10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark one)

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

For the fiscal year ended December 31, 2011

OR

¨ 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.    ¨  Yes    x  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.    ¨  Yes    x  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.    x  Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months.    x  Yes    ¨  No

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or 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	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

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

At June 30, 2011, the aggregate market value of the voting stock held by non-affiliates of the registrant, based on a share price of $15.50 per share (such price being the last trade price on such date) was $39.1 million.

At March 26, 2012, there were outstanding 2,734,799 of the registrant’s common shares, $6.25 par value.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of CSB Bancorp Inc.’s 2011 Annual Report to Shareholders.

Portions of CSB Bancorp Inc.’s Proxy Statement dated March 22, 2012.

PART I

ITEM 1. BUSINESS.

General

CSB Bancorp, Inc. (“CSB”), 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.

Business Overview and Lending Activities

CSB operates primarily through the Bank and its other subsidiaries, providing a wide range of banking, trust, financial and brokerage services to corporate, institutional and individual customers throughout northeast Ohio. 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 provides residential real estate, commercial real estate, commercial and consumer loans to customers located primarily in Holmes, Tuscarawas, Wayne, Stark and portions of surrounding counties in Ohio. The Bank’s market area has historically exhibited relatively stable economic conditions; however, a pronounced slowdown in economic activity has been evident since the latter half of 2008. Unemployment levels in Holmes County have generally been among the lowest in the State of Ohio, while the balance of the Bank’s market area typically experiences unemployment levels similar to the state average. Unemployment in the Bank’s market area peaked during 2010 and has improved steadily thereafter, with average unemployment at December 2011 approximately 20-25% lower than December 2010. Real estate values have experienced moderate declines as a result of the slow recessionary conditions.

Certain risks are involved in providing loans, including, but not limited 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, the collateral being used to secure the transaction, the 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.

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, in order to evaluate whether estimated future cash flows will be adequate to service principal and interest of the new obligation in addition to existing obligations.

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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. The Bank monitors advances and the maximum loan to value ratio is typically limited to the lesser of 90% of cost or 80% of appraisal. Management performs much of 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 the collateral or up to 100% of collateral value with PMI. An appraisal from a qualified real estate appraiser or an evaluation primarily 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 upon completion. The Bank usually makes the permanent loan at the end of the construction phase. Generally, construction loans 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 who have 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 a 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 CSB’s chief decision-makers monitor the revenue streams of the various financial 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. For a discussion of CSB’s financial performance for the fiscal year ended December 31, 2011, see the Consolidated Financial Statements and Notes to the Consolidated Financial Statements found in Item 8 of this Annual Report on Form 10-K.

Employees

At December 31, 2011, CSB had 154 employees, 137 of which were employed on a full-time basis. CSB has no separate employees not also employed by the Bank. No employees are covered by collective bargaining agreements. Employees are provided a comprehensive benefit program, some of which are contributory. 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 and federal law also permits nationwide interstate banking. In its primary market area of Holmes, Tuscarawas, Wayne, Stark and surrounding Ohio counties, the Bank competes for new deposit dollars and loans with several other commercial banks, including 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 Bank believes its presence in the Holmes, Tuscarawas, Wayne and Stark County areas provides the Bank with a competitive advantage due to its ability to make loans and provide services to the local community.

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Competition within the financial service industry continues to increase as a result of mergers between, and expansion of, financial service providers within and outside of the Bank’s primary market areas. In addition, the deregulation of the financial services industry (see the discussion of the Gramm-Leach-Bliley Act of 1999 (“GLBA”) in the section of this item captioned “Financial Modernization”) has allowed securities firms and insurance companies that have elected to become financial holding companies to acquire commercial banks and other financial institutions, which can create additional competitive pressure.

Investor Relations

The Company’s website address is www.csb1.com. The Company makes available its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports, free of charge on its website as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission (the “SEC”). The Company also makes available through its website, other reports filed with the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including its proxy statements and reports filed by officers and directors under Section 16(a) of the Exchange Act, as well as the Company’s Code of Ethics. The Company does not intend for information contained in its website to be incorporated by reference into this Annual Report on Form 10-K.

In addition, the Company’s filings with the SEC may be read and copied at the SEC’s Public Reference Room at 450 Fifth Street, NW, Washington DC 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. These filings are also available on the SEC’s website at www.sec.gov free of charge as soon as reasonably practicable after the Company has filed the above referenced reports.

Supervision and Regulation of CSB and Subsidiaries

CSB and the Bank are subject to extensive regulation by federal and state regulatory 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, the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder, 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 FRB. Because the Federal Deposit Insurance Corporation (the “FDIC”) insures its deposits, the Bank is also subject to certain regulations of that federal agency. The FDIC is an independent federal agency which insures the deposits, up to prescribed statutory limits, of federally-insured banks and savings associations and safeguards the safety and soundness of the financial institution industry. The Bank’s deposits are insured up to applicable limits by the Deposit Insurance Fund of the FDIC and the Bank is subject to deposit insurance assessments to maintain the Deposit Insurance Fund.

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, that have, or could have, a material impact on the Company’s business. This discussion 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.

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Dodd-Frank Wall Street Reform and Consumer Protection Act

Federal regulators continue to implement many provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), which was signed into law by President Obama on July 21, 2010. The Dodd-Frank Act created many new restrictions and an expanded framework of regulatory oversight for financial institutions, including depository institutions. Currently, federal regulators are still in the process of drafting the implementing regulations for many portions of the Dodd-Frank Act. The Company is closely monitoring all relevant sections of the Dodd-Frank Act to ensure continued compliance with these regulatory requirements. The following discussion summarizes significant aspects of the Dodd-Frank Act that may affect the Company and the Bank:

• the Consumer Financial Protection Bureau has been established and empowered to exercise broad regulatory, supervisory and enforcement authority with respect to both new and existing consumer financial protection laws;

• the deposit insurance assessment base for federal deposit insurance has been expanded from domestic deposits to average assets minus average tangible equity;

• the Dodd-Frank Act instructs appropriate federal banking agencies to make the capital requirements for banks and savings and loan holding companies and insured depository institutions countercyclical so that the amount of capital required to be maintained increases in times of economic expansion and decreases in times of economic contraction, consistent with safety and soundness;

• the prohibition on the payment of interest on business demand deposits has been repealed, effective July 21, 2011, thereby permitting depository institutions to pay interest on business transaction and other accounts;

• the standard maximum amount of deposit insurance per customer has been permanently increased to $250,000 and noninterest-bearing transaction accounts have unlimited deposit insurance through December 31, 2012;

• financial holding companies, such as the Company, are required to be well-capitalized and well-managed and must continue to be both well-capitalized and well-managed in order to acquire banks located outside their home state;

• the Dodd-Frank Act extended the application to most bank holding companies of the same leverage and risk-based capital requirements that apply to insured depository institutions, which, among other things, will disallow treatment of trust preferred securities as Tier 1 capital under certain circumstances;

• new corporate governance requirements, which are generally applicable to most larger public companies, now require new compensation practices, including, but not limited to, providing shareholders the opportunity to cast a non-binding vote on executive compensation, to consider the independence of compensation advisors and new executive compensation disclosure requirements;

• the Dodd-Frank Act amended the Electronic Fund Transfer Act to, among other things, give the FRB the authority to establish rules regarding interchange fees charged for electronic debit transactions by payment card issuers having assets over $10 billion and to enforce a new statutory requirement that such fees be reasonable and proportional to the actual cost of a transaction to the issuer; and

• the authority of the FRB to examine financial holding companies and their non-bank subsidiaries was expanded.

Many aspects of the Dodd-Frank Act are still subject to rulemaking and will take effect over several years, making it difficult to anticipate the overall financial impact on the Company, its subsidiaries, their respective customers or the financial services industry more generally.

Regulation of Financial Holding Companies

As a bank holding company, which is also designated as a financial holding company under GLBA, CSB’s activities are subject to extensive regulation by the FRB. CSB is required to file reports with the FRB and provide 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 financial holding companies, including the ability to assess civil money penalties, issue cease and desist orders and require that a financial holding company divest subsidiaries (including subsidiary banks). The FRB may initiate enforcement actions for violations of laws and regulations, and for unsafe and unsound practices. Under FRB policies, a financial 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 financial 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 financial 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.

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

Financial Modernization

Pursuant to GLBA, 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. CSB has been a financial holding company since 2005. 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.

GLBA 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. These capital guidelines 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”). 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.

Under the guidelines, the minimum 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 “Tier 1” risk-based capital, which consists 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 (although the Tier 1 capital treatment of trust preferred securities will be phased out under the Dodd-Frank Act in certain circumstances), 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. 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 also 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.

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%, a leverage ratio of at least 5% 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.

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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 II 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. The Dodd-Frank Act requires federal banking regulators to adopt regulations imposing minimum Basel II-based capital requirements in cases where the Basel II-based capital requirements and any changes in capital regulations resulting from Basel III (discussed below) otherwise would permit lower requirements. In June 2011, the federal banking agencies adopted a rule applicable to only large, internationally active banks requiring their risk-based capital to meet the higher of the minimum requirements under Basel III or under the risk-based capital rules generally applicable to United States banks.

In December 2010 and January 2011, the Basel Committee released a final framework for strengthening international capital and liquidity regulation (Basel III). Basel III, when implemented by the U.S. federal banking agencies and fully phased-in, will require bank holding companies and their bank subsidiaries to maintain substantially more capital, with a greater emphasis on common equity.

The Basel III final capital framework, among other things: (i) introduces as a new capital measure of “Common Equity Tier 1” (“CET1”); (ii) specifies that Tier 1 capital consist of CET1 and “Additional Tier 1 capital” instruments meeting specified requirements; (iii) defines CET1 narrowly by requiring that most adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and (iv) expands the scope of the adjustments as compared to existing regulations.

When fully phased in on January 1, 2019, Basel III will require banks to maintain: (i) as a newly adopted international standard, a minimum ratio of CET1 to risk-weighted assets of 4.5%, plus a 2.5% “capital conservation buffer” (which is added to the 4.5% CET1 ratio as that buffer is phased in, which will effectively result in a minimum ratio of CET1 to risk-weighted assets of 7.0%); (ii) a minimum ratio of Tier 1 capital to risk-weighted assets of 6.0%, plus the capital conservation buffer (which is added to the 6.0% Tier 1 capital ratio as that buffer is phased in, effectively resulting in a minimum Tier 1 capital ratio of 8.5% on full implementation); (iii) a minimum ratio of total (Tier 1 plus Tier 2) capital to risk-weighted assets of at least 8.0%, plus the capital conservation buffer (which is added to the 8.0% total capital ratio as that buffer is phased in, effectively resulting in a minimum total capital ratio of 10.5% upon full implementation); and (iv) as a newly adopted international standard, a minimum leverage ratio of 3.0%, calculated as the ratio of Tier 1 capital to balance sheet exposures plus certain off-balance sheet exposures (computed as the average for each quarter of the month-end ratios for the quarter).

Basel III also provides for a “countercyclical capital buffer,” generally imposed when federal banking agencies determine that excess aggregate credit growth becomes associated with a buildup of systemic risk, that would be in addition to the capital conservation buffer in the range of 0.0% to 2.5% when fully implemented, potentially resulting in total buffers of 2.5% to 5.0%. The countercyclical capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of CET1 to risk-weighted assets above the minimum, but below the conservation buffer (or below the combined capital conservation buffer and countercyclical capital buffer, when applicable) will have constraints imposed on their dividends, equity repurchases and compensation, based on the amount of the shortfall.

The implementation of the Basel III capital framework will commence on January 1, 2013. On that date, banking institutions will be required to maintain 3.5% CET1 to risk weighted assets, 4.5% Tier 1 capital to risk weighted assets and 8.0% total capital to risk-weighted assets.

Notwithstanding its release of the Basel III framework as a final framework, the Basel Committee is considering further amendments to Basel III, including the imposition of additional capital surcharges on globally systemically important financial institutions. In addition to Basel III, the Dodd-Frank Act requires or permits the federal banking agencies to adopt regulations affecting banking institutions’ capital requirements in a number of respects, including potentially more stringent capital requirements for systemically important financial institutions. Accordingly, the regulations ultimately applicable to the Company may be substantially different from the Basel III final framework as published in December 2011.

Prompt Corrective Action

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.”

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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, 2011, the Bank meets the ratio requirements to be deemed “well-capitalized” according to the guidelines described above. See Note 12 of the Notes to Consolidated Financial Statements located on page 49 of CSB’s 2011 Annual Report, which is incorporated herein by reference.

Federal Deposit Insurance Corporation

Substantially all of the deposits of the Bank are insured up to applicable limits by the Deposit Insurance Fund of the FDIC, and the Bank is assessed deposit insurance premiums to maintain the Deposit Insurance Fund. Insurance premiums for each insured institution are determined based upon the institution’s capital level and supervisory rating provided to the FDIC by the institution’s primary federal regulator and other information deemed by the FDIC to be relevant to the risk posed to the Deposit Insurance Fund by the institution. The assessment rate is then applied to the amount of the institution’s deposits to determine the institution’s insurance premium.

On February 7, 2011, the FDIC approved a final rule that changed the deposit insurance assessment base, as required by the Dodd-Frank Act. As adopted, the final rule changed the deposit insurance assessment base from domestic deposits to average assets minus average tangible equity. In addition, the final rule also adopted a new large-bank pricing assessment scheme and established a target size for the Deposit Insurance Fund. Specifically, the final rule set a target size for the Deposit Insurance Fund at 2 percent of insured deposits and implements a lower assessment rate schedule when the fund reaches 1.15 percent and, in lieu of dividends, provides for a lower rate schedule when the reserve ratio reaches 2 percent and 2.5 percent. The final rule also created a scorecard-based assessment system for banks with more than $10 billion in assets. The final rule went into effect beginning with the second quarter of 2011. The change to the assessment base and assessment rates, as well as the Deposit Insurance Fund restoration time frame, has lowered the Company’s deposit insurance assessment and future assessments should continue to be favorable.

As insurer, the FDIC is authorized to conduct examinations of, and to require reporting by, federally-insured institutions. It also may prohibit any federally-insured institution from engaging in any activity the FDIC determines by regulation or order to pose a serious threat to the Deposit Insurance Fund. The FDIC also has the authority to take enforcement actions against insured institutions. Insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged or is engaging in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC or written agreement entered into with the FDIC. The management of the Bank does not know of any practice, condition or violation that might lead to termination of deposit insurance.

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.

The monetary policies of the FRB have had a significant effect on the operating results of financial institutions in the past and are expected to continue to have significant effects in the future. In view of the changing conditions in the economy, the money markets and the activities of monetary and fiscal authorities, the Company can make no definitive predictions as to future changes in interest rates, credit availability or deposit levels.

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.

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Payments of dividends by the Bank are 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 dividends, which may be declared by the Bank. However, the FRB expects CSB to serve as a source of strength for the Bank and may require CSB to retain capital for further investment in the Bank, rather than pay dividends to 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.

The FRB issued a policy statement that provides that insured banks and bank holding companies should generally only pay dividends out of current operating earnings. At December 31, 2011, approximately $5.0 million of the total shareholders’ equity of the Bank was available for payment to CSB without the prior approval of the applicable regulatory authorities. See Note 12 of the “Notes to Consolidated Financial Statements located on page 50 of CSB’s 2011 Annual Report.

Customer Privacy

Under the GLBA, federal banking agencies 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 federal banking 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 to certify 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. Provisions of the Dodd-Frank Act provide a permanent exemption for smaller companies which have a public float of less than $75 million, from the SOX attestation requirement by the external accountants on internal controls. CSB is exempt from the requirement for external accountant attestation on internal controls. Management’s assessment of internal controls over financial reporting, which is located on page 22 of the CSB 2011 Annual Report, is incorporated by reference. Other provisions of the Dodd-Frank Act may apply to CSB in the future as various affected Agencies issue new regulations.

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 or 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.

9

Executive and Incentive Compensation

In June 2010, the federal banking agencies issued joint interagency guidance on incentive compensation policies (the “Joint Guidance”) intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk-taking. This principles-based guidance, which covers all employees that have the ability to materially affect the risk profile of an organization, either individually or as part of a group, is based upon the key principles that a banking organization’s incentive compensation arrangements should: (i) provide incentives that do not encourage risk-taking beyond the organization’s ability to effectively identify and manage risks; (ii) be compatible with effective internal controls and risk management; and (iii) be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors.

Pursuant to the Joint Guidance, the FRB will review as part of a regular, risk-focused examination process, the incentive compensation arrangements of financial institutions such as the Company. Such review will be tailored to each organization based on the scope and complexity of the organization’s activities and the prevalence of incentive compensation arrangements. The findings of the supervisory initiatives will be included in reports of examination and deficiencies will be incorporated into the institution’s supervisory ratings, which can affect the institution’s ability to make acquisitions and take other actions. Enforcement actions may be taken against an institution if its incentive compensation arrangements, or related risk-management control or governance processes, pose a risk to the organization’s safety and soundness and prompt and effective measures are not being taken to correct the deficiencies.

Future Legislation

Various and significant legislation affecting financial institutions and the financial industry is from time to time introduced by the U.S. Congress, as evidenced by the sweeping reforms in the Dodd-Frank Act adopted in 2010. Such legislation may continue to change banking statutes and the operating environment of CSB and its subsidiaries in substantial and unpredictable ways, and could significantly increase or decrease costs of doing business, limit or expand permissible activities or affect the competitive balance among financial institutions. With the enactment of the Dodd-Frank Act and the continuing implementation of final rules and regulations thereunder, the nature and extent of future legislative and regulatory changes affecting financial institutions remains very unpredictable.

Statistical Disclosures

The following schedules present, for the periods indicated, certain financial and statistical information of the Company as required under the SEC’s Industry Guide 3 “Statistical Disclosures by Bank Holding Companies,” or a specific reference as to the location of required disclosures in the Company’s 2011 Annual Report.

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

The information set forth under the heading “Average Balance Sheets and Net Interest Margin Analysis” located on page 11 of the Company’s 2011 Annual Report and is incorporated by reference herein.

The information set forth under the heading “Rate/Volume Analysis of Changes in Income and Expense” located on page 12 of the Company’s 2011 Annual Report and is incorporated by reference herein.

Investment Portfolio

The following is a schedule of the carrying value of securities at December 31:

(Dollars in thousands)	2011		2010		2009
Securities available-for-sale, at fair value
U.S. Treasury securities	$	100	$	100	$	100
U.S. Government corporations and agencies		28,323		19,711		14,033
Mortgage-backed securities		76,332		42,351		51,358
Obligations of states and political subdivisions		14,880		11,994		9,614
Equity securities		61		56		53
Corporate bonds		3,330		992		—
Total	$	123,026	$	75,204	$	75,158

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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, 2011:

	One Year or Less					After One Year Through Five Years					Maturing After Five Years Through Ten Years					After Ten Years					Total
(Dollars in thousands)	Amortized Cost		Yield			Amortized Cost		Yield			Amortized Cost		Yield			Amortized Cost		Yield			Amortized Cost		Yield
Available for sale:
U.S. Treasury	$	100		0.28	%	$	—		—	%	$	—		—	%	$	—		—	%	$	100		0.28	%
U.S. Government corporations and agencies		—		—			2,000		0.79			10,127		2.11			16,136		2.14			28,263		2.03
Mortgage-backed securities		57		1.76			642		4.63			3,593		4.11			70,542		2.86			74,834		2.93
Obligations of states and political subdivisions		500		2.64			4,890		5.22			6,773		4.94			1,985		5.55			14,148		5.04
Corporate bonds		—		—			3,445		2.84			—		—			—		—			3,445		2.84
Total	$	657		2.21	%	$	10,977		3.63	%	$	20,493		3.40	%	$	88,663		2.79	%	$	120,790		2.97	%

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%.

Loan Portfolio

Total loans on the balance sheet are comprised of the following classifications at December 31:

(Dollars in thousands)	2011		2010		2009		2008		2007
Commercial	$	89,828	$	78,540	$	69,351	$	61,859	$	46,000
Commercial real estate		106,332		104,829		107,794		109,284		97,985
Residential real estate		103,518		108,832		114,882		125,149		92,085
Construction and land development		18,061		16,515		13,761		11,239		11,701
Installment and credit card		6,216		6,715		7,464		8,677		8,862
Total loans	$	323,955	$	315,431	$	313,252	$	316,208	$	256,633

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, 2011:

	Maturing
(Dollars in thousands)	One Year or Less		One Through Five Years		After Five Years		Total
Commercial	$	46,937	$	18,339	$	24,552	$	89,828
Commercial real estate		3,614		11,525		91,193		106,332
Construction and land development		5,283		617		12,161		18,061
Total	$	55,834	$	30,481	$	127,906	$	214,221

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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, 2011.

(Dollars in thousands)	Fixed Rate		Variable Rate
Total commercial, commercial real estate and construction and land development loans due after one year	$	19,595	$	138,792

The following schedule summarizes nonaccrual, past due and restructured loans.

(Dollars in thousands)	2011		2010		2009		2008		2007
Loans accounted for on a nonaccrual basis	$	2,908	$	3,905	$	3,786	$	2,227	$	427
Accruing loans that are contractually past due 90 days or more as to interest or principal payments		581		685		355		416		144
Totals	$	3,489	$	4,590	$	4,141	$	2,643	$	571

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.

Information regarding impaired loans at December 31 is as follows:

(Dollars in thousands)	2011		2010		2009
Loans accounted for under ASC Topic 310	$	—	$	440	$	874
Balance of impaired loans		7,263		1,806		1,205
Less portion for which no allowance for loan loss is allocated		—		458		181
Portion of impaired loan balance for which an allowance for loan losses is allocated		7,263		1,788		1,898
Portion of allowance for loan losses allocated to the impaired loan balance at December 31		522		330		343

For the year ended December 31, 2011, interest income recognized on impaired loans amounted to $169 thousand, while $190 thousand would have been recognized had the loans been performing under their contractual terms. For the year ended December 31, 2010, interest income recognized on impaired loans amounted to $2 thousand, while $175 thousand would have been recognized had the loans been performing under their contractual terms. For the year ended December 31, 2009, interest income recognized on impaired loans amounted to $17 thousand while $114 thousand 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, automobile loans, home equity loans and second-mortgage loans. Such loans are included in nonaccrual and past due disclosures 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.

At December 31, 2011, 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 in the tables set forth above. On a monthly basis,

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the Company internally classifies certain loans based on various factors. At December 31, 2011, these amounts, including impaired and nonperforming loans, amounted to $16.4 million of substandard loans and $0 doubtful loans.

There were no foreign outstandings during any period presented.

As of December 31, 2011, there are no concentrations of loans greater than 10% of total loans that are not otherwise disclosed as a category of loans in the loan portfolio table set forth above.

As of December 31, 2011, there are no other interest-bearing assets required to be disclosed if such assets were loans.

Summary Of Loan Loss Experience

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)	2011			2010			2009			2008			2007
LOANS
Average loans outstanding during period	$	318,781		$	313,549		$	317,254		$	262,933		$	241,979
ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period	$	4,031		$	4,060		$	3,394		$	2,586		$	2,607
Loans charged-off:
Commercial		(528	)		(622	)		(320	)		(55	)		(146	)
Commercial real estate		(68	)		(187	)		(254	)		(10	)		(333	)
Residential real estate		(297	)		(488	)		(177	)		(19	)		(34	)
Consumer		(121	)		(92	)		(134	)		(70	)		(100	)
Total loans charged-off		(1,014	)		(1,389	)		(885	)		(154	)		(613	)
Recoveries of loans previously charged-off:
Commercial		38			93			55			6			43
Commercial real estate		—			—			86			4			—
Residential real estate		19			—			—			10			9
Consumer		58			32			73			151			68
Total loan recoveries		115			125			214			171			120
Net loans (charged-off) recovered		(899	)		(1,264	)		(671	)		17			(493	)
Provision charged to operating expense		950			1,235			1,337			333			472
Addition from acquisition		—			—			—			458			—
Balance at end of period	$	4,082		$	4,031		$	4,060		$	3,394		$	2,586
Ratio of net charge-offs (recoveries) to average loans outstanding for period		0.28	%		0.40	%		0.21	%		(0.01	)%		0.20	%

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 collectability 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.

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The following schedule is a breakdown of the allowance for loan losses allocated by type of loan and related ratios. While management’s periodic analysis of the adequacy of the allowance for loan losses may allocate portions of the allowance for specific problem-loan situations, the entire allowance is available for any loan charge-offs that occur.

	----- Allocation of the Allowance for Loan Losses ----- (Dollars in thousands)
	Allowance Amount		Percentage of Loans in Each Category to Total Loans			Allowance Amount		Percentage of Loans in Each Category to Total Loans			Allowance Amount		Percentage of Loans in Each Category to Total Loans			Allowance Amount		Percentage of Loans in Each Category to Total Loans			Allowance Amount		Percentage of Loans in Each Category to Total Loans
	December 31, 2011					December 31, 2010					December 31, 2009					December 31, 2008					December 31, 2007
Commercial	$	1,024		27.73	%	$	1,179		24.90	%	$	1,031		22.14	%	$	716		19.56	%	$	454		17.93	%
Commercial real estate		1,673		32.82			1,183		33.23			1,338		34.41			1,058		34.56			1,012		38.18
Residential real estate		894		31.95			1,057		34.50			1,140		36.68			1,244		39.58			666		35.88
Construction & land development		180		5.58			213		5.24			246		4.39			111		3.56			104		4.56
Installment and credit card		78		1.92			80		2.13			77		2.38			94		2.74			96		3.45
Unallocated		233					319					228					171					254
Total	$	4,082		100.00	%	$	4,031		100.00	%	$	4,060		100.00	%	$	3,394		100.00	%	$	2,586		100.00	%

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Deposits

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

	Average Amounts Outstanding Year ended December 31						Average Rate Paid Year ended December 31
(Dollars in thousands)	2011		2010		2009		2011			2010			2009
Noninterest-bearing demand	$	70,543	$	58,601	$	46,388		N/A			N/A			N/A
Interest-bearing demand deposits		53,896		51,990		46,107		0.08	%		0.08	%		0.10	%
Savings deposits		91,232		73,694		58,672		0.25			0.34			0.42
Time deposits		152,194		149,788		153,735		1.70			2.15			2.61
Total deposits	$	367,865	$	334,073	$	304,902

The Bank does not have any material deposits by foreign depositors.

The following is a schedule of maturities of time certificates of deposit in amounts of $100,000 or more as of December 31, 2011:

(Dollars in thousands)
Three months or less	$	11,837
Over three through six months		4,840
Over six through twelve months		11,178
Over twelve months		32,235
Total	$	60,090

Return On Equity and Assets

	2011			2010			2009
Return on average assets		0.78	%		0.78	%		0.79	%
Return on average shareholders’ equity		7.57			7.43			7.51
Dividend payout ratio		53.40			56.32			58.06
Average shareholders’ equity to average assets		10.33			10.56			10.57

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)	2011			2010			2009
Securities sold under agreements to repurchase, federal funds purchased and short-term advances at period-end	$	37,073		$	32,018		$	28,764
Weighted average interest rate at period-end		0.25	%		0.55	%		0.76	%
Maximum outstanding at any month-end during the year		37,073			33,629			30,164
Average amount outstanding		32,577			29,700			25,444
Weighted average rates during the year		0.43	%		0.68	%		1.06	%

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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. Words such as “anticipate”, “estimates”, “may”, “feels”, “expects”, “believes”, “plans”, “will”, “would”, “should”, “could” and similar expressions are intended to identify these forward-looking statements but are not the exclusive means of identifying such statements. 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 the Company and or its 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. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially. Factors that could cause or contribute to such differences include, without limitation, risks and uncertainties detailed from time to time in the Company’s filings with the SEC, including without limitation the risk factors disclosed in this Annual Report on Form 10-K.

Other factors not currently anticipated may also materially and adversely affect on the Company’s business, financial condition, results of operations or cash flows. There can be no assurance that future results will meet expectations. While the Company believes that the forward-looking statements in this Annual Report on Form 10-K are reasonable, the reader should not place undue reliance on any forward-looking statement. In addition, these statements speak only as of the date made. The Company does not undertake, and expressly disclaims, any obligation to update or alter any statements whether as a result of new information, future events or otherwise, except as may be required by applicable law.

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 are 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. The Company desires to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.

