Press Release  |  October 20, 2006


Third Quarter and Year-to-Date Highlights

Quarter Ended Nine Months Ended
September 30, 2006 September 30, 2006
Diluted earnings per share $.32 $.89

Net Income $813,000 $2,264,000

Return on average common equity 9.42% 8.69%

Return on average assets 1.01% .95%

Millersburg, Ohio – October 20, 2006 – CSB Bancorp, Inc. (OTCBB: CSBB.ob) today announced third quarter net income of $813 thousand, or $.32 per basic and diluted share, up from $690 thousand, or $.26 per basic and diluted share for the same period in 2005.

Annualized returns on average common equity (“ROAE”) and average assets (“ROAA”) for the quarter were 9.42% and 1.01%, respectively, compared with 7.49% and .87% for the third quarter of 2005.

For the nine months ended September 30, 2006, the Company reported net income of $2.26 million, or $.89 per diluted share, up from $1.97 million, or $.74 per diluted share for the same period of the prior year. ROAE and ROAA for the nine month period were 8.69% and .95%, respectively, compared to 7.24% and .84% for the comparable period in 2005.

“We are pleased with the continued progress in the Company’s income generating ability,” said Eddie L. Steiner, President and CEO. “The net interest margin, at 4.40%, remained above 4% for the seventh consecutive quarter and was off just slightly from last year’s same quarter results of 4.43%. Non-interest income of $648 thousand was 21% higher than the same quarter last year, driven primarily by increased customer use of overdraft privilege services.”

Total revenue, defined as net interest income on a fully-tax equivalent basis plus non-interest income net of securities transactions, was $4.0 million for the third quarter of 2006, compared with $3.8 million in the prior-year third quarter, an increase of 4.1%.

Mr. Steiner continued, “We remain focused on increasing efficiencies while simultaneously improving product offerings and customer service. The Company’s third quarter efficiency ratio of 67.0% compares favorably to last year’s same period results of 70.6%, and year over year the ratio has improved by 164 basis points. During the fourth quarter we will introduce Xpress Remote Deposit Capture, an electronic imaging product that will provide business customers the opportunity to deposit their customers’ checks remotely from their place of business. We have also announced plans to open a new banking center near Orrville, Ohio during the first quarter of 2007, pending regulatory approval. The remote deposit services and new banking center will each provide expanded market coverage while offering enhanced value to existing and prospective customers.”

Non-interest expense totaled $2.7 million for the third quarter of 2006, a decrease of $33 thousand, or 1.2%, from the third quarter of 2005. For the nine months ended September 30, 2006, non-interest expense is up $300 thousand, or 3.7% versus the prior year nine month period. Year to date non-interest expense includes a pre-tax charge of $237 thousand from an isolated irregularity regarding cash assets. The irregularity was discovered, recorded and reported during the second quarter reporting period and remains the subject of an ongoing investigation. The Company’s insurance against this type of loss carries a $50 thousand deductible, and a loss claim is pending.

Federal income tax expense was $378 thousand for third quarter 2006, compared to $283 thousand for the same quarter in 2005. The effective tax rate for the quarter ended September 30, 2006 was 31.7% compared to 29.1% for the quarter ended September 30, 2005. The increase in the effective tax rate for 2006 reflects a decline in tax-free interest income, primarily resulting from the sale and maturity of bonds within the tax-free investment portfolio.

Commenting on the current competitive and economic environment, Mr. Steiner noted, “Deposit growth and retention continue to be challenging issues for our Company and for the banking industry as a whole. Competition for deposit balances has put increasing pressure on deposit interest rates and limited the Company’s combined deposit and repurchase agreement balance totals to growth of 1.2% above year ago levels. Loan demand, while not vigorous, has remained fairly consistent and we’ve been able to grow our loan portfolio by about 5% over the past year. We have funded the lag in deposit growth versus loan growth primarily with short term borrowings.”

