10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:  MARCH 31, 2003

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Commission file number:

0-21714

CSB Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Ohio

34-1687530

(State or other jurisdiction of

(I.R.S. Employer Identification Number)

incorporation or organization)

6 W. Jackson Street, P.O. Box 232, Millersburg, Ohio 44654

(Address of principal executive offices)

(330) 674-9015

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes (X)

No (  )

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

Yes (  )

No (X)

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

Outstanding at April 28, 2003:

2,636,659 common shares

CSB BANCORP, INC.

FORM 10-Q

QUARTER ENDED MARCH 31, 2003

Table of Contents

Part I - Financial Information

ITEM 1 - FINANCIAL STATEMENTS

Page

Consolidated Balance Sheets

3

Consolidated Statements of Income

4

Condensed Consolidated Statements of Shareholders' Equity

5

Condensed Consolidated Statements of Cash Flows

6

Note to Consolidated Financial Statements

7

ITEM 2 -

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

8

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

11

ITEM 4 – CONTROLS AND PROCEDURES……………………………………………….    12

Part II - Other Information

Other Information

12

Signatures

13

CSB BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31, 2003	December 31, 2002
ASSETS
Cash and due from banks	$14,063,047	$12,079,581
Interest-bearing deposits with other banks	137,335	192,115
Federal funds sold	---	10,293,000
Total cash and cash equivalents	14,200,382	22,564,696
Securities available-for-sale, at fair value	20,368,939	22,671,668
Securities held-to-maturity (Fair value of $49,111,990 in 2003 and $50,756,761 in 2002)	46,251,625	47,822,882
Restricted stock, at cost	2,619,800	2,593,500
Total securities	69,240,364	73,088,050
Loans, net of allowance for loan losses of $2,560,959 in 2003 and $2,700,643 in 2002	206,153,962	197,109,272
Premises and equipment, net	8,980,075	9,070,238
Accrued interest receivable and other assets	3,203,161	2,880,868
Total assets	$301,777,944	$304,713,124
LIABILITIES
Deposits
Noninterest-bearing	$31,367,623	$32,397,210
Interest-bearing	202,249,267	207,578,723
Total deposits	233,616,890	239,975,933
Securities sold under repurchase agreements	13,276,228	14,448,384
Federal funds purchased	4,601,000	---
Federal Home Loan Bank borrowings	15,044,635	15,380,060
Accrued interest payable and other liabilities	1,198,484	1,166,463
Total liabilities	267,737,237	270,970,840
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	11,853,189	11,621,292
Treasury stock at cost: 34,976 shares in 2003 and 37,528 shares in 2002	(997,243)	(1,088,312)
Accumulated other comprehensive income	97,179	121,722
Total shareholders' equity	34,040,707	33,742,284
Total liabilities and shareholders' equity	$301,777,944	$304,713,124

See note to consolidated financial statements.

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended March 31,
	2003	2002
Interest income
Loans, including fees	$3,173,099	$3,150,995
Taxable securities	292,932	526,684
Non-taxable securities	483,777	575,104
Other	9,340	61,667
Total interest income	3,959,148	4,314,450
Interest expense
Deposits	1,027,368	1,794,590
Other	198,946	110,747
Total interest expense	1,226,314	1,905,337
Net interest income	2,732,834	2,409,113
Provision (credit) for loan losses	(71,000)	---
Net interest income after provision for loan losses	2,803,834	2,409,113
Non-interest income
Service charges on deposit accounts	185,360	209,125
Gain on sale of securities	---	114,822
Trust and financial services	93,141	93,318
Other income	189,193	165,026
Total non-interest income	467,694	582,291
Non-interest expenses
Salaries and employee benefits	1,308,711	1,352,568
Occupancy expense	168,602	149,367
Equipment expense	129,034	138,708
State franchise tax	104,095	92,296
Professional and director fees	182,811	206,331
Other expenses	699,443	759,430
Total non-interest expenses	2,592,696	2,698,700
Income before income taxes	678,832	292,704
Federal income tax provision (credit	81,000	(83,685)
Net income	$597,832	$376,389
Basic and diluted earnings per share	$  0.23	$  0.14

See note to consolidated financial statements.