Risks Relating to Economic and Market Conditions

Difficult market conditions and economic trends have adversely affected the financial services industry and the Company’s business.

Beginning in the latter half of 2007 through 2009, the U.S. economy was in recession and business activity across a wide range of industries and regions in the U. S. was greatly reduced. Although economic conditions have improved, certain sectors, such as real estate and manufacturing, remain weak and unemployment remains high. Local governments and many businesses are still in serious difficulty due to lower consumer spending and decreased liquidity in the credit markets.

Market conditions have also led to the failure and merger of a number of financial institutions. These failures, as well as projected future failures, have had a significant negative impact on the capitalization levels and of the Deposit Insurance Fund, which has led to a significant increase in deposit insurance premiums paid by financial institutions.

The Company’s success depends, to a certain extent, upon local and national economic and political conditions as well as governmental monetary policies. Conditions such as inflation, recession, unemployment, changes in interest rates, money supply and other factors beyond the Company’s control may adversely affect asset quality, deposit levels and loan demand and, therefore, the Company’s earnings. Because the Company has a significant amount of real estate loans, additional decreases in real estate values could adversely affect the value of property used as collateral and the Company’s ability to sell the collateral upon foreclosure. Adverse changes in the economy may also have a negative effect on the ability of borrowers to make timely repayments of their loans, which would have an adverse impact on the Company’s earnings. If during a period of reduced real estate values, the Company is required to liquidate the collateral securing loans to satisfy the debt or to increase its allowance for loan losses, it could materially reduce the Company’s profitability and adversely affect its financial condition. The substantial majority of the Company’s loans are to individuals and businesses located in Holmes, Tuscarawas, Wayne and Stark Counties in Ohio. Consequently, further significant declines in north central Ohio could have a material adverse effect on the Company’s business, financial condition or results of operations.

16

Changes in interest rates could adversely affect income and financial condition.

The Company’s earnings and financial condition are substantially dependent 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 FRB. Changes in interest rates will influence the origination of loans, the purchase of investments and the level of prepayments on the Company’s loans and the receipt of payments on mortgage-backed securities resulting in fluctuations of income and cash flow. Changes in interest rates also can affect the value of loans, securities, mortgage servicing rights and assets under management. Although fluctuations in market interest rates are neither completely predictable nor controllable, the Company’s Asset Liability Committee (ALCO) meets periodically to monitor the Company’s interest rate sensitivity position and oversee the Company’s financial risk management by establishing policies and operating limits. If short-term interest rates remain at their historically low levels for a prolonged period of time the Company’s interest-earning assets could continue to reprice downward while the Company’s interest-bearing liability rates, especially customer deposit rates, could remain at current levels. During 2011, the Company’s net interest margin and spread tightened as the rate environment remained low, cash increased with a branch acquisition and was redeployed in low interest rate investments and market competition for loan growth through lower pricing accelerated. For more information, see Item 7a. Quantitative and Qualitative Disclosures about Market Risk in this Annual Report on Form 10-K, which summarizes the Company’s exposure to interest rate risk.

Defaults by another larger financial institution could adversely affect financial markets generally.

The commercial soundness of many financial institutions may be closely interrelated as a result of credit, trading, clearing or other relationships between institutions. As a result, concerns about, or a default or threatened default by, one institution could lead to significant market-wide liquidity and credit problems, losses or defaults by other institutions. This is sometimes referred to as “systemic risk” and may adversely affect financial intermediaries, such as clearing agencies, clearing houses, banks, securities firms and exchanges, with which the Company and its subsidiaries interact on a daily basis, and therefore could adversely affect the Company’s business, financial condition or results of operations.

Risks Related to the Company’s Business

The Company’s exposure to credit risk could adversely affect its earnings and financial condition.

Credit Risk is the risk of losing principal and interest income because borrowers fail to repay loans. The Company’s earnings may be negatively impacted if it fails to manage credit risk, as the origination of loans is an integral part of the Company’s business. Factors which may affect the ability of borrowers to repay loans include a slowing of the local economy in which the Company operates, a downturn in one or more business sectors in which the Company’s customers operate or a rapid increase in interest rates. All of the Company’s loan portfolios, particularly commercial real estate loans, may continue to be affected by the sustained economic weakness of the Company’s north central Ohio market and the impact of higher unemployment rates. There has been a slowdown in the housing market across the Company’s footprint, reflecting declining prices and excess inventories of houses to be sold. Further declines in home values and the reduced levels of home sales in the Company’s market may continue to have a negative effect on the Company’s business, financial condition or results of operation.

The Company’s allowance for loan losses may be insufficient.

The Company maintains an allowance for loan losses that it believes is a reasonable estimate of known and inherent losses within the loan portfolio. The Company makes various assumptions and judgments about the collectability of its loan portfolio, including the creditworthiness of its 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 the Company’s control, and these losses may exceed current estimates. The Company cannot fully predict the amount or timing of losses or whether the loss allowance will be adequate in the future. If the Company’s assumptions prove to be incorrect, the allowance for loan losses may not be sufficient to cover losses inherent in the Company’s loan portfolio, resulting in additions to the allowance. Excessive loan losses and significant additions to the Company’s allowance for loan losses could have a material adverse impact on the Company’s business, financial condition and results of operations. In addition, bank regulators periodically review the Company’s allowance for loan losses and may require the Company to increase its provision for loan losses or recognize further loan charge-offs. Any such increase in the Company’s allowance for

17

loan losses or loan charge-offs as required by these regulatory authorities might have a material adverse effect on the Company’s business, financial condition or results of operations.

The Company has significant exposure to risks associated with commercial loans.

As of December 31, 2011, approximately 61% of the Company’s loan portfolio consisted of commercial loans. Commercial loans are generally viewed as having more inherent risk of default than residential mortgage or consumer loans. The repayment of these loans often depends on the successful operation of a business. These loans are more likely to be adversely affected by weak conditions in the economy. Also, the commercial loan balance per borrower is typically larger than that for residential mortgage loans and consumer loans, indicating higher potential losses on an individual loan basis. The deterioration of one or a few of these loans could cause a significant increase in nonperforming loans and a reduction in interest income. An increase in nonperforming loans could result in an increase in the provision for loans losses and an increase in loan charge-offs, both of which could have a material adverse effect on the Company’s business, financial condition and results of operations.

The Company is subject to liquidity risk.

The Company requires liquidity to meet its deposit and debt obligations as they come due. The Company’s access to funding sources in amounts adequate to finance its activities or on terms that are acceptable to it could be impaired by factors that affect it specifically or the financial services industry or economy generally. Factors that could reduce its access to liquidity sources include a downturn in the north central Ohio market, difficult credit markets or adverse regulatory actions. The Company’s access to deposits may also be affected by the liquidity needs of its depositors. In particular, a substantial majority of the Company’s liabilities are demand, savings, interest checking and money market deposits, which are payable on demand or upon several days’ notice, while by comparison, a substantial portion of its assets are loans, which cannot be called or sold in the same time frame. Although the Company historically has been able to replace maturing deposits and advances as necessary, it might not be able to replace such funds in the future, especially if a large number of its depositors sought to withdraw their accounts, regardless of the reason. A failure to maintain adequate liquidity could have a material adverse effect on the Company’s business, financial condition or results of operations.

The Company’s business strategy includes planned growth. The Company’s financial condition and results of operations could be negatively affected if the Company fails to grow or fails to manage its growth effectively.

The Company’s ability to grow successfully will depend on a variety of factors, including the continued availability of desirable business opportunities, its ability to integrate acquisitions and manage growth and the Company’s ability to raise capital. While the Company believes it has the management resources and systems in place to successfully manage future growth, there can be no assurance that growth opportunities will be available.

Failure to manage the Company’s growth effectively could have a material adverse effect on its business, future prospects, financial condition or results of operations and could adversely affect the Company’s ability to successfully implement its business strategy.

The Company may need to raise capital in the future, but capital may not be available when needed or at acceptable terms.

Federal and state banking regulators require the Company and the Bank to maintain adequate levels of capital to support its operations. In addition, in the future the Company may need to raise additional capital to support its business or to finance acquisitions, if any, or the Company may otherwise elect to raise additional capital in anticipation of future growth opportunities. Many financial institutions have sought to raise considerable amounts of capital in recent years in response to deterioration in their results of operations and financial condition. Such overall market demand for capital may diminish the Company’s ability to raise additional capital if and when it is needed.

The Company’s ability to raise additional capital for parent company or the banking subsidiary needs will depend on conditions at that time in the capital markets, overall economic conditions, CSB’s financial performance and condition, and other factors, many of which are outside our control. There is no assurance that, if needed, CSB will be able to raise additional capital on favorable terms or at all. An inability to raise additional capital may have a material adverse effect on our ability to expand operations, and on our financial condition, results of operations and future prospects.

18

Strong competition within the market in which the Company operates could reduce its ability to attract and retain business.

The Company will need to adjust to competition in both originating loans and attracting deposits. Competition in the financial services industry is intense, as the Company competes 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 the Company’s competitors offer a broader range of products and services than it can offer. The Company’s ability to achieve its financial objectives will depend on its ability to deliver or expand product delivery systems and changes in technology required by customers. The increasingly competitive environment is, in part, a result of changes in regulation, changes in technology and product delivery systems and the accelerating pace of consolidation among financial service providers.

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 the Company’s business, it collects, processes and retains sensitive and confidential client and customer information on behalf of the Company’s subsidiaries and other third parties. Despite the security measures the Company has in place, its facilities and systems, and those of the Company’s 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 the Company or damages to others. Any security breach involving the misappropriation, loss or other unauthorized disclosure of confidential customer information, whether by the Company or by its vendors, could severely damage the Company’s reputation, expose it to the risks of litigation and liability or disrupt the Company’s operations and may have a material adverse effect on the Company’s business.

The Company may not be able to attract and retain skilled people.

The Company’s success depends, in large part, on its ability to attract and retain key people. Competition for the best people in most activities in which the Company engages can be intense, and the Company may not be able to retain or hire the people it wants or needs. In order to attract and retain qualified employees, the Company must compensate them at market levels. If the Company is unable to continue to attract and retain qualified employees, or do so at rates necessary to maintain its competitive position, the Company’s performance, including its competitive position, could suffer, and, in turn, adversely affect the Company’s business, financial condition or results of operations.

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.

As a financial holding company, 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. The FRB issued a policy statement that provides that insured banks and bank holding companies should generally only pay dividends out of current operating earnings. 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 business, financial condition, results of operations or prospects.

The trading volume and price of the Company’s common shares can be volatile.

The Company’s common shares are very thinly traded and, therefore, susceptible to price swings. The Company’s common shares are traded on the Over the Counter Bulletin Board under the symbol “CSBB.ob;” however, the investment community does not actively follow the Company’s common shares. Given the lower trading volume of the Company’s common shares, significant sales of the Company’s common shares, or the expectation of significant sales, could cause the Company’s share price to fall.

19

Risks Related to the Legal and Regulatory Environment

Legislative or regulatory changes or actions, or significant litigation, could adversely impact the Company or the businesses in which it is engaged.

The financial services industry is extensively regulated. The Company and its subsidiaries are subject to extensive state and federal regulation, supervision and legislation that govern almost all aspects of its operations. Laws and regulations may change from time to time and are primarily intended for the protection of consumers, depositors and the Deposit Insurance Fund, and not to benefit the Company’s shareholders. The impact of any changes to laws and regulations or other actions by regulatory agencies may negatively impact the Company or its ability to increase the value of its business. Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of an institution, the classification of assets by an institution and the adequacy of an institution’s allowance for loan losses. Additionally, actions by regulatory agencies or significant litigation against the Company could cause it to devote significant time and resources to defending the Company’s business and may lead to penalties that materially affect the Company and its shareholders.

Increases in FDIC insurance premiums may have a material adverse effect on our earnings.

The FDIC maintains the Deposit Insurance Fund to resolve the cost of bank failures. Since 2007, the number of bank failures has increased significantly, which dramatically increased resolution costs of the FDIC and depleted the Deposit Insurance Fund. Also during this period, the FDIC and the U.S. Congress instituted two programs to further insure customer deposits at FDIC-member banks: (i) deposit accounts are now insured up to $250,000 per customer (up from $100,000); and (ii) non-interest bearing transactional accounts are fully insured (unlimited coverage) through December 31, 2012. These actions have placed additional stress on the Deposit Insurance Fund.

Since late 2008, the FDIC has taken various actions intended to maintain a strong funding position and restore reserve ratios of the Deposit Insurance Fund. These actions have included increasing assessment rates for all insured institutions, requiring riskier institutions to pay a larger share of premiums by factoring in rate adjustments based on secured liabilities and unsecured debt levels, imposing special assessments and requiring insured depository institutions to prepay their quarterly risk-based assessments for the fourth quarter of 2009 and full years 2010 through 2012. In addition, on February 7, 2011, the FDIC approved a final rule that changed the deposit insurance assessment base and assessment rate schedule, adopted a new large-bank pricing assessment scheme and set a target size for the Deposit Insurance Fund. The rule, as mandated by the Dodd-Frank Act, finalized a target size for the Deposit Insurance Fund at 2 percent of insured deposits. The final rule went into effect beginning with the second quarter of 2011.

The Company has a limited ability to control the amount of premiums we are required to pay for FDIC insurance. If there are additional financial institution failures or other significant legislative or regulatory changes, the FDIC may be required to increase assessment rates or take actions similar to those taken during 2009. Increases in FDIC insurance assessment rates may materially adversely affect the Company’s business, financial condition or results of operations.

The recently enacted Dodd-Frank Act may adversely impact the Company’s business, financial condition or results of operations.

On July 21, 2010, the Dodd-Frank Act was signed into law. The Dodd-Frank Act represents a comprehensive overhaul of the financial services industry within the U.S. There are a number of reform provisions that are likely to significantly impact the ways in which banks and bank holding companies do business. A detailed discussion regarding the Dodd-Frank Act can be found under the caption “Dodd-Frank Act” in Item 1 of this Annual Report on Form 10-K.

Many provisions of the Dodd-Frank Act will not be implemented immediately and will require interpretation and rule making by federal regulators. The Company is closely monitoring all relevant sections of the Dodd-Frank Act to ensure continued compliance with all new or revised laws and regulations. While the ultimate effect of the Dodd-Frank Act cannot currently be determined, the law and its implementing rules and regulations are likely to result in increased compliance costs and fees paid to regulators, along with possible restrictions on the Bank’s operations, all of which may have a material adverse affect on the Company’s business, financial condition or results of operations.

20

The recent repeal of federal prohibitions on the payment of interest on demand deposits could increase our interest expense.

All federal prohibitions on the ability of financial institutions to pay interest on demand deposit accounts were repealed as part of the Dodd-Frank Act beginning on July 21, 2011. As a result, some financial institutions have commenced offering interest on demand deposits to compete for clients. The Company does not yet know what interest rates other institutions may offer as market interest rates increase. The Company’s interest expense will increase and its net interest margin will decrease if the Company begins offering interest on demand deposits to attract new customers or maintain current customers, which could have a material adverse effect on the Company’s business, financial condition and results of operations.

Environmental liability associated with commercial lending could have a material adverse effect on our business, financial condition or results of operations.

A significant portion of the Company’s loan portfolio is secured by real property. During the ordinary course of business, the Company may foreclose on and take title to properties securing certain loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties. If hazardous or toxic substances are found, the Company may be liable for remediation costs, as well as for personal injury and property damage.

Environmental laws may require the Company to incur substantial expenses and may materially reduce the affected property’s value or limit the Company’s ability to use or sell the affected property. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase the Company’s exposure to environmental liability. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on the Company’s business, financial condition or results of operations.

The Company may be a defendant from time to time in the future in a variety of litigation and other actions, which could have a material adverse effect on its business, financial condition or results of operations.

The Company and its subsidiaries may be involved from time to time in the future in a variety of litigation arising out of its business. The Company’s insurance may not cover all claims that may be asserted against it, and any claims asserted against the Company, regardless of merit or eventual outcome, may harm its reputation. Should the ultimate judgments or settlements in any litigation exceed the Company’s insurance coverage, it could have a material adverse effect on the Company’s business, financial condition or results of operations. In addition, the Company may not be able to obtain appropriate types or levels of insurance in the future, nor may the Company be able to obtain adequate replacement policies with acceptable terms, if at all.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

21

ITEM 2. PROPERTIES.

The Bank operates sixteen banking centers as noted below:

Location	Banking Center	Other Property	Address	Owned	Leased
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
Orrville	X		330 West High Street, Orrville, Ohio 44667		X
Operations Center	X		91North Clay Street, Millersburg, Ohio 44654	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
Wooster	X		305 West Liberty Street, Wooster, Ohio 44691		X
Wooster	X		3562 Commerce Parkway, Wooster, Ohio 44691	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.

In the normal course of business, CSB is subject to pending and threatened legal actions, including claims for which material relief or damages sought are substantial. Although CSB is not able to predict the outcome of such actions, after reviewing pending and threatened actions, management believes that the outcome of any or all such actions will not have a material adverse effect on the results of operations or shareholders’ equity of CSB. Further, there are no material legal proceedings in which any director, executive officer, principal shareholder or affiliate of CSB is a party or has a material interest that is adverse to CSB or the Bank. None of the routine litigation in which CSB or the Bank is involved, is expected to have a material adverse impact on the financial position or results of operations of CSB or the Bank.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

22

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 21 of the Annual Report is incorporated herein by reference.

ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans		Maximum Number of Shares that May Yet be Purchased Under the Plan
October 1, 2011 to October 31, 2011		—		—		—		41,471
November 1, 2011 to November 30, 2011		—		—		—		41,471
December 1, 2011 to December 31, 2011		—		—		—		41,471

On July 7, 2005 CSB filed a Current Report on Form 8-K with the SEC 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 may be made from time to time as market and business conditions warrant, in the open market, through block purchases and in negotiated private transactions.

23

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, 2011, with the cumulative total return on the Standard and Poor’s 500 Stock Index and the NASDAQ Community Bank Stock Index. The comparison assumes $100 was invested on December 31, 2006 in CSB’s Common Shares and in each of the indicated indices and assumes reinvestment of dividends.

	2006		2007		2008		2009		2010		2011
CSBB	$	100	$	97	$	86	$	92	$	98	$	111
S & P 500		100		106		66		84		97		99
NASDAQ Bank		100		77		64		52		58		54

ITEM 6. SELECTED FINANCIAL DATA.

Information contained in the section captioned “Selected Financial Data” on page 9 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 “2011 Financial Review” on pages 8 through 21 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 18-19 of the Annual Report is incorporated herein by reference.

24

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 23 through 55 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 and Chief Financial Officer, 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 Chief Executive Officer and Chief Financial Officer 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 22 of the Annual Report and is incorporated herein by reference. This annual report does not include an attestation report of the Company’s independent 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 the 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, 2011, 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

25

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The information required by Item 401 of Regulation S-K concerning the directors of the Company and the nominees for election as directors of the Company at the Annual Meeting of Shareholders to be held on April 25, 2012 (the “2012 Annual Meeting”) is incorporated herein by reference from the information to be included under the caption “Proposal 1 – Election of Directors” in the Company’s definitive proxy statement relating to the 2012 Annual Meeting to be filed with the SEC (“2012 Proxy Statement”). The information required by Item 401 of Regulation S-K concerning the executive officers of the Company is incorporated herein by reference from the information to be included under the caption “Executive Officers” in the 2012 Proxy Statement.

Compliance with Section 16(a) of the Securities Exchange Act of 1934, as amended.

The information required by Item 405 of Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” in the 2012 Proxy Statement.

Code of Ethics.

The Company has adopted a Code of Ethics that applies to its senior financial officers, including the Chief Executive Officer and Chief Financial Officer. The Company has posted its Code of Ethics on its website at www.csb1.com. The Company plans to satisfy SEC disclosure requirements regarding any amendments to, or waiver of, the Code of Ethics relating to its Chief Executive Officer or Chief Financial Officer, and persons performing similar functions, by posting such information on the Company’s 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.

Procedures for Recommending Directors Nominees.

Information concerning the procedures by which shareholders may recommend nominees to the Company’s Board of Directors is incorporated herein by reference from the information to be included under the caption “Shareholder Nominations” in 2012 Proxy Statement. These procedures have not materially changed from those described in CSB’s definitive proxy materials for the 2011 Annual Meeting of Shareholders.

Audit Committee.

The information required by Items 407(d)(4) and (d)(5) of Regulation S-K is incorporated herein by reference from the disclosure to be included under the captions “Membership and Meetings of the Board and its Committees” and “Committees of the Board of Directors – Audit Committee” in the 2012 Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by Item 402 of Regulation S-K is incorporated herein by reference from the disclosure to be included under the captions “Compensation Discussion and Analysis” and “Executive Compensation and Other Information” in the 2012 Proxy Statement.

The information required by Item 407(e)(4) of Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption “Compensation Committee Interlocks and Insider Participation” in the 2012 Proxy Statement.

The information required by Item 407(e)(5) of Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption “The Compensation Committee Report” in the 2012 Proxy Statement.

26

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

Equity Compensation Plan Information

	Number of shares of common stock to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of shares remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)		(b)		(c)
Equity compensation plans approved by stockholders		26,716	$	17.32		173,284
Equity compensation plans not approved by stockholders		—		—		—
Total		26,716	$	17.32		173,284

Security Ownership of Certain Beneficial Owners and Management

The information required by Item 403 of Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption “Beneficial Ownership of Management and Certain Beneficial Owners” in the 2012 Proxy Statement.

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

The information required by Item 404 of Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption “Certain Relationships and Related Transactions” in the 2012 Proxy Statement. There were no relationships where transactions exceeded $120,000 for the year ended December 31, 2011.

The information required by Item 407(a) of Regulation S-K is incorporated herein by reference from the disclosure to be included under the caption “Membership and Meetings of the Board and its Committees” in the 2012 Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The information required by this Item 14 is incorporated herein by reference from the disclosure to be included under the captions “Independent Registered Public Accounting Firm Fees” and “Audit Committee Procedures for Pre-Approval of Services by the Independent Public Accounting Firm” in the 2012 Proxy Statement.

27

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 2011 Annual Report as noted:

• Report of Independent Registered Public Accounting Firm (S.R. Snodgrass) – pg. 23.

• Consolidated Balance Sheets at December 31, 2011 and 2010 – pg. 24.

• Consolidated Statements of Income for the years ended December 31, 2011, 2010 and 2009 – pg. 25.

• Consolidated Statements of Shareholders’ Equity – pg. 26.

• Consolidated Statements of Cash flows for the years ended December 31, 2011, 2010 and 2009 – pgs. 27-28.

• Notes to Consolidated Financial Statements – pgs. 29-55.

(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
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).
3.2.1	Amended Article VIII Code of Regulations of CSB Bancorp, Inc. (incorporated by reference to Registrant’s Form DEF 14a for the Fiscal Year ended December 31, 2008).
4	Form of Certificate of Common Shares of CSB Bancorp, Inc. (incorporated by reference to Registrant’s Form 10-SB).
10	Amended and Restated Separation Agreement and General Release between Rick L. Ginther and The Commercial and Savings Bank of Millersburg, Ohio.
13	CSB Bancorp, Inc. 2011 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
101	The following materials from CSB’s 2011 Annual Report to Shareholders formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets: (ii) Consolidated Statements of Income: (iii) Consolidated Statements of Shareholders’ Equity: (iv) Consolidated Statements of Cash Flows: and (v) Notes to Consolidated Financial Statements, tagged as blocks of text.

28

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 26, 2012	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 26, 2012.

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

29

INDEX TO EXHIBITS

Exhibit Number	Description of Document	Sequential Page
3.1	Amended Articles of Incorporation of CSB Bancorp, Inc. (incorporated by reference to Registrant’s 1994 Form 10-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
3.2.1	Amended Article VIII Code of Regulations of CSB Bancorp, Inc. (incorporated by reference to Registrant’s Form DEF 14a for the Fiscal Year ended December 31, 2008).	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	Amended and Restated Separation Agreement and General Release between Rick L. Ginther and The Commercial and Savings Bank of Millersburg, Ohio.	N/A
13	CSB Bancorp, Inc. 2011 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
101	The following materials from CSB’s 2011 Annual Report to Shareholders formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets: (ii) Consolidated Statements of Income: (iii) Consolidated Statements of Shareholders’ Equity: (iv) Consolidated Statements of Cash Flows: and (v) Notes to Consolidated Financial Statements, tagged as blocks of text.	N/A

30

EX-10

EXHIBIT 10

AMENDED AND RESTATED SEPARATION AGREEMENT AND GENERAL RELEASE

THIS AGREEMENT is entered into as of this 8th day of December, 2011, by and between Rick L. Ginther, an individual, for and on behalf of himself and his successors, heirs, family and assigns (“Ginther”) and The Commercial and Savings Bank of Millersburg, a state bank organized and existing under the laws of the State of Ohio (“Bank”);

WHEREAS, the purpose of this Agreement is to set forth certain understandings which have been reached between Ginther and Bank;

WHEREAS, Ginther has been an employee of Bank since on or about July 21, 2003; and

WHEREAS, both Ginther and Bank desire to end the employment relationship between them with a minimum of hardship to Ginther and disruption to Bank.

NOW, THEREFORE, IT IS AGREED AS FOLLOWS:

1. Ginther shall be permitted to resign his employment with Bank effective at the close of business on December 31, 2011 (the “Separation Date”). Ginther shall be permitted to disclose the fact that he resigned his employment for personal reasons.

2. Through December 31, 2011, Bank shall pay Ginther the salary and shall provide Ginther with the employee benefits he is receiving from the Bank as of the date on which this Separation Agreement is executed. On the first regular Bank pay date in 2012, Bank shall pay Ginther $97,137.00 in a lump sum, subject to applicable withholding requirements.

3. Through June 30, 2012, for so long as Ginther is eligible for and elects to exercise his right to purchase continuation health insurance benefits under the Comprehensive Omnibus Budget Reconciliation Act of 1985, as amended (hereinafter referred to as “COBRA”), Bank shall pay that portion of Ginther’s monthly health insurance premium which Bank paid immediately prior to December 31, 2011. In the event that Ginther decides not to elect COBRA coverage or if he otherwise ceases to be entitled by law to COBRA coverage, the obligation of Bank under this paragraph 3 to make such payment shall cease and terminate.

4. Bank shall reimburse Ginther’s country club dues, through June 30, 2012, on the same terms as were in effect prior to the parties entering into this Separation Agreement.

5. Ginther will be eligible for consideration of a bonus payment of up to 30% of his 2011 Base Salary at the discretion of the Board of Directors of Bank, at such time as the Board of Directors makes bonus determinations for other members of the executive management team in 2012.

6. Immediately upon the Separation Date, Ginther shall return to Bank any and all property of Bank in his possession including, but not limited to, his cellular phone, keys, equipment, all documents and computer files. Ginther agrees that he shall not take, copy, use or reveal to any person in any form or manner, any documents, computer files or information which Bank deems confidential or proprietary, including, but not limited to, financial information, business and strategic plans, and other confidential materials or information.

7. Any employment agreement or other relationship between Ginther and Bank, including but not limited to their July 21, 2003 Employment Agreement, is hereby rendered null and void in its entirety and shall have no further force or effect, except that Section 4 of the Employment Agreement shall remain in effect through December 31, 2012 and Sections 5 and 6 of the July 21, 2003 Employment Agreement shall remain in full force and effect.

8. Ginther hereby releases and forever discharges Bank, its operating companies or entities, subsidiary companies or entities, its parent companies or entities, its affiliated companies or entities, their shareholders, officers, directors, trustees, employees, associates, agents, benefit plans, successors and assigns from any and all claims, demands or rights of action which exist as of the date this Agreement is executed, whether contractual, common law or statutory, whether known or unknown, including but not limited to claims which may in any way relate to Ginther’s employment and association with Bank or the termination of that employment and association, including, but not limited to claims arising under the Age Discrimination in Employment Act. Subject to the last sentence of paragraph 12 below, this Agreement amends, restates and supersedes in its entirety the Separation Agreement and General Release, dated as of October 27, 2011, between Ginther and Bank (the “Original Agreement”).

9. Bank hereby releases Ginther from any and all claims, demands or rights of action which exist as of the date this Agreement is executed, whether contractual, common law or statutory, whether known or unknown, including but not limited to claims which may in any way relate to Ginther’s employment and association with Bank or the termination of that employment and association.

