UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 10-K

[X]
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT of 1934

For the Fiscal Year Ended December 31, 2011
 
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________to ___________.

Commission File No.  000-24147
 
Killbuck Bancshares, Inc.
(Exact name of registrant as specified in its charter)
     
Ohio   34-1700284
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)
     
165 North Main Street
Killbuck, Ohio 44637
(Address of principal executive offices)
 
Registrant's telephone number, including area code: (330) 276-2771

Securities to be registered pursuant to Section 12(b) of the Act:  None

Securities to be registered pursuant to Section 12(g) of the Act:
 
Title of each class   Name of each exchange on which registered
Common Stock No Par Value    None
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes [   ]No  [ x ]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.Yes [   ]No  [ x ]

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 than the registrant was required to file such report(s), and (2) has been subject to such filing requirements for the past 90 days.  [x] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regional S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  [x] Yes [ ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in part III of this Form 10-K or any amendment to this Form 10-K. [x]
 
 
 
 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company (Check one):
 
  Large accelerated filer  [   ]   Accelerated filer  [   ]  
  Non-accelerated filer  [   ]     Smaller reporting Company  [ X ]  
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [   ] No  [ x ]

The aggregate market value of the voting stock held by nonaffiliates of the registrant, calculated by reference to the stock valuation done on Killbuck Bancshares, Inc. common stock as of June 30, 2011 was $63.8 million (Registrant has assumed that all of its executive officers and directors are affiliates.  Such assumption shall not be deemed to be conclusive for any other purpose):

There were 613,771 shares of no par value common stock outstanding as of December 31, 2011.

DOCUMENTS INCORPORATED BY REFERENCE
 
1.
Portions of the 2011 Annual Report to Shareholders

2.
Portions of the Proxy Statement for the Annual Meeting of Shareholders to be held on May 14, 2011. (Part III)

 
 
 

FORM 10-K INDEX
 
PART I    
     
Item 1.  Business  
     
Item 1A  Risk Factors  
     
Item 1B Unresolved Staff Comments  
     
Item 2. Properties  
     
Item 3.  Legal Proceedings  
     
Item 4.   Mine Safety Disclosures  
     
PART II
   
     
Item 5. Market for the Registrant's Common Stock, Related Stockholder Matters and  Issuer Purchase of Equity Securities  
     
Item 6. Selected Financial Data  
     
Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations  
     
Item 7A. Quantitative and Qualitative Disclosure About Market Risk  
     
Item 8. Financial Statements and Supplementary Data  
     
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  
     
Item 9A. Controls and Procedures  
     
Item 9B.  Other Information  
     
PART III
   
     
Item 10.  Directors, Executive Officers and Corporate Governance  
     
Item 11. Executive Compensation  
     
Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters  
     
Item 13.   Certain Relationships and Related Transactions, and Director Independence  
     
Item 14.  Principal Accounting Fees and Services  
     
PART IV
   
     
Item 15.  Exhibits and Financial Statement Schedules  
     
 
 
 
 

PART I

Killbuck Bancshares, Inc. (the “Company”) may from time to time make written or oral “forward-looking statements”, including statements contained in the Company’s filings with the Securities and Exchange Commission (including this Annual Report on Form 10-K and the Exhibits thereto), in its report to shareholders and in other communications by the Company, which are made in good faith by the Company pursuant to the “safe harbor” provisions of the private securities litigation reform act of 1995.

These forward-looking statements involve risks and uncertainties, such as statements of the Company’s plans, objectives, expectations, estimates and intentions that are subject to change based on various important factors (some of which are beyond the Company’s control).  The following factors, among others, could cause the Company’s financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, inflation, changes in real estate values in the Company’s primary lending areas, market and monetary fluctuations; the impact of changes in financial services’ laws and regulations (including laws concerning taxes, banking, securities and insurance); technological changes, acquisitions; changes in consumer spending and savings habits; and the success of the Company at managing the risks involved in the foregoing.

The Company cautions that the foregoing list of important factors is not exclusive.  The Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.

Item 1.  Business

Killbuck Bancshares, Inc. (the "Company") was incorporated under the laws of the State of Ohio for the primary purpose of acquiring and holding all of the outstanding shares of The Killbuck Savings Bank Company (the “Bank”).  The principal office of the Company is located at 165 N. Main Street, Killbuck, Ohio.  The Killbuck Savings Bank Company was incorporated under the banking laws of the State of Ohio in 1900.

The Bank is headquartered in Killbuck, Ohio, which is in Holmes County. Holmes County is located in northeastern Ohio, and has a population of approximately 42,000.

The Bank provides a wide range of retail banking services to individuals and small to medium-sized businesses.  These services include various deposit products, business and personal loans, credit cards, residential mortgage loans, home equity loans, internet banking, bill payment, and other consumer oriented financial services including IRA accounts, Health Savings Accounts (“HSA”), safe deposit and night depository facilities.  The Bank also has automatic teller machines (“ATM”) located at all locations providing 24 hour banking service to our customers.  The Bank belongs to STAR, a national ATM network with thousands of locations nationwide.  Neither the Company nor the Bank has any foreign operations, assets, investments or deposits.

The Bank is the Company’s sole subsidiary.  The Bank has ten offices, with seven in Holmes County including a loan production office, two in Knox County and one in Tuscarawas County.
The Company, through its Bank subsidiary, conducts the business of a commercial banking organization.  At December 31, 2011, the Company and its subsidiary had total consolidated assets of $436.5 million and total consolidated shareholders’ equity of $45.2 million.  The capital of the Company consists of 1,000,000 authorized shares of capital stock, no par value of which 613,771 shares were issued and outstanding at December 31, 2011 to 988 shareholders.

The Bank is a state chartered commercial bank, regulated by the Ohio Division of Financial Institutions ("ODFI") and the Federal Reserve Board (“FRB”), with its deposits insured by the Federal Deposit Insurance Corporation (“FDIC”) to the extent permitted by law.
 
 
 
 

Employees

As of December 31, 2011, the Bank had 100 full-time and 21 part-time employees.  The Company had no employees.  The Bank provides a number of benefits for its full-time employees, including health and life insurance, pension, workers' compensation, social security, paid vacations, and numerous bank services.  No employees are union participants or subject to a collective bargaining agreement.

Competition

The commercial banking business in the market areas served by the Bank is very competitive.  Many of these competitors are substantially larger than the Bank.  In addition to local bank competition, the Bank competes with larger commercial banks headquartered in metropolitan areas, savings banks, credit unions, finance companies and other financial intermediaries for loans and deposits.

There are eight financial institutions operating in Holmes County.  As of June 30, 2011 (the most recent date for which such information is available), the Bank had the largest market share with $288.3 million in total deposits as of such date, representing a market share of approximately 45%.  The institution with the second largest market share had deposits of $231.7 million as of such date, representing a market share of approximately 36%.

