10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark one)

þ ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2008

OR

o 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.

(Exact name of registrant as specified in its charter)

Ohio	34-1687530
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
91 North Clay Street, Millersburg, Ohio	44654
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code (330) 674-9015

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

Securities registered under Section 12(g) of the Act:

Common Shares, $6.25 par value
(Title of class)

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  o Yes þ No

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  o Yes þ No

     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. þ Yes o 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. þ

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

Large accelerated filer o Accelerated filer o  Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company þ

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

At June 30, 2008, the aggregate market value of the voting stock held by non-affiliates of the registrant, based on a share price of $15.75 per share (such price being the last trade price on such date) was $35.7 million.

At March 25, 2009, there were outstanding 2,734,799 of the registrant’s Common Shares, $6.25 par value.

TABLE OF CONTENTS

PART I
	ITEM 1. BUSINESS.
	Item 1A. Risk Factors.
	Item 1B. Unresolved Staff Comments.
	ITEM 2. PROPERTIES.
	ITEM 3. LEGAL PROCEEDINGS.
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
PART II
	ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
	ITEM 6. SELECTED FINANCIAL DATA.
	ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
	ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
	ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
	ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
	ITEM 9A. CONTROLS AND PROCEDURES.
	ITEM 9B. OTHER INFORMATION.
PART III
	ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
	ITEM 11. EXECUTIVE COMPENSATION.
	ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
	ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
	ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
PART IV
	ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
SIGNATURES
INDEX TO EXHIBITS
EX-13
EX-21
EX-23.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Registrant’s 2008 Annual Report to Shareholders.
Portions of Registrant’s Proxy Statement dated March 25, 2009.

PART I

Available Information

Our website address is www.csb1.com. We make our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports available free of charge on our website as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission (the “SEC”). We also make available through our website, other reports filed with the SEC under the Exchange Act, including our proxy statements and reports filed by officers and directors under Section 16(a) of that Act, as well as our Code of Ethics. We do not intend for information contained in our website to be part of this Annual Report on Form 10-K.

In addition, the public may read and copy any materials we filed with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, NW, Washington DC 20549. Information on the operation of the Public Reference Room is available by calling the SEC at 1-800-SEC-0330. Also, the SEC maintains an Internet site that contains reports, proxy and information statements and other information at www.sec.gov.

ITEM 1. BUSINESS.

General

CSB Bancorp, Inc. (the “Company”), is a registered financial holding company under the Bank Holding Company Act of 1956, as amended, and was incorporated under the laws of the State of Ohio in 1991. The Commercial and Savings Bank of Millersburg, Ohio (the “Bank”), an Ohio banking corporation chartered in 1879, is a wholly-owned subsidiary of the Company. The Bank is a member of the Federal Reserve system, and its deposits are insured up to the maximum provided by law by the Federal Deposit Insurance Corporation. The primary regulators of the Bank are the Federal Reserve Board and the Ohio Division of Financial Institutions.

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, brokerage and trust services.

The Bank grants residential real estate, commercial real estate, consumer and commercial loans to customers located primarily in Holmes, Tuscarawas and portions of surrounding counties in Ohio. The general economic conditions in the Company’s market area have been sound, although a slowdown in activity due to a general recessionary environment was evident, particularly in the latter half of 2008. Unemployment statistics have generally been among the lowest in the state of Ohio, and the area has experienced slightly lower real estate values, a result of the softening economy.

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 or renews an existing 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, borrower’s character, and other factors. For all commercial loan relationships greater than $275,000, 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, all commercial loan relationships greater than $750,000, a sample of commercial loan relationships less than $750,000, loans within an industry concentration 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.

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Commercial loan rates are variable as well as fixed, 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. Business assets such as equipment, accounts receivable, and inventory typically secure such loans. 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 residences, 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 economy 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 80% or less. Commercial construction loans are secured by commercial real estate and in most cases the bank also provides the permanent financing. Advances are monitored by the Bank and the maximum loan to value is typically limited to the lesser of 90% of cost or 80% of appraisal. 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 and willingness 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 85% or less of the value of collateral or up to 100% with PMI. An appraisal from a qualified real estate appraiser or an evaluation based on tax value is obtained for substantially all loans secured by real estate. Residential construction loans are secured by residential real estate that generally will be occupied by the borrower on completion. The Bank usually makes the permanent loan at the end of the construction phase. Construction loans also are made in amounts of 85% or less of the value of the collateral.

Home equity lines of credit are made to individuals and are secured by second or first mortgages on the borrower’s residence. Loans are based on similar credit and appraisal criteria used for residential real estate loans; however, loans up to 100% of the value of the property may be approved for borrowers with excellent credit histories. These loans typically bear interest at variable rates and require certain minimum monthly payments.

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 100% of the purchase price of the automobile. Loans for used automobiles generally do not exceed average wholesale or trade-in values as stipulated in a recent auto-industry used-car price guide. 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 and willingness 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.

Recent Developments

CSB announced the proposed acquisition of Indian Village Bancorp, Inc., and its wholly-owned subsidiary, Indian Village Community Bank, on May 14, 2008. The transaction was consummated on October 31, 2008. In that transaction, Indian Village Bancorp, Inc. was merged with and into CSB, and Indian Village Community Bank was merged with and into the Bank. Financial data pertaining to the transaction is reflected in the CSB financial reports set forth herein. As a result of the transaction, the Bank now operates three new full-service branch facilities in Gnadenhutten, North Canton, and New Philadelphia, Ohio.

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Employees

At December 31, 2008, the Company had 150 employees, 120 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, Tuscarawas 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, and which rates are used as indices on several loan products. The Bank believes its presence in the Holmes and Tuscarawas 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, the Gramm-Leach-Bliley Act of 1999 (“GLB”) was signed into law. GLB 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. GLB has changed the competitive environment in which the Company conducts business. See “Financial Modernization” for further discussion.

Supervision and Regulation of CSB and Subsidiaries

CSB and the Bank are subject to extensive regulation by federal and state agencies. The regulation of financial holding companies and their subsidiaries by bank regulatory agencies is intended primarily for the protection of consumers, depositors, federal deposit insurance funds and the banking system as a whole, and not for the protection of shareholders.

CSB is registered with the Federal Reserve Board (“FRB”) as a financial holding company under the Bank Holding Company Act, as amended (the “BHC Act”), and is subject to regulation, examination, and supervision by the FRB under the BHC Act. CSB is also subject to the disclosure and regulatory requirements of the Securities Exchange Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, as administered by the SEC.

The Bank, as an Ohio state-chartered bank and member of the Federal Reserve System, is subject to regulation, supervision, and examination by the Ohio Division 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.

The earnings, dividends, and other aspects of the operations and activities of CSB 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 FRB, United States fiscal and economic policies, international currency regulations and monetary policies, certain restrictions on relationships with many phases of the securities business, and capital adequacy and liquidity restraints.

The following information describes selected federal and state statutory and regulatory provisions, and is qualified in its entirety by reference to the full text of the particular statutory or regulatory provisions. These statutes and regulations are continually under review by the United States Congress and state legislatures, and state and federal regulatory agencies. A change in statutes, regulations, or regulatory policies applicable to CSB and its subsidiaries could have a material effect on their respective businesses.

Regulation of Bank Holding Companies

As a bank holding company which is also designated as a financial holding company under GLB, CSB’s activities are subject to extensive regulation by the FRB. CSB is required to file reports with the FRB and such additional information as the FRB may require, and is subject to regular examination and inspection by the FRB.

The FRB has extensive enforcement authority over bank holding companies, including the ability to assess civil money penalties, issue cease and desist orders, and require that a bank holding company divest subsidiaries (including subsidiary banks). The FRB may initiate enforcement actions for violations of laws and regulations, and

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for unsafe and unsound practices. Under FRB policies, a bank holding company is expected to act as a “source of strength” to its subsidiary banks and to commit resources to support those subsidiary banks. Under this policy, the FRB may require a bank holding company to contribute additional capital to an undercapitalized subsidiary bank.

The BHC Act requires the prior approval of the FRB in cases where a bank holding company proposes to acquire direct or indirect ownership or control of more than 5% of the voting shares of any bank that is not already majority-owned by it, acquire all or substantially all of the assets of another bank or another financial or bank holding company, or merge or consolidate with any other financial or bank holding company.

The FRB also regulates and provides limitations on transactions between affiliates of a bank holding company, loans to directors and officers of bank affiliates, and securities transactions, and liability for losses incurred by commonly-controlled banks in certain circumstances.

Financial Modernization

Pursuant to GLB, 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 with the FRB that the bank holding company wishes to become a financial holding company. No prior regulatory approval is required for a financial holding company to acquire certain companies, other than banks and savings associations, that are financial in nature as determined by the FRB.

GLB defines “financial in nature” to include securities underwriting, dealing and market making; sponsoring mutual funds and investment companies; insurance underwriting and agency activities; merchant banking activities; and activities that the FRB has determined to be closely related to banking. Bank subsidiaries 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 subsidiary or subsidiaries. In addition, a financial holding company or a bank subsidiary of a financial holding company 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 bank has a CRA rating of satisfactory or better.

Regulatory Capital

The FRB has adopted risk-based capital guidelines for bank holding companies and state member banks. The guidelines provide a systematic analytical framework which makes regulatory capital requirements sensitive to differences in risk profiles among banking organizations, takes off-balance sheet exposures expressly into account in evaluating capital adequacy, and minimizes disincentives to holding liquid, low-risk assets. Capital levels as measured by these standards are also used to categorize financial institutions for purposes of certain prompt corrective action regulatory provisions.

The minimum guideline for the ratio of total capital to risk-weighted assets (including certain off-balance sheet items such as standby letters of credit) is 8%. At least half of the minimum total risk-based capital ratio (4%) must be composed of common shareholders’ equity, minority interests in certain equity accounts of consolidated subsidiaries and a limited amount of qualifying preferred stock and qualified trust preferred securities, less goodwill and certain other intangible assets, including the unrealized net gains and losses, after applicable taxes, on available-for-sale securities carried at fair value (commonly known as “Tier 1” risk-based capital). The remainder of total risk-based capital (commonly known as “Tier 2” risk-based capital) may consist of certain amounts of hybrid capital instruments, mandatory convertible debt, subordinated debt, preferred stock not qualifying as Tier 1 capital, loan and lease loss allowance and net unrealized gains on certain available-for-sale equity securities, all subject to limitations established by the guidelines.

Under the guidelines, capital is compared to the relative risk related to the balance sheet. To derive the risk included in the balance sheet, one of four risk weights (0%, 20%, 50% and 100%) is applied to different balance sheet and off-balance sheet assets, primarily based on the relative credit risk of the counterparty. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

The FRB has established minimum leverage ratio guidelines for bank holding companies. The FRB guidelines provide for a minimum ratio of Tier 1 capital to average assets (excluding the loan and lease loss allowance, goodwill and certain other intangibles), or “leverage ratio,” of 3% for bank holding companies that meet certain criteria, including having the highest regulatory rating, and 4% for all other bank holding companies. The guidelines further provide that bank holding companies making acquisitions will be expected to maintain strong capital positions substantially above the minimum levels.

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The FRB’s review of certain bank holding company transactions is affected by whether the applying bank holding company is “well-capitalized.” To be deemed “well-capitalized,” the bank holding company must have a Tier 1 risk-based capital ratio of at least 6% and a total risk-based capital ratio of at least 10%, and must not be subject to any written agreement, order, capital directive or prompt corrective action directive issued by the FRB to meet and maintain a specific capital level for any capital measure.

The federal banking agencies have established a system of “prompt corrective action” to resolve certain of the problems of undercapitalized institutions. This system is based on five capital level categories for insured depository institutions: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized.”

The federal banking agencies may (or in some cases must) take certain supervisory actions depending upon a bank’s capital level. For example, the banking agencies must appoint a receiver or conservator for a bank within 90 days after it becomes “critically undercapitalized” unless the bank’s primary regulator determines, with the concurrence of the FDIC, that other action would better achieve regulatory purposes. Banking operations otherwise may be significantly affected depending on a bank’s capital category. For example, a bank that is not “well capitalized” generally is prohibited from accepting brokered deposits and offering interest rates on deposits higher than the prevailing rate in its market, and the holding company of any undercapitalized depository institution must guarantee, in part, specific aspects of the bank’s capital plan for the plan to be acceptable.

In order to be “well-capitalized,” a bank must have total risk-based capital of at least 10%, Tier 1 risk-based capital of at least 6% and a leverage ratio of at least 5%, and the bank must not be subject to any written agreement, order, capital directive or prompt corrective action directive to meet and maintain a specific capital level for any capital measure. As of December 31, 2008, the Bank meets the ratio requirements to be deemed “well capitalized” according to the guidelines described above. See Note12 of the Notes to Consolidated Financial Statements located on page 48 of CSB’s 2008 Annual Report, which is incorporated herein by reference.

The risk-based capital guidelines adopted by the federal banking agencies are based on the “International Convergence of Capital Measurement and Capital Standards” (Basel I), published by the Basel Committee on Banking Supervision (the “Basel Committee”) in 1988. In 2004, the Basel Committee published a new, more risk-sensitive capital adequacy framework (Basel II) for large, internationally active banking organizations. In December 2007, the federal banking agencies issued final rules making the implementation of certain parts of Basel 11 mandatory for any bank that has consolidated total assets of at least $250 billion (excluding certain assets) or has consolidated on-balance sheet foreign exposure of at least $10 billion, and making it voluntary for other banks.

In response to concerns regarding the complexity and cost associated with implementing the Basel II rules, in July 2008, the federal banking agencies issued a notice of proposed rulemaking that would revise the existing risk-based capital framework for banks that will not be subject to the Basel II rules. The proposed rules would allow banks other than the large Basel II banks to elect to adopt the new risk weighting methodologies set forth in the proposed rules or remain subject to the existing risk-based capital rules.

CSB will not be required to implement Basel II. Until the final rules for the non-Basel II banks are adopted by the federal banking agencies, CSB is unable to predict whether and when any subsidiary bank will adopt the new capital guidelines.

Fiscal and Monetary Policies

The business and earnings of CSB are affected significantly by the fiscal and monetary policies of the United States Government and its agencies. CSB is particularly affected by the policies of the FRB, which regulates the supply of money and credit in the United States. These policies are used in varying degrees and combinations to directly affect the availability of bank loans and deposits, as well as the interest rates charged on loans and paid on deposits.

Limits on Dividends and Other Payments

There are various legal limitations on the extent to which subsidiary banks may finance or otherwise supply funds to their parent holding companies. Under applicable federal and state laws, subsidiary banks may not, subject to certain limited exceptions, make loans or extensions of credit to, or investments in the securities of, their bank holding companies. Subsidiary banks are also subject to collateral security requirements for any loan or extension of credit permitted by such exceptions.

Payment of dividends by the Bank is limited by applicable state and federal laws and regulations. The ability of CSB to obtain funds for the payment of dividends and for other cash requirements is largely dependent on the amount of

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dividends which may be declared by the Bank. However, the FRB expects CSB to serve as a source of strength to its subsidiary banks, which may require CSB to retain capital for further investment in its subsidiary banks, rather than pay dividends to the CSB shareholders. Payment of dividends by the Bank may be restricted at any time at the discretion of its applicable regulatory authorities, if they deem such dividends to constitute an unsafe and/or unsound banking practice. These provisions could have the effect of limiting CSB’s ability to pay dividends on its common shares.

At December 31, 2008, approximately $1.6 million of the total stockholders’ equity of the Bank was available for payment to CSB without the approval of the applicable regulatory authorities. See Note 12 of the “Notes to Consolidated Financial Statements located on page 49 of CSB’s 2008 Annual Report.

Privacy Provisions of GLB

Under GLB, federal banking regulators have adopted rules that limit the ability of banks and other financial institutions to disclose non-public information about consumers to nonaffiliated third parties. These limitations require distribution of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to nonaffiliated third parties.

USA Patriot Act

In response to the events of September 11, 2001, the United and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “Patriot Act”) was signed into law in October, 2001. The Patriot Act gives the federal government powers to address terrorist threats through enhanced security measures, expanded surveillance powers, increased information sharing and broadened anti-money laundering requirements. Title III of the Patriot Act takes measures intended to encourage information sharing among bank regulatory agencies and law enforcement officials. Further, certain provisions of Title III impose affirmative obligations on a broad range of financial institutions to, among other things, establish a program specifying procedures for obtaining identifying information from customers seeking to open new accounts and establish enhanced due diligence policies, procedures and controls designed to detect and report suspicious activity. The Bank has established policies and procedures that are believed to be compliant with the requirements of the Patriot Act.

Corporate Governance

The Sarbanes-Oxley Act of 2002 (“SOX”) was signed into law on July 30, 2002. SOX contains important requirements for public companies with regard to financial disclosure and corporate governance. In accordance with section 302(a) of SOX, written certifications by CSB’s Chief Executive Officer and Chief Financial Officer are required. These certifications attest that CSB’s quarterly and annual reports filed with the SEC do not contain any untrue statement of a material fact or fail to state a material fact. CSB has also implemented a program designed to comply with Section 404 of SOX, which includes identification of significant processes and accounts, documentation of the design of control effectiveness over process and entity-level controls, and testing of the operating effectiveness of key controls. On February 1, 2008, the SEC announced a proposed further delay for Section 404(b) compliance for non-accelerated filers, including CSB, relating to the attestation by the external accountants. Under the proposal, Section 404(b) would be required to be implemented by CSB for the year ended December 31, 2009. Management’s assessment on internal controls over financial reporting is incorporated by reference on page 25 of the CSB 2008 Annual Report.

