CSB FINANCIAL GROUP INC, DEFM14A, 2000-06-16

CSB FINANCIAL GROUP INC
DEFM14A, 2000-06-16
SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED

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SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [x]

Filed by a Party other than the Registrant [ ]
Check the appropriate box:

[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))

CSB FINANCIAL GROUP, INC.
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the
Registrant)

Payment of Filing Fee (Check the appropriate box):

[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:

(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:
[x] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:

CSB FINANCIAL GROUP, INC.
200 SOUTH POPLAR
CENTRALIA, ILLINOIS 62801
(618) 532-1918

June 19, 2000

To the stockholders of CSB Financial Group, Inc.:

You are cordially invited to attend a special meeting of stock-
holders of CSB Financial Group, Inc. to be held on July 14, 2000, at
10:00 a.m., local time, at 801 12th Street, Carlyle, Illinois.

At the meeting, you will be asked to approve and adopt a merger
agreement under which:

* each outstanding share of CSB's common stock will be
converted into the right to receive $16.00 in cash, which
may be reduced; and

* CSB will become a wholly owned subsidiary of Midland States
Bancorp, Inc.

The investment banking firm of Keefe, Bruyette & Woods, Inc. has
issued its written opinion advising CSB that, as of the date of the
opinion, the consideration to be received by CSB stockholders in the
merger is fair, from a financial point of view, to them.

After carefully considering the merger, the merger agreement and
the benefits which will result to the stockholders, the board of
directors has determined that the merger is advisable and in the best
interests of the stockholders and recommends that you vote in favor of
the merger agreement.

A notice of special meeting of stockholders and a proxy statement
containing a discussion of the merger and related transactions
accompany this letter. We urge you to read this material carefully
before voting. If you attend the meeting, you may vote in person if
you desire, even if you had previously returned your proxy.

Your vote is important. Approval of the merger agreement requires
the affirmative vote of the holders of a majority of the shares of
common stock of CSB Financial Group, Inc. Whether or not you expect
to attend the meeting in person, please complete and sign the
accompanying proxy and return it promptly in the enclosed envelope.

Sincerely,

/s/ K. Gary Reynolds

K. Gary Reynolds
PRESIDENT AND CHIEF EXECUTIVE OFFICER

Please do not send your common stock certificates at this time.
If the merger is consummated, you will be sent instructions regarding
the surrender of your stock certificates.

CSB FINANCIAL GROUP, INC.
200 SOUTH POPLAR
CENTRALIA, ILLINOIS 62801
(618) 532-1918

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 14, 2000

NOTICE IS HEREBY GIVEN that a special meeting of the stockholders
of CSB Financial Group, Inc. will be held at 801 12th Street, Carlyle,
Illinois, on July 14, 2000 at 10:00 a.m., local time, for the
following purposes:

1. To approve and adopt an agreement and plan of merger, dated
as of January 26, 2000, by and among Midland States Bancorp,
Inc., CSB Acquisition Corporation (a wholly owned subsidiary
of Midland) and CSB Financial Group, Inc. under which CSB
Acquisition will merge with and into CSB, with CSB surviving
as a wholly owned subsidiary of Midland. A copy of the
merger agreement is attached to the proxy statement as
Appendix A; and

2. To transact other business that may properly come before the
meeting or any adjournments or postponements of the meeting.

Only stockholders of record at the close of business on June 8,
2000 will be entitled to notice of, and to vote at, the meeting and
any adjournments or postponements.

Each stockholder has the right to dissent and demand payment of
the fair value of the stockholder's shares. The right of a stockholder
to receive this payment is contingent upon strict compliance with the
requirements of Section 262 of the Delaware General Corporation Law,
which is contained in Appendix D to this proxy statement. A summary
of these requirements is contained in the accompanying proxy
statement. The obligation of Midland to effect the merger is
conditioned upon the holders of not more than 10 percent of the shares
of CSB common stock validly demanding and perfecting these dissenters'
appraisal rights.

By Order of the Board of Directors

/s/ K. Gary Reynolds

K. Gary Reynolds
PRESIDENT AND CHIEF EXECUTIVE OFFICER

June 19, 2000
Centralia, Illinois

CSB FINANCIAL GROUP, INC.
200 SOUTH POPLAR
CENTRALIA, ILLINOIS 62801
(618) 532-1918

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

PROXY STATEMENT
-------------------

This proxy statement is furnished to the holders of outstanding
shares of common stock of CSB Financial Group, Inc. in connection with
the solicitation of proxies by CSB to approve and adopt an agreement
and plan of merger involving CSB, Midland States Bancorp, Inc. and CSB
Acquisition Corporation.

If the merger contemplated by the merger agreement is completed,
Midland will pay you $16.00 in cash for each share of CSB common stock
you own, which may be reduced, and CSB will become a wholly owned
subsidiary of Midland.

The board of directors recommends that you vote for approval and
adoption of the merger agreement.

We have scheduled a special meeting for our stockholders to vote
on the merger agreement. YOUR VOTE IS VERY IMPORTANT. This meeting
will be held at 10:00 a.m., local time, on July 14, 2000, at 801 12th
Street, Carlyle, Illinois.

Whether or not you plan to attend the meeting, please take the
time to vote by completing and signing the enclosed proxy card and
mailing it to us. IF YOU COMPLETE, SIGN, AND MAIL YOUR PROXY WITHOUT
INDICATING HOW YOU WANT TO VOTE, YOUR PROXY WILL BE COUNTED AS A VOTE
IN FAVOR OF THE MERGER AGREEMENT. If you abstain or do not vote, this
will have the effect of a vote against the merger agreement.

This proxy statement provides you with detailed information about
the proposed merger. In addition, you may obtain information about
CSB from documents that we have filed with the Securities and Exchange
Commission. We encourage you to read this entire document carefully.

The United States Securities and Exchange Commission has not
passed upon the accuracy or adequacy of this proxy statement. Any
representation to the contrary is unlawful.

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

This proxy statement, the accompanying notice of special meeting
and the accompanying form of proxy are first being mailed to CSB
stockholders on or about June 19, 2000.

TABLE OF CONTENTS

PAGE

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Companies . . . . . . . . . . . . . . . . . . . . . 1
The Meeting . . . . . . . . . . . . . . . . . . . . . . 2
The Merger . . . . . . . . . . . . . . . . . . . . . . 3
Merger Consideration . . . . . . . . . . . . . . . . . 3
Effective Time; Effective Date . . . . . . . . . . . . 3
Interests of Certain Persons in the Merger . . . . . . 4
Material Provisions of the Merger Agreement . . . . . . 4
Reasons for the Merger . . . . . . . . . . . . . . . . 7
Recommendation of the Board of Directors . . . . . . . 7
Opinion of Financial Advisor . . . . . . . . . . . . . 7
Accounting Treatment . . . . . . . . . . . . . . . . . 7
Federal Income Tax Consequences of the Merger . . . . . 8
Dissenters' Appraisal Rights . . . . . . . . . . . . . 8
Regulatory Approvals . . . . . . . . . . . . . . . . . 8
Market and Market Prices . . . . . . . . . . . . . . . 9
SELECTED CONSOLIDATED FINANCIAL DATA . . . . . . . . . . . . . 10
THE MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Place, Time, Date and Record Date . . . . . . . . . . . 12
Matters to be Considered . . . . . . . . . . . . . . . 12
Vote Required . . . . . . . . . . . . . . . . . . . . . 12
Proxies . . . . . . . . . . . . . . . . . . . . . . . . 13
Security Ownership . . . . . . . . . . . . . . . . . . 14
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . 17
General . . . . . . . . . . . . . . . . . . . . . . . . 17
Merger Consideration . . . . . . . . . . . . . . . . . 17
Background of and Reasons for the Merger . . . . . . . 19
Recommendation of the Board of Directors . . . . . . . 23
Opinion of Financial Advisor . . . . . . . . . . . . . 23
Midland's Financial Resources . . . . . . . . . . . . . 28
Effective Time; Effective Date . . . . . . . . . . . . 28
Exchange of Certificates by CSB Stockholders . . . . . 28
Dissenters' Appraisal Rights . . . . . . . . . . . . . 29
Regulatory Approvals . . . . . . . . . . . . . . . . . 31
THE MERGER AGREEMENT . . . . . . . . . . . . . . . . . . . . . 33
Representations and Warranties . . . . . . . . . . . . 33
Business Pending the Merger and Other Covenants . . . . 33
Conditions to the Merger . . . . . . . . . . . . . . . 38
Waiver and Amendment; Termination . . . . . . . . . . . 40
Dividends . . . . . . . . . . . . . . . . . . . . . . . 43
Interests of Certain Persons in the Merger . . . . . . 43
Federal Income Tax Consequences of the Merger . . . . . 47
PRICE RANGE OF COMMON STOCK AND DIVIDENDS . . . . . . . . . . . 50
AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
STOCKHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . 51
WHERE YOU CAN FIND MORE INFORMATION . . . . . . . . . . . . . . 51

Appendix A - Agreement and Plan of Merger
Appendix B - Opinion of Keefe, Bruyette & Woods, Inc.
Appendix C - CSB's Annual Report on Form 10-KSB for the fiscal
year ending September 30, 1999 and Quarterly Report
on Form 10-QSB for the quarter ending March 31, 2000
Appendix D - Section 262 of the Delaware General Corporation Law

SUMMARY

This summary highlights selected information from this proxy
statement. It may not contain all the information that is important to
you. To understand the merger fully and for a more complete
description of the legal terms of the merger, you should carefully
read this document and the documents we refer to. See "WHERE YOU CAN
FIND MORE INFORMATION" (Page 37).

THE COMPANIES

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

CSB is a bank holding company and was incorporated as a Delaware
corporation in December, 1994. CSB owns all of the common stock of
Centralia Savings Bank, an Illinois state-chartered stock savings
bank. In October, 1995, Centralia converted from a state-chartered
mutual savings bank to a state-chartered stock savings bank, at which
time CSB acquired all of Centralia's outstanding stock. CSB issued
1,035,000 shares of common stock in a stock offering. CSB's common
stock is quoted on the OTC electronic bulletin board under the symbol
"CSBF."

CSB is engaged in the business of directing, planning and
coordinating the business activities of Centralia. At March 31, 2000,
CSB had consolidated total assets of $49,060,000 and stockholders'
equity of $10,293,000.

Centralia's principal business involves accepting retail deposits
in its primary market area, Marion county, from the general public and
investing those deposits, together with funds generated from
operations, mainly in one- to four- family residential mortgage loans.
Centralia also invests in multifamily mortgages, commercial real
estate, construction, land development and other loans. Centralia
also invests in investment securities.

CSB and Centralia serve the financial needs of communities in
their market area through a main office located in Centralia, Illinois
and a branch office located in Carlyle, Illinois.

MIDLAND STATES BANCORP, INC.
133 West Jefferson Street
Effingham, Illinois 62401
(217) 342-2141

Midland is a bank holding company and a Delaware corporation.
The common stock of Midland is privately held.

Midland owns all of the outstanding capital stock of Effingham
State Bank, an Illinois state-chartered bank with full trust powers,

which is a member of the Federal Reserve System. Effingham is
headquartered in Effingham, Illinois, with banking offices located in
Effingham, Altamont, Farina, and Greenville, Illinois.

Midland is engaged in the business of directing, planning and
coordinating the business activities of Effingham. At December 31,
1999, Midland had consolidated total assets of $196,141,000 and
stockholders' equity of $23,422,000.

Effingham engages in the commercial lending business in the
communities it serves.

CSB ACQUISITION CORPORATION
133 West Jefferson Street
Effingham, Illinois 62401
(217) 342-2141

CSB Acquisition, a recently formed Delaware corporation and
wholly owned subsidiary of Midland, does not conduct any ongoing
operations. Its primary purpose is to facilitate Midland's acquisition
of CSB.

THE MEETING (PAGE 10)

MEETING AND RECORD DATE. CSB will hold a special meeting of
stockholders on July 14, 2000, at 801 12th Street, Carlyle, Illinois,
at 10:00 a.m., local time. Only holders of record of common stock at
the close of business on the record date, June 8, 2000, are entitled
to notice of, and to vote at, the meeting.

MATTERS TO BE CONSIDERED. At the meeting, stockholders will vote
on the approval and adoption of the agreement and plan of merger,
dated as of January 26, 2000, by and among Midland, CSB Acquisition,
and CSB, under which CSB Acquisition will merge with and into CSB and
each share of CSB common stock will be converted into the right to
receive $16.00 in cash, which may be reduced. See "THE MERGER-MERGER
CONSIDERATION" (Page 14). Stockholders will also consider and vote
upon other matters that may properly be brought before the meeting.

VOTE REQUIRED. Approval of the merger agreement requires the
affirmative vote of the holders of a majority of the shares of CSB
common stock. As of the record date, there were 732,299 shares of CSB
common stock entitled to be voted at the meeting.

Approval of the merger agreement and the merger by the CSB
stockholders is a condition to, and required for, consummation of the
merger. See "THE MERGER AGREEMENT-CONDITIONS TO THE MERGER" (Page
28).

SECURITY OWNERSHIP OF MANAGEMENT. As of the record date,
directors and executive officers of CSB held in the aggregate with the
ability to vote 164,039 shares or approximately 22.4 percent of the
common stock. Each of these persons has entered into a support

agreement with Midland which provides for each person to vote the
shares of common stock which are beneficially owned or over which each
person has voting power or control, directly or indirectly, including
any shares acquired after the date of the given support agreement, for
approval and adoption of the merger agreement.

THE MERGER (PAGE 14)

Each CSB stockholder is being asked to consider and vote upon a
proposal to approve and adopt the merger agreement, under which CSB
Acquisition will merge with and into CSB, with CSB surviving the
merger as a wholly owned subsidiary of Midland. Upon consummation of
the merger, the ownership interest of all current stockholders in CSB
will cease.

MERGER CONSIDERATION (PAGE 14)

Each share of CSB common stock issued and outstanding immediately
before the merger, except shares:

* held in the treasury of CSB,

* held directly or indirectly by CSB or Midland or any
subsidiary of CSB or Midland, other than those held directly
or indirectly in trust accounts, managed accounts or
otherwise in a fiduciary capacity and held regarding a debt
previously contracted, and

* for which CSB stockholders have validly demanded and
perfected appraisal rights under Section 262 of the Delaware
General Corporation Law,

will be converted into the right to receive $16.00 in cash, which may
be reduced, at the effective time of the merger. The total merger
consideration will be reduced, on a dollar-for-dollar basis, to the
extent that the consolidated stockholders' equity of CSB as of the
effective date is less than $10,176,000. See "THE MERGER-EFFECTIVE
TIME; EFFECTIVE DATE" (Page 21).

EFFECTIVE TIME; EFFECTIVE DATE (PAGE 21)

The certificate of merger to be filed with the Delaware Secretary
of State will specify the effective date and the effective time of the
merger. The effective date will occur on the date of which Midland
notifies CSB in writing and after the satisfaction or waiver of all
conditions to the merger, but not later than 60 days after this
satisfaction or waiver. The closing of the merger will take place on
the effective date of the merger.

INTERESTS OF CERTAIN PERSONS IN THE MERGER (PAGE 32)

CSB's executive officers and directors may be deemed to have
interests in the merger in addition to their interests as stockholders
of CSB generally. These material interests include provisions in the
merger agreement relating to indemnification and the purchase of
directors' and officers' liability insurance coverage. In addition,
the consummation of the merger will affect the employee benefits of
executive officers and directors under the CSB stock option and
management development and recognition plans and the Centralia Savings
Bank employee stock ownership plan. Also, an employment agreement
between Centralia and K. Gary Reynolds will become effective and
supersede an existing employment agreement between these parties upon
the consummation of the merger. CSB's board was aware of all of the
interests described in this proxy statement and considered them and
other matters in approving the merger agreement and the transactions
contemplated by the merger agreement.

MATERIAL PROVISIONS OF THE MERGER AGREEMENT (PAGE 25)

The merger agreement is attached as Appendix A to this proxy
statement. You should read the merger agreement because it is the
legal document that governs the merger. The merger agreement includes
many material terms and provisions which are described in detail
elsewhere in this proxy statement, including provisions that:

* require CSB to conduct its business according to particular
guidelines;

* require that specified conditions be satisfied or waived
before the merger may be consummated;

* regulate the ability of the parties to waive or amend
provisions of the merger agreement; and

* regulate the ability of the parties to terminate the
agreement.

CONDITIONS. Conditions which must be satisfied or waived by the
parties include:

* the requisite approval of the merger agreement and the
merger by CSB stockholders;

* the obtaining of all regulatory approvals and the expiration
of all statutory waiting periods;

* the absence of any legal restraint or governmental
proceeding preventing or restricting the consummation of the
merger;

* the performance by the parties in all material respects of
all their obligations under the merger agreement before or
at the effective time; and

* the material truth and correctness of the representations
and warranties of the parties in the merger agreement.

CSB has received the Keefe, Bruyette & Woods, Inc. written
fairness opinion that, as of the date of this proxy statement, the per
share merger consideration is fair to CSB stockholders, from a
financial point of view, which is included as Appendix B to this proxy
statement.

In addition, the following conditions relating to CSB must be
satisfied or waived:

* the cancellation of all CSB stock options as of the
effective time in exchange for the per share option
consideration;

* the outstanding shares of CSB common stock at the effective
time being no more than 732,299 shares, excluding shares
issued after January 26, 2000 from the exercise of a stock
option;

* no occurrence of any event or circumstance having or
reasonably being expected to result in a material adverse
effect on CSB; and

* no more than 10 percent of CSB common stockholders entitled
to vote at the meeting having validly demanded and perfected
dissenters' appraisal rights.

TERMINATION. The merger agreement may be terminated before the
effective time by the parties by the mutual written consent of CSB and
Midland based on majority vote of the entire boards of CSB and
Midland. Also, either CSB or Midland may terminate the merger
agreement before the effective time:

* upon written notice to the other party, for a governmental
entity having issued a final nonappealable order prohibiting
consummation of any transaction contemplated by the merger
agreement;

* after July 31, 2000 for the merger not having been
consummated;

* for a material breach of any representation or warranty in
the merger agreement not cured within 30 days following
written notice or unable to be cured before the closing;

* for a material breach of any covenant or agreement to the
merger agreement not cured within 30 days following written
notice;

* if Midland is to pay less than $15.50 per share of CSB
common stock on an adjusted basis and Midland is not willing
to pay $15.50 per share; or

* by failure to obtain the requisite approval of the CSB
stockholders of the merger agreement and the merger at the
meeting.

Midland can terminate the merger agreement before the effective
time by:

* the CSB board's withdrawal or adverse modification of its
approval or recommendation of the merger agreement or the
merger or the approval or recommendation of a competing
transaction involving CSB and a party other than Midland or
its subsidiaries; or

* CSB's authorization of any officer, director, employee or
agent to directly or indirectly initiate, solicit or
entertain offers from, negotiate with or encourage, discuss,
accept or consider any competing transaction proposal,
unless CSB's board will have determined in good faith that
failing to take this action will violate its obligations or
duties to CSB or its stockholders and that the proposal for
a competing transaction is a superior competing transaction
and all discussions with the third party to further a
competing transaction will have been terminated within 45
calendar days of the CSB board's good faith determination.

CSB can terminate the merger agreement before the effective time,
upon two days prior written notice to Midland, if CSB's board decides
by a good faith determination to accept an unsolicited proposal for a
competing transaction, including a tender offer, after CSB and its
financial and legal advisors have negotiated with Midland for at least
three calendar days to adjust the terms and conditions of the merger
agreement.

TERMINATION FEES. If the merger agreement is terminated for the
last three Midland or CSB termination reasons described above or by
CSB for any other termination reason if Midland would have the right
to terminate for the first or second of those three termination
reasons at the time of CSB's termination, CSB will promptly pay to
Midland a $500,000 termination fee no later than two business days
after the termination date.

Also, if the merger is terminated by Midland or CSB for failure
to obtain the requisite CSB stockholder approval at the meeting or by
Midland relating to a competing transaction following a good faith CSB
board determination, a $500,000 termination fee will be payable by CSB

to Midland only if a proposal for a competing transaction will have
been made before the CSB stockholders meeting and within 270 days
after this meeting:

* CSB will have entered into an agreement with a third party
providing for the consummation of a superior competing
transaction, or

* a superior competing transaction will have occurred.

Payment of the $500,000 termination fee by or on behalf of CSB
will be instead of and in full satisfaction of any other rights or
remedies otherwise available to Midland or CSB Acquisition for
termination of the merger agreement.

REASONS FOR THE MERGER (PAGE 17)

CSB's board believes that the merger will enable stockholders to
realize significant value on their investment. In reaching its
decision to approve the merger agreement and the transactions
contemplated by the merger agreement, the board considered various
factors, which are discussed in the proxy statement.

RECOMMENDATION OF THE BOARD OF DIRECTORS (PAGE 18)

CSB's board of directors has unanimously approved and adopted the
merger agreement and the transactions contemplated by the merger
agreement and has determined that the merger is advisable and in the
best interests of CSB and its stockholders. THE BOARD UNANIMOUSLY
RECOMMENDS A VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.

OPINION OF FINANCIAL ADVISOR (PAGE 18)

CSB retained Keefe to be its financial advisor regarding the
transactions contemplated by the merger agreement and to evaluate the
financial terms of the merger.

On January 26, 2000, Keefe delivered its written opinion and as
of the date of this proxy statement confirmed and delivered its
updated written opinion to CSB that, as of each of these dates, the
consideration to be received by CSB stockholders in the merger is
fair, from a financial point of view, to them.

The full text of the written opinion of Keefe is attached as
Appendix B and is incorporated by reference in this proxy statement.
YOU ARE URGED TO READ THIS OPINION IN ITS ENTIRETY.

ACCOUNTING TREATMENT

The merger will be accounted for as a "purchase transaction."

FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (PAGE 34)

In general, the receipt of cash for shares of common stock under
the merger agreement or relating to the valid demand and perfection of
dissenters' appraisal rights will be a taxable transaction for federal
income tax purposes and may also be a taxable transaction for state,
local and other tax purposes.

Because tax consequences may vary depending upon the particular
circumstances of a stockholder, you are urged to consult your tax
advisor concerning the specific tax consequences of the merger to you,
including the applicability and effect of federal and various state,
local and foreign tax laws.

DISSENTERS' APPRAISAL RIGHTS (PAGE 22)

Holders of record of shares of common stock who do not vote to
approve and adopt the merger agreement may dissent and elect to have
the fair value of their shares of common stock, based on all relevant
factors and excluding any element of value arising from the
accomplishment or expectation of the merger, judicially appraised and
paid to them in cash. This fair value may be more, the same as, or
less than the merger consideration. These stockholders must deliver a
written demand for this appraisal to CSB before the vote on the
approval and adoption of the merger agreement and comply with other
requirements of Section 262 of the Delaware General Corporation Law,
the full text of which is attached to this proxy statement as Appendix
D. Any deviation from the requirements of Section 262 may result in
forfeiture of appraisal rights. Voting for approval of the merger
agreement, or delivering a proxy in connection with the meeting,
unless the proxy directs a vote against, or expressly abstains from
the vote on, the approval and adoption of the merger agreement, will
constitute a waiver of a stockholder's right to seek appraisal for the
shares of common stock voted or covered by that proxy and will nullify
any written demand for appraisal submitted by that stockholder.
Return of a blank, executed proxy will constitute a vote in favor of
the merger agreement and result in waiver of appraisal rights. Voting
against or failing to vote for the merger agreement will not by itself
constitute a valid demand for appraisal rights. The obligation of
Midland to effect the merger is conditioned upon the holders of not
more than 10 percent of the shares of CSB common stock validly
demanding and perfecting appraisal rights. "THE MERGER AGREEMENT-
CONDITIONS TO THE MERGER" (Page 28).

REGULATORY APPROVALS (PAGE 24)

A merger transaction involving bank holding companies, like CSB
and Midland, is conditioned upon the prior approval of the Board of
Governors of the Federal Reserve System under the Bank Holding Company
Act of 1956. On March 22, 2000, Midland submitted an application for
approval by the Federal Reserve Board. Midland received the Federal
Reserve Board's approval on May 1, 2000.

In addition, the Office of Banks and Real Estate for the State of
Illinois under the Illinois Savings Bank Act must approve the merger.

On March 22, 2000, Midland submitted an application for approval by
the Bureau of Residential Finance, Thrift Division of the Illinois
Office of Banks and Real Estate. On April 6, 2000, Midland received
this approval.

In addition, Effingham and Centralia submitted an application to
the Federal Reserve Board requesting approval to merge Centralia with
and into Effingham under the Federal Deposit Insurance Act on May 2,
2000. Midland received the approval of the Federal Reserve Board on
June 6, 2000. Also, Effingham and Centralia submitted applications
for approval of this merger with the Commercial Banking Division and
the Thrift Division of the Illinois Office of Banks and Real Estate
under Illinois Banking Act and the Illinois Savings Bank Act on May 2,
2000. On May 19, 2000, the Thrift Division granted its approval. It
is anticipated that the Commercial Banking Division will grant its
approval before July 14, 2000. However, there can be no assurance as
to the timing of the approval of the Commercial Banking Division, or
that the Commercial Banking Division will grant this approval.

The consummation of the merger is conditioned upon the obtaining
of all regulatory approvals required for consummation of the merger
and all transactions contemplated by the merger agreement and the
expiration of all statutory waiting periods. There can be no
assurance that these conditions will be satisfied. See "THE MERGER
AGREEMENT - CONDITIONS TO THE MERGER" (Page 28).

MARKET AND MARKET PRICES

CSB's common stock is currently included for quotation on the OTC
electronic bulletin board under the symbol "CSBF." The following
table shows the high and low sale prices per share of CSB common stock
for each of the trading dates preceding public announcement of the
proposed merger and the execution of the merger agreement and the most
recent practicable trading date preceding the mailing of this proxy
statement. See "PRICE RANGE OF COMMON STOCK AND DIVIDENDS" (Page 36).

High Low
---- ---
December 3, 1999 . . . . . . . . . . $10 5/8 $10 5/8
January 26, 2000 . . . . . . . . . . $14 5/16 $14 1/4
May 30, 2000 . . . . . . . . . . . . $15 1/2 $15 1/4

SELECTED CONSOLIDATED FINANCIAL DATA

The following table shows in summary form historical consolidated
financial data of CSB. This information is qualified in its entirety
by the historical consolidated financial statements of CSB, including
the notes, which are incorporated by reference in this proxy statement
and included in the annual report on Form 10-KSB and the quarterly
report on Form 10-QSB attached as Appendix C to this proxy statement.

AS OF AND FOR THE
SIX MONTHS ENDED
MARCH 31, AS OF AND FOR THE YEAR ENDED SEPTEMBER 30,
------------------ -------------------------------------------
2000 1999 1999 1998 1997 1996 1995
----- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
SELECTED FINANCIAL CONDITION DATA:
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets $49,060 $47,787 $48,920 $46 423 $48,534 $50,016 $44,620
Cash and due from banks 1,444 1,936 871 1,542 2,675 4,766 10,906
Investments 16,014 15,766 17,334 17,146 16,987 16,496 13,197
Loans, net 29,890 28,553 28,920 26,111 27,134 26,931 19,277
Deposits 38,581 37,178 36,906 35,855 36,586 36,854 29,503
FHLB borrowings and other
borrowings 0 0 1,400 0 0 0 0

Total stockholder's equity 10,293 10,233 10,278 10,129 11,652 12,784 5,575
SELECTED OPERATING DATA:
Interest income 1,692 1,622 3,253 3,304 3,253 2,893 2,449
Interest expense 818 797 1,535 1,638 1,642 1,301 1,203
Net interest income before
provision for loan losses 874 825 1,718 1,666 1,611 1,592 1,246
Provision for loan losses 17 36 72 63 90 64 80

Net interest income after
provision for loan losses 857 789 1,646 1,603 1,521 1,528 1,166
Non-interest income 68 64 132 134 154 61 72
Non-interest expense 765 670 1,347 1,273 1,319 1,148 740
Earnings before income taxes 160 183 431 464 356 441 498
Income taxes 21 54 132 119 111 206 181
Net income 139 129 299 345 245 235 317

PER SHARE DATA:
Book value per share 14.06 13.97 14.04 13.82 12.91 14.17 N/A
Basic earnings per share 0.19 0.18 0.42 0.43 0.28 0.25 N/A
Diluted earnings per share 0.19 0.18 0.41 0.42 0.27 0.25 N/A
Cash dividends per share 0.00 0.00 0.00 0.00 0.00 0.00 N/A

Return on assets 0.56% 0.54% 0.62% 0.73% 0.51% 0.55% 0.92%
Return on equity 2.70 2.53 2.93 3.24 2.05 1.87 5.81
Interest rate spread during the
period <2> 3.16 3.07 2.84 2.67 2.45 2.61 3.10
Net interest margin during the
period <3> 3.77 3.69 3.76 3.74 3.56 3.85 3.72
Non-interest expense to assets <4> 3.06 2.80 2.79 2.68 2.75 2.70 2.14
Non-interest income to assets 0.27 0.27 0.27 0.28 0.32 0.14 0.21

Interest-earning assets to
interest-bearing liabilities 117.34 117.36 127.57 128.88 130.44 139.54 117.32

ASSET QUALITY RATIOS:
Nonperforming assets to
total assets 0.25% 0.79% 0.42% 0.88% 0.85% 0.50% 0.81%
Allowance for loan losses to
nonperforming loans 181.82 51.85 108.29 41.71 42.86 46.43 31.30
Net charge-offs to average gross
loans 0.06 0.04 0.07 0.21 0.15 0.27 0.36

REGULATORY CAPITAL AND CAPITAL
RATIOS:

Tangible capital ratio 20.30 20.10 20.30 19.80 22.94 27.72 12.46
Core capital ratio 38.20 41.30 42.90 45.30 50.40 56.39 35.16
Risk-based capital ratio 39.10 42.10 43.90 46.20 51.17 56.92 35.49
Average equity to average assets 20.54 21.30 21.18 22.35 24.90 29.60 15.78
Equity to assets at end of period 20.98 21.41 21.01 21.82 24.01 25.56 12.49
_______________________

<F1> With the exception of end of the period ratios, all ratios are based on average month-end balances during the
respective months.

