10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark one)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF

        1934

        For the fiscal year ended December 31, 2002

[  ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF

       1934

For the transition period from ______________ to ________________

Commission File No. 0-21714

CSB BANCORP, INC.

(Name of registrant in its charter)

Ohio                                                                                        34-1687530

(State or other jurisdiction of incorporation or organization)            (I.R.S. Employer Identification No.)

 6 West Jackson Street

Millersburg, Ohio                                                                               44654

               (Address of principal executive offices)                                                   (Zip code)

(330) 674-9015

(Registrant’s telephone number)

Securities registered under Section 12(b) of the Exchange Act:  None

Securities registered under Section 12(g) of the Exchange Act:  Common Shares, $6.25 par value

                                                                                                                  (Title of class)

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 if disclosure of delinquent filers in response to item 405 of Regulation S-K is not contained herein and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).  

Yes  [  ]  No  [X]

At June 30, 2002, the aggregate market value of the voting stock held by nonaffiliates of the registrant, based on a share price of $18.75 per share (such price being the average of the bid and asked prices on such date) was  $51.3 million.

At March 20, 2003, there were outstanding 2,633,812 of the registrant’s Common Shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Registrant’s 2002 Annual Report to Shareholders.

PART I

ITEM 1 - DESCRIPTION OF BUSINESS

General

CSB Bancorp, Inc. (the “Company”) was incorporated under the laws of the State of Ohio on June 28, 1991, at the direction of management of The Commercial and Savings Bank (the “Bank”) for the purpose of becoming a bank holding company by acquiring all outstanding shares of the Bank.  The Company acquired all such shares of the Bank following an interim bank merger, which transaction was consummated on January 31, 1992.  The Bank is a commercial bank chartered under the laws of the State of Ohio and was organized in 1879.  The Bank is the wholly owned subsidiary of the Company and its only significant asset.

The Bank provides retail and commercial banking services to its customers, including checking and savings accounts, time deposits, IRAs, safe deposit facilities, personal loans, commercial loans, real estate mortgage loans, installment loans, night depository facilities and trust services.  The Bank is a member of the Federal Reserve System, its deposits are insured by the Federal Deposit Insurance Corporation and it is regulated by the Ohio Division of Financial Institutions.

The Company, through the Bank, grants residential real estate, commercial real estate, consumer and commercial loans to customers located primarily in Holmes County and portions of surrounding counties in Ohio.  The general economic conditions in the Company’s market area have been sound.  Unemployment statistics have generally been among the lowest in the state of Ohio and real estate values have been stable to rising.

Certain risks are involved in granting loans, primarily related to the borrowers’ ability and willingness to repay the debt.  Before the Bank extends a new loan to a customer, these risks are assessed through a review of the borrower’s past and current credit history, collateral being used to secure the transaction in the event the customer does not repay the debt, borrower’s character and other factors.  Once the decision has been made to extend credit, the Bank’s independent loan review function monitors these factors throughout the life of the loan.  For all commercial loan relationships greater than $100,000, the Bank’s internal credit department performs an annual risk rating review.  In addition to this review, an independent outside loan review firm is engaged to review all watch list and adversely classified credits, commercial loan relationships greater than $250,000, a sample of commercial loan relationships less than $250,000 and a sample of consumer/mortgage loans. In addition, any loan identified as a problem credit by management and/or the external loan review consultants is assigned to the Bank’s “loan watch list,” and is subject to ongoing review by the Bank’s credit department and the assigned loan officer to ensure appropriate action is taken when deterioration has occurred.

Commercial loans are variable as well as fixed rate and include operating lines of credit and term loans made to small businesses primarily based on their ability to repay the loan from the cash flow of the business.  Such loans are typically secured by business assets such as equipment and inventory, and occasionally by the business owner’s principal residence.  When the borrower is not an individual, the Bank generally obtains the personal guarantee of the business owner.  As compared to consumer lending, which includes single-family residence, personal installment loans and automobile loans, commercial lending entails significant additional risks.  These loans typically involve larger loan balances, are generally dependent on the cash flow of the business, and thus may be subject to a greater extent to adverse conditions in the general econom y or in a specific industry.  Management reviews the borrower’s cash flows when deciding whether to grant the credit to evaluate whether estimated future cash flows will be adequate to service principal and interest of the new obligation in addition to existing obligations.

Commercial real estate loans are primarily secured by borrower-occupied business real estate and are dependent on the ability of the related business to generate adequate cash flow to service the debt.  Commercial real estate loans are generally originated with a loan-to-value ratio of 75% or less.  Management performs much the same analysis when deciding whether to grant a commercial real estate loan as when deciding whether to grant a commercial loan.

Residential real estate loans carry both fixed and variable rates and are secured by the borrower’s residence.  Such loans are made based on the borrower’s ability to make repayment from employment and other income.  Management assesses the borrower’s ability to repay the debt through review of credit history and ratings, verification of employment and other income, review of debt-to-income ratios and other measures of repayment ability.  The Bank generally makes these loans in amounts of 90% or less of the value of collateral.  An appraisal is obtained from a qualified real estate appraiser for substantially all loans secured by real estate.  Construction loans are secured by residential and business real estate that generally will be occupied by the borrower on completion.  While not contractually required to do so, the Ban k usually makes the permanent loan at the end of the construction phase.  Construction loans also are made in amounts of 90% or less of the value of the collateral.

Installment loans to individuals include loans secured by automobiles and other consumer assets, including second mortgages on personal residences.  Consumer loans for the purchase of new automobiles generally do not exceed 80% of the purchase price of the car.  Loans for used cars generally do not exceed average wholesale or trade-in values as stipulated in a recent auto-industry used-car price guide.  Credit card and overdraft protection loans are unsecured personal lines of credit to individuals of demonstrated good credit character with reasonably assured sources of income and satisfactory credit histories.  Consumer loans generally involve more risk than residential mortgage loans because of the type and nature of collateral and, in certain types of consumer loans, absence of collateral.  Since these loans are generally repaid from ordinary income of the individual or family unit, repayment may be adversely affected by job loss, divorce, ill health or by general decline in economic conditions.  The Bank assesses the borrower’s ability to make repayment through a review of credit history, credit ratings, debt-to-income ratios and other measures of repayment ability.

While the Company’s chief decision-makers monitor the revenue streams of the various Company products and services, operations are managed and financial performance is evaluated on a Company-wide basis.  Accordingly, all of the Company’s banking operations are considered by management to be aggregated in one reportable operating segment.

Employees

At December 31, 2002, the Bank employed 128 employees, 116 of which were employed on a full-time basis.  The Company has no separate employees not also employed by the Bank.  No employees are covered by collective bargaining agreements.  Management considers its employee relations to be good.

Competition

The Bank operates in a highly-competitive industry due, in part, to Ohio law permitting statewide branching by banks, savings and loan associations and credit unions.  Ohio law also permits nationwide interstate banking on a reciprocal basis.  In its primary market area of Holmes and surrounding counties, the Bank competes for new deposit dollars and loans with several other commercial banks, both large regional banks and smaller community banks, as well as savings and loan associations, credit unions, finance companies, insurance companies, brokerage firms and investment companies.  The ability to generate earnings is impacted, in part, by competitive pricing on loans and deposits and by changes in the rates on various U.S. Treasury and State and political subdivision issues which comprise a significant portion of the Bank’s investment portfolio, an d which rates are used as indices on several loan products.  The Bank believes its presence in the Holmes County area provides the Bank with a competitive advantage due to its large asset base and ability to make loans and provide services to the local community.

On November 12, 1999, President Clinton signed into law the Gramm-Leach-Bliley Act of 1999 (“Gramm-Leach”) that permits bank holding companies to become financial holding companies and thereby affiliate with securities firms and insurance companies and engage in other activities that are financial in nature.  Gramm-Leach may significantly change the competitive environment in which the Company conducts business.  See “Financial Modernization” for further discussion.

Supervision and Regulation

The Bank is subject to supervision, regulation and periodic examination by the State of Ohio Superintendent of Financial Institutions and the Federal Reserve Board.  Because the Federal Deposit Insurance Corporation insures its deposits, the Bank is also subject to certain regulations of that federal agency.  As a bank holding company, the Company is subject to supervision, regulation and periodic examination by the Federal Reserve Board.  The earnings of the Company and the Bank are affected by state and federal laws and regulations, and by policies of various regulatory authorities.  These policies include, for example, statutory maximum lending rates, requirements on maintenance of reserves against deposits, domestic monetary policies of the Board of Governors of the Federal Reserve System, United States fiscal policy, international currency regul ations and monetary policies, certain restrictions on banks’ relationships with many phases of the securities business and capital adequacy and liquidity restraints.

Financial Modernization

Pursuant to Gramm-Leach, a bank holding company may become a financial holding company if each of its subsidiary banks is well capitalized under regulatory prompt corrective action provisions, is well managed, and has at least a satisfactory rating under the Community Reinvestment Act (CRA) by filing a declaration that the bank holding company wishes to become a financial holding company.  No regulatory approval will be required for a financial holding company to acquire a company, other than a bank or savings association, engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the Federal Reserve Board.

Gramm-Leach defines “financial in nature” to include securities underwriting, dealing and market making; sponsoring mutual funds and investment companies; insurance underwriting and agency; merchant banking activities; and activities that the Board has determined to be closely related to banking.  Subsidiary banks of a financial holding company must continue to be well capitalized and well managed in order to continue to engage in activities that are financial in nature without regulatory actions or restrictions, which could include divestiture of the financial in nature subsidiary or subsidiaries.  In addition, a financial holding company or a bank may not acquire a company that is engaged in activities that are financial in nature unless each of the subsidiary banks of the financial holding company or the bank has CRA rating of satisfactory or bett er.

Statistical Disclosures

The following schedules present, for the periods indicated, certain financial and statistical information of the Company as required under the Securities and Exchange Commission’s Industry Guide 3, or a specific reference as to the location of required disclosures in the Company’s 2002 Annual Report to Shareholders (the “Annual Report”).

I.  Distribution of Assets, Liabilities and Stockholders’ Equity; Interest Rates and Interest Differential

A&B. Average Balance Sheet and Related Analysis of Net Interest Earnings:  The information set forth under the heading “Average Balances, Rates and Yields” which is incorporated by reference pursuant to Part II, Item 7 of  this document, is incorporated herein by reference.

C.  Interest Differential:  The information set forth under the heading “Rate/Volume Analysis of Changes in Income and Expense” which is incorporated by reference pursuant to Part II, Item 7 of this document, is incorporated herein by reference.

II.  Securities Portfolio

A.  The following is a schedule of the carrying value of securities at December 31, 2002, 2001 and 2000.

(In thousands of dollars)	2002	2001	2000
Securities available for sale (at fair value)
U.S. Treasury securities	$ -	$ -	$ 1,002
U.S. Government corporations and agencies	18,675	32,444	22,866
Mortgage-related securities	3,339	1,004	991
Other securities	3,251	2,484	2,331
	$25,265	$35,932	$27,190
Securities held to maturity (at amortized cost)
U.S. Treasury securities	$102	$102	$   102
U.S. Government corporations and agencies	7,001	8,002	18,496
Obligations of states and political subdivisions	40,720	48,571	50,762
	$47,823	$56,675	$69,360

B.  The following is a schedule of maturities for each category of debt securities and the related weighted average yield of such securities as of December 31, 2002:

(In thousands of dollars)
	------------------------------------Maturing------------------------------------
	One Year or Less		After One Year Through Five Years		After Five Years Through Ten Years		After Ten Years
	Amount	Yield	Amount	Yield	Amount	Yield	Amount	Yield
Available for sale
U.S. Treasury
U.S. Government corporations and agencies	$2,003	1.54%	$16,672	3.66%
Mortgage-related							3,339	4.05
Corporate notes			658	5.20
Total	$2,003	1.54%	$17,330	3.72%			$3,339	4.05%
Held to maturity
U.S. Treasury							$102	7.70%
U.S. Government corporations and agencies	5,001	5.52	2,000	5.71
Obligations of states and political subdivisions	4,098	6.77	18,284	7.08	18,338	7.56
Total	$9,099	6.08%	$20,284	6.94%	$18,338	7.56%	$102	7.70%

The weighted average yields are calculated using amortized cost of investments and are based on coupon rates for securities purchased at par value, and on effective interest rates considering amortization or accretion if securities were purchased at a premium or discount.  The weighted average yield on tax-exempt obligations is presented on a taxable-equivalent basis based on the Company’s marginal federal income tax rate of 34%.  Other securities consist of Federal Reserve Bank and Federal Home Loan Bank stock bearing no stated maturity or yield and are not included in this analysis.

C.  Excluding holdings of U.S. Treasury securities and other agencies and corporations of the U.S. Government, there were no investments in securities of any one issuer that exceeded 10% of the Company’s consolidated shareholders’ equity at December 31, 2002.

III.  Loan Portfolio

A.  Types of Loans - Total loans on the balance sheet are comprised of the following classifications at December 31:

(In thousands of dollars)	2002	2001	2000	1999	1998
Commercial	$74,907	$68,180	$85,458	$86,186	$86,971
Commercial real estate	41,665	31,170	39,122	35,690	33,137
Residential real estate	65,653	55,228	56,342	31,511	33,685
Residential real estate loans held for sale	-	-	-	20,533	23,636
Construction	5,453	1,255	7,543	7,447	3,155
Installment and credit card	12,382	13,518	18,033	17,645	16,992
Total loans	$200,060	$169,351	$206,498	$199,012	$197,576

B.  Maturities and Sensitivities of Loans to Changes in Interest Rates - The following is a schedule of maturities of loans based on contract terms and assuming no amortization or prepayments, excluding real estate mortgage and installment loans, as of December 31, 2002:

	---------------------------------Maturing-----------------------------
(In thousands of dollars)	One Year  or Less	One Through Five Years	After Five Years	Total
Commercial	22,577	34,340	17,990	74,907
Commercial real estate	426	16,547	24,692	41,665
Construction	145	1,853	3,455	5,453
Total	23,148	52,740	46,137	122,025

The following is a schedule of fixed rate and variable rate commercial, commercial real estate and real estate construction loans due after one year from December 31, 2002.

(In thousands of dollars)	Fixed Rate	Variable Rate
Total commercial, commercial real estate and construction loans due after one year	26,370	72,507

C.  Risk Elements

1.  Nonaccrual, Past Due and Restructured Loans - The following schedule summarizes nonaccrual, past due and restructured loans.

	December 31
(In thousands of dollars)	2002	2001	2000	1999	1998
(a)  Loans accounted for on a nonaccrual basis	$1,721	$3,159	$1,119	$  529	$  567
(b)  Accruing loans that are contractually past due 90 days or more as to interest or principal payments	-	119	226	1,008	890
(c)  Loans which are “troubled debt restructuring” as defined in Statement of Financial Accounting standards No. 15 (exclusive of loans in (a) or (b) above):	-0-	-0-	-0-	-0-	-0-
Totals	$1,721	$3,278	$1,345	$1,537	$1,457

The policy for placing loans on nonaccrual status is to cease accruing interest on loans when management believes that collection of interest is doubtful, when commercial loans are past due as to principal and interest 90 days or more or when mortgage and consumer loans are past due as to principal and interest 120 days or more, except that in certain circumstances interest accruals are continued on loans deemed by management to be well-secured and in process of collection.  In such cases, loans are individually evaluated in order to determine whether to continue income recognition after 90 days beyond the due date.  When loans are placed on nonaccrual, any accrued interest is charged against interest income.  Consumer loans are not placed on non-accrual but are charged off after 120 days past due.

(d)  Impaired Loans - Information regarding impaired loans at December 31 is as follows:

(In thousands of dollars)	2002	2001	2000
Balance of impaired loans at December 31	$916	$4,303	$11,967
Less portion for which no allowance for loan loss is allocated	-	634	94
Portion of impaired loan balance for which an allowance for loan losses is allocated	916	3,669	11,873
Portion of allowance for loan losses allocated to the impaired loan balance at December 31	239	1,061	3,276

Interest income recognized on impaired loans during the year represented $105,000 while $225,000 would have been recognized had the loans been performing under their contractual terms.

Impaired loans are comprised of commercial and commercial real estate loans, and are carried at the present value of expected cash flows discounted at the loan’s effective interest rate or at fair value of the collateral if the loan is collateral dependent.  A portion of the allowance for loan losses is allocated to impaired loans.

Smaller-balance homogeneous loans are evaluated for impairment in total.  Such loans include residential first-mortgage loans secured by one- to four-family residences, residential construction loans, and automobile, home equity and second-mortgage loans less than $100,000.  Such loans are included in nonaccrual and past due disclosures in (a) and (b) above, but not in the impaired loan totals.  Commercial loans and mortgage loans secured by other properties are evaluated individually for impairment.  When analysis of borrower operating results and financial condition indicates that underlying cash flows of the borrower’s business are not adequate to meet its debt service requirements, the loan is evaluated for impairment.  Impaired loans, or portions thereof, are charged off when deemed uncollectible.

2.  Potential Problem Loans - At December 31, 2002, no loans were identified that management has serious doubts about the borrowers’ ability to comply with present loan repayment terms that are not included in item III.C.1.  On a monthly basis, the Company internally classifies certain loans based on various factors.  At December 31, 2002, these amounts, including impaired and nonperforming loans, amounted to $6.0 million of substandard loans and $750,000 of doubtful loans.

3.  Foreign Outstandings - There were no foreign outstandings during any period presented.

4.  Loan Concentrations - As of December 31, 2002, there are no concentrations of loans greater than 10% of total loans that are not otherwise disclosed as a category of loans in Item III.A above.

D.  Other Interest-Bearing Assets - As of December 31, 2002, there are no other interest-bearing assets required to be disclosed under Item III.C.1 or 2 if such assets were loans.

IV.  Summary Of Loan Loss Experience

A.  The following schedule presents an analysis of the allowance for loan losses, average loan data and related ratios for the years ended December 31:

(In thousands of dollars)	2002	2001	2000	1999	1998
LOANS
Average loans outstanding during period	$181,147	$186,665	$208,193	$191,112	$187,198
ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period	$4,019	$7,460	$3,419	$2,888	$2,349
Loans charged off:
Commercial	(429)	(1,585)	(1,633)	(417)	(350)
Commercial real estate	(342)	(1,441)	(6)	(0)	(37)
Residential real estate	(154)	(151)	(18)	(4)	(76)
Installment and credit card	(240)	(571)	(590)	(184)	(105)
Total loans charged off	(1,165)	(3,748)	(2,247)	(605)	(568)
Recoveries of loans previously charged off:
Commercial	244	126	52	7	1
Commercial real estate	0	0	0	0	0
Residential real estate	36	42	0	1	15
Installment	153	104	94	28	40
Total loan recoveries	433	272	146	36	56
Net loans charged off	(732)	(3,476)	(2,101)	(569)	(512)
Provision charged to operating expense	(586)	35	6,142	1,100	1,051
Balance at end of period	$2,701	$4,019	$7,460	$3,419	$2,888
Ratio of net charge-offs to average loans outstanding for period	.40%	1.86%	1.01%	.30%	.27%

The allowance for loan losses balance and provision charged to expense are determined by management based on periodic reviews of the loan portfolio, past loan loss experience, economic conditions and various other circumstances subject to change over time.  In making this judgment, management reviews selected large loans, as well as impaired loans, other delinquent, nonaccrual and problem loans and loans to industries experiencing economic difficulties.  The collectibility of these loans is evaluated after considering current operating results and financial position of the borrower, estimated market value of collateral, guarantees and the Company’s collateral position versus other creditors.  Judgments, which are necessarily subjective, as to the probability of loss and amount of such loss are formed on these loans, as well as other loans taken toget her.

B.  The following schedule is a breakdown of the allowance for loan losses allocated by type of loan and related ratios.

While management’s periodic analysis of the adequacy of the allowance for loan losses may allocate portions of the allowance for specific problem-loan situations, the entire allowance is available for any loan charge-offs that occur.

