SECURITY AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB



(Mark One)

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934

    For the quarterly period ended March 31, 1998

                                       OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

    For the transition period from ____________________ to _____________________

                         Commission File Number: 0-26650

                            CSB FINANCIAL GROUP, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


         United States                                        37-1336338
---------------------------------                    ---------------------------
  (State or other jurisdiction                       (I.R.S. Employer ID Number)
of incorporation or organization)

  200 South Poplar, Centralia, Illinois                        62801
----------------------------------------                     ----------
(Address of principal executive offices)                     (Zip code)


        Registrant's telephone number, including area code (618) 532-1918


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

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.

          Class                                Shares outstanding at May 1, 1998
-----------------------------                  ---------------------------------
Common Stock, Par Value $0.01                              839,596






<PAGE>


Contents

PART I.  FINANCIAL INFORMATION

Item I.  Financial Statements

        - Consolidated Statements of Financial Condition               

        - Consolidated Statements of Income                         

        - Consolidated Statements of Cash Flows            

        - Notes to Consolidated Financial Statements                   

Item 2.  Management's Discussion and Analysis of Financial Condition and
          Results of Operations                                  

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings                                        

Item 2.  Changes in Securities                                          

Item 3.  Defaults Upon Senior Securities                            

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

Item 5.  Other Information                                       

Item 6.  Exhibits and Reports on Form 8-K                           

SIGNATURES                                         





<PAGE>


CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
March 31, 1998 and September 30, 1997
(in thousands, except share data)

                                                                       
ASSETS                                        March 31,  September 30,
                                                1998         1997
----------------------------------------------------------------------
                                             (Unaudited)   (Audited)

Cash and cash equivalents ................     $ 1,542      $ 2,675
Securities:
   Available for sale ....................      17,068       16,777
   Nonmarketable equity securities .......         210          210
Loans ....................................      27,322       27,299
Allowance for loan losses ................        (182)        (165)
                                               --------------------
              Loans, net .................      27,140       27,134
Loans held for sale ......................         353
Premises and equipment ...................         597          602
Accrued interest receivable ..............         324          290
Intangible assets ........................         630          660
Other assets .............................         119          186
                                               --------------------
              Total assets ...............     $47,983      $48,534
                                               ====================






<PAGE>


CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
March 31, 1998 and September 30, 1997
(in thousands, except share data)
<TABLE>
                                                                 
                                                                
LIABILITIES AND STOCKHOLDERS'  EQUITY                            March 31,  September 30,
                                                                   1998        1997
----------------------------------------------------------------------------------------
                                                                (Unaudited)  (Audited)
<S>                                                             <C>         <C>  
LIABILITIES:
   Deposits:
      Demand ...................................................  $  9,066    $ 9,073
      Savings ..................................................     3,385      3,395
      Time deposits > $100,000 .................................     1,305      1,085
      Other time deposits ......................................    22,742     23,033
                                                                  -------------------
              Total deposits ...................................    36,498     36,586
                                                                  -------------------
   Other liabilities ...........................................       127         52
   Deferred income taxes .......................................       254        244
                                                                  -------------------
              Total liabilities ................................    36,879     36,882
                                                                  -------------------

COMMITMENTS, CONTINGENCIES AND CREDIT RISK

STOCKHOLDERS' EQUITY
   Preferred stock, $0.01 par value; 100,000 shares authorized;
      none issued
   Common stock, $0.01 par value; authorized 2,000,000 shares;
      1,035,000 shares issued ..................................        10         10
   Paid-in capital .............................................     7,819      7,813
   Retained earnings ...........................................     6,220      6,039
   Unrealized gain on available for sale securities, net of tax        126        110
   Unearned employee stock ownership plan shares ...............      (189)      (202)
   Management recognition plan .................................      (570)      (589)
                                                                  -------------------
                                                                    13,416     13,181
   Less cost of treasury stock; 196,110 shares at March 31, 1998
      and 132,775 shares at September 30, 1997 .................    (2,312)    (1,529)
                                                                   ------------------
              Total stockholders' equity .......................    11,104     11,652
                                                                   ------------------

              Total liabilities and stockholders' equity .......   $47,983    $48,534
                                                                   ==================

</TABLE>
See Notes to Consolidated Financial Statements.

