FORM 10KSB FOR CGB&L FINANCIAL GROUP, INC. FILED ON JUNE 29, 1999 12:00 PM


                     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, 1999
                                           --------------

                        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.
                                    $581,123
                                    --------

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, 1999 was $830,775. For purposes of this determination
only, directors and executive officers of the Registrant have been presumed to
be affiliates. The market value is based upon $11.00 per share, the last sales
price as quoted on the Over The Counter Market for March 31, 1999.

The Registrant had 99,000 shares of Common Stock outstanding, for ownership
purposes, at March 31, 1999.

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

The Exhibit Index is located at pages 52-53.


                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 1999 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 . . . . . . . . . . . . . . . . . .  30

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 . . . . . . . . . .  52


                                        2
<PAGE>


PART III

Item 9.  Directors, Executive Officers, Promoters and
          Control Persons; Compliance with Section
          16(a) of the Exchange Act. . . . . . . . . . . . . . . . .  52

Item 10. Executive Compensation. . . . . . . . . . . . . . . . . . .  52

Item 11. Security Ownership of Certain Beneficial
          Owners and Management. . . . . . . . . . . . . . . . . . .  52

Item 12. Certain Relationships and Related Transactions. . . . . . .  52

Item 13. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . .  52

SIGNATURES


                                     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, 1999 consist primarily of the investment in the
Building & Loan of $1,252,506, cash and cash equivalents of $249,966 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, 1999, the Building & Loan
had total assets, liabilities, and stockholders' equity of $7,032,766,
$5,780,260, and $1,252,505 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
                                            -----------------------------
                                               1999               1998(2)
                                            ----------          ---------
Total assets............................... $7,382,732          6,934,981
Cash and cash equivalents..................    775,314            524,845
Interest-bearing time deposits.............    891,000            590,000
Investment securities available for sale...    211,827            175,329
Loans, net.................................  5,390,273          5,526,189
Federal Home Loan Bank stock...............     55,100             46,200
Deposits...................................  4,995,294          5,250,307
Long-term debt.............................    600,000            600,000
Total Stockholders' equity (3).............  1,667,578            986,014


                                        4
<PAGE>


OPERATING DATA:                              For the Fiscal Year Ended March 31,
                                             -----------------------------------
                                                       1999            1998
                                                    ----------      ----------
Total interest income .........................     $  573,930      $  541,984
Total interest expense ........................        315,124         309,763
                                                    ----------      ----------
Net interest income ...........................        258,806         232,221
Provision for loan losses .....................             --          26,500
                                                    ----------      ----------
Net interest income after
 provision for loan loss ......................        258,608         205,721
Other income ..................................          7,193           6,708
Other expenses ................................        218,003         159,855
                                                    ----------      ----------
Income before income tax ......................         47,996          52,574
Income tax expense ............................         10,625          10,702
                                                    ----------      ----------
Net income ....................................     $   37,371      $   41,872
                                                    ==========      ==========
OTHER DATA:
Number of real estate loans outstanding .......            193             197
Number of deposit accounts ....................            611             638

KEY OPERATING RATIOS:
The table below sets forth certain
 performance ratios of CGB&L.                For the Fiscal Year Ended March 31,
                                             -----------------------------------
                                                       1999             1998
                                                    ----------      ----------

Return on assets (net income divided
  by average total assets) ....................         0.52%           0.63%
Return on average equity (net income
  divided by average equity) ..................         2.75%           4.60%
Average equity to average assets ..............        18.81%          13.62%
Interest rate spread (difference
  between average yield on interest
  earning assets and average cost of
  interest bearing liabilities) ...............         2.82%           2.67%
Net interest margin (net interest
  income as a percentage of average
  interest earning assets) ....................         3.76%           3.47%
Non-interest expense to average assets ........         3.05%           2.38%
Average interest-earning assets to
  interest bearing liabilities ................       120.37%         117.29%
Allowance for loan losses to
  total loans at end of period ................         0.60%           0.58%
Net charge offs to average outstanding
  loans during the period .....................          N/A             N/A
Ratio of nonperforming assets
  To total assets (1) .........................         0.78%           0.16%
-----------------------------
(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,
     1998 reflects the Building & Loan operations only.

(3)  Prior to conversion on September 22, 1998, data relates to total equity
     capital.


                                        5
<PAGE>


AVERAGE BALANCE SHEET

   The following table presents the average balance sheet for CGB&L for the
years ended March 31, 1999 and 1998, 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,
                                              ------------ -------------------------------------------------------------------------
                                                  1999                  1999                                   1998
                                                -------    ----------------------------------    -----------------------------------

                                                AVERAGE                              AVERAGE                              AVERAGE
                                                 YIELD/    AVERAGE                    YIELD/     AVERAGE                   YIELD/
                                                  RATE     BALANCE      INT.           RATE      BALANCE       INT.         RATE
                                                -------   --------    --------       -------    --------     --------     -------
                                                                              (DOLLARS IN THOUSANDS)
<S>         <C>                                   <C>     <C>         <C>             <C>        <C>         <C>            <C>
INTEREST-EARNING ASSETS:
 LOANS, NET (1) ...........................       9.00%   $  5,615    $    507        9.03%(5)   $  5,289    $    466       8.81%(5)
   INT-BEARING DEPOSITS WITH
    FINANCIAL INSTITUTIONS ................       4.85       1,081          62        5.74          1,205          71       5.89
  SECURITIES ..............................       2.58         194           5        2.58            189           5       2.65
                                                          --------    --------                   --------    --------
TOTAL INTEREST-EARNING ASSETS .............       7.99       6,890         574        8.33          6,683         542       8.11
                                                                      --------                               --------
   NON-INTEREST-EARNING ASSETS ............                    267                                     29
                                                          --------                               --------
TOTAL ASSETS ..............................               $  7,157                               $  6,712
                                                          ========                               ========
INTEREST-BEARING LIABILITIES:
  DEPOSITS:
    SAVINGS ...............................       2.50    $    474          14        2.96       $    462          15       3.25
    CERTIFICATES ..........................       5.57       4,650         262        5.64          4,885         274       5.61
                                                          --------    --------                   --------    --------
    TOTAL DEPOSITS ........................       5.33       5,124         276        5.39          5,347         289       5.40
  FHLB ADVANCES ...........................       6.36         600          39        6.50            351          21       5.98
                                                          --------    --------                   --------    --------
TOTAL INTEREST-BEARING
  LIABILITIES .............................       5.44       5,724         315        5.51          5,698         310       5.44
                                                          --------    --------                   --------    --------

NON-INTEREST-BEARING LIABILITIES ..........                     87                                    100
                                                          --------                                -------
  TOTAL LIABILITIES .......................                  5,811                                  5,798
  STOCKHOLDERS' EQUITY (4) ................                  1,346                                    914
                                                          --------                                -------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY ..               $  7,157                               $  6,712
                                                          ========                               ========

NET INTEREST INCOME;
  INTEREST RATE SPREAD (2) ................       2.55%               $    259        2.82%                  $    232       2.67%
                                               =======                ========     =======                   ========    =======
NET INTEREST MARGIN (3) ...................       3.57%                               3.76%                                 3.47%
                                               =======                             =======                               =======
RATIO OF AVERAGE INT-EARNING
 ASSETS TO INT-BEARING LIABILITIES ........     124.77%                             120.37%                               117.29%
                                               =======                             =======                               =======
</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)  Prior to conversion on September 22, 1998, data relates to total
          equity capital.

