UNITED STATES
                        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 June 30, 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 July 31, 1998
-----------------------------                -----------------------------------
Common Stock, Par Value $0.01                                820,870
<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
June 30, 1998 and September 30, 1997
(in thousands, except share data)

                                              June 30,  September 30, 
                                                1998         1997
-------------------------------------------------------------------
ASSETS

Cash and cash equivalents ................     $ 2,047      $ 2,675
Securities:
   Available for sale ....................      16,423       16,777
   Nonmarketable equity securities .......         215          210
Loans ....................................      26,550       27,299
Allowance for loan losses ................        (186)        (165)
                                               --------------------
              Loans, net .................      26,364       27,134
Loans held for sale ......................         434          - -
Premises and equipment ...................         603          602
Accrued interest receivable ..............         409          290
Intangible assets ........................         615          660
Other assets .............................         108          186
                                               --------------------
        Total assets                           $47,218      $48,534
                                               ====================


See Notes to Unaudited Consolidated Financial Statements.
<PAGE>


CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
June 30, 1998 and September 30, 1997
(in thousands, except share data)
<TABLE>
                                                                 June 30,  September 30,   
                                                                   1998        1997
----------------------------------------------------------------------------------------
<S>                                                              <C>       <C>  
LIABILITIES AND STOCKHOLDERS'  EQUITY

LIABILITIES:
   Deposits:
      Demand ..................................................   $ 8,674    $ 9,073
      Savings .................................................     3,547      3,395
      Time deposits > $100,000 ................................     1,317      1,085
      Other time deposits .....................................    22,328     23,033
                                                                  ------------------
              Total deposits ..................................    35,866     36,586
                                                                  ------------------
   Other liabilities ..........................................       157         52
   Deferred income taxes ......................................       242        244
                                                                  ------------------
              Total liabilities ...............................    36,265     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 ............................................     7,822      7,813
   Retained earnings ..........................................     6,315      6,039
   Unrealized gain on available for sale securities, net of tax       108        110
   Unearned employee stock ownership plan shares ..............      (182)      (202)
   Management recognition plan ................................      (561)      (589)
                                                                  ------------------
                                                                   13,512     13,181
   Less cost of treasury stock; 214,130 shares at June 30, 1998
      and 132,775 shares at September 30, 1997 ................    (2,559)    (1,529)
                                                                  ------------------
              Total stockholders' equity ......................    10,953     11,652
                                                                  ------------------

              Total liabilities and stockholders' equity ......   $47,218    $48,534
                                                                  ==================
</TABLE>
See Notes to Unaudited Consolidated Financial Statements.
<PAGE>


CSB FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
Nine Months Ended June 30, 1998 and 1997
(Unaudited, in thousands, except per share data)
<TABLE>
                                                                      Nine Months
                                                                     Ended June 30,
                                                                    -----------------
                                                                     1998      1997
                                                                    -----------------
<S>                                                                 <C>       <C>  
Interest income:
   Loans and fees on loans ......................................   $ 1,662   $ 1,621
   Securities ...................................................       838       806
                                                                    -----------------
              Total interest income .............................     2,500     2,427
                                                                    -----------------

Interest expense on deposits ....................................     1,230     1,224
                                                                    -----------------

              Net interest income ...............................     1,270     1,203
Provision for loan losses .......................................        45        67
                                                                    -----------------

              Net interest income after provision for loan losses     1,225     1,136
                                                                    -----------------

Noninterest income:
   Service charges on deposits ..................................        61        54
   Gain on sale of securities, net ..............................         3        40
   Gain on sale of loans, net ...................................         6       - -
   Other ........................................................        30        23
                                                                    -----------------
              Total noninterest income ..........................       100       117
                                                                    -----------------