<F2> Interest rate spread represents the difference between the weighted average yield on interest-earning assets
and the weighted average cost of interest-bearing liabilities.

<F3> Net interest margin represents net interest income as a percentage of interest-earning assets.

<F4> The 1996 ratio includes the effect of the SAIF special assessment.

</TABLE>

THE MEETING

PLACE, TIME, DATE AND RECORD DATE

A special meeting of the stockholders of CSB will be held on July
14, 2000, at 801 12th Street, Carlyle, Illinois, at 10:00 a.m., local
time. This proxy statement is being sent to stockholders and
accompanies a form of proxy which CSB is soliciting for use at the
meeting and at any and all adjournments or postponements of the
meeting.

CSB has fixed the close of business on June 8, 2000 as the record
date for determining holders of common stock who will be entitled to
notice of, and to vote at, the meeting. Only holders of record of
shares of common stock at the close of business on the record date are
entitled to notice of, and to vote at, the meeting. As of the record
date, there were outstanding and entitled to be voted 732,299 shares
of common stock.

MATTERS TO BE CONSIDERED

At the meeting, stockholders will vote on the approval and
adoption of the merger agreement, under which CSB Acquisition will
merge with and into CSB and each share of CSB common stock will be
converted into the right to receive $16.00 in cash, which may be
reduced, upon the consummation of the merger. See "THE MERGER-MERGER
CONSIDERATION" (Page 14). Stockholders will also consider and vote
upon other matters as may properly be brought before the meeting. As
of the date of this proxy statement, CSB knows of no business that
will be presented for consideration at the meeting other than the
matters described in this proxy statement.

VOTE REQUIRED

The affirmative vote of the holders of a majority of the shares
of CSB common stock is required for approval and adoption of the
merger agreement. ABSTENTIONS AND BROKER NON-VOTES WILL HAVE THE SAME
EFFECT AS VOTES AGAINST THE PROPOSAL TO APPROVE AND ADOPT THE MERGER
AGREEMENT. Brokers holding shares of record for customers generally
are not entitled to vote on particular matters unless they receive
voting instructions from their customers. "Broker non-votes" means
the votes that could have been cast on the merger agreement by brokers
with respect to uninstructed shares if the brokers had received their
customers' instructions.

Each stockholder on the record date will be entitled to cast one
vote per share on the merger agreement at the meeting. This vote may
be exercised in person or by properly executed proxy. The certificate
of incorporation of CSB provides that for a period of five years
following the effective date of the conversion of Centralia from
mutual to stock form, no person shall indirectly or directly acquire
beneficial ownership of more than 10 percent of any class of equity
security of CSB. The certificate of incorporation further provides

that, where any person directly or indirectly acquires beneficial
ownership of more than 10 percent of any class of equity security of
CSB during this five-year period, the securities beneficially owned in
excess of 10 percent shall not be counted as entitled to vote, shall
not be voted by any person or counted as voting shares in connection
with any matter submitted to the stockholders for a vote and shall not
be counted as outstanding for purposes of determining a quorum or the
affirmative vote necessary to approve any matter submitted to the
stockholders for a vote. Based upon amended Schedule 13G filed with
the Securities and Exchange Commission and dated February 11, 2000 by
Wellington Management Company, LLP and amended Schedule 13G filed with
the SEC and dated February 15, 2000 by First Financial Fund, Inc. and
other information available to CSB, CSB is aware of only First
Financial Fund, via Wellington Management, beneficially owning more
than 10 percent of CSB common stock. See "-SECURITY OWNERSHIP" (Page
11).

The presence, in person or represented by properly executed
proxy, of the holders of a majority of the shares of common stock
entitled to vote at the meeting is necessary to constitute a quorum.
In the absence of a quorum, it is expected that the meeting will be
adjourned or postponed by the stockholders entitled to vote at the
meeting present in person or represented by proxy to solicit
additional proxies. Abstentions and broker non-votes will be treated
as shares present at the meeting for purposes of determining the
presence of a quorum.

Approval of the merger agreement and the merger by the
stockholders of CSB is a condition to, and required for, consummation
of the merger. See "THE MERGER AGREEMENT-CONDITIONS TO THE MERGER"
(Page 28).

PROXIES

Shares of common stock represented by properly executed proxies
received before or at the meeting will, unless these proxies have been
revoked, be voted at the meeting and any adjournments or postponements
of the meeting, according to the instructions indicated in the
proxies. IF NO INSTRUCTIONS ARE INDICATED ON A PROPERLY EXECUTED
PROXY, THE SHARES WILL BE VOTED "FOR" THE MERGER AGREEMENT.

Any proxy given relating to this solicitation or otherwise may be
revoked by the person giving it at any time before it is voted either:

* by delivering to K. Gary Reynolds, President, at CSB
Financial Group, Inc., 200 South Poplar, Centralia, Illinois
62801, on or before the taking of the vote at the meeting, a
written notice of revocation bearing a later date than the
date of the proxy or a later dated proxy relating to the
same shares, or

* by attending the meeting and voting in person.

Attendance at the meeting will not in itself constitute the revocation
of a proxy.

If any other matters are properly presented at the meeting for
consideration, the persons named in the proxy or acting under the
proxy will have discretion to vote on these matters according to their
best judgment. If a proposal to adjourn the meeting is properly
presented, however, the persons named in the enclosed form of proxy
will not have discretion to vote in favor of the adjournment proposal
any shares which have been voted against the approval and adoption of
the merger agreement. As of the date of this proxy statement, CSB
knows of no other matters to be presented at the meeting.

In addition to solicitation by mail, directors, officers and
employees of CSB, who will not be specifically compensated for these
services, may solicit proxies from the stockholders of CSB, personally
or by telephone, telegram or other forms of communication. Brokerage
houses, nominees, fiduciaries and other custodians will be requested
to forward soliciting materials to beneficial owners and will be
reimbursed for their reasonable expenses incurred in sending proxy
material to beneficial owners. Registrar and Transfer Company, CSB's
transfer agent, will perform some of these functions. CSB will bear
its own expenses in connection with the solicitation of proxies for
the meeting.

Wesley N. Breeze, A. John Byrne and W. Harold Monken serve as
trustees under the Centralia ESOP, which is the record owner of all
shares of common stock held by participants in this ESOP. The trustee
will vote the shares allocated to the account of each participant in
this ESOP according to the directions received from the participant.
To obtain these voting directions, the trustees will forward this
proxy statement and a proxy to each participant in this ESOP. This
proxy must be executed and returned if the shares held under this ESOP
are to be voted. Unallocated shares of common stock held in the
Centralia ESOP or allocated shares for which no voting instructions
are received in a timely manner will be voted by the trustees in the
same proportion as allocated shares voted by participants, unless the
trustee is instructed otherwise by the benefits committee or unless
inconsistent with the trustee's fiduciary responsibility. Because the
Centralia ESOP participants are not the record owners of the related
shares, these shares may not be voted in person by participants in
this ESOP at the meeting.

Holders of common stock are requested to complete, date and sign
the accompanying proxy and return it promptly in the enclosed
postage-paid envelope.

SECURITY OWNERSHIP

As of June 8, 2000, directors and executive officers of CSB held
in the aggregate and were entitled to vote 164,039 shares, or
approximately 22.4 percent, of the common stock. Each of the
directors and executive officers of CSB has entered into a support

agreement with Midland which provides for each director and executive
officer to vote the shares of common stock which are beneficially
owned or over which each person has voting power or control, directly
or indirectly, including any shares acquired after the date of the
given support agreement, for approval and adoption of the merger
agreement.

The following table sets forth, as of March 31, 2000, information
regarding share ownership of:

* those persons or entities known by CSB to beneficially own
more than five percent of the outstanding shares of the
common stock,

* each director of CSB,

* the president and chief executive officer of CSB, who is
also a director, and

* all directors and executive officers of CSB as a group.
<TABLE>
<CAPTION>

SHARES OF
COMMON STOCK
BENEFICIALLY OWNED AT PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER MARCH 31, 200 <1> COMMON STOCK
------------------------------------- --------------------- -------------
<S> <C> <C>
First Financial Fund, Inc. . . . . . . . . . . . . . 74,600 <2> 10.2%
Gateway Center Three
100 Mulberry Street, 9th Floor
Newark, New Jersey 07102

Wellington Management Company, LLP . . . . . . . . . 74,600 <3> 10.2%
75 State Street
Boston, Massachusetts 02109

Wesley N. Breeze . . . . . . . . . . . . . . . . . . 8,827 <4> 1.2% <10>
A. John Byrne . . . . . . . . . . . . . . . . . . . . 21,105 <5> 2.9% <10>
Michael Donnewald . . . . . . . . . . . . . . . . . . 43,397 <6> 5.9% <10>
Larry M. Irvin . . . . . . . . . . . . . . . . . . . 17,797 <7> 2.4% <10>
W. Harold Monken . . . . . . . . . . . . . . . . . . 29,347 <8> 4.0% <10>
K. Gary Reynolds . . . . . . . . . . . . . . . . . . 29,691 <9> 4.1% <10>

All directors and executive officers as a group (8 persons) . . . . 164,039 22.4% <11>

</TABLE>
___________

<F1> Unless otherwise indicated, the nature of beneficial ownership
for shares shown in this column is sole voting and investment
power.
<F2> Based on Amended Schedule 13G dated February 15, 2000. All
74,600 shares are beneficially owned with sole voting and
shared investment power. These are the same 74,600 shares
reported as beneficially owned by Wellington Management
Company, LLP.
<F3> Based on Amended Schedule 13G dated February 11, 2000. All
74,600 shares are beneficially owned with no voting and shared

investment power. These are the same 74,600 shares reported as
beneficially owned by First Financial Fund, Inc.

<F4> Of the 8,827 shares reported as beneficially owned by Wesley N.
Breeze, 3,908 are held in joint tenancy with Robyn D. Breeze,
his wife, and 572 are held by Robert W. Baird & Co., Inc. in
trust for the benefit of Wesley N. Breeze and Robyn D. Breeze.
Also includes options to purchase 3,105 shares of common stock
under CSB's 1995 stock option and incentive plan.

<F5> Of the 21,105 shares reported as beneficially owned by A. John
Byrne, 1,000 are held by Robert W. Baird & Co., Inc. in trust
for the benefit of Catherine S. Byrne, his wife, 12,500 are
held by the Dwight P. Friedrich Trust for which Mr. Byrne acts
as trustee with shared voting and investment power with respect
to the shares and 2,000 are held by the Dwight P. Friedrich
Family Trust for which Mr. Byrne acts as trustee with shared
voting and investment power with respect to the shares. Also
includes options to purchase 3,105 shares of common stock under
CSB's 1995 stock option and incentive plan.

<F6> Includes options to purchase 3,105 shares of common stock under
CSB's 1995 stock option and incentive plan.

<F7> Of the 17,797 shares reported as beneficially owned by Larry M.
Irvin, 1,250 are held by Matthew Irvin, his son. Also includes
options to purchase 3,105 shares of common stock under CSB's
1995 stock option and incentive plan.

<F8> Of the 29,347 shares reported as beneficially owned by W.
Harold Monken, 14,503 are held in joint tenancy with Jan
Monken, his wife, and 5,245 are held by Robert W. Baird & Co.,
Inc. in trust for the benefit of Jan Monken. Also includes
options to purchase 3,105 shares of common stock under CSB's
1995 stock option and incentive plan.

<F9> Of the 29,691 shares reported as beneficially owned by K. Gary
Reynolds, 313 are held in joint tenancy by Jeanette Reynolds,
his wife, and Gregory Reynolds, his son, and 313 are held by
Jeanette Reynolds as custodian for Kristen Reynolds, his
daughter. Also includes options to purchase 15,525 shares of
common stock under CSB's 1995 stock option and incentive plan.

<F10> Percentage is calculated on a partially diluted basis, assuming
only the exercise of stock options by the individual which are
exercisable within 60 days.

<F11> Percentage is calculated on a fully diluted basis, assuming the
exercise of all stock options which are exercisable within 60
days.

THE MERGER

The information in this proxy statement concerning the terms of
the merger is qualified in its entirety by the full text of the merger
agreement, which, excluding the CSB disclosure schedule and exhibits,
is attached as Appendix A and incorporated by reference, and the other
information contained elsewhere in this proxy statement, including the
appendices and the documents incorporated by reference. All
stockholders are urged to read carefully this entire proxy statement,
including the appendices and any document incorporated by reference.

GENERAL

Under the merger agreement, CSB Acquisition will be merged with
and into CSB, with CSB being the surviving corporation. After the
conditions to consummation of the merger described below have been
satisfied or waived, and unless the merger agreement has been
terminated as provided below, a certificate of merger will be filed
with the Delaware Secretary of State regarding the merger. The
certificate of merger to be filed with the Delaware Secretary of State
will specify the effective date and the effective time of the merger.
See "-EFFECTIVE TIME; EFFECTIVE DATE" (Page 21) and "THE MERGER
AGREEMENT-CONDITIONS TO THE MERGER" (Page 28) and "-WAIVER AND
AMENDMENT; TERMINATION" (Page 29).

Upon consummation of the merger, the CSB stockholders will be
entitled to receive $16.00 in cash per share, which may be reduced, in
consideration for their common stock and will no longer be
stockholders of CSB. See "-MERGER CONSIDERATION" below. As a
consequence of the merger, CSB will become a wholly owned subsidiary
of Midland.

MERGER CONSIDERATION

Under the merger agreement, each share of common stock issued and
outstanding immediately before the merger, EXCEPT shares:

* held in the treasury of CSB,

* for which CSB stockholders have validly demanded and
perfected appraisal rights under Section 262 of the Delaware
General Corporation Law,

will be converted into the right to receive $16.00 in cash, which may
be reduced, at the effective time of the merger. As of the effective
time, each share of CSB common stock relating to a plan share award
under the CSB management recognition plan, regardless of whether

vested, will be treated as a fully vested, issued and outstanding
share of CSB common stock. Also, as of the effective time, each
outstanding and unexercised CSB stock option, regardless of whether
exercisable under a CSB stock option plan, will be converted into the
right to receive $16.00 in cash, which may be reduced, less the
exercise price of the stock option.

The total merger consideration will be reduced, on a dollar-for-
dollar basis, to the extent that the consolidated stockholders' equity
of CSB as of the effective date, is less than $10,176,000. See "-
EFFECTIVE TIME; EFFECTIVE DATE" (Page 21).

The reduction to the merger consideration will be determined as
follows. CSB will prepare a consolidated balance sheet, according to
generally accepted accounting principles, consistently applied, as of
the fifteenth day immediately preceding the effective date which
specifies the CSB consolidated stockholders' equity. This balance
sheet will reflect all of the following transaction costs and
expenses, regardless of whether required by GAAP to be recorded,
incurred or to be incurred, as reasonably estimated by CSB, by CSB as
a result of the merger or other transactions contemplated by the
merger agreement, including:

* attorney, accountant, investment banker, advisor and other
professional advisor or service provider fees and expenses,

* a $50,000 reserve established regarding that class action
lawsuit filed by a CSB stockholder in the Delaware Court of
Chancery in New Castle County, regardless of whether
required by GAAP, reduced, on a dollar-for-dollar basis, but
not less than zero, by any specific reserve otherwise
established by CSB for this stockholder litigation required
by GAAP, and

* the cost of continued coverage under CSB's current policy of
directors' and officers' liability insurance in amount and
scope at least as favorable as CSB's existing coverage to be
effective for five years following the effective time to the
extent of $17,880,

reduced by any applicable insurance coverage, evidenced by the
unconditional acceptance of coverage by the insurance carrier. See
"THE MERGER AGREEMENT-INTERESTS OF CERTAIN PERSONS IN THE MERGER"
(Page 32).

However, if the stockholder litigation is settled before the
closing date, then the settlement amount will be deemed a transaction
cost instead of the litigation reserve, reduced by any applicable
insurance coverage.

On June 12, 2000, CSB's counsel in the stockholder litigation
confirmed in correspondence to plaintiff's counsel the agreement to

settle their attorney's fee claim in exchange for a payment of
$65,000.

The following will not be deemed to be transaction costs and will
be disregarded for purposes of determining CSB's consolidated
stockholders' equity for the foregoing consolidated balance sheet:

* any addition to CSB's loan loss reserve or charge to any CSB
loan request by Midland after January 26, 2000 for
consistency with Midland's policy, and

* any cost of the continued coverage under CSB's directors'
and officers' liability insurance as described above in
excess of $17,880.

If Midland objects to this balance sheet, Midland must notify CSB
in writing of each adjustment item, specifying the amount of, and
describing in reasonable detail the basis for, the adjustment, no
later than five business days after Midland's receipt of the balance
sheet. This balance sheet will be final, binding and conclusive on
the parties if Midland does not provide CSB with written notification
of objection.

If a proposed adjustment is in dispute, Midland and CSB will
attempt to reconcile their differences and any resolution by them will
be final, binding and conclusive on the parties. If the parties are
unable to resolve the dispute(s) within five days after Midland
delivers written notice of the dispute(s), the parties may submit the
items in dispute for resolution to an independent accounting firm of
national reputation mutually appointed by Midland and CSB. The
independent accounting firm will resolve any dispute by sole reference
to CSB's historic practice of maintaining its books and records,
taking into account the transaction costs. The independent accounting
firm will determine and report in writing to the parties on the
disputed items within ten days after submission, which report will be
final, binding and conclusive on the parties. Midland and CSB will
share equally the fees and charges of the independent accounting firm.

BACKGROUND OF AND REASONS FOR THE MERGER

BACKGROUND OF THE MERGER. In recent years, the financial
institution industry has undergone substantial and rapid change
characterized by increasing consolidation, intensifying competition
and acquisition growth of many domestic banking organizations. CSB's
executive officers and directors have sought to remain apprised of
trends and issues in the financial services industry.

During the second and third quarters of 1999, CSB, together with
Keefe, evaluated its business plan. CSB and Keefe discussed:

* the competition at the retail franchise level and the
potential for growth in this business through acquisition
opportunities;

* the liquidity of CSB's common stock and share repurchase
programs as a possible means of enhancing stockholder value;
and

* the current merger market, the relative pricing and
potential opportunities that might be available for CSB.

CSB and Keefe analyzed these issues in light of CSB's goal to continue
to increase stockholder value. As a result of this review, CSB's
board decided to explore a strategic affiliation with another
financial institution.

In July, 1999, CSB engaged Keefe to advise and assist CSB
regarding strategic alternatives to enhance stockholder value,
including a possible strategic alliance. See "--OPINION OF FINANCIAL
ADVISOR" (Page 18). Keefe worked with CSB to prepare a confidential
investor profile containing financial and operating information about
CSB and Centralia. In August, 1999, Keefe, on behalf of CSB, began a
confidential inquiry, contacting 26 potential candidates. Twelve
candidates executed confidentiality agreements, including Midland, and
received the confidential investor profile. In September, 1999, three
financial institutions submitted preliminary non-binding indications
of interest to acquire CSB. Upon receipt of the preliminary
indications of interest, Keefe reviewed with CSB's board of directors
the pricing and terms of each proposal. After discussion with the
CSB board, it was determined to go back to each party submitting a
proposal to explore the possibility for a stronger offer. The
potential acquirors were given access to additional information about
and the management of CSB to answer questions about the operations of
CSB and to provide additional information to revise their proposal.
From this process, two revised proposals were received in October,
1999. CSB determined that the Midland proposal, including the
consideration to be paid, was acceptable and further discussions
commenced immediately.

On October 28, 1999, Barrett Rochman, a stockholder of CSB, filed
a preliminary proxy statement with the SEC containing only draft
correspondence to CSB stockholders. In this letter, Mr. Rochman
criticized CSB's financial performance and demanded that CSB analyze
and communicate with its stockholders about third party proposals to
acquire CSB.

On November 12, 1999, Mr. Rochman filed a definitive proxy
statement with the SEC containing a definitive version of the above
correspondence, which stated he was considering engaging in a proxy
solicitation regarding the annual stockholders meeting in January,
2000. In the proxy solicitation, Mr. Rochman would oppose CSB's slate
of directors and would nominate his own slate of directors as well as
make a proposal for CSB stockholders to consider. He stated that he
hoped CSB's board of directors would meet with him to resolve his
concerns and avoid a possible proxy contest. Simultaneously with this
filing, Mr. Rochman distributed this correspondence to CSB
stockholders. On November 16, 1999, Mr. Rochman filed another

preliminary proxy statement with the SEC. This preliminary proxy
statement described Mr. Rochman's solicitation of proxies to vote in
favor of the election of him and Robert Buffington, another CSB
stockholder, to the CSB board of directors and his stockholder
proposal recommending that the CSB board engage a financial advisor to
make recommendations about improving CSB's earnings and enhancing
stockholder value and to prepare a report of these recommendations for
distribution to CSB's stockholders within six months of the 2000
annual stockholders meeting.

On November 30, 1999, Mr. Rochman gave written notice under CSB's
certificate of incorporation and bylaws to CSB of the foregoing
director nomination and stockholder proposal, including a copy of the
aforementioned preliminary proxy statement.

On December 3, 1999, CSB and Midland jointly announced that they
had signed a letter of intent under which Midland had agreed in
principle to purchase all issued and outstanding shares of CSB common
stock for $16.00 in cash per share. The proposed acquisition was
conditioned upon the negotiation and execution of a definitive
acquisition agreement and other conditions.

On December 17, 1999, CSB filed with the SEC and began to
distribute to its stockholders its definitive proxy statement for the
2000 annual stockholders meeting.

During December, 1999 and January, 2000, CSB and its counsel and
Midland and its counsel conducted negotiations over the terms of the
merger agreement. In addition, CSB provided additional documents
requested by Midland.

On January 14, 2000, CSB held its annual stockholders meeting, at
which CSB's two director nominees were duly elected.

A board meeting was held on January 24, 2000. Following a review
and discussion of the proposed terms of the penultimate draft of the
merger agreement, consideration of the penultimate draft of the
fairness opinion of Keefe to be dated the date of the merger agreement
and numerous other relevant factors, the board, by a unanimous vote of
all directors, approved and adopted the penultimate draft of the
merger agreement, subject to revisions proposed by CSB's counsel to
Midland's counsel. The board also authorized and directed that the
merger agreement be submitted to a vote of the stockholders. On
January 26, 2000, Keefe delivered its written opinion to CSB that, as
of that date, the consideration to be received by the CSB stockholders
in the merger under the terms of the merger agreement is fair, from a
financial point of view, to them. The parties executed, and jointly
announced the execution of, the merger agreement on January 26, 2000.

THE BOARD'S REASONS FOR THE MERGER. After careful study and
evaluation, the board has unanimously approved the merger agreement
and has determined that the merger is advisable and in the best
interests of CSB and its stockholders. The board believes that the

merger will enable stockholders to realize significant value on their
investment.

In reaching its determination that the merger is advisable and in
the best interests of CSB and its stockholders, the board carefully
considered a variety of factors with the assistance of its legal and
financial advisors, including the following:

* Based upon the financial terms of other recent business
combinations in the financial institution industry and
information concerning the business, financial condition,
results of operations and prospects of CSB, the board
solicited an opinion from Keefe regarding the fairness of
the consideration to be received by the CSB stockholders,
from a financial point of view, to them. Based upon the
opinion of Keefe (see "-OPINION OF FINANCIAL ADVISOR" (Page
18)) and the likelihood that the proposed transaction would
be consummated, the board determined that the merger was the
most preferable proposal available to CSB.

* The prices and premiums paid in comparable acquisition
transactions involving other financial institutions of which
the board was aware, based, among other things, on
information supplied by Keefe. The board noted that the
price offered by Midland compared favorably with similar
transactions involving other financial institutions.

* Midland represented and warranted in the merger agreement
its ability to pay the merger consideration.

* The current and prospective environments in which CSB
operates, including national and local economic conditions,
the current regulatory environment and the trend toward
consolidation in the financial institution industry
generally were also factors in the board's decision. The
increases in competition, together with increased bank
regulatory reporting and other requirements, have made it
more difficult for independent banks to compete with the
banking affiliates of much larger institutions regarding the
range of products and services offered and the costs at
which the products and services can be offered.

* The merger consideration to be paid to the stockholders in
relation to the market value, book value and earnings per
share on CSB's common stock.

* The anticipated impact of the merger on depositors,
employees, customers and communities served by CSB.

While each director individually evaluated each of these as well
as other factors, the board collectively did not assign any specific
or relative weights to the factors considered and did not make any
determination regarding any individual factor. The board collectively

made its determination about the merger based on the unanimous
conclusion reached by the directors that the merger, in light of the
factors that each director, individually, considered as appropriate,
is advisable and in the best interests of CSB and its stockholders.

In approving the merger, the board was aware that the merger
agreement contains termination provisions regarding competing
transactions and other events and that CSB would be obligated to pay a
$500,000 termination fee relating to specified termination events.
See "THE MERGER AGREEMENT-WAIVER AND AMENDMENT; TERMINATION" (Page
29). However, the board was also aware that these termination
provisions and the termination fee obligation were bargained for as
inducements for Midland to enter into the merger agreement.

RECOMMENDATION OF THE BOARD OF DIRECTORS

The board has unanimously approved and adopted the merger
agreement and the transactions contemplated thereby and has determined
that the merger is advisable and in the best interests of CSB and its
stockholders. THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF
CSB VOTE FOR THE PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT.

OPINION OF FINANCIAL ADVISOR

On July 19, 1999, CSB retained Keefe to evaluate CSB's strategic
alternatives as part of a stockholder enhancement program and to
review and evaluate any specific proposals for a strategic alliance
that might be received regarding an alliance with CSB. Keefe, as part
of its investment banking business, is regularly engaged in the
evaluation of businesses and securities in connection with mergers and
acquisitions, negotiated underwritings and distributions of listed and
unlisted securities. Keefe is familiar with the market for common
stocks of publicly traded banks, thrifts and bank holding companies.
CSB's board selected Keefe on the basis of the firm's reputation and
its experience and expertise in transactions similar to the merger.

Under the engagement, Keefe was asked to render a fairness
opinion. Keefe delivered its fairness opinion to the CSB board that,
as of January 26, 2000, the date of the merger agreement, and
confirmed and delivered its updated fairness opinion to the CSB board
that, as of the date of this proxy statement, the consideration to be
received by the CSB stockholders is fair, from a financial point of
view, to them. No limitations were imposed by CSB's board upon Keefe
concerning investigations made or procedures followed by it in
rendering its opinion. Keefe has consented to the inclusion in this
proxy statement of the summary of its opinion to the CSB board and to
the reference to the entire opinion contained in Appendix B.

THE FULL TEXT OF THE FAIRNESS OPINION OF KEEFE, WHICH IS
CONTAINED IN APPENDIX B TO THIS PROXY STATEMENT, INCLUDES THE
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW
UNDERTAKEN BY KEEFE, AND SHOULD BE READ IN ITS ENTIRETY. THE SUMMARY

OF THE FAIRNESS OPINION OF KEEFE IN THIS PROXY STATEMENT IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO THE OPINION.

In rendering its opinion, Keefe:

* reviewed the merger agreement;

* reviewed:

- CSB's annual reports and proxy statements for the past
three fiscal years;

- CSB's consolidated audited financial statements for the
fiscal year ended September 30, 1999;

- Midland's annual report for the year ended December 31,
1998;

- Midland's unaudited financial statements for the nine
months ended September 30, 1999; and

- other information considered relevant, including
internal reports, like board reports, asset-liability
reports, asset-quality reports and loan files;

* discussed with senior management and the boards of directors
of CSB and Centralia, the current position and prospective
outlook for CSB;

* considered historical quotations, levels of activity and
prices of recorded transactions in CSB's common stock;

* reviewed financial and stock market data of other thrifts in
a comparable asset range and asset composition as CSB;

* reviewed recent business combinations with thrifts as the
acquired company, which Keefe deemed comparable to the
merger in whole or in part; and

* performed other analyses that Keefe considered appropriate.

In rendering its opinion, Keefe assumed and relied upon the
accuracy and completeness of the financial information provided to it
by CSB and Midland. In its review, with the consent of the CSB board,
Keefe did not undertake any independent verification of the assets or
liabilities of CSB or Midland, and potential or contingent liabilities
of CSB or Midland.

In rendering its opinion, Keefe analyzed the consideration
offered by Midland in relation to the following:

* the results of the marketing efforts to solicit a potential
acquirer for CSB as described below; and

* comparable merger and acquisition transactions of pending
thrift deals, comparing transaction consideration relative
to tangible book value, last 12 months earnings, total
assets, total deposits and premium to core deposits. Keefe
analyzed this data together with the composition of CSB's
earnings. Pending thrift deals consist of all thrift
acquisitions, announced but not yet closed, as of November
10, 1999.