     (5)  Loan fees included in interest income were $26,013 and $29,842 for
          1999 and 1998, respectively.


                                        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.

                                               ---------------------------------
                                                       Year Ended March 31,
                                               ---------------------------------
                                                     1999       vs.    1998
                                               ---------------------------------
                                                   Increase
                                                  (Decrease)
                                                    Due to
                                               -----------------    Net Increase
                                               Volume       Rate     (Decrease)
                                               ------      -----    ------------
                                                       (In Thousands)
Interest-earning assets:

  Loans, net ............................       $ 29        $ 12        $ 41

  Interest-bearing deposits with
    Financial institutions ..............         (7)         (2)         (9)

  Securities ............................         --          --          --
                                                ----        ----        ----

  Total change in interest income .......       $ 17        $ 15        $ 32
                                                ----        ----        ----

Interest-bearing liabilities:

  Deposits:

  Savings ...............................         --          (1)         (1)

  Certificates ..........................        (13)          1         (12)

  FHLB advances .........................         16           2          18
                                                ----        ----        ----

  Total change in interest expense ......          1           4           5
                                                ----        ----        ----

Net change in net interest income .......       $ 16        $ 11        $ 27
                                                ====        ====        ====


                                        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, 1999 CGB&L held $211,827 in investments securities, compared
with $175,329 at March 31, 1998.

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

                                                     March 31,
                                  -------------------------------------------
                                          1999                    1998
                                  -------------------    --------------------
                                    Book   Percent of      Book    Percent of
                                    Value  Portfolio       Value   Portfolio
                                  -------- ----------    --------  ----------
FHLMC common stock..........      $211,827     100%       $175,329     100%
                                  ========     ====       ========     ====


The FHLMC common stock had a book value and market value of $211,827 as of March
31, 1999 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 20 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, 1999     31, 1998
                                              ----------    ---------
Real estate
 One- to four-family residential              $5,272,294   $5,303,917

 Multi-family residential                         78,901       87,348

 Commercial                                      174,524      185,060
                                              ----------    ---------
  Total Real Estate Mortgage Loans             5,525,719    5,576,325
 Consumer (Share loans)                           67,892       79,534
                                              ----------    ---------
                                               5,593,611    5,655,859
Less:
 Undisbursed portion of loans (1)               (100,291)     (23,555)

 Deferred loan fees                              (70,347)     (73,415)
                                              ----------    ---------
   Total loans, gross                          5,422,973    5,558,889

 Allowance for loan losses                       (32,700)     (32,700)
                                              ----------   ----------
   Total loans, net                           $5,390,273   $5,526,189
                                              ==========   ==========

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

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

                                                 March      March
                                               31, 1999   31, 1998
                                               --------   --------
Real estate:
 One- to four-family                             94.3%      93.8%
 Multi-family residential                         1.4        1.5
 Commercial                                       3.1        3.3

Consumer (Share loans)                            1.2        1.4
                                               -------    -------
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 20 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, 1999 was
approximately $27,000. 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%. 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-sales 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. Such loans are currently
secured by office and retail buildings. Borrowers are always established
businesses with ties to the Cerro Gordo community.

   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 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


                                       10
<PAGE>


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 passbook account or
certificate of deposit 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 passbook account or certificate of
deposit which is pledged as collateral.

   DELINQUENCIES. The Building & Loan's collection procedures with respect to
delinquent loans include written notice of delinquency and contact by letter or
telephone 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, 1999, no loans had been placed 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 loans 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, 1999, 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,
                                                           --------------------
                                                             1999        1998
                                                           --------    --------
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 .................................    57,415      11,116
    Multi-family ........................................        --          --
    Commercial ..........................................        --          --
   Share ................................................        --          --
                                                           --------    --------
    TOTAL ...............................................  $ 57,415    $ 11,116
                                                           --------    --------
Total of Nonaccrual and 90 days past due loans ..........  $ 57,415    $ 11,116

Real estate owned .......................................        --          --
Other Non-Performing Assets .............................  $     --          --
                                                           --------    --------
  Total nonperforming assets ............................  $ 57,415    $ 11,116
                                                           ========    ========

Total loans delinquent 90 days or more net loans ........      1.07%        .20%
Total loans delinquent 90 days or more to total assets ..       .78%        .16%
Total nonperforming assets
  To total assets .......................................       .78%        .16%

   As of and during years ended March 31, 1999 and 1998 there were no impaired
loans. As of March 31, 1999 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.

   An insured institution is required to establish prudent general allowances
for loan losses with respect to assets classified as substandard or doubtful.


                                       12
<PAGE>


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, 1999 and 1998 the aggregate amounts of the Building & Loan's
classified assets, and of Building & Loan's general loss allowances for the
period then ended, were as follows:

                                                At March 31,
                                         ------------------------
                                           1999             1998
                                         -------          -------
Substandard assets....................   $57,415          $11,116
General loss allowances...............   $32,700          $32,700

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

   ALLOWANCE FOR LOAN LOSSES. Under applicable federal policies and general
accepted accounting principles the Building & Loan is required to establish
general allowances for loan losses. In addition to such general valuation
allowances, the Building & Loan may establish specific assets with respect to
which a loss may be realized. General allowances represent loss allowances which
have been established to recognize the inherent risks associated with lending
activities, but which, unlike specific allowances, have not been allocated to
recognize probable losses on particular problem assets.

   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 classi- fication 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 provisions for loan losses for the years
ended March 31, 1999 and March 31, 1998 of $0 and $27,000, respectively. At
March 31, 1999, the Building & Loan had an allowance for loan losses of $32,700,
or, .60%, of total loans, and 56.96% of non-performing assets.

   Management believes that the Building & Loan's loan loss reserves were
adequate at March 31, 1999. 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


                                       13
<PAGE>


reserve and the amount of loss realized has been charged or credited to current
income.