CSB BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

	Three Months Ended March 31,
	2003	2002
Balance at beginning of period	$33,742,284	$32,721,137
Net income	597,832	376,389
Other comprehensive income, net of income tax	(24,543)	(254,476)
Total comprehensive income	573,289	121,913
Issuance of shares from treasury under dividend reinvestment program (3,554 shares)	59,106	---
Purchase of treasury shares (1,002 shares in 2003 and 4 shares in 2002)	(18,035)	(80)
Cash dividends declared, $0.12 per share	(315,937)	---
Balance at end of period	$34,040,707	$32,842,970

See note to consolidated financial statements.

CSB BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended March 31,
	2003	2002
Net cash from operating activities	$442,001	$ (330,101)
Cash flows from investing activities
Securities available-for-sale
Proceeds from maturities, calls, and repayments	10,597,000	7,128,000
Proceeds from sales	---	3,125,516
Purchases	(8,339,602)	(4,600,000)
Securities held to maturity
Proceeds from maturities, calls and repayments	1,565,000	1,555,000
Purchases	---	---
Net change in loans	(9,083,786)	(1,697,309)
Premises and equipment expenditures	(57,348)	(194,301)
Net cash from investing activities	(5,318,736)	5,316,906
Cash flows from financing activities
Net change in deposits	(6,359,043)	(16,730,444)
Net change in securities sold under repurchase agreements	(1,172,156)	(1,115,579)
Net change in federal funds purchased	4,601,000	---
Principal payments on FHLB borrowings	(335,425)	(384,938)
Purchase of treasury shares	(18,035)	(80)
Cash dividends paid	(203,920)	---
Net cash from financing activities	(3,487,579)	(18,231,041)
Net change in cash and cash equivalents	(8,364,314)	(13,244,236)
Cash and cash equivalents at beginning of period	22,564,696	34,548,519
Cash and cash equivalents at end of period	$14,200,382	$21,304,283
Supplemental disclosures
Interest paid	$1,206,156	$1,959,994
Income taxes paid	---	---

See note to consolidated financial statements.

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

The consolidated financial statements have been prepared without audit.  In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the Company’s financial position at March 31, 2003, and the results of operations and changes in cash flows for the periods presented have been made.

Certain information and footnote disclosures typically included in financial statements prepared in accordance with generally accepted accounting principles have been omitted.  The Annual Report for CSB for the year ended December 31, 2002, contains consolidated financial statements and related footnote disclosures which should be read in conjunction with the accompanying consolidated financial statements.  The results of operations for the period ended March 31, 2003, are not necessarily indicative of the operating results for the full year or any future interim period.

CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

The following discussion focuses on the consolidated financial condition of CSB Bancorp, Inc. (the Company) at March 31, 2003, compared to December 31, 2002, and the consolidated results of operations for the quarterly period ending March 31, 2003 compared to the same period in 2002.  The purpose of this discussion is to provide the reader with a more thorough understanding of the consolidated financial statements.  This discussion should be read in conjunction with the interim consolidated financial statements and related footnotes.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this report that are not historical facts are forward-looking statements that are subject to certain risks and uncertainties.  When used herein, the terms “anticipates”, “plans”, “expects”, “believes”, and similar expressions as they relate to the Company or its management are intended to identify such forward-looking statements.  The Company’s actual results, performance or achievements may materially differ from those expressed or implied in the forward-looking statements.  Risks and uncertainties that could cause or contribute to such material differences include, but are not limited to, general economic conditions, interest rate environment, competitive conditions in the financial services industry, changes in law, governmental policies and regulations, and rapi dly changing technology affecting financial services.

The Company does not undertake, and specifically disclaims any obligation, to publicly revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

FINANCIAL CONDITION

Total assets were $301.8 million at March 31, 2003, compared to $304.7 million at December 31, 2002, representing a decrease of $2.9 million, or 1.0%. Cash and cash equivalents decreased $8.4 million, or 37.1%, during the quarter, including a $10.3 million decrease in federal funds sold. Total securities decreased approximately $3.8 million, or 5.3%, during the quarter.  Since one of the primary functions of the securities portfolio is to provide a source of liquidity, it is structured such that securities maturities and cash flows satisfy the Company’s liquidity needs and asset-liability management requirements.  

The decreases in cash and cash equivalents and securities were used to fund cash outflows for deposit withdrawals and securities sold under agreements to repurchase which decreased $6.4 million, or     2.6%, and $1.2 million, or 8.1%, respectively, during the quarter.  The Bank has historically experienced an outflow of deposit funds during the first quarter of the year, partially due to the slowdown in tourism.

CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Net loans increased $9.0 million, or 4.6% from December 31, 2002, to $206.2 million at March 31, 2003.  The loan growth in the first quarter of 2003 was primarily in commercial and commercial real estate loans and residential real estate loans. The allowance for loan losses amounted to $2.6 million, or 1.23% of total loans, at March 31, 2003, compared to $2.7 million, or 1.35% of total loans at December 31, 2002.  The components of the change in the allowance for loan loss during the quarter ended March 31, 2003, included net loan charge-offs of $69,000.  Loans past due more than 90 days and loans placed on nonaccrual status, were approximately $1.3 million, or 0.60% of total loans at March 31, 2003, compared to $1.7 million, or 0.86% of loans at December 31, 2002.  

At March 31, 2003, the ratio of net loans to deposits was 88.2%, compared to 82.1% at the end of 2002. The increase in this ratio is due to deposit shrinkage normally experienced during the first quarter along with the loan growth during the three months ended March 31, 2003.

Total shareholders’ equity increased to $34.0 million, or 11.3% of total assets, primarily due to year-to-date net income of $598,000, less the dividend declared of $316,000.  The Company and its subsidiary met all regulatory capital requirements at March 31, 2003.  

RESULTS OF OPERATIONS

Net income for the quarter ending March 31, 2003, was $598,000, or $0.23 per share, as compared to $376,000, or $0.14 per share during the same period last year, an increase of $222,000, or 58.8%.  The increase was a result of a $324,000, or 13.4%, increase in net interest income and a $106,000, or 3.9%, decrease in non-interest expenses, and a $71,000 credit for loan losses. These increases to net income were partially offset by a $115,000, or                           19.7%, decrease in non-interest income.  The decrease in non-interest income was essentially all due to a $115,000 gain on sale of securities in the first quarter of 2002.

Interest income for the quarter ended March 31, 2003 was $4.0 million, a decrease of $355,000, or 8.2%, over the same period last year.  Interest and fees on loans increased $22,000, or 0.7%, with the volume of loan growth more than offsetting the decrease in loan interest yields.  Interest on securities decreased $325,000, or 29.5%, as short term interest rates remained at historically low levels and certain callable securities were redeemed by the issuer.  Other interest income decreased $52,000, or 84.9%, due to federal funds sold being invested to fund growth of the loan portfolio.

CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Interest expense decreased $679,000, or 35.6%, to $1.2 million for the quarter ended March 31, 2003, compared to $1.9 million for the quarter ended March 31, 2002.  Interest expense on deposits decreased $767,000, or 42.8%, from the same period as last year.  This decrease was caused by a $5.3 million, or 2.2%, decrease in interest-bearing deposits, as well as higher rate certificate of deposits renewing at lower rates.

A credit for loan losses of $71,000 was recorded during the first quarter of 2003, as a result of an improvement in asset quality through the reduction and payoff of classified assets.

Non-interest income decreased $115,000 primarily as a result of the gain on sale of investment securities during the 2002 period, as noted previously.

Non-interest expenses decreased $106,000, or 3.9%, for the three months ended March 31, 2003, compared to the same period in 2002.  Salaries and employee benefits decreased $44,000, or 3.2%; occupancy expense increased $19,000, or 12.9%; professional and director fees decreased $24,000, or 11.4%; and other expenses decreased $60,000 or 7.9%. The provision for income taxes was $81,000 during the first quarter of 2003, as compared to a credit of $84,000 for the first quarter of 2002.  

CSB BANCORP, INC.

QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK

ITEM 3  QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK

There have been no material changes in the quantitative and qualitative disclosures about market risks as of March 31, 2003 from that presented in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002.  Management performs a quarterly analysis of the Company’s interest rate risk.  All positions are currently within the Board-approved policy limits.

ITEM 4.  

CONTROLS AND PROCEDURES

The Chief Executive Officer and the Chief Financial Officer of the Company have reviewed, as of a date within ninety days of this filing, the disclosure controls and procedures that ensure that information relating to the Company required to be disclosed by the Company in the reports that it files or submits under the Securities and Exchange Act of 1934, as amended, is recorded, processed, summarized and reported in a timely and proper manner.  Based upon this review, the Company believes that there are adequate controls and procedures in place.  There are no significant changes in the internal controls or other factors that could affect the internal controls after the date of the evaluation.

CSB BANCORP, INC.

