----------------------------------------

                           BUSINESS OF THE CORPORATION
                    ----------------------------------------


         CSB Financial  Group,  Inc. (the "Company") was organized as a Delaware
corporation  on December 12, 1994 to acquire all of the capital  stock issued by
Centralia  Savings Bank (the "Bank").  The Company is engaged in the business of
directing, planning and coordinating the business activities of the Bank. In the
future,  the  Company  may acquire or  organize  other  operating  subsidiaries,
although there are no current plans or agreements to do so.

         The  Bank is an  Illinois-chartered  stock  savings  bank.  The  Bank's
deposits are insured by the Federal Deposit  Insurance  Corporation (the "FDIC")
through  the  Savings  Association  Insurance  Fund (the  "SAIF").  The Bank was
originally  chartered  in  1879  as  a  federally  chartered  savings  and  loan
association, merged with another savings association in the 1970's and converted
to a  state-chartered  savings  bank on July 1, 1993 under its  current  name of
Centralia  Savings  Bank.  The Bank  conducts  its  business  through its office
located at 200 South Poplar Street, Centralia, Illinois 62801, and its telephone
number is (618) 532-1918.

         The Bank provides its customers with a broad range of community banking
services.  The Bank is primarily engaged in the business of attracting  deposits
from the general public and using such deposits to invest in one- to four-family
residential mortgage loans, and, to a lesser extent,  multi-family  residential,
consumer, commercial business and commercial real estate loans. In addition, the
Bank  invests in U.S.  Government  and Agency  securities,  state and  municipal
obligations and mortgage-backed securities.






<PAGE>


                           CSB FINANCIAL GROUP, INC.
                                200 South Poplar
                            Centralia, Illinois 62801
                                 (618) 532-1918
                          ----------------------------

                               PRESIDENT'S MESSAGE
                          ----------------------------


Dear Fellow Shareholders:

Highlights  for 1999  include  growth  in total  assets of $2.5  million,  total
deposits of $1.1 million and gross loans of $2.9 million with an additional $1.0
million in loan  commitments at year-end.  Our loan  department had a productive
year with loan  originations  of $15.4  million in new loans  compared  to $10.1
million in 1998, led primarily by the  refinancing  of  residential  real estate
loans and new commercial  loans.  Quality of the loan portfolio  improved during
the fiscal year, with  non-performing  assets declining by 50% to $205,000.  Our
allowance  for loan losses to total  non-performing  assets ratio also  improved
significantly from 42% to 108%.

The consolidated net income declined  $46,000,  or 13%, to $299,000 at September
30,  1999.  The  decrease  in income  represented  a $0.01  decrease  in diluted
earnings per share from 1998. Consolidated income before income taxes (excluding
non-recurring  items) for 1999 increased 11% to $516,000 as compared to $464,000
in 1998.  The  non-recurring  items were related to the data  processing and the
Year-2000  conversion expenses of $85,000 incurred during the last six months of
the fiscal year ended September 30, 1999. These non-recurring items approximated
a $0.07 per share decline in the diluted earnings per share.

The market price for CSB Financial  Group,  Inc.'s stock as of November 26, 1999
was $11.25 per share,  an increase of 14% from the close of November  23,  1998.
This is encouraging,  due to the market  volatility of bank stocks in the NASDAQ
index.  Our strategic  plans for improving  shareholders'  return on equity were
briefly  delayed by isolated  shareholder  actions.  The Board of  Directors  is
committed to improving return on equity and implementing these strategic plans.

In May 1999,  the Company  changed data  processing  servicers.  The cost of the
conversion  of data to  another  servicer  was  significant.  These  costs  were
attributable  to 12% of the noninterest  expenses for the year. Of course,  this
change was made for three primary reasons: (1) to provide our customer base with
enhanced  services at a reasonable cost, (2) to ensure continued data processing
capabilities  during the century date change, and (3) to reduce our labor costs.
We expect the data processing  expenses to remain at prior year's levels,  while
providing more products and service benefits to our customers.  One such service
enhancement that saves time and labor for our checking account  customers is the
implementation  of the imaging system for checking  accountholders.  This system
provides a  digital-image  of every  check and deposit on a  customer's  monthly
checking  account  statement  for easy  retrieval  and storage.  When  customers
experienced the  convenience of this  statement,  which was pre-punched to fit a
provided binder,  many commented they would not be satisfied with any other type
of statement. The customer can also arrange to have a monthly statement prepared
that combines the banking activities of several accounts on one statement.

The  century-date  change,  commonly  referred to as "Year 2000" or "Y2K," is an
event that has placed unusual demands on all businesses, especially those in the
financial industry. As a result, the Company has devoted much time and resources
to ensure our ability to meet our customers'  financial  needs. Our current data
processing service completed its testing and achieved  compliance in early 1998.
Centralia  Savings Bank developed,  tested and implemented  backup procedures to
address  ongoing  operations in the unusual event there is a malfunction  in the
electrical  or  telecommunication  systems.  We completed an  evaluation  of all
equipment,  software applications,  and third-party vendors to ensure there will
be no interruptions in services.  We have also evaluated all significant  credit
accounts to determine if alternate  procedures are warranted to diminish any Y2K
risks they may pose to the Company.  We are  confident in the results of our Y2K
evaluations and we look forward to the New Year.
<PAGE>


The financial  service  industry will be experiencing a great deal of change due
to the recent  repeal of the  Glass-Steagall  Act. The offering of insurance and
investment  products/services  will  become an  increasing  portion  of a bank's
product  offerings  to its  customer  base.  Technological  advances  will  give
customers  access to their accounts  through  Internet  services.  The continued
merger and acquisition  between  financial  institutions will continue to change
the landscape of the banking community.

Through the coming months,  our greatest  challenge is to maintain a competitive
advantage,  identify  the customer  products  and services to offer,  select the
means of  distributing  these  products/services  and  improve  the value of our
shareholders'  investment in this Company. Our greatest competitive advantage is
that our customers know we are accessible and that decisions are made locally by
managers and directors that live, work and participate in this community.

The employees of the Company are well trained,  experienced and loyal.  They are
dedicated to serving our customers and shareholders. Our success continues to be
linked to the  commitment and dedication of our employees and the support of our
customers  and  shareholders.  The Board of Directors  has committed to programs
targeting asset growth,  leveraging  capital and evaluating  strategic  alliance
opportunities  with  the  singular  goal of  providing  the  best  value  to our
shareholders.

We are  confident  and  excited  about our future as a community  bank.  We look
forward to opportunities the future brings. On behalf of the board of directors,
officers  and  staff of the  Company,  we thank you our  shareholders  for their
investment and our customers for their business.

Sincerely,


/s/ A. John Byrne
-------------------------------------
A. John Byrne
Chairman of the Board


/s/ K. Gary Reynolds
-------------------------------------
K. Gary Reynolds
President and Chief Executive Officer


<PAGE>



                     Management's Discussion and Analysis of
                   Financial Condition & Results of Operations

         Management's discussion and analysis of financial condition and results
of  operations is intended to assist the reader in  understanding  the financial
condition,  changes in  financial  condition  and results of  operation  for CSB
Financial Group, Inc. (the "Company"). The information contained in this section
should be read in conjunction with the Consolidated Financial Statements and the
other sections contained herein.

General

         On December 12, 1994, CSB Financial  Group,  Inc. was organized for the
purpose of acquiring all of the outstanding stock of Centralia Savings Bank (the
"Bank") upon  conversion of the Bank from a mutual to a stock savings bank.  The
conversion was completed on October 5, 1995.  The Company sold 1,035,000  shares
of common  stock in the  initial  stock  offering  at $8 per share.  The Company
purchased  100% of the  outstanding  common  stock of the Bank  using 50% of the
$7,584,000 in net proceeds generated from the initial offering.

         The Company  conducts no  significant  business  other than through the
Bank.  The  Bank has a wholly  owned  subsidiary,  Centralia  SLA,  Inc.,  which
provides insurance services.  All references to the Company include the Bank and
its subsidiary,  unless otherwise indicated.  References to the Company prior to
October  5, 1995 are to the Bank and  Centralia  SLA,  Inc.,  on a  consolidated
basis.

         In June, 1999, the Board of Directors  authorized  management to retain
an independent third party to evaluate  strategic  alternatives for the Company.
This action resulted from an unsolicited offer that was declined by the Board of
Directors.

Comparison  of Operating  Results for the Fiscal Years Ended  September 30, 1999
and 1998

         General.  The operating  results of the Company depend primarily on its
net interest income,  which is the difference between the interest income earned
on  interest-earning   assets  (primarily  loans,   investment   securities  and
mortgage-backed  securities) and interest expense  incurred on  interest-bearing
liabilities  (primarily deposits).  The Company's net income also is affected by
the establishment of provision for loan losses and the level of its non-interest
income,  including loan fees,  deposit service charges,  insurance  commissions,
gains and  losses  from the sale of  assets  as well as its  other  non-interest
expenses and provisions for income taxes.

         The Company's  net income for the fiscal year ended  September 30, 1999
was  $299,000 as compared to $345,000  for the fiscal year ended  September  30,
1998. This represents a $46,000, or 13.3%, decrease in net income.

         Net Interest  Income.  The Company's net interest income for the fiscal
years  ended  September  30,  1999  and 1998  were  $1,718,000  and  $1,666,000,
respectively.  This  represents  a $52,000,  or 3.1%,  increase in net  interest
income. This is primarily due to an increase in the net interest rate spread.

         Interest income decreased  $51,000,  or 1.54%,  from $3,304,000 for the
fiscal year ended  September 30, 1998 compared to $3,253,000 for the fiscal year
ended September 30, 1999. The decrease resulted  primarily from a 29 basis point
decrease in the average rate earned on the Company's interest-earning assets.

         The  $99,000  decrease in interest  on  securities  and other  interest
earning assets was partially offset by the $48,000 increase in interest and fees
on loans.  The decrease in interest on  securities  and other  interest  earning
assets was a result of a decrease in average  balances of $490,000 and yields of
40 basis  points.  As yields on  investment  securities  continued  to  decline,
management  chose to invest funds in loans with an average yield of 7.84% rather
than mortgage backed securities or investment  securities with average yields of
8.13% and 5.69%, respectively.
<PAGE>


         Interest expense  decreased  $103,000,  or 6.29%, to $1,535,000 for the
fiscal  year ended  September  30,  1999 from  $1,638,000  for fiscal year ended
September 30, 1998. The $1.2 million  increase in average balances was more than
offset by the 47 basis point decrease in cost of funds.

         Provision for Loan Losses. The Company's  provision for loan losses for
the fiscal year ended  September  30, 1999 was $72,000,  compared to $63,000 for
the fiscal year ended September 30, 1998.  Management  evaluates the adequacy of
the Company's  allowance for loan losses on a quarterly  basis and may, based on
such review, adjust the amount of the provision for loan losses.
Classified loans are considered as part of this review.

         Non-Interest  Income. The Company's  non-interest income for the fiscal
year ended  September  30, 1999 was  $132,000,  as compared to $134,000  for the
fiscal year ended September 30, 1998.  This represents a decrease of $2,000,  or
1.49%, in non-interest  income.  The decrease  resulted  primarily from a $5,000
decrease in gains on sale of securities  offset by a $1,000  increase in service
charges on deposits and a $2,000 increase in other non-interest income.

         Non-Interest Expense. The Company's non-interest expense for the fiscal
year ended September 30, 1999 was $1,347,000,  as compared to $1,273,000 for the
fiscal  year ended  September  30,  1998.  The  $74,000,  or 5.81%,  increase in
non-interest  expense is  principally  due to additional  costs  incurred in the
conversion of data processing service centers.

         Compensation and Employee Benefits expense increased $20,000, or 3.17%,
to $651,000  for the fiscal year ended  September  30, 1999.  This  increase was
primarily due to an increase of $17,000 in group insurance premiums.

         Data processing expense increased  $55,000,  or 53.40%, to $158,000 for
the  fiscal  year  ended   September  30,  1999.  This  increase  was  primarily
attributable to costs associated with the conversion of data processing  service
centers.

         Other non-interest  expenses  decreased $14,000,  or 4.06%, to $331,000
for the fiscal year ended  September  30,  1999 as compared to $345,000  for the
fiscal year ended September 30, 1998.