U.S. Treasury Capital Purchase Program

In response to the financial crisis affecting the banking system and financial markets, the Emergency Economic Stabilization Act of 2008 (“EESA”) was signed into law on October 3, 2008, creating the Troubled Assets Relief Program (“TARP”). As part of TARP, the U.S. Treasury established a Capital Purchase Program to provide up to $700 billion of funding to eligible financial institutions through the purchase of capital stock and other financial instruments for the purpose of stabilizing and providing liquidity to the United States financial markets. In connection with the EESA, there have been numerous actions by the Federal Reserve Board, the United States Congress, the U.S. Treasury, the FDIC, the SEC and others to further the economic and banking industry stabilization efforts under the EESA. Participation in the EESA, TARP and other programs involves restrictions on the activities and dividends of participating institutions. It remains unclear at this time what further legislative and regulatory measures will be implemented under EESA that may affect CSB.

CSB has not elected to participate in the EESA or TARP programs to date.

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Statistical Disclosure

The statistical disclosure relating to CSB and its subsidiaries required under the SEC’s Industry Guide 3, “Statistical Disclosure by Bank Holding Companies,” is included in the section of CSB’s 2008 Annual Report captioned “FINANCIAL REVIEW,” on pages 10 through 25, and in Note 1 of the Notes to Consolidated Financial Statements located on pages 38 through 39 of CSB’s 2008 Annual Report, Note 2 of the Notes to Consolidated Financial Statements located on page 40 of CSB’s 2008 Annual Report. This statistical disclosure is incorporated herein by reference.

Effect of Environmental Regulation

Compliance with federal, state and local provisions regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had a material effect upon the capital expenditures, earnings or competitive position of CSB and its subsidiaries. CSB believes the nature of the operations of its subsidiaries has little, if any, environmental impact. CSB, therefore, anticipates no material capital expenditures for environmental control facilities for its current fiscal year or for the foreseeable future.

CSB believes its primary exposure to environmental risk is through the lending activities of the Bank. In cases where management believes environmental risk potentially exists, the Bank mitigates environmental risk exposure by requiring environmental site assessments at the time of loan origination to confirm collateral quality as to commercial real estate parcels posing higher than normal potential for environmental impact, as determined by reference to present and past uses of the subject property and adjacent sites. In addition, environmental assessments are typically required prior to any foreclosure activity involving non-residential real estate collateral.

Item 1A. Risk Factors.

Cautionary Statement Regarding Forward-Looking Information

Certain statements contained in this Annual Report on Form 10-K which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, the statements specifically identified as forward-looking statements within this document. In addition, certain statements in future filings by CSB with the SEC, in press releases, and in oral and written statements made by or with the approval of CSB which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include: (i) projections of income or expense, earnings per share, the payment or non-payment of dividends, capital structure and other financial items; (ii) statements of plans and objectives of CSB or our management or Board of Directors, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as “believes,” “anticipates,” “‘expects,” “intends,” “targeted” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying those statements.

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information so long as those statements arc identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those discussed in the forward-looking statements. We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve risks and uncertainties. Actual results may differ materially from those predicted by the forward-looking statements because of various factors and possible events, including those factors and events identified below. There is also the risk that CSB’s management or Board of Directors incorrectly analyzes these risks and uncertainties or that the strategies CSB develops to address them are unsuccessful.

Forward-looking statements speak only as of the date on which they are made, and, except as may be required by law, CSB undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made to reflect unanticipated events. All subsequent written and oral forward-looking statements attributable to CSB or any person acting on CSB’s behalf are qualified in their entirety by the following cautionary statements.

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General

Investments in CSB stock involve risk. The market price of CSB common stock may fluctuate significantly in response to a number of factors, including the following.

• Regulatory and Legislative initiatives

• Credit risk

• Changes in interest rates

• Economy

• New developments in the banking industry

• Thinly traded stock

• Failure to realize the anticipated benefits of the acquisition of Indian Village Bancorp, Inc

• Inability to pay dividends

• Unauthorized disclosure of sensitive customer information

• Consumers may decide not to use banks to conduct their financial transactions

Regulatory and Legislative initiatives

The Company and its wholly owned subsidiary The Commercial and Savings Bank are subject to extensive state and federal regulation, supervision and legislation that govern nearly every aspect of its operations. Changes to these laws could affect the Company’s ability to deliver or expand its services and diminish the value of its business. There is a potential for new federal and state laws and regulations regarding lending and funding practices and liquidity standards, and bank regulatory agencies are expected to be very aggressive in responding to concerns and trends identified in examinations. This increased governmental action may increase our costs and limit our ability to pursue certain business opportunities. We also may be required to pay even higher FDIC premiums than the recently increased level, and in fact the FDIC has pending a proposal to do so, because financial institution failures have depleted and may continue to deplete the deposit insurance fund and reduce its ratio of reserves to insured deposits.

Credit Risk

Credit Risk is the risk of losing principal and interest income because borrowers fail to repay loans. Our earnings may be negatively impacted if we fail to manage credit risk, as the origination of loans is an integral part of our business. Factors which may affect the ability of borrowers to repay loans would include a slowing of the local economy that we operate in, a downturn in one or more business sectors in which our customers operate or a rapid increase in interest rates.

We maintain an allowance for loan losses that we believe is a reasonable estimate of known and inherent losses within the loan portfolio. We make various assumptions and judgments about the collectibility of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of loans. Through a periodic review and consideration of the loan portfolio, management determines the amount of the allowance for loan losses by considering general market conditions, credit quality of the loan portfolio, the collateral supporting the loans and performance of customers relative to their financial obligations with us. The amount of future losses is susceptible to changes in economic, operating and other conditions, including changes in interest rates, which may be beyond our control, and these losses may exceed current estimates. We cannot fully predict the amount or timing of losses or whether the loss allowance will be adequate in the future. If our assumptions prove to be incorrect, our allowance for loan losses may not be sufficient to cover losses inherent in our loan portfolio, resulting in additions to the allowance. Excessive loan losses and significant additions to our allowance for loan losses could have a material adverse impact on our financial condition and results of operations.

Changes in interest rates

CSB’s earnings and financial condition are dependent to a large degree upon net interest income, which is the difference between interest earned from loans and investments and interest paid on deposits and borrowings. Market interest rates are largely beyond the Company’s control, and they fluctuate in response to general economic conditions and the policies of various governmental and regulatory agencies, in particular, the Federal Reserve Board. Changes in interest rates will influence the origination of loans, the purchase of investments and the level of prepayments on our loans and the receipt of payments on our mortgage-backed securities resulting in fluctuations of income and cash flow.

Economy

Downturns in the local economy in which we operate may adversely affect our business. Our loan portfolio is concentrated primarily in Holmes, Tuscarawas and portions of Wayne and Stark counties in Ohio. Our profits

9

depend on providing products and services to customers in these areas. A decline in real estate values, a prolonged low interest rate environment or increases in unemployment could depress our earnings. Weakness in our market area could result from a decline in tourism resulting in the value of collateral securing our loans declining while borrowers may not be able to repay their loans.

New developments in the banking industry

CSB will need to adjust to competition in both originating loans and attracting deposits. Competition in the financial services industry is intense as we compete with securities dealers, finance and insurance companies, mortgage brokers and investment advisors. As a result of their size and ability to achieve economies of scale, certain of our competitors offer a broader range of products and services than we offer. Our ability to obtain our financial objectives will depend on our ability to deliver or expand product delivery systems and changes in technology required by our customers.

Thinly traded stock

CSB common stock is very thinly traded, and it is therefore susceptible to price swings. However, CSB common stock is traded on the Over the Counter Bulletin Board under the symbol “CSBB.ob”. We list three brokers, who facilitate trades, within the back cover of our annual report to shareholders. The stock is not actively followed by the investment community and the price may be negatively impacted any time there are more sellers than buyers.

Failure to realize the anticipated benefits of the acquisition of Indian Village Bancorp, Inc.

Difficulties may arise in the integration of the business and operations of Indian Village with the Company and, as a result, the Company may not be able to achieve the cost savings and synergies that are expected to result from the acquisition. Achieving cost savings is dependent on consolidating certain operational and functional areas, eliminating duplicate positions and terminating certain agreements for outside services. Additional operational savings are dependent upon the integration of the banking businesses of the Company and Indian Village, and the conversion of Indian Village’s core operating systems, data systems and products to those of the Company and the standardization of business practices. Complications or difficulties in the conversion of the core operating systems, data systems and products of Indian Village to those of the Company may result in the loss of customers, damage to the Company’s reputation within the financial services industry, operational problems, one-time costs currently not anticipated by the Company or reduced cost savings resulting from the acquisition.

The Bank’s ability to pay dividends is subject to regulatory limitations which, to the extent the Company requires such dividends in the future, may affect its ability to pay dividends or repurchase its stock.

The Company is a separate legal entity from its subsidiaries and does not have significant operations of its own. Dividends from the Bank provide a significant source of capital for the Company. The availability of dividends from the Bank is limited by various statutes and regulations. It is possible, depending upon the financial condition of the Bank and other factors, that the Ohio Division of Financial Institutions, as the Bank’s primary regulator, could assert that the payment of dividends or other payments by the Bank are an unsafe or unsound practice. In the event the Bank is unable to pay dividends to the Company, the Company may not be able to pay its obligations as they become due, repurchase its stock, or pay dividends on its common stock. Consequently, the potential inability to receive dividends from the Bank could adversely affect the Company’s financial condition, results of operations and prospects

Unauthorized disclosure of sensitive or confidential client or customer information, whether through a breach of our computer systems or otherwise, could severely harm our business.

As part of our financial institution business, we collect, process and retain sensitive and confidential client and customer information on behalf of our subsidiaries and other third parties. Despite the security measures we have in place, our facilities and systems, and those of our third-party service providers, may be vulnerable to security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors or other similar events. If information security is breached, information can be lost or misappropriated, resulting in financial loss or costs to us or damages to others. Any security breach involving the misappropriation, loss or other unauthorized disclosure of confidential customer information, whether by us or by our vendors, could severely damage our reputation, expose us to the risks of litigation and liability or disrupt our operations and have a material adverse effect on our business.

Consumers may decide not to use banks to conduct their financial transactions.

Technology and other changes are allowing parties to utilize alternative methods to complete financial transactions that historically have involved banks. For example, consumers can now maintain funds in brokerage accounts or mutual funds that would have historically been held as bank deposits. Consumers can also complete transactions such as paying bills and/or transferring funds directly without the assistance of banks. The process of eliminating

10

banks as intermediaries, known as “disintermediation,” could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits. The loss of these revenue streams and the lower cost deposits as a source of funds could have a material adverse effect on our financial condition and results of operations.

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 2008 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. Dollar Amount of Change in Interest Income and Interest Expense: 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. Investment Portfolio

A. The following is a schedule of the carrying value of securities at December 31, 2008, 2007 and 2006.

	(Dollars in thousands)
	2008		2007		2006
Securities available-for-sale, at fair value
U.S. Treasury securities	$	100	$	102	$	100
U.S. Government corporations and agencies		12,541		25,509		32,917
Mortgage-backed securities		56,899		42,365		28,048
Obligations of states and political subdivisions		7,040		3,159		5,769
Equity securities		76		285		301
Total	$	76,656	$	71,420	$	67,135

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, 2008:

	(Dollars in thousands)
	Maturing
						After One Year
						Through Five					After Five Years
	One Year or Less					Years					Through Ten Years					After Ten Years					Total
	Amortized					Amortized					Amortized					Amortized					Amortized
	Cost		Yield			Cost		Yield			Cost		Yield			Cost		Yield			Cost		Yield
Available for sale:
U.S. Treasury	$	100		4.88	%																$	100		4.88	%
U.S. Government corporations and agencies		3,000		4.25		$	7,896		3.67	%	$	1,551		4.80	%							12,447		3.95
Mortgage-backed securities		12		4.69								4,117		4.69		$	52,569		5.51	%		56,698		5.45
Obligations of states and political subdivisions		2,859		5.76			1,064		6.56			1,618		6.12			1,505		6.38			7,046		6.10
Total	$	5,971		4.98	%	$	8,960		4.01	%	$	7,286		5.03	%	$	54,074		5.53	%	$	76,291		5.27	%

11

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 tax-equivalent basis based on the Company’s marginal federal income tax rate of 34%.

III. Loan Portfolio

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

(Dollars in thousands)	2008		2007		2006		2005		2004
Commercial	$	61,859	$	46,000	$	55,513	$	69,922	$	77,231
Commercial real estate		109,284		97,985		72,707		52,661		43,744
Residential real estate		125,149		92,085		85,933		78,722		78,862
Construction		11,239		11,701		7,735		2,120		8,034
Installment and credit card		8,677		8,862		10,510		11,539		10,273
Total loans	$	316,208	$	256,633	$	232,398	$	214,964	$	218,144

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, 2008:

	(Dollars in thousands)
	Maturing
	One Year		One Through		After Five
	or Less		Five Years		Years		Total
Commercial	$	33,105	$	13,706	$	15,048	$	61,859
Commercial real estate		4,076		9,037		96,171		109,284
Construction		3,572		3,402		4,265		11,239
Total	$	40,753	$	26,145	$	115,484	$	182,382

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, 2008.

(Dollars in thousands)	Fixed Rate		Variable Rate
Total commercial, commercial real estate and construction loans due after one year	$	25,127	$	116,502

C. Risk Elements

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

(Dollars in thousands)	2008		2007		2006		2005		2004
(a) Loans accounted for on a nonaccrual basis	$	2,227	$	427	$	1,509	$	633	$	1,552
(b) Accruing loans that are contractually past due 90 days or more as to interest or principal payments		416		144		—		168		119
Totals	$	2,643	$	571	$	1,509	$	801	$	1,671

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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 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 nonaccrual but are charged-off after 90 days past due.

Impaired Loans — Information regarding impaired loans at December 31 is as follows:

(Dollars in thousands)	2008		2007		2006
Balance of impaired loans at December 31	$	2,405	$	198	$	988
Less portion for which no allowance for loan loss is allocated		20		—		—
Portion of impaired loan balance for which an allowance for loan losses is allocated		2,385		198		988
Portion of allowance for loan losses allocated to the impaired loan balance at December 31		335		43		327

For the year ended December 31, 2008, interest income recognized on impaired loans amounted to $8,439, while $33,376 would have been recognized had the loans been performing under their contractual terms. For the year ended December 31, 2007, interest income recognized on impaired loans amounted to $25,876, while $61,042 would have been recognized had the loans been performing under their contractual terms. For the year ended December 31, 2006, interest income recognized on impaired loans amounted to $25,717 while $58,905 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, 2008, 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, 2008, these amounts, including impaired and nonperforming loans, amounted to $7.8 million of substandard loans and $0 doubtful loans.

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

4. Loan Concentrations — As of December 31, 2008, 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, 2008, there are no other interest-bearing assets required to be disclosed under Item III.C.1 or 2 if such assets were loans.

13

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:

(Dollars in thousands)	2008			2007			2006			2005			2004
LOANS
Average loans outstanding during period	$	262,933		$	241,979		$	225,445		$	220,655		$	216,864
ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period	$	2,586		$	2,607		$	2,445		$	2,575		$	2,459
Loans charged-off:
Commercial		(55	)		(146	)		(9	)		(16	)		(95	)
Commercial real estate		(10	)		(333	)		(123	)		(442	)		0
Residential real estate		(19	)		(34	)		(74	)		(16	)		(275	)
Installment and credit card		(70	)		(100	)		(104	)		(102	)		(64	)
Total loans charged-off		(154	)		(613	)		(310	)		(576	)		(434	)
Recoveries of loans previously charged-off:
Commercial		6			43			20			63			61
Commercial real estate		4			0			80			2			0
Residential real estate		10			9			3			33			23
Installment		151			68			67			67			43
Total loan recoveries		171			120			170			163			127
Net loans (charged-off) recovered		17			(493	)		(140	)		(413	)		(307	)
Provision charged to operating expense		333			472			302			283			423
Addition from acquisition		458			—			—			—			—
Balance at end of period	$	3,394		$	2,586		$	2,607		$	2,445		$	2,575
Ratio of net charge-offs (recoveries) to average loans outstanding for period		(0.01	)%		0.20	%		0.06	%		0.19	%		0.14	%

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 together.

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.

