U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   FORM 10-KSB

                 ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                        For the Year ended March 31, 2000
                                          ---------------

                        Commission file number 000-24793
                                              ----------

                           CGB&L FINANCIAL GROUP, INC.
                     ---------------------------------------
                 (Name of small business issuer in its charter)

                     Delaware                          37-1374123
           -----------------------------           -----------------
          (State or other jurisdiction of            (IRS Employer
           incorporation or organization)          Identification No.)

        229 E. SOUTH ST. -P.O. Box 680, Cerro Gordo, Illinois  61818-0680
        ------------------------------------------------------ ----------
        (Address of principal executive offices)               (Zip Code)

          Issuer's telephone number, including area code   (217) 763-2911
                                                           --------------

                    Securities registered under Section 12(b)
                            of the Exchange Act:  None
                                                 ------

                    Securities registered under Section 12(g)
                              of the Exchange Act:

                   Common Stock: par value $0.01 per share
                   ---------------------------------------
                             (Title of class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]


Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation SB contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB. [ ]


                                        1
<PAGE>


            State issuer's revenues for its most recent fiscal year.
                                    $633,480
                                    --------

The aggregate market value of the voting stock held by non-affiliates of the
Registrant, i.e., persons other than directors and executive officers of the
Registrant, at May 31, 2000 was $637,380. For purposes of this determination
only, directors and executive officers of the Registrant have been presumed to
be affiliates. There is no active trading market in the stock. The above market
value is based upon $9.00 per share, the last sales price as quoted on the Over
The Counter Market for March 31, 2000. This reflects a value based solely on
this last trade, but may not reflect the ongoing value of the stock.

The Registrant had 92,895 shares of Common Stock outstanding, for ownership
purposes, at March 31, 2000.

Transitional Small Business Disclosure Format: Yes [ ] No [X]

The Exhibit Index is located at pages 55-56.


                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 2000 Annual Meeting of Stockholders are
incorporated by reference into Part III of this Form 10-KSB.



                                TABLE OF CONTENTS

PART I
                                                                    PAGE

Item 1.  Description of Business . . . . . . . . . . . . . . . . . .   3

Item 2.  Description of Property . . . . . . . . . . . . . . . . . .  29

Item 3.  Legal Proceedings . . . . . . . . . . . . . . . . . . . . .  30

Item 4.  Submission of Matters to a
          Vote of Security Holders . . . . . . . . . . . . . . . . .  30

PART II

Item 5.  Market for Common Equity and
          Related Stockholder Matters. . . . . . . . . . . . . . . .  30

Item 6.  Management's Discussion
          and Analysis or Plan of Operation. . . . . . . . . . . . .  31

Item 7.  Financial Statements. . . . . . . . . . . . . . . . . . . .  34

Item 8.  Changes In and Disagreements with Accountants
          on Accounting and Financial Disclosure . . . . . . . . . .  55


                                        2
<PAGE>


PART III

Item 9.  Directors, Executive Officers, Promoters and
          Control Persons; Compliance with Section
          16(a) of the Exchange Act. . . . . . . . . . . . . . . . .  55

Item 10. Executive Compensation. . . . . . . . . . . . . . . . . . .  55

Item 11. Security Ownership of Certain Beneficial
          Owners and Management. . . . . . . . . . . . . . . . . . .  55

Item 12. Certain Relationships and Related Transactions. . . . . . .  55

Item 13. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . .  55

         SIGNATURES  . . . . . . . . . . . . . . . . . . . . . . . .  57


                             PART I

ITEM 1.        DESCRIPTION OF BUSINESS.

GENERAL

   CGB&L Financial Group, Inc. ("CGB&L") was incorporated on May 21, 1998 and on
September 22, 1998 acquired all of the outstanding shares of common stock of
Cerro Gordo Building and Loan, s.b., Cerro Gordo, Illinois, (the "Building &
Loan") upon the Building & Loan's conversion from a state chartered mutual
savings bank to a state chartered stock savings bank (the "Conversion"). CGB&L
purchased 100% of the outstanding capital stock of the Building & Loan using 50%
of the net proceeds from CGB&L's initial stock offering which was completed on
September 22, 1998. CGB&L sold 99,000 shares of common stock in the initial
offering at $10 per share, including 7,919 shares purchased by the Building &
Loan's Employee Stock Ownership Plan ("ESOP"). The Building & Loan acquired the
ESOP shares with proceeds from a CGB&L loan totaling $79,190. The net proceeds
of the offering totaled $699,293: $990,000 less $290,707 in underwriting costs
and other conversion expenses. CGB&L began trading on the Over The Counter
Bulletin Board on September 23, 1998 under the symbol "CGBL".

   The acquisition of the Building & Loan by CGB&L was accounted for as a
"pooling-of-interests" under generally accepted accounting principles. The
application of the pooling-of-interests method records the assets and
liabilities of the merged companies on a historical cost basis with no goodwill
or other intangible assets being recorded.

   CGB&L's assets at March 31, 2000 consist primarily of the investment in the
Building & Loan of $1,273,047, cash and cash equivalents of $164,350 and
interest bearing time deposits of $100,000. CGB&L does not transact any other
material business except through its subsidiary, the Building & Loan.

BUSINESS OF THE BUILDING & LOAN

   The Building & Loan was originally chartered as a state-chartered savings and
loan association in 1886 and converted to a state-chartered savings bank in
1992. Prior to changing its name to Cerro Gordo Building and Loan, s.b on
January 1, 1993 the institution operated as Cerro Gordo Building and Loan
Association.


                                        3
<PAGE>


   The Building & Loan's primary market area consists of a ten-mile radius of
Cerro Gordo, Illinois, which includes portions of the counties of Piatt, Macon,
and Moultrie. Cerro Gordo has a population of approximately 1,500. The primary
employers located in and around Cerro Gordo include the Cerro Gordo School
District, Bridgestone/Firestone, Inc., Caterpillar, Inc., Archer Daniels
Midland, and agriculture.

   The Building & Loan maintains one office in Cerro Gordo and provides savings
accounts, certificates of deposit and mortgage loans with emphasis on one- to
four-family residential mortgage loans. At March 31, 2000, the Building & Loan
had total assets, liabilities, and stockholders' equity of $7,709,117,
$6,436,071, and $1,273,046 respectively.

   The Building & Loan's principal business consists of the acceptance of retail
deposits from the residents and small businesses surrounding its office and the
investment of those deposits, together with funds generated from operations,
primarily in one- to four-family residential mortgage loans. The Building & Loan
also invests, to a lesser extent, in multi-family mortgage loans, commercial
real estate loans, construction loans, and consumer (share) loans.

   The Building & Loan's revenues are derived principally from interest on its
mortgage and share loans, and, to a lesser extent, interest and dividends on its
interest bearing deposits and securities. The Building & Loan's primary sources
of funds are deposits, principal and interest payments and principal prepayments
on loans, and proceeds from Federal Home Loan Bank ("FHLB") advances.


SELECTED FINANCIAL INFORMATION OF CGB&L

   The following table sets forth certain selected financial data for CGB&L on a
consolidated basis. This summary has been derived from, and should be read in
conjunction with, the financial statements of CGB&L and the related notes
thereto and management's discussion included elsewhere in this report.

FINANCIAL DATA:
                                                       At March 31
                                                ------------------------
                                                   2000         1999(2)
                                                ----------     ---------
Total assets ...............................    $7,981,684     7,382,732
Cash and cash equivalents ..................       512,729       775,314
Interest-bearing time deposits .............       590,000       891,000
Investment securities available for sale ...       163,317       211,827
Loans, net .................................     6,591,500     5,390,273
Federal Home Loan Bank stock ...............        55,100        55,100
Deposits ...................................     5,265,067     4,995,294
Long-term debt .............................     1,000,000       600,000
Total Stockholders' equity .................     1,586,663     1,667,578


                                        4
<PAGE>


OPERATING DATA:                           For the Fiscal Year Ended March 31,
                                          -----------------------------------
                                                   2000        1999(2)
                                                 --------     --------
Total interest income .......................    $629,303     $573,930
Total interest expense ......................     322,918      315,124
                                                 --------     --------
Net interest income .........................     306,385      258,806
Provision for loan losses ...................          --           --
                                                 --------     --------
Net interest income after
 provision for loan loss ....................     306,385      258,608
Other income ................................       4,177        7,193
Other expenses ..............................     273,040      218,003
                                                 --------     --------
Income before income tax ....................      37,522       47,996
Income tax expense ..........................       7,414       10,625
                                                 --------     --------
Net income ..................................    $ 30,108     $ 37,371
                                                 ========     ========
OTHER DATA:
Number of real estate loans outstanding .....         209          193
Number of deposit accounts ..................         639          611


KEY OPERATING RATIOS:
The table below sets forth certain
 performance ratios of CGB&L.              For the Fiscal Year Ended March 31,
                                           -----------------------------------
                                                    2000        1999(2)
                                                  --------     --------


Return on assets (net income divided
  by average total assets) ..................        0.38%        0.52%
Return on average equity (net income
  divided by average equity) ................        1.84%        2.75%
Average equity to average assets ............       20.69%       18.81%
Interest rate spread (difference
  between average yield on interest
  earning assets and average cost of
  interest bearing liabilities) .............        2.67%        2.82%
Net interest margin (net interest
  income as a percentage of average
  interest earning assets) ..................        3.88%        3.76%
Non-interest expense to average assets ......        3.46%        3.05%
Average interest-earning assets to
  interest bearing liabilities ..............      129.90%      120.37%
Allowance for loan losses to
  total loans at end of period ..............        0.50%        0.60%
Net charge offs to average outstanding
  loans during the period ...................         N/A          N/A
Ratio of nonperforming assets
  To total assets (1) .......................        1.70%        0.78%

-----------------------------
(1)  Nonperforming assets include non-accrual loans, accruing loans delinquent
     90 days or more and real estate owned.
(2)  On September 22, 1998, the Building & Loan converted from a state chartered
     mutual savings bank to a state chartered stock savings bank, therefore,
     1999 reflects the Building & Loan operations for 12 months and CGB&L from
     September 22, 1998 through March 31, 1999.


                                        5
<PAGE>


AVERAGE BALANCE SHEET

   The following table presents the average balance sheet for CGB&L for the
years ended March 31, 2000 and 1999, the interest on interest-earning assets and
interest-bearing liabilities and the related average yield or cost. The average
balances are derived from average monthly balances. The yields or costs are
calculated by dividing income or expense by the average balance of assets or
liabilities, respectively, for the periods shown except where noted otherwise.
The yields and costs include fees which are considered adjustments to yields.

<TABLE>
<CAPTION>
                                              AT MARCH 31,                        YEAR ENDED MARCH 31,
                                              -----------  -----------------------------------------------------------------
                                                 2000                   2000                              1999
                                                -------    --------------------------------    -----------------------------
                                                                                    AVERAGE                          AVERAGE
                                                           AVERAGE                   YIELD/    AVERAGE                YIELD/
                                                  RATE     BAL.(5)      INT.          RATE     BAL.(5)     INT.        RATE
                                                 ------    -------     ------       -------    -------    ------     -------
                                                                            (DOLLARS IN THOUSANDS)
<S>                                                <C>      <C>        <C>          <C>         <C>       <C>         <C>
INTEREST-EARNING ASSETS:
 LOANS, NET (1) .............................      8.14%    $6,309     $  550       8.72%(4)   $5,615     $  507      9.03%(4)
   INT-BEARING DEPOSITS WITH
    FINANCIAL INSTITUTIONS ..................      5.81      1,332         73       5.48%       1,081         62      5.74%
  SECURITIES ................................      2.61        192          6       3.13          194          5      2.58%
                                                            ------     ------                   ------    ------
TOTAL INTEREST-EARNING ASSETS ...............      7.88      7,833        629       8.03        6,890        574      8.33%
                                                                       ------                             ------
   NON-INTEREST-EARNING ASSETS ..............                   54                                267
                                                            ------                             ------
TOTAL ASSETS ................................               $7,887                             $7,157
                                                            ======                             ======
INTEREST-BEARING LIABILITIES:
  DEPOSITS:
    SAVINGS .................................      2.50     $  398         10       2.51       $  474         14      2.96
    CERTIFICATES ............................      5.47      4,815        264       5.48        4,650        262      5.64
                                                            ------     ------                  ------     ------
    TOTAL DEPOSITS ..........................      5.28      5,213        274       5.26        5,124        276      5.39
  FHLB ADVANCES .............................      6.29        817         49       6.00          600         39      6.50
                                                            ------     ------                  ------     ------
TOTAL INTEREST-BEARING
  LIABILITIES ...............................      5.44      6,030        323       5.36        5,724        315      5.51
                                                            ------     ------                  ------     ------

NON-INTEREST-BEARING LIABILITIES ............                  225                                 87
                                                            ------                             ------
  TOTAL LIABILITIES .........................                6,255                              5,811
  STOCKHOLDERS' EQUITY ......................                1,632                              1,346
                                                            ------                             ------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY ....               $7,887                             $7,157
                                                            ======                             ======
NET INTEREST INCOME;
  INTEREST RATE SPREAD (2) ..................      2.44%               $  306       2.67%                 $  259      2.82%
                                                 ======                ======     ======                  ======    ======
NET INTEREST MARGIN (3) .....................      3.57%                            3.88%                             3.76%
                                                 ======                           ======                            ======
RATIO OF AVERAGE INT-EARNING
 ASSETS TO INT-BEARING LIABILITIES ..........    125.90%                          129.90%                           120.37%
                                                 ======                           ======                            ======
</TABLE>

(1)  Amount is net of deferred loan fees, loan discounts and premiums, loans in
     process, allowance for loan losses and nonperforming loans.

(2)  Net interest rate spread represents the difference between the yield on
     average interest-earning assets and the cost of average interest-bearing
     liabilities.

(3)  Net interest margin represents net interest income divided by average
     interest-earning assets.

(4)  Loan fees included in interest income were $37,199 and $26,013 for 2000 and
     1999, respectively.

(5)  Average balances are based on month end balances.


                                        6
<PAGE>


   RATE/VOLUME ANALYSIS - The following table describes the extent to which
changes in interest rates and changes in the volume of interest-earning assets
and interest-bearing liabilities have affected CGB&L's interest income and
expense during the periods indicated. For each category of interest-earning
assets and interest-bearing liabilities, information is provided on changes
attributable to (i) changes in volume (change in volume multiplied by prior
rate), (ii) changes in rate (change in rate multiplied by prior volume); and
(iii) the total change in rate and volume. The combined effect of changes in
both rate and volume has been allocated proportionately to the change due to
volume and the change due to rate, based on the absolute value of each to the
total.

<TABLE>
<CAPTION>
                                           ----------------------         ----------------------
                                            Year Ended March 31,           Year Ended March 31,
                                           ----------------------         ----------------------
                                           2000      vs.     1999         1999      vs.     1998
                                           ----------------------         ----------------------
                                             Increase (Decrease)           Increase (Decrease)
                                                    Due to                        Due to
                                           ----------------------         ----------------------
                                           Volume    Rate     Net         Volume    Rate     Net
                                           ------    ----     ---         ------    ----     ---
                                               (In Thousands)                 (In Thousands)
<S>                                        <C>      <C>      <C>          <C>      <C>      <C>
Interest-earning assets:

  Loans, net ..........................    $ 61     ($18)    $ 43         $ 29     $ 12     $ 41

  Interest-bearing deposits with
    financial institutions ............      14       (3)      11           (7)      (2)      (9)

  Securities ..........................      --        1        1           --       --       --
                                           ----     ----     ----         ----     ----     ----

  Total change in interest income .....    $ 76     $(21)    $ 55         $ 17     $ 15     $ 32
                                           ----     ----     ----         ----     ----     ----
Interest-bearing liabilities:

  Deposits:

  Savings .............................      (2)      (2)      (4)          --       (1)      (1)

  Certificates ........................       9       (7)       2          (13)       1      (12)

  FHLB advances .......................      13       (3)      10           16        2       18
                                           ----     ----     ----         ----     ----     ----
  Total change in
    interest expense ..................      17       (9)       8            1        4        5
                                           ----     ----     ----         ----     ----     ----

Net change in net interest income .....    $ 60     ($13)    $ 47         $ 16     $ 11     $ 27
                                           ====     ====     ====         ====     ====     ====
</TABLE>


                                        7
<PAGE>


INVESTMENT ACTIVITIES

   Under applicable regulations of the Commissioner, the Building & Loan has the
authority to invest in various types of liquid assets, including United States
Treasury obligations, obligations of various Federal agencies and corporations
and of state and municipal governments, Federal Home Loan Bank of Chicago stock,
and certificates of deposit, demand or savings accounts or other insured
obligations of federally insured financial institutions. Subject to various
restrictions, the Building & Loan may also invest a portion of its assets in
investment grade commercial paper and debt securities.