                                             Period Ended March 31,
                                           -------------------------
                                             1999              1998
                                           -------           -------
Allowance at beginning of period........   $32,700           $ 6,200
Provision for loan losses...............        --            26,500
  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          .60%              .58%
Ratio of net charge offs to average
 Loans outstanding during the period           N/A               N/A

   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,
                                             -----------------------------------------------------
                                                         1999                      1998
                                             --------------------------  -------------------------
                                                           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 on a short-term basis 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


                                       14
<PAGE>


reviews at least on a monthly basis the interest rates set for its deposit
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, 1999, 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, 1999          March 31, 1998
                                   -----------------       -----------------
                                     Amount    Rate          Amount    Rate
                                   ----------  -----       ----------  -----
Regular Savings Accounts           $  473,674  2.50%       $  488,812  3.10%

Fixed Rate Certificate of Deposit   4,649,831  5.57%        4,855,689  5.64%
                                   ----------  -----       ----------  -----
                Total Deposits     $5,123,505  5.33%       $5,344,501  5.41%
                                   ==========  =====       ==========  =====

RETURN ON EQUITY AND ASSETS                             1999           1998
                                                       ------         ------
Return on assets (net income divided by
   average total assets)                                0.52%          0.63%
Return on equity (net income divided by
   average total equity) (1)                            2.75%          4.60%
Dividend payout ratio (dividends per
   share divided by net income per share)               0.0 %          0.0 %
Equity to assets ratio (average equity
   divided by average total assets) (1)                18.81%         13.62%

(1)  Prior to Conversion on September 22, 1998, data relates to total equity
     capital.

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 materially
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. 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, will increase
employee compensation expense in the future and could effect 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, 1999,
approximately 98.8% 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 effects of 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.

   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
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 following table sets forth the Building and Loan's
NPV as of March 31, 1999 as calculated by the Commissioner.

                                                        NPV as % of Portfolio
                              Net Portfolio Value          Value of Assets
                           --------------------------   ---------------------
Change (In Basis Points)
 In Interest Rates (1)     Amount   Change   % Change   NPV Ratio   Change(1)
------------------------   ------   ------   --------   ---------   ---------
                           (Dollars in Thousands)

         + 400              $1,144  $(293)      (26)      17.30        (234)

         + 300               1,256   (181)      (15)      18.42        (122)

         + 200               1,369    (68)       (5)      19.46         (18)

         + 100               1,465     28         2       20.25          61

            0                1,437     --        --       19.64          --

         - 100               1,470     33         2       19.69           6

         - 200               1,454     17         1       19.22         (42)

         - 300               1,452     15         1       18.90         (74)

         - 400               1,454     17         1       18.61        (103)

(1)  Assumes an instantaneous and permanent uniform change in interest rates at
     all maturities.

   Management believes that the assumptions used by it to evaluate the
vulnerability of the Building and Loan's operations to changes in interest


                                       17
<PAGE>


rates approximate actual experience and considers them reasonable; however, 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 and NPV indicated in the above table could vary substantially if
different assumptions were used or actual experience differs from the historical
experience on which they are based. In addition, the interest rate
characteristics of certain of the Building and Loan's asset and liabilities
impact the results of the above table.

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, 1999, 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 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. CGB&L's initial stock offering, which was completed
on September 22, 1998, contributed substantially to the CGB&L's overall
liquidity levels. 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 29.63% at March 31, 1999, well above
the required minimum.

   As of March 31, 1999, the Building and Loan had outstanding commitments
(including undisbursed loan proceeds) of $100,291. The Building and Loan
anticipates that it will have sufficient funds available to meet its current
loan origination commitments. Certificates of deposit, which are scheduled to
mature in one year or less from March 31, 1999, total approximately $3 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, 1999, 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 the CGB&L and the Building & Loan established 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. During the fiscal year ended March 31, 1999, the
Building & Loan paid approximately $3,000 in supervisory fees and expenses.

   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 relation- ships 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, 1999, the Building and Loan was in compliance with
applicable regulatory capital requirements as follows:

          Tier 1 Capital to Average Assets                 15.74%
          Tier 1 Capital to Risk Weighted Assets           35.62%
          Risk Based Capital to Risk Weighted Assets       36.67%

   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,
1999, the Building & Loan's net profits were $42,761, and the Building & Loan
could have paid dividends totaling $42,761 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,


                                       21
<PAGE>


asset growth, asset quality, earnings and compensation, and fees and 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.


                                       22
<PAGE>


   PROMPT CORRECTIVE REGULATORY ACTION. Federal law requires, among other
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


                                       23
<PAGE>


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
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 nonaffiliates.

   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 a rate that is 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 $46.5 million or less (subject to adjustment by the Federal
Reserve Board) the reserve requirement is 3%; and for accounts greater than
$46.5 million, the reserve requirement is $1.46.5 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 $46.5 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, 1999, of
$55,100. FHLB advances must be secured by specified types of collateral and all
long-term advances may only be obtained for the purpose of providing funds for
residential housing financing. At March 31, 1999, the Building & Loan had
$600,000 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


                                       26
<PAGE>


directly or indirectly in any activity other than banking or managing or
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 which 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-term 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".

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


                                       27
<PAGE>


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 it 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.

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. 133 also acknowledges that
the method of recording a gain or loss depends on the use of the derivative.

   The new Statement applies to all entities. If hedge accounting is elected by
the entity, the method of assessing the effectiveness of the hedging derivative
and the measurement approach of determining the hedge's ineffectiveness must be
established at the inception of the hedge.

   Statement No. 133 amends Statement No. 52 and supercedes Statements No. 80,
105 and 119. Statement No. 107 is amended to include the disclosure provisions
about the concentrations of credit risk from Statement No. 105. Several Emerging
Issues Task Force consensuses's are also changed or modified by the provisions
of Statement No. 133.

   Statement No. 133 will be effective for all fiscal years beginning after June
15, 1999. The 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.

   Also in 1998, the FASB issued Statement No. 134, "Accounting for Mortgage-
Backed Securities Retained After the Securitization of Mortgage Loans Held for
Sale by a Mortgage Banking Enterprise." It establishes accounting standards for
certain activities of mortgage banking enterprises and for other enterprises
with similar mortgage operations. This Statement amends Statement No. 65.


                                       28
<PAGE>


   Statement No. 65, as previously amended by Statements No. 115 and 125,
required a mortgage banking enterprise to classify a mortgage-backed security as
a trading security following the securitization of the mortgage loan held for
sale. This Statement further amends Statement No. 65 to require that after the
securitization of mortgage loans held for sale, an entity engaged in mortgage
banking activities must classify the resulting mortgage-backed security or other
retained interests based on the entity's ability and intent to sell or hold
those investments.