Regulation and Supervision

The following is a summary of certain statutes and regulations affecting the Company and its subsidiary.  This summary is qualified in its entirety by such statutes and regulations.

The Company

General

The Company is a registered bank holding company under the Bank Holding Company Act of 1956, as amended, ("BHC Act") and as such is subject to regulation by the FRB.  A bank holding company is required to file with the FRB quarterly reports and other information regarding its business operations and those of its subsidiaries.  A bank holding company and its subsidiary banks are also subject to examination by the FRB.

Financial Services Modernization Act of 1999

Under the Gramm-Leach-Bliley Act (better known as the Financial Services Modernization Act of 1999), bank holding companies are entitled to become financial holding companies and thereby affiliate with securities firms and insurance companies and engage in other activities that are financial in nature.  A bank holding company may become a financial holding company if each of its subsidiary banks is well capitalized under the Federal Deposit Insurance Corporation Act of 1991 prompt corrective action provisions, is well managed, and has at least a satisfactory rating under the Community Reinvestment Act by filing a declaration that the bank holding company wishes to become a financial holding company.  No regulatory approval will be required for a financial holding company to acquire a company, other than a bank or savings association, engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the FRB.
 
 
 
 

The Financial Services Modernization Act defines “financial in nature” to include:

 
·
securities underwriting, dealing and market making;
 
·
sponsoring mutual funds and investment companies;
 
·
insurance underwriting and agency;
 
·
merchant bank activities and activities that the Federal Reserve Board has determined to be closely relating to banking.

In addition, a financial holding company may not acquire a company that is engaged in activities that are financial in nature unless each of the subsidiary banks of the financial holding company has a Community Reinvestment Act rating of satisfactory or better.

Affiliate Transactions

Various governmental requirements, including Sections 23A and 23B of the Federal Reserve Act, limit borrowings by holding companies and non-bank subsidiaries from affiliated insured depository institutions, and also limit various other transactions between holding companies and their non-bank subsidiaries, on the one hand, and their affiliated insured depository institutions on the other. Section 23A of the Federal Reserve Act also generally requires that an insured depository institution’s loan to its non-bank affiliates be secured, and Section 23B of the Federal Reserve Act generally requires that an insured depository institution’s transactions with its non-bank affiliates be on arms-length terms.

Control Acquisitions

The Change in Bank Control Act prohibits a person or group of persons from acquiring “control” of a bank holding company, unless the FRB has been notified and has not objected to the transaction. Under the rebuttable presumption established by the FRB, the acquisition of 10% or more of a class of voting stock of a bank holding company with a class of securities registered under Section 12 of the Exchange Act, such as the Company, would, under the circumstances set forth in the presumption, constitute acquisition of control of the bank holding company.

In addition, the BHC Act requires every bank holding company to obtain the prior approval of the FRB before acquiring substantially all the assets of any bank or bank holding company or ownership or control of any voting shares of any bank or bank holding company, if, after such acquisition, it would own or control, directly or indirectly, more than five percent (5%) of the voting shares of such bank or bank holding company, or would otherwise be able to exercise a “controlling influence” over the other bank or holding company.  In approving acquisitions by bank holding companies of companies engaged in banking-related activities, the FRB considers whether the performance of any such activity by a subsidiary of the holding company reasonably can be expected to produce benefits to the public, such as greater convenience, increased competition, or gains in efficiency, which outweigh possible adverse effects, such as over concentration of resources, decrease of competition, conflicts of interest, or unsound banking practices.

Securities Laws and Compliance

In 1998, the Company's common stock was registered under the Securities Exchange Act of 1934, as amended ("1934 Act").  This registration requires ongoing compliance with the 1934 Act and its periodic filing requirements, as well as a wide range of federal and state securities laws.  These requirements include, but are not limited to, the filing of annual, quarterly and other reports with the SEC, certain requirements as to the solicitation of proxies from shareholders, as well as other proxy rules, and compliance with the reporting requirements and "short-swing" profit rules imposed by section 16 of the 1934 Act.
 
 
 
 

The Bank

The Company operates the Bank as its only subsidiary.  As an Ohio state-chartered commercial bank, the Bank is supervised and regulated by the ODFI, and is subject to the laws and regulations applicable to all Ohio commercial banks.

Capital Requirements

The FRB, ODFI, and FDIC require banks and holding companies to maintain minimum capital ratios.

The FRB has promulgated "risk-adjusted" capital guidelines for bank holding companies.  The ODFI and FDIC have adopted substantially similar risk-based capital guidelines with respect to the Bank.  These ratios involve a mathematical process of assigning various risk weights to different classes of assets, then evaluating the sum of the risk-weighted balance sheet structure against the Company's capital base.  The rules set the minimum guidelines for the ratio of capital to risk-weighted assets (including certain off-balance sheet activities, such as standby letters of credit) at 8%.  At least half of the total capital is to be composed of common equity, retained earnings, and a limited amount of perpetual preferred stock less certain goodwill items ("Tier 1 Capital").  The remainder may consist of a limited amount of subordinated debt, other preferred stock, or a limited amount of loan loss reserves.

In addition, the federal banking regulatory agencies have adopted leverage capital guidelines for banks and bank holding companies.  Under these guidelines, banks and bank holding companies must maintain a minimum ratio of three percent (3%) Tier 1 Capital to total assets.  The Federal Reserve Board has indicated, however, that banking organizations that are experiencing or anticipating significant growth, are expected to maintain capital ratios well in excess of the minimum levels.

Regulatory authorities may increase such minimum regulatory capital requirements for all banks and bank holding companies, as well as specific individual banks or bank holding companies.  Mandated increases in the minimum required capital ratios could adversely affect the Company and the Bank, including their ability to pay dividends.

At December 31, 2011, the Company’s respective total and Tier 1 risk-based capital ratios and leverage ratios significantly exceeded the minimum regulatory requirements.  See Notes to the Consolidated Financial Statements included in the Annual Report and incorporated herein by reference in the report as Exhibit 13.

In addition, the Federal Deposit Insurance Company Improvement Act of 1991 ("FDICIA"), and the regulations promulgated under FDICIA, among other things, established five capital categories for insured depository institutions-well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized-and requires U.S. federal bank regulatory agencies to implement systems for “prompt corrective action” for insured depository institutions that do no meet minimum capital requirements based on these categories.  Unless a bank is well capitalized, it is subject to restrictions on its ability to offer brokered deposits and on certain other aspects of its operations.  An undercapitalized bank must develop a capital restoration plan and its parent bank holding company must guarantee the bank’s compliance with the plan up to the lesser of 5% of the banks or thrift’s assets at the time it became undercapitalized and the amount needed to comply with the plan.  As of December 31, 2011, the Company’s banking subsidiary was well capitalized pursuant to these prompt corrective action guidelines.