<PAGE>


CSB FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended March 31, 1998 and 1997
(Unaudited, in thousands, except per share data)
<TABLE>

                                                                    Six Months Ended
                                                                        March 31,
                                                                    -----------------
                                                                     1998       1997
                                                                    -----------------
<S>                                                                 <C>       <C>  
Interest income:
   Loans and fees on loans ......................................   $ 1,120   $ 1,076
   Securities ...................................................       561       542
                                                                    -----------------
              Total interest income .............................     1,681     1,618
                                                                    -----------------

Interest expense on deposits ....................................       824       812
                                                                    -----------------

              Net interest income ...............................       857       806
Provision for loan losses .......................................        30        45
                                                                    -----------------
              Net interest income after provision for loan losses       827       761
                                                                    -----------------

Noninterest income:
   Service charges on deposits ..................................        41        38
   Gain on sale of securities, net ..............................         3        39
   Gain on sale of loans, net ...................................         2       - -
   Other ........................................................        22        16
                                                                    -----------------
              Total noninterest income ..........................        68        93
                                                                    -----------------

Noninterest expense:
   Compensation and employee benefits ...........................       324       310
   Occupancy and equipment ......................................        42        43
   Data processing ..............................................        50        49
   Audit, legal and other professional ..........................        55        67
   Other ........................................................       188       194
                                                                    -----------------
              Total noninterest expense .........................       659       663
                                                                    -----------------
              Income before income taxes ........................       236       191
Income taxes ....................................................        55        26
                                                                    -----------------
              Net income ........................................   $   181  $    165
                                                                    =================

Earnings per share
   Basic ........................................................   $  0.23  $   0.19
                                                                    =================
   Diluted ......................................................   $  0.22  $   0.18
                                                                    =================

Weighted average shares outstanding
   Basic ........................................................   777,488   891,482
                                                                    =================

   Diluted ......................................................   807,959   915,788
                                                                    =================
</TABLE>
See Notes to Consolidated Financial Statements.

<PAGE>


CSB FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 1998 and 1997
(Unaudited, in thousands, except per share data)
<TABLE>

                                                                      Three Months Ended
                                                                          March 31,
                                                                     -------------------
                                                                       1998        1997
                                                                     -------------------
<S>                                                                  <C>         <C>   
Interest income:
   Loans and fees on loans ......................................    $   552     $   541
   Securities ...................................................        277         180
                                                                     -------------------
              Total interest income .............................        829         721
                                                                     -------------------

Interest expense on deposits ....................................        407         398
                                                                     -------------------

              Net interest income ...............................        422         323
Provision for loan losses .......................................         15          23
                                                                     -------------------

              Net interest income after provision for loan losses        407         300
                                                                     -------------------

Noninterest income:
   Service charges on deposits ..................................         19          19
   (Loss) on sale of securities, net ............................         (5)        - -
   Gain on sale of loans, net ...................................          2         - -
   Other ........................................................         14           9
                                                                     -------------------
              Total noninterest income ..........................         30          28
                                                                     -------------------

Noninterest expense:
   Compensation and employee benefits ...........................        148         164
   Occupancy and equipment ......................................         21          24
   Data processing ..............................................         25          23
   Audit, legal and other professional ..........................         25          29
   Other ........................................................         96          77
                                                                     -------------------
              Total noninterest expense .........................        315         317
                                                                     -------------------
              Income before income taxes ........................        122          11
Income taxes ....................................................         38         (46)
                                                                     -------------------
              Net income ........................................    $    84    $     57
                                                                     ===================

Earnings per share
   Basic ........................................................    $  0.11    $   0.07
                                                                     ===================

   Diluted ......................................................    $  0.10    $   0.06
                                                                     ===================

Weighted average shares outstanding
   Basic ........................................................    777,542     872,216
                                                                     ===================

   Diluted ......................................................    808,752     897,866
                                                                     ===================
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>