	-----Allocation of the Allowance for Loan Losses ----- (In thousands of dollars)
	Allowance Amount	Percentage of Loans in Each Category to Total Loans	Allowance Amount	Percentage of Loans in Each Category to Total Loans	Allowance Amount	Percentage of Loans in Each Category to Total Loans	Allowance Amount	Percentage of Loans in Each Category to Total Loans	Allowance Amount	Percentage of Loans in Each Category to Total Loans
	December 31, 2002		December 31, 2001		December 31, 2000		December 31, 1999		December 31, 1998
Commercial	$809	37.44%	$2,011	40.26%	$3,879	41.39%	$1,114	43.31%	$1,181	44.02%
Commercial real estate	908	20.82	1,132	18.41	2,486	18.95	863	17.93	748	16.77
Residential real estate	491	32.82	370	32.61	214	27.28	773	26.15	302	29.01
Construction	35	2.73	0	.74	0	3.65	0	3.74	0	1.60
Installment and credit card	231	6.19	401	7.98	628	8.73	317	8.87	237	8.60
Unallocated	227	-	105	-	253	-	352	-	420	-
Total	$2,701	100.00%	$4,019	100.00%	$7,460	100.00%	$3,419	100.00%	$2,888	100.00%

V.  Deposits

A. & B.  The following is a schedule of average deposit amounts and average rates paid on each category for the periods indicated:

	Average Amounts Outstanding Year ended December 31			Average Rate Paid Year ended December 31
	2002	2001	2000	2002	2001	2000
(In thousands of dollars)
Noninterest-bearing demand	$27,884	$26,446	$29,379	N/A	N/A	N/A
Interest-bearing demand deposits	44,456	40,625	37,840	.92%	1.56%	2.18%
Savings deposits	35,759	33,508	35,663	.99	2.08	2.85
Time deposits	126,981	160,098	161,913	3.94	5.86	5.79
Total deposits	$235,080	$260,677	$264,795

C. and E.  There were no foreign deposits in any period presented.

D.  The following is a schedule of maturities of time certificates of deposit in amounts of $100,000 or more as of December 31, 2002:

(In thousands of dollars)
Three months or less	$6,590
Over three through six months	5,955
Over six through twelve months	6,857
Over twelve months	9,345
Total	$28,747

VI.  Return On Equity and Assets

	2002	2001	2000
Return on average assets	0.65%	0.34%	.10%
Return on average shareholders’ equity	5.76	3.32	1.00
Dividend payout ratio	41.04	24.78	368.89
Average shareholders’ equity to average assets	11.30	10.16	9.85

VII.  Short-Term Borrowings

Short-term borrowings consist of securities sold under agreements to repurchase and federal funds purchased.  Securities sold under agreements to repurchase generally mature within three months from the transaction date.  Federal funds purchased generally have overnight terms.  Information concerning short-term borrowings is summarized as follows:

Dollars in thousands	2002	2001	2000
Securities sold under agreements to repurchase and federal funds purchased at period-end	$14,448	$14,957	$15,584
Weighted average interest rate at period-end	.76%	0.53%	4.89%
Maximum outstanding at any month-end during the year	15,596	16,890	15,584
Average amount outstanding	13,760	12,930	13,234
Weighted average rates during the year	.82%	2.11%	4.46%

ITEM 2 - PROPERTIES

The Bank owns and operates its main office at 6 West Jackson Street, Millersburg, Ohio 44654.  The Bank also operates eight branches and one other property as noted below:

The Berlin Branch, 4587  S. R. 39, Suite B, Berlin, Ohio 44610 (leased)

The South Clay Branch, 91 S. Clay Street, Millersburg, Ohio 44654 (owned)

The Winesburg Branch, 2225 U.S. 62, Winesburg, Ohio 44690 (owned)

The Clinton Commons Branch, 2101 Glen Drive, Millersburg, Ohio 44654 (leased)

The Walnut Creek Branch, 4980 Old Pump Street, Walnut Creek, Ohio 44687 (owned)

The Charm Office, 4440 C.R. 70, Charm, Ohio 44617 (leased)

The Sugarcreek Office, 127 S. Broadway, Sugarcreek, Ohio 44681 (owned)

The Operations Center, 91 North Clay Street, Millersburg, Ohio 44654 (owned)

The Shreve Office, 333 W. South Street, Shreve, OH  44676 (owned)

The Bank considers its physical properties to be in good operating condition and suitable for the purposes for which they are being used.  All properties owned by the Bank are unencumbered by any mortgage or security interest and are adequately insured, in management’s opinion.

ITEM 3 - LEGAL PROCEEDINGS

There is no pending litigation, other than routine litigation incidental to the business of the Company and Bank, or of a material nature involving or naming the Company or Bank as a defendant.  Further, there are no material legal proceedings in which any director, executive officer, principal shareholder or affiliate of the Company is a party or has a material interest that is adverse to the Company or Bank.  None of the routine litigation in which the Company or Bank is involved is expected to have a material adverse impact on the financial position or results of operations of the Company or Bank.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of security holders during the fourth quarter of 2002.

PART II

ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Information contained in the section captioned “Common Stock and Shareholder Information” on page 27 of the Annual Report is incorporated herein by reference.

ITEM 6 – SELECTED FINANCIAL DATA

Information contained in the section captioned “Selected Financial Data” on page 17 of the Annual Report is incorporated herein by reference.

ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Information contained in the section captioned “2002 Financial Review” on pages 16 through 27 of the Annual Report is incorporated herein by reference.

ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information contained in the section captioned “ Quantitative and Qualitative Disclosures About Market Risk” on page 24 of the Annual Report is incorporated herein by reference.

ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Information contained in the consolidated financial statements and related notes and the report of independent auditors thereon, on pages 28 through 52 of the Annual Report is incorporated herein by reference.

ITEM 9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Information contained in the section captioned “Change in Registrant’s Certifying Accountant” on page 26 of the Annual Report is incorporated herein by reference.

PART III

ITEM 10 – DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information contained in the section captioned “ELECTION OF DIRECTORS” on pages 5 through 8 of the Company’s proxy statement for the Company’s Annual Meeting of Shareholders filed with the Securities and Exchange Commission on March 25, 2003 (the “Proxy Statement”) and information contained in the section captioned “SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE” on page 4 of the Proxy Statement is incorporated herein by reference.

ITEM 11 – EXECUTIVE COMPENSATION

Information contained in the section captioned “REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION” on pages  8 and 9 of the Proxy Statement, the section captioned “EXECUTIVE COMPENSATION” on pages 11 through 14 of the Proxy Statement and the section captioned “PERFORMANCE GRAPH” on page 15 of the Proxy Statement, is incorporated herein by reference.

ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information contained in the section captioned “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT” on pages 2 through 4 of the Proxy Statement is incorporated herein by reference.

ITEM 13 – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information contained in the section captioned “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS” on pages  15 and 16 of the Proxy Statement is incorporated herein by reference.

ITEM 14 – CONTROLS AND PROCEDURES

(a)

Evaluation Of Disclosure Controls And Procedures

Within 90 days prior to the filing of this report, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), an evaluation of the effectiveness of the Company's disclosure controls and procedures was performed. Based on this evaluation, the CEO and CFO have concluded that the Company's disclosure controls and procedures are effective to ensure that material information is recorded, processed, summarized and reported by management of the Company on a timely basis in order to comply with the Company's disclosure obligations under the Securities Exchange Act of 1934 and the SEC rules thereunder.

(b)

Changes In Internal Controls

There have been no significant changes in the Company’s internal controls or in other factors that could have significantly affected those controls subsequent to the date of our most recent evaluation of internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART IV

ITEM 15 – EXHIBITS, FINANCIAL STATEMENT SCHEDULES,  AND REPORTS ON FORM 8-K      .

(a) Exhibits

Exhibit Number	Description of Document
3.1	Amended Articles of Incorporation of CSB Bancorp, Inc. (incorporated by reference to Registrant’s 1994 Form 10-KSB)
3.1.1	Amended form of Article Fourth of Amended Articles of Incorporation, as effective April 9, 1998 (incorporated by reference to Registrant’s 1998 Form 10-K)
3.2	Code of Regulations of CSB Bancorp, Inc. (incorporated by reference to Registrant’s Form 10-SB)
4	Form of Certificate of Common Shares of CSB Bancorp, Inc. (incorporated by reference to Registrant’s Form 10-SB)
10.1	Leases for the Clinton Commons, Berlin and Charm Branch Offices of The Commercial and Savings Bank (incorporated by reference to Registrant’s Form 10-SB)
10.2	Second amendment to Employment Agreement between CSB Bancorp, Inc. and C. James Bess
10.3	Employment Agreement between CSB Bancorp, Inc. and Kelly W. George
10.4	Employment Agreement between CSB Bancorp, Inc. and Michael J. Saporito
11	Statement Regarding Computation of Per Share Earnings
13	Excerpts of CSB Bancorp, Inc. 2002 Annual Report to Shareholders
21	Subsidiary of CSB Bancorp, Inc.
23.1	Consent of Clifton Gunderson LLP
23.2	Consent of Crowe, Chizek and Company LLP
24	Powers of Attorney
99.1	Certification of Chief Executive Officer
99.2	Certification of Chief Financial Officer

(b) The following reports on Form 8-K were filed during the last quarter of the period covered by this report.

1.  Form 8-K dated October 11, 2002 containing a report to shareholders and announcing a dividend to shareholders.

2.  Form 8-K dated October 17, 2002 containing a report to shareholders that included its financial statements for the period ended September 30, 2002.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

/s/ C. JAMES BESS

C. James Bess, President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on March                        .

Signatures	Title
/s/ C. JAMES BESS	President and Chief Executive Officer (Principal Executive Officer)
C. James Bess
/s/ A. LEE MILLER	Senior Vice President and Chief Financial Officer
A. Lee Miller
/s/ PAMELA S. BASINGER	Financial Officer and Principal Accounting Officer
Pamela S. Basinger
/s/ RONALD E. HOLTMAN	Director
Ronald E. Holtman
/s/ JEFFREY A. ROBB, SR.	Director
Jeffrey A. Robb, Sr.
/s/ J. THOMAS LANG	Director
J. Thomas Lang
/s/ ROBERT K. BAKER	Director
Robert K. Baker
/s/ DANIEL J. MILLER	Director
Daniel J. Miller
/s/ JOHN R. WALTMAN	Director
John R. Waltman
/s/ SAMUEL M. STEIMEL	Director
Samuel M. Steimel
/s/ EDDIE L. STEINER	Director
Eddie L. Steiner

CERTIFICATIONS

Senior Vice President and Chief Financial Officer

I, A. Lee Miller, certify that:

I have reviewed this annual report on Form 10-K of CSB Bancorp, Inc.;

Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Securities Exchange Act of 1934 Rules 13a-14 and 15d-14) for the registrant and we have:

designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within ninety days prior to the filing date of this annual report (the "Evaluation Date"); and

presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)     any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.     The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 27, 2003

/s/ A. LEE MILLER

A. Lee Miller

Senior Vice President and

Chief Financial Officer

Chairman of the Board, President and Chief Executive Officer

I, C. James Bess, certify that:

I have reviewed this annual report on Form 10-K of CSB Bancorp, Inc.;

Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Securities Exchange Act of 1934 Rules 13a-14 and 15d-14) for the registrant and we have:

designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within ninety days prior to the filing date of this annual report (the "Evaluation Date"); and

presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)     any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.     The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 27, 2003

/s/ C. JAMES BESS

C. James Bess

Chairman of the Board, President

and Chief Executive Officer

INDEX TO EXHIBITS

Exhibit Number	Description of Document	Sequential Page
3.1	Amended Articles of Incorporation of CSB Bancorp, Inc. (incorporated by reference to Registrant’s 1994 Form 10-SB)	N/A
3.1.1	Amended form of Article Fourth of Amended Articles of Incorporation, as effective April 9, 1998 (incorporated by reference to Registrant’s 1998 Form 10-K).	N/A
3.2	Code of Regulations of CSB Bancorp, Inc. (incorporated by reference to Registrant’s Form 10-SB).	N/A
4	Form of Certificate of Common Shares of CSB Bancorp, Inc. (incorporated  by reference to Registrant’s Form 10-SB).	N/A
10.1	Leases for the Clinton Commons, Berlin and Charm Branch Offices of The Commercial and Savings Bank (incorporated by reference to Registrant’s Form 10-SB).	N/A
10.2	Second amendment to Employment Agreement between CSB Bancorp, Inc. and     C. James Bess	N/A
10.3	Employment Agreement between CSB Bancorp, Inc. and Kelly W. George	N/A
10.4	Employment Agreement between CSB Bancorp, Inc. and Michael J. Saporito	N/A
11	Statement Regarding Computation of Per Share Earnings	N/A
13	Excerpts of the CSB Bancorp, Inc. 2002 Annual Report to Shareholders	N/A
21	Subsidiary of CSB Bancorp, Inc.	N/A
23.1	Consent of Clifton Gunderson LLP	N/A
23.2	Consent of Crowe, Chizek and Company LLP	N/A
24	Powers of Attorney	N/A
99.1	Certification of Chief Executive Officer	N/A
99.2	Certification of Chief Financial Officer	N/A

EX-10

EXHIBIT 10.2

SECOND AMENDMENT TO

EMPLOYMENT AGREEMENT

This Second Amendment to Employment Agreement (the “Second Amendment”) is made as of the 25th day of April, 2002 by and between The Commercial and Savings Bank of Millersburg, an Ohio state bank with its principal office located at 6 West Jackson Street, Millersburg, Ohio  44654 (“Bank”) and C. James Bess, a resident of Ohio (“Employee”).

WHEREAS, the Bank and Employee entered into an Employment Agreement effective as of March 1, 2001 (the “Agreement”); and

WHEREAS, the Bank and Employee entered into a First Amendment to Employment Agreement (the “First Amendment”) effective as of September 1, 2001; and

WHEREAS, the Bank and Employee wish to further amend the Agreement.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows:

1.

Section 4.4 of the Agreement is hereby amended in its entirety as follows:

4.4

Employee’s Rights Upon Termination.

A.

In the event that this Agreement is terminated by Bank without cause or is terminated by Employee for Good Reason, Employee shall receive all Base Salary to be paid according to this Agreement through February 28, 2004 plus one (1) years Base Salary.  Such amount shall be paid on an accelerated basis in a lump-sum on the termination date.  Additionally, Employee shall be entitled to participate, at the Bank’s expense, in the employee benefits provided pursuant to Section 2.3 above for one (1) year from the termination date.  The stock option entitlement under Section 2.5 shall remain in full force and effect through March 1, 2006.

Employee’s rights upon termination as provided for in this Section 4.4A shall be subject to reduction or elimination by the Board of Directors in the event the Bank:

a.

becomes insolvent; or

b.

has appointed any conservator or receiver; or

c.

is assigned a composite rating of 5 by the appropriate federal banking agency or is informed in writing by the Federal Deposit Insurance Corporation that it is rated a 5 under the Uniform Financial Institution's Rating System of the Federal Financial Institutions Examination Council; or

d.

has initiated against it by the Federal Deposit Insurance Corporation a proceeding to terminate or suspend deposit insurance; or

e.

is prohibited from complying with the terms of this Agreement pursuant to the provisions of a memorandum of understanding or written agreement imposed on Bank by its applicable regulators.

B.

In the event that this Agreement is terminated by Bank for Cause, Employee shall be entitled to receive all pay and benefits earned through the date of termination with any benefits being paid in arrears being pro rated through the date of termination.  The stock option entitlement under Section 2.5 shall terminate thirty (30) business days after such termination by Bank for cause.

2.

Section 6.2(a) of the Agreement is hereby amended in its entirety as follows:

Employee shall receive a cash payment equal to the remaining Base Salary portion of this Agreement through February 28, 2004 plus one (1) year’s Base Salary, all in a lump sum at the closing of the Change of Control Event.  The stock option entitlement under paragraph 2.5 of this Agreement shall remain in full force and effect.

3.

Except as set forth above, the terms and conditions of the Agreement, as amended by the First Amendment, shall remain in full force and effect.

4.

CSB Bancorp, Inc. shall guarantee the obligations of the Bank hereunder pursuant to a guarantee is substantially the form attached as Exhibit A.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date set forth above.

THE COMMERCIAL AND SAVINGS BANK

OF MILLERSBURG

By: /s/ A. Lee Miller, Senior Vice President and CFO

(Name)      

(Title)

/s/ C. James Bess

C. James Bess

EXHIBIT A

GUARANTY

The undersigned hereby guarantees to C. James Bess (“Bess”), his successors and assigns, the full and prompt payment and performance, at maturity (including accelerated or extended maturity), of all obligations and liabilities arising out of the Employment Agreement, as amended, by and between C. James Bess and The Commercial and Savings Bank of Millersburg (the “Bank”), now existing or hereafter created or arising, whether direct, indirect, absolute, contingent, joint or several (all such obligations and liabilities are collectively called “Obligations”); and the undersigned further agrees to pay or reimburse Bess for all reasonable expenses, court costs or attorneys’ fees, paid or incurred by Bess in endeavoring to collect such Obligations or any part thereof or in enforcing this Guaranty.

WAIVER and SUBORDINATION.  The undersigned hereby waives notice of acceptance of this Guaranty, all notice of the creation or existence of any of the Obligations, and of the amounts and terms thereof, and of all defaults by or disputes with Bess, and all other notice to which the undersigned may be entitled or which may be required by law.  Notwithstanding the above, if Bank is contesting or disputing any Obligation, the undersigned shall have no obligation hereunder until the resolution of such contest or dispute.  The undersigned hereby waives all rights and defenses arising out of an election of remedies by Bess.  

AUTHORIZATION TO BANK.  Without limitation of the foregoing waivers, the undersigned hereby authorizes Bank, without notice or demand and without affecting the undersigned’s liability hereunder, from time to time to renew, compromise, extend, accelerate, or otherwise change the time for performance or payment or the terms of the Obligations, or any part thereof, including, without limitation:  settle or compromise any disputes; assert any right Bank may have against Bess for any of the Obligations; and anything whatsoever, whether or not herein specified which may be done or waived by or between Bank and Bess.  The undersigned agrees that Bank may do any or all of the foregoing in such manner, upon such terms, and at such times as Bank, in its discretion, deems advisable, without, in any way or respect, impairing, affecting, redu cing or releasing the undersigned from liability hereunder and the undersigned hereby consents to each and all of the foregoing acts, events and/or occurrences.

ENFORCEMENT.  This is a continuing Guaranty and the obligation of the undersigned is a primary, absolute, and unconditional obligation of payment and not of collection or collectibility.  Should any Obligations not be paid or performed at maturity (including accelerated or extended maturity) Bess shall have the right to enforce this Guaranty at any time without any notice whatsoever and without any proceeding or action against Bank, the undersigned hereby waiving presentment, demand, protest, notice of dishonor and any right to require Bess to prosecute or seek to enforce any remedies against Bank.  Notwithstanding the above, if Bank is contesting or disputing any Obligation, the undersigned shall have no obligation hereunder until the resolution of such contest or dispute.  This Guaranty and the Obligations may not be assigned b y Bess without the consent of the undersigned; the undersigned may not assign the guarantees and obligations contained herein.  This Guaranty shall be binding upon the successors and assigns of the undersigned and shall inure to and may be enforced by Bess, his successors and assigns.

GOVERNING LAW AND JURY WAIVER.  The laws of the State of Ohio shall govern the enforceability and interpretation of this Guaranty.  Wherever possible, each provision of this Guaranty shall be interpreted in such manner as to be effective and valid under applicable law, and if any provision of this Guaranty shall be prohibited or be invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Guaranty.  

GUARANTOR:  CSB Bancorp, Inc.

By:  /s/ A. Lee Miller, Senior Vice President and CFO

EX-10

EXHIBIT 10.3

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”), effective as of  July 1, 2002 (the “Effective Date”), by and between THE COMMERCIAL AND SAVINGS BANK OF MILLERSBURG, an Ohio state bank with its principal office located at 6 West Jackson Street, Millersburg, Ohio 44654 (“Bank”), and Kelly W. George, a resident of Ohio (“Employee”).