10. Ginther shall keep confidential and not disclose to any person or any entity or encourage or facilitate the disclosure to any person or entity the terms of this Agreement, including but not limited to the monetary amount of this Agreement. Notwithstanding the foregoing, Ginther may disclose to prospective employers the existence of Sections 4, 5 and 6 of the July 21, 2003 Employment Agreement. Notwithstanding anything to the contrary contained herein, the confidentiality provisions of this paragraph shall remain in full force and effect with respect to each term or provision of this Agreement unless and until such term or provision becomes part of the public domain through no act, omission or fault of Ginther.

11. Ginther shall not voluntarily make any oral or written statements or reveal any information to any person, company, or agency which may be construed to be negative, disparaging or damaging to Bank’s reputation or Bank’s business, or which would interfere in any way with Bank’s business relations with the general public.

12. Ginther acknowledges that he has been advised by this writing to consult with an attorney and has had the opportunity to take at least 21 days in which to review and consider this Agreement and to consult with legal counsel with respect thereto. Ginther further acknowledges that he has entered into this Agreement voluntarily and of his own free will. Ginther acknowledges his right to revoke this Agreement within seven days following the execution hereof by giving written notice thereof to Bank. In the event of such revocation, (a) this Agreement shall become null and void and no party hereto shall have any rights or obligations hereunder and (b) the Original Agreement shall be automatically reinstated in its entirety and shall thereafter remain in full force and effect in accordance with its terms.

13. This Agreement shall not be construed in any manner as an admission by Bank that it has violated any law, policy or procedure or acted wrongfully with respect to Ginther or any other person, or that Ginther has any rights whatsoever against Bank. Ginther acknowledges that Bank specifically disclaims any liability to Ginther arising from his employment relationship with Bank or the termination of that relationship.

14. This Agreement shall be construed under the laws of the State of Ohio.

Signed as of this 8th day of December, 2011.

/s/ Margaret L.Conn	/s/ Rick L. Ginther
Witness	Rick L. Ginther
	THE COMMERCIAL AND SAVINGS BANK OF MILLERSBURG
/s/ Margaret L. Conn	By: /s/ Eddie L. Steiner
Witness
	Its: Chairman

EX-13

2011 Annual Report

A Relationship

You Can “Bank On”

CSB Bancorp, Inc.

“Bank On”

This original 1930’s-era brass piggy bank motivated many CSB customers to start saving.

2011 Financial Highlights 3

2011 Letter to Shareholders 4

Board of Directors 7

2011 Financial Review. 8

Report on Management’s Assessment

of Internal Control over Financial Reporting 22

Report of Independent Registered

Public Accounting Firm 23

Consolidated Balance Sheets 24

Consolidated Statements of Income 25

Consolidated Statements of Shareholders’ Equity 26

Consolidated Statements of Cash Flows 27

Summary of Significant Accounting Policies 29

Notes to Consolidated Financial Statements 34

Officers of The Commercial & Savings Bank 56

Shareholder & General Inquiries 57

Banking Center Information 60

2 2011 Annual Report to Shareholders | CSB Bancorp, Inc.

2011 Financial Highlights

FOR THE YEAR ENDED DECEMBER 31 2011 2010 % CHANGE

(Dollars in thousands, except per share data)

CONSOLIDATED RESULTS

Net interest income $ 16,340 $ 15,570 5%

Net interest income –

fully taxable-equivalent (“FTE”) basis 16,596 15,796 5

Noninterest income 3,508 3,275 7

Provision for loan losses 950 1,235 –23

Noninterest expense 13,609 12,546 8

Net income 3,687 3,496 5

AT YEAR-END

Loans, net $ 320,100 $ 311,616 3%

Assets 551,233 457,056 21

Deposits 443,553 353,491 25

Shareholders’ equity 49,429 47,154 5

Cash dividends declared 0.72 0.72 0

Book value 18.07 17.24 5

Tangible book value 15.97 16.46 –3

Market price 16.75 15.57 8

Basic and diluted earnings per share 1.35 1.28 5

FINANCIAL PERFORMANCE

Return on average assets 0.78% 0.78%

Return on average equity 7.57 7.43

Net interest margin, FTE 3.71 3.73

Efficiency ratio 68.11 65.96

CAPITAL RATIOS

Risk-based capital:

Tier 1 12.92% 14.66%

Total 14.17 15.91

Leverage 8.05 9.75

2011 Annual Report to Shareholders | CSB Bancorp, Inc. 3

Letter to Shareholders

Eddie L. Steiner John R. Waltman

President & CEO, CSB Bancorp, Inc. Chairman, Board of Directors,

CSB Bancorp, Inc.

Dear Fellow Shareholder:

CSB’s strategy is to provide high quality financial services through each channel and in each market we serve. As an independent community bank, we know that banking, trust and brokerage services provide vital access to funds and economic stability for businesses, consumers and organizations throughout our market area. Community banking is a people business. It is built on relationships. The Bank honors its end of the bargain by:

• Maintaining a strong balance sheet through effective risk management

• Investing continuously in its people, processes, and systems

• Staying in tune with the financial needs and wants of constituents in the communities it serves

We are committed to being a company that is actively engaged in fostering growth, progress and economic stability.

Share Performance

CSB’s stock (symbol CSBB.OB) delivered a total return of 12.6% in 2011, with quarterly dividends representing approximately one-third of that return. Our dividend yield has averaged 4.3% over the past five-year period. We continue to recognize the importance of our dividend to many shareholders in this environment of very low interest rates on savings deposits. While approximately one-half of publicly traded banks in the U.S. are not paying a dividend, CSB has either increased or held its dividend steady in each of the past 39 quarters. The Company’s stock finished the year priced at 97% of tangible book value and a multiple of twelve times the last twelve months’ reported earnings. We believe the outlook for our stock is encouraging, given our consistent earnings performance and attractive dividend yield, and we thank each shareholder for their continued support.

Company Performance Against 2011 Objectives

At the beginning of 2011, we established four broad performance goals that encapsulated our tactical plans for the year. These goals were to:

• Maintain a primary focus on credit quality issues

• Monitor all risks to earnings, with special focus on the interest rate and regulatory environments

• Continue to work on determining how to most efficiently deliver excellence in banking products and services both in the current and coming years

• Seek and capitalize on prudent growth opportunities

EARNINGS DIVIDENDS BOOK VALUE TANGIBLE BOOK VALUE

PER SHARE, DILUTED PER SHARE (ANNUAL) PER SHARE PER SHARE

4 2011 Annual Report to Shareholders | CSB Bancorp, Inc.

Letter to Shareholders

We made forward strides in each of the four areas, but our work is far from finished. However, enough progress was made to deliver

$1.35 per share in net income, thus meeting our earnings plan and exceeding the prior year’s performance. We want to do even better.

Nevertheless, this year’s achievements were solid, and they warrant some further explanation.

Credit Quality

Credit quality considerations have required very careful and constant attention for several years as consumers and businesses grapple with pressures created by the prolonged aftermath of deep recessionary conditions. While we have experienced elevated levels of delinquency and loan charge-offs as compared to our historical norm, the impact to earnings has been moderate. This we attribute to our emphasis on maintaining a strong credit culture. At the end of 2011, 0.64% of the Bank’s assets met FDIC’s classification of noncurrent or other property owned. The average of all Ohio banks at the end of the year was more than three times that rate, and the average for Ohio’s ninety commercial banks ranging from $100 million to $1 billion in assets was more than double our rate.

Interest Rate and Regulatory Environments

The very low interest rate environment has resulted in margin compression throughout the industry. Our tax-adjusted net interest margin declined only slightly to 3.71% for the year. However, during the fourth quarter we acquired two branches in Wooster, Ohio with a deposit base far exceeding the acquired loan balances. While we anticipate loan growth in this new retail market, our net interest margin, stated as a percentage, will be lower during 2012 as we work to increase the ratio of loan to deposit balances.

Another risk to bank earnings that received a lot of attention this past year involved regulatory developments. As a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank, 2010), the regulatory landscape governing banking and financial services is being significantly reshaped by new sets of authorities for various governing bodies and many new rules. These changes will be developed and implemented over a period of years. While a number of new regulations have already affected our activities and increased operating costs, thus far the total impact on our financial results has not been materially adverse. We are committed to functioning in accordance with guidelines established by the vested authorities and will continue to monitor and adapt our business model as necessary in response to changing regulatory conditions.

Efficient and Effective Delivery of Products and Services

During 2011, we began a multi-year initiative focused on the delivery of convenient and high-quality banking services. Electronic banking channels, such as the internet and mobile phone, provide new levels of convenience for some bank transactions. These channels have been experiencing rapid industry growth, while traditional branch activity has been declining. Early in 2011, we introduced optional “e-statements” which were quickly adopted by many customers.

We are evaluating these trends, and developing and implementing plans to ensure that we invest properly in related capability needs. Technology upgrades will be a part of the investments required to meet emerging channel demands. Training and talent development will also play a key role in ensuring the Company’s proper positioning to meet customer preferences. Within the past year, we have assessed and modified significant portions of our training and career development programs. Our corporate training group is charged with ensuring that we provide the knowledge tools required to keep pace with changes in the industry, and to foster leadership development from within the Company. This period of heightened investment in technology and training protocols will take several years, and the related investment costs will have some impact on near-term earnings as we build new capabilities to meet changing consumption patterns.

We also continued to invest in our existing infrastructure during 2011. Key accomplishments in this area included:

• Upgrading all of our ATM machines

• Remodeling the Walnut Creek Banking Center

• Enhancing security features for our web-based delivery channels

• Rolling out a company communications platform on our corporate intranet -wide

These upgrades position us well to meet our plans and objectives for 2012.

CLOSING MARKET PRICE RETURN ON RETURN ON LEVERAGE RATIO

PER SHARE AVERAGE ASSETS AVERAGE EQUITY (TIER 1 CAPITAL TO AVERAGE ASSETS)

2011 Annual Report to Shareholders | CSB Bancorp, Inc. 5

Letter to Shareholders

Growth

Our commitment to seeking growth provided the opportunity to acquire two branches in Wooster, Ohio, on October 15, 2011. CSB now has five branches in Wayne County, and we now have branch locations in the county seat of three of the four counties in our primary market area. The two additional branches increased CSB’s asset size by 16% and bring the total number of CSB’s branches to fifteen. The Company has completed one bank acquisition, opened two new banking centers and purchased two banking centers in the past five years, growing from $350 million in total assets to $551 million. We remain firmly committed to prudent growth. Our commitment is grounded in the belief that appropriate growth provides scale from which we can derive:

• Economies of effort

• Absorption of externally mandated costs

• Opportunities for employee development and advancement

• Diversification of exposure to risks

• Potential for greater long- return on investment term

Key Drivers of Continued Success

CSB’s success going forward will be driven by our commitment to continuous improvement in all aspects of our operations, and relentless focus on providing products and services that conveniently meet customers’ banking needs. We will monitor and adapt innovative uses of technology that enhance our delivery of banking products and services. We will capitalize on our ability to deliver a diverse set of banking services to consumers and commercial customers, and we will continue to prudently manage risks across our enterprise and our range of activities. All of these efforts will be conducted within the framework of our long-standing core values:

• Profit responsibility

• Customer service

• Fair and empowering interactions with all employees

• Honesty and integrity in all of our dealings

• Enjoyment of life and the privilege to work and serve in the communities in which we live

• Growth, as part of the life- of our future blood

Closing

CSB is in an excellent position to continue growing and providing rewarding returns to our shareholders. The Company’s balance sheet is strong, able to support needed investments and positioned to benefit from a recovering economy. While many of the fundamentals of good banking remain based upon tried and true principles, the industry itself is changing. We are actively investing in our people, technology and other infrastructure required to support the future. Our team is fully committed to delivering financial products and services that meet the wants and needs of customers both today and in the future. For customers and shareholders alike, we remain dedicated to the proposition of being a relationship you can bank on.

Eddie L. Steiner John R. Waltman

President and Chairman,

Chief Executive Officer Board of Directors

NET INTEREST MARGIN EFFICIENCY RATIO TOTAL ASSETS TOTAL DEPOSITS

(TAX EQUIVALENT BASIS) (TAX EQUIVALENT BASIS) AT YEAR-END ($ MILLIONS) AT YEAR-END ($ MILLIONS)

6 2011 Annual Report to Shareholders | CSB Bancorp, Inc.

Board of Directors

Standing, Left to Right

J. Thomas Lang Eddie L. Steiner Ronald E. Holtman Robert K. Baker John R. Waltman

Veterinarian, President, Attorney, Co-owner and Controller, Attorney, Of Counsel

Dairy Farmer, Chief Executive Officer, Logee, Hostetler, Bakerwell, Inc. Critchfield, Critchfield

Spring Hill Farms, Inc. CSB Bancorp, Inc. Stutzman & Lehman & Johnston

Chairman, President, Chairman,

Chief Executive Officer, CSB Bancorp, Inc.

The Commercial and

Savings Bank

Seated, Left to Right

Jeffery A. Robb, Sr. Daniel J. Miller

President, Retired Physician,

Robb Companies, Inc. East Holmes Family Care, Inc.

ALLOWANCE FOR NET LOAN CHARGE-OFFS

NET LOANS LOAN & LEASE LOSSES (RECOVERIES) ALLL COVERAGE

AT YEAR-END ($ MILLIONS) AS A PERCENTAGE OF LOANS AS A PERCENTAGE OF AVERAGE LOANS OF NONPERFORMING LOANS

2011 Annual Report to Shareholders | CSB Bancorp, Inc. 7

2011 Financial Review

INTRODUCTION

CSB Bancorp, Inc. (the “Company” or “CSB”) was incorporated under the laws of the State of Ohio in 1991 and is a registered bank holding company. The Company’s wholly-owned subsidiaries are The Commercial and 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, with deposits 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 and trust and brokerage services. Its customers are located primarily in Holmes, Tuscarawas, Wayne, Stark and portions of surrounding counties in Ohio.

The Company’s market area has historically exhibited relatively stable economic conditions; however, a pronounced slowdown in economic activity has been evident since the latter half of 2008. Unemployment levels in Holmes County have generally been among the lowest in the State of Ohio, while the balance of the Company’s market area typically experiences unemployment levels similar to the state average. Unemployment in the Company’s market area peaked during 2010 and improved steadily thereafter, with average unemployment at December 2011 approximately 20–25% lower than December 2010. Moderate reductions in residential real estate values have also continued as a result of the slow recessionary conditions.

Effective as of the close of business on October 14, 2011, the Bank acquired two branches from Premier Bank & Trust (“Premier”). The acquired banking centers are located in Wooster, Ohio. The Bank paid a 5% premium on the deposits. The transaction was accounted for using the purchase method of accounting (see Note 3 – Branch Acquisition).

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 risk factors as discussed in this annual report and the Company’s annual report on Form 10-K. 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.

8 2011 Annual Report to Shareholders | CSB Bancorp, Inc.

2011 Financial Review

SELECTED FINANCIAL DATA

The following table sets forth certain selected consolidated financial information:

(Dollars in thousands) 2011 2010 2009 2008 2007

Statements of income:

Total interest income $ 20,018 $ 20,390 $ 22,105 $ 20,621 $ 21,231

Total interest expense 3,678 4,820 6,340 6,743 7,905

Net interest income 16,340 15,570 15,765 13,878 13,326

Provision for loan losses 950 1,235 1,337 333 472

Net interest income after

provision for loan losses 15,390 14,335 14,428 13,545 12,854

Noninterest income 3,508 3,275 3,243 3,033 3,035

Noninterest expenses 13,609 12,546 12,746 11,311 10,701

Income before income taxes 5,289 5,064 4,925 5,267 5,188

Income tax provision 1,602 1,568 1,534 1,730 1,674

Net income $ 3,687 $ 3,496 $ 3,391 $ 3,537 $ 3,514

Per share of common stock:

Basic income per share $ 1.35 $ 1.28 $ 1.24 $ 1.43 $ 1.42

Diluted income per share 1.35 1.28 1.24 1.43 1.42

Dividends 0.72 0.72 0.72 0.72 0.72

Book value 18.07 17.24 16.76 15.89 14.82

Average basic common shares outstanding 2,734,799 2,734,799 2,734,799 2,482,335 2,467,110

Average diluted common shares outstanding 2,734,838 2,734,799 2,734,799 2,482,335 2,467,812

Year-end balances:

Loans, net $ 320,100 $ 311,616 $ 309,423 $ 312,897 $ 254,073

Securities 128,489 80,667 80,621 81,888 74,526

Total assets 551,233 457,056 450,666 424,657 350,270

Deposits 443,553 353,491 329,486 305,453 259,386

Borrowings 56,234 54,927 73,774 73,889 53,329

Shareholders’ equity 49,429 47,154 45,822 43,468 36,278

Average balances:

Loans, net $ 314,670 $ 309,121 $ 313,726 $ 260,132 $ 239,405

Securities 93,851 77,967 75,597 70,680 66,966

Total assets 471,329 445,649 427,613 357,667 327,771

Deposits 367,865 334,073 304,902 257,478 253,221

Borrowings 52,717 62,951 75,734 60,472 37,278

Shareholders’ equity 48,674 47,081 45,184 38,308 35,772

Selected ratios:

Net interest margin, tax equivalent basis 3.71% 3.73% 3.93% 4.13% 4.35%

Return on average total assets 0.78 0.78 0.79 0.99 1.07

Return on average shareholders’ equity 7.57 7.43 7.51 9.23 9.82

Average shareholders’ equity as a percent

of average total assets 10.33 10.56 10.57 10.71 10.91

Net loan charge-offs (recoveries) as a percent

of average loans 0.28 0.40 0.21 (0.01) 0.20

Allowance for loan losses as a percent of

loans at year-end 1.26 1.28 1.29 1.07 1.01

Shareholders’ equity as a percent of total

year-end assets 8.97 10.32 10.17 10.24 10.36

Dividend payout ratio 53.40 56.32 58.06 50.99 50.41

2011 Annual Report to Shareholders | CSB Bancorp, Inc. 9

2011 Financial Review

RESULTS OF OPERATIONS

Net Income

Net income for 2011 was $3.7 million, an increase of $191 thousand or 5.5% from 2010. Basic and diluted net income per share was $1.35. Net income increased in 2011 primarily due to a $770 thousand increase in net interest income, a $233 thousand increase in other noninterest income and a decrease in provision for loan losses of $285 thousand. Partially offsetting the increase to net income was a $1.1 million increase in noninterest expenses. Return on average assets was 0.78% in 2011 and 2010, and return on average shareholders’ equity was 7.57% in 2011 as compared to 7.43% in 2010.

CSB’s 2010 net income was $3.5 million while basic and diluted earnings per share were $1.28, as compared to $3.4 million or $1.24 per share for the year ended 2009. Net income increased 3.1% during 2010 as compared to 2009, due primarily to a $200 thousand decrease in total noninterest expenses and a $32 thousand increase in total noninterest income. Partially offsetting the income increases were a reduction in net interest income and increases in the provision for loan losses and federal income taxes. Return on average assets was 0.78% in 2010 compared to 0.79% in 2009, and return on average shareholders’ equity was 7.43% in 2010 as compared to 7.51% in 2009.

Net Interest Income

(Dollars in thousands) 2011 2010 2009

Net interest income $ 16,340 $ 15,570 $ 15,765

Taxable equivalent adjustment1 256 226 209

Net interest income, fully taxable equivalent $ 16,596 $ 15,796 $ 15,974

Net interest yield 3.65% 3.68% 3.88%

Taxable equivalent adjustment1 .06% .05% .05%

Net interest yield – taxable equivalent 3.71% 3.73% 3.93%

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

Net interest income is the largest source of the Company’s revenue and consists of the difference between interest income generated on earning assets and interest expense incurred on liabilities (deposits and short-term and long-term borrowings). Volumes, interest rates and composition of interest-earning assets and interest-bearing liabilities affect net interest income.

Interest income decreased $372 thousand, or 1.8% in 2011 as compared to 2010. This decrease was primarily due to the 34 basis point decrease on earning assets as historical interest rates hit new lows in 2011.

Interest income decreased $1.7 million in 2010 as compared to 2009. The decrease was primarily due to a decrease of 62 basis points on earning assets as historically low interest rates continued in 2010 from 2009. Additionally, the daily average balance of loans decreased $3.7 million or 1.2% during 2010.

Interest expense decreased $1.1 million, or 23.7% for 2011 as compared to 2010, due to a decline in the average rate paid for interest bearing liabilities from 1.42% in 2010 to 1.05% in 2011. Interest expense on deposits decreased $645 thousand, or 18.4% in 2011. The decrease in interest expense occurred even though the average balance of interest-bearing deposits and borrowed funds increased by $11.6 million or 3.4% in 2011 as compared to 2010. The increase in the average balances of interest-bearing deposits was partially from the Branch Acquisition.

Interest expense decreased $1.5 million, or 24.0%, for 2010 as compared to 2009, due to continued declines in average rates paid for interest bearing liabilities, from 1.90% in 2009 to 1.42% in 2010. Interest expense on deposits declined $797 thousand, even though average deposit balances increased by $17.0 million, or 6.6% in 2010 as compared to 2009. Interest expense on borrowed funds decreased by $723 thousand due to principal reductions and maturities of FHLB advances, and lower interest rates remaining on outstanding borrowings.

10 2011 Annual Report to Shareholders | CSB Bancorp, Inc.

2011 Financial Review

The following tables provide detailed analysis of changes in average balances, yield and net interest income:

AVERAGE BALANCE SHEETS AND NET INTEREST MARGIN ANALYSIS

2011 2010 2009

AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE

(Dollars in thousands) BALANCE1 INTEREST RATE2 BALANCE1 INTEREST RATE 2 BALANCE1 INTEREST RATE 2

Interest-earning assets

Federal funds sold $ 92 $ 0 0.04% $ 215 $ 0 0.13% $ 195 $ 0 0.15%

Interest-earning deposits 34,205 82 0.24 31,265 77 0.25 13,520 31 0.23

Securities:

Taxable 81,341 2,538 3.12 67,413 2,648 3.93 67,019 3,216 4.80

Tax exempt 12,510 421 3.37 10,554 354 3.36 8,578 319 3.70

Loans3 318,781 16,977 5.33 313,549 17,311 5.52 317,254 18,539 5.84

Total interest-earning assets 446,929 20,018 4.48% 422,996 20,390 4.82% 406,566 22,105 5.44%

Noninterest-earning assets

Cash and due from banks 11,094 9,535 7,951

Bank premises and

equipment, net 8,040 8,301 8,696

Other assets 9,377 9,245 7,928

Allowance for loan losses (4,111) (4,428) (3,528)

Total assets $ 471,329 $ 445,649 $ 427,613

Interest-bearing liabilities

Demand deposits $ 53,896 44 0.08% $ 51,990 42 0.08% $ 46,107 45 0.10%

Savings deposits 91,232 228 0.25 73,694 247 0.34 58,672 244 0.42

Time deposits 152,194 2,592 1.70 149,788 3,220 2.15 153,735 4,017 2.61

Borrowed funds 52,717 814 1.54 62,951 1,311 2.08 75,734 2,034 2.69

Total interest-bearing liabilities 350,039 3,678 1.05% 338,423 4,820 1.42% 334,248 6,340 1.90%

Noninterest-bearing liabilities

and shareholders’ equity

Demand deposits 70,543 58,601 46,388

Other liabilities 2,073 1,544 1,793

Shareholders’ equity 48,674 47,081 45,184

Total liabilities and equity $ 471,329 $ 445,649 $ 427,613

Net interest income $ 16,340 $ 15,570 $ 15,765

Net interest margin 3.65% 3.68% 3.88%

Net interest spread 3.43% 3.40% 3.54%

1Average balances have been computed on an average daily basis.

2Average rates have been computed based on the amortized cost of the corresponding asset or liability. 3Average loan balances include nonaccrual loans.

2011 Annual Report to Shareholders | CSB Bancorp, Inc. 11

2011 Financial Review

The following table compares the impact of changes in average rates and changes in average volumes on net interest income: RATE/VOLUME ANALYSIS OF CHANGES

IN INCOME AND EXPENSE1

2011 v. 2010 2010 v. 2009

NET INCREASE NET INCREASE

(Dollars in thousands) (DECREASE) VOLUME RATE (DECREASE) VOLUME RATE

Increase (decrease) in interest income:

Interest-earning deposits $ 5 $ 7 $ (2) $ 46 $ 44 $ 2

Securities:

Taxable (110) 434 (544) (568) 15 (583)

Tax exempt 67 66 1 35 66 (31)

Loans (334) 279 (613) (1,228) (205) (1,023)

Total interest income change (372 ) 786 (1,158) (1,715) (80) (1,635)

Increase (decrease) in interest expense:

Demand deposits 2 2 — (4) 5 (9)

Savings deposits (19) 44 (63) 3 50 (47)

Time deposits (628) 41 (669) (796) (85) (711)

Other borrowed funds (497) (158) (339) (723) (266) (457)

Total interest expense change (1,142) (71) (1,071) (1,520) (296) (1,224)

Net interest income $ 770 $ 857 $ (87) $ (195) $ 216 $ (411 )

1Changes 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.

Provision for Loan Losses

The provision for loan losses is determined by management as the amount required to bring the allowance for loan losses to a level considered appropriate to absorb probable future net charge-offs inherent in the loan portfolio as of period end. The provision for loan losses was $950 thousand for 2011, $1.2 million for 2010 and $1.3 million for 2009. Lower provision expense in 2011 and 2010 reflects improving economic conditions which have led to a decrease in charge-offs and nonperforming loans. See “Financial Condition – Allowance for Loan Losses” below for additional discussion and information relative to the provision for loan losses.

Noninterest Income

YEAR ENDED DECEMBER 31

CHANGE FROM 2010 CHANGE FROM 2009

(Dollars in thousands) 2011 AMOUNT % 2010 AMOUNT % 2009

Service charges on deposit accounts $ 1,134 $ 8 0.7% $ 1,126 $ (108) (8.8)% $ 1,234

Trust services 677 22 3.4 655 108 19.7 547

Debit card interchange fees 631 124 24.5 507 114 29.0 393

Securities gain (loss) 237 89 60.1 148 66 80.5 82

Gain on sale of loans, includingMSRs 219 (23) (9.5) 242 (221)

Other 610 13 2.2 597 73 13.9 524

Total noninterest income $ 3,508 $ 233 7.1% $ 3,275 $ 32 1.0% $ 3,243

N.M., not a meaningful value

Noninterest income increased $233 thousand for 2011 as compared to 2010. The annual increase was due to a $124 thousand increase in debit card interchange fees as customers move toward electronic transactions and away from checks and other forms of payment. The Company anticipates some market-related long-term impact on its electronic banking fees in the future from caps on debit card interchange fees even though CSB is not directly subject to the new regulations. CSB recognized an $89 thousand increase in net securities gains as mortgage-backed securities were sold when prepayments increased on high coupon mortgages.

12 2011 Annual Report to Shareholders | CSB Bancorp, Inc.

2011 Financial Review

Gains on sale of mortgage loans decreased as the volume of loans refinancing in 2011 was lower than 2010 Trust fees improved .

3.4% for the year due to higher average trust assets.

Noninterest income increased $32 thousand, or 1.0% for 2010 as compared to 2009. Service charges on deposits declined $108 thousand, or 8.8% for 2010 as compared to 2009, continuing a two-year trend of consumers overdrawing their accounts less frequently. Trust services income increased in 2010 from 2009 as fair market valuations and assets under management both increased. The average market value of trust assets under management during 2010 and 2009 was $61.2 million and $53.2 million, respectively. Debit card interchange fees increased $114 thousand, or 29.0% due primarily to increased consumer usage as monthly fees are waived on certain consumer checking accounts when the consumer reaches a specified minimum number of monthly debit card transactions Gain on sale of loans declined in 2010 from 2009 due to volume decreases in 1 .— family residential 4 mortgages sold into the secondary market, reflecting a softening of the consumer refinancing wave. Securities gains increased from 2009 primarily from the sale of certain mortgage-backed securities whose values rose in the low interest rate environment in 2010. Other income increased $73 thousand in 2010 over 2009, or 13.9% primarily from increases in loan servicing income of $35 thousand and check printing income of $28 thousand.