The information in the following table summarizes the comparable
group results analyzed by Keefe regarding the merger. This summary
does not purport to be a complete description of the analysis
performed by Keefe and should not be construed independently of the
other information considered by Keefe in rendering its opinion.
Selecting portions of Keefe's analysis or isolating particular aspects
of the comparable transactions without considering all analysis and
factors could create an incomplete or potentially misleading view of
the evaluation process.

<TABLE>
<CAPTION>
PRICE TO CORE DEPOSIT
------------------------------------------------------------- ------------
NUMBER TANG. BOOK<1> LTM EPS<2> DEPOSITS ASSETS PREMIUM
( %) (X) ( %) ( %) ( %)
<S> <C> <C> <C> <C> <C> <C>
Consideration to
CSB: $16.00: 122.0% 40.1 24.4% 31.2% 6.2%
Median of
Pending Deals: 36 171.7 24.3 20.0 26.6 12.2
Median of
Completed Deals: 57 169.0 23.7 18.3 25.2 10.9

</TABLE>
Particular analysis and discussion was given to the pending
thrift transactions that have been announced since the market for
financial institution equities began its market correction in August,
1998. The following information regarding the market movement was
taken into consideration in the fairness presentation:

% PRICE CHANGE % PRICE CHANGE
FOR 1999 FROM JULY 31, 1998
-------------- ------------------

KBW Index<a> (4.4)% (12.6)%
SNL Thrift Index<b> (20.3) (32.6)
CSB Stock Price 62.5 23.1

_________________________

<F1> Assumes CSB tangible book value of $13.56.

<F2> LTM: Last twelve months ending June 30, 1999 earnings per share
of $0.41.

<Fa> The KBW Index is an index of 24 large banking institutions
consolidated as an index that trades on the Philadelphia Options
Exchange. This index generally tracks the overall movement in
financial institution stocks.

<Fb> The SNL Thrift Index is an index that includes any exchange
traded thrift that is market weighted similar to that of the S&P
500 index.

Based on the above information, Keefe concluded that the above
analysis of the transaction with an implied deal price of $16.00,
which represents a 51 percent price premium over the $10-5/8 closing
price of CSB common stock on December 3, 1999, the trading date
preceding public announcement of the proposed merger, is fair from a
financial point of view to the stockholders of CSB.

In preparing its analysis, Keefe made numerous assumptions about
industry performance, business and economic conditions and other
matters, many of which are beyond the control of Keefe and CSB. The
analyses performed by Keefe are not necessarily indicative of actual
values or future results, which may be significantly more or less
favorable than suggested by those analyses and do not purport to be
appraisals or reflect the prices at which a business may be sold.

MARKETING PROCESS. Throughout the second and third quarter of
1999, CSB, together with Keefe, evaluated its business plan, including
its historical strategy of enhancing the earnings generated by the
retail franchise through the addition of wholesale leverage
opportunities. Discussions included:

* an analysis of competition at the retail franchise level and
the ability to grow this part of the business through
acquisition opportunities that meet CSB's asset mix and
geographic goals or additional new branch locations;

* the liquidity of CSB's common stock and potential to enhance
stockholder value through share repurchase programs; and

* the status of the current merger market, the relative
pricing and the opportunities that might be available for
CSB.

All of these issues were analyzed along with CSB's goal to continue to
increase stockholder value. Based on this review, CSB's board decided
to explore a strategic affiliation with another financial institution.

Keefe, working with CSB, prepared a confidential investor profile
containing financial and operating information about CSB and
Centralia. In August, 1999, Keefe, on behalf of CSB, began a
confidential inquiry and contacted 26 potential candidates. Twelve of
those candidates executed confidentiality agreements, including
Midland, and received the confidential investor profile. In
September, 1999, three financial institutions submitted preliminary
non-binding indications of interest to acquire CSB. Upon receipt of
the preliminary indications of interest, Keefe reviewed with CSB's
board the pricing and terms of each proposal. After discussion with

the CSB board, it was determined to go back to each party submitting a
proposal to explore the possibility for a stronger offer. The
potential acquirors were given access to additional information about
and the management of CSB during this time period to answer questions
about the operations of CSB and to provide additional information to
revise their proposal. From this process, two revised proposals were
received in October, 1999.

CSB determined that the Midland proposal, including the
consideration to be paid, was acceptable and further discussions
commenced immediately. Due diligence and discussion about a
definitive acquisition agreement commenced immediately. After
completion of the due diligence and the negotiation of the merger
agreement, the pricing and terms initially proposed remained
substantially unchanged.

On January 24, 2000, the CSB board met with Keefe and CSB's legal
counsel. Before this meeting, a draft of the merger agreement and the
fairness presentation was distributed to CSB's board for their review.
At this meeting, CSB's legal counsel reviewed the terms of the merger
agreement and other relevant documents and the contemplated
transaction. Keefe discussed with CSB's board the financial terms of
the merger and provided updated market information regarding thrift
mergers and acquisitions. On January 26, 2000, the date of the merger
agreement, Keefe rendered its written fairness opinion to CSB's board
that, as of that date, the consideration to be received by CSB's
stockholders in the merger was fair to them from a financial point of
view.

Keefe confirmed and delivered its updated written opinion to
CSB's board as of the date of this proxy statement that the
consideration to be received by the stockholders of CSB in the merger
is fair from a financial point of view as of that date. A copy of
Keefe's updated opinion, which sets forth assumptions made, matters
considered and limitations on the reviews undertaken, is attached to
and incorporated by reference in this proxy statement as Appendix B.
Keefe has consented to the inclusion of this opinion and a summary of
the matters considered in forming its opinion in this proxy statement.

Under an engagement letter dated July 19, 1999, between CSB and
Keefe, for financial advisory services, CSB paid Keefe a fee of $7,500
upon the execution of the merger agreement and $20,000 upon delivery
of its fairness opinion. An additional fee equal to 1 percent of the
aggregate merger consideration received by CSB's stockholders up to
$100,000, less $27,500, will be payable to Keefe as of the closing of
the merger. CSB also agreed to reimburse Keefe for its out-of-pocket
expenses up to $5,000 and reasonable additional expenses incurred by
Keefe on behalf of CSB, with CSB's consent, and to indemnify Keefe and
its affiliates and the directors, officers, agents and employees of
the foregoing against particular liabilities.

MIDLAND'S FINANCIAL RESOURCES

In the merger agreement, Midland has represented and warranted
that it has the financial wherewithal, whether by using its internal
funds, external financing, or both to perform its obligations under
the merger agreement.

EFFECTIVE TIME; EFFECTIVE DATE

The certificate of merger to be filed with the Delaware Secretary
of State will specify the effective date and the effective time of the
merger. The effective date will occur on the date of which Midland
notifies CSB in writing and after the satisfaction or waiver of all
conditions to the merger, but not later than 60 days after this
satisfaction or waiver. See "THE MERGER AGREEMENT-CONDITIONS TO THE
MERGER" (Page 28). The closing of the merger will take place on the
effective date of the merger.

If it is not practicable to consummate the merger on the closing
date initially designated by Midland because of the time required to
resolve any dispute regarding any proposed adjustment to the
consolidated balance sheet, then the closing date will be postponed
until all disputes are resolved and will be rescheduled to a date
mutually agreed to by Midland and CSB, which will not be less than
three nor more than ten business days for resolution of the disputes.
See "-MERGER CONSIDERATION" (Page 14).

EXCHANGE OF CERTIFICATES BY CSB STOCKHOLDERS

Promptly after the effective time of the merger, Midland will
cause the paying agent, Effingham State Bank, to mail to each holder
of record of shares of CSB common stock a transmittal notice and
instructions for use in effecting the surrender of the CSB common
stock certificate(s) in exchange for the per share merger
consideration. At or before the effective time, Midland will
irrevocably deposit or cause to be irrevocably deposited with the
paying agent an amount of cash for payment of the per share merger
consideration payable to CSB stockholders. STOCKHOLDERS SHOULD NOT
SEND IN THEIR CERTIFICATES UNTIL THEY RECEIVE THE TRANSMITTAL
MATERIALS FROM THE PAYING AGENT.

Following the consummation of the merger, upon the proper
surrender by a stockholder to the paying agent of all necessary
transmittal materials and the certificate(s), the stockholder will be
entitled to receive a check for the per share merger consideration to
which the stockholder is entitled and the certificate(s) will be
cancelled.

After the effective time of the merger, there will be no
transfers on the stock transfer books of CSB of the shares of CSB
common stock which were issued and outstanding immediately before the
effective time.

Until properly surrendered, each outstanding certificate formerly
representing shares of common stock will be deemed to evidence solely
the right to receive the per share merger consideration to which the
stockholder is entitled under the merger agreement. If any
certificate evidencing the common stock has been lost, stolen or
destroyed, the stockholder must submit to the paying agent an
affidavit of lost, stolen or destroyed certificate and post a bond in
an amount as the paying agent may reasonably direct as indemnity
against claims that may be made against that certificate. The paying
agent will issue in exchange for the foregoing the applicable per
share merger consideration under the merger agreement.

Any portion of the per share merger consideration held by the
paying agent for payment to CSB's stockholders which remains unclaimed
for twelve months after the effective time of the merger will be paid
by the paying agent to CSB as the surviving corporation of the merger,
after which time any holder of certificate(s) who has not delivered
the certificate(s) to the paying agent will look only to CSB for
payment of the per share merger consideration payable for that
stockholder's shares of common stock, without interest.

DISSENTERS' APPRAISAL RIGHTS

Under the Delaware General Corporation Law, stockholders are
entitled to appraisal rights in connection with the merger. Any
holder of record of common stock that objects to the merger may elect
to have his or her shares of common stock appraised under the
procedures of the Delaware General Corporation Law and to be paid the
fair value of his or her shares. The fair value of the shares will
not include any value arising from the merger but may include a fair
rate of interest. It is possible that the fair value determined may be
more or less than the consideration to be received by holders of
common stock in the merger.

Any stockholder who is considering exercising his or her
appraisal rights is urged to review carefully the provisions of
Section 262 of the Delaware General Corporation Law, a copy of which
is attached to this proxy statement as Appendix D, particularly with
respect to the procedural steps required to perfect the right of
appraisal. The right of appraisal may be lost if the procedural
requirements of Section 262 are not followed exactly. The following
is a summary of the procedures relating to exercise of the right of
appraisal, which should be read together with the full text of
Section 262.

Under Section 262, CSB is required to notify each stockholder
entitled to appraisal rights at least 20 days before the meeting that
the appraisal rights are available. The notice should include a copy
of Section 262. This proxy statement constitutes this notice to the
stockholders of CSB.

A stockholder electing to exercise his or her appraisal rights
under Section 262 must deliver to CSB a written demand for appraisal

before the vote is taken at the meeting. The written demand must
identify the stockholder and state that the stockholder intends to
demand appraisal of his or her shares of common stock. A vote against
the approval and adoption of the merger agreement or an abstention
will not constitute a demand for appraisal. A stockholder electing to
make a demand for appraisal must do this by a separate written demand
to CSB. Demands should be mailed or delivered to CSB Financial Group,
Inc., 200 South Poplar, Centralia, Illinois 62801, Attention: K. Gary
Reynolds, President. Within ten days after the effective time of the
merger, CSB will notify each stockholder who has made a proper written
demand for appraisal and who has not voted for the approval and
adoption of the merger agreement that the merger has been completed.
A vote for the approval and adoption of the merger agreement will have
the effect of waiving all appraisal rights.

Within 120 days after the effective time of the merger, CSB or
any stockholder who has complied with the foregoing notice requirement
and the other requirements of Section 262 may file a petition in the
Delaware Court of Chancery demanding a determination of the fair value
of his or her shares of common stock. CSB has no obligation to file a
petition and does not currently intend to do this. As a result, any
dissenting stockholder who wishes to file a petition is advised to do
this on a timely basis. If a petition for appraisal is not filed
during the 120-day period, all appraisal rights relating to the common
stock will terminate. Any stockholder may withdraw a demand for
appraisal at any time within 60 days after the effective time of the
merger.

If a stockholder either withdraws his or her demand for appraisal
or has his or her appraisal rights terminated as described above, the
stockholder will only be entitled to receive the merger consideration
for his or her shares of common stock as provided in the merger
agreement.

Within 120 days after the effective time of the merger, any
stockholder who has complied with the above-described notice
requirements and the other requirements of Section 262 may request in
writing a list of the aggregate number of shares of common stock for
which demands for appraisal have been made and the aggregate number of
holders demanding appraisal rights.

If a petition is filed by a dissenting stockholder, CSB will
receive notice from the Delaware Court of Chancery of the filing.
Within 20 days after CSB receives this notice, CSB must file with the
office of the Register in Chancery in which the petition was filed a
list containing the names and addresses of all stockholders who have
demanded appraisal rights and the names of all stockholders who have
disagreements with CSB regarding the value of their shares of common
stock. If a petition is filed by CSB, the petition will be accompanied
by a similar list. If ordered by the Delaware Court of Chancery, the
Register in Chancery will give notice of the time and place of the
hearing by registered or certified mail to CSB and to each stockholder
shown on the list. The notice will also be given by publishing the

notice in a newspaper of general circulation published in Wilmington,
Delaware, or any other location the Delaware Court of Chancery may
determine, at least one week before the hearing. The forms of the
notices to be used will be approved by the Delaware Court of Chancery,
and all costs related to the distribution of the notices will be paid
by CSB.

After the Delaware Court of Chancery determines which of the
stockholders are entitled to an appraisal under Section 262, the
Delaware Court of Chancery will appraise the fair value of the shares
of the common stock. Following this determination of the fair value
of the shares, CSB will pay all dissenting stockholders the fair value
of their shares, together with interest, if any, upon surrender to CSB
of their certificates representing common stock. The costs of the
appraisal proceeding may be determined by the Delaware Court of
Chancery and charged to the parties as the Delaware Court of Chancery
deems equitable under the circumstances. Upon application of a
dissenting stockholder, the Delaware Court of Chancery may order all
or a portion of the expenses incurred by any dissenting stockholder in
connection with the appraisal proceeding, including reasonable
attorneys' fees and the fees and expenses of experts, to be charged
pro rata against the value of all of the shares entitled to an
appraisal.

After the effective time of the merger, no stockholder who has
demanded his or her appraisal rights as described above will be
entitled to vote his or her shares for any purpose or to receive
payment of dividends or other distributions on his or her common
stock, except permitted dividends or other permitted distributions
payable to stockholders of record at a date before the effective time
of the merger.

The preceding discussion is a summary of the provisions regarding
appraisal rights under the Delaware General Corporation Law and is
qualified in its entirety by the text of Section 262 of the Delaware
General Corporation Law, which is attached to this proxy statement as
Appendix D. CSB stockholders who are interested in perfecting
appraisal rights in connection with the merger should consult with
their legal counsel for advice as to the procedures required to be
followed.

The obligation of Midland to effect the merger is conditioned
upon the holders of not more than 10 percent of the shares of CSB
common stock validly demanding and perfecting appraisal rights. See
"THE MERGER AGREEMENT- CONDITIONS TO THE MERGER" (Page 28).

REGULATORY APPROVALS

The merger, which involves CSB and Midland, which are bank
holding companies, is conditioned upon the prior approval of the
Federal Reserve Board under the Bank Holding Company Act of 1956. On
March 22, 2000, Midland submitted an application for approval by the

Federal Reserve Board. Midland received the Federal Reserve Board's
approval on May 1, 2000.

In general, the Federal Reserve Board must consider the financial
and managerial resources and future prospects of the institutions
involved in the transaction and the convenience and needs of the
communities to be served. The Federal Reserve Board cannot approve the
merger if it would:

* result in a monopoly or be in furtherance of any combination
or conspiracy to monopolize or to attempt to monopolize the
business of banking in any part of the United States,

* lessen competition substantially or tend to create monopoly
in any section of the country, or

* be a restraint of trade in any other manner,

unless the Federal Reserve Board finds that the anti-competitive
effects of the merger are clearly outweighed in the public interest by
the probable effect of it meeting the convenience and needs of the
communities to be served. The Federal Reserve Board has the authority
to deny an application if it concludes that the combined organization
would have an inadequate capital position. Also, the Federal Reserve
Board must assess the records of the depository subsidiaries of
Midland and CSB under the Community Reinvestment Act of 1977, which
requires that the Federal Reserve Board analyze and consider when
evaluating an application each depository institution's record of
meeting the credit needs of its local communities, including low and
moderate income neighborhoods, consistent with safe and sound
operation.

In addition, a transaction involving a change of control of the
ownership of an Illinois savings bank, like the merger, requires the
approval of the Office of Banks and Real Estate for the State of
Illinois under the Illinois Savings Bank Act. On March 22, 2000,
Midland submitted an application for approval by the Bureau of
Residential Finance, Thrift Division of the Illinois Office of Banks
and Real Estate. On April 6, 2000, Midland received this approval.

In addition, Effingham and Centralia submitted an application to
the Federal Reserve Board requesting approval to merge Centralia with
and into Effingham under the Federal Deposit Insurance Act on May 2,
2000. Midland received the approval of the Federal Reserve Board on
June 6, 2000. Also, Effingham and Centralia submitted applications
for approval of this merger with the Commercial Banking Division and
the Thrift Division of the Illinois Office of Banks and Real Estate
under the Illinois Banking Act and the Illinois Savings Bank Act on
May 2, 2000. On May 19, 2000, the Thrift Division granted its
approval. It is anticipated that the Commercial Banking Division will
grant its approval before July 14, 2000. However, there can be no
assurance as to the timing of the approval of the Commercial Banking

Division or that the Commercial Banking Division will grant this
approval.

The consummation of the merger is conditioned upon the obtaining
of all regulatory approvals required for consummation of the merger
and all transactions contemplated by the merger agreement and the
expiration of all statutory waiting periods. There can be no assurance
that these conditions will be satisfied. See "THE MERGER AGREEMENT-
CONDITIONS TO THE MERGER" (Page 28).

THE MERGER AGREEMENT

REPRESENTATIONS AND WARRANTIES

The parties made representations and warranties to each other in
the merger agreement customary for this type of a transaction. It is
a condition of the closing that each party's representations and
warranties in the merger agreement be true and correct in all material
respects as of the closing, as though made on and as of the closing.
Except for CSB's representations and warranties regarding
capitalization and authority, the representations and warranties of
each party in the merger agreement will be deemed to be true and
correct in all material respects unless the failure(s) of the
representations and warranties to be true and correct, individually or
in the aggregate, represent a material adverse effect on the given
party. See "-CONDITIONS TO THE MERGER" (Page 28). As of the date of
this proxy statement, neither CSB nor Midland or CSB Acquisition has
any knowledge that this condition will not be satisfied.

BUSINESS PENDING THE MERGER AND OTHER COVENANTS

CSB. CSB has agreed to conduct its business according to
guidelines in the merger agreement.

CSB has agreed that, between the date of the merger agreement and
the effective time, unless the prior written consent of Midland is
given, CSB and, where applicable, a CSB subsidiary, will:

* not declare or pay any dividends on, or make other
distributions regarding, any shares of CSB capital stock,
other than dividends from wholly owned CSB subsidiaries to
CSB;

* not split, combine or reclassify any shares of its capital
stock;

* not repurchase, redeem or otherwise acquire any shares of
CSB's capital stock or any securities convertible into or
exercisable for any shares of the capital stock of CSB, with
particular exceptions;

* not issue, deliver or sell, authorize, or propose the
issuance, delivery or sale of, any shares of its capital

stock or any securities convertible into or exercisable for
or any rights, warrants or options to acquire these shares
or enter into an agreement regarding the foregoing, other
than the issuance of CSB common stock relating to the
exercise of outstanding CSB stock options as of the date of
the merger agreement, if permitted by the stock options and
the merger agreement;

* not amend its certificate of incorporation, bylaws or other
similar governing documents;

* not authorize or permit any of its officers, directors,
employees or agents to directly or indirectly initiate,
solicit, or entertain offers from, negotiate with or in any
manner encourage, discuss, accept or consider any proposal
of any party other than Midland relating to the acquisition
of CSB common stock or CSB and/or any CSB subsidiary, their
assets or business, in whole or in part, whether directly or
indirectly, through purchase, merger, consolidation, or
other type of competing transaction to achieve a similar
purpose, other than the sale of loans, securities and other
assets in the ordinary course, unless the CSB board of
directors determines in good faith that failure to take this
action will violate the board's obligations or duties to CSB
or its stockholders and that the proposal is a superior
competing transaction:

- CSB will immediately cease and cause to be terminated
any existing activities, discussions or negotiations
previously conducted with any third party;

- CSB will take all actions necessary or advisable to
inform its officers, directors, employees or agents of
the these obligations; and

- CSB will notify Midland immediately if any inquiries or
proposals concerning a potential competing transaction
are received by, any information is requested from, or
any negotiations or discussions are sought to be
initiated or continued with, CSB and CSB will promptly
inform Midland in writing of all the relevant details;

* not make any capital expenditures other than those made in
the ordinary course of business or which are necessary to
maintain existing assets in good repair and are no more than
$50,000 individually and $200,000 in the aggregate, except
for emergency repairs or replacements;

* not enter into any new line of business;

* not acquire or agree to acquire by merger, consolidation
with or purchase of a material equity interest in or a
material portion of the assets of, any business,

corporation, partnership, association, or other business
organization or division, or otherwise acquire any assets
that would be material to CSB, individually or in the
aggregate, other than in the case of Centralia concerning
foreclosures, settlements instead of foreclosure or troubled
loan or debt restructurings in the ordinary course of
business consistent with prudent banking practices;

* not take any action that is intended or may reasonably be
expected to result in any of its representations and
warranties in the merger agreement being or becoming untrue
in any material respect or in any of the conditions to the
merger not being satisfied or in violation of any provision
of the merger agreement, except as may be required by
applicable law;

* not change its methods of accounting in effect on September
30, 1999, unless required to by changes in GAAP or
regulatory accounting principles as concurred in by CSB's
independent auditors;

* not adopt, amend, renew or terminate any employee benefit
plan or any agreement, arrangement, plan or policy between
CSB or any CSB subsidiary and any current or former
directors, officers or employees, except as specifically
contemplated by the merger agreement or as required by
applicable law or to maintain tax qualification under the
Internal Revenue Code of 1986;

* not increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any
benefit not required by any employee benefit plan as in
effect as of the merger agreement date, except for normal
increases in the ordinary course of business consistent with
past practice or as required by applicable law or otherwise
contemplated by the merger agreement;

* not consummate or agree to the sale, lease, encumbrance,
assignment or disposal of any material portion of assets,
properties or other rights or agreements, except in the
ordinary course of business consistent with past practice;

* not incur any indebtedness for borrowed money, or otherwise
assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any other
individual, corporation or entity, except in the ordinary
course of business consistent with past practice;

* not file any application to relocate or terminate the
operations of any banking office of Centralia;

* not make or commit to make any material equity investment in
real estate or in any real estate development project, other

than in connection with foreclosures, settlements instead of
foreclosure or troubled loan or debt restructurings in the
ordinary course of business consistent with prudent banking
practices;

* not take any action which would cause the termination or
cancellation by the Federal Deposit Insurance Corporation of
insurance regarding Centralia's deposits;

* except for particular prime borrowers, not enter into, renew
or increase any loan or other extension of credit, or commit
to make any loan or other extension of credit to:

- any person or entity, or modify any of the material
provisions or renew or otherwise extend the maturity
date of any existing loan or other extension of credit
or commitment in an amount in excess of $150,000 or in
an amount which, when aggregated with all existing
loans, other extensions of credit or credit commitments
to that person or entity, would be in excess of
$500,000;

- any person or entity other than according to the
lending policies of Centralia as in effect on the
merger agreement date;

- without first consulting with Midland, any person or
entity if any of the loans or other extensions of
credit by Centralia to that person or entity are on
Centralia's "watch list" or similar internal report in
an amount in excess of $75,000, except for CSB or any
CSB subsidiary honoring any contractual obligation in
existence on the date of merger agreement; or

- any director or officer of CSB or any CSB subsidiary;

* not create, renew, amend or terminate or give notice of a
proposed renewal, amendment or termination of, any material
contract, agreement or lease for goods, services or office
space to which CSB or any CSB subsidiary is a party or by
which they or their respective properties are bound, other
than particular permitted activities in the merger
agreement; or

* not agree to do any of the above.

Also, CSB will:

* carry on its business and cause each CSB subsidiary to carry
on its business in the ordinary course consistent with past
practice; and

* use its reasonable best efforts to preserve the business
organization of CSB and each CSB subsidiary intact, keep
available the present services of employees of CSB and
Centralia and preserve the goodwill of the customers of and
others having business relationships with CSB and each CSB
subsidiary.

During the period from the date of the merger agreement to the
effective time, CSB will:

* confer on a regular and frequent basis, not less often than
monthly, with Midland and report the general status of the
ongoing operations of CSB and Centralia;

* promptly notify Midland of its receipt of any governmental
complaints or the initiation of any governmental
investigations or hearings or communications indicating that
the same may be contemplated or institution or threat of
significant litigation involving it or Centralia and will
continue to keep Midland fully informed of these events; and

* promptly following its filing with the SEC, deliver to
Midland copies of any quarterly or annual report on Form 10-
QSB or 10-KSB.

MIDLAND. Midland has agreed to use its reasonable best efforts
to preserve its business organization and that of its banking
subsidiary, keep available the present services of employees of
Midland and its banking subsidiary and preserve the goodwill of the
customers of and others having business relationships with Midland and
its banking subsidiary.

Except as otherwise provided or contemplated by the merger
agreement, between the merger agreement date and the effective time of
the merger, neither Midland nor CSB Acquisition will take any action
which:

* would adversely affect in any manner the ability of Midland
or CSB Acquisition to consummate the merger; or

* is intended or may reasonably be expected to result in any
of the representations or warranties of either Midland or
CSB Acquisition in the merger agreement being or becoming
untrue in any material respect, or any of the conditions to
the merger not being satisfied, or in violation of any
provision of the merger agreement, except in every case as
may be required by applicable law.

THE PARTIES. Each of CSB, Midland and CSB Acquisition will use
all reasonable efforts to take, or cause to be taken, all actions
necessary, proper or advisable to comply promptly with all legal
requirements and to obtain and comply with any consent, authorization,
order or approval of, or any exemption by, any governmental entity and

third party which is required to be obtained by CSB, Midland, CSB
Acquisition or any of their subsidiaries relating to the merger.

Each of Midland, CSB Acquisition and CSB will promptly advise any
other party of any change or event which it believes has caused or
constitutes, or is reasonably likely to cause or constitute, a
material breach of any of its representations, warranties or covenants
or is reasonably likely to cause any condition not to be satisfied.

AMENDMENT TO RIGHTS AGREEMENT. The rights agreement dated as of
June 13, 1997 between CSB and Registrar and Transfer Company was
amended by amendment no. 1, dated as of January 26, 2000, to provide
that none of Midland and its subsidiaries or affiliates will become an
"Acquiring Person" and that no "Stock Acquisition Date" or
"Distribution Date" as defined in this rights agreement will occur as
a result of the execution of the merger agreement or the support
agreements, or the consummation of the merger.

SUPPORT AGREEMENTS. Promptly after the execution of the merger
agreement, directors and executive officers of CSB each entered into a
support agreement with Midland which provides for each person to vote
the shares of common stock which are beneficially owned or over which
each person has voting power or control, directly or indirectly,
including any shares acquired after the given date of the support
agreement, for approval and adoption of the merger agreement.

CONDITIONS TO THE MERGER

The obligations of the parties to effect the merger are subject
to the satisfaction or waiver of conditions before or at the effective
time of the merger, including conditions that:

* the merger agreement and the merger will have received the
requisite approval by the CSB stockholders;

* all regulatory approvals required to consummate the merger
will have been obtained and all statutory waiting periods
will have expired; provided, however, that Midland will not
be obligated to effect the merger if, in its reasonable
opinion, any of the required regulatory approvals contains
or imposes any condition or requirement that would have a
material adverse effect on any party;

* no order, injunction, decree or other legal restraint issued
by any court or agency of competent jurisdiction preventing
the consummation of the merger will be in effect, and no
statute, rule, regulation, order, injunction or decree
restricting the consummation of the merger will have been
enacted, entered, promulgated or enforced by a government
entity;

* each party will have performed in all material respects all
obligations required to be performed by it under the merger
agreement, before or at the effective time;

* no proceeding initiated by any governmental entity seeking
to restrict consummation of the merger will be pending; and

* the representations and warranties of the parties, other
than those regarding capitalization and corporate authority
in the case of CSB, will be true and correct in all material
respects as of the date of the merger agreement and as of
the closing, as though made on and as of the closing, unless
the failure of the representations or warranties to be true
and correct, individually or in the aggregate, represent a
material adverse effect on the party.

CSB has satisfied the condition of receipt of the Keefe written
fairness opinion that, as of the date of this proxy statement, the per
share merger consideration is fair to the CSB stockholders from a
financial point of view.