CSB FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended March 31, 1998 and 1997
(Unaudited, in thousands)
<TABLE>
                                                                       Six Months Ended
                                                                           March 31,
                                                                       ------------------
                                                                         1998       1997
                                                                       ------------------
<S>                                                                    <C>        <C>   
Cash Flows from Operating Activities:
   Net income ......................................................   $   181    $   165
   Adjustments to reconcile net income to net cash provided
      by operating activities:
      Provision for loan losses ....................................        30         45
      Provision for depreciation ...................................        18         16
      Amortization of intangible assets ............................        30         31
      Employee stock ownership plan compensation expense ...........        19         39
      Management recognition plan compensation expense .............        19         11
      Deferred income taxes ........................................       - -         96
      Originations of loans held for sale ..........................      (653)       - -
      Proceeds from loans held for sale ............................       302        - -
      Gain on sale of securities ...................................        (3)       (39)
      Gain on sale of loans ........................................        (2)       - -
      Loss on the sale of other real estate owned ..................         2        - -
      Amortization and accretion on securities .....................         1         41
      Change in assets and liabilities:
        (Increase) decrease in accrued interest receivable .........       (34)        11
        (Increase) decrease in other assets ........................        39        (36)
        (Decrease) increase in other liabilities ...................        75       (244)
                                                                       ------------------
              Net cash provided by operating activities ............        24        136
                                                                       ------------------

Cash Flows from Investing Activities:
   Securities available for sale:
      Purchases ....................................................    (7,759)    (1,452)
      Proceeds from sales ..........................................     3,003        - -
      Proceeds from maturities and paydowns ........................     4,493      1,424
   Securities held to maturity:
      Proceeds from sales ..........................................       - -        359
   Decrease in securities purchased under agreements
      to resell ....................................................       - -        300
   (Increase) decrease in loans ....................................       (36)      (518)
   Proceeds from the sale of other real estate owned ...............        26
   Purchase of premises and equipment ..............................       (13)       (28)
                                                                       ------------------
              Net cash provided by (used in) investing activities ..      (286)        85
                                                                       ------------------

Cash Flows from Financing Activities:
   (Decrease) in deposits ..........................................       (88)    (1,121)
   Purchase of treasury stock ......................................      (783)      (966)
                                                                       ------------------
              Net cash (used in) financing activities ..............      (871)    (2,087)

              (Decrease) in cash and cash equivalents ..............    (1,133)    (1,866)

Cash and cash equivalents at beginning of period ...................     2,675      4,766
                                                                       ------------------

Cash and cash equivalents at end of period .........................   $ 1,542    $ 2,900
                                                                       ==================

Supplemental Disclosures:
      Cash paid for:
        Interest on deposits .......................................   $   826    $   812
        Income taxes ...............................................   $    21    $    47

      Change in gross unrealized gain/loss on securities available
        for sale ...................................................   $    26    $   - -

      Change in deferred taxes on unrealized gain/loss on securities
        available for sale .........................................   $    10    $   - -

      Transfer of securities from held to maturity to available for
        sale .......................................................   $   - -    $ 1,657

</TABLE>
See Notes to Consolidated Financial Statements.

<PAGE>



CSB FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)



Note 1.  Background Information

On October 5, 1995, CSB Financial  Group,  Inc. (the "Company")  acquired all of
the  outstanding  shares of Centralia  Savings Bank (the "Bank") upon the Bank's
conversion  from a state  chartered  mutual  savings  bank to a state  chartered
capital stock savings bank.  Centralia Savings Bank is located in Masson County,
Illinois.  The Company  purchased 100% of the  outstanding  capital stock of the
Bank using 50% of the net proceeds  from the Company's  initial  stock  offering
which was  completed on October 5, 1995.  The Company sold  1,035,000  shares of
$0.01 par value common stock at a price of $8 per share, including 82,800 shares
purchased by the Bank's Employee Stock Ownership Plan ("ESOP").  The ESOP shares
were acquired by the Bank with  proceeds from a Company loan totaling  $662,400.
The gross  proceeds  of the  offering  were  $8,280,000.  After  reducing  gross
proceeds for conversion costs of $696,000, net proceeds totaled $7,584,000.  The
Company's stock trades on the NASDAQ Small Caps market under the symbol "CSBF".

The  acquisition  of the Bank by the Company was  accounted for as a "pooling of
interests" under generally accepted  accounting  principles.  The application of
the pooling of interests method records the assets and liabilities of the merged
entities on a historical cost basis with no goodwill or other intangible  assets
being recorded.