14

	—Allocation of the Allowance for Loan Losses—
	(Dollars in thousands)
			Percentage of					Percentage of					Percentage of					Percentage of					Percentage of
			Loans in					Loans in					Loans in					Loans in					Loans in
			Each					Each					Each					Each					Each
	Allowance		Category to			Allowance		Category to			Allowance		Category to			Allowance		Category to			Allowance		Category to
	Amount		Total Loans			Amount		Total Loans			Amount		Total Loans			Amount		Total Loans			Amount		Total Loans
	December 31, 2008					December 31, 2007					December 31, 2006					December 31, 2005					December 31, 2004
Commercial	$	716		19.56	%	$	454		17.93	%	$	967		23.89	%	$	936		32.52	%	$	1,256		35.41	%
Commercial real estate		1,058		34.56			1,012		38.18			1,041		31.28			763		24.50			765		20.05
Residential real estate		1,244		39.58			666		35.88			379		36.98			278		36.62			261		36.15
Construction		111		3.56			104		4.56			22		3.33			4		.99			18		3.68
Installment and credit card		94		2.74			96		3.45			32		4.52			36		5.37			22		4.71
Unallocated		171					254					166					428					253
Total	$	3,394		100.00	%	$	2,586		100.00	%	$	2,607		100.00	%	$	2,445		100.00	%	$	2,575		100.00	%

15

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						Average
	Amounts Outstanding						Rate Paid
	Year ended December 31						Year ended December 31
	2008		2007		2006		2008			2007			2006
(Dollars in thousands)
Noninterest-bearing demand	$	42,598	$	41,740	$	38,938		N/A			N/A			N/A
Interest-bearing demand deposits		45,166		45,606		46,096		0.29	%		0.56	%		0.50	%
Savings deposits		45,591		41,123		41,528		0.82			1.24			0.99
Time deposits		124,123		124,752		120,981		3.49			4.48			3.95
Total deposits	$	257,478	$	253,221	$	247,543

D. The following is a schedule of maturities of time certificates of deposit in amounts of $100,000 or more as of December 31, 2008:

(Dollars in thousands)
Three months or less	$	10,248
Over three through six months		6,944
Over six through twelve months		14,525
Over twelve months		16,742
Total	$	48,459

VI. Return On Equity and Assets

	2008			2007			2006
Return on average assets		0.99	%		1.07	%		0.97	%
Return on average shareholders’ equity		9.23			9.82			8.95
Dividend payout ratio		50.99			50.41			51.89
Average shareholders’ equity to average assets		10.71			10.91			10.87

16

VII. Short-Term Borrowings

Short-term borrowings consist of securities sold under agreements to repurchase, short-term advances through Federal Home Loan Bank and federal funds purchased. Securities sold under agreements to repurchase generally mature one (1) day from the transaction date. Federal funds purchased generally have overnight terms. Information concerning short-term borrowings is summarized as follows:

(Dollars in thousands)	2008			2007			2006
Securities sold under agreements to repurchase, federal funds purchased and short-term advances at period-end	$	22,892		$	27,305		$	28,022
Weighted average interest rate at period-end		1.52	%		3.49	%		3.71	%
Maximum outstanding at any month-end during the year		28,826			34,371			41,468
Average amount outstanding		25,761			29,950			32,974
Weighted average rates during the year		2.23	%		3.96	%		3.84	%

Item 1B. Unresolved Staff Comments.

None.

17

ITEM 2. PROPERTIES.

The Bank operates thirteen banking centers and two other properties as noted below:

Location	Banking Center	Other Property	Address	Owned	Leased
Millersburg		X	6 West Jackson Street, Millersburg, Ohio 44654	X
Walnut Creek	X		4980 Old Pump Street, Walnut Creek, Ohio 44687	X
Winesburg	X		2225 U.S. 62, Winesburg, Ohio 44690	X
Sugarcreek	X		127 South Broadway, Sugarcreek, Ohio 44681	X
Charm	X		4440 C.R.70, Charm, Ohio 44617		X
Clinton Commons	X		2102 Glen Drive, Millersburg, Ohio 44654		X
Berlin	X		4587 S.R.39 Suite B, Berlin, Ohio 44610		X
South Clay	X		91 South Clay Street, Millersburg, Ohio 44654	X
Shreve	X		333 West South Street, Shreve, Ohio 44676	X
Orrville	X		461 Wadsworth Road, Orrville, Ohio 44667		X
Operations Center	X		91North Clay Street, Millersburg, Ohio 44654	X
Wooster Trust		X	146 East Liberty Street, Wooster, Ohio 44691		X
Gnadenhutten	X		100 South Walnut Street, Gnadenhutten, Ohio 44629	X
New Philadelphia	X		635 West High Avenue, New Philadelphia, Ohio 44663	X
North Canton	X		1210 North Main Street, North Canton, Ohio 44720		X

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 in management’s opinion, are adequately insured.

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 2008.

18

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 25 of the Annual Report is incorporated herein by reference.

Equity Compensation Plan Information

					Number of shares
	Number of shares of				remaining available for
	common stock to be issued		Weighted-average exercise		future issuance under
	upon exercise of		price of outstanding		equity compensation plans
	outstanding options,		options, warrants, and		(excluding securities
	warrants and rights		rights		reflected in column (a))
	(a)		(b)		(c)
Equity compensation plans approved by stockholders		40,720	$	17.55		159,280
Equity compensation plans not approved by stockholders		—		—		—
Total		40,720	$	17.55		159,280

ISSUER PURCHASES OF EQUITY SECURITIES

							Maximum
					Total Number of		Number of
					Shares		Shares that
					Purchased as Part of		May Yet be
	Total Number of		Average Price		Publicly Announced		Purchased
Period	Shares Purchased		Paid Per Share		Plans		Under the Plan
October 1, 2008 to October 31, 2008		—		—		—		41,471
November 1, 2008 to November 30, 2008		—		—		—		41,471
December 1, 2008 to December 31, 2008		—		—		—		41,471

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

19

PERFORMANCE GRAPH

The following graph compares the yearly stock change and the cumulative total shareholder return on CSB’s Common Shares during the five-year period ended December 31, 2008, with the cumulative total return on the NASDAQ Bank Stock Index and the Standard and Poor’s 500 Stock Index. The comparison assumes $100 was invested on December 31, 2003 in CSB’s Common Shares and in each of the indicated indices and assumes reinvestment of dividends.

	2003		2004		2005		2006		2007		2008
CSBB	$	100.00	$	123.03	$	130.38	$	121.83	$	118.57	$	104.93
S & P 500		100.00		108.99		112.26		127.55		132.06		81.23
NASDAQ Bank		100.00		110.99		106.18		117.87		91.85		69.88

ITEM 6. SELECTED FINANCIAL DATA.

Information contained in the section captioned “Selected Financial Data” on page 11 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 “2008 Financial Review” on pages 10 through 24 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 pages 20-21 of the Annual Report is incorporated herein by reference.

20

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Information contained in the consolidated financial statements and related notes and the Report of Independent Registered Public Accounting Firm thereon, on pages 26 through 53 of the Annual Report is incorporated herein by reference.

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

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Evaluation Of Disclosure Controls And Procedures

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 (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) was performed, as of the end of the period covered by this Annual Report. 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 there under.

Management’s Report on Internal Control Over Financial Reporting

Management’s Assessment of Internal Control Over Financial Reporting is contained in the consolidated financial statements and related notes on page 25 of the Annual Report and is incorporated herein by reference. This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this filing.

Changes In Internal Control Over Financial Reporting

There have been no significant changes during the quarter ended December 31, 2008, in the Company’s internal controls over financial reporting (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) or in other factors that could have significantly affected those controls subsequent to the date of our most recent evaluation of internal controls over financial reporting, including any corrective actions with regard to significant deficiencies and material weaknesses.

ITEM 9B. OTHER INFORMATION.

None

21

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Information contained in the section captioned “ELECTION OF DIRECTORS” on pages 7 and 8; “DIRECTORS AND EXECUTIVE OFFICERS” pages 9 and 10; “MEMBERSHIP AND MEETINGS OF THE BOARD AND ITS COMMITTEES” page 10; “COMMITTEES OF THE BOARD OF DIRECTORS” on pages 11 and 12; of the Company’s proxy statement for the Company’s Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission on or about March 25, 2009 (the “Proxy Statement”) and information contained in the section captioned “SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE” on page 7 of the Proxy Statement is incorporated herein by reference.

Code of Ethics

We have adopted a Code of Ethics that applies to our senior financial officers including our Chief Executive Officer and Chief Financial Officer. We have posted our Code of Ethics on our website at www.csb1.com. We plan to satisfy SEC disclosure requirements regarding any amendments to, or waiver of, the Code of Ethics relating to our Chief Executive Officer or Chief Financial Officer, and persons performing similar functions, by posting such information on our website or by making any necessary filings with the SEC. Any person may receive a copy of our Code of Ethics free of charge upon request.

ITEM 11. EXECUTIVE COMPENSATION.

Information contained in the section captioned “COMPENSATION DISCUSSION AND ANALYSIS” on pages 13 through 16 of the Proxy Statement, the section captioned “EXECUTIVE COMPENSATION AND OTHER INFORMATION” on pages 17 and 18 of the Proxy Statement, the section captioned “EMPLOYMENT CONTRACTS AND OTHER ARRANGEMENTS” on pages 21 and 22 of the Proxy Statement, and the section captioned “POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL” on page 20 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 6 and 7 of the Proxy Statement is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Information contained in the section captioned “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS” on page 25 of the Proxy Statement is incorporated herein by reference. There were no relationships where transactions exceeded $120,000 for the year ended December 31, 2008.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Information contained in the section captioned “INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES” on page 24 of the Proxy Statement is incorporated herein by reference.

22

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a)(1) Financial Statements

The consolidated financial statements (and report thereon) listed below are incorporated by reference from CSB Bancorp, Inc.’s 2008 Annual Report as noted:

• Report of Independent Registered Public Accounting Firm (S.R. Snodgrass) — pg. 26.

• Consolidated Balance Sheets at December 31, 2008 and 2007 — pg. 27.

• Consolidated Statements of Income for the years ended December 31, 2008, 2007 and 2006 — pg. 28.

• Consolidated Statements of Shareholder’s Equity — pg. 29.

• Consolidated Statements of cash flows for the years ended December 31, 2008, 2007 and 2006 — pgs. 30-31.

• Notes to Consolidated Financial Statements — pgs. 38-53.

(a)(2) Financial Statement Schedules

All schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and have been omitted.

(a)(3) Exhibits

The documents listed below are filed with this Annual Report on Form 10-K as exhibits or incorporated into this Annual Report on Form 10-k by reference as noted:

Exhibit Number	Description of Document
2.1	Agreement and Plan of Merger, dated as of May 14, 2008, by and between CSB Bancorp, Inc. and Indian Village Bancorp, Inc., as filed as Exhibit 2.1 with CSB Bancorp Inc.’s Form 8-K on May 16, 2008.
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).
10.3	Employment Agreement between CSB Bancorp, Inc. and John J. Limbert (incorporated by reference to Registrant’s Form 8-K filed May 22, 2003).
13	CSB Bancorp, Inc. 2008 Annual Report to Shareholders
21	Subsidiaries of CSB Bancorp, Inc.
23.1	Consent of S.R. Snodgrass A.C.
31.1	Section 302 Certification of Chief Executive Officer
31.2	Section 302 Certification of Chief Financial Officer
32.1	Section 906 Certification of Chief Executive Officer
32.2	Section 906 Certification of Chief Financial Officer

23

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/ Eddie L. Steiner
Date: March 25, 2009	Eddie L. Steiner, President and Chief Executive
	Officer

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 indicated on March 25, 2009.

Signatures	Title
/s/ Eddie L. Steiner Eddie L. Steiner	President and Chief Executive Officer
/s/ Paula J. Meiler Paula J. Meiler	Senior Vice President and Chief Financial Officer
/s/ Pamela S. Basinger Pamela S. Basinger	Vice President and Principal Accounting Officer
/s/ Robert K. Baker Robert K. Baker	Director
/s/ Ronald E. Holtman Ronald E. Holtman	Director
/s/ J. Thomas Lang J. Thomas Lang	Director
/s/ Daniel J. Miller Daniel J. Miller	Director
/s/ Jeffery A. Robb, Sr. Jeffery A. Robb, Sr.	Director
/s/ John R. Waltman John R. Waltman	Director

24

INDEX TO EXHIBITS

Exhibit		Sequential
Number	Description of Document	Page
2.1	Agreement and Plan of Merger, dated as of May 14, 2008, by and between CSB Bancorp, Inc. and Indian Village Bancorp, Inc., as filed as Exhibit 2.1 with CSB Bancorp Inc.’s Form 8-K on May 16, 2008.	N/A
3.1	Amended Articles of Incorporation of CSB Bancorp, Inc. (incorporated by reference to Registrant’s 1994 Form 10-KSB)	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
10.3	Employment Agreement between CSB Bancorp, Inc. and John J. Limbert (incorporated by reference to Registrant’s Form 8-K filed May 22, 2003)	N/A
13	CSB Bancorp, Inc. 2008 Annual Report to Shareholders	N/A
21	Subsidiaries of CSB Bancorp, Inc.	N/A
23.1	Consent of S.R. Snodgrass A.C.	N/A
31.1	Section 302 Certification of Chief Executive Officer	N/A
31.2	Section 302 Certification of Chief Financial Officer	N/A
32.1	Section 906 Certification of Chief Executive Officer	N/A
32.2	Section 906 Certification of Chief Financial Officer	N/A

25

EX-13

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

2008 Financial Highlights	4
2008 Letter to Shareholders	5
2008 Financial Review	10
Report on Management’s Assessment of Internal Control over Financial Reporting	25
Report of Independent Registered Public Accounting Firm	26
Consolidated Balance Sheets	27
Consolidated Statements of Income	28
Consolidated Statements of Shareholders’ Equity	29
Consolidated Statements of Cash Flows	30
Summary of Significant Accounting Policies	32
Notes to Consolidated Financial Statements	38
Officers of The Commercial & Savings Bank	54
General Information	55

      2008 Financial Highlights

For the years ended December 31, 2008 and 2007

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

4     CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

2008 Letter to Shareholders     

Dear Fellow Shareholder

     This 2008 annual report is presented to you on behalf of the women and men who serve as employees, officers and directors of CSB Bancorp, Inc. Their effort, dedication and competence yielded the favorable results of the past year; and each day provides ongoing safety, stability and strength in banking and financial services for our customers.

Financial Overview

     In 2008, the Company grew to $425 million in total assets, with year-end loan and deposit balances increasing to $313 million and $305 million, respectively. The greatest portion of 2008 growth occurred late in the year with the acquisition of Indian Village Bancorp, Inc. That event is discussed in further detail below.

     Net income for the year totaled $3.5 million, increasing $23 thousand over the prior year, and resulting in earnings per share of $1.43, or $0.01 per share above 2007.

     We were able to increase net interest income by $552 thousand during 2008, while noninterest income was flat and noninterest expenses increased by $610 thousand.

     Return on assets and return on equity both declined moderately in 2008, affected primarily by the impact of costs associated with the Indian Village acquisition while having the benefit of the increased scale for only the last two months of the year.

     CSB’s loan loss rate remained very low through 2008, and our capital levels and liquidity remain high. Our long-term shareholders know that one of the challenges we have is finding suitable opportunities for effective deployment of our capital levels. While the Indian Village acquisition represented such an opportunity, we still retain very high capital levels, which provide added measures of safety and stability during times of economic stress. The accompanying chart shows that our leverage ratio remained above 10% at the end of 2008. This key measurement is more than double the minimum standard required by regulatory authorities in order to be considered “well-capitalized.”

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS     5

Indian Village Acquisition

     CSB acquired Indian Village Bancorp, Inc. and its wholly owned subsidiary, Indian Village Community Bank on October 31, 2008. Indian Village was founded in 1923 and operated banking centers in Gnadenhutten, New Philadelphia and North Canton, Ohio.

     The Indian Village transaction increased our balance sheet by $82 million, adding $57 million in loans and approximately $59 million in deposits. With the acquisition, CSB became the largest independent community bank in its four county market area.

     We converted the Indian Village facilities to the CSB brand effective with the transaction date and are very pleased that the majority of former Indian Village employees have joined the CSB team. A transition planning team jointly composed of CSB and Indian Village employees performed superbly from the springtime announcement of the definitive agreement until the transaction was closed at the end of October. As a result, we were able to open the three new banking centers as full-fledged CSB operations on November 1.

     The Indian Village acquisition fit nicely with our strategic plan, a part of which includes growth by expanding primarily in Holmes and the surrounding counties. The three former Indian Village locations significantly expand the eastern range of our market presence and serve a sizeable deposit base. We are confident these new markets will provide opportunities for growth as we fully implement CSB’s combination of community banking excellence and competitive consumer and business product offerings.

Headwinds

     CSB’s biggest financial challenge during 2008 was managing interest rate risk, as market rates declined sharply over the course of the year. With the prime rate finishing the year at 3.25% and having dropped steadily from 7.25% at the beginning of 2008, we needed to actively manage our rate risk on both sides of the balance sheet. The challenge was compounded by liquidity needs of certain competitors, who paid above market rates for some deposit products through much of the year. Although we chose not to compete based on price in situations where rates were artificially high, we did have success in retaining core deposit relationships.

     We also experienced reductions in gross revenue within our trust and affiliated brokerage operations, driven

6     CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

largely by declining values of assets under management as the equity markets tumbled.

     As the end of 2008 approached, we noted greater frequencies of late payments on consumer and business loans, a potential early sign of stress on the loan portfolio.

     Still, we were able to maintain our core earnings momentum. More important, the high overall quality of our loan and investment portfolios, coupled with strong levels of capital and liquidity, position us to continue generating earnings and returns to our shareholders going forward.

Recession

     Simply put, the contraction of the overall economy was the big financial story of 2008 at both the national and local level. The slowdown started in 2007, with the largest drop in home prices in 25 years, and continued gaining strength throughout 2008.

     This recession appears to be as severe and as broad as any in the post-depression era, and has spread across much of the globe with tight credit conditions and a lack of liquidity in various financial markets. Foreclosure and unemployment rates have risen sharply across the U.S. Most individuals have experienced some measure of adverse financial consequence from the economic turmoil. For some, it means sharply reduced retirement savings or an extended horizon to retirement; for others, it means having to confront the stress of much lower cash flow, lost jobs, or even bankruptcy.

     The markets we serve have been impacted by these factors. As mentioned previously, signs of deteriorating credit conditions are apparent in our markets. Unemployment has risen in each of the four counties within our primary market. We will be closely monitoring these patterns and are increasing efforts to work with borrowers experiencing financial stress.