The obligations of Midland and CSB Acquisition to effect the
merger are also subject to the satisfaction or waiver of the following
conditions that:

* the representations and warranties of CSB regarding
capitalization and corporate authority in the merger
agreement will be true and correct in all material respects
as of the date of the merger agreement and as of the
closing, as though made on and as of the closing;

* all the CSB stock options will be canceled as of the
effective time in exchange for the per share option
consideration;

* excluding any shares of CSB common stock issued from and
after the merger agreement date from the exercise of a stock
option, there will be no more than 732,299 shares of CSB
common stock outstanding at the effective time;

* there will not have occurred any event or circumstance that
has or would reasonably be expected to result in a material
adverse effect on CSB; and

* the holders of not more than 10 percent of the shares of CSB
common stock entitled to vote at the stockholders meeting
will have validly demanded and perfected dissenters'
appraisal rights.

WAIVER AND AMENDMENT; TERMINATION

Before the effective time of the merger, the parties, by board
action, may, to the extent legally allowed:

* extend the time for performance of any obligations or other
acts of any other party;

* waive any inaccuracies in the representations and warranties
contained in the merger agreement or any document delivered
under the merger agreement; and

* waive compliance with any agreements or conditions in the
merger agreement.

Any agreement on the part of a party to any extension or waiver
will be valid only if in a written instrument signed on behalf of that
party, but the extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition will
not operate as a waiver of or estoppel regarding any subsequent or
other failure.

The parties may amend the merger agreement, by board action, in a
written instrument signed on behalf of each party before or after
approval of the merger by the stockholders of CSB.

The merger agreement may be terminated before the effective time
of the merger by:

* the mutual written consent of CSB and Midland if the CSB and
Midland boards determine by majority vote of the entire
boards;

* either CSB or Midland upon written notice to the other if a
governmental entity of competent jurisdiction will have
issued a final nonappealable order enjoining, denying
approval of, or otherwise prohibiting the consummation of
any of the transactions contemplated by the merger
agreement;

* either CSB or Midland at any time after July 31, 2000 if the
merger will not have been consummated unless the failure of
the closing to occur will be due to the failure of the party
seeking termination to perform or observe its covenants and
agreements in the merger agreement;

* either Midland or CSB if there will have been a material
breach of any representation or warranty in the merger
agreement by the other party, which is not in material
breach of any representation, warranty, covenant or
agreement, that will not have been cured within 30 days
following written notice to the breaching party or cannot be
cured before the closing; provided, however, that neither

party will have the right to terminate the merger agreement
unless the breach, together with all other breaches, would
entitle the other party not to consummate the merger because
of failure to satisfy the condition to closing relating to
the representations and warranties;

* either Midland or CSB if there will have been a material
breach of any covenant or agreement in the merger agreement
by the other party, which is not in material breach of any
representation, warranty, covenant or agreement, that will
not have been cured within 30 days following written notice
to the breaching party; or

* either CSB or Midland, if Midland, due to adjustment under
the merger agreement, is to pay less than $15.50 per share
of CSB common stock; provided, however, that CSB may not
terminate the merger agreement unless Midland is not willing
to pay $15.50 per share of CSB common stock.

The sole remedy available to a party terminating the merger
agreement for any of the six reasons described above will be
limited to that party's right not to effect the merger and the
non-terminating party will not be deemed to be in breach of the
merger agreement. However, no party will be relieved or released
as a result of the termination from any liabilities or damages
arising out of its willful breach of any merger agreement
provision.

The merger agreement may also be terminated before the effective
time by:

* Midland, if CSB's board will have withdrawn or adversely
modified its approval or recommendation of the merger
agreement or the merger, or approved or recommended a
competing transaction involving CSB and a party other than
Midland or its subsidiaries;

* Midland, if CSB will have authorized or permitted any of its
officers, directors, employees or agents to directly or
indirectly initiate, solicit, or entertain offers from,
negotiate with or in any manner encourage, discuss, accept
or consider any proposal of any party other than Midland
relating to the acquisition of CSB common stock or CSB
and/or any CSB subsidiary, their assets or business, in
whole or in part, whether directly or indirectly, through
purchase, merger, consolidation, or other type of competing
transaction to achieve a similar purpose, other than the
sale of loans, securities and other assets in the ordinary
course, unless the CSB board of directors will have
determined in good faith that failure to take this action
will violate the board's obligations or duties to CSB or its
stockholders and that the proposal is a superior competing
transaction and all discussions with the third party in

furtherance of a competing transaction will have been
terminated within 45 calendar days of the CSB board's good
faith determination; or

* CSB, upon two days prior written notice to Midland, if, as a
result of an unsolicited proposal, including a tender offer,
by a party other than Midland or its subsidiaries for a
competing transaction that CSB's board decides by a good
faith determination be accepted; provided, however, that
before delivering this notice to Midland to effect a
termination, CSB will and will cause its financial and legal
advisors to negotiate with Midland for not less than three
calendar days to make adjustments to the terms and
conditions of the merger agreement that would enable CSB to
proceed with the transactions contemplated by the merger
agreement on adjusted terms.

If the merger agreement is terminated due to any of the foregoing
three reasons or by CSB for any termination reason if, at the
time of CSB's termination, Midland would have had the right to
terminate for the first or second of the above reasons, CSB will
promptly pay to Midland, no later than two business days after
the date of termination, a termination fee of $500,000, as
reimbursement of Midland's direct and indirect expenses and
costs, including legal, accounting and administration costs, as
well as the opportunity cost to Midland of business transactions
foregone as a result of its efforts to effect the merger.

The merger agreement also may be terminated before the
effective time by:

* either Midland or CSB if the approval of the CSB
stockholders required for the consummation of the merger
will not have been obtained by reason of the failure to
obtain the required vote at the stockholders meeting or any
adjournment or postponement.

If the merger agreement is terminated for the foregoing reason or if
terminated by Midland because of actions taken by CSB relating to a
competing transaction as described above following a good faith
determination by CSB's board, then a termination fee of $500,000 will
be payable to Midland only if a proposal for a competing transaction
will have been made before the CSB stockholders meeting, and within
270 calendar days following this stockholders' meeting:

* CSB will have entered into an agreement with a third party
providing for the consummation of a superior competing
transaction, or

* a superior competing transaction with a third party will
have occurred.

The merger agreement defines superior competing transaction as a
competing transaction providing for consideration, whether in cash,
securities or other property or a combination of the foregoing, on a
per share basis more than the per share merger consideration.

The payment of the termination fee of $500,000 as described above
by or on behalf of CSB will be instead of and in full satisfaction of
any other rights or remedies otherwise available to Midland or CSB
Acquisition as a result of termination of the merger agreement.

To the extent that CSB will be prohibited by applicable law or
regulation or by administration actions or policy of any governmental
entity from satisfying in full its requirement to pay the termination
fee, it will immediately notify Midland and deliver or cause to be
delivered from time to time to Midland that portion of the payments
required to be paid that it will no longer be prohibited within five
business days after the date on which CSB will no longer be
prohibited; provided, however, that if CSB at any time will be
prohibited for the above reason from paying all or any portion of the
termination fee, it will:

* use reasonable best efforts to obtain all required
regulatory and legal approvals and file any required notices
as promptly as practicable,

* within five days of the submission or receipt of any
documents relating to these approvals, provide Midland with
copies, and

* keep Midland advised of the status of any request for these
approvals and any discussions with any relevant governmental
entity or related third party.

DIVIDENDS

Under the merger agreement, CSB agreed not to declare or pay any
dividends on its capital stock, other than dividends from wholly owned
CSB subsidiaries to CSB.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

CSB's executive officers and directors may be deemed to have
interests in the merger in addition to their interests as stockholders
of CSB generally.

STOCK OPTIONS. The executive officers and directors of CSB hold
CSB stock options covering an aggregate 61,750 shares of common stock
as of the record date. The CSB 1995 stock option and incentive plan
was approved by the stockholders and the board of directors. The CSB
1997 nonqualified stock option plan, which holds no shares of CSB
common stock, was approved by the board of directors. The merger
agreement provides that in exchange for entering into agreements
providing for the cancellation of their CSB stock options effective as

of the effective time, the holders of CSB stock options will receive
the difference between $16.00 in cash, which may be reduced, and the
exercise price for each share of CSB common stock covered by a CSB
stock option, regardless of whether vested or unvested. See "THE
MERGER-MERGER CONSIDERATION" (Page 14). In effect, each share of CSB
common stock covered by a stock option will be treated as fully vested
and exercisable and cashed out. The average CSB stock option exercise
price is $9.753. The executive officers and directors will receive
payments in consideration of these stock options in an amount
estimated to be $385,765 in the aggregate, which may be reduced.
Before the effective time and in recognition that Midland has
expressly agreed not to assume any CSB stock option plan, CSB's board
will terminate all CSB stock option plans. The following information
assumes the merger will be consummated by July 31, 2000 and that no
CSB stock options will be exercised before then:

<TABLE>
<CAPTION>
NUMBER OF OPTIONS
PER SHARE OPTION FOR SHARES OF VALUE OF
NAME EXERCISE PRICE COMMON STOCK OPTIONS<3>
----- ---------------- ----------------- -------
<S> <C> <C> <C>
Wesley N. Breeze . . . . . . . $9.08 5,175<4> $35,811<4>
A. John Byrne . . . . . . . . . $9.08 5,175<4> 35,811<4>
Michael Donnewald . . . . . . . $9.08 5,175<4> 35,811<4>
Larry M. Irvin . . . . . . . . $9.08 5,175<4> 35,811<4>
W. Harold Monken . . . . . . . $9.08 5,175<4> 35,811<4>
K. Gary Reynolds . . . . . . . $9.36 25,875<5> 171,810<5>
Stephen Greene . . . . . . . . $12.51 6,000<6> 20,940<6>
Larry Griffin . . . . . . . . . $12.51 4,000<6> 13,960<6>
------ -------
Total . . . . . . . . . . . . . 61,750 $385,765
======= ==========
</TABLE>
______________________

<F3> Represents the difference between the cash per share merger
consideration, $16.00, which may be reduced, and the per share
option exercise price multiplied by the number of shares of CSB
common stock subject to the option.

<F4> As of July 31, 2000, of the number of options listed, 80 percent
will be vested and 20 percent will be unvested.

<F5> As of July 31, 2000, of the number of options listed, 60 percent
will be vested and 40 percent will be unvested.

<F6> As of July 31, 2000, of the number of options listed, 40 percent
will be vested and 60 percent will be unvested.

MANAGEMENT RECOGNITION PLAN. Under CSB's management recognition
plan, directors and executive officers of CSB have been awarded 18,630
shares of common stock subject to vesting requirements. The CSB

management recognition plan was approved by the stockholders. The
merger agreement provides that the executive officers and directors
will receive payments for both vested and unvested plan share awards
in an amount estimated to be $298,080 in the aggregate, which may be
reduced. See "THE MERGER-MERGER CONSIDERATION" (Page 14). In
essence, each plan share award will be treated as fully vested and
cashed out. Before the effective time of the merger, and in
recognition that Midland has expressly agreed not to assume the CSB
management recognition plan, the board of directors of CSB will
terminate this plan and direct the trustees of the plan to return to
CSB any shares of CSB common stock then held by the trustees which are
not subject to plan share awards, and all of these unallocated shares
will be canceled at the effective time. The information below
regarding plan share awards held by CSB's directors and executive
officers assumes that the merger will be consummated by July 31, 2000:

<TABLE>
<CAPTION>
NAME NUMBER OF SHARES VALUE OF SHARES<7>
---- ---------------- ------------------

<S> <C> <C>
Wesley N. Breeze . . . . . . . 2,070<8> $33,120<8>
Michael Donnewald . . . . . . . 2,070<8> 33,120<8>
Larry M. Irvin . . . . . . . . 2,070<8> 33,120<8>
W. Harold Monken . . . . . . . 2,070<8> 33,120<8>
K. Gary Reynolds . . . . . . . 5,175<9> 82,800<9>
Stephen Greene . . . . . . . . 2,070<9> 33,120<9>
Joanne Ticknor . . . . . . . . 3,105<9> 49,680<9>

Total . . . . . . . . . . . . . 18,630 $298,080
====== ========
</TABLE>
____________________

<F7> Determined by multiplying the number of shares by the cash per
share merger consideration of $16.00.

<F8> As of July 31, 2000, of the number of shares listed, 80 percent
will be vested and 20 percent will be unvested.

<F9> As of July 31, 2000, of the number of shares listed, 60 percent
will be vested and 40 percent will be unvested.

CENTRALIA ESOP. If the ESOP terminates before July 31, 2000, it
is assumed that no shares of common stock will be awarded under the
ESOP for the 2000 fiscal year and it is estimated that the following
executive officers of CSB - Messrs. Reynolds, Greene and Griffin -
will receive cash payments of approximately $78,966, in the aggregate,
upon termination, subject to possible downward adjustment. See "THE
MERGER-MERGER CONSIDERATION" (Page 14).

DIRECTORS' AND OFFICERS' LIABILITY INSURANCE AND INDEMNIFICATION.
The merger agreement provides that for five years after the effective
time of the merger, Midland agrees to indemnify and hold harmless

those individuals who presently are or become before the effective
time officers or directors of CSB or a CSB subsidiary, regarding
actions occurring or facts, events, or circumstances existing before
the effective time which give rise to a claim for indemnification, to
the extent these indemnified parties would be entitled to
indemnification under, and to the full extent permitted by, Delaware
General Corporate Law and the certificate of incorporation of CSB as
existing on the date of the merger agreement; provided, however, that
all rights to indemnification concerning any claim asserted or made
within this five-year period will continue until the final disposition
of that claim.

In addition, CSB will purchase continued coverage under its
current policy of directors' and officers' liability insurance, in
amount and scope at least as favorable as CSB's existing directors'
and officers' liability insurance to be effective for five years
following the effective time.

EMPLOYMENT AGREEMENT. Centralia entered into an employment
agreement with Mr. Reynolds dated as of January 26, 2000, which
provides that Mr. Reynolds will be employed as Community President of
Centralia for a term commencing at the effective time of the merger
and ending on December 31, 2000 and may be extended for additional one
calendar year periods, unless earlier terminated or unless either
party provides written notice to the other of its decision not to
extend this agreement by October 1 of the current term.

Mr. Reynolds' annual base salary will be $75,000, which may be
increased according to the normal business practices of Centralia and,
if increased, may not later be decreased under this agreement. In
addition, Mr. Reynolds will be entitled to receive a bonus of up to 10
percent of his annual base salary and to participate in employee
benefit programs offered to qualifying Centralia employees, including
401(k) and profit sharing, and to enjoy medical benefits.

This agreement provides that, within one year of the effective
time, if Mr. Reynolds voluntarily terminates his employment for any
reason or Centralia terminates his employment for any reason other
than for "cause" as defined in the agreement, then Centralia will pay
Mr. Reynolds two times his annual base salary. Mr. Reynolds also may
be terminated without cause, in which case, after the first
anniversary of the effective time, Centralia will pay him amounts
payable to him for the remainder of the term, including a bonus equal
to the average of his bonuses for the two immediately preceding fiscal
years of Centralia. In both cases of termination, Centralia will
continue to pay the cost of Mr. Reynolds' medical benefits during the
term. The parties also may agree to terminate the agreement and Mr.
Reynolds' employment on terms and conditions on which they agree.

The effectiveness of this agreement is conditioned upon the
consummation of the merger. Once effective, this agreement will
supersede Mr. Reynolds' 1999 employment agreement with Centralia, as
described below. If this agreement does not become effective, then

Mr. Reynolds' 1999 employment agreement will remain in full force and
effect. Midland required Mr. Reynolds to execute this agreement,
which was prepared by Midland's counsel, immediately before the
execution by the parties of the merger agreement. Centralia's board
of directors considered and authorized the execution of this
agreement.

Centralia entered into an employment agreement with Mr. Reynolds,
effective August 1, 1999, which provides that Mr. Reynolds will be
employed as President and Chief Executive Officer for a term expiring
on November 30 of each year. The term of the agreement will be
automatically renewed for another one-year period, unless the
Centralia board of directors has given Mr. Reynolds 90 days notice
before November 30 of the given year of its intent not to renew. In
this circumstance, this agreement will expire on November 30 of the
next year. Mr. Reynolds' base salary for fiscal 1999 was $71,440 per
year; he will be entitled to receive annually an increase in his base
salary in an amount at least equal to the average percentage increase,
if any, granted to other Centralia officers and employees. In
addition to base salary, this agreement provides for participation in
any group health, medical, hospitalization, dental care, sick leave
pay, life insurance, or death benefit and disability plan offered by
Centralia to its employees. This agreement also provides for
participation in the Centralia ESOP and the CSB management recognition
plan and stock option plan.

This agreement provides for continuing benefits in the event Mr.
Reynolds is terminated, or his agreement is not renewed, other than
for "cause" as defined in the agreement. In these instances, Mr.
Reynolds will receive severance pay equal to 24 months of his base
salary. This agreement also provides that Mr. Reynolds may elect to
treat any substantial change in his duties and responsibilities, made
without his consent, or any material reduction in his compensation, as
a termination by Centralia without cause.

FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

THE FOLLOWING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF THE
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER AND DOES
NOT PURPORT TO BE A COMPLETE ANALYSIS OR DESCRIPTION OF ALL POTENTIAL
TAX EFFECTS OF THE MERGER. THIS DISCUSSION DOES NOT COVER ANY ASPECT
OF STATE, LOCAL OR FOREIGN TAXATION. THIS DISCUSSION IS BASED UPON
LAWS, REGULATIONS, RULINGS AND DECISIONS NOW IN EFFECT, ALL OF WHICH
MAY CHANGE BY LEGISLATION, ADMINISTRATIVE ACTION OR JUDICIAL DECISION.
NO RULING HAS BEEN OR WILL BE REQUESTED FROM THE INTERNAL REVENUE
SERVICE ON ANY TAX MATTER RELATING TO THE TAX CONSEQUENCES OF THE
MERGER.

The following discussion of material federal income tax
consequences of the merger under present law is for general
information only and does not purport to be a complete analysis of all
tax consequences that may be relevant to any particular stockholder.
Some stockholders, including, without limitation, insurance companies,

tax-exempt organizations, financial institutions, broker-dealers,
employee stockholders, foreign corporations and persons who are not
citizens or residents of the United States, may be covered by special
rules not discussed below. The discussion assumes that each
stockholder holds shares of common stock as a capital asset within the
meaning of Section 1221 of the Internal Revenue Code. However,
stockholders who are employees or directors of CSB may not be entitled
to treat particular shares which they may have acquired from CSB as
capital assets or a portion of the gain on the sale of these shares as
capital gain because they will be required to report any gain on the
sale of the shares as taxable compensation from CSB.

The receipt of cash in exchange for shares of common stock under
the merger or to the exercise of dissenters' appraisal rights by
stockholders will be treated as a sale or exchange of the shares of
CSB common stock for federal income tax purposes, and may also be a
taxable transaction for state, local and other tax purposes. Each
stockholder will recognize gain or loss for federal income tax
purposes in an amount equal to the difference between the amount of
cash received in exchange for the shares of common stock and the
adjusted basis of his or her shares of common stock.

Except for gain attributable to particular shares owned by
employees or directors of CSB as described above, gain or loss on the
sale of the shares by non-corporate stockholders will be a long-term
capital gain or loss if the shares of common stock have been held by
the stockholder for more than one year. Otherwise, gain or loss on the
sale of the shares will be a short-term capital gain or loss. The
holding period relating to the shares of common stock must be
calculated separately for those shares of common stock held by a
particular stockholder.

For non-corporate taxpayers, the tax rate on long-term capital
gains depends on the type of asset sold. If the asset is stock, other
than small business stock under Section 1202 of the Internal Revenue
Code, the rate is generally 20 percent. However, the maximum tax rate
on ordinary income and short-term capital gains is 39.6 percent. The
distinction between capital gains and ordinary income is relevant in
that taxpayers may be limited in their ability to deduct net capital
losses, which may be deducted in full against capital gains, against
ordinary income. For corporate taxpayers, net capital gains, which is
the excess of net long-term capital gain over net short-term capital
loss, and ordinary income are taxed at the same rate.

The receipt of cash for shares of common stock may be subject to
backup withholding at the rate of 31 percent unless the holder:

* is a corporation or comes within other exempt categories, or

* provides a certified taxpayer identification number and
otherwise complies with the back-up withholding rules.

Back-up withholding is not an additional tax; any amounts withheld may
be credited against the federal income tax liability of the person
subject to the withholding.

Each stockholder is urged to consult his or her own tax and
financial advisors as to the effect of the federal income tax
consequences of the merger on his or her own particular facts and
circumstances and also as to any state, local, foreign or other tax
consequences arising out of the merger.

PRICE RANGE OF COMMON STOCK AND DIVIDENDS

CSB's common stock is included for quotation on the OTC
electronic bulletin board under the symbol "CSBF." At the record date,
there were 732,299 shares of common stock issued and outstanding and
there were approximately 393 holders of record. The table below shows
the price range of the common stock for the last quarter of fiscal
year 1997 and for each quarter of fiscal years 1998 and 1999 and for
the first and second quarters of fiscal 2000 and through May 30, 2000.
These prices reflect inter-dealer prices, may not represent actual
transactions and do not include retail markups, markdowns or
commissions.

PER SHARE
QUARTER ENDED HIGH LOW DIVIDEND
------------- ---- --- ------
September 30, 1997 . . . . . . $12.500 $11.750 $-0-
December 31, 1997 . . . . . . . $14.000 $12.250 $-0-
March 31, 1998 . . . . . . . . $13.625 $12.875 $-0-
June 30, 1998 . . . . . . . . . $14.000 $13.000 $-0-
September 30, 1998 . . . . . . $12.750 $ 9.000 $-0-
December 31, 1998 . . . . . . . $10.500 $ 8.750 $-0-
March 31, 1999 . . . . . . . . $ 9.250 $ 8.875 $-0-
June 30, 1999 . . . . . . . . . $12.875 $ 9.125 $-0-
September 30, 1999 . . . . . . $10.625 $ 9.875 $-0-
December 31, 1999 . . . . . . . $19.500 $10.000 $-0-
March 31, 2000 . . . . . . . . $15.250 $14.250 $-0-
through May 30, 2000 . . . . . $16.000 $15.000 $-0-

The stock price information shown in the table above was provided
by the OTC electronic bulletin board.

CSB has agreed in the merger agreement not to declare or pay any
dividends on its capital stock other than dividends from wholly owned
CSB subsidiaries to CSB. CSB does not pay cash dividends on its
common stock.

AUDITORS

The consolidated financial statements of CSB and its subsidiaries
included in CSB's annual report to stockholders for the fiscal year
ended September 30, 1999 have been incorporated by reference in this
proxy statement in reliance on the report regarding these consolidated
financial statements of McGladrey & Pullen, LLP, independent auditors,
given upon the authority of that firm as experts in accounting and
auditing.

McGladrey & Pullen, LLP has been selected as independent auditors
for CSB for the fiscal year ending September 30, 2000. CSB expects
that a representative of McGladrey & Pullen, LLP will be present at
the meeting with the authority to make a statement if he or she
desires to do so and to respond to appropriate questions.

STOCKHOLDER PROPOSALS

If the merger is not consummated, it is anticipated CSB's next
annual meeting of stockholders will be held on or about January 12,
2001 or on another date that may be fixed by the board. To be
eligible for inclusion in CSB's proxy materials for this annual
meeting, any stockholder proposal to take action at this meeting must
be received by CSB no later than August 16, 2000. Any proposal will
be covered by the requirements of the proxy rules adopted under the
Securities Exchange Act of 1934. In addition, CSB's bylaws establish
an advance notice procedure regarding matters to be brought before an
annual meeting other than by or at the direction of CSB's board of
directors and CSB's certificate of incorporation establishes an
advance notice procedure regarding candidates for election as
directors other than by or at the direction of CSB's board. This
notice must be delivered to or mailed to and received by the Secretary
of CSB at its principal executive office not later than the close of
business on the 40th day nor earlier than the close of business on the
70th day before the first anniversary of the preceding year's annual
meeting. The stockholder also must comply with other provisions
contained in CSB's bylaws regarding the bringing of business before an
annual meeting and in CSB's certificate of incorporation regarding the
nomination of an individual for election as a director. For a copy of
all the provisions in CSB's bylaws and certificate of incorporation,
an interested stockholder should contact Joanne Ticknor, Secretary, at
CSB Financial Group, Inc., 200 South Poplar Street, Centralia,
Illinois 62801.

WHERE YOU CAN FIND MORE INFORMATION

CSB files annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy any
document CSB files at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at
(800) SEC-0330 for further information on the public reference rooms.
CSB's SEC filings also are available to the public at the SEC's
website at http://www.sec.gov.

The SEC allows CSB to "incorporate by reference" into this proxy
statement the information CSB files with it, which means that CSB can
disclose important information to you by referring to those documents.
The information incorporated by reference is considered part of this
proxy statement.

Copies of CSB's annual report on Form 10-KSB for the year ended
September 30, 1999 (which includes as an exhibit its 1999 annual
report to stockholders) and its quarterly report on Form 10-QSB for
the quarter ending March 31, 2000 are attached as Appendix C to this
proxy statement and are incorporated by reference. CSB's current
reports on Form 8-K filed on December 6, 1999 and January 27, 2000,
definitive proxy statement relating to the annual stockholders meeting
filed on December 17, 1999, registration statement on Form 8-A/A filed
on January 27, 2000, and quarterly report on Form 10-QSB for the

quarter ending December 31, 1999, also are incorporated by reference
in this proxy statement.

This proxy statement incorporates documents by reference which
neither are presented in nor delivered with the proxy statement.
Copies of these documents, excluding all exhibits unless specifically
incorporated by reference, will be furnished to you without charge by
first class mail or equivalent, upon written or oral request to CSB
Financial Group, Inc., 200 South Poplar, Centralia, Illinois 62801,
Attention: K. Gary Reynolds, President; telephone number: (618)
532-1918, within one business day of receipt of the request.

APPENDIX A: AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

MIDLAND STATES BANCORP, INC.