FORM 10-Q

Quarter ended March 31, 2003

PART II – OTHER INFORMATION

Item 1 -

Legal Proceedings:

There are no matters required to be reported under this item.

Item 2 -

Changes in Securities and Use of Proceeds:

There are no matters required to be reported under this item.

Item 3 -

Defaults Upon Senior Securities:

There are no matters required to be reported under this item.

Item 4 -

Submission of Matters to a Vote of Security Holders:

There are no matters required to be reported under this item.

Item 5 -

Other Information:

There are no matters required to be reported under this item.

Item 6 -

Exhibits 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)
10	Third amendment to Employment Agreement between CSB Bancorp, Inc. and C. James Bess
11	Statement Regarding Computation of Per Share Earnings (reference is hereby made to Consolidated Statements of Income on page 4 hereof.)
99	CEO / CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b)

Reports on Form 8-K:  

Form 8-K dated January 10, 2003, containing a quarterly report to shareholders regarding fourth quarter 2002 earnings and announcing a dividend to shareholders.

Form 8-K dated January 24, 2003, containing a quarterly report to shareholders that included financial statements for the period ended December 31, 2002.

SIGNATURES

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

CSB BANCORP, INC.

(Registrant)

Date:  May 12, 2003

/s/ C. JAMES BESS

C. James Bess

President

Chief Executive Officer

Date:  May 12, 2003

/s/ A. LEE MILLER

A. Lee Miller

Senior Vice President

Chief Financial Officer

CERTIFICATIONS

President and Chief Executive Officer

I, C. James Bess, certify that:

1.

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

2.

Based on my knowledge, this quarterly 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;

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report;

4.

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:

a)

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 quarterly report is being prepared;

b)

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 quarterly report (the "Evaluation Date"); and

c)

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

5.

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):

a)

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 quarterly 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: May 12, 2003

/s/ C. JAMES BESS

C. James Bess

President and

Chief Executive Officer

CSB BANCORP, INC.

Senior Vice President and Chief Financial Officer

I, A. Lee Miller, certify that:

1.

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

2.

Based on my knowledge, this quarterly 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;

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report;

4.

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:

a)

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 quarterly report is being prepared;

b)

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 quarterly report (the "Evaluation  Date"); and

c)

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

5.

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):

a)

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 quarterly 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: May 12, 2003

/s/ A. LEE MILLER

A. Lee Miller

Senior Vice President and

Chief Financial Officer

EX-10

THIRD AMENDMENT TO EMPLOYMENT AGREEMENT

This Third Amendment to Employment Agreement (the "Third Amendment") is made as of the 2nd day of May, 2003 by and between The Commercial and Savings Bank of Millersburg, an Ohio state bank with its principal office at 6 West Jackson Street, Millersburg, Ohio   44654 ("Bank") and C. James Bess, a resident of Ohio ("Employee").

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

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

WHEREAS, Bank and Employee entered into a Second Amendment to Employment Agreement dated the 25th day of April, 2002 (the "Second Amendment"); and

WHEREAS, Bank and Employee wish to further amend the Agreement, as amended by the First Amendment and the Second Amendment.

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 4.1 of the Agreement, as amended by the First Amendment, is deleted and replaced in its entirety as follows:

4.1  Term.  Employee shall be employed until July 31, 2003 at which time such employment shall terminate.  Employee agrees to execute a resignation on July 31, 2003 pursuant to which he shall resign any and all offices held (i) with Bank, including the office of Chief Executive Officer, and (ii) with CSB Bancorp, Inc. ("CSB"), the parent corporation of Bank.

2.

Resignation.  At any time after the date hereof, Employee agrees, upon request of the Board of Directors of Bank, to resign as the President of Bank and CSB.  The provisions of Section 1 of the Agreement are hereby amended as of the effective date of such resignation by deleting the office of President from that Section 1.  Employee further agrees that upon such resignation Bank may appoint another employee of Bank as President of Bank (and CSB) and that the successor President shall assume and perform all services and duties customarily accompanying that position.

3.

Good Reason.  Bank and Employee agree that (i) the resignation of Employee as President and/or Chief Executive Officer, (ii) the appointment of another employee of Bank as President or Chief Executive Officer of Bank (and CSB), and (iii) the assumption by such successor President or Chief Executive Officer of the service and duties customarily accompanying either position, shall not, either alone or together, constitute "Good Reason" as that term is defined in Section 4.2(b) of the Agreement, as amended.

4.