Noninterest Expenses

YEAR ENDED DECEMBER 31

CHANGE FROM 2010 CHANGE FROM 2009

(Dollars in thousands) 2011 AMOUNT % 2010 AMOUNT % 2009

Salaries and employee benefits $ 7,459 $ 579 8.4% $ 6,880 $ (20) (0.3)% $ 6,900

Occupancy expense 890 82 10.1 808 (206) (20.3) 1,014

Equipment expense 524 27 5.4 497 (42) (7.8) 539

Professional and directors’ fees 713 82 13.0 631 (10) (1.6) 641

Franchise tax expense 550 14 2.6 536 29 5.7 507

Marketing and public relations 320 (2) (0.6) 322 (28) (8.0) 350

Software expense 373 3 0.8 370 (22) (5.6) 392

Debit card expense 253 21 9.1 232 33 16.6 199

Amortization of intangible assets 78 15 23.8 63 (2) (3.1) 65

FDIC assessment 352 (134) (27.6) 486 (56) (10.3) 542

Branch acquisition 337 337 N.M. – – – –

Other 1,760 39 2.3 1,721 124 7.8 1,597

Total noninterest expenses $ 13,609 $ 1,063 8.5% $ 12,546 $ (200) (1.6)% $ 12,746

N.M., not a meaningful value

Noninterest expense increased $1.1 million, or 8.5% in 2011 as compared to 2010. In 2011, salaries and employee benefits increased $579 thousand, or 8.4% for the period, a result of the increase in the number of full-time equivalent (“FTE”) employees to 154 at December 31, 2011, as compared to 140 FTE count at December 31, 2010. The increase in staff occurred with the acquisition of the two Wooster branches, additional payroll costs incurred with the related conversion and an increase in support staff necessary to run a larger company. Branch acquisition costs of $337 thousand recognized in 2011 included system conversion and operations integration charges that were expensed as incurred. FDIC insurance decreased by $134 thousand due to a new calculation of FDIC insurance expense, effective April 1, 2011. Professional and directors’ fees increased $82 thousand, or 13.0% which included employment search fees, telecommunication and data processing consulting. Occupancy expense increased $82 thousand, or 10.1% in 2011 as compared to 2010, of which $49 thousand was attributable to the new branch offices.

Noninterest expense decreased $200 thousand in 2010 as compared to 2009. Occupancy expense decreased $206 thousand as a nonrecurring impairment of the building previously occupied as the Millersburg main office building was recognized in 2009. FDIC deposit insurance expense decreased $56 thousand in 2010 as compared to 2009 as a result of the nonrecurring special assessment of 2009. Equipment expense decreased $42 thousand in 2010 as furniture and equipment originally purchased during construction of the Millersburg operations center became fully depreciated in 2009. Other expenses increased $124 thousand, or 7.8%, primarily due to increased loan collection expense related to foreclosure costs including delinquent taxes and sales expenses on various loans secured by commercial real estate and multi-family housing units.

2011 Annual Report to Shareholders | CSB Bancorp, Inc. 13

2011 Financial Review

Income Taxes

The provision for income taxes amounted to $1.6 million in 2011 and 2010, an effective rate of 30.3% in 2011 compared to 31.0% in 2010, and $1.5 million in 2009, an effective rate of 31.1%. The decrease in the effective tax rate during 2011 as compared to 2010 is due primarily to a higher percentage of tax-exempt income to total income.

FINANCIAL CONDITION

Total assets of the Company were $551.2 million at December 31, 2011, compared to $457.1 million at December 31, 2010, representing an increase of $94.2 million, or 20.6%. Net loans increased $8.5 million, or 2.7%, while investment securities increased

$47.8 million, or 59.3% and interest-earning deposits with other banks increased $31.2 million. Deposits increased $90.1 million, or

25.5%, while other borrowings from the Federal Home Loan Bank (FHLB) decreased by $3.7 million, or 16.4%.

Securities

Total investment securities increased $48 million, or 59% to $128.5 million at year-end 2011. CSB’s portfolio primarily comprises agency mortgage-backed securities, other government agencies and corporations debt, and obligations of state and political subdivisions. Restricted securities consist primarily of FHLB stock. During 2011, increases occurred in government agency and corporation debt, mortgage-backed securities and state and political subdivision securities.

The Company has no exposure to government-sponsored enterprise preferred stocks, collateralized debt obligations or trust preferred securities. The Company’s municipal bond portfolio consists of both taxable and tax-exempt general obligation and revenue bonds. As of December 31, 2011, $12.8 million, or 86%, held an S&P or Moody’s investment grade rating and $2.1 million or 14% were nonrated. The portfolio includes a broad spectrum of counties, towns, universities and school districts in Ohio. The Company holds two nonagency collateralized mortgage securities whose national credit ratings have declined below investment grade since their purchase. The bonds current factors are below .20 on original faces of $4.5 million and there has been no significant evidence to support any adverse changes in the expected cash flows. The Company has the ability and intent to hold the bonds until the recovery of its cost. Total gross unrealized security losses within the portfolio were 0.2% of total available-for-sale securities at December 31, 2011, reflecting interest rate fluctuations, not credit downgrades.

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

Total loans increased $8.5 million, or 2.7% during 2011. Volume increases were recognized in commercial loans of $11.3 million, or 14.4%, and construction loans of $1.5 million, or 9.4%. These increases were offset by a decline in residential real estate loan balances of $5.3 million, or 4.9%, caused partially by the sale of most newly originated residential mortgages to the secondary market, and to a lesser extent a continued soft housing market suppressing overall mortgage lending activity. Attractive interest rates in the secondary market drove consumer demand for 1-4 family fixed rate residential mortgages during 2011 and the Company sold $7.0 million of originated mortgages into the secondary market. This demand for low fixed-rate mortgages included refinancing of the Company’s in-house mortgage portfolio, leading to a decline in residential mortgage balances.

Demand for home equity loans continued in 2011, with balances increasing $4.2 million. However, demand for installment lending declined as consumers continued to deleverage by paying down debt and increasing savings during 2011.

Commercial loans and commercial real estate loans increased with specific loan purchases being made in the Company’s new market areas acquired during the Wooster branch acquisition. Management anticipates the Company’s local service areas will exhibit slow economic growth with modest commercial real estate loan demand in 2012.

Commercial and commercial real estate loans comprise approximately 61% of the total loan portfolio, increasing from 58% at year-end 2010. Residential real estate decreased from 34% to approximately 32% between December 31, 2010 and December 31, 2011. Construction loans increased from 5.2% to 5.6% of the total portfolio between 2010 and 2011. The Company is well within the respective regulatory guidelines for investment in construction development and investment property loans that are not owner occupied.

14 2011 Annual Report to Shareholders | CSB Bancorp, Inc.

2011 Financial Review

Most of the Company’s lending activity is with customers primarily located within Holmes, Tuscarawas, Wayne and Stark Counties in Ohio. 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, 2011 included $21.6 million, or 6.7% of total loans to lessors of nonresidential buildings or dwellings; $16.7 million, or 5.2% of total loans to lessors of residential real estate;

$16.3 million, or 5.0% of total loans to borrowers in the hotel, motel and lodging business and $14.1 million, or 4.3% of total loans to logging, sawmills and timber tract operations. These loans are generally secured by real property and equipment, and repayment is expected from operational cash flow. Credit losses arising from the Company’s lending experience in all four industries compare favorably with the Company’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.

Nonperforming Assets, Impaired Loans and Loans Past Due 90 Days or More

Nonperforming assets consist of nonaccrual loans, loans past due 90 days and still accruing and other real estate acquired through or in lieu of foreclosure. Other impaired loans include certain loans that are internally classified as substandard or doubtful. Loans are placed on nonaccrual status when they become past due 90 days or more, or when mortgage loans are past due as to principal and interest 120 days or more, unless they are both well secured and in the process of collection.

NONPERFORMING ASSETS FOR THE YEAR ENDED

(Dollars in thousands) 2011 2010

Nonaccrual loans:

Commercial $ 13 $ 24

Commercial real estate 1,526 1,619

Residential real estate 1,193 1,811

Construction & land development 176 451

Loans past due 90 days and still accruing:

Commercial 150 58

Commercial real estate 141 26

Residential real estate 282 601

Construction & land development 8 —

Total nonperforming loans 3,489 4,590

Other real estate owned 10 36

Total nonperforming assets $ 3,499 $ 4,626

Nonperforming assets as a percentage of loans plus other real estate 1.08% 1.47%

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 that 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 the 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 in part subjective, as to the probability of loss and the amount of loss on these loans as well as other loans taken together. The Company’s Allowance for Loan 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.

2011 Annual Report to Shareholders | CSB Bancorp, Inc. 15

2011 Financial Review

ALLOWANCE FOR LOAN LOSSES FOR THE YEAR ENDED

(Dollars in thousands) 2011 2010

Beginning balance of allowance for loan losses $ 4,031 $ 4,060

Provision for loan losses 950 1,235

Charge-offs:

Commercial 487 479

Commercial real estate 68 187

Construction & land development 41 143

Consumer 86 76

Residential real estate and home equity 297 488

Deposit accounts 35 16

Credit cards — —

Total charge-offs 1,014 1,389

Recoveries:

Commercial 38 93

Commercial real estate — —

Consumer 46 21

Residential real estate and home equity 19 —

Deposit accounts 11 9

Credit cards 1 2

Total recoveries 115 125

Net charge-offs 899 1,264

Ending balance of allowance for loan losses $ 4,082 $ 4,031

Net charge-offs as a percentage of average total loans 0.28% 0.40%

Allowance for loan losses as a percent of total loans 1.26% 1.28%

Allowance for loan losses to total nonperforming loans 1.17× 0.88×

Components of the allowance for loan losses:

General reserves $ 3,560 $ 3,686

Specific reserve allocations 522 345

Total allowance for loan losses $ 4,082 $ 4,031

The allowance for loan losses totaled $4.1 million, or 1.26% of total loans at year-end 2011 as compared to $4.0 million or 1.28% of total loans at year-end 2010. Net charge-offs for 2011 totaled $899 thousand as compared to net charge-offs of $1.3 million in 2010 and $671 thousand in 2009.

The Company 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 $3.5 million, or 1.1% of loans at year-end 2011 as compared to $4.6 million, or 1.5% of loans at year-end 2010. Impaired loans were $7.3 million at year-end 2011 as compared to $2.2 million at year-end 2010. The decrease in nonperforming loans reflects an improvement in the economy of the Company’s market area with decreasing unemployment levels and economic stabilization since 2010. 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 $635 thousand to $8.5 million at year-end 2011 primarily the result of acquiring $672 thousand of fixed assets in the Branch Acquisition. Other real estate owned at December 31, 2011 was $10 thousand as compared to $36 thousand owned at December 31, 2010. At December 31, 2011 the Company recognized a net deferred tax liability of $202 thousand as compared to a net deferred tax asset of $430 thousand at December 31, 2010. The change in the Company’s net deferred tax position resulted primarily from the increase in the net deferred liability related to the unrealized gain on securities available for sale and the usage of the net operating loss carry forward resulting from the aquisition of Indian Village Bancorp in 2008.

16 2011 Annual Report to Shareholders | CSB Bancorp, Inc.

2011 Financial Review

Deposits

The Company’s deposits are obtained primarily 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.

DECEMBER 31 CHANGE FROM 2010 BRANCH DEPOSITS

(Dollars in thousands) 2011 2010 AMOUNT % ACQUIRED IN 2011

Noninterest-bearing demand $ 85,890 $ 69,151 $ 16,739 24.2 % $ 9,313

Interest-bearing demand 61,830 55,340 6,490 11.7 4,650

Traditional savings 57,517 42,042 15,475 36.8 6,616

Money market savings 65,787 35,956 29,831 83.0 20,311

Time deposits in excess of $100,000 60,090 51,288 8,802 17.2 11,708

Other time deposits 112,439 99,714 12,725 12.8 21,713

Total deposits $ 443,553 $ 353,491 $ 90,062 25.5 % $ 74,311

Other Funding Sources

The Company obtains additional funds through securities sold under repurchase agreements, overnight borrowings from the FHLB or other financial institutions and advances from the FHLB. Short-term borrowings, which consist of securities sold under repurchase agreements, increased $5.1 million, while other borrowings which consist of FHLB advances decreased $3.7 million due to maturities and required principal repayments during 2011.

CAPITAL RESOURCES

Total shareholders’ equity increased to $49.4 million at December 31, 2011 as compared to $47.2 million at December 31, 2010. This increase was primarily due to $3.7 million of net income in 2011, which was partially offset by the payment of cash dividends of $2.0 million. 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 then-outstanding common shares. Repurchased shares are to be held as treasury stock and would be available for general corporate purposes. At December 31, 2011, approximately forty-one thousand shares could still be repurchased under the current authorized program. No shares were repurchased in 2011 or 2010.

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 (for which 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 Bank to CSB 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 the 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

DECEMBER 31 CHANGE

(Dollars in millions) 2011 2010 FROM 2010

Cash and cash equivalents $ 82 $ 48 $ 34

Unused lines of credit 31 36 (5)

Unpledged securities at fair market value 61 16 45

$ 174 $ 100 $ 74

Net deposits and short-term liabilities $ 420 $ 324 $ 96

Liquidity ratio 41.5% 30.8%

Minimum board-approved liquidity ratio 20.0% 20.0%

2011 Annual Report to Shareholders | CSB Bancorp, Inc. 17

2011 Financial Review

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 liquidity ratio rose in 2011 after receiving $61 million in cash through the branch acquisition. Liquidity is centrally monitored by CSB’s Asset Liability Committee. The Company was within all Board-approved limits at December 31, 2011 and 2010. Additional sources of liquidity include net income, loan repayments, and adjustments of interest rates to attract deposit accounts.

As summarized in the consolidated statements of cash flows, the most significant investing activities for the Company in 2011 included net cash from the branch acquisition of $61 million, net loan originations of $1 million and the maturities and calls of securities totaling $45 million, offset by $96 million in securities purchases. The Company’s financing activities included a $16 million increase in deposits, a $5 million increase in securities sold under agreements to repurchase and a $4 million net repayment of FHLB advances.

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 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 Company’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 2011 and 2010. Income simulation analysis is used to measure the sensitivity of forecasted net interest income to changes in market rates over a two-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. Interest rate risk policy limits are determined by measuring the anticipated change in net interest income over a two year period assuming a quarterly ramped 100, 200, 300 and 400 basis point increase in market interest rates as compared to a stable rate environment or base model.

Net Interest Income at Risk

DECEMBER 31, 2011

CHANGE IN NET INTEREST DOLLAR

INTEREST RATES INCOME CHANGE PERCENTAGE BOARD

(BASIS POINTS) (Dollars in thousands) CHANGE POLICY LIMITS

+400 $ 17,500 $ 818 4.9% ± 25%

+300 17,241 559 3.4 ± 15

+200 17,028 346 2.1 ± 10

+100 16,857 175 1.0 ± 5

0 16,682 — — —

DECEMBER 31, 2010

CHANGE IN NET INTEREST DOLLAR

INTEREST RATES INCOME CHANGE PERCENTAGE BOARD

(BASIS POINTS) (Dollars in thousands) CHANGE POLICY LIMITS

+300 $ 16,275 $ 443 2.8% ± 15%

+200 16,073 241 1.5 ± 10

+100 15,906 74 0.5 ± 5

0 15,832 — — —

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, 2011 and 2010.

18 2011 Annual Report to Shareholders | CSB Bancorp, Inc.

2011 Financial Review

Economic Value of Equity at Risk

CHANGE IN

INTEREST RATES PERCENTAGE BOARD

(BASIS POINTS) CHANGE POLICY LIMITS

December 31, 2011

+400 – 10.9% ± 35%

+300 – 4.6 ± 30

+200 – 0.7 ± 20

+100 1.9 ± 15

December 31, 2010

+400 – 6.7% ± 35%

+300 – 4.2 ± 30

+200 – 1.8 ± 20

+100 0.7 ± 15

Management periodically measures and reviews the Economic Value of Equity at Risk with the Board. At December 31, 2011, the market value of equity as a percent of base in a 400 basis point rising rate environment indicates a decrease of 10.9%, as compared to a decrease of 6.7% as of December 31, 2010. The Company was within all Board-approved limits at December 31, 2011 and 2010.

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.

United States Treasury securities, obligations of U. Government corporations and agencies and obligations of states and S. political subdivisions will generally repay at their stated maturity, or if callable prior to their final maturity date. Mortgage backed security payments increase when interest rates are low and decrease when interest rates rise. 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 that affect the sales and price levels of residential and commercial 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 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. Time deposits generally have early withdrawal penalties, which discourage customer withdrawal prior to maturity. Short-term borrowings have fixed maturities. 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, 2011 and 2010 in Note 16 to the consolidated financial statements.

2011 Annual Report to Shareholders | CSB Bancorp, Inc. 19

2011 Financial Review

OFF-BALANCE SHEET ARRANGEMENTS, CONTRACTUAL OBLIGATIONS, AND CONTINGENT LIABILITIES AND COMMITMENTS

The following table summarizes the Company’s loan commitments, including letters of credit, as of December 31, 2011:

(Dollars in thousands) AMOUNT OF COMMITMENT TO EXPIRE PER PERIOD

TOTAL LESS THAN 1 TO 3 3 TO 5 OVER 5

TYPE OF COMMITMENT AMOUNT 1 YEAR YEARS YEARS YEARS

Commercial lines-of-credit $ 49,089 $ 47,450 $ 636 $ 1 $ 1,002

Real estate lines-of-credit 28,691 1,808 4,805 5,557 16,521

Consumer lines-of-credit 1,023 1,023 — — —

Credit cards lines-of-credit 3,108 3,108 — — —

Overdraft privilege 6,734 6,734 — — —

Commercial real estate loan commitments 2,200 — — — 2,200

Letters of credit 875 875 — — —

Total commitments $ 91,720 $ 60,998 $ 5,441 $ 5,558 $ 19,723

As indicated in Note 10 to the consolidated financial statements, the Company had $91.7 million in total loan commitments at the end of 2011, with $61 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 Company 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, 2011:

(Dollars in thousands) PAYMENT DUE BY PERIOD

TOTAL LESS THAN 1 TO 3 3 TO 5 OVER 5

CONTRACTUAL OBLIGATIONS AMOUNT 1 YEAR YEARS YEARS YEARS

Total time deposits $ 172,529 $ 89,007 $ 67,901 $ 15,621 $ —

Short-term borrowings 37,073 37,073 — — —

Other borrowings 19,161 6,490 403 265 12,003

Operating leases 1,259 291 534 421 13

Total obligations $ 230,022 $ 132,861 $ 68,838 $ 16,307 $ 12,016

The other borrowings noted in the preceding table represent borrowings from the FHLB 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 Company 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 Company’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 Company’s deposit product offerings.

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 2011 Financial Review, provide information about how significant assets and liabilities are valued in the financial statements and

20 2011 Annual Report to Shareholders | CSB Bancorp, Inc.

2011 Financial Review

how those values are determined. Management has identified the determination of other-than-temporary impairment on investment securities and the 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 uses 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.

CSB accounts for business combinations using the acquisition method of accounting Goodwill and intangible assets with . indefinite useful lives are not amortized. Intangible assets with finite useful lives, consisting of core deposit intangibles, are amortized using accelerated methods over their estimated weighted-average useful lives, approximating ten years. Additional information is presented in Note 5, Goodwill and Other Intangible Assets.

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 the Company’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.

COMMON STOCK AND SHAREHOLDER INFORMATION

Common shares of the Company are not traded on an established market. Shares are traded on the over-the-counter-bulletin-board 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 table specifies cash dividends declared by the Company to its shareholders during 2011 and 2010. No assurances can be given that future 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.

QUARTER ENDED HIGH LOW DIVIDENDS DECLARED

March 31, 2011 $ 15.67 $ 14.50 $ 492,264

June 30, 2011 16.00 14.57 492,264

September 30, 2011 15.99 14.34 492,264

December 31, 2011 17.07 14.77 492,264

March 31, 2010 $ 15.95 $ 14.05 $ 492,264

June 30, 2010 17.00 14.60 492,264

September 30, 2010 17.00 15.00 492,264

December 31, 2010 16.25 15.00 492,264

As of December 31, 2011, the Company had 1,335 known shareholders of record and 2,734,799 outstanding shares of common stock.

2011 Annual Report to Shareholders | CSB Bancorp, Inc. 21

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 U.S. 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, 2011. Based upon this assessment, management believes that our internal control over financial reporting is effective as of December 31, 2011.

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 the 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 Senior Vice President,

Chief Executive Officer Chief Financial Officer

22 2011 Annual Report to Shareholders | CSB Bancorp, Inc.

Report of Independent Registered Public Accounting Firm

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, 2011 and 2010, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2011. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these 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. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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, 2011 and 2010, and the consolidated results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles.

Wexford, Pennsylvania March 8, 2012

2011 Annual Report to Shareholders | CSB Bancorp, Inc. 23

Consolidated Balance Sheets

December 31, 2011 and 2010

(Dollars in thousands)	2011			2010
ASSETS
Cash and cash equivalents
Cash and due from banks	$	12,519		$	9,798
Interest-earning deposits in other banks		69,739			38,497
Federal funds sold		—			65
Total cash and cash equivalents		82,258			48,360
Securities
Available-for-sale, at fair value		123,026			75,204
Restricted stock, at cost		5,463			5,463
Total securities		128,489			80,667
Loans		324,182			315,647
Less allowance for loan losses		4,082			4,031
Net loans		320,100			311,616
Premises and equipment, net		8,513			7,878
Core deposit intangible		1,034			406
Goodwill		4,728			1,725
Bank-owned life insurance		3,068			2,961
Accrued interest receivable and other assets		3,043			3,443
TOTAL ASSETS	$	551,233		$	457,056
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Deposits
Noninterest-bearing	$	85,890		$	69,151
Interest-bearing		357,663			284,340
Total deposits		443,553			353,491
Short-term borrowings		37,073			32,018
Other borrowings		19,161			22,909
Accrued interest payable and other liabilities		2,017			1,484
Total liabilities		501,804			409,902
SHAREHOLDERS’ EQUITY
Common stock, $6.25 par value. Authorized 9,000,000 shares; issued 2,980,602 shares; outstanding 2,734,799 shares in 2011 and 2010		18,629			18,629
Additional paid-in capital		9,994			9,994
Retained earnings		24,391			22,673
Treasury stock at cost – 245,803 shares in 2011 and 2010		(5,015	)		(5,015	)
Accumulated other comprehensive income		1,430			873
Total shareholders’ equity		49,429			47,154
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	551,233		$	457,056

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

24            2011 Annual Report to Shareholders | CSB Bancorp, Inc.

Consolidated Statements of Income

Years Ended December 31, 2011, 2010 and 2009

(Dollars in thousands, except per share data)	2011		2010		2009
INTEREST AND DIVIDEND INCOME
Loans, including fees	$	16,977	$	17,311	$	18,539
Taxable securities		2,538		2,648		3,216
Nontaxable securities		421		354		319
Other		82		77		31
Total interest and dividend income		20,018		20,390		22,105
INTEREST EXPENSE
Deposits		2,864		3,509		4,306
Short-term borrowings		139		201		271
Other borrowings		675		1,110		1,763
Total interest expense		3,678		4,820		6,340
NET INTEREST INCOME		16,340		15,570		15,765
PROVISION FOR LOAN LOSSES		950		1,235		1,337
Net interest income, after provision for loan losses		15,390		14,335		14,428
NONINTEREST INCOME
Service charges on deposit accounts		1,134		1,126		1,234
Trust services		677		655		547
Debit card interchange fees		631		507		393
Securities gain, net		237		148		152
Other-than-temporary impairment losses		—		—		(70	)
Gain on sale of loans, net		219		242		463
Other income		610		597		524
Total noninterest income		3,508		3,275		3,243
NONINTEREST EXPENSES
Salaries and employee benefits		7,459		6,880		6,900
Occupancy expense		890		808		1,014
Equipment expense		524		497		539
Professional and director fees		713		631		641
Franchise tax expense		550		536		507
Marketing and public relations		320		322		350
Software expense		373		370		392
Debit card expense		253		232		199
Amortization of intangible assets		78		63		65
FDIC assessment expense		352		486		542
Branch acquisition expense		337		—		—
Other expenses		1,760		1,721		1,597
Total noninterest expenses		13,609		12,546		12,746
Income before income taxes		5,289		5,064		4,925
FEDERAL INCOME TAX PROVISION		1,602		1,568		1,534
NET INCOME	$	3,687	$	3,496	$	3,391
NET INCOME PER SHARE
Basic	$	1.35	$	1.28	$	1.24
Diluted	$	1.35	$	1.28	$	1.24

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

2011 Annual Report to Shareholders | CSB Bancorp, Inc.         25

Consolidated Statements of Shareholders’ Equity

Years Ended December 31, 2011, 2010 and 2009

(Dollars in thousands)	COMMON STOCK		ADDITIONAL PAID-IN CAPITAL		RETAINED EARNINGS			TREASURY STOCK			ACCUMULATED OTHER COMPREHENSIVE INCOME			TOTAL
BALANCE AT DECEMBER 31, 2008	$	18,629	$	9,986	$	19,724		$	(5,015	)	$	144		$	43,468
Comprehensive income:
Net income		—		—		3,391			—			—			3,391
Change in net unrealized gain, net of reclassification adjustments and related income tax provision of $476		—		—		—			—			924			924
Total comprehensive income															4,315
Stock-based compensation expense		—		8		—			—			—			8
Cash dividends declared, $0.72 per share		—		—		(1,969	)		—			—			(1,969	)
BALANCE AT DECEMBER 31, 2009	$	18,629	$	9,994	$	21,146		$	(5,015	)	$	1,068		$	45,822
Comprehensive income:
Net income		—		—		3,496			—			—			3,496
Change in net unrealized loss, net of reclassification adjustments and related income tax benefit of $100		—		—		—			—			(195	)		(195	)
Total comprehensive income															3,301
Cash dividends declared, $0.72 per share		—		—		(1,969	)		—			—			(1,969	)
BALANCE AT DECEMBER 31, 2010	$	18,629	$	9,994	$	22,673		$	(5,015	)	$	873		$	47,154
Comprehensive income:
Net income		—		—		3,687			—			—			3,687
Change in net unrealized gain, net of reclassification adjustments and related income tax provision of $287		—		—		—			—			557			557
Total comprehensive income															4,244
Cash dividends declared, $0.72 per share		—		—		(1,969	)		—			—			(1,969	)
BALANCE AT DECEMBER 31, 2011	$	18,629	$	9,994	$	24,391		$	(5,015	)	$	1,430		$	49,429

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

26            2011 Annual Report to Shareholders | CSB Bancorp, Inc.

Consolidated Statements of Cash Flows

Years Ended December 31, 2011, 2010 and 2009

(Dollars in thousands)	2011			2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	3,687		$	3,496		$	3,391
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of premises, equipment and software		662			645			758
Deferred income taxes		345			293			403
Provision for loan losses		950			1,235			1,337
Gain on sale of loans, net		(219	)		(242	)		(463	)
Securities (gain) loss, net		(237	)		(148	)		(152	)
Security amortization, net of accretion		226			121			105
Other-than-temporary impairment of investments		—			—			70
Secondary market loan sale proceeds		7,201			11,362			21,005
Originations of secondary market loans held-for-sale		(7,019	)		(10,831	)		(20,986	)
Effects of changes in operating assets and liabilities:
Net deferred loan costs		35			62			78
Accrued interest receivable		(134	)		100			70
Accrued interest payable		(31	)		(109	)		(96	)
Prepaid FDIC assessment		345			437			(1,483	)
Other assets and liabilities		(37	)		(419	)		(611	)
Net cash provided by operating activities	$	5,774		$	6,002		$	3,426
CASH FLOWS FROM INVESTING ACTIVITIES
Securities available-for-sale:
Proceeds from maturities and repayments	$	45,332		$	51,234		$	33,769
Proceeds from sale		3,244			3,359			1,305
Purchases		(95,542	)		(54,909	)		(32,197	)
Purchase of restricted stock		—			—			(231	)
Loan originations, net of repayments		(1,065	)		(3,827	)		1,864
Net cash from acquisition		60,872			—			—
Proceeds from sale of other real estate		883			476			83
Property, equipment and software acquisitions		(586	)		(103	)		(671	)
Net cash provided by (used in) investing activities	$	13,138		$	(3,770	)	$	3,922

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

2011 Annual Report to Shareholders | CSB Bancorp, Inc.         27

Consolidated Statements of Cash Flows

Years Ended December 31, 2011, 2010 and 2009

(Dollars in thousands)	2011			2010			2009
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits	$	15,648		$	24,084		$	24,246
Net change in short-term borrowings		5,055			3,254			5,872
Federal Home Loan Bank borrowings:
Proceeds		—			—			4,000
Repayments		(3,748	)		(21,902	)		(9,582	)
Cash dividends paid		(1,969	)		(1,969	)		(1,969	)
Net cash provided by financing activities	$	14,986		$	3,467		$	22,567
NET INCREASE IN CASH AND CASH EQUIVALENTS		33,898			5,699			29,915
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		48,360			42,661			12,746
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	82,258		$	48,360		$	42,661
SUPPLEMENTAL DISCLOSURES
Cash paid during the year for:
Interest expense	$	3,769		$	5,206		$	7,055
Income taxes		1,525			1,310			920
Acquisition of noncash assets and liabilities:
Assets acquired		13,631			—			—
Liabilities assumed		74,503			—			—
Noncash investing activities:
Transfer of loans to other real estate owned		814			337			195

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

28            2011 Annual Report to Shareholders | CSB Bancorp, Inc.

