CSB BANCORP will repurchase its own stock under normal circumstances. Please call John Mann, President and CEO at 734 475-1355 if you are interested in selling CSB BANCORP stock.
Current price offered by CSB BANCORP for CSB BANCORP stock is
$300.00 per share.
The Bank currently has a moratorium on the buyback of CSB BANCORP Stock.
Questions
and Answers - Proposed S Corporation Conversion
This Q&A is
intended only as an overview of the S corporation conversion process.
More information will be provided at the Annual Meeting on April 8
and will be sent to shareholders after the Annual Meeting.
Q: Why does the Company want
to convert to an S corporation?
A:
There are tax advantages to being an S corporation.
Currently, income earned by the Company is taxed twice.
The Company pays a tax on its income and shareholders pay an
additional tax on dividends they receive.
As an S corporation, the Company will not pay income tax on its
earnings. Instead, the
Company's earnings will "flow through" on a pro rata basis to
each shareholder's Form 1040 and be taxed directly to the shareholder.
So, the Company's earnings will be taxed only once.
C Corp vs S Corp Comparison C Corp S Corp
Pre-Tax
Earnings
3,500,000
3,500,000
Corporate Tax (27% eff) 945,000 --
Dist.to Shareholders to Pay Tax (30%) -- 1,050,000
Available for Distribution 2,555,000 2,450,000
Undistributed Equity 40% 1,022,000 980,000
Distribution to Shareholders 60% 1,533,000 1,470,000
Federal & State Tax 18%
275,940
--
Net Cash to Shareholders
1,257,060
1,470,000
Additional basis in stock -- 980,000
Future tax benefit of basis assumed rate 23% -- 225,400
Total Annual S Corp Benefit
Increase
in Cash to shareholders
212,940
Future
tax savings
225,400
438,340
Assumptions:
34% Corporate tax rate (27% effective with non taxable income)
39% Individual Federal and State (30% effective with non-taxable income)
18% Federal and State Dividend tax
Company pays out 60% of earnings (40% retained to
support future growth)
Q:
What does the Company need to do to be able to convert to an S
corporation?
A:
There are several steps that the Company must take in order to be
able to convert to an S corporation:
§
S corporations may only have up to 100 shareholders;
however, certain family members (within six generations of each other) can
be counted as a single shareholder. The
Company will need to determine how many shareholders it has for purposes
of the S corporation rules, after applying the family counting rules.
We expect that the Company will still have over 100 shareholders,
which means that the Company will need to buy out the stock of some
existing shareholders.
A
special note about family units: This
is for counting purposes only. You
will still own your stock separately.
The more families we can aggregate, the more qualifying
shareholders we can have, and the fewer small shareholders will have to be
bought out. This benefits all
of us. It is important that
you tell us who your family members are that also own stock in the
corporation from brothers, sisters, children, and grandchildren to
first, second, third, and even fourth cousins.
Perhaps its easiest to work from the beginning if
applicable, tell us who your parents, grandparents, great grandparents,
and even great-great grandparents were from whom you inherited your stock.
A green form is included for this purpose.
§
The Company will need to make sure that all of its
shareholders who will not be bought out are eligible under federal tax
rules to be shareholders of an S corporation.
In general, and with some exceptions, the tax laws do not allow
corporations or other entities to own shares of an S corporation. Any shareholder who is not eligible to own shares of an S
corporation will need to change the way in which the shares are owned or
be bought out by the Company.
§
Each shareholder who is not bought out will need to consent
to the Company's conversion to an S corporation.
The Company will be sending consent forms to each shareholder later
in 2008.
§
Each shareholder who is not bought out will also need to
sign a Shareholder Agreement. The
main purpose of this agreement is to restrict the transfer of shares of
the Company's common stock so that the Company remains in compliance with
the S corporation rules.
The Company is hopeful that all of these steps can be completed by the end of 2008, although there is no guarantee that this will take place.
Q: Will my shares be bought out by the Company?
A: In order to avoid having your shares bought out by the Company, you will be required to do each of the following:
1. Consent to the Company's conversion to an S corporation
2. Sign the Shareholder Agreement
3.
Be eligible to be an S corporation shareholder under federal tax
laws
Even if you meet each of these three conditions, there is a chance
that your shares will be bought out because of the fact that the Company
will not be able to have more than 100 shareholders (with certain family
members counting as 1 shareholder).
Q:
What price will the Company pay to shareholders whose shares are
bought out?
A:
The Company has engaged an independent appraisal of its common
stock. Once that appraisal is
completed, the Board of Directors will use it to determine a fair price
for the common stock to be purchased by the Company in the course of the S
corporation conversion.
1718408/3
Last Updated 04/05/2008