Employee shall continue to receive the Base Salary provided in Section 2.1 of the Agreement through July 31, 2003, at which time all Base Salary shall cease.

5.

Bonus.  Employee shall not be eligible to receive any bonus under Section 2.2 of the Agreement.

6.

Vacation.  Employee shall be paid for all unused vacation.  Bank and Employee agree that Employee is entitled to four (4) weeks of vacation for the year beginning March 1, 2003 and that as of the date hereof, Employee has taken no days of vacation.  Such unused vacation pay shall be paid to Employee, after applicable withholding, upon his resignation as Chief Executive Officer of Bank.

7.

Automobile Allowance.  Employee shall continue to receive the automobile allowance provided in Section 2.6 of the Agreement through July 31, 2003 at which time the automobile allowance shall cease.

8.

Stock Options.  Section 2.5 of the Agreement shall be unaffected by this Third Amendment.

9.

Housing Allowance.  Section 2.7 of the Agreement, as amended by Section 1 of the First Amendment, is deleted in its entirety.  Bank and Employee agree to execute any and all documents necessary to terminate the Trust Agreement referred to in Section 3 of the First Amendment so that all amounts held by the trust can be delivered to Bank, free and clear of any claim of Employee.

10.

Other Benefits.  Employee shall participate until July 31, 2004 in the other benefits provided to other employees of the Bank as of July 31, 2003.  Such benefits shall include, but shall not be limited to, family health insurance coverage and a payment to Employee in an amount equal to the contribution to the Bank's 401k plan with respect to contributions made to such plan by Employee prior to July 31, 2003 as if Employee had been employed by Bank on December 31, 2003.  Employee agrees that the family health insurance coverage provided hereunder is in substitution for any COBRA rights Employee otherwise was or is entitled to exercise.

11.

Board of Directors.  Employee shall resign as a director of Bank and CSB on July 31, 2003, and prior to such time shall continue to receive (for the months of April, May, June, and July) as board fees for services a monthly fee of $2,500, per month.

12.

Other Amounts and Severance.  Bank agrees that Employee may retain all amounts previously paid to him as Salary or Board of Director fees, subject to applicable withholding.  Employee shall be paid severance equal in amount to $200,000 on July 31, 2003, which payment shall be subject to withholding as required by law.

13.

Consulting.  Employee agrees to act as a consultant to Bank for the period beginning on August 1, 2003 and ending on February 29, 2004.  Employee shall make himself available to perform consulting services to Bank for up to twenty (20) hours per month.  Such services may be performed over the telephone or, if requested by Bank, in person in Millersburg, Ohio or at such other mutually agreed location as requested by the Bank.  In the event that Bank requests employee to perform consulting services other than by telephone (i) Bank shall reimburse Employee for all reasonable out-of-pocket expenses incurred by Employee in traveling to and from the location designated by Bank, including food and lodging expenses, and (ii) the amount of time spent by Employee traveling to the location designated by Bank shall not be considered hours s pent consulting hereunder.  Bank shall pay Employee in a lump sum on July 31, 2003, $50,000 and thereafter $7,145 per month for his consulting services under this Agreement.  Bank and Employee acknowledge and agree that Employee, from and after August 1, 2003, is an independent contractor and not an employee of Bank.  Employee acknowledges and agrees that he shall be responsible for paying all taxes with respect to the consulting fees paid to him under this Agreement.

14.

Release by Employee.  Employee, for and on behalf of himself and his heirs, beneficiaries, executors, administrators, attorneys, successors, and assigns shall forever waive, release, discharge, and covenant not to sue Bank, its past, present, former and future parent corporations, owners, affiliates, subsidiaries, divisions, successors, licensees, franchisees, assigns, and employees, officers, directors, agents, insurers, and attorneys thereof (hereinafter also referred to as the “Released Parties”), from and for any and all of Employee’s potential or actual causes of action, any attorney’s fees, relating to his resignation, which are known or unknown, fixed or contingent, and by reason of any matter, cause, thing, charge, claim, right or action whatsoever, against and as to Company and/or any of the other Released Parties, including, but not limited to, any wages, bonuses, commissions, insurance coverage, benefits, premiums, or medical expenses, or on account of any alleged conduct of the Released Parties which might be alleged by Employee to constitute breach of contract, race, sex, religious, national origin, disability discrimination, breach of contract, or in any way related to Employee’s employment with Company, or any claim or right under the Worker Adjustment and Retraining Notification Act (“WARN”), 23 U.S.C. §2101 et seq., the National Labor Relations Act, 29 U.S.C. §151 et seq., Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §2000e et seq., the Americans With Disabilities Act, 42 U.S.C. §12101 et seq., the Ohio Fair Employment Practices Law , Oh. St. §4112.01 et seq., the Equal Pay Act, 29 U.S.C. §206, the Fair Labor Standards Act, 29 U.S.C. §201 et seq., or any other provision of federal, state or local sta tutory or common law or regulation.