AND

CSB ACQUISITION CORPORATION

AND

CSB FINANCIAL GROUP, INC.
DATED AS OF JANUARY 26, 2000

A-1

TABLE OF CONTENTS
PAGE
----

ARTICLE I
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . A-7
1.1. The Merger. . . . . . . . . . . . . . . . . . . . . . A-7
1.2. Effective Time. . . . . . . . . . . . . . . . . . . . A-8
1.3. Effects of the Merger . . . . . . . . . . . . . . . . A-8
1.4. Conversion of CSB Common Stock . . . . . . . . . . . A-8
1.5 Payment for Options . . . . . . . . . . . . . . . . . A-9
1.6. Certificate of Incorporation of Surviving
Corporation . . . . . . . . . . . . . . . . . . . . . A-9
1.7 Bylaws of Surviving Corporation . . . . . . . . . . . A-9
1.8. Directors and Officers of Surviving Corporation . . . A-9
1.9. Certain Defined Terms . . . . . . . . . . . . . . . . A-10
1.10. Adjustment to Merger Consideration . . . . . . . . . A-10

ARTICLE II
PAYMENT OF MERGER CONSIDERATION . . . . . . . . . . . . . . A-12
2.1. Deposit of Merger Consideration . . . . . . . . . . . A-12
2.2. Payment for Shares . . . . . . . . . . . . . . . . . A-12

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CSB . . . . . . . . . . . A-13
3.1. Corporate Organization . . . . . . . . . . . . . . . A-13
3.2. Capitalization . . . . . . . . . . . . . . . . . . . A-15
3.3. Authority; No Violation . . . . . . . . . . . . . . . A-15
3.4. Consents and Approvals . . . . . . . . . . . . . . . A-16
3.5. Regulatory Reports; Examinations . . . . . . . . . . A-17
3.6. Financial Statements . . . . . . . . . . . . . . . . A-17
3.7. Broker's Fees . . . . . . . . . . . . . . . . . . . . A-18
3.8. Absence of Certain Changes or Events . . . . . . . . A-18
3.9. Legal Proceedings . . . . . . . . . . . . . . . . . . A-18
3.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . A-19
3.11. Employee Benefits . . . . . . . . . . . . . . . . . . A-20
3.12. Insurance . . . . . . . . . . . . . . . . . . . . . . A-22
3.13. Year 2000 . . . . . . . . . . . . . . . . . . . . . . A-22
3.14. Compliance with Applicable Law . . . . . . . . . . . A-23
3.15. Certain Contracts . . . . . . . . . . . . . . . . . . A-23
3.16. Agreements with Regulatory Agencies . . . . . . . . . A-24
3.17. Investment Securities . . . . . . . . . . . . . . . . A-24
3.18. Property . . . . . . . . . . . . . . . . . . . . . . A-24
3.19. Equity and Real Estate Investments . . . . . . . . . A-25
3.20. Environmental Matters . . . . . . . . . . . . . . . . A-25
3.21. Derivative Transactions . . . . . . . . . . . . . . . A-27
3.22. Loan Portfolio . . . . . . . . . . . . . . . . . . . A-27
3.23. Other Activities . . . . . . . . . . . . . . . . . . A-28
3.24. SEC Reports . . . . . . . . . . . . . . . . . . . . . A-28
3.25. Opinion of Financial Advisor . . . . . . . . . . . . A-28
3.26. Certain Board Action . . . . . . . . . . . . . . . . A-29

A-2

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MIDLAND . . . . . . . . . A-29
4.1. Corporate Organization . . . . . . . . . . . . . . . A-29
4.2. Authority; No Violation . . . . . . . . . . . . . . . A-29
4.3. Consents and Approvals . . . . . . . . . . . . . . . A-30
4.4. Legal Proceedings . . . . . . . . . . . . . . . . . . A-31
4.5. Financial Resources . . . . . . . . . . . . . . . . . A-31
4.6 Vote Required . . . . . . . . . . . . . . . . . . . . A-31

ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS . . . . . . . . . A-31
5.1. Covenants of CSB . . . . . . . . . . . . . . . . . . A-31
5.2. Covenants of Midland . . . . . . . . . . . . . . . . A-35

ARTICLE VI
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . A-35
6.1. Regulatory Matters . . . . . . . . . . . . . . . . . A-35
6.2. Stockholder Meeting . . . . . . . . . . . . . . . . . A-35
6.3. Access to Information . . . . . . . . . . . . . . . . A-36
6.4. Legal Conditions to Merger . . . . . . . . . . . . . A-36
6.5. Additional Agreements . . . . . . . . . . . . . . . . A-37
6.6. Advice of Changes, Failure of Conditions . . . . . . A-37
6.7. Subsequent Financial Statements . . . . . . . . . . . A-37
6.8. Current Information . . . . . . . . . . . . . . . . . A-37
6.9. Merger Sub . . . . . . . . . . . . . . . . . . . . . A-38
6.10. Support Agreements . . . . . . . . . . . . . . . . . A-38
6.11. Employee Benefit Plans . . . . . . . . . . . . . . . A-38
6.12. Employee Stock Ownership Plan . . . . . . . . . . . . A-39
6.13. Agreement with Optionees . . . . . . . . . . . . . . A-40
6.14. Directors and Officers Liability Insurance and
Indemnification . . . . . . . . . . . . . . . . . . . A-40
6.15. COBRA . . . . . . . . . . . . . . . . . . . . . . . . A-40
6.16. Termination of Stock Options . . . . . . . . . . . . A-41
6.17. Treatment of Plan Share Awards . . . . . . . . . . . A-41
6.18. Profit Sharing Plan . . . . . . . . . . . . . . . . . A-41
6.19. List of CSB Stockholders . . . . . . . . . . . . . . A-42
6.20. CSB Rights Agreement . . . . . . . . . . . . . . . . A-42

ARTICLE VII
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . A-42
7.1. Conditions to Each Party's Obligation to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . A-42
(a) Stockholder Approval . . . . . . . . . . . . A-42
(b) Regulatory Approvals . . . . . . . . . . . . A-42
(c) No Injunctions or Restraints; Illegality . . A-42
7.2. Conditions to Obligations of Midland . . . . . . . . A-43
(a) Representations and Warranties . . . . . . . A-43
(b) Performance of Obligations of CSB . . . . . . A-43
(c) No Pending Governmental Actions . . . . . . . A-43
(d) Legal Opinion . . . . . . . . . . . . . . . . A-43
(e) CSB Stock Options . . . . . . . . . . . . . . A-43
7.3. Conditions to Obligations of CSB . . . . . . . . . . A-44

A-3

ARTICLE VIII
TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . . . . A-45
8.1. Termination . . . . . . . . . . . . . . . . . . . . . A-45
8.2 Effect of Termination; Expenses . . . . . . . . . . . A-46
8.3. Amendment . . . . . . . . . . . . . . . . . . . . . . A-48
8.4. Extension; Waiver . . . . . . . . . . . . . . . . . . A-48

ARTICLE IX
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . A-48
9.1. Closing . . . . . . . . . . . . . . . . . . . . . . . A-48
9.2. Subsidiary Bank Merger . . . . . . . . . . . . . . . A-48
9.3. Nonsurvival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . A-49
9.4. Expenses . . . . . . . . . . . . . . . . . . . . . . A-49
9.5. Notices . . . . . . . . . . . . . . . . . . . . . . . A-49
9.6. Interpretation; Effect . . . . . . . . . . . . . . . A-50
9.7. Counterparts . . . . . . . . . . . . . . . . . . . . A-50
9.8. Entire Agreement . . . . . . . . . . . . . . . . . . A-50
9.9. Governing Law . . . . . . . . . . . . . . . . . . . . A-50
9.10. Enforcement of Agreement . . . . . . . . . . . . . . A-51
9.11. Severability . . . . . . . . . . . . . . . . . . . . A-51
9.12. Publicity . . . . . . . . . . . . . . . . . . . . . . A-51
9.13. Assignment; No Third Party Beneficiaries . . . . . . A-51

A-4

CSB Disclosure Schedule
-----------------------

Section 3.2 Capitalization and Stock Options
Section 3.7 Fees Associated with Proposed Transaction
Section 3.8(a) Material Liabilities
Section 3.8(b) Compensation and Bonus
Section 3.9 Legal Proceedings
Section 3.10(a) Tax Returns, Tax Liens, Filing Extensions
Section 3.11 Employee Welfare Benefits and Plans
Section 3.12 Insurance Policies
Section 3.15(a) Certain Contracts
Section 3.17 Investment Securities
Section 3.18 Property
Section 3.22 Loan Portfolio
Section 5.1(q) Prime Borrowers Exclusion List

A-5

EXHIBITS

Exhibit A Support Agreement
Exhibit B Legal Opinion of Schiff Hardin & Waite, Counsel for CSB
Exhibit C Legal Opinion of Gallop, Johnson & Neuman, L.C., Counsel for
Midland and Merger Sub

A-6

AGREEMENT AND PLAN OF MERGER
----------------------------

AGREEMENT AND PLAN OF MERGER ("Agreement), dated as of the 26th
day of January, 2000, by and among Midland States Bancorp, Inc., a
Delaware corporation ("Midland"), CSB Acquisition Corporation, a
Delaware corporation and a wholly owned subsidiary of Midland ("Merger
Sub") and CSB Financial Group, Inc., a Delaware corporation ("CSB").

WHEREAS, Midland desires to acquire CSB by means of a transaction
in which Merger Sub will merge with and into CSB, whereupon CSB will
become a wholly owned subsidiary of Midland, all subject to the terms,
provisions and conditions set forth herein (the "Merger"); and

WHEREAS, each of the Boards of Directors of Midland, Merger Sub
and CSB has determined that the Merger is advisable and is in the best
interest of their respective companies and stockholders and, by
resolutions (including resolutions of Midland, as the sole stockholder
of Merger Sub) duly adopted, has approved this Agreement and the
consummation of the transactions provided for hereunder; and

WHEREAS, Midland is a registered bank holding company under the
Bank Holding Company Act of 1956, as amended (the "Holding Company
Act"); and

WHEREAS, CSB is a registered bank holding company under the
Holding Company Act, and is the record and beneficial holder of all of
the capital stock of Centralia Savings Bank, an Illinois-chartered
stock savings bank headquartered in Centralia, Illinois, with an
office located in Carlyle, Illinois ("Centralia Savings Bank"); and

WHEREAS, the parties desire to make certain representations,
warranties, undertakings and agreements in connection with the Merger
and also to prescribe certain conditions to the Merger;

NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and
intending to be legally bound hereby, the parties agree as follows:

ARTICLE I
THE MERGER

1.1. The Merger. Subject to the terms and conditions of this
Agreement, in accordance with the General Corporation Law of the State
of Delaware (the "DGCL"), at the Effective Time (as defined in
Section 1.2 hereof), Merger Sub shall merge with and into CSB. CSB
shall be the surviving corporation in the Merger (sometimes referred
to herein as the "Surviving Corporation"), which shall continue its
corporate existence under the laws of the State of Delaware. Upon
consummation of the Merger, the separate corporate existence of Merger
Sub shall terminate.

A-7

1.2. Effective Time. The Certificate of Merger to be filed with
the Secretary of State of the State of Delaware shall specify the date
upon which the Merger shall be consummated (the "Effective Date") and
the time on the Effective Date at which the Merger shall be
consummated (the "Effective Time"). The parties hereto shall take all
actions necessary to satisfy the requirements for effecting the Merger
in accordance with the DGCL, including the adoption of a Certificate
of Merger in the form required under the DGCL. Subject to the terms
and conditions of this Agreement, the Effective Date shall occur on
such date as Midland shall notify CSB in writing (such notice to be at
least five business days in advance of the Effective Date and, in any
event, permit CSB sufficient time to prepare and deliver the "Closing
Balance Sheet" pursuant to Section 1.10 hereof) but (i) not earlier
than the satisfaction of all conditions set forth in Section 7.1 (the
"Approval Date") and (ii) not later than sixty (60) days after the
Approval Date.

1.3. Effects of the Merger. At and after the Effective Time, the
Merger shall have the effects set forth in Section 259 of the DGCL.

1.4. Conversion of CSB Common Stock. (a) At the Effective Time,
each share of the $0.01 par value common stock of CSB, together with
the common stock purchase rights, issued pursuant to that certain
Rights Agreement (the "CSB Rights Agreement") dated as of June 13,
1997 between CSB and Registrar and Transfer Company, associated
therewith (collectively, "CSB Common Stock") issued and outstanding
immediately prior to the Effective Time (other than shares of CSB
Common Stock held (i) in the treasury of CSB or (ii) directly or
indirectly by CSB or Midland or any Subsidiary (defined below) thereof
(except for Trust Account Shares and DPC Shares, as such terms are
defined in Section 1.4(b) hereof) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted
into the right to receive the Per Share Merger Consideration (defined
below), subject to the appraisal rights of dissenting stockholders
pursuant to Section 262 of the DGCL (the "Appraisal Rights"). All
shares of CSB Common Stock that are converted at the Effective Time
into the right to receive the Per Share Merger Consideration pursuant
to this Article I shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist, and each
certificate (each, a "Certificate") previously representing any such
shares of CSB Common Stock shall thereafter represent only the right
to receive the Per Share Merger Consideration (subject to Appraisal
Rights, if validly demanded and perfected by the holder thereof) into
which such shares have been converted pursuant to this Section 1.4(a).
Shares of CSB Common Stock held by a stockholder who has properly
exercised his or her Appraisal Rights with respect thereto in
accordance with Section 262 of the DGCL shall not be converted into
the Per Share Merger Consideration. From and after the Effective
Time, a stockholder who validly demands and perfects such Appraisal
Rights shall no longer retain any right of a stockholder of CSB or the
Surviving Corporation, other than those provided for under the DGCL.

A-8

(b) At the Effective Time, all shares of CSB Common Stock that
are owned by CSB as treasury stock, including (except to the extent
otherwise provided in Section 6.17) those shares available for plan
share awards under the CSB Management Development and Recognition Plan
(the "CSB MRP"), or that are owned directly or indirectly by CSB,
Midland or any Subsidiary of either CSB or Midland, other than shares
of CSB Common Stock (i) held directly or indirectly in trust accounts,
managed accounts and the like or otherwise held in a fiduciary
capacity that are beneficially owned by third parties (any such
shares, whether held directly or indirectly by CSB, Midland or any
Subsidiary of either CSB or Midland, being referred to herein as
"Trust Account Shares") and (ii) held by CSB, Midland or any
Subsidiary thereof in respect of a debt previously contracted (any
such shares of CSB Common Stock, whether held directly or indirectly
by CSB or Midland or any Subsidiary of either CSB or Midland, being
referred to herein as "DPC Shares") shall be cancelled and shall cease
to exist and no consideration in respect of the cancellation of such
shares shall be paid in connection therewith.

(c) Each share of the no par value common stock of Merger Sub
issued and outstanding immediately prior to the Effective Time, which
shall be the only shares of capital stock of Merger Sub outstanding
prior to the Effective Time and all of which shall be owned by
Midland, shall be converted into one fully paid and nonassessable
share of the $0.01 par value common stock of the Surviving Corporation
and shall at the Effective Time constitute all of the issued and
outstanding shares of the capital stock of Surviving Corporation in
the Merger.

1.5 Payment for Options. In addition to the Per Share Merger
Consideration (defined below) to be paid by the Paying Agent (defined
below) upon surrender of the Certificates, Midland shall pay to each
holder of a CSB Stock Option (defined below) upon surrender thereof,
cash in the amount of the Per Share Option Consideration (defined
below) multiplied by the number of Underlying Shares (defined below).

1.6. Certificate of Incorporation of Surviving Corporation. The
Certificate of Incorporation of CSB immediately prior to the Effective
Time shall continue as the Certificate of Incorporation of Surviving
Corporation until otherwise amended or repealed from and after the
Effective Time.

1.7 Bylaws of Surviving Corporation. The Bylaws of CSB
immediately prior to the Effective Time shall continue as the Bylaws
of Surviving Corporation until otherwise amended or repealed from and
after the Effective Time.

1.8. Directors and Officers of Surviving Corporation. At the
Effective Time, the Board of Directors and the officers of Merger Sub
immediately prior thereto shall continue as the Board of Directors and
the officers, respectively, of Surviving Corporation, to hold office
in accordance with the Bylaws of Surviving Corporation and applicable laws.

A-9

1.9. Certain Defined Terms. As used herein, the following terms
shall have the following meanings:

"CSB Stock Options" means all of those options granted by CSB to
its officers, employees or directors to purchase shares of CSB Common
Stock under any CSB Stock Option Plan, whether or not such options are
exercisable prior to the Effective Time.

"CSB Stock Option Plans" means those written stock option plans
specified in Section 3.2 of the CSB Disclosure Schedule.

"Litigation Reserve" means a reserve established in respect of
that certain class action lawsuit filed by a stockholder of CSB in the
Court of Chancery of the State of Delaware in New Castle County (the
"Stockholder Litigation"), in the amount of $50,000, whether or not
required by GAAP (defined below), reduced, on a dollar for dollar
basis (but not less than zero), by any specific reserve otherwise
established by CSB in respect of the Stockholder Litigation required
by GAAP.

"Merger Consideration" means the product obtained by multiplying
Sixteen Dollars ($16.00) by the number of shares of CSB Common Stock
outstanding immediately prior to the Effective Time (the "Outstanding
Shares"), subject to possible adjustment pursuant to Section 1.10
hereof. All references herein to the term Merger Consideration (and
to the Per Share Merger Consideration) shall be deemed to include the
effect of any adjustment thereto made pursuant to Section 1.10 hereof.

"Per Share Merger Consideration" means Sixteen Dollars ($16.00);
provided, however, that such amount shall be subject to possible
adjustment pursuant to Section 1.10 hereof, determined on a per share
basis.

"Option Consideration" means the total amount of cash to be paid
in cancellation of all CSB Stock Options in existence immediately
prior to the Effective Time.

"Per Share Option Consideration" means, with respect to each CSB
Stock Option, the product obtained by multiplying the number of
Underlying Shares issuable upon the exercise thereof in full by the
amount by which the Per Share Merger Consideration exceeds the
exercise price per share provided for in the CSB Stock Option in
question to acquire the Underlying Shares.

"Underlying Shares" means, with respect to each CSB Stock Option,
the total number of shares of CSB Common Stock issuable upon the
exercise thereof in full, without regard to whether or not such CSB
Stock Option is then fully vested or exercisable.

1.10. Adjustment to Merger Consideration. (a) Notwithstanding
anything to the contrary set forth herein, the total Merger
Consideration shall be reduced, on a dollar-for-dollar basis, to the

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extent that the consolidated stockholders' equity of CSB as of the
Effective Date, determined in accordance with paragraph (b) of this
Section 1.10, is less than $10,176,000.

(b) CSB shall prepare a consolidated balance sheet as of the
fifteenth day immediately preceding the Effective Date (the "Closing
Balance Sheet Date"), specifying, among other things, the consolidated
stockholders' equity of CSB as of such date (the "Closing Balance
Sheet"). The Closing Balance Sheet shall be prepared in accordance
with generally accepted accounting principles ("GAAP"), consistently
applied. Additionally, the Closing Balance Sheet shall reflect all
"Transaction Costs" (defined below) whether or not required by GAAP to
then be recorded (whether as an expense, accrual, reserve or
otherwise) thereon. As used herein, the term "Transaction Costs"
means any and all costs and expenses incurred or to be incurred
(determined, where necessary, by the reasonable estimate of CSB) by
CSB as a result of the Merger or other transactions contemplated
hereby, including, without limitation, the fees and expenses of
attorneys, accountants, investment bankers and advisors and other
professional advisors or service providers and the Litigation Reserve,
reduced by any insurance coverage with respect thereto (evidenced by
the unconditional acceptance of coverage by the insurance carrier);
provided, however, that if the Stockholder Litigation is settled prior
to the Closing Date, then the amount of such settlement shall be
deemed a Transaction Cost in lieu of the Litigation Reserve, reduced
by any insurance coverage with respect thereto. Notwithstanding the
foregoing, any addition to CSB's loan loss reserve or charge to any
CSB loan requested by Midland after the date hereof for consistency
with Midland's policy in that regard shall not be deemed to be a
Transaction Cost and shall be disregarded for purposes of determining
CSB's consolidated stockholders' equity for the Closing Balance Sheet.

(c) Midland and its accountants shall be entitled to consult
with CSB and its accountants in connection with the preparation of the
Closing Balance Sheet. CSB's accountants shall make its work papers
available to Midland and its accountants. If Midland objects to the
Closing Balance Sheet, it must notify CSB in writing of each
adjustment item, specifying the amount thereof and setting forth, in
reasonable detail, the basis for such adjustment, no later than five
business days after Midland's receipt of the Closing Balance Sheet.
If Midland does not so notify CSB, the Closing Balance Sheet, as
prepared by CSB, shall be final, binding and conclusive on the
parties. In the event of a dispute with respect to a proposed
adjustment, Midland and CSB shall attempt to reconcile their
differences, and any resolution by them as to any disputed amount
shall be final, binding and conclusive on the parties. If the parties
are unable to resolve such dispute(s) within five days after Midland
delivers written notice thereof, the parties may submit the items
remaining in dispute for resolution to an independent accounting firm
of national reputation mutually appointed by Midland and CSB (the
"Independent Accounting Firm"). The Independent Accounting Firm shall
resolve any such dispute by sole reference to CSB's historic practice

A-11

of maintaining its books and records, taking into account the
treatment of Transaction Costs as provided in this Section 1.10. The
Independent Accounting Firm shall, within ten days after submission,
determine and report in writing to the parties upon such disputed
items, and such report shall be final, binding and conclusive on the
parties hereto. Midland and CSB shall share equally the fees and
charges of the Independent Accounting Firm. If, as a result of the
time required to resolve a dispute pursuant to this Section 1.10(b),
it is not practicable to consummate the Merger on the Closing Date
initially designated by Midland, then such Closing Date shall be
postponed until all such disputes are resolved, whereupon the Closing
Date shall be rescheduled to such date mutually agreed to by Midland
and CSB, which date shall not be less than three nor more than ten
business days following the resolution of such disputes.

ARTICLE II
PAYMENT OF MERGER CONSIDERATION

2.1. Deposit of Merger Consideration. At or prior to the
Effective Time, Midland shall irrevocably deposit, or shall cause to
be irrevocably deposited, in either case subject to Section 2.2(d),
with Effingham State Bank (the "Paying Agent"), for the benefit of the
holders of Certificates, for payment upon surrender of Certificates in
accordance with this Article II, cash in the amount of the Per Share
Merger Consideration to be held by the Paying Agent in a separate
account (the "Payment Fund").

2.2. Payment for Shares.

(a) Promptly after the Effective Time, Midland shall cause the
Paying Agent to mail to each holder of record of shares of CSB Common
Stock a transmittal notice (in customary form) thereof together with
instructions for effecting the surrender of Certificates evidencing
shares of CSB Common Stock in exchange for the Per Share Merger
Consideration. No distribution of the Per Share Merger Consideration
shall be made to any holder of CSB Common Stock until the Certificate
(or a lost stock certificate affidavit in form and substance
satisfactory to Midland) and the requisite documentation has been
properly surrendered to the Paying Agent or the Surviving Corporation,
and no interest shall be payable thereon.

(b) Upon surrender of a CSB Stock Option, Midland shall pay to
the holder thereof cash in the amount of the Per Share Option
Consideration, subject to any required withholding taxes. If, with
respect to any CSB Stock Option, the exercise price (on a per share
basis) is equal to or more than the Per Share Merger Consideration,
then the Surviving Corporation shall pay to the holder thereof an
amount equal to $0.01 multiplied by the number of Underlying Shares
with respect to such CSB Stock Option, subject to any required
withholding taxes.

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(c) After the Effective Time, there shall be no transfers on the
stock transfer books of CSB of the shares of CSB Common Stock which
were issued and outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates representing such shares
are presented for transfer to the Paying Agent, they shall be
cancelled and exchanged for the Per Share Merger Consideration
issuable with respect thereto as provided in this Article II, without
interest.

(d) Any portion of the Payment Fund that remains unclaimed by
the former stockholders of CSB for 12 months after the Effective Time
shall be paid to the Surviving Corporation. Any of the former
stockholders of CSB who have not theretofore complied with this
Article II shall thereafter look only to the Surviving Corporation for
payment of the consideration due them under this Agreement without any
interest thereon. Notwithstanding the foregoing, none of Midland,
Surviving Corporation, CSB, the Paying Agent or any other person shall
be liable to any former holder of Shares or CSB Stock Options for any
amount delivered in good faith to a public official pursuant to
applicable abandoned property, escheat or similar laws.

(e) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if
reasonably required by Midland, the posting by such person of a bond
in such amount as Midland may reasonably direct as indemnity against
any claim that may be made against it with respect to such
Certificate, the Paying Agent will issue in exchange for such lost,
stolen or destroyed Certificate consideration issuable pursuant to
this Agreement.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CSB

CSB hereby represents and warrants to Midland as follows:

3.1. Corporate Organization. (a) CSB is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. CSB has the corporate power and authority to own
or lease all of its properties and assets and to carry on its business
as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified
would not have a Material Adverse Effect (defined below) on CSB. The
Certificate of Incorporation and Bylaws of CSB, copies of which have
previously been delivered to Midland, are true and complete copies of
such documents as in effect as of the date of this Agreement. As used
in this Agreement, the term "Material Adverse Effect" means, with
respect to CSB, any effect that (i) is material and adverse to the
business, assets, properties, prospects (insofar as they can

A-13

reasonably be foreseen), results of operations or financial condition
of CSB and its Subsidiaries, taken as a whole, or (ii) materially
impairs the ability of CSB and its Subsidiaries to consummate the
transactions contemplated hereby; provided, however, that Material
Adverse Effect shall not be deemed to include the impact of
(a) changes in laws and regulations or interpretations thereof that
are generally applicable to the banking or savings institution
industries, (b) changes in generally accepted accounting principles or
regulatory accounting requirements that are generally applicable to
the banking or savings institution industries, (c) subject to
Section 8.2(b) hereof, expenses incurred in connection with the
transactions contemplated hereby, (d) changes attributable to or
resulting from changes in general economic conditions, including
changes in the prevailing level of interest rates, and (e) any
modifications or changes to valuation policies and practices in
connection with the Merger or restructuring charges taken in
connection with the Merger, in each case in accordance with GAAP,
consistently applied. As used in this Agreement, the word
"Subsidiary," when used with respect to any party, means any bank,
corporation, partnership or other organization, whether incorporated
or unincorporated, which is consolidated with such party for financial
reporting purposes.

(b) CSB has no Subsidiaries other than Centralia Savings Bank
and Centralia SLA, Inc. ("SLA"), both of which are, directly or
indirectly, wholly owned by CSB. Centralia Savings Bank is a savings
bank duly organized, validly existing and in good standing under the
laws of the State of Illinois. The deposit accounts of Centralia
Savings Bank are insured by the Federal Deposit Insurance Corporation
("FDIC") through the Savings Association Insurance Fund ("SAIF") to
the fullest extent permitted by law, and all premiums and assessments
required to be paid in connection therewith have been paid when due by
Centralia Savings Bank. Each of Centralia Savings Bank and SLA has
the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being
conducted, and is duly licensed and qualified to do business in each
jurisdiction in which the nature of the business conducted by it or
the character or location of the properties and assets owned or leased
by it makes such licensing or qualifications necessary, except where a
failure to be so licensed or qualified would not have a Material
Adverse Effect on CSB. The Articles of Incorporation and Bylaws of
Centralia Savings Bank and of SLA, copies of which have previously
been delivered to Midland, are true and complete copies of such
documents as in effect as of the date of this Agreement. All of the
outstanding capital stock of Centralia Savings Bank is owned by CSB,
and all of the outstanding capital stock of SLA is owned by Centralia
Savings Bank. SLA is a corporation duly organized, validly existing
and in good standing under the laws of the State of Illinois.

(c) The minute books of CSB and each of the Subsidiaries each
contain true, complete and accurate records in all material respects
of all meetings and other corporate actions held or taken since

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January 1, 1995 of the respective stockholders and Board of Directors
of each entity (including committees of the Board of Directors).

3.2. Capitalization. The authorized capital stock of CSB
consists of 2,000,000 shares of CSB Common Stock and 100,000 shares of
$0.01 par value preferred stock ("CSB Preferred Stock"). As of the
date of this Agreement, there are (i) 732,299 shares of CSB Common
Stock issued and outstanding (including 30,222 shares held by the CSB
MRP, of which 7,452 shares are subject to plan share awards under the
CSB MRP) and no shares of CSB Preferred Stock issued and outstanding,
(ii) 302,701 shares of CSB Common Stock held in CSB's treasury, (iii)
no shares of CSB Common Stock or CSB Preferred Stock are reserved for
issuance except for (A) 61,750 shares issuable upon the exercise of
the CSB Stock Options granted under the CSB Stock Option Plans adopted
by the Board of Directors of CSB, which are specified in Section 3.2
of the CSB Disclosure Schedule, and (B) as otherwise indicated in
Section 3.2 of the Disclosure Schedule which is being delivered by CSB
to Midland concurrently herewith (the "CSB Disclosure Schedule"). All
of the issued and outstanding shares of CSB Common Stock have been
duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights. Except as referred to above or
reflected in Section 3.2 of the CSB Disclosure Schedule, neither CSB
nor any Subsidiary is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling
for the purchase or issuance of any shares of CSB Common Stock, CSB
Preferred Stock or any other equity security of CSB or of any CSB
Subsidiary or any securities representing the right to purchase or
otherwise receive any shares of CSB Common Stock, CSB Preferred Stock
or any other equity security of CSB or any CSB Subsidiary.
Section 3.2 of the CSB Disclosure Schedule sets forth the names of the
holders of all CSB Stock Options, issued and outstanding as the date
hereof, together with, for each such CSB Stock Option, the date of
grant thereof, the number of shares subject thereto, the expiration
date thereof and the current exercise or purchase price thereunder.

3.3. Authority; No Violation. (a) CSB has full corporate power
and authority to execute and deliver this Agreement and, subject to
the approval of this Agreement by the stockholders of CSB and
regulatory approvals, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly approved by the Board of Directors of CSB. The Board of
Directors of CSB has directed that this Agreement and the transactions
contemplated hereby be submitted to CSB's stockholders for approval at
a meeting of such stockholders and, except for the adoption of this
Agreement by the requisite vote (as described below) of CSB's
stockholders, no other corporate proceedings on the part of CSB are
necessary to approve this Agreement and to consummate the transactions
contemplated hereby. The only approval by stockholders of CSB
required under applicable law, the Certificate of Incorporation or
Bylaws of CSB or otherwise, in order to effect the Merger and other
transactions provided for herein is the affirmative vote of the

A-15

holders of a majority of the outstanding shares of CSB Common Stock.
This Agreement has been duly and validly executed and delivered by CSB
and (assuming due authorization, execution and delivery by Midland and
Merger Sub) constitutes a valid and binding obligation of CSB,
enforceable against CSB in accordance with its terms, except as
enforcement may be limited by general principles of equity, whether
applied in a court of law or a court of equity, and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies
generally.

(b) Assuming that the consents and approvals referred to in
Section 3.4 are duly obtained, neither the execution and delivery of
this Agreement by CSB, nor the consummation by CSB of the transactions
contemplated hereby, nor compliance by CSB with any of the terms or
provisions hereof, will (i) violate any provision of the Certificate
of Incorporation or Bylaws of CSB, or (ii) (x) violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to CSB or any CSB Subsidiary or any of their
respective properties or assets, or (y) violate, conflict with, result
in a breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, result in the termination
of or a right of termination or cancellation under, accelerate the
performance required by, or result in the creation of any lien,
pledge, security interest, charge or other encumbrance upon any of the
respective properties or assets of CSB or any CSB Subsidiary
(collectively, the "CSB Entities" and each, a "CSB Entity") under, any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which any CSB Entity is a party, or by
which any CSB Entity or any of its properties or assets may be bound
or affected, except, in the case of clause (y) above, for such
violations, conflicts, breaches or defaults which, either individually
or in the aggregate, would not have or be reasonably likely to have a
Material Adverse Effect on CSB.

3.4. Consents and Approvals. (a) Other than in connection or in
compliance with the provisions of the DGCL, the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and the rules and
regulations thereunder, or filings, consents, reviews, authorizations,
approvals or exemptions required under the Holding Company Act, a
review of this Agreement and transactions contemplated by the U.S.
Department of Justice ("DOJ") under federal antitrust laws, any
required approvals or filings pursuant to any state statutes or
regulations applicable to CSB, Midland or their respective
Subsidiaries (including Merger Sub) with respect to the transactions
contemplated hereby, or related filings, authorizations or approvals,
no consents or approvals of or filings or registrations with any
court, administrative agency or commission or other governmental
authority or instrumentality or self-regulatory organization, as
defined in Section 3(a)(26) of the Exchange Act (each a "Governmental
Entity"), or with any third party are necessary on behalf of CSB in

A-16

connection with (1) the execution and delivery by CSB of this
Agreement, and (2) the consummation by CSB of the Merger and the other
transactions contemplated hereby.