   The determination of the appropriate classification for securities retained
after the securitization of mortgage loans by a mortgage banking enterprise now
conforms to Statement No. 115. The only new requirement is that if an entity has
a sales commitment in place, the security must be classified into trading.

   This Statement is effective for the first fiscal quarter beginning after
December 15, 1998. On the date the Statement is initially applied, an entity may
reclassify mortgage-backed securities and other beneficial interests retained
after the securitization of mortgage loans held for sale from the trading
category, except for those with sales commitments in place. Those securities and
other interests shall be classified based on the entity's present ability and
intent to hold the investments. The adoption of this Statement will have no
material impact on CGB&L's financial condition and results of operations.

REPORTING ON THE COSTS OF START-UP ACTIVITIES

   During 1998, the Accounting Standards Executive Committee, ("AcSEC") issued
Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities."
Statement of Position 98-5 will affect all non-government entities, including
not-for-profits, reporting start-up costs in their financial statements.

   Some existing industry practices result in the capitalization and
amortization of start-up costs. This Statement of Position requires that
start-up costs be expensed when incurred. The Statement of Position applies to
start-up activities and organizational costs associated with both development
stage and established operating entities.

   According to Statement of Position 98-5, start-up activities are "those
one-time activities related to opening a new facility, introducing a new product
or service, conducting business in a new territory, conducting
business with a new class of customer or beneficiary, initiating a new process
in an existing facility, or commencing some new operation. Start-up activities
include activities related to organizing a new entity commonly referred to as
organizational costs."

   Statement of Position 98-5 is effective for fiscal years beginning on or
after December 15, 1998. Earlier application is encouraged in fiscal years
during which annual financial statements have not yet been issued. The adoption
of this Statement will not have a material impact on CGB&L's financial condition
or results of operation.


                                       29
<PAGE>


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, 1999, the net book value of the Building & Loan's premises and equipment was
$16,000. The Building & Loan believes that its 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, 1999, 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.

   These quotations represent inter-dealer prices without retail mark-ups,
mark-downs or commissions and do not necessarily represent actual stock
transactions. 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
                            ----         ----           -------------
09/28/98 - 12/31/98          11           10                  --
01/01/99 - 03/31/99          11           11                  --

   At March 31, 1999, 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 currently
anticipates it will pay semi-annual cash dividends in and accordingly, declared
a semi-annual dividend of $.10 per share, payable on May 11, 1999 to
stockholders of record as of April 27, 1999. However, declarations of dividends
and the amount of any declared dividends are subject to the discretion of the
Board of Directors, and depend upon a number of factors, including, without
limitation, investment opportunities available to CGB&L,


                                       30
<PAGE>


capital requirements, regulatory limitations, CGB&L's financial condition and
results of operations. When dividends are declared, CGB&L will probably be
largely dependent upon dividends from the Building & Loan for funds to pay
dividends on the common stock.

   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. Additionally, the Federal
Reserve Board 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 Building & Loan out of its net
profits (1.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 the Building & Loan may declare dividends in any calendar year
in an amount in excess of 50% of its net profits for that calendar year.
Additionally, the Building & Loan will be unable to pay dividends in an amount
which would reduce its capital below the greater of (i) the amount required by
the FDIC or (ii) the amount required for the liquidation account established by
the Building & Loan in connection with its conversion to the stock form of
organization. The Commissioner and the FDIC also have the authority to prohibit
the payment of any dividends by the Building & Loan if the Commissioner of the
FDIC 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, 1999 AND MARCH 31, 1998.

   Total assets increased $447,751 from March 31, 1998 to March 31, 1999 or
6.5%. This increase was attributable primarily to increases in cash/cash
equivalents, investments in interest-bearing deposits, one investment security
and Federal Home Loan Bank("FHLB") stock. Cash and cash equivalents increased
$250,469 and interest-bearing time deposits increased $301,000 due to cash
generated from CGB&L's stock offering.

   The $36,498 increase in investment securities from March 31, 1998 to March
31, 1999 was the result of an increase in the market value of the Federal Home
Loan Mortgage Corporation ("FHLMC") stock. The FHLMC stock is the sole
investment security held by the Building & Loan.


                                       31
<PAGE>


   The $135,916 decrease in net loans from March 31, 1998 to December 31, 1998
was the result of prepayments of one- to four-family residential mortgage loans
in excess of new loan originations.

   FHLB Stock held by the Building & Loan increased $8,900 from March 1998 to
March 31, 1999 to meet the capital stock required by statute and regulation.

   The decline in total deposits from March 31, 1998 to March 31, 1999 of
$255,013 or 4.9% was primarily due to depositors withdrawing funds to purchase
CGB&L's stock. The Building & Loan's depositors funded approximately 24% of
CGB&L's stock purchased with amounts previously on deposit.

   Other liabilities increased $12,825 from March 31, 1998 to March 31, 1999,
primarily due to an increase in the deferred income tax liability relating to
the unrealized gain on the FHLMC stock.

   Equity received from contributions to the Employee Stock Ownership Plan
(ESOP) was $8,375. This increase was due to the creation of the ESOP as a result
of the stock conversion and represents the fair value of shares released during
the year.

   Total stockholders' equity increased $681,564 from March 31, 1998 to March
31, 1999; the increase summarized as follows:

   Stockholders' equity, March 31, 1998...........................  $  986,014
   Gross proceeds of stock offering...............................     990,000
   Underwriting commissions & other conversion expenses...........    (290,706)
   Net income.....................................................      37,371
   Increase in unrealized gain on securities available for sale...      24,089
   Total shares purchased by ESOP.................................     (79,190)
                                                                    ----------
 Total Stockholder's equity, March 31, 1999 ......................  $1,667,578
                                                                    ==========


  COMPARISON OF OPERATING RESULTS FOR THE FISCAL YEARS ENDED MARCH 31, 1999 AND
                                 MARCH 31, 1998.

   CGB&L's net income was $37,371 for the fiscal year ended March 31, 1999
compared to $41,872 for the comparative period ending March 31, 1998. The 10.75%
decrease in earnings is primarily attributable to additional expenses related to
reporting as a public company and higher salaries and employee benefit expense
offset by higher net interest income.

   Net interest income increased $26,585 in the fiscal year ended March 31, 1999
compared to the same period in 1998, due to an increase in average loans that
were financed by borrowings from the Federal Home Loan Bank and slightly higher
average rates on loans during the fiscal year ending March 31, 1999. Interest
expense on deposits decreased due to a decrease in average deposits during the
fiscal year ending March 31, 1999. Interest expense on Federal Home Loan Bank
borrowings increased due to the higher average balance of Federal Home Loan Bank
long term borrowings during the fiscal year ended March 31, 1999.


