<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549

                                   FORM 10-K

             Annual Report Pursuant to Section 13 or 15 (d) of the
                        Securities Exchange Act of 1934

                  For the fiscal year ended December 31, 2000
                         Commission File No.: 1-14274

                        CITIZENS FIRST FINANCIAL CORP.
            (Exact name of registrant as specified in its charter)

                DELAWARE                                37-1351861
     (State or other jurisdiction of            (I.R.S. Employer I.D. No.)
     incorporation or organization)

           2101 North Veterans Parkway, Bloomington, Illinois 61704
              (Address of principal executive offices) (Zip Code)

                 Registrant's telephone number: (309) 661-8700
          Securities registered pursuant to Section 12(g) of the Act:
                    Common Stock par value $0.01 per share
                               (Title of class)

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


     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for past 90 days.
     Yes [X]  No [_]

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

     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 is $19,602,717 and is based upon the last sales price of $14.125 as
quoted on The Nasdaq National Market for March 14, 2001.

     The Registrant had 1,568,512 shares of Common Stock outstanding as of March
14, 2001.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Annual Report to Stockholders for the year ended December
31, 2000, are incorporated by reference into Part II of this Form 10-K.

     Portions of the Proxy Statement for the 2001 Annual Meeting of Shareholders
are incorporated by reference into Part III of this Form 10-K.
<PAGE>

                                     INDEX

                                                                            PAGE

PART I

     Item 1   Business.....................................................    1
     Item 2   Properties...................................................   22
     Item 3   Legal Proceedings............................................   23
     Item 4   Submission of Matters to a Vote of Security Holders..........   23
     Supplemental Information - Executive Officers of the Registrant

PART II

     Item 5   Market for Registrant's Common Equity and Related
              Stockholder Matters..........................................   24
     Item 6   Selected Financial Data......................................   24
     Item 7   Management's Discussion and Analysis of Financial
              Condition and Results of Operations..........................   24
     Item 7A  Quantitative and Qualitative Disclosures about
              Market Risk..................................................   24
     Item 8   Financial Statements and Supplementary Data..................   24
     Item 9   Changes in and Disagreements With Accountants
              on Accounting and Financial Disclosure.......................   24

PART III

     Item 10  Directors and Executive Officers of the Registrant...........   24
     Item 11  Executive Compensation.......................................   25
     Item 12  Security Ownership of Certain Beneficial Owners
              and Management...............................................   25
     Item 13  Certain Relationships and Related Transactions...............   25

PART IV

     Item 14  Exhibits, Financial Statement Schedules, and Reports on Form
              8-K..........................................................   25

Signatures.................................................................   27

                                      -i-
<PAGE>

                                    PART 1

Item 1     Business

General

       Citizens First Financial Corp. (the "Company") was incorporated under
Delaware law in January 1996. The Company completed its initial public offering
of 2,817,500 shares of common stock on May 1, 1996 in connection with the
conversion of Citizens Savings Bank, (the "Bank") from the mutual to stock form
of ownership (the "Conversion"). The Company is a savings and loan holding
company and is subject to regulation by the Office of Thrift Supervision
("OTS"), and the Securities and Exchange Commission ("SEC"). Currently, the
Company does not transact any material business other than through its
subsidiary, the Bank. At December 31, 2000, the Company had total assets of
$329.9 million, total deposits of $228.1 million and total stockholders' equity
of $29.3 million.

       The Bank was originally chartered in 1888 by the State of Illinois and in
1989 became a federally chartered savings bank. In April 1999, the Bank was
converted from a federally chartered savings bank to an Illinois state savings
bank. The Bank's principal business consists of the acceptance of retail
deposits from the general public in the area surrounding its branch offices and
the investment of those deposits, together with funds generated from operations
and borrowings, in one-to-four family residential mortgage loans, multi-family,
commercial real estate, consumer and other loans. The Bank originates loans for
investment and for sale. Currently, it is the Bank's policy to sell, on a
servicing retained basis, most longer-term fixed rate one-to-four family
mortgage loans it originates as a method of controlling its growth, managing its
interest rate risk and increasing its loan servicing fee income. The Bank's
revenues are derived principally from interest on its mortgage, consumer and
commercial loans, loan servicing fees and, to a lesser extent, the interest on
its securities. The Bank's primary source of funds are deposits, principal and
interest payments on loans and securities, borrowings from the Federal Home Loan
Bank of Chicago and, to a lesser extent, proceeds from the sale of loans and
securities. The Bank has a wholly-owned service corporation, CSL Service
Corporation, an Illinois-chartered corporation that is a participant in a joint
venture that has purchased and is developing commercial real estate.

Market Area and Competition

       The Bank is a community-oriented savings institution offering a variety
of financial products and services to meet the needs of the communities it
serves. The Bank's deposit gathering is concentrated in the communities
surrounding its five offices located in the municipalities of Bloomington,
Normal and Fairbury, Illinois which are part of McLean and Livingston Counties.
McLean County comprises the greater Bloomington/Normal metropolitan area and
Livingston County is adjacent to the greater Bloomington/Normal metropolitan
area. The economy in McLean and Livingston Counties has historically benefited
from the presence of the national and regional headquarters of State Farm
Insurance Company, the Mitsubishi Motors Corporation, the Eureka Company,
Illinois Farm Bureau, Illinois State University and Illinois Wesleyan University
as well as a variety of agricultural related businesses. These counties are the
primary market area for the Bank's lending and deposit gathering activities.

       The Bank faces significant competition both in making loans and in
attracting deposits. The greater Bloomington/Normal metropolitan area is a
highly competitive market. The Bank faces direct competition from a significant
number of financial institutions operating in its market area, many with a
state-wide or regional presence and in some cases a national presence. Many of
these financial institutions are significantly larger and have greater financial
resources than the Bank. State Farm Insurance Company, Bloomington-Normal's
largest business, has a savings bank, which it operates through its agents on a
national basis. The Bank's competition for loans comes principally from
commercial banks, savings and loan associations, mortgage banking companies,
credit unions and insurance companies. Its most direct competition for deposits
has historically come from savings and loan associations and commercial banks.
In addition, the Bank faces increasing competition for deposits from non-bank
institutions such as brokerage firms and insurance companies in such areas as
short-term money market funds, corporate and government securities funds, mutual
funds and

                                      -1-
<PAGE>

annuities. Competition may also increase as a result of the lifting of
restrictions on the interstate operations of financial institutions.

Investment Activities

       The investment policy of the Bank, as approved by the Board of Directors,
requires management to maintain adequate liquidity and generate a favorable
return on investments without incurring undue interest rate and credit risk. The
Bank has invested primarily in U.S. Agency securities, a Federal Home Loan Bank
demand investment account, eligible mutual funds, corporate securities and U.S.
government sponsored agency issued mortgage-backed securities. SFAS 115 requires
the Bank to designate its securities as held to maturity, available for sale or
held for trading. The Bank does not currently maintain a portfolio of securities
categorized as held to maturity or held for trading. The Bank's investment
securities generally consist of U.S. Agency obligations and mortgage-backed and
mortgage-related securities. The Bank's mortgage-backed securities consist of
pass through certificates representing interests in pools of fixed and
adjustable rate mortgage loans issued or guaranteed by FHLMC or FNMA. At
December 31, 2000, the Bank's portfolio of investment and mortgage-backed
securities totaled $15.1 million, all of which was categorized as available for
sale.

       In recent periods, the Bank has primarily invested in securities in order
to maintain liquid assets for its operations and as a means of utilizing its
excess funding not necessary for loan originations. The Board of Directors
reviews all of the activity in the investment portfolio on a monthly basis.

Lending Activities

       Origination, Sale, Servicing and Purchase of Loans The Bank's loan
origination activities are conducted primarily by its loan personnel, operating
at its five offices. All loans originated by the Bank are underwritten by the
Bank pursuant to the Bank's policies and procedures. The Bank originates both
adjustable-rate and fixed-rate mortgage loans, commercial loans and consumer
loans. The Bank's ability to originate loans is dependent upon the relative
customer demand for the type of loan and demand for fixed-rate or adjustable-
rate loans, which is affected by the current and expected future level of
interest rates.

       While the Bank has in the past, from time to time, sold adjustable-rate
one-to-four family loans and retained mortgage loans with terms of 10 years or
more, it is currently the general policy of the Bank to originate for sale in
the secondary market one-to-four family fixed-rate mortgage loans with
maturities exceeding ten years and to originate for investment all adjustable-
rate one-to-four family mortgage loans and fixed-rate one-to-four family
mortgage loans with maturities of ten years or less.