(b) As of the date hereof, CSB is not aware of any reasons
relating to the CSB Entities why all consents and approvals will not
be procured from all Governmental Entities having jurisdiction over
the transactions contemplated by this Agreement as shall be necessary
for consummation of the transactions contemplated by this Agreement.

3.5. Regulatory Reports; Examinations. Each CSB Entity has
timely filed all reports, registrations and statements, together with
any amendments required to be made with respect thereto, that it was
required to file since January 1, 1995, with any Governmental Entity
and has paid all fees and assessments due and payable in connection
therewith, except where the failure to file such report, registration
or statement or to pay such fees or expenses, either individually or
in the aggregate, will not have a Material Adverse Effect on CSB.
Except for normal examinations conducted by a Governmental Entity in
the regular course of the businesses of the CSB Entities and except as
set forth in Section 3.5 of the CSB Disclosure Schedule, no
Governmental Entity has initiated any proceeding or, to the best
knowledge of CSB, investigation into the business or operations of
either CSB Entity since January 1, 1995, the outcome of which could
result in a Material Adverse Effect on CSB. There is no unresolved
material violation, criticism or exception by any Governmental Entity
with respect to any report or statement relating to any examinations
of any CSB Entity.

3.6. Financial Statements. CSB has previously delivered to
Midland copies of (a) the audited consolidated balance sheets of CSB
as of September 30 for the fiscal years 1999 and 1998 and the related
consolidated statements of income, changes in stockholders' equity and
cash flows for each of such annual periods, together with the notes
thereto, audited by McGladrey & Pullen, LLP and incorporated by
reference in CSB's annual report on Form 10-KSB, as filed with the
SEC, and (b) the unaudited consolidated balance sheet of CSB as of
December 31, 1998 and March 31 and June 30, 1999 and the related
unaudited consolidated statements of income and cash flows for the
periods then ended included in the Quarterly Reports on Form 10-QSB as
filed with the SEC (collectively, and together with the Financial
Statements of CSB referred to in Section 6.7 hereof, the "CSB
Statements"). The CSB Statements have been or will be prepared in
accordance with GAAP, present or will present fairly the consolidated
financial position of CSB and its Subsidiaries at the date and the
consolidated results of operations, cash flows and changes in
stockholders' equity of CSB and its Subsidiaries for the periods
stated therein and are derived from the books and records of CSB and
its Subsidiaries, which are complete and accurate in all material
respects and have been maintained in all material respects in
accordance with applicable laws and regulations. No CSB Entity has

A-17

any material contingent liabilities that are not reflected in the most
recent audited CSB Statements or notes thereto.

3.7. Broker's Fees. Neither CSB nor any of its officers or
directors has employed any broker or finder or incurred any liability
for any broker's fees, commissions or finder's fees in connection with
any of the transactions contemplated by this Agreement, except that
CSB has engaged, and has and/or will pay a fee to, Charles Webb &
Company, a division of Keefe, Bruyette & Woods, Inc. ("Charles Webb"),
in accordance with the terms of a letter agreement between CSB and
Charles Webb, attached as Section 3.7 of the CSB Disclosure Schedule.

3.8. Absence of Certain Changes or Events. (a) Except as may be
set forth in Section 3.8(a) of the CSB Disclosure Schedule, (i) since
September 30, 1999, none of the CSB Entities taken as a whole has
incurred any material liability, except in the ordinary course of its
business consistent with its past practices (excluding the incurrence
of expenses in connection with this Agreement and the transactions
contemplated hereby), (ii) since September 30, 1999, no event has
occurred which has caused, or is reasonably likely to cause,
individually or in the aggregate, a Material Adverse Effect on CSB,
and (iii) for the period from October 1, 1999 to the date of this
Agreement, each CSB Entity has carried on its business in the ordinary
course consistent with its past practices (excluding, in the case of
CSB, the execution of this Agreement and matters in connection
therewith).

(b) Except as set forth in Section 3.8(b) of the CSB Disclosure
Schedule, since September 30, 1999, no CSB Entity has (i) increased
the wages, salaries, compensation, pension or other fringe benefits or
perquisites payable to any officer or director from the amount thereof
then in effect (which amounts have been previously disclosed to
Midland), granted any severance or termination pay, entered into any
contract to make or grant any severance or termination pay or paid any
bonus other than those year end bonuses for fiscal 1999 or except as
listed in Section 3.8(b) of the CSB Disclosure Schedule, (ii) suffered
any strike, work stoppage, slow-down or other labor disturbance,
(iii) been a party to a collective bargaining agreement, contract or
other agreement or understanding with a labor union or organization,
or (iv) had any union organizing activities.

3.9. Legal Proceedings. (a) Except as set forth in Section 3.9
of the CSB Disclosure Schedule, no CSB Entity is a party to any, and
there are no pending or, to the best of CSB's knowledge, threatened,
legal, administrative, arbitral or other proceedings, claims, actions
or governmental or regulatory investigations of any nature against any
CSB Entity (i) as to which there is a reasonable probability of an
adverse determination and which, if adversely determined, would,
individually or in the aggregate, have or be reasonably expected to
have a Material Adverse Effect on CSB or (ii) challenging the validity
or propriety of the transactions contemplated by this Agreement.

A-18

(b) There is no injunction, order, judgment, decree or
regulatory restriction (other than regulatory restrictions that apply
to similarly situated bank holding companies or savings banks) imposed
upon any CSB Entity or its assets which has had, or could reasonably
be expected to have, a Material Adverse Effect on CSB.

3.10. Taxes. (a) Except as set forth in Section 3.10(a) of
the CSB Disclosure Schedule, each CSB Entity has (i) duly and timely
filed (including applicable extensions granted without penalty) all
Tax Returns (as hereinafter defined) required to be filed at or prior
to the Effective Time, and such Tax Returns are true, correct and
complete in all material respects and, to the extent required, CSB has
disclosed on its federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of
federal income Taxes (as hereinafter defined) within the meaning of
Section 6662 of the Internal Revenue Code of 1986, as amended (the
"Code"), and (ii) paid in full or made adequate provision in the CSB
Statements (in accordance with GAAP) for all known Taxes. Except as
set forth in Section 3.10(a) of the CSB Disclosure Schedule, no
deficiencies for any Taxes have been proposed, asserted, assessed or,
to the best knowledge of management of CSB, threatened against or with
respect to a CSB Entity. Except as set forth in Section 3.10(a) of
the CSB Disclosure Schedule, (i) there are no liens for Taxes upon the
assets of any CSB Entity except for statutory liens for current Taxes
not yet due, (ii) no CSB Entity has requested any extension of time
within which to file any Tax Returns in respect of any fiscal year
which have not since been filed and no request for waivers of the time
to assess any Taxes are pending or outstanding, (iii) with respect to
each taxable period of a CSB Entity, the federal and state income Tax
Returns of the CSB Entities have not been examined by the Internal
Revenue Service (the "IRS") or appropriate other tax authorities or
the time for assessing and collecting income Tax with respect to such
taxable period has closed and such taxable period is not subject to
review, (iv) CSB has not filed or been included in a combined,
consolidated or unitary income Tax Return nor is it subject to any
actual or contingent liability for the Taxes of any person under
Regulation Section 1.1502-6 under the Code (or any similar provision
of state law), (v) CSB is not a party to any agreement providing for
the allocation or sharing of Taxes (other than the allocation of
federal income taxes as provided by Regulation Section 1.1552-1(a)(1)
under the Code), (vi) CSB is not required to include in income any
adjustment pursuant to Section 481(a) of the Code (or any similar or
corresponding provision or requirement of state or foreign income Tax
law), by reason of the voluntary change in accounting method (nor has
any taxing authority proposed in writing any such adjustment or change
of accounting method), (vii) CSB has not filed a consent pursuant to
Section 341(f) of the Code, (viii) CSB has not made any payment nor
will it be obligated to make any payment (by contract or otherwise)
which will not be deductible by reason of Section 280G of the Code as
a result of the consummation of the Merger, and (ix) none of the
assets of the CSB Entities directly or indirectly secures any debt the
interest on which is tax-exempt under Section 103(a) of the Code.

A-19

(b) For purposes of this Agreement, (i) "Taxes" shall mean all
taxes, charges, fees, levies, penalties or other assessments imposed
by any United States federal, state, local or foreign taxing
authority, as applicable, including, but not limited to income,
excise, property, sales, use, transfer, franchise, gross receipts,
payroll, withholding, estimated, social security, unemployment
insurance, stamp, workers' compensation or other taxes, including any
interest, penalties or additions attributable thereto, and (ii) "Tax
Return" shall mean any return, report, information return or other
document (including any related or supporting information) with
respect to Taxes.

3.11. Employee Benefits. (a) Section 3.11 of the CSB
Disclosure Schedule lists all employee benefit plans, arrangements and
agreements to which any CSB Entity is a party or by which it is bound,
legally or otherwise (collectively, the "Plans" and each individually
a "Plan"), including, without limitation, (i) any profit-sharing,
deferred compensation, bonus, stock option, stock purchase, pension,
retainer, consulting, retirement, severance, welfare or incentive
plan, agreement or arrangement (ii) any plan, agreement or arrangement
providing for "fringe benefits" or perquisites to employees, officers,
directors or agents, including but not limited to benefits relating to
company automobiles, clubs, vacation, child care, parenting,
sabbatical, sick leave, medical, dental, hospitalization, life
insurance and other types of insurance, and (iii) any other "employee
benefit plan" (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). CSB has
delivered to Midland true and complete copies of each Plan (including
a summary description of any such Plan not otherwise in writing) and
all related documents, including but not limited to (i) all summary
plan descriptions (if applicable) relating to the Plan, (ii) the
actuarial report for the Plan (if applicable) for each of the last two
years, (iii) the most recent determination letter from the Internal
Revenue Service (if applicable) for the Plan, and (iv) in the case of
any and all such severance Plans, a listing setting forth the total
dollar amount payable to each current employee of any CSB Entity under
such Plans currently in effect based on the various assumptions set
forth in such list. Except as set forth in Section 3.11 of the CSB
Disclosure Schedule, there are no negotiations, demands or proposals
that are pending or have been made that concern matters now covered,
or that would be covered, by the Plans. Except as set forth in
Section 3.11 of the CSB Disclosure Schedule, the CSB Entities are in
full compliance with the applicable provisions of ERISA (as amended
through the date of this Agreement), the regulations and published
authorities thereunder, and all other laws, rules and regulations
applicable with respect to all Plans that are subject to ERISA, except
to the extent that any non-compliance would likely not have a Material
Adverse Effect on CSB or the Plan in question. The CSB Entities have
performed all of their material obligations under all the Plans,
including, but not limited to, the full payment when due of all
amounts required to be made as contributions thereto or otherwise,
except where such nonperformance would not have a Material Adverse

A-20

Effect on CSB. To the best knowledge of CSB, there are no actions,
suits or claims (other than routine claims for benefits) pending or
threatened against such Plans or their assets, or arising out of such
Plans, and, to the best knowledge of CSB, no facts exist which could
give rise to any such actions, suits or claims that might have a
Material Adverse Effect on such Plans. With respect to each such Plan
which is an "employee benefit plan" (within the meaning of
Section 3(3) of ERISA) or a "plan" (within the meaning of
Section 4975(e)(1) of the Code), there has occurred no transaction
prohibited by Section 406 of ERISA and no "prohibited transaction"
(within the meaning of Section 4975(c) of the Code) for which no
exemption under Section 408(b) of ERISA or Section 4975(d) of the Code
exists or for which no administrative exemption has been granted under
Section 408(a) of ERISA.

(b) Section 3.11 of the CSB Disclosure Schedule separately
identifies all "employee pension benefit plans" (within the meaning of
Section 3(2) of ERISA) which are also stock bonus, pension or profit-
sharing plans within the meaning of Section 401(a) of the Code (each a
"Qualified Plan"). Each such Qualified Plan has been duly authorized
by the Board of Directors of CSB or CSB Bank, as appropriate, and is
qualified in form and operation under Section 401(a) of the Code and
each trust under each such Qualified Plan is exempt from tax under
Section 501(a) of the Code. No event has occurred that will or could
give rise to disqualification or loss of tax-exempt status of any such
Qualified Plan or related trust under such Sections. No event has
occurred that will or could subject any such Qualified Plan to tax
under Section 511 of the Code. In addition to those documents
deliverable under Section 3.11(a), CSB has delivered to Midland for
each such Qualified Plan copies of the following documents: (i) the
Form 5500 filed in each of the most recent three plan years,
including, if required under applicable law, all schedules thereto and
financial statements with attached opinions of independent
accountants, (ii) the consolidated statement of assets and liabilities
of such Qualified Plan as of its most recent valuation date, and
(iii) the statement of changes in fund balance and in financial
position or the statement of changes in net assets available for
benefits under such Qualified Plan for the most recently ended plan
year. The financial statements so delivered fairly present the
financial condition and the results of operations of each such
Qualified Plan as of such dates. "ERISA Affiliate", as applied to any
person, means (i) any corporation which is a member of a controlled
group of corporations within the meaning of Section 414(b) of the Code
of which that person is a member, (ii) any trade or business (whether
or not incorporated) which is a member of a group of trades or
business under common control within the meaning of Section 414(c) of
the Code of which that person is a member, and (iii) any member of an
affiliated service group within the meaning of Section 414(m) and (o)
of the Code of which that person, any corporation described in
clause (i) above or any trade or business described in clause (ii)
above is a member.

A-21

(c) No Plan listed in Section 3.11 of the CSB Disclosure
Schedule is subject to Title IV of ERISA or Section 412 of the Code.
No CSB Entity has ever contributed to or had an obligation to
contribute to a plan subject to Title IV of ERISA or Section 412 of
the Code. No ERISA Affiliate has withdrawn from any such plan subject
to Title IV of ERISA with respect to which there is any outstanding
liability as of the date hereof.

(d) No Plan listed in Section 3.11 of the CSB Disclosure
Schedule is a "multiemployer plan" (within the meaning of
Section 3(37) of ERISA). No CSB Entity has ever contributed to or had
an obligation to contribute to any multiemployer plan. No ERISA
Affiliate has withdrawn from any such multiemployer plan in a complete
or partial withdrawal under Subtitle E of Title IV of ERISA with
respect to which there is any outstanding liability as of the date
hereof, or received notice from any such multiemployer plan that it is
in reorganization or insolvency pursuant to Sections 4241 or 4245 of
ERISA or that it intends to terminate or has terminated under
Section 4041A or 4042 or ERISA.

(e) All Plans that are group health plans of CSB and any ERISA
Affiliate have been operated in material compliance with the group
health plan continuation coverage requirements of Part 6 Subtitle B of
Title I of ERISA and 4980B of the Code to the extent such requirements
are applicable. Except to the extent required under Section 4980B of
the Code or as otherwise disclosed in Section 3.11 of the CSB
Disclosure Schedule, no CSB Entity provides health or welfare benefits
(through the purchase of insurance or otherwise) for any retired or
former employees.

(f) There has been no act or omission by CSB or any ERISA
Affiliate that has given rise to or may give rise to fines, penalties,
taxes, or related changes under Section 502(c), (i) or (1)
Section 4071 of ERISA or Chapter 43 of the Code.

(g) No representation and warranty sent forth in this Section
3.11 shall be deemed to be breached unless such breach, individually
or in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect on CSB.

3.12. Insurance. Set forth in Section 3.12 of the CSB
Disclosure Schedule is a list of all insurance policies maintained by
or for the benefit of any of the CSB Entities or their respective
directors, officers, employees or agents.

3.13. Year 2000. None of the CSB Entities has received, or
reasonably expects to receive, a "Year 2000 Deficiency Notification
Letter" (as such term is employed in the Federal Reserve Board's
Supervision and Regulation Letter No. SR98-3 (ISSUE P), dated March 4,
1998). CSB has made available to Midland a complete and accurate copy
of Centralia Savings Bank's plan for addressing and complying with the
issues set forth in the Interagency Statements of the Federal

A-22

Financial Institutions Examination Council addressed to the Boards of
Directors and Chief Executive Officers of all federally supervised
financial institutions regarding Year 2000 safety and soundness for
insured depository institutions. As of the date hereof, Centralia
Savings Bank has substantially completed the implementation of such
plan and has complied in all material respects with the "Interagency
Guidelines Establishing Year 2000 Standards for Safety and Soundness"
issued pursuant to Section 39 of the Federal Deposit Insurance Act.

3.14. Compliance with Applicable Law. The CSB Entities
collectively hold, and have at all times since September 30, 1999
held, all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under
and pursuant to each, and, except as disclosed in Section 3.14 of the
CSB Disclosure Schedule, have complied with and are not in default in
any respect under any applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity
relating to the CSB Entity in question, except where the failure to
hold such license, franchise, permit or authorization or such
noncompliance or default would not, individually or in the aggregate,
have or be reasonably likely to have a Material Adverse Effect on CSB,
and CSB does not know of, and has received no notice of, any material
violations of any of the above. No CSB Entity is required by
Section 32 of the Federal Deposit Insurance Act or other applicable
laws to give prior notice to any federal Governmental Entity of any
proposed addition of an individual to its board of directors or the
employment of an individual as an officer.

3.15. Certain Contracts. (a) Except as set forth in
Section 3.15(a) of the CSB Disclosure Schedule, no CSB Entity is a
party to or bound by any contract, arrangement, plan, commitment or
understanding (whether written or oral) (i) with respect to the
employment of any directors, officers, employees or consultants,
(ii) which, upon the consummation of the transactions contemplated by
this Agreement, will (either alone or upon the occurrence of any
additional acts or events) result in any payment (whether of severance
pay or otherwise) becoming due from Midland, CSB, any CSB Entity or
Surviving Corporation to any officer or employee thereof, (iii) which
is a material contract (as defined in Item 601(b)(10) of Regulation S-
B of the SEC) to be performed after the date of this Agreement that
has not been filed or incorporated by reference in CSB Reports,
(iv) which is an agreement, not otherwise described by clause (iii)
hereof, involving the payment by a CSB Entity of more than $100,000
per annum, (v) which materially restricts the conduct of any line of
business by the CSB Entity, or (vi) under which any of the benefits
will be increased, or the vesting of the benefits will be accelerated,
by the occurrence of any of the transactions contemplated by this
Agreement, or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by
this Agreement. Each contract, arrangement, plan, commitment or
understanding of the type described in this Section 3.15(a), whether
or not set forth in Section 3.15(a) of the CSB Disclosure Schedule, is

A-23

referred to herein as a "CSB Contract." CSB has previously delivered
to Midland true, complete and correct copies of each CSB Contract and
any amendments or modifications thereof.

(b) (i) Each CSB Contract is valid and binding and in full force
and effect, (ii) the applicable CSB Entity has in all material
respects performed all obligations required to be performed by it to
date under each CSB Contract, except where such noncompliance,
individually or in the aggregate, would not have or be reasonably
likely to have a Material Adverse Effect on CSB, (iii) no event or
condition exists which constitutes or, after notice or lapse of time
or both, would constitute, a material default on the part of a CSB
Entity under any such CSB Contract, except where such default,
individually or in the aggregate, would not have or be reasonably
likely to have a Material Adverse Effect on CSB and (iv) no other
party to such CSB Contract is, to the best knowledge of CSB, in
default in any respect thereunder, except where such default,
individually or in the aggregate, would not have or be reasonably
likely to have a Material Adverse Effect on CSB.

3.16. Agreements with Regulatory Agencies. No CSB Entity is
subject to any cease-and-desist or other order issued by, and is not a
party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any written order or directive by, or
a recipient of any extraordinary supervisory letter from, or has
adopted any board resolutions at the request of (each of the
foregoing, a "Regulatory Agreement"), any Governmental Entity that
currently restricts the conduct of its business or that in any manner
relates to its capital adequacy, its credit policies, its management
or its business, nor has any CSB Entity been advised by any
Governmental Entity that it is considering issuing or requesting any
Regulatory Agreement.

3.17. Investment Securities. Section 3.17 of the CSB
Disclosure Schedule sets forth an investment securities report as of
September 30, 1999 which includes security descriptions, CUSIP
numbers, original and current face values, book values, coupon rates
and current market values. Section 3.17 of the CSB Disclosure
Schedule sets forth all securities pledged by CSB Bank for any purpose
as of September 30, 1999, if any.

3.18. Property. The CSB Entities collectively have good and
marketable title, free and clear of all liens, encumbrances,
mortgages, pledges, charges, defaults or equitable, interests to all
of the real property and personal property, whether tangible or
intangible, which, individually or in the aggregate, are material, and
which are reflected on the balance sheet of CSB as of September 30,
1999 or acquired after such date, except (i) liens for taxes not yet
due and payable, (ii) liens listed and described in Section 3.18 of
the CSB Disclosure Schedule, (iii) pledges to secure deposits and
other liens incurred in the ordinary course of banking business,

A-24

(iv) such imperfections of title, easements and encumbrances, if any,
as are not material in character, amount or extent, (v) for
dispositions thereof and encumbrances thereon for adequate
consideration in the ordinary course of business or (vi) with respect
to assets classified as real estate owned. All leases pursuant to
which CSB, as lessee, leases real or personal property which,
individually or in the aggregate, are material, are valid and
enforceable in accordance with their respective terms and neither the
CSB Entity being a party thereto nor, to the best knowledge of CSB,
any other party thereto, is in default in any material respect
thereunder. Section 3.18 of the CSB Disclosure Schedule identifies
the book value on the books of CSB as of September 30, 1999, of all
interests of the CSB Entities in such real property.

3.19. Equity and Real Estate Investments. The CSB Entities
have no (i) equity investments, or (ii) investments in real estate,
other than assets classified as "Real Estate Owned" and set forth in
Section 3.23 of the CSB Disclosure Schedule.

3.20. Environmental Matters. (a) Neither the conduct nor
operation of the CSB Entities nor any condition of any property
presently owned, leased or operated by any CSB Entity, nor to the best
knowledge of CSB, previously owned, leased or operated by any CSB
Entity (each, a "Property") violates or violated Environmental Laws
(as defined below), and no condition has existed or event has occurred
with respect to the CSB Entities or any such Property that is
reasonably likely to result in liability under Environmental Laws,
except for any violations or conditions which, individually or in the
aggregate, have not had and are not reasonably likely to have a
Material Adverse Effect on CSB. CSB will, upon the request of
Midland, promptly provide Midland with copies of all documentation
relative to the compliance with Environmental Laws with respect to any
specific Property;

(b) No litigation, claim or other proceeding under any
Environmental Law is pending before any court or governmental agency
(and, to the best of CSB's knowledge, no such litigation, claim or
other proceeding has been threatened) alleging noncompliance with or
violation of any Environmental Laws by any CSB Entity, and none of the
CSB Entities or any of their respective properties is a party to or is
subject to any order, decree, agreement, memorandum of understanding
or similar arrangement with any federal or state governmental agency
or authority charged with monitoring or enforcing any Environmental
Laws that has not been satisfactorily resolved and closed, and no CSB
Entity has been advised by any such regulatory authority charged with
monitoring or enforcing any Environmental Laws that such authority is
contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree,
agreement or memorandum of understanding (all of the above,
collectively "Environmental Legal Matters"), except for any
Environmental Legal Matter which, individually or in the aggregate,

A-25

has not had, and is not reasonably likely to have, a Material Adverse
Effect on CSB;

(c) No CSB Entity has received any notice from any person or
entity that (i) such CSB Entity is or was in violation of, or (ii) the
operation or condition of any property at any time owned, leased or
operated by a CSB Entity or, to the best knowledge of CSB, held as
collateral or held as a fiduciary by a CSB Entity is or was in
violation of or is or has been alleged to give rise to liability on
the part of such CSB Entity under, any Environmental Law, including
but not limited to responsibility (or potential responsibility) for
the cleanup or other remediation of any pollutants, contaminants, or
hazardous or toxic wastes, substances or materials (collectively,
"Hazardous Materials") at, on, beneath, or originating from any such
property that has not been satisfactorily resolved and closed and,
except for any of the above which, individually or in the aggregate,
has not had, and is not reasonably likely to have, a Material Adverse
Effect on CSB; and

(d) For purposes of this Section 3.20, "Environmental Laws"
means all applicable local, state and federal environmental, health
and safety laws and regulations, including, without limitation, the
Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation, and Liability Act, the Clean
Water Act, the Federal Clean Air Act, and the Occupational Safety and
Health Act, each as amended, and all regulations promulgated
thereunder, and all state law counterparts thereof.

(e) Within 45 days after the date hereof, CSB, at its expense,
will furnish to Midland, with respect to each parcel of real property
utilized by a CSB Entity for the conduct of business and each parcel
of Real Property Owned, a written environmental audit prepared by an
engineering firm or other qualified expert satisfactory to Midland,
and prepared in accordance with the ASTM standard for Phase I
environmental site assessments exclusive of the title search (as such
search is being done independent of the environmental audit), and
designed to meet the requirements of any applicable state law relating
to an innocent owner defense to liability for releases of Hazardous
Substances (the "Phase I Audits"). Midland may request by written
notice to CSB within ten days following receipt of any Phase I Audit
that additional investigation be performed ("Phase II Work"). Costs
associated with Phase II Work with respect to those Phase I Audits
which recommended that additional investigation be done shall be paid
by CSB up to $15,000 and thereafter paid by Midland. Any and all
costs associated with other Phase II Work or other environmental
investigation shall be borne solely by Midland. Within ten days of
receiving the results of any Phase II Work that confirms the presence
of a significant environmental concern that may reasonably have a
Material Adverse Effect on CSB, Midland and CSB will agree to
negotiate a mutually agreeable resolution. If a mutually agreeable
resolution cannot be reached within ten days following Midland's
receipt of such Phase II results, either CSB or Midland shall have the

A-26

right to terminate this Agreement by providing written notice of the
same to the other party.

3.21. Derivative Transactions. (a) No CSB Entity has engaged
in transactions in or involving, and does not own or hold and has no
exposure to, any forwards, futures, options on futures, swaps or other
derivative instruments (the foregoing being collectively called the
"Derivative Securities") except for any such transactions entered into
by the CSB Entity as agent on the order and for the account of others,
or as principal for purposes of hedging interest rate risk on U.S.
dollar denominated securities and other financial instruments.

(b) All Derivative Securities to which a CSB Entity is a party,
or by which any of its respective properties or assets may be bound,
were entered into in the ordinary course of business in accordance
with prudent banking practice and applicable rules, regulations and
policies of Regulatory Authorities and with counterparts believed to
be financially responsible at the time, and are legal, valid and
binding obligations and are in full force and effect. Each CSB Entity
has duly performed in all material respects all of its obligations
thereunder to the extent that such obligations to perform have
accrued, and there are no material breaches, violations or defaults or
allegations or assertions of such by any party thereunder.

3.22. Loan Portfolio. (a) Except as set forth in
Section 3.22 of the CSB Disclosure Schedule, Centralia Savings Bank is
not a party to any written or oral (i) loan agreement, note or
borrowing arrangement (including, without limitation, leases, credit
enhancements, commitments, guarantees and interest-bearing assets)
(collectively, "Loans"), under the terms of which the obligor is, as
of the date of this Agreement, over 90 days delinquent in payment of
principal or interest or in default of any other material provision,
or (ii) Loan with any director, executive officer or, to the best of
CSB's knowledge, greater than five percent stockholder of CSB, or to
the best knowledge of CSB, any person, corporation or enterprise
controlling, controlled by or under common control with any of the
foregoing. Section 3.22 of the CSB Disclosure Schedule sets forth
(i) all of the Loans of Centralia Savings Bank that as of the date of
this Agreement are classified by any bank examiner (whether regulatory
or internal) as "Other Loans Specially Mentioned", "Special Mention",
"Substandard", "Doubtful", "Loss", "Classified", "Criticized", "Credit
Risk Assets", "Concerned Loans", "Watch List" or words of similar
import, together with the principal amount of and accrued and unpaid
interest on each such Loan and the identity of the borrower
thereunder, (ii) by category of Loan (i.e., commercial, consumer,
etc.), all of the Loans of Centralia Savings Bank that as of the date
of this Agreement are classified as such, together with the aggregate
principal amount of and accrued and unpaid interest on such Loans by
category, and (iii) each asset of Centralia Savings Bank that as of
the date of this Agreement is classified as "Real Estate Owned" and
the book value thereof.

A-27

(b) Each Loan (i) is evidenced by notes, agreements or other
evidences of indebtedness which are true, genuine and what they
purport to be, (ii) to the extent secured, has been secured by valid
liens and security interests which have been perfected, and (iii) to
the best knowledge of CSB, is the legal, valid and binding obligation
of the obligor named therein, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent conveyance and
other laws of general applicability relating to or affecting
creditors' rights and to general equity principles, in each case other
than Loans as to which the failure to satisfy the foregoing standards
would not have a Material Adverse Effect on CSB.

3.23. Other Activities. (a) No CSB Entity other than SLA
engages in any insurance activities other than acting as a principal,
agent or broker for insurance that is directly related to the
extension of credit by Centralia Savings Bank and limited to assuring
the repayment of the balance due on the extension of credit by
Centralia Savings Bank in the event of the death, disability or
involuntary unemployment of the debtor.