   Investment decisions are made by the C.E.O. of CGB&L in accordance with an
investment policy adopted by the Board of Directors of CGB&L. Under the
investment policy in effect as of the date hereof, CGB&L is permitted to invest
in U.S. treasury bills, notes and bonds, securities backed by the full faith and
credit of the federal government or federal agencies, state, county and
municipal securities that meet specified credit standards and certificates of
deposit, demand or savings accounts or other insured obligations of federally
insured financial institutions. Under CGB&L's investment policy, CGB&L may
invest in certain other forms of bank-eligible securities if such investment is
approved by the Board of Directors.

   At March 31, 2000 CGB&L held $163,317 in investments securities, compared
with $211,827 at March 31, 1999.

   The following table sets forth CGB&L's investment securities portfolio at
carrying value at the dates indicated.

                                                    March 31,
                                  --------------------------------------------
                                           2000                   1999
                                  --------------------    --------------------
                                    Book    Percent of      Book    Percent of
                                    Value   Portfolio       Value   Portfolio
                                  --------  ----------    --------  ----------
FHLMC common stock............    $163,317     100%       $211,827     100%
                                  ========     ====       ========     ====


The FHLMC common stock had a book value and market value of $163,317 as of March
31, 2000 which was in excess of 10% of CGB&L's retained earnings at that date.

LENDING ACTIVITIES

   GENERAL. Historically, the principal lending activity of the Building & Loan
has been the origination of long-term fixed-rate mortgage loans for the purpose
of constructing, financing or refinancing one- to four-family residential
properties. The Building & Loan also originates, from time to time, multi-family
and commercial real estate loans, and consumer share loans, although such loans
presently constitute a relatively small percentage of the Building & Loan's
total loan portfolio.


                                        8
<PAGE>


     LOAN PORTFOLIO COMPOSITION. Virtually all of the loan portfolio is secured
by properties located in Piatt, Macon, and Moultrie counties in Central
Illinois. All loans are fixed rate loans with maximum maturities of 30 years or
less. The Building & Loan has historically not sold loans in the secondary
mortgage market, including transactions with FHLMC or mortgage brokers. The
following table sets forth the composition of the consolidated loan portfolio in
dollar amounts and in percentages of the respective portfolios at the dates
indicated:

                                          Amount of Loans Outstanding at
                                          ------------------------------

                                               March           March
                                             31, 2000        31, 1999
                                            -----------     -----------
Real estate
 One- to four-family residential            $ 6,361,223     $ 5,272,294

 Multi-family residential                        68,777          78,901

 Commercial                                     255,131         174,524
                                            -----------     -----------
  Total Real Estate Mortgage Loans            6,685,131       5,525,719
 Consumer (Share loans)                         124,841          67,892
                                            -----------     -----------
                                              6,809,972       5,593,611
Less:
 Undisbursed portion of loans (1)              (122,500)       (100,291)

 Deferred loan fees                             (63,272)        (70,347)
                                            -----------     -----------
   Total loans, gross                         6,624,200       5,422,973

 Allowance for loan losses                      (32,700)        (32,700)
                                            -----------     -----------
   Total loans, net                         $ 6,591,500     $ 5,390,273
                                            ===========     ===========

(1)  The undisbursed portion of loans represents amounts included in gross loans
     that have been approved, but not disbursed to the borrower.

                                        Percentage of Loans Outstanding at
                                        ----------------------------------

                                               March           March
                                             31, 2000        31, 1999
                                            ----------      ----------
Real estate:
 One- to four-family                           93.4%            94.3%
 Multi-family residential                       1.0              1.4
 Commercial                                     3.8              3.1

Consumer (Share loans)                          1.8              1.2
                                            -------          -------
Total loans                                   100.0%           100.0%
                                            =======          =======


                                        9
<PAGE>


   ONE- TO FOUR-FAMILY RESIDENTIAL LOANS. The primary lending activity of the
Building & Loan is the extension of fixed rate first mortgage residential loans
ranging in terms from 15 to 30 years to enable borrowers to purchase existing
one- to four-family homes or to construct new one- to four-family homes.
Management believes that its policy of focusing on one- to four-family
residential mortgage loans has been successful in contributing to interest
income while keeping delinquencies and losses to a minimum.

   The average outstanding balance of the loans included in the Building &
Loan's one- to four-family residential loan portfolio as of March 31, 2000 was
approximately $30,582. Management estimates that the average size of a new
single family residential first mortgage loan in its market area is
approximately $45,000.

   The loan-to-value ratio of most single family first mortgage loans made by
the Building & Loan is 80% or less. The maximum loan-to-value ratio is 90%. When
a loan is more than 80% loan-to-value, the interest rate increases to justify
the additional risk exposure. Under the Building & Loan's lending policies, the
maximum loan-to-value ratio on a loan for the construction of a new single
family residential home is 80%, and the maximum loan-to-value ratio on loans on
two- to four-family dwellings is 80%.

   The Building & Loan requires title insurance, or an attorney's opinion as to
title, and fire and casualty insurance coverage of the property securing any
mortgage loan originated by the Building & Loan. All of the Building & Loan's
real estate loans contain due-on-sale clauses which provide that if the
mortgagor sells, conveys or alienates the property underlying the mortgage note,
the Building & Loan has the right at its option to declare the note immediately
due and payable without notice. The Building & Loan's practice is to enforce
such due-on-sale clauses.

   MULTI-FAMILY RESIDENTIAL LENDING. Under the Building & Loan's current lending
policies, multi-family real estate loans are generally limited to 80% of the
appraised value of the property or the selling price, whichever is less. Loans
secured by multi-family real estate are generally larger and, like commercial
real estate loans, involve a greater degree of risk than one- to four-family
residential loans. The number of multi-family residential dwellings in the
Building & Loan's market area is limited, and mortgage loans on such dwellings
have historically represented a relatively small percentage of the Building &
Loan's loan portfolio. The Building & Loan does not anticipate that the
origination of such loans will constitute a significant part of its future
lending business.

   COMMERCIAL REAL ESTATE LOANS. The Building & Loan has historically made
commercial real estate loans on a limited basis as first mortgage loans. Such
loans are secured by office and retail buildings. Borrowers are always
established businesses with ties to the Cerro Gordo community. The loan-to-value
ratio of commercial real estate first mortgage loans made by the Building & Loan
is 80% or less.

   Loans secured by commercial real estate are generally larger and involve a
greater degree of risk than one- to four-family residential loans. Because
payments on loans secured by commercial real estate properties are often
dependent on the successful operation or management of the properties, repayment
of such loans may be subject to adverse conditions in the real


                                       10
<PAGE>


estate market or the economy. The Building & Loan's practice has been to
underwrite such loans based on its analysis of the amount of cash flow generated
by the business in which the real estate is used and the resulting ability of
the borrower to meet its payment obligations. Although such loans are secured by
a first mortgage on the underlying property, the Building & Loan also generally
seeks to obtain a personal guarantee of the loan by the owner of the business in
which the property is used. The Building & Loan does not anticipate that the
origination of such loans will constitute a significant part of its future
lending business.

   SHARES LOANS. Share Loans are loans to depositors of the Building & Loan
which are secured by the borrowers' deposits. Under the Building & Loan's
current lending policies, share loans are limited to 90% of the borrower's
savings on deposit with the Building & Loan. The borrower's deposit account is
flagged by the Building & Loan. These accounts are monitored to insure that the
loan principal and interest balance is not more than 90% of the borrower's
passbook account or certificate of deposit. The rate of interest charged on
share loans is the greater of (i) the rate on direct reduction mortgage loans on
personal residences, or (ii) one and one-half percent over the interest rate
paid on the deposit account that is pledged as collateral.

   DELINQUENCIES. The Building & Loan's collection procedures with respect to
delinquent loans include written notice and telephone contact by Building & Loan
personnel. Most loan delinquencies are cured within 90 days and no legal action
is taken. With respect to mortgage loans, if the delinquency exceeds 90 days,
the Building & Loan institutes measures to enforce its remedies resulting from
the default, including the commencement of foreclosure action or the
repossession of collateral.

   NON-PERFORMING ASSETS. Non-performing assets include loans placed on
non-accrual status, loans that are 90 or more days past due, troubled debt
restructurings and foreclosed properties. The Building & Loan places loans that
are 90 days or more past due on non-accrual status unless such loans are
adequately collateralized and in the process of collection. Accrual of interest
on a non-accrual loan is resumed only when all contractually past due payments
are brought current and management believes that the outstanding loan principal
and contractually due interest are no longer doubtful of collection. As of March
31, 2000, no loans were on non-accrual status.

   Property acquired by the Building & Loan as a result of a foreclosure,
property upon which a judgement of foreclosure has been entered but for which no
foreclosure sale has yet taken place and property which is in substance
foreclosed are classified as foreclosed property or real estate owned.
Foreclosed properties are recorded at the lower of the unpaid principal balance
of the related loan or fair market value. The amount by which the recorded loan
balance exceeds the fair market value at the time the property is classified as
foreclosed property is charged against the allowance for loan losses. Any
subsequent reduction in the carrying value of a foreclosed property, along with
expenses to maintain or dispose of a foreclosed property, is charged against
current earnings. As of March 31, 2000, the Building & Loan had no foreclosed
properties or "real estate owned."

   The following table sets forth information with respect to the Building &
Loan's non-performing assets for the periods indicated. During the periods
shown, the Building & Loan had no troubled debt restructured loans within the
meaning of Statement of SFAS 15.


                                       11
<PAGE>


                                                            At March 31,
                                                        --------------------
                                                          2000        1999
                                                        --------    --------
Loans accounted for on
  a non-accrual basis: .............................    $     --    $     --
Accruing loans which are contractually
 Past due 90 days or more:
   Real estate -
    One- to four-family ............................     135,705      57,415
    Multi-family ...................................          --          --
    Commercial .....................................          --          --
   Share ...........................................          --          --
                                                        --------    --------
    TOTAL ..........................................    $135,705    $ 57,415
                                                        --------    --------
Total of nonaccrual and 90 days past due loans .....    $135,705    $ 57,415

Real estate owned ..................................          --          --
Other nonperforming assets .........................    $     --          --
                                                        --------    --------
  Total nonperforming assets .......................    $135,705    $ 57,415
                                                        ========    ========

Total loans delinquent 90 days or more to net loans         2.06 %      1.07 %
Total loans delinquent 90 days or more to total assets      1.70 %       .78 %
Total nonperforming assets to total assets                  1.70 %       .78 %

   As of and during years ended March 31, 2000 and 1999 there were no impaired
loans. In applying the provisions of Statement of Financial Accounting Standards
(SFAS) No. 114, the Building and Loan considers its investments in one- to
four-family residential and share loans to be homogeneous and therefore excluded
from separate identification for valuation of impairment. As of March 31, 2000
the Building & Loan has no loans which are not described above, but where known
information about possible credit problems of borrowers causes management to
have serious doubts as to the ability of such borrowers to comply with the
present repayment terms.

   CLASSIFIED ASSETS. FDIC policies require that each insured depository
institution review and classify its assets on a regular basis. In addition, in
connection with examinations of insured institutions, regulatory examiners have
the authority to identify problem assets and, if appropriate, require them to be
classified. The Building & Loan reviews and classifies its assets at least
quarterly. There are three classifications for problem assets: substandard,
doubtful and loss. Substandard assets must have one or more defined weaknesses
and are characterized by the distinct possibility that the insured institution
will sustain some loss if the deficiencies are not corrected. Doubtful assets
have the weaknesses of substandard assets, with the additional characteristic
that the weaknesses make collection or liquidation in full on the basis of
currently existing facts, conditions and values, questionable, and there is a
high possibility of loss. An asset classified as loss is considered unable to
collect and of such little value that continued treatment of the asset as an
asset on the books of the institution is not warranted.


                                       12
<PAGE>


   An insured institution is required to establish prudent general allowances
for loan losses with respect to assets classified as substandard or doubtful.
The institution is required either to charge off assets classified as loss or to
establish a specific allowance for 100% of the portion of the asset classified
as loss.

   At March 31, 2000 and 1999 the aggregate amounts of the Building & Loan's
classified assets and the Building & Loan's general loss allowances for the
period then ended, were as follows:

                                              At March 31,
                                       ------------------------
                                         2000            1999
                                       --------        --------
Substandard assets..................   $135,705        $ 57,415
General loss allowances.............   $ 32,700        $ 32,700

   The classified assets identified in the table above at March 31, 2000 relate
to four residential mortgage loans and at March 31, 1999 relate to two
residential mortgage loans.

   ALLOWANCE FOR LOAN LOSSES. The Building & Loan's management evaluates the
amount of its allowance for loan losses quarterly. Such evaluation includes a
review of all loans for which full ability to collect may not be reasonably
assured and considers among other matters, the estimated market value of the
underlying collateral of problem loans, prior loss experience, economic
conditions and overall portfolio quality. The Building & Loan's determination as
to its classification of assets and the amount of its specific and general
valuation allowances are subject to review by the Commissioner and the FDIC,
either of which can require the Building & Loan to establish additional general
or specific loan loss allowances. Provisions for losses are charged against
earnings in the year they are established and added to the allowance. Loan
losses are charged against the allowance.

   The Building & Loan established no provisions for loan losses for the years
ended March 31, 2000 and March 31, 1999. At March 31, 2000, the Building & Loan
had an allowance for loan losses of $32,700, or, .50%, of total loans, and
24.10% of nonperforming assets.

   Management believes that the Building & Loan's loan loss reserves were
adequate at March 31, 2000. There can be no assurance, however, that the
allowance for loan losses will be adequate to cover losses which may in fact be
realized in the future and that additional provisions for loan losses will not
be required. Any material increase in reserves or material loss for which an
adequate reserve has not been established may adversely affect the Building &
Loan's financial condition and earnings.

   The following table sets forth an analysis of the Building & Loan's gross
allowance for possible loan losses for the periods indicated. Where specific
loan loss reserves have been established, any difference between the loss
reserve and the amount of loss realized has been charged or credited to current
income.


                                       13
<PAGE>


<TABLE>
<CAPTION>
                                                                 Period Ended March 31,
                                                                 ----------------------
                                                                   2000          1999
                                                                 -------       -------
<S>                                                              <C>           <C>
Allowance at beginning of period ...........................     $32,700       $32,700
Provision for loan losses ..................................          --            --
  Total recoveries .........................................          --            --

  Total charge offs ........................................          --            --
                                                                 -------       -------
  Balance at end of period .................................     $32,700       $32,700
                                                                 =======       =======
Ratio of allowance to total loans
 outstanding at the end of the period                                .50%          .60%
Ratio of net charge offs to average
 loans outstanding during the period                                 N/A           N/A
</TABLE>

   The following table sets forth the breakdown of the allowance for loan losses
by loan category for the periods indicated.

<TABLE>
<CAPTION>
                                                    At March 31,
                                -------------------------------------------------------
                                           2000                          1999
                                --------------------------   --------------------------
                                              As % of                      As % of
                                         Outstanding Loans            Outstanding Loans
                                Amount      in Category      Amount      in Category
                                -------  -----------------   -------  -----------------
<S>                             <C>               <C>        <C>               <C>
Real estate - mortgage:
  One- to four- family ......   $30,850           94%        $30,850           94%
  Multi-family ..............        --           --              --           --
  Commercial ................     1,850            6%          1,850            6%
Share .......................        --           --              --           --
Unallocated .................        --           --              --           --
Total allowance for
 loan losses ................   $32,700          100%        $32,700          100%
                                =======      =======         =======      =======
</TABLE>

DEPOSIT ACTIVITIES AND OTHER SOURCES OF FUNDS

   GENERAL. The Building & Loan's primary sources of funds for use in lending
and investing and for other general purposes are deposits and proceeds from
principal and interest payments on loans, investment securities and interest
bearing time deposits. Contractual loan repayments are a relatively stable
source of funds, while deposit inflows and outflows and loan prepayments are
significantly influenced by general interest rates and money market conditions.
Borrowings may be used to compensate for reductions in the availability of funds
from other sources.