         Provision  for Income Taxes.  The Company's  provision for income taxes
for the fiscal  year ended  September  30,  1999 was  $132,000,  as  compared to
$119,000  for the fiscal  year ended  September  30,  1998.  This  represents  a
$13,000, or 10.9%, increase in the provision for income taxes.

Comparison of Financial Condition as of September 30, 1999 and 1998

         General.  At September 30, 1999, the Company's  total assets were $48.9
million,  an increase of $2.5 million,  or 5.4%, as compared to $46.4 million at
September 30, 1998. The increase  resulted from a $2.8 million increase in loans
receivable,  net of the allowance for loan losses, which offset the $.7 decrease
in cash and cash equivalents. The increase in loans was funded by a $1.1 million
increase in deposits and $1.4 million in borrowings.

         Loans.  Loans,  net of the allowance for loan losses,  at September 30,
1999 were $28.9  million,  an increase of $2.8  million,  or 10.8%,  compared to
$26.1  million for the fiscal year ended  September  30,  1998.  Mortgage  loans
increased $3.0 million, or 14.55%, consumer loans decreased $646,000, or 15.78%,
as  compared to the fiscal  year ended  September  30,  1998.  Commercial  loans
increased $539,000,  or 86.24%, to $1.2 million for the year ended September 30,
1999 as compared to $625,000 for the year ended  September 30, 1998. Home equity
lines of credit and share loans remained relatively stable.


<PAGE>


         Average loan balances for 1999 amounted to $28.5 million as compared to
$26.9 million in the previous  fiscal year.  The Company  continues to emphasize
mortgage  lending,  however,  management is also making more loans on commercial
real estate and commercial operations.

         The  residential  mortgage loans increased $1.9 million during 1999, or
10.00%,  to $21.2 million as compared to $19.3 million for the fiscal year ended
September 30, 1998.  During 1999, loan  originations  for  residential  mortgage
loans amounted to $7.6 million as compared to $5.2 million in  originations  for
the prior fiscal year.

         Residential  mortgage loans represent  72.83% of gross loans.  Consumer
loans,  consisting primarily of automobile loans, made up 11.84% of gross loans,
commercial  loans made up 3.99% of gross loans,  home equity lines of credit and
share loans made up 2.81% of gross loans,  commercial  real estate loans made up
1.78% of gross loans, and  non-residential  real estate loans comprised 6.75% of
the portfolio at September 30, 1999.

         Allowance  for Loan Losses.  An allowance for loan losses is maintained
at a level considered  adequate by management to absorb potential loan losses as
determined by  evaluations  of the loan  portfolio on a continuing  basis.  This
evaluation by management  includes  consideration  of past loan loss experience,
changes in the  composition of the loan  portfolio,  the volume and condition of
the loan portfolio as well as the financial  condition of specific borrowers and
current  economic  conditions.   Loans  with  principal  and  interest  payments
contractually  due but not yet paid are  reviewed at least  semimonthly  and are
placed on a nonaccrual status when scheduled  payments remain unpaid for 90 days
or  more,  unless  the  loan is  both  well  secured  and is in the  process  of
collection.

         Nonperforming  loans as of September  30, 1999  amounted to $205,000 or
 .42% of total  assets as  compared  to  $410,000  or .88% of total  assets as of
September 30, 1998.

         The  following  table sets forth an  analysis  of the  Company's  gross
allowance for loan losses for the periods indicated.

                                                         For the Fiscal Year
                                                         Ended September 30,
                                                         --------------------
                                                           1999        1998
                                                         --------------------
                                                           (In Thousands)

Allowance at beginning of period .................       $   171     $   165
Provision for loan losses ........................            72          63
Recoveries:
    Consumer loans ...............................            18           4
          Total recoveries .......................            18           4

Charge-offs:
    Consumer loans ...............................            39          61
          Total charge-offs ......................            39          61
          Net charge-offs ........................           (21)        (57)
          Balance at end of period ...............       $   222     $   171

Ratio of allowance for loan losses to gross loans
  outstanding at the end of the period ...........         0.76%       0.65%
Ratio of net charge offs to average loans
  outstanding net during the period ..............         0.07%       0.21%
Ratio of allowance for loan losses to total
  nonperforming assets at the end of the period ..       108.29%      41.71%
<PAGE>


         Investment  Securities.  Investment  securities  represented  35.43% of
total assets as of September  30, 1999  compared to 36.93% of total assets as of
September 30, 1998. Investment securities increased $188,000,  1.10%, from $17.1
million to $17.3 million as of September  30, 1999.  At September 30, 1999,  the
Company held approximately $17.3 million in investment securities of which $17.1
million were held as available for sale, and $216,000 were non-marketable equity
securities.  Of the $17.3 million in investment  securities,  $13.1 million,  or
75.57%,  were U. S. Government and agency  securities,  $1.0 million,  or 5.78%,
were U.S. Treasury securities, $1.6 million, or 9.38%, were obligations of state
and political  subdivisions,  $216,000,  or 1.25%,  were  non-marketable  equity
securities, $482,000, or 2.78% were corporate securities and $909,000, or 5.24%,
were mortgage-backed securities.

         Deposits.  At September  30,  1999,  total  deposits  amounted to $36.9
million,  or 75.44%, of total assets.  Total deposits increased $1.1 million, or
2.93% from  September  30,  1998.  The  increase  resulted  from an  increase of
$947,000,  $407,000 and $20,000 in time deposits greater than $100,000,  savings
and demand deposits,  respectively,  offset by a $323,000 decrease in other time
deposits.

         Borrowings.  At  September  30,  1999,  total  borrowings  totaled $1.4
million, or 2.86% of total assets, and consisted of advances on a line of credit
from the  Federal  Home  Loan  Bank of  Chicago.  The  borrowings  were  made in
September 1999 to fund loan growth. The Company had no borrowings outstanding at
September 30, 1998.

Return on Equity and Assets

         Net income for the fiscal year ended September 30, 1999 was $299,000 as
compared to $345,000 for the fiscal year ended September 30, 1998.

         Return on average  assets (ROA) for the year ended  September  30, 1999
was .62% as compared to .73% for the year ended  September  30, 1998.  The cause
for the  decrease  in ROA was  principally  due to an  increase  in  noninterest
expenses.

         Return on average  equity (ROE) for the year ended  September  30, 1999
was 2.93% as compared to 3.24% for the year ended  September 30, 1998. The cause
for the  decrease in ROE was due to  decreased  net income and a decrease in the
fair value of securities available for sale.

         The average equity to average assets ratio as of September 30, 1999 was
21.18% as compared to 22.35% as of September 30, 1998. The primary cause for the
decrease  was the  decreased  net income and the  decrease  in the fair value of
securities available for sale.

Average Balance Sheet

         The following  table presents the average balance sheet for the Company
for the years  ended  September  30,  1999 and 1998,  the  interest  on interest
earning assets and interest bearing liabilities and the related average yield or
cost.  The yields and costs are  derived  by  dividing  income or expense by the
average balance of the related asset or liability for the periods shown. Average
balances were determined from averaging month-end balances.
<PAGE>


<TABLE>
                                                           For the Fiscal Year Ended September 30,
                                                -----------------------------------------------------------
                                                            1999                           1998
                                                ----------------------------   ----------------------------
                                                                      (In Thousands)
                                                Average   Interest &  Yield/   Average  Interest &  Yield/
                                                Balance   Dividends    Cost    Balance  Dividends    Cost
                                                -----------------------------------------------------------
<S>                                             <C>       <C>         <C>      <C>      <C>         <C>
Interest-earning assets:
  Mortgage loans (5) ........................   $22,506    $ 1,634     7.26%   $20,201    $ 1,630     8.07%
  Commercial loans (5) ......................     1,968        210    10.67%       961         96     9.99%
  Consumer loans (5) ........................     4,045        391     9.67%     5,736        461     8.04%
                                                ------------------             ------------------
        Total loans, net ....................   $28,519    $ 2,235     7.84%   $26,898      2,187     8.13%

  Mortgage-backed securities (3) ............   $ 1,046    $    85     8.13%   $ 1,048         98     9.35%
  Investment securities (2)(3) ..............    15,312        871     5.69%    15,712        943     6.00%
  Daily interest-bearing deposits ...........       617         48     7.78%       706         62     8.78%
  FHLB stock ................................       214         14     6.54%       213         14     6.57%
                                                ------------------             ------------------
        Total interest-earning assets .......   $45,708    $ 3,253     7.12%   $44,577      3,304     7.41%

Non-interest earning assets:
  Office properties and equipment, net ......   $   630                        $   603
  Real estate, net ..........................         7                              5
  Other non-interest earning assets .........     1,911                          2,377
                                                -------                        -------
        Total assets ........................   $48,256                        $47,562
                                                =======                        =======

Interest-bearing liabilities:
  Passbook accounts .........................   $ 3,604    $    74    2.05%    $ 3,435         82     2.39%
  NOW accounts ..............................     4,575         86    1.88%      3,712         69     1.86%
  Money market accounts .....................     2,960         99    3.34%      3,550        134     3.77%
  Certificates of deposit ...................    24,658      1,274    5.17%     23,892      1,353     5.66%
                                                ------------------             ------------------
        Total deposits ......................   $35,797    $ 1,533    4.28%    $34,589      1,638     4.74%
  FHLB Advances .............................        34          2    5.88%        - -        - -      - -
                                                ------------------             ------------------
        Total interest-bearing ..............   $35,831    $ 1,535    4.28%    $34,589    $ 1,638     4.74%
liabilities

Non-interest bearing liabilities:
  Non-interest bearing deposits .............   $ 1,827                        $ 1,451
  Other liabilities .........................       378                            890
                                                -------                        -------
        Total liabilities ...................   $38,036                        $36,930
Stockholders' equity ........................    10,220                         10,632
                                                -------                        -------
        Total liabilities and
            stockholders' equity ............   $48,256                        $47,562
                                                =======                        =======

Net interest income .........................             $ 1,718                         $ 1,666
                                                          =======                         =======
Interest rate spread (4) ....................                         2.84%                           2.67%
Net interest margin (1) .....................                         3.76%                           3.74%
Ratio of average interest-earning
  assets to average interest-bearing
  liabilities ...............................   127.57%                        128.88%
<FN>
(1)  Net interest income as a percentage of average interest-earning assets.
(2)  Includes available for sale investment securities.
(3)  Interest is classified as interest income on securities in the Consolidated
     Statement of Income.
(4)  Difference  between weighted average yield on  interest-earning  assets and
     weighted average cost of interest-bearing liabilities.
(5)  Average volume includes nonaccrual loans.
</FN>
</TABLE>
<PAGE>


Rate and Volume Analysis

         The following  table sets forth the effects of changing  interest rates
and volumes of interest earning assets and interest  bearing  liabilities on net
interest income for the Company. The combined rate-volume variances are included
in the total volume variance.  In addition to this schedule,  a two year average
balance sheet and an analysis of net interest  income  setting forth (i) average
assets,  liabilities and  stockholder's  equity;  (ii) interest income earned on
interest  earning  assets and  interest  expense  incurred  on  interest-bearing
liabilities;  (iii) average yields earned on interest-earning assets and average
rates incurred on  interest-bearing  liabilities;  (iv) the net interest  margin
(i.e. the average yield earned on interest  earning assets less the average rate
incurred   on   interest-bearing   liabilities);   and  (v)  the  net  yield  on
interest-earning   assets  (i.e.   net  interest   income   divided  by  average
interest-earning assets).
<TABLE>
                                 1999 Compared to 1998       1998 Compared to 1997
                               Increase (Decrease) Due To  Increase (Decrease) Due To
                               --------------------------  --------------------------
                                  Rate   Volume      Net     Rate   Volume      Net
                               --------------------------  --------------------------
                                      (In Thousands)            (In Thousands)
<S>                            <C>       <C>       <C>      <C>     <C>       <C>
Interest-earning assets:
  Mortgage loans ..............  $ (163) $   167   $    4   $   80  $     6   $   86
  Commercial loans ............       7      107      114       15      (18)      (3)
  Consumer loans ..............      93     (163)     (70)     (43)     (17)     (60)
                                 ------------------------   ------------------------
        Total loans ...........     (63)     111       48       52      (29)      23