Noninterest expense:
   Compensation and employee benefits ...........................       474       472
   Occupancy and equipment ......................................        63        67
   Data processing ..............................................        78        70
   Audit, legal and other professional ..........................        69        85
   Other ........................................................       277       281
                                                                    -----------------
              Total noninterest expense .........................       961       975
                                                                    -----------------
              Income before income taxes ........................       364       278
Income taxes ....................................................        88        61
                                                                    -----------------
              Net income ........................................   $   276   $   217
                                                                    =================

Earnings per share
   Basic ........................................................   $  0.36   $  0.24
                                                                    ================= 

   Diluted ......................................................   $  0.34   $  0.24
                                                                    =================

Weighted average shares outstanding
   Basic ........................................................   774,912   887,312
                                                                    =================

   Diluted ......................................................   804,252   912,112
                                                                    =================

</TABLE>
See Notes to Unaudited Consolidated Financial Statements.
<PAGE>


CSB FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended June 30, 1998 and 1997
(Unaudited, in thousands, except per share data)
<TABLE>
                                                                      Three Months
                                                                     Ended June 30,
                                                                    -----------------
                                                                     1998      1997
                                                                    -----------------
<S>                                                                 <C>       <C>   
Interest income:
   Loans and fees on loans ......................................   $   542   $   545
   Securities ...................................................       277       264
                                                                    -----------------
              Total interest income .............................       819       809
                                                                    -----------------

Interest expense on deposits ....................................       406       412
                                                                    -----------------

              Net interest income ...............................       413       397
Provision for loan losses .......................................        15        22
                                                                    -----------------

              Net interest income after provision for loan losses       398       375
                                                                    -----------------

Noninterest income:
   Service charges on deposits ..................................        20        16
   Gain on sale of securities ...................................       - -         1
   Gain on sale of loans ........................................         4       - -
   Other ........................................................         8         7
                                                                    -----------------
              Total noninterest income ..........................        32        24
                                                                    -----------------

Noninterest expense:
   Compensation and employee benefits ...........................       150       162
   Occupancy and equipment ......................................        21        24
   Data processing ..............................................        28        21
   Audit, legal and other professional ..........................        14        18
   Other ........................................................        89        87
                                                                    -----------------
              Total noninterest expense .........................       302       312
                                                                    -----------------
              Income before income taxes ........................       128        87
Income taxes ....................................................        33        35
                                                                    -----------------
              Net income ........................................   $    95   $    52
                                                                    =================

Earnings per share
   Basic ........................................................   $  0.12   $  0.06
                                                                    =================

   Diluted ......................................................   $  0.12   $  0.06
                                                                    =================

Weighted average shares outstanding
   Basic ........................................................   766,449   875,660
                                                                    =================

   Diluted ......................................................   796,837   904,760
                                                                    =================
</TABLE>
See Notes to Unaudited Consolidated Financial Statements.
<PAGE>


CSB FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended June 30, 1998 and 1997
(Unaudited, in thousands)
<TABLE>
                                                                       Nine Months
                                                                     Ended June 30,
                                                                    ------------------
                                                                      1998      1997
                                                                    ------------------
<S>                                                                 <C>        <C> 
Cash Flows from Operating Activities:
   Net income ...................................................   $   276    $   217
   Adjustments to reconcile net income to net cash provided
      by operating activities:
      Provision for loan losses .................................        45         67
      Provision for depreciation ................................        27         27
      Amortization of intangible assets .........................        45         46
      Employee stock ownership plan compensation expense ........        29         60
      Management recognition plan compensation expense ..........        28         22
      Deferred income taxes .....................................       - -         97
      Originations of loans held for sale .......................    (1,194)       - -
      Proceeds from loans held for sale .........................       766        - -
      Gain on sale of securities ................................        (3)       (40)
      Gain on sale of loans .....................................        (6)       - -
      Loss on the sale of other real estate owned ...............         3        - -
      Amortization and accretion on securities ..................        (1)        60
      Change in assets and liabilities:
        (Increase) decrease in accrued interest receivable ......      (119)        20
        (Increase) decrease in other assets .....................        50        (18)
        (Decrease) increase in other liabilities ................       105       (224)
                                                                    ------------------
              Net cash provided by operating activities .........        51        334
                                                                    ------------------
Cash Flows from Investing Activities:
   Securities available for sale:
      Purchases .................................................    (9,512)    (6,772)
      Proceeds from sales .......................................     3,755        - -
      Proceeds from maturities and paydowns .....................     6,111      6,764
   Securities held to maturity:
      Proceeds from sales                                               - -        369 
   Nonmarketable equity securities:
      Purchases of nonmarketable equity securities ..............        (5)       (45)
   Decrease in securities purchased under agreements to resell ..       - -        300
   (Increase) decrease in loans .................................       725       (199)
   Proceeds from the sale of other real estate owned ............        25        - -
   Purchase of premises and equipment ...........................       (28)       (40)
                                                                    ------------------
              Net cash provided by investing activities .........     1,071        377
                                                                    ------------------