   DEPOSIT ACCOUNTS. The Building & Loan attracts deposits within its primary
market area by offering a variety of deposit accounts, including passbook
savings accounts and certificates of deposit. The flow of deposits is influenced
significantly by general economic conditions, changes in money market and
prevailing interest rates, and competition. Management generally reviews at
least on a monthly basis the interest rates set for its deposit


                                       14
<PAGE>


accounts. The Building & Loan has historically paid deposit rates at the higher
end of the range offered by its competitors, in order to retain existing and
attract new deposits, although there are no assurances that management will
continue the practice in the future. Such practice is also subject to regulation
by the FDIC. The Building & Loan also relies on customer service and
long-standing relationships with customers to attract and retain deposits.

   At March 31, 2000, the Building & Loan had one $100,000 deposit invested in a
certificate account in the amount of $100,000 with a remaining maturity of 3
months or less.

   The following table shows the average amount of deposits and average rate of
interest paid thereon for the years indicated.

                                     March 31, 2000          March 31, 1999
                                   -----------------       -----------------
                                     Amount    Rate          Amount    Rate
                                   ----------  -----       ----------  -----
Regular Savings Accounts           $  398,330  2.51%       $  473,674  2.96%

Fixed Rate Certificate of Deposit   4,814,978  5.48%        4,649,831  5.64%
                                   ----------  -----       ----------  -----
            Total Deposits         $5,213,308  5.26%       $5,123,505  5.39%
                                   ==========  =====       ==========  =====


RETURN ON EQUITY AND ASSETS                             2000           1999
                                                       ------         ------
Return on assets (net income divided by
  average total assets)                                 0.38%          0.52%
Return on equity (net income divided by
  average total equity)                                 1.84%          2.75%
Dividend payout ratio (dividends per
   share divided by net income per share)               0.61%          0.00%
Equity to assets ratio (average equity
   divided by average total assets)                    20.69%         18.81%


SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES, LITIGATION REFORM ACT OF
1995

This report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. CGB&L intends such forward-looking
statements to be covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Reform Act of 1995, and is
including this statement for purposes of these safe harbor provisions.
Forward-looking statements, which are based on certain assumptions and describe
future plans, strategies and expectations of CGB&L, are generally identifiable
by use of the words "believe," "expect," "intend," "anticipate," "estimate,"
"project" or similar expressions. CGB&L's ability to predict results or the
actual effect of future plans or strategies is inherently uncertain. Factors
which could have a material adverse affect on the operations and future
prospects of CGB&L and the subsidiaries include, but are not limited to, changes
in: interest rates, general economic conditions,


                                       15
<PAGE>


legislative/regulatory changes, monetary and fiscal policies of the U.S.
Government, including policies of the U.S. Treasury and the Federal Reserve
Board, the quality or composition of the loan or investment portfolios, demand
for loan products, deposit flows, competition, demand for financial services in
CGB&L's market area and accounting principles, policies and guidelines. These
risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements. Such
statements speak only of CGB&L's views as of the date this statement was made,
and they are not a guarantee of future performance. Certain factors concerning
CGB&L and its business, including additional factors that could affect CGB&L's
financial results, are listed below.

   The substantial increase in stockholder's equity due to the conversion may
result in a reduction of the Building & Loan's return on average equity (net
income divided by average equity) compared with historical levels, absent a
corresponding increase in net income. It is not expected that the Building and
Loan will be able to increase net income in future periods commensurate with the
increase in equity.

   The Building & Loan depends to a considerable degree on a limited number of
key management personnel, in particular, the C.E.O., Maralyn F. Heckman and
Board Secretary Michelle Shively. The loss of such personnel could adversely
effect the Building and Loan's operations. CGB&L and the Building & Loan have
entered into Employment Agreements with Mrs. Heckman. Management believes that
the future success of CGB&L will depend in large part upon its abilities to
attract and retain qualified personnel.

   The ESOP and MRP expenses planned for employee incentive, increase employee
compensation expense and could affect the future earnings of the Building &
Loan.

   Potential impact of changes in real estate property values could have a
material effect on the Building and Loan's operations. At March 31, 2000,
approximately 98.2% of the Building & Loan's net loan portfolio consisted of
loans secured by real estate properties located in central Illinois. There is no
assurance as to the future performance of the central Illinois real estate
markets.

   Potential changes in interest rates could effect the Building & Loan's future
earnings. The operations of the Building and Loan are substantially dependent on
its net interest income, which is the difference between the interest income
earned on its interest-earning assets and the interest expense paid on its
interest-bearing liabilities. "See Business of the Building & Loan."

   Significant competition both in attracting deposits and in originating loans
could be a factor to the Building & Loan's future earnings due to the low growth
primary market area. Reporting requirements related to being a public company
have increased expenses, effecting consolidated earnings.

   The factors discussed above, among others, could cause our actual results to
differ. Though CGB&L has attempted to list the important factors above, CGB&L
cautions you that other factors may in the future prove to be important in
affecting CGB&L's results. New factors emerge from time to time, and it is not
possible for management to predict all of such factors, nor can it


                                       16
<PAGE>


assess the impact of each such factor on the business or the extent to which any
factor or combination of factors may cause actual results to differ materially
from those contained in any forward looking statement.

ASSET AND LIABILITY MANAGEMENT

   Asset and liability management is used to maintain an appropriate balance
between liquidity for the Building and Loan, on the one hand, and
interest-earning assets and interest-bearing liabilities, on the other, in order
to produce stable net income during changing market interest-rate cycles. The
operations of the Building and Loan are substantially dependent on its net
interest income, which is the difference between the interest income earned on
its interest-earning assets and the interest expense paid on its
interest-bearing liabilities.

   Like most savings institutions, the Building and Loan's earnings are affected
by changes in market interest rates and other economic factors beyond its
control. If an institution's interest-earning assets have longer effective
maturities than its interest-bearing liabilities, the yield on the institution's
interest-earning assets generally will adjust more slowly than the cost of its
interest-bearing liabilities. As a result, the institution's net interest income
generally would be adversely affected by material and prolonged increases in
interest rates and positively affected by comparable declines in interest rates.

   The Building and Loan's Board of Directors monitors its interest rate
sensitivity through the use of the net portfolio value model produced by the
Commissioner which generates estimates of the change in the Savings Bank's net
portfolio value ("NPV") over a range of interest rate scenarios. NPV is the
present value of expected cash flows from assets, liabilities, and off-balance
sheet contracts. The NPV ratio, under any interest rate scenario, is defined as
the NPV in that scenario divided by the market value of assets in the same
scenario. The Commissioner produces such estimates utilizing its own model,
based upon data submitted on the Building and Loan's Call Report on a quarterly
basis. The Commissioner's model assumes estimated loan prepayment rates,
reinvestment rates and deposit decay rates.

   The Building and Loan has sought to reduce the vulnerability of its
operations to changes in interest rates by managing the nature and composition
of its interest rate sensitive assets and liabilities. Management believes that
the assumptions used by the NPV model to evaluate the vulnerability of the
Building and Loan's operations to changes in interest rates approximate actual
experience and considers them reasonable. Management takes into account that the
interest rate sensitivity of the Building and Loan's assets and liabilities and
the estimated effects of changes in interest rates on the Building and Loan's
net income.

   The Building and Loan's deposits include a relatively high amount of
certificates of deposit ("certificates"), which are generally higher costing and
more interest-rate sensitive than "core" deposits. At March 31, 2000, $4.9
million of the Building and Loan's total deposits were comprised of certificates
of which $1.7 million, or 34.7%, were scheduled to mature within one year.
Certificates generally are costlier and a more volatile source of funds than
savings accounts. In addition, certificates are more likely to be invested in
other instruments than are savings accounts. Notwithstanding the


                                       17
<PAGE>


foregoing, management believes that most of its certificates will remain at the
Building and Loan upon maturity. The Building and Loan does not accept brokered
deposits.

   In addition to affecting interest income and expense, changes in interest
rates also would affect the value of the Building and Loan's interest-earning
assets, which are comprised of fixed instruments, and the ability to realize
gains from the sale of such assets if the loans were sold. The Building and Loan
has always serviced all loans locally and does not have plans to sell any of the
loan portfolios. As of March 31, 2000, $6.6 million or 87.9% of the Building and
Loan's interest-earning assets were fixed-rate loans.

COMPETITION

   The Building & Loan faces strong competition both in attracting deposits and
making real estate loans. Its most direct competition for deposits has
historically come from other savings institutions, credit unions and commercial
banks located in its market area including many large financial institutions
that have greater financial and marketing resources available to them. As of
March 31, 2000, the Building & Loan's total deposits ranked eighth out of eight
commercial banks and savings associations operating in Piatt County, Illinois.
In addition, during times of high interest rates, the Building & Loan has faced
significant competition for investors' funds from short-term money market
securities, mutual funds and other corporate and government securities. The
ability of the Building & Loan to attract and retain savings deposits depends on
its ability to generally provide a rate of return, liquidity and risk comparable
to that offered by competing investment opportunities.

   The Building & Loan experiences strong competition for real estate loans
principally from other savings institutions, and commercial banks. The Building
& Loan competes for loans principally through the interest rates and loan fees
it charges, the efficiency and quality of services it provides borrowers and the
convenient location of its office. Competition may increase as a result of
internet lending and the continuing reduction of restrictions on the interstate
operations of financial institutions.

LIQUIDITY

   The Building and Loan's primary sources of funds are deposits, principal and
interest payments on loans and FHLB advances. While maturities and scheduled
amortizations of loans are predictable sources of funds, deposit flows and
mortgage prepayments are greatly influenced by general interest rates, economic
conditions, and competition. The Federal Deposit Insurance Corporation ("FDIC"),
CGB&L's and the Building and Loan's primary regulator, requires the Building and
Loan to maintain minimum levels of liquid assets. Currently, the required ratio
is 5%. The Building and Loan's liquidity ratio was 15.16% at March 31, 2000,
well above the required minimum.

   As of March 31, 2000, the Building and Loan had outstanding commitments
(including undisbursed loan proceeds) of $200,500. The Building and Loan
anticipates it will have sufficient funds available to meet its current loan
origination commitments. Certificates of deposit, scheduled to mature in one
year or less from March 31, 2000, total approximately $1.7 million. Based upon
the Building and Loan's experience, management believes that a significant
portion of such deposits will remain with the Building and Loan.


                                       18
<PAGE>


PERSONNEL

   As of March 31, 2000, the Building & Loan had a total of 4 full-time
employees. The Building & Loan's employees are not represented by a union or
collective bargaining group. The Building & Loan considers its relationship with
its employees to be satisfactory.

                         REGULATION AND SUPERVISION
GENERAL

   Financial institutions and their holding companies are extensively regulated
under federal and state law by various regulatory authorities including the
Federal Reserve Board, the Federal Deposit Insurance Corporation "FDIC" and the
Illinois Office of Banks and Real Estate "Commissioner". The financial
performance of the CGB&L and the Building & Loan may be affected by such
regulation, although the extent to which they may be affected cannot be
predicted with a high degree of certainty.

   Federal and state laws and regulations generally applicable to financial
institutions and their holding companies regulate, among other things, the scope
of business, investments, reserves against deposits, capital levels relative to
operations, the nature and amount of collateral for loans, the establishment of
branches, mergers, consolidations and dividends. The system of supervision and
regulation applicable to CGB&L and the Building & Loan establishes a
comprehensive framework for their operations and is intended primarily for the
protection of the FDIC's deposit insurance funds and the depositors of the
Building & Loan, rather than the stockholders of the CGB&L.

   The following references to material statutes and regulations affecting the
CGB&L and the Building & Loan are brief summaries thereof and are qualified in
their entirety by reference to such statutes and regulations. Any change in
applicable law or regulations may have a material effect on the business of the
CGB&L and the Building & Loan.

THE BUILDING & LOAN

   GENERAL. The Building & Loan is an Illinois-chartered savings bank, with
deposit accounts which are insured by the Saving Association Insurance Fund
"SAIF" of the FDIC. The Building & Loan is subject to the examination,
supervision, reporting and enforcement requirements of the Commissioner, as the
chartering authority for Illinois savings banks, and the FDIC, as administrator
of the SAIF, and to the statutes and regulations administered by the
Commissioner and the FDIC governing such matters as capital standards, mergers,
establishment of branch offices, subsidiary investments and activities and
general investment authority. The Building & Loan is required to file reports
with the Commissioner and the FDIC concerning its activities and financial
condition and will be required to obtain regulatory approvals prior to entering
into certain transactions, including mergers with, or acquisitions of, other
financial institutions.

   The Commissioner and the FDIC have extensive enforcement authority over
Illinois-chartered saving banks, such as the Building & Loan. This enforcement
authority includes, among other things, the ability to issue cease-and-desist or
removal orders, to assess civil money penalties and to


                                       19
<PAGE>


initiate injunctive actions. In general, these enforcement actions may be
initiated for violations of laws and regulations and unsafe and unsound
practices.

   The Commissioner has established a schedule for the assessment of
"supervisory fees" upon all Illinois savings banks to fund the operations of the
Commissioner. These supervisory fees are computed on the basis of each saving
bank's total assets (including consolidated subsidiaries) and are payable at the
end of each calendar quarter. A schedule of fees has also been established for
certain filings made by Illinois savings banks with the Commissioner. The
Commissioner also assesses fees for examinations conducted by the Commissioner's
staff, based upon the number of hours spent by the Commissioner's staff
performing the examination.

   CAPITAL REQUIREMENTS. Under the Illinois Savings Bank Act "ISBA" and the
regulations of the Commissioner, an Illinois savings bank must maintain a
minimum level of total capital equal to the higher of 3% of total assets or the
amount required to maintain insurance of deposits by the FDIC. The Commissioner
has the authority to require an Illinois savings bank to maintain a higher level
of capital if the Commissioner deems such higher level necessary based on the
savings bank's financial condition, history, management or earnings prospects.

   FDIC-insured institutions are required to follow certain capital adequacy
guidelines which prescribe minimum levels of capital and require that
institutions meet certain risk-based and leverage capital requirements.
FDIC-insured institutions in the strongest financial and managerial condition
(those not experiencing significant growth, with well-diversified risks,
excellent asset quality, gross earnings and a composite rating of "1" under the
Uniform Financial Institutions Rating System) are required to maintain "Tier 1
capital" to total assets of 3% (the "leverage capital requirement). For all
other FDIC-insured institutions, the minimum leverage limit requirement is a
ratio of tier 1 capital to total assets of 4%. Tier 1 capital is defined to
include the sum of common stockholders' equity, noncumulative perpetual stock
(including any related surplus), and minority interests in consolidated
subsidiaries, minus all intangible assets (other than qualifying servicing
rights, qualifying purchased credit-card relationships and qualifying
supervisory goodwill), certain identified losses (as defined in the FDIC's
regulations) and investments in certain subsidiaries.

   FDIC-insured institutions also are required to adhere to certain risk-based
capital guidelines which are designed to provide a measure of capital more
sensitive to the risk profiles of individual banks. Under the risk-based capital
guidelines, capital is divided into two tiers: core Tier 1)capital, as defined
above, and supplementary (Tier 2) capital. Tier 2 capital that may be recognized
for risk-based capital purposes is limited to 100% of core capital and includes
cumulative perpetual preferred stock, perpetual preferred stock for which the
dividend rate is reset periodically based on current credit standing, regardless
of whether dividends are cumulative or noncumulative, mandatory convertible
securities, subordinated debt, intermediate preferred stock and the allowance
for possible loan and lease losses. The allowance for possible loan and lease
losses includable in Tier 2 capital is limited to a maximum of 1.25% of
risk-weighted assets.


