UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

For the quarterly period ended: JUNE 30, 2004

OR

Commission file number: 0-21714

CSB Bancorp, Inc.

6 W. Jackson Street, P.O. Box 232, Millersburg, Ohio 44654

(330) 674-9015

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.

Yes (X)     No ( )

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes ( )     No (X)

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

CSB BANCORP, INC.
FORM 10-Q
QUARTER ENDED June 30, 2004

Table of Contents

CSB BANCORP, INC.

See note to consolidated financial statements.

3.

CSB BANCORP, INC.

See note to consolidated financial statements.

4.

CSB BANCORP, INC.

See note to consolidated financial statements.

5.

CSB BANCORP, INC.

See note to consolidated financial statements.

6.

CSB BANCORP, INC.

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial statements include the accounts of CSB Bancorp, Inc. and its wholly-owned subsidiary, The Commercial and Savings Bank (together referred to as the “Company” or “CSB”). All significant intercompany transactions and balances have been eliminated in consolidation.

The consolidated financial statements have been prepared without audit. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the Company’s financial position at June 30, 2004, and the results of operations and changes in cash flows for the periods presented have been made.

Certain information and footnote disclosures typically included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. The Annual Report for CSB for the year ended December 31, 2003, contains consolidated financial statements and related footnote disclosures which should be read in conjunction with the accompanying consolidated financial statements. The results of operations for the period ended June 30, 2004 are not necessarily indicative of the operating results for the full year or any future interim period.

7.

CSB BANCORP, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion focuses on the consolidated financial condition of CSB Bancorp, Inc. (the Company) at June 30, 2004, compared to December 31, 2003, and the consolidated results of operations for the six month and quarterly periods ending June 30, 2004 compared to the same periods in 2003. The purpose of this discussion is to provide the reader with a more thorough understanding of the consolidated financial statements. This discussion should be read in conjunction with the interim consolidated financial statements and related footnote.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this report that are not historical facts are forward-looking statements that are subject to certain risks and uncertainties. When used herein, the terms “anticipates”, “plans”, “expects”, “believes”, and similar expressions as they relate to the Company or its management are intended to identify such forward-looking statements. The Company’s actual results, performance or achievements may materially differ from those expressed or implied in the forward-looking statements. Risks and uncertainties that could cause or contribute to such material differences include, but are not limited to, general economic conditions, interest rate environment, competitive conditions in the financial services industry, changes in law, governmental policies and regulations, and rapidly changing technology affecting financial services.

The Company does not undertake, and specifically disclaims any obligation, to publicly revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

FINANCIAL CONDITION

Total assets were $320.5 million at June 30, 2004, compared to $306.2 million at December 31, 2003, representing an increase of $14.3 million or 4.7%. Cash and cash equivalents decreased $4.7 million, or 27.2%, during the six-month period ending June 30, 2004, due to a $4.7 million decrease in Federal funds sold. Total securities increased $9.9 million, or 14.5%, during the six month period. Federal funds purchased increased $13.3 million during the six-month period, while Federal Home Loan Bank borrowings increased $9.5 million during the period.

The increase in securities and Federal Home Loan Bank borrowings resulted from a $10 million leverage program entered into during the first quarter of 2004. Increases of Federal funds purchased of $13.3 million and securities sold under repurchase agreements of $1.5 million during the six-month period were used to fund portions of the loan growth of $8.4 million (4.0%), as well as deposit shrinkage of $9.8 million (3.9%).

8.

CSB BANCORP, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Net loans increased $8.4 million, or 4.0% during the six-month period ended June 30, 2004. This increase was due to a combination of increased loan demand and production within the Company’s market area. The allowance for loan losses amounted to $2.6 million, or 1.15% of total loans, at June 30, 2004, compared to $2.5 million, or 1.15% of total loans at December 31, 2003. The components of the change in the allowance for loan losses during the six-month period ended June 30, 2004, included a provision of $173,000 and net loan charge-offs of $80,000. Loans past due more than 90 days and still accruing interest and loans placed on nonaccrual status, aggregated $487,000, or 0.22% of total loans at June 30, 2004, compared to $1.3 million, or 0.63% of total loans at December 31, 2003.

At June 30, 2004, the ratio of net loans to deposits was 91.6%, compared to 84.7% at the end of 2003. The increase in this ratio is due to loan growth coupled with deposit shrinkage experienced during the six months ended June 30, 2004.

Total shareholders’ equity amounted to $34.6 million, or 10.8% of total assets, at June 30, 2004, compared to $34.7 million, or 11.3% of total assets, at December 31, 2003. The decrease in shareholders’ equity during the six months ended June 30, 2004 was due to the aggregate of dividends declared of $688,000 and the unrealized loss on available-for-sale marketable securities, net of tax, of $604,000, exceeding net income for the six-month period of $1.1 million. The Company and its subsidiary met all regulatory capital requirements at June 30, 2004.

RESULTS OF OPERATIONS

Net income for the six months ending June 30, 2004, was $1.1 million, or $0.43 per share, as compared to $1.2 million, or $0.44 per share during the same period in 2003. Net interest income was $5.5 million for the six months ended June 30, 2004, remaining stable from the same period last year. Total non-interest expenses decreased $206,000, or 3.9%, for the six month period ended June 30, 2004, as compared to the same period of 2003 while non-interest income increased $44,000, or 4.3%. These improvements in net income were partially offset by a change in the provision (credit) for loan losses of $224,000.