Looking Ahead

     While the current recession has cast a wide shadow over economic activities, we are very encouraged about CSB’s position in the marketplace, and are committed to using our strength and capabilities to best meet the banking needs in the markets we serve.

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS     7

     Our 2009 emphasis in the newly acquired Indian Village markets will have three primary components. First, we will be working to conform the Indian Village loan, investment and deposit profiles to the CSB business model. This will primarily entail work on credit quality and mix of deposits. Second, we will be working hard to establish our visible presence and brand recognition in the communities served by the three banking centers. The retention of key Indian Village employees will assist greatly in this effort, but we have a lot of work to do in introducing our commercial lending, business development and financial services staff to both current and prospective customers. Finally, we will be focusing on customer relationship banking. At CSB, that means striving for multiple points of service with each customer and not simply targeting growth through single relationship accounts.

     Strong customer adoption of business cash management services continued in 2008 and we remain focused on expanding the penetration of these services in 2009. Internet banking, direct deposit of payroll, direct debit and remote deposit capture are specific areas with forward momentum.

     We anticipate that market conditions will create additional growth opportunities for our Company over the next few years. Our primary commitment is to maintain the Bank’s strength and stability for each community and customer we serve. It is through this foundation that we can provide consistent return and value to our shareholders. We recognize that prudent growth can help us build even more strength when paced and managed properly. We will carefully assess each opportunity as it develops.

     As you review the accompanying charts and formal report of our financial condition and operating results, we believe you will find that our strategy of delivering excellence in community banking is yielding compelling results.

     Thank you for being a shareholder of CSB Bancorp, Inc. We hope to see you at the Company’s annual meeting on Wednesday, April 22, 2009.

Eddie L. Steiner	John R. Waltman
President and	Chairman,
Chief Executive Officer	Board of Directors

8     CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS     9

      2008 Financial Review

Introduction

     CSB Bancorp, Inc. (the “Company” or “CSB”) was incorporated under the laws of the State of Ohio in 1991 as a registered bank holding company for its wholly owned subsidiaries, The Commercial & Savings Bank (the “Bank”) and CSB Investment Services, LLC. 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 its primary Regulators are the Ohio Division of Financial Institutions and the Federal Reserve Board.

     The Company, through the Bank, provides retail and commercial banking services to its customers including checking and savings accounts, time deposits, cash management, safe deposit facilities, personal loans, commercial loans, real estate mortgage loans, installment loans, IRAs, night depository facilities, trust, and brokerage services. Its customers are located primarily in Holmes, Tuscarawas and portions of surrounding counties in Ohio. The general economic conditions in the Company’s market area have been sound, although a slowdown in activity due to a general recessionary environment was evident, particularly in the latter half of 2008. Unemployment statistics have generally been among the lowest in the State of Ohio, and the area has experienced slightly lower real estate values, a result of the softening economy.

     Effective as of the close of business on October 31, 2008, CSB completed the merger of Indian Village Bancorp, Inc. (“Indian Village”) with and into CSB pursuant to the terms of the Agreement and Plan of Merger dated May 14, 2008. Immediately following the merger, Indian Village Community Bank was merged with and into The Commercial & Savings Bank of Millersburg. The former Indian Village banking centers are located in Gnadenhutten, New Philadelphia and North Canton, Ohio. The Company paid a combination of stock and cash as set forth in the definitive agreement and plan of merger for each outstanding common share of Indian Village, resulting in merger consideration of approximately $8.1 million, including direct acquisition costs. The transaction was accounted for using the purchase method of accounting (see Note 3 – Business Combination).

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.

10     CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

2008 Financial Review     

Selected Financial Data

     The following table sets forth certain selected consolidated financial information:

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

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS     11

2008 Financial Review

Results of Operations

Net Income

     Net income for 2008 was $3,537,000, an increase of $23,000 or 0.7% from 2007. Basic and diluted net income per share was $1.43 and $1.42 for the years ended December 31, 2008 and 2007, respectively. Return on average assets was 0.99% in 2008 compared to 1.07% in 2007, and return on average shareholders’ equity was 9.23% in 2008 compared to 9.82% in 2007.

     Net income for 2007 was $3,514,000 or $1.42 per basic and diluted share as compared to $3,110,000 or $1.23 per basic and diluted share for 2006. This equated to a return on average assets of 1.07% in 2007 and 0.97% in 2006, while the return on average shareholders’ equity for the same periods was 9.82% and 8.95%, respectively.

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 the year of 2008 was $20.6 million, a decrease of $610 thousand or 2.9% from $21.2 million reflected for the year ended December 31, 2007. Interest and fees on loans decreased $1.0 million, or 5.6%, to $17.0 million from $18.0 million in 2007. The decrease is mainly attributable to a decrease of 98 basis points average yield over 2007. Interest income on securities increased $298,000 as the average balance in investments increased by $3.7 million in 2008 and the average yield increased 17 basis points. Other interest income rose $95,000 to $121,000 as the volume of overnight federal funds increased in 2008.

     Interest income for 2007 was $21.2 million, increasing $1.2 million from $20.0 million in 2006. Interest and fees on loans was $18.0 million, an increase of $1.4 million, or 8.3%, from 2006. This increase was mainly attributable to both an increase in volume of $16.5 million and a yield increase of 7 basis points. Interest income on securities decreased $210,000, as average balances decreased by $8.0 million in 2007 to provide funding for loan growth within the Company’s market area. Other interest income rose $14,000, as both the volume and rate of overnight federal funds sold increased in 2007.

     Interest expense for 2008 was $6.7 million, a decline of $1.2 million or 14.7% from 2007. Interest rates paid on interest bearing liabilities fell 73 basis points to 2.45% from 3.18% during the year when rates managed by the Federal Reserve Board fell 400 basis points. Interest expense on borrowed funds increased $354,000 to $1.9 million in 2008 primarily due to the increase in the average balance of borrowed funds of $23.2 million to $60.5 million. This increase included the assumption of $17.6 million fair value borrowings from the Indian Village acquisition.

     Interest expense for 2007 was $7.9 million, an increase of $1.0 million or 14.9%, from 2006. The Company’s interest expense on deposits increased $934,000 or 17.2%, due primarily to a 40 basis point increase in the average rate paid on interest-bearing deposits.

     Net interest income for 2008 increased by $552,000 to $13.9 million. The $29.6 million increase in average interest-earning assets was offset somewhat by a 22 basis point decrease in the net interest margin as rates decreased faster on interest-earning assets than interest-bearing liabilities.

     Net interest income for 2007 increased by $158,000 to $13.3 million. The $8.8 million increase in average interest-earning assets was offset somewhat by a 7 basis point decrease in the net interest margin as rates increased faster on interest-bearing liabilities than interest-bearing assets.

12     CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

2008 Financial Review     

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

(1)	Average balances have been computed on an average daily basis.
(2)	Average rates have been computed based on the amortized cost of the corresponding asset or liability.
(3)	Average loan balances include nonaccrual loans.

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS     13

2008 Financial Review

	Rate/Volume Analysis of Changes in Income and Expense (1)
	(Dollars in thousands)
	2008 v. 2007									2007 v. 2006
	Change In									Change In
	Income/			Volume			Rate			Income/			Volume			Rate
	Expense			Effect			Effect			Expense			Effect			Effect
Interest Income
Federal funds sold	$	95		$	110		$	(15	)	$	14		$	11		$	3
Interest-earning deposits		—			1			(1	)		1			2			(1	)
Securities:
Taxable		326			172			154			(78	)		(251	)		173
Tax exempt		(28	)		11			(39	)		(132	)		(131	)		(1	)
Loans		(1,003	)		1,357			(2,360	)		1,381			1,231			150
Total interest income		(610	)		1,651			(2,261	)		1,186			862			324
Interest Expense
Demand deposits		(124	)		(1	)		(123	)		25			(3	)		28
Savings deposits		(135	)		37			(172	)		100			(5	)		105
Time deposits		(1,257	)		(22	)		(1,235	)		810			169			641
Other borrowed funds		354			731			(377	)		93			61			32
Total interest expense		(1,162	)		745			(1,907	)		1,028			222			806
Net interest income	$	552		$	906		$	(354	)	$	158		$	640		$	(482	)

(1) Changes attributable to both volume and rate, which cannot be segregated, have been allocated based on the absolute value of the change due to volume and the change due to rate.

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

(Dollars in thousands)	2008			2007			2006
Net interest income	$	13,878		$	13,326		$	13,167
Taxable equivalent adjustment (1)		131			144			210
Net interest income – fully taxable equivalent	$	14,009		$	13,470		$	13,377
Net interest yield		4.09	%		4.31	%		4.38	%
Taxable equivalent adjustment (1)		.04			.04			.07
Net interest yield – taxable equivalent		4.13	%		4.35	%		4.45	%

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

Provision for Loan Losses

     During 2008, the Company reported a provision for loan losses of $333,000 as compared to a provision of $472,000 in 2007 and a provision for loan losses of $302,000 for 2006. See “Financial Condition – Allowance for Loan Losses” for additional discussion and information relative to the provision for loan losses.

14     CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

2008 Financial Review     

Noninterest Income

	Year Ended December 31
	(Dollars in thousands)
	Change from 2007								Change from 2006
	2008			Amount			%		2007			Amount			%			2006
Service charges on deposit accounts	$	1,273		$	42		3.4	%	$	1,231		$	(48	)		(3.8	)%	$	1,279
Trust services		646			(85	)	(11.6	)		731			191			35.4			540
Debit card interchange fees		317			41		14.9			276			65			30.8			211
Credit card fee income		166			(96	)	36.6			262			(29	)		(10.0	)		291
Insurance recovery		—			(187	)	N.M.			187			187			N.M.			—
Securities gain (loss)		(35	)		(52	)	N.M.			17			74			N.M.			(57	)
Gain on sale of loans		288			270		N.M.			18			6			50.0			12
Gain (loss) on sale of other real estate		3			4		N.M.			(1	)		25			N.M.			(26	)
Other		375			61		19.4			314			(28	)		(8.2	)		342
Total noninterest income	$	3,033			(2	)	(0.1	)%	$	3,035			443			17.1	%	$	2,592

N.M.,  not a meaningful value

     Total noninterest income decreased $2,000 or (0.1%) in 2008 from 2007. Service charges on deposit accounts rose $42,000 or 3.4% as fees were increased in 2008. Trust service fee income declined $85,000 in 2008 primarily the result of the fair market value of the assets under management declining, therefore reducing the driver for fee income. Debit card interchange fees increased $41,000 or 14.9% primarily the result of a full year under a new third party vendor, which provided increased interchange fees. The securities loss was the result of a $35,000 other-than-temporary impairment recognized on an equity investment. The gain on sale of loans recognizes the $267,000 gain on sale of the credit card portfolio during first quarter 2008. Other income reflected an increase of $61,000 or 19.4%. This includes increases in accretion in CSV life insurance acquired in the Indian Village transaction of $17,000, $24,000 increase recognized on an administrative services agreement, $11,000 increase in noncustomer ATM fees, and a $6,000 increase in wire transfer fees.

     Total noninterest income increased $443,000 or 17.1% to $3.0 million in 2007 from $2.6 million in 2006. Fees from Trust services and brokerage rose $191,000, a result of both Trust assets under management and account fees increasing in 2007. Debit card interchange fees rose $65,000 in 2007 over 2006, a result of a mid-year conversion in 2007 to a different third party service provider that provides increased interchange fees. The $187,000 insurance recovery represents the net insurance proceeds received in the repayment of the 2006 expense involving a cash irregularity. Securities gains were recognized in 2007 on the early call and redemption features of bonds called at a premium.

Noninterest Expenses

	Year Ended December 31
	(Dollars in thousands)
	Change from 2007								Change from 2006
	2008		Amount			%			2007		Amount			%			2006
Salaries and employee benefits	$	6,261	$	407			7.0	%	$	5,854	$	(32	)		0.5	%	$	5,886
Occupancy expense		1,034		301			41.1			733		47			6.9			686
Equipment expense		520		16			3.2			504		6			1.2			498
Professional and directors’ fees		512		(68	)		11.7			580		(79	)		(12.0	)		659
Franchise tax expense		437		20			4.8			417		(13	)		3.0			430
Marketing and public relations		364		(9	)		(2.5	)		373		39			11.7			334
Telecommunications		221		(4	)		(1.8	)		225		4			1.8			221
Cash irregularity		—		—			—			—		(237	)		N.M.			237
Amortization of intangible assets		11		11			N.M.			—		—			—			—
Other		1,951		(64	)		(3.2	)		2,015		51			2.6			1,964
Total noninterest expenses	$	11,311	$	610			5.7	%	$	10,701	$	(214	)		(2.0	)%	$	10,915

N.M.,  not a meaningful value

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS     15

2008 Financial Review

     Total noninterest expense increased $610,000 or 5.7% during 2008. Salaries and employee benefits increased $407,000 or 7.0% in 2008 a result of increased medical costs of approximately $40,000 or 10% in 2008, increases to retirement and incentive accruals, overtime paid during the acquisition and systems conversion of Indian Village, and salary and benefit costs arising from the acquisition of Indian Village beginning November 1, 2008 of approximately $83,000. Occupancy and equipment expense rose $317,000 in 2008 primarily the result of a $250,000 write-down of the downtown Millersburg building. The office located on the square in Millersburg is the former main office that has been designated as a disaster recovery site and is currently used for storage. The increase in occupancy expense for the three Indian Village acquired offices during 2008 approximates $38,000. Professional and directors’ fees decreased $68,000 or 11.7% during 2008 primarily the result of a reduction in outside service fees for overdraft privilege of $28,000, directors’ fees of $13,000, and audit and other professional fees of $27,000. Other expenses decreased $64,000 from 2007, primarily the result of the sale of the credit card portfolio during the first quarter of 2008. Credit card expenses decreased $195,000, ATM third party vendor fees decreased $41,000 and trust and brokerage other expense decreased $16,000. Increases in other expenses were recognized as follows: $60,000 increase in stationery and printing a result of the Indian Village conversion and implementation of electronic image capture, $35,000 increase in FDIC premiums, and $38,000 increase in correspondent bank fees and software expense as the bank sends and receives all checks for clearing electronically. Total noninterest expenses related to the Indian Village conversion including overtime were $137,000 in 2008.

     Total noninterest expenses decreased $214,000 or 2.0% during 2007. Salaries and employee benefits expense decreased $32,000 or 0.5%, a result of a reduction of incentive and medical expenses that were partially offset by the addition of employees to staff the Orrville office. Occupancy and equipment expenses rose $53,000 in 2007 from 2006. The increase was primarily the result of opening the branch facility in the Orrville, Ohio area. Professional and directors’ fees decreased $79,000 from 2006 to 2007. Within this category, decreases were recognized in legal and collection fees of $13,000, directors’ fees of $13,000, and audit and tax fees of $18,000. Additional decreases within professional fees were recognized as other outside service fees decreased $24,000, reflecting lower amounts paid to the vendor for Overdraft Privilege services. Other expenses increased $51,000 from 2006. This increase was associated with a $39,000 increase resulting from an ATM and debit card conversion expense as the Company changed debit card vendors during the last half of 2007.

Income Taxes

     The provision for income taxes amounted to $1,729,400 in 2008 (effective rate 32.8%) as compared to $1,674,200 in 2007 (effective rate of 32.3%), and $1,433,000 in 2006 (effective rate of 31.5%). The increase in the provision during the three-year period reflects increasing taxable revenues.

Financial Condition

     Total assets of the Company were $424.7 million at December 31, 2008, compared to $350.3 million at December 31, 2007, representing an increase of $74 million or 21.2%. Net loans increased $58.8 million or 23.2% while investments rose $7.4 million or 9.9%. Deposits increased $46.1 million or 17.8% while other borrowings from the Federal Home Loan Bank (FHLB) increased by $25.0 million.

Securities

     Total securities increased $7.4 million or 9.9% from $74.5 million at year-end 2007. During the first quarter 2008 a $10 million leverage strategy was implemented by purchasing $10 million in agency mortgage-backed pass through securities that were funded by various mid-term FHLB advances. The goal of the strategy is to provide a minimum 1% return on assets after tax for a period of five years. The securities portfolio at year-end 2008 and 2007 consisted of U.S. Treasury, U.S. government corporations and agencies, obligations of state and political subdivisions and mortgage-backed securities. Restricted securities consist primarily of FHLB stock. During 2008, increases occurred in total mortgage-backed securities, tax-free bonds and restricted stock.

16     CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

2008 Financial Review     

     The Company held private label CMO investments of $5 million current value, with gross unrealized losses of $37,000 at December 31, 2008, compared to a $4.6 million current value and gross unrealized losses of $32,000 at December 2007. All bonds have investment grade ratings at December 31, 2008, collateralized primarily by fixed-rate 1-4 family mortgage loans with borrowers in a wide geographical dispersion. All credit scores and loan to value ratios exceed subprime status.

     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.

Loans

     Gross loans totaled $316.3 million at December 31, 2008 as compared to $256.7 million at year-end 2007, representing an increase of $59.6 million or 23.2%. The acquisition of Indian Village did not materially change the composition of the loan portfolio while adding $56.7 million in fair-valued loans on the acquisition date. Commercial and commercial real estate loans comprise approximately 54% of the total portfolio decreasing from 56% at year-end 2007. Residential real estate increased from 36% to approximately 40% between December 31, 2007 and 2008. Construction loans decreased from 5% to 4% of the total portfolio between 2007 and 2008. The Company is well within the respective regulatory guidelines for investment in construction development and investment property loans that are not owner occupied. After a review of its increasing vendor costs and lack of material growth within the Company’s credit card portfolio, the Company sold its credit card portfolio during the first quarter 2008. Proceeds from the sale were $2.5 million with $267,000 gain on sale recognized.

