Press Release  |  October 20, 2009


Millersburg, Ohio – October 20, 2009 – CSB Bancorp, Inc. (OTCBB: CSBB.ob) today announced third quarter 2009 net income of $858 thousand, or $.31 per basic and diluted share, as compared to $890 thousand, or $.37 per basic and diluted share for the same period in 2008.

Annualized returns on average common equity (“ROE”) and average assets (“ROA”) for the quarter were 7.49% and 0.80%, respectively, compared with 9.46% and 1.02% for the third quarter of 2008.

“Loan demand and economic activity remain soft in our market,” commented Eddie Steiner, CSB President and CEO. “The recessionary climate and high unemployment levels continue to exert pressure on credit quality and we are reserving for future loan losses that may exceed our historical norm. Our balance sheet remains strong, and while net income is 11% behind last year at this time, revenue is up 13.5% on a year to date basis. We also continued our company’s expansion this quarter by opening a second banking center in the Orrville market at the end of September.”

Total revenue amounted to $4.8 million during the quarter, compared with $4.1 million in the third quarter of 2008, an increase of 15.5%. Net interest income of $3.9 million increased $425 thousand or 12.3% over the same quarter of the prior year, and $33 thousand or 0.8% on a linked quarter basis.

Other income of $870 thousand reflects an increase of $196 thousand from the same quarter in the prior year. Gains on sales of secondary market mortgages account for $163 thousand of the difference, with the balance of the increase primarily related to an increase of $34 thousand in trust and brokerage revenues.

Non-interest expense totaled $3.2 million during the quarter, an increase of $526 thousand or 19.8% from third quarter 2008. The majority of the increased non-interest expense reflects the larger scale of the Company’s operations following the Indian Village acquisition during fourth quarter 2008. Higher FDIC insurance premiums assessed on all member financial institutions also accounted for $85 thousand of the quarterly difference. The third quarter ratio of operating expenses to revenue increased to 66.1% as compared to 64.2% in the same quarter of 2008. Absent the higher FDIC premiums, the ratio would have amounted to 64.3%.

Federal income tax expense was $396 thousand for third quarter 2009, reflecting an effective tax rate of 31.6%, compared to $454 thousand for the same quarter in 2008, or 33.8%. The decrease in the effective tax rate was primarily the result of a higher proportion of tax-exempt securities in the Company’s investment portfolio.

Average asset balances during third quarter 2009 totaled $425 million, an increase of $80 million or 23.1% over third quarter 2008. Gross loan balances of $315 million at September 30, 2009 decreased $3.2 million or 1.0% during the quarter. Average commercial loan balances, including commercial real estate, increased $830 thousand or 0.4%, while average balances for residential mortgage and home equity loans declined $3.5 million or 2.8% during the quarter, and installment and other consumer average loan balances decreased $619 thousand, or 6.9%. Much of the decline in home mortgage loan balances was attributable to consumer refinancing from existing in-house mortgages to the secondary mortgage market given favorable prevailing secondary market rates.

As of September 30, 2009, nonperforming assets totaled $4.5 million or 1.44% of period-end loans plus other real estate, compared with $4.1 million or 1.29% at June 30, 2009. The Company had a net recovery of charged-off loans during the quarter totaling $6 thousand. Year to date net charge-offs stand at $625 thousand, which equates to an annualized rate of 0.26% of average total loans.

The Company’s allowance for loan losses at September 30, 2009 was 1.17% of period end loans and the Company funded $293 thousand in loan loss provision during the quarter. The ratio of allowance for loan losses to nonperforming loans stood at 82% at quarter-end. Steiner remarked, “While our charge-off activity slowed during third quarter, nonperforming loan balances and total delinquencies both exhibited some growth. Consequently, we increased our provision for loan losses and continue to actively work with those credit relationships that are struggling to remain current.”

Average deposit balances declined $4.3 million, or 1.4% during the quarter to $301 million. Within the deposit category, average balances for non interest-bearing accounts increased $436 thousand or 1.0%, while interest bearing checking, money market and savings average balances decreased $1.3 million or 1.3% during the quarter and average time deposit balances declined $3.4 million, or 2.1%. Most of the decline in time deposit balances occurred with maturities of brokered CD’s acquired as part of last year’s Indian Village transaction, as the company’s present funding strategy does not rely on such products.

Short-term and other borrowings amounted to $76.9 million as of September 30, an increase of $1.7 million or 2.3% from June 30, with the increase attributable to repurchase agreement balances maintained with customers of the company.

Shareholders’ equity totaled $45.6 million on September 30, 2009 with 2.7 million common shares outstanding and a tangible equity to assets ratio of 10.26% at quarter-end.

The Company declared a common dividend of $.18 per share during the quarter. Steiner concluded by saying, “CSB has continued its same attractive quarterly dividend level throughout the past two and a half years while maintaining a strong balance sheet and core revenue generation. The company remains well positioned to meet the banking needs in our markets with strength and stability.”

About CSB Bancorp, Inc.
CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $427 million as of September 30, 2009. 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 fourteen banking centers in Holmes, Tuscarawas, Wayne and Stark 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.

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