Employee and Bank each agree and expressly acknowledge that this Agreement includes a waiver and release of all claims which employee has or may have under the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. §621, et seq. ("ADEA") and the Older Workers Benefit Protection Act ("OWBPA").  The following terms and conditions apply to and are part of the waiver and release of ADEA and OWBPA claims under this Agreement:

a.

The waiver and release of claims under the ADEA and OWBPA contained in this Agreement does not cover rights or claims that may arise after the date on which Employee signs this Agreement.

b.

Employee is advised to consult an attorney before signing this Agreement.

c.

Employee is granted twenty-one (21) days after he is presented with this Agreement to decide whether or not to sign this Agreement.

d.

Employee will have the right to revoke the waiver and release of claims under the ADEA and OWBPA within seven (7) days of his signing this Agreement, and this Agreement shall not become effective or enforceable until that revocation period has expired without Employee having revoked this Agreement.

e.

Employee hereby acknowledges and agrees that he is knowingly and voluntarily waiving and releasing his rights and claims only in exchange for consideration (something of value) in addition to anything of value to which he is already entitled.

This Third Amendment shall not become effective or enforceable until the eighth day following Employee's execution of this Third Amendment without Employee having previously revoked this Agreement.  Employee shall have the right to revoke this Third Amendment at any time during the seven (7) day period immediately following his execution of this Third Amendment.  In order to revoke this Third Amendment, Employee must submit written notice of his revocation to Mr. Robert K. Baker, 6 West Jackson Street, Millersburg, Ohio  44654, such that the notice is received by said individual before the expiration of the seven-day revocation period.

Employee agrees to sign a release identical to the release contained in Section 14 on July 31, 2003.

15.

Release by Bank.  Bank forever releases Employee and his successors, assigns, representatives, agents and insurers and persons related to the foregoing, from all claims that the Bank now has or may have of any nature whatsoever, be they common law or statutory, legal or equitable, in contract or tort, including but not limited to claims arising out of the Banks' employment of the Employee and/or the termination of his employment.  The Bank hereby waives all rights to assert a claim available under any such laws, including but not limited to attorneys' fees, damages, reinstatement, back pay or injunctive relief, including any right the Bank may have to seek reimbursement from Employee for any compensation received.

16.

Entire Agreement.  Except as provided in this Third Amendment, the Agreement, as previously amended, shall remain in full force and effect.  No further amendment or modification of the Agreement, as previously amended shall be valid or binding when made in writing and signed by the parties hereto.

17.

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.  This Agreement shall not be construed against any party as the sole drafter or author of the Agreement.

exhibit10.doc

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date set forth above.

THE COMMERCIAL AND SAVINGS

BANK OF MILLERSBURG

By:  /s/ ROBERT K. BAKER

Robert K. Baker

Its:  Chairman of the Board

Employee:  /s/ C. JAMES BESS

C. James Bess

exhibit10.doc

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EX-11

CSB BANCORP, INC.

EXHIBIT 11

STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS

	Three Months Ended March 31,
	2003	2002
Basic Earnings Per Share
Net income	$597,832	$376,389
Weighted average common shares	2,633,233	2,628,703
Basic Earnings Per Share	$0.23	$0.14
Diluted Earnings Per Share
Net income	$597,832	$376,389
Weighted average common shares	2,633,233	2,628,703
Weighted average effect of assumed stock options	4,072	16,327
Total	2,637,305	2,645,034
Diluted Earnings Per Share	$0.23	$0.14

EX-99

CSB BANCORP, INC.

EXHIBIT 99

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 quarterly report of CSB Bancorp, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, C. James Bess, President and Chief Executive Officer, and A. Lee Miller, Senior Vice President and Chief Financial Officer, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that to the best of our 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	/s/ A. LEE MILLER
C. James Bess President and Chief Executive Officer	A. Lee Miller Senior Vice President and Chief Financial Officer