  Mortgage-backed securities ..     (13)     - -      (13)      (3)     (34)     (37)
  Investment and other
    securities ................     (49)     (23)     (72)      29       91      120
  Interest-bearing deposits ...      (7)      (7)     (14)      83     (139)     (56)
  FHLB stock ..................     - -      - -      - -       (1)       2        1
                                 ------------------------   ------------------------
        Total net change income
          on interest-earning
          assets ..............    (132)      81      (51)     160     (109)      51
                                 ------------------------   ------------------------
Interest-bearing liabilities:
  Passbook ....................     (11)       3       (8)      (6)      (4)     (10)
  Interest-bearing demand
    (NOW) accounts ............       1       16       17      - -      (26)     (26)
  Money market deposit
    accounts ..................     (15)     (20)     (35)      23      (10)      13
  Certificates of deposit .....    (117)      38      (79)     (76)      95       19
  FHLB Advances ...............     - -        2        2      - -      - -      - -
                                 ------------------------   ------------------------
        Total net change in
          expense on interest-
          bearing liabilities .    (142)      39     (103)     (59)      55       (4)
                                 ------------------------   ------------------------
        Net change in net
          interest income .....  $   10   $   42   $   52   $  219   $ (164)  $   55
                                 ========================   ========================
</TABLE>
<PAGE>


Asset and Liability Management

         The matching of assets and liabilities may be analyzed by examining the
extent to which such assets and liabilities are "interest-rate  sensitive",  and
by  monitoring  an  institution's  interest-rate  sensitivity  gap.  An asset or
liability can be considered to be interest-rate sensitive within a specific time
period if it will mature or reprice within that time period.  The  interest-rate
sensitivity   gap  is  defined  as  the   difference   between   the  amount  of
interest-earning assets anticipated,  based upon certain assumptions,  to mature
or reprice  within a specific  time period,  and the amount of  interest-bearing
liabilities  anticipated,  based upon certain assumptions,  to mature or reprice
within that same time period.  A gap is  considered  positive when the amount of
interest-rate  sensitive  assets exceeds the amount of  interest-rate  sensitive
liabilities.  A gap is  considered  negative  when the  amount of  interest-rate
sensitive liabilities exceeds the amount of interest-rate sensitive assets.

         During a period of rising  interest rates, a negative gap would tend to
adversely  affect net interest  income while a positive gap would tend to result
in an  increase  in net  interest  income.  During a period of falling  interest
rates, a negative gap would tend to result in an increase in net interest income
while a positive gap would tend to adversely affect net interest income.

         At  September  30, 1999,  the  Company's  interest-bearing  liabilities
either  maturing or  repricing  within one year  exceeded  its  interest-earning
assets  either  maturing  or  repricing  within  one  year  by  $(1.6)  million,
representing a cumulative  one-year  interest-rate  sensitivity  gap of negative
(3.25)%.  During periods of rising interest rates, it is expected that the yield
on the Company's interest-earning assets would rise more slowly than the cost on
its  interest-bearing  liabilities,  which  would be expected to have a negative
effect on net  interest  income.  A decrease  in  interest  rates would have the
opposite  effect  on  net  interest  income,  as  the  interest  rates  paid  on
interest-bearing  liabilities  would fall more  rapidly  than would the interest
rates earned on interest-earning assets.

         The primary  function of asset and liability  management is to maintain
an appropriate  balance between liquidity on the one hand, and  interest-earning
assets and  liabilities on the other.  The  appropriate  balance will enable the
Company to produce stable net income during changing interest-rate cycles.

         In recent years, the Company's assets have been comprised  primarily of
one-to-four-family   residential  mortgage  balloon  payment  notes  along  with
long-term investment and mortgage-backed securities,  while its liabilities have
been comprised primarily of short-term  certificates of deposit. The majority of
the  Company's  balloon  payment notes have  maturities of three years,  while a
small number have  maturities of either one or five years.  The balloon  payment
notes are not  interest-rate  sensitive  in a rapidly  increasing  interest-rate
environment  because  the  interest  rate  remains  fixed  for up to five  years
regardless of an increase in market  interest rates.  Furthermore,  although the
interest rate on the balloon payment notes may be changed if the note is renewed
at the end of the term, the balloon payment notes have interest rate caps of one
or two  percentage  points over the initial rate of interest.  Consequently,  if
interest rates increase by an amount  exceeding the interest rate cap during the
term of the note, the Company may be forced to renew the notes at interest rates
below the prevailing market rate.

         Since the first calendar quarter of 1995, the  adjustable-rate-mortgage
(ARM) has replaced the standard  balloon  payment loan as the principal  type of
mortgage  loan  offered  to  new  residential  first-mortgage  customers  of the
Company.  The ARM's have higher  interest rate ceilings than the balloon payment
loans, along with interest rate floors, and will accordingly provide the Company
with increased interest rate protection. Beginning in February 1996, the Company
initiated a program of converting  the balloon  mortgage loans to comparable ARM
mortgage loans. As the balloon  mortgage loans mature,  they are converted to an
ARM.

         Because the majority of the Company's  deposits are in higher  yielding
short-term  certificates  of deposit  (which  can be  expected  to reprice  upon
maturity), an increase in market interest rates will have a more dramatic effect
on the  Company's  cost of funds than if such deposits  were in  transaction  or
passbook  savings account.  The interest rates on the Company's  certificates of
deposit  tend to  increase  more  quickly  and in  greater  increments  than the
interest rates on its transaction or passbook savings accounts.
<PAGE>


         The Company's  investment  securities portfolio had an average maturity
of 4.4 years, excluding  mortgage-backed  securities,  as of September 30, 1999.
Accordingly,  the Company's  investment  securities portfolio could be made less
interest-rate sensitive by increasing the average maturity of the portfolio.

Liquidity and Capital Resources

         The Company's primary sources of funds are customer deposits,  proceeds
from  principal  and  interest  payments on loans,  payments on  investment  and
mortgage-backed   securities  and  sales  of  Company  stock.   While  scheduled
maturities  of  loans  and   investment  and   mortgage-backed   securities  are
predictable  sources  of funds,  deposit  flows,  mortgage  prepayments  and the
Company's  ability to renew  balloon  payment  notes are greatly  influenced  by
general interest rates, economic conditions and competition.

         The primary  investing  activity of the Company is the  origination  of
one-to-four-family  residential  mortgage loans. During each of the fiscal years
ended  September 30, 1999 and 1998,  the Company  originated  one-to-four-family
residential  mortgage  loans in the  amount of $7.6  million  and $5.2  million,
respectively.  These  activities were funded primarily by Federal Home Loan Bank
advances and deposit growth.

         The net cash used in  investing  activities  for the fiscal  year ended
September  30, 1999 totaled $3.5  million.  Investment  activities  included the
purchase of investment  securities  which totaled $7.1 million and $13.0 million
for the fiscal  year ended  September  30, 1999 and 1998,  respectively  and the
origination  of loans,  net of  paydowns,  of $2.9  million  for the year  ended
September  30, 1999.  Sources of cash for investing  activities  was provided by
operating  activities,  maturities  and sales of  securities,  and cash and cash
equivalents  held at the  beginning  of the fiscal year.  Investment  activities
included  the sale of  investment  securities  which  totaled  $500,000 and $5.2
million for the fiscal years ended  September  30, 1999 and 1998,  respectively.
Investment  activities  also  included  maturities  and  paydowns on  investment
securities  which  totaled  $6.1  million and $7.8  million for the fiscal years
ended September 30, 1999 and 1998, respectively.

         The Company must maintain an adequate  level of liquidity to ensure the
availability of sufficient funds to support loan growth and deposit withdrawals,
satisfy  financial  commitments and take advantage of investment  opportunities.
During the fiscal year ended  September 30, 1999 and 1998,  the Company used its
sources of funds primarily to fund loan commitments.  At September 30, 1999, the
Company had  commitments  to extend credit in the amount of $2.3 million.  These
commitments  were comprised of variable-rate  and fixed-rate  commitments in the
amounts  of  $1,173,000  and  $1,146,000,  respectively.  The  range of rates on
fixed-rate commitments was 7.75% to 10.5%.

         At September 30, 1999,  certificates of deposits totaled $24.5 million,
or 66.52% of total  deposits,  as compared to $23.9 million,  or 66.73% of total
deposits for fiscal year ended  September 30, 1998.  Time deposits over $100,000
accounted for $2.6 million and $1.7 million, respectively, of the certificate of
deposit totals. Historically,  the Company has been able to retain a significant
amount of its maturing  deposits by increasing  the interest rates earned by the
certificates of deposit.  Because deposit insurance  premiums paid by commercial
banks on BIF-insured  deposits have been  drastically  reduced,  the Company may
find it more difficult to retain such deposits. Management believes it will have
adequate  resources to fund maturing  deposits and  withdrawals  from additional
deposits,  proceeds of scheduled  repayments  of loans as well as from  payments
received on investment and mortgage-backed securities.

         Capital.  The  Company is  required  to  maintain a specific  amount of
capital  pursuant  to  the  regulations  of  the  Commissioner  of  Savings  and
Residential Finance and the Federal Deposit Insurance  Corporation (FDIC). As of
September 30, 1999, the Company was in compliance  with all  regulatory  capital
requirements  with a Tier 1 capital  to  risk-weighted  assets  ratio of 42.93%,
compared to the minimum ratio required of 4.0%,  total capital to  risk-weighted
assets ratio of 43.90% compared to the minimum ratio required of 8.0% and a Tier
1 capital  to average  assets  ratio of 20.29%  compared  to the  minimum  ratio
required of 4.0%.
<PAGE>


         The Company  continues to maintain a strong capital position to support
its  capital  requirements.  Stockholders'  equity  increased  $149,000 to $10.3
million as of September 30, 1999.  This increase was due primarily to net income
of $299,000 offset by a decrease in unrealized gain on securities  available for
sale of $207,000.

Impact of New Accounting Pronouncements

         Accounting for Derivative  Instruments and Hedging Activities Statement
of Financial Accounting Standard No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (FAS 133) establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts and for hedging activities. It requires that an entity recognize
all  derivatives  as either assets or  liabilities in the statement of financial
position and measure those instruments at fair value. The accounting for changes
in the fair value of a derivative  depends on the intended use of the derivative
and the resulting  designation.  This statement applies to all entities. FAS 133
is effective for all fiscal  quarters of fiscal years  beginning  after June 15,
1999.  Earlier  application  is  encouraged.  The statement is not to be applied
retroactively to financial  statements of prior periods. In June 1999, Statement
of Financial Accounting Standard No. 137 was issued to extend the effective date
by one year to all fiscal  quarters  of fiscal  years  beginning  after June 15,
2000.  The Company  does not believe the  adoption of FAS 133, as amended by FAS
137, will have a material impact on the consolidated financial statements.

         Accounting   for   Mortgage-Backed   Securities   Retained   after  the
Securitization of Mortgage Loans Held for Sale by a Mortgage Banking  Enterprise
Statement  of  Financial   Accounting   Standard   No.  134,   "Accounting   for
Mortgage-Backed  Securities  Retained after the Securitization of Mortgage Loans
Held for Sale by a  Mortgage  Banking  Enterprise"  (FAS  134)  changes  the way
mortgage  banking firms account for certain  securities and other interests they
retain after securitizing  mortgage loans that were held for sale. The Statement
is effective for financial  statements  for the first fiscal  quarter  beginning
after December 15, 1998.  The Company does not securitze  mortgages and is not a
Mortgage  Banking  Enterprise and therefore,  FAS 134 will not have an impact on
the consolidated financial statements.

Recent Regulatory Developments

         Deposit Insurance Premiums.  Deposits of the Bank are currently insured
by the FDIC under the SAIF. The FDIC also maintains  another insurance fund, the
BIF,  which  primarily  insures  commercial  bank and some  state  savings  bank
deposits.  Applicable  law requires that the SAIF and BIF funds each achieve and
maintain a ratio of insurance reserves to total insured deposits equal to 1.25%.
In 1995,  the BIF reached this 1.25%  reserve  level,  and the FDIC  announced a
reduction in BIF premiums for most banks.  Based on this reduction,  the highest
rated  institutions  (approximately 92 percent of the nearly 11,000  BIF-insured
banks) will pay the statutory annual minimum of $2,000 for FDIC insurance. Rates
for all other  institutions  were  reduced  to $.04 per $100 as well,  leaving a
premium  range of $.03 to $.27 per $100 instead of the previous $.04 to $.31 per
$100. Currently,  SAIF-member  institutions pay deposit insurance premiums based
on a schedule of $0.00 to $0.27 per $100 of deposits.

