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CSB FINANCIAL GROUP, INC.
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(Name of Registrant as Specified In Its Charter)
BARRETT ROCHMAN
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<PAGE>
BARRETT R. ROCHMAN
1345 East Park Street
Carbondale, Illinois 62901
October 28, 1999
Re: CSB Financial Group, Inc.
Dear Fellow Stockholders:
Now that almost a year has passed since CSB's last annual meeting of
stockholders, I wanted to write to you and give you my thoughts on certain
financial performance of our company for 1997, 1998 and 1999. As you may be
aware, I own approximately ___% of the outstanding shares of CSB.
I believe that CSB's recent performance has been very disappointing
based on financial information CSB has filed with the Securities and Exchange
Commission. For its fiscal year ended September 30, 1998, CSB had a return on
average stockholders equity of 3.24%. Look back to its fiscal year ended
September 30, 1997, and CSB had a 2.05% return on average equity-indicating a
very poor trend. Based on the FDIC quarterly banking profile, the average return
on equity for thrifts nationwide was 11.35% in 1998 and 10.84% in 1997. For
thrifts located in Illinois with less than $100 million in assets, the return on
average stockholders equity was 4.66% for the period ended June 30, 1998 and
6.53% for the period ended June 30, 1997. So, you can easily see that CSB's
return on average stockholders equity for the past two years has been less than
one-third of the national averages and significantly lower than the Illinois
averages reported by the FDIC.
And, CSB's return on equity is not improving in 1999. For the period
ended June 30, 1999, CSB posted a return on average stockholders equity of 2.2%.
Well folks . . . let's cut to the chase: 1998 return on equity was
poor and so was 1997's. Simplistically speaking, I could make almost twice as
much if I would sell my CSB stock and put my money into 90-day U.S. government
treasuries. In addition, CSB did not pay a dividend in 1997 or 1998.
This now leads me to the next problem. We are being sued by one of our
stockholders, who also is trying to make the suit a class action. According to
the complaint, our company was received a proposal at $14.75 a share by a
potential buyer and the board did not bother to tell the stockholders about this
proposal. At the time of the proposal, shares of CSB were trading at only $9.00.
<PAGE>
Was the board's response to carefully consider the proposal and hire an
investment banker to prudently analyze our situation to see if this proposal was
in the stockholders' best interests? Was the board's response to let the
stockholders know that a proposal had been made? Was the board's response to
make any response or counteroffer to the possible buyer? The answer seems to be
"no" to all of the above. Of course, such a sale might threaten the board
members' position of power. (Somehow the words "management entrenchment" come to
mind.)
Litigation is distractive, costly and whenever possible should be
avoided. When I questioned one board member about the pending lawsuit, his
response was he was ready to "go to war." I guess he's ready to spend our
company's money to the last dollar in order to defend his principles on
non-response.
I have been on a bank board and simple courtesy demands a response.(1)
I feel that prudent fiscal policy demands you analyze a possible sale proposal.
Maybe we should sell, maybe we should stay the course. But whatever we do, we
should let the stockholders know what is happening. Obviously, letting us know
would not have hurt negotiations. While I would not expect management to comment
on negotiations, CSB wasn't negotiating with anyone given its lack of response.
Call me old-fashioned, but I like to think that the stockholders own and have
input in their company.
Sincerely,
Barrett Rochman
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(1) A courteous response to inquiries seems to be a problem with this
bank. I sent a letter more than a month ago in an effort to arrange a meeting
with the board of directors to discuss my concerns. To date, I have not received
a response from CSB.