       One-to-Four Family Mortgage Lending The Bank currently offers both fixed-
rate and adjustable-rate mortgage loans secured by one-to-four family residences
located in the Bank's primary market area, with maturities of up to thirty
years. While the Bank has originated such loans secured by properties outside
its market area, substantially all of such loans at December 31, 2000 were
secured by property located in the Bank's primary market area. One-to-four
family mortgage loan originations are generally obtained from the Bank's loan
representatives operating in its branch offices and their contacts with the
local real estate industry, existing or past customers, and members of the local
communities.

       Multi-Family Lending The Bank originates fixed and adjustable-rate multi-
family mortgage loans generally secured by 5 to 70 unit apartment and student
housing buildings located in the Bank's primary market area. In reaching its
decision on whether to make a multi-family loan, the Bank considers the
qualifications and financial condition of the borrower as well as the value and
condition of the underlying property. The factors considered by the Bank
include: the net operating income of the mortgaged premises before debt service
and depreciation; the debt coverage ratio (the ratio of net earnings to debt
service); and the ratio of loan amount to appraised value.

       Commercial Real Estate Lending The Bank originates adjustable-rate
commercial real estate loans that are generally secured by properties used for
business purposes such as small office buildings or a combination of residential
and retail facilities located in the Bank's primary market area.

                                      -2-
<PAGE>

       Loans secured by commercial real estate properties, like multi-family
loans, generally involve larger principal amounts and a greater degree of risk
than one-to-four family residential mortgage loans. Because payments on loans
secured by commercial real estate properties are often dependent on 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 Bank
seeks to minimize these risks through its underwriting standards, which require
such loans to be qualified on the basis of the property's income and debt
coverage ratio.

       Construction and Land Lending The Bank originates loans for the
acquisition and development of commercial and residential property located in
its primary market area. These loans are offered to local developers and
individuals. The majority of the Bank's construction loans are originated
primarily to finance the construction of one-to-four family, owner-occupied
residential properties and multi-family properties located in the Bank's primary
market area. Such loans are offered for the construction of properties that are
pre-sold or for which permanent financing has been secured, as well as for
properties that are not pre-sold or for which permanent financing has not been
secured.

       Construction and land development financing is generally considered to
involve a higher degree of credit risk than long-term financing on improved,
owner-occupied real estate. Risk of loss on a construction loan is dependent
largely upon the accuracy of the initial estimate of the property's value at
completion of construction or development compared to the estimated cost
(including interest) of construction. If the estimate of value proves to be
inaccurate, the Bank may be confronted with a project, when completed, having a
value which is insufficient to assure full repayment.

       Commercial Lending The Bank offers commercial loans to businesses
operating in the Bank's primary market area on a selective basis.

       Unlike mortgage loans, which generally are made on the basis of the
borrower's ability to make repayment from his or her employment and other
income, and which are secured by real property whose value tends to be more
easily ascertainable, commercial business loans are of higher risk and typically
are made on the basis of the borrower's ability to make repayment from the cash
flow of the borrower's business. As a result, the availability of funds for the
repayment of commercial business loans may be substantially dependent on the
success of the business itself. Further, the collateral securing the loans may
depreciate over time, may be difficult to appraise and may fluctuate in value
based on the success of the business. Included in this total are agricultural
loans made within our lending area. These agricultural loans are generally
offered with one year terms in amounts up to $500,000 and are generally secured
by crops, equipment and other assets and personal guarantees.

       Consumer and Other Lending The Bank's portfolio of consumer and other
loans primarily consist of fixed-rate, fixed-term home equity loans, adjustable
home equity lines of credit, loans secured by automobiles, home improvement
loans, loans secured by deposit accounts and unsecured personal loans.

       Loan Servicing The Bank generally services all loans it retains for
investment and also services a portfolio of one-to-four family mortgage loans
for others which is primarily generated from its loan sale activity. Loan
servicing includes collecting and remitting loan payments, accounting for
principal and interest, making inspections as required of mortgaged premises,
contacting delinquent mortgagors, supervising foreclosures and property
dispositions in the event of unremedied defaults, making certain insurance and
tax payments on behalf of the borrowers and generally administering the loans.

                                      -3-
<PAGE>

Deposit Activities

       Deposits The Bank offers a variety of deposit accounts with a range of
interest rates and terms. The Bank's deposit accounts consist of savings, NOW
accounts, checking accounts, money market accounts, certificate and brokered
deposit accounts. The Bank also offers certificate of deposit accounts with
balances in excess of $100,000 at negotiated rates (jumbo certificates) and
Individual Retirement Accounts ("IRAs"). For the year ended December 31, 2000,
the balance of core deposits (savings and demand deposit accounts) totaled $62.9
million, or 27.6%, of total deposits. The flow of deposits is influenced
significantly by general economic conditions, changes in money market rates,
prevailing interest rates and competition. The Bank's deposits are obtained
predominantly from the areas in which its branch offices are located. The Bank
relies primarily on customer service and long-standing relationships with
customers to attract and retain these deposits; however, market interest rates
and rates offered by competing financial institutions significantly affect the
Bank's ability to attract and retain deposits. The Bank uses traditional means
of advertising its deposit products, including radio and print media and
generally does not solicit deposits from outside its market area. While
certificate accounts in excess of $100,000 are accepted by the Bank, the Bank
does not actively solicit such deposits nor does the Bank currently use brokers
to obtain deposits. The Bank has attempted to increase its deposit customer base
and decrease its level of dependency on certificate accounts by offering
interest free checking accounts without minimum balance requirements. The sale
of a branch facility in April 2000 included $26.1 million of deposits. The sold
deposits were replaced by funds from brokered deposits and borrowings from the
FHLB. The Bank has $11.7 million of brokered deposits with six and twelve month
maturities at an average rate of 6.90%. Brokered deposits are an alternative
source of liquidity that offers the Bank the opportunity to obtain funds at a
competitive interest rate.

                                      -4-
<PAGE>

Statistical Data

INVESTMENT SECURITIES

     The amortized cost, gross unrealized gains, gross unrealized losses and
approximate market value of the investment securities at the dates indicated
were:

<TABLE>
<CAPTION>
                                                              Gross        Gross
                                               Amortized    Unrealized   Unrealized     Fair
                                                  Cost        Gains        Losses      Value
                                                  ----        -----        ------      -----
(Dollars in thousands)
<S>                                            <C>          <C>          <C>           <C>
Available for sale at December 31, 2000:
   Federal agencies                              $ 3,993        $  6        $ 25       $ 3,974
   Mortgage-backed securities                     10,104          67          87        10,084
   Other asset-backed securities                       5                                     5
   Marketable equity securities                    1,000                       9           991
                                                 -------        ----        ----       -------
       Total available for sale                  $15,102        $ 73        $121       $15,054
                                                 =======        ====        ====       =======

Available for sale at December 31, 1999:
   Federal agencies                              $ 7,502                    $288       $ 7,214
   Mortgage-backed securities                      8,144                     258         7,886
   Other asset-based securities                       15                                    15
   Marketable equity securities                    1,000                      12           988
                                                 -------                    ----       -------
       Total available  for sale                 $16,661                    $558       $16,103
                                                 =======                    ====       =======

Available for sale at December 31, 1998:
   Federal agencies                              $ 6,500        $  6        $  2       $ 6,504
   Mortgage-backed securities                     10,380          10          91        10,299
   Other asset-backed securities                     231                                   231
   Marketable equity securities                    1,000                       1           999
                                                 -------                    ----       -------
      Total available for sale                   $18,111        $ 16        $ 94       $18,033
                                                 =======        ====        ====       =======
</TABLE>


The balance of Federal Home Loan Bank of Chicago stock owned at December 31 is
as follows:

                    Cost
----------------------------------------------
            (Dollars in thousands)
        2000        1999       1998
        ----        ----       ----

        $4,166      $2,853     $1,971
        ======      ======     ======

The fair value of Federal Home Loan Bank stock approximates cost. The yield on
the stock is approximately 7.75% at December 31, 2000.