 
 
 
 
Dividend Regulation

The ability of the Company to obtain funds for the payment of dividends and for other cash requirements is largely dependent on the amount of dividends that may be declared by the Bank.  Generally, the Bank may not declare a dividend, without ODFI approval, if the total of dividends declared in a calendar year exceeds the total of its net income for that year combined with its retained earnings of the preceding two years.  At December 31, 2011, the Bank had the ability to pay dividends of approximately $3.0 million to the Company without prior regulatory approval.

Government Policies and Legislation

The earnings of the Company are dependent upon the earnings of its wholly-owned subsidiary bank.  The earnings of the subsidiary bank are affected by the policies of regulatory authorities, including the Ohio Division of Financial Institutions, the Board of Governors of the FRB and the FDIC.   For example, an important function of the FRB is to regulate aggregate national credit and money supply through such means as open market dealings in securities, establishment of the discount rate on member bank borrowings, and changes in reserve requirements against member bank deposits.  Policies of these agencies may be influenced by many factors, including inflation, unemployment, short-term and long-term changes in the international trade balance and fiscal policies of the United States government.  The policies and regulations of the regulatory agencies have had and will continue to have a significant effect on deposits, loans and investment growth, as well as the rate of interest earned and paid, and therefore will affect the earnings of the subsidiary bank and the Company in the future, although the degree of such future impact cannot accurately be predicted.

FDIC Insurance

All of the Bank’s deposits are insured under the Federal Deposit Insurance Act by the FDIC to the fullest extent permitted by law.  As an FDIC-insured institution, the Bank is required to pay deposit insurance premium assessments to the FDIC. The federal deposit insurance system was overhauled in 2006 as a result of the enactment of The Federal Deposit Insurance Reform Act of 2005 (the “Reform Act”), which was signed into law in February of 2006. Pursuant to the Reform Act, the FDIC has modified its risk-based assessment system for deposit insurance premiums. Under the new system, all insured depository institutions are placed into one of four categories and assessed insurance premiums based primarily on their level of capital and supervisory evaluations.

For the quarter beginning January 1, 2009, the FDIC raised the base annual assessment rate for institutions in Risk Category I to between 12 and 14 basis points while the base annual assessment rates for institutions in Risk Categories II, III and IV were increased to 17, 35, and 50 basis points, respectively. For the quarter beginning April 1, 2009 the FDIC set the base annual assessment rate for institutions in Risk Category I to between 12 and 16 basis points and the base annual assessment rates for institutions in Risk Categories II, III and IV at 22, 32, and 45 basis points, respectively. An institution’s assessment rate could be lowered by as much as five basis points based on the ratio of its long-term unsecured debt to deposits or, for smaller institutions, based on the ratio of certain amounts of Tier 1 capital to deposits. The assessment rate may be adjusted for Risk Category I institutions that have a high level of brokered deposits and have experienced higher levels of asset growth (other than through acquisitions) and could be increased by as much as ten basis points for institutions in Risk Categories II, III, and IV whose ratio of brokered deposits to deposits exceeds 10%. Reciprocal deposit arrangements like CDARS were treated as brokered deposits for Risk Category II, III, and IV institutions but not for institutions in Risk Category I. An institution’s base assessment rate would also be increased if an institution’s ratio of secured liabilities (including FHLB advances and repurchase agreements) to deposits exceeds 25%. The maximum adjustment for secured liabilities for institutions in Risk Categories I, II, III and IV would be 8, 11, 16, and 22.5 basis points, respectively, provided that the adjustment may not increase an institution’s base assessment rate by more than 50%.

 
 
 
 
The FDIC imposed a special assessment equal to five basis points of assets less Tier 1 capital as of June 30, 2009 payable on September 30, 2009 and reserved the right to impose additional special assessments. In lieu of further special assessments, on November 12, 2009 the FDIC approved a final rule to require all insured depository institutions to prepay their estimated risk-based assessments for the fourth quarter of 2009, and for all of 2010, 2011, and 2012 on December 30, 2009. For purposes of estimating future assessments, an institution would assume 5% annual growth in the assessment base and a three basis point increase in the current assessment rate for 2011 and 2012. The prepaid assessment would be applied against the actual assessment until exhausted. Any funds remaining after June 30, 2013 would be returned to the institution. If the prepayment would impair an institution’s liquidity or otherwise create significant hardship, it could apply for an exemption.
 
On February 7, 2011, the FDIC adopted a final rule on deposit insurance assessments, implementing a change in the deposit insurance assessment base, as required by the Dodd-Frank Act. The final rule also changed the assessment rates. Under the new rule, deposit insurance assessments are based on average total assets, less average tangible equity capital instead of average total deposits. Base assessment rates were reduced to between 5 and 9 basis points for institutions in Risk Category I, 14 basis points for institutions in Risk Category II, 23 basis points for institutions in Risk Category III, and 35 basis points for institutions in Risk Category IV. The changes to the assessment base and the base rates became effective April 1, 2011.
 
In addition, all FDIC-insured institutions are required to pay assessments to the FDIC to fund interest payments on bonds issued by the Financing Corporation (“FICO”), an agency of the Federal government established to recapitalize the Federal Savings and Loan Insurance Corporation. The FICO assessment rates, which are determined quarterly, averaged .00835 % of insured deposits on an annualized basis in fiscal year 2011. These assessments will continue until the FICO bonds mature in 2017.

Depositor Preference Statute

In the “liquidation or other resolution” of an institution by any receiver, U.S. federal legislation provides that deposits and certain claims for administrative expenses and employee compensation against the insured depository institution would be afforded a priority over general unsecured claims against that institution, including federal funds and letters of credit.