Note 2.  Basis of Presentation

The accompanying  consolidated  financial statements include the accounts of CSB
Financial Group, Inc., its wholly owned subsidiary,  Centralia Savings Bank, the
Bank, and the Bank's  wholly-owned  subsidiary,  Centralia  SLA.  Centralia SLA,
Inc.'s  principal  business  activity  is to  provide  insurance  services.  All
significant  intercompany  accounts and  transactions  have been  eliminated  in
consolidation.  The accompanying consolidated financial statements are unaudited
and should be read in conjunction with the consolidated financial statements and
notes  thereto  included in the Bank's annual report on Form 10-KSB for the year
ended  September 30, 1997. The  accompanying  unaudited  consolidated  financial
statements  have been  prepared in  accordance  with the  instructions  for Form
10-QSB and,  therefore,  do not include information or footnotes necessary for a
complete  presentation of financial condition,  results of operations,  and cash
flows in  conformity  with  generally  accepted  accounting  principles.  In the
opinion of  management  of the Company,  the  unaudited  consolidated  financial
statements  reflect all  adjustments  necessary to present  fairly the financial
position of the Company at March 31,  1998,  the results of  operations  for the
three months ended March 31, 1998 and 1997,  and the results of  operations  and
cash flows for the six months ended March 31, 1998 and 1997. All  adjustments to
the financial statements were normal and recurring in nature.

Operating  results for the six months  ended March 31, 1998 are not  necessarily
indicative of the results that may be expected for the year ending September 30,
1998.


Note 3.  Earnings Per Share

Basic  earnings per share ("EPS") is computed as net income  available to common
stockholders  divided by the weighted  average  common  shares  outstanding  and
vested shares of the Management Recognition Plan.

Diluted EPS is computed as net income available to common  stockholders  divided
by the weighted average common shares outstanding, common stock equivalents, and
shares  awarded under the  Management  Recognition  Plan weighted to reflect the
portion of the period the shares were outstanding.
<PAGE>



The following  reflects  earnings per share  calculations  for basic and diluted
methods:

                                                                 For the Six 
                                                                 Months Ended
                                                                   March 31, 
                                                              ------------------
                                                                1998      1997
                                                              ------------------

Net income available to common shareholders ................  $    181  $    165

Basic diluted potential common shares:
   Weighted average shares outstanding .....................   773,762   891,482
   Management recognition plan shares vested ...............     3,726       - -
                                                              ------------------
Basic average shares outstanding ...........................   777,488   891,482
                                                              ------------------

Diluted potential common shares:
   Management recognition plan shares granted, but not vested   14,904    18,630
   Stock option equivalents ................................    15,567     5,676
                                                              ------------------
Diluted average shares outstanding .........................   807,959   915,788
                                                              ------------------

Basic earnings per share ...................................  $   0.23  $   0.19
                                                              ==================

Diluted earnings per share .................................  $   0.22  $   0.18
                                                              ==================

<TABLE>
                                                              
                                                                  For the Three
                                                                   Months Ended
                                                                    March 31,
                                                                -------------------
                                                                 1998        1997
                                                                -------------------
<S>                                                             <C>        <C>    

Net income available to common shareholders .................   $     84   $     57

Basic diluted potential common shares:
   Weighted average shares outstanding ......................    773,816    872,216
   Management recognition plan shares vested ................      3,726        - -
                                                                -------------------

Basic weighted average shares outstanding ...................    777,542    872,216
                                                                -------------------

Diluted potential common shares:
   Management recognition plan shares granted, but not vested     14,904     18,630
   Stock option equivalents .................................     16,306      7,020
                                                                -------------------

Diluted average shares outstanding ..........................    808,752    897,866
                                                                -------------------

Basic earnings per share ....................................   $   0.11   $   0.07
                                                                ===================

Diluted earnings per share ..................................   $   0.10   $   0.06
                                                                ===================
</TABLE>


Note 4.  Employee Stock Ownership Plan

In conjunction with the conversion, an ESOP was created and 82,800 shares of the
Company's stock were purchased for future allocation to employees.  The purchase
was funded with a loan from the Company.

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.
<PAGE>


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 $19 and $39 for
the six months ended March 31, 1998 and 1997, respectively.

Dividends  received,  if any, by the ESOP on unallocated shares will be used for
debt service.