                                       32
<PAGE>


   The provision for loan loss expense decreased by $26,500 for the fiscal year
compared to the same period in 1998. Management of the Building & Loan believes
that the allowance for loan losses is sufficient based on information currently
available. No assurances can be made that future events or 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.

   Total other expense increased $58,148 or 36.4% for the fiscal year ending
March 31, 1999 compared to the same period of 1998, due to an increase in
employee compensation and other expenses. Employee compensation expense
increased due to increasing employees to 4 full time from 3 full time and one
part time. Employee compensation expense also increased due to ESOP expense of
$8,375 for the fiscal year ending March 31, 1999 compared to $0 during the same
period of 1998. Other expenses increased due to additional expenses related to
reporting as a public company.

   Total income tax expense was $10,625 for the year ended March 31, 1999
compared to $10,702 for the same period in 1998, reflecting the decrease in
earnings. The effective tax rate was 22.1% for 1999 as compared to 23.9% in
1998.

YEAR 2000 COMPLIANCE

   The Building & Loan has completed phase I & phase II of its Year 2000
preparedness assessment and business resumption contingency planning process.
During these phases, the Building & Loan identified those computer applications
used to process information within the Building & Loan including accounting
software used for loans and deposits. Each of the companies providing these
software programs has assured the Building & Loan in writing that its programs
are Year 2000 compliant. In addition, the Building & Loan has contacted its
principal external vendors and asked for assurance that they are adequately
addressing system and software issues related to Year 2000. Each vendor
responded that either they are or expect to be Year 2000 compliant prior to
December 31, 1999. The Building & Loan has procedures in place to confirm
compliance by vendors who expect to be compliant prior to December 31, 1999. The
Building & Loan has also completed a review of its loan portfolio and determined
that the Building & Loan has no significant loss exposure in the event a
borrower's business is interrupted as a result of a Year 2000 compliance
problem. The Building & Loan developed a testing schedule and completed this
schedule prior to March 31, 1999. The Building & Loan has incurred costs of less
than $1,000 to date with respect to the Year 2000 and based on the results of
its assessment does not anticipate that the costs to complete its Year 2000
testing schedule will be material. The Building & Loan has taken steps to
educate the public about their Year 2000 preparedness. Although the Building &
Loan believes it is taking the necessary actions to address Year 2000, no
assurances can be given that some problems will not occur.


                                       33
<PAGE>


ITEM 7.   FINANCIAL STATEMENTS


                           CGB&L FINANCIAL GROUP, INC.
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 1999 AND 1998


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

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

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

Consolidated Statement of Stockholders' Equity .............................. 38

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

Notes to Consolidated Financial Statements .................................. 40


                                       34
<PAGE>


                          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, 1999 and 1998, 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, 1999 and 1998, 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 12, 1999


                                       35
<PAGE>


                   CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>

MARCH 31                                                                     1999            1998
-----------------------------------------------------------------------------------------------------
<S>                                                                      <C>             <C>
ASSETS
    Cash and due from banks                                              $   287,458     $    13,721
    Interest-bearing demand deposits                                         487,856         511,124
                                                                        -----------------------------
            Cash and cash equivalents                                        775,314         524,845
    Interest-bearing deposits                                                891,000         590,000
    Investment securities available for sale                                 211,827         175,329
    Loans, net of allowance for loan losses of $32,700 for each year       5,390,273       5,526,189
    Premises and equipment                                                    16,193          15,726
    Federal Home Loan Bank stock                                              55,100          46,200
    Other assets                                                              43,025          56,692
                                                                        -----------------------------

            Total assets                                                 $ 7,382,732     $ 6,934,981
                                                                        =============================

LIABILITIES
    Interest-bearing deposits                                            $ 4,995,294     $ 5,250,307
    Long-term debt                                                           600,000         600,000
    Other liabilities                                                        111,485          98,660
                                                                        -----------------------------
            Total liabilities                                              5,706,779       5,948,967
                                                                        -----------------------------

COMMITMENTS AND CONTINGENT LIABILITIES

EQUITY RECEIVED FROM CONTRIBUTIONS TO THE ESOP                                 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 7,127                         911
    Additional paid-in capital                                               619,193
    Retained earnings                                                        910,056         872,685
    Accumulated other comprehensive income                                   137,418         113,329
                                                                        -----------------------------
            Total stockholders' equity                                     1,667,578         986,014
                                                                        -----------------------------

            Total liabilities and stockholders' equity                   $ 7,382,732     $ 6,934,981
                                                                        =============================
</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                                         1999           1998
----------------------------------------------------------------------------------
<S>                                                      <C>            <C>
INTEREST INCOME
    Loans receivable                                     $ 507,134      $ 466,389
    Investment securities                                    5,386          4,680
    Interest bearing deposits                               61,410         70,915
                                                        --------------------------
            Total interest income                          573,930        541,984

INTEREST EXPENSE
    Deposits                                               276,434        289,130
    FHLB borrowing                                          38,690         20,633
                                                        --------------------------
            Total interest expense                         315,124        309,763
                                                        --------------------------

NET INTEREST INCOME                                        258,806        232,221
    Provision for loan losses                                              26,500
                                                        --------------------------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES        258,806        205,721
                                                        --------------------------

OTHER INCOME                                                 7,193          6,708
                                                        --------------------------

OTHER EXPENSE
    Salaries and employee benefits                         160,010        115,617
    Net occupancy and equipment expenses                     4,321          4,922
    Deposit insurance expense                                3,172          3,436
    Insurance expense                                        4,965          4,936
    Other expenses                                          45,535         30,944
                                                        --------------------------
            Total other expense                            218,003        159,855
                                                        --------------------------

INCOME BEFORE INCOME TAX                                    47,996         52,574
    Income tax expense                                      10,625         10,702
                                                        --------------------------

NET INCOME                                               $  37,371      $  41,872
                                                        ==========================
</TABLE>

See notes to consolidated financial statements.