Recent Legislation

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”) signed by the President on July 21, 2010 posed a significant impact on financial regulations. Certain provisions such as the permanent increase in deposit insurance coverage had an immediate effective date. Provisions regarding rules for interchanges fees on electronic debit transactions were effective July 21, 2011. Other provisions which, though intended to provide regulatory relief to community banks, may require time and further analysis to evaluate the actual consequences. Implementation of the Dodd-Frank Act provisions, which are conservatively estimated at more than 5,000 pages of new or expanded regulations for banks, will result in new rulemaking by the federal regulatory agencies over the next several years. Fully implementing the new and expanded regulation will involve ensuring compliance with extensive new disclosure and reporting requirements. The Dodd-Frank Act created an independent regulatory body, the Bureau of Consumer Financial Protection (“Bureau”), with authority and responsibility to set rules and regulations for most consumer protection laws applicable to all banks — large and small — adds another regulator to scrutinize and police financial activities. Transfer to the Bureau of all consumer financial protection functions for designated laws by the other federal agencies was completed during 2011. The Bureau has responsibility for mortgage reform and enforcement, as well as broad new powers over consumer financial activities which could impact what consumer financial services would be available and how they are provided. The following consumer protection laws are the designated laws that will fall under the Bureau’s rulemaking authority: the Alternative Mortgage Transactions Parity Act of 1928, the Consumer Leasing Act of 1976, the Electronic Fund Transfer Act, the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act subject to certain exclusions, the Fair Debt Collection Practices Act, the Home Owners Protection Act, certain privacy provisions of the Gramm-Leach-Bliley Act, the Home Mortgage Disclosure Act (HMDA), the Home Ownership and Equity Protection Act of 1994, the Real Estate Settlement Procedures Act (RESPA), the S.A.F.E. Mortgage Licensing Act of 2008 (SAFE Act), and the Truth in Lending Act. Review and revision of current financial regulations in conjunction with added new financial service regulations will heighten the regulatory compliance burden and increase litigation risk for the banking industry.
 
 
 
 

Also, in response to unprecedented financial market turmoil, the Emergency Economic Stabilization Act of 2008 ("EESA") was enacted in 2008. EESA authorized the U.S. Treasury Department to provide up to $700 billion in funding for the financial services industry. Pursuant to the EESA, the Treasury was initially authorized to use $350 billion for the Troubled Asset Relief Program (“TARP”). Of this amount, Treasury allocated $250 billion to the TARP Capital Purchase Program. On January 15, 2009, the second $350 billion of TARP monies was released to the Treasury. The Secretary's authority under TARP expired on December 31, 2009. The Company previously determined to not participate in the TARP Capital Purchase Program.

In addition to the Dodd-Frank Act and EESA, there is significant potential for new federal regulations relating to lending, funding practices, and liquidity and capital standards, and the bank regulatory agencies are expected to be very aggressive in responding to concerns and trends identified in examinations. These increased governmental actions may increase our costs and limit our ability to pursue certain business opportunities.

Reports to Security Holders

The Company files Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, current reports on Form 8-K and proxy solicitation materials, as applicable, under Commission Regulation 14A.  The public may read and copy any materials the Company files with the Commission at the SEC’s Public Reference Room at 100 F. Street, NE, Washington, DC 20549, on official business days during the hours of 10:00 am to 3:00 pm.  The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.  The Commission maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission at http://www.sec.gov . The Company’s Internet website is http://www.killbuckbank.com .  The proxy statement and annual report to security holders are available at http://materials.proxyvote.com/494113 .

Item 1A   Risk Factors

Not applicable to Smaller Reporting Companies.

Item 1B   Unresolved Staff Comments

None

 
 
 
 
Item 2 Description of Property

Properties

The Company and the Bank’s executive offices are located at 165 North Main Street, Killbuck, Ohio.  The Company pays no rent or other form of consideration for the use of this facility. All office properties are owned by the Bank except the German Village Branch, which is leased.  The Bank has seven offices located in Holmes County (1), two in Knox County (2), and one in Tuscarawas County (3).  The Bank’s total investment in office property and equipment was $11.1 million with a net book value $5.5 million at December 31, 2011.  The offices are at the following locations.
 
Main Office: (1)   Mt. Hope Branch (1)   Millersburg Loan Annex (1)
165 North Main Street   8115 State Rt. 241   164 N. Clay Street
Killbuck, Ohio 44637   Mt. Hope, Ohio 44660   Millersburg, Ohio 44654
         
Millersburg North Branch (1)     Millersburg South Branch (1)    Apple Valley Branch (2)
181 N. Washington Street    1642 S. Washington Street     21841 Plank Road
Millersburg, Ohio 44654    Millersburg, Ohio 44654     Howard, Ohio 43028
         
German Village Branch (1)    Sugarcreek Branch (3)    
4900 Oak Street      1035 W. Main Street    
Berlin, Ohio  44610      Sugarcreek, Ohio 44681    
         
Danville Branch (2)   Berlin Branch (1) (4)    
701 S. Market Street    4790 Township Road 366    
Danville, Ohio 43014     Millersburg, Ohio  44654    
 
(4) Includes ATM location at 4853 Main Street, Berlin, Ohio 44610.

Item 3 Legal Proceedings

Neither the Bank nor the Company is involved in any material legal proceedings.  The Bank, from time to time, is a party to litigation, which arises in the ordinary course of business, such as claims to enforce liens, claims involving the origination and servicing of loans, and other issues related to the business of the Bank.  In the opinion of management, the resolution of any such issues will generally not have a material adverse impact on the financial position, results of operation, or liquidity of the Bank or the Company.

Item 4 Mine Safety Disclosures

None

PART II

Item 5 Market for Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchase of Equity Securities

At December 31, 2011, there were 613,771 of the Company’s shares issued and outstanding, held by 988 shareholders of record and in street name.  While there is no established public trading market for our common stock, our shares are currently quoted in the inter-dealer quotation, or “over-the-counter,” marketplace under the trading symbol “KILB.” Over-the-counter securities are generally considered to be any equity securities not otherwise listed on a national exchange, such as NASDAQ, NYSE or Amex.  The principal over-the-counter market is operated by OTC Markets Group, Inc. (formerly Pink OTC Markets Inc.), which provides quotes for the Company on its middle tier, the OTCQB.  All OTCQB companies are reporting with the SEC or a U.S. banking regulator, but there are no financial or qualitative standards to be in this tier.  Community Banc Investments (“CBI”), a licensed intrastate securities dealer that specializes in marketing the stock of independent banks located in Ohio, also handles a limited amount of the Company’s stock transactions.
 
 
 
 

The common stock of the Company trades infrequently.  Parties interested in buying or selling the Company’s stock are generally referred to CBI.  The quarterly high and low price information in the table below was obtained from CBI and the OTC Markets Group, Inc.
 
Quarter Ended
 
High
    Low    
Cash Dividends Paid
 
                     
2011
March 31
  $ 107.27     $ 106.37       N/A  
 
June 30
    109.04       108.01     $ 1.50  
 
September 30
    110.95       109.26       N/A  
 
December 31
    111.64       110.29     $ 1.55  
                           
2010
March 31
  $ 106.39     $ 104.74       N/A  
 
June 30
    107.59       106.72     $ 1.50  
 
September 30
    108.83       107.45       N/A  
 
December 31
    109.52       107.71     $ 1.55  
 
Management does not have knowledge of the prices paid in all transactions and has not verified the accuracy of those prices that have been reported.  Because of the lack of an established market for the Company’s stock, these prices may not reflect the actual prices at which the stock would trade in a more active market.