         The assessment for the Bank was $21,000 as of September 30, 1999.

         FICO Assessment.  The Financing Corporation (FICO),  established by the
Competitive  Equality  Banking  Act of  1987,  is a  mixed-ownership  government
corporation  whose sole  purpose was to function as a financing  vehicle for the
Federal Savings & Loan Insurance  Corporation  (FSLIC).  Effective  December 12,
1991, as provided by the Resolution Trust Corporation Refinancing, Restructuring
and  Improvement  Act of  1991,  the  FICO's  ability  to  issue  new  debt  was
terminated.  Outstanding FICO bonds, which are 30-year  noncallable bonds with a
principal amount of approximately $8.1 billion, mature in 2017 through 2019.

         The FICO has assessment  authority,  separate from the FDIC's authority
to assess  risk-based  premiums  for deposit  insurance,  to collect  funds from
FDIC-insured  institutions  sufficient  to pay interest on FICO bonds.  The FDIC
acts as  collection  agent for the FICO.  The Deposit  Insurance  Funds Act 1996
(DIFA)  authorized the FICO to assess both BIF- and SAIF-insured  deposits,  and
required the BIF rate to equal one-fifth the SAIF rate through year-end 1999, or
until the insurance funds are merged, whichever occurs first.  Thereafter,  BIF-
and SAIF-insured deposits will be assessed at the same rate by FICO.

         The FICO  assessment  rate is adjusted  quarterly to reflect changes in
the assessment  bases of the respective funds based on quarterly Call Report and
Thrift Financial Report submissions. The quarterly FICO rates since enactment of
DIFA have ranged from 1.164 to 1.30 basis points for BIF  institutions  and 5.82
to 6.50 basis points for SAIF institutions.
<PAGE>


         Income Tax  Regulations  Affecting  Bad Debt  Reserve.  Under  existing
provisions  of the Internal  Revenue  Code and similar  sections of the Illinois
income tax law,  qualifying  thrifts may claim bad debt deductions  based on the
greater of (1) a specified  percentage  of taxable  income,  as defined,  or (2)
actual loss  experience.  If, in the  future,  any of the  accumulated  bad debt
deductions are used for any purpose other than to absorb bad debt losses,  gross
taxable income may result and income taxes may be payable.

         The Small  Business Job  Protection  Act became law on August 20, 1996.
One of the  provisions in this law repealed the reserve method of accounting for
bad debts for thrift  institutions  so that the bad debt deduction  described in
the  preceding  paragraph  will no longer be effective  for tax years  beginning
after  December 31, 1995.  The change in the law requires  that the tax bad debt
reserves  accumulated after September 30, 1988 be recaptured into taxable income
over a six-year  period.  The start of the six-year period can be delayed for up
to two  years if the  Company  meets  certain  residential  lending  thresholds.
Deferred  taxes have been  provided  on the  portion of the tax reserve for loan
loss that must be recaptured.

         Pending  Legislation.  On November 4, 1999, the United States  Congress
approved  legislation  that would allow bank  holding  companies  to engage in a
wider range of nonbanking  activities,  including greater authority to engage in
securities  and  insurance  activities.  Under the  Gramm-Leach-Bliley  Act (the
"Act"), a bank holding company that elects to become a financial holding company
may engage in any activity  that the Board of  Governors of the Federal  Reserve
System (the  "Federal  Reserve"),  in  consultation  with the  Secretary  of the
Treasury,  determines by  regulation  or order is (i) financial in nature,  (ii)
incidental to any such financial  activity,  or (iii)  complementary to any such
financial  activity  and does  not  pose a  substantial  risk to the  safety  or
soundness of depository institutions or the financial system generally.  The Act
specifies  certain  activities  that  are  deemed  to be  financial  in  nature,
including   lending,   exchanging,   transferring,   investing  for  others,  or
safeguarding money or securities;  underwriting and selling insurance; providing
financial, investment, or economic advisory services;  underwriting,  dealing in
or making a market in, securities; and any activity currently permitted for bank
holding  companies  by the Federal  Reserve  under  section  4(c)(8) of the Bank
Holding  Company  Act.  A bank  holding  company  may elect to be  treated  as a
financial holding company only if all depository institution subsidiaries of the
holding  company  are  well-capitalized,   well-managed  and  have  at  least  a
satisfactory rating under the Community Reinvestment Act.

         National  banks  are  also  authorized  by the Act to  engage,  through
"financial  subsidiaries,"  in any activity that is permissible  for a financial
holding company (as described  above) and any activity that the Secretary of the
Treasury,  in consultation with the Federal Reserve,  determines is financial in
nature or  incidental  to any such  financial  activity,  except  (i)  insurance
underwriting,  (ii) real estate development or real estate investment activities
(unless   otherwise   permitted  by  law),  (iii)  insurance  company  portfolio
investments  and (iv)  merchant  banking.  The  authority of a national  bank to
invest  in a  financial  subsidiary  is  subject  to  a  number  of  conditions,
including,  among other things,  requirements that the bank must be well-managed
and  well-capitalized  (after  deducting  from  capital  the bank's  outstanding
investments  in financial  subsidiaries).  The Act provides that state banks may
invest in financial  subsidiaries  (assuming they have the requisite  investment
authority under  applicable state law) subject to the same conditions that apply
to national bank investments in financial subsidiaries.

         The Act must be signed by the President before it will take effect.  At
this time,  the  Company is unable to predict the impact the Act may have on the
Company and its subsidiary.



<PAGE>


Effect of Inflation and Changing Prices

         The Consolidated Financial Statements and Notes thereto included herein
have been prepared in accordance  with GAAP,  which require the  measurement  of
financial  position and operating results in terms of historical dollars without
considering  changes in the relative  purchasing power of money over time due to
inflation.  The impact of inflation is  reflected in the  increased  cost of the
Company's operations.  Unlike industrial companies, nearly all of the assets and
liabilities of the Company are monetary in nature.  As a result,  interest rates
have a greater  impact  on the  Company's  performance  than do the  effects  of
general levels of inflation.  Interest rates do not necessarily move in the same
direction or the same extent as the prices of goods and services.

Year 2000 Compliance

         The year 2000 has posed a unique set of challenges to those  industries
reliant on  information  technology.  As a result of methods  employed  by early
programmers,  many software  applications and operational programs may be unable
to distinguish the year 2000 from the year 1900. If not  effectively  addressed,
this problem could result in the production of inaccurate data, or, in the worst
cases,  the  inability  of the  systems  to  continue  to  function  altogether.
Financial  institutions  are  particularly  vulnerable  due  to  the  industry's
dependence on electronic data processing  systems.  In 1997, the Company started
the process of  identifying  the  hardware and  software  issues  required to be
addressed to assure year 2000  compliance.  The Company  began by assessing  the
issues  related to the year 2000 and the potential for those issues to adversely
affect the Company's operations and those of its subsidiaries.

         Since that time,  the Company has  established  a Year 2000  Compliance
Team (the  Team)  composed  of  representatives  from key areas  throughout  the
organization.  It is the  mission  of this Team to  identify  areas  subject  to
complications  related  to the  year  2000  and to  initiate  remedial  measures
designed to eliminate any adverse effects on the Company's operations.  The Team
has identified all mission-critical  software and hardware that may be adversely
affected by the year 2000 and has required vendors to represent that the systems
and products provided are or will be year 2000 compliant.

         All mission  critical  software was upgraded and tested to achieve year
2000 compliance.  In addition,  the Team developed  contingency plans to address
systems which do not become year 2000 compliant.

         Management has determined  that if a business  interruption as a result
of Year 2000 issue occurred, such an interruption could be material. The primary
effort  required to prevent a potential  business  interruption is to assure the
Company's  third  party  processor  is year  2000  compliant.  As a cost  saving
measure,  management  contracted  with a  different  third party  processor  and
converted  data  during the  quarter  ended  June 30,  1999.  This  third  party
processor has stated that Year 2000  remediation  and testing  efforts have been
successfully completed.

         The Company is committed to a plan for achieving  compliance,  focusing
not only on its own data processing systems, but also on its loan customers. The
Team has taken steps to educate and assist its customers with identifying  their
year 2000  compliance  problems.  In addition,  the Team has proposed policy and
procedure changes to help identify potential risks to the Company and to gain an
understanding  of how customers are managing the risks  associated with the year
2000.



<PAGE>


         Management  believes that the  organization  has an effective year 2000
compliance program in place and that additional  expenditures  required to bring
its systems into  compliance  will not have a materially  adverse  effect on the
Company's  operations,  cash flow, or financial  condition.  To date,  year 2000
compliance  expenditures  have  amounted to $40,000.  Management  expects  total
additional  out-of-pocket  expenditures  to be less than $25,000.  This includes
costs to upgrade equipment  specifically for the purpose of year 2000 compliance
and  certain  administrative  expenditures.  However,  the year 2000  problem is
pervasive  and  complex  and  can  potentially   affect  any  computer  process.
Accordingly, no assurance can be given that year 2000 compliance can be achieved
without  additional  unanticipated  expenditures  and  uncertainties  that might
affect future financial results.

         The Federal banking regulators have established standards for achieving
year 2000  compliance  for  federally  insured  depository  institutions.  If an
institution  fails  to  meet  any  of the  established  standards,  its  primary
regulator may issue an order  directing the  institution to cure the deficiency.
Until the deficiency cited in the regulator's  order is cured, the regulator may
restrict the  institution's  growth rate and take any action the regulator deems
appropriate.

<PAGE>














                            CSB FINANCIAL GROUP, INC.

                        Consolidated Financial Statements
                        With Independent Auditor's Report

                     Years Ended September 30, 1999 and 1998




<PAGE>


                            CSB FINANCIAL GROUP, INC.


                                    Contents


--------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT
--------------------------------------------------------------------------------

CONSOLIDATED FINANCIAL STATEMENTS

   Consolidated balance sheets

   Consolidated statements of income

   Consolidated statements of stockholders' equity

   Consolidated statements of cash flows

   Notes to consolidated financial statements

--------------------------------------------------------------------------------






<PAGE>










                          Independent Auditor's Report


To the Stockholders and Board of Directors
CSB Financial Group, Inc.
Centralia, Illinois


We have audited the  accompanying  consolidated  balance sheets of CSB Financial
Group,  Inc. and  subsidiary as of September 30, 1999 and 1998,  and the related
consolidated statements of income,  stockholders' equity, and cash flows for the
years then ended. These consolidated financial statements are the responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these consolidated financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial  position of CSB
Financial Group,  Inc. and subsidiary as of September 30, 1999 and 1998, and the
results  of their  operations  and their  cash flows for the years then ended in
conformity with generally accepted accounting principles.