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 bank holding company. The Company’s wholly-owned subsidiaries are The Commercial and Savings Bank of Millersburg, Ohio (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 sixteen Banking Centers located in Holmes, Tuscarawas, Wayne and Stark Counties in Ohio and nearby communities. These communities are the source of substantially all deposit, loan and trust activities. The majority of the Bank’s income is derived from commercial and retail lending activities and investments in securities. Its primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are residential mortgage, commercial 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 business operations. 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 Consolidated Balance Sheets and reported amounts of revenues and expenses during each reporting period. Actual results could differ from those estimates. The most significant estimates susceptible to change in the near term relate 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, 2011 and 2010 was $400,000.

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.

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 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 receipt of principal and interest according to the contractual terms, 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 to hold the security 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 to hold the security requires 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 Statements of Income.

Investments in Federal Home Loan Bank of Cincinnati (“FHLB”) and Federal Reserve Bank stock are classified as restricted stock, carried at cost, and evaluated for impairment.

The Bank is required to maintain an investment in common stock of the FHLB and Federal Reserve Bank because the Bank is a member of the FHLB and the Federal Reserve System. We consider these stocks to be nonmarketable equity securities and carry them at cost.

2011 Annual Report to Shareholders | CSB Bancorp, Inc.         29

Summary of Significant Accounting Policies

While the Federal Home Loan Banks have been negatively impacted by the current economic conditions, the Federal Home Loan Bank of Cincinnati has reported profits for 2011 and 2010, remains in compliance with regulatory capital and liquidity requirements and continues to pay dividends on the stock and make redemptions at the par value. With consideration given to these factors, management concluded that the stock was not impaired at December 31, 2011 or 2010.

LOANS

Loans that management has the intent and ability to hold for the foreseeable future, or until maturity or payoff, 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.

At origination, a determination is made whether a loan will be held in the Bank’s portfolio or is intended for sale in the secondary market. Mortgage loans held for sale are recorded at the lower of the aggregate cost or fair value. Generally these loans are held for sale for less than three days. The Bank includes gains and losses on sales of the loans held for sale when the sale is completed.

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 Company 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 Company does not separately identify individual consumer and residential loans for impairment disclosures.

OTHER REAL ESTATE OWNED

Other real estate acquired through or in lieu of foreclosure is initially recorded at 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 $10,000 and $36,300 at December 31, 2011 and 2010, 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.

30         2011 Annual Report to Shareholders | CSB Bancorp, Inc.

Summary of Significant Accounting Policies

GOODWILL AND CORE DEPOSIT INTANGIBLE ASSETS

Goodwill is not amortized, but is tested at least annually for impairment, in the fourth quarter or more frequently if indicators of impairment are present. The evaluation for impairment involves comparing the estimated current fair value of the reporting unit to its carrying value, including goodwill. If the estimated current fair value of a reporting unit exceeds its carrying value, no additional testing is required and an impairment loss is not recorded. CSB uses market capitalization and multiples of tangible book value methods to determine the estimated current fair value of its reporting unit. Based on this analysis no impairment was recorded in 2011 or 2010.

The core deposit intangible assets are assigned useful lives, which are amortized on an accelerated basis over their weighted average lives. The Company periodically reviews the intangible asset for impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

MORTGAGE SERVICING RIGHTS

Mortgage servicing rights (“MSRs”) represent the right to service loans for third party investors. MSRs are recognized as a separate asset upon the sale of mortgage loans to a third party investor with the servicing rights retained by CSB. Originated MSRs are recorded at allocated fair value at the time of the sale of the loans to the third party investor. MSRs are amortized in proportion to and over the estimated period of net servicing income. MSRs are carried at amortized cost, less a valuation allowance for impairment, if any. MSRs are evaluated on a discounted earnings basis to determine the present value of future earnings of the underlying serviced mortgages. All assumptions are reviewed annually or more frequently, if necessary, and adjusted to reflect current and anticipated market conditions.

BANK-OWNED LIFE INSURANCE

The cash surrender value of these policies is included as an asset on the Consolidated Balance Sheets 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 are not covered by federal deposit insurance.

ADVERTISING COSTS

All advertising costs are expensed as incurred. Advertising expenses amounted to $175 thousand, $169 thousand, and $180 thousand for the years ended 2011, 2010 and 2009, respectively.

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, domiciled in Ohio, is not currently subject to state and local income taxes.

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 no stock-based compensation expense for 2011 and 2010, and $8 thousand for the year ended December 31, 2009. The total income tax benefit recognized in the accompanying Consolidated Statements of Income related to stock-based compensation was $2 thousand in 2009, with no tax benefit recognized in 2011 or 2010. Shares issued in connection with stock option exercises may be issued from available treasury shares or from market purchases.

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

	2011		2010		2009
Risk-free interest rate		N/A		N/A		2.5	%
Dividend yield						4.8	%
Volatility						18.4	%
Expected option life						5.0 yrs.

2011 Annual Report to Shareholders | CSB Bancorp, Inc.         31

Summary of Significant Accounting Policies

As of December 31, 2011, there was no unrecognized compensation cost related to unvested share-based compensation awards granted. All shares are vested.

Options are granted to certain employees at prices equal to the market value of the stock on the grant date. The CSB Share Incentive Plan was adopted at the 2002 annual meeting of shareholders and 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 estimates 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. There were no option grants for the years ended December 31, 2011 and 2010, and options to acquire 1,000 shares of CSB common stock were granted for the year ended December 31, 2009.

COMPREHENSIVE INCOME

The Company includes recognized revenue, expenses, gains and losses 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 Consolidated Balance Sheets. These 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 Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

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 number of common shares outstanding for basic and diluted earnings per share computations was as follows:

	2011			2010			2009
Weighted average common shares		2,980,602			2,980,602			2,980,602
Average treasury shares		(245,803	)		(245,803	)		(245,803	)
Total weighted average common shares outstanding (basic)		2,734,799			2,734,799			2,734,799
Dilutive effect of assumed exercise of stock options		39			—			—
Weighted average common shares outstanding (diluted)		2,734,838			2,734,799			2,734,799

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

There were 17,856 stock options to purchase common stock for $18.00 per share that were antidilutive at December 31, 2011. There were 39,945 stock options to purchase common stock for $15.00 to $18.00 per share that were antidilutive at December 31, 2010 and there were 40,195 stock options to purchase common stock for $15.00 to $18.00 per share that were antidilutive at December 31, 2009.

ACCOUNTING DEVELOPMENTS

In April 2011, the FASB issued ASU 2011-02, Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring. The amendments in this Update provide additional guidance or clarification to help creditors in determining whether a creditor has granted a concession and whether a debtor is experiencing financial difficulties for purposes of determining whether a restructuring constitutes a troubled debt restructuring. The amendments in this Update are effective for the first interim or annual reporting period beginning on or after June 15, 2011, and should be applied retrospectively to the beginning annual period of adoption. As a result of applying these amendments, an entity may identify receivables that are newly considered impaired. For purposes of measuring impairment of those receivables, an entity should apply the amendments prospectively for the first interim or annual period beginning on or after June 15, 2011. The Company has provided the necessary disclosures in Note 2.

In April 2011, the FASB issued ASU 2011-03, Transfers and Services (Topic 860): Reconsideration of Effective Control for Repurchase Agreements. The main objective in developing this Update is to improve the accounting for repurchase agreements (repos) and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. The amendments

32         2011 Annual Report to Shareholders | CSB Bancorp, Inc.

Summary of Significant Accounting Policies

in this Update remove from the assessment of effective control (1) the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee, and (2) the collateral maintenance implementation guidance related to that criterion. The amendments in this Update apply to all entities, both public and nonpublic. The amendments affect all entities that enter into agreements to transfer financial assets that both entitle and obligate the transferor to repurchase or redeem the financial assets before their maturity. The guidance in this Update is effective for the first interim or annual period beginning on or after December 15, 2011 and should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. Early adoption is not permitted. This ASU is not expected to have a significant impact on the Company’s financial statements.

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

In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The amendments in this Update improve the comparability, clarity, consistency, and transparency of financial reporting and increase the prominence of items reported in other comprehensive income. To increase the prominence of items reported in other comprehensive income and to facilitate convergence of U.S. GAAP and IFRS, the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity was eliminated. The amendments require that all nonowner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. All entities that report items of comprehensive income, in any period presented, will be affected by the changes in this Update. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. For nonpublic entities, the amendments are effective for fiscal years ending after December 15, 2012, and interim and annual periods thereafter. The amendments in this Update should be applied retrospectively, and early adoption is permitted. This ASU is not expected to have a significant impact on the Company’s financial statements.

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

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

2011 Annual Report to Shareholders | CSB Bancorp, Inc.         33

Notes to Consolidated Financial Statements

NOTE 1 – SECURITIES

Securities consist of the following at December 31, 2011 and 2010:

(Dollars in thousands)	AMORTIZED COST		GROSS UNREALIZED GAINS		GROSS UNREALIZED LOSSES		FAIR VALUE
December 31, 2011
Available-for-sale:
U.S. Treasury security	$	100	$	—	$	—	$	100
Obligations of U.S. government corporations and agencies		28,263		83		23		28,323
Mortgage-backed securities in government sponsored entities		74,834		1,562		64		76,332
Obligations of states and political subdivisions		14,148		732		—		14,880
Corporate bonds		3,445		6		121		3,330
Total debt securities		120,790		2,383		208		122,965
Equity securities in financial institutions		69		3		11		61
Total available-for-sale		120,859		2,386		219		123,026
Restricted stock		5,463		—		—		5,463
Total securities	$	126,322	$	2,386	$	219	$	128,489
December 31, 2010
Available-for-sale:
U.S. Treasury security	$	100	$	—	$	—	$	100
Obligations of U.S. government corporations and agencies		20,009		8		306		19,711
Mortgage-backed securities in government sponsored entities		41,005		1,374		28		42,351
Obligations of states and political subdivisions		11,699		341		46		11,994
Corporate bonds		1,000		—		8		992
Total debt securities		73,813		1,723		388		75,148
Equity securities in financial institutions		69		3		16		56
Total available-for-sale		73,882		1,726		404		75,204
Restricted stock		5,463		—		—		5,463
Total securities	$	79,345	$	1,726	$	404	$	80,667

34            2011 Annual Report to Shareholders | CSB Bancorp, Inc.

Notes to Consolidated Financial Statements

NOTE 1 – SECURITIES (CONTINUED)

The amortized cost and fair value of securities at December 31, 2011, 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.

(Dollars in thousands)	AMORTIZED COST		FAIR VALUE
Available-for-sale:
Due in one year or less	$	657	$	657
Due after one through five years		10,977		11,257
Due after five through ten years		20,493		21,005
Due after ten years		88,663		90,046
Total debt securities available-for-sale	$	120,790	$	122,965

Securities with a carrying value of approximately $70.4 million and $63.3 million were pledged at December 31, 2011 and 2010, 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 FHLB and Federal Reserve Bank stock. The Bank’s investment in FHLB stock amounted to $5.0 million at December 31, 2011 and 2010. Federal Reserve Bank stock was $471 thousand at December 31, 2011 and 2010.

The following table shows the proceeds from sales of available-for-sale securities and the gross realized gains and losses on the sales of those securities that have been included in earnings as a result of the sales. Gains or losses on the sales of available-for-sale securities are recognized upon sale and are determined by the specific identification method.

	FOR THE YEARS ENDED DECEMBER 31
(Dollars in thousands)	2011		2010		2009
Proceeds	$	3,244	$	3,359	$	1,305
Realized gains	$	237	$	148	$	153
Realized losses		—		—		1
Impairment losses		—		—		70
Net securities gains	$	237	$	148	$	82

The income tax provision applicable to realized gains amounted to $81 thousand in 2011, $50 thousand in 2010 and $52 thousand in 2009. The income tax benefit applicable to realized losses and impairment losses amounted to $24 thousand in 2009. There were no tax benefits recognized from gross realized losses in 2011 and 2010.

2011 Annual Report to Shareholders | CSB Bancorp, Inc.         35

Notes to Consolidated Financial Statements

NOTE 1 – SECURITIES (CONTINUED)

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, 2011 and 2010:

	SECURITIES IN A CONTINUOUS UNREALIZED LOSS POSITION
	LESS THAN 12 MONTHS				12 MONTHS OR MORE				TOTAL
(Dollars in thousands)	GROSS UNREALIZED LOSSES		FAIR VALUE		GROSS UNREALIZED LOSSES		FAIR VALUE		GROSS UNREALIZED LOSSES		FAIR VALUE
2011
Obligations of U.S. corporations and agencies	$	23	$	6,974	$	—	$	—	$	23	$	6,974
Mortgage-backed securities in government sponsored entities		63		16,794		1		192		64		16,986
Corporate bonds		49		2,397		72		428		121		2,825
Total debt securities		135		26,165		73		620		208		26,785
Equity securities in financial institutions		—		—		11		43		11		43
Total temporarily impaired securities	$	135	$	26,165	$	84	$	663	$	219	$	26,828
2010
Obligations of U.S. corporations and agencies	$	306	$	12,686	$	—	$	—	$	306	$	12,686
Mortgage-backed securities in government sponsored entities		14		4,032		14		493		28		4,525
Obligations of state and political subdivisions		46		2,561		—		—		46		2,561
Corporate bonds		8		492		—		—		8		492
Total debt securities		374		19,771		14		493		388		20,264
Equity securities in financial institutions		—		—		16		38		16		38
Total temporarily impaired securities	$	374	$	19,771	$	30	$	531	$	404	$	20,302

There were seventeen (17) securities in an unrealized loss position at December 31, 2011, two (2) of which were in a continuous loss position for twelve months or more. At least quarterly, the Company conducts a comprehensive security-level impairment assessment. The assessments are based on the nature of the securities, the extent and duration of the securities, the extent and duration of the loss, management’s intent to sell or if it is more likely than not that management will be required to sell a security before recovery of its amortized cost basis, which may be maturity. Management believes the Company will fully recover the cost of these securities and it does not intend to sell these securities and likely will not be required to sell them before the anticipated recovery of the remaining amortized cost basis, which may be maturity. As a result, management concluded that these securities were not other-than-temporarily impaired at December 31, 2011 and has recognized the total amount of the impairment in accumulated other comprehensive income, net of tax.

36         2011 Annual Report to Shareholders | CSB Bancorp, Inc.

Notes to Consolidated Financial Statements

NOTE 2 – LOANS

Loans consist of the following at December 31:

(Dollars in thousands)	2011		2010
Commercial	$	89,828	$	78,540
Commercial real estate		106,332		104,829
Residential real estate		103,518		108,832
Construction and land development		18,061		16,515
Consumer		6,216		6,715
Total loans before deferred costs		323,955		315,431
Deferred loan costs		227		216
Total Loans	$	324,182	$	315,647

Loan Origination/Risk Management

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

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

Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans, in addition to those of real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type. This diversity helps reduce the Company’s exposure to adverse economic events that affect any single industry. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. In addition, management tracks the level of owner-occupied commercial real estate loans versus nonowner occupied loans. At December 31, 2011 and 2010, approximately 89% and 87%, respectively, of the outstanding principal balance of the Company’s commercial real estate loans were secured by owner-occupied properties.

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

2011 Annual Report to Shareholders | CSB Bancorp, Inc.         37

Notes to Consolidated Financial Statements

NOTE 2 – LOANS (CONTINUED)

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

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

Concentrations of Credit

Nearly all of the Company’s lending activity occurs within the State of Ohio, including the four counties of Holmes, Stark, Tuscarawas and Wayne, as well as other markets. The majority of the Company’s loan portfolio consists of commercial and industrial and commercial real estate loans. As of December 31, 2011 and 2010, there were no concentrations of loans related to any single industry.

Allowance for Loan Loss

The following table represents a summary of the activity in the allowance for loan losses for the years ended December 31:

(Dollars in thousands)	2011			2010			2009
Beginning balance	$	4,031		$	4,060		$	3,394
Provision for loan losses		950			1,235			1,337
Loans charged-off		(1,014	)		(1,389	)		(885	)
Recoveries		115			125			214
Ending balance	$	4,082		$	4,031		$	4,060

The following table details activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2011 and 2010. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

(Dollars in thousands)	COMMERCIAL			COMMERCIAL REAL ESTATE			RESIDENTIAL REAL ESTATE			CONSUMER			CONSTRUCTION AND LAND DEVELOPMENT			UNALLOCATED			TOTAL
December 31, 2011:
Beginning balance, January 1	$	1,179		$	1,183		$	1,057		$	80		$	213		$	319		$	4,031
Provision for loan losses		294			558			115			61			8			(86	)		950
Charge-offs		(487	)		(68	)		(297	)		(121	)		(41	)		—			(1,014	)
Recoveries		38			—			19			58			—			—			115
Net charge-offs		(449	)		(68	)		(278	)		(63	)		(41	)		—			(899	)
Ending balance	$	1,024		$	1,673		$	894		$	78		$	180		$	233		$	4,082
December 31, 2010:
Beginning balance, January 1	$	1,031		$	1,338		$	1,140		$	77		$	246		$	228		$	4,060
Provision for loan losses		534			32			405			63			110			91			1,235
Charge-offs		(479	)		(187	)		(488	)		(92	)		(143	)		—			(1,389	)
Recoveries		93			—			—			32			—			—			125
Net charge-offs		(386	)		(187	)		(488	)		(60	)		(143	)		—			(1,264	)
Ending balance	$	1,179		$	1,183		$	1,057		$	80		$	213		$	319		$	4,031

38         2011 Annual Report to Shareholders | CSB Bancorp, Inc.

Notes to Consolidated Financial Statements

NOTE 2 – LOANS (CONTINUED)

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

(Dollars in thousands)	COMMERCIAL		COMMERCIAL REAL ESTATE		RESIDENTIAL REAL ESTATE		CONSTRUCTION AND LAND DEVELOPMENT		CONSUMER		UNALLOCATED		TOTAL
2011
Allowance for loan losses:
Ending allowance balances attributable to loans:
Individually evaluated for impairment	$	165	$	304	$	53	$	—	$	—	$	—	$	522
Collectively evaluated for impairment		859		1,369		841		180		78		233		3,560
Total ending allowance balance	$	1,024	$	1,673	$	894	$	180	$	78	$	233	$	4,082
Loans:
Loans individually evaluated for impairment	$	4,605	$	2,476	$	182	$	—	$	—			$	7,263
Loans collectively evaluated for impairment		85,223		103,856		103,336		18,061		6,261				316,692
Total ending loans balance	$	89,828	$	106,332	$	103,518	$	18,061	$	6,261			$	323,955
2010
Allowance for loan losses:
Ending allowance balances attributable to loans:
Individually evaluated for impairment	$	106	$	132	$	—	$	—	$	—	$	—	$	238
Collectively evaluated for impairment		1,073		1,051		1,057		121		80		319		3,701
Acquired with deteriorated credit quality		—		—		—		92		—		—		92
Total ending allowance balance	$	1,179	$	1,183	$	1,057	$	213	$	80	$	319	$	4,031
Loans:
Loans individually evaluated for impairment	$	622	$	886	$	298	$	—	$	—			$	1,806
Loans collectively evaluated for impairment		77,919		103,943		108,533		16,075		6,715				313,185
Loans acquired with deteriorated credit quality		—		—		—		440		—				440
Total ending loans balance	$	78,541	$	104,829	$	108,831	$	16,515	$	6,715			$	315,431

2011 Annual Report to Shareholders | CSB Bancorp, Inc.         39

Notes to Consolidated Financial Statements

NOTE 2 – LOANS (CONTINUED)

The following table presents loans individually evaluated for impairment by class of loans as of December 31:

(Dollars in thousands)	UNPAID PRINCIPAL BALANCE		RECORDED INVESTMENT WITH NO ALLOWANCE		RECORDED INVESTMENT WITH ALLOWANCE		TOTAL RECORDED INVESTMENT		RELATED ALLOWANCE		AVERAGE RECORDED INVESTMENT
2011
Commercial	$	4,605	$	—	$	4,605	$	4,605	$	165	$	2,890
Commercial real estate		2,621		—		2,476		2,476		304		2,924
Residential real estate		182		—		182		182		53		103
Total impaired loans	$	7,408	$	—	$	7,263	$	7,263	$	522	$	5,917
2010
Commercial	$	644	$	51	$	571	$	622	$	106	$	571
Commercial real estate		1,047		109		777		886		132		1,631
Residential real estate		590		298		—		298		—		97
Construction & land development		683		—		440		440		92		483
Total impaired loans	$	2,964	$	458	$	1,788	$	2,246	$	330	$	2,782

The following table presents the aging of past due and nonaccrual loans by class of loans as of December 31:

(Dollars in thousands)	CURRENT		30-59 DAYS PAST DUE		60-89 DAYS PAST DUE		90 DAYS + PAST DUE		NONACCRUAL		TOTAL PAST DUE AND NONACCRUAL		TOTAL LOANS
2011
Commercial	$	89,365	$	272	$	28	$	150	$	13	$	463	$	89,828
Commercial real estate		103,828		587		250		141		1,526		2,504		106,332
Residential real estate		100,297		1,443		303		282		1,193		3,221		103,518
Consumer		5,985		194		29		8		—		231		6,216
Construction & land development		17,885		—		—		—		176		176		18,061
Total loans	$	317,360	$	2,496	$	610	$	581	$	2,908	$	6,595	$	323,955
2010
Commercial	$	78,235	$	63	$	160	$	58	$	24	$	305	$	78,540
Commercial real estate		100,914		2,156		114		26		1,619		3,915		104,829
Residential real estate		105,593		574		253		601		1,811		3,239		108,832
Consumer		6,580		69		66		—		—		135		6,715
Construction & land development		16,061		3		—		—		451		454		16,515
Total loans	$	307,383	$	2,865	$	593	$	685	$	3,905	$	8,048	$	315,431

Troubled Debt Restructurings

The Company had troubled debt restructurings of $8.5 million as of December 31, 2011, with $516 thousand of specific reserves allocated to customers whose loan terms have been modified in troubled debt restructurings. As of December 31, 2010, the Company had troubled debt restructurings of $4.1 million, with $22 thousand of specific reserves allocated.

Loan modifications that are considered troubled debt restructurings completed during the year ended December 31, 2011 were as follows:

(Dollars in thousands)	NUMBER OF LOANS RESTRUCTURED		PREMODIFICATION RECORDED INVESTMENT		POSTMODIFICATION RECORDED INVESTMENT
Commercial		2	$	4,440	$	4,440
Commercial real estate		2		372		372
Residential real estate		5		286		286
Total restructured loans		9	$	5,098	$	5,098

40         2011 Annual Report to Shareholders | CSB Bancorp, Inc.

Notes to Consolidated Financial Statements

Credit Quality Indicators

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

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

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

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

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

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. Loans listed as not rated are either less than $275 thousand or are included in groups of homogeneous loans. Based on the most recent analysis performed, the risk category of loans by class is as follows at December 31:

(Dollars in thousands)	PASS		SPECIAL MENTION		SUBSTANDARD		DOUBTFUL		NOT RATED		TOTAL
2011
Commercial	$	76,216	$	5,147	$	7,710	$	—	$	755	$	89,828
Commercial real estate		84,846		10,385		8,686		—		2,415		106,332
Residential real estate		1,151		—		61		—		102,306		103,518
Consumer		—		—		—		—		6,216		6,216
Construction & land development		12,695		4,340		168		—		858		18,061
Total	$	174,908	$	19,872	$	16,625	$	—	$	112,550	$	323,955
2010
Commercial	$	65,371	$	3,843	$	9,252	$	—	$	74	$	78,540
Commercial real estate		78,191		9,982		8,188		—		8,468		104,829
Residential real estate		1,153		—		365		—		107,314		108,832
Consumer		—		—		2		—		6,713		6,715
Construction & land development		11,626		2,905		591		—		1,393		16,515
Total	$	156,341	$	16,730	$	18,398	$	—	$	123,962	$	315,431

2011 Annual Report to Shareholders | CSB Bancorp, Inc.         41

Notes to Consolidated Financial Statements

NOTE 2 – LOANS (CONTINUED)

Nonperforming loans include loans past due 90 days and greater and loans on nonaccrual of interest status. The following table presents loans that are not rated, by class of loans as of December 31:

(Dollars in thousands)	PERFORMING		NONPERFORMING		TOTAL
December 31, 2011
Commercial	$	755	$	—	$	755
Commercial real estate		2,415		—		2,415
Residential real estate		100,892		1,414		102,306
Consumer		6,208		8		6,216
Construction & land development		850		8		858
Total	$	111,120	$	1,430	$	112,550
December 31, 2010
Commercial	$	74	$	—	$	74
Commercial real estate		8,468		—		8,468
Residential real estate		105,201		2,113		107,314
Consumer		6,713		—		6,713
Construction & land development		1,383		10		1,393
Total	$	121,839	$	2,123	$	123,962

Loans serviced for others approximated $49.9 million and $45.1 million at December 31, 2011 and 2010, respectively.

Mortgage Servicing Rights

For the years ended December 31, 2011 and 2010, the Company had outstanding mortgage servicing rights (“MSRs”) of $167 thousand and $155 thousand, respectively. No valuation allowance was recorded at December 31, 2011 or 2010 as the fair value of the MSRs exceeded their carrying value. On December 31, 2011, the Company had $44.3 million residential mortgage loans with servicing retained as compared to $43.2 million with servicing retained at December 31, 2010.

42         2011 Annual Report to Shareholders | CSB Bancorp, Inc.

Notes to Consolidated Financial Statements

NOTE 3 – ACQUISITION

Premier Bank & Trust Branches

Effective as of the close of business on October 14, 2011, the Bank completed the branch purchase and assumption of liabilities of two branches of Premier Bank & Trust, National Association (“Premier”) located in Wooster, Ohio. The Bank paid a 5% premium on all deposit accounts. As a result of this purchase, the two full-service banking offices of Premier, located at 305 West Liberty Street and 3562 Commerce Parkway in Wooster, Ohio, became full-service banking offices of the Bank.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of the acquisition:

(Dollars in thousands)
Cash	$	60,872
Loans, net		9,219
Premises, leasehold and equipment		672
Goodwill		3,003
Core deposit intangible		706
Other assets		31
Total assets acquired	$	74,503
Deposits		74,475
Other liabilities		28
Total liabilities assumed	$	74,503

The assets acquired and liabilities assumed from Premier were recorded at fair value on the date of acquisition, and costs related to the acquisition, primarily professional fees, were expensed as incurred. All loans acquired from Premier were performing as of the acquisition date. During the year ended December 31, 2011, $337 thousand in merger and acquisition integration expenses was incurred related to the Branch Acquisition.

The core deposit intangible asset is being amortized over its estimated useful life of approximately ten years, using an accelerated method. The goodwill, which is not amortized for book purposes, will be amortized over 15 years for tax purposes, using the straight line method.

The fair value for loans acquired from Premier was estimated using projected monthly cash flows discounted to present value using a market rate for similar loans. There was no carry-over of Premier’s allowance for credit losses associated with the loans we acquired as the loans were initially recorded at fair value.