In July 1997,  the Company  repurchased  41,400  shares of common stock from the
ESOP.  The ESOP  used  the  proceeds  received  from the  repurchase  to  reduce
outstanding debt to the Company. The balance in unearned ESOP shares was reduced
by the  cost of the  shares  sold to the  Company.  As of  March  31,  1998  and
September  30,  1997,  the  ESOP  held  23,757  and  25,108,  respectively,   of
non-committed shares with a fair value of $315 and $309, respectively.


Note 5.  Stock Option Plan

At the annual  stockholder's  meeting on May 22,  1996,  the Stock  Option  Plan
("SOP") was approved. The board has reserved an amount of stock equal to 103,500
shares or 10% of the common stock sold in the  conversion for issuance under the
SOP. The options will be granted by a Committee,  comprised of directors, to key
employees and directors based on their  services.  The exercise price of options
granted  must be at least equal to the fair market  value of the common stock on
the date the  option is  granted.  The  options  granted  under the plan  become
exercisable at a rate of 20 percent per year commencing one year after the grant
date and 20 percent on each anniversary date for the following four years. As of
March 31, 1998, 61,750 options had been granted.

The Board  adopted  the 1997  Nonqualified  Stock  Option  Plan (SOP)  effective
January 9, 1997.  The Board has  reserved up to 103,500  shares of common  stock
under  the SOP.  The  options  will be  granted  by a  committee,  comprised  of
directors,  to key employees and directors based on their services. The exercise
price of the option  granted  must be at least equal to the fair market value of
the common stock on the date the option is granted. The terms of the options and
the  exercise  schedule  are  at the  discretion  of the  committee  and  option
agreements  need not be  identical.  As of March 31,  1998,  no options had been
granted.


Note 6.  Management Recognition Plan

The Management  Recognition  Plan ("MRP") was approved with an effective date of
October  10,  1996 and  amended on January 9, 1997.  The MRP intends to purchase
with funds  provided  by the  Company,  whether  in the open  market or from the
Holding Company in the form of newly issued shares,  62,100 shares, or 6% of the
aggregate  number of shares of Common Stock issued and sold in  connection  with
the Conversion for issuance to officers, directors, and employees of the Holding
Company.  Directors,  officers,  and  employees  become  vested in the shares of
common stock awarded to them under the MRP at a rate of 20% per year, commencing
one year after the grant date, and 20% on the  anniversary  date thereof for the
following four years. As of March 31, 1998,  18,630 shares have been awarded and
remain  outstanding  to officers,  directors,  and employees.  MRP  compensation
expense  was $19 and $11 for the six  months  ended  March  31,  1998 and  1997,
respectively.  The  bank  accounts  for its MRP in  accordance  with  Accounting
Principle  Board  Statement  25.  Compensation  expense is  recognized  over the
vesting period for shares awarded under the plan.


Note 7.  New Accounting Standards

Reporting  Comprehensive  Income Statement of Financial  Accounting Standard No.
130, "Reporting  Comprehensive Income," was issued in July 1997 by the Financial
Accounting Standards Board. The standard establishes  reporting of comprehensive
income for general purpose financial statements. Comprehensive income is defined
as the change in equity of a business  enterprise  during a period and all other
events and circumstances  from nonowner sources.  In addition to an enterprise's
net income,  change in equity  components under  comprehensive  income reporting
would also  include such items as the net change in  unrealized  gain or loss on
available for sale securities and foreign currency translation adjustments.  The
Standard is effective for fiscal years  beginning  after  December 15, 1997. The
Company  does not believe  the  adoption  of the  Standard  will have a material
impact on the consolidated financial statements.

Disclosures about Segments of an Enterprise and Related Information Statement of
Financial  Accounting  Standard  No.  131,  "Disclosures  about  Segments  of an
Enterprise  and Related  Information"  (FAS 131), was issued in July 1997 by the
Financial  Accounting  Standards Board. The standard requires the Corporation to
disclose the factors used to identify reportable segments including the basis of
organization,  differences  in products  and  services,  geographic  areas,  and
regulatory  environments.  FAS 131 additionally requires financial results to be
reported in the financial  statements for each reportable segment.  The Standard
is effective for financial  statement  years  beginning after December 15, 1997.
The  Statement is not  expected to have a  significant  impact on the  Company's
current business segment disclosures.
<PAGE>




CSB FINANCIAL GROUP, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
--------------------------------------------------------------------------------