Cash dividends are paid on a semi-annual basis.  The Company has paid regular semi-annual cash dividends for the last twenty years, and assuming the ability to do so, it is management’s intent that the Company will continue to declare regular semi-annual cash dividends.

For information on dividends per share, earnings per share and ratio of dividends to earnings per share, see the Selected Financial Data of the 2011 Annual Report to Shareholders of Killbuck Bancshares, Inc, included in this Report as Exhibit 13 and incorporated herein by reference.

The ability of the Company to pay dividends will depend on the earnings of the Bank and its financial condition, as well as other factors such as market conditions, interest rates and regulatory requirements.  Therefore, no assurances may be given as to the continuation of the Company's ability to pay dividends or maintain its present level of earnings.  For a discussion on Bank dividends see the Notes to the Consolidated Financial Statements of the 2011 Annual Report to Shareholders of Killbuck Bancshares, Inc. included in this Report as Exhibit 13 and incorporated herein by reference.

The common stock of the Company is not subject to any redemption provisions or restrictions on alienability.  The common stock is entitled to share pro rata in dividends and in distributions in the event of dissolution or liquidation.  There are not any options, warrants, privileges nor other rights with respect to the Company shares at the present time, nor are any such rights proposed to be issued.

 
 
 

Unregistered Sales of Equity Securities and Use of Proceeds
None

Issuer Purchases of Equity Securities

Period
(a) Total Number of Shares (or Units) Purchased
(b) Average Price Paid per Share (or Unit)
(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (1)
(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
October 1 – 31, 2011
100
$111.35
N/A
N/A
November 1 – 30, 2011
--
--
N/A
N/A
December 1 – 31, 2011
--
--
N/A
N/A
Total (2)
100
$111.35
N/A
N/A

(1)
The Company does not have any publicly announced share repurchase plans as of December 31, 2011.
(2)
100 shares of common stock were purchased by Killbuck Bancshares in open-market transactions.

Item 6 Selected Consolidated Financial Data

Selected Consolidated Financial Data of the 2011 Annual Report to Shareholders of Killbuck Bancshares, Inc. is included in this Report as part of Exhibit 13, and is incorporated herein by reference.

 
 
 

Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations included in the 2011 Annual Report to Shareholders of Killbuck Bancshares, Inc. and filed with this Report as Exhibit 13, and incorporated herein by reference.

Investment Portfolio

Book Value of Investments

Carrying values of investment securities at December 31 are as follows (in thousands):
 
Securities available for sale:
 
2011
   
2010
   
2009
   
2008
   
2007
 
Obligations of U.S. Government
                             
Agencies and Corporations
  $ 97,599     $ 75,486     $ 64,841     $ 50,939     $ 53,116  
Mutual funds
    503       559       494       611       1,000  
Total securities available for sale
    98,102       76,045       65,335       51,550       54,116  
Securities held to maturity:
                                       
Obligations of state and political subdivisions
    41,040       39,332       35,087       32,168       29,552  
Total securities held to maturity
    41,040       39,332       35,087       32,168       29,552  
Total
  $ 139,142     $ 115,377     $ 100,422     $ 83,718     $ 83,668  
 
 
 
 
 
MATURITY SCHEDULE OF INVESTMENTS

The following table presents the investment portfolio, the weighted average yield and maturities at December 31, 2011 (dollars in thousands):
 
    Within three months    
After three months but
Within one year
   
After one year but Within five years
   
After five but Within ten years
   
After 10 years
       
   
Amount
   
Yield
   
Amount
    Yield    
Amount
    Yield    
Amount
    Yield    
Amount
    Yield     Total  
Available for Sale (1)
                                                                 
Mortgage backed securities
  $ --       0.00 %   $ 895       1.87 %   $ 393       5.45 %   $ --       0.00 %   $ 3,434       0.86 %   $ 4,722  
Obligations of U.S.
                                                                                       
Government sponsored enterprises
  $ --       0.00 %   $ --       0.00 %   $ 49,861       1.84 %   $ 43,016       2.10 %   $ --       0.00 %   $ 92,877  
Mutual funds
  $ --       0.00 %   $ 503       0.00 %   $ --       0.00 %   $ --       0.00 %   $ --       0.00 %   $ 503  
Total
  $ --       0.00 %   $ 1,398       1.20 %   $ 50,254       1.87 %   $ 43,016       2.10 %   $ 3,434       0.86 %   $ 98,102  
Held to Maturity
                                                                                       
Obligations of state and political subdivisions (2)
  $ --       0.00 %   $ 2,538       3.85 %   $ 14,598       3.59 %   $ 23,048       3.41 %   $ 856       3.12 %   $ 41,040  
Total
  $ --       0.00 %   $ 2,538       3.85 %   $ 14,598       3.59 %   $ 23,048       3.41 %   $ 856       3.12 %   $ 41,040  

(1) 
The weighted average yield has been computed using the historical amortized cost for available for sale securities.
(2) 
Weighted average yields on nontaxable obligations have been computed based on actual yield stated on the security.

Excluding holdings of U.S. Treasuries and Government sponsored enterprises; there were no investments in securities of any one issuer that exceeded 10% of the Company’s shareholders equity at December 31, 2011.

 
 
 
 
TYPES OF LOANS

The following table presents the composition of the loan portfolio (before consideration of loan origination fees and the allowance for loan losses), as well as the percentage of loans by type (dollars in thousands):
 
   
2011
   
2010
   
December 31,
2009
   
2008
   
2007
 
   
Amount
   
% of
Total Loans
   
Amount
   
% of
Total Loans
   
Amount
   
% of
Total Loans
   
Amount
   
% of
Total Loans
   
Amount
   
% of
Total Loans
 
Real estate-residential
  $ 97,583       43.0 %   $ 87,506       42.1 %   $ 81,505       38.8 %   $ 72,663       35.8 %   $ 72,858       36.6 %
Real estate-farm
    11,028       4.8       9,925       4.8       9,729       4.6       8,843       4.4       9,967       5.0  
Real estate-commercial
    58,214       25.7       51,311       24.7       57,924       27.6       59,505       29.3       59,817       30.0  
Real estate-construction
    12,468       5.5       10,406       5.0       11,873       5.6       12,077       5.9       7,778       3.9  
Commercial and other
    41,667       18.4       41,931       20.2       43,068       20.5       43,239       21.3       41,678       20.9  
Consumer and credit card
    5,865       2.6       6,866       3.2       6,140       2.9       6,901       3.3       7,201       3.6  
    $ 226,825       100.0 %   $ 207,945       100.0 %   $ 210,239       100.0 %   $ 203,228       100.0 %   $ 199,299       100.0 %
 
 
 
 
 
The largest category of loans comprising the Bank’s loan portfolio is residential real estate loans.  These loans are primarily single-family residential real estate loans secured by a first mortgage on the dwelling.  The risks associated with these loans are primarily the risk of default in repayment and inadequate collateral.  Real estate commercial loans represent the second largest category and include development loans as well as investment commercial real estate loans.  These loans have risks, which include the risk of default in the repayment of principal and inadequate collateral as well as the risk of cash flow interruption due to, in the case of rental real estate, the inability to obtain or collect adequate rental rates.  The next largest loan segment of the Bank’s loan portfolio is the commercial and other category.  The loans comprising this category represent loans to business interests located primarily within the Bank’s defined market areas. The Bank has no significant industry loan concentration.  Commercial loans include both secured and unsecured loans.  The risks associated with these loans are principally the risk in default of the repayment of principal resulting from economic problems of the commercial customer, an economic downturn affecting the market in general and, in the case of secured loans, inadequate collateral.

MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATE

The following table presents maturity distribution and interest rate sensitivity of real estate – commercial, real estate - construction and commercial and other loans at December 31, 2011 (dollars in thousands):
 
   
Within
1 Year
   
After 1 Year
Within
5 Years
   
After 5 Years
   
Total
 
Real estate – commercial
  $ 41,485     $ 14,172     $ 2,557     $ 58,214  
Real estate – construction
    9,069       3,092       307       12,468  
Commercial and other
    32,688       8,886       93       41,667  
    $ 83,242     $ 26,150     $ 2,957     $ 112,349  
Fixed interest rates
  $ 3,419     $ 11,947     $ 1,421     $ 16,787  
Variable interest rates
    79,823       14,203       1,536       95,562  
    $ 83,242     $ 26,150     $ 2,957     $ 112,349  
 
RISK ELEMENTS

Loans are subject to ongoing periodic monitoring by management and the Board of Directors.  The Company ceases accruing interest on residential mortgages secured by real estate and consumer loans when principal or interest payments are delinquent 90 days or more.  Commercial loans that are 90 days or more past due are reviewed by the Executive Vice President and the loan officer to determine whether they will be classified as nonperforming.  These officers review various factors which include, but are not limited to, the timing of the maturity of the loan in relation to the ability to collect, whether the loan is deemed to be well secured, whether the loan is in the process of collection, and the favorable results of the analysis of customer financial data.  A nonperforming loan will only be reclassified as a performing loan when stringent criteria have been met.  At the time the accrual of interest is discontinued, future income is recognized only when cash is received or the loan has been returned to performing loan status.  Renegotiated loans are those loans which terms have been renegotiated to provide a reduction or deferral of principal or interest as a result of the deterioration of the borrower.  At December 31, 2011, the Company had nonperforming loans of $597,000. The following table presents information concerning nonperforming assets including nonaccrual loans, loans 90 days or more past due, renegotiated loans, other real estate and repossessed assets at December 31, (dollars in thousands).
 
 
 
 
 
    At December 31,  
   
2011
   
2010
   
2009
   
2008
   
2007
 
Loans on nonaccrual basis
  $ 596     $ 107     $ -     $ 73     $ 839  
Loans past due 90 days or more
    1       2       -       -       -  
Renegotiated loans (1)
    -       -       -       -       -  
Total nonperforming loans
    597       109       -       73       839  
Other real estate
    -       -       23       -       -  
Repossessed assets
    -       -       -       -       -  
Total nonperforming assets
  $ 597     $ 109     $ 23     $ 73     $ 839  
Nonperforming loans as a percent of total loans
    .26 %     .05 %     .00 %     .04 %     .42 %
Nonperforming loans as a percent of total assets
    .14 %     .03 %     .00 %     .02 %     .25 %
Nonperforming assets as a percent of total assets
    .14 %     .03 %     .01 %     .02 %     .25 %
 
(1)  Excludes renegotiated loans that are performing or reported as nonaccrual.
 
 
 
 
 
The amount of interest income that would have been recognized had the loans performed in accordance with their original terms was approximately $54,000 for the year ended December 31, 2011.

There are not any loans as of December 31, 2011, other than those discussed above, where known information about the borrower caused management to have serious doubts about the borrower’s ability to comply with their contractual repayment obligations.  There are no concentrations of loans to borrowers engaged in similar activities which exceed 10% of total loans of which management is aware.  Based upon the ongoing quarterly review and assessment of credit quality, management is not aware of any trends or uncertainties related to any accounts which might have a material adverse effect on future earnings, liquidity or capital resources.

There are no other interest-bearing assets that would be subject to disclosure as either nonperforming or impaired other than those disclosed in the Notes to the Consolidated Financial Statements for December 31, 2011, attached hereto as Exhibit 13 to this Annual Report on Form 10K.

LOAN LOSS EXPERIENCE

Management makes periodic provisions to the allowance for loan losses to maintain the allowance at an acceptable level commensurate with the credit risks inherent in the loan portfolio.  There can be no assurances, however, that additional provisions will not be required in future periods.  The following table presents a summary of loan losses by loan type and changes in the allowance for loan losses for the years ended December 31, (dollars in thousands):
 
 
 
 
 
    Year Ended December 31,  
   
2011
   
2010
   
2009
   
2008
   
2007
 
Allowance for loan losses at beginning of year
  $ 2,666     $ 2,441     $ 2,525     $ 2,510     $ 2,394  
Provision charged to expense
    -       215       2       61       127  
Charge-offs:
                                       
Real estate-residential
    19       50       21       19       6  
Real estate-farm
    -       -       -       -       -  
Real estate-commercial
    393       -       37       33       71  
Real estate-construction
    -       -       -       -       -  
Commercial and other
    -       -       59       37       16  
Consumer and credit card
    5       10       16       24       39  
Total charge-offs
    417       60       133       113       132  
Recoveries:
                                       
Real estate-residential
    -       1       -       -       57  
Real estate-farm
    -       -       -       -       -  
Real estate-commercial
    4       44       12       42       27  
Real estate-construction
    -       -       -       -       -  
Commercial and other
    20       19       19       14       16  
Consumer and credit card
    2       6       16       11       21  
Total recoveries
    26       70       47       67       121  
Net charge-offs
    391       (10 )     86       46       11  
Allowance for loan losses at end of period
  $ 2,275     $ 2,666     $ 2,441     $ 2,525     $ 2,510  
Total loans outstanding
  $ 226,825     $ 207,945     $ 210,239     $ 203,228     $ 199,299  
Average loans outstanding
  $ 217,016     $ 210,091     $ 207,846     $ 201,179     $ 202,692  
Allowance for loan losses as a percent of total loans
    1.00 %     1.28 %     1.16 %     1.24 %     1.26 %
Net charge-offs as a percent of average loans
    .18 %     .00 %     .04 %     .02 %     .01 %
 
 
 
 
 
The Bank reviews the adequacy of its allowance for loan losses on a quarterly basis.  In determining the adequacy of its allowance account the Bank makes allocations based upon loan categories, nonaccrual, past due and classified loans.  The Bank has determined that the allowance is adequate as of December 31, 2011, based upon its analysis and experience.  However, there can be no assurance that the current allowance for loan losses will be adequate to absorb all future loan losses.