Average assets totaled $320.5 million for the quarter, an increase of $5.5 million, or 1.7% from the same quarter in the prior year. Average loan balances of $229.0 million reflect an increase of $7.9 million, or 3.6%, over third quarter prior year, while average securities balances increased $3.3 million, or 4.8% as compared to the same quarter in the prior year.

At the quarter end of September 30, 2006, assets totaled $320 million, up $815 thousand, or .3% from September 30, 2005. Period end loans were $230 million, up $11.3 million, or 5.1%, versus September 30, 2005, while investment securities, cash equivalents and fed funds sold declined a combined $9.3 million, or 10.0%.

Within the loan category, mortgage balances grew $6.0 million, or 9.9% versus September 30, 2005, while commercial loans increased $4.3 million, or 3.4%, and home equity balances increased $1.9 million, or 10.4%. Consumer installment loan balances declined by $815 thousand, or 8.5%, versus the prior September 30.

As of September 30, 2006, nonperforming assets totaled $1.47 million, or .64% of period-end loans plus other real estate, compared with $1.41 million, or .64%, as of September 30, 2005. Net charge-offs for the quarter totaled $5 thousand.

The Company’s allowance for loan losses at September 30, 2006 was 1.10% of period end loans and the Company funded $75 thousand in loan loss provision during the third quarter. The ratio of allowance for loan losses to nonperforming loans stood at 177% on September 30, 2006. Commenting on the Company’s credit quality, Mr. Steiner noted, “Loan charge-offs remain at modest levels compared to historical norms, and we believe our loan loss reserve is appropriately funded for current portfolio risk.”

Liabilities totaled $286 million at September 30, 2006, up $2.7 million or .9% from year ago levels. Period end deposits totaled $250 million, a decrease of $6.1 million, or 2.4%, from September 30, 2005. Within the deposit category, non-interest bearing accounts decreased $404 thousand, or 1.1%, while interest bearing checking, money market and traditional savings balances declined a combined $10.4 million, or 10.6% from year ago levels and time deposits increased $4.6 million, or 3.9%.

The deposit decline was offset by growth in securities sold under repurchase agreement. These securities, while considered short term borrowings, are primarily tied to customer deposit sweep accounts and increased by $9.5 million, or 74.7%, compared to ending balances on September 30, 2005.

Shareholders’ equity was $34.6 million on September 30, 2006. During the quarter, the Company repurchased 20,258 shares, and period end common shares outstanding totaled 2.5 million. The Company’s capital position remains strong, with tangible equity to assets at 10.8% on September 30, 2006, compared to 11.4% on September 30, 2005. The common dividend declared during the quarter was $.16 per share, a $.02 increase from the prior-year quarter. Year to date dividends declared of $.48 per share are 14% above prior year to date.

About CSB Bancorp, Inc.
CSB is a financial services holding company headquartered in Millersburg, Ohio, with approximate assets of $320 million as of September 30, 2006. CSB provides a complete range of banking and other financial services to consumers and businesses through its wholly owned subsidiary, The Commercial and Savings Bank, with nine banking centers in Holmes, Tuscarawas and Wayne counties and Trust offices located in Millersburg and Wooster, Ohio.

Forward-Looking Statement
This release contains forward-looking statements relating to present or future trends or factors affecting the banking industry, and specifically the financial condition and results of operations, including without limitation, statements relating to the earnings outlook of the Company, as well as its operations, markets and products. Actual results could differ materially from those indicated. Among the important factors that could cause results to differ materially are interest rate changes, softening in the economy, which could materially impact credit quality trends and the ability to generate loans, changes in the mix of the Company’s business, competitive pressures, changes in accounting, tax or regulatory practices or requirements and those risk factors detailed in the Company’s periodic reports and registration statements filed with the Securities and Exchange Commission. The Company undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this release.

Contact Information:
Paula J. Meiler, SVP & CFO

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