     The Company’s market reflected softened demand for both commercial real estate and residential real estate loans in 2008. There was continued consumer demand for home equity loans in 2008. Management believes the Company’s local service areas will experience modest economic activity with a continued need for these types of lending products in 2009.

     Most of the Bank’s lending activity is with customers primarily located within Holmes County, Tuscarawas County and Wayne County. Credit concentrations, including commitments, as determined using North American Industry Classification Codes (NAICS), to the four largest industries compared to total loans at December 31, 2008 included $20.1 million or 6.4% of total loans to lessors of residential building or dwellings; $16.4 million or 5.2% of total loans to lessors of nonresidential real estate; $13.6 million or 4.3% of total loans to logging, sawmills and timber tract operations; $12.2 million or 3.8% of total loans to borrowers in the hotel, motel and lodging business. These loans are generally secured by real property and equipment, and repayment is expected from operational cash flow. Credit losses arising from the Bank’s lending experience in all four industries compare favorably with the Bank’s loss experience on its loan portfolio as a whole. Credit evaluation is based on an evaluation of cash flow coverage of principal and interest payments and the adequacy of the collateral received.

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’s Allowance for Loan and Lease Losses Policy includes, among other items, provisions for classified loans and a provision for the remainder of the portfolio based on historical data, including past charge-offs.

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS     17

2008 Financial Review

     The allowance for loan losses totaled $3.4 million or 1.07% of total loans at year-end 2008 as compared to $2.6 million or 1.01% of total loans at year-end 2007. Net recoveries for 2008 totaled $17,000 as compared to net charge-offs of $493,000 and $140,000 in 2007 and 2006, respectively. Net charge-offs of $55,000, $9,000, $(96,000), $(1,000) and $16,000 occurred in commercial loans, mortgage loans, consumer loans, credit cards, and overdrafts, respectively, during 2008.

     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, aggregated $2.6 million or 0.8% of loans at year-end 2008 as compared to $571,000, or 0.2% and $1.5 million, or 0.6% of loans at year-end 2007. Impaired loans were $2.4 million at year-end 2008 as compared to $198,000 at year-end 2007. The increase in 2008 results from the acquisition of $2.2 million fair value from the Indian Village loan portfolio and $220,000 organic increases, while $169,000 in loans classified as impaired at December 2007 were removed either through payment or charge-off. 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 increased $1.2 million to $8.5 million at year-end 2008. The fair value of the Indian Village fixed assets acquired was $1.6 million and depreciation exceeded new purchases in the Company.

     Other real estate owned at December 31, 2008 was $79,000 as compared to $102,000 owned at December 31, 2007. At December 31, 2008 the Company recognized a net deferred tax asset of $1.6 million as compared to a net liability of $54,000 at December 2007. The change in the Company’s net deferred tax position resulted primarily from the recognition of the tax loss carry-forward from the acquisition of Indian Village.

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. Total deposits increased $46.1 million to $305.5 million at year-end 2008 as compared to $259.4 million at year-end 2007. The Indian Village acquisition added $58.9 million in fair-valued deposits as of the acquisition date. Noninterest-bearing deposits increased $3.0 million or 6.6% to $49.1 million as compared to $46.0 million at year-end 2007. Interest-bearing deposits increased $43.0 million or 20.2% to $256.4 million at year-end 2008 as compared to $213.3 million at year-end 2007. Interest-bearing demand deposits decreased $1.4 million to $47.5 million at year-end 2008 as compared to $48.9 million at year-end 2007, while money market savings accounts increased by $7.6 million and traditional saving deposits increased $6.0 million from year-end 2007. Time deposits in excess of $100,000 increased $14.2 million while other certificates of deposit increased $16.7 million, during a time period when the Company adopted relationship pricing that pays a higher rate of interest on time deposits only if the customer has additional checking, savings or consumer loan relationships.

Other Funding Sources

     The Company obtains additional funds through securities sold under repurchase agreements and advances from the FHLB and overnight borrowings from the FHLB or other financial institutions. These borrowings totaled $73.9 million at year-end 2008 as compared to $53.3 million at year-end 2007. Of the $20.6 million increase in borrowings, $17.6 million was a result of the acquisition of Indian Village.

18     CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

2008 Financial Review     

Capital Resources

     Total shareholders’ equity increased to $43.5 million at December 31, 2008 as compared to $36.3 million at December 31, 2007. This increase was primarily due to the issuance of 312,816 common shares valued at $5.5 million to acquire Indian Village Bancorp, Inc. on October 31, 2008, $3.5 million net income in 2008, which was partially offset by the payment of cash dividends of $1.8 million and the repurchase of 25,641 shares of treasury stock for $415,000. The Board of Directors announced a Stock Repurchase Program on July 7, 2005 that would allow the repurchase of up to 10% of the Company’s common shares outstanding. Repurchased shares are to be held as treasury stock and would be available for general corporate purposes. At December 31, 2008 approximately 41,000 shares could still be repurchased under the current authorized Program.

     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 and Bank’s actual and required capital amounts are disclosed in Note 12 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 year net income and prior two years net 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 $12.7 million at December 31, 2008 an increase of $500,000 from $12.2 million at December 31, 2007. Net income, securities available for sale, and loan repayments also serve as sources of liquidity. Cash and cash equivalents and securities maturing within one year represent 6.6% of total assets at year-end 2008, as compared to 4.5% of total assets at year-end 2007. Other sources of liquidity include, but are not limited to, purchase of federal funds, advances from the FHLB, adjustments of interest rates to attract deposits, and borrowing at the Federal Reserve discount window. Management believes that its sources of liquidity are adequate to meet both the short-term and long-term needs of the Company.

     As summarized in the consolidated statements of cash flows, the most significant investing activities for the Company in 2008 included net loan originations of $4.7 million, the maturities and calls of securities totaling $35.6 million, offset by $31.6 million in securities purchases. The Company’s financing activities included an $8.0 million increase in FHLB advances and a $12.8 million decrease in deposits.

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS     19

2008 Financial Review

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 consist 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 board of directors establishes broad policies and operating limits with respect to interest rate risk. 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 modeling, 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 2008 and 2007. Income simulation analysis is used to measure the sensitivity of forecasted net interest income to changes in market rates over a one-year time horizon. The economic value of equity (EVE) is calculated by subjecting the period-end balance sheet on a quarterly basis to changes in interest rates and measuring the impact of the changes on the values of the assets and liabilities. 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.

Net Interest Income at Risk
December 31, 2008
Change in		Net Interest		Dollar
Interest Rates		Income		Change		Percentage			Board Policy
(basis points)		(Dollars in Thousands)				Change			Limits
	+200	$	16,084	$	651		4.2	%		±15.0	%
	+100		15,786		353		2.3			±10.0
	0		15,433		—		—
	-100		15,532		99		0.6			±10.0
	-200		N/A		N/A		N/A			±15.0

Net Interest Income at Risk
December 31, 2007
Change in		Net Interest		Dollar
Interest Rates		Income		Change			Percentage			Board Policy
(basis points)		(Dollars in Thousands)					Change			Limits
	+200	$	14,682	$	506			3.6	%		± 15.0	%
	+100		14,457		281			2.0			± 10.0
	0		14,176		—			—
	-100		13,988		(188	)		(1.3	)		± 10.0
	-200		13,646		(530	)		(3.7	)		± 15.0

     Management reviews Net Interest Income at Risk with the Board on a periodic basis. The Company was within all Board-approved limits at December 31, 2008 and 2007.

20     CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

2008 Financial Review

Economic Value of Equity at Risk

Change in Interest Rates (basis points)	Percentage Change			Board policy limits
December 31, 2008
+200		-18.1	%		±20	%
+100		-6.8			±15
-100		N/A			±15
-200		N/A			±20
December 31, 2007
+200		-17.3	%		±20	%
+100		-5.6			±15
-100		+3.1			±15
-200		+5.2			±20

     Management reviews Economic Value of Equity at Risk with the Board on a periodic basis. The Company was within all Board-approved limits at December 31, 2008 and 2007.

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 adjustable rate loans depending on the current relative levels and expectations of future short-term and long-term interest rates. Prepayments on adjustable rate residential 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 Measurements

     The Company discloses the estimated fair value of its financial instruments at December 31, 2008 in Note 16 to the consolidated financial statements.

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS      21

2008 Financial Review

Off-Balance Sheet Arrangements, Contractual Obligations, and Contingent Liabilities and Commitments

     The following table summarizes the Bank’s loan commitments, including letters of credit, as of December 31, 2008:

	Amount of Commitment to Expire Per Period
	(Dollars In Thousands)
	Total		Less Than 1		1–3		4–5		Over 5
Type of Commitment	Amount		Year		Years		Years		Years
Commercial lines-of-credit	$	33,059	$	30,299	$	2,571	$	25	$	164
Real estate lines-of-credit		21,193		176		623		3,708		16,686
Consumer lines-of-credit		1,000		1,000		—		—		—
Overdraft Privilege		5,767		5,767		—		—		—
Letters of credit		772		753		19		—		—
Total Commitments	$	61,791	$	37,995	$	3,213	$	3,733	$	16,850

     As indicated in the preceding table, the Bank had $61.8 million in total loan commitments at the end of 2008, with $38.0 million of that amount expiring within one year. All lines-of-credit represent either fee-paid or legally binding loan commitments for the loan categories noted. Letters of credit are also included in the amounts noted in the table since the Bank requires that each letter of credit be supported by a loan agreement. The commercial and consumer lines represent both unsecured and secured obligations. The real estate lines are secured by mortgages on residential and nonresidential property. It is anticipated that a significant portion of these lines will expire without being drawn upon.

     The following table summarizes the Company’s other contractual obligations, exclusive of interest, as of December 31, 2008:

	Payment Due by Period
	(Dollars In Thousands)
	Total		Less Than 1		1–3		4–5		Over 5
Contractual Obligations	Amount		Year		Years		Years		Years
Total time deposits	$	154,225	$	94,226	$	50,531	$	8,812	$	656
Short-term borrowings		22,892		22,892		—		—		—
Other borrowings		50,998		9,643		26,195		2,703		12,457
Operating leases		396		120		239		37		—
Total Obligations	$	228,511	$	126,881	$	76,965	$	11,552	$	13,113

     The other borrowings noted in the preceding table represent borrowings from the Federal Home Loan Bank of Cincinnati. The notes require payment of interest on a monthly basis with principal due in monthly installments or at maturity, depending upon the issue. The obligations bear stated fixed interest rates and stipulate a prepayment penalty if the note’s interest rate exceeds the current market rate for similar borrowings at the time of repayment. As the notes mature, the Bank evaluates the liquidity and interest rate circumstances at that time to determine whether to pay off or renew the note. The evaluation process typically includes the strength of current and projected customer loan demand, the Bank’s federal funds sold or purchased position, projected cash flows from maturing investment securities, the current and projected market interest rate environment, local and national economic conditions, and customer demand for the Bank’s deposit product offerings.

22     CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

2008 Financial Review

Accounting Developments

     In April 2008, the FASB issued FASB Staff Position No. 142-3, Determination of the Useful Life of Intangible Assets (“FSP 142-3”). FSP 142-3 amends the factors that should be considered in developing assumptions about renewal or extension used in estimating the useful life of a recognized intangible asset under FAS No. 142, Goodwill and Other Intangible Assets. This standard is intended to improve the consistency between the useful life of a recognized intangible asset under FAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under FAS No. 141R and other GAAP. FSP 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008. The measurement provisions of this standard will apply only to intangible assets of the Company acquired after the effective date. The Company is currently evaluating the impact the adoption of the FSP will have on the Company’s results of operations.

     In February 2008, the FASB issued FSP No. FAS 140-3, Accounting for Transfers of Financial Assets and Repurchase Financing Transactions. This FSP concludes that a transferor and transferee should not separately account for a transfer of a financial asset and a related repurchase financing unless (a) the two transactions have a valid and distinct business or economic purpose for being entered into separately and (b) the repurchase financing does not result in the initial transferor regaining control over the financial asset. The FSP is effective for financial statements issued for fiscal years beginning on or after November 15, 2008 and interim periods within those fiscal years. The adoption of this FSP is not expected to have a material effect on the Company’s results of operations or financial position.

     In December 2007, the FASB issued FAS No. 141 (revised 2007), Business Combinations [“FAS 141(R)], which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in an acquiree, including the recognition and measurement of goodwill acquired in a business combination. FAS No. 141(R) is effective for fiscal years beginning on or after December 15, 2008. Earlier adoption is prohibited. The adoption of this standard is not expected to have a material effect on the Company’s results of operations or financial position.

     In September 2006, the FASB issued FAS No. 157, Fair Value Measurements, which provides enhanced guidance for using fair value to measure assets and liabilities. The standard applies whenever other standards require or permit assets or liabilities to be measured at fair value. The Standard does not expand the use of fair value in any new circumstances. FAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. In February 2008, the FASB issued Staff Position No. 157-1, Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13, which removed leasing transactions accounted for under FAS No. 13 and related guidance from the scope of FAS No. 157. Also in February 2008, the FASB issued Staff Position No.157-2, Partial Deferral of the Effective Date of Statement 157, which deferred the effective date of FAS No. 157 for all nonfinancial assets and nonfinancial liabilities to fiscal years beginning after November 15, 2008. Management does not anticipate that the provision of FAS No. 157 will have an impact on the Company’s consolidated results of operations or consolidated financial position but will require additional disclosures in the Company’s consolidated financial statements.

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS     23

2008 Financial Review

Critical Accounting Policies

     The Company’s consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles and follow general practices within the commercial banking industry. Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements. These estimates, assumptions, and judgments are based upon the information available as of the date of the financial statements.

     The most significant accounting policies followed by the Company are presented in the Summary of Significant Accounting Policies. These policies, along with the other disclosures presented in the Notes to Consolidated Financial Statements and the 2008 Financial Review, provide information about how significant assets and liabilities are valued in the financial statements and how those values are determined. Management has identified the determination of the other-than-temporary investment security impairment and allowance for loan losses as the accounting areas that require the most subjective and complex estimates, assumptions, and judgments and, as such, could be the most subject to revision as new information becomes available.

     Securities are evaluated periodically to determine whether a decline in their value is other-than-temporary. Management utilizes criteria such as the magnitude and duration of the decline, in addition to the reasons underlying the decline, to determine whether the loss in value is other-than-temporary. The term “other-than-temporary” is not intended to indicate that the decline is permanent, but indicates that the prospect for a near-term recovery of value is not necessarily favorable, or that there is a lack of evidence to support a realizable value equal to or greater than the carrying value of the investment. Once a decline in value is determined to be other-than-temporary, the value of the security is reduced and a corresponding charge to earnings is recognized.

     As previously noted in the section entitled Allowance for Loan Losses, management performs analysis to assess the adequacy of its allowance for loan losses. This analysis encompasses a variety of factors including the potential loss exposure for individually reviewed loans, the historical loss experience, the volume of nonperforming loans (i.e., loans in nonaccrual status or past due 90 days or more), the volume of loans past due, any significant changes in lending or loan review staff, an evaluation of current and future local and national economic conditions, any significant changes in the volume or mix of loans within each category, a review of the significant concentrations of credit, and any legal, competitive, or regulatory concerns.

Impact of Inflation and Changing Prices

     The consolidated financial statements and related data presented herein have been prepared in accordance with U.S. 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.

24     CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

2008 Financial Review

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 interdealer prices, without markup, markdown or commission and may not represent actual transactions. The chart specifies cash dividends declared by the Company to its shareholders during 2008 and 2007. 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 12 of the consolidated financial statements.

					Dividends
Quarter Ended	High		Low		Declared
March 31, 2008	$	17.90	$	15.75	$	439,353
June 30, 2008		18.00		15.75		435,969
September 30, 2008		16.25		14.40		435,957
December 31, 2008		16.00		14.00		492,264
March 31, 2007	$	19.05	$	17.50	$	443,320
June 30, 2007		18.25		17.42		443,320
September 30, 2007		19.00		15.95		443,320
December 31, 2007		17.75		15.40		441,531

As of December 31, 2008, the Company had 1,399 shareholders and 2,734,799 outstanding shares of common stock.

Report on Management’s Assessment of Internal Control over Financial Reporting

     The management of CSB Bancorp, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting. Management has designed our internal control over financial reporting to provide reasonable assurance that our published financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles.

     Management is required by paragraph (c) of Rule 13a-15 of the Securities Exchange Act of 1934, as amended, to assess the effectiveness of our internal control over financial reporting as of each year-end. In making this assessment, management used the Internal Control-Integrated Framework issued in July 1994 by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

     Management conducted the required assessment of the effectiveness of our internal control over financial reporting as of December 31, 2008. Based upon this assessment, management believes that our internal control over financial reporting is effective as of December 31, 2008.

     This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

Eddie L. Steiner	Paula J. Meiler
President and CEO	Senior Vice President and Chief Financial Officer

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS     25

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders CSB Bancorp, Inc.

     We have audited the accompanying consolidated balance sheets of CSB Bancorp, Inc. and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statement of income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2008. 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.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of CSB Bancorp, Inc. and subsidiaries as of December 31, 2008 and 2007, and the consolidated results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles.

