registrant)

Date: November 13, 2012				/s/ Eddie L. Steiner
				Eddie L. Steiner
				President Chief Executive Officer

Date: November 13, 2012				/s/ Paula J. Meiler
				Paula J. Meiler
				Senior Vice President Chief Financial Officer

CSB BANCORP, INC.

INDEX TO EXHIBITS


Exhibit Number		Description of Document

3.1		Amended Articles of Incorporation of CSB Bancorp, Inc. (incorporated by reference to the Company’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 the Company’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 the Company’s Form 10-SB).

3.2.1		Amended Article VIII Code of Regulations of CSB Bancorp, Inc. (incorporated by reference to the Company’s Form DEF 14a for the fiscal year ended December 31, 2008).

4.0		Specimen stock certificate (incorporated by reference to the Company’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 Certification (filed herewith).

31.2		Rule 13a-14(a)/15d-14(a) CFO’s Certification (filed herewith).

32.1		Section 1350 CEO’s Certification (filed herewith).

32.2		Section 1350 CFO’s Certification (filed herewith).

101		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets: (ii) Consolidated Statements of Income: (iii) Consolidated Statements of Comprehensive Income: (iv) Condensed Consolidated Statements of Changes in Shareholders’ Equity: (v) Condensed Consolidated Statements of Cash Flows: and (vi) Notes to Consolidated Financial Statements.

TABLE OF CONTENTS

Part I Financial Information Item 1. Financial Statements Note 1 Summary Of Significant Accounting Policies Note 1 Summary Of Significant Accounting Policies (continued)Note 2 Securities Note 2 Securities (continued)Note 3 Loans Note 3 Loans (continued)Note 4 Fair Value Measurements Note 4 Fair Value Measurements (continued)Note 5 Fair Values Of Financial Instruments Note 5 Fair Values Of Financial Instruments (continued)Item 2 Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 3 Quantitative and Qualitative Disclosures About Market Risk Item 4T Controls and Procedures Part II Other Information Item 1 Legal Proceedings Item 1A Risk Factors Item 2 Unregistered Sales Of Equity Securities and Use Of Proceeds Item 3 Defaults Upon Senior Securities Item 4 Mine Safety Disclosures Item 5 Other Information Item 6 Exhibits

CSBB 10-Q Quarter ended Sept. 30, 2012