Cash Flows from Financing Activities:
   (Decrease) in deposits .......................................   $  (720)   $  (559)
   Purchase of treasury stock ...................................    (1,030)      (966)
                                                                    ------------------
              Net cash (used in) financing activities ...........    (1,750)    (1,525)
              (Decrease) in cash and cash equivalents ...........      (628)      (814)
Cash and cash equivalents at beginning of period ................     2,675      4,766
                                                                    ------------------
Cash and cash equivalents at end of period ......................   $ 2,047    $ 3,952
                                                                    ==================
Supplemental Disclosures:
   Cash paid for:
      Interest on deposits ......................................   $ 1,233    $ 1,223
      Income taxes ..............................................   $    37    $    47
   Change in gross unrealized gain/loss on securities available
      for sale ..................................................   $    (4)   $   181
   Change in deferred taxes on unrealized gain/loss on securities
      available for sale ........................................   $    (2)   $    68
   Transfer of securities from held to maturity to available for
      sale ......................................................   $   - -    $ 1,657
</TABLE>
See Notes to Unaudited 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 Centralia,
Illinois and serves  customers in Illinois  counties of Clinton and Marion.  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 June 30, 1998 the results of operations for the three
months  ended June 30,  1998 and 1997,  and the results of  operations  and cash
flows for the nine months ended June 30, 1998 and 1997.  All  adjustments to the
financial statements were normal and recurring in nature.

Operating  results for the nine months  ended June 30, 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 Nine Months
                                                               Ended June 30,
                                                             -------------------
                                                                1998       1997
                                                              ------------------

Net income available to common shareholders ................. $    276  $    217

Basic diluted potential common shares:
   Weighted average shares outstanding ......................  769,530   885,656
   Management recognition plan shares vested ................    5,382     1,656
                                                              ------------------

Basic average shares outstanding ............................  774,912   887,312
                                                              ------------------

Diluted potential common shares:
   Management recognition plan shares granted, but not vested   13,248    16,974
   Stock option equivalents .................................   16,092     7,826
                                                              ------------------

Diluted average shares outstanding ..........................  804,252   912,112
                                                              ==================

Basic earnings per share .................................... $   0.36  $   0.24
                                                              ==================

Diluted earnings per share .................................. $   0.34  $   0.24
                                                              ==================
<TABLE>
                                                                   For the Months 
                                                                   Ended June 30,
                                                                -------------------
                                                                  1998        1997
                                                                -------------------
<S>                                                             <C>        <C> 
Net income available to common shareholders .................   $     95   $     52

Basic diluted potential common shares:
   Weighted average shares outstanding ......................    761,067    874,004
   Management recognition plan shares vested ................      5,382      1,656
                                                                -------------------

Basic weighted average shares outstanding ...................    766,449    875,660
                                                                -------------------

Diluted potential common shares:
   Management recognition plan shares granted, but not vested     13,248     16,974
   Stock option equivalents .................................     17,140     12,126
                                                                -------------------