/s/ McGladrey & Pullen, LLP


Champaign, Illinois
October 28, 1999




<PAGE>


CSB FINANCIAL GROUP, INC. and SUBSIDIARY
Consolidated Balance Sheets
September 30, 1999 and 1998
(in thousands, except share data)

<TABLE>
                                                                   1999        1998
------------------------------------------------------------------------------------
<S>                                                               <C>        <C>
ASSETS
Cash and cash equivalents .....................................   $   871    $ 1,542
Securities:
   Available for sale .........................................    17,118     16,931
   Nonmarketable equity securities ............................       216        215
Loans, net of allowance for loan losses of $222 in 1999 and
   $171 in 1998 ...............................................    28,920     26,111
Premises and equipment ........................................       683        607
Accrued interest receivable ...................................       318        304
Intangible assets .............................................       539        600
Other assets ..................................................       255        113
                                                                  ------------------
              Total assets ....................................   $48,920    $46,423
                                                                  ==================

LIABILITIES AND STOCKHOLDERS'  EQUITY
LIABILITIES:
   Deposits:
      Demand ..................................................   $ 8,563    $ 8,543
      Savings .................................................     3,794      3,387
      Time deposits of $100,000 or more .......................     2,627      1,680
      Other time deposits .....................................    21,922     22,245
                                                                  ------------------
              Total deposits ..................................    36,906     35,855
   Other liabilities ..........................................       191        169
   Advances from the Federal Home Loan Bank ...................     1,400        - -
   Deferred income taxes ......................................       145        270
                                                                  ------------------
              Total liabilities ...............................    38,642     36,294
                                                                  ------------------

COMMITMENTS, CONTINGENCIES AND CREDIT RISK

STOCKHOLDERS' EQUITY
   Preferred stock, $0.01 par value; 100,000 shares authorized;
      none issued and outstanding .............................       - -        - -
   Common stock, $0.01 par value; authorized 2,000,000 shares;
      1,035,000 shares issued .................................        10         10
   Paid-in capital ............................................     7,829      7,823
   Retained earnings ..........................................     6,683      6,384
   Accumulated other comprehensive income .....................       (53)       154
   Unearned employee stock ownership plan shares ..............      (160)      (180)
   Management recognition plan ................................      (514)      (551)
                                                                  ------------------
                                                                   13,795     13,640
   Less cost of treasury stock; 1999 302,701 shares;
      1998 302,080 shares .....................................    (3,517)    (3,511)
                                                                  ------------------
              Total stockholders' equity ......................    10,278     10,129
                                                                  ------------------

              Total liabilities and stockholders' equity ......   $48,920    $46,423
                                                                  ==================
</TABLE>
See Notes to Consolidated Financial Statements.

<PAGE>


CSB FINANCIAL GROUP, INC. and SUBSIDIARY
CONSOLIDATED Statements of Income
Years Ended September 30, 1999 and 1998
(in thousands, except share data)

<TABLE>

                                                                     1999    1998
----------------------------------------------------------------------------------
<S>                                                                 <C>     <C>
Interest income:
   Loans and fees on loans .......................................  $2,235  $2,187
   Securities:
      Taxable ....................................................     880     988
      Nontaxable .................................................      76      53
   Other .........................................................      62      76
                                                                    --------------
                                                                     3,253   3,304
                                                                    --------------
Interest expense:
   Deposits ......................................................   1,533   1,638
   Borrowings ....................................................       2     - -
                                                                    --------------
                                                                     1,535   1,638
                                                                    --------------
              Net interest income ................................   1,718   1,666

Provision for loan losses ........................................      72      63
                                                                    --------------
              Net interest income after  provision for loan losses   1,646   1,603
                                                                    --------------

Noninterest income:
   Service charges on deposits ...................................      82      81
   Gain on sale of securities ....................................     - -       5
   Other .........................................................      50      48
                                                                    --------------
                                                                       132     134
                                                                    --------------
Noninterest expense:
   Compensation and employee benefits ............................     651     631
   Occupancy and equipment .......................................     106      89
   Data processing ...............................................     158     103
   SAIF deposit insurance ........................................      21      22
   Professional fees .............................................      80      83
   Other .........................................................     331     345
                                                                    --------------
                                                                     1,347   1,273
                                                                    --------------

              Income before income taxes .........................     431     464
Income taxes .....................................................     132     119
                                                                    --------------
              Net income .........................................  $  299  $  345
                                                                    --------------

Earnings per share:
   Basic .........................................................  $ 0.42  $ 0.43

   Diluted .......................................................  $ 0.41  $ 0.42
</TABLE>

See Notes to Consolidated Financial Statements.
<PAGE>


CSB FINANCIAL GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended September 30, 1999 and 1998
(In thousands, except share data)
<TABLE>

                                                                                  Accu-
                                                                                 mulated  Unearned
                                                                                  Other   Employee
                                                                                 Compre-    Stock    Management
                                           Preferred  Common  Paid-In  Retained  hensive  Ownership  Recognition  Treasury
                                             Stock     Stock  Capital  Earnings  Income  Plan Shares    Plan        Stock    Total
                                           -----------------------------------------------------------------------------------------
<S>                                        <C>        <C>     <C>      <C>       <C>     <C>         <C>          <C>        <C>
Balance at September 30, 1997 .............  $  - -   $   10   $7,813    $6,039  $  110   $  (202)    $  (589)    $(1,529)  $11,652
   Net income .............................     - -      - -      - -       345     - -       - -         - -         - -       345
   Comprehensive Income:
      Change in unrealized gain (loss) on
        securities available for sale, net
        of tax of $26 .....................     - -      - -      - -       - -      47       - -         - -         - -        47
      Realized gain on securities sold
        during the year, net of tax of $2 .     - -      - -      - -       - -      (3)      - -         - -         - -        (3)
                                                                                 ------                                     -------
   Comprehensive income ...................     - -      - -      - -       - -      44       - -         - -         - -       389
                                                                                 ------                                     -------
   Employee stock ownership plan shares
        allocated .........................     - -      - -       10       - -     - -        22         - -         - -        32
   Management recognition plan shares
        allocated .........................     - -      - -      - -       - -     - -       - -          38         - -        38
   Purchase of treasury stock .............     - -      - -      - -       - -     - -       - -         - -      (1,982)   (1,982)
                                             ---------------------------------------------------------------------------------------
Balance at September 30, 1998 .............     - -       10    7,823     6,384     154      (180)       (551)     (3,511)   10,129
   Net income .............................     - -      - -      - -       299     - -       - -         - -         - -       299
   Comprehensive Income:
      Change in unrealized gain (loss) on
        securities available for sale, net
        of tax of $(127) ..................     - -      - -      - -       - -    (207)      - -         - -         - -      (207)
                                                                                 ------                                     --------
   Comprehensive income ...................     - -      - -      - -       - -    (207)      - -         - -         - -        92
                                                                                 ------                                     --------
   Employee stock ownership plan shares
     allocated ............................     - -      - -        6       - -     - -        20         - -         - -        26
   Management recognition plan shares
     allocated ............................     - -      - -      - -       - -     - -       - -          37         - -        37
   Purchase of treasury stock .............     - -      - -      - -       - -     - -       - -         - -          (6)       (6)
                                            ----------------------------------------------------------------------------------------
Balance at September 30, 1999 ...........   $   - -   $   10   $7,829    $6,683  $  (53)  $  (160)     $ (514)    $(3,517)   $10,278
                                            ========================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.

<PAGE>


CSB FINANCIAL GROUP, INC. and SUBSIDIARY
CONSOLIDATED Statements of Cash Flows
Years Ended September 30, 1999 and 1998
(in thousands)
<TABLE>
                                                                          1999        1998
-------------------------------------------------------------------------------------------
<S>                                                                     <C>         <C>
Cash Flows from Operating Activities
   Net income ......................................................    $   299     $   345
   Adjustments to reconcile net income to net cash provided by
      operating activities:
      Provision for loan losses ....................................         72          63
      Provision for depreciation ...................................         49          38
      Amortization of intangible assets ............................         61          60
      Employee stock ownership plan compensation expense ...........         26          32
      Management recognition plan compensation expense .............         37          38
      Deferred income taxes ........................................          2         - -
      Gain on sale of securities ...................................        - -          (5)
      Loss on sale of other real estate owned ......................        - -           3
      Amortization and accretion of securities .....................         11          (1)
      Change in assets and liabilities:
        (Increase) in accrued interest receivable ..................        (14)        (14)
        (Increase) decrease in other assets ........................       (142)         46
        Increase in other liabilities ..............................         22         117
                                                                        -------------------
              Net cash flows from operating activities .............        423         722
                                                                        -------------------

Cash Flows from Investing Activities
   Securities available for sale:
      Purchases ....................................................     (7,143)    (13,004)
      Proceeds from sales ..........................................        500       5,154
      Proceeds from maturities and paydowns ........................      6,111       7,772
   Nonmarketable equity securities:
      Purchases of nonmarketable equity securities .................         (1)         (5)
   Loan originations, net of principal payments on loans ...........     (2,881)        981
   Proceeds from the sale of other real estate owned ...............        - -           3
   Purchases of premises and equipment .............................       (125)        (43)
                                                                        -------------------
              Net cash flows from investing activities .............     (3,539)        858
                                                                        -------------------

Cash Flows from Financing Activities
   Net increase (decrease) in demand deposits and savings accounts .    $   427     $  (538)
   Net increase (decrease) in time deposits ........................        624        (193)
   Purchase of treasury stock ......................................         (6)     (1,982)
   Proceeds from Federal Home Loan Bank advances ...................      1,400         - -
                                                                        -------------------
              Net cash flows from financing activities .............      2,445      (2,713)
                                                                        -------------------

              Net decrease in cash and cash equivalents ............       (671)     (1,133)

Cash and cash equivalents, beginning of year .......................      1,542       2,675
                                                                        -------------------
Cash and cash equivalents, end of year .............................    $   871     $ 1,542
                                                                        ===================

Cash paid during the year for:
   Interest ........................................................    $ 1,526     $ 1,626
                                                                        ===================
   Income taxes, net of refunds ....................................    $    59     $    15
                                                                        ===================

Supplemental Disclosures of Investing and Financing Activities:
   Change in unrealized gain (loss) on securities available for sale    $  (334)    $    70
                                                                        ===================
   Change in deferred income taxes attributable to the unrealized
      gain (loss) on securities available for sale .................    $  (127)    $    26
                                                                        ===================

Loans originated to facilitate sale of other real estate owned .....    $   - -     $    21
                                                                        ===================
</TABLE>

See Notes to Consolidated Financial Statements.
<PAGE>



CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
--------------------------------------------------------------------------------

Note 1.  Summary of Significant Accounting Policies

Nature of  operations  CSB  Financial  Group,  Inc. (the Company) is the holding
company of its  wholly-owned  subsidiary,  Centralia  Savings  Bank (the  Bank).
Centralia  Savings Bank is a state chartered stock savings bank,  converted from
mutual form on October 5, 1995, located in Marion County,  Illinois.  The Bank's
deposits are insured by the Federal Deposit Insurance Corporation (FDIC) through
the  Savings  Association  Insurance  Fund  (SAIF).  The Bank is  subject to the
regulations  of  certain  federal  and state  agencies  and  undergoes  periodic
examinations by those agencies.

Principles of presentation The accompanying  consolidated  financial  statements
include the accounts of the Company and its wholly-owned  subsidiary,  the Bank,
and the Bank's  wholly-owned  subsidiary,  Centralia SLA.  Centralia SLA, Inc.'s
principal  business activity is to provide insurance  services.  For purposes of
the consolidated  financial  statements,  all material intercompany amounts have
been eliminated.

In preparing  the  consolidated  financial  statements,  Company  management  is
required  to make  estimates  and  assumptions  which  significantly  affect the
amounts reported in the consolidated financial statements. Significant estimates
which are  particularly  susceptible to change in a short period of time include
the  determination of the allowance for loan losses and valuation of real estate
and other properties acquired in connection with foreclosures or in satisfaction
of amounts due from borrowers on loans.
Actual results could differ from those estimates.

Effective  October 1, 1998, the Company adopted Financial  Accounting  Standards
Board  Statement No. 130,  "Comprehensive  Income,"  which was issued in June of
1997.  Statement No. 130  establishes new rules for the reporting and display of
comprehensive income and its components,  but has no effect on the Company's net
income or total  stockholders'  equity.  Statement  No. 130 requires  unrealized
gains and losses on the Company's available for sale securities,  which prior to
adoption were reported  separately in  stockholders'  equity,  to be included in
comprehensive  income. Prior year financial statements have been reclassified to
conform to the requirements of Statement No. 130.

The  accounting  and  reporting  policies  of the Company  conform to  generally
accepted accounting principles and general practice within the banking industry.
Following is a description  of the more  significant  policies which the Company
follows in preparing and presenting its financial statements.

Cash and cash  equivalents  For  purposes of reporting  cash flows,  the Company
considers all cash on hand,  deposit accounts and money-market  funds to be cash
equivalents.

Securities  available for sale  Securities  classified as available for sale are
those debt securities that the Company intends to hold for an indefinite  period
of time,  but not  necessarily  to  maturity.  Any  decision  to sell a security
classified  as available for sale would be based on various  factors,  including
significant  movements  in interest  rates,  changes in the  maturity mix of the
Company's  assets  and  liabilities,   liquidity   needs,   regulatory   capital
considerations,  and other similar  factors.  Securities  available for sale are
carried at fair value.  The  difference  between fair value and amortized  cost,
adjusted  for  amortization  of premium and  accretion of  discounts,  which are
recognized in interest income using the interest  method over their  contractual
lives,  results in an unrealized  gain or loss.  Unrealized  gains or losses are
reported as accumulated other comprehensive  income, net of the related deferred
tax effect.  Realized  gains or losses,  determined  on the basis of the cost of
specific securities sold, are included in earnings.