(b) To the best knowledge of CSB, (i) any personal trust,
corporate trust or other fiduciary activities performed by Centralia
Savings Bank ("Trust Activities") has been performed with requisite
authority under applicable law of Governmental Agencies and in all
material respects in accordance with the agreements and instruments
governing such Trust Activities, sound fiduciary principles and all
applicable laws and regulations; (ii) there is no investigation or
inquiry by any Governmental Entity pending or threatened against any
CSB Entity relating to the compliance by it with sound fiduciary
principles and applicable law and regulations; (iii) each employee of
Centralia Savings Bank had the authority to act in the capacity in
which such employee acted with respect to Trust Activities in each
case in which such employee was held out as a representative of
Centralia Savings Bank; and (iv) Centralia Savings Bank has
established policies and procedures for the purpose of complying with
applicable laws of Governmental Entities relating to Trust Activities,
has followed such policies and procedures in all material respects and
has performed appropriate internal audit reviews of Trust Activities,
which audits have disclosed no material violations of applicable laws
of Governmental Entities or such policies and procedures.

3.24. SEC Reports. All final registration statements,
reports, schedules and definitive proxy statements filed since
January 1, 1997 by CSB with the SEC pursuant to the Securities Act of
1933, as amended (the "Securities Act"), or the Exchange Act
(collectively, the "CSB Reports") complied in all material respects
with the published rules and regulations of the SEC with respect
thereto.

3.25. Opinion of Financial Advisor. CSB has received a
written opinion of Charles Webb, its financial advisor, to the effect
that as of the date of the meeting of CSB's Board of Directors

A-28

approving the Merger (referred to in Section 3.26), the Per Share
Merger Consideration is fair to the stockholders of CSB from a
financial point of view.

3.26. Certain Board Action. Prior to the execution of this
Agreement, the Board of Directors of CSB, at a meeting duly called and
held, has by the required vote (i) determined that this Agreement and
the transactions contemplated hereby, including the Merger and the
transactions contemplated thereby, taken together, are advisable and
in the best interest of CSB and its stockholders, and (ii) resolved to
recommend that the holders of the shares of CSB Common Stock adopt
this Agreement and the transactions contemplated herein, including the
Merger.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MIDLAND

Midland and Merger Sub hereby represent and warrant to CSB as
follows:

4.1. Corporate Organization. (a) Each of Midland and Merger Sub
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each of Midland and Merger
Sub has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or
the character or location of the properties and assets owned or leased
by it makes such licensing or qualification necessary, except where
the failure to be so licensed or qualified would not have a Material
Adverse Effect on Midland or Merger Sub. Midland is duly registered
as a bank holding company under the Holding Company Act. The
Certificate of Incorporation and Bylaws of Midland and Merger Sub,
copies of which previously have been delivered to CSB, are true and
complete as of the date hereof.

(b) The only Subsidiaries of Midland consist of (i) Effingham
State Bank, an Illinois state bank and wholly owned by Midland, and
(ii) Merger Sub, a Delaware corporation and wholly owned by Midland.
Merger Sub has no subsidiaries.

4.2. Authority; No Violation. (a) Each of Midland and Merger Sub
has full corporate power and authority to execute and deliver this
Agreement and, subject to the approval of this Agreement by the CSB
stockholders and regulatory approvals, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been
duly and validly approved by the Board of Directors of each of
Midland, as a party to this Agreement and also as the sole stockholder
of Merger Sub, and Merger Sub in accordance with the DGCL. No other
corporate proceedings on the part of Midland and Merger Sub are
necessary to approve this Agreement and to consummate the transactions

A-29

contemplated hereby. This Agreement has been duly and validly
executed and delivered by Midland and Merger Sub and (assuming due
authorization, execution and delivery by CSB) constitutes a valid and
binding obligation of each of Midland and Merger Sub, enforceable
against each of Midland and Merger Sub in accordance with its terms,
except as enforcement may be limited by general principles of equity,
whether applied in a court of law or a court of equity, and by
bankruptcy, insolvency and similar laws affecting creditors' rights
and remedies generally.

(b) Assuming that the consents and approvals referred to in
Section 4.3 are duly obtained, neither the execution and delivery of
this Agreement by Midland or by Merger Sub, nor the consummation by
Midland or Merger Sub, as the case may be, of the transactions
contemplated hereby, nor compliance by Midland or Merger Sub, as the
case may be, with any of the terms or provisions hereof, will
(i) violate any provision of the Certificate of Incorporation or
Bylaws of Midland, or bylaws or similar governing documents of any of
its Subsidiaries (including Merger Sub), or (ii) (x) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to Midland or any of its Subsidiaries
(including Merger Sub) or any of their respective properties or
assets, or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default
(or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance
required by, or result in the creation of any lien, pledge, security
interest, charge or other encumbrance upon any of the respective
properties or assets of Midland or any of its Subsidiaries (including
Merger Sub) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Midland or any of
its Subsidiaries (including Merger Sub) is a party, or by which they
or any of their respective properties or assets may be bound or
affected, except, in the case of clause (y) above, for such
violations, conflicts, breaches or defaults which either individually
or in the aggregate would not have or be reasonably likely to have a
Material Adverse Effect on Midland.

4.3. Consents and Approvals. (a) Except for (i) the filing of an
application with the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board") under the Holding Company Act for
approval of the acquisition by Midland directly or indirectly of one
hundred percent (100%) of the stock of CSB (the "Federal Reserve
Application"), (ii) review of this Agreement and the transactions
contemplated hereby by the DOJ under federal antitrust laws, and
(iii) any required approvals or filings pursuant to any state statutes
or regulations applicable to CSB, Midland or their respective
Subsidiaries with respect to the transactions contemplated hereby, no
consents or approvals of or filings or registrations with any
Governmental Entity or with any third party are necessary on behalf of

A-30

Midland or Merger Sub in connection with (1) the execution and
delivery by Midland and Merger Sub of this Agreement, and (2) the
consummation by Midland and Merger Sub of the Merger and the other
transactions contemplated hereby.

(b) As of the date hereof, Midland is not aware of any reasons
relating to Midland or its banking Subsidiary why all consents and
approvals will not be procured from all Governmental Entities having
jurisdiction over the transactions contemplated by this Agreement as
shall be necessary for consummation of the transactions contemplated
by this Agreement.

4.4. Legal Proceedings. Neither Midland nor any of its
Subsidiaries (including Merger Sub) is a party to any, and there are
no pending or, to the best of Midland's knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against
Midland or any of its Subsidiaries (including Merger Sub) challenging
the validity or propriety of the transactions contemplated by this
Agreement.

4.5. Financial Resources. Midland has the financial wherewithal,
whether by using its internal funds, external financing, or both, to
perform its obligations under this Agreement. Midland and its
Subsidiaries are, and to the best knowledge of Midland, will be
following the Merger, adequately capitalized for all applicable
regulatory purposes. Midland has furnished to CSB true and complete
copies of its consolidated balance sheets, statements of income,
statements of cash flows and statements of shareholders' equity
(collectively, the "Midland Financial Statements") at and for the
years ended December 31, 1998 and 1997, and the Midland Financial
Statements for the nine months ended September 30, 1999.

4.6 Vote Required. The approval by Midland, as the sole
stockholder of Merger Sub, of this Agreement and the Merger is the
only vote of the holders of any class or series of capital stock of
Midland or Merger Sub required for any of the transactions
contemplated by this Agreement.

ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS

5.1. Covenants of CSB. During the period from the date of this
Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement or with the prior written
consent of Midland, CSB shall carry on its business, and shall cause
each CSB Subsidiary to carry on its business, in the ordinary course
consistent with past practice. CSB will use its reasonable best
efforts to (x) preserve its business organization and that of each CSB
Subsidiary intact, (y) keep available to itself the present services
of the employees of CSB and Centralia Savings Bank and (z) preserve
for itself the goodwill of the customers of CSB and each CSB

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Subsidiary and others with whom such business relationships exist.
Without limiting the generality of the foregoing, and except as set
forth on Section 5.1 of the CSB Disclosure Schedule or as otherwise
contemplated by this Agreement or consented to in writing by Midland,
CSB shall not, and, where applicable, shall not permit a CSB
Subsidiary to:

(a) declare or pay any dividends on, or make other
distributions in respect of, any shares of CSB capital stock,
other than dividends from wholly owned CSB Subsidiaries to CSB;

(b) (i) split, combine or reclassify any shares of its
capital stock or (ii) repurchase, redeem or otherwise acquire
(except for (A) the acquisition of Trust Account Shares and DPC
Shares, or (B) as provided in Section 6.12 hereof) any shares of
the capital stock of CSB, or any securities convertible into or
exercisable for any shares of the capital stock of CSB;

(c) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or
any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such shares, or enter
into any agreement with respect to any of the foregoing, other
than the issuance of CSB Common Stock pursuant to the exercise of
CSB Stock Options outstanding as of the date hereof, if and as
permitted pursuant to the terms of such CSB Stock Options as of
the date hereof and Section 1.5;

(d) amend its Certificate of Incorporation, Bylaws or other
similar governing documents;

(e) authorize or permit any of its officers, directors,
employees or agents to directly or indirectly initiate, solicit,
or entertain offers from, negotiate with or in any manner
encourage, discuss, accept or consider any proposal of any other
person relating to the acquisition of CSB Common Stock or CSB
and/or any CSB Entity, their assets or business, in whole or in
part, whether directly or indirectly, through purchase, merger,
consolidation, or other transaction (other than the sale of
loans, securities and other assets in the ordinary course) to
achieve a similar purpose (any of the foregoing, a "Competing
Transaction"), unless the Board of Directors of CSB determines in
good faith (the "Good Faith Board Determination"), that failure
to take such action will violate such Board of Directors'
obligations or duties to CSB or its stockholders and that such
proposal is a "Superior Competing Transaction" (defined in
Section 8.2(b) hereof). CSB will immediately cease and cause to
be terminated any existing activities, discussions or
negotiations previously conducted with any parties other than
Midland with respect to any of the foregoing. CSB will take all
actions necessary or advisable to inform the appropriate
individuals or entities referred to in the first clause of this

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Section 5.1(e) of the obligations undertaken in this
Section 5.1(e). CSB will notify Midland immediately if any such
inquiries or proposals with respect to a potential Competing
Transaction are received by, any such information is requested
from, or any such negotiations or discussions are sought to be
initiated or continued with, CSB and CSB will promptly inform
Midland in writing of all of the relevant details with respect to
the foregoing;

(f) make any capital expenditures other than expenditures
which (i) are made in the ordinary course of business or are
necessary to maintain existing assets in good repair and (ii) in
any event are in an amount of no more than $50,000 individually
and $200,000 in the aggregate, except in the case of emergency
repairs or replacements;

(g) enter into any new line of business;

(h) acquire or agree to acquire, by merging or
consolidating with, or by purchasing a material equity interest
in or a material portion of the assets of, or by any other
manner, any business or any corporation, partnership, association
or other business organization or division thereof or otherwise
acquire any assets, which would be material, individually or in
the aggregate, to CSB, other than, in the case of Centralia
Savings Bank, in connection with foreclosures, settlements in
lieu of foreclosure or troubled loan or debt restructurings in
the ordinary course of business consistent with prudent banking
practices;

(i) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties
set forth in this Agreement being or becoming untrue in any
material respect, or in any of the conditions to the Merger set
forth in Article VII not being satisfied, or in a violation of
any provision of this Agreement except, in every case, as may be
required by applicable law;

(j) change its methods of accounting in effect at
September 30, 1999, except as required by changes in GAAP or
regulatory accounting principles as concurred in by CSB's
independent auditors;

(k) (i) except as otherwise contemplated by this Agreement
or as required by applicable law or to maintain qualification
pursuant to the Code, adopt, amend, renew or terminate any Plan
or any agreement, arrangement, plan or policy between any CSB
Entity and one or more of its current or former directors,
officers or employees or (ii) except for normal increases in the
ordinary course of business consistent with past practice or
except as required by applicable law or otherwise contemplated by
this Agreement, increase in any manner the compensation or fringe

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benefits of any director, officer or employee or pay any benefit
not required by any Plan as in effect as of the date hereof
(including without limitation, the granting of stock options,
stock appreciation rights, restricted stock, restricted stock
units or performance units or shares);

(l) other than activities in the ordinary course of
business consistent with past practice, sell, lease, encumber,
assign or otherwise dispose of, or agree to sell, lease,
encumber, assign or otherwise dispose of, any material portion of
assets, properties or other rights or agreements;

(m) other than in the ordinary course of business
consistent with past practice, incur any indebtedness for
borrowed money, or assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other
individual, corporation or other entity;

(n) file any application to relocate or terminate the
operations of any banking office of Centralia Savings Bank;

(o) make any material equity investment or commitment to
make such an investment in real estate or in any real estate
development project, other than in connection with foreclosures,
settlements in lieu of foreclosure or troubled loan or debt
restructurings in the ordinary course of business consistent with
prudent banking practices;

(p) take any action which would cause the termination or
cancellation by the FDIC of insurance in respect of Centralia
Savings Bank's deposits;

(q) except as set forth in Section 5.1(q) of the CSB
Disclosure Schedule, enter into, renew or increase any loan or
other extension of credit (including guaranties and standby
letters of credit), or commit to make any such loan or other
extension of credit, to any person or entity, or modify any of
the material provisions or renew or otherwise extend the maturity
date of any existing loan or other extension of credit or
commitment therefor (collectively, "Lend to") in an amount in
excess of $150,000 or in an amount which, when aggregated with
any and all existing loans, other extensions of credit or credit
commitments to such person or entity, would be in excess of
$500,000; (ii) Lend to any person or entity other than in
accordance with the lending policies of Centralia Savings Bank as
in effect on the date hereof; or (iii) without first consulting
with Midland, Lend to any person or entity if any of the loans or
other extensions of credit by Centralia Savings Bank to such
person or entity are on Centralia Savings Bank's "watch list" or
similar internal report of Centralia Savings Bank in an amount in
excess of $75,000; provided, however, that nothing in this
Section 5.1(q) shall prohibit any CSB Entity from honoring any

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contractual obligation in existence on the date of this
Agreement;

(r) Lend to (as defined in Section 5.1(q)) any director or
officer of a CSB Entity; or

(s) subject to the permitted activities under
paragraphs (e), (f), (h), (k), (l), (m), (o), (p), and (r) above,
which are specifically excepted herefrom, create, renew, amend or
terminate or give notice of a proposed renewal, amendment or
termination of, any material contract, agreement or lease for
goods, services or office space to which any CSB Entity is a
party or by which any CSB Entity or their respective properties
are bound; or

(t) agree to do any of the foregoing.

5.2. Covenants of Midland. Midland will use its reasonable best
efforts to (x) preserve its business organization and that of its
banking Subsidiary, (y) keep available to itself the present services
of the employees of Midland and its banking Subsidiary and
(z) preserve for itself the goodwill of the customers of Midland and
its banking Subsidiary and others with whom such business
relationships exist. Except as set forth in Section 5.2 of the
Midland Disclosure Schedule or as otherwise contemplated by this
Agreement, between the date hereof and the Effective Time, neither
Midland nor Merger Sub will take any action (i) which would adversely
affect in any manner the ability of Midland or Merger Sub to
consummate the Merger, or (ii) that is intended or may reasonably be
expected to result in any of the representations and warranties of
either entity set forth in this Agreement being or becoming untrue in
any material respect, or any conditions to the Merger set forth in
Article VII not being satisfied, or in violation of any provision of
this Agreement except, in every case, as may be required by applicable
law.

ARTICLE VI
ADDITIONAL AGREEMENTS

6.1. Regulatory Matters. As soon as practicable following the
execution of this Agreement, CSB shall prepare and, subject to the
review of Midland with respect to matters involving Midland, file with
the SEC a preliminary proxy statement and related materials
(collectively, the "Proxy Statement") with respect to the
Stockholders' Meeting (defined below).

6.2. Stockholder Meeting. CSB shall take all steps necessary to
duly call, give notice of, convene and hold a special meeting of its
stockholders to be held as soon as is reasonably practicable after the
date on which the Proxy Statement is cleared by the SEC to disseminate
the Proxy Statement to the stockholders of CSB for the purpose of
voting upon the adoption of this Agreement (the "Stockholders'

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Meeting"). The Board of Directors of CSB hereby does and (subject to
the fiduciary duties of CSB's Board of Directors, as advised by
outside counsel to CSB) will recommend that stockholders of CSB vote
to adopt this Agreement and the Merger and the other transactions
contemplated by this Agreement.

6.3. Access to Information. (a) Upon reasonable notice and
subject to applicable laws relating to the exchange of information,
CSB shall afford to the officers, employees, accountants, counsel and
other representatives of Midland, access, during normal business hours
during the period prior to the Effective Time, to all its properties,
books, contracts, commitments, records, officers, employees,
accountants, counsel and other representatives and, during such
period, CSB shall make available to Midland (i) a copy of each report,
schedule, registration statement and other document filed or received
by it during such period pursuant to the requirements of Federal
securities laws or Federal or state banking laws (other than reports
or documents which CSB is not permitted to disclose under applicable
law) and (ii) all other information concerning its business,
properties and personnel of CSB as Midland may reasonably request.
CSB shall not be required to provide access to or to disclose
information where such access or disclosure would violate or prejudice
the rights of CSB's or Centralia Savings Bank's customers, jeopardize
any attorney-client privilege or contravene any law, rule, regulation,
order, judgment, decree, fiduciary duty or binding agreement entered
into prior to the date of this Agreement. The parties hereto will
make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence
apply. Midland will hold all such information in confidence to the
extent required by, and in accordance with, the provisions of a
certain letter agreement, dated August 30, 1999, between Midland and
Charles Webb, acting as agent for CSB (the "Confidentiality
Agreement").

(b) To the extent that CSB obtains or becomes aware of any
information that is confidential or proprietary to Midland or any of
its Subsidiaries, CSB will hold all such information in strictest
confidence and be otherwise bound by the terms of the Confidentiality
Agreement as though all references therein to Midland (whether by use
of the word "you" or otherwise) were to CSB.

(c) No investigation by either Midland, Merger Sub or CSB or
their respective representatives shall affect the representations,
warranties, covenants or agreements of the other set forth herein.

6.4. Legal Conditions to Merger. Subject to the terms and
conditions of this Agreement, each of CSB, Midland and Merger Sub
shall use all reasonable efforts (a) to take, or cause to be taken,
all actions necessary, proper or advisable to comply promptly with all
legal requirements which may be imposed on CSB, Midland or on Merger
Sub, respectively, in regard to the Merger and to consummate the
transactions contemplated by this Agreement and (b) to obtain (and to

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cooperate with the other party to obtain) any consent, authorization,
order or approval of, or any exemption by, any Governmental Entity and
any other third party which is required to be obtained by CSB,
Midland, Merger Sub or any of their respective Subsidiaries in
connection with the Merger and the other transactions contemplated by
this Agreement, and to comply with the terms and conditions of such
consent, authorization, order or approval. Without limiting the
generality of the foregoing, as soon as practicable following the
execution and delivery of this Agreement, Midland and Merger Sub will
prepare and file with the Board of Governors of the Federal Reserve
System an application for approval of its acquisition of CSB and CSB's
Subsidiaries under the terms and conditions of this Agreement.

6.5. Additional Agreements. In case at any time after the
Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement or to vest Surviving Corporation
with full title to all properties, assets, rights, approvals,
immunities and franchises of CSB, the officers and directors of CSB
serving in such capacity at a particular time shall take all such
necessary action as may be reasonably requested by Midland.

6.6. Advice of Changes, Failure of Conditions. Each of Midland,
Merger Sub and CSB shall promptly advise the other party or parties of
any change or event which it believes has caused or constitutes, or is
reasonably likely to cause or constitute, a material breach of any of
its representations, warranties or covenants contained herein or is
reasonably likely to cause any condition in Article VII to the other
party's obligation to consummate the Merger not to be satisfied. From
time to time prior to the Effective Time (and on the day prior to the
Closing), each party will promptly supplement or amend the Disclosure
Schedules delivered by it in connection with the execution of this
Agreement to reflect any matter that, if existing, occurring or known
at the date of this Agreement, would have been required to be set
forth or described in such Disclosure Schedules or that is necessary
to correct any information in such Disclosure Schedules which has been
rendered inaccurate thereby. No supplement or amendment to such
Disclosure Schedules shall have any effect for the purpose of
determining satisfaction of the conditions set forth in Sections
7.2(a) or 7.3(a) hereof, as the case may be, or the compliance by CSB,
Midland or Merger Sub, as the case may be, with the respective
covenants and agreements of such parties contained herein.

6.7. Subsequent Financial Statements. Promptly following its
filing thereof with the SEC between the date hereof and the Effective
Time, CSB will deliver to Midland copies of any Quarterly or Annual
Report on Form 10-QSB or 10-KSB.

6.8. Current Information. During the period from the date of
this Agreement to the Effective Time, CSB will cause one or more of
its designated representatives to confer on a regular and frequent
basis (not less often than monthly) with representatives of Midland
and to report the general status of the ongoing operations of CSB and

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Centralia Savings Bank. CSB will promptly notify Midland of its
receipt of any governmental complaints or the initiation of any
governmental investigations or hearings (or communications indicating
that the same may be contemplated) or institution or threat of
significant litigation involving it or Centralia Savings Bank, and
thereafter will keep Midland fully informed of such events.

6.9. Merger Sub. Midland shall cause Merger Sub to take all
necessary action to complete the transactions contemplated hereby,
subject to the terms and conditions hereof.

6.10. Support Agreements. Promptly following the execution of
this Agreement, CSB shall deliver to each of its directors and/or
executive officers an agreement in the form attached hereto as
EXHIBIT A (each, a "Support Agreement").

6.11. Employee Benefit Plans. (a) As soon as practical
following the Effective Time, the employees of each CSB Entity (the
"CSB Employees") and their dependents shall be entitled to participate
in each of Midland's employee benefit plans and welfare plans
(excluding any agreement between Midland and an employee of Midland or
any of its Subsidiaries) in which similarly situated employees of
Midland Bank or any Midland Subsidiary and their dependents
participate, to the same extent as comparable employees of Midland
Bank or any Midland Subsidiary and their dependents (it being
understood that inclusion of CSB Employees and their dependents in
Midland's employee benefit plans may occur at different times with
respect to different plans). Midland shall be under no obligation to
continue, or cause Surviving Corporation to continue, any of the
existing employee benefit and welfare plans of any of the CSB
Entities; provided, however, that no coverage of any CSB employee or
dependent shall terminate under any existing employee benefit plan of
a CSB Entity prior to the time such CSB employee or dependent becomes
eligible to participate in the Midland employee benefit plans and
welfare plans, as applicable.

(b) With respect to each employee and welfare plan of Midland
and its Subsidiaries, for purposes of determining eligibility to
participate and vesting, service with a CSB Entity prior to the
Effective Time shall be treated as service with Midland; provided,
however, that such service shall not be recognized to the extent that
such recognition would result in a duplication of benefits for benefit
accrual purposes. Such service shall also apply for purpose of
satisfying any waiting periods, actively-at-work requirements and
evidence of insurability requirements. No pre-existing condition
limitations will apply to the CSB Employees and their dependents who
were participants in the CSB plan comparable to the plan in question
at the Effective Time. CSB Employees and their dependents shall be
given credit for amounts paid under a corresponding benefit plan
during the same period for purposes of applying deductibles, co-
payments and out-of-pocket maximums as though such amounts had been

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paid in accordance with the terms and conditions of the corresponding
Midland plan.

6.12. Employee Stock Ownership Plan. At the Effective Time, the
ESOP shall be terminated on such terms and conditions as CSB shall
determine, and the loan between Centralia Savings Bank and the ESOP
shall be repaid in full from the cash consideration received for
unallocated shares of CSB Common Stock held by the ESOP upon the
conversion pursuant to the Merger of such shares of CSB Common Stock
held by the ESOP. Any remaining cash consideration received for such
unallocated shares after such repayment shall be allocated as
investment earnings to the ESOP accounts of those CSB Employees who
are ESOP participants and beneficiaries (the "ESOP Participants") in
accordance with the terms of the ESOP as amended with respect to such
termination and as in effect on the Effective Time. All ESOP
Participants shall fully vest and have a nonforfeitable interest in
their accounts under the ESOP (including allocations of the
consideration received on the unallocated shares) determined as of the
Effective Time. As soon as practicable after the receipt of a
favorable determination letter from the Internal Revenue Service
("IRS") as to the tax qualified status of the ESOP upon its
termination under Section 401(a) and 4975(e) of the Code (the "Final
Determination Letter"), distributions of the benefits under the ESOP
shall be made to the ESOP Participants. From and after the date of
this Agreement, in anticipation of such termination and distribution,
CSB shall cause Centralia Savings Bank and its representatives before
the Effective Time to, and Midland and its representatives after the
Effective Time, shall, use their best efforts to apply for and to
obtain such favorable Final Determination Letter from the IRS. If
Centralia Savings Bank and its representatives, before the Effective
Time, and Midland and its representatives, after the Effective Time,
reasonably determine that the ESOP cannot obtain a favorable Final
Determination Letter, or that the amounts held therein cannot be so
applied, allocated or distributed without causing the ESOP to lose its
tax qualified status, Midland, or Centralia Savings Bank at the
direction of CSB, before the Effective Time, and Midland after the
Effective Time, shall take such action as they may reasonably
determine with respect to the distribution of benefits to the ESOP
Participants. Notwithstanding the foregoing, if the IRS imposes any
requirement(s) on the ESOP, CSB or Midland as a condition to the
issuance of a favorable Final Determination Letter, then such party
shall take all actions as is necessary to meet such requirements even
though such required action may be otherwise inconsistent with the
foregoing. Notwithstanding anything contained herein to the contrary,
if the assets of the ESOP shall be held for the benefit of the ESOP
Participants, in no event shall any portion of the amounts held in the
ESOP revert, directly or indirectly, to any CSB Entity, or to Midland
or any affiliate thereof. If the CSB Employees otherwise become
eligible to participate in an employee stock ownership plan maintained
by Midland or any affiliate thereof ("Midland ESOP"), each CSB
Entity's employee's period of employment with a CSB Entity before the
Effective Time shall be counted for all purposes under the Midland

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ESOP, including without limitation, for purposes of eligibility and
vesting. At the time distribution of benefits is made under the ESOP
on or after the Effective Date, at the election of the participant,
the amount thereof that constitutes an "eligible rollover
distribution" (as defined in Section 402(f)(2)(A) of the Code) may be
rolled over by such participant to any qualified Midland benefit plan
or to any eligible individual retirement account.

6.13. Agreement with Optionees. As soon as practicable
following the mailing of the Proxy Statement to its stockholders, CSB
will deliver to each holder of CSB Stock Options an agreement
providing for the cancellation of such CSB Stock Options effective as
of the Effective Time in exchange for the Per Share Option
Consideration to be paid in connection therewith pursuant to
Section 1.5, and providing for such other matters as deemed relevant
or as reasonably requested by Midland.

6.14. Directors and Officers Liability Insurance and
Indemnification. (a) For a period of five years following the
Effective Time (the "Indemnification Period"), Midland agrees to
indemnify and hold harmless those individuals who are now or become
before the Effective Time a director or officer of any CSB Entity
(collectively, the "Indemnified Parties") with respect to actions
occurring or facts, events or circumstances existing prior to the
Effective Time which give rise to a claim for indemnification, to the
extent such Indemnified Parties would be entitled to indemnification
under, and to the full extent permitted by, the DGCL and the
Certificate of Incorporation of CSB as existing on the date hereof;
provided, however, that all rights to indemnification with respect of
any claim asserted or made within such five-year period shall continue
until the final disposition of such claim.

(b) CSB will purchase continued coverage under its current
policy of directors' and officers' liability insurance ("D&O
Coverage"), in amount and scope at least as favorable as CSB's
existing D&O Coverage to be effective during the entire
Indemnification Period. The cost of such continued D&O Coverage shall
be deemed a Transaction Cost to the extent of $17,880; provided,
however, that any cost for such D&O Coverage in excess of $17,880
shall not be considered a Transaction Cost and shall be disregarded
for purposes of the Closing Balance Sheet.

6.15. COBRA. Until the Effective Time, CSB shall be liable for
all obligations for continued health coverage pursuant to
Section 4980B of the Code and Sections 601 through 609 of ERISA
("COBRA") with respect to each qualified beneficiary (as defined in
COBRA) of CSB who incurs a qualifying event (as defined in COBRA)
before the Effective Time. Midland shall be liable for (i) all
obligations for continued health coverage under COBRA with respect to
each qualified beneficiary (as defined in COBRA) who incurs a
qualifying event (as defined in COBRA) from and after the Effective
Time, and (ii) for continued health coverage under COBRA from and

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after the Effective Time for each CSB qualified beneficiary who incurs
a qualifying event before the Effective Time.

6.16. Termination of Stock Options. Prior to the Effective Time
and in recognition that Midland has expressly agreed not to assume the
CSB Stock Option Plans, the Board of Directors of CSB shall terminate
the CSB Stock Option Plans.

6.17. Treatment of Plan Share Awards. All shares of CSB Common
Stock subject to plan share awards under the CSB MRP, whether or not
vested as of the Effective Time shall be treated as fully vested,
issued and outstanding shares of CSB Common Stock for purposes of
Section 1.4. Prior to the Effective Time and in recognition that
Midland has expressly agreed not to assume the CSB MRP, the Board of
Directors of CSB shall terminate the CSB MRP, and shall direct the
trustees of the CSB MRP to return to CSB any shares of CSB Common
Stock then held by such trustees which are not subject to plan share
awards (and thus not allocated) and all of such unallocated shares
shall be canceled pursuant to Section 1.4(b) at the Effective Time.