W I T N E S S E T H:

WHEREAS, Bank is a state bank duly organized and validly existing under the laws of the state of Ohio and engages in banking activities;

WHEREAS, Employee has knowledge, experience and expertise in the area of business of Bank, and Bank wishes to obtain the benefits of Employee’s knowledge, experience and expertise; and

WHEREAS, Bank desires to employ Employee on the terms and subject to the conditions set forth herein and subject to approval, permission and determinations of safety, soundness and fairness of any and all regulatory entities, and Employee is willing to accept employment on such terms and conditions.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows:

1.

Employment.  On the terms and subject to the conditions set forth in this Agreement and subject to approval, permission and determinations of safety, soundness and fairness of any and all regulatory entities, Bank shall employ Employee to serve as Senior Vice President and Chief  Lending Officer, and perform all services and duties, as set forth on Exhibit 1, attached hereto and made a part hereof.  Employee hereby agrees that Bank have the ability to revise the title, duties and responsibilities of Employee as set forth hereunder, at any time, in the sole discretion of Bank except that Employee's titles, duties and responsibilities cannot be revised to a title or position to one that is generally considered in the industry to have less responsibility or authority.  Employee shall devote Employee’s entire productive time, ability and attention to the business of Bank and shall not directly or indirectly render any services of a business, commercial or professional nature to any other person or organization, whether for compensation or otherwise, without prior consent of the immediate supervisor of Employee.

2.

Compensation.  

2.1

Base Salary.  As consideration for Employee's services as an employee hereunder, Bank agrees to pay Employee, and Employee agrees to accept, an annual base salary of $100,000 (“Base Salary”).  The Base Salary, as so determined, shall be payable in equal biweekly installments.  It is further understood and agreed that during the term of Employee’s status as an Employee, Employee shall be subject to the withholding of taxes as required by law.

The Board of Directors of Bank may determine, in its sole discretion, to pay a bonus to Employee.  The Bonus shall be paid to Employee within ninety (90) days after the end of the period during which the Bonus is earned.

2.2

Benefits.  Employee shall be entitled to participate in any insurance or other benefit plans now or hereafter provided or made available to employees of Bank generally; provided, however that nothing contained in this Agreement shall require Bank to establish, maintain or continue any such benefits already in existence or hereafter adopted for employees of Bank.

2.3

Vacation.  Employee shall be entitled to annual vacation and leave time of four (4) weeks at full pay.  Unused vacation time may not be carried from one calendar year to another calendar year.

3.

Term and Termination.  

3.1

Term.  Employee shall be employed for a two (2) year term commencing on the Effective Date hereof, and ending on the second anniversary of the Effective Date, unless sooner terminated in accordance with the provisions of this Agreement.

3.2

Termination.  

(a)

Death or Disability.  If Employee dies or becomes disabled to the extent that Employee cannot perform his duties under this Agreement for a period of more than sixty (60) consecutive days (the “Disability Period”), this Agreement shall cease and terminate on the date of Employee’s death or conclusion of the Disability Period, as applicable.

(b)

Termination for Cause or with Good Reason.  If this Agreement is terminated by Bank for Cause (as defined herein) or by Employee with Good Reason (as defined herein), this Agreement and the employment of Employee shall cease and terminate as of such date.  “Cause” shall be defined as (i) commission of an act of dishonesty in the course of Employee's duties hereunder;  (ii) conviction (whether as a result of a trial or plea, including a plea of nolo contendere) by a court of competent jurisdiction of a crime constituting a felony or conviction (whether as a result of a trial or plea, including a plea of nolo contendere) with respect to any act involving fraud, dishonesty, or moral turpitude; (iii) Employee's continued, habitual intoxication or performance under the influence of controlled substances during working hours; (i v) frequent or extended, and unjustifiable (not as a result of incapacity or disability) absenteeism or (v) Employee’s continued  inability or refusal to perform the duties and responsibilities described in this Agreement and any Exhibits hereto, if (A) Bank shall have given Employee prior written notice of the reason therefor and (B) a period of ten (10) days following receipt by Employee of such notice shall have lapsed and the matters which constitute or give rise to such Cause shall not have been cured or eliminated by Employee.  “Good Reason” shall be defined as (i) a reduction in Employee's rate of Base Salary; (ii) a transfer of Employee's primary place of employment to a location more than twenty-five (25) miles from the city limits of Millersburg, Ohio, without written consent of Employee; (iii) a change in Employee's title or position to one that is generally considered in the industry to have less responsibility or authority; or (iv) a material breach of this Agreement by Bank, which shall not have been cured within ten (10) days after Employee shall have advised Bank in writing of his or her intention to terminate his or her employment for Good Reason in the event such condition shall not have been cured, provided, however, that if such matters are of a nature that same cannot be cured or eliminated within such ten (10) day period, such period shall be extended for up to thirty (30) days if Bank shall be endeavoring diligently and in good faith to cure or eliminate such matters.

3.3

Termination Without Cause.  Bank may terminate Employee’s employment at any time without Cause, or Employee may terminate this Agreement for Good Reason, by giving thirty (30) days advance notice in writing to Employee or Bank, respectively.  In addition to the benefits payable under Section 3.4, Employee shall be entitled upon termination of employment described in this Section 3.3 to receive payment of an additional one hundred eighty (180) days of Base Salary, payable biweekly.

3.4

Employee’s Rights Upon Termination.  In the event that this Agreement is terminated by Bank for Cause, Employee shall receive all Base Salary and benefits earned through Employee’s final day of employment.  Any earned but unpaid Base Salary and benefits shall be paid to Employee within thirty (30) days of Employee’s final day of employment.  Employee’s rights upon termination shall be subject to determinations of safety, soundness and fairness of any and all regulatory entities.

3.5

       Purchase of Employee’s Residence.  In the event Employee purchases a residence in Holmes County or Wayne County, Ohio (the “Residence”), Bank agrees, at the termination of this Agreement for any reason and for a one year period after such termination, to purchase the Residence from Employee for the amount which Employee originally purchased the Residence.  Employee must notify Bank in writing that he will require Bank to purchase his Residence.  Employee must transfer the Residence to Bank by general warranty deed and the Residence must not be encumbered by any liens or other encumbrances.  

4.

Covenant Not to Compete.  From the Effective Date and for a period of one hundred eighty (180) days following the termination of this Agreement for Cause, Employee shall not, without prior written consent of Bank, engage in any business activity, directly or indirectly, on his own behalf or as a partner, shareholder (except by ownership of less than five percent (5%) of the stock of a publicly-held bank or corporation), director, trustee, principal, agent, employee, consultant or otherwise of any bank, thrift, savings and loan or credit union having and office or branch within a 25-mile radius of any of Bank’s offices or branches.  From the Effective Date and for a period of three (3) months following the termination of this Agreement for Good Reason by Employee or without Cause by Bank, Employee shall not, without prior written cons ent of Bank, engage in any business activity, directly or indirectly, on his own behalf or as a partner, shareholder (except by ownership of less than five percent (5%) of the stock of a publicly-held bank or corporation), director, trustee, principal, agent, employee, consultant or otherwise of any bank, thrift, savings and loan or credit union having and office or branch within a 25-mile radius of any of Bank’s offices or branches.

5.

Change in Control.

5.1

Change in Control.  Upon the occurrence of a Change in Control (as herein defined) the Bank shall provide Change in Control Benefits to Employee as set forth below.  A “Change in Control” for the purposes of this Agreement shall be deemed to have occurred if either (i) any person, together with his, her or its Affiliates or Associates, acquires beneficial ownership, directly or indirectly, of shares of CSB Bancorp, Inc. ("CSB"), entitling such person, together with such Affiliates or Associates, to cast more than twenty percent (20%) of the votes eligible to be cast at any meeting of shareholders of CSB, (ii) a change occurs in the acquisition of the ability to control the election of a majority of CSB's or Bank's directors, (iii) a change occurs in the acquisition of a controlling influence over the management or pol icies of CSB or Bank by any person or by persons acting as a “group” (within the meaning of Section 13(d) of the Securities Exchange Act of 1934) or (iv) during any period of two consecutive years, individuals (the "Continuing Directors") who at the beginning of such period constitute the Board of Directors of CSB (the "Existing Board") cease for any reason to constitute at least a majority thereof, provided that any individual whose election or nomination for election as member of the Existing Board was approved by a vote of at least a majority of the Continuing Directors then in office shall be considered a Continuing Director.  For purposes of this definition, a person shall be deemed the “beneficial owner” of any shares of CSB (i) which such person or any of its Affiliates or Associates, as defined below, beneficially owns, directly or indirectly; (ii) which such person or any of its Affiliates or Associates, has directly or indirectly, (A) the right to acquir e (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (B) the right to vote pursuant to any agreement, arrangement or understanding or (iii) which are beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of CSB.  For purposes of this Agreement, a  “person” shall mean any individual, firm, company, partnership, other entity or group, and the terms “Affiliate” or “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as of the date hereof.  Provided however, that a Change of Control shall not be deemed to have resulted from any transfer (i) to CSB; (ii) to a fiduciary for the benefit of the transferring owner or his spouse or lineal descendants or (iii) by will or by operation of the laws of descent and distribution.

5.2

Change in Control Benefits.    The Change in Control benefits that Employee shall be entitled to receive in accordance with the provisions hereof are as follows:

(a)

Employee shall receive his or her Base Salary for a two (2) year period following termination of employment pursuant to Section 5.1, above.  Such Base Salary shall be paid periodically at the same frequency as prior to the termination of employment.

(b)

The Bank shall provide to Employee continued coverage for one (1) year under a health plan with benefits the same or similar to those Employee had with Bank prior to the Change in Control.

5.3

Tax Obligations. In the event that any Change in Control benefits which Employee is entitled to receive from Bank (either under this Agreement or otherwise) constitute an “excess parachute payment” as defined for the purposes of Section 280G(b)(1) of the Internal Revenue Code of 1986, as amended (the “Code”), then such Change in Control benefits shall be reduced such that no “excess parachute payment” is received by Employee from Bank.

5.4

Mitigation of Benefits.  Employee shall not be required to mitigate the amount of any paid Change in Control benefit by seeking other employment or otherwise, nor shall the amount of any Change in Control benefit be reduced by any compensation earned by Employee as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by Employee to Bank or for any other reason.

6.

Confidential Information and Property of Bank.

6.1

Confidential Information.  Employee acknowledges and agrees that in connection with his employment by Bank, Employee will have access to certain confidential and proprietary information owned by and related to Bank.  For purposes of this Agreement, “Confidential Information” means any proprietary information of or related to Bank, including but not limited to: (i) operations manuals and guidelines, marketing manuals and plans and business strategies, techniques and methodologies; (ii) financial information, including information set forth in internal records, files and ledgers, or incorporated in profit and loss statements, fiscal reports, sales reports  and business plans; (iii) any and all active prospective mergers or acquisitions of Bank, and all financial data, pricing terms, information memoranda and due diligence re ports relating thereto; (iv) all internal memoranda and other office records, including electronic and data processing files and records and financial information regarding customers of Bank and (v) any other information constituting a trade secret under governing trade secrets law.

6.2

Non-Disclosure of Confidential Information.  Employee shall not at any time willfully use, disclose or divulge any such Confidential Information to any person, firm or corporation, except: (i) in connection with the discharge of his duties hereunder; (ii) with the prior written consent of Bank which consent may be withheld in Bank's sole discretion or (iii) to the extent necessary to comply with law or the valid order of a court of competent jurisdiction, in which event Employee shall notify Bank as promptly as practicable and, if possible, prior to making such disclosure.  Employee shall use his best efforts to prevent any such disclosure by others.

7.

Remedies.  For purposes of Sections 4 and 6 of this Agreement, Employee acknowledges that the services to be rendered by him are of a special, unique and extraordinary character and that it would be extremely difficult or impracticable to replace such services, that the material provisions of this Agreement are of crucial importance to Bank and that any damage caused by the breach of this Agreement would result in irreparable harm to the business of Bank for which money damages alone would not be adequate compensation. Accordingly, Employee agrees that if he violates this Agreement, Bank shall, in addition to any other rights or remedies of Bank available at law: (i) be entitled to equitable relief in any court of competent jurisdiction, including, without limitation, temporary injunction and permanent injunction; and (ii) be entitled to hold Employee liable to Bank for all costs and expenses to Bank resulting from such breach (including, without limitation, reasonable attorneys' fees and expenses in dealing with this breach and any suits or actions with regard thereto).

8.

Entire Agreement.  This Agreement constitutes the entire agreement and understanding of the parties with respect to the transactions contemplated hereby and supersedes all prior agreements, arrangements and understandings of the parties with respect to the subject matter hereof.  No amendment or modification of this Agreement shall be valid or binding unless made in writing and signed by the parties hereto.

9.

Notices.  All notices and other communications under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service if served personally on the party (including without limitation service by overnight courier service) to whom notice is to be given, or on the third day after mailing if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, at the address set forth below, or on the date of service if delivered by facsimile to the facsimile number then utilized by the party receiving the facsimile.  All notices shall be addressed to the parties to be served as follows:

(a) If to Bank: The Commercial and Savings Bank of Millersburg 6 West Jackson Street Millersburg, Ohio 44654 Attn:  Mr. C. James Bess	Copy to: Dinsmore & Shohl LLP 1900 Chemed Center 255 East Fifth Street Cincinnati, Ohio  45202 Attention: John E. Barnes, Esq.
(b) If to Employee: Kelly W. George At the address maintained in the employment records of the Bank

10.

Severability.  If any provision of this Agreement shall be invalid or unenforceable, in whole or in part, then such provision shall be deemed to be modified or restricted to the extent and in the manner necessary to render the same valid and enforceable, and this Agreement shall be construed and enforced to the maximum extent permitted by law.  

11.

Waiver.  No waiver of any default or breach of this Agreement shall be deemed a continuing waiver or a waiver of any other breach or default.

12.

Governing Law.  This agreement shall be governed by and construed in accordance with the laws of the State of Ohio without regard to principles of conflicts of law.

13.

Assignment.  Employee may not assign any rights under this Agreement without the prior written consent of Bank. If Bank, or any entity resulting from any stock purchase, merger or consolidation with or into Bank, is merged with or consolidated into or with any other entity or entities, or if substantially all of the stock or operating assets of any of the aforementioned entities is sold or otherwise transferred to another entity, the provisions of this Agreement shall be binding upon and shall inure to the benefit of the continuing entity in, or the entity resulting from, such asset purchase, merger or consolidation, or the entity to which such assets are sold or transferred.

14.

Headings; Gender.  The headings contained in this Agreement are for reference purposes only and should not affect in any way the meaning or interpretation of this Agreement.  When the context requires, the gender of all words used herein shall include the masculine, feminine and neuter.

15.

Mutual Negotiation.

Each party has been represented by counsel in drafting and negotiating this Agreement.  This Agreement shall therefore be deemed to have been negotiated, prepared and drafted jointly hereto.  This Agreement shall not be construed against any party as the sole drafter or author of the Agreement.

#

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the Effective Date.

THE COMMERCIAL AND SAVINGS BANK OF MILLERSBURG, an Ohio state bank

By:  /s/ C. James Bess

Its:  Chairman of the Board, President and CEO

EMPLOYEE

  /s/ Kelly W. George

Kelly W. George

#

EXHIBIT 1

DUTIES

#

EX-10

EXHIBIT 10.4

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”), effective as of  July 1, 2002 (the “Effective Date”), by and between THE COMMERCIAL AND SAVINGS BANK OF MILLERSBURG, an Ohio state bank with its principal office located at 6 West Jackson Street, Millersburg, Ohio 44654 (“Bank”), and Michael J. Saporito, a resident of  Ohio (“Employee”).

W I T N E S S E T H:

WHEREAS, Bank is a state bank duly organized and validly existing under the laws of the state of Ohio and engages in banking activities;

WHEREAS, Employee has knowledge, experience and expertise in the area of business of Bank, and Bank wishes to obtain the benefits of Employee’s knowledge, experience and expertise; and

WHEREAS, Bank desires to employ Employee on the terms and subject to the conditions set forth herein and subject to approval, permission and determinations of safety, soundness and fairness of any and all regulatory entities, and Employee is willing to accept employment on such terms and conditions.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows:

1.

Employment.  On the terms and subject to the conditions set forth in this Agreement and subject to approval, permission and determinations of safety, soundness and fairness of any and all regulatory entities, Bank shall employ Employee to serve as Senior Vice President and Chief  Operations Officer and Chief Information Officer, and perform all services and duties, as set forth on Exhibit 1, attached hereto and made a part hereof.  Employee hereby agrees that Bank have the ability to revise the title, duties and responsibilities of Employee as set forth hereunder, at any time, in the sole discretion of Bank except that Employee's titles, duties and responsibilities cannot be revised to a title or position to one that is generally considered in the industry to have less responsibility or authority.  Employee shall devote E mployee’s entire productive time, ability and attention to the business of Bank and shall not directly or indirectly render any services of a business, commercial or professional nature to any other person or organization, whether for compensation or otherwise, without prior consent of the immediate supervisor of Employee.

2.

Compensation.  

2.1

Base Salary.  As consideration for Employee's services as an employee hereunder, Bank agrees to pay Employee, and Employee agrees to accept, an annual base salary of $95,000 (“Base Salary”).  The Base Salary, as so determined, shall be payable in equal biweekly installments.  It is further understood and agreed that during the term of Employee’s status as an Employee, Employee shall be subject to the withholding of taxes as required by law.

The Board of Directors of Bank may determine, in its sole discretion, to pay a bonus to Employee.  The Bonus shall be paid to Employee within ninety (90) days after the end of the period during which the Bonus is earned.

2.2

Benefits.  Employee shall be entitled to participate in any insurance or other benefit plans now or hereafter provided or made available to employees of Bank generally; provided, however that nothing contained in this Agreement shall require Bank to establish, maintain or continue any such benefits already in existence or hereafter adopted for employees of Bank.

2.3

Vacation.  Employee shall be entitled to annual vacation and leave time of four (4) weeks at full pay.  Unused vacation time may not be carried from one calendar year to another calendar year.

3.

Term and Termination.  

3.1

Term.  Employee shall be employed for a two (2) year term commencing on the Effective Date hereof, and ending on the second anniversary of the Effective Date, unless sooner terminated in accordance with the provisions of this Agreement.

3.2

Termination.  

(a)

Death or Disability.  If Employee dies or becomes disabled to the extent that Employee cannot perform his duties under this Agreement for a period of more than sixty (60) consecutive days (the “Disability Period”), this Agreement shall cease and terminate on the date of Employee’s death or conclusion of the Disability Period, as applicable.

(b)

Termination for Cause or with Good Reason.  If this Agreement is terminated by Bank for Cause (as defined herein) or by Employee with Good Reason (as defined herein), this Agreement and the employment of Employee shall cease and terminate as of such date.  “Cause” shall be defined as (i) commission of an act of dishonesty in the course of Employee's duties hereunder;  (ii) conviction (whether as a result of a trial or plea, including a plea of nolo contendere) by a court of competent jurisdiction of a crime constituting a felony or conviction (whether as a result of a trial or plea, including a plea of nolo contendere) with respect to any act involving fraud, dishonesty, or moral turpitude; (iii) Employee's continued, habitual intoxication or performance under the influence of controlled substances during working hours; (i v) frequent or extended, and unjustifiable (not as a result of incapacity or disability) absenteeism or (v) Employee’s continued  inability or refusal to perform the duties and responsibilities described in this Agreement and any Exhibits hereto, if (A) Bank shall have given Employee prior written notice of the reason therefor and (B) a period of ten (10) days following receipt by Employee of such notice shall have lapsed and the matters which constitute or give rise to such Cause shall not have been cured or eliminated by Employee.  “Good Reason” shall be defined as (i) a reduction in Employee's rate of Base Salary; (ii) a transfer of Employee's primary place of employment to a location more than twenty-five (25) miles from the city limits of Millersburg, Ohio, without written consent of Employee; (iii) a change in Employee's title or position to one that is generally considered in the industry to have less responsibility or authority; or (iv) a material breach of this Agreement by Bank, which shall not have been cured within ten (10) days after Employee shall have advised Bank in writing of his or her intention to terminate his or her employment for Good Reason in the event such condition shall not have been cured, provided, however, that if such matters are of a nature that same cannot be cured or eliminated within such ten (10) day period, such period shall be extended for up to thirty (30) days if Bank shall be endeavoring diligently and in good faith to cure or eliminate such matters.