                                       37
<PAGE>


                   CGB&L FINANCIAL GROUP, INC. AND SUBSIDIARY

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                         ACCUMULATED
                                                                                                            OTHER
                                                      COMMON     PAID-IN     COMPREHENSIVE   RETAINED   COMPREHENSIVE
                                                      STOCK      CAPITAL         INCOME      EARNINGS       INCOME        TOTAL
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>          <C>          <C>            <C>          <C>          <C>
BALANCES, APRIL 1, 1997                                                                     $  830,813   $   64,084   $   894,897
    Comprehensive income
      Net income                                                              $   41,872        41,872                     41,872
      Other comprehensive income, net of tax
          Unrealized gains on securities                                          49,245                     49,245        49,245
                                                                             ------------
    Comprehensive income                                                      $   91,117
                                                                             ============

                                                   ------------------------                ---------------------------------------
BALANCES, MARCH 31, 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
                                                   ========================                =======================================
</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                                                        1999           1998
-------------------------------------------------------------------------------------------------
<S>                                                                    <C>            <C>
OPERATING ACTIVITIES
    Net income                                                         $   37,371     $   41,872
    Adjustments to reconcile net income to net cash
       provided by operating activities
      Provision for loan loss                                                             26,500
      Depreciation                                                          1,344          1,344
      Deferred income tax expense (benefit)                                 1,546        (12,780)
      Compensation expense related to employee stock ownership plan         8,375
      Change in
          Other liabilities                                                (1,130)           789
          Other assets                                                     13,667        (15,399)
                                                                      ---------------------------
            Net cash provided by operating activities                      61,173         42,326
                                                                      ---------------------------

INVESTING ACTIVITIES
    Net change in interest-bearing deposits                              (301,000)       689,000
    Net change in loans                                                   135,916       (847,404)
    Purchase of premises and equipment                                     (1,811)        (7,632)
    Purchase of FHLB stock                                                 (8,900)        (3,200)
                                                                      ---------------------------
            Net cash used by investing activities                        (175,795)      (169,236)
                                                                      ---------------------------

FINANCING ACTIVITIES
    Net change in
      Savings deposits                                                    (81,190)        (6,239)
      Certificates of deposit                                            (173,823)       (51,918)
    Proceeds from long-term debt                                                         600,000
    Issuance of common stock, net of offering costs                       620,104
                                                                      ---------------------------
            Net cash provided by financing activities                     365,091        541,843
                                                                      ---------------------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                   250,469        414,933

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                              524,845        109,912
                                                                      ---------------------------

CASH AND CASH EQUIVALENTS, END OF YEAR                                 $  775,314     $  524,845
                                                                      ===========================

ADDITIONAL CASH FLOWS INFORMATION
    Interest paid                                                      $  317,301     $  306,925
    Income tax paid                                                         6,631         25,500
</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.
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, 1999, 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.

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.

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. The cost of shares
issued to the ESOP but not yet committed to be released to participants is
presented in the consolidated balance sheet. 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 difference between the fair value and
the cost of shares committed to be released is recorded as an adjustment to
paid-in capital.

EARNINGS PER SHARE -- Basic earnings per share will be computed based upon the
weighted average common shares outstanding for periods subsequent to the Bank's
conversion to a stock savings bank on September 22, 1998. Earnings per share for
1999 are not meaningful.

RECLASSIFICATIONS of certain amounts in the 1998 financial statements have been
made to conform to the 1999 presentation.


                                       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>
                                                        1999
                                -----------------------------------------------------
                                                 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     $ 208,208     $       0     $ 211,827
                                =====================================================

<CAPTION>
                                                        1998
                                -----------------------------------------------------
                                                 GROSS         GROSS
                                               UNREALIZED    UNREALIZED       FAIR
MARCH 31                            COST         GAINS         LOSSES        VALUE
-------------------------------------------------------------------------------------

Federal Home Loan Mortgage
    Corporation common stock     $   3,619     $ 171,710     $       0     $ 175,329
                                =====================================================
</TABLE>

There were no pledged securities at March 31, 1999 or 1998.

There were no sales of securities available for sale during 1999 or 1998.

The Company's investment in the Federal Home Loan Mortgage Corporation Common
Stock exceeded 10% of stockholders' equity at March 31, 1999. 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, 1999.


                                       42
<PAGE>


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


NOTE 4 -- LOANS AND ALLOWANCE

MARCH 31                                             1999             1998
------------------------------------------------------------------------------

Real estate mortgage loans
    One-to-four family                           $ 5,272,294      $ 5,303,917
    Multi-family                                      78,901           87,348
    Commercial                                       174,524          185,060
Share loans                                           67,892           79,534
                                                ------------------------------
                                                   5,593,611        5,655,859
Less
    Undisbursed portion of loans                    (100,291)         (23,555)
    Deferred loan fees                               (70,347)         (73,415)
    Allowance for loan losses                        (32,700)         (32,700)
                                                ------------------------------

            Total loans                          $ 5,390,273      $ 5,526,189
                                                ==============================


MARCH 31                                             1999             1998
------------------------------------------------------------------------------

Allowance for loan losses
    Balances, April 1                            $    32,700      $     6,200
    Provision for losses                                               26,500
    Recoveries on loans
    Loans charged off
                                                ------------------------------

    Balances, March 31                           $    32,700      $    32,700
                                                ==============================

The amount of impaired loans as of or during the periods ending March 31, 1999
and 1998 was immaterial.


NOTE 5 -- PREMISES AND EQUIPMENT

MARCH 31                                             1999             1998
------------------------------------------------------------------------------

Land                                             $       500      $       500
Buildings and land improvements                       21,382           21,382
Furniture and equipment                               54,269           52,458
                                                ------------------------------
            Total cost                                76,151           74,340

Accumulated depreciation                             (59,958)         (58,614)
                                                ------------------------------

            Net                                  $    16,193      $    15,726
                                                ==============================


                                       43
<PAGE>


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


NOTE 6 -- OTHER ASSETS AND OTHER LIABILITIES

MARCH 31                                             1999             1998
------------------------------------------------------------------------------

Other assets
    Interest receivable
      Investment securities                      $     2,521      $     2,855
      Loans                                           13,569           16,594
    Prepaid expenses and other                        26,935           37,243
                                                ------------------------------

            Total                                $    43,025      $    56,692
                                                ==============================

Other liabilities
    Interest payable
      Deposits                                   $    49,042      $    51,219
      Long-term debt                                   3,286            3,286
    Accrued expenses payable                          11,548           10,501
    Deferred tax liability                            47,609           33,654
                                                ------------------------------

            Total                                $   111,485      $    98,660
                                                ==============================


NOTE 7 -- DEPOSITS

MARCH 31                                                1999             1998
------------------------------------------------------------------------------

Savings deposits                                 $   380,194      $   461,384
Certificates of deposit of $100,000 or more          100,000          100,000
Other certificates of deposits                     4,515,100        4,688,923
                                                ------------------------------

            Total deposits                       $ 4,995,294      $ 5,250,307
                                                ==============================


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

2000                                                              $ 3,049,267
2001                                                                  465,487
2002                                                                  279,874
2003                                                                  433,680
2004                                                                  313,127
Thereafter                                                             73,665
                                                                 -------------

                                                                  $ 4,615,100
                                                                 =============


                                       44
<PAGE>


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


NOTE 8 -- LONG-TERM DEBT

At March 31, 1999, long-term debt consisted of a Federal Home Loan Bank (FHLB)
advance, 6.36%, due December 2007. The FHLB borrowing is secured by all stock in
the FHLB and first mortgage loans. The borrowing is subject to restrictions or
penalties in the event of prepayment.