For the quarter ended June 30, 2004, the Company recorded net income of $607,000, or $0.23 per share, as compared to net income of $ 572,000, or $0.21 per share. The increase in net income for the quarter of $35,000 was principally due to a $27,000 increase in net interest income and a $128,000 decrease in non-interest expenses, offset by a $59,000 increase in the provision for loan losses and a $74,000 increase in the federal income tax provision.

9.

CSB BANCORP, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Interest income for the six months ended June 30, 2004 was $7.4 million, a decrease of $485,000, or 6.1%, from the same period in 2003. Interest on securities decreased $67,000, or 4.4%, as short term interest rates fell and certain callable securities were called. Interest income for the quarter ended June 30, 2004 was $3.7 million, a decrease of $194,000, or 4.9%, compared to the same period in 2003. This decrease was due to the reasons previously noted.

Interest expense decreased $475,000 to $1.9 million for the six months ended June 30, 2004, compared to the six months ended June 30, 2003. Interest expense on deposits decreased $376,000, or 18.8%, from the same period as last year, while interest expense on other borrowings decreased $100,000, or 24.0%. The decrease in deposit interest expense was caused by the lower rates on transaction accounts and certificates of deposit, as well as an overall decrease in average interest-bearing deposit balances. Interest expense for the quarter ended June 30, 2004 was $967,000, a decrease of $221,000, or 18.6%, from the same period in 2003.

The provision for loan losses was $173,000 during the first six months of 2004, as compared to a credit of $51,000 in the same six-month period of 2003. The provision or credit for loan losses is determined based on management’s calculation of the allowance for loan losses, which includes provisions for classified loans, as well as for the remainder of the portfolio based on historical data, including past charge-offs, and current economic trends. The provision for loan losses for the quarter ended June 30, 2004 was $79,000, compared to a provision of $20,000 for the same quarter in 2003 for the reasons stated above.

Non-interest income increased $44,000, or 4.3%, during the six months ended June 30, 2004 as compared to the same period in 2003. The increase in non-interest income was primarily due to a $26,000 gain on sale of securities in 2004 and a $21,000, or 11.0%, increase in Trust and Financial Services. Non-interest expenses decreased $206,000, or 3.9%, for the six months ended June 30, 2004, compared to the same period in 2003. Salaries and employee benefits decreased $103,000, or 3.9%; occupancy expense decreased $10,000, or 2.9%; professional and director fees decreased $37,000, or 9.1%; and other expenses decreased $59,000, or 4.2%. The provision for income taxes was $192,000 (effective rate of 14.5%) for the six months ended June 30, 2004, compared to $134,000 (effective rate of 10.3%) for the six months ended June 30, 2003. The increase in the effective tax rate resulted from a decrease in tax-exempt interest income.

Non-interest income for the quarter ended June 30, 2004 was $572,000, an increase of $12,000, or 2.2%, compared to the same quarter in 2003. This increase was primarily due to trust and financial services as noted previously. Non-interest expenses for the quarter ended June 30, 2004 decreased $128,000, or 4.8%, compared to last year’s period. This decrease was due to reasons previously noted.

10.

CSB BANCORP, INC.

ITEM 3 QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the quantitative and qualitative disclosures about market risks as of June 30, 2004 from that presented in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003. Management performs a quarterly analysis of the Company’s interest rate risk. All positions are currently within the Board-approved policy limits.

ITEM 4 - CONTROLS AND PROCEDURES

EVALUATION OF CONTROLS AND PROCEDURES

With the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that:

(a) information required to disclosed by the Company in this Quarterly Report on Form 10-Q would be accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure;

(b) information required to be disclosed by the Company in this Quarterly Report on Form 10-Q would be recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and

(c) the Company’s disclosure controls and procedures are effective as of the end of the period covered by this Quarterly Report on Form 10-Q to ensure that material information relating to the Company and its consolidated subsidiary is made known to them, particularly during the period for which our periodic reports, including this Quarterly Report on Form 10-Q, are being prepared.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes during the period covered by this Quarterly Report on Form 10-Q in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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CSB BANCORP, INC.

FORM 10-Q
Quarter ended June 30, 2004

Item 1 - Legal Proceedings:

There are no matters required to be reported under this item.

Item 2 - Changes in Securities, Use of Proceeds, and Issuer Purchases of Equity Securities:

There are no matters required to be reported under this item.

Item 3 - Defaults Upon Senior Securities:

There are no matters required to be reported under this item.

Item 4 - Submission of Matters to a Vote of Security Holders:

The 2004 Annual Meeting of Shareholders of the Company was held on April 21, 2004. Matters submitted to a vote of the security holders at the meeting was the election of three members to the Board of Directors, each to continue in office until the 2007 Annual Shareholders’ Meeting.

The following individuals continued as directors of CSB following the 2004 Annual Meeting of Shareholders:

John J. Limbert J. Thomas Lang Robert K. Baker Ronald E. Holtman Daniel J. Miller Eddie L. Steiner

Item 5 - Other Information:

There are no matters required to be reported under this item.

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CSB BANCORP, INC.

FORM 10-Q
Quarter ended June 30, 2004
PART II - OTHER INFORMATION

Item 6 - Exhibits and Reports on Form 8-K:

(a)

Exhibits:

(b) Reports on Form 8-K:

Form 8-K dated April 19, 2004, containing a quarterly report to shareholders that included financial statements for the period ended March 31, 2004.

Form 8-K dated June 25, 2004, containing a press release announcing the quarterly dividend.

13.

CSB BANCORP, INC.

SIGNATURES

Pursuant to the requirements 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.

14.

CSB BANCORP, INC.

Index to Exhibits

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