3.3

Termination Without Cause.  Bank may terminate Employee’s employment at any time without Cause, or Employee may terminate this Agreement for Good Reason, by giving thirty (30) days advance notice in writing to Employee or Bank, respectively.  In addition to the benefits payable under Section 3.4, Employee shall be entitled upon termination of employment described in this Section 3.3 to receive payment of an additional six (6) months of Base Salary, payable biweekly.

3.4

Employee’s Rights Upon Termination.  In the event that this Agreement is terminated by Bank for Cause, Employee shall receive all Base Salary and benefits earned through Employee’s final day of employment.  Any earned but unpaid Base Salary and benefits shall be paid to Employee within thirty (30) days of Employee’s final day of employment.  Employee’s rights upon termination shall be subject to determinations of safety, soundness and fairness of any and all regulatory entities.

3.5

       Purchase of Employee’s Residence.  In the event Employee purchases a residence in Holmes County or Wayne County, Ohio (the “Residence”), Bank agrees, at the termination of this Agreement for any reason and for a one year period after such termination, to purchase the Residence from Employee for the amount which Employee originally purchased the Residence.  Employee must notify Bank in writing that he will require Bank to purchase his Residence.  Employee must transfer the Residence to Bank by general warranty deed and the Residence must not be encumbered by any liens or other encumbrances.  

4.

Covenant Not to Compete.  From the Effective Date and for a period of six (6) months following the termination of this Agreement for Cause, Employee shall not, without prior written consent of Bank, engage in any business activity, directly or indirectly, on his own behalf or as a partner, shareholder (except by ownership of less than five percent (5%) of the stock of a publicly-held bank or corporation), director, trustee, principal, agent, employee, consultant or otherwise of any bank, thrift, savings and loan or credit union having and office or branch within a 25-mile radius of any of Bank’s offices or branches.  From the Effective Date and for a period of three (3) months following the termination of this Agreement for Good Reason by Employee or without Cause by Bank, Employee shall not, without prior written consent of Bank, en gage in any business activity, directly or indirectly, on his own behalf or as a partner, shareholder (except by ownership of less than five percent (5%) of the stock of a publicly-held bank or corporation), director, trustee, principal, agent, employee, consultant or otherwise of any bank, thrift, savings and loan or credit union having and office or branch within a 25-mile radius of any of Bank’s offices or branches.

5.

Change in Control.

5.1

Change in Control.  Upon the occurrence of a Change in Control (as herein defined) the Bank shall provide Change in Control Benefits to Employee as set forth below.  A “Change in Control” for the purposes of this Agreement shall be deemed to have occurred if either (i) any person, together with his, her or its Affiliates or Associates, acquires beneficial ownership, directly or indirectly, of shares of CSB Bancorp, Inc. ("CSB"), entitling such person, together with such Affiliates or Associates, to cast more than twenty percent (20%) of the votes eligible to be cast at any meeting of shareholders of CSB, (ii) a change occurs in the acquisition of the ability to control the election of a majority of CSB's or Bank's directors, (iii) a change occurs in the acquisition of a controlling influence over the management or pol icies of CSB or Bank by any person or by persons acting as a “group” (within the meaning of Section 13(d) of the Securities Exchange Act of 1934) or (iv) during any period of two consecutive years, individuals (the "Continuing Directors") who at the beginning of such period constitute the Board of Directors of CSB (the "Existing Board") cease for any reason to constitute at least a majority thereof, provided that any individual whose election or nomination for election as member of the Existing Board was approved by a vote of at least a majority of the Continuing Directors then in office shall be considered a Continuing Director.  For purposes of this definition, a person shall be deemed the “beneficial owner” of any shares of CSB (i) which such person or any of its Affiliates or Associates, as defined below, beneficially owns, directly or indirectly; (ii) which such person or any of its Affiliates or Associates, has directly or indirectly, (A) the right to acquir e (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (B) the right to vote pursuant to any agreement, arrangement or understanding or (iii) which are beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of CSB.  For purposes of this Agreement, a  “person” shall mean any individual, firm, company, partnership, other entity or group, and the terms “Affiliate” or “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as of the date hereof.  Provided however, that a Change of Control shall not be deemed to have resulted from any transfer (i) to CSB; (ii) to a fiduciary for the benefit of the transferring owner or his spouse or lineal descendants or (iii) by will or by operation of the laws of descent and distribution.

5.2

Change in Control Benefits.    The Change in Control benefits that Employee shall be entitled to receive in accordance with the provisions hereof are as follows:

(a)

Employee shall receive his or her Base Salary for a two (2) year period following termination of employment pursuant to Section 5.1, above.  Such Base Salary shall be paid periodically at the same frequency as prior to the termination of employment.

(b)

The Bank shall provide to Employee continued coverage for one (1) year under a health plan with benefits the same or similar to those Employee had with Bank prior to the Change in Control.

5.3

Tax Obligations. In the event that any Change in Control benefits which Employee is entitled to receive from Bank (either under this Agreement or otherwise) constitute an “excess parachute payment” as defined for the purposes of Section 280G(b)(1) of the Internal Revenue Code of 1986, as amended (the “Code”), then such Change in Control benefits shall be reduced such that no “excess parachute payment” is received by Employee from Bank.

5.4

Mitigation of Benefits.  Employee shall not be required to mitigate the amount of any paid Change in Control benefit by seeking other employment or otherwise, nor shall the amount of any Change in Control benefit be reduced by any compensation earned by Employee as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by Employee to Bank or for any other reason.

6.

Confidential Information and Property of Bank.

6.1

Confidential Information.  Employee acknowledges and agrees that in connection with his employment by Bank, Employee will have access to certain confidential and proprietary information owned by and related to Bank.  For purposes of this Agreement, “Confidential Information” means any proprietary information of or related to Bank, including but not limited to: (i) operations manuals and guidelines, marketing manuals and plans and business strategies, techniques and methodologies; (ii) financial information, including information set forth in internal records, files and ledgers, or incorporated in profit and loss statements, fiscal reports, sales reports  and business plans; (iii) any and all active prospective mergers or acquisitions of Bank, and all financial data, pricing terms, information memoranda and due diligence re ports relating thereto; (iv) all internal memoranda and other office records, including electronic and data processing files and records and financial information regarding customers of Bank and (v) any other information constituting a trade secret under governing trade secrets law.

6.2

Non-Disclosure of Confidential Information.  Employee shall not at any time willfully use, disclose or divulge any such Confidential Information to any person, firm or corporation, except: (i) in connection with the discharge of his duties hereunder; (ii) with the prior written consent of Bank which consent may be withheld in Bank's sole discretion or (iii) to the extent necessary to comply with law or the valid order of a court of competent jurisdiction, in which event Employee shall notify Bank as promptly as practicable and, if possible, prior to making such disclosure.  Employee shall use his best efforts to prevent any such disclosure by others.

7.

Remedies.  For purposes of Sections 4 and 6 of this Agreement, Employee acknowledges that the services to be rendered by him are of a special, unique and extraordinary character and that it would be extremely difficult or impracticable to replace such services, that the material provisions of this Agreement are of crucial importance to Bank and that any damage caused by the breach of this Agreement would result in irreparable harm to the business of Bank for which money damages alone would not be adequate compensation. Accordingly, Employee agrees that if he violates this Agreement, Bank shall, in addition to any other rights or remedies of Bank available at law: (i) be entitled to equitable relief in any court of competent jurisdiction, including, without limitation, temporary injunction and permanent injunction; and (ii) be entitled to hold Employee liable to Bank for all costs and expenses to Bank resulting from such breach (including, without limitation, reasonable attorneys' fees and expenses in dealing with this breach and any suits or actions with regard thereto).

8.

Entire Agreement.  This Agreement constitutes the entire agreement and understanding of the parties with respect to the transactions contemplated hereby and supersedes all prior agreements, arrangements and understandings of the parties with respect to the subject matter hereof.  No amendment or modification of this Agreement shall be valid or binding unless made in writing and signed by the parties hereto.

9.

Notices.  All notices and other communications under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service if served personally on the party (including without limitation service by overnight courier service) to whom notice is to be given, or on the third day after mailing if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, at the address set forth below, or on the date of service if delivered by facsimile to the facsimile number then utilized by the party receiving the facsimile.  All notices shall be addressed to the parties to be served as follows:

(a) If to Bank: The Commercial and Savings Bank of Millersburg 6 West Jackson Street Millersburg, Ohio 44654 Attn:  Mr. C. James Bess	Copy to: Dinsmore & Shohl LLP 1900 Chemed Center 255 East Fifth Street Cincinnati, Ohio  45202 Attention: John E. Barnes, Esq.
(b) If to Employee: Michael J. Saporito At the address maintained in the employment records of the Bank

10.

Severability.  If any provision of this Agreement shall be invalid or unenforceable, in whole or in part, then such provision shall be deemed to be modified or restricted to the extent and in the manner necessary to render the same valid and enforceable, and this Agreement shall be construed and enforced to the maximum extent permitted by law.  

11.

Waiver.  No waiver of any default or breach of this Agreement shall be deemed a continuing waiver or a waiver of any other breach or default.

12.

Governing Law.  This agreement shall be governed by and construed in accordance with the laws of the State of Ohio without regard to principles of conflicts of law.

13.

Assignment.  Employee may not assign any rights under this Agreement without the prior written consent of Bank. If Bank, or any entity resulting from any stock purchase, merger or consolidation with or into Bank, is merged with or consolidated into or with any other entity or entities, or if substantially all of the stock or operating assets of any of the aforementioned entities is sold or otherwise transferred to another entity, the provisions of this Agreement shall be binding upon and shall inure to the benefit of the continuing entity in, or the entity resulting from, such asset purchase, merger or consolidation, or the entity to which such assets are sold or transferred.

14.

Headings; Gender.  The headings contained in this Agreement are for reference purposes only and should not affect in any way the meaning or interpretation of this Agreement.  When the context requires, the gender of all words used herein shall include the masculine, feminine and neuter.

15.

Mutual Negotiation.

Each party has been represented by counsel in drafting and negotiating this Agreement.  This Agreement shall therefore be deemed to have been negotiated, prepared and drafted jointly hereto.  This Agreement shall not be construed against any party as the sole drafter or author of the Agreement.

#

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the Effective Date.

THE COMMERCIAL AND SAVINGS BANK OF

MILLERSBURG, an Ohio state bank

By:  /s/ C. James Bess

Its:  Chairman of the Board, President and CEO

EMPLOYEE

  /s/ Michael J. Saporito

Michael J. Saporito

#

EXHIBIT 1

DUTIES

#

EX-11

EXHIBIT 11

STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS

	Years ended December 31,
	2002	2001	2000
Average basic common shares outstanding	2,630,931	2,625,241	2,628,998
Average diluted common shares outstanding	2,634,558	2,626,014	2,629,733
Net income	$1,923,138	$1,059,078	$320,893
Basic and diluted earnings per common share	$0.73	$0.40	$     0.12

EX-13

EXHIBIT 13

2002 Financial Review

INTRODUCTION

CSB Bancorp, Inc. (the “Company”) was incorporated under the laws of the State of Ohio in 1991 to become a one-bank holding company for its wholly owned subsidiary, The Commercial and Savings Bank (the “Bank”). The Bank is chartered under the laws of the State of Ohio and was organized in 1879. The Bank is a member of the Federal Reserve System, insured by the Federal Deposit Insurance Corporation and regulated by the Ohio Division of Financial Institutions and the Federal Reserve Bank.

The Company, through the Bank, provides retail and commercial banking services to its customers including checking and savings accounts, time deposits, safe deposit facilities, personal loans, commercial loans, real estate mortgage loans, installment loans, IRAs, night depository facilities and trust services. Its customers are located primarily in Holmes County and portions of surrounding counties in Ohio. The general economic conditions in the Company’s market area have been sound. Unemployment statistics have generally been among the lowest in the State of Ohio and the area has experienced stable to rising real estate values.

The following discussion is presented to aid in understanding the Company’s consolidated financial condition and results of operations, and should be read in conjunction with the audited consolidated financial statements and related notes.

FORWARD-LOOKING STATEMENTS

Certain statements contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations are not related to historical results, but are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks and uncertainties. Any forward-looking statements made by the Company herein and in future reports and statements are not guarantees of future performance and actual results may differ materially from those in forward-looking statements because of various factors. The Company does not undertake, and specifically disclaims any obligation to publicly release the result of any revisions to any forward-looking statements to reflect the occurrence of unanticipated events or circumstances after the date of such statements.

REGULATORY MATTERS

As disclosed in Note 10 to the consolidated financial statements, the Company and Bank entered into a Written Agreement in November 2000 with the Federal Reserve Bank of Cleveland and the Ohio Division of Financial Institutions which, among other things, required the Company and Bank to complete a review of the Board of Directors and Management; make improvements in the lending function including, but not limited to, policies and procedures, documentation, and a plan for the reduction of adversely classified assets; and prepare new policies and procedures for internal audit, internal controls, asset/liability management, trust, and information technology. The Written Agreement was terminated in June 2002.

SELECTED FINANCIAL DATA

The following table sets forth certain selected consolidated financial information.

	2002	2001		2000		1999			1998
	(Dollars in thousands, except per share data)
Statements of income:
Total interest income	$   16,700		$   21,656		$   25,497		$   23,707	$   23,404
Total interest expense	6,467		11,471		12,782		11,682	11,563
Net interest income	10,233		10,185		12,715		12,025	11,841
Provision (credit) for loan losses	(587)		35		6,142		1,100	1,051
Net interest income after provision (credit) for loan losses	10,820		10,150		6,573		10,925	10,790
Non-interest income	2,037		1,976		2,019		2,063	1,616
Non-interest expenses	10,999		11,604		9,191		7,573	6,844
Income (loss) before income taxes	1,858		522		(599)		5,415	5,562
Income tax provision (credit)	(65)		(537)		(920)		1,149	1,331
Net Income	$     1,923		$     1,059		$        321		$     4,266	$     4,231
Per share of common stock
Basic and diluted income	$       0.73		$       0.40		$       0.12		$       1.61	$       1.60
Dividends	0.30		0.10		0.45		0.70	0.60
Book value	12.83		12.46		12.02		12.49	11.65
Average basic common shares outstanding	2,630,931		2,625,241		2,628,998		2,651,910	2,637,011
Average diluted common shares outstanding	2,634,558		2,626.014		2,629,733		2,652,836	2,637,956
Year-end balances:
Loans, net (includes held for sale)	$ 197,109		$ 164,916		$198,358		$194,862	$193,824
Securities	73,088		92,607		96,550		105,387	89,368
Total assets	304,713		306,345		325,212		326,546	317,502
Deposits	239,976		251,430		268,583		269,939	265,747
Borrowings	29,828		21,317		24,048		22,545	19,882
Shareholders' equity	33,742		32,721		31,540		33,202	30,860
Average balances:
Loans, net	$ 177,592		$ 180,157		$203,790		$187,893	$184,746
Securities	80,176		90,538		100,216		99,993	82,406
Total assets	295,399		314,153		325,880		322,022	296,239
Deposits	235,080		260,677		264,795		268,881	246,961
Borrowings	25,971		20,532		28,108		19,357	18,440
Shareholders' equity	33,382		31,921		32,083		32,454	29,402
Selected ratios:
Net yield on average interest-earning assets	3.73%		3.45%		4.11%		3.96%	4.20%
Return on average total assets	0.65		0.34		0.10		1.32	1.43
Return on average shareholders' equity	5.76		3.32		1.00		13.14	14.39
Average shareholders' equity as a percent of average total assets	11.30		10.16		9.85		10.08	9.93
Net loan charge-offs as a percent of average loans	0.40		1.86		1.01		0.30	0.27
Allowance for loan losses as a percent of loans at year-end	1.35		2.38		3.62		1.72	1.46
Shareholders' equity as a percent of total year-end assets	11.07		10.68		9.70		10.17	9.72

RESULTS OF OPERATIONS

Net Income

Net income totaled $1,923,000 in 2002, an increase of $864,000 from 2001. Net income per share was $0.73 and $0.40 for the years ended December 31, 2002 and 2001. Return on average assets was 0.65% in 2002, as compared to 0.34% in 2001, and return on average shareholders’ equity was 5.76% in 2002 compared to 3.32% in 2001.

Net income for 2001 was $1,059,000 or $0.40 per share, as compared to $321,000 or $0.12 per share for 2000. This equated to a return on average assets of 0.34% in 2001 and 0.10% in 2000, while the return on average shareholders’ equity for the same periods was 3.32% and 1.00%.

Net Interest Income

Net interest income is the largest component of the Company’s net income and consists of the difference between income generated on interest-earning assets and interest expense incurred on interest-bearing liabilities. Volumes, interest rates and composition of interest-earning assets and interest-bearing liabilities affect net interest income.

Interest income for 2002 was $16.7 million, decreasing $5.0 million from $21.7 million in 2001. Interest and fees on loans was $12.6 million, a decrease of $3.8 million, or 23.2%, from 2001, mostly attributable to the $5.5 million decrease in the average balance of loans and the decreased yield on loans of 184 basis points in 2002. Interest income on securities decreased $780,000, or 16.8%, to $3.8 million as compared to 2001 of $4.6 million, due primarily to the $10.4 million decrease in the average balance of securities in 2002 as compared to 2001. Other interest

income decreased $350,000 to $212,000 in 2002 compared to $562,000 in 2001, primarily as a result of a decrease in the average federal funds sold balance, from $17.9 million in 2001 to $13.1 million in 2002 and a decrease in the average yield from 3.11% in 2001 to 1.61% in 2002.

Interest income for 2001 was $21.7 million, decreasing $3.8 million from $25.5 million in 2000. Interest and fees on loans was $16.5 million, a decrease of $3.7 million, or 18.1%, from 2000, mostly attributable to the $21.5 million decrease in the average balance of loans and the decreased yield on loans of 84 basis points in 2001. Interest income on securities decreased $719,000, or 13.4%, to $4.6 million as compared to 2000 of $5.3 million, due primarily to the decrease in the average balance of securities in 2001 as compared to the previous year. Other interest income increased $529,000 to $562,000 in 2001 compared to $33,000 in 2000, primarily as a result of an increase in the average federal funds sold balance, from $522,000 in 2000 to $17.9 million in 2001, a result of a decrease in the loan portfolio.

Interest expense for 2002 was $6.5 million, a decrease of $5.0 million, or 43.6%, from 2001. The Company’s interest expense on deposits decreased $5.0 million in 2002, due primarily to the decrease in deposit interest rates during 2002, as cost of deposits decreased to 2.78% in 2002, compared to 4.58% in 2001 and the average balance of time deposits decreased $33.1 million, or 20.7%. Interest expense on other borrowings decreased $51,000 due to the 96 basis point decrease in the cost of these funds in 2002 as compared to 2001.

Interest expense for 2001 was $11.5 million, a decrease of $1.3 million, or 10.3%, from 2000. The Company’s interest expense on deposits decreased $503,000 in 2001, due primarily to the decrease in deposit interest rates during 2001, as cost of deposits decreased to 4.58% in 2001, compared to 4.76% in 2000. Interest expense on other borrowings decreased $808,000 due to the decreased use of federal funds purchased and the decrease in the cost of these funds by 188 basis points in 2001.