     As discussed in Note 15 to the consolidated financial statements, effective January 1, 2008, the Company adopted Statement of Financial Accounting Standards No. 157, Fair Value Measurements.

     We were not engaged to examine management’s assertions about the effectiveness of CSB Bancorp, Inc.’s internal control over financial reporting as of December 31, 2008, included in the accompanying “Report on Management’s Assessment of Internal Control over Financial Reporting” and, accordingly, we do not express an opinion thereon.

Wexford, Pennsylvania
March 9, 2009

26     CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

Consolidated Balance Sheets

December 31, 2008 and 2007

	2008			2007
Assets
Cash and cash equivalents
Cash and due from banks	$	8,698,917		$	12,111,807
Interest-earning deposits in other banks		2,961,153			81,555
Federal funds sold		1,086,000			—
Total cash and cash equivalents		12,746,070			12,193,362
Securities
Available-for-sale, at fair value		76,655,816			71,419,830
Restricted stock, at cost		5,231,800			3,105,900
Total securities		81,887,616			74,525,730
Loans		316,290,412			256,659,059
Less allowance for loan losses		3,393,685			2,585,901
Net loans		312,896,727			254,073,158
Premises and equipment, net		8,470,855			7,273,238
Other intangible assets		597,014			14,962
Goodwill		1,448,029			—
Bank-owned life insurance		2,748,909			—
Accrued interest receivable and other assets		3,861,962			2,189,295
Total Assets	$	424,657,182		$	350,269,745
Liabilities and Shareholders’ Equity
Liabilities
Deposits
Noninterest-bearing	$	49,058,592		$	46,038,976
Interest-bearing		256,394,147			213,347,066
Total deposits		305,452,739			259,386,042
Short-term borrowings		22,891,593			27,305,157
Other borrowings		50,997,537			26,023,888
Accrued interest payable and other liabilities		1,846,841			1,276,610
Total liabilities		381,188,710			313,991,697
Shareholders’ Equity
Common stock, $6.25 par value. Authorized 9,000,000 shares; issued 2,980,602 shares in 2008 and 2,667,786 in 2007		18,628,767			16,673,667
Additional paid-in capital		9,986,499			6,452,319
Retained earnings		19,723,972			17,990,445
Treasury stock at cost – 245,803 shares in 2008 and 220,162 shares in 2007		(5,014,541	)		(4,599,282	)
Accumulated other comprehensive income (loss)		143,775			(239,101	)
Total shareholders’ equity		43,468,472			36,278,048
Total Liabilities and Shareholders’ Equity	$	424,657,182		$	350,269,745

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

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS     27

Consolidated Statements of Income

Years Ended December 31, 2008, 2007 and 2006

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

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

28     CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

Consolidated Statements of Shareholders’ Equity

Years Ended December 31, 2008, 2007 and 2006

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

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

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS     29

Consolidated Statements of Cash Flows

Years Ended December 31, 2008, 2007 and 2006

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

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

30     CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

Consolidated Statements of Cash Flows

Years Ended December 31, 2008, 2007 and 2006

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

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

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS     31

Summary of Significant Accounting Policies

     CSB Bancorp, Inc. (the “Company” or “CSB”) was incorporated in 1991 in the State of Ohio, and is a registered financial holding company for its wholly-owned subsidiaries, The Commercial & Savings Bank (the Bank) and CSB Investment Services, LLC. The Company, through its subsidiaries, operates in one industry segment, the commercial banking industry.

     The Bank, an Ohio-chartered bank organized in 1879, provides financial services through its thirteen Banking Centers located in Holmes County 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 U.S. 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 estimate susceptible to change in the near term relates to management’s determination of the allowance for loan losses and the fair value of financial instruments.

Principles of Consolidation

     The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. 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 that 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, 2008 and 2007 was $400,000 and $3,128,000, respectively.

Securities

     Securities designated as available-for-sale are carried at fair value with unrealized gains and losses on such securities, net of applicable income taxes, recognized as other comprehensive income (loss).

     The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity based on the interest method. Such amortization and accretion is included in interest and dividends on securities.

     Investments in Federal Home Loan Bank and Federal Reserve Bank stock are classified as restricted securities, carried at cost, and evaluated for impairment.

     Gains and losses on sales of securities are accounted for on a trade date basis, using the specific identification method, and are included in noninterest income. Securities are periodically reviewed for other-than-temporary impairment based

32     CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

Summary of Significant Accounting Policies     

upon a number of factors, including, but not limited to, the length of time and extent to which the market value has been less than cost, the financial condition of the underlying issuer, the ability of the issuer to meet contractual obligations, the likelihood of the security’s ability to recover any decline in its market value and management’s intent and ability to hold the security for a period of time sufficient to allow for a recovery in market value. Among the factors that are considered in determining management’s intent and ability is a review of the Company’s capital adequacy, interest rate risk position and liquidity. The assessment of a security’s ability to recover any decline in market value, the ability of the issuer to meet contractual obligations and management’s intent and ability require considerable judgment. A decline in value that is considered to be other-than-temporary is recorded as a loss within noninterest income in the consolidated statement of income.

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 over the life 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.

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS      33

      Summary of Significant Accounting Policies

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 write-downs are included in other operating expense, as are gains or losses upon sale and expenses related to maintenance of the properties. Other real estate owned amounted to $79,000 and $101,700 at December 31, 2008 and 2007, respectively.

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.

Goodwill and Other Intangible Assets

     Goodwill represents the excess of the cost of the Company’s investment in the net assets of the acquired company over the fair value of the underlying identifiable net assets at the date of acquisition. Goodwill is not amortized, but is tested at least annually for impairment.

     Other intangible assets represent core deposit intangible and mortgage servicing rights. These assets are assigned useful lives which are amortized on a straight-line basis over their weighted average lives. The Company will periodically review the intangible asset for impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

Bank-Owned Life Insurance

     The Company acquired bank-owned life insurance with the Indian Village acquisition. The cash surrender value of these policies is included as an asset on the consolidated balance sheet and any increases in the cash surrender value are recorded as noninterest income on the consolidated statements of income. In the event of the death of an insured individual under these policies, the Company would receive a death benefit, which would be recorded as noninterest income.

Repurchase Agreements

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

Advertising Costs

     All advertising costs are expensed as incurred.

Federal Income Taxes

     The Company and its subsidiaries file a consolidated tax return. 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.

34       CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

Summary of Significant Accounting Policies     

Stock-Based Compensation

     The Company sponsors a stock-based compensation plan, administered by a committee, under which incentive stock options may be granted periodically to certain employees. The Company recorded compensation expense of $15,000, $24,554, and $13,850 for the years ended December 31, 2008, 2007, and 2006, respectively. The total income tax benefit recognized in the accompanying consolidated statements of income related to stock-based compensation was $5,100, $8,348 and $4,709 in 2008, 2007 and 2006 respectively. Shares issued in connection with stock option exercises may be issued from available treasury shares or from market purchases.

     The effects are computed using option pricing models, using the following weighted-average assumptions as of grant date.

	2008			2007		2006
Risk-free interest rate		3.52	%		N/A		4.57	%
Dividend yield		4.47	%				3.56	%
Volatility		12	%				9	%
Expected option life	5.0		yrs.			3.0		yrs.

     As of December 31, 2008, there was approximately $5,930 of unrecognized compensation cost related to unvested share-based compensation awards granted. That cost is expected to be recognized over the next year.

     Options are granted to certain employees at prices equal to the market value of the stock on the date the options are granted. The 2002 Plan authorized the issuance of 75,000 shares. The Plan was amended April 27, 2005 to authorize the issuance of 200,000 shares. The time period during which any option is exercisable under the Plan is determined by the committee but shall not continue beyond the expiration of ten years after the date the option is awarded.

     The fair value of each option is amortized into compensation expense on a straight-line basis between the grant date for the option and each vesting date. CSB estimated the fair value of stock options on the date of the grant using the Black-Scholes option pricing model. The model requires the use of numerous assumptions, many of which are highly subjective in nature. Option grants of 2,000, 0 , and 29,760 were granted for the years ended December 31, 2008, 2007, and 2006, respectively.

Comprehensive Income

     U.S. generally accepted accounting principles 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.

Transfers of Financial Assets

     Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Bank does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS      35

      Summary of Significant Accounting Policies

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. Diluted income per common share includes the dilutive effect of additional potential common shares issuable under stock options.

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

	2008			2007			2006
Weighted average common shares outstanding		2,719,922			2,667,786			2,667,786
Average treasury shares		(237,587	)		(200,676	)		(140,872	)
Total weighted average common shares outstanding (basic)		2,482,335			2,467,110			2,526,914
Dilutive effect of assumed exercise of stock options		—			702			5,678
Weighted average common shares outstanding (diluted)		2,482,335			2,467,812			2,532,592

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

     There were 40,720 stock options to purchase common stock for $16.05 to $19.00 per share that were antidilutive at December 31, 2008. There were 42,760 stock options to purchase common stock for $17.50 to $19.00 per share that were antidilutive at December 31, 2007 and there were no antidilutive shares at December 31, 2006.

Accounting Developments

     In April 2008, the FASB issued FASB Staff Position No. 142-3, Determination of the Useful Life of Intangible Assets (“FSP 142-3”). FSP 142-3 amends the factors that should be considered in developing assumptions about renewal or extension used in estimating the useful life of a recognized intangible asset under FAS No. 142, Goodwill and Other Intangible Assets. This standard is intended to improve the consistency between the useful life of a recognized intangible asset under FAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under FAS No. 141R and other GAAP. FSP 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008. The measurement provisions of this standard will apply only to intangible assets of the Company acquired after the effective date. The Company is currently evaluating the impact the adoption of the FSP will have on the Company’s results of operations.

     In February 2008, the FASB issued FSP No. FAS 140-3, Accounting for Transfers of Financial Assets and Repurchase Financing Transactions. This FSP concludes that a transferor and transferee should not separately account for a transfer of a financial asset and a related repurchase financing unless (a) the two transactions have a valid and distinct business or economic purpose for being entered into separately and (b) the repurchase financing does not result in the initial transferor regaining control over the financial asset. The FSP is effective for financial statements issued for fiscal years beginning on or after November 15, 2008, and interim periods within those fiscal years. The adoption of this FSP is not expected to have a material effect on the Company’s results of operations or financial position.

     In December 2007, the FASB issued FAS No. 141 (revised 2007), Business Combinations (“FAS 141(R)), which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in an acquiree, including the recognition and measurement of goodwill acquired in a business combination. FAS No. 141(R) is effective for fiscal years beginning on or after December 15, 2008. Earlier adoption is prohibited. The adoption of this standard is not expected to have a material effect on the Company’s results of operations or financial position.

36       CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

Summary of Significant Accounting Policies     

     In September 2006, the FASB issued FAS No. 157, Fair Value Measurements, which provides enhanced guidance for using fair value to measure assets and liabilities. The standard applies whenever other standards require or permit assets or liabilities to be measured at fair value. The Standard does not expand the use of fair value in any new circumstances. FAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. In February 2008, the FASB issued Staff Position No. 157-1, Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13, which removed leasing transactions accounted for under FAS No. 13 and related guidance from the scope of FAS No. 157. Also in February 2008, the FASB issued Staff Position No.157-2, Partial Deferral of the Effective Date of Statement 157, which deferred the effective date of FAS No. 157 for all nonfinancial assets and nonfinancial liabilities to fiscal years beginning after November 15, 2008. Management does not anticipate that the provision of FAS No. 157 will have an impact on the Company’s consolidated results of operations or consolidated financial position but will require additional disclosures in the Company’s consolidated financial statements.

Reclassification of Comparative Amounts

     Certain comparative amounts from the prior years have been reclassified to conform to current year classifications. Such classifications had no effect on net income or shareholders’ equity.

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS       37

      Notes to Consolidated Financial Statements

Note 1 — Securities

     Securities consist of the following at December 31, 2008 and 2007:

			Gross		Gross
			Unrealized		Unrealized		Fair
	Amortized Cost		Gains		Losses		Value
December 31, 2008
Available-for-sale:
U.S. Treasury security	$	99,988	$	473	$	—	$	100,461
Obligations of U.S. Government corporations and agencies		12,447,301		93,055		—		12,540,356
Mortgage-backed securities		56,697,763		618,677		417,495		56,898,945
Obligations of states and political subdivisions		7,045,468		77,901		83,073		7,040,296
Total debt securities		76,290,520		790,106		500,568		76,580,058
Equity securities		147,458		645		72,345		75,758
Total available-for-sale		76,437,978		790,751		572,913		76,655,816
Restricted stock		5,231,800		—		—		5,231,800
Total securities	$	81,669,778	$	790,751	$	572,913	$	81,887,616
December 31, 2007
Available-for-sale:
U.S. Treasury security	$	99,944	$	1,704	$	—	$	101,648
Obligations of U.S. Government corporations and agencies		25,498,979		18,190		7,904		25,509,265
Mortgage-backed securities		42,682,972		15,639		333,666		42,364,945
Obligations of states and political subdivisions		3,098,457		60,088		—		3,158,545
Total debt securities		71,380,352		95,621		341,570		71,134,403
Equity securities		401,752		665		116,990		285,427
Total available-for-sale		71,782,104		96,286		458,560		71,419,830
Restricted stock		3,105,900		—		—		3,105,900
Total securities	$	74,888,004	$	96,286	$	458,560	$	74,525,730

     The amortized cost and fair value of securities at December 31, 2008, 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		Fair
	Cost		Value
Available-for-sale:
Due in one year or less	$	5,971,263	$	6,013,843
Due after one through five years		8,959,619		9,052,048
Due after five years through ten years		7,285,353		7,365,909
Due after ten years		54,074,285		54,148,258
Total debt securities available-for-sale	$	76,290,520	$	76,580,058

38       CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

Notes to Consolidated Financial Statements     

Note 1 — Securities, (continued)

     Securities with a carrying value of approximately $55,418,731 and $50,385,000 were pledged at December 31, 2008 and 2007, 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 $4,961,800 and $2,835,900 at December 31, 2008 and 2007, respectively.

     Gross gains realized from sales of previous other-than-temporary impairment write-offs of securities available-for-sale amounted to $0 in 2008, $16,830 in 2007, and $0 in 2006, with the income tax provision applicable to such gains amounting to $5,700 in 2007, $0 in 2008 and 2006. Gross realized losses of $35,000 (tax benefit of $11,900) in 2008 for other-than-temporary impairment and $56,800 (tax benefit of $19,300) from sales of securities available-for-sale were realized in 2006. There were no gross realized losses in 2007.

     The following table presents gross unrealized losses and fair value of securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2008 and 2007:

	Securities in a Continuous Unrealized Loss Position
	Less Than 12 Months				12 Months or More				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
	Losses		Value		Losses		Value		Losses		Value
2008
Mortgage-backed securities	$	312,520	$	9,327,561	$	104,975	$	1,101,425	$	417,495	$	10,428,986
Obligations of state & political subdivisions		83,073		4,291,747		—		—		83,073		4,291,747
Total debt securities		395,593		13,619,308		104,975		1,101,425		500,568		14,720,733
Equity securities		—		—		72,345		64,038		72,345		64,038
Total temporarily impaired securities	$	395,593	$	13,619,308	$	177,320	$	1,165,463	$	572,913	$	14,784,771
2007
Obligations of U.S. Government corporations and agencies	$	—	$	—	$	7,904	$	14,491,455	$	7,904	$	14,491,455
Mortgage-backed securities		112,399		21,664,006		221,267		15,868,261		333,666		37,532,267
Total debt securities		112,339		21,664,006		229,171		30,359,716		341,570		52,023,722
Equity securities		54,790		171,875		62,200		109,183		116,990		281,058
Total temporarily impaired securities	$	167,189	$	21,835,881	$	291,371	$	30,468,899	$	458,560	$	52,304,780

     There were thirty-one (31) securities in an unrealized loss position at December 31, 2008, four (4) of which were in a continuous loss position for twelve months or more. Management reviews these securities quarterly. Management has considered industry analyst reports, sector credit reports and volatility in the bond and equity markets in concluding that the unrealized losses as of December 31, 2008 were primarily the result of customary and expected fluctuations in the markets. As a result, all security impairments as of December 31, 2008 are not considered other-than-temporary.

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS      39

      Notes to Consolidated Financial Statements

Note 2 — Loans

     Loans consist of the following at December 31, 2008 and 2007:

	2008		2007
Commercial	$	61,859,176	$	46,000,089
Commercial real estate		109,284,157		97,984,830
Residential real estate		125,148,884		92,084,807
Installment and credit card		8,676,948		8,862,456
Construction		11,238,597		11,700,889
Deferred loan costs		82,650		25,988
Total Loans	$	316,290,412	$	256,659,059

     The following represents a summary of the activity in the allowance for loan losses for the years ended December 31, 2008, 2007 and 2006:

	2008			2007			2006
Beginning balance	$	2,585,901		$	2,607,118		$	2,445,494
Provision for loan losses		333,094			472,100			301,667
Loans charged-off		(154,299	)		(612,723	)		(309,644	)
Recoveries		170,850			119,406			169,601
Addition from acquisition		458,139			—			—
Ending balance	$	3,393,685		$	2,585,901		$	2,607,118

     Impaired loans were as follows for December 31, 2008 and 2007:

	2008		2007
Year-end loans accounted for under SOP 03-3	$	816,270	$	—
Year-end loans with no allowance for loan losses allocated		20,381		—
Year-end loans with allowance for loan losses allocated		1,568,393		198,286
Amount of the allowance allocated		335,492		42,773

	2008		2007		2006
Average of impaired loans during the year	$	469,712	$	729,699	$	700,202
Interest income recognized during impairment		8,439		25,876		25,717
Cash-basis interest income recognized		7,890		25,674		24,762
Accrued interest not recognized		24,937		35,166		33,188

     Nonperforming 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, 2008 and 2007:

	2008		2007
Loans past due over 90 days still accruing interest	$	415,861	$	144,339
Nonaccrual loans		2,226,867		426,706

     Loans serviced for others approximated $27,726,000 and $19,349,000 at December 31, 2008 and 2007, respectively.