The fair value for savings and transaction deposit accounts acquired from Premier was assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand. Certificates of deposit were valued by comparing the contractual cost of the portfolio to an identical portfolio bearing current market rates. The projected cash flows from maturing certificates were calculated based on contractual rates. The fair value of the certificates of deposit was calculated by discounting their contractual cash flows at a market rate for a certificate of deposit with a corresponding maturity.

2011 Annual Report to Shareholders | CSB Bancorp, Inc.         43

Notes to Consolidated Financial Statements

NOTE 4 – PREMISES AND EQUIPMENT

Premises and equipment consist of the following at December 31:

(Dollars in thousands)	2011		2010
Land and improvements	$	1,489	$	1,418
Buildings and improvements		9,422		9,606
Furniture and equipment		6,272		6,255
Leasehold improvements		260		172
		17,443		17,451
Accumulated depreciation		8,930		9,573
Premises and equipment, net	$	8,513	$	7,878

The Bank leases certain office locations. Total rental expense under these leases approximated $187 thousand, $142 thousand, and $160 thousand in 2011, 2010 and 2009, respectively. Depreciation expense amounted to $530 thousand, $527 thousand and $630 thousand for the years ended December 31, 2011, 2010, and 2009, respectively.

Future minimum lease payments at December 31, 2011 were as follows:

(Dollars in thousands)
2012	$	291
2013		267
2014		267
2015		268
2016		153
2017		13
Total	$	1,259

NOTE 5 – GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

Goodwill totaled $4.7 and $1.7 million at December 31, 2011 and 2010. In 2011, the increase in goodwill relates to the Branch Acquisition (see Note 3 above) resulting from the premium paid and purchase accounting adjustments. The following table shows a rollforward of goodwill:

(Dollars in thousands)
Balance at January 1, 2010	$	1,725
Balance at December 31, 2010	$	1,725
Acquisition		3,003
Balance at December 31, 2011	$	4,728

Core Deposit Intangible

During 2011, the Bank recorded a core deposit intangible totaling $706 thousand with the Branch Acquisition. 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 $78 thousand, $63 thousand and $65 thousand in 2011, 2010 and 2009, respectively. The following table shows the core deposit intangible and the related accumulated amortization:

	December 31,
(Dollars in thousands)	2011			2010
Gross carrying amount	$	1,251		$	545
Accumulated amortization		(217	)		(139	)
Net carrying amount	$	1,034		$	406

44         2011 Annual Report to Shareholders | CSB Bancorp, Inc.

Notes to Consolidated Financial Statements

NOTE 5 – GOODWILL AND OTHER INTANGIBLE ASSETS (CONTINUED)

The estimated aggregate future amortization expense for the core deposit asset remaining as of December 31, 2011 is as follows:

(Dollars in thousands)	CORE  DEPOSIT AMORTIZATION
2012	$	140
2013		135
2014		130
2015		125
2016		121
Thereafter		383
	$	1,034

NOTE 6 – INTEREST-BEARING DEPOSITS

Interest-bearing deposits at December 31 are as follows:

(Dollars in thousands)	2011		2010
Demand	$	61,830	$	55,340
Savings		123,304		77,998
Time deposits:
In excess of $100,000		60,090		51,288
Other		112,439		99,714
Total interest-bearing deposits	$	357,663	$	284,340

At December 31, 2011, stated maturities of time deposits were as follows:

(Dollars in thousands)
2012	$	89,007
2013		50,395
2014		17,506
2015		6,964
2016		8,657
Total	$	172,529

NOTE 7 – BORROWINGS

Short-term Borrowings

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

(Dollars in thousands)	2011			2010
Balance at year-end	$	37,073		$	32,018
Average balance outstanding		32,577			29,700
Maximum month-end balance		37,073			33,629
Weighted-average rate at year-end		0.25	%		0.55	%
Weighted-average rate during the year		0.43			0.68

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

2011 Annual Report to Shareholders | CSB Bancorp, Inc.         45

Notes to Consolidated Financial Statements

NOTE 7 – BORROWINGS (CONTINUED)

Other Borrowings

The following table sets forth information concerning other borrowings:

(Dollars in thousands)	MATURITY RANGE		WEIGHTED AVERAGE INTEREST RATE			STATED INTEREST RATE RANGE						AT DECEMBER 31,
DESCRIPTION	FROM	TO				FROM			TO			2011		2010
Fixed rate	3/14/2012	12/21/2017		3.21	%		1.82	%		3.73	%	$	18,000	$	21,000
Fixed rate amortizing	1/1/2012	3/1/2017		5.50			3.40			7.15			1,161		1,909
												$	19,161	$	22,909

Maturities of other borrowings at December 31, 2011, are summarized as follows:

YEAR ENDING DECEMBER 31,	AMOUNT		WEIGHTED- AVERAGE RATE
2012	$	6,490		2.55	%
2013		213		6.06
2014		190		6.03
2015		169		6.01
2016		96		5.84
2017 and beyond		12,003		3.62
	$	19,161		3.34	%

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, 2011 the Company has the capacity to borrow an additional $30.8 million from the FHLB.

NOTE 8 – INCOME TAXES

The provision for income taxes consists of the following for the years ended December 31:

(Dollars in thousands)	2011		2010		2009
Current	$	1,257	$	1,275	$	1,131
Deferred		345		293		403
Total income tax provision	$	1,602	$	1,568	$	1,534

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:

(Dollars in thousands)	2011			2010			2009
Expected provision using statutory federal income tax rate	$	1,798		$	1,722		$	1,674
Tax-exempt income on state and municipal securities and political subdivision loans		(169	)		(149	)		(138	)
Interest expense associated with carrying certain state and municipal securities and political subdivision loans		8			9			8
Other		(35	)		(14	)		(10	)
Total income tax provision	$	1,602		$	1,568		$	1,534

46         2011 Annual Report to Shareholders | CSB Bancorp, Inc.

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 are as follows:

(Dollars in thousands)	2011			2010
Allowance for loan losses	$	1,195		$	1,244
Net operating loss carryforward		727			855
Capital loss carryforward		35			35
Other		147			81
		2,104			2,215
Valuation allowance on deferred tax assets		(35	)		(35	)
Deferred tax assets		2,069			2,180
Premises and equipment		(389	)		(144	)
Federal Home Loan Bank stock dividends		(736	)		(736	)
Deferred loan fees		(121	)		(90	)
Unrealized gain on securities available for sale		(736	)		(449	)
Prepaid expenses		(83	)		(110	)
Other		(206	)		(221	)
Deferred tax liabilities		(2,271	)		(1,750	)
Net deferred tax (liability) asset	$	(202	)	$	430

The Company has a net operating loss tax carryforward of approximately $2.1 million, as of December 31, 2011. The net operating loss carryforward can be used to offset future taxable income and will begin to expire in tax year 2026.

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 2014. A valuation allowance for the capital loss carryforward is reflected at December 31, 2011 and 2010. 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.

There is currently no liability for uncertain tax positions and no known unrecognized tax benefits. CSB recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Consolidated Statement of Income. With few exceptions, CSB is no longer subject to U.S. federal, state, or local income tax examinations by tax authorities for years before 2008.

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 investment 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 2.5% of each eligible participant’s compensation for 2011, 2010 and 2009, respectively. The Plan also provides for a 50% Company match of participant contributions up to a maximum of 2% of each participant’s annual compensation. Expense under the Plan amounted to approximately $242 thousand, $199 thousand and $230 thousand for 2011, 2010 and 2009, respectively.

The Company maintains a stock option plan. No stock options were granted in 2011 or 2010. During 2009, the Board of Directors extended options to purchase 1,000 shares originally expiring in 2009 through August 2014 at an exercise price of $15.00.

2011 Annual Report to Shareholders | CSB Bancorp, Inc.         47

Notes to Consolidated Financial Statements

NOTE 9 – EMPLOYEE BENEFITS (CONTINUED)

The following summarizes stock options activity for the years ended December 31:

	2011						2010						2009
	SHARES			WEIGHTED AVERAGE EXERCISE PRICE			SHARES			WEIGHTED AVERAGE EXERCISE PRICE			SHARES			WEIGHTED AVERAGE EXERCISE PRICE
Outstanding at beginning of year		39,945		$	17.48			40,195		$	17.47			40,720		$	17.55
Granted		—			—			—			—			1,000			15.00
Exercised		—			—			—			—			—			—
Forfeited		(13,229	)		(17.81	)		(250	)		(16.05	)		(1,525	)		(17.98	)
Outstanding at end of year		26,716		$	17.32			39,945		$	17.48			40,195		$	17.47
Options exercisable at year-end		26,716		$	17.32			39,945		$	17.48			40,195		$	17.47
Weighted-average fair value of options granted during year					N/A						N/A					$	1.40

Options outstanding at December 31, 2011 were as follows:

	OUTSTANDING				EXERCISABLE
RANGE OF EXERCISABLE PRICES	NUMBER		WEIGHTED AVERAGE REMAINING CONTRACTUAL LIFE (YEARS)		NUMBER		WEIGHTED AVERAGE EXERCISE PRICE
$15.00		1,000		2.57		1,000	$	15.00
16.05		6,860		0.99		6,860		16.05
16.10		1,000		0.17		1,000		16.10
18.00		17,856		4.19		17,856		18.00
Outstanding at year-end		26,716		3.16		26,716	$	17.32

The total intrinsic value of outstanding in-the-money stock options and outstanding in-the-money exercisable stock options was $7,200 and $570 at December 31, 2011 and 2010, respectively. There were no stock options exercised in 2011, 2010, or 2009. There were no options vested in 2011 or 2010. The total fair value of stock options vested was $8,900 in 2009.

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:

(Dollars in thousands)	2011		2010
Commitments to extend credit	$	90,845	$	74,715
Letters of credit	$	875	$	1,302

48         2011 Annual Report to Shareholders | CSB Bancorp, Inc.

Notes to Consolidated Financial Statements

NOTE 10 – FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (CONTINUED)

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 Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral, obtained if deemed necessary by the Company 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 Company 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, 2011 are due on demand or expire in 2012. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company requires collateral supporting these commitments when deemed appropriate.

NOTE 11 – RELATED-PARTY TRANSACTIONS

In the ordinary course of business, loans are granted by the Company 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 ended December 31, 2011:

(Dollars in thousands)
Balance at beginning of year	$	4,316
New loans and advances		393
Repayments, including loans sold		(1,058	)
Balance at end of year	$	3,651

Deposits from executive officers, directors and their related business interests at both December 31, 2011 and 2010 were approximately $10.2 million and $10.2 million.

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, 2011 and 2010, that the Company and Bank met or exceeded all capital adequacy requirements to which they are subject.

As of December 31, 2011, 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 known conditions or events since that notification that Management believes have changed the Bank’s category.

2011 Annual Report to Shareholders | CSB Bancorp, Inc.         49

Notes to Consolidated Financial Statements

NOTE 12 – REGULATORY MATTERS (CONTINUED)

The actual capital amounts and ratios of the Company and Bank as of December 31 are presented in the following tables:

	ACTUAL					MINIMUM REQUIRED FOR CAPITAL ADEQUACY PURPOSES					MINIMUM REQUIRED TO BE WELL CAPITALIZED UNDER PROMPT  CORRECTIVE ACTION
(Dollars in thousands)	AMOUNT		RATIO			AMOUNT		RATIO			AMOUNT		RATIO
As of December 31, 2011
Total capital (to risk-weighted assets)
Consolidated	$	46,300		14.2	%	$	26,133		8.0	%	$	32,667		10.0	%
Bank		45,517		13.9			26,114		8.0			32,643		10.0
Tier I capital (to risk-weighted assets)
Consolidated		42,220		12.9			13,067		4.0			19,600		6.0
Bank		41,437		12.7			13,057		4.0			19,586		6.0
Tier I capital (to average assets)
Consolidated		42,220		8.1			20,971		4.0			26,214		5.0
Bank		41,437		7.9			20,965		4.0			26,207		5.0
As of December 31, 2010
Total capital (to risk-weighted assets)
Consolidated	$	47,899		15.9	%	$	24,085		8.0	%	$	30,107		10.0	%
Bank		47,227		15.7			24,074		8.0			30,093		10.0
Tier I capital (to risk-weighted assets)
Consolidated		44,134		14.7			12,043		4.0			18,064		6.0
Bank		43,462		14.4			12,037		4.0			18,056		6.0
Tier I capital (to average assets)
Consolidated		44,134		9.8			18,100		4.0			22,626		5.0
Bank		43,462		9.6			18,097		4.0			22,622		5.0

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 in the prior table. Under these provisions, at January 1, 2012, the Bank could dividend $5,021,900 to the Company. The Company does not anticipate the financial need to obtain regulatory 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, 2011 and 2010 and for each of the three years in the period ended December 31, 2011 follows:

(Dollars in thousands)	2011		2010
CONDENSED BALANCE SHEETS
ASSETS
Cash deposited with subsidiary bank	$	535	$	376
Investment in subsidiary bank		48,652		46,489
Securities available-for-sale		60		56
Other assets		196		247
Total assets	$	49,443	$	47,168
LIABILITIES AND SHAREHOLDERS’ EQUITY
Total liabilities	$	14	$	14
Total shareholders’ equity		49,429		47,154
Total liabilities and shareholders’ equity	$	49,443	$	47,168

50         2011 Annual Report to Shareholders | CSB Bancorp, Inc.

Notes to Consolidated Financial Statements

NOTE 13 – CONDENSED PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)

(Dollars in thousands)	2011			2010			2009
CONDENSED STATEMENTS OF INCOME
Interest on securities	$	1		$	1		$	1
Dividends from subsidiary		2,300			2,000			2,200
Securities gain		—			—			1
Other-than-temporary impairment losses		—			—			(70	)
Total income		2,301			2,001			2,132
Operating expenses		336			483			518
Income before taxes and undistributed equity income of subsidiary		1,965			1,518			1,614
Income tax benefit		(115	)		(164	)		(176	)
Equity earnings in subsidiary, net of dividends		1,607			1,814			1,601
Net income	$	3,687		$	3,496		$	3,391
(Dollars in thousands)	2011			2010			2009
CONDENSED STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
Net income	$	3,687		$	3,496		$	3,391
Adjustments to reconcile net income to cash provided by operations:
Securities gain		—			—			(1	)
Other-than-temporary impairment of investments		—			—			70
Equity earnings in subsidiary, net of dividends		(1,607	)		(1,814	)		(1,601	)
Stock compensation expense		—			—			8
Change in other assets, liabilities		48			21			134
Net cash provided by operating activities		2,128			1,703			2,001
Cash flows from investing activities:
Purchase of investment securities		—			(4	)		—
Proceeds from sale of investment securities		—			—			13
Net cash provided by (used in) investing activities		—			(4	)		13
Cash flows from financing activities:
Cash dividends paid		(1,969	)		(1,969	)		(1,969	)
Net cash used in financing activities		(1,969	)		(1,969	)		(1,969	)
Increase (decrease) in cash		159			(270	)		45
Cash at beginning of year		376			646			601
Cash at end of year	$	535		$	376		$	646

2011 Annual Report to Shareholders | CSB Bancorp, Inc.         51

Notes to Consolidated Financial Statements

NOTE 14 – OTHER COMPREHENSIVE INCOME

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

(Dollars in thousands)	2011			2010			2009
Unrealized holding gains (losses) on available-for-sale securities	$	1,081		$	(148	)	$	1,482
Less reclassification adjustment for securities gains recognized in income		(237	)		(148	)		(82	)
Net unrealized holding gains (losses)		844			(296	)		1,400
Federal income tax provision (benefit)		287			(101	)		476
Other comprehensive income (loss)	$	557		$	(195	)	$	924

NOTE 15 – FAIR VALUE MEASUREMENTS

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

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

The following table presents the assets reported on the consolidated statements of financial condition at their fair value as of December 31, 2011 and December 31, 2010, by level within the fair value hierarchy. No liabilities are carried at fair value. As required by the accounting standards, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Equity securities and U.S. Treasury Notes are valued at the closing price reported on the active market on which the individual securities are traded. Obligations of U.S. government corporations and agencies, mortgage-backed securities and obligations of states and political subdivisions are valued at observable market data for similar assets.

52         2011 Annual Report to Shareholders | CSB Bancorp, Inc.

Notes to Consolidated Financial Statements

NOTE 15 – FAIR VALUE MEASUREMENTS (CONTINUED)

(Dollars in thousands)	Level I		Level II		Level III		Total
	December 31, 2011
Assets:
Securities available-for-sale
U.S. Treasury security	$	100	$	—	$	—	$	100
Obligations of U.S. government corporations and agencies		—		28,323		—		28,323
Mortgage-backed securities in government sponsored entities		—		76,332		—		76,332
Obligations of states and political subdivisions		—		14,880		—		14,880
Corporate bonds		—		3,330		—		3,330
Total debt securities		100		122,865		—		122,965
Equity securities in financial institutions		61		—		—		61
Total available-for-sale securities	$	161	$	122,865	$	—	$	123,026
	December 31, 2010
Assets:
Securities available-for-sale
U.S. Treasury security	$	100	$	—	$	—	$	100
Obligations of U.S. government corporations and agencies		—		19,711		—		19,711
Mortgage-backed securities in government sponsored entities		—		42,351		—		42,351
Obligations of states and political subdivisions		—		11,994		—		11,994
Corporate bonds		—		992		—		992
Total debt securities		100		75,048		—		75,148
Equity securities in financial institutions		56		—		—		56
Total available-for-sale securities	$	156	$	75,048	$	—	$	75,204

The following table presents the assets measured on a nonrecurring basis on the consolidated balance sheets at their fair value as of December 31, 2011, and December 31, 2010, by level within the fair value hierarchy. Impaired loans and other real estate that are collateral dependent are written down to fair value through the establishment of specific reserves. The building held at December 31, 2010, was transferred to a new owner during 2011. Techniques used to value the collateral that secure the impaired loans 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.

The fair value of MSRs is based on a valuation model that calculates the present value of estimated net servicing income. The valuation model incorporates discounted cash flow and repayment assumptions based on management’s best judgment. As a result, these rights are measured at fair value on a nonrecurring basis and are classified within Level III of the fair value hierarchy.

(Dollars in thousands)	Level I		Level II		Level III		Total
	December 31, 2011
Assets Measured on a Nonrecurring Basis:
Impaired loans	$	—	$	—	$	6,741	$	6,741
Other real estate owned		—		—		10		10
Mortgage servicing rights		—		—		167		167
	December 31, 2010
Impaired loans	$	—	$	—	$	1,916	$	1,916
Other real estate owned		—		—		36		36
Premises		—		200		—		200
Mortgage servicing rights		—		—		155		155

2011 Annual Report to Shareholders | CSB Bancorp, Inc.         53

Notes to Consolidated Financial Statements

NOTE 16 – FAIR VALUES OF FINANCIAL INSTRUMENTS

The estimated fair values of recognized financial instruments as of December 31, 2011 and 2010 are as follows:

(Dollars in thousands)	2011				2010
	CARRYING VALUE		FAIR VALUE		CARRYING VALUE		FAIR VALUE
Financial assets:
Cash and cash equivalents	$	82,258	$	82,258	$	48,360	$	48,360
Securities		128,489		128,489		80,667		80,667
Loans, net		320,100		327,138		311,616		316,474
Accrued interest receivable		1,349		1,349		1,215		1,215
Financial liabilities:
Deposits	$	443,553	$	445,587	$	353,491	$	355,589
Short-term borrowings		37,073		37,073		32,018		32,018
Other borrowings		19,161		20,087		22,909		23,042
Accrued interest payable		182		182		213		213

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 value. Fair value of non-accrual loans is based on carrying value.

Deposits and other borrowings 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.

The Company also has unrecognized financial instruments at December 31, 2011 and 2010. These financial instruments relate to commitments to extend credit and letters of credit. The aggregated contract amount of such financial instruments was approximately $91.7 million at December 31, 2011 and $76 million at December 31, 2010. 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.

54         2011 Annual Report to Shareholders | CSB Bancorp, Inc.

Notes to Consolidated Financial Statements

NOTE 17 – CONTINGENT LIABILITIES

In the normal course of business, the Company is subject to pending and threatened legal actions. Although, the Company is not able to predict the outcome of such actions, after reviewing pending and threatened actions, management believes that the outcome of any or all such actions will not have a material adverse effect on the results of operations or shareholders’ equity of the Company.

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, 2011 and 2010:

(Dollars in thousands)	INTEREST INCOME		NET INTEREST INCOME		NET INCOME		BASIC EARNINGS PER SHARE		DILUTED EARNINGS PER SHARE
2011
First quarter	$	4,946	$	3,934	$	896	$	0.33	$	0.33
Second quarter		5,003		4,096		973		0.35		0.35
Third quarter		4,958		4,098		998		0.37		0.37
Fourth quarter		5,111		4,212		820		0.30		0.30
2010
First quarter	$	5,155	$	3,880	$	737	$	0.27	$	0.27
Second quarter		5,029		3,833		921		0.34		0.34
Third quarter		5,159		3,957		882		0.32		0.32
Fourth quarter		5,047		3,900		956		0.35		0.35

2011 Annual Report to Shareholders | CSB Bancorp, Inc.         55

Officers of The Commercial & Savings Bank

Rebecca A. Baker

Assistant Vice President, Banking Center Manager

Pamela S. Basinger

Vice President, Financial Officer

Deborah S. Berner

Vice President,

Retail Services Manager

Pamela L. Bromund

Assistant Vice President, Loan Operations Supervisor

Wendy D. Brown

Assistant Vice President, Bank Operations Manager

C. Dawn Butler

Vice President,

Regional Bank Manager

Beverly A. Carr

Operations Officer, Bank Operations

Colby M. Chamberlin

Vice President, Commercial Lender

Dale J. Clinton

Vice President, Internal Auditor

G. Gail Cochran

Assistant Vice President, Executive Loan Secretary

Peggy L. Conn

Corporate Secretary

Marianne Davis

Officer,

Banking Center Manager

Christopher J. Delatore

Vice President, Commercial Lender

David J. Dolan

Assistant Vice President, Mortgage Services Manager

Paula S. Foy

Vice President,

Compliance Officer/BSA Officer

Lori S. Frantz

Assistant Vice President, Banking Center Manager

Brett A. Gallion

Assistant Vice President, Project Manager

Carrie A. Gerber

Credit Officer

Eric R. Giauque

Assistant Vice President, Banking Center Manager

Benjamin J. Hershberger

Officer,

Banking Center Manager

Deissy L. Houmard

Officer,

Assistant Banking Center Manager

Brandi L. Hudnall

Officer,

Banking Center Manager

Jason B. Hummel

Vice President, Commercial Lender

Julie A. Jones

Vice President,

Director of Human Resources

Stephen K. Kilpatrick

First Vice President, Senior Credit Officer

Betty C. Lyon

Assistant Vice President, Banking Center Manager

W. Robert Manning, Jr. Executive Vice President, Chief Operations Officer, Chief Information Officer

Kevin J. McAllister

Vice President, Trust Officer

Robyn E. McClintock

Vice President,

Regional Bank Manager

Jay R. McCulloch

Vice President, Brokerage Manager

Sherry A. McRobie

Assistant Vice President, Banking Center Manager

Paula J. Meiler

Senior Vice President, Chief Financial Officer

A. Lee Miller

Vice President,

Cash Management & Special Projects, CRA Officer

Edward J. Miller

Vice President,

Operations Services Manager, Security

Daniel L. Muse

Operations Officer

Shawn E. Oswald

Vice President,

Information System Director, OFAC Officer

Amy R. Patterson

Assistant Vice President, Loan Officer

Thomas S. Rumbaugh

Vice President, Trust Officer

Lisa M. Schonauer

Assistant Vice President, Banking Center Manager

Rebecca J. Shultz

Assistant Vice President, Loan Officer

Melissa F. Sprang

Assistant Vice President, Regional Bank Manager

Bud Stebbins

First Vice President, Senior Loan Officer

Eddie L. Steiner

Chairman, President,

Chief Executive Officer

Steven J. Stiffler

Vice President, Commercial Lender

Eric D. Strouse

Vice President, Commercial Lender

Elaine A. Tedrow

Assistant Vice President, Banking Center Manager

Jennifer M. Thorpe

Assistant Vice President, Senior Credit Analyst

William R. Tinlin

Vice President, Recovery

Brian D. Troyer

Assistant Vice President, Trust Operations

Jane C. Whitmer

Officer,

Assistant Banking Center Manager

Michael D. Workman

Vice President, Mortgage Loan Officer, Small Business Lender

Crystal R. Yoder

Operations Officer

56 2011 Annual Report to Shareholders | CSB Bancorp, Inc.

Shareholder & General Inquiries

Stock Listing Common Symbol: CSBB.OB

CORPORATE OFFICE 91 North Clay Street, Millersburg, Ohio. . . . . . . . . . . . . . . . . . . . . . . . . . . . 330-674-9015 or 800-654-9015

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

Peggy L. Conn

Corporate Secretary CSB Bancorp, Inc.

91 North Clay Street Millersburg, Ohio 44654

330-674 • 800 -9015 -654-9015

Legal Counsel

Vorys, Sater, Seymour and Pease LLP

52 East Gay Street

P.O. Box 1008

Columbus, Ohio 43216

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 • 800 -2397 -654-9015

George Geissbuhler

Sweney Cartwright & Co.

17 South High Street, Suite 300 Columbus, Ohio 43215 800-334-7481

Nicolas “Nick” P. Bicking

Boenning & Scattergood 9916 Brewster Lane Powell, Ohio 43065 866-326-8113

The annual meeting of shareholders is currently scheduled to be held on Wednesday, April 25, 2012 at 7:00 p.m. at the Carlisle Inn in Walnut Creek, Ohio.

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 • 800 -9015 -654-9015

2011 Annual Report to Shareholders | CSB Bancorp, Inc. 57

58 2011 Annual Report to Shareholders | CSB Bancorp, Inc.

2011 Annual Report to Shareholders | CSB Bancorp, Inc. 59

CSB Bancorp, Inc.

Banking Center 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

24 HOUR XPRESS NET BANKING & BILLPAY www.csb1.com

LOAN SERVICES 91 North Clay Street, Millersburg 330-674-9015 or 1-800-654-9015

OPERATIONS CENTER 91 North Clay Street, Millersburg 330-674-9015

TRUST & INVESTMENT SERVICES 91 North Clay Street, Millersburg. Holmes, Stark & Tuscarawas Counties 330-674-2397

TRUST & INVESTMENT SERVICES 305 West Liberty Street, Wooster Wayne County 330-263-1955

CSB BANKING CENTERS

HOLMES REGION

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

MILLERSBURGCLINTON COMMONS BANKING CENTER 2102 Glen Drive, Millersburg (Drive-Up ATM) 330-674-2265

MILLERSBURG SOUTH CLAY BANKING CENTER 91 South Clay Street, Millersburg (Drive-Up ATM) 330-674-0687

WALNUT CREEK BANKING CENTER 4980 Olde Pump Street, Walnut Creek (Walk-Up ATM) 330-893-2961

WINESBURG BANKING CENTER 2225 U.S. 62, Winesburg (Drive-Up ATM) 330-359-5543

TUSCARAWAS & STARK REGION

GNADENHUTTEN BANKING CENTER 100 South Walnut Street, Gnadenhutten 740-254-4313

NEW PHILADELPHIA BANKING CENTER 635 West High Avenue, New Philadelphia (Drive-Up ATM) 330-308-4867

NORTH CANTON BANKING CENTER 1210 North Main Street, North Canton (Drive-Up ATM) 330-497-0839

SUGARCREEK BANKING CENTER 127 South Broadway, Sugarcreek (Drive-Up ATM) 330-852-4444

WAYNE REGION

ORRVILLE AREA BANKING CENTER 461 Wadsworth Road, Orrville (Drive-Up ATM) 330-682-8000

ORRVILLE HIGH STREET BANKING CENTER 330 West High Street, Orrville (Drive-Up ATM) 330-682-8001

SHREVE BANKING CENTER 333 West South Street, Shreve (Drive-Up ATM) 330-567-2226

WOOSTER DOWNTOWN BANKING CENTER 305 West Liberty Street, Wooster (Drive-Up ATM) 330-263-1955

WOOSTER MILLTOWN BANKING CENTER 3562 Commerce Parkway, Wooster (Drive-Up ATM) 330-345-2031

OTHER CSB ATM LOCATIONS

POMERENE HOSPITAL 981 Wooster Road, Millersburg

SKIP’S CONVENIENCE STORE 213 Main Street, Gnadenhutten

TONY’S UNION 76 3054 East Main Street, Port Washington UNION HOSPITAL 659 Boulevard Street, Dover

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).