Diluted average shares outstanding ..........................    796,837    904,760
                                                                -------------------

Basic earnings per share ....................................   $   0.12   $   0.06
                                                                -------------------

Diluted earnings per share ..................................   $   0.12   $   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.
<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 $29 and $60 for
the nine months ended June 30, 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 June 30, 1998 and September
30, 1997, the ESOP held 23,143 and 25,108, respectively, of non-committed shares
with a fair value of $310 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
June 30, 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 June 30,  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 June 30, 1998,  18,630 shares have been awarded to
officers, directors, and employees. MRP compensation expense was $28 and $22 for
the nine months ended June 30, 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.
<PAGE>


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 financial  statement  periods 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.
<PAGE>


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 June 30, 1998 and  September 30, 1997,
cash and cash equivalents totaled $2,047 and $2,675, respectively.  The decrease
in cash and cash  equivalents  is due to a  decrease  in demand  deposits  and a
decrease in time deposits less than $100,000.

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 June 30,
1998, the Bank had no outstanding advances from the FHLB.

At June 30,  1998,  the Bank had $440 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.

                                           March 31, September 30,     Minimum
                                             1998        1997       Requirements
                                           -------------------------------------

Total capital to risk weighted assets ...    48.90%      51.17%        8.0%
Tier I capital to risk weighted assets ..    48.03%      50.40%        4.0%
Tier I capital to average assets ........    21.37%      22.94%        4.0%

Financial Condition

Total  assets  decreased  $1,316 to  $47,218  at June 30,  1998 from  $48,534 at
September 30, 1997. The principal  cause of this decrease was a decrease of $628
in cash and cash  equivalents,  a decrease in  securities  available for sale of
$350 and a decrease in loans held for portfolio of $770.  These  decreases  were
partially offset by an increase in loans held for sale of $434.

The decrease in the loan portfolio  occurred in the commercial,  installment and
home  equity  areas.  For the nine  months  ended  June 30,  1998,  the  Company
originated $1,194 of mortgage loans for sale in the secondary  market.  The Bank
continues  to  focus on the  expansion  of its  commercial  loan  portfolio  and
originates commercial loans which meet prudent underwriting standards.

The decrease in assets were funded by a decrease in demand  deposits of $399 and
a decrease in time deposits less than $100,000 of $705.

The Company  acquired  81,355 shares of treasury  stock in the nine months ended
June 30, 1998 for $1,030.

The decrease in the investment  securities  relates to governmental  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 June 30, 1998 compared to three months ended June 30, 1997

Net Income - The  Company's  net income for the three months ended June 30, 1998
was $95 compared to $52 for the three  months ended June 30, 1997.  The increase
in net income  resulted  primarily from an increase in net interest  income,  an
increase  in other  income,  a  decrease  in the  provision  for loan loss and a
decrease  in other  expenses.  The  decrease in other  expenses  is  principally
attributable to a decrease in compensation and employee  benefits.  Compensation
and  employee  benefits  expense  is  declining  as a  result  of the  Company's
redemption of shares held by the Employee Stock Option Plan.
<PAGE>


Interest Income - Interest income  increased for the three months ended June 30,
1998 by $10 to $819 from $809 for the three  months  ended  June 30,  1997.  The
increase is due to an increase in the average balance of the security portfolio.

Interest  Expense - Interest  expense  decreased for the three months ended June
30, 1998 by $6 to $406 from $412 for the three months ended June 30, 1997.  This
decrease in interest  expense is  attributable  to the decline in time  deposits
less than $100,000.  Management  continues to price deposit products in order to
remain  competitive  in the local  economy  and  manage its  interest  rate risk
exposure.

Net Interest  Income - Net interest income after the provision for loan loss for
the three months ended June 30, 1998  increased by $23 to $398 from $375 for the
three months ended June 30, 1997.

Noninterest expense decreased for the three months ended June 30, 1998 by $10 to
$302 from $312 for the three months ended June 30, 1997.  The  principal  reason
for the decrease is the decrease in compensation  and employee  benefits for the
quarter of $12.