The following table presents management’s estimate of the allocation of the allowance for loan losses among the loan categories, although the entire allowance balance is available to absorb any actual charge-offs that may occur, along with the percentage of loans in each category to total loans for the years ended December 31 (dollars in thousands):
 
 
 
 
 
    2011     2010     2009     2008     2007  
    Allowance     % of Loans to Total Loans     Allowance     % of Loans to Total Loans     Allowance     % of Loans to Total Loans     Allowance     % of Loans to Total Loans     Allowance     % of Loans to Total Loans  
Real estate – residential
  $ 604       43.0 %   $ 603       42.1 %   $ 850       38.8 %   $ 524       35.8 %   $ 621       36.6 %
Real estate – farm
    70       4.8       69       4.8       55       4.6       212       4.4       21       5.0  
Real estate – commercial
    519       25.7       887       24.7       580       27.6       990       29.3       566       30.0  
Real estate – construction
    98       5.5       98       5.0       67       5.6       -       5.9       -       3.9  
Commercial and other loans
    933       18.4       955       20.2       793       20.5       544       21.3       1,191       20.9  
Consumer and credit loans
    51       2.6       54       3.2       96       2.9       255       3.3       111       3.6  
    $ 2,275       100.0 %   $ 2,666       100.0 %   $ 2,441       100.0 %   $ 2,525       100.0 %   $ 2,510       100.0 %
 
 
 
 
 
CONTRACTUAL OBLIGATIONS
 
The following table presents, as of December 31, 2011, significant fixed and determinable contractual obligations to third parties by payment date.  Further discussion of the nature of each obligation is included in the referenced Note to the Consolidated Financial Statements for December 31, 2011, attached hereto as Exhibit 13 to this Annual Report on Form 10K.
 

 
(In thousands)
 
Note Reference
   
One Year or Less
   
One to Three Years
   
Three to Five Years
   
Over Five Years
   
Total
 
Borrowed funds
    8,9     $ 1,134     $ 151     $ 75     $ 1     $ 1,361  
Certificates of deposit
    7       86,616       49,972       35,214       4       171,806  
Operating leases
    12       20       28       -       -       48  
Deposits without a  stated maturity
    N/A       217,257        -        -       -       217,257  
Total           $ 305,027     $ 50,151     $ 35,289     $ 5     $ 390,472  
 
 
 
 

COMMITMENTS
 
The following table details the amounts and expected maturities of significant commitments as of December 31, 2011.  Further discussion of these commitments is included in Notes to the Consolidated Financial Statements, attached hereto as Exhibit 13 to this Annual Report on Form 10K.
 
(In thousands)
 
One Year or Less
   
One to Three Years
   
Three to Five Years
   
Over Five Years
   
Total
 
                               
Commitments to extend credit
                             
Commercial
  $ 24,280     $ 152     $ 9     $ -     $ 24,441  
Residential real estate
    6,750       305       -       -       7,055  
Revolving home equity
    -       -       -       15,631       15,631  
Credit card lines
    4,131       -       -       -       4,131  
Standby letters of credit
    834       -       -       -       834  
 
Item 7A Quantitative and Qualitative Disclosures About Market Risk

See the section Quantitative and Qualitative Disclosures About Market Risk contained in the Company’s Management Discussion and Analysis attached hereto as Exhibit 13 and incorporated herein by reference.
 
 
 
 
 
Item 8 Financial Statements and Supplementary Data

The report of the Independent Registered Public Accountants and the Consolidated Financial Statements included in the 2011 Annual Report to Shareholders of Killbuck Bancshares, Inc. and filed with this Report as Exhibit 13 are incorporated herein by reference.

Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A. Controls and Procedures
 
The Company has carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s President and Chief Executive Officer and Vice President and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the President and Chief Executive Officer and Vice President and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective, as of the end of the period covered by this report, in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic SEC filings.

There was no change in the Company’s internal control over financial reporting that occurred during the Company’s calendar quarter ended December 31, 2011, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for the preparation and fair presentation of the financial statements included in this Annual Report.  The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and reflect management’s judgments and estimates concerning effects of events and transactions that are accounted for or disclosed.

Management is also responsible for establishing and maintaining adequate internal control over financial reporting.  The Company’s internal control over financial reporting includes those policies and procedures that pertain to the Company’s ability to record, process, summarize and report reliable financial data.  Management recognizes that there are inherent limitations in the effectiveness of any internal control over financial reporting, including the possibility of human error and the circumvention or overriding of internal control.  Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation.  Further, because of changes in conditions, the effectiveness of internal control over financial reporting may vary over time.

In order to ensure that the Company’s internal control over financial reporting is effective, management is required to evaluate, with the participation of the Company’s principal executive and principal financial officers, the effectiveness of the Company’s internal control over financial reporting as of the end of each year and did so most recently for its financial reporting as of December 31, 2011.  Management’s assessment of the effectiveness of the Company’s internal control over financial reporting was based on criteria for effective internal control over financial reporting described in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on this assessment, management has concluded that the internal control over financial reporting was effective as of December 31, 2011.  This Annual Report does not include an attestation report of the Company’s registered independent public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s registered independent public accounting firm pursuant to rules of the Securities and Exchange Commission which permits the Company to provide only management’s report in this Annual Report.

 
 
 
 
The Board of Directors, acting through its Audit Committee, is responsible for the oversight of the Company’s accounting policies, financial reporting and internal control.  The Audit Committee of the Board of Directors is comprised entirely of outside directors who are independent of management.  The Audit Committee is responsible for the appointment and compensation of the independent registered public accounting firm and approves decisions regarding the appointment or removal of the Company’s internal auditors.  The Committee meets periodically with management, the independent registered public accountants and the internal auditors to ensure that they are carrying out their responsibilities.  The Audit Committee is also responsible for performing an oversight role by reviewing and monitoring the financial, accounting and auditing procedures of the Company in addition to reviewing the Company’s financial reports.  The independent registered public accountants and the internal auditors have full and unlimited access to the Audit Committee, with or without management, to discuss the adequacy of internal control over financial reporting, and any other matter which they believe should be brought to the attention of the Audit Committee.

