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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 it’s 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.

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Last Updated 04/05/2008