Net interest income for 2002 remained stable at $10.2 million. The $20.7 million decrease in average interest-earning assets was offset by a 28 basis point increase in the net interest margin as higher-earning loans comprised 66.0% of interest-earning assets in 2002 as compared to 63.2% in 2001. Net interest income for 2001 decreased from $12.7 million in 2000 to $10.2 million, a decrease of $2.5 million.

The following tables provide detailed analysis of changes in average balances, yields, and net interest income identifying that portion of the changes due to change in average volume versus that portion due to change in average rates.

AVERAGE BALANCES, RATES AND YIELDS

(Dollars in thousands)

2002

 2001

 2000

   Average

         Average

                Average

  Balance (1)    Interest Rate (2)       Balance (1)  Interest Rate (2)        Balance (1)  Interest Rate (2)

Interest-earning assets
Federal funds sold	$ 13,131	$    211	1.61%	$ 17,896	$    557	3.11%	$    522	$     31	5.94%
Interest-earning deposits	36	1	1.41	132	5	4.25	45	2	4.44
Securities:
Taxable	34,722	6,659	4.78	40,403	2,222	5.50	48,929	2,895	5.92
Tax exempt	45,454	2,190	4,82	50,135	2,407	4.80	51,287	2,453	4.75
Loans (3)	181,147	12,639	6.98	186,665	16,465	8.82	208,192	20,115	9.66
Total interest-earning assets	274,490	16,700	6.08	295,231	21,656	7.34	308,975	25,496	8.24
Noninterest-earning assets
Cash and due from banks	10,591			10,246			10,163
Bank premises and Equipment, net	8,910			9,340			8,955
Other assets	4,963			5,844			2,189
Allowance for loan losses	(3,555)			(6,508)			(4,402)
Total assets	295,399			$314,153			$325,880
Interest-bearing liabilities
Demand deposits	$ 44,456	$   409	0.92%	$ 40,625	$   634	1.56%	$ 37,840	$   825	2.18%
Savings deposits	35,759	355	0.99	33,508	696	2.08	35,663	1,016	2.85
Time deposits	126,981	5,000	3.94	160,098	9,387	5.86	161,913	9,379	5.79
Other borrowed funds	25,971	703	2.71	20,532	754	3.67	28,108	1,561	5.55
Total interest-bearing liabilities	233,167	6,467	2.77	254,763	11,471	4.50	263,524	12,781	4.85
Noninterest-bearing liabilities and shareholders' equity
Demand deposits	27,884			26,446			29,379
Other liabilities	966			1,023			894
Shareholders' equity	33,382			31,921			32,083
Total liabilities and equity	295,399			314,153			$325,880
Net interest income		10,233			10,185			$12,715
Net interest margin			3.73%			3.45%			4.11%

(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 nonaccruing loans.

RATE/VOLUME ANALYSIS OF CHANGES IN INCOME AND EXPENSE (1) (Dollars in thousands)

2002 v. 2001

2001 v. 2000

	Change in Income/ Expense	Volume Effect	Rate Effect	Change in Income/ Expense	Volume Effect	Rate Effect
Interest income
Federal funds sold	$  (346)	$  (123)	$  (223)	$   526	$   534	$     (8)
Interest-earning deposits	(4)	(3)	(1)	3	3	---
Securities:
Taxable	(563)	(291)	(272)	(673)	(479)	(194)
Tax exempt	(217)	(226)	9	(46)	(55)	9
Loans	(3,826)	(474)	(3,352)	(3,650	(1,982)	(1,668)
Total interest income	(4,956)	(1,117)	(3,839)	(3,840)	(1,979)	(1,861)
Interest Expense
Demand deposits	(225)	67	(292)	(191)	67	(258)
Savings deposits	(341)	50	(391)	(320)	(58)	(262)
Time deposits	(4,387)	(1,694)	(2,693)	8	(91)	99
Other borrowed funds	(51)	173	(224)	(807)	(358)	(449)
Total interest expense	(5,004)	(1,404)	(3,600)	(1,310)	(440)	(870)
Net Interest income	$       48	$    287	$  (239)	$(2,530)	$(1,530)	$(991)

(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.

The following table reconciles net interest income as shown in the financial statements to taxable equivalent net interest income:

2002 2001 2000

	2002	2001	2000
Net interest income	$10,232,966	$10,185,459	$12,715,383
Taxable equivalent adjustment (1)	1,128,235	1,239,955	1,263,935
Net interest income-fully taxable equivalent	$11,361,201	$11,425,414	$13,979,318
Net interest yield	3.73%	3.45%	4.11%
Taxable equivalent adjustment (1)	.41	.42	.41
Net interest yield - taxable equivalent	4.14%	3.87%	4.52%

(1) Taxable equivalent adjustments have been computed assuming a 34% tax rate.

Provision (Credit) for Loan Losses

During 2002, the Company reported a credit for loan losses of $587,000 compared to a provision for loan losses of $35,000 for 2001 and $6.1 million for 2000. The credit in 2002 resulted from the resolution and payoff of several large classified credits, as well as more aggressive collection procedures and stronger underwriting standards. These factors contributed to an improved charge-off experience rate which is a component of management’s calculation of the allowance for loan losses. The decrease in classified assets during 2002, including a $3.4 million decrease in impaired loans and a $1.4 million decrease in loans on nonaccrual of interest, also contributed to the 2002 credit for loan losses. As part of management’s aggressive collection efforts, the Bank incurred approximately $135,000 of external collection costs in 2002, mostly representing legal and ot her professional fees. These costs are reported as non-interest expenses in the 2002 consolidated statement of income. See “Financial Condition – Allowance for Loan Losses” for additional discussion and information relative to the provision (credit) for loan losses.

Non-Interest Income

Total non-interest income increased by $61,000, or 3.1%, to $2.0 million in 2002. Increases of $75,000 in service charges on deposit accounts, $86,000 in securities gains, and $64,000 in other income were partially offset by a $48,000 decrease in trust and financial services, and an $84,000 decrease in gain on sale of loans.

Total non-interest income decreased by $43,000, or 2.1% from 2000, to $2.0 million in 2001. Decreases of $68,000 in service charges on deposit accounts and $78,000 in trust and financial services were partially offset by a $42,000 increase in gain on sale of loans, a $28,000 increase in security gains, and $36,000 increase in other non-interest income.

Non-Interest Expenses

Total non-interest expenses decreased $605,000, or 5.2%, during 2002. The largest component of non-interest expenses is salaries and employee benefits, which increased $274,000 or 5.2% in 2002. The increase was from normal salary adjustments and the rising costs of employee benefits.  Professional and director fees decreased to $868,000, a decrease of $766,000. This decrease was primarily due to the decrease in consulting, legal fees, and internal audit fees which had been incurred due to the Written Agreement and other regulatory matters.

Income Taxes

The credit for income taxes amounted to $65,000 in 2002, compared to $537,000 in 2001 and $920,000 in 2000. The credit in all three years resulted from a net loss before income taxes after consideration of non-taxable interest income.

FINANCIAL CONDITION

Total assets of the Company were $304.7 million at December 31, 2002, compared to $306.3 million at December 31, 2001, representing a decrease of $1.6 million, or 0.5%. Net loans increased $32.2 million with the loan growth funded by a $12.0 million decrease in cash and cash equivalents and a $19.5 million decrease in securities. An $11.5 million decrease in deposits was partially offset by a $9.0 million increase in Federal Home Loan Bank borrowings.

Securities

Total securities decreased $19.5 million, or 21.1% from $92.6 million at year-end 2001 to $73.1 million at year-end 2002. Available-for-sale securities decreased $10.8 million while held-to-maturity securities decreased $8.9 million. The securities portfolio at year-end 2002 consisted of U.S. Treasuries, U.S. government corporations and agencies, obligations of state and political subdivisions and corporate securities. Restricted securities include Federal Home Loan Bank of Cincinnati (“FHLB”) stock which increased to $2.3 million through stock dividends during 2002.

Since one of the primary functions of the securities portfolio is to provide a source of liquidity, it is structured such that maturities and cash flows satisfy the Company’s liquidity needs and asset/liability management requirements.

Securities classified as held-to-maturity are carried at amortized cost, and include securities that Management has the positive intent and ability to hold to maturity. Securities classified as available-for-sale include those that may be sold before maturity for liquidity, asset/liability management or other reasons.

Loans

Total loans amounted to $199.8 million at year-end 2002, compared to $168.9 million at year-end 2001, representing an increase of $30.9 million or 18.3%. The loan portfolio at year-end 2002 and 2001, comprised approximately 58% and 59%, respectively, of commercial and commercial real estate loans. The Company recorded an increase of $6.7 million, or 9.9%, in commercial loans; a $10.4 million, or 18.9%, increase in residential real estate loans; an increase of $10.5 million, or 33.7%, in commercial real estate loans; a decrease of $1.1 million, or 8.4%, in installment and credit card loans; and an increase of $4.2 million in construction loans.

The increase in commercial and commercial real estate loans was partially due to the Bank’s entering into several participation loan agreements with local and regional financial institutions. These loans are subject to the same underwriting standards as other commercial and commercial real estate loans in the Bank’s portfolio and were all performing at December 31, 2002.

Agriculture production loans and loans secured by farmland totaled approximately $1.1 million at year-end 2002, and are included in the commercial, commercial real estate and residential real estate categories. Credit card loans, which are primarily unsecured, totaled $2.4 million, or 1.2%, of loans at year-end 2002. Demand for commercial business loans, as well as both commercial and residential real estate loans, was stable in 2002. Management believes the Company’s local service areas will experience continued economic strength and a continued need for these types of lending products in 2003.

Allowance for Loan Losses

The allowance for loan losses is maintained at a level considered adequate to cover loan losses that are currently anticipated based on past loss experience, general economic conditions, changes in mix and size of the loan portfolio, information about specific borrower situations, and other factors and estimates which are subject to change over time. Management periodically reviews selected large loans, delinquent and other problem loans, and selected other loans. Collectibility of these loans is evaluated by considering current financial position and performance of the borrower, estimated market value of the collateral, the Company’s collateral position in relationship to other creditors, guarantees and other potential sources of repayment. Management forms judgments, which are subjective, as to the probability of loss and the amount of loss on these loans as well as other loans taken together. The Bank amended, in the fourth quarter of 2000, the Allowance for Loan and Lease Losses Policy.  This policy includes, among other items, provisions for classified loans and a provision for the remainder of the portfolio and historical data, including past charge-offs.

The allowance for loan losses totaled $2.7 million or 1.35% of total loans at year-end 2002, down from $4.0 million or 2.38% of total loans at year-end 2001. Net charge-offs for 2002 totaled $732,000, compared to $3.5 million in 2001 and $2.1 million in 2000. During the third and fourth quarters of 2002, the Company sold $1.3 million of commercial and commercial real estate loans that resulted in $494,000 of the chargeoffs in 2002. During the second quarter of 2001, the Company sold $7.5 million of commercial and commercial real estate loans that resulted in $1.6 million of the charge-offs in 2001. For many of the other loans that have been charged-off, Management is continuing collection efforts,

and future recoveries may occur.

The Bank maintains an internal watch list, on which it places loans where management’s analysis of the borrower’s operating results and financial condition indicates that the borrower’s cash flows are inadequate to meet its debt service requirements, and loans where there exists an increased risk that such a shortfall may occur.

Nonperforming loans, which consist of loans past due 90 days or more and nonaccrual loans, were $1.7 million or 0.9% of loans at year-end 2002 compared to $3.3 million or 1.9% of loans at year-end 2001. Impaired loans decreased at year-end from $4.3 million in 2001 to $916,000 in 2002. Management has assigned loss allocations to absorb the estimated losses on these impaired loans, and these allocations are included in the total allowance for loan losses balance.

Other Assets

Net premises and equipment decreased $270,000 to $9.1 million at year-end 2002 from $9.3 million at year-end 2001. The decrease in 2002 was due to depreciation exceeding the relatively low volume of equipment purchases. Other assets, including accrued interest receivable, decreased $2.1 million to $2.9 million at year end 2002 due in part to a $1.4 million reduction in net deferred tax assets.

Deposits

The Company’s deposits are obtained from individuals and businesses located in its market area. For deposits, the Company must compete with products offered by other financial institutions as well as other investment options such as mutual funds. As a result of this competition and the lower interest rate environment, total deposits decreased 4.6% to $240.0 million at year-end 2002, compared to $251.4 million at year-end 2001. Noninterest-bearing deposits increased $2.7 million, or 9.0%, to $32.4 million compared to $29.7 million at year-end 2001.  Interest-bearing deposits decreased $14.1 million or 6.4% at year-end 2002 compared to year-end 2001. Interest-bearing demand deposits increased $6.6 million, and statement and passbook savings increased $3.3 million. Certificates of deposit in excess of $100,000 decreased $3.3 million while other certificates of dep osit decreased by $20.7 million.

Other Funding Sources

The Company obtains additional funds through securities sold under repurchase agreements and advances from the FHLB. These borrowings totaled $29.8 million at year-end 2002. These funding sources provided a net increase in cash of $8.5 million from year-end 2001 to 2002. A $10 million advance from the FHLB was partially offset by a $509,000 decrease in repurchase agreements and $980,000 of repayments of funds borrowed from the FHLB. The repurchase agreements are uninsured, so the Company pledges securities against these customer funds.

CAPITAL RESOURCES

Total shareholders’ equity increased from $32.7 million at December 31, 2001 to $33.7 million at December 31, 2002. This increase was primarily due to net income of $1.9 million, offset by dividends declared of $789,000. Because of the dividend reinvestment program, shareholders’ equity increased $120,000 in 2002 and $65,000 in 2001 as a portion of dividends declared were reinvested by shareholders in common stock.

Banking regulations have established minimum capital ratios for banks and bank holding companies. Therefore, the Company and the Bank must meet a risk-based capital requirement, which defines two tiers of capital and compares each to the Company’s “risk-weighted assets.”  The Company’s assets and certain off-balance-sheet items, such as loan commitments, are each assigned a risk factor such that assets with potentially higher credit risk will require more capital support than assets with lower risk. These regulations require the Company to have a minimum total risk-based capital ratio of 8%, at least half of which must be Tier 1 capital. The Company’s Tier 1 capital is its shareholders’ equity before any unrealized gain or loss on securities available for sale, while total risk-based capital includes Tier 1 capital and a limited amount of the allowance for loan losses. In addition, a bank or bank holding company’s leverage ratio (which for the Company equals its shareholders’ equity before any unrealized gain or loss on securities available for sale divided by average assets) must be maintained at a minimum of 4%. The Company’s actual and required capital amounts are disclosed in Note 10 to the consolidated financial statements.

Dividends paid by the Company’s bank subsidiary are the primary source of funds available to the Company for payment of dividends to shareholders and for other working capital needs. The payment of dividends by the Bank to the Company is subject to restrictions by regulatory authorities, which generally limit dividends to current and prior two years retained earnings, as defined by regulation. In addition, dividend payments generally cannot reduce regulatory capital levels below the minimum regulatory guidelines discussed above.

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 $22.6 million at December 31, 2002, a decrease of $12.0 million from year-end 2001. Net income, securities available for sale, maturities/calls of securities held to maturity, and loan repayments also serve as sources of liquidity. Cash and cash equivalents and securities maturing within one year represent 11.0% of total assets at year-end 2002, as compared to 13.5% in 2001. Other sources of liquidity the Company could use to help to ensure funds are available when needed include, but are not limited to, purchase of federal funds, advances from the FHLB, adjustments of interest rates to attract deposit s, and borrowing at the Federal Reserve discount window. Management believes that its sources of liquidity are adequate to meet the needs of the Company.

As summarized in the consolidated statements of cash flows, the most significant investing activities for the Company in 2002 included the maturities and calls of securities totaling $39.9 million offset by $20.5 million in purchases, and net loan originations of $32.6 million. The Company’s financing activities included $11.5 million of reductions in deposits, $509,000 reduction in repurchase agreements, and $10.0 million in proceeds from of FHLB advances partially offset by $980,000 in repayments.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The most significant market risk to which the Company is exposed is interest rate risk. The business of the Company and the composition of its balance sheet consists of investments in interest-earning assets (primarily loans and securities), which are funded by interest-bearing liabilities (deposits and borrowings). These financial instruments have varying levels of sensitivity to changes in the market rates of interest, resulting in market risk. None of the Company’s financial instruments are held for trading purposes.

The Company manages interest rate risk regularly through its Asset Liability Committee. The Committee meets on a monthly basis and reviews various asset and liability management information, including but not limited to, the Bank’s liquidity position, projected sources and uses of funds, interest rate risk position and economic conditions.

The Company monitors its interest rate risk through a sensitivity analysis, whereby it measures potential changes in its future earnings and the fair values of its financial instruments that may result from one or more hypothetical changes in interest rates. This analysis is performed by estimating the expected cash flows of the Company’s financial instruments using interest rates in effect at year-end 2002 and 2001. For the fair value estimates, the cash flows are then discounted to year-end to arrive at an estimated present value of the Company’s financial instruments.  Hypothetical changes in interest rates are then applied to the financial instruments, and the cash flows and fair values are again estimated using these hypothetical rates. For the net interest income estimates, the hypothetical rates are applied to the financial instruments based on the assumed cash flows. The Company applies these interest rate “shocks” to its financial instruments up and down 200 basis points in 100 basis point increments.

The following table presents an analysis of the estimated sensitivity of the Company’s annual net interest income to sudden and sustained 100 basis point changes in market interest rates at December 31, 2002 and 2001:

		2002
Change in Interest Rate (Basis Points)	Net Interest Income		Dollar Change	Percentage Change
		(Dollars in thousands)
+200	$12,043		$  877	7.9%
+100	11,618		452	4.0
0	11,166		0	0.0
-100	10,853		(313)	(2.8)
-200	10,544		(622)	(5.6)

		2001
Change in Interest Rate (Basis Points)	Net Interest Income		Dollar Change	Percentage Change
		(Dollars in thousands)
+200	$10,425		$  710	7.3%
+100	10,100		385	4.0
0	9,715		0	0.0
-100	9,577		(138)	(1.4)
-200	9.755		40	0.4

Management reviews its rate shock position with the Board on a periodic basis. The Company was within all Board-approved limits at December 31, 2002 and 2001.

Significant Assumptions and Other Considerations

The above analysis is based on numerous assumptions, including relative levels of market interest rates, loan prepayments and reactions of depositors to changes in interest rates, and should not be relied upon as being indicative of actual results. Further, the analysis does not necessarily contemplate all actions the Company may undertake in response to changes in interest rates.

Securities owned by the Company will generally repay at their stated maturity. Many of the Company’s loans permit the borrower to prepay the principal balance prior to maturity without penalty. The likelihood of prepayment depends on a number of factors, including current interest rate and interest rate index (if any) on the loan, the financial ability of the borrower to refinance, the economic benefit to be obtained from refinancing, availability of refinancing at attractive terms, as well as economic and other factors in specific geographic areas which affect the sales and price levels of residential property. In a changing interest rate environment, prepayments may increase or decrease on fixed- and adjustablerate loans depending on the current relative levels and expectations of future short and long-term interest rates. Prepayments on adjustable-rate residentia l mortgage loans generally increase when long-term interest rates fall or are at historically low levels relative to short-term interest rates, thus making fixed-rate loans more desirable. While savings and checking deposits generally may be withdrawn upon the customer’s request without prior notice, a continuing relationship with customers resulting in future deposits and withdrawals is generally predictable, resulting in a dependable and uninterrupted source of funds. No change in the rates on such deposits is assumed when market rates increase or decrease 100 basis points. When market rates increase or decrease 200 basis points, the analysis assumes a corresponding 50 basis point change in the rates paid on such deposits. Short-term borrowings have fixed maturities. Time deposits generally have early withdrawal penalties, which discourage customer withdrawal prior to maturity. Certain advances from the FHLB carry prepayment penalties and are expected to be repaid in accordance with their contractual terms.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company disclosed the estimated fair value of its financial instruments at December 31, 2002 and 2001 in Note 13 to the consolidated financial statements. Fair value of the Company’s financial instruments experienced modest changes in 2002. Estimated fair value of loans amounted to 102.0% of the carrying value in 2002, decreasing from 102.8% in 2001. The fair value of securities increased to 104.0% of carrying value in 2002, from 102.0% in 2001. Estimated fair value of time deposits decreased from 101.8% of carrying value in 2001 to 100.6% in 2002.

IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board issued a new pronouncement in December 2002 to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. While this pronouncement may impact future financial statement disclosures it is not expected to have a significant impact on the consolidated financial statements.  Management is unaware of any other recently issued, but not yet adopted, accounting pronouncements that will have a future impact on the consolidated financial statements of the Company.

IMPACT OF INFLATION AND CHANGING PRICES

The financial statements and related data presented herein have been prepared in accordance with generally accepted accounting principles, requiring measurement of financial position and results of operations primarily in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. Unlike most industrial companies, most assets and liabilities of the Company are monetary in nature. Therefore, interest rates have a more significant impact on a financial institution’s performance than the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or in the same magnitude as prices of goods and services. The liquidity, maturity structure and quality of the Company’s assets and liabilities are critical to maintenance of acceptable performance levels.

CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

The Board of Directors of the Company, acting on the recommendation of the Audit Committee of the Board, determined to replace the Company’s auditor, Crowe, Chizek and Company LLP (“Crowe, Chizek”), following the date of completion of the audit of financial statements and reports for the year ended December 31, 2000, and was effective as of March 31, 2001. The reports on the Company’s financial statements for the year ended December 31, 2000 did not contain an adverse opinion or disclaimer of opinion nor was it qualified as to uncertainty, audit scope or accounting principles. During the year ended December 31, 2000, there were no disagreements with Crowe, Chizek on any matter of accounting principles or practices, financial disclosure, or auditing scope or procedure. The Company, on February 28, 2001, engaged Clifton Gunderson LLP as the principal ac countant of the Company to audit the Company’s financial statements. The financial statements for the years

ended December 31, 2002 and 2001 were audited by Clifton Gunderson LLP.

COMMON STOCK AND SHAREHOLDER INFORMATION

Common shares of the Company are not traded on an established market. Shares are traded through broker/dealers under the symbol “CSBB.OB” and through private transactions. The table below represents the range of high and low prices paid for transactions known to the Company. Management does not have knowledge of prices paid on all transactions. Because of the lack of an established market, these prices may not reflect the prices at which stock would trade in an active market. These quotations reflect inter-dealer prices, without mark-up, markdown or commission and may not represent actual transactions. The chart specifies cash dividends declared by the Company to its shareholders during 2002 and 2001. No assurances can be given that dividends will be declared, or if declared, what the amount of any such dividends will be.  Additional information concerning restrictions over the payment of dividends is included in Note 10 of the consolidated financial statements.

Quarter Ended	High	Low	Dividends Declared (1)
March 31, 2002	$20.00	$16.75	$            —
June 30, 2002	19.85	18.75	262,952
September 30, 2002	19.15	17.00	263,191
December 31, 2002	17.50	16.05	263,026
March 31, 2001	16.75	$15.00	$            —
June 30, 2001	19.00	15.75	—
September 30, 2001	16.95	13.10	—
December 31, 2001	16.00	13.25	262,465

(1) First quarter 2002 dividend of $0.05 was not approved by regulators until April 5, 2002. Therefore, it was considered   declared in second quarter. An additional $0.05 dividend was declared later in the second quarter.

As of December 31, 2002, CSB Bancorp, Inc. had approximately 1,219 shareholders and 2,630,258 outstanding shares of common stock.

TRANSFER AGENT

CSB Bancorp, Inc. acts as its own transfer agent for its common stock.

Winnie Ellis

CSB Bancorp, Inc.

6 West Jackson Street

Millersburg, Ohio 44654

Phone 330-674-9015 or 800-654-9015

ANNUAL AND OTHER REPORTS; SHAREHOLDER AND GENERAL INQUIRIES

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:

A. Lee Miller, Chief Financial Officer

CSB Bancorp, Inc.

6 West Jackson Street

Millersburg, Ohio 44654

Phone 330-674-9015 or 800-654-9015

The annual meeting of shareholders is currently scheduled to be Wednesday, April 23, 2003 at 7:00 pm at the Company’s Operations Center.

Report of Independent Auditors

Shareholders and Board of Directors

CSB Bancorp, Inc.

Millersburg, Ohio

We audited the accompanying consolidated balance sheets of CSB Bancorp, Inc. and subsidiary as of December 31, 2002 and 2001, and the related consolidated statements of income, shareholders’ equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. The consolidated statements of income, shareholders’ equity, and cash flows for the year ended December 31, 2000 of CSB Bancorp, Inc. and subsidiary were audited by other auditors whose report dated March 14, 2001, expressed an unqualified opinion on those financial statements.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the 2002 and 2001 consolidated financial statements referred to above present fairly, in all material respects, the financial position of CSB Bancorp, Inc. and subsidiary as of December 31, 2002 and 2001, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Clifton Gunderson LLP

Toledo, Ohio

January 31, 2003

Consolidated Balance Sheets

ASSETS	2002	2001
CASH AND CASH EQUIVALENTS
Cash and due from banks	$ 12,079,581	$ 10,509,626
Interest-earning deposits in other banks	192,115	185,893
Federal funds sold	10,293,000	23,853,000
Total cash and cash equivalents	22,564,696	34,548,519
SECURITIES
Available-for-sale, at fair value	22,671,668	33,448,120
Held-on-maturity, at amortized cost (fair value of $50,756,761 in 2002 and $58,549,665 in 2001)	47,822,882	56,675,126
Restricted stock, at cost	2,593,500	2,483,800
Total securities	73,088,050	92,607,046
LOANS	199,809,915	168,935,136
Less allowance for loan losses	2,700,643	4,019,302
Net loans	197,109,272	164,915,834
PREMISES AND EQUIPMENT, NET	9,070,238	9,340,570
ACCRUED INTEREST RECEIVABLE AND OTHER ASSETS	2,880,868	4,933,343
TOTAL ASSETS	$ 304,713,124	$ 306,345,312
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Deposits:
Noninterest-bearing	$  32,397,210	$   29,721,134
Interest-bearing	207,578,723	221,708,596
Total deposits	239,975,933	251,429,730
Securities sold under repurchase agreements	14,448,384	14,957,025
Federal Home Loan Bank borrowings	15,380,060	6,359,788
Accrued interest payable and other liabilities	1,166,463	877,632
Total liabilities	270,970,840	273,624,175
SHAREHOLDERS’ EQUITY
Common stock, $6.25 par value. Authorized 9,000,000 shares; issued 2,667,786 shares	$16,673,667	$ 16,673,667
Additional paid-in capital	6,413,915	6,413,915
Retained earnings	11,621,292	10,571,152
Treasury stock at cost - 37,528 shares in 2002 and 39,077 shares in 2001	(1,088,312)	(1,204,018)
Accumulated other comprehensive income	121,722	266,421
Total shareholders' equity	33,742,284	32,721,137
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 304,713,124	$ 306, 345,312

INTEREST AND DIVIDEND INCOME	2002	2001	2000
Loans, including fees	$12,639,261	$ 16,465,458	$ 20,115,631
Taxable securities	1,658,996	2,221,656	2,894,997
Non-taxable securities	2,190,103	2,406,972	2,453,521
Other	211,435	562,273	32,725
Total interest and dividend income	16,699,795	21,656,359	25,496,874
INTEREST EXPENSE
Deposits	5,764,027	10,717,243	11,220,253
Other	702,802	753,657	1,561,238
Total interest expense	6,466,829	11,470,900	12,781,491
Net interest income	10,232,966	10,185,459	12,715,383
PROVISION (CREDIT) FOR LOAN LOSSES	(586,521)	34,801	6,142,464
Net interest income, after provision (credit) for loan losses	10,819,487	10,150,658	6,572,919
NON-INTEREST INCOME
Service charges on deposit accounts	807,206	732,705	800,964
Merchant fees	212,109	243,225	252,319
Trust services	334,089	381,833	459,680
Securities gains	114,822	28,828	236
Gain on sale of loans	5,843	90,204	47,998
Other	562,992	498,799	457,667
Total non-interest income	2,037,061	1,975,594	2,018,864
NON-INTEREST EXPENSES
Salaries and employee benefits	5,554,344	5,279,958	4,429,679
Occupancy expense	622,037	645,607	541,537
Equipment expense	534,296	538,566	445,021
Franchise tax expense	377,274	358,546	381,276
Professional and director fees	868,257	1,634,110	789,639
Other expenses	3,042,202	3,147,387	2,603,399
Total non-interest expenses	10,998,410	11,604,174	9,190,551
Income (loss) before income taxes	1,858,138	522,078	(598,768)
FEDERAL INCOME TAX CREDIT	(65,000)	(537,000)	(919,661)
NET INCOME	$   1,923,138	$   1,059,078	$    320,893
NET INCOME PER SHARE
Basic and diluted	$               .73	$           .40	$          .12

These consolidated financial statements should be read only in connection with the accompanying summary of significant accounting policies and notes to consolidated financial statements.

Consolidated Statements of Income

CSB Bancorp, Inc. and Subsidiary | Years Ended December 31, 2002, 2001, and 2000

					Common Stock		Additional Paid-In Capital			Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (loss)					Total
BALANCE AT DECEMBER 31, 1999					$16,673,693		$6,387,800			$10,702,853		$(173,802)			$(388,866)		$33,201,678
			Comprehensive income: Net income		—		—			320,893		—			—		320,893
			Changes in net unrealized gain (loss), net of reclassification adjustments and related income taxes		—		—			—		—			339,634		339,634
			Total comprehensive income		—		—			—		—			—		660,527
			Common stock transactions under dividend reinvestment program		(26)		34,498			—		304,100			—		338,572
			Exercise of 1,800 stock options		—		(8,383)			—		38,500			—		30,117
			Cash dividends declared, $.45 per share		—		—			(1,183,730)		—			—		(1,183,730)
			Purchase of 48,842 treasury shares		—		—			—		(1,507,230)			—		(1,507,230)
BALANCE AT DECEMBER 31, 2000				16,673,667			6,413,915			9,840,016		(1,338,432)			(49,232)		31,539,934
			Comprehensive income: Net income	—			—			1,059,078		—			—		1,059,078
			Changes in net unrealized gain (loss), net of reclassification adjustments and related income taxes	—			—			—		—			315,653		315,653
			Total comprehensive income	—			—			—		—			—		1,374,731
			Shares issued from treasury under dividend reinvestment program	—			—			(60,227)		125,556			—		65,329
			Shares issued from treasury as employee compensation	—			—			(5,250)		9,052			—		3,802
			Purchase of 11 treasury shares	—			—			—		(194)			—		(194)
			Cash dividends declared, $.10 per share	—			—			(262,465)		—			—		(262,465)
	BALANCE AT DECEMBER 31, 2001					16,673,667			6,413,915		10,571,152		(1,204,018)			266,421		32,721,137
		Comprehensive income: Net income				—			—		1,923,138		—			—		1,923,138
		Changes in net unrealized gain (loss), net of reclassification adjustments and related income taxes				—		—			—		—			(144,699)		(144,699)
		Total comprehensive income				—		—			—		—			—		1,778,439
		Shares issued from treasury under dividend reinvestment program				—		—			(83,829)		203,434			—		119,605
		Purchase of 5,013 treasury shares				—		—			—		(87,728)			—		(87,728)
		Cash dividends declared, $.30 per share				—		—			(789,169)		—			—		(789,169)
	BALANCE AT DECEMBER 31, 2002					$16,673,667			$6,413,915		$11,621,292		$(1,088,312)			$121,722		$33,742,284

These consolidated financial statements should be read only in connection with the accompanying summary of significant accounting policies and notes to consolidated financial statements.

Consolidated Statements of Cash Flows

CSB Bancorp, Inc. and Subsidiary | Years Ended December 31, 2002, 2001, and 2000

CASH FLOWS FROM OPERATING ACTIVITIES				2002	2001	2000
	Net income			$1,923,138	$1,059,078	$320,893
	Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of premises and equipment			720,316	630,778	540,216
		Deferred income taxes		1,426,542	435,642	(1,436,845)
		Provision (credit) for loan losses		(586,521)	34,801	6,142,464
		Gain on sale of loans		(5,843)	(90,204)	(47,998)
		Securities gains		(114,822)	(28,828)	(236)
		Loss (gain) on sale of premises and equipment		(1,762)	30,913	—
		Shares issued from treasury as employee compensation		—	3,802	—
		Loss (gain) on sale of other real estate owned		3,350	(5,952)	(1,189)
		Security amortization and accretion		88,983	69,010	140,290
		Federal Home Loan Bank stock dividends		(109,700)	(145,000)	(147,200)
		Secondary market loan sale proceeds		3,871,289	7,139,958	2,722,633
		Originations of secondary market loans held-for-sale		(3,865,446)	(7,058,420)	(2,698,500)
		Effects of changes in operating assets and liabilities: Net deferred loan fees		(166,716)	(263,299)	(51,938)
			Accrued interest receivable	406,812	648,333	37,933
			Accrued interest payable	(184,174)	(151,233)	70,781
			Other assets and liabilities	557,806	(1,129,917)	135,769
	Net cash provided by operating activities			3,963,252	1,179,462	5,727,073

CASH FLOWS FROM INVESTING ACTIVITIES

Securities available-for-sale: Proceeds from maturities and repayments	31,129,822	26,665,843	4,000,000
Purchases	(20,497,528)	(34,770,000)	—
Securities held-to-maturity: Proceeds from maturities and repayments	8,803,000	12,630,000	6,328,950
Purchases	—	—	(969,782)
Proceeds from sale of loans	780,732	5,957,710	—
Loan originations, net of repayments	(32,605,933)	27,712,783	(9,586,848)
Proceeds from sale of other real estate	327,486	90,952	69,895
Proceeds from sale of premises and equipment	11,450	114,093	—
Property and equipment expenditures	(459,672)	(717,886)	(807,918)
Purchase of other real estate	—	(85,000)	—
Net cash provided by (used in) investing activities	(12,510,643)	37,598,495	(965,703)

These consolidated financial statements should be read only in connection with the accompanying summary of significant accounting policies and notes to consolidated financial statements.

CASH FLOWS FROM FINANCING ACTIVITIES	2002	2001	2000
Net change in deposits	$(11,453,797)	$(17,153,189)	$(1,356,523)
Net change in securities sold under repurchase agreements	(508,641)	(626,502)	2,747,973
Federal Home Loan Bank borrowings: Proceeds	10,000,000	—	—
Repayments	(979,728)	(2,105,039)	(1,245,004)
Purchase of treasury shares	(87,728)	(194)	(1,507,230)
Stock options exercised	—	—	30,117
Cash dividends paid	(406,538)	(197,136)	(845,158)
Net cash used in financing activities	(3,436,432)	(20,082,060)	(2,175,825)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(11,983,823)	18,695,897	2,585,545
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	34,548,519	15,852,622	13,267,077
CASH AND CASH EQUIVALENTS AT END OF YEAR	$22,564,696	$34,548,519	$15,852,622
SUPPLEMENTAL DISCLOSURES Cash paid during the year for: Interest	$6,651,003	$11,622,133	$12,710,710
Income taxes	$—	$—	$438,350
Loans transferred from held-for-sale to portfolio	$—	$—	$20,553,301
Non-cash investing activity – transfer of loans to other real estate owned	$385,000	$—	$—
Non-cash financing activity – payments of dividends through issuance of treasury shares in 2002 and 2001, and issuance of common shares in 2000, under dividend reinvestment program	$119,605	$65,329	$338,572

These consolidated financial statements should be read only in connection with the accompanying summary of significant accounting policies and notes to consolidated financial statements.

Summary of Significant Accounting Policies

CSB Bancorp, Inc. (the Company) was incorporated in 1991 in the State of Ohio as a one-bank holding company for its wholly-owned subsidiary, The Commercial and Savings Bank (the Bank). The Company, through its subsidiary, operates in one industry segment, the commercial banking industry.

The Bank, an Ohio chartered bank organized in 1879, provides financial services through its main office and eight branches located in Millersburg, Ohio, and nearby communities. These communities are the source of substantially all deposit, loan and trust activities. The majority of the Bank’s income is derived from commercial and retail lending activities and investments in securities. Its primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are residential mortgage, commercial, and installment loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets and real estate. Commercial loans are expected to be repaid from cash flow from operations of business. Real estate loans are secured by both residential and commercial real estate.

Significant accounting policies followed by the Company are presented below:

USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS

In preparing consolidated financial statements in conformity with generally accepted accounting principles management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during each reporting period. Actual results could differ from those estimates. The most significant area involving the use of management’s estimates and assumptions is the allowance for loan losses.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.

The Bank has established a trust department and the assets held by the Bank in fiduciary or agency capacities for its customers are not included in the consolidated balance sheets as such items are not assets of the Bank.

CASH AND CASH EQUIVALENTS

For purposes of the consolidated statements of cash flows, cash and cash equivalents include cash on hand, amounts due from banks, and federal funds sold which mature overnight or within three days.

CASH RESERVE REQUIREMENTS

The Bank is required by the Federal Reserve to maintain reserves consisting of cash on hand and noninterest-earning balances on deposit with the Federal Reserve Bank. The required reserve balance at December 31, 2002 and 2001 was $1,226,000 and $1,240,000, respectively.

SECURITIES

Securities are designated at the time of purchase as either held-to-maturity or available-for-sale. Securities designated as held-to-maturity are carried at their amortized cost. Securities designated as available-for-sale are carried at fair value, with unrealized gains and losses, net of applicable income taxes, on such securities recognized as other comprehensive income (loss).

The amortized cost of debt securities classified as held-to-maturity or available-for-sale is adjusted for amortization of premiums  and accretion of discounts to maturity. Such amortization and accretion is included in interest and dividends on securities.

Investment in Federal Home Loan Bank and Federal Reserve Bank stock is classified as a restricted security, carried at cost, and evaluated for impairment.

Gains and losses on sales of securities are accounted for on a completed transaction basis, using the specific identification method, and are included in noninterest income. Securities are written down to fair value when a decline in fair value is not temporary.

LOANS

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are stated at their outstanding principal amount, adjusted for charge-offs, the allowance for loan losses and any deferred loan fees or costs on originated loans.  Interest is accrued based upon the daily outstanding principal balance. Loan origination fees and certain direct origination costs are capitalized and recognized as an adjustment of the yield of the related loan.

Interest income is not reported when full repayment is in doubt, typically when the loan is impaired or payments are past due over 90 days. All interest accrued but not collected for loans that are placed on nonaccrual or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial, commercial real estate, and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest

rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Bank does not separately identify individual consumer and residential loans for impairment disclosures.

OTHER REAL ESTATE OWNED

Other real estate acquired through or in lieu of foreclosure is initially recorded at the lower of cost or fair value, less estimated costs to sell, and any loan balance in excess of fair value is charged to the allowance for loan losses. Subsequent valuations are periodically performed and writedowns are included in other operating expense, as are gains or losses upon sale and expenses related to maintenance of the properties.

PREMISES AND EQUIPMENT

Premises and equipment is stated at cost less accumulated depreciation and amortization. Upon the sale or disposition of the assets, the difference between the depreciated cost and proceeds is charged or credited to income. Depreciation and amortization is determined based on the estimated useful lives of the individual assets (typically 20 to 40 years for buildings and 3 to 10 years for equipment) and is computed using both accelerated and straight-line methods.

SERVICING

Mortgage servicing rights are recognized as an asset when acquired through sale of loans. Capitalized servicing rights are reported in other assets and are amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. Servicing assets are evaluated for impairment based upon the fair value of the rights as compared to amortized cost. Any impairment is recognized through a valuation allowance to the extent that fair value is less than the capitalized amount.

REPURCHASE AGREEMENTS

Substantially all securities sold under repurchase agreements represent amounts advanced by various customers. Securities are pledged to cover those obligations which are not covered by federal deposit insurance.

ADVERTISING COSTS

All advertising costs are expensed as incurred.