Nonmarketable  equity securities  Nonmarketable equity securities consist of the
Banks'  required  investment in the capital stock of the Federal Home Loan Bank.
This   investment  is  carried  at  cost  as  the  fair  value  is  not  readily
determinable.
<PAGE>


Loans  Loans are  stated  at the  principal  amount  outstanding  less  unearned
interest income and an allowance for loan losses. Interest income on principally
all loans is credited to income based on the principal balance outstanding.

The Company's  policy is to  discontinue  the accrual of interest  income on any
loan when, in the opinion of  management,  there is  reasonable  doubt as to the
timely  collectibility of interest or principal.  Interest income on these loans
is  recognized  to the  extent  payments  are  received,  and the  principal  is
considered fully collectible.

Loans are considered  impaired when, based on current information and events, it
is probable the Company will not be able to collect all amounts due. The portion
of the allowance for loans losses applicable to impaired loans would be computed
based on the present  value of the  estimated  future cash flows of interest and
principal  discounted at the loan's effective interest rate or on the fair value
of the collateral for collateral  dependent  loans. The entire change in present
value of  expected  cash  flows of  impaired  loans  or of  collateral  value is
reported as part of the provision for loan losses  expense in the same manner in
which  impairment  initially  was  recognized or as a reduction in the amount of
provision for loan losses expense that otherwise  would be reported.  Management
had not classified any loans as impaired as of September 30, 1999 or 1998.

Allowance for loan losses The allowance for loan losses is established through a
provision  for loan  losses  charged to  operating  expenses.  Loans are charged
against  the  allowance  for  loan  losses  when  management  believes  that the
collectibility  of the  principal is unlikely.  The  allowance is an amount that
management believes will be adequate to absorb losses on existing loans that may
become  uncollectible,  based on evaluations of the  collectibility of loans and
prior loan loss experience. The evaluations take into consideration such factors
as changes in the nature  and volume of the loan  portfolio,  overall  portfolio
quality,  review of specific problem loans and current economic  conditions that
may  affect  the  borrowers'  ability  to pay.  While  management  uses the best
information  available  to  make  its  evaluation,  future  adjustments  to  the
allowance  may be  necessary  if  there  are  significant  changes  in  economic
conditions.  In  addition,  regulatory  agencies,  as an integral  part of their
examination  process,  periodically review the Bank's allowance for loan losses,
and may  require  the Bank to make  additions  to the  allowance  based on their
judgment about information available to them at the time of their examination.

Premises  and  equipment   Premises  and  equipment  are  stated  at  cost  less
accumulated  depreciation.  Depreciation  is provided over the estimated  useful
lives of the related assets principally on the straight-line basis.

Intangible assets Core deposit  intangible and goodwill were recorded as part of
the  acquisition  of the  Carlyle  branch.  Core  deposit  intangible  is  being
amortized by the straight line method over a ten year period.  Goodwill is being
amortized by the straight line method over a fifteen year period.

Income taxes Deferred income tax assets and  liabilities  are computed  annually
for  differences  between the  financial  statement  and tax bases of assets and
liabilities  that will  result in  taxable or  deductible  amounts in the future
based on  enacted  tax laws and rates  applicable  to the  periods  in which the
differences  are  expected to affect  taxable  income.  Deferred  tax assets are
reduced by a valuation allowance when, in the opinion of management,  it is more
likely than not that some  portion or all of the deferred tax assets will not be
realized.  Deferred tax assets and  liabilities  are adjusted for the effects of
changes in tax laws and rates on the date of  enactment.  Income tax  expense is
the tax payable or refundable for the period plus or minus the change during the
period in deferred tax assets and liabilities.

Earnings per common  share Basic  earnings per share is computed by dividing net
income for the year by the  weighted  average  number of shares  outstanding  of
719,245 and 797,237 for 1999 and 1998, respectively.  Diluted earnings per share
is determined by dividing net income for the year by the weighted average number
of shares of common stock and common stock equivalents outstanding. Common stock
equivalents  assume  exercise  of stock  options and use of proceeds to purchase
treasury stock at the average market price for the period. Unallocated shares of
the ESOP are not considered outstanding. The weighted average shares outstanding
for  purposes of computing  diluted  earnings per share were 728,767 and 824,296
for 1999 and 1998, respectively.
<PAGE>


Reclassifications Certain reclassifications have been made to the balances as of
September  30, 1998,  with no effect on net income,  to be  consistent  with the
classifications adopted for September 30, 1999.

Effect of New Accounting Standards

   Accounting for Derivative  Instruments  and Hedging  Activities  Statement of
   Financial Accounting Standard No. 133, "Accounting for Derivative Instruments
   and  Hedging  Activities"  (FAS 133)  establishes  accounting  and  reporting
   standards  for   derivative   instruments,   including   certain   derivative
   instruments  embedded  in other  contracts  and for  hedging  activities.  It
   requires  that an  entity  recognize  all  derivatives  as  either  assets or
   liabilities  in  the  statement  of  financial  position  and  measure  those
   instruments at fair value.  The accounting for changes in the fair value of a
   derivative  depends on the intended use of the  derivative  and the resulting
   designation. This Statement applies to all entities. FAS 133 is effective for
   all fiscal quarters of fiscal years  beginning  after June 15, 1999.  Earlier
   application is encouraged.  The Statement is not to be applied  retroactively
   to  financial  statements  of  prior  periods.  In June  1999,  Statement  of
   Financial Accounting Standard No. 137 was issued to extend the effective date
   by one year to all fiscal  quarters of fiscal years  beginning after June 15,
   2000. The Company does not believe the adoption of FAS 133, as amended by FAS
   137, will have a material impact on the consolidated financial statements.

   Accounting for  Mortgage-Backed  Securities Retained after the Securitization
   of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise Statement of
   Financial  Accounting  Standard  No.  134,  "Accounting  for  Mortgage-Backed
   Securities  Retained after the Securitization of Mortgage Loans Held for Sale
   by a Mortgage Banking  Enterprise" (FAS 134) changes the way mortgage banking
   firms account for certain  securities  and other  interests they retain after
   securitizing  mortgage  loans  that  were  held for sale.  The  Statement  is
   effective for financial  statements  for the first fiscal  quarter  beginning
   after December 15, 1998. The Company does not securitize mortgages and is not
   a Mortgage Banking Enterprise and therefore,  FAS 134 will not have an impact
   on the consolidated financial statements


Note 2.  Securities

Amortized cost and fair values of securities available for sale are as follows:
<TABLE>
                                                            Gross      Gross
                                                Amortized Unrealized Unrealized   Fair
September 30, 1999                                 Cost     Gains      Losses     Value
------------------                              ---------------------------------------
<S>                                             <C>       <C>        <C>        <C>
Obligations of states and political
   subdivisions ..............................   $ 1,642   $    12    $   28    $ 1,626
U.S. Government and agency ...................    13,182        25       108     13,099
U.S. Treasury ................................     1,000         2       - -      1,002
Mortgage backed securities ...................       880        39        10        909
Corporate Securities .........................       500       - -        18        482
                                                 --------------------------------------
                                                 $17,204   $    78    $  164    $17,118
                                                 ======================================

September 30, 1998
------------------

Obligations of states and political
   subdivisions ..............................   $ 1,643   $    44    $    3    $ 1,684
U.S. Government and agency ...................     9,752       123       - -      9,875
U.S. Treasury ................................     4,000        16       - -      4,016
Mortgage backed securities ...................     1,288        73         5      1,356
                                                 --------------------------------------
                                                 $16,683   $   256    $    8    $16,931
                                                 ======================================
</TABLE>
<PAGE>


The  amortized  cost and  fair  value  of  securities  available  for  sale,  by
contractual  maturity,  are shown below.  Maturities may differ from contractual
maturities in mortgage-backed  securities  because the mortgages  underlying the
securities  may be called or repaid  without  any  penalties.  Therefore,  these
securities are not included in the maturity categories in the following maturity
summary:

                                              As of September 30,
                                                     1999
                                              -------------------
                                              Amortized   Fair
                                                Cost      Value
                                              ------------------

Less than one year .........................   $ 2,205   $ 2,198
Due after one year through five years ......     9,369     9,343
Due after five years through ten years .....     4,546     4,475
Due after ten years ........................       204       193
Mortgage-backed securities .................       880       909
                                               -----------------
                                               $17,204   $17,118
                                               =================

As a member of the  Federal  Home  Loan Bank  system,  the Bank is  required  to
maintain an  investment  in capital  stock of the  Federal  Home Loan Bank in an
amount equal to 1% of its outstanding home loans. No ready market exists for the
Bank stock,  and it has no quoted market value.  For disclosure  purposes,  such
stock is assumed to have a market value which is equal to cost.

The Company had securities with a carrying value of $200 and $150, respectively,
pledged as collateral for public deposits for the years ended September 30, 1999
and 1998.

Gross realized  gains and losses from the sale of securities  available for sale
follow:

                                                     Years Ended
                                                    September 30,
                                                  ------------------
                                                    1999      1998
                                                  ------------------

Gross gains .............................         $   - -    $     6
Gross losses ............................             - -         (1)
                                                  ------------------
              Net gain ..................         $   - -    $     5
                                                  ==================

<PAGE>


Note 3.  Loans

Loans are summarized as follows:

                                                      September 30,
                                                    ------------------
                                                      1999       1998
                                                    ------------------
Mortgage loans:
   One to four family ...........................   $21,225    $19,037
   Commercial real estate .......................       519      1,120
   Other loans secured by real estate ...........     1,966        541
                                                    ------------------
              Total mortgage loans ..............    23,710     20,698
                                                    ------------------

Commercial and consumer loans:
   Commercial loans .............................     1,164        625
   Consumer loans ...............................     3,449      4,095
   Home equity lines of credit ..................       649        678
   Share loans ..................................       170        193
                                                    ------------------
              Total commercial and consumer loans     5,432      5,591
                                                    ------------------

Less:
   Allowance for loan losses ....................      (222)      (171)
   Deferred loan fees ...........................       - -         (6)
   Unearned income on consumer loans ............       - -         (1)
                                                    ------------------
                                                       (222)      (178)
                                                    ------------------

              Loans, net ........................   $28,920    $26,111
                                                    ==================

The Bank generally originates single-family residential loans within its primary
lending area, Marion County. The Bank's underwriting policies require such loans
to be made at 80%  loan-to-value  based upon  appraised  values  unless  private
mortgage  insurance  is  obtained.  These  loans are  secured by the  underlying
properties.

At September 30, 1999 and 1998, the Company had  approximately  $205 and $410 of
loans for which the accrual of interest had been discontinued.

In the  normal  course  of  business,  the Bank  makes  loans  to its  executive
officers,  directors and employees,  and to companies and individuals affiliated
with  officers,  directors  and  employees of the Bank and the  Company.  In the
opinion of management,  these loans were made on  substantially  the same terms,
including  interest rates and  collateral,  as those  prevailing at the time for
comparable  transactions with unrelated parties.  The activity in these loans is
as follows:

Balance as of October 1, 1998 ..............................            $ 1,050
   New loans ...............................................              2,174
   Repayments ..............................................             (2,012)
                                                                        -------
Balance as of September 30, 1999 ...........................            $ 1,212
                                                                        =======

<PAGE>


Note 4.  Allowance for Loan Losses

The following is an analysis of the allowance for loan losses:

                                                      Year Ended
                                                     September 30,
                                                  ------------------
                                                   1999        1998
                                                  ------------------

Balance, beginning ..........................     $  171      $  165
   Provision charged to income ..............         72          63
   Charge-offs ..............................        (39)        (61)
   Recoveries ...............................         18           4
                                                  ------------------

Balance, ending .............................     $  222      $  171
                                                  ==================


Note 5.  Premises and Equipment

Premises and equipment consist of:

                                                           September 30,
                                                         -----------------
                                                           1999      1998
                                                         -----------------

Land ............................................        $   136   $   136
Office building .................................            492       479
Furniture and equipment .........................            541       429
                                                         -----------------
                                                           1,169     1,044
Less accumulated depreciation ...................           (486)     (437)
                                                         -----------------
                                                         $   683   $   607
                                                         =================


Note 6.  Deposits

At September 30, 1999, the scheduled maturities of time deposits are as follows:

Year Ended September 30:                                                  Amount
------------------------                                                 -------

   2000                                                                  $11,972
   2001                                                                    8,982
   2002                                                                    2,091
   2003                                                                      954
   2004                                                                      464
   Thereafter                                                                 86
                                                                         -------
                                                                         $24,549
                                                                         =======

<PAGE>


Note 7.  Advances from the Federal Home Loan Bank

At September 30, 1999,  the Company had $1,400 of advances on its line of credit
with the Federal Home Loan Bank at a rate of 5.89%,  interest  payable  monthly.
The investment  securities held in safekeeping at the Federal Home Loan Bank are
used as  collateral  on the line and their  carrying  value  dictates  the total
amount the Company is allowed to borrow on their line.