                                       20
<PAGE>


   Total capital is the sum of Tier 1 and Tier 2 capital. The risk-based capital
framework assigns balance sheet assets to one of four broad risk categories
which are assigned risk weighs ranging from 0% to 100% based primarily on the
degree of credit risk associated with the obligor. Off-balance sheet items are
converted on an on-balance sheet "credit equivalent" amount utilizing certain
conversion factors. The sum of the four risk-weighted categories equals risk
weighted assets.

   FDIC insured institutions must maintain Tier 1 capital of not less than 4% of
risk-weighted assets and total capital of not less than 8% of risk-weighted
assets. At March 31, 2000, the Building and Loan was in compliance with
applicable regulatory capital requirements as follows:

          Tier 1 Capital to Average Assets                 14.61%
          Tier 1 Capital to Risk Weighted Assets           31.85%
          Risk Based Capital to Risk Weighted Assets       32.75%

   DIVIDENDS. Under the ISBA, dividends may only be declared when the total
capital of the Building & Loan is greater that that required by Illinois law.
Dividends may be paid by the Building & Loan out of its net profits (i.e.,
earnings from current operations, plus actual recoveries on loans, investments
and other assets, after deducting all current expenses, including dividends or
interest on deposits, additions to reserves as required by the Commissioner,
actual losses, accrued dividends on preferred stock, if any, and all state and
federal taxes). The written approval of the Commissioner must be obtained,
however, before a savings bank having total capital of less than 6% of total
assets may declare dividends in any calendar year in an amount in excess of 50%
of its net profits for that calendar year. A Building & Loan may not declare
dividends in excess of its net profits in any year without the approval of the
Commissioner. In addition, before declaring a dividend on its capital stock, the
Building & Loan must transfer no less than 10% of its net profits of the
preceding half year in the case of quarterly of semi-annual dividends, or not
less than 10% of the net profits for the preceding two half periods in the case
of annual dividends to its paid-in surplus until it shall have paid in surplus
equal to its capital stock. Finally, the Building & Loan will be unable to pay
dividends in an amount which would reduce its capital below the greater (i) the
amount required by the FDIC, (ii) the amount required by the Commissioner or
(iii) the amount required for the liquidation account established by the
Building & Loan in connection with the Conversion. The Commissioner and the FDIC
also have the authority to prohibit the payment of any dividends by the Building
& Loan if the Commissioner or the FDIC determines that the distribution would
constitute an unsafe or unsound practice. For the calendar year ended March 31,
2000, the Building & Loan's net profits were $61,110, and the Building & Loan
could have paid dividends totaling $61,110 without the written approval of the
Commissioner and continued to maintain compliance with its capital requirements.

   STANDARDS FOR SAFETY AND SOUNDNESS. The federal banking agencies adopted
Interagency Guidelines Establishing Standards for Safety and Soundness (the
"Guidelines"). The Guidelines set forth the safety and soundness standards that
the federal banking agencies use to identify and address problems at insured
depository institutions before capital becomes impaired. The Guidelines address
internal controls and information systems, internal audit system, credit
underwriting, loan documentation, interest rate risk exposure, asset growth,
asset quality, earnings and compensation, and fees and


                                       21
<PAGE>


benefits. If FDIC determines that an insured institution fails to meet any
standard prescribed by the Guidelines, the FDIC may require the institution to
submit an acceptable plan to achieve compliance with the standard.

   BROKERED DEPOSITS. FDIC regulations govern the acceptance of brokered
deposits by insured financial institutions. Well-capitalized insured financial
institutions that are not troubled are not subject to brokered deposit
limitations. Adequately-capitalized insured financial institutions are able to
accept, renew or roll over brokered deposits but only (i) with a waiver from the
FDIC and (ii) subject to the limitation that they do not pay an effective yield
on any such deposit that exceeds by more than 75 basis points (a) the effective
yield paid on deposits of comparable size and maturity in such association's
normal market area for deposits accepted in it normal market area or (b) the
national prime rate paid on deposits of comparable size and maturity for
deposits accepted outside the institution's normal market area. Undercapitalized
insured financial institutions are not permitted to accept brokered deposits and
may not solicit deposits by offering an effective yield that exceeds by more
than 75 basis points the prevailing effective yields on insured deposits of
comparable maturity in the institution's normal market area or the market area
in which such deposits are being solicited. The Building & Loan is not presently
soliciting brokered deposits.

   LENDING RESTRICTIONS. Under the ISBA, the Building & Loan is prohibited from
making secured or unsecured loans for business, corporate, commercial or
agricultural purposes representing in the aggregate an amount in excess of 15%
of its total assets, unless a greater amount is authorized in writing by the
Commissioner.

   The Building & Loan is also subject to a loans-to-one borrower limitation.
Under the ISBA, the total loans and extensions of credit, both direct and
indirect, by the Building & Loan to any person (other than the United States
or its agencies, the State of Illinois or its agencies, and any municipal
corporation for money borrowed) outstanding at one time must not exceed the
greater of $500,000 or 20% of the Building & Loan's total capital plus general
loan loss reserves. In addition, the Building & Loan may make loans in an amount
equal to an additional 10% of the Building & Loan's capital plus general loan
loss reserves if the loans are 100% secured by readily marketable collateral.

   The FDIC and the other federal banking agencies have adopted regulations that
prescribe standards for extensions of credit that (i) are secured by real estate
or (ii) are made for the purpose of financing the construction or improvements
on real estate. The FDIC regulations require each institution to establish and
maintain written internal real estate lending standards that are consistent with
safe and sound banking practices and appropriate to the size of the institution
and the nature and scope of its real estate lending activities. The standards
also must be consistent with FDIC guidelines, which include loan-to-value
limitations for the different types of real estate loans. Institutions are also
permitted to make a limited amount of loans that do not conform to the proposed
loan-to-value limitations so long as such exceptions are reviewed and justified
appropriately. The guidelines also list a number of lending situations in which
exceptions to the loan-to-value standard are justified.

   PROMPT CORRECTIVE REGULATORY ACTION. Federal law requires, among other


                                       22
<PAGE>


things, that federal regulatory authorities take "prompt corrective action" with
respect to savings banks that do not meet minimum capital requirements. For
these purposes, the law establishes five capital categories: well capitalized,
adequately capitalized, undercapitalized, significantly undercapitalized, and
critically undercapitalized.

   The FDIC has adopted regulations to implement the prompt corrective action
legislation. Among other things, regulations define the relevant capital
measures for the five capital categories. An institution is deemed to be "well
capitalized" if it has a total risk-based capital ratio of 10% or greater, a
Tier I risk-based capital ratio of 6% or greater, and a leverage ratio of 5% or
greater, and is not subject to a regulatory order, agreement or directive to
meet and maintain a specific capital level for any capital measure. An
institution is deemed to be "adequately capitalized" if it has a total
risk-based capital ratio of 8% or greater, a Tier I risk-based capital ratio of
4% or greater, and generally a leverage ratio of 4% or greater. An institution
is deemed to be "undercapitalized" if it has a total risk-based capital ration
of less than 8%, a Tier I risk-based capital ratio of less than 4%, or generally
a leverage ratio of less than 4%. An institution is deemed to be "significantly
undercapitalized" if it has a total risk-based capital ratio of less than 6%, a
Tier I risk-based capital ratio of less than 3%, or a leverage ratio of less
than 3%. An institution is deemed to be "critically undercapitalized" if it has
a ratio of tangible equity (as defined in the regulations) to total assets that
is equal to or less than 2%.

   "Undercapitalized" institutions are subject to growth, capital distribution
(including dividend) and other limitations and are required to submit a capital
restoration plan. An institution's compliance with such plan is required to be
guaranteed by any company that controls the undercapitalized institutions in an
amount equal to the lesser of 5.0% of the institution's total assets when deemed
undercapitalized or the amount necessary to achieve the status of adequately
capitalized. If an "undercapitalized" institution fails to submit an acceptable
plan, it is treated as if it is "significantly undercapitalized." "Significantly
undercapitalized" institutions are subject to one or more of a number of
additional restrictions, including but not limited to an order by the FDIC to
sell sufficient voting stock to become adequately capitalized, requirements to
reduce total assets and cease receipt of deposits from correspondent banks or
dismiss directors or officers, and restrictions on interest rates paid on
deposits, compensation of executive officers and capital distributions by the
parent holding company. "Critically undercapitalized" institutions also may not,
beginning 60 days after becoming "critically undercapitalized," make any payment
of principal or interest on certain subordinated debt or extend credit for a
highly leveraged transaction or enter into any material transaction outside the
ordinary course of business. In addition, "critically undercapitalized"
institutions are subject to appointment of a receiver or conservator. Generally,
subject to a narrow exception, the appointment of a receiver or conservator is
required for a "critically undercapitalized" institution within 270 days after
it obtains such status.

   TRANSACTIONS WITH AFFILIATES. Under current federal law, transactions between
depository institutions and their affiliates are governed by Sections 23A and
23B of the Federal Reserve Act. An affiliate of a savings bank is any company or
entity that controls, is controlled by, or is under common control with the
savings bank, other than a subsidiary. In a holding company context, at a
minimum, the parent holding company of a savings bank and any


                                      23
<PAGE>


companies which are controlled by such parent holding companies are affiliates
of the savings bank. Generally, Section 23A limits the extent to which the
Building & Loan or its subsidiaries may engage in "covered transactions" with
any one affiliate to an amount equal to 10% of the Building and Loan's capital
stock and surplus, and contains an aggregate limit on all such transactions with
all affiliates to an amount equal to 20% of such capital stock and surplus. The
term "covered transactions" includes the making of loans or other extensions of
credit to an affiliate; the purchase of assets from an affiliate; the purchase
of, or an investment in, the securities of an affiliate; the acceptance of
securities of an affiliate as collateral for a loan or extension of credit to
any person; or issuance of a guarantee, acceptance, or letter of credit on
behalf of an affiliate. Section 23A also establishes specific collateral
requirements for loans or extensions of credit to, or guarantees, acceptances on
letters of credit issued on behalf of an affiliate. Section 23B requires that
covered transactions and a broad list of other specified transactions be on
terms substantially the same, or no less favorable, to the savings bank or its
subsidiary as similar transactions with non-affiliates. In the absence of
similar transactions, the terms must be those which, in good faith, would be
offered to those who are not affiliates.

   Further, Section 22(h) of the Federal Reserve Act restricts a savings bank
with respect to loans to directors, executive officers, and principal
stockholders. Under Section 22(h), loans to directors, executive officers and
stockholders who control, directly or indirectly, 10% or more of voting
securities of a savings bank, and certain related interests of any of the
foregoing, may not exceed, together with all other outstanding loans to such
persons and affiliated entities, the savings bank's total capital and surplus.
Section 22(h) also prohibits loans above amounts prescribed by the appropriate
federal banking agency to directors, executive officers, and shareholders who
control 10% of more of voting securities of a stock savings bank, and their
respective related interests, unless such loan is approved in advance by a
majority of the board of directors of the savings bank. Any "interested"
director may not participate in the voting. The loan amount (which includes all
other outstanding loans to such person and their related interests) as to which
such prior board of director approval is required, is greater of $25,000 or 5%
of capital and surplus or any loans over $500,000. Further, pursuant to Section
22(h), loans to directors, executive officers and principal shareholders must be
made on terms substantially the same as offered in comparable transactions to
other persons, except that such insiders may receive preferential loans made
pursuant to a benefit or compensation program that is widely available to the
institution's employees and does not give preference to the insider over other
employees. Section 22(g) of the Federal Reserve Act places additional
limitations on loans to executive officers.

   INSURANCE OF DEPOSIT ACCOUNTS. Deposits of the Building & Loan are presently
insured by the SAIF. The SAIF and the Bank Insurance Fund (the "BIF") are
required by law to achieve and maintain a ratio of insurance reserves to total
insured deposits equal to 1.25% percent. The BIF reached this required reserve
ratio during 1995, while some predictions indicated the SAIF would not reach
this target until the year 2002. The SAIF had not grown as quickly as the BIF
for many reasons, but in large part because almost half of SAIF premiums had to
be used to retire bonds issued by the Financing Corporation ("FICO Bonds") in
the late 1980s to recapitalize the Federal Savings and Loan Insurance
Corporation.


                                       24
<PAGE>


   Until 1995, the SAIF and BIF deposit insurance premium rate schedules had
been identical. But in mid-1995, the FDIC issued final rules modifying its
assessment rate schedules for SAIF and BIF member institutions. Under the
revised schedule, SAIF members continued to pay assessments ranging from $0.23
to $0.31 per $100 of deposits, while BIF members paid assessments ranging from
zero to $0.27 per $100 of deposits, but the majority of BIF members paid only
the minimum annual premium. Thrift industry representatives argued that this
significant premium differential caused savings associations to operate at a
competitive disadvantage to their BIF insured bank counterparts.

   On September 30, 1996, President Clinton signed the Deposit Insurance Funds
Act of 1996 ("DIFA") which among other things, imposed a special assessment of
65.7 basis points on SAIF assessable deposits held as of March 31, 1995, payable
November 27, 1996. As a result of the DIFA and the special assessment, the FDIC
has lowered the SAIF assessment to the current rate of 0 to 27 basis points.

   The amount each insured depository institution pays for FDIC deposit
insurance coverage is determined in accordance with a risk-based assessment
system under which all insured depository institutions are placed into one of
nine categories and assessed insurance premiums based upon their level of
capital and supervisory evaluation. SAIF member institutions classified as
well-capitalized and considered healthy pay the lowest premium (currently 0% of
deposits) while SAIF member institutions that are undercapitalized and of
substantial supervisory concern pay the highest premium (currently up to .27% of
deposits).

   FICO BOND PAYMENTS. The DIFA also amended the Federal Home Loan Bank Act to
impose the assessment for the payment of the FICO Bonds against both SAIF and
BIF deposits beginning in 1997. As of January 1, 1997, BIF deposits are assessed
for FICO payments at 20% of the rate assessed on SAIF deposits. The FICO
assessment rate on BIF and SAIF deposits will be the same beginning on the
earlier of January 1, 2000 or the date the BIF and SAIF are merged.

   FEDERAL RESERVE SYSTEM. The Federal Reserve Board regulations require
depository institutions to maintain non-interest-earning reserves against their
transaction accounts (primarily NOW and regular checking accounts). The Federal
Reserve Board regulations currently require that reserves be maintained against
aggregate transaction accounts as follows: for that portion of transaction
accounts aggregating $44.35 million or less (subject to adjustment by the
Federal Reserve Board) the reserve requirement is 3%; and for accounts greater
than $44.3 million, the reserve requirement is $1.329 million plus 10% (subject
to adjustment by the Federal Reserve Board between 8% and 14%) against that
portion of total transaction accounts in excess of $44.3 million. The first $4.9
million of otherwise reservable balances (subject to adjustments by the Federal
Reserve Board) are exempted from the reserve requirements. Because required
reserves must be maintained in the form of either vault cash, a
non-interest-bearing account at a Federal Reserve Bank or a pass-through account
as defined by the Federal Reserve Board, the effect of this reserve requirement
is to reduce the Building and Loan's interest-earning assets. Federal Home Loan
Bank ("FHLB") System members are also authorized to borrow from the Federal
Reserve "discount window," but Federal Reserve Board regulations require
institutions to exhaust all FHLB sources before borrowing from a Federal Reserve
Bank.


                                       25
<PAGE>


   COMMUNITY REINVESTMENT ACT. Under the Community Reinvestment Act, as amended
("CRA"), as implemented by FDIC regulations, a savings bank has a continuing and
affirmative obligation consistent with its safe and sound operation to help meet
the credit needs of its entire community, including low and moderate income
neighborhoods. The CRA does not establish specific lending requirements or
programs for financial institutions nor does it limit an institution's
discretion to develop the types of products and services that it believes are
best suited to its particular community, consistent with the CRA. The CRA
requires the FDIC, in connection with its examination of a savings institution,
to assess the institution's record of meeting the credit needs of its community
and to take such record into account in its evaluation of certain applications
by such institution. The FDIC is required to provide a written evaluation of an
institution's CRA performance utilizing a four-tiered descriptive rating system
and an institution's rating is subject to public disclosure. The Building &
Loan's latest CRA rating, received from the FDIC was "Satisfactory."