General

The  principal  assets of the Company are its  investment  in the Bank's  common
stock  and the net  proceeds  from the  sale of the  Company's  common  stock in
connection  with the  conversion.  The  Company's  principal  revenue  source is
interest and dividends on its  investments.  The principal  business of the Bank
consists of attracting deposits from the general public and using these funds to
originate  mortgage  loans  secured by one- to  four-family  residences  located
primarily in  Centralia,  Illinois and  surrounding  areas.  The Bank engages in
various forms of consumer and commercial  lending and invests in mortgage-backed
U.S.  Government and federal agency  securities,  local  municipal  issues,  and
interest-bearing deposits. The Bank's profitability depends primarily on its net
interest income, which is the difference between the interest income it earns on
its loans and investment  portfolio and its cost of funds, which consists mainly
of interest  paid on deposits.  Net interest  income is affected by the relative
amounts  of  interest-earning  assets,  interest-bearing  liabilities,  and  the
interest rates earned or paid on these balances.

The Bank's profitability is also affected by the level of noninterest income and
expense.  Noninterest  income consists primarily of late charges and other fees.
Noninterest  expense  consists  of  salaries  and  benefits,  occupancy  related
expenses,  deposit  insurance  premiums  paid to the SAIF,  and other  operating
expenses.

The  operations of the Bank are  significantly  influenced  by general  economic
conditions and related  monetary and fiscal policies of financial  institutions'
regulatory  agencies.  Deposit  flows  and the cost of funds are  influenced  by
interest  rates on competing  investments  and general market rates of interest.
Lending  activities  are  affected by the demand for  financing  real estate and
other types of loans,  which in turn is affected by the interest  rates at which
such  financing may be offered and other factors  affecting  loan demand and the
availability of funds.

Business Strategy

The  business  strategy  is to operate  as a well  capitalized,  profitable  and
independent  community  savings bank  dedicated to financing  home ownership and
consumer  needs in its  primary  market  area.  The Bank  has  implemented  this
strategy by: (1) closely monitoring the needs of customers and providing quality
service; (2) emphasizing  consumer-oriented  banking by originating construction
and  permanent  loans on  residential  and  commercial  real estate and consumer
loans, and by offering other financial services and products;  (3) improving and
maintaining high asset quality;  (4) maintaining capital in excess of regulatory
requirements; and (5) managing interest rate risk by emphasizing the origination
of loans with  adjustable  rates or shorter terms and  investments in short-term
and liquid  investments.  The Bank has adopted  various new business  strategies
intended to increase its presence in its primary market area, thereby increasing
its lending activities and sources of income.

Liquidity and Capital Resources

The  Bank's  primary  sources  of funds  consists  of  deposits,  repayment  and
prepayment of loans,  maturities of investments and  interest-bearing  deposits.
Scheduled  repayments of loans and mortgage-backed  securities and maturities of
investment  securities are  predictable,  influenced by general  interest rates,
economic  conditions,  and  competition.  The Bank uses its liquidity  resources
principally  to fund  existing  and future loan  commitments,  to fund  maturing
certificates  of deposit  and  demand  deposit  withdrawals,  to invest in other
interest-earning  assets, to maintain liquidity, and to meet operating expenses.
Management  believes  that loan  repayments  and other  sources of funds will be
adequate to meet the Bank's liquidity needs for the immediate future.

A portion of the Bank's liquidity  consists of cash and cash equivalents,  which
include investments in highly liquid,  short-term  deposits.  The level of these
assets is dependent on the Bank's operating,  investing,  lending, and financing
activities  during any given  period.  At March 31, 1998 and September 30, 1997,
cash and cash equivalents  totaled $1.5 million and $2.7 million,  respectively.
The decrease in cash and cash equivalents is due to an increase in the Company's
investment in municipal securities and an increase in mortgage lending.

Liquidity  management  is  both a  daily  and  long-term  function  of  business
management.  If the Bank  requires  funds  beyond its ability to  generate  them
internally,  the Bank may borrow  additional  funds from the FHLB.  At March 31,
1998, the Bank had no outstanding advances from the FHLB.
<PAGE>


At March 31, 1998,  the Bank had $155 of  outstanding  commitments  to originate
loans.