                                      -5-
<PAGE>

The maturity distribution (dollars in thousands) and average yields for the
securities available for sale portfolio at December 31, 2000 were:

<TABLE>
<CAPTION>
                        Within 1 Year         1 - 5 Years          5 - 10 Years
                        -------------         -----------          ------------
                       Amount    Yield      Amount    Yield       Amount    Yield
                       ------    -----      ------    -----       ------    -----
<S>                    <C>       <C>       <C>        <C>         <C>       <C>
Federal agencies        $-0-     0.00%     $1,001      6.78%      $2,973     6.65%
                        ----     ----      ------      ----       ------     ----

    Total               $-0-     0.00%     $1,001      6.78%      $2,973     6.65%
                        ====     ====      ======      ====       ======     ====
</TABLE>

<TABLE>
<CAPTION>
                                                          Marketable Equity,
                                                          Mortgage and Other
                                    Due After Ten Year    Asset-Backed Securities              Total
                                    ------------------    -----------------------              -----
                                      Amount    Yield       Amount        Yield         Amount        Yield
                                      ------    -----       ------        -----         ------        -----
<S>                                 <C>       <C>         <C>             <C>           <C>           <C>
Federal agencies                                                                        $ 3,974        6.69%
Mortgage-backed securities               -0-     0.00%     $ 10,084         8.09%        10,084        8.09
Other asset-based securities             -0-     0.00             5         5.44              5        5.44
Marketable equity securities             -0-     0.00           991         5.26            991        5.26
                                       -----     ----      --------         ----        -------        ----
      Total                            $ -0-     0.00%     $ 11,080         7.83%       $15,054        7.53%
                                       =====     ====      ========         ====        =======        ====
</TABLE>

With exception of securities of the U.S. Treasury and other U.S. government
agencies and corporations, the Company did not hold any securities of a single
issuer, payable from and secured by the same source of revenue or taxing
authority, the book value of which exceeded 10% of stockholders' equity at
December 31, 2000.

                                      -6-
<PAGE>

LOAN PORTFOLIO
Types of Loans

<TABLE>
<CAPTION>
                                                  2000          1999          1998          1997          1996
                                                  ----          ----          ----          ----          ----
                                                                    (Dollars in thousands)
<S>                                            <C>           <C>           <C>           <C>           <C>
Commercial loans                               $ 20,622      $ 19,622      $ 12,727      $ 16,863      $  8,063
Real estate loans:
   Construction and land                         40,141        31,968        40,946        15,862        12,489
   Commercial                                    71,566        64,336        24,073        25,610         8,934
   Residential                                  150,914       152,444       150,255       168,678       174,021
Consumer and other loans                         13,246        12,806        12,072        12,345        11,444
                                               --------      --------      --------      --------      --------
   Total                                        296,489       281,176       240,073       239,358       214,951

Less:
   Undisbursed portion of
loans (1)                                        11,174        15,623         7,189         9,049         3,397
   Allowance for loan losses                      1,826         1,679         1,256           840           512
                                               --------      --------      --------      --------      --------

Loans, net                                     $283,489      $263,874      $231,628      $229,469      $211,042
                                               ========      ========      ========      ========      ========
</TABLE>

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

         Loans held for sale at December 31, 2000, 1999, 1998, 1997, and 1996
were $1,494,359, $3,007,425, $5,245,872, $2,393,567 and $3,027,468,
respectively, were not included in the above totals.

Maturities and Sensitivities of Loans to Changes in Interest Rates

         Presented in the table below are the maturities of loans (excluding
commercial real estate, residential real estate and consumer and other loans)
outstanding as of December 31, 2000. Also presented are the amounts due after
one year classified according to the sensitivity to changes in interest rates.

<TABLE>
<CAPTION>
                                                                       Maturing
                                           -------------------------------------------------------------
                                                 Within          1-5           Over 5
                                                 1 Year         Years          Years         Total
                                                 ------         -----          -----         -----
                                                               (Dollars in thousands)
<S>                                              <C>            <C>            <C>           <C>
Commercial loans                                 $12,555        $ 6,811        $1,256        $20,622
Real estate loans-Construction
and land                                          36,274          3,867             0         40,141
                                                 -------        -------        ------        -------
     Total                                       $48,829        $10,678        $1,256        $60,763
                                                 =======        =======        ======        =======
</TABLE>

<TABLE>
<CAPTION>
                                                               Maturing
                                                  --------------------------------
                                                   1 - 5                  Over
                                                   Years                  5 Years
                                                  -------                ---------
                                                       (Dollars in thousands)
<S>                                               <C>                    <C>
Loans maturing after one year with:
   Fixed rates                                    $ 9,423                 $ 1,256
   Variable rate                                  $ 1,255                 $     0
                                                  -------                 -------
      Total                                       $10,678                 $ 1,256
                                                  =======                 =======
</TABLE>

                                      -7-
<PAGE>

Risk Elements

<TABLE>
<CAPTION>
                                                                             December
                                                    ----------------------------------------------------------
                                                         2000          1999         1998        1997        1996
                                                         ----          ----         ----        ----        ----
                                                                         (Dollars in thousands)
<S>                                                     <C>            <C>          <C>         <C>         <C>
Nonaccruing loans                                       $1,493         $435         $129        $737        $198

Loans contractually past due 90 days
or more other
than nonaccruing                                         3,767          134          250         211         369

Restructured loans                                         301          314          325         341         463
</TABLE>


         Nonaccruing loans are loans which are reclassified to a nonaccruing
status when in management's judgment the collateral value and financial
condition of the borrower do not justify accruing interest. Interest previously
recorded but not deemed collectible is reversed and charged against current
income. Interest income on these loans is then recognized when collected.

         Restructured loans are loans for which the contractual interest rate
has been reduced or other concessions are granted to the borrower because of a
deterioration in the financial condition of the borrower resulting in the
inability of the borrower to meet the original contractual terms of the loans.

         Interest income of $26,000 for the year ended December 31, 2000, was
recognized on the nonaccruing and restructured loans listed in the table above,
whereas interest income of $92,000 would have been recognized under their
original loan terms.

Potential Problem Loans

         Potential problem loans increased from $250,000 at December 31, 1999 to
$3,017,000 at December 31, 2000. The balance relates to a commercial mortgage in
a retail development. Subsequent to year-end, the borrowers requested and were
granted a loan modification of their loan's interest rate and maturity. The loan
was delinquent less than 30 days at December 31, 2000. As of March 1, 2000 it is
two months delinquent. The modifications were requested because of the
borrowers' difficulties meeting their combined obligations to other lenders. The
collateral for the Company's loan for this development is a commercial building
in a large shopping center. The building that serves as the Bank's collateral is
leased and, in addition, the borrowers have personally guaranteed the loan.
Management believes there will be no loss related to this loan.

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

         The Company accounts for impaired loans in accordance with SFAS No. 114
and No. 118, "Accounting by Creditors for an Impairment of a Loan" and
"Accounting by Creditors

                                      -8-
<PAGE>

for Impairment of a Loan - Income Recognition and Disclosures". These Statements
require that impaired loans within the scope of these Statements be measured at
the present value of expected future cash flows discounted at the loan's
effective interest rate, or as a practical expedient, at the loan's observable
market price or fair value of the collateral, if the loan is collateral
dependent. A loan is impaired when, based on current information and events, it
is probable that a creditor will be unable to collect all amounts due, both
principal and interest, according to the contractual terms of the note.

<TABLE>
<CAPTION>
                                                                                         Balance at
Impaired Loans:                                                                       December 31,2000
                                                                                      ----------------
<S>                                                                                   <C>
Impaired loans with an allowance                                                          $2,766,603
Impaired loans for which the discounted cash flows or
collateral value exceeds the carrying value of the loan                                    1,493,000
                                                                                          ----------
                                                                                          $4,259,603
         Total impaired loans                                                             ==========

</TABLE>


<TABLE>
<CAPTION>
                                                                                         Year Ended
Impaired Loans:                                                                       December 31, 2000
                                                                                      -----------------
<S>                                                                                   <C>
Average balance of impaired loans                                                         $5,038,603
Interest income recognized on impaired loans                                              $  366,050
Cash-basis interest included above                                                        $  264,834
</TABLE>


         The amount of impaired loans outstanding at December 31, 1999 and
during 1999 were immaterial. The Company considers 1-4 family real estate and
consumer loans to be homogeneous and are therefore excluded from the separate
identification for evaluation of impairment.

Allowance for Loan Losses and Impaired Loans

         The Company maintains an allowance for loan losses to absorb losses
inherent in the loan portfolio. The allowance for losses increased from
$1,679,000 at December 31, 1999 to $1,826,000 at December 31, 2000, an increase
of $147,000 or 8.8%. The allowance is based on ongoing assessments of the
probable estimated losses inherent in the loan portfolio. The methodology for
assessing the appropriateness of the allowance consists of several key elements,
which include a formula allowance, a specific allowance for identified problem
loans and an unallocated allowance.

         The formula allowance is calculated by applying loss factors to
outstanding loans based on the internal risk grade of such loans. Changes in
risk grades of both performing and non-performing loans affect the amount of the
formula allowance. Loss factors are based on historical loss experience and may
be adjusted for significant factors that, in management's judgment, affect the
collectibility of the portfolio as of the evaluation date. Loss factors are
based on (1) historical loss experience over a five-year period, which
management believes approximates a business cycle; (2) individual evaluations of
residential, commercial real estate, construction, agricultural, commercial and
consumer loans and (3) expected charge-offs by loan classification for one-year.