   FEDERAL HOME LOAN BANK SYSTEM. The Building & Loan is a member of the FHLB
System, which consists of 12 regional FHLBs. The FHLB provides a central credit
facility primarily for member institutions. The Building & Loan, as a member of
the FHLB of Chicago, is required to acquire and hold shares of capital stock in
that FHLB in an amount at least equal to 1% of the aggregate principal amount of
its unpaid residential mortgage loans and similar obligations at the beginning
of each year, or 1/20 of its advances (borrowings) for the FHLB of Chicago,
whichever is greater. The Building & Loan was in compliance with this
requirement with an investment in FHLB of Chicago stock at March 31, 2000, of
$55,100. FHLB advances must be secured by specified types of collateral and all
long-term advances may be obtained only for the purpose of providing funds for
residential housing financing. At March 31, 2000, the Building & Loan had $1
million in FHLB advances.

CGB&L

   GENERAL. CGB&L is a bank holding company and is the sole stockholder of the
Building & Loan. As a bank holding company, the CGB&L is required to register
with, and is subject to regulation by, the Federal Reserve Board under the Bank
Holding Company Act ("BHCA"). In accordance with Federal Reserve Board policy,
CGB&L is expected to act as a source of financial strength to the Building &
Loan and to commit resources to support the Building & Loan in circumstances
where CGB&L might not do so absent such policy. Under the BHCA, CGB&L is subject
to periodic examination by the Federal Reserve Board and is required to file
periodic reports of its operations and such additional information as the
Federal Reserve Board may require. Because the Building & Loan is chartered
under Illinois law, CGB&L is also subject to registration with, and regulation
by, the Commissioner under the ISBA.

   The BHCA requires prior Federal Reserve Board approval for, among other
things, the acquisition by a bank holding company of direct or indirect
ownership or control of more than five percent of the voting shares or
substantially all the assets of any bank or bank holding company, or for a
merger or consolidation of a bank holding company with another bank holding
company. With certain exceptions, the BHCA prohibits a bank holding company from
acquiring direct or indirect ownership or control of voting shares of any
company which is not a bank or a bank holding company and from engaging directly
or indirectly in any activity other than banking or managing or


                                       26
<PAGE>


controlling banks or performing services for its authorized subsidiaries. A
bank holding company may, however, engage in or acquire an interest in a company
that engages in activities that the Federal Reserve Board has determined by
regulation or order to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto.

   A bank holding company is a legal entity separate and distinct from its
subsidiary bank or banks. Normally, the major source of a holding company's
revenue is dividends a holding company receives from its subsidiary banks. The
right of a bank holding company to participate as a stockholder in any
distribution of assets of its subsidiary banks upon their liquidation or
reorganization or otherwise is subject to the prior claims of creditors of such
subsidiary banks. The subsidiary banks are subject to claims by creditors for
long- and short-term debt obligations, including substantial obligations for
federal funds purchased and securities sold under repurchase agreements, as well
as deposit liabilities. Under the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, in the event of a loss suffered by the FDIC in
connection with a banking subsidiary of a bank holding company (whether due to a
default or the provision of FDIC assistance), other banking subsidiaries of the
holding company could be assessed for such loss.

   Federal laws limit the transfer of funds by a subsidiary bank to its holding
company in the form of loans or extensions of credit, investments or purchase of
assets. "See The Building & Loan - Transactions with Affiliates".

   The Federal Reserve Board has adopted risk-based capital standards to assist
in evaluating bank holding company capital adequacy. For purposes of risk-based
capital standards, capital is broken into "core capital elements" (Tier 1
capital) and supplementary capital elements" (Tier 2 capital).

   A bank holding company's Tier 1 capital generally consists of common
stockholder's equity, noncumulative perpetual preferred stock (including any
related surplus); and minority interest in the common equity accounts of
consolidated subsidiaries offset by goodwill and certain other intangible
assets. A bank holding company's Tier 2 capital generally consists of allowance
for loan and lease losses (subject to certain limitations), perpetual preferred
stock and related surplus (subject to certain conditions, hybrid capital
instruments, perpetual debt and mandatory convertible debt securities, term
subordinated debt, and intermediate-term preferred stock.

   The Federal Reserve Board's capital standards require a minimum ratio of
qualifying total capital (i.e., Tier 1 plus Tier 2 capital) to weighted risk
assets of 8%, of which at least half should be in the form of Tier 1 capital. In
addition, the maximum amount of supplementary (i.e., Tier 2) capital that can be
counted toward the 8% standard is limited to 100% of a holding company's Tier 1
capital.

   The Federal Reserve Board has adopted a minimum ratio of Tier 1 capital to
total assets of 3% (the "Tier 1 Leverage Ratio") for strong bank holding
companies (those rated "1" under the BOPEC rating system for bank holding
companies) and for holding companies that have implemented risk-based capital
measures for market risk. For all other bank holding companies, the minimum Tier
1 Leverage Ratio is 4%. The Federal Reserve Board expects bank holding companies
with supervisory, financial, operational, or managerial weakness and those
anticipating or experiencing significant growth to maintain capital ratios well
above the minimum level.


                                       27
<PAGE>


INTERSTATE BANKING AND BRANCHING

   Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
(the "Riegle-Neal Act"), since September 29, 1995, the Federal Reserve Board is
permitted, under specified circumstances to approve the acquisition by a bank
holding company located in one state of a bank or a bank holding company located
in another state, without regard to any prohibition contained in state law.

   The Riegle-Neal Act permits states to require that a target bank have been in
operation for a minimum period, up to five years, and to impose non-
discriminatory limits on the percentage of the total amount of deposits with
insured depository institutions in the state which may be controlled by a single
bank or bank holding company. In addition, the Riegle-Neal Act imposed federal
deposit concentration limits (10% of nationwide total deposits, and 30% of total
deposits in the host state on applications subsequent to the applicant's initial
entry to the host state).

   The Riegle-Neal Act also authorized, effective June 1, 1997, the responsible
federal banking agency to approve applications for mergers of banks across state
lines without regard to whether such activity is contrary to state law. Any
state could, however, by adoption of a non-discriminatory law after September
29, 1994 and before June 1, 1997, either elect to have this provision take
effect before June 1, 1997 or opt-out of the provision. The effect of opting out
is to prevent banks chartered by, or having their main office located in, such
state from participating in any interstate branch merger. Each state is
permitted to retain a minimum age requirement of up to five years, a
non-discriminatory deposit cap, and non-discriminatory notice or filing
requirements. The responsible federal agency will apply the same federal
concentration limits and capital management adequacy requirements noted above
with respect to BHCA applications. Only Texas opted-out of the interstate merger
provision.

   While Illinois adopted legislation to opt-in to the interstate merger
provision, unlike some states and as permitted by federal law, Illinois law does
not authorize the establishment of de novo branches or the purchase by an
out-of-state bank of one or more branches of a bank with its main office in
Illinois. Since the laws of the various states which do authorize de novo
branches or branch purchases normally have reciprocity provisions, Illinois
state-chartered banks generally are not able to establish or acquire branches in
other states except through the merger with a bank in another state.

   Branches acquired in a host state by both out-of-state state-chartered and
national banks will be subject to community reinvestment, consumer protection,
fair lending and interstate branching laws of the host state to the same extent
as branches of a national bank having its main office in the host state. Among
other things, the Riegle-Neal Act also preserves state taxation authority,
prohibits the operation by out-of-state banks of interstate branches as deposit
production offices, imposes additional notice requirements upon interstate banks
proposing to close branch offices in a low or moderate-income area, and creates
new Community Reinvestment Act evaluation requirements for interstate depository
institutions.

RECENT DEVELOPMENTS

   On November 12, 1999, President Clinton signed legislation that will allow


                                       28
<PAGE>


bank holding companies to engage in a wider range of non-banking activities than
has been permitted up to now, including securities and insurance
activities. Under the Gramm-Leach-Bliley Act, a bank holding company that elects
to become a "financial holding company" may engage in any activity that the
Federal Reserve Board, in consultation with the Secretary of the Treasury,
determines is (1) financial in nature or incidental thereto, or (ii)
complementary to any such financial-in-nature activity, provided that such
complementary activity does not pose a substantial risk to the safety and
soundness of depository institutions or the financial system generally. A bank
holding company may elect to become a financial holding company only if each of
its depository institution subsidiaries is well-capitalized, well-managed, and
has a Community Reinvestment Act rating of "satisfactory" or better at its most
recent examination.

   This new law specifies many activities that are financial in nature,
including lending, exchanging, transferring, investing for pothers, or
safeguarding money or securities; underwriting and selling insurance; providing
financial, investment or economic advisory services; underwriting, dealing in,
or \making a market in securities; and those activities currently permitted for
bank holding companies that are so closely related to banking, or managing or
controlling banks, as to be a proper incident thereto.

   The Gramm-Leach-Bliley Act effects many other changes to federal law
applicable to Community Investment Group and the Bank. Among the changes are
provisions for streamlined bank holding company supervision; further definition
of the boundaries of state and federal regulatory authority over banking,
securities, and insurance activities carried on through the financial holding
company framework; and requirements that financial institutions take steps to
protect customers' nonpublic personal information" and establish and disclose to
customers the institution's policies and practices with respect to such
disclosures.

   The Gramm-Leach-Bliley Act requires the promulgation of new regulations,
several of which are expected in the twelve months following passage of the law.
At present, we are unable to predict the full impact the Gramm-Leach-Bliley Act
will have on the Bank and their affiliates.

IMPACT OF NEW ACCOUNTING STANDARDS

   During 1998, the Financial Accounting Standards Board ("FASB") issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities."  This Statement requires companies to record derivatives on the
balance sheet at their fair value.  Statement No. 137 amended the effective
date of Statement No. 133 to fiscal years beginning after June 15, 2000. The new
Statement applies to all entities. This Statement may not be applied
retroactively to financial statements of prior periods. The adoption of the
Statement will have no material impact on the Corporation's financial condition
or result of operations.

ITEM 2.   DESCRIPTION OF PROPERTY.

    The Building & Loan conducts its business through its sole office at 229 E.
South Street, Cerro Gordo, Illinois 61818. The institution moved to this office
in 1963. It consists of the first floor of a two-story, brick building. At March
31, 2000, the net book value of the Building & Loan's premises and equipment was
$16,526. The Building & Loan believes that its


                                       29
<PAGE>


facilities are adequate for its current needs and those of the foreseeable
future. The property is not subject to any encumbrances and is adequately
covered by insurance.

ITEM 3.   LEGAL PROCEEDINGS.

   CGB&L and the Building & Loan are, from time to time, a party to legal
proceedings arising in the ordinary course of its business, including legal
proceedings to enforce its rights against borrowers. CGB&L and the Building &
Loan are not currently a party to any legal proceedings which could reasonably
be expected to have a material adverse effect on the financial condition or
operations of CGB&L and the Building & Loan.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

   During the quarter ended March 31, 2000, no matters were submitted to a vote
of security holders through a solicitation of proxies or otherwise.

                                   PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

   The following table shows, for the indicated periods, the range of prices
per share of CGB&L's common stock in the over-the-counter market of which CGB&L
is aware. This information was obtained from Trident Securities, Inc. As to the
bid of 10.5, this information is based on a private transaction between CGB&L
and a shareholder.

   Except for the 10.5 bid, which was not over the counter, these quotations
represent inter-dealer prices without retail mark-ups, mark-downs or commissions
and do not necessarily represent actual stock transactions. For the period after
June 30, 1999, there were no high or low bids over the counter. At this time,
there is no active trading market in the stock.

   CGB&L's common stock was first issued on September 28, 1998 at a price to the
public of $10 per share.

                                Bid price               Dividend paid
                            High         Low
                            ----         ----           -------------
09/28/1998 - 12/31/1998     11           10                  --
01/01/1999 - 03/31/1999     11           11                  --
04/01/1999 - 06/30/1999     11            9                 .10
07/01/1999 - 09/30/1999     --           --                  --
10/31/1999 - 12/31/1999     10.5         10.5               .10
01/01/2000 - 03/31/2000     --           --                  --

   At March 31, 2000, there were approximately 90 holders of record of CGB&L's
common stock.

   The Board of Directors has the authority to declare dividends, subject to
statutory and regulatory requirements. The Board of Directors paid semi-annual
cash dividends of $.10 per share on May 11, 1999 to stockholders of record as of
April 27, 1999, again on November 10, 1999 to stockholders of record as of
October 26, 1999 and again on May 11, 2000 to stockholders of record as of April
27, 2000. Declarations of dividends and the amount of any declared dividends are
subject to the discretion of the Board of Directors,


                                       30
<PAGE>


and depend upon a number of factors, including, without limitation, investment
opportunities available to CGB&L, capital requirements, regulatory limitations,
CGB&L's financial condition and results of operations. When dividends are
declared, CGB&L probably will be largely dependent upon dividends from the
Building & Loan for funds to pay common stock dividends.
The Federal Reserve Board has issued a policy statement on the payment of cash
dividends by Building & Loan holding companies. In the policy statement, the
Federal Reserve Board expressed its view that a bank holding company
experiencing earnings weaknesses should not pay cash dividends exceeding its net
income or which could only be funded in ways that weakened the bank holding
company's financial health, such as by borrowing. The Federal Reserve Board
additionally possesses enforcement powers over bank holding companies and their
non-bank subsidiaries to prevent or remedy actions that represent unsafe or
unsound practices or violations of applicable statutes and regulations.

   Among these powers is the ability to prescribe the payment of dividends by
banks and bank holding companies. In addition to the restrictions on dividends
imposed by the Federal Reserve Board, the Delaware General Corporation Law would
allow CGB&L to pay dividends only out of its surplus, or if CGB&L has no such
surplus, out of its net profits for the fiscal year in which the dividend is
declared and/or the preceding fiscal year. Under the ISBA and the regulations of
the Commissioner, dividends may be paid by the CGB&L out of its net profits
(i.e., earnings from current operations, investments and other assets plus
actual recoveries on loan, net or current expenses including dividends or
interest on deposits, additions to reserves as required by the Commissioner,
actual losses, accrued dividends on preferred stock, if any and all state and
federal taxes). The written approval of the Commissioner must be obtained,
however, before CGB&L may declare dividends in any calendar year in an amount in
excess of 50% of its net profits for that calendar year. Additionally, CGB&L
will be unable to pay dividends in an amount which would reduce its capital
below the greater of the amount required (i) by the FDIC or (ii) for the
liquidation account established by the CGB&L in connection with its conversion
to the stock form of organization. The Commissioner and the FDIC also have the
authority to prohibit dividend payment by CGB&L if either body determines that
the distribution would constitute an unsafe or unsound practice.

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2000 AND MARCH 31, 1999.

   Total assets increased $598,952 from $7,382,732 at March 31, 1999 to
$7,981,684 at March 31, 2000 or 8.1% compared to a 6.5% increase in the year
ending March 31, 1999. This increase was attributable primarily to the
$1,201,227 increase in the loan portfolio from $5,390,273 at March 31, 1999 to
$6,591,500 at March 31, 2000 offset by a $262,390 decrease in cash and cash
equivalents from $287,458 at March 31, 1999 to $25,068 at March 31, 2000 and a
$301,000 decrease in interest-bearing time deposits from $891,000 to $590,000
for the same period.

   The $48,510 decrease in investment securities from March 31, 1999 to March
31, 2000 was the result of a decrease in the market value of the Federal Home
Loan Mortgage Corporation ("FHLMC") stock. The FHLMC stock value at March 31,
1999 was $211,827 compared to $163,317 at March 31, 2000. The FHLMC stock is the
sole investment security held by the Building & Loan.


                                       31
<PAGE>


   The $1,201,227 increase in net loans from March 31, 1999 to March 31, 2000
was the result primarily of one- to four-family loan originations. This 22.3%
increase in loans was primarily due to aggressively pursuing this category of
loan with new and varied loan products and publishing mortgage rates weekly. For
owner occupied residential fixed rate mortgages, the Building and Loan extended
the maximum maturity from 20 years to 30 years, increased maximum loan-to-value
from 80% to 90% and loan fee points are no longer collected.