Note 8.  Income Taxes

Income taxes consist of:

                                                 For the Year Ended
                                                 -------------------
                                                     September 30,
                                                  ------------------
                                                    1999       1998
                                                  ------------------

Current ...............................           $   130    $   119
Deferred ..............................                 2        - -
                                                  ------------------
              Total ...................           $   132    $   119
                                                  ==================

The Company and its  subsidiary  file  consolidated  federal income tax returns.
Under  provisions  of the  Internal  Revenue  Code and  similar  sections of the
Illinois  income  tax  law for the  years  beginning  before  January  1,  1996,
qualifying thrifts could claim bad debt deductions based on the greater of (1) a
specified  percentage  of  taxable  income,  as  defined,  or  (2)  actual  loss
experience.

The Small  Business Job Protection Act became law on August 20, 1996. One of the
provisions in this law repealed the reserve  method of accounting  for bad debts
for  thrift  institutions  so  that  the bad  debt  deduction  described  in the
preceding  paragraph will no longer be effective for tax years  beginning  after
December 31, 1995. The change in the law requires that the tax bad debt reserves
accumulated  after  September 30, 1988 be recaptured  into taxable income over a
six-year  period.  The start of the six-year period can be delayed for up to two
years if the Company  meets certain  residential  lending  thresholds.  Deferred
taxes have been  provided  on the  portion of the tax reserve for loan loss that
must be recaptured.

Retained earnings at September 30, 1999 and 1998, includes approximately $867 of
the tax reserve which  accumulated  prior to 1988, for which no deferred federal
income tax liability has been recognized.  This amount  represents an allocation
of income to bad debt deductions for tax purposes only.  Reduction of amounts so
allocated  for purposes  other than tax bad debt losses or  adjustments  arising
from  carryback of net  operating  losses  would create  income for tax purposes
only, which would be subject to the then current  corporate income tax rate. The
unrecorded  deferred income tax liability on the above amounts was approximately
$336 as of September 30, 1999 and 1998.

Income tax expense differed as follows:

                                                             Year Ended
                                                            September 30,
                                                          -----------------

                                                            1999      1998
                                                          -----------------

Maximum statutory rate applied to earnings
  before income tax ................................      $   151   $   162
Increase in income taxes resulting from:
   Tax exempt interest income ......................          (27)      (19)
   Other ...........................................            8       (24)
                                                          -----------------
                                                          $   132   $   119
                                                          =================
<PAGE>


The tax effects of  temporary  differences  that give rise to the  deferred  tax
assets and deferred tax liabilities are as follows:

                                                         Year Ended
                                                        September 30,
                                                       ---------------
                                                        1999     1998
                                                       ---------------

Allowance for loan losses - book ....................  $   86   $   66
Illinois net operating loss carryforward ............      37       22
Unrealized loss on securities available for sale ....      33      - -
                                                       ---------------
              Total deferred tax assets .............     156       88
                                                       ---------------

Unrealized gain on securities available for sale ....     - -      (94)
Allowance for loan losses - tax .....................     (76)     (92)
Cash basis adjustment ...............................    (119)     (95)
FHLB stock basis ....................................      (7)      (7)
Premises and equipment basis ........................     (36)     (23)
Other ...............................................     (63)     (47)
                                                       ---------------
              Total deferred tax liabilities ........    (301)    (358)
                                                       ---------------

              Net deferred tax liabilities ..........  $ (145) $  (270)
                                                       ===============


Note 9.  Fair Value of Financial Instruments

The  Company  provides  disclosure  of fair value  information  about  financial
instruments,  whether or not  recognized in the balance  sheet,  for which it is
practicable to estimate that value.  In cases where quoted market prices are not
available,  fair  values are based on  estimates  using  present  value or other
valuation  techniques.  Those  techniques  are  significantly  affected  by  the
assumptions  used,  including  the  discount  rate and  estimates of future cash
flows. In that regard,  the derived fair value estimates cannot be substantiated
by comparison to independent  markets and, in many cases,  could not be realized
in immediate settlement of the instrument. Certain financial instruments and all
nonfinancial  instruments  are excluded from the  disclosure.  Accordingly,  the
aggregate fair value amounts  presented do not represent the underlying value of
the Company and its subsidiary.

The following table reflects a comparison of carrying values and the fair values
of the financial instruments:

                                               September 30,
                                     ----------------------------------
                                           1999             1998
                                     ----------------------------------
                                     Carrying  Fair   Carrying   Fair
                                      Value    Value    Value    Value
                                     ----------------------------------

Assets:
   Cash and cash equivalents ......  $   871  $   871  $ 1,542  $ 1,542
   Securities available for sale ..   17,118   17,118   16,931   16,931
   Nonmarketable equity securities       216      216      215      215
   Accrued interest receivable ....      318      318      304      304
   Loans ..........................   28,920   27,770   26,111   26,013
Liabilities:
   Deposits .......................   36,906   36,996   35,855   35,909
   Advances from FHLB .............    1,400    1,400      - -      - -
   Accrued interest payable .......       21       21       12       12

The following methods and assumptions were used by the Company in estimating the
fair value disclosures for financial instruments:
<PAGE>


Cash and cash  equivalents The carrying values reported in the balance sheet for
cash and cash  equivalents,  including  cash and due  from  banks  and  interest
earning deposits approximate their fair values.

Securities  Fair values for securities are based on quoted market prices,  where
available.  If quoted market prices are not available,  fair values are based on
quoted market prices of comparable  instruments.  The carrying  value of accrued
interest  receivable  approximates  its  fair  value.  The  carrying  value  for
nonmarketable equity securities approximates their fair values.

Loans For  variable-rate  loans that reprice  frequently and with no significant
change in credit risk, fair values are based on carrying values. The fair values
for fixed-rate  loans are estimated  using  discounted  cash flow analyses using
interest rates currently being offered for loans with similar terms to borrowers
of similar credit  quality.  The carrying value of accrued  interest  receivable
approximates its fair value.

Deposits The fair value disclosed for demand deposits are, by definition,  equal
to the amount payable on demand at the balance sheet date.  The carrying  values
for  variable-rate,  demand  deposits and savings deposit  accounts  approximate
their  fair  values at the  balance  sheet  date.  Fair  values  for  fixed-rate
certificates of deposit are estimated  using a discounted cash flow  calculation
that  applies  interest  rates  currently  being  offered on  certificates  to a
schedule  of  aggregated  expected  monthly  maturities  on time  deposits.  The
carrying value of accrued interest payable approximates its fair value.

Advances from the Federal Home Loan Bank The carrying amounts of advances on the
line of credit from the Federal Home Loan Bank approximates their fair values.

Off-balance-sheet  instruments  Fair  values  for the  Bank's  off-balance-sheet
instruments,  which consist of commitments to extend credit and standby  letters
of credit, are based on fees currently charged to enter into similar agreements,
taking  into   account  the   remaining   terms  of  the   agreements   and  the
counterparties'  credit standing.  The fair value for such financial instruments
is nominal.


Note 10.  Capital Ratios

The Company is subject to various regulatory capital  requirements  administered
by the federal banking  agencies.  Failure to meet minimum capital  requirements
can initiate certain mandatory--and  possibly additional  discretionary--actions
by regulators  that, if undertaken,  could have a direct  material effect on the
Company's  financial  statements.  Under  capital  adequacy  guidelines  and the
regulatory  framework  for  prompt  corrective  action,  the  Company  must meet
specific capital guidelines that involve quantitative  measures of the Company's
assets,  liabilities,  and certain  off-balance-sheet  items as calculated under
regulatory   accounting   practices.   The   Company's   capital   amounts   and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require  the Company to  maintain  minimum  amounts and ratios (set forth in the
table  below) of total and Tier I capital  (as  defined in the  regulations)  to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined).  Management  believes,  as of September 30, 1999,  that the
Company meets all capital adequacy requirements to which it is subject.
<PAGE>


As of September 30, 1999, the most recent  notification from the Federal Deposit
Insurance  Corporation  categorized  the  Bank as  well  capitalized  under  the
regulatory  framework  for  prompt  corrective  action.  To  be  categorized  as
adequately capitalized,  the Bank must maintain minimum total risk-based, Tier I
risk-based,  and Tier I leverage ratios as set forth in the table.  There are no
conditions  or events since that  notification  that  management  believes  have
changed the Bank's category.
<TABLE>
                                                                                To Be Well
                                                              For Capital    Capitalized Under
                                                                Adequacy     Prompt Corrective
                                               Actual           Purposes     Action Provisions
                                           ----------------  --------------- -----------------
                                            Amount   Ratio    Amount   Ratio   Amount    Ratio
                                           ---------------------------------------------------
<S>                                        <C>       <C>       <C>     <C>     <C>       <C>
As of September 30, 1999:
Total Capital (to Risk Weighted
   Assets)
      Consolidated .....................   $10,014    43.9%    $1,825   8.0%      N/A
      Bank .............................   $ 9,769    42.8%    $1,825   8.0%   $2,281    10.0%
Tier I Capital (to Risk Weighted
   Assets)
      Consolidated .....................   $ 9,792    42.9%    $  913   4.0%      N/A
      Bank .............................   $ 9,547    41.9%    $  913   4.0%   $1,369     6.0%
Tier I Capital (to Average
   Adjusted Assets)
      Consolidated .....................   $ 9,792    20.3%    $1,930   4.0%      N/A
      Bank .............................   $ 9,547    19.8%    $1,930   4.0%   $2,412     5.0%

As of September 30, 1998:
Total Capital (to Risk Weighted
   Assets)
      Consolidated .....................   $ 9,546    46.2%    $1,655   8.0%      N/A
      Bank .............................   $ 9,239    44.7%    $1,655   8.0%   $2,069    10.0%
Tier I Capital (to Risk Weighted
   Assets)
      Consolidated .....................   $ 9,375    45.3%    $  827   4.0%      N/A
      Bank .............................   $ 9,067    43.8%    $  827   4.0%   $1,241     6.0%
Tier I Capital (to Average
   Adjusted Assets)
      Consolidated .....................   $ 9,375    19.8%    $1,899   4.0%      N/A
      Bank .............................   $ 9,067    19.4%    $1,899   4.0%   $2,337     5.0%
</TABLE>


Note 11.  Officer, Director and Employee Benefit Plans

Employee  Stock  Ownership  Plan  (ESOP)  The ESOP  holds  41,400  shares of the
Company's  common stock for allocation to employees.  The ESOP borrowed from the
Company to purchase the common stock. The loan obligation is considered unearned
employee  stock  ownership  plan  shares  and is  reflected  as a  reduction  of
stockholders' equity.

The following table reflects the status of the shares held by the plan:

                                                                  September 30,
                                                                ----------------
                                                                 1999     1998
                                                                ----------------

Shares allocated ............................................   19,530   17,029
Shares released to be allocated .............................    1,849    1,842
Unreleased shares (Fair value as of September 30, 1999
   and 1998 $195 and $281) ..................................   20,021   22,529
                                                                ---------------

                                                                41,400   41,400
                                                                ===============
<PAGE>


Shares are allocated to all eligible  employees as the debt is repaid based on a
prorata  share of total  eligible  compensation.  Employees  21 or older with at
least  1,000  hours  of  service  in a  twelve  month  period  are  eligible  to
participate.  Benefits  will vest over a five year period and in full after five
years of qualified service.