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. and in the Registration Statement on Form S-8 of The Commercial & Savings Bank 401(k) Retirement Plan of our report dated March 8, 2012, 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, 2011.

/s/ S.R. Snodgrass A.C.

Wexford, Pennsylvania

March 26, 2012

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 26, 2012
	/s/ Eddie L. Steiner
	Eddie L. Steiner
	President and Chief Executive Officer

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 26, 2012
	/s/ Paula J. Meiler
	Paula J. Meiler
	Senior Vice President and Chief Financial Officer

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, 2011, 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

President and Chief Executive Officer

March 26, 2012

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, 2011, 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 26, 2012

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Contingent Liabilities

12 Months Ended

Dec. 31, 2011

Financial Instruments With Off-Balance Sheet Risk and Contingent Liabilities [Abstract]

CONTINGENT LIABILITIES

NOTE 17 – CONTINGENT LIABILITIES

In the normal course of business, the Company is subject to pending and threatened legal actions. Although, the Company is not able to predict the outcome of such actions, after reviewing pending and threatened actions, management believes that the outcome of any or all such actions will not have a material adverse effect on the results of operations or shareholders’ equity of the Company.

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.

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Securities

12 Months Ended

Dec. 31, 2011

Securities [Abstract]

SECURITIES

NOTE 1 – SECURITIES

Securities consist of the following at December 31, 2011 and 2010:

(Dollars in thousands)	AMORTIZED COST		GROSS UNREALIZED GAINS		GROSS UNREALIZED LOSSES		FAIR VALUE
December 31, 2011
Available-for-sale:
U.S. Treasury security	$	100	$	—	$	—	$	100
Obligations of U.S. government corporations and agencies		28,263		83		23		28,323
Mortgage-backed securities in government sponsored entities		74,834		1,562		64		76,332
Obligations of states and political subdivisions		14,148		732		—		14,880
Corporate bonds		3,445		6		121		3,330
Total debt securities		120,790		2,383		208		122,965
Equity securities in financial institutions		69		3		11		61
Total available-for-sale		120,859		2,386		219		123,026
Restricted stock		5,463		—		—		5,463
Total securities	$	126,322	$	2,386	$	219	$	128,489
December 31, 2010
Available-for-sale:
U.S. Treasury security	$	100	$	—	$	—	$	100
Obligations of U.S. government corporations and agencies		20,009		8		306		19,711
Mortgage-backed securities in government sponsored entities		41,005		1,374		28		42,351
Obligations of states and political subdivisions		11,699		341		46		11,994
Corporate bonds		1,000		—		8		992
Total debt securities		73,813		1,723		388		75,148
Equity securities in financial institutions		69		3		16		56
Total available-for-sale		73,882		1,726		404		75,204
Restricted stock		5,463		—		—		5,463
Total securities	$	79,345	$	1,726	$	404	$	80,667

The amortized cost and fair value of securities at December 31, 2011, 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.

(Dollars in thousands)	AMORTIZED COST		FAIR VALUE
Available-for-sale:
Due in one year or less	$	657	$	657
Due after one through five years		10,977		11,257
Due after five through ten years		20,493		21,005
Due after ten years		88,663		90,046
Total debt securities available-for-sale	$	120,790	$	122,965

Securities with a carrying value of approximately $70.4 million and $63.3 million were pledged at December 31, 2011 and 2010, 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 FHLB and Federal Reserve Bank stock. The Bank’s investment in FHLB stock amounted to $5.0 million at December 31, 2011 and 2010. Federal Reserve Bank stock was $471 thousand at December 31, 2011 and 2010.

The following table shows the proceeds from sales of available-for-sale securities and the gross realized gains and losses on the sales of those securities that have been included in earnings as a result of the sales. Gains or losses on the sales of available-for-sale securities are recognized upon sale and are determined by the specific identification method.

	FOR THE YEARS ENDED DECEMBER 31
(Dollars in thousands)	2011		2010		2009
Proceeds	$	3,244	$	3,359	$	1,305
Realized gains	$	237	$	148	$	153
Realized losses		—		—		1
Impairment losses		—		—		70
Net securities gains	$	237	$	148	$	82

The income tax provision applicable to realized gains amounted to $81 thousand in 2011, $50 thousand in 2010 and $52 thousand in 2009. The income tax benefit applicable to realized losses and impairment losses amounted to $24 thousand in 2009. There were no tax benefits recognized from gross realized losses in 2011 and 2010.

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, 2011 and 2010:

	SECURITIES IN A CONTINUOUS UNREALIZED LOSS POSITION
	LESS THAN 12 MONTHS				12 MONTHS OR MORE				TOTAL
(Dollars in thousands)	GROSS UNREALIZED LOSSES		FAIR VALUE		GROSS UNREALIZED LOSSES		FAIR VALUE		GROSS UNREALIZED LOSSES		FAIR VALUE
2011
Obligations of U.S. corporations and agencies	$	23	$	6,974	$	—	$	—	$	23	$	6,974
Mortgage-backed securities in government sponsored entities		63		16,794		1		192		64		16,986
Corporate bonds		49		2,397		72		428		121		2,825
Total debt securities		135		26,165		73		620		208		26,785
Equity securities in financial institutions		—		—		11		43		11		43
Total temporarily impaired securities	$	135	$	26,165	$	84	$	663	$	219	$	26,828
2010
Obligations of U.S. corporations and agencies	$	306	$	12,686	$	—	$	—	$	306	$	12,686
Mortgage-backed securities in government sponsored entities		14		4,032		14		493		28		4,525
Obligations of state and political subdivisions		46		2,561		—		—		46		2,561
Corporate bonds		8		492		—		—		8		492
Total debt securities		374		19,771		14		493		388		20,264
Equity securities in financial institutions		—		—		16		38		16		38
Total temporarily impaired securities	$	374	$	19,771	$	30	$	531	$	404	$	20,302

There were seventeen (17) securities in an unrealized loss position at December 31, 2011, two (2) of which were in a continuous loss position for twelve months or more. At least quarterly, the Company conducts a comprehensive security-level impairment assessment. The assessments are based on the nature of the securities, the extent and duration of the securities, the extent and duration of the loss, management’s intent to sell or if it is more likely than not that management will be required to sell a security before recovery of its amortized cost basis, which may be maturity. Management believes the Company will fully recover the cost of these securities and it does not intend to sell these securities and likely will not be required to sell them before the anticipated recovery of the remaining amortized cost basis, which may be maturity. As a result, management concluded that these securities were not other-than-temporarily impaired at December 31, 2011 and has recognized the total amount of the impairment in accumulated other comprehensive income, net of tax.

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2011

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

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 bank holding company. The Company’s wholly-owned subsidiaries are The Commercial and Savings Bank of Millersburg, Ohio (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 sixteen Banking Centers located in Holmes, Tuscarawas, Wayne and Stark Counties in Ohio and nearby communities. These communities are the source of substantially all deposit, loan and trust activities. The majority of the Bank’s income is derived from commercial and retail lending activities and investments in securities. Its primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are residential mortgage, commercial 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 business operations. 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 Consolidated Balance Sheets and reported amounts of revenues and expenses during each reporting period. Actual results could differ from those estimates. The most significant estimates susceptible to change in the near term relate 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, 2011 and 2010 was $400,000.

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.

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 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 receipt of principal and interest according to the contractual terms, 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 to hold the security 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 to hold the security requires 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 Statements of Income.

Investments in Federal Home Loan Bank of Cincinnati (“FHLB”) and Federal Reserve Bank stock are classified as restricted stock, carried at cost, and evaluated for impairment.

The Bank is required to maintain an investment in common stock of the FHLB and Federal Reserve Bank because the Bank is a member of the FHLB and the Federal Reserve System. We consider these stocks to be nonmarketable equity securities and carry them at cost.

While the Federal Home Loan Banks have been negatively impacted by the current economic conditions, the Federal Home Loan Bank of Cincinnati has reported profits for 2011 and 2010, remains in compliance with regulatory capital and liquidity requirements and continues to pay dividends on the stock and make redemptions at the par value. With consideration given to these factors, management concluded that the stock was not impaired at December 31, 2011 or 2010.

LOANS

Loans that management has the intent and ability to hold for the foreseeable future, or until maturity or payoff, 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.

At origination, a determination is made whether a loan will be held in the Bank’s portfolio or is intended for sale in the secondary market. Mortgage loans held for sale are recorded at the lower of the aggregate cost or fair value. Generally these loans are held for sale for less than three days. The Bank includes gains and losses on sales of the loans held for sale when the sale is completed.

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 Company 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 Company does not separately identify individual consumer and residential loans for impairment disclosures.

OTHER REAL ESTATE OWNED

Other real estate acquired through or in lieu of foreclosure is initially recorded at 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 $10,000 and $36,300 at December 31, 2011 and 2010, 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 CORE DEPOSIT INTANGIBLE ASSETS

Goodwill is not amortized, but is tested at least annually for impairment, in the fourth quarter or more frequently if indicators of impairment are present. The evaluation for impairment involves comparing the estimated current fair value of the reporting unit to its carrying value, including goodwill. If the estimated current fair value of a reporting unit exceeds its carrying value, no additional testing is required and an impairment loss is not recorded. CSB uses market capitalization and multiples of tangible book value methods to determine the estimated current fair value of its reporting unit. Based on this analysis no impairment was recorded in 2011 or 2010.

The core deposit intangible assets are assigned useful lives, which are amortized on an accelerated basis over their weighted average lives. The Company periodically reviews the intangible asset for impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

MORTGAGE SERVICING RIGHTS

Mortgage servicing rights (“MSRs”) represent the right to service loans for third party investors. MSRs are recognized as a separate asset upon the sale of mortgage loans to a third party investor with the servicing rights retained by CSB. Originated MSRs are recorded at allocated fair value at the time of the sale of the loans to the third party investor. MSRs are amortized in proportion to and over the estimated period of net servicing income. MSRs are carried at amortized cost, less a valuation allowance for impairment, if any. MSRs are evaluated on a discounted earnings basis to determine the present value of future earnings of the underlying serviced mortgages. All assumptions are reviewed annually or more frequently, if necessary, and adjusted to reflect current and anticipated market conditions.

BANK-OWNED LIFE INSURANCE

The cash surrender value of these policies is included as an asset on the Consolidated Balance Sheets 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 are not covered by federal deposit insurance.

ADVERTISING COSTS

All advertising costs are expensed as incurred. Advertising expenses amounted to $175 thousand, $169 thousand, and $180 thousand for the years ended 2011, 2010 and 2009, respectively.

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, domiciled in Ohio, is not currently subject to state and local income taxes.

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 no stock-based compensation expense for 2011 and 2010, and $8 thousand for the year ended December 31, 2009. The total income tax benefit recognized in the accompanying Consolidated Statements of Income related to stock-based compensation was $2 thousand in 2009, with no tax benefit recognized in 2011 or 2010. Shares issued in connection with stock option exercises may be issued from available treasury shares or from market purchases.

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

	2011		2010		2009
Risk-free interest rate		N/A		N/A		2.5	%
Dividend yield						4.8	%
Volatility						18.4	%
Expected option life						5.0 yrs.

As of December 31, 2011, there was no unrecognized compensation cost related to unvested share-based compensation awards granted. All shares are vested.

Options are granted to certain employees at prices equal to the market value of the stock on the grant date. The CSB Share Incentive Plan was adopted at the 2002 annual meeting of shareholders and 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 estimates 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. There were no option grants for the years ended December 31, 2011 and 2010, and options to acquire 1,000 shares of CSB common stock were granted for the year ended December 31, 2009.

COMPREHENSIVE INCOME

The Company includes recognized revenue, expenses, gains and losses 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 Consolidated Balance Sheets. These 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 Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

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 number of common shares outstanding for basic and diluted earnings per share computations was as follows:

	2011			2010			2009
Weighted average common shares		2,980,602			2,980,602			2,980,602
Average treasury shares		(245,803	)		(245,803	)		(245,803	)
Total weighted average common shares outstanding (basic)		2,734,799			2,734,799			2,734,799
Dilutive effect of assumed exercise of stock options		39			—			—
Weighted average common shares outstanding (diluted)		2,734,838			2,734,799			2,734,799

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

There were 17,856 stock options to purchase common stock for $18.00 per share that were antidilutive at December 31, 2011. There were 39,945 stock options to purchase common stock for $15.00 to $18.00 per share that were antidilutive at December 31, 2010 and there were 40,195 stock options to purchase common stock for $15.00 to $18.00 per share that were antidilutive at December 31, 2009.

ACCOUNTING DEVELOPMENTS

In April 2011, the FASB issued ASU 2011-02, Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring. The amendments in this Update provide additional guidance or clarification to help creditors in determining whether a creditor has granted a concession and whether a debtor is experiencing financial difficulties for purposes of determining whether a restructuring constitutes a troubled debt restructuring. The amendments in this Update are effective for the first interim or annual reporting period beginning on or after June 15, 2011, and should be applied retrospectively to the beginning annual period of adoption. As a result of applying these amendments, an entity may identify receivables that are newly considered impaired. For purposes of measuring impairment of those receivables, an entity should apply the amendments prospectively for the first interim or annual period beginning on or after June 15, 2011. The Company has provided the necessary disclosures in Note 2.

In April 2011, the FASB issued ASU 2011-03, Transfers and Services (Topic 860): Reconsideration of Effective Control for Repurchase Agreements. The main objective in developing this Update is to improve the accounting for repurchase agreements (repos) and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. The amendments in this Update remove from the assessment of effective control (1) the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee, and (2) the collateral maintenance implementation guidance related to that criterion. The amendments in this Update apply to all entities, both public and nonpublic. The amendments affect all entities that enter into agreements to transfer financial assets that both entitle and obligate the transferor to repurchase or redeem the financial assets before their maturity. The guidance in this Update is effective for the first interim or annual period beginning on or after December 15, 2011 and should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. Early adoption is not permitted. This ASU is not expected to have a significant impact on the Company’s financial statements.

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

In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The amendments in this Update improve the comparability, clarity, consistency, and transparency of financial reporting and increase the prominence of items reported in other comprehensive income. To increase the prominence of items reported in other comprehensive income and to facilitate convergence of U.S. GAAP and IFRS, the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity was eliminated. The amendments require that all nonowner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. All entities that report items of comprehensive income, in any period presented, will be affected by the changes in this Update. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. For nonpublic entities, the amendments are effective for fiscal years ending after December 15, 2012, and interim and annual periods thereafter. The amendments in this Update should be applied retrospectively, and early adoption is permitted. This ASU is not expected to have a significant impact on the Company’s financial statements.

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

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

Notes to Consolidated Financial Statements

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Cash and cash equivalents
Cash and due from banks	$ 12,519	$ 9,798
Interest-earning deposits in other banks	69,739	38,497
Federal funds sold	0	65
Total cash and cash equivalents	82,258	48,360
Securities
Available-for-sale, at fair value	123,026	75,204
Restricted stock, at cost	5,463	5,463
Total securities	128,489	80,667
Loans	324,182	315,647
Less allowance for loan losses	4,082	4,031
Net loans	320,100	311,616
Premises and equipment, net	8,513	7,878
Core deposit intangible	1,034	406
Goodwill	4,728	1,725
Bank-owned life insurance	3,068	2,961
Accrued interest receivable and other assets	3,043	3,443
TOTAL ASSETS	551,233	457,056
Deposits
Noninterest-bearing	85,890	69,151
Interest-bearing	357,663	284,340
Total deposits	443,553	353,491
Short-term borrowings	37,073	32,018
Other borrowings	19,161	22,909
Accrued interest payable and other liabilities	2,017	1,484
Total liabilities	501,804	409,902
SHAREHOLDERS' EQUITY
Common stock, $6.25 par value. Authorized 9,000,000 shares; issued 2,980,602 shares; outstanding 2,734,799 shares in 2011 and 2010	18,629	18,629
Additional paid-in capital	9,994	9,994
Retained earnings	24,391	22,673
Treasury stock at cost - 245,803 shares in 2011 and 2010	(5,015)	(5,015)
Accumulated other comprehensive income	1,430	873
Total shareholders' equity	49,429	47,154
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 551,233	$ 457,056

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Consolidated Statement of Shareholder's Equity (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Income taxes on change in unrealized gain	$ 287	$ 100	$ 476
Cash dividends declared per share	$ 0.72	$ 0.72	$ 0.72
RETAINED EARNINGS
Cash dividends declared per share	$ 0.72	$ 0.72	$ 0.72
ACCUMULATED OTHER COMPREHENSIVE INCOME
Income taxes on change in unrealized gain	$ 287	$ 100	$ 476

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Other Comprehensive Income

12 Months Ended

Dec. 31, 2011

Other Comprehensive Income [Abstract]

OTHER COMPREHENSIVE INCOME

NOTE 14 – OTHER COMPREHENSIVE INCOME

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

(Dollars in thousands)	2011			2010			2009
Unrealized holding gains (losses) on available-for-sale securities	$	1,081		$	(148	)	$	1,482
Less reclassification adjustment for securities gains recognized in income		(237	)		(148	)		(82	)
Net unrealized holding gains (losses)		844			(296	)		1,400
Federal income tax provision (benefit)		287			(101	)		476
Other comprehensive income (loss)	$	557		$	(195	)	$	924

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Fair Values of Financial Instruments

12 Months Ended

Dec. 31, 2011

Fair Values of Financial Instruments [Abstract]

FAIR VALUES OF FINANCIAL INSTRUMENTS

NOTE 16 – FAIR VALUES OF FINANCIAL INSTRUMENTS

The estimated fair values of recognized financial instruments as of December 31, 2011 and 2010 are as follows:

(Dollars in thousands)	2011				2010
	CARRYING VALUE		FAIR VALUE		CARRYING VALUE		FAIR VALUE
Financial assets:
Cash and cash equivalents	$	82,258	$	82,258	$	48,360	$	48,360
Securities		128,489		128,489		80,667		80,667
Loans, net		320,100		327,138		311,616		316,474
Accrued interest receivable		1,349		1,349		1,215		1,215
Financial liabilities:
Deposits	$	443,553	$	445,587	$	353,491	$	355,589
Short-term borrowings		37,073		37,073		32,018		32,018
Other borrowings		19,161		20,087		22,909		23,042
Accrued interest payable		182		182		213		213

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 value. Fair value of non-accrual loans is based on carrying value.

Deposits and other borrowings 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.

The Company also has unrecognized financial instruments at December 31, 2011 and 2010. These financial instruments relate to commitments to extend credit and letters of credit. The aggregated contract amount of such financial instruments was approximately $91.7 million at December 31, 2011 and $76 million at December 31, 2010. 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.

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 3,687	$ 3,496	$ 3,391
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of premises, equipment and software	662	645	758
Deferred income taxes	345	293	403
Provision for loan losses	950	1,235	1,337
Gain on sale of loans, net	(219)	(242)	(463)
Securities (gain) loss, net	(237)	(148)	(152)
Security amortization, net of accretion	226	121	105
Other-than-temporary impairment of investments			70
Secondary market loan sale proceeds	7,201	11,362	21,005
Originations of secondary market loans held-for-sale	(7,019)	(10,831)	(20,986)
Effects of changes in operating assets and liabilities:
Net deferred loan costs	35	62	78
Accrued interest receivable	(134)	100	70
Accrued interest payable	(31)	(109)	(96)
Prepaid FDIC assessment	345	437	(1,483)
Other assets and liabilities	(37)	(419)	(611)
Net cash provided by operating activities	5,774	6,002	3,426
Securities available-for-sale:
Proceeds from maturities and repayments	45,332	51,234	33,769
Proceeds from sale	3,244	3,359	1,305
Purchases	(95,542)	(54,909)	(32,197)
Purchase of restricted stock			(231)
Loan originations, net of repayments	(1,065)	(3,827)	1,864
Net cash from acquisition	60,872
Proceeds from sale of other real estate	883	476	83
Property, equipment and software acquisitions	(586)	(103)	(671)
Net cash provided by (used in) investing activities	13,138	(3,770)	3,922
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits	15,648	24,084	24,246
Net change in short-term borrowings	5,055	3,254	5,872
Federal Home Loan Bank borrowings:
Proceeds			4,000
Repayments	(3,748)	(21,902)	(9,582)
Cash dividends paid	(1,969)	(1,969)	(1,969)
Net cash provided by financing activities	14,986	3,467	22,567
NET INCREASE IN CASH AND CASH EQUIVALENTS	33,898	5,699	29,915
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	48,360	42,661	12,746
CASH AND CASH EQUIVALENTS AT END OF YEAR	82,258	48,360	42,661
Cash paid during the year for:
Interest expense	3,769	5,206	7,055
Income taxes	1,525	1,310	920
Acquisition of noncash assets and liabilities:
Assets acquired	13,631
Liabilities assumed	74,503
Noncash investing activities:
Transfer of loans to other real estate owned	$ 814	$ 337	$ 195

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Consolidated Balance Sheets (Parenthetical) (USD $)	Dec. 31, 2011	Dec. 31, 2010
Consolidated Balance Sheets [Abstract]
Common Stock, Par Value	$ 6.25	$ 6.25
Common Stock, Shares Authorized	9,000,000	9,000,000
Common Stock, Shares Issued	2,980,602	2,980,602
Common Stock, Shares Outstanding	2,734,799	2,734,799
Treasury Stock, At Shares	245,803	245,803

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Employee Benefits

12 Months Ended

Dec. 31, 2011

Employee Benefits [Abstract]

EMPLOYEE BENEFITS

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 investment 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 2.5% of each eligible participant’s compensation for 2011, 2010 and 2009, respectively. The Plan also provides for a 50% Company match of participant contributions up to a maximum of 2% of each participant’s annual compensation. Expense under the Plan amounted to approximately $242 thousand, $199 thousand and $230 thousand for 2011, 2010 and 2009, respectively.

The Company maintains a stock option plan. No stock options were granted in 2011 or 2010. During 2009, the Board of Directors extended options to purchase 1,000 shares originally expiring in 2009 through August 2014 at an exercise price of $15.00.

The following summarizes stock options activity for the years ended December 31:

	2011						2010						2009
	SHARES			WEIGHTED AVERAGE EXERCISE PRICE			SHARES			WEIGHTED AVERAGE EXERCISE PRICE			SHARES			WEIGHTED AVERAGE EXERCISE PRICE
Outstanding at beginning of year		39,945		$	17.48			40,195		$	17.47			40,720		$	17.55
Granted		—			—			—			—			1,000			15.00
Exercised		—			—			—			—			—			—
Forfeited		(13,229	)		(17.81	)		(250	)		(16.05	)		(1,525	)		(17.98	)
Outstanding at end of year		26,716		$	17.32			39,945		$	17.48			40,195		$	17.47
Options exercisable at year-end		26,716		$	17.32			39,945		$	17.48			40,195		$	17.47
Weighted-average fair value of options granted during year					N/A						N/A					$	1.40

Options outstanding at December 31, 2011 were as follows:

	OUTSTANDING				EXERCISABLE
RANGE OF EXERCISABLE PRICES	NUMBER		WEIGHTED AVERAGE REMAINING CONTRACTUAL LIFE (YEARS)		NUMBER		WEIGHTED AVERAGE EXERCISE PRICE
$15.00		1,000		2.57		1,000	$	15.00
16.05		6,860		0.99		6,860		16.05
16.10		1,000		0.17		1,000		16.10
18.00		17,856		4.19		17,856		18.00
Outstanding at year-end		26,716		3.16		26,716	$	17.32

The total intrinsic value of outstanding in-the-money stock options and outstanding in-the-money exercisable stock options was $7,200 and $570 at December 31, 2011 and 2010, respectively. There were no stock options exercised in 2011, 2010, or 2009. There were no options vested in 2011 or 2010. The total fair value of stock options vested was $8,900 in 2009.

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Document and Entity Information (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Mar. 26, 2012	Jun. 30, 2010
Document and Entity Information [Abstract]
Entity Registrant Name	CSB BANCORP INC /OH
Entity Central Index Key	0000880417
Document Type	10-K
Document Period End Date	Dec. 31, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 39.1
Entity Common Stock, Shares Outstanding		2,734,799

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Financial Instruments With Off-Balance Sheet Risk

12 Months Ended

Dec. 31, 2011

Financial Instruments With Off-Balance Sheet Risk and Contingent Liabilities [Abstract]

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

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:

(Dollars in thousands)	2011		2010
Commitments to extend credit	$	90,845	$	74,715
Letters of credit	$	875	$	1,302

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 Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral, obtained if deemed necessary by the Company 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 Company 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, 2011 are due on demand or expire in 2012. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company requires collateral supporting these commitments when deemed appropriate.

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Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
INTEREST AND DIVIDEND INCOME
Loans, including fees	$ 16,977	$ 17,311	$ 18,539
Taxable securities	2,538	2,648	3,216
Nontaxable securities	421	354	319
Other	82	77	31
Total interest and dividend income	20,018	20,390	22,105
INTEREST EXPENSE
Deposits	2,864	3,509	4,306
Short-term borrowings	139	201	271
Other borrowings	675	1,110	1,763
Total interest expense	3,678	4,820	6,340
NET INTEREST INCOME	16,340	15,570	15,765
PROVISION FOR LOAN LOSSES	950	1,235	1,337
Net interest income, after provision for loan losses	15,390	14,335	14,428
NONINTEREST INCOME
Service charges on deposit accounts	1,134	1,126	1,234
Trust services	677	655	547
Debit card interchange fees	631	507	393
Securities gain, net	237	148	152
Other-than-temporary impairment losses			(70)
Gain on sale of loans, net	219	242	463
Other income	610	597	524
Total noninterest income	3,508	3,275	3,243
NONINTEREST EXPENSES
Salaries and employee benefits	7,459	6,880	6,900
Occupancy expense	890	808	1,014
Equipment expense	524	497	539
Professional and director fees	713	631	641
Franchise tax expense	550	536	507
Marketing and public relations	320	322	350
Software expense	373	370	392
Debit card expense	253	232	199
Amortization of intangible assets	78	63	65
FDIC assessment expense	352	486	542
Branch acquisition expense	337
Other expenses	1,760	1,721	1,597
Total noninterest expenses	13,609	12,546	12,746
Income before income taxes	5,289	5,064	4,925
FEDERAL INCOME TAX PROVISION	1,602	1,568	1,534
NET INCOME	$ 3,687	$ 3,496	$ 3,391
NET INCOME PER SHARE
Basic	$ 1.35	$ 1.28	$ 1.24
Diluted	$ 1.35	$ 1.28	$ 1.24

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Premises and Equipment

12 Months Ended

Dec. 31, 2011

Premises and Equipment [Abstract]

PREMISES AND EQUIPMENT

NOTE 4 – PREMISES AND EQUIPMENT

Premises and equipment consist of the following at December 31:

(Dollars in thousands)	2011		2010
Land and improvements	$	1,489	$	1,418
Buildings and improvements		9,422		9,606
Furniture and equipment		6,272		6,255
Leasehold improvements		260		172
		17,443		17,451
Accumulated depreciation		8,930		9,573
Premises and equipment, net	$	8,513	$	7,878

The Bank leases certain office locations. Total rental expense under these leases approximated $187 thousand, $142 thousand, and $160 thousand in 2011, 2010 and 2009, respectively. Depreciation expense amounted to $530 thousand, $527 thousand and $630 thousand for the years ended December 31, 2011, 2010, and 2009, respectively.