FEDERAL INCOME TAXES

Deferred income taxes are provided on temporary differences between financial statement and income tax reporting. Temporary differences are differences between the amounts of assets and liabilities, reported for financial statement purposes and their tax bases. Deferred tax assets are recognized for temporary differences that will be deductible in future years’ tax returns and for operating loss and tax credit carryforwards.  Deferred tax assets are reduced by a valuation allowance if it is deemed more likely than not that some or all of the deferred tax assets will not be realized. Deferred tax liabilities are recognized for temporary differences that will be taxable in future years’ tax returns.

The Bank is not currently subject to state and local income taxes.

STOCK-BASED COMPENSATION

Employee compensation expense under stock option plans is reported if options are granted below market price at the grant date. Pro forma disclosures of compensation cost of stock-based awards have been determined using the fair value method that considers the time value of the option considering the volatility of the Company’s stock and the risk-free interest rate over the expected life of the option using a Black-Scholes valuation model. Had compensation cost for stock options been measured using FASB Statement No. 123, net income and earnings per share would have been the pro forma amounts indicated below. The pro forma effect may increase in the future if more options are granted.

	2002	2001
Net income as reported	$1,923,138	$1,059,078
Pro forma net income	1,904,729	1,032,078
Basic earnings per share as reported	.73	.40
Pro forma basic earnings per share	.72	.39
Diluted earnings per share as reported	.73	.40
Pro forma diluted earnings per share	.72	.39
The pro forma effects are computed using option pricing methods, Using the following weighted-average assumptions as of grant date.
Risk-free interest rate	3.00%	3.50%
Expected option life	9.5 years	10.0 years
Dividend yield	2.50%	2.50%

COMPREHENSIVE INCOME

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income.

PER SHARE DATA

Basic net income per share is computed based on the weighted average number of shares of common stock outstanding during each year, after restatement for stock dividends. Diluted income per common share includes the dilutive effect of additional potential common shares issuable under stock options.

The weighted average number of common shares outstanding for basic and diluted earnings per share computations were as follows:

	2002	2001	2000
Weighted average common shares outstanding (basic)	2,630,931	2,625,241	2,628,998
Dilutive effect of assumed exercise of stock options	3,627	773	735
Weighted average common shares outstanding (diluted)	2,634,558	2,626,014	2,629,733

Dividends per share are based on the number of shares outstanding at the declaration date.

RECLASSIFICATIONS

Certain reclassifications of 2001 and 2000 amounts have been made to conform with the 2002 presentation.

This information is an integral part of the accompanying consolidated financial statements.

Notes To Consolidated Financial Statements

NOTE 1 - SECURITIES

Securities consist of the following at December 31, 2002 and 2001:

DECEMBER 31, 2002		Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
	Available-for-sale: Obligations of U.S. government corporations and agencies	$18,521,998	$153,478	$—	$18,675,476
	Mortgage-backed securities	3,338,616	14	—	3,338,630
	Corporate security	626,626	30,936	—	657,562
	Total available-for-sale	22,487,240	184,428	—	22,671,668
	Held-to-maturity: U.S. Treasury security	101,644	34,575	—	136,219
	Obligations of U.S. government corporations and agencies	7,000,912	183,148	—	7,184,060
	Obligations of states and political subdivisions	40,720,326	2,716,156	—	43,436,482
	Total held-to-maturity	47,822,882	2,933,879	—	50,756,761
	Restricted stock	2,593,500	—	—	2,593,500
	Total securities	$72,903,622	$3,118,307	$     —	$76,021,929

DECEMBER 31, 2001

Available-for-sale: Obligations of U.S. government corporations and agencies	$32,044,452	$402,000	$2,500	$32,443,952
Mortgage-backed security	1,000,000	4,168	—	1,004,168
Total available-for-sale	33,044,452	406,168	2,500	33,448,120
Held-to-maturity: U.S. Treasury security	101,685	21,753	—	123,438
Obligations of U.S. government corporations and agencies	8,002,596	282,090	—	8,284,686
Obligations of states and political subdivisions	48,570,845	1,575,495	4,799	50,141,541
Total held-to-maturity	56,675,126	1,879,338	4,799	58,549,665
Restricted stock	2,483,800	—	—	2,483,800
Total securities	$92,203,378	$2,285,506	$7,299	$94,481,585

NOTE 1 — SECURITIES (CONTINUED)

The amortized cost and fair value of securities at December 31, 2002, 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.

	Amortized Cost	Fair Value
Available-for-sale:
Due in one year or less	$    2,002,179	$    2,002,812
Due after one through five years	17,146,445	17,330,226
Mortgage-backed securities	3,338,616	3,338,630
Total available-for-sale	$ 22,487,240	$ 22,671,668
Held-to-maturity:
Due in one year or less	$   9,099,255	$   9,295,091
Due after one through five years	20,283,980	21,641,490
Due after five years through ten years	18,338,003	19,683,961
Due after ten years	101,644	136,219
Total held-to-maturity	$ 47,822,882	$ 50,756,761

Gains from sales of securities in 2002 amounted to $114,822 (there were no losses from sales of securities). All securities gains in 2001 and 2000 resulted from securities called or settled by the issuer, except for a $13,877 gain in 2001 resulting from recovery of a previous impairment write-off.  There were no securities sold during 2001 and 2000.

Securities with a carrying value of approximately $39,552,000 and $54,090,000 were pledged at December 31, 2002 and 2001, respectively, to secure public deposits, as well as other deposits and borrowings as required or permitted by law.

Restricted stock primarily consists of investments in Federal Home Loan Bank of Cincinnati and Federal Reserve Bank of Cleveland stock. The Bank’s investment in Federal Home Loan Bank stock amounted to $2,323,500 and $2,213,800 at December 31, 2002 and 2001, respectively.

NOTE 2 — LOANS

Loans consist of the following at December 31, 2002 and 2001:

	2002	2001
Commercial	$   74,907,083	$   68,180,330
Commercial real estate	41,665,397	31,170,301
Residential real estate	65,652,751	55,227,953
Installment and credit card	12,381,939	13,518,397
Construction	5,452,456	1,254,582
Deferred loan fees, net	(249,711)	(416,427)
Loans	$ 199,809,915	$ 168,935,136

The following represents a summary of the activity in the allowance for loan losses for the years ended December 31, 2002, 2001 and 2000:

	2002	2001	2000
Beginning balance	$  4,019,302	$ 7,460,370	$ 3,418,797
Provision (credit) for loan losses	(586,521)	34,801	6,142,464
Loans charged-off	(1,165,247)	(3,747,814)	(2,246,719)
Recoveries	433,109	271,945	145,828
Ending balance	$ 2,700,643	$ 4,019,302	$ 7,460,370

During 2002, the Bank sold certain commercial and commercial real estate loans with an outstanding principal balance aggregating approximately $1,275,000 and received total proceeds of $780,732, with a charge to the allowance for loan losses of approximately $494,000. There was no gain or loss recorded on the sales.

In 2001, the Bank reached an agreement to sell certain commercial and commercial real estate loans with an outstanding principal balance approximating $7,527,000. After recording a charge to the allowance for loan losses of $1,608,557, the Bank completed the sale in April 2001 resulting in proceeds of $5,957,710. There was no gain or loss recorded on the sale.

As a result of an increase in nonperforming loans during 2000 and a regulatory examination performed in the second quarter of 2000, management analyzed certain of its credits, resulting in increased loan charge-offs and specific and general allocation of its allowance for loan losses, which caused an increase in the provision for loan losses during the year. Certain of these credits were favorably resolved during 2002 and 2001, resulting in actual loan charge-offs being less than the specific allocations provided. As a result of these favorable outcomes, the Bank recognized a provision (credit) for loan losses of ($586,521) in 2002 and $34,801 in 2001.

Impaired loans were as follows:

	2002	2001
Year-end loans with no allowance for loan losses allocated	$         —	$   634,048
Year-end loans with allowance for loan losses allocated	915,705	3,669,122
Amount of the allowance allocated	239,270	1,061,291
	2002	2001	2000
Average of impaired loans during the year	$ 2,496,740	$ 9,707,662	$ 4,698,923
Interest income recognized during impairment	105,169	787,279	471,341
Cash-basis interest income recognized	105,169	766,353	376,832

Non-performing loans, including certain impaired loans and smaller balance homogenous loans such as residential mortgage and consumer loans that are collectively evaluated for impairment, were as follows at December 31, 2002 and 2001:

	2002	2001
Loans past due over 90 days still accruing interest	$           —	$   119,000
Nonaccrual loans	1,721,000	3,159,000

Loans serviced for others approximated $19,586,000 and $21,340,000 at December 31, 2002 and 2001, respectively.

NOTE 3 — PREMISES AND EQUIPMENT

Premises and equipment consist of the following at December 31, 2002 and 2001:

	2002	2001
Land and improvements	$    989,877	$    989,877
Buildings and improvements	8,442,336	8,439,259
Furniture and equipment	5,389,169	5,068,133
Leasehold improvements	79,979	79,979
	14,901,361	14,577,248
Accumulated depreciation	5,831,123	5,236,678
Premises and equipment, net	$ 9,070,238	$ 9,340,570

The Bank leases certain office locations. Total rental expense under these leases approximated $77,000, $67,000, and $66,000 in 2002, 2001, and 2000, respectively. Future minimum lease payments at December 31, 2002 are not material.

NOTE 4 — INTEREST-BEARING DEPOSITS

Interest-bearing deposits at December 31, 2002 and 2001 are as follows:

	2002	2001
Demand	$   50,785,182	$   44,161,183
Statement and passbook savings	37,976,444	34,686,712
Certificate of deposit
In excess of $100,000	28,747,123	32,086,238
Other	90,069,974	110,774,463
Total interest-bearing deposits	$ 207,578,723	$ 221,708,596
At December 31, 2002, stated maturities of time deposits were as follows:
2003	$  79,912,780
2004	22,312,966
2005	3,765,988
2006	4,166,365
2007 and beyond	8,658,998
Total	$ 118,817,097

NOTE 5 — BORROWINGS

During 2002, the Bank borrowed $10,000,000 from the Federal Home Loan Bank under a secured note, with interest at 3.44%, due in November 2003. The Bank also borrows from the Federal Home Loan Bank to fund certain fixed-rate residential real estate loans. Such borrowings carry fixed interest rates ranging from 5.60% to 7.15% at December 31, 2002 and 2001, with 10, 15 or 20 year maturities. Monthly principal and interest payments are due on the borrowings. In addition, a principal curtailment of 10% of outstanding principal balance is due on the anniversary date of each borrowing.

Future estimated principal payments on Federal Home Loan Bank borrowings, including curtailments, are as follows:

2003	$ 10,867,571
2004	767,247
2005	677,396
2006	568,442
2007	475,512
Thereafter	2,023,892
Total	$ 15,380,060

Federal Home Loan Bank borrowings are collateralized by the Bank’s Federal Home Loan Bank stock and certain qualifying mortgage loans.

Securities sold under agreements to repurchase generally mature within three months from the transaction date. Physical control is maintained for all securities sold under repurchase agreements. Information concerning securities sold under agreements to repurchase for 2002 and 2001 is as follows:

	2002	2001
Average balance during the year	$13,759,609	$12,929,824
Average interest rate during the year	.82%	2.11%
Maximum month-end balance during the year	$15,596,344	$16,890,022

NOTE 6 — INCOME TAXES

The credit for income taxes consists of the following for the years ended December 31, 2002, 2001 and 2000:

	2002	2001	2000
Current	$ (1,491,542)	$ (972,642)	$    517,184
Deferred	1,426,542	435,642	(1,436,845)
Total income tax credit	$     (65,000)	$ (537,000)	$ (919,661)

The significant components of the provision (credit) for deferred income taxes for the years ended December 31, 2002, 2001, and 2000, were as follows:

	2002	2001	2000
Tax effect of temporary differences, exclusive of item listed below	$   439,542	$ 435,642	$ (1,436,845)
Impact of change in tax law – Job Creation and Worker Assistance Act of 2002	987,000	—	—
Total deferred income tax provision (credit)	$ 1,426,542	$ 435,642	$ (1,436,845)

The enactment on March 9, 2002 of the Job Creation and Worker Assistance Act of 2002, enabled the Company to carryback net operating losses for a period of five years, as opposed to the normal two-year carryback period. Consequently, refundable income taxes at December 31, 2001, were increased and deferred tax assets decreased approximately $987,000 as a result of this tax law change.

The income tax credit attributable to income from operations differs from the amounts computed by applying the statutory federal income tax rate of 34% to income before income taxes as follows:

	2002	2001	2000
Expected provision (credit) using statutory federal income tax rate	$ 631,800	$  177,500	$ (203,581)
Tax-exempt income on state and municipal securities and political subdivision loans	(756,400)	(842,200)	(850,171)
Interest expense associated with carrying certain state and municipal securities and political subdivision loans	68,800	126,600	136,795
Other	(9,200)	1,100	(2,704)
Total income tax credit	$ (65,000)	$ (537,000)	$ (919,661)

The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities at December 31, 2002 and 2001, are as follows:

	2002	2001
Allowance for loan losses	$ 484,300	$ 1,025,400
Alternative minimum tax credit carryforwards	501,000	712,000
Net operating loss carryforward	—	523,600
Other	37,200	64,800
Deferred tax assets	1,022,500	2,325,800
Unrealized gain on securities available-for-sale	(62,705)	(137,247)
Depreciation of premises and equipment	(310,200)	(242,000)
Federal Home Loan Bank stock dividends	(294,300)	(258,500)
Deferred loan fees	(63,800)	(38,600)
Other	(34,495)	(40,453)
Deferred tax liabilities	(765,500)	(716,800)
Net deferred tax assets	$ 257,000	$ 1,609,000

At December 31, 2002, the Company has available alternative minimum tax credit carryforwards of approximately $501,000 which may be utilized in the future to the extent computed regular tax exceeds the alternative minimum tax.

The Company believes it is more likely than not that the benefit of deferred tax assets will be realized. Consequently, no valuation allowance for deferred tax assets is deemed necessary at December 31, 2002 and 2001.

Refundable income taxes approximated $685,000 and $1,113,000 at December 31, 2002 and 2001, respectively, and are included in other assets in the accompanying consolidated balance sheets. Such refundable income taxes primarily result from carryback claims and the December 31, 2001 amount does not reflect the impact of the aforementioned Job Creation and Worker Assistance Act of 2002.

NOTE 7 — EMPLOYEE BENEFITS

The Bank sponsors a contributory 401(k) profit-sharing plan covering substantially all employees who meet certain age and service requirements.  The Plan permits investing in the Company’s common stock subject to various limitations and provides for discretionary profit sharing and matching contributions. The discretionary profit sharing contribution is determined annually by the Board of Directors and amounted to 3% of each eligible participant’s compensation for 2002, 2001 and 2000. The Plan also provides for a 100% Bank match of participant contributions up to a maximum of 2% of each participant’s annual compensation. Expense under the Plan amounted to $197,000, $134,000 and $179,000 for 2002, 2001 and 2000, respectively.

Effective December 31, 2002, the Board of Directors granted to various officers and employees of the Bank, options to purchase a total of 14,660 shares of common stock under the Company’s Share Incentive Plan. The options are exercisable on the anniversary of the grant date in annual 20% increments. The exercise price for the options is the December 31, 2002 market price ($16.05 per share) and the options expire 10 years from the grant date.

On March 1, 2001, the Board of Directors granted options to purchase 20,000 shares of common stock at an exercise price of $15 per share to an executive officer.

The following summarizes stock options activity for the years ended December 31, 2002 and 2001:

	2002		2001
	Shares	Weighted Average  Exercise Price	Shares	Weighted Average  Exercise Price
Outstanding at beginning of year	20,000	$ 15.00	—	$      —
Granted	14,660	16.05	20,000	15.00
Exercised	—	—	—	—
Outstanding at end of year	34,660	$ 15.44	20,000	$ 15.00
Options exercisable at year end	20,000	$ 15.00	20,000	$ 15.00

NOTE 8 — FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Bank is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments are primarily loan commitments to extend credit and letters of credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amounts recognized in the consolidated balance sheets. The contract amount of these instruments reflects the extent of involvement the Bank has in these financial instruments.

The Bank’s exposure to credit loss in the event of the nonperformance by the other party to the financial instruments for loan commitments to extend credit and letters of credit is represented by the contractual amounts of these instruments. The Bank uses the same credit policies in making loan commitments as it does for on-balance sheet loans.

The following financial instruments whose contract amount represents credit risk were outstanding at December 31, 2002 and 2001:

	Contract Amount
	2002	2001
Commitments to extend credit	$48,290,000	$50,021,000
Letter of Credit	$185,000	$242,000

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. The Bank evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on management’s credit evaluation of the customer. Collateral held varies but may include accounts receivable; inventory; property,

plant and equipment; and income-producing commercial properties.

Letters of credit are written conditional commitments issued by the Bank to guarantee the performance of a customer to a third party and are reviewed for renewal at expiration. All letters of credit outstanding at December 31, 2002, are due on demand or expire in 2003. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Bank requires collateral supporting these commitments when deemed necessary.

NOTE 9 — RELATED-PARTY TRANSACTIONS

In the ordinary course of business, loans are granted to executive officers, directors and their related business interests. The following is an analysis of activity of related-party loans for the years ending December 31, 2002 and 2001:

	2002	2001
Balance at beginning of year	$ 2,622,121	$ 2,732,433
New loans and advances	5,274,233	1,815,941
Repayments, including loans sold	(1,597,266)	(1,926,253)
Balance at end of year	$ 6,299,088	$ 2,622,121

Deposits from executive officers, directors and their related business interests at December 31, 2002 and 2001 were approximately $2,340,000 and $3,147,000, respectively.

NOTE 10 — REGULATORY MATTERS

The Company (on a consolidated basis) and Bank are subject to various regulatory capital requirements administered by the federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company’s and Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of the assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt correc tive action provisions are not applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy require the Company and Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital to average assets (as defined). Management believes, as of December 31, 2002 and 2001, that the Company and Bank met all capital adequacy requirements to which they are subject.

As of December 31, 2002, the most recent notification from federal and state banking agencies categorized the Bank as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized”, an institution must maintain minimum total-risk based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following tables. There are no conditions or events since that notification that management believes have changed the Bank’s category.

The actual capital amounts and ratios of the Company and Bank as of December 31, 2002 and 2001, are also presented in the following table (dollars in thousands):

	Actual		Minimum Required for Capital Adequacy Purposes		Minimum Required  to be Well Capitalized Under Prompt Corrective Action Regulations
	Amount	Ratio	Amount	Ratio	Amount	Ratio
As of December 31, 2002
Total capital (to risk-weighted assets)
Consolidated	$ 36,080	18.3%	$ 15,910	8.0%	N/A	N/A
Bank	34,328	17.4	15,758	8.0	19,698	10.0%
Tier I capital (to risk-weighted assets)
Consolidated	33,615	17.1	7,955	4.0	N/A	N/A
Bank	31,863	16.2	7,879	4.0	11,819	6.0
Tier I capital (to average assets)
Consolidated	33,615	11.3	11,999	4.0	N/A	N/A
Bank	31,863	10.7	11,924	4.0	14,905	5.0

	Actual		Minimum Required for Capital Adequacy Purposes		Minimum Required  to be Well Capitalized Under Prompt Corrective Action Regulations
	Amount	Ratio	Amount	Ratio	Amount	Ratio
As of December 31, 2001
Total capital (to risk-weighted assets)
Consolidated	$ 34,792	18.6%	$ 15,006	8.0%	N/A	N/A
Bank	33,025	17.8	14,865	8.0	18,582	10.0%
Tier I capital (to risk-weighted assets)
Consolidated	32,448	17.3	7,503	4.0	N/A	N/A
Bank	30,681	16.5	7,433	4.0	11,149	6.0
Tier I capital (to average assets)
Consolidated	32,448	10.3	12,568	4.0	N/A	N/A
Bank	30,681	9.8	12,497	4.0	15,621	5.0

On November 22, 2000, the Company and Bank entered into a Written Agreement with the Federal Reserve Bank of Cleveland and the Ohio Division of Financial Institutions which, among other things, required the Company and Bank to complete a review of the Board of Directors and Management; make improvements in the lending function including, but not limited to, policies and procedures, documentation, and a plan for the reduction of adversely classified assets; and prepare new policies and procedures for internal audit, internal controls, asset/liability management, trust, and information technology. Under the Written Agreement, the Company and Bank could not declare or pay dividends without prior written approval of the regulators. The Company’s applications to declare a fourth quarter 2001 and a first quarter 2002 dividend were approved by its regulators.