         A specific allowance is established in cases where management has
identified significant conditions or circumstances related to a loan that
management believes indicate the probability that a loss has been incurred.

         The unallocated allowance is based upon management's evaluation of
various conditions, the effects of which are not directly measured in the
determination of the formula and specific allowances. The evaluation of the
inherent loss with respect to these conditions is subject to a higher degree of
uncertainty because they are not identified with specific loans. The conditions
evaluated in connection with the unallocated allowance include (1) general
economic and business conditions affecting the Company's lending areas; (2)
collateral values; (3) loan volumes and concentrations; (4) seasoning of the
loan portfolio; (5) specific industry conditions and (6) recent loss experience
in particular segments of the portfolio.

                                      -9-
<PAGE>

         The allowance for loan losses is based upon estimates of probable
losses inherent in the loan portfolio. The amount of actual losses can vary
significantly from the estimated amounts. The methodology includes several
features that are intended to reduce the differences between estimated and
actual losses. The Company closely monitors any difference of actual and
estimated losses and adjusts the methodology accordingly.

         There were no changes in estimation methods or assumptions that
affected our methodology for assessing the appropriateness of the allowance for
loan losses from December 31, 1999 to December 31, 2000. The increased allowance
in 2000 was related to the Bank's loan growth which was primarily commercial
real estate and construction and land loans, which generally bear a greater
degree of risk as compared to one-to-four family mortgage loans.

         Although the risk of non-payment for any reason exists with respect to
all loans, certain other more specific risks are associated with each type of
loan. The primary risks associated with commercial loans are quality of the
borrower's management and the impact of national and local economic factors.
Currently the business atmosphere remains stable for the local economy in the
McLean, Livingston and Tazewell County areas. Risk associated with real estate
loans include concentrations of loans in a loan type, such as residential real
estate, decline in real estate values and a sudden rise in interest rates.
Individual loans face the risk of borrower's unemployment as a result of
deteriorating economic conditions or renewed contract differences between unions
and management of several large companies in the Company's market area. The
Company's strategy with respect to addressing and managing these types of risks
is for the Company to follow its loan policies and underwriting criteria.

         The Company has substantially increased its investment in commercial,
commercial real estate and construction and land loans since December 31, 1996.
Because of the higher degree of risk associated with these types of loans, the
Company has undertaken to increase its allowance for loan losses to reflect this
increased risk.

                                      -10-
<PAGE>

         A provision for loan losses is charged to income to increase the
allowance to a level deemed to be adequate based on management's evaluation.
When a loan or a part thereof is considered by management to be uncollectible, a
charge is made against the allowance. Recoveries of previously charged-off loans
are credited back to the allowance. The following table summarizes the changes
in the allowance for loan losses for the last five years (in thousands):

Summary of Loan Loss Experience

<TABLE>
<CAPTION>
                                                           2000          1999           1998          1997          1996
                                                         ----------------------------------------------------------------
<S>                                                      <C>          <C>             <C>          <C>           <C>
Balance at January 1                                     $ 1,679        $1,256          $840          $512          $412

Loan charged off (net):
Commercial loans                                               -             -            (8)            -             -
Real estate loans:
   Construction and land                                  (2,800)            -            (7)            -             -
   Commercial                                                  -             -             -           (32)            -
   Residential                                              (103)          (57)          (32)         (106)          (47)
Consumer and other loans                                       -             -             -           (32)          (20)
                                                         -------        ------        ------          ----          ----
Net charge-offs                                           (2,903)          (57)          (47)         (188)          (67)
                                                         -------        ------        ------          ----          ----
Provision for loan losses                                  3,050           480           463           516           167
                                                         -------        ------        ------          ----          ----
Balance at December 31                                   $ 1,826        $1,679        $1,256          $840          $512
                                                         =======        ======        ======          ====          ====

Ratio of net charge-offs during the
period to average loans outstanding
during the period                                           1.03%         0.02%         0.02%         0.08%         0.03%
                                                         =======        ======        ======          ====          ====
</TABLE>

         For many years, the Company has minimized credit risk by adhering to
sound underwriting and credit review policies. These policies are reviewed at
least annually and changes approved by the board of directors. Senior management
is actively involved in business development efforts and maintenance and
monitoring of credit underwriting approval.

         Management believes the allowance for loan losses is adequate to absorb
probable loan losses and that the policies and procedures in place to identify
and monitor loans for potential losses are satisfactory.

                                      -11-
<PAGE>

     Allocation of the Allowance for Loan Losses

          Presented below is an analysis of the composition of the allowance for
loan losses (in thousands of dollars) and percent of each category to total
loans:

<TABLE>
<CAPTION>
                                              2000                   1999                   1998
     --------------------------------------------------------------------------------------------------
                                         % of                   % of                   % of
                                        Amount      Total      Amount      Total      Amount      Total
     --------------------------------------------------------------------------------------------------
     <S>                                <C>         <C>        <C>         <C>        <C>         <C>
     Commercial loans                   $  440      24.10%     $  405      24.12%     $  320      25.48%
     Real estate loans:
        Construction and land              305      16.70         210      12.51          70       5.57
        Commercial                         370      20.26         285      16.97         120       9.55
        Residential                        460      25.19         480      28.59         435      34.63
     Consumer and other loans              130       7.12         120       7.15          75       5.97
     Unallocated                           121       6.63         179      10.66         236      18.80
                                        ------      -----      ------      -----      ------      -----

          Total                         $1,826      100.0%     $1,679      100.0%     $1,256      100.0%
                                        ======      ======     ======      ======     ======      ======
</TABLE>

<TABLE>
<CAPTION>
                                              1997                   1996
     ---------------------------------------------------------------------------
                                         % of                   % of
                                        Amount      Total      Amount      Total
     ---------------------------------------------------------------------------
     <S>                                <C>         <C>        <C>         <C>
     Commercial loans                   $  213      25.36%     $   68      13.28%
     Real estate loans
        Construction and land               40       4.76          46       8.98
        Commercial                         116      13.81          36       7.03
        Residential                        393      46.78         222      43.37
     Consumer and other loans               78       9.29         140      27.34
     Unallocated                             0        0.0           0        0.0
                                        ------      -----      ------      -----

         Total                          $  840      100.0%     $  512      100.0%
                                        ======      =====      ======      =====
</TABLE>

          The percentage of the allocation of the allowance for loan losses
among the various categories have changed for the years 1996 through 2000 to
reflect the changes in the types of loans that the Company was originating, the
degree of risk associated with these loans and the performance of specific
loans. The increase in the delinquency of certain residential construction loans
and the establishment of a $150,000 specific reserve resulted in an increase in
the allocated reserve for construction and land loans in 2000. Since 1996, the
increased investment in the higher risk commercial, commercial real estate and
construction and land loans is reflected in the increased allowance attributed
to these classifications during that period. The unallocated portion of the
allowance for loan losses represents the amount that is necessary to cover any
current adverse conditions on the loan portfolio such as a possible
deterioration in a specific industry.

                                      -12-
<PAGE>

DEPOSITS AND BORROWINGS

Deposits

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

<TABLE>
<CAPTION>
                                                      1999                        1998                           1997
                                                      ----                        ----                           ----
                                                    Weighted                    Weighted                       Weighted
                                                    Average                      Average                        Average
                                              Amount          Rate        Amount           Rate          Amount           Rate
                                              ------          ----        ------           ----          ------           ----
                                                                           (Dollars in thousands)
<S>                                           <C>             <C>         <C>              <C>            <C>             <C>
Balance at December 31:
Noninterest bearing                          $ 15,116         0.00%      $ 14,217          0.00%        $ 10,333          0.00%
deposits
Money market deposit                           12,567         3.30%        12,542          3.40%          10,345          2.26%
accounts
Savings deposits                               16,458         2.25%        19,003          2.20%          17,221          2.40%
NOW accounts                                   16,862         1.78%        19,079          1.76%          16,668          2.27%
Certificate of deposit and
   Other time deposits                        156,152         5.88%       150,068          5.36%         147,591          5.77%
                                             --------         ----       --------          ----         --------          ----
     Total deposits                          $217,155         4.73%      $214,909          4.29%        $202,158          4.72%
                                             ========         ====       ========          ====         ========          ====
</TABLE>

As of December 31, 2000, certificates of deposit and other time deposits of
$100,000 or more mature as follows:

<TABLE>
<CAPTION>
                                                                       Maturing
                                        ----------------------------------------------------------------------
                                        3 Months         3-6            6-12          Over 12
                                        or less         Months         Months         Months           Total
                                        -- ----         ------         ------         ------           -----
                                                                (Dollars in thousands)
<S>                                     <C>            <C>            <C>            <C>              <C>
Certificates of deposit and other
   time deposits                        $  4,157       $  4,751       $  6,861       $   5,993        $ 21,762
                                        ========       ========       ========       =========        ========
Per cent                                   19.10%         21.83%         31.53%          27.54%         100.00%
                                           =====          =====          =====           =====          ======
</TABLE>

RETURN ON EQUITY AND ASSETS

<TABLE>
<CAPTION>
                                                                                     2000         1999         1998
                                                                                     ----         ----         ----
    <S>                                                                              <C>          <C>          <C>
    Return on assets (net income divided by
       average total assets)                                                         0.56%        0.40%        0.73%
    Return on equity (net income divided by
       average equity (1)                                                            5.24%        3.38%        5.54%
    Dividend payout ratio (dividends per
       share divided by net income per share)                                       20.00%       17.67%        0.00%
    Equity to assets ratio (average equity
       divided by average total assets)                                             10.76%       11.73%       13.11%
</TABLE>

                                      -13-
<PAGE>

Subsidiary Activities

         At December 31, 2000, the Bank had a wholly owned service corporation,
CSL Service Corporation ("CSL"), an Illinois chartered company. CSL is a
participant in a joint venture real estate development (Williamsburg Place LLC),
which has purchased and is developing commercial real estate.