Item 9B. Other Information

None

PART III

Item 10 Directors, Executive Officers and Corporate Governance

The following table lists the Executive Officers of the Company and its subsidiary, The Killbuck Savings Bank Company, and certain other information with respect to each individual as of December 31, 2011.  The information required by this item with respect to Directors and other executive officers of the Company and its subsidiary, The Killbuck Savings Bank Company, is incorporated herein by reference to the information under the heading “Election of Directors and Information with Respect to Directors and Officers” in the Proxy Statement of the Company.  The information required regarding disclosure of any known late filings or failure by an insider to file a report required by Section 16(a) of the Securities Exchange Act is incorporated herein by reference to the information under the heading “Compliance with Section 16(a) of the Securities Exchange Act of 1934” in the Proxy Statement of the Company.
 
Name
Age
All Positions with Company and Bank
     
Craig A. Lawhead
54
President and CEO of the Company and CEO of the Bank since March 2011. Vice president and treasurer of Company from 1992 to March 2011;
President of the Bank since May 2010;
Executive vice president of the Bank from 1991 to May 2010;
Director of both the Company and the Bank since December 2010.
     
Victor H. Weaver
50
Vice president and treasurer of the Company since March 2011;
Executive vice president of the Bank since December 2010;
Vice president of the Bank from 2002 to December 2010.
     
Luther E. Proper
62
Senior vice president/administration of the Company and the Bank since
March 2011. President and CEO of the Company and CEO of the Bank
from 1991 to March 2011. Vice-chairman of the Board of Directors of both the Company and the Bank since 2001.
     
Lawrence M. Cardinal
60
Vice president and secretary of the Company since June 2010;
Senior vice president and Chief Financial Officer of Bank since June 2010.
 
The Company has adopted a Code of Ethics that applies to its principal executive, financial and accounting officers. A copy of the Code of Ethics is posted on the Company’s web site at http://www.killbuckbank.com . In the event we make any amendment to, or grant any waiver of, a provision of the Code of Ethics that applies to the principal executive, financial or accounting officer, or any person performing similar functions, that requires disclosure under applicable SEC rules, we intend to disclose such amendment or waiver, the nature of and reasons for it, along with the name of the person to whom it was granted and the date, on our internet website.
 
 
 
 

Item 11 Executive Compensation

Information required by this item is incorporated herein by reference to the information under the heading “Executive Compensation and Other Information” in the Proxy Statement of the Company.

Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information required by this item is incorporated herein by reference to the information under the heading “Principal Shareholders” and “Security Ownership of Management” in the Proxy Statement of the Company.  The Company currently has no equity compensation plans or arrangements, such as stock option or restricted stock arrangements, pursuant to which equity securities of the Company are authorized for issuance.

Item 13 Certain Relationships and Related Transactions, and Director Independence

Information required by this item is incorporated herein by reference to the information under the heading “Director Independence and Related Party Transactions” in the Proxy Statement of the Company and in the Notes to Consolidated Financial Statements included in the 2011 Annual Report to Shareholders filed with this Report as Exhibit 13.

Item 14 Principal Accounting Fees and Services

Information required by this item is incorporated herein by reference to the information under the heading “Audit Committee Report” in the Proxy Statement of the Company.

PART IV

Item 15 Exhibits and Financial Statement Schedules

Financial Statements and Schedules

The following Consolidated Financial Statements of Killbuck Bancshares, Inc. included in the Annual Report to Shareholders covering the Years Ended December 31, 2011, 2010, and 2009 are incorporated by reference in item 8:

Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheet at December 31, 2011 and 2010
Consolidated Statement of Income for the Years Ended December 31, 2011, 2010 and 2009
Consolidated Statement of Changes in Shareholders’ Equity for the Years Ended  December 31, 2011, 2010 and 2009
Consolidated Statement of Cash Flows for the Years Ended December 31, 2011,  2010 and 2009
Notes to Consolidated Financial Statements

Schedules are omitted because they are inapplicable, not required, or the information is included in the Consolidated Financial Statements or Notes thereto.
 
 
 
 

Exhibits

The following exhibits are filed herewith and/or are incorporated herein by reference.
 
Exhibit
Number
 
Description

3(i) 
Certificate and Articles of Incorporation of Killbuck Bancshares, Inc.*

3(ii) 
Code of Regulations of Killbuck Bancshares, Inc.*

10.1
Employment Agreement dated April 23, 2007 between Killbuck Savings Bank Company and Luther E. Proper. **

10.2
Employment Agreement dated April 23, 2007 between Killbuck Savings Bank Company and Craig A. Lawhead. **

12 
Statement regarding computation of ratios.

13 
Portions of the 2011 Annual Report to Shareholders

21 
Subsidiary of the Holding Company.*

31.1
Rule 13a-14(a) Certification

31.2 
Rule 13a-14(a) Certification

32.1
Certification pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2
Certification pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the      Sarbanes-Oxley Act of 2002.
 
101.INS
XBRL Instance ***
 
101.SCH
XBRL Taxonomy Extension Schema ***
 
101.CAL
XBRL Taxonomy Extension Calculation ***
 
101.DEF
XBRL Taxonomy Extension Definition ***
 
101.LAB
XBRL Taxonomy Extension Labels ***
 
101.PRE
XBRL Taxonomy Extension Presentation ***
 
*
Incorporated by reference to an identically numbered exhibit to the Form 10 (File No. 000-24147) filed with the SEC on April 30, 1998 and subsequently amended on July 8, 1998 and July 31, 1998.

**
Incorporated by reference to an identically numbered exhibit to the Form 8-K filed with the SEC on April 23, 2007.
 
***
XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
 
 
 
 
 
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Killbuck Bancshares, Inc.

(Registrant)
By: /s/ Craig A. Lawhead
Craig A. Lawhead
President and Chief Executive Officer/Director
(Duly authorized representative)

Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
 
Signatures
 
Description
 
Date
         
/s/ Craig A. Lawhead      President, Chief Executive     March 26, 2012
Craig A. Lawhead      Officer and Director    
         
/s/ Luther E. Proper    Senior Vice President/   
March 26, 2012
Luther E. Proper    Administration and Director    
         
/s/ John W. Baker  
Director
 
March 26, 2012
John W. Baker
       
         
/s/ Ted Bratton  
Director
 
March 26, 2012
Ted Bratton
       
         
/s/ Gail E. Patterson  
Director
 
March 26, 2012
Gail E. Patterson
       
         
/s/ Allan R. Mast  
Director
 
March 26, 2012
Allan R. Mast
       
         
/s/ Max A. Miller  
Director
 
March 26, 2012
Max A. Miller
       
         
/s/ Dean J. Mullet  
Director
 
March 26, 2012
Dean J. Mullet
       
         
/s/ Michael S. Yoder  
Director
 
March 26, 2012
Michael S. Yoder        
         
/s/ Lawrence M. Cardinal    Chief Financial and Chief  
March 26, 2012
Lawrence M. Cardinal    Accounting Officer    

 
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