Future minimum lease payments at December 31, 2011 were as follows:

(Dollars in thousands)
2012	$	291
2013		267
2014		267
2015		268
2016		153
2017		13
Total	$	1,259

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Acquisition

12 Months Ended

Dec. 31, 2011

Acquisition [Abstract]

ACQUISITION

NOTE 3 – ACQUISITION

Premier Bank & Trust Branches

Effective as of the close of business on October 14, 2011, the Bank completed the branch purchase and assumption of liabilities of two branches of Premier Bank & Trust, National Association (“Premier”) located in Wooster, Ohio. The Bank paid a 5% premium on all deposit accounts. As a result of this purchase, the two full-service banking offices of Premier, located at 305 West Liberty Street and 3562 Commerce Parkway in Wooster, Ohio, became full-service banking offices of the Bank.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of the acquisition:

(Dollars in thousands)
Cash	$	60,872
Loans, net		9,219
Premises, leasehold and equipment		672
Goodwill		3,003
Core deposit intangible		706
Other assets		31
Total assets acquired	$	74,503
Deposits		74,475
Other liabilities		28
Total liabilities assumed	$	74,503

The assets acquired and liabilities assumed from Premier were recorded at fair value on the date of acquisition, and costs related to the acquisition, primarily professional fees, were expensed as incurred. All loans acquired from Premier were performing as of the acquisition date. During the year ended December 31, 2011, $337 thousand in merger and acquisition integration expenses was incurred related to the Branch Acquisition.

The core deposit intangible asset is being amortized over its estimated useful life of approximately ten years, using an accelerated method. The goodwill, which is not amortized for book purposes, will be amortized over 15 years for tax purposes, using the straight line method.

The fair value for loans acquired from Premier was estimated using projected monthly cash flows discounted to present value using a market rate for similar loans. There was no carry-over of Premier’s allowance for credit losses associated with the loans we acquired as the loans were initially recorded at fair value.

The fair value for savings and transaction deposit accounts acquired from Premier was assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand. Certificates of deposit were valued by comparing the contractual cost of the portfolio to an identical portfolio bearing current market rates. The projected cash flows from maturing certificates were calculated based on contractual rates. The fair value of the certificates of deposit was calculated by discounting their contractual cash flows at a market rate for a certificate of deposit with a corresponding maturity.

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Fair Value Measurements

12 Months Ended

Dec. 31, 2011

Fair Value Measurements [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 15 – FAIR VALUE MEASUREMENTS

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

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

The following table presents the assets reported on the consolidated statements of financial condition at their fair value as of December 31, 2011 and December 31, 2010, by level within the fair value hierarchy. No liabilities are carried at fair value. As required by the accounting standards, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Equity securities and U.S. Treasury Notes are valued at the closing price reported on the active market on which the individual securities are traded. Obligations of U.S. government corporations and agencies, mortgage-backed securities and obligations of states and political subdivisions are valued at observable market data for similar assets.

(Dollars in thousands)	Level I		Level II		Level III		Total
	December 31, 2011
Assets:
Securities available-for-sale
U.S. Treasury security	$	100	$	—	$	—	$	100
Obligations of U.S. government corporations and agencies		—		28,323		—		28,323
Mortgage-backed securities in government sponsored entities		—		76,332		—		76,332
Obligations of states and political subdivisions		—		14,880		—		14,880
Corporate bonds		—		3,330		—		3,330
Total debt securities		100		122,865		—		122,965
Equity securities in financial institutions		61		—		—		61
Total available-for-sale securities	$	161	$	122,865	$	—	$	123,026
	December 31, 2010
Assets:
Securities available-for-sale
U.S. Treasury security	$	100	$	—	$	—	$	100
Obligations of U.S. government corporations and agencies		—		19,711		—		19,711
Mortgage-backed securities in government sponsored entities		—		42,351		—		42,351
Obligations of states and political subdivisions		—		11,994		—		11,994
Corporate bonds		—		992		—		992
Total debt securities		100		75,048		—		75,148
Equity securities in financial institutions		56		—		—		56
Total available-for-sale securities	$	156	$	75,048	$	—	$	75,204

The following table presents the assets measured on a nonrecurring basis on the consolidated balance sheets at their fair value as of December 31, 2011, and December 31, 2010, by level within the fair value hierarchy. Impaired loans and other real estate that are collateral dependent are written down to fair value through the establishment of specific reserves. The building held at December 31, 2010, was transferred to a new owner during 2011. Techniques used to value the collateral that secure the impaired loans 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.

The fair value of MSRs is based on a valuation model that calculates the present value of estimated net servicing income. The valuation model incorporates discounted cash flow and repayment assumptions based on management’s best judgment. As a result, these rights are measured at fair value on a nonrecurring basis and are classified within Level III of the fair value hierarchy.

(Dollars in thousands)	Level I		Level II		Level III		Total
	December 31, 2011
Assets Measured on a Nonrecurring Basis:
Impaired loans	$	—	$	—	$	6,741	$	6,741
Other real estate owned		—		—		10		10
Mortgage servicing rights		—		—		167		167
	December 31, 2010
Impaired loans	$	—	$	—	$	1,916	$	1,916
Other real estate owned		—		—		36		36
Premises		—		200		—		200
Mortgage servicing rights		—		—		155		155

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Related-Party Transactions

12 Months Ended

Dec. 31, 2011

Related-Party Transactions [Abstract]

RELATED-PARTY TRANSACTIONS

NOTE 11 – RELATED-PARTY TRANSACTIONS

In the ordinary course of business, loans are granted by the Company 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 ended December 31, 2011:

(Dollars in thousands)
Balance at beginning of year	$	4,316
New loans and advances		393
Repayments, including loans sold		(1,058	)
Balance at end of year	$	3,651

Deposits from executive officers, directors and their related business interests at both December 31, 2011 and 2010 were approximately $10.2 million and $10.2 million.

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Borrowings

12 Months Ended

Dec. 31, 2011

Borrowings [Abstract]

BORROWINGS

NOTE 7 – BORROWINGS

Short-term Borrowings

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

(Dollars in thousands)	2011			2010
Balance at year-end	$	37,073		$	32,018
Average balance outstanding		32,577			29,700
Maximum month-end balance		37,073			33,629
Weighted-average rate at year-end		0.25	%		0.55	%
Weighted-average rate during the year		0.43			0.68

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:

(Dollars in thousands)	MATURITY RANGE		WEIGHTED AVERAGE INTEREST RATE			STATED INTEREST RATE RANGE						AT DECEMBER 31,
DESCRIPTION	FROM	TO				FROM			TO			2011		2010
Fixed rate	3/14/2012	12/21/2017		3.21	%		1.82	%		3.73	%	$	18,000	$	21,000
Fixed rate amortizing	1/1/2012	3/1/2017		5.50			3.40			7.15			1,161		1,909
												$	19,161	$	22,909

Maturities of other borrowings at December 31, 2011, are summarized as follows:

YEAR ENDING DECEMBER 31,	AMOUNT		WEIGHTED- AVERAGE RATE
2012	$	6,490		2.55	%
2013		213		6.06
2014		190		6.03
2015		169		6.01
2016		96		5.84
2017 and beyond		12,003		3.62
	$	19,161		3.34	%

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, 2011 the Company has the capacity to borrow an additional $30.8 million from the FHLB.

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Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2011

Goodwill and Other Intangible Assets [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE 5 – GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

Goodwill totaled $4.7 and $1.7 million at December 31, 2011 and 2010. In 2011, the increase in goodwill relates to the Branch Acquisition (see Note 3 above) resulting from the premium paid and purchase accounting adjustments. The following table shows a rollforward of goodwill:

(Dollars in thousands)
Balance at January 1, 2010	$	1,725
Balance at December 31, 2010	$	1,725
Acquisition		3,003
Balance at December 31, 2011	$	4,728

Core Deposit Intangible

During 2011, the Bank recorded a core deposit intangible totaling $706 thousand with the Branch Acquisition. 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 $78 thousand, $63 thousand and $65 thousand in 2011, 2010 and 2009, respectively. The following table shows the core deposit intangible and the related accumulated amortization:

	December 31,
(Dollars in thousands)	2011			2010
Gross carrying amount	$	1,251		$	545
Accumulated amortization		(217	)		(139	)
Net carrying amount	$	1,034		$	406

The estimated aggregate future amortization expense for the core deposit asset remaining as of December 31, 2011 is as follows:

(Dollars in thousands)	CORE  DEPOSIT AMORTIZATION
2012	$	140
2013		135
2014		130
2015		125
2016		121
Thereafter		383
	$	1,034

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Interest-Bearing Deposits

12 Months Ended

Dec. 31, 2011

Interest-Bearing Deposits and Regulatory Matters [Abstract]

INTEREST-BEARING DEPOSITS

NOTE 6 – INTEREST-BEARING DEPOSITS

Interest-bearing deposits at December 31 are as follows:

(Dollars in thousands)	2011		2010
Demand	$	61,830	$	55,340
Savings		123,304		77,998
Time deposits:
In excess of $100,000		60,090		51,288
Other		112,439		99,714
Total interest-bearing deposits	$	357,663	$	284,340

At December 31, 2011, stated maturities of time deposits were as follows:

(Dollars in thousands)
2012	$	89,007
2013		50,395
2014		17,506
2015		6,964
2016		8,657
Total	$	172,529

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Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

INCOME TAXES

NOTE 8 – INCOME TAXES

The provision for income taxes consists of the following for the years ended December 31:

(Dollars in thousands)	2011		2010		2009
Current	$	1,257	$	1,275	$	1,131
Deferred		345		293		403
Total income tax provision	$	1,602	$	1,568	$	1,534

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:

(Dollars in thousands)	2011			2010			2009
Expected provision using statutory federal income tax rate	$	1,798		$	1,722		$	1,674
Tax-exempt income on state and municipal securities and political subdivision loans		(169	)		(149	)		(138	)
Interest expense associated with carrying certain state and municipal securities and political subdivision loans		8			9			8
Other		(35	)		(14	)		(10	)
Total income tax provision	$	1,602		$	1,568		$	1,534

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

(Dollars in thousands)	2011			2010
Allowance for loan losses	$	1,195		$	1,244
Net operating loss carryforward		727			855
Capital loss carryforward		35			35
Other		147			81
		2,104			2,215
Valuation allowance on deferred tax assets		(35	)		(35	)
Deferred tax assets		2,069			2,180
Premises and equipment		(389	)		(144	)
Federal Home Loan Bank stock dividends		(736	)		(736	)
Deferred loan fees		(121	)		(90	)
Unrealized gain on securities available for sale		(736	)		(449	)
Prepaid expenses		(83	)		(110	)
Other		(206	)		(221	)
Deferred tax liabilities		(2,271	)		(1,750	)
Net deferred tax (liability) asset	$	(202	)	$	430

The Company has a net operating loss tax carryforward of approximately $2.1 million, as of December 31, 2011. The net operating loss carryforward can be used to offset future taxable income and will begin to expire in tax year 2026.

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 2014. A valuation allowance for the capital loss carryforward is reflected at December 31, 2011 and 2010. 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.

There is currently no liability for uncertain tax positions and no known unrecognized tax benefits. CSB recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Consolidated Statement of Income. With few exceptions, CSB is no longer subject to U.S. federal, state, or local income tax examinations by tax authorities for years before 2008.

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Condensed Parent Company Financial Information

12 Months Ended

Dec. 31, 2011

Condensed Parent Company Financial Information [Abstract]

CONDENSED PARENT COMPANY FINANCIAL INFORMATION

NOTE 13 – CONDENSED PARENT COMPANY FINANCIAL INFORMATION

A summary of condensed financial information of the parent company as of December 31, 2011 and 2010 and for each of the three years in the period ended December 31, 2011 follows:

(Dollars in thousands)	2011		2010
CONDENSED BALANCE SHEETS
ASSETS
Cash deposited with subsidiary bank	$	535	$	376
Investment in subsidiary bank		48,652		46,489
Securities available-for-sale		60		56
Other assets		196		247
Total assets	$	49,443	$	47,168
LIABILITIES AND SHAREHOLDERS’ EQUITY
Total liabilities	$	14	$	14
Total shareholders’ equity		49,429		47,154
Total liabilities and shareholders’ equity	$	49,443	$	47,168

(Dollars in thousands)	2011			2010			2009
CONDENSED STATEMENTS OF INCOME
Interest on securities	$	1		$	1		$	1
Dividends from subsidiary		2,300			2,000			2,200
Securities gain		—			—			1
Other-than-temporary impairment losses		—			—			(70	)
Total income		2,301			2,001			2,132
Operating expenses		336			483			518
Income before taxes and undistributed equity income of subsidiary		1,965			1,518			1,614
Income tax benefit		(115	)		(164	)		(176	)
Equity earnings in subsidiary, net of dividends		1,607			1,814			1,601
Net income	$	3,687		$	3,496		$	3,391
(Dollars in thousands)	2011			2010			2009
CONDENSED STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
Net income	$	3,687		$	3,496		$	3,391
Adjustments to reconcile net income to cash provided by operations:
Securities gain		—			—			(1	)
Other-than-temporary impairment of investments		—			—			70
Equity earnings in subsidiary, net of dividends		(1,607	)		(1,814	)		(1,601	)
Stock compensation expense		—			—			8
Change in other assets, liabilities		48			21			134
Net cash provided by operating activities		2,128			1,703			2,001
Cash flows from investing activities:
Purchase of investment securities		—			(4	)		—
Proceeds from sale of investment securities		—			—			13
Net cash provided by (used in) investing activities		—			(4	)		13
Cash flows from financing activities:
Cash dividends paid		(1,969	)		(1,969	)		(1,969	)
Net cash used in financing activities		(1,969	)		(1,969	)		(1,969	)
Increase (decrease) in cash		159			(270	)		45
Cash at beginning of year		376			646			601
Cash at end of year	$	535		$	376		$	646

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Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2011

Quarterly Financial Data (Unaudited) [Abstract]

QUARTERLY FINANCIAL DATA (UNAUDITED)

NOTE 18 – QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is a summary of selected quarterly financial data (unaudited) for the years ended December 31, 2011 and 2010:

(Dollars in thousands)	INTEREST INCOME		NET INTEREST INCOME		NET INCOME		BASIC EARNINGS PER SHARE		DILUTED EARNINGS PER SHARE
2011
First quarter	$	4,946	$	3,934	$	896	$	0.33	$	0.33
Second quarter		5,003		4,096		973		0.35		0.35
Third quarter		4,958		4,098		998		0.37		0.37
Fourth quarter		5,111		4,212		820		0.30		0.30
2010
First quarter	$	5,155	$	3,880	$	737	$	0.27	$	0.27
Second quarter		5,029		3,833		921		0.34		0.34
Third quarter		5,159		3,957		882		0.32		0.32
Fourth quarter		5,047		3,900		956		0.35		0.35

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Consolidated Statement of Shareholder's Equity (USD $) In Thousands, unless otherwise specified	Total	COMMON STOCK	ADDITIONAL PAID-IN CAPITAL	RETAINED EARNINGS	TREASURY STOCK	ACCUMULATED OTHER COMPREHENSIVE INCOME
Beginning balance at Dec. 31, 2008	$ 43,468	$ 18,629	$ 9,986	$ 19,724	$ (5,015)	$ 144
Comprehensive income:
Net income	3,391			3,391
Change in net unrealized gain (loss), net of reclassification adjustments and related income tax provision (benefit) of $476, $100 and $287 in 2009, 2010 and 2011 respectively	924					924
Total comprehensive income	4,315
Stock-based compensation expense	8		8
Cash dividends declared, $0.72 per share	(1,969)			(1,969)
Ending balance at Dec. 31, 2009	45,822	18,629	9,994	21,146	(5,015)	1,068
Comprehensive income:
Net income	3,496			3,496
Change in net unrealized gain (loss), net of reclassification adjustments and related income tax provision (benefit) of $476, $100 and $287 in 2009, 2010 and 2011 respectively	(195)					(195)
Total comprehensive income	3,301
Cash dividends declared, $0.72 per share	(1,969)			(1,969)
Ending balance at Dec. 31, 2010	47,154	18,629	9,994	22,673	(5,015)	873
Comprehensive income:
Net income	3,687			3,687
Change in net unrealized gain (loss), net of reclassification adjustments and related income tax provision (benefit) of $476, $100 and $287 in 2009, 2010 and 2011 respectively	557					557
Total comprehensive income	4,244
Cash dividends declared, $0.72 per share	(1,969)			(1,969)
Ending balance at Dec. 31, 2011	$ 49,429	$ 18,629	$ 9,994	$ 24,391	$ (5,015)	$ 1,430

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Loans

12 Months Ended

Dec. 31, 2011

Loans [Abstract]

LOANS

NOTE 2 – LOANS

Loans consist of the following at December 31:

(Dollars in thousands)	2011		2010
Commercial	$	89,828	$	78,540
Commercial real estate		106,332		104,829
Residential real estate		103,518		108,832
Construction and land development		18,061		16,515
Consumer		6,216		6,715
Total loans before deferred costs		323,955		315,431
Deferred loan costs		227		216
Total Loans	$	324,182	$	315,647

Loan Origination/Risk Management

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

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

Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans, in addition to those of real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type. This diversity helps reduce the Company’s exposure to adverse economic events that affect any single industry. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. In addition, management tracks the level of owner-occupied commercial real estate loans versus nonowner occupied loans. At December 31, 2011 and 2010, approximately 89% and 87%, respectively, of the outstanding principal balance of the Company’s commercial real estate loans were secured by owner-occupied properties.

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

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

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

Concentrations of Credit

Nearly all of the Company’s lending activity occurs within the State of Ohio, including the four counties of Holmes, Stark, Tuscarawas and Wayne, as well as other markets. The majority of the Company’s loan portfolio consists of commercial and industrial and commercial real estate loans. As of December 31, 2011 and 2010, there were no concentrations of loans related to any single industry.

Allowance for Loan Loss

The following table represents a summary of the activity in the allowance for loan losses for the years ended December 31:

(Dollars in thousands)	2011			2010			2009
Beginning balance	$	4,031		$	4,060		$	3,394
Provision for loan losses		950			1,235			1,337
Loans charged-off		(1,014	)		(1,389	)		(885	)
Recoveries		115			125			214
Ending balance	$	4,082		$	4,031		$	4,060

The following table details activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2011 and 2010. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

(Dollars in thousands)	COMMERCIAL			COMMERCIAL REAL ESTATE			RESIDENTIAL REAL ESTATE			CONSUMER			CONSTRUCTION AND LAND DEVELOPMENT			UNALLOCATED			TOTAL
December 31, 2011:
Beginning balance, January 1	$	1,179		$	1,183		$	1,057		$	80		$	213		$	319		$	4,031
Provision for loan losses		294			558			115			61			8			(86	)		950
Charge-offs		(487	)		(68	)		(297	)		(121	)		(41	)		—			(1,014	)
Recoveries		38			—			19			58			—			—			115
Net charge-offs		(449	)		(68	)		(278	)		(63	)		(41	)		—			(899	)
Ending balance	$	1,024		$	1,673		$	894		$	78		$	180		$	233		$	4,082
December 31, 2010:
Beginning balance, January 1	$	1,031		$	1,338		$	1,140		$	77		$	246		$	228		$	4,060
Provision for loan losses		534			32			405			63			110			91			1,235
Charge-offs		(479	)		(187	)		(488	)		(92	)		(143	)		—			(1,389	)
Recoveries		93			—			—			32			—			—			125
Net charge-offs		(386	)		(187	)		(488	)		(60	)		(143	)		—			(1,264	)
Ending balance	$	1,179		$	1,183		$	1,057		$	80		$	213		$	319		$	4,031

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

(Dollars in thousands)	COMMERCIAL		COMMERCIAL REAL ESTATE		RESIDENTIAL REAL ESTATE		CONSTRUCTION AND LAND DEVELOPMENT		CONSUMER		UNALLOCATED		TOTAL
2011
Allowance for loan losses:
Ending allowance balances attributable to loans:
Individually evaluated for impairment	$	165	$	304	$	53	$	—	$	—	$	—	$	522
Collectively evaluated for impairment		859		1,369		841		180		78		233		3,560
Total ending allowance balance	$	1,024	$	1,673	$	894	$	180	$	78	$	233	$	4,082
Loans:
Loans individually evaluated for impairment	$	4,605	$	2,476	$	182	$	—	$	—			$	7,263
Loans collectively evaluated for impairment		85,223		103,856		103,336		18,061		6,261				316,692
Total ending loans balance	$	89,828	$	106,332	$	103,518	$	18,061	$	6,261			$	323,955
2010
Allowance for loan losses:
Ending allowance balances attributable to loans:
Individually evaluated for impairment	$	106	$	132	$	—	$	—	$	—	$	—	$	238
Collectively evaluated for impairment		1,073		1,051		1,057		121		80		319		3,701
Acquired with deteriorated credit quality		—		—		—		92		—		—		92
Total ending allowance balance	$	1,179	$	1,183	$	1,057	$	213	$	80	$	319	$	4,031
Loans:
Loans individually evaluated for impairment	$	622	$	886	$	298	$	—	$	—			$	1,806
Loans collectively evaluated for impairment		77,919		103,943		108,533		16,075		6,715				313,185
Loans acquired with deteriorated credit quality		—		—		—		440		—				440
Total ending loans balance	$	78,541	$	104,829	$	108,831	$	16,515	$	6,715			$	315,431

The following table presents loans individually evaluated for impairment by class of loans as of December 31:

(Dollars in thousands)	UNPAID PRINCIPAL BALANCE		RECORDED INVESTMENT WITH NO ALLOWANCE		RECORDED INVESTMENT WITH ALLOWANCE		TOTAL RECORDED INVESTMENT		RELATED ALLOWANCE		AVERAGE RECORDED INVESTMENT
2011
Commercial	$	4,605	$	—	$	4,605	$	4,605	$	165	$	2,890
Commercial real estate		2,621		—		2,476		2,476		304		2,924
Residential real estate		182		—		182		182		53		103
Total impaired loans	$	7,408	$	—	$	7,263	$	7,263	$	522	$	5,917
2010
Commercial	$	644	$	51	$	571	$	622	$	106	$	571
Commercial real estate		1,047		109		777		886		132		1,631
Residential real estate		590		298		—		298		—		97
Construction & land development		683		—		440		440		92		483
Total impaired loans	$	2,964	$	458	$	1,788	$	2,246	$	330	$	2,782

The following table presents the aging of past due and nonaccrual loans by class of loans as of December 31:

(Dollars in thousands)	CURRENT		30-59 DAYS PAST DUE		60-89 DAYS PAST DUE		90 DAYS + PAST DUE		NONACCRUAL		TOTAL PAST DUE AND NONACCRUAL		TOTAL LOANS
2011
Commercial	$	89,365	$	272	$	28	$	150	$	13	$	463	$	89,828
Commercial real estate		103,828		587		250		141		1,526		2,504		106,332
Residential real estate		100,297		1,443		303		282		1,193		3,221		103,518
Consumer		5,985		194		29		8		—		231		6,216
Construction & land development		17,885		—		—		—		176		176		18,061
Total loans	$	317,360	$	2,496	$	610	$	581	$	2,908	$	6,595	$	323,955
2010
Commercial	$	78,235	$	63	$	160	$	58	$	24	$	305	$	78,540
Commercial real estate		100,914		2,156		114		26		1,619		3,915		104,829
Residential real estate		105,593		574		253		601		1,811		3,239		108,832
Consumer		6,580		69		66		—		—		135		6,715
Construction & land development		16,061		3		—		—		451		454		16,515
Total loans	$	307,383	$	2,865	$	593	$	685	$	3,905	$	8,048	$	315,431

Troubled Debt Restructurings

The Company had troubled debt restructurings of $8.5 million as of December 31, 2011, with $516 thousand of specific reserves allocated to customers whose loan terms have been modified in troubled debt restructurings. As of December 31, 2010, the Company had troubled debt restructurings of $4.1 million, with $22 thousand of specific reserves allocated.

Loan modifications that are considered troubled debt restructurings completed during the year ended December 31, 2011 were as follows:

(Dollars in thousands)	NUMBER OF LOANS RESTRUCTURED		PREMODIFICATION RECORDED INVESTMENT		POSTMODIFICATION RECORDED INVESTMENT
Commercial		2	$	4,440	$	4,440
Commercial real estate		2		372		372
Residential real estate		5		286		286
Total restructured loans		9	$	5,098	$	5,098

Credit Quality Indicators

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

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

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

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

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

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. Loans listed as not rated are either less than $275 thousand or are included in groups of homogeneous loans. Based on the most recent analysis performed, the risk category of loans by class is as follows at December 31:

(Dollars in thousands)	PASS		SPECIAL MENTION		SUBSTANDARD		DOUBTFUL		NOT RATED		TOTAL
2011
Commercial	$	76,216	$	5,147	$	7,710	$	—	$	755	$	89,828
Commercial real estate		84,846		10,385		8,686		—		2,415		106,332
Residential real estate		1,151		—		61		—		102,306		103,518
Consumer		—		—		—		—		6,216		6,216
Construction & land development		12,695		4,340		168		—		858		18,061
Total	$	174,908	$	19,872	$	16,625	$	—	$	112,550	$	323,955
2010
Commercial	$	65,371	$	3,843	$	9,252	$	—	$	74	$	78,540
Commercial real estate		78,191		9,982		8,188		—		8,468		104,829
Residential real estate		1,153		—		365		—		107,314		108,832
Consumer		—		—		2		—		6,713		6,715
Construction & land development		11,626		2,905		591		—		1,393		16,515
Total	$	156,341	$	16,730	$	18,398	$	—	$	123,962	$	315,431

Nonperforming loans include loans past due 90 days and greater and loans on nonaccrual of interest status. The following table presents loans that are not rated, by class of loans as of December 31:

(Dollars in thousands)	PERFORMING		NONPERFORMING		TOTAL
December 31, 2011
Commercial	$	755	$	—	$	755
Commercial real estate		2,415		—		2,415
Residential real estate		100,892		1,414		102,306
Consumer		6,208		8		6,216
Construction & land development		850		8		858
Total	$	111,120	$	1,430	$	112,550
December 31, 2010
Commercial	$	74	$	—	$	74
Commercial real estate		8,468		—		8,468
Residential real estate		105,201		2,113		107,314
Consumer		6,713		—		6,713
Construction & land development		1,383		10		1,393
Total	$	121,839	$	2,123	$	123,962

Loans serviced for others approximated $49.9 million and $45.1 million at December 31, 2011 and 2010, respectively.

Mortgage Servicing Rights

For the years ended December 31, 2011 and 2010, the Company had outstanding mortgage servicing rights (“MSRs”) of $167 thousand and $155 thousand, respectively. No valuation allowance was recorded at December 31, 2011 or 2010 as the fair value of the MSRs exceeded their carrying value. On December 31, 2011, the Company had $44.3 million residential mortgage loans with servicing retained as compared to $43.2 million with servicing retained at December 31, 2010.

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Regulatory Matters

12 Months Ended

Dec. 31, 2011

Interest-Bearing Deposits and Regulatory Matters [Abstract]

REGULATORY MATTERS

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, 2011 and 2010, that the Company and Bank met or exceeded all capital adequacy requirements to which they are subject.

As of December 31, 2011, 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 known 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 are presented in the following tables:

	ACTUAL					MINIMUM REQUIRED FOR CAPITAL ADEQUACY PURPOSES					MINIMUM REQUIRED TO BE WELL CAPITALIZED UNDER PROMPT  CORRECTIVE ACTION
(Dollars in thousands)	AMOUNT		RATIO			AMOUNT		RATIO			AMOUNT		RATIO
As of December 31, 2011
Total capital (to risk-weighted assets)
Consolidated	$	46,300		14.2	%	$	26,133		8.0	%	$	32,667		10.0	%
Bank		45,517		13.9			26,114		8.0			32,643		10.0
Tier I capital (to risk-weighted assets)
Consolidated		42,220		12.9			13,067		4.0			19,600		6.0
Bank		41,437		12.7			13,057		4.0			19,586		6.0
Tier I capital (to average assets)
Consolidated		42,220		8.1			20,971		4.0			26,214		5.0
Bank		41,437		7.9			20,965		4.0			26,207		5.0
As of December 31, 2010
Total capital (to risk-weighted assets)
Consolidated	$	47,899		15.9	%	$	24,085		8.0	%	$	30,107		10.0	%
Bank		47,227		15.7			24,074		8.0			30,093		10.0
Tier I capital (to risk-weighted assets)
Consolidated		44,134		14.7			12,043		4.0			18,064		6.0
Bank		43,462		14.4			12,037		4.0			18,056		6.0
Tier I capital (to average assets)
Consolidated		44,134		9.8			18,100		4.0			22,626		5.0
Bank		43,462		9.6			18,097		4.0			22,622		5.0

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 in the prior table. Under these provisions, at January 1, 2012, the Bank could dividend $5,021,900 to the Company. The Company does not anticipate the financial need to obtain regulatory 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.