   Interest bearing deposits increased $269,773 or 5.4% from $4,995,294 at March
31, 1999 to $5,265,067 at March 31, 2000. Long-term debt at the Federal Home
Loan Bank of Chicago increased a total of $400,000 for the same period, from
$600,000 to $1,000,000. The funds generated from new deposits and proceeds from
long term debt were used primarily to fund the mortgage loan portfolio.

   Equity received from contributions to the Employee Stock Ownership Plan
(ESOP) was $20,278 at March 31, 2000 compared to $8,375 at March 31, 1999. This
$11,903 increase represents the fair value of shares released during four
quarters in fiscal year 2000 as compared to three quarters in fiscal year 1999.

   The stock-based compensation incentive plan adopted during fiscal year 2000
covers directors and key employees. The incentive plan was authorized to acquire
and grant 3,960 shares of CGB&L's common stock. All 3,960 shares authorized were
granted in October 1999. The shares were purchased in fiscal year 2000.
Participants in the incentive plan vest over five years. The incentive stock
option plan grants directors and key employees stock option awards that vest pro
rata over five years and become fully exercisable at the end of 5 years of
continued employment. The plan includes a provision for accelerated vesting
based on certain conditions, which includes the death of any participants.

   Total stockholders' equity decreased $80,915 from March 31, 1999 to March 31,
2000; the decrease summarized as follows:

   Stockholders' equity, March 31, 1999 ..........................   $1,667,578
   Net income ....................................................       30,108
   Decrease in unrealized gain on securities available for sale ..      (32,017)
   Cash Dividends ................................................      (18,384)
   Incentive plan shares acquired ................................      (41,580)
   Incentive plan shares earned ..................................        5,791
   Purchase of treasury stock ....................................      (24,833)
                                                                     ----------
 Total Stockholder's equity, March 31, 2000 ......................   $1,586,663
                                                                     ==========

COMPARISON OF OPERATING RESULTS FOR THE FISCAL YEARS ENDED MARCH 31, 2000 AND
MARCH 31, 1999.

   CGB&L's net income was $30,108 for fiscal year ended March 31, 2000
compared to $37,371 for the comparative period ending March 31, 1999.  The
19.4% decrease in earnings of $7,263 is primarily attributable to an increase in
added expenses related to reporting as a public company and an increase in
salaries and employee benefit expense offset by higher net interest income.


                                       32
<PAGE>


   Net interest income increased to $306,385 in fiscal year ended March 31, 2000
compared to $258,806 for the same period in 1999. The increase of $47,579 is due
to an increase in average loans that were financed by the increase in deposits
and borrowings from the Federal Home Loan Bank during fiscal year ending March
31, 2000. The decrease of $2,333 in interest expense on deposits from $276,434
to $274,101 was due to a slight decrease in average rate paid on certificates of
deposit during fiscal year ending March 31, 2000. Interest expense on Federal
Home Loan Bank borrowings increased from $38,690 to $48,817, a total of $10,127
due to the higher average balance of Federal Home Loan Bank borrowings during
fiscal year ended March 31, 2000.

   The provision for loan loss expense was $0 for the 2000 and 1999 fiscal
years. Building & Loan management believes the allowance for loan loss is
sufficient based on information currently available. No assurances can be made
that future events, conditions or regulatory directives will not result in
increased provisions for loan losses or additions to the Building & Loan's
allowance for loan losses which may adversely affect net income. Non-performing
assets at fiscal year ended March 31, 2000 increased to $135,705 (four loans
)from $57,415 (two loans) at March 31, 1999. These loans were each three
payments delinquent when classified, all have sufficient collateral and the
Building and Loan anticipates no collection problems.

   Total other expense increased from $218,003 to $273,040 for a total of
$55,037 or 25.2% for fiscal year ending March 31, 2000 compared to the same
period of 1999. This change is due to an increase in employee compensation and
other expenses related to reporting as a public company, including stock
transfer services, required reporting to the Securities and Exchange Commission,
professional advice from attorneys and accountants, and printing the annual
report and proxy statements. Employee compensation expense increased due to ESOP
expense of $11,903 for the fiscal year ending March 31, 2000 compared to $8,375
during the same period of 1999. Employee compensation expense also increased by
$5,791 due to recognition of the incentive plan shares earned during the period.
Other expenses related to reporting as a public company were $50,307 for fiscal
year ended March 31, 2000 compared to $13,931 for the period from September 28,
1998 to March 31, 1999 for a total increase of $36,376.

   Total income tax expense was $7,414 for the year ended March 31, 2000
compared to $10,625 for the same period in 1999, reflecting the decrease in
earnings. The effective tax rate was 19.8% in 2000 compared to 22.1% in 1999.


                                       33
<PAGE>


ITEM 7.   FINANCIAL STATEMENTS

                   CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

Independent Auditor's Report..................................................35

Consolidated Balance Sheet....................................................36

Consolidated Statement of Income..............................................37

Consolidated Statement of Stockholder's Equity................................38

Consolidated Statement of Cash Flows..........................................39

Notes to consolidated Financial Statements....................................40


                                       34
<PAGE>


[LOGO] OLIVE



                          INDEPENDENT AUDITOR'S REPORT



To the Stockholders and
Board of Directors
CGB&L Financial Group, Inc. and Subsidiary
Cerro Gordo, Illinois


We have audited the accompanying consolidated balance sheet of CGB&L Financial
Group, Inc. and subsidiary as of March 31, 2000 and 1999, and the related
consolidated statements of income, stockholders' equity, and cash flows for the
years then ended. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements described above present
fairly, in all material respects, the consolidated financial position of CGB&L
Financial Group, Inc. and subsidiary as of March 31, 2000 and 1999, and the
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.



/s/ Olive LLP

Decatur, Illinois
April 20, 2000


                                       35
<PAGE>


                   CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>

MARCH 31                                                                  2000             1999
-----------------------------------------------------------------------------------------------------
<S>                                                                   <C>              <C>
ASSETS
   Cash and due from banks                                            $    25,068      $   287,458
   Interest-bearing demand deposits                                       487,661          487,856
                                                                   ----------------------------------
         Cash and cash equivalents                                        512,729          775,314

   Interest-bearing deposits                                              590,000          891,000
   Investment securities available for sale                               163,317          211,827
   Loans, net of allowance for loan losses of $32,700                   6,591,500        5,390,273
   Premises and equipment                                                  16,526           16,193
   Federal Home Loan Bank stock                                            55,100           55,100
   Other assets                                                            52,512           43,025
                                                                   ----------------------------------

         Total assets                                                 $ 7,981,684      $ 7,382,732
                                                                   ==================================

LIABILITIES
   Interest-bearing deposits                                          $ 5,265,067      $ 4,995,294
   Long-term debt                                                       1,000,000          600,000
   Other liabilities                                                      109,676          111,485
                                                                   ----------------------------------
         Total liabilities                                              6,374,743        5,706,779
                                                                   ----------------------------------

COMMITMENTS AND CONTINGENT LIABILITIES

EQUITY RECEIVED FROM CONTRIBUTIONS TO THE ESOP                             20,278            8,375
                                                                   ----------------------------------
STOCKHOLDERS' EQUITY
   Preferred stock, $.01 par value
     Authorized and unissued -- 100,000
   Common stock, $.01 par value
     Authorized -- 900,000 shares
     Issued -- 99,000 shares, less ESOP shares of 5,939 and 7,127             911              911
   Additional paid-in capital                                             618,747          619,193
   Retained earnings                                                      921,780          910,056
   Accumulated other comprehensive income                                 105,401          137,418
                                                                   ----------------------------------
                                                                        1,646,839        1,667,578
   Less:
   Unearned incentive plan shares -- 3,366 and 0 shares                   (35,343)
   Treasury stock, at cost -- 2,365 and 0 shares                          (24,833)
                                                                   ----------------------------------
         Total stockholders' equity                                     1,586,663        1,667,578
                                                                   ----------------------------------

         Total liabilities and stockholders' equity                   $ 7,981,684      $ 7,382,732
                                                                   ==================================
</TABLE>

See notes to consolidated financial statements.


                                       36
<PAGE>


                   CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY

                        CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>

YEAR ENDED MARCH 31                                        2000          1999
----------------------------------------------------------------------------------
<S>                                                     <C>           <C>
INTEREST INCOME
   Loans receivable                                     $ 550,033     $ 507,134
   Investment securities                                    6,088         5,386
   Interest bearing deposits                               73,182        61,410
                                                     -----------------------------
         Total interest income                            629,303       573,930

INTEREST EXPENSE
   Deposits                                               274,101       276,434
   FHLB borrowing                                          48,817        38,690
                                                     -----------------------------
         Total interest expense                           322,918       315,124
                                                     -----------------------------

NET INTEREST INCOME                                       306,385       258,806
   Provision for loan losses
                                                     -----------------------------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES       306,385       258,806
                                                     -----------------------------

OTHER INCOME                                                4,177         7,193
                                                     -----------------------------

OTHER EXPENSE
   Salaries and employee benefits                         174,126       160,010
   Net occupancy and equipment expenses                     8,730         4,321
   Deposit insurance expense                                2,519         3,172
   Insurance expense                                        5,052         4,965
   Other expenses                                          82,613        45,535
                                                     -----------------------------
         Total other expense                              273,040       218,003
                                                     -----------------------------

INCOME BEFORE INCOME TAX                                   37,522        47,996
   Income tax expense                                       7,414        10,625
                                                     -----------------------------

NET INCOME                                              $  30,108     $  37,371
                                                     =============================

BASIC EARNINGS PER SHARE                                $    0.33           N/A
                                                     =============================

DILUTED EARNINGS PER SHARE                              $    0.33           N/A
                                                     =============================
</TABLE>

See notes to consolidated financial statements.


                                       37
<PAGE>


                   CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                    ACCUMULATED
                                              ADDITIONAL                               OTHER      UNEARNED
                                      COMMON   PAID-IN    COMPREHENSIVE  RETAINED  COMPREHENSIVE  INCENTIVE   TREASURY
                                      STOCK    CAPITAL       INCOME      EARNINGS      INCOME    PLAN SHARES    STOCK       TOTAL
------------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>      <C>          <C>          <C>          <C>          <C>        <C>        <C>
BALANCES, APRIL 1, 1998                                                  $872,685     $113,329                           $  986,014
   Comprehensive income
     Net income                                             $ 37,371       37,371                                            37,371
     Other comprehensive income, net
       of tax
       Unrealized gains on securities                         24,089                    24,089                               24,089
                                                           ----------
   Comprehensive income                                     $ 61,460
                                                           ==========
   Issuance of common stock           $990     $698,304                                                                     699,294
   Employee stock ownership plan
     shares acquired                   (79)     (79,111)                                                                    (79,190)
                                      ------------------                 -----------------------------------------------------------

BALANCES, MARCH 31, 1999               911      619,193                   910,056      137,418                            1,667,578
   Comprehensive loss
     Net income                                             $ 30,108       30,108                                            30,108
     Other comprehensive income, net
       of tax
       Unrealized losses on securities                       (32,017)                  (32,017)                             (32,017)
                                                           ----------
   Comprehensive loss                                       $ (1,909)
                                                           ==========
   Cash dividends ($.20 per share)                                        (18,384)                                          (18,384)
   Incentive plan shares acquired                                                                  $(41,580)                (41,580)
   Incentive plan shares earned                    (446)                                              6,237                   5,791
   Purchase of treasury stock                                                                                 $(24,833)     (24,833)
                                      ------------------                 -----------------------------------------------------------

BALANCES, MARCH 31, 2000              $911     $618,747                  $921,780     $105,401     $(35,343)  $(24,833)  $1,586,663
                                      ==================                 ===========================================================
</TABLE>

See notes to consolidated financial statements.


                                       38
<PAGE>


                   CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>

YEAR ENDED MARCH 31                                                                  2000               1999
---------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>                 <C>
OPERATING ACTIVITIES
   Net income                                                                    $    30,108         $  37,371
   Adjustments to reconcile net income to net cash
     provided by operating activities
     Depreciation                                                                      1,344             1,344
     Deferred income tax expense                                                       2,829             1,546
     Compensation expense related to employee stock ownership plan and
       incentive plan                                                                 17,694             8,375
     Change in
       Other liabilities                                                              11,855            (1,130)
       Other assets                                                                   (9,487)           13,667
                                                                               ---------------------------------
         Net cash provided by operating activities                                    54,343            61,173
                                                                               ---------------------------------

INVESTING ACTIVITIES
   Net change in interest-bearing deposits                                           301,000          (301,000)
   Net change in loans                                                            (1,201,227)          135,916
   Purchase of premises and equipment                                                 (1,677)           (1,811)
   Purchase of FHLB stock                                                                               (8,900)
                                                                               ---------------------------------
         Net cash used by investing activities                                      (901,904)         (175,795)
                                                                               ---------------------------------

FINANCING ACTIVITIES
   Net change in
     Savings deposits                                                                (48,165)          (81,190)
     Certificates of deposit                                                         317,938          (173,823)
   Proceeds from long-term debt                                                      400,000
   Cash dividends                                                                    (18,384)
   Purchase of stock for incentive plan                                              (41,580)
   Purchase of treasury stock                                                        (24,833)
   Issuance of common stock, net of offering costs                                                     620,104
                                                                               ---------------------------------
         Net cash provided by financing activities                                   584,976           365,091
                                                                               ---------------------------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                             (262,585)          250,469

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                         775,314           524,845
                                                                               ---------------------------------

CASH AND CASH EQUIVALENTS, END OF YEAR                                           $   512,729         $ 775,314
                                                                               =================================

ADDITIONAL CASH FLOWS INFORMATION
   Interest paid                                                                 $   316,458         $ 317,301
   Income tax paid                                                                    10,264             6,631
</TABLE>

See notes to consolidated financial statements.


                                       39
<PAGE>


                   CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 -- NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of CGB&L Financial Group, Inc. (Company)
and its wholly owned subsidiary Cerro Gordo Building and Loan, s.b. (Bank)
conform to generally accepted accounting principles and reporting practices
followed by the thrift industry. The more significant of the policies are
described below.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.

The Company is a thrift holding company whose principal activity is the
ownership and management of the Bank. The Bank operates under a state thrift
charter and provides full banking services. As a state-chartered thrift, the
Bank is subject to regulation by the Illinois Office of Banks and Real Estate
and the Federal Deposit Insurance Corporation.

The Bank generates mortgage and share loans and receives deposits from customers
located primarily in Piatt County. The Bank's loans are generally secured by
specific items of collateral including real property and consumer assets.
Although the Bank has a diversified loan portfolio, a substantial portion of its
debtors' ability to honor their contracts is dependent upon economic conditions
in Piatt County and the surrounding communities.

CONSOLIDATION -- The consolidated financial statements include the accounts of
the Company and Bank after the elimination of all material intercompany
transactions.

INVESTMENT SECURITIES -- Marketable equity securities are classified as
available for sale. Securities available for sale are carried at fair value with
unrealized gains and losses reported separately as accumulated other
comprehensive income in equity capital, net of tax.

Amortization of premiums and accretion of discounts are recorded as interest
income from securities. Realized gains and losses are recorded as net security
gains (losses). Gains and losses on sales of securities are determined on the
specific-identification method.

LOANS are carried at the principal amount outstanding. Interest income is
accrued on the principal balances of loans. The accrual of interest on impaired
loans is discontinued when, in management's opinion, the borrower may be unable
to meet payments as they become due. When interest accrual is discontinued, all
unpaid accrued interest is reversed when considered uncollectible. Interest
income is subsequently recognized only to the extent cash payments are received.
In applying the provisions of Statement of Financial Accounting Standards (SFAS)
No. 114, the Company considers its investments in one-to-four family residential
and share loans to be homogeneous and therefore excluded from separate
identification for valuation of impairment. Certain loan fees and direct costs
are being deferred and amortized as an adjustment of yield on the loans. Escrow
accounts for borrowers are not maintained, but rather tax and insurance payments
are charged to the mortgage loan balance. Monthly payments are allocated first
to interest income with the remainder credited to the unpaid balance of the
loan.


                                       40
<PAGE>


CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


ALLOWANCE FOR LOAN LOSSES is maintained to absorb loan losses based on
management's continuing review and evaluation of the loan portfolio and its
judgment as to the impact of economic conditions on the portfolio. The
evaluation by management includes consideration of past loss experience, changes
in the composition of the portfolio, the current condition and amount of loans
outstanding, and the probability of collecting all amounts due. Impaired loans
are measured by the present value of expected future cash flows, or the fair
value of the collateral of the loan, if collateral dependent.