40     CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

Notes to Consolidated Financial Statements     

Note 3 — Business Combination

     After the close of business, on October 31, 2008, CSB completed the acquisition of Indian Village Bancorp Inc. (“Indian Village”). CSB and Indian Village entered into a definitive Agreement and Plan of Merger on May 14, 2008. Indian Village operated as a bank holding company with three branch offices located in Tuscarawas and Stark Counties in north central Ohio. The primary reasons for the merger with Indian Village were to enhance shareholder value, to improve CSB’s competitive position in the financial services industry and to further expand its existing branch network in Ohio. CSB’s Consolidated Statements of Income include the results of operations of Indian Village from the closing date of the acquisition.

     The aggregate purchase price for Indian Village was approximately $8.1 million and was consummated through the exchange of a combination of CSB common stock at a rate of 0.7611 shares for each Indian Village share outstanding and $4.375 per share in cash. The acquisition was completed through the issuance of 312,816 shares of CSB newly issued common stock and the payment of $2.2 million in cash inclusive of the $430,000 paid for Indian Village’s outstanding stock options, 401(k) and specific ESOP stock. Direct costs of $194,000 were accounted for as part of the purchase price and included in goodwill associated with the merger.

     Following is a reconciliation of the purchase price allocation:

	Fair Value of Net
(in thousands)	Assets Acquired
Loans	$	56,732
Other tangible assets		27,213
Goodwill		1,448
Core deposit intangible		545
Deposits		(58,880	)
Borrowings		(17,616	)
Other liabilities		(1,314	)
Total purchase price	$	8,128

     Goodwill and other intangible assets were allocated to The Commercial & Savings Bank. The Indian Village core deposit intangible has a weighted-average useful life of approximately 10 years.

     The Company’s consolidated financial statements include the results of operation of Indian Village after October 31, 2008, the date of the acquisition. The following unaudited summary information presents the consolidated results of operations of CSB on a pro forma basis, as if the Indian Village acquisition had occurred at the beginning of each of the periods presented.

(in thousands, except per share amounts)	2008		2007
Net interest income	$	15,858	$	15,854
Provision for loan losses		1,130		1,018
Net interest income after provision for loan losses		14,728		14,836
Noninterest income		3,188		3,280
Noninterest expense		14,310		12,983
Income before income taxes		3,606		5,133
Federal income tax provision		1,219		1,690
Net income	$	2,387	$	3,443
Net income per common share
Basic	$	0.87	$	1.24
Diluted	$	0.87	$	1.24
Average common shares outstanding
Basic		2,743,015		2,779,926
Diluted		2,743,015		2,780,628

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS     41

      Notes to Consolidated Financial Statements

Note 3 — Business Combination, (continued)

     The pro forma results include amortization of fair value adjustments on loans, deposits, and other borrowings, and amortization of newly created intangible assets and post-merger acquisition related expenses. The pro forma results for 2008 also include certain non-recurring items including additional compensation and severance benefits, professional fees, and deconversion costs that were expensed as incurred at Indian Village prior to the acquisition and do not represent ongoing costs of the fully integrated combined organization. The pro forma results presented do not reflect cost savings or revenue enhancements anticipated from the acquisition, and are not necessarily indicative of what actually would have occurred if the acquisition had been completed as of the beginning of the periods presented, nor are they necessarily indicative of future consolidated results.

Note 4 — Premises and Equipment

     Premises and equipment consist of the following at December 31, 2008 and 2007:

	2008		2007
Land and improvements	$	1,267,762	$	1,007,927
Buildings and improvements		9,009,325		8,499,044
Furniture and equipment		6,023,404		4,753,393
Leasehold improvements		675,484		172,483
		16,975,975		14,432,847
Accumulated depreciation		8,505,120		7,159,609
Premises and equipment, net	$	8,470,855	$	7,273,238

     The Bank leases certain office locations. Total rental expense under these leases approximated $139,000, $125,000, and $87,000 in 2008, 2007, and 2006, respectively. Future minimum lease payments at December 31, 2008 aggregate $396,268 and are due as follows: 2009, $119,942; 2010, $119,420; 2011, $119,420 and 2012, $37,486.

     Depreciation expense amounted to $585,959, $583,012, and $565,389 for the years ended December 31, 2008, 2007, and 2006, respectively.

Note 5 — Goodwill and Other Intangible Assets

Goodwill

     Goodwill totaled $1.4 million at December 31, 2008, all of which related to the acquisition of Indian Village during 2008 (see Note 3 – Business Combination).

Core Deposit Intangible

     During 2008, the Company recorded a core deposit intangible totaling $545,000 with the acquisition of Indian Village. The core deposit intangible asset will be amortized over an estimated life of ten years. Amortization expense related to the core deposit intangible asset totaled $11,000 in 2008. The estimated aggregate future amortization expense for the core deposit asset remaining as of December 31, 2008 is as follows:

	Core deposit
(dollars in thousands)	amortization
2009	$	65
2010		63
2011		61
2012		59
2013		56
Thereafter		230
	$	534

42      CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

Notes to Consolidated Financial Statements     

Note 5 — Goodwill and Other Intangible Assets (continued)

Mortgage Servicing Rights

     For the years ended December 31, 2008 and 2007, the Company had outstanding mortgage servicing rights of $63,000 and $15,000. The servicing asset acquired in the Indian Village acquisition was $63,000. On December 31, 2008, the Company had $23.2 million residential mortgage loans with servicing retained as compared to $13.1 million with servicing retained at December 31, 2007.

Note 6 — Interest-Bearing Deposits

     Interest-bearing deposits at December 31, 2008 and 2007 are as follows:

	2008		2007
Demand	$	47,515,178	$	48,922,949
Savings		54,654,402		41,027,057
Time deposits:
In excess of $100,000		48,458,513		34,282,194
Other		105,766,054		89,114,866
Total interest-bearing deposits	$	256,394,147	$	213,347,066

     At December 31, 2008, stated maturities of time deposits were as follows:

2009	$	94,225,613
2010		18,859,217
2011		31,671,659
2012		5,028,131
2013		3,783,738
2014 and beyond		656,209
Total	$	154,224,567

Note 7 — Borrowings

Short-term borrowings

     Short-term borrowings include overnight repurchase agreements, Federal funds purchased and short-term advances through the Federal Home Loan Bank (FHLB). The outstanding balances and related information for short-term borrowings are summarized as follows:

	2008			2007
Balance at year-end	$	22,891,593		$	27,305,157
Average balance outstanding		25,761,283			29,950,025
Maximum month-end balance		28,826,290			34,371,093
Weighted-average rate at year-end		1.52	%		3.49	%
Weighted-average rate during the year		2.23			3.96

     Average balances outstanding during the year represent daily average balances, and average interest rates represent interest expenses divided by the related average balances.

Other borrowings

     The following table sets forth information concerning other borrowings:

	Maturity Range				Weighted Average			Stated Interest Rate						At December 31,
Description	From		To		Interest Rate			From			To			2008		2007
Fixed rate		10/26/09		12/21/17		4.29	%		2.48	%		6.23	%	$	47,104,719	$	24,000,000
Fixed rate amortizing		3/01/09		3/01/17		4.92	%		2.50	%		7.15	%		3,892,818		2,023,888
														$	50,997,537	$	26,023,888

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS     43

      Notes to Consolidated Financial Statements

Note 7 — Borrowings, (continued)

     Maturities of other borrowings at December 31, 2008, are summarized as follows:

Year Ending December 31,	Amount		Weighted-Average Rate
2009	$	9,643,090		3.76	%
2010		22,446,802		3.38
2011		3,747,602		3.36
2012		2,490,196		3.73
2013		212,962		6.06
2014 and beyond		12,456,885		3.71
	$	50,997,537		3.56	%

     Monthly principal and interest payments are due on the fixed rate amortizing borrowings; additionally a 10% principal curtailment is due on the borrowing’s anniversary date. FHLB borrowings are secured by a blanket collateral agreement. At December 31, 2008 the Company has the capacity to borrow an additional $42.8 million from the FHLB.

Note 8 — Income Taxes

     The provision for income taxes consists of the following for the years ended December 31, 2008, 2007 and 2006:

	2008			2007			2006
Current	$	1,776,300		$	1,787,250		$	1,234,325
Deferred		(46,900	)		(113,050	)		198,675
Total income tax provision	$	1,729,400		$	1,674,200		$	1,433,000

     The income tax provision 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:

	2008			2007			2006
Expected provision using statutory federal income tax rate	$	1,790,600		$	1,763,900		$	1,544,700
Tax-exempt income on state and municipal securities and political subdivision loans		(86,100	)		(94,760	)		(138,600	)
Interest expense associated with carrying certain state and municipal securities and political subdivision loans		7,900			9,400			11,800
Other		17,000			(4,340	)		15,100
Total income tax provision	$	1,729,400		$	1,674,200		$	1,433,000

44      CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

Notes to Consolidated Financial Statements

Note 8 — Income Taxes, (continued)

     The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities at December 31, 2008 and 2007 are as follows:

	2008			2007
Allowance for loan losses	$	1,274,500		$	722,900
Net operating loss carryforward		1,087,800			—
Unrealized loss on securities available-for-sale		—			123,200
Purchase accounting adjustments		295,300			—
Capital loss carryforward		93,200			—
Other		65,300			15,900
		2,816,100			862,000
Valuation allowance on deferred tax assets		(93,200	)		—
Deferred tax assets		2,722,900			862,000
Depreciation of premises and equipment		(210,500	)		(309,300	)
Federal Home Loan Bank stock dividends		(736,200	)		(459,600	)
Deferred loan fees		(77,700	)		(80,500	)
Unrealized gain on securities available for sale		(74,100	)		—
Other		(123,600	)		(66,500	)
Deferred tax liabilities		(1,222,100	)		(915,900	)
Net deferred tax (liability) asset	$	1,500,800		$	(53,900	)

     The Company acquired net operating loss tax carryforwards of approximately $3,262,400 and a capital loss carryforward of $274,000 in 2008, utilizing $63,000 of the net operating loss during 2008. The net operating loss carryforward can be used to offset future taxable income and will begin to expire in tax years 2021 through 2027. The capital loss carryforward will expire in 2009.

     The Company believes it is more likely than not that the benefit of deferred tax assets will be realized with the possible exception of the capital loss carryforward due to expire in 2009. A valuation allowance for the capital loss carryforward is reflected at December 31, 2008. No additional valuation allowance is deemed necessary in view of certain tax strategies, coupled with the anticipated future taxable income as evidenced by the Company’s earnings potential.

     The Company adopted the provisions of FIN No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement 109, effective January 1, 2007. FIN No. 48 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be recognized in the financial statements only when it is more-likely-than-not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. FIN No. 48 also provides guidance on the accounting for and disclosure of unrecognized tax benefits, interest and penalties. Adoption of FIN No. 48 did not have a significant impact on the Company’s financial statements. In accordance with FIN No. 48, interest or penalties incurred for income taxes will be recorded as a component of income tax expense.

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS       45

      Notes to Consolidated Financial Statements

Note 9 — Employee Benefits

     The Company 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 2.75% of each eligible participant’s compensation for 2008, 2.75% for 2007, and 2.5% of each eligible participant’s compensation for 2006. The Plan also provides for a 50% Bank match of participant contributions up to a maximum of 2% of each participant’s annual compensation. Expense under the Plan amounted to approximately $214,300, $166,700, and $232,000 for 2008, 2007 and 2006, respectively.

     During 2008, the Board of Directors extended options to purchase 2,000 shares originally expiring in 2008 through July 2013 at an exercise price of $16.10. During 2006, the Board of Directors granted options to various executive officers of the Company, including options to purchase 29,760 shares of the Company’s common shares at an exercise price of $18.00 per share through March 2016. No stock options were granted in 2007.

     The following summarizes stock options activity for the years ended December 31, 2008, 2007 and 2006:

	2008						2007						2006
				Weighted						Weighted						Weighted
				Average						Average						Average
				Exercise						Exercise						Exercise
	Shares			Price			Shares			Price			Shares			Price
Outstanding at beginning of year		50,840		$	17.64			51,245		$	17.63			21,970		$	17.09
Granted		2,000			16.10			—			—			29,760			18.00
Exercised		—			—			(40	)		(16.05	)		—			—
Forfeited		(12,120	)		(17.77	)		(365	)		(16.05	)		(485	)		(16.05	)
Outstanding at end of year		40,720		$	17.55			50,840		$	17.64			51,245		$	17.63
Options exercisable at year-end		34,768		$	17.47			32,984		$	17.45			19,788		$	17.20
Weighted-average fair value of options granted during year				$	1.09						N/A					$	1.26

     Options outstanding at December 31, 2008 were as follows:

			Outstanding				Exercisable
					Weighted Average				Weighted
					Remaining				Average
	Range of				Contractual Life				Exercise
	Exercisable Prices		Number		(Years)		Number		Price
	$	16.05		7,960		3.95		7,960	$	16.05
		16.10		2,000		4.52		2,000		16.10
		17.50		2,000		4.50		2,000		17.50
		18.00		27,760		7.15		21,808		18.00
		19.00		1,000		.60		1,000		19.00
Outstanding at year-end				40,720		6.23		34,768	$	17.47

     The total intrinsic value of outstanding in-the-money stock options and outstanding in-the-money exercisable stock options was $0 at December 31, 2008. The total intrinsic value of stock options exercised was $0 in 2008, $225 in 2007 and $0 in 2006. The total fair value of share awards vested was $17,179 in 2008, $22,273 in 2007 and $8,034 in 2006.

46       CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

Notes to Consolidated Financial Statements

Note 10 — 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, 2008 and 2007:

	Contract Amount
	2008		2007
Commitments to extend credit	$	61,019,000	$	63,849,000
Letters of credit	$	772,000	$	1,310,000

     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; recognized 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, 2008 are due on demand or expire in 2009. 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 appropriate.

Note 11 — Related-Party Transactions

     In the ordinary course of business, loans are granted by the Bank to executive officers, directors and their related business interests consistent with Federal Reserve Regulation O. The following is an analysis of activity of related-party loans for the year ending December 31, 2008:

	2008
Balance at beginning of year	$	5,954,891
New loans and advances		544,562
Repayments, including loans sold		(901,804	)
Balance at end of year	$	5,597,649

     Deposits from executive officers, directors and their related business interests at December 31, 2008 and 2007 were approximately $4,447,000 and $3,139,000, respectively.

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS       47

      Notes to Consolidated Financial Statements

Note 12 — 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.

     Quantitative measures established by regulation to ensure capital adequacy require the Company and Bank to maintain minimum amounts and ratios (set forth in the following table) 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, 2008 and 2007, that the Company and Bank met or exceeded all capital adequacy requirements to which they are subject.

     As of December 31, 2008, 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, 2008 and 2007, are also presented in the following table (dollars in thousands):

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

48       CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

     Notes to Consolidated Financial Statements

Note 12 — Regulatory Matters, (continued)

     The Company’s primary source of funds with which to pay dividends, are dividends received from the Bank. The payment of dividends by the Bank to the Company is subject to restrictions by its regulatory agencies. These restrictions generally limit dividends to current year net income and prior two-years net retained earnings. Also, dividends may not reduce capital levels below the minimum regulatory requirements disclosed above. Under these provisions, at January 1, 2009, the Bank could dividend $1,630,000 to the Company. The Company does not anticipate the financial need to obtain this approval due to its current cash balances and ability to access the credit markets. Federal law prevents the Company from borrowing from the Bank unless loans are secured by specific obligations. Further, such secured loans are limited to an amount not exceeding ten percent of the Bank’s common stock and capital surplus.