Personnel

         As of December 31, 2000, the Bank had 74 authorized full-time employee
positions and 33 authorized part-time employee positions. The employees are not
represented by a collective bargaining unit and the Bank considers its
relationship with its employees to be good.

                          REGULATION AND SUPERVISION

General

         The Company, as a savings and loan holding company, is required to file
certain reports with, and other wise comply with the rules and regulations of
the OTS under the Home Owners' Loan Act, as amended (the "HOLA").

         The Bank is an Illinois state chartered savings bank and its deposit
accounts are insured up to applicable limits by the FDIC under the Savings
Association Insurance Fund (the "SAIF"). The Bank is subject to extensive
regulation by the Illinois Office of Banks and Real Estate Commissioner (the
"Commissioner"), as its chartering authority, and by the FDIC, as deposit
insurer. The Bank must file reports with the Commissioner and the FDIC
concerning its activities and financial condition, in addition to obtaining
regulatory approval prior to entering into certain transactions such as
establishing branches and mergers with, or acquisitions of, other depository
institutions. There are periodic examinations by the Commissioner and the FDIC
to assess the Bank's compliance with various regulatory requirements and
financial condition. This regulation and supervision establishes a framework of
activities in which a savings bank can engage and is intended primarily for the
protection of the insurance fund and depositors. The regulatory structure also
gives the regulatory authorities discretion in connection with their supervisory
and enforcement activities and examination policies, including policies with
respect to classification of assets and the establishment of adequate loan loss
reserves for regulatory purposes. Any change in such regulation, whether by the
Commissioner, the FDIC or through legislation, could have a material adverse
impact on the Company and the Bank and their operations and stockholders. The
Holding Company will also be required to file certain reports with and otherwise
comply with the rules and regulations, of the OTS, the Commissioner and the
Securities and Exchange Commission (the "SEC") under the federal securities
laws. Certain of the regulatory requirements applicable to the Bank and to the
Holding Company are referred to below or elsewhere herein. However, the
description of such requirements is not exhaustive and it does not purport to be
a complete description of the applicable laws and regulations.

                                      -14-
<PAGE>

         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 savings
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 year ended December 31, 2000, the Bank
paid approximated $64,000 in supervisory fees and expenses.

Bank Regulations

         Capital Requirements Under the Illinois Savings Bank Act (the "ISBA")
and the regulations of the Commissioner, an Illinois savings bank must maintain
a minimum level at a level not less than that 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 deemed necessary based on
the savings bank's financial condition, history, management or earnings
prospects.

         The FDIC has also adopted risk-based capital guidelines to which the
Bank is subject. The Bank is required to maintain certain levels of regulatory
capital in relation to regulatory risk-weighted assets. Risk-based capital
ratios are determined by allocating assets and specified off-balance sheet items
to four risk-weighted categories ranging from 0% to 100%, with higher levels of
capital being required for the categories perceived as representing greater
risk. The guidelines divide a savings bank's capital into two tiers. The first
tier ("Tier I") includes common equity, retained earnings, certain non-
cumulative perpetual preferred stock (excluding auction rate issues) and
minority interests in equity accounts of consolidated subsidiaries, less
goodwill and other intangible assets (except mortgage servicing rights and
purchased credit card relationships subject to certain limitations).
Supplementary ("Tier II") capital includes, among other items, cumulative
perpetual and long-term limited life preferred stock, mandatory convertible
securities, certain hybrid capital instruments, term subordinated debt and the
allowance for loan and lease losses, subject to certain limitation, less
required deductions. Savings banks are required to maintain a total risk-based
capital ratio of 8%, of which at least 4% must be Tier I capital.

         In addition, the FDIC has established regulations prescribing a minimum
Tier I leverage ratio. These regulations provide for a minimum Tier I leverage
ratio of 3% for banks that meet certain specified criteria, including that they
have the highest examination rating and are not experiencing or anticipating
significant growth. All other banks are required to maintain a Tier I leverage
ratio of at least 4%. The FDIC may, however, set higher leverage and risk-based
capital requirements on individual institutions when particular circumstances
warrant.

         The following is a summary of the Bank's regulatory capital at December
         31, 2000:
                  Total Capital to Risk-Weighted Assets                13.3%
                  Tier I Leverage Ratio                                 8.6%
                  Tier I to Risk-Weighted Assets                       12.5%

         The FDIC, along with other federal banking agencies, adopted a
regulation providing that the agencies will take account of the exposure of a
bank's capital and economic value to changes in interest rate risk in assessing
a bank's capital adequacy.

                                      -15-
<PAGE>

         Standard for Safety and Soundness. The federal banking agencies have
adopted Interagency Guidelines Establishing Standards for Safety and Soundness.
The Guidelines set forth the safety and soundness standards in various areas
such as internal controls, audit, systems, loan documentation, credit
underwriting, interest rate exposure, asset growth and quality, earnings and
compensation that the banking agencies use to identify and address problems at
insured depository institutions before capital becomes impaired. If the
appropriate federal banking agency determines that an institution fails to meet
any standard prescribed by the Guidelines, the agency may require the
institution to submit to the agency an acceptable plan to achieve compliance
with the standard.

         Lending Restriction. The Bank is prohibited by the ISBA from making
secured or unsecured loans for business, commercial or agricultural purposes
representing in the aggregate an amount in excess of 15% of its total assets,
unless the Commissioner authorizes in writing a higher percentage limit for such
loans upon the request of an institution.

         The Bank is also subject to a loans-to-one borrower limitation. Under
the Illinois law, the total loans and extensions of credit by the Bank to any
person outstanding at one time must not exceed the greater of $500,000 or 20% of
the Bank's total capital plus general loan loss reserves. In addition, the Bank
may make loans in an amount equal to an additional 10% of the Bank's capital
plus general loan loss reserves if secured by readily marketable collateral.

         Dividend Limitations. Under the ISBA, dividends may only be declared
when the total capital of the Bank is greater than that required by the ISBA.
Dividends may be paid by the Bank out of its net profits. 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 year
in an amount in excess of 50% of its net profits for that year. A savings bank
may not declare dividends in excess of its net profits in any year without the
approval of the Commissioner. Finally, the Bank 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 capital regulations or otherwise specified by the FDIC,
(ii) the amount required by the Commissioner or (iii) the amount required for
the liquidation account established by the Bank in connection with the Bank's
conversion to stock form. The Commissioner and the FDIC also have the authority
to prohibit the payment of any dividends by the Bank if the Commissioner or the
FDIC determines that the distribution would constitute an unsafe or unsound
practice.

         Prompt Corrective Regulatory Action. Federal law requires, among other
things, that the federal bank regulatory authorities take "prompt corrective
action" with respect to banks that do not meet minimum capital requirements. For
these purposes, the law establishes various capital categories. The FDIC has
adopted regulations to implement the prompt corrective action legislation. Under
the regulations, an institution is deemed to be "undercapitalized" if it has a
total risk-based capital ratio 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
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" banks are subject to growth, capital distribution
(including dividend) and other limitations and are required to submit a capital
restoration plan. A bank's compliance with such plan must be guaranteed by any
company that controls the undercapitalized institution in an amount equal to the
lesser of 5% of the Bank's total assets when deemed undercapitalized or the
amount necessary to achieve the status of adequately capitalized. If an
"undercapitalized" bank fails to submit an acceptable plan, it is treated as if
it is "significantly undercapitalized". "Significantly undercapitalized" banks
are subject to one or more of a number off 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.
"Critically undercapitalized" institutions also may not make any payment of
principal or interest on certain subordinated debt or extend credit for a highly
leveraged transaction or enter into any material transactions outside the
ordinary course of business. In addition, subject to a narrow exception, the
appointment of a receiver or

                                      -16-
<PAGE>

conservator is required for a "critically undercapitalized" institution within
270 days after it obtains such status.