The determination of the adequacy of the allowance for loan losses is based on
estimates that are particularly susceptible to significant changes in the
economic environment and market conditions. Management believes that as of March
31, 2000, the allowance for loan losses is adequate based on information
currently available. A worsening or protracted economic decline in the area
within which the Bank operates would increase the likelihood of additional
losses due to credit and market risks and could create the need for additional
loss reserves.

PREMISES AND EQUIPMENT are carried at cost net of accumulated depreciation.
Depreciation is computed using the straight-line method based on the estimated
useful lives of the assets. Maintenance and repairs are expensed as incurred
while major additions and improvements are capitalized. Gains and losses on
dispositions are included in current operations.

FEDERAL HOME LOAN BANK STOCK is a required investment for institutions that are
members of the Federal Home Loan Bank (FHLB) system. The required investment in
the common stock is based on a predetermined formula.

TREASURY STOCK is stated at cost. Cost is determined by the first-in, first-out
method.

INCOME TAX in the consolidated statement of income includes deferred income tax
provisions or benefits for all significant temporary differences in recognizing
income and expenses for financial reporting and income tax purposes. The Company
files consolidated income tax returns with its subsidiary.

INCENTIVE PLAN -- The Company accounts for its stock award program or incentive
plan in accordance with Accounting Principals Board Opinion (APB) No. 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES. The aggregate purchase price of all
shares owned by the incentive plan is reflected as a reduction of stockholders'
equity. Compensation expense is based on the market price of the Company's stock
on the date the shares are granted and is recorded over the vesting period. The
differences between the aggregate purchase price and the fair value on the date
granted of the shares is recorded as an adjustment to paid-in capital.

EMPLOYEE STOCK OWNERSHIP PLAN -- The Company accounts for its employee stock
ownership plan (ESOP) in accordance with American Institute of Certified Public
Accountants (AICPA) Statement of Position 93-6. Compensation expense is recorded
based on the fair value of the shares as they are committed to be released for
allocation to participant accounts. The allocated shares are included in the
mezzanine as equity received from contributions to the ESOP and are adjusted
based on the changes in market value.

EARNINGS PER SHARE -- Basic earnings per share have been computed based upon the
weighted average common shares outstanding during each year. Diluted earnings
per share reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted into common
stock or resulted in the issuance of common stock that then shared in the
earnings of the Company. Earnings per share for 1999 are not meaningful due to
the Bank's conversion to a stock savings bank on September 22, 1998.


                                       41
<PAGE>


CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 -- CONVERSION TO STOCK OWNERSHIP

On September 22, 1998, the Bank consummated its conversion from a state
chartered mutual savings bank to a state chartered stock savings bank pursuant
to the Bank's plan of conversion. Concurrent with the formation of the Company,
the Company acquired 100% of the stock of the Bank and issued 99,000 shares of
Company common stock, with $.01 par value, at $10 per share. Net proceeds of the
Company's stock issuance, after costs and Employee Stock Ownership Plan shares,
were $620,104.


NOTE 3 -- INVESTMENT SECURITIES AVAILABLE FOR SALE

<TABLE>
<CAPTION>
                                                              2000
                                 ----------------------------------------------------------
                                                     GROSS          GROSS
                                                  UNREALIZED      UNREALIZED      FAIR
MARCH 31                             COST            GAINS          LOSSES       VALUE
-------------------------------------------------------------------------------------------
<S>                                 <C>            <C>                <C>       <C>
Federal Home Loan Mortgage
   Corporation common stock         $3,619         $159,698           $0        $163,317
                                 =========================================================


                                                               1999
                                 ----------------------------------------------------------
                                                     GROSS          GROSS
                                                  UNREALIZED      UNREALIZED      FAIR
MARCH 31                             COST            GAINS          LOSSES       VALUE
-------------------------------------------------------------------------------------------

Federal Home Loan Mortgage
   Corporation common stock         $3,619         $208,208           $0        $211,827
                                 ==========================================================
</TABLE>


There were no pledged securities at March 31, 2000 or 1999.

There were no sales of securities available for sale during 2000 or 1999.

The Company's investment in the Federal Home Loan Mortgage Corporation Common
Stock exceeded 10% of stockholders' equity at March 31, 2000. The Company did
not hold any other securities of a single issuer, payable from and secured by
the same source of revenue of taxing authority, the book value of which exceeded
10% of stockholders' equity at March 31, 2000.


                                       42
<PAGE>


CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4 -- LOANS AND ALLOWANCE

MARCH 31                                     2000              1999
------------------------------------------------------------------------

Real estate mortgage loans
   One-to-four family                     $6,361,223        $5,272,294
   Multi-family                               68,777            78,901
   Commercial                                255,131           174,524
Share loans                                  124,841            67,892
                                       ---------------------------------
                                           6,809,972         5,593,611
Less
   Undisbursed portion of loans             (122,500)         (100,291)
   Deferred loan fees                        (63,272)          (70,347)
   Allowance for loan losses                 (32,700)          (32,700)
                                       ---------------------------------

         Total loans                      $6,591,500        $5,390,273
                                       =================================


There was no activity in the allowance for loan losses for 1999 or 1998.

The amount of impaired loans as of or during the periods ending March 31, 2000
and 1999 was immaterial.


NOTE 5 -- PREMISES AND EQUIPMENT

MARCH 31                                    2000              1999
----------------------------------------------------------------------

Land                                      $    500          $    500
Buildings and land improvements             21,382            21,382
Furniture and equipment                     55,947            54,269
                                       -------------------------------
         Total cost                         77,829            76,151

Accumulated depreciation                   (61,303)          (59,958)
                                       -------------------------------

         Net                              $ 16,526          $ 16,193
                                       ===============================


                                       43
<PAGE>


CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6 -- OTHER ASSETS AND OTHER LIABILITIES

MARCH 31                                           2000               1999
------------------------------------------------------------------------------

Other assets
   Interest receivable
     Investment securities                      $    3,598         $   2,521
     Loans                                          16,376            13,569
   Prepaid expenses and other                       32,538            26,935
                                             ---------------------------------

         Total                                  $   52,512         $  43,025
                                             =================================

Other liabilities
   Interest payable
     Deposits                                   $   53,373         $  49,042
     Long-term debt                                  5,415             3,286
   Accrued expenses payable                         16,940            11,548
   Deferred tax liability                           33,948            47,609
                                             ---------------------------------

         Total                                    $109,676          $111,485
                                             =================================


NOTE 7 -- DEPOSITS

MARCH 31                                           2000              1999
------------------------------------------------------------------------------

Savings deposits                                $  332,029        $  380,194
Certificates of deposit of $100,000 or more        100,000           100,000
Other certificates of deposits                   4,833,038         4,515,100
                                             ---------------------------------

         Total deposits                         $5,265,067        $4,995,294
                                             =================================



CERTIFICATES MATURING IN YEARS ENDING MARCH 31,
------------------------------------------------------------------------------

2001                                                              $1,730,561
2002                                                               1,638,826
2003                                                                 474,719
2004                                                                 361,183
2005                                                                 194,915
Thereafter                                                           532,834
                                                                  ------------

                                                                  $4,933,038
                                                                  ============


                                       44
<PAGE>


CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 8 -- LONG-TERM DEBT

<TABLE>
<CAPTION>

MARCH 31                                                                               2000               1999
----------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>                <C>
Federal Home Loan Bank advances, fixed rates ranging from 6.18% to 6.36%, due at
   various dates through December, 2007                                             $1,000,000         $600,000
                                                                                  ==============================
</TABLE>

The Federal Home Loan Bank (FHLB) advances are secured by all stock in the FHLB
and first mortgage loans.

The FHLB advances consist of two advances, a $400,000 advance due February, 2005
at 6.18% and a $600,000 advance due December, 2007 at 6.36%.


NOTE 9 -- INCOME TAX

<TABLE>
<CAPTION>

YEAR ENDED MARCH 31                                                                     2000             1999
-----------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>              <C>
Income tax expense
   Currently payable
     Federal                                                                          $  2,951         $  5,843
     State                                                                               1,634            3,236

   Deferred
     Federal                                                                             2,829            1,546
                                                                                  -------------------------------

         Total income tax expense                                                     $  7,414          $10,625
                                                                                  ===============================

Reconciliation of federal statutory to actual tax expense
   Federal statutory income tax at 34%                                                 $12,758          $16,319
   Graduated tax rates                                                                  (7,129)          (9,517)
   Effect of state income taxes                                                          1,078            2,136
   Other                                                                                   707            1,687
                                                                                  -------------------------------

         Actual tax expense                                                           $  7,414          $10,625
                                                                                  ===============================
</TABLE>


                                       45
<PAGE>


CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


A cumulative net deferred tax liability is included in other liabilities. The
components of the liability are as follows:

<TABLE>
<CAPTION>

MARCH 31                                                                     2000             1999
-------------------------------------------------------------------------------------------------------
<S>                                                                        <C>               <C>
ASSETS
   Loan fees                                                               $ 18,349          $ 20,401
   Allowance for loan losses                                                  7,655             6,742
                                                                       --------------------------------

         Total assets                                                        26,004            27,143
                                                                       --------------------------------

LIABILITIES
   Accrual to cash adjustment                                                (3,749)           (2,385)
   Depreciation                                                                (601)             (274)
   Net unrealized gains on securities available for sale                    (54,297)          (70,788)
   FHLB stock dividends                                                      (1,305)           (1,305)
                                                                       --------------------------------

         Total liabilities                                                  (59,952)          (74,752)
                                                                       --------------------------------

                                                                           $(33,948)         $(47,609)
                                                                       ================================
</TABLE>

Retained earnings include approximately $125,000 for which no deferred income
tax liability has been recognized. This amount represents an allocation of
income to bad debt deductions as of April 30, 1988, for tax purposes only.
Reduction of amounts so allocated for purposes other than tax bad debt losses or
adjustments arising from carryback of net operating losses would create income
for tax purposes only, which income would be subject to the then-current
corporate income tax rate. The unrecorded deferred income tax liability on the
above amount was approximately $43,000.


NOTE 10 -- OTHER COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
                                                                             2000
                                                       -------------------------------------------------
                                                          BEFORE-TAX          TAX            NET-OF-TAX
YEAR ENDED MARCH 31                                         AMOUNT          BENEFIT            AMOUNT
--------------------------------------------------------------------------------------------------------
<S>                                                        <C>               <C>              <C>
Unrealized gains on securities:
   Unrealized holding losses arising during the year       $(48,510)         $16,493          $(32,017)
                                                       =================================================

<CAPTION>
                                                                             1999
                                                       -------------------------------------------------
                                                          BEFORE-TAX          TAX            NET-OF-TAX
YEAR ENDED MARCH 31                                         AMOUNT          EXPENSE            AMOUNT
--------------------------------------------------------------------------------------------------------

Unrealized gains on securities:
   Unrealized holding gains arising during the year         $36,498         $(12,409)          $24,089
                                                       =================================================
</TABLE>


                                       46
<PAGE>


CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11 -- COMMITMENTS AND CONTINGENT LIABILITIES

In the normal course of business there are outstanding commitments and
contingent liabilities, such as commitments to extend credit, which are not
included in the accompanying financial statements. The Bank's exposure to credit
loss in the event of nonperformance by the other party to the financial
instruments for commitments to extend credit is represented by the contractual
or notional amount of those instruments. The Bank uses the same credit policies
in making such commitments as it does for instruments that are included in the
balance sheet.

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Bank evaluates each customer's credit
worthiness on a case-by-case basis. The amount of collateral obtained, if deemed
necessary by the Bank upon extension of credit, is based on management's credit
evaluation. Collateral held varies but may include residential real estate,
income-producing commercial properties, or other assets of the borrower. The
Bank had loan commitments at fixed rates of $78,000 and $0 as of March 31, 2000
or 1999. The interest rates on the loan commitments ranged from 8.50% to 9.25%
at March 31, 2000.

The Company and subsidiary are subject to claims and lawsuits which arise
primarily in the ordinary course of business. It is the opinion of management
that the disposition or ultimate resolution of such claims and lawsuits will not
have a material adverse effect on the financial position of the Company.


NOTE 12 -- DIVIDEND AND CAPITAL RESTRICTIONS

Without prior approval, the Bank is restricted by Illinois law and regulations
of the Commissioner of Bank and Trust Companies, State of Illinois
(Commissioner), and the Federal Deposit Insurance Corporation as to the maximum
amount of dividends it can pay to the Company. The Bank is permitted to pay
dividends to the Company in an amount equal to its net profits in any fiscal
year. As a practical matter, the Bank restricts dividends to a lessor amount
because of the need to maintain an adequate capital structure.

At the time of conversion, a liquidation account was established in an amount
equal to the Bank's net worth as reflected in the latest statement of condition
used in its final conversion offering circular. The liquidation account is
maintained for the benefit of eligible deposit account holders who maintain
their deposit account in the Bank after conversion. In the event of a complete
liquidation, and only in such event, each eligible deposit account holder will
be entitled to receive a liquidation distribution from the liquidation account
in the amount of the then current adjusted subaccount balance for deposit
accounts then held, before any liquidation distribution may be made to
stockholders. Except for the repurchase of stock and payment of dividends, the
existence of the liquidation account will not restrict the use or application of
net worth. The initial balance of the liquidation account was $898,939.


                                       47
<PAGE>


CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 13 -- REGULATORY CAPITAL

The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies and is assigned to a capital category. The assigned
capital category is largely determined by three ratios that are calculated
according to the regulations: total risk adjusted capital, Tier 1 capital, and
Tier 1 leverage ratios. The ratios are intended to measure capital relative to
assets and credit risk associated with those assets and off-balance sheet
exposures of the entity. The capital category assigned to an entity can also be
affected by qualitative judgments made by regulatory agencies about the risk
inherent in the entity's activities that are not part of the calculated ratios.

There are five capital categories defined in the regulations, ranging from well
capitalized to critically undercapitalized. Classification of a bank in any of
the undercapitalized categories can result in actions by regulators that could
have a material effect on a bank's operations. At March 31, 2000 and 1999, the
Bank is categorized as well capitalized and met all subject capital adequacy
requirements. There are no conditions or events since March 31, 2000 that
management believes have changed the Bank's classification.

The Bank's actual and required capital amounts and ratios are as follows:

<TABLE>
<CAPTION>
                                                                                     2000
                                                  --------------------------------------------------------------------------
                                                                              REQUIRED FOR ADEQUATE           TO BE WELL
                                                             ACTUAL                 CAPITAL(1)                CAPITALIZED(1)
                                                  --------------------------------------------------------------------------
MARCH 31                                                 AMOUNT    RATIO          AMOUNT   RATIO           AMOUNT    RATIO
----------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>         <C>           <C>        <C>           <C>        <C>
Total risk-based capital(1) (to risk-weighted
   assets)                                             $1,199,000  32.75%        $293,000   8.0%          $366,000   10.0%

Core capital(1) (to adjusted tangible assets)           1,166,000  31.85          146,000   4.0%           220,000    6.0

Core capital(1) (to adjusted total assets)              1,166,000  14.61          320,000   4.0%           399,000    5.0

<CAPTION>
                                                                                      1999
                                                  --------------------------------------------------------------------------
                                                                               REQUIRED FOR ADEQUATE         TO BE WELL
                                                             ACTUAL                  CAPITAL(1)              CAPITALIZED(1)
                                                  --------------------------------------------------------------------------
MARCH 31                                                 AMOUNT    RATIO          AMOUNT   RATIO           AMOUNT    RATIO
----------------------------------------------------------------------------------------------------------------------------

Total risk-based capital(1) (to risk-weighted
   assets)                                             $1,149,000  36.67%        $251,000   8.0%          $313,000   10.0%

Core capital(1) (to adjusted tangible assets)           1,116,000  35.62          125,000   4.0%           188,000    6.0

Core capital(1) (to adjusted total assets)              1,116,000  15.74          284,000   4.0%           354,000    5.0

(1) As defined by regulatory agencies
</TABLE>


                                       48
<PAGE>


CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 14 -- EMPLOYEE BENEFITS

The Company maintains a Simplified Employee Pension Plan for the benefit of
eligible employees. Contributions to the Plan are based on 15% of the eligible
participant's salary and were $4,466 and $13,923 during 2000 and 1999,
respectively.