NOTE 9 -- INCOME TAX

YEAR ENDED MARCH 31                                       1999          1998
-------------------------------------------------------------------------------

Income tax expense
    Currently payable
      Federal                                          $   5,843     $  19,885
      State                                                3,236         3,597
    Deferred
      Federal                                              1,546       (12,780)
                                                      -------------------------

            Total income tax expense                   $  10,625     $  10,702
                                                      =========================

Reconciliation of federal statutory to actual tax
  expense
    Federal statutory income tax at 34%                $  16,319     $  17,875
    Graduated tax rates                                   (9,517)      (11,610)
    Effect of state income taxes                           2,136         2,374
    Other                                                  1,687         2,063
                                                      -------------------------

            Actual tax expense                         $  10,625     $  10,702
                                                      =========================


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

MARCH 31                                                  1999          1998
-------------------------------------------------------------------------------

ASSETS
    Loan fees                                          $  20,401     $  21,290
    Allowance for loan losses                              6,742         5,828
                                                      -------------------------

            Total assets                                  27,143        27,118
                                                      -------------------------

LIABILITIES
    Accrual to cash adjustment                            (2,385)         (814)
    Depreciation                                            (274)         (274)
    Net unrealized gains on securities available
      for sale                                           (70,788)      (58,379)
    FHLB stock dividends                                  (1,305)       (1,305)
                                                      -------------------------
            Total liabilities                            (74,752)      (60,772)
                                                      -------------------------

                                                       $ (47,609)    $ (33,654)
                                                      =========================


                                       45
<PAGE>


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


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>
                                                                         1999
                                                        ----------------------------------------
                                                         BEFORE-TAX       TAX         NET-OF-TAX
YEAR ENDED MARCH 31                                        AMOUNT       EXPENSE         AMOUNT
------------------------------------------------------------------------------------------------
<S>                                                      <C>           <C>            <C>
Unrealized gains on securities:
    Unrealized holding gains arising during the year     $  36,498     $ (12,409)     $  24,089
                                                        ========================================

<CAPTION>
                                                                         1998
                                                        ----------------------------------------
                                                         BEFORE-TAX       TAX         NET-OF-TAX
YEAR ENDED MARCH 31                                        AMOUNT       EXPENSE         AMOUNT
------------------------------------------------------------------------------------------------

Unrealized gains on securities:
    Unrealized holding gains arising during the year     $  74,613     $ (25,368)     $  49,245
                                                        ========================================
</TABLE>


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 no commitments as of March 31, 1999 or 1998.


                                       46
<PAGE>


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


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 -- YEAR 2000

Like all entities, the Company and subsidiary are exposed to risks associated
with the Year 2000 Issue, which affects computer software and hardware;
transactions with customers, vendors, and other entities; and equipment
dependent upon microchips. The Company has begun, but not yet completed, the
process of identifying and remediating potential Year 2000 problems. It is not
possible for any entity to guarantee the results of its own remediation efforts
or to accurately predict the impact of the Year 2000 Issue on third parties with
which the Company and subsidiary does business. If remediation efforts of the
Company or third parties with which the Company and subsidiary does business are
not successful, the Year 2000 Issue could have negative effects on the Company's
financial condition and results of operations in the near term.


NOTE 13 -- 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. The Bank could have paid dividends of approximately $43,000, the Bank's
earnings, without the written approval of the Commissioner.

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.


NOTE 14 -- 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.


                                       47
<PAGE>


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


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 December 31, 1998 and 1997,
the Bank is categorized as well capitalized and met all subject capital adequacy
requirements. There are not conditions or events since December 31, 1998 that
management believes have changed the Bank's classification.

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

<TABLE>
<CAPTION>
                                                                                 1999
                                               ----------------------------------------------------------------------
                                                                             REQUIRED FOR             TO BE WELL
                                                        ACTUAL            ADEQUATE 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)                                      $ 1,149,000     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

<CAPTION>
                                                                                 1998
                                               ----------------------------------------------------------------------
                                                                             REQUIRED FOR             TO BE WELL
                                                        ACTUAL            ADEQUATE CAPITAL(1)       CAPITALIZED(1)
                                               ----------------------------------------------------------------------
MARCH 31                                          AMOUNT       RATIO       AMOUNT      RATIO      AMOUNT       RATIO
---------------------------------------------------------------------------------------------------------------------

Total risk-based capital(1) (to risk-weighted
  assets)                                      $   906,000     28.58%   $   254,000     8.0%   $   317,000     10.0%

Tier 1 capital(1) (to risk-weighted assets)        873,000     27.54        127,000     4.0        190,000      6.0

Tier 1 capital(1) (to average assets)              873,000     12.55        278,000     4.0        349,000      5.0
</TABLE>

(1) As defined by regulatory agencies


NOTE 15 -- 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 $13,923 and $12,753 during 1999 and 1998,
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
complete at least twelve consecutive months of service for the Bank during which
the employee performs at least 1,000 hours of service. A participant is 100%
vested after seven years of credited service.


                                       48
<PAGE>


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


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.

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, March 31, 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
                                 ===================================================
</TABLE>


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

<TABLE>
<CAPTION>

MARCH 31                                                                    1999
------------------------------------------------------------------------------------
<S>                                                                     <C>
Allocated shares                                                                792
Unallocated shares                                                            7,127
                                                                        ------------
            Total ESOP shares                                                 7,919
                                                                        ============

Fair value of unallocated shares at March 31                             $   78,397
                                                                        ============
</TABLE>


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, 1999 and 1998 was $229,439
and $272,079.


                                       49
<PAGE>


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


Deposits from related parties held by the Bank at March 31, 1999 and 1998
totaled $389,997 and $402,491.

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

                                                                       1999
--------------------------------------------------------------------------------
Balances, April 1, 1998                                            $   272,079
Changes in composition of related parties                                6,735
New loans, including renewals                                           37,155
Payments, etc., including renewals                                     (86,530)
                                                                  --------------

Balances, March 31, 1999                                           $   229,439
                                                                  ==============


NOTE 17 -- 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.