         Transactions with Affiliates. Transactions between depository
institutions and their affiliates are governed by federal law. An affiliate of a
savings bank is any company or entity that controls, is controlled by, or is
under common control with the savings bank, other than a subsidiary. In a
holding company context, at a minimum, the parent holding company of a savings
bank and any companies which are controlled by such parent holding company are
affiliates of the savings bank. Generally, the extent to which the savings bank
or its subsidiaries may engage in "covered transactions", including loans, with
any one affiliate is limited to 10% of such savings bank's capital stock and
surplus, and there is an aggregate limit on all such transactions with all
affiliates of 20% of such capital stock and surplus. Federal law also
establishes specific collateral requirements for loans or extensions of credit
to, or guarantees or acceptances on letters of credit issued on behalf of an
affiliate. Covered transactions and a broad list of other specified transactions
also must be on terms substantially the same, or no less favorable, to the
savings bank or its subsidiary as similar transactions with non-affiliates.

         Federal law also restricts a savings bank with respect to loans to
directors, executive officers, and principal stockholders. 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 the savings bank's total capital and
surplus. 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 compensation program that is widely available to the Bank's
employees and does not give preference to the insider over other employees.
Federal law also requires that the board of directors approve loans to insiders
exceeding a certain amount. There are additional limitations on loans to
executive officers.

         Enforcement. The Commissioner and the FDIC have extensive enforcement
authority over Illinois-chartered savings banks, including the Bank. This
enforcement authority includes, among other things, the ability to assess civil
money penalties, to issue cease and desist orders and to remove directors and
officers. In general, these enforcement actions may be initiated in response to
violations of laws and regulations and to unsafe or unsound practices.

         The Commissioner is given authority by the ISBA to appoint a
conservator or receiver for an Illinois savings bank under certain circumstances
including, but not limited to, insolvency, a substantial dissipation of assets
due to violation of law, regulation or order of the Commissioner or an unsafe or
unsound practice. The FDIC also has authority under federal law to appoint a
conservator or receiver for an insured savings bank under certain circumstances.

         Insurance of Deposit Accounts. Deposits of the Bank are presently
insured by the SAIF. The FDIC maintains a risk-based assessment system by which
institutions are assigned to one of three categories based on their
capitalization and one of the three subcategories based on examination ratings
and other supervisory information. An institution's assessment rate depends upon
the categories to which it is assigned. Assessment rates for SAIF member
institutions are determined semiannually by the FDIC and currently range from
zero basis points of assessable deposits for the healthiest institutions to 27
basis points for the riskiest.

         In addition to the assessment for deposit insurance, institutions are
required to make payments on bonds issued in the late 1980s by the Financing
Corporation ("FICO") to recapitalize the predecessor to the SAIF. During 1999,
FICO payments for SAIF members approximated 6.5 basis points, while Bank
Insurance Fund ("BIF") members paid 1.3 basis points. By law, there was equal
sharing of FICO payments between SAIF and BIF members beginning on January 1,
2000.

         The Bank's assessment rate for 2000 was zero basis points, therefore
no premium was paid for the period. Payments toward the FICO bonds amounted to
$123,000. The FDIC has authority to increase insurance assessments. A
significant increase in SAIF insurance premiums would likely have an adverse
effect on the operating expenses and

                                      -17-
<PAGE>

results of operations of the Bank. Management cannot predict what insurance
assessment rates will be in the future.

         Insurance of deposits may be terminated by the FDIC upon finding that
the institution has engaged in unsafe or unsound practices, is in an unsafe or
unsound condition to continue operations or has violated any applicable law,
regulation, rule, order or condition imposed by the FDIC. The Bank does not know
of any practice, condition or violation that might lead to termination of
deposit insurance.

         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 generally require that reserves be maintained against
aggregate transaction accounts as follows: for that portion of transaction
accounts aggregating $42.8 million or less (subject to adjustment by the Federal
Reserve Board) the reserve requirement is 3%; and for accounts greater than
$42.8 million, the reserve requirement is $1.284 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 $42.8 million. The first $5.5 million
of otherwise reservable balances (subject to adjustment by the Federal Reserve
Board) are exempted from the reserve requirements. The Bank is in compliance
with the foregoing requirement.

         Federal Home Loan Bank System. The Bank is a member of the Federal Home
Loan Bank (the "FHLB") system, which consists of 12 regional FHLBs. The FHLBs
provides a central credit facility primarily for member institutions. The Bank,
as a member of the FHLB of Chicago, is required to acquire and hold shares of
capital stock 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) from the FHLB,
whichever is greater. The Bank is in compliance with this requirement with an
investment in FHLB stock at December 31, 2000 of $4,166,300.

         The FHLBs are required to provide funds for the resolution of insolvent
thrifts and to contribute funds for affordable housing programs. These
requirements could reduce the amount of dividends that the FHLBs pay to their
members and could result in the FHLBs imposing a higher rate of interest on
advances to their members. For the years ended December 31, 2000, 1999, and
1998, dividends from the FHLB to the Bank amounted to approximately $280,000,
$159,000, and $138,000, respectively.

         Holding Company Regulation . Federal law allows a state savings bank
that qualifies as a "qualified thrift lender" to elect to be treated as a
savings association for purposes of the savings and loan holding company
provisions of federal law. Such election results in its holding company being
regulated as a savings and loan holding company by the OTS rather than as a bank
holding company by the Federal Reserve Board. The Bank has made such election
and has received approval from the OTS to become a savings and loan holding
company. The Company has registered with the OTS and is subject to OTS
regulations, examinations, supervision and reporting requirements. In addition,
the OTS has enforcement authority over the Company and its non-savings
institution subsidiaries. Among other things, this authority permits the OTS to
restrict or prohibit activities that are determined to be a serious risk to the
subsidiary savings institution. Additionally, the Bank is required to notify the
OTS at least 30 days before declaring any dividend to the Company. Because the
Bank is chartered under Illinois law, the Company is also subject to
registration with and regulation by the Commissioner.

         As a unitary savings and loan company, the Company is generally not
restricted under existing laws as to the types of business activities in which
it may engage. The Gramm-Leach-Billey Act of 1999 provides that no company may
acquire control of a savings association after May 4, 1999 unless it engages
only in the financial activities permitted for financial holding companies under
the law and for multiple savings and loan holding companies as described below.
Further, the Gramm-Leach-Billey Act specifies that existing savings and loan
holding companies may only engage in such activities. The Gramm-Leach-Billey
Act, however, grand fathered the unrestricted authority for activities with
respect to unitary savings and loan holding companies existing prior to May 4,
1999, such as the Company, so long as the Bank continues to comply with the
qualified thrift lender test. Upon any non-supervisory acquisition by

                                      -18-
<PAGE>

the Company of another savings association as a separate subsidiary, the Company
would become a multiple savings and loan holding company and would be subject to
extensive limitations on the types of business activities in which it could
engage. Federal law limits the activities of a multiple savings and loan holding
company and its non-insured institution subsidiaries primarily to activities
permissible for bank holding companies under Section 49c)(8) of the Bank Holding
Company Act, subject to prior approval of the OTS, and to other activities
authorized by OTS regulation. Multiple savings and loan holding companies are
prohibited from acquiring or retaining, with certain exceptions, more than 5% of
a non-subsidiary company engaged in activities other than those permitted by
federal law.

         Federal law prohibits a savings and loan holding company, directly or
indirectly, or through one or more subsidiaries, from merging with or acquiring
more than 5% of the voting stock of another savings institution or holding
company thereof without prior written approval of the OTS. In evaluating
applications by holding companies to acquire savings institutions, the OTS must
consider the financial and managerial resources and future prospects of the
company and institution involved, the effect of the acquisition on the risk to
the insurance funds, the convenience and needs of the community and competitive
factors.

         The OTS is prohibited from approving any acquisition that would result
in a multiple savings and loan holding company controlling savings institutions
in more than one state, except: (i) interstate supervisory acquisitions by
savings and loan holding companies; and (ii) the acquisition of a savings
institution in another state if the laws of the state of the target savings
institution permit such acquisitions. The states vary in the extent to which
they permit interstate savings and loan holding company acquisitions.