Note 13 — Condensed Parent Company Financial Information

     A summary of condensed financial information of the parent company as of December 31, 2008 and 2007 and for each of the three years in the period ended December 31, 2008 are as follows:

Condensed Balance Sheets

	2008		2007
Assets
Cash deposited with subsidiary bank	$	601,525	$	1,748,248
Investment in subsidiary bank		42,384,823		33,990,029
Securities available-for-sale		75,758		285,427
Other assets		589,094		261,769
Total assets	$	43,651,200	$	36,285,473
Liabilities and Shareholders’ Equity
Liabilities:
Other liabilities	$	182,728	$	7,425
Total shareholders’ equity		43,468,472		36,278,048
Total liabilities and shareholders’ equity	$	43,651,200	$	36,285,473

Condensed Statements of Income

	2008			2007			2006
Interest on securities	$	2,084		$	11,242		$	27,230
Other income		24,072			—			—
Dividends from subsidiary		3,500,000			2,500,000			3,600,000
Securities gains (loss)		(35,000	)		5,430			—
Total income		3,491,156			2,516,672			3,627,230
Operating expenses		421,797			450,030			377,769
Income before taxes and undistributed equity income of subsidiary		3,069,359			2,066,642			3,249,461
Income tax benefit		(135,000	)		(150,000	)		(125,000	)
Equity earnings in subsidiary, net of dividends		332,711			1,297,272			(264,356	)
Net income	$	3,537,070		$	3,513,914		$	3,110,105

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS       49

Notes to Consolidated Financial Statements

Note 13 — Condensed Parent Company Financial Information, (continued)

Condensed Statements of Cash Flows

	2008			2007			2006
Cash flows from operating activities:
Net income	$	3,537,070		$	3,513,914		$	3,110,105
Adjustments to reconcile net income to cash provided by operations:
Security accretion		—			(508	)		(187	)
Securities gain		—			(5,430	)		—
Other-than-temporary impairment of investments		35,000			—			—
Software amortization		1,667			6,667			6,667
Equity earnings in subsidiary, net of dividends		(332,711	)		(1,297,272	)		264,356
Stock compensation expense		15,000			24,554			13,850
Change in other assets, liabilities		(187,022	)		(21,451	)		3,000
Net cash provided by operating activities		3,069,004			2,220,474			3,397,791
Cash flows from investing activities:
Purchase of investment securities		(7,370	)		(95,787	)		(1,590	)
Maturities, calls of investment securities		—			504,985			—
Acquisition of Indian Village		(1,989,555	)		—			—
Net cash provided by (used in) investing activities		(1,996,925	)		409,198			(1,590	)
Cash flows from financing activities:
Purchase of treasury shares		(415,259	)		(904,410	)		(1,609,416	)
Issuance of treasury shares		—			644			—
Cash dividends paid		(1,803,543	)		(1,771,491	)		(1,613,747	)
Net cash used in financing activities		(2,218,802	)		(2,675,257	)		(3,223,163	)
Net change in cash		(1,146,723	)		(45,585	)		173,038
Cash at beginning of year		1,748,248			1,793,833			1,620,795
Cash at end of year	$	601,525		$	1,748,248		$	1,793,833

Note 14 — Other Comprehensive Income (Loss)

     The components of other comprehensive income (loss) and related tax effects are as follows for the years ended December 31, 2008, 2007 and 2006:

	2008		2007			2006
Unrealized holding (losses) gain on available-for-sale securities	$	545,115	$	538,825		$	(57,908	)
Less reclassification adjustment for securities losses (gains) recognized in income		35,000		(16,830	)		56,800
Net unrealized holding gains (losses)		580,115		521,995			(1,108	)
Federal income tax provision (benefit)		197,239		177,478			(377	)
Other comprehensive income (loss)	$	382,876	$	344,517		$	(731	)

50       CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

Notes to Consolidated Financial Statements

Note 15 — Fair Value Measurements (Fas No. 157)

     Effective January 1, 2008, the Company adopted the provisions of FAS No. 157, Fair Value Measurements, for financial assets and financial liabilities. FAS No. 157 provides enhanced guidance for using fair value to measure assets and liabilities. The standard applies whenever other standards require or permit assets or liabilities to be measured at fair value. The standard does not expand the use of fair value in any new circumstances. The FASB issued Staff Position No. 157-1, Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13, which removed leasing transactions accounted for under FAS No. 13 and related guidance from the scope of FAS No. 157. The FASB also issued Staff Position No.157-2, Partial Deferral of the Effective Date of Statement 157, which deferred the effective date of FAS No. 157 for all nonfinancial assets and nonfinancial liabilities to fiscal years beginning after November 15, 2008.

     FAS No. 157 establishes a hierarchal disclosure framework associated with the level of pricing observability utilized in measuring assets and liabilities at fair value. The three broad levels defined by FAS No. 157 hierarchy are as follows:

Level I:	Quoted prices are available in active markets for identical assets or liabilities as of the reported date.
Level II:	Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities include items for which quoted prices are available but traded less frequently, and items that are fair valued using other financial instruments, the parameters of which can be directly observed.
Level III:	Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

     The following table presents the assets reported on the consolidated balance sheets at their fair value as of December 31, 2008 by level within the fair value hierarchy. No liabilities are carried at fair value. As required by FAS No. 157, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

	December 31, 2008
	Level I		Level II		Level III		Total
Assets:
Securities available for sale	$	176,219	$	76,479,597	$	—	$	76,655,816

     Securities: The fair value of securities available for sale which are measured on a recurring basis are determined primarily by obtaining quoted prices on nationally recognized securities exchanges or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on securities’ relationship to other similar securities. These securities are classified within level 1 or 2 of the fair value hierarchy. Positions that are not traded in active markets for which valuations are generated using assumptions not observable in the market or management’s best estimate are classified within level 3 of the fair value hierarchy.

     The following table presents the assets measured on a nonrecurring basis on the consolidated balance sheets at their fair value as of December 31, 2008, by level within the fair value hierarchy. Impaired loans that are collateral dependent are written down to fair value through the establishment of specific reserves. Techniques used to value the collateral that secure the impaired loan include: quoted market prices for identical assets classified as Level I inputs; observable inputs, employed by certified appraisers, for similar assets classified as Level II inputs. In cases where valuation techniques included inputs that are unobservable and are based on estimates and assumptions developed by management based on the best information available under each circumstance, the asset valuation is classified as Level III inputs.

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS       51

Notes to Consolidated Financial Statements

Note 15 — Fair Value Measurements (Fas No. 157), (continued)

	December 31, 2008
	Level I		Level II		Level III		Total
Assets Measured on a Nonrecurring Basis:
Impaired loans		—	$	2,049,171		—	$	2,049,171

     Impaired loans: The fair value of impaired loans is measured for impairment using the fair value of the collateral for collateral-dependent loans on a nonrecurring basis. Collateral may be in the form of real estate or business assets including equipment, inventory and accounts receivable. The use of discounted cash flow models and management’s best judgment are significant inputs in arriving at the fair value measure of the underlying collateral and are therefore classified within level 3 of the fair value hierarchy.

Note 16 — Fair Values of Financial Instruments (Fas No. 107)

     The estimated fair values of recognized financial instruments as of December 31, 2008 and 2007 are as follows:

	2008				2007
	(Dollars In Thousands)
	Carrying		Fair		Carrying		Fair
	value		value		value		value
Financial assets:
Cash and cash equivalents	$	12,746	$	12,746	$	12,193	$	12,193
Securities		81,888		81,888		74,526		74,526
Loans, net		312,897		321,924		254,073		254,623
Accrued Interest Receivable		1,386		1,386		1,409		1,409
Financial liabilities:
Deposits	$	305,453	$	308,213	$	259,386	$	259,612
Short-term borrowings		22,892		22,892		27,305		27,305
Other borrowings		50,998		53,073		26,024		25,915
Accrued Interest Payable		417		417		375		375

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

Cash and Cash Equivalents, Accrued Interest Receivable, Short-Term Borrowings, Accrued Interest Payable

     The fair value of the above instruments is considered to be carrying value.

Securities

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

Loans

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

Deposits and Other Borrowed Funds

     The fair values of certificates of deposit and other borrowed funds are based on the discounted value of contractual cash flows. The discount rates are estimated using rates currently offered for similar instruments with similar remaining maturities. Demand, savings, and money market deposit accounts are valued at the amount payable on demand as of year-end.

52       CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

Notes to Consolidated Financial Statements

Note 16 — Fair Values of Financial Instruments (Fas No. 107), (continued)

     The Company also has unrecognized financial instruments at December 31, 2008 and 2007. These financial instruments relate to commitments to extend credit and letters of credit. The aggregated contract amount of such financial instruments was approximately $61,791,000 at December 31, 2008 and $65,159,000 at December 31, 2007. Such amounts are also considered to be the estimated fair values.

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

Note 17 — 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 Company has entered into employment agreements with various officers. Upon the occurrence of certain types of termination of employment, the Company 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 18 — Quarterly Financial Data (Unaudited)

The following is a summary of selected quarterly financial data (unaudited) for the years ended December 31, 2008 and 2007:

							Basic		Diluted
	Interest		Net Interest		Net		Earnings		Earnings
	Income		Income		Income		Per Share		Per Share
2008
First quarter	$	5,283,411	$	3,379,765	$	1,001,760	$	.41	$	.41
Second quarter		4,893,331		3,285,764		877,762		.36		.36
Third quarter		4,966,317		3,439,827		890,564		.37		.37
Fourth quarter		5,477,667		3,772,553		766,984		.29		.29
2007
First quarter	$	5,146,282	$	3,255,292	$	814,512	$	.33	$	.33
Second quarter		5,288,509		3,275,353		956,467		.39		.39
Third quarter		5,418,095		3,389,682		863,090		.35		.35
Fourth quarter		5,378,235		3,406,055		879,845		.35		.35

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS       53

Officers of The Commercial & Savings Bank

Linda C. Amos	Eric R. Giauque	Lisa M. Nelson
Assistant Vice President,	Assistant Vice President,	Assistant Vice President,
Mortgage Underwriter	Banking Center Manager	Banking Center Manager
Rebecca A. Baker	Rick L. Ginther	Shawn E. Oswald
Assistant Vice President,	President/Chief Executive Officer,	Vice President,
Banking Center Manager	The Commercial & Savings Bank	Information System Director
Pamela S. Basinger	Loretta Gray	Amy R. Patterson
Vice President, Financial Officer	Assistant Cashier,	Assistant Vice President,
	Assistant Banking Center Manager	Personal Lender
Deborah S. Berner
Vice President,	Paul D. Greig	Christopher S. Rickly
Marketing & Public Relations	Senior Vice President,	Vice President,
	Chief Operation/Information Officer	Commercial Lender
Pamela L. Bromund
Assistant Vice President,	Jason B. Hummel	Thomas S. Rumbaugh
Loan Operations Supervisor	Assistant Vice President,	Vice President, Trust Officer
	Commercial Lender
Wendy D. Brown		Rebecca J. Shultz
Assistant Vice President,	Julie A. Jones	Assistant Vice President,
Cash Management Services	Vice President,	Loan Officer
	Director of Human Resources
C. Dawn Butler		Melissa F. Sprang
Vice President,	Stephen K. Kilpatrick	Assistant Cashier,
Banking Center Manager	First Vice President,	Banking Center Manager
	Senior Credit Officer
Beverly A. Carr		Scott A. Stallman
Operations Officer,	Larry S. Kutcher	Operations Officer
Deposit Processing	Assistant Vice President,
	Small Business Development	Harland L. Stebbins, III
Colby M. Chamberlin		First Vice President,
Vice President,	Betty C. Lyon	Senior Loan Officer
Business Development Officer,	Assistant Vice President,
Commercial Lender	Banking Center Manager	Eddie L. Steiner
		President/Chief Executive Officer,
Dale J. Clinton	Kevin J. McAllister	CSB Bancorp, Inc
Vice President, Internal Auditor	Assistant Vice President, Trust Officer
		Eric D. Strouse
G. Gail Cochran	Jason R. McCulloch	Vice President,
Assistant Vice President,	Assistant Vice President,	Commercial Lender
Executive Loan Secretary	Brokerage Manager
		Elaine A. Tedrow
Peggy L. Conn	Sherry A. McRobie	Assistant Vice President,
Corporate Secretary	Assistant Cashier,	Banking Center Manager
	Banking Center Manager
Marianne Davis		Jennifer M. Thorpe
Assistant Cashier,	Paula J. Meiler	Assistant Vice President,
Banking Center Manager	Senior Vice President,	Senior Credit Analyst
	Chief Financial Officer
Paula S. Foy		William R. Tinlin
Vice President,	A. Lee Miller	Vice President,
Compliance Officer	Vice President,	Recovery/Security
	Cash Management & Special Projects
Lori S. Frantz		Brian D. Troyer
Assistant Vice President,	Edward J. Miller	Assistant Vice President,
Banking Center Manager	Vice President,	Trust Operations
	Banking Center Services
Carrie A. Gerber		Jane C. Whitmer
Credit Officer	Daniel L. Muse	Assistant Cashier,
	Operations Officer	Assistant Banking Center Manager

54       CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS

General Information

The Commercial & Savings Bank

Information & Customer Service	330-674-9015 or 1-800-654-9015
24 Hour Xpress Phone Banking	330-674-2720 or 1-888-438-2720
Loan Services 91 N. Clay, Millersburg	Personal Loans 330-763-2823
	Business Loans 330-763-2822
Trust & Investment Services 91 N. Clay, Millersburg	Holmes, Stark & Tuscarawas County 330-674-2397
Trust & Investment Services 146 E. Liberty, Suite 230, Wooster	Wayne County 330-264-0334
24 Hour Xpress Net Banking & BillPay	www.csb1.com
CSB Banking Centers
Clinton Commons Banking Center 2102 Glen Dr., Millersburg (Drive-Up ATM)	330-674-2265
South Clay Banking Center 91 S. Clay St., Millersburg (Drive-Up ATM)	330-674-0687
Berlin Banking Center 4587 S.R. 39, Berlin (Drive-Up ATM)	330-893-3565
Charm Banking Center 4440 C.R. 70, Charm (Walk-Up ATM)	330-893-3323
Gnadenhutten Banking Center 100 S. Walnut St., Gnadenhutten	740-254-4313
New Philadelphia Banking Center 635 W. High Ave., New Philadelphia (Drive-Up ATM)	330-308-4867
North Canton Banking Center 1210 North Main St., North Canton (Drive-Up ATM)	330-497-0839
Orrville Area Banking Center 461 Wadsworth Road, Orrville (Drive-Up ATM)	330-682-8000
Shreve Banking Center 333 W. South St., Shreve (Drive-Up ATM)	330-567-2226
Sugarcreek Banking Center 127 S. Broadway, Sugarcreek (Drive-Up ATM)	330-852-4444
Walnut Creek Banking Center 4980 Olde Pump St., Walnut Creek (Walk-Up ATM)	330-893-2961
Winesburg Banking Center 2225 U.S. 62, Winesburg (Drive-Up ATM)	330-359-5543
Shareholder & General Inquiries	Stock Listing Common Symbol: CSBB.OB
Corporate Office 91 N. Clay, Millersburg	330-674-9015

If you have questions regarding your CSB Bancorp, Inc. stock, please contact:

Registrar and Transfer Company
Attn: Investor Relations
10 Commerce Drive
Cranford, New Jersey 07016
800-368-5948
www.rtco.com

Legal Counsel
Bricker & Eckler LLP
100 South Third Street
Columbus, Ohio 43215

If you are interested in purchasing shares of CSB Bancorp, Inc., you may contact your local broker or one of the following:

Jay McCulloch
Investment Executive
CSB Investment Services
Located at The Commercial & Savings Bank
91 North Clay Street
P.O. Box 50
Millersburg, Ohio 44654
330-674-2397 • 800-654-9015

George Geissbuhler
Sweney Cartwright & Co.
17 South High Street, Suite 300
Columbus, Ohio 43215
800-334-7481

Linda Reall
Capital Securities of America, Inc.
150 Grand Trunk Avenue
Hartville, Ohio 44632
800-494-9497

CSB Bancorp, Inc. is required to file an annual report on Form 10-K annually with the Securities and Exchange Commission. Copies of the Form 10-K annual report and the Company’s quarterly reports may be obtained without charge by contacting:

Paula J. Meiler
Chief Financial Officer
CSB Bancorp, Inc.
91 North Clay Street
Millersburg, Ohio 44654
330-674-9015 • 800-654-9015

The annual meeting of shareholders is currently scheduled to be held on Wednesday, April 22, 2009 at 7:00 pm, at the Carlisle Inn in Walnut Creek, Ohio.

CSB BANCORP, INC. | 2008 ANNUAL REPORT TO SHAREHOLDERS       55

EX-21

EXHIBIT 21

SUBSIDIARIES OF CSB BANCORP, INC.

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

CSB Investment Services, LLC, an Ohio limited liability company (100% owned).

26

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statement No. 333-130082 on Form S-8 of CSB Bancorp, Inc., Form S-3 of CSB Bancorp, Inc. Share Owner Dividend Reinvestment Plan and in the Registration Statement on Form S-8 of The Commercial & Savings Bank 401(k) Retirement Plan of our report dated March 9, 2009, relating to our audit of the consolidated financial statements included in the Annual Report on Form 10-K of CSB Bancorp, Inc. for the year ended December 31, 2008.

/s/ S.R. Snodgrass A.C.  

Wexford, Pennsylvania
March 24, 2009

27

EX-31.1

EXHIBIT 31.1

SECTION 302 CERTIFICATION

Chief Executive Officer

I, Eddie L. Steiner, certify that:

1	I have reviewed this annual report on Form 10-K of CSB Bancorp, Inc.;
2.	Based on my knowledge, this 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 report;
3.	Based on my knowledge, the financial statements, and other financial information included in this 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 report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, 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;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 25, 2009

/s/ Eddie L. Steiner  

Eddie L. Steiner 

Chief Executive Officer 

28

EX-31.2

EXHIBIT 31.2

SECTION 302 CERTIFICATION

Senior Vice President and Chief Financial Officer

I, Paula J. Meiler, certify that:

1	I have reviewed this annual report on Form 10-K of CSB Bancorp, Inc.;
2.	Based on my knowledge, this 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 report;
3.	Based on my knowledge, the financial statements, and other financial information included in this 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 report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, 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;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 25, 2009

/s/ Paula J. Meiler  

Paula J. Meiler 

Senior Vice President and
Chief Financial Officer 

29

EX-32.1

EXHIBIT 32.1

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, 2008, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Eddie L. Steiner, 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/ Eddie L. Steiner  

Eddie L. Steiner 

Chief Executive Officer 

March 25, 2009

30

EX-32.2

EXHIBIT 32.2

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, 2008, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Paula J. Meiler, 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/ Paula J. Meiler  

Paula J. Meiler 

Senior Vice President and
Chief Financial Officer 

March 25, 2009

31