6.18. Profit Sharing Plan. (a) Immediately prior to the
Effective Time, CSB shall cause the Centralia Savings Bank Employees'
Profit Sharing Plan (the "Profit Sharing Plan") to be terminated, and
in connection therewith to fully vest the accounts held for the Profit
Sharing Plan participants on the date of such termination. As soon as
practicable after receipt of a favorable determination letter from the
IRS as to the tax-qualified status of the Profit Sharing Plan under
Sections 401(a) and 501(a) of the Code upon its termination (the
"Profit Sharing Determination Letter"), all remaining account balances
held under the Profit Sharing Plan shall be distributed to, or rolled
over by, Profit Sharing Plan participants pursuant to the distribution
options available to participants under the Profit Sharing Plan who
terminate employment or otherwise separate from service. CSB and its
representatives prior to the Effective Time, and Midland and its
representatives after the Effective Time, shall use their best efforts
to apply for and obtain such Profit Sharing Determination Letter from
the IRS. In the event that CSB and its representatives prior to the
Effective Time, and Midland and its representatives after the
Effective Time, reasonably determine that the Profit Sharing Plan
cannot obtain a favorable Profit Sharing Determination Letter, CSB and
its representatives prior to the Effective Time, and Midland and its
representatives after the Effective Time, shall take such actions as
they may reasonably determine, with respect to the distribution of
benefits to the Profit Sharing Participants, provided that the assets
of the Profit Sharing Plan shall be held or paid only for the benefit
of such Profit Sharing Participants; and provided further that in no
event shall any portion of the amounts held in the Profit Sharing Plan
revert, directly or indirectly, to CSB or any affiliate thereof, or to
Midland or any affiliate thereof.

(b) If employees of CSB or any CSB affiliate become eligible to
participate in a Midland profit sharing plan (the "Midland Plan"):

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(i) all such employees who are or were Profit Sharing Plan
participants shall become participants in the Midland Plan on the date
the Midland Plan is made available; and (ii) each such employee's
period of employment with CSB or any CSB affiliate before the
Effective Time shall be counted for all purposes under the Midland
Plan, including, without limitation, for purposes of eligibility and
vesting.

6.19. List of CSB Stockholders. At the Effective Time, CSB
shall deliver to Midland a list of holders of record of the
outstanding CSB Common Stock as of the most recent reasonable
practicable date, and the accuracy of such list shall be certified by
the Chief Executive Officer of CSB.

6.20. CSB Rights Agreement. The CSB Rights Agreement will be
(or has been) timely amended and will remain amended (and no
replacement plan shall be adopted) so as to provide that none of
Midland and its Subsidiaries or affiliates will become an "Acquiring
Person" and that no "Stock Acquisition Date" or "Distribution Date"
(as such terms are defined in the CSB Rights Agreement) will occur as
a result of the execution of this Agreement or the Support Agreements,
or the consummation of the Merger pursuant to this Agreement.

ARTICLE VII
CONDITIONS PRECEDENT

7.1. Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger shall be
subject to the satisfaction or waiver at or prior to the Effective
Time of the following conditions:

(a) Stockholder Approval. This Agreement and the Merger
provided for herein shall have received the requisite approval by the
stockholders of CSB.

(b) Regulatory Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby (including the Merger)
shall have been obtained and shall remain in full force and effect and
all statutory waiting periods in respect thereof shall have expired
(all such approvals and the expiration of all such waiting periods
being referred to herein as the "Requisite Regulatory Approvals");
provided, however, that Midland shall not be obligated to effect the
Merger if, in the reasonable opinion of Midland, any Requisite
Regulatory Approval contains or imposes any condition or requirement
that would have a Material Adverse Effect on any party hereto.

(c) No Injunctions or Restraints; Illegality. No order,
injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger or any of the other transactions
contemplated by this Agreement (an "Injunction") shall be in effect.
No statute, rule, regulation, order, injunction or decree shall have

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been enacted, entered, promulgated or enforced by any Governmental
Entity which prohibits, restricts or makes illegal the consummation of
the Merger.

7.2. Conditions to Obligations of Midland. The obligations of
Midland and Merger Sub to effect the Merger are also subject to the
satisfaction or waiver by Midland or Merger Sub at or prior to the
Effective Time of the following conditions:

(a) Representations and Warranties. (i) The representations and
warranties of CSB set forth in Sections 3.2 and 3.3(a) of this
Agreement shall be true and correct in all material respects as of the
date of this Agreement and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing as
though made on and as of the Closing; and (ii) all other
representations and warranties of CSB set forth in this Agreement
shall be true and correct in all material respects as of the date of
this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing as though
made on and as of the Closing; provided, however, that for purposes of
determining the satisfaction of the condition contained in this
clause (ii), such representations and warranties shall be deemed to be
true and correct unless the failure or failures of such
representations and warranties to be so true and correct, individually
or in the aggregate, represent a Material Adverse Effect on CSB.
Midland shall have received a certificate signed on behalf of CSB by
the Chief Executive Officer of CSB to such effect.

(b) Performance of Obligations of CSB. CSB shall have performed
in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time, and Midland
shall have received a certificate signed on behalf of CSB by the Chief
Executive Officer of CSB to such effect.

(c) No Pending Governmental Actions. No proceeding initiated by
any Governmental Entity seeking an Injunction shall be pending.

(d) Legal Opinion. Midland shall have received a legal opinion,
dated as of the Effective Date, of Schiff Hardin & Waite ("CSB's
Counsel"), substantially in the form attached hereto as EXHIBIT B. In
rendering such opinion, CSB's Counsel may rely upon representations
and covenants contained in certificates of officers of Midland, Merger
Sub, CSB and others.

(e) CSB Stock Options. All of the CSB Stock Options shall
either (i) be cancelled as of the Effective Time in exchange for the
Per Share Option Consideration, or (ii) have been exercised in full.

(f) Outstanding Shares. At the Effective Time, there shall be
no more than 732,299 shares of CSB Common Stock outstanding, exclusive
of any shares of CSB Common Stock issued from and after the date
hereof pursuant to the exercise of a CSB Stock Option.

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(g) Material Adverse Effect. There shall not have occurred any
event or circumstance that has or would reasonably to expected to
result in a Material Adverse Effect on CSB.

(h) Appraisal Rights. The holders of not more than ten percent
(10%) of the outstanding shares of CSB Common Stock entitled to vote
at Stockholders' Meeting shall have validly demanded and perfected
their Appraisal Rights.

7.3. Conditions to Obligations of CSB. The obligation of CSB to
effect the Merger is also subject to the satisfaction or waiver by CSB
at or prior to the Effective Time of the following conditions:

(a) Representations and Warranties. The representations and
warranties of Midland and Merger Sub set forth in this Agreement shall
be true and correct in all material respects as of the date of this
Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing as though
made on and as of the Closing; provided, however, that for purposes of
determining the satisfaction of the condition contained in this
subparagraph (a), such representations and warranties shall be deemed
to be true and correct unless the failure or failures of such
representations and warranties to be so true and correct, individually
or in the aggregate, represent a Material Adverse Effect on Midland
(after giving effect to the transactions contemplated hereby). CSB
shall have received a certificate signed on behalf of Midland and
Merger Sub by their respective Chief Executive Officer to such effect.

(b) Performance of Obligations. Each of Midland and Merger Sub
shall have performed in all material respects all obligations required
to be performed by them under this Agreement at or prior to the
Effective Time, and CSB shall have received a certificate signed on
behalf of Midland and Merger Sub by their respective Chief Executive
Officer to such effect.

(c) No Pending Governmental Actions. No proceeding initiated by
any Governmental Entity seeking an Injunction shall be pending.

(d) Legal Opinion. CSB shall have received a legal opinion,
dated as of the Effective Date, of Gallop, Johnson & Neuman, L.C.
("Midland's Counsel") in substantially the form attached hereto as
EXHIBIT C. In rendering such opinion, Midland's Counsel may require
and rely upon representations and covenants contained in certificates
of officers of Midland, Merger Sub, CSB and others.

(e) Fairness Opinion. CSB shall have received the written
opinion of Charles Webb, as its financial advisor, to the effect that,
as of the date of the definitive Proxy Statement, the Per Share Merger
Consideration is fair to the stockholders of CSB from a financial
point of view.

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ARTICLE VIII
TERMINATION AND AMENDMENT

8.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
stockholders of CSB of the matters presented in connection with the
Merger:

(a) by mutual consent of Midland and CSB in a written
instrument, if the Board of Directors of each so determines by a vote
of a majority of the members of its entire Board;

(b) by either Midland or CSB upon written notice to the other
party if any Governmental Entity of competent jurisdiction shall have
issued a final nonappealable order enjoining, denying approval of, or
otherwise prohibiting the consummation of any of the transactions
contemplated by this Agreement;

(c) by either Midland or CSB at any time after July 31, 2000 if
the Merger shall not theretofore have been consummated, unless the
failure of the Closing to occur by such date shall be due to the
failure of the party seeking to terminate this Agreement to perform or
observe the covenants and agreements of such party set forth herein;

(d) by either Midland or CSB if the approval of the stockholders
of CSB required for the consummation of the Merger shall not have been
obtained by reason of the failure to obtain the required vote at a
duly held meeting of such stockholders or at any adjournment or
postponement thereof;

(e) by either Midland or CSB (provided that the terminating
party is not then in material breach of any representation, warranty,
covenant or other agreement contained herein) if there shall have been
a material breach of any of the representations or warranties set
forth in this Agreement on the part of the other party, which breach
is not cured within 30 days following written notice to the party
committing such breach, or which breach, by its nature, cannot be
cured prior to the Closing; provided, however, that neither party
shall have the right to terminate this Agreement pursuant to this
Section 8.1(e) unless the breach of any representation or warranty,
together with all other such breaches, would entitle the party
receiving such representation or warranty not to consummate the
transactions contemplated hereby under Section 7.2(a) (in the case of
a breach of a representation or warranty by CSB) or Section 7.3(a) (in
the case of a breach of a representation or warranty by Midland or
Merger Sub);

(f) by either Midland or CSB (provided that the terminating
party is not then in material breach of any representation, warranty,
covenant or other agreement contained herein) if there shall have been
a material breach of any of the covenants or agreements set forth in
this Agreement on the part of the other party, which breach shall not

A-45

have been cured within 30 days following receipt by the breaching
party of written notice of such breach from the other party hereto; or

(g) by Midland, if (i) the Board of Directors of CSB shall have
(x) withdrawn or adversely modified its approval or recommendation of
this Agreement or the Merger, or (y) approved or recommended any
Competing Transaction involving CSB other than the Merger involving
CSB, in each case, by or involving a party other than Midland or any
of its Subsidiaries, or (ii) CSB shall have taken any of the actions
described in Section 5.1(e) hereof unless: (i) pursuant to a Good
Faith Board Determination, and (ii) all discussions with the party in
furtherance of a Competing Transaction have been terminated within 45
calendar days of such Good Faith Board Determination.

(h) By CSB, upon two days' prior notice to Midland, if, as a
result of an unsolicited proposal (including a tender offer) by a
party other than Midland or its Subsidiaries for a Competing
Transaction, the Board of Directors of CSB, pursuant to a Good Faith
Board Determination, determines that such Competing Transaction be
accepted; provided, however, that before delivering such two days'
prior notice to Midland to effect a termination under this paragraph
(h), CSB shall, and shall cause its financial and legal advisers to,
negotiate with Midland for not less than three calendar days to make
such adjustments in the terms and conditions of this Agreement as
would enable CSB to proceed with the transactions contemplated herein
on such adjusted terms.

(i) by either Midland or CSB, if, as a result of the adjustment
to the Merger Consideration as provided Section 1.10 hereof, the Per
Share Merger Consideration is less than $15.50; provided, however,
that notwithstanding the foregoing, if, as a result of such
adjustment, the Per Share Merger Consideration is less than $15.50,
and notwithstanding such adjustment, Midland is willing to pay a Per
Share Merger Consideration of $15.50, then CSB shall not have the
right to terminate this Agreement pursuant to this Section 8.1(i).

8.2 Effect of Termination; Expenses. (a) Midland and CSB hereby
agree that, subject to Section 8.2(b) hereof, the sole remedy
available to a party terminating this Agreement pursuant to
Section 8.1 hereof, shall be limited to such party's right not to
effect the Merger and the other transactions provided for in or
contemplated by this Agreement, it being understood and agreed that
subject to the provisos to this sentence, the non-terminating party
shall not be deemed in breach of this Agreement; provided, however,
that notwithstanding the foregoing (i) the last sentence of each of
Sections 6.3(a) and 6.3(b), this Section 8.2 and Section 9.4 shall
survive any termination of this Agreement and (ii) no party shall be
relieved or released, as a result of such termination, from any
liabilities or damages arising out of its willful breach of any
provision of this Agreement.

A-46

(b) (i) Notwithstanding subparagraph (a) of this Section 8.2,
if this Agreement is terminated (A) by Midland pursuant to
Section 8.1(g), or (B) by CSB pursuant to Section 8.1 (other than
pursuant to Section 8.1(h)) if, at the time of such termination by
CSB, Midland would have had the right to terminate this Agreement
pursuant to Section 8.1(g), or (C) by CSB pursuant to Section 8.1(h),
regardless of whether or not Midland would then have had the right to
terminate this Agreement pursuant to Section 8.1(g), then, in any such
case, CSB shall promptly, but in no event later than two business days
after the date of such termination, pay to Midland, as reimbursement
of Midland's direct and indirect expenses and costs, including legal,
accounting and administration costs, as well as the opportunity cost
to Midland of business transactions foregone as a result of its
efforts to effect the Merger, a fee equal to Five Hundred Thousand
Dollars ($500,000) (the "Termination Fee"). Notwithstanding the
preceding sentence, if this Agreement is terminated pursuant to
Section 8.1(d) hereof by either party, or if this Agreement is
terminated by Midland because of actions taken by CSB under
Section 5.1(e) following a Good Faith Board Determination, then the
Termination Fee shall be payable to Midland only if (A) a proposal
with respect to a Competing Transaction shall have occurred prior to
the meeting of CSB's stockholders referred to herein, and (B) within
270 calendar days following such stockholders' meeting, (I) CSB shall
have entered into an agreement with a third party providing for the
consummation of a Superior Competing Transaction, or (II) a Superior
Competing Transaction with a third party shall have occurred. As used
herein, the term "Superior Competing Transaction" means a Competing
Transaction which provides for consideration (whether in the form of
cash, securities or other property or mixture thereof) on a per share
basis of more than the Per Share Merger Consideration. The payment of
the Termination Fee by or on behalf of CSB shall be in lieu of, and in
full satisfaction of, any other rights or remedies otherwise available
to Midland or Merger Sub as a result of a termination hereof.

(ii) Notwithstanding the foregoing, to the extent that CSB
shall be prohibited by applicable law or regulation, or by
administrative actions or policy of any Governmental Entity, from
satisfying in full its requirement to make the Termination Fee, it
shall immediately so notify Midland and shall thereafter deliver or
cause to be delivered, from time to time, to Midland, that portion of
the payments required to be paid by it hereunder that it shall no
longer be prohibited from paying, within five business days after the
date on which CSB shall no longer be so prohibited; provided, however,
that if CSB at any time shall be prohibited by applicable law or
regulation, or by administrative actions or policy of any Governmental
Entity, from making all or any portion of the Termination Fee required
hereunder, it shall (A) use its reasonable best efforts to obtain all
required regulatory and legal approvals and to file any required
notices as promptly as practicable in order to make such payments,
(B) within five days of the submission or receipt of any documents
relating to such regulatory or legal approvals, provide Midland with
copies of the same, and (C) keep Midland advised of both the status of

A-47

any such request for regulatory and legal approvals, as well as any
discussions with any relevant Governmental Entity or third party
reasonably related to same. Nothing contained in this
subparagraph (b) shall be deemed to authorize CSB to breach any
provision of this Agreement.

8.3. Amendment. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or
authorized by their respective Boards of Directors, at any time before
or after approval by the stockholders of CSB of the Merger and the
transactions provided for herein. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the
parties hereto.

8.4. Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective
Board of Directors, may, to the extent legally allowed, (a) extend the
time for the performance of any of the obligations or other acts of
the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only
if set forth in a written instrument signed on behalf of such party,
but such extension or waiver or failure to insist on strict compliance
with an obligation, covenant, agreement or condition shall not operate
as a waiver of, or estoppel with respect to, any subsequent or other
failure.

ARTICLE IX
GENERAL PROVISIONS

9.1. Closing. Subject to the terms and conditions of this
Agreement, including Section 1.2 hereof, the consummation of the
Merger (the "Closing") will occur on the Effective Date at the offices
of Midland, unless another place is agreed to in writing by the
parties hereto.

9.2. Subsidiary Bank Merger. Upon the request of Midland, CSB
shall cause Centralia Savings Bank to enter into an agreement with
Effingham State Bank and take all of the actions necessary and
appropriate to cause the merger of Centralia Savings Bank with and
into Effingham State Bank (the "Subsidiary Bank Merger") to be
effective. The Agreement pursuant to which the Subsidiary Bank Merger
will be effected shall provide, in addition to customary terms for
such a bank merger, (i) for the consummation of the Subsidiary Bank
Merger on a date on or after the Effective Date, as may be selected by
Effingham State Bank, and (ii) that the obligations of Centralia
Savings Bank hereunder are conditioned on the prior or simultaneous
consummation of the Merger pursuant to this Agreement. The Merger
shall not be conditioned upon the consummation of the Subsidiary Bank
Merger.

A-48

9.3. Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties, covenants and agreements in
this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Effective Time, except for those covenants
and agreements contained herein which by their terms apply in whole or
in part after the Effective Time.

9.4. Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expense, provided, however, that
nothing contained herein shall limit either party's rights to recover
any liabilities or damages arising out of the other party's willful
breach of any provision of this Agreement, as provided in
Section 8.2(a) hereof or Midland's rights under Section 8.2(b).

9.5. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation), mailed by registered or certified mail
(return receipt requested) or delivered by an express courier (with
confirmation) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):

(a) if to Midland and Merger Sub, to:
Midland States Bancorp, Inc.
133 West Jefferson Street
Effingham, Illinois 62401
Attention: Randall J. Dempsey
President and Chief Executive Officer
Telephone: (217) 342-2141
Telecopy: (217) 342-9449

with a copy to:

Gallop, Johnson & Neuman, L.C.
101 South Hanley Road
St. Louis, Missouri 63105
Attention: Harold S. Goodman, Esq.
Telephone: (314) 862-1200
Telecopy: (314) 862-1219
and

(b) if to CSB, to:
CSB Financial Group, Inc.
200 South Poplar
Centralia, Illinois 62801
Attention: K. Gary Reynolds
Chairman, President and Chief Executive
Officer
Telephone: (618) 532-1918
Telecopy: (618) 532-7857

A-49

with a copy to:

Schiff Hardin & Waite
6600 Sears Tower
Chicago, Illinois 60606-6473
Attention: Christopher J. Zinski, Esq.
Telephone: (312) 258-5548
Telecopy: (312) 258-5600

9.6. Interpretation; Effect. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be
to a Section of or an Exhibit or Schedule to this Agreement unless
otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. The phrases
"the date of this Agreement", "the date hereof" and terms of similar
import, unless the context otherwise requires, shall be deemed to
refer to January 26, 2000. Whenever the words "include", "includes"
or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". No provision of this
Agreement shall be construed to require CSB, Midland, Merger Sub or
any of their respective Subsidiaries, affiliates or directors to take
any action which would violate applicable law (whether statutory or
common law), rule or regulation. The phrases "to the knowledge of
CSB" and "to the best knowledge of CSB" shall mean the actual
knowledge of the Chief Executive Officer of CSB, or, after reasonable
investigation and inquiry, facts or circumstances that such Chief
Executive Officer should have known.

9.7. Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each of the parties and delivered to the other parties, it
being understood that all parties need not sign the same counterpart.

9.8. Entire Agreement. This Agreement (including the documents
and the instruments referred to herein) constitutes the entire
agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties hereto with respect to the subject
matter hereof (other than with respect to the terms and conditions of
the Confidentiality Agreement dated August 30, 1999, which also shall
apply to CSB as though all references therein to Midland, whether by
use of the word "you" or otherwise, were to CSB, and such
Confidentiality Agreement as so construed shall remain in full force
and effect) and any agreement or instrument referred to or
contemplated herein or therein.

9.9. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware,
without regard to any applicable conflicts of law, except to the
extent specifically provided herein or otherwise required by law.

A-50

9.10. Enforcement of Agreement. The parties hereto agree
that irreparable damage would occur in the event that the provisions
contained in the last sentence of each of Sections 6.3(a) and 6.3(b)
of this Agreement were not performed in accordance with their
respective specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction
or injunctions to prevent breaches of the last sentence of each of
Sections 6.3(a) and 6.3(b) of this Agreement and to enforce
specifically the terms and provisions thereof in any court of the
United States or any state having jurisdiction, this being in addition
to any other remedy to which they are entitled at law or in equity.

9.11. Severability. If any term or provision of this
Agreement shall be declared invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without rendering
invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the
terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement shall be declared to be so broad as to
be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.

9.12. Publicity. Except as otherwise required by law, so
long as this Agreement is in effect, neither Midland, Merger Sub nor
CSB shall issue or cause the publication of any press release or other
public announcement with respect to, or otherwise make any public
statement concerning, the transactions contemplated by this Agreement
without the consent of the other party, which consent shall not be
unreasonably withheld.

9.13. Assignment; No Third Party Beneficiaries. Neither this
Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and assigns. Except as
otherwise expressly provided herein, this Agreement (including the
documents and instruments referred to herein) is not intended to
confer upon any person other than the parties hereto any rights or
remedies hereunder.

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IN WITNESS WHEREOF, Midland, Merger Sub and CSB have caused this
Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.

MIDLAND STATES BANCORP, INC.

By: /s/ Randall J. Dempsey
----------------------------------------
Name: Randall J. Dempsey
Title: President and Chief Executive Officer

CSB ACQUISITION CORPORATION

By: /s/ Randall J. Dempsey
----------------------------------------
Name: Randall J. Dempsey
Title: President and Chief Executive Officer

CSB FINANCIAL GROUP, INC.

By: /s/ K. Gary Reynolds
----------------------------------------
Name: K. Gary Reynolds
Title: President and Chief Executive Officer

A-52

Appendix B: Opinion of Keefe, Bruyette & Woods, Inc.

KEEFE, BRUYETTE & WOODS, INC.
SPECIALISTS IN FINANCIAL SERVICES

211 BRADENTON AVE. DUBLIN, OH 43017

PHONE FAX
614-766-8400 614-766-8406

June 19, 2000

Board of Directors
CSB Financial Group, Inc.
200 South Poplar Street
Centralia, Illinois 62801

Dear Gentlemen:

You have requested our opinion as an independent investment banking
firm regarding the fairness, from a financial point of view, to the
stockholders of CSB Financial Group, Inc. ("CSBF"), of the
consideration to be received by such stockholders in the merger (the
"Merger") between CSBF and Midland States Bancorp, Inc. ("Midland").
We have not been requested to opine as to, and our opinion does not in
any manner address, CSBF's underlying business decision to proceed
with or effect the Merger.

Pursuant to the Agreement and Plan of Merger, dated January 26, 2000,
between CSBF and Midland and a wholly owned subsidiary thereof (the
"Agreement"), at the effective time of the Merger, Midland will
acquire all of CSBF's outstanding shares of common stock including all
allocated and unallocated shares of common stock under the ESOP and
all vested and unvested shares underlying awards under CSBF's
management recognition and development plan. The holders of CSBF
common stock will receive $16.00 per share, in cash, upon surrender of
stock certificates of CSBF representing the shares following the
effective date of the merger. In addition, all options to purchase
shares outstanding on the effective date of the Merger would be
cancelled in exchange for the purchase thereof by Midland in cash for
an amount equal to the excess, if any, of the per share merger price
over the per share exercise price, multiplied by the number of shares
covered by the option in question. The $16.00 per share merger
consideration may be reduced as described in Section 1.10 of the
Agreement. The complete terms of the proposed transaction are
described in the Agreement, and this summary is qualified in its
entirety by reference thereto.

Keefe, Bruyette & Woods, Inc., as part of its investment banking
business, is regularly engaged in the evaluation of businesses and
securities in connection with mergers and acquisitions, negotiated
underwritings, and distributions of listed and unlisted securities.

B-1

We are familiar with the market for common stocks of publicly traded
banks, savings institutions and bank and savings institution holding
companies.

In connection with this opinion we reviewed certain financial and
other business data supplied to us by CSBF: Annual Reports for the
years ended September 30, 1997, 1998, and 1999; Proxy Statements for
the years ended September 30, 1997, 1998, and 1999; consolidated
audited financial statements of CSBF at and for the year ended
September 30, 1999; and other information we deemed relevant. We
discussed with senior management and the board of directors of CSBF
the current position and prospective outlook for CSBF. We reviewed
financial and stock market data of other savings institutions,
particularly in the CSBF region of the United States, and the
financial and structural terms of several other recent transactions
involving mergers and acquisitions of savings institutions or proposed
changes of control of comparably situated companies.

For Midland, we reviewed the annual report for the fiscal year ended
December 31, 1998; financial statements (unaudited) for the nine
months ended September 30, 1999; and certain other information we
deemed relevant.

For purposes of this opinion we have relied, without independent
verification, on the accuracy and completeness of the material
furnished to us by CSBF and Midland and the material otherwise made
available to us, including information from published sources, and we
have not made any independent effort to verify such data. With
respect to the financial information, including asset valuations we
received from CSBF, we assumed (with your consent) that they had been
reasonably prepared reflecting the best currently available estimates
and judgment of CSBF management. In addition, we have not made or
obtained any independent appraisals or evaluations of the assets or
liabilities, and potential and/or contingent liabilities of CSBF and
Midland. We have further relied on the assurances of management of
CSBF and Midland that they are not aware of any facts that would make
such information inaccurate or misleading. We express no opinion on
matters of a legal, regulatory, tax or accounting nature or the
ability of the Merger, as set forth in the Agreement, to be
consummated.

In rendering our opinion, we have assumed that in the course of
obtaining the necessary approvals for the Merger, no restrictions or
conditions will be imposed that would have a material adverse effect
on the contemplated benefits of the Merger to CSBF or the ability to
consummate the Merger. Our opinion is based on the market, economic
and other relevant considerations as they exist and can be evaluated
on the date hereof.

Consistent with the engagement letter with you, we have acted as
financial advisor to CSBF in connection with the Merger and will
receive a fee for such services, a portion of which is contingent upon

B-2

the consummation of the Merger. In addition, CSBF has agreed to
indemnify us for certain liabilities arising out of our engagement by
CSBF in connection with the Merger.

Based upon and subject to the foregoing, as outlined in the foregoing
paragraphs and based on such other matters as we considered relevant,
it is our opinion that as of the date hereof, the consideration to be
received by the stockholders of CSBF in the Merger under the terms of
the Agreement is fair, from a financial point of view, to the
stockholders of CSBF.

This opinion may not, however, be summarized, excerpted from or
otherwise publicly referred to without our prior written consent,
although this opinion and any update thereof may be included in its
entirety in the proxy statement of CSBF used to solicit stockholder
approval of the Merger. It is understood that this letter is directed
to the Board of Directors of CSBF in its consideration of the
Agreement, and is not intended to be and does not constitute a
recommendation to any stockholder as to how such stockholder should
vote with respect to the Merger.

Very truly yours,

/s/ Patricia A. McJoynt

Keefe, Bruyette, & Woods, Inc.

B-3

APPENDIX C: CSB FINANCIAL GROUP, INC.'S ANNUAL REPORT ON FORM 10-KSB
FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 1999 (INCLUDES ONLY EXHIBIT
13.1, 1999 ANNUAL REPORT TO STOCKHOLDERS) AND QUARTERLY REPORT ON FORM
10-QSB FOR THE QUARTER ENDING MARCH 31, 2000 (EXCLUDES ALL EXHIBITS);
COPIES OF THE OMITTED EXHIBITS WILL BE FURNISHED TO YOU UPON REQUEST
TO CSB FINANCIAL GROUP, INC., 200 SOUTH POPLAR, CENTRALIA, ILLINOIS
62801, ATTENTION: K. GARY REYNOLDS, PRESIDENT, TELEPHONE NUMBER: (618)
532-1918.

U.S. Securities and Exchange Commission
Washington, D.C. 20549

FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 1999
------------------

Commission file number 0-26650
-------

CSB FINANCIAL GROUP, INC.
(Name of small business issuer in its charter)

DELAWARE 37-1336338
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

200 South Poplar, Centralia, Illinois 62801
------------------------------------- -----
(Address or principal executive offices) (Zip Code)

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

Securities registered under Section 12(b) of the Exchange Act: None
----

Securities registered under Section 12(g) of the Exchange Act:

COMMON STOCK, PAR VALUE $0.01 PER SHARE
AND RELATED COMMON STOCK PURCHASE RIGHTS
(Title of class)

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 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 ___

Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B contained in this form, and no
disclosure will be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this
Form 10-KSB.