                                       50
<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>
                                                            1999                         1998
                                                --------------------------------------------------------
                                                  CARRYING         FAIR         Carrying         Fair
MARCH 31                                           AMOUNT          VALUE         Amount         Value
--------------------------------------------------------------------------------------------------------
<S>                                             <C>            <C>            <C>            <C>
ASSETS
    Cash and cash equivalents                   $   775,314    $   775,314    $   524,845    $   524,845
    Interest-bearing deposits                       891,000        891,000        590,000        590,000
    Investment securities available for sale        211,827        211,827        175,329        175,329
    Loans, net                                    5,390,273      5,597,000      5,526,189      5,576,000
    Interest receivable                              16,090         16,090         19,449         19,449
    Stock in FHLB                                    55,100         55,100         46,200         46,200

LIABILITIES
    Deposits                                      4,995,294      5,007,000      5,250,307      5,271,000
    Long-term debt                                  600,000        606,000        600,000        603,000
    Interest payable                                 52,328         52,328         54,505         54,505

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


                                       51
<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 on August 11, 1999
at pages 5 through 6 and at page 20.

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 on August 11, 1999 at pages 9 through
12.

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 on August 11, 1999
at pages 8 through 9.

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 on August 11, 1999 at pages 7 through
8.

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 are included in this report
          and its Index is located at Item 7, page 34 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.


                                       52
<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.

          4.0  Stock Certificate of CGB&L Financial Group, Inc.*

         10.1  Cerro Gordo Building and Loan, s.b. Employee Stock
                Ownership Plan*

         10.2  Employment Agreement between Cerro Gordo Building
                and Loan, s.b. and Maralyn Heckman

         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.)

         11.0  Statement of Computation of per Share Earnings

         21.0  Subsidiary information is incorporated herein by reference to
                "Part I - General"

         27.0  Financial Data Schedule for fiscal year ended March 31, 1999

       * 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.

          (b)  REPORTS ON FORM 8-K

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


                                       53
<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:             , 1999                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:             , 1999                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:             , 1999                By:  /s/ John A. Sochor, DDS
     -----------------------          ---------------------------------------
                                      John A. Sochor, DDS
                                      Chairman of the Board of Directors

Date:              , 1999               By:  /s/ C. Russell York
     -----------------------          ---------------------------------------
                                      C. Russell York
                                      Vice-Chairman of the Board of Directors

Date:              , 1999               By:  /s/ Dale C. Born
     -----------------------          ---------------------------------------
                                      Dale C. Born, Director

Date:              , 1999               By:  /s/ Noel R. Buckley
     -----------------------          ---------------------------------------
                                      Noel R. Buckley, Director

Date:              , 1999               By:  /s/ Lester W. Crandall
     -----------------------          ---------------------------------------
                                      Lester W. Crandall, Director

Date:               , 1999              By:  /s/ Larry D. Gaitros
     -----------------------          --------------------------------------
                                      Larry D. Gaitros, Director


                                       54

<PAGE>


================================================================================

                           CGB&L FINANCIAL GROUP, INC.

================================================================================



                                                           July 6, 1999

Dear Shareholder,

Greetings from CGB&L Financial Group, Inc. ("CGB&L") and Cerro Gordo Building
and Loan, s.b. ("Building & Loan"). I am pleased and proud to present you with
our first Annual Report. This report reflects our operations and financial
condition for the year ended March 31, 1999. The report reflects the earnings of
the Building & Loan for the 12 month period and for CGB&L since conversion on
September 22, 1998.

The Board of Directors of CGB&L declared our first stock dividend payable May
ll, 1999 of $.20 a share for the semi-annual period. This was a good year for
CGB&L with net income of $37,371. We are happy to report at the end of our
fiscal year, the book value of a share of stock stood at $16.84.

As a cost controlling measure, this annual report consists of Form 10-KSB, which
is a required annual filing with the U.S. Securities and Exchange Commission.
Please stop by or call me if you ever have questions or comments regarding CGB&L
or the Building & Loan.

We have a unique opportunity as a locally owned and operated community Building
& Loan to personally know our customers and stockholders. Our goals are
continued service to the good people of our community while pursuing every
avenue available in achieving what is in the best interest of our investor.

I want to join the board of directors in thanking you for your interest and
investment in CGB&L Financial Group, Inc. A special thank you goes to those of
you who are valued customers of Cerro Gordo Building and Loan, s.b. We will
continually strive to improve CGB&L for the benefit of all of us.

Sincerely,



Maralyn F. Heckman
President


    229 EAST SOUTH STREET - P.O. BOX 680       CERRO GORDO, IL. 61818-0680
                  PHONE (217)763-2911      FAX (217)763-4711

<PAGE>


                              BOARDS OF DIRECTORS

JOHN A. SOCHOR, DDS        C. RUSSELL YORK                MARALYN F. HECKMAN
Chairman of the Board of   Assistant Chairman of the      President and Chief
Directors                  Board of Directors             Executive Officer of
                                                          CGB&L Financial Group,
                                                          Inc. and Cerro Gordo
Dentist                    Technician;                    Building and Loan,
                             Phil Flaugher Electric       s.b.
                             Corporation

DALE C. BORN               NOEL R. BUCKLEY                LARRY D. GAITROS
Farmer                     Retired; Firestone Tire        Millwright; Archer
Retired; A. E. Staley        and Rubber Company             Daniels Midland
  Manufacturing Company

LESTER W. CRANDALL
Meat Manager;
  Wal-Mart


                                EXECUTIVE OFFICER

                           MARALYN F. HECKMAN
                           President, Secretary and
                           Treasurer



                               OFFICE LOCATION

                           229 East South Street
                           P.O. Box 680
                           Cerro Gordo, IL 61818-0680
                           (217)763-2911



                             GENERAL INFORMATION

INDEPENDENT AUDITORS       ANNUAL MEETING                 STOCKHOLDER
Olive                      The Annual Meeting of          INQUIRIES AND
225 North Water Street     Stockholders will be held on   AVAILABILITY OF
Suite 400                  August 11, 1999 at  7:00 p.m.  10-KSB REPORT
Decatur, Illinois 62525    in the meeting room of
                           Hope Welty Public Library      THE ANNUAL REPORT
                           100 South Madison Street,      CONTAINED HEREIN
                           Cerro Gordo, Illinois          IS THE REPORT 10-KSB
                                                          FOR THE FISCAL YEAR
SPECIAL COUNSEL                                           ENDED MARCH 31, 1999
Howard & Howard                                           AS FILED WITH
 Attorneys, P.C.           TRANSFER AGENT AND REGISTRAR   THE SECURITIES AND
321 Liberty Street         Illinois Stock Transfer        EXCHANGE COMMISSION.
Suite 200                  Company
Peoria, Illinois 61602     Chicago, Illinois