As shares  are  committed  to be  released  from  unallocated  shares,  the Bank
recognizes compensation expense equal to the current market price of the shares,
and the shares  become  outstanding  for  purposes of  calculating  earnings per
share. The Bank recognized  compensation expense for the ESOP of $26 and $32 for
the years ended September 30, 1999 and 1998, respectively.

The Board of Directors of the Company may direct payment of cash  dividends,  if
any, be paid in cash to the participants or be credited to participant  accounts
and invested.  Dividends received, if any, by the ESOP on unallocated shares are
used for debt service.

Profit  Sharing  Plan  The  Bank  has  a  noncontributory  defined  contribution
profit-sharing  plan for all  employees who have attained age 21 and one year of
service. Nondeductible voluntary contributions are permitted, but none have been
made to date. The Board of Directors  determines the annual  contribution to the
plan which is allocated to those employees who worked more than 500 hours during
the  plan  year or who are  employed  at the end of the plan  year  based on the
prorata share of eligible compensation for the plan year.
There have been no  contributions  for the years  ended  September  30, 1999 and
1998.

Management Recognition Plan (MRP) The MRP purchased,  with funds provided by the
Company, 62,100 shares. Directors,  officers, and employees become vested in the
shares of common stock awarded to them under the MRP at a rate of 20 percent per
year,  commencing  one  year  after  the  grant  date,  and 20  percent  on each
anniversary  date thereof for the following four years. As of September 30, 1999
and 1998,  17,388 shares and 18,009 shares,  respectively,  have been awarded to
officers,  directors,  and  employees.  Compensation  expense is recognized on a
straight line basis over the vesting  period for shares  awarded under the plan.
Compensation expense of $37 and $38 was recognized for the years ended September
30, 1999 and 1998, respectively.

Stock Rights In June 1997,  the Board of Directors  adopted a Rights  Agreement.
Under  the  Agreement,  the  Board  declared  a  dividend  of one right for each
outstanding  share of Common Stock to  stockholders  of record on June 23, 1997.
There was no fair  value  attached  to these  rights as of the grant  date.  The
rights are not exercisable  until the Distribution  date which is defined as the
earlier of the tenth business day after a public  announcement  that a person or
group of  affiliated or associated  persons  acquired,  or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding shares of Common
Stock of the  Company  or the  tenth  business  day after  the  commencement  or
announcement of an intention to make a tender offer or exchange offer that would
result in any person or group or affiliated or  associated  persons  becoming an
acquiring person.  Each right enables the registered holder to purchase from the
Company one share of Common Stock at a price of $36.

Stock  Option  Plans The  Company  has two stock  option  plans  which may grant
options to purchase  common  stock at the market price on the date of the grant.
The options will be granted by a committee comprised of directors.

Options for up to 103,500 shares may be granted to employees and directors under
the Stock Option Plan approved May 22, 1996 and options for up to 103,500 shares
may be granted to key employees and directors under the 1997 Nonqualified  Stock
Option Plan.

The  options  under the Stock  Option Plan  become  exercisable  at a rate of 20
percent per year commencing one year after the grant date. At September 30, 1999
and 1998, 35,875 options had been granted.

The  terms of the  options  under the  Nonqualified  Stock  Option  Plan and the
exercise schedule are at the discretion of the Committee.  At September 30, 1999
and 1998, 25,875 options had been granted.
<PAGE>


A summary of the status of the  Company's  fixed  stock  option plan and changes
during the years ending September 30, 1999 and 1998 is presented below:

                                                     September 30,
                                         ---------------------------------------
                                             1999                 1998
                                         ------------------  -------------------
                                                 Weighted             Weighted
                                                  Average              Average
                                                  Exercise             Exercise
                                         Shares    Price      Shares     Price
                                         ------------------  -------------------

Options outstanding, beginning
   of the year .......................   61,750   $  9.75     51,750   $ 9.22
Options granted ......................      - -       - -     10,000    12.51
Options exercised ....................      - -       - -        - -      - -
                                         -------------------------------------

Options outstanding, end of year .....   61,750   $  9.75     61,750   $  9.75
                                         =====================================

Options exercisable ..................   27,875               15,525
Weighted-average fair value of options
   granted during the year ...........   $  - -               $ 4.37

The  fair  value  of each  grant  is  estimated  at the  grant  date  using  the
Black-Sholes   option-pricing   model   with  the   following   weighted-average
assumptions for grants in 1998:  dividend rate of 0%; price volatility of 20.44%
and a risk free interest rate of 4.59%.

As permitted by generally  accepted  accounting  principles,  grants under these
plans  are   accounted   for   following   APB   Opinion   No.  25  and  related
interpretations.  Had compensation  cost for the stock-based  compensation  plan
been  determined  based on the grant  date fair  values  of awards  (the  method
described  in FASB  Statement  No.  123),  reported  net income and earnings per
common share would have been reduced to the proforma amounts shown below.

                                                    1999       1998
                                                  ------------------
Net income:
   As reported ..........................         $   299    $   345
   Proforma .............................             273        302

Basic earnings per share:
   As reported ..........................         $  0.42    $  0.43
   Proforma .............................            0.38       0.38

Diluted earning per share:
   As reported ..........................         $  0.41    $  0.42
   Proforma .............................            0.37       0.37

The following table summarizes information about fixed stock options outstanding
at September 30, 1999:

                                              Number
                 Options Outstanding       Excercisable
             -------------------------------------------
                               Weighted
                               Average
                              Remaining
Exercise        Number       Contractual      Number
 Price       Outstanding        Life       Exercisable
--------------------------------------------------------

 $ 9.08         25,875           6.7         15,525
   9.36         25,875           7.1         10,350
  12.51         10,000           8.0          2,000
                ------                       ------
                61,750                       27,875
                ======                       ======
<PAGE>



Note 12.  Commitments, Contingencies and Credit Risk

The Company is, from time to time, a party to legal  proceedings  arising in the
ordinary  course of its business,  including  legal  proceedings  to enforce its
rights  against  borrowers.  The  Company is not  currently a party to any legal
proceedings which could reasonably be expected to have a material adverse effect
on the consolidated financial condition or operations of the Company.

In May 1999, a shareholder of CSB Financial Inc. filed a class action lawsuit in
a Delaware  court  against the Company,  its top executive and its directors for
breach of fiduciary duty for failure to put an acquisition  offer to shareholder
vote. The class action is seeking  buyout of current  shares at $14.75  (offered
purchase price).

The Bank is a party to financial instruments with  off-balance-sheet risk in the
normal course of business to meet the financing  needs of its  customers.  These
financial  instruments  include commitments to extend credit and standby letters
of credit.  Those instruments  involve,  to varying degrees,  elements of credit
risk in excess of the amount  recognized in the balance sheet.  The  contractual
amounts of those  instruments  reflect the extent of involvement the Bank has in
particular classes of financial instruments.

The Bank's exposure to credit loss in the event of  nonperformance  by the other
party to the financial  instrument for  commitments to extend credit and standby
letters of credit  written is  represented  by the  contractual  amount of those
instruments.  The Bank uses the same credit  policies in making  commitments and
conditional obligations as it does for on-balance-sheet  instruments.  Financial
instruments  whose contract amounts  represent credit risk at September 30, 1999
and 1998 follow:

                                                               Range of Rates
                      Variable Rate  Fixed Rate     Total       on Fixed Rate
                       Commitments   Commitments  Commitments    Commitments
                      -------------------------------------------------------
Commitment to extend
  credit:
  1999                    $1,173       $1,146       $2,319      7.75% - 10.5%
  1998                       275        1,008        1,283      8.25% - 11.5%

The Bank generally originates single-family residential loans within its primary
lending area, Marion County. The Bank's underwriting policies require such fixed
rate loans to be made at 80% loan-to-value and variable rate loans to be made at
85% loan-to-value  based upon appraised values unless private mortgage insurance
is obtained. These loans are secured by the underlying properties.

The Company does not engage in the use of interest rate swaps, futures, forwards
or   option   contracts,   or   other   financial   instruments   with   similar
characteristics.
<PAGE>



                        --------------------------------

                              CORPORATE INFORMATION
                        --------------------------------
<TABLE>

<S>                                                         <C>


Holding Company                                             Form 10-KSB Annual Report
CSB Financial Group, Inc.                                   Copies of CSB Financial Group, Inc.'s Form
200 South Poplar Street                                     10-KSB annual report as filed with the
Centralia, Illinois 62801                                   Securities and Exchange Commission and other
                                                            published reports may be obtained without
Subsidiaries                                                charge by writing our corporate headquarters:
Centralia Savings Bank
200 South Poplar Street                                     CSB Financial Group, Inc.
Centralia, Illinois 62801                                   200 South Poplar Street
                                                            Centralia, Illinois 62801
Centralia SLA, Inc.                                         Attention: K. Gary Reynolds
200 South Poplar Street
Centralia, Illinois 62801                                   Registrar and Transfer Agent
                                                            The Registrar and Transfer Company
Stock Information                                           ("Registrar")  maintains all stockholder  records.
The Common Stock  of  the  Holding  Company  was            Registrar   handles  stock  transfer  and registration,
quoted on the Nasdaq  "SmallCap"  market under              address  changes, corrections/changes  in
the symbol  "CSBF" until  December  31,  1998, at which     taxpayer  identification numbers, and Form 1099
time the Company transferred the quotation to the OTC       tax reporting questions. If you require assistance
Bulletin Board under the same symbol.                       assistance or have any questions, please contact
                                                            Registrar by mail or phone:
On October 5, 1995, the Company issued
1,035,000 shares of its Common Stock at a                               Registrar and Transfer Company
purchase price of $8.00 per share in connection                               10 Commerce Drive
with the conversion of the Savings Bank from a                            Cranford, New Jersey 07016
state chartered mutual savings bank to a state
chartered capital stock savings bank.  The closing          Annual Meeting
price per share for the Holding Company's                   The annual meeting of stockholders of CSB
Common Stock as reported on the OTC                         Financial Group, Inc. will be held on January 14,
Bulletin Board market on November 26, 1999                  2000 at 10:00 a.m. at 801 12th Street, Carlyle,
was $11.25.  The Holding Company has not                    Illinois.
paid cash dividends on its Common Stock.
                                                            Independent Auditors
Stock Pricing History                                       McGladrey & Pullen, LLP
The following table sets forth the high and low             1806 Fox Drive
sales  prices as  reported on the Nasdaq                    Champaign, Illinois 61820
"SmallCap" and OTC Bulletin Board market
during the past year.                                       Special Counsel
                                                            Schiff Hardin & Waite
Fiscal 1999                    High           Low           7200 Sears Tower
--------------------------------------------------          Chicago, Illinois 60606
First Quarter                $10.50        $8.75
Second Quarter               $ 9.25        $8.875
Third Quarter                $12.875       $9.125
Fourth Quarter               $10.625       $9.875
</TABLE>
<PAGE>


                    ----------------------------------------

                                    DIRECTORS
                            CSB Financial Group, Inc.
                                       and
                             Centralia Savings Bank
                    ----------------------------------------

                                Wesley N. Breeze
                   Owner and Operator, Byrd Watson Drug Store

                                  A. John Byrne
                                     Retired

                                Michael Donnewald
                      President, Donnewald Distributing Co.

                                 Larry M. Irvin
                  Chairman of the Board, Centralia Savings Bank
                  Owner and Operator, Irvin Funeral Homes, Ltd.

                                W. Harold Monken
                        Auto Dealer, Centralia, Illinois

                                K. Gary Reynolds
          President and Chief Executive Officer, Centralia Savings Bank


                    ----------------------------------------

                                    OFFICERS
                            CSB Financial Group, Inc.
                    ----------------------------------------

                                K. Gary Reynolds
                      President and Chief Executive Officer

                    ----------------------------------------

                                    OFFICERS
                             Centralia Savings Bank
                    ----------------------------------------

                                K. Gary Reynolds
                      President and Chief Executive Officer

                                Stephen J. Greene
                                 Vice President

                                Joanne S. Ticknor
                             Secretary and Treasurer