Regulatory Capital

Federally insured savings associations such as the Bank are required to maintain
a minimum level of regulatory  capital.  The Corporation and its subsidiary have
capital  ratios which  substantially  exceed all  regulatory  requirements.  The
Corporation's capital ratios are shown below.
<TABLE>

                                                           March 31,      September 30,        Minimum
                                                             1998              1997         Requirements
                                                           ---------------------------------------------
<S>                                                        <C>            <C>               <C>  
Total capital to risk weighted assets                       47.75%            51.17%            8.0%
Tier I capital to risk weighted assets                      46.92%            50.40%            4.0%
Tier I capital to average assets                            22.35%            22.94%            4.0%
</TABLE>


Financial Condition

Total  assets  decreased  $551 to  $47,983  at March 31,  1998 from  $48,534  at
September 30, 1997. The decrease  resulted from a decrease of $1,133 in cash and
cash  equivalents  due to the purchase of treasury  stock totaling $783 combined
with an increase in investments of $291 and an increase in loans of $359.

Gross loans have increased $376 from $27,299 at September 30, 1997 to $27,675 at
March 31,  1998.  The growth in the loan  portfolio  is  comprised  primarily of
mortgage  lending.  As the Company  continues to see growth in mortgage lending,
alternative sources of funding are evaluated. For the six months ended March 31,
1998,  the Company  originated  $653 of mortgage loans for sale in the secondary
market.  As of March 31, 1998,  the Company holds  mortgage  loans of $353 which
have been  originated with the intent to sell. The Bank continues to focus their
efforts  in the  expansion  of the  commercial  loan  market  and  continues  to
originate commercial loans which meet prudent underwriting standards.

Securities  increased  $291 since  September  30,  1997.  The increase is due to
additional investments in municipal securities,  however the portfolio continues
to consist primarily of U.S.  Government and agency  securities.  All securities
are held as available for sale.

Results of Operations

Three months ended March 31, 1998 compared to three months ended March 31, 1997

Net Income - The  Company's net income for the three months ended March 31, 1998
was $84 compared to $57 for the three months ended March 31, 1997.  The increase
in net income resulted  primarily from an increase in interest income recognized
on  securities.  The average  balance of interest  earning  assets  continues to
increase as management  monitors liquidity positions and invests excess cash and
cash  equivalents in short-term U.S.  government  securities.  Compensation  and
employee benefits expense are declining as a result of the Company's  repurchase
of Employee Stock Option Plan shares in July 1997.

Interest Income - Interest income increased for the three months ended March 31,
1998 by $108 to $829 from $721 for the three months  ended March 31,  1997.  The
increase is due to an increase in the average balance of interest earning assets
for the respective periods.

Interest Expense - Interest  expense  increased for the three months ended March
31, 1998 by $9 to $407 from $398 for the three months ended March 31, 1997.  The
deposit portfolio has remained relatively  consistent.  Management  continues to
price deposit products in order to remain competitive in the local economy.

Net Interest  Income - Net interest  income for the three months ended March 31,
1998  increased  by $99 to $422 from $323 for the three  months  ended March 31,
1997.  The increase is  attributable  to the increase in the  Company's  average
balance of securities for the respective period.

Noninterest expense decreased for the three months ended March 31, 1998 by $2 to
$315 from $317 for the three  months  ended March 31,  1997.  Compensation  cost
decreased  for the quarter by $16.  This  decrease  was offset by an increase in
other  operating  costs  of  $19.  Management  continues  to  focus  efforts  on
controlling  compensation costs as was done in the repurchase of shares from the
ESOP in July 1997.
<PAGE>


Six months ended March 31, 1998 compared to six months ended March 31, 1997

Net Income -The Company's net income for the six months ended March 31, 1998 was
$181 compared to $165 for the six months ended March 31, 1997. The increase is a
result of decreased  compensation  expense associated with the Company's buyback
of ESOP shares in July 1997. Net income continues to increase as a result of the
Company's  increase in net interest income.  The increase in net interest income
is a result of an increase in mortgage  lending and an increase in the Company's
average  balance of securities.  Results for the six months ended March 31, 1997
also include gains on the sale of securities of $39 as management  realigned the
investment portfolio.  Excluding investment gains realized during 1998 and 1997,
the Company's net income rose  approximately  40% for the six month period ended
March 31, 1998.