         In order to elect and continue to be regulated as a savings and loan
holding company by the OTS, the Bank must continue to qualify as a qualified
thrift lender. This requires the Bank to maintain compliance with the test for a
"domestic building and loan association", as defined in the Internal Revenue
Code, or with a Qualified Thrift Lender Test. Under the Test, a savings
association is required to maintain at least 65% of its "portfolio assets"
(total assets less: (i) specified liquid assets up to 20% of total assets; (ii)
intangibles, including goodwill; and (iii) the value of property used to conduct
business) in certain "qualified thrift investments" (primarily residential
mortgages and related investments, including certain mortgage-backed and related
securities) in at least 9 months out of each 12 month period. A holding company
of a savings institution that fails to qualify as a qualified thrift lender must
either convert to a bank holding company and thereby become subject to the
regulation and supervision of the Federal Reserve Board or operate under certain
restrictions. As of December 31, 2000, the Bank maintained in excess of 65% of
its portfolio assets in qualified thrift investments. The Bank also met the test
in each of the prior 12 months and, therefore, is a qualified thrift lender.
Recent legislative amendments have broadened the scope of "qualified thrift
investments" that go toward meeting the test to fully include credit card loans,
student loans and small business loans.

                                      -19-
<PAGE>

FEDERAL AND STATE INCOME TAXATION

Federal Taxation

         General. The Company and its affiliates file a consolidated federal
income tax return. To the extent a member of the consolidated group incurs a
loss which is utilized to reduce the consolidated group's federal tax liability,
that member will be reimbursed by those members that would have incurred federal
tax liability if not for the member's tax loss.

         Amounts provided for income tax expense are based upon income reported
for financial statement purposes and do not necessarily represent amounts
currently payable to federal or other tax authorities. Deferred income taxes,
which principally arise from the temporary differences related to the
recognition of certain income and expense items for financial reporting purposes
and the period in which they affect federal and state taxable income, are
included in the amounts provided for income taxes.

         Bad Debt Reserves. The Small Business Job Protection Act of 1996 (the
"1996 Act"), which was enacted on August 20, 1996, made significant changes to
provisions of the Internal Revenue Code of 1986 (the "Code") relating to a
savings institution's use of bad debt reserves for federal income tax purposes
and requires such institutions to recapture (i.e. include in income) certain
portions of their accumulated bad debt reserves. Prior to the enactment of the
1996 Act, the Bank was permitted to establish tax reserves for bad debts and to
make annual additions thereto, which additions, within specified formula limits
were deducted in arriving at the Bank's taxable income. The Bank's deduction
with respect to "qualifying loans", which are generally loans secured by certain
interests in real property, could be computed using an amount based on a
six-year moving average of the Bank's actual loss experience (the "Experience
Method"), or a percentage equal to 8% of the Bank's taxable income (the "PTI
Method"), computed without regard to this deduction and with additional
modifications and reduced by the amount of any permitted addition to the
non-qualifying reserve. The Bank's deduction with respect to non-qualifying
loans was required to be computed under the Experience Method.

         The 1996 Act. Under the 1996 Act, for its current and future taxable
years as a "Small Bank", the Bank is permitted to make additions to its bad debt
reserves for Federal income tax purposes under the Experience Method based on
total loans. However, the Bank is required to recapture (i.e. include in income)
over a six-year period the excess of the balance of its bad debt reserves as of
December 31, 1995 over the balance of such reserves as of December 31, 1987. As
of December 31, 1995, the Bank's bad debt reserve exceeded the balance of such
reserve as of December 31, 1987 by $326,713.

         Distributions. Under the 1996 Act, if the Bank makes "non-dividend
distributions" to the Company, such distributions will be considered to have
been made from the Bank's unrecaptured bad debt reserves (including the balance
of its reserves as of December 31, 1987) to the extent thereof, and an amount
based on the amount distributed (but not in excess of the amount of such
reserves) will be included in the Bank's income. In general, the term
"non-dividend distributions" is defined as distributions in excess of the Bank's
current and accumulated earnings and profits, as calculated for federal income
tax purposes, distributions in redemption of stock, and distributions in partial
or complete liquidation. Dividends paid out of the Bank's current or accumulated
earnings and profits will not cause this pre-1988 reserve to be included in the
Bank's income.

         The amount of additional taxable income created by a non-dividend
distribution is an amount that, when reduced by the tax attributable to the
income, is equal to the amount of the distribution. Thus, if the Bank makes a
non-dividend distribution to the Company, approximately 65% of the amount of
such distribution (but not in excess of the amount of such reserves) would be
included in income for federal income tax purposes, assuming a 35% federal
corporate income tax rate. The Bank does not intend to pay dividends that would
result in a recapture of any portion of its bad debt reserves.

         Dividends Received Deduction and Other Matters. The Company may exclude
from its income 100% of dividends received from the Bank as a member of the same
affiliated group of corporations. The corporate dividends received deduction is
generally 70% in the case of dividends received from unaffiliated corporations
with which the Company and the Bank

                                      -20-
<PAGE>

will not file a consolidated tax return, except that if the Company owns more
than 20% of the stock of a corporation distributing a dividend, then 80% of any
dividend received may be excluded.

State Taxation

         Illinois State Taxation. The Company and its subsidiaries are required
to file Illinois income tax returns and pay tax at an effective tax rate of
approximately 4.8% on Illinois taxable income, assuming a 35% Federal income tax
rate. For these purposes, Illinois taxable income, generally means federal
taxable income subject to certain modifications, the primary one of which is the
exclusion of interest income from United States Treasury obligations.

         The Company and its subsidiaries file one combined corporation return
for State of Illinois income tax purposes.

         Delaware State Taxation. As a Delaware holding company not earning
income in Delaware, the Company is exempted from Delaware Corporate income tax
but is required to file an annual report with and pay an annual franchise tax to
the State of Delaware.

Forward Looking Statements

          This annual report on Form 10-K (including certain information
incorporated by reference) contains forward-looking statements, including
certain plans, expectations, goals and projections, which are subject to
numerous assumptions, risks and uncertainties. These forward-looking statements
are identified by the use of terms such as "believes", "anticipates",
"estimates", "expects", "projects" or similar words. Actual results could differ
materially from those contained or implied by such statements for a variety of
factors including, but not limited to: changes in general and/or local economic
conditions; movements in interest rates; competitive pressures on product
pricing and services; success and timing of business strategies, and; the
nature, extent and timing of governmental actions and reforms. These risks and
uncertainties should be considered in evaluating forward-looking statements and
undue reliance should not be placed on such statements.

                                      -21-
<PAGE>

Item 2            Properties

       The Bank conducts its business through an executive and full service
office located in Bloomington and four other full service branch offices. The
Company believes that the Bank's current facilities are adequate to meet the
present and immediately foreseeable needs of the Bank and the Company.

<TABLE>
<CAPTION>
                                                              Original     Net Book Value at
Location                                                        Year       December 31, 2000
--------                                      Leased         Leased or           2000                  Deposits per
                                             or Owned         Acquired                                   Office

                                                                               (In thousands)

<S>                                          <C>              <C>            <C>                        <C>

Executive Branch Office:
2101 North Veterans Parkway*
Bloomington, Illinois 61704                   Owned             1997                  $  4,936               $35,945

Branch Offices:
301 Broadway*
Normal, Illinois 61761                        Owned             1963                       544                60,533

2402 E. Washington*                           Owned             1980                       748                46,803
Bloomington, Illinois 61704

1722 Hamilton Road*                           Owned             1995                     1,211                16,656
Bloomington, Illinois 61704

115 N. Third Street*                          Owned             1981                       685                56,478
Fairbury, Illinois 61739
                                                                                      --------             ---------
Total                                                                                 $  8,124             $ 216,415
                                                                                      ========             =========
</TABLE>


* An automated teller machine is located at each office.  None of the properties
owned by the Company are subject to any encumbrance.

                                      -22-
<PAGE>

Item 3    Legal Proceedings

     The registrant is not involved in any pending legal proceedings other than
routine legal proceedings occurring in the ordinary course of business. Such
routine legal proceedings, in the aggregate, are believed by management to be
immaterial to the registrant's financial condition or results of operations.

Item 4    Submission of Matters to a Vote of Security Holders

     No matters were submitted during the fourth quarter of 2000 to a vote of
security holders, through the solicitation of proxies or otherwise.

SUPPLEMENTAL INFORMATION - EXECUTIVE OFFICERS OF THE REGISTRANT
---------------------------------------------------------------

The names, ages and positions with the Company and subsidiary bank of all
executive officers of the Company are listed below:

<TABLE>
<CAPTION>
                             Officers with the Company              Principal Occupation
       Name and Age          And Subsidiary Bank                    During Past Five Years
       ------------          -------------------                    ----------------------
<S>                          <C>                                    <C>
C. William Landefeld, 61       President and Chief Executive          President and Chief Executive
                               Officer, Citizens First Financial      Officer, Citizens First Financial
                               Corp.; President and Chief Executive   Corp. since 1996; President and
                               Officer, Citizens Savings Bank.        Chief Executive Officer, Citizens
                                                                      Savings Bank since 1987.