Nine months ended June 30, 1998 compared to nine months ended June 30, 1997

Net Income -The Company's net income for the nine months ended June 30, 1998 was
$276  compared  to $217 for the nine  months  ended  June 30,  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  as well as  increased  yields  on  existing  adjustable  rate
mortgage  loans and an increase in the Company's  average  balance of investment
securities.  Results for the nine months ended June 30, 1997 also include  gains
on the  sale  of  securities  of  $40 as  management  realigned  the  investment
portfolio.  Excluding  investment  gains  realized  during  1998 and  1997,  the
Company's net income rose approximately 54% for the nine month period ended June
30, 1998.

Interest  Income - Interest  income  increased $73 from $2,427 to $2,500,  or by
3.0% during the nine months of 1998 compared to the  respective  period of 1997.
This  increase  resulted  from an increase in the mortgage  portfolio as well as
increased  yields on existing  adjustable rate mortgage loans,  combined with an
increase in the Company's average balance of investment securities.

Interest Expense - Interest expense increased $6 or 0.5%, to $1,230 for the nine
months ended June 30, 1998 from $1,224 for the same period in 1997. The increase
is  attributable to the increase in the Company's time deposits.  However,  this
increase was more than offset by a decrease in demand deposits.

Net  Interest  Income - Net  interest  income for the nine months ended June 30,
1998 was $1,270  compared to $1,203 for the nine months ended June 30, 1997. The
increase is attributable to the increase in mortgage loans during the quarter as
well as increased  yields on existing  adjustable  rate mortgage  loans combined
with an increase in the Company's average balance of investment 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 nine months ended June 30, 1998
and 1997, the provision for loan losses was $45 and $67, respectively.

Allowance  for Loan Losses - The  allowance  for loan losses was $186 or .70% of
loans receivable at June 30, 1998, compared to $165, or .60% of loans receivable
at September 30, 1997. The level of nonperforming loans was 2.01% of total loans
at June 30, 1998 compared to 1.00% as of June 30, 1997. Based on current balance
of the  allowance  for loan losses 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  considers that the balance
in the allowance for loan losses at June 30, 1998 is adequate.

Total  charge-offs  amounted  to $27 during the first nine months of fiscal year
1998  while  total  recoveries  amounted  to $3 during  the same  period.  This,
compared  to total  charge-offs  of $29 during the first nine months of 1997 and
total recoveries of $1 during the same period.
<PAGE>


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 June 30, 1998 and September 30,
1997, management had not identified any loans as impaired.

Nonperforming Assets

At June 30, 1998, the Bank had $534, of nonperforming assets, representing 1.13%
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.

Year 2000 Compliance

The Year  2000  compliance  issue  exists  because  many  computer  systems  and
applications  currently use two-digit fields to designate a year. As the century
date  change  occurs,  date-sensitive  systems  may either  fail or not  operate
properly unless the underlying programs are modified or replaced.

The Bank has initiated a program to assure that all computer  applications  will
be Year 2000 compliant.  This program includes the monitoring and testing of the
Bank's outside data  processing  provider and other vendors Year 2000 compliance
progress.

The Bank is continuing to assess the extent of programming  changes  required to
address this issue.  Although  final cost  estimates  have not been  determined,
management projects  approximately $150,000 will be expended to become Year 2000
compliant.  It is not expected that these expenses will have a material  adverse
impact on the Company and the Bank's financial condition,  liquidity, or results
of operations.
<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:  AUGUST 13, 1998                      /s/ K. Gary Reynolds
       ----------------------------         -----------------------------------
                                            K. Gary Reynolds
                                            Chief Executive Officer and Director



Date: AUGUST 13, 1998                      /s/ Joanne Ticknor
       ----------------------------        -------------------------------------
                                           Joanne Ticknor
                                           Secretary and Treasurer