Press Release  |  January 28, 2010


Fourth Quarter and Full Year Highlights

Quarter Ended Full Year Ended
December 31, 2009 December 31, 2009
Diluted earnings per share $.34 $1.24

Net Income $931,000 $3,391,000

Return on average common equity 8.04% 7.51%

Return on average assets 0.84% 0.79%

Millersburg, Ohio – January 27, 2010 – CSB Bancorp, Inc. (OTCBB: CSBB.ob) today announced fourth quarter 2009 net income of $931 thousand or $.34 per basic and diluted share, as compared to $767 thousand or $.29 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 8.04% and 0.84%, respectively, compared with 7.40% and 0.76% for the fourth quarter of 2008.

For the full year of 2009, the Company reported net income of $3.39 million or $1.24 per basic and diluted share, as compared to $3.54 million or $1.43 per basic and diluted share in 2008. Full year ROE and ROA were 7.51% and 0.79%, respectively, compared to 9.23% and 0.99% in 2008.

Eddie Steiner, President and CEO commented, “We are pleased that fourth quarter net income was higher than each of the preceding six quarters in spite of continuing difficult economic and interest rate environments. Full year earnings declined 4% from last year’s results, primarily due to increased provisioning for loan losses and higher FDIC assessments for deposit insurance.”

“Net interest margin improved to 4.01% during the quarter,” continued Steiner, “partially due to higher than expected cash collections on previously impaired loans. However, further improvement in net interest margin will be limited in the near term by economic conditions that are suppressing demand for new loans and by low interest rates which are expected to remain through at least the first half of 2010.”

Revenue totaled $5.0 million for the fourth quarter of 2009, an increase of 10.2% over the prior-year fourth quarter. Revenue increased 12.6% for the full year of 2009 to $19.2 million as compared to $17.0 million in 2008.

Non-interest expense amounted to $3.2 million during the quarter, a decrease of $112 thousand or 3.4% from fourth quarter 2008. For the full year ended December 31, 2009, non-interest expense increased $1.4 million or 12.4% versus the prior year. The increase in full year non-interest expense is primarily attributable to the acquisition of Indian Village Bancorp Inc. on October 31, 2008 which increased the Company’s balance sheet by approximately 20% and added three new banking centers in Tuscarawas and Stark counties.

The Company’s fourth quarter efficiency ratio was 63.5% as compared to 72.6% for the same quarter in the prior year. The full year 2009 efficiency ratio of 66.2% was virtually unchanged from 2008.

Federal income tax provision was $413 thousand for fourth quarter 2009, compared to $354 thousand for the same quarter in 2008. Full year income tax of $1.5 million for 2009 and $1.7 million for 2008 reflects effective tax rates of 31.2% and 32.8%, respectively. The decrease in the effective tax rate for 2009 was the result of comparatively higher tax-free interest income generated from higher average balances of nontaxable securities in the Company’s investment portfolio during 2009, partially offset by lower yields on those securities.

Average deposit balances grew by $12 million during the fourth quarter, or 4.1%. Total average deposits of $313 million for the quarter were 9.5% above the prior year’s fourth quarter average.

Average total assets during the quarter amounted to $440 million, an increase of $39 million or 9.7% above the same quarter of the prior year. Average loan balances of $315 million reflect an increase of $21 million or 7.3% over the prior year fourth quarter, while average securities balances of $78 million increased $1.5 million or 2.0% as compared to fourth quarter 2008.

Total assets amounted to $451 million on December 31, 2009, up $26 million or 6.1% from December 31, 2008. Net loans decreased to $309 million, down $3 million or 1.1% from the prior year-end, while securities balances of $81 million declined $1 million or 1.6%.

Average commercial loan balances for the quarter, including commercial real estate, increased $19 million or 11.3% above year ago levels. Average residential mortgage balances declined by $4 million or 4.1% during the year. The decline of in-house mortgage balances was primarily due to customers selecting secondary market products because of prevailing lower interest rates in those products. Home equity balances increased $6 million or 24.0%, and average consumer credit balances declined $0.4 million or 4.7% versus the same quarter of the prior year.

Net charge-offs for the quarter and the full year were $46 thousand and $671 thousand, respectively. Net charge-offs equated to 0.21% of average loans during 2009 as compared to a net recovery of 0.06% during 2008.

Nonperforming assets totaled $4.3 million or 1.37% of total loans plus other real estate at December 31, 2009, compared to $2.7 million or 0.86% at the prior year-end. Delinquent loan balances as of year-end 2009 amounted to 1.92% of total loans as compared to 1.82% at the end of 2008.

The Company funded $409 thousand in loan loss provision during the fourth quarter and the allowance for loan losses amounted to 1.29% of total loans on December 31, 2009. The ratio of the allowance for loan losses to nonperforming loans stood at 94% at the end of 2009.

Commenting on the Company’s credit quality, Steiner noted, “Our ratio of nonperforming assets declined modestly from September 30, 2009, while delinquencies rose slightly as a percent of total loans. Based on our assessment of prevailing economic conditions and related potential impact on credit quality, we increased our allowance for loan losses during the quarter. We believe the allowance is appropriately funded for current portfolio risk.”

Deposit balances totaled $329 million at year-end, an increase of $24 million or 7.9% from the prior year-end total. Within the deposit category, average non interest-bearing account balances for the fourth quarter increased by $2 million, or 3.8% above the same period in the prior year. Average interest-bearing checking, money market and traditional savings balances increased $14 million, or 14.3% from year ago levels, while average time deposit balances grew by $11 million, or 8.1% during the year. In addition to the changes in average deposit balances, the average balance of securities sold under repurchase agreement during the fourth quarter grew by $4 million or 16.7% above the average for the same period in the prior year. Repurchase agreements, while considered short-term borrowings, are primarily tied to overnight customer sweep accounts.

Shareholders’ equity totaled $45.8 million on December 31, 2009 with 2.7 million common shares outstanding at year-end. The Company’s capital position remains strong, with tangible equity to assets approximating 9.7% on December 31, 2009, compared to 9.8% on December 31, 2008. The Company declared a common dividend of $.18 per share during the quarter. Total dividends declared during 2009 were $0.72 per share, or 58% of reported earnings per share.

About CSB Bancorp, Inc.
CSB is a financial holding company headquartered in Millersburg, Ohio, with approximate assets of $451 million as of December 31, 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.

Contact Information:
Paula J. Meiler, SVP & CFO

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