Richard F. Becker, 53          Executive Vice President and           Executive Vice President and
                               Secretary, Citizens First Financial    Secretary, Citizens First Financial
                               Corp.; Executive Vice President and    Corp. since 2000, Executive Vice
                               Secretary, Citizens Savings Bank.      President and Secretary, Citizens
                                                                      Savings Bank since 2000, Senior Vice
                                                                      President and Secretary, Citizens
                                                                      First Financial Corp. 1996-2000,
                                                                      Senior President and Secretary,
                                                                      Citizens Savings Bank 1996-2000, Vice
                                                                      President, Citizens Savings Bank
                                                                      1979-1996.

Dallas G. Smiley, 54           Senior Vice President and Chief        Senior Vice President and Chief
                               Financial Officer, Citizens First      Financial Officer, Citizens First
                               Financial Corp.; Senior Vice           Financial Corp. since 1996, Senior
                               President and Chief Financial          President and Chief Financial
                               Officer, Citizens Savings Bank.        Officer, Citizens Savings Bank since
                                                                      1995, Vice President and Chief
                                                                      Financial Officer, Citizens Savings
                                                                      Bank since 1987-1995.
</TABLE>

                                      -23-
<PAGE>

                                    PART II

Item 5 Market for the Registrant's Common Equity and Related Stockholder Matters

       Information relating to the market for registrant's common equity,
dividends paid and related stockholder matters appears in the registrant's 2000
Annual Report to Stockholders on page 43 and is incorporated herein by
reference.

Item 6 Selected Financial Data

       Information required under this item is incorporated by reference to page
5 of the Company's 2000 Annual Report to Stockholders under the caption
"Selected Financial Data".

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

       The above-captioned information appears under Management's Discussion and
Analysis of Results of Operations and Financial Condition in the registrant's
2000 Annual Report to Stockholders on pages 6 through 11 and 14 through 16 and
is incorporated herein by reference.

Item 7A Quantitative and Qualitative Disclosures about Market Risk

       The information required under this item is incorporated by reference to
pages 12 and 13 of the Company's 2000 Annual Report to Stockholders.

Item 8 Financial Statements and Supplementary Data

       The Consolidated Financial Statements of Citizens First Financial Corp.
and its subsidiaries, together with the report thereon by Olive LLP for the year
ended December 31, 2000 appears in the registrant's 2000 Annual Report to
Stockholders on pages 17 through 42 and are incorporated herein by reference.

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

       None.

                                   PART III

Item 10 Directors and Executive Officers of the Registrant

       The information required under this item relating to directors is
incorporated by reference to the registrant's 2001 Proxy Statement furnished to
its stockholders in connection with an annual meeting to be held April 23, 2000
(the "2000 Proxy Statement"), under the caption "Election of Directors", which
Proxy Statement has been filed with the Commission. The information required
under this item relating to executive officers is set forth in Part I,
"Supplemental Information - Executive Officers of the Registrant" of this annual
report on Form 10-K.

                                      -24-
<PAGE>

Item 11 Executive Compensation

       The information relating to directors' and executive compensation is
incorporated herein by reference to the registrant's 2000 Proxy Statement at
pages 17 through 22 and pages 10 and 11 under the caption "Directors'
Compensation".

Item 12 Security Ownership of Certain Beneficial Owners and Management

       The information required under this item is incorporated by reference to
pages 15 and 16 of the registrant's 2000 Proxy Statement, under the captions
"Security Ownership of Directors, Nominees for Directors, Most Highly
Compensated Executive Officers and All Directors and Executive Officers as a
Group" and "Security Ownership of Shareholder Holding 5% or More".

Item 13 Certain Relationships and Related Transactions

       The information relating to certain relationships and related
transactions is incorporated herein by reference to the registrant's 2000 Proxy
Statement at page 22 under the caption "Transactions with Certain Related
Persons".

                                    PART IV

Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K

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

        (1)   Financial Statements

        Consolidated Financial Statements of the Company are incorporated by
        reference to the following indicated pages of the 2000 Annual Report to
        Stockholders

                                                                            PAGE

              Independent Auditor's Report...............................     17

              Consolidated Balance Sheet as of
              December 31, 2000 and 1999.................................     18

              Consolidated Statement of Income for the
              years ended December 31, 2000, 1999 and 1998...............     19

              Consolidated Statement of Changes in Stockholders' Equity
              for the years ended December 31, 2000, 1999 and 1998.......     20

              Consolidated Statement of Cash Flows for the
              years ended December 31, 2000, 1999 and 1998...............  21-22

                                      -25-
<PAGE>

              Notes to Consolidated Financial Statements.................  23-42

              The remaining information appearing in the Annual Report to
              Stockholders is not deemed to be filed as part of this report,
              except as expressly provided herein.

              (2)  Financial Statement 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.

              (3)  Exhibits

                   The following exhibits are filed as part of this report.

              3.1      Certificate of Incorporation of Citizens First Financial
                       Corp.*
              3.2      Bylaws of Citizens First Financial Corp.**
              4.0      Stock Certificate of Citizens First Financial Corp.*
              10.1     Citizens Savings Bank, F.S.B. Employee Stock Ownership
                       Plan*
              10.2     Form of Employment Agreement between Citizens Savings
                       Bank, F.S.B. and certain executive officers*
              10.3     Form of Employment Agreement between Citizens First
                       Financial Corp. and certain executive officers*
              10.4     Form of Citizens Savings Bank, F.S.B. Supplemental
                       Executive Retirement Plan*
              10.5     Form of Change in Control Agreement between Citizens
                       Savings Bank, F.S.B. and certain executive officers*
              10.6     Form of Citizens Savings Bank, F.S.B. Supplemental
                       Executive Retirement Plan*
              10.7     Form of Citizens Savings Bank, F.S.B. Employee Severance
                       Compensation Plan*
              10.8     Citizens First Financial Corp. 1997 Stock-Based Incentive
                       Plan***
              13.0     Portions of 2000 Annual Report to Stockholders (filed
                       herewith)
              21.0     Subsidiary information is incorporated herein by
                       reference to "Part I, Item 1 -Subsidiary Activities"
              23.0     Consent of Olive LLP


                 *    Incorporated herein by reference to the Exhibits to Form
                      SB-2, Registration Statement, filed on January 24, 1997
                      and any amendments thereto, Registration No. 333-556.

                **    Incorporated by reference to Exhibit 99.1 to Current
                      Report on Form 8-K filed on September 1, 2000.

               ***    Incorporated herein by reference to the Proxy Statement
                      for the Special Meeting of Shareholders held on November
                      12, 1997.

        (b)   Reports on Form 8-K:

              A report on Form 8-K was filed on October 30, 2000 to announce the
        declaration of a dividend to be paid and third quarter results.

              A report on Form 8-K was filed on October 31, 2000 to announce a
        "dutch auction" tender offer to purchase up to 391,000 shares of the
        Company's common stock and that the Company had entered into an
        Agreement to Sell Stock and Mutual Release with a shareholder.

                                      -26-
<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, on this 30/th/ day of
March, 2000.

                                           CITIZENS FIRST FINANCIAL CORP.


                                           By:   /s/ C. William Landefeld
                                              ----------------------------------
                                              C. William Landefeld
                                              President, Chief Executive Officer
                                                  and Director

                                           Date: March 30, 2001

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

<TABLE>
<CAPTION>
Name                                           Title                                               Date
----                                           -----                                               ----
<S>                                            <C>                                                 <C>
/s/ C. William Landefeld                       President, Chief Executive Officer and Director     March 30, 2001
-------------------------------
C. William Landefeld                           (principal executive officer)

/s/ Dallas G. Smiley                           Senior Vice President, Treasurer and Chief          March 30, 2001
-------------------------------
Dallas G. Smiley                               Financial Officer (principal accounting and
                                               financial officer)

/s/ Dr. Lowell M. Thompson                     Director                                            March 30, 2001
-------------------------------
Dr. Lowell M. Thompson

/s/ Harold L. Hoeferle                         Director                                            March 30, 2001
-------------------------------
Harold L. Hoeferle

/s/ Ronald C. Wells                            Director                                            March 30, 2001
-------------------------------
Ronald C. Wells

/s/ L. Carl Borngasser                         Director                                            March 30, 2001
-------------------------------
L. Carl Borngasser

/s/ Arthur W. Mier                             Director                                            March 30, 2001
-------------------------------
Arthur W. Mier
</TABLE>

                                      -27-