Interest  Income - Interest  income  increased  $63 from  $1,618 to $1,681 or by
3.9%,  during the six months of 1998 compared to the respective  period of 1997.
This increase resulted from an increase in the loan portfolio,  comprised mainly
of mortgage lending,  combined with an increase in the Company's average balance
of securities.

Interest Expense - Interest  expense  increased $12 or 1.5%, to $824 for the six
months ended March 31, 1998 from $812 for the same period in 1997.  The increase
is attributable  to the increase in the Company's  other time deposits,  however
the deposit portfolio has remained relatively consistent.

Net  Interest  Income - Net  interest  income for the six months ended March 31,
1998 was $857  compared  to $806 for the six months  ended March 31,  1997.  The
increase is  attributable  to an increase in mortgage  loans  during the quarter
combined with an increase in the Company's average balance of securities.

Provision for Loan Losses - The allowance for loan losses is established through
a  provision  for loan  losses  based  on  management's  evaluation  of the risk
inherent  in its  loan  portfolio  and  the  general  economy.  Such  evaluation
considers  numerous  factors  including,   general  economic  conditions,   loan
portfolio  composition,  prior loss experience,  the estimated fair value of the
underlying  collateral  and other factors that warrant  recognition in providing
for an adequate loan loss allowance.  During the six months ended March 31, 1998
and 1997, the provision for loan losses was $30 and $45, respectively.

Allowance  for Loan Losses - The  allowance  for loan losses was $182 or .66% of
loans  receivable  at  March  31,  1998,  compared  to  $165,  or .60% of  loans
receivable at September 30, 1997. The level of nonperforming  loans was 1.65% of
total loans at March 31, 1998 compared to 1.50% as of September 30, 1997.  Based
on current  reserve levels in relation to total loans  receivable and classified
assets and the diligent  effort put forth by management to address  problem loan
situations  in recent  years,  management  believes its  reserves are  currently
adequate.

Net charge-offs amounted to $13 during the first six months of fiscal year 1998,
compared  to net  charge-offs  of $15 during the first six months of fiscal year
1997.

The allowance for loan losses is established through a provision for loan losses
charged to expense. 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 evaluation of
the collectibility of loans and prior loss experience. The evaluation also takes
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
examinations.

Loans are considered  impaired when, based on current information and events, it
is  probable  that the Bank will not be able to collect  all  amounts  due.  The
portion of the allowance for loan losses  applicable to impaired  loans has been
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 bad debt  expense in the same manner in which
impairment  initially was recognized or as a reduction in the amount of bad debt
expense that otherwise would be reported. As of March 31, 1998 and September 30,
1997, management had not identified any loans as impaired.
<PAGE>


Nonperforming Assets

At March 31, 1998, the Bank had $458, of nonperforming assets, representing .95%
of total  assets.  On  September  30, 1997,  the Bank had $413 of  nonperforming
assets, representing .85% of total assets.

Impact on Inflation and Changing Prices

The  unaudited  consolidated  financial  statements  and related data  presented
herein have been  prepared in  accordance  with  generally  accepted  accounting
principles,  which require the measurement of financial  position and results of
operations in terms of historical  dollars  without  considering  changes in the
relative  purchasing power of money over time because of inflation.  Unlike most
industrial companies, virtually all of the assets and liabilities of the Company
are  monetary in nature.  As a result,  interest  rates have a more  significant
impact on the  Company's  performance  than the  effects  of  general  levels of
inflation.  Interest rates do not  necessarily  move in the same direction or in
the same magnitude as the prices of goods and services.
<PAGE>




                           PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

         None.

Item 2.  Changes in Securities

         None.

Item 3.  Defaults Upon Senior Securities

         None.

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

         Not applicable.

Item 5.  Other Information

         None.

Item 6.  Exhibits and Reports on Form 8K

         Exhibits:

         None.

         Reports on Form 8K:

         None.




<PAGE>


                                   SIGNATURES


Pursuant  to the  requirement  of the  Securities  Exchange  Act  of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.




                                            CSB Financial Group, Inc.



Date:May 1, 1998                            /s/ K. Gary Reynolds
                                            ------------------------------------
                                            K. Gary Reynolds
                                            Chief Executive Officer and Director



Date:May 1, 1998                            /s/ Joanne Ticknor
                                            ------------------------------------
                                            Joanne Ticknor
                                            Secretary and Treasurer