In a June 17, 2002 letter, the Federal Reserve Bank of Cleveland and the Ohio Division of Financial Institutions informed the Company that the Written Agreement was terminated effective June 14, 2002.

The Company’s primary source of funds with which to pay dividends is dividends received from the Bank. The payment of dividends by the Bank to the Company is subject to restrictions by its regulatory agency. These restrictions generally limit  dividends to current and prior two years retained earnings. Also, dividends may not reduce capital levels below the minimum regulatory requirements disclosed above. Under these provisions, approximately $2,038,000 was available for dividends on January 1, 2003, without the need to obtain the approval of the State of Ohio Division of Financial Institutions.

NOTE 11 — CONDENSED PARENT COMPANY FINANCIAL INFORMATION

A summary of condensed financial information of the parent company as of December 31, 2002 and 2001 and for each of the three years in the period ended December 31, 2002 are as follows:

CONDENSED BALANCE SHEETS		2002	2001
ASSETS
Cash deposited with subsidiary bank		$   1,406,200	$   1,157,951
Investment in subsidiary bank		31,989,558	30,954,063
Security held-to-maturity		498,743	498,555
Other assets		110,809	110,568
Total assets		$ 34,005,310	$ 32,721,137
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liability – dividends payable		$      263,026	$             —
Shareholders’ equity:
Common stock		16,673,667	16,673,667
Additional paid-in capital		6,413,915	6,413,915
Retained earnings		11,621,292	10,571,152
Treasury stock		(1,088,312)	(1,204,018)
Accumulated other comprehensive income		121,722	266,421
Total shareholders’ equity		33,742,284	32,721,137
Total liabilities and shareholders’ equity		$ 34,005,310	$ 32,721,137
CONDENSED STATEMENTS OF INCOME	2002	2001	2000
Interest on security	$      24,837	$ 24,837	$ 24,837
Dividends from subsidiary	789,169	262,465	1,183,855
Total Income	814,006	287,302	1,208,692
Operating expenses	107,670	130,429	74,223
Income before taxes and undistributed
equity income of subsidiary	706,336	156,873	1,134,469
Income tax benefit	36,608	44,346	25,236
Equity income in subsidiary, net of dividends	1,180,194	857,859	(838,812)
Net income	$ 1,923,138	$ 1,059,078	$ 320,893

NOTE 11 — CONDENSED PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)

CONDENSED STATEMENTS OF CASH FLOW	2002	2001	2000
Cash flows from operating activities:
Net income	$ 1,923,138	$ 1,059,078	$ 320,893
Adjustments to reconcile net income to
cash provided by operations:
Shares issued from treasury as  employee compensation	—	3,802	—
Security accretion	(188)	(187)	(187)
Equity income in subsidiary, net of dividends	(1,180,194)	(857,859)	838,812
Change in other assets	(241)	(19,102)	(3,494)
Net cash from operating activities	742,515	185,732	1,156,024
Cash flows from financing activities:
Purchase of treasury shares	(87,728)	(194)	(1,507,230)
Stock options exercised	—	—	30,117
Cash dividends paid	(406,538)	(197,136)	(845,158)
Net cash from financing activities	(494,266)	(197,330)	(2,322,271)
Net change in cash	248,249	(11,598)	(1,166,247)
Cash at beginning of year	1,157,951	1,169,549	2,335,796
Cash at end of year	$ 1,406,200	$ 1,157,951	$ 1,169,549

NOTE 12 — OTHER COMPREHENSIVE INCOME

The components of other comprehensive income and related tax effects are as follows for the years ended December 31, 2002, 2001 and 2000:

	2002	2001	2000
Unrealized holding gains (losses) on available-for-sale securities	$ (104,419)	$ 507,089	$ 514,603
Less reclassification adjustment for securities gains recognized in income	(114,822)	(28,828)	—
Net unrealized holding gains (losses)	(219,241)	478,261	514,603
Tax effect	(74,542)	162,608	174,969
Other comprehensive income (loss)	$ (144,699)	$ 315,653	$ 315,653

NOTE 13 — FAIR VALUES OF FINANCIAL INSTRUMENTS

The estimated fair values of recognized financial instruments as of December 31, 2002 and 2001, are as follows (dollars in thousands):

	2002		2001
	Carrying Amounts	Fair Value	Carrying Amounts	Fair Value
Financial assets:
Cash and cash equivalents	$ 22,565	$ 22,565	$ 34,549	$ 34,549
Securities	73,088	76,022	92,607	94,482
Loans, net	197,109	201,040	164,916	169,533
Total	$ 292,762	$ 299,627	$ 292,072	$ 298,564
Financial liabilities:
Deposits	$ 239,976	$ 241,373	$ 251,430	$ 253,846
Securities sold under agreements to repurchase	14,448	14,448	14,957	14,957
Federal Home Loan Bank borrowings	15,380	17,341	6,360	7,659
Total	$ 269,804	$ 273,162	$ 272,747	$ 276,462

The preceding summary does not include accrued interest receivable, accrued interest payable, and other liabilities which are also considered financial instruments. The estimated fair value of such items is considered to be their carrying amount.

The Bank also has unrecognized financial instruments at December 31, 2002 and 2001. These financial instruments relate to commitments to extend credit and letters of credit. The contract amount of such financial instruments approximated to $48,475,000 at December 31, 2002 and $50,263,000 at December 31, 2001. Such amounts are also considered to be the estimated fair values.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments shown above:

Cash and cash equivalents

Fair value is determined to be the carrying amount for these items (which include cash on hand, due from banks, and federal funds sold) because they represent cash or mature in 90 days or less and do not represent unanticipated credit concerns.

Securities

The fair value of securities (both available-for-sale and held-to-maturity) is determined based on quoted market prices of the individual securities or, if not available, estimated fair value was obtained by comparison to other known securities with similar risk and maturity characteristics. Such value does not consider possible tax ramifications or estimated transaction costs.

Loans

Fair value for loans was estimated for portfolios of loan with similar financial characteristics. For adjustable rate loans, which reprice at least annually and generally possess low risk characteristics, the carrying amount is believed to be a reasonable estimate of fair value. For fixed rate loans, the fair value is estimated based on secondary market quotes from various dealers, considering weighted average rates and terms of the portfolio, adjusted for credit and interest rate risk inherent in the loans. Fair value for nonperforming loans is based on recent appraisals or estimated discounted cash flows.  The estimated value of credit card loans is based on existing loans and does not include the value that relates to estimated cash flows from new loans generated from existing cardholders over the remaining life of the portfolio.

Deposit liabilities

The fair value of core deposits, including demand deposits, savings accounts, and certain money market deposits, is the amount payable on demand.  The fair value of fixed-maturity certificates of deposit is estimated using the rates offered at year end for deposits of similar remaining maturities. The estimated fair value does not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the marketplace.

Other financial instruments

The fair value of commitments to extend credit and letters of credit is determined to be the contract amount since these financial  instruments generally represent commitments at existing rates. The fair value of federal funds purchased and securities sold under repurchase agreements is determined to be the carrying amount since these financial instruments represent obligations which are due on demand. The fair value of borrowed funds is determined based on a discounted cash flow analysis.

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.

NOTE 14 — CONTINGENT LIABILITIES

In the normal course of business, the Company and its subsidiary may be involved in various legal actions, but in the opinion of management and its legal counsel, the ultimate disposition of such matters is not expected to have a material adverse effect on the consolidated financial statements.

The Bank has entered into employment agreements with various officers. Upon the occurrence of certain types of termination of employment, the Bank may be required to make specified severance payments if termination occurs within a specified period of time, generally two years from the date of the agreement, or pursuant to certain change in control transactions.

NOTE 15 — QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is a summary of selected quarterly financial data (unaudited) for the years ended December 31, 2002 and 2001:

	Interest Income	Net Interest Income	Net Income (Loss)	Basic and Diluted Earnings per Common Share
2002
First quarter	$ 4,314,450	$ 2,409,113	$ 376,389	$ .14
Second quarter	4,171,423	2,487,271	504,858	.19
Third quarter	4,126,898	2,609,171	635,657	.24
Fourth quarter	4,087,024	2,727,411	406,234	.16
2001
First quarter	6,030,663	2,869,830	307,686	.12
Second quarter	5,586,855	2,587,570	(1,357,512)	(0.52)
Third quarter	5,298,180	2,431,148	1,856,052	0.71
Fourth quarter	4,740,661	2,296,911	252,852	0.09

This information is an integral part of the accompanying consolidated financial statements.

EX-21

EXHIBIT 21

SUBSIDIARY OF CSB BANCORP, INC.

The Commercial and Savings Bank, Millersburg, Ohio, an Ohio-chartered commercial bank (100% owned).

EX-23

EXHIBIT 23.1

CONSENT OF CLIFTON GUNDERSON LLP

We hereby consent to the incorporation by reference in the prospectuses constituting part of the registration statements on Form S-3 for the CSB Bancorp, Inc. Share Owner Dividend Reinvestment Plan and on Form S-8 for The Commercial & Savings Bank of Millersburg Profit Sharing and 401(k) Savings Retirement Plan and Trust of our report dated January 31, 2003 on the consolidated balance sheet of CSB Bancorp, Inc. as of December 31, 2002 and 2001 and the related consolidated statements of income, shareholders’ equity and cash flows for the years then ended, which report is incorporated by reference in this Form 10-K.

/s/   CLIFTON GUNDERSON LLP

CLIFTON GUNDERSON LLP

Toledo, Ohio

March 28, 2003

EX-23

EXHIBIT 23.2

CONSENT OF INDEPENDENT AUDITORS

We  hereby  consent  to  the incorporation by reference in the prospectuses constituting  part of the registration statements on Form S-3 for the CSB Bancorp,  Inc.  Share  Owner Dividend Reinvestment Plan and on Form S-8 for

The  Commercial  &  Savings  Bank  of Millersburg Profit Sharing and 401(k) Savings Retirement Plan and Trust of our report dated March 14, 2001 on the consolidated statements of income, changes in shareholders' equity and cash

flows for the year ended December 31, 2000, which report is incorporated by reference in this Annual Report on Form 10-K of CSB Bancorp, Inc. for the year ended December 31, 2002.

/s/   Crowe, Chizek and Company LLP

Crowe, Chizek and Company LLP

Columbus, Ohio

March 31, 2003

EX-24

EXHIBIT 24

LIMITED POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, RONALD E. HOLTMAN, does hereby make, constitute and appoint as his lawful attorney-in-fact, C. James Bess, whose address is 6 West Jackson Street, Millersburg, Ohio 44654, for him and in his stead the full power and authority to sign and file on his behalf, the Form 10-K of CSB Bancorp, Inc. for the period ending December 31, 2001 and any and all amendments thereto filed with the Securities and Exchange Commission.

The attorney-in-fact is hereby authorized to do and perform all and every act and thing whatsoever requisite and necessary to be done in connection with the limited powers granted to him hereunder, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power and substitution and revocation, hereby ratifying all that the attorney-in-fact shall do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this 27th day of March, 2003.

  /s/ RONALD E. HOLTMAN

Ronald E. Holtman

887856_1.DOC

LIMITED POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, SAMUEL M. STEIMEL, does hereby make, constitute and appoint as his lawful attorney-in-fact, C. James Bess, whose address is 6 West Jackson Street, Millersburg, Ohio 44654, for him and in his stead the full power and authority to sign and file on his behalf, the Form 10-K of CSB Bancorp, Inc. for the period ending December 31, 2001 and any and all amendments thereto filed with the Securities and Exchange Commission.

The attorney-in-fact is hereby authorized to do and perform all and every act and thing whatsoever requisite and necessary to be done in connection with the limited powers granted to him hereunder, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power and substitution and revocation, hereby ratifying all that the attorney-in-fact shall do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this 27th day of March, 2003.

  /s/ SAMUEL M. STEIMEL

Samuel M. Steimel

887856_1.DOC

LIMITED POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, ROBERT K. BAKER, does hereby make, constitute and appoint as his lawful attorney-in-fact, C. James Bess, whose address is 6 West Jackson Street, Millersburg, Ohio 44654, for him and in his stead the full power and authority to sign and file on his behalf, the Form 10-K of CSB Bancorp, Inc. for the period ending December 31, 2001 and any and all amendments thereto filed with the Securities and Exchange Commission.

The attorney-in-fact is hereby authorized to do and perform all and every act and thing whatsoever requisite and necessary to be done in connection with the limited powers granted to him hereunder, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power and substitution and revocation, hereby ratifying all that the attorney-in-fact shall do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this 27th day of March, 2003.

  /s/ ROBERT K. BAKER

Robert K. Baker

887856_1.DOC

LIMITED POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, J. THOMAS LANG, does hereby make, constitute and appoint as his lawful attorney-in-fact, C. James Bess, whose address is 6 West Jackson Street, Millersburg, Ohio 44654, for him and in his stead the full power and authority to sign and file on his behalf, the Form 10-K of CSB Bancorp, Inc. for the period ending December 31, 2001 and any and all amendments thereto filed with the Securities and Exchange Commission.

The attorney-in-fact is hereby authorized to do and perform all and every act and thing whatsoever requisite and necessary to be done in connection with the limited powers granted to him hereunder, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power and substitution and revocation, hereby ratifying all that the attorney-in-fact shall do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this 27th day of March, 2003.

  /s/ J. THOMAS LANG

J. Thomas Lang

887856_1.DOC

LIMITED POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, DANIEL J. MILLER, does hereby make, constitute and appoint as his lawful attorney-in-fact, C. James Bess, whose address is 6 West Jackson Street, Millersburg, Ohio 44654, for him and in his stead the full power and authority to sign and file on his behalf, the Form 10-K of CSB Bancorp, Inc. for the period ending December 31, 2001 and any and all amendments thereto filed with the Securities and Exchange Commission.

The attorney-in-fact is hereby authorized to do and perform all and every act and thing whatsoever requisite and necessary to be done in connection with the limited powers granted to him hereunder, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power and substitution and revocation, hereby ratifying all that the attorney-in-fact shall do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this 27th day of March, 2003.

  /s/ DANIEL J. MILLER

Daniel J. Miller

887856_1.DOC

LIMITED POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, JEFFREY A. ROBB, SR., does hereby make, constitute and appoint as his lawful attorney-in-fact, C. James Bess, whose address is 6 West Jackson Street, Millersburg, Ohio 44654, for him and in his stead the full power and authority to sign and file on his behalf, the Form 10-K of CSB Bancorp, Inc. for the period ending December 31, 2001 and any and all amendments thereto filed with the Securities and Exchange Commission.

The attorney-in-fact is hereby authorized to do and perform all and every act and thing whatsoever requisite and necessary to be done in connection with the limited powers granted to him hereunder, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power and substitution and revocation, hereby ratifying all that the attorney-in-fact shall do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this 27th day of March, 2003.

  /s/ JEFFREY A. ROBB, SR.

Jeffrey A. Robb, Sr.

887856_1.DOC

LIMITED POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, JOHN R. WALTMAN, does hereby make, constitute and appoint as his lawful attorney-in-fact, C. James Bess, whose address is 6 West Jackson Street, Millersburg, Ohio 44654, for him and in his stead the full power and authority to sign and file on his behalf, the Form 10-K of CSB Bancorp, Inc. for the period ending December 31, 2001 and any and all amendments thereto filed with the Securities and Exchange Commission.

The attorney-in-fact is hereby authorized to do and perform all and every act and thing whatsoever requisite and necessary to be done in connection with the limited powers granted to him hereunder, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power and substitution and revocation, hereby ratifying all that the attorney-in-fact shall do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this 27th day of March, 2003.

  /s/ JOHN R. WALTMAN

John R. Waltman

887856_1.DOC

LIMITED POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, EDDIE L. STEINER, does hereby make, constitute and appoint as his lawful attorney-in-fact, C. James Bess, whose address is 6 West Jackson Street, Millersburg, Ohio 44654, for him and in his stead the full power and authority to sign and file on his behalf, the Form 10-K of CSB Bancorp, Inc. for the period ending December 31, 2001 and any and all amendments thereto filed with the Securities and Exchange Commission.

The attorney-in-fact is hereby authorized to do and perform all and every act and thing whatsoever requisite and necessary to be done in connection with the limited powers granted to him hereunder, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power and substitution and revocation, hereby ratifying all that the attorney-in-fact shall do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this 27th day of March, 2003.

  /s/ EDDIE L. STEINER

Eddie L. Steiner

887856_1.DOC

LIMITED POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, F. JOANNE VINCENT, does hereby make, constitute and appoint as her lawful attorney-in-fact, C. James Bess, whose address is 6 West Jackson Street, Millersburg, Ohio 44654, for her and in her stead the full power and authority to sign and file on her behalf, the Form 10-K of CSB Bancorp, Inc. for the period ending December 31, 2001 and any and all amendments thereto filed with the Securities and Exchange Commission.

The attorney-in-fact is hereby authorized to do and perform all and every act and thing whatsoever requisite and necessary to be done in connection with the limited powers granted to her hereunder, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power and substitution and revocation, hereby ratifying all that the attorney-in-fact shall do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set her hand as of this 27th day of March, 2003.

  /s/ F. JOANNE VINCENT

F. Joanne Vincent

887856_1.DOC

LIMITED POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, A. LEE MILLER, does hereby make, constitute and appoint as his lawful attorney-in-fact, C. James Bess, whose address is 6 West Jackson Street, Millersburg, Ohio 44654, for him and in his stead the full power and authority to sign and file on his behalf, the Form 10-K of CSB Bancorp, Inc. for the period ending December 31, 2001 and any and all amendments thereto filed with the Securities and Exchange Commission.

The attorney-in-fact is hereby authorized to do and perform all and every act and thing whatsoever requisite and necessary to be done in connection with the limited powers granted to him hereunder, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power and substitution and revocation, hereby ratifying all that the attorney-in-fact shall do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this 27th day of March, 2003.

  /s/ A. LEE MILLER

A. Lee Miller

887856_1.DOC

LIMITED POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, PAMELA S. BASINGER, does hereby make, constitute and appoint as her lawful attorney-in-fact, C. James Bess, whose address is 6 West Jackson Street, Millersburg, Ohio 44654, for her and in her stead the full power and authority to sign and file on her behalf, the Form 10-K of CSB Bancorp, Inc. for the period ending December 31, 2001 and any and all amendments thereto filed with the Securities and Exchange Commission.

The attorney-in-fact is hereby authorized to do and perform all and every act and thing whatsoever requisite and necessary to be done in connection with the limited powers granted to her hereunder, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power and substitution and revocation, hereby ratifying all that the attorney-in-fact shall do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set her hand as of this 27th day of March, 2003.

  /s/ PAMELA S. BASINGER

Pamela S. Basinger

887856_1.DOC

EX-99

EXHIBIT 99.1

Certification Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of CSB Bancorp, Inc. (the "Company") on Form 10-K for the fiscal year ended December  31, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, C. James Bess, Chairman of the Board, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ C. James Bess

C. James Bess

Chairman of the Board, President and Chief Executive Officer

March 27, 2003

EX-99

EXHIBIT 99.2

Certification Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of CSB Bancorp, Inc. (the "Company") on Form 10-K for the fiscal year ended December  31, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, A. Lee Miller, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ A. Lee Miller

A. Lee Miller

Senior Vice President and

Chief Financial Officer

March 27, 2003