In connection with the conversion, the Company established an employee stock
ownership plan (ESOP) covering substantially all of its employees. The ESOP
borrowed $79,190 from the Company and used those funds to acquire 7,919 shares
of the Company's common stock at $10 per share. The ESOP covers employees who
perform at least 1,000 hours of service. A participant is 100% vested after
seven years of credited service.

The ESOP shares are held in trust and allocated to the ESOP participants based
on the interest and principal payments made by the ESOP on the loan from the
Company. The loan is secured by shares purchased with the loan proceeds and is
being repaid by the ESOP with funds from the Company's discretionary
contributions to the ESOP and earnings on ESOP assets. Dividends on unallocated
ESOP shares will be applied to reduce the loan. Principal payments are scheduled
to occur in even annual amounts over a seven year period. However, in the event
Company's contributions exceed the minimum debt service requirements, additional
principal payments will be made. The ESOP provides the participants with a put
option which permits the participants to sell such company stock to the Company
at the fair market value of the company stock.

Below are the transactions affecting the ESOP equity accounts:

<TABLE>
<CAPTION>
                                                      ADDITIONAL
                                         COMMON         PAID-IN       UNALLOCATED
                                         STOCK          CAPITAL        ESOP SHARES       TOTAL
----------------------------------------------------------------------------------------------------
<S>                                       <C>           <C>             <C>             <C>
Balances, April 1, 1998
   Employee stock ownership
     plan shares acquired                 $79           $79,111         $(79,190)       $        0
   Market value increase in
     Employee stock ownership
     plan shares released                                   455                                455
   Loan repayments                                                         7,920             7,920
                                    ----------------------------------------------------------------

Balances, March 31, 1999                   79            79,566          (71,270)            8,375
   Market value increase in
     Employee stock ownership
     plan shares released                                    26                                 26
   Loan repayments                                                        11,877            11,877
                                    ----------------------------------------------------------------

Balances, March 31, 2000                  $79           $79,592         $(59,393)          $20,278
                                    ================================================================
</TABLE>


                                       49
<PAGE>


CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


During the year ended March 31, 2000 and 1999, 1,188 and 792 shares of stock
with an average fair value of $10.02 and $10.58 were committed to be released,
resulting in ESOP compensation expense of $11,903 and $8,375, respectively. The
following table reflects the shares held by the plan:

MARCH 31                                              2000              1999
-------------------------------------------------------------------------------

Allocated shares                                      1,980               792
Unallocated shares                                    5,939             7,127
                                                  -----------------------------
         Total ESOP shares
                                                      7,919             7,919
                                                  =============================

Fair value of unallocated shares at March 31        $57,905           $78,397
                                                  =============================


During fiscal year 2000, the Company adopted a stock-based compensation program
which included a stock award program or incentive plan. The incentive plan
covers key employees and directors and was authorized to acquire and grant 3,960
shares of the Company's common stock. All 3,960 shares authorized under the plan
were granted during October 1999. The shares were purchased in fiscal year 2000.
Participants in the incentive plan vest over five years. During fiscal year
2000, 220 shares were vested due to accelerated vesting as allowed by the plan.

As of March 31, 2000, no shares were distributed or forfeited. For the year
ended March 31, 2000, $5,791 was recorded as compensation expense under the
plan.


NOTE 15 -- STOCK OPTION PLAN

Under the Company's incentive stock option plan, which is accounted for in
accordance with Accounting Principles Board Opinion (APB) No. 25, ACCOUNTING FOR
STOCK ISSUED TO EMPLOYEES, and related interpretations, the Company grants
selected executives and other key employees stock option awards which vest pro
rata over a five year period and become fully exercisable at the end of 5 years
of continued employment. The plan includes a provision for accelerated vesting
based on certain conditions. During October 1999, the Company authorized and
granted 9,900 options of the Company's common stock. The exercise price of each
option, which has a 10-year life, was equal to the market price of the Company's
stock on the date of grant; therefore, no compensation expense was recognized.


                                       50
<PAGE>


CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Although the Company has elected to follow APB No. 25, SFAS No. 123 requires pro
forma disclosures of net income and earnings per share as if the Company had
accounted for its employee stock options under that Statement. The fair value of
each option grant was estimated on the grant date using an option-pricing model
with the following assumptions:

                                                                        2000
                                                                    -----------

Risk-free interest rates                                               6.50%
Dividend yields                                                        4.10%
Volatility factors of expected market price of common stock           18.00%

Weighted-average expected life of the options                         10 years

Under SFAS No. 123, compensation cost is recognized in the amount of the
estimated fair value of the options and amortized to expense over the options'
vesting period. The pro forma effect on net income and earnings per share of
this statement are as follows:

                                                                        2000
                                                                    -----------

Net income                                           As reported      $30,108
                                                     Pro forma         28,486

Basic earnings per share                             As reported         0.33
                                                     Pro forma           0.32

Diluted earnings per share                           As reported         0.33
                                                     Pro forma           0.31


The following is a summary of the status of the Company's stock option plan and
changes in that plan as of and for the year ended March 31, 2000.

YEAR ENDED MARCH 31                                                2000
-------------------------------------------------------------------------------
                                                                   WEIGHTED-
                                                                    AVERAGE
                       OPTIONS                          SHARES   EXERCISE PRICE
-------------------------------------------------------------------------------

Outstanding, beginning of year
Granted                                                  9,900       $9.75
Exercised
Forfeited/expired
                                                       --------

Outstanding, end of year                                 9,900       $9.75
                                                       ========

Options exercisable at year end                            750
Weighted-average fair value of options granted
  during the year                                                    $2.08


                                       51
<PAGE>


CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The shares exercisable at year end related to accelerated vesting as a result of
the death of a participant. As of March 31, 2000, the 9,900 options outstanding
have an exercise price of $9.75 and a weighted-average remaining contractual
life of 9.5 years.


NOTE 16 -- RELATED PARTY TRANSACTIONS

The Bank has entered into transactions with certain directors, executive
officers, significant stockholders and their affiliates or associates (related
parties). Such transactions were made in the ordinary course of business on
substantially the same terms and conditions, including interest rates and
collateral, as those prevailing at the same time for comparable transactions
with other customers, and did not, in the opinion of management, involve more
than normal credit risk or present other unfavorable features. The aggregate
amount of loans to such related parties at March 31, 2000 and 1999 was $231,536
and $229,439.

Deposits from related parties held by the Bank at March 31, 2000 and 1999
totaled $162,890 and $389,997.

The aggregate amount of loans, as defined, to such related parties were as
follows:

<TABLE>
<CAPTION>
                                                                                   2000
-------------------------------------------------------------------------------------------
<S>                                                                              <C>
Balances, April 1, 1999                                                          $229,439
Changes in composition of related parties                                         (33,254)
New loans, including renewals                                                      70,900
Payments, etc., including renewals                                                (35,549)
                                                                              -------------

Balances, March 31, 2000                                                         $231,536
                                                                              =============
</TABLE>


NOTE 17 -- EARNINGS PER SHARE

Earnings per share (EPS) were computed as follows:

<TABLE>
<CAPTION>
                                                                       YEAR ENDED MARCH 31, 2000
                                                             --------------------------------------------
                                                                           Weighted Average    Per-Share
                                                               Income            Shares         Amount
                                                             --------------------------------------------
<S>                                                            <C>               <C>             <C>
BASIC EARNINGS PER SHARE
   Income available to common stockholders                     $30,108           90,431          $0.33

EFFECT OF DILUTIVE SECURITIES
   Unearned incentive plan shares                                                 1,194

DILUTED EARNINGS PER SHARE
                                                             --------------------------------------------
   Income available to common stockholders and assumed
     conversions                                               $30,108           91,625          $0.33
                                                             ============================================
</TABLE>

The stock options were not dilutive as of March 31, 2000.


                                       52
<PAGE>


CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 18 -- FAIR VALUES OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of
each class of financial instrument:

CASH AND CASH EQUIVALENTS -- The fair value of cash and cash equivalents
approximates carrying value.

INTEREST-BEARING DEPOSITS -- The fair value of interest-bearing deposits
approximates carrying value.

SECURITIES -- Fair values are based on quoted market prices.

LOANS -- For short-term loans that reprice frequently and with no significant
change in credit risk, fair values are based on carrying values. The fair values
for mortgage loans, including one-to-four family residential, are based on
quoted market prices of similar loans sold in conjunction with securitization
transactions, adjusted for differences in loan characteristics.

INTEREST RECEIVABLE/PAYABLE -- The fair values of interest receivable/payable
approximate carrying values.

FHLB STOCK -- Fair value of FHLB stock is based on the price at which it may be
resold to the FHLB.

DEPOSITS -- The fair values of interest-bearing savings accounts are equal to
the amount payable on demand at the balance sheet date. The carrying amounts for
variable rate, fixed-term certificates of deposit approximate their fair values
at the balance sheet date. Fair values for fixed-rate certificates of deposit
are estimated using a discounted cash flow calculation that applies interest
rates currently being offered on certificates to a schedule of aggregated
expected monthly maturities on such time deposits.

LONG-TERM DEBT -- The fair value of these borrowings are estimated using a
discounted cash flow calculation, based on current rates for similar debt.

OFF-BALANCE SHEET COMMITMENTS -- Commitments include commitments to originate
mortgage loans, and are generally of a short-term nature. The fair value of such
commitments are based on fees currently charged to enter into similar
agreements, taking into account the remaining terms of the agreements and the
counterparties' credit standing.


                                       53
<PAGE>


CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The estimated fair values of the Company's financial instruments are as follows:

<TABLE>
<CAPTION>
                                                                2000                               1999
                                                -------------------------------------------------------------------
                                                     CARRYING          FAIR            Carrying            Fair
MARCH 31                                              AMOUNT           VALUE            Amount             Value
-------------------------------------------------------------------------------------------------------------------
<S>                                               <C>               <C>              <C>               <C>
ASSETS
   Cash and cash equivalents                      $   512,729       $   512,729      $   775,314       $   775,314
   Interest-bearing deposits                          590,000           590,000          891,000           891,000
   Investment securities available for sale           163,317           163,317          211,827           211,827
   Loans, net                                       6,591,500         6,406,095        5,390,273         5,597,000
   Interest receivable                                 19,974            19,974           16,090            16,090
   Stock in FHLB                                       55,100            55,100           55,100            55,100

LIABILITIES
   Deposits                                         5,265,067         5,289,986        4,995,294         5,007,000
   Long-term debt                                   1,000,000           970,982          600,000           606,000
   Interest payable                                    58,788            58,788           52,328            52,328

OFF-BALANCE SHEET ASSETS (LIABILITIES)
   Commitments to extend credit                             0                 0                0                 0
</TABLE>


                                       54
<PAGE>


ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

          None

                                 PART III

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
          COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

   The information relating to directors and executive officers of the
Registrant is incorporated herein by reference to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held August 09, 2000
under "Management: Who are our Directors."

ITEM 10.  EXECUTIVE COMPENSATION

   The information relating to executive and director compensation is
Incorporated herein by reference to the Registrant's Proxy Statement for the
Annual Meeting of Stockholders to be held August 09, 2000 under "Management: How
are Our Directors Compensated" and "Compensation Tables and Compensation
Matters."

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

   The information relating to security ownership of certain beneficial owners
and management is incorporated herein by reference to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held August 9, 2000 under
"Security Ownership of Directors, Nominees For Directors and Most Highly
Compensated Executive Officers."

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   The information relating to certain relationships and related transactions is
incorporated herein by reference to the Registrant's Proxy Statement for the
Annual Meeting of Stockholders to be held August 9, 2000 under "Management: What
Other Transaction Do We Have With Management?"

ITEM 13.   EXHIBITS AND REPORTS ON FORM 8-K.

   (a)     The following documents are filed as a part of this report:

           (1) FINANCIAL STATEMENTS

           Consolidated Financial Statements of CGB&L and its Index are included
           in this report and are located at Item 7, page 34-54 of this report.

           (2) SCHEDULES

           All schedules are omitted because they are not required or
           applicable, or the required information is shown in the consolidated
           financial statements or the notes thereto.


                                       55
<PAGE>


           (3) EXHIBITS

           The following exhibits are filed as part of this report:

            3.1       Certificate of Incorporation of CGB&L Financial Group,
                      Inc.*
            3.2       Bylaws of CGB&L Financial Group, Inc. (incorporated by
                      reference to Exhibit 3.2 of the Company's 10KSB for the
                      fiscal year ended March 31, 1999, filed on June 29, 1999).
            4.0       Stock Certificate of CGB&L Financial Group, Inc.*
           10.2       Employment Agreement between Cerro Gordo Building and
                      Loan, s.b. and Maralyn Heckman (incorporated by reference
                      to Exhibit 10.2 of the Company's 10KSB for fiscal year
                      March 31, 1999 filed on June 29, 1999).**
           10.3       Employment Agreement between CGB&L Financial Group, Inc.
                      and Maralyn Heckman (This Employment Agreement is not
                      being filed as it is virtually identical to the Employment
                      Agreement filed as Exhibit 10.2 except that CGB&L
                      Financial Group, Inc. is the party acting as the employer
                      instead of Cerro Gordo Building and Loan, s.b.)**
           10.4       CGB&L Financial Group 1999 Stock Option and Incentive Plan
                      (incorporated by reference to Appendix of Proxy Statement
                      for 1999 annual meeting filed June 29, 1999.**
           10.5       CGB&L Financial Group, Inc. Management Development and
                      Recognition Plan and Trust Agreement (incorporated by
                      reference to Appendix of Proxy Statement for 1999 annual
                      meeting filed June 29, 1999.**
           11.0       Statement of Computation of per Share Earnings
           21.0       Subsidiary information is incorporated herein by reference
                      to "Part I - General".
           23.0       Consent of Olive to publish their Consolidated Financial
                      Statements dated March 31, 2000 and 1999.
           27.0       Financial Data Schedule for Fiscal year ended March 31,
                      2000.

            *Incorporated herein by reference to the Exhibits to Form SB-2
             Registration Statement, filed on June 3, 1998 and any amendments
             thereto, Registration No. 333-55953.

           **Management Compensation Plans

   (b)     REPORTS ON FORM 8-K

           There were no Reports filed on Form 8-K for the period.


                                       56
<PAGE>


                                   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.

                                      CGB&L FINANCIAL GROUP, INC.
Date:     June 29, 2000                By:   /s/ Maralyn F. Heckman
     -----------------------          -------------------------------
                                      Maralyn F. Heckman
                                      President, Chief Executive Officer,
                                      Chief Financial Officer and Director


   Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons in the capacities and on the
dates indicated.

Date:     June 29, 2000                By:   /s/ Maralyn F. Heckman
     -----------------------          ---------------------------------------
                                      Maralyn F. Heckman
                                      President, Chief Executive Officer,
                                      C.F.O., C.A.O. and Director
                                      (principal executive officer, principal
                                      financial officer, principal accounting
                                      officer and director)

Date:      June 29, 2000               By:   /s/ John A. Sochor, DDS
     -----------------------          ---------------------------------------
                                      John A. Sochor, DDS
                                      Chairman of the Board of Directors

Date:      June 29, 2000               By:   /s/ C. Russell York
     -----------------------          ---------------------------------------
                                      C. Russell York
                                      Vice-Chairman of the Board of Directors

Date:      June 29, 2000               By:   /s/ Noel R. Buckley
     -----------------------          ---------------------------------------
                                      Noel R. Buckley, Director

Date:      June 29, 2000               By:   /s/ Lester W. Crandall
     -----------------------          ---------------------------------------
                                      Lester W. Crandall, Director

Date:      June 29, 2000               By:   /s/ James E. Flaugher
     -----------------------          ---------------------------------------
                                      James E. Flaugher, Director

Date:      June 29, 2000               By:   /s/ Larry D. Gaitros
     -----------------------          --------------------------------------
                                      Larry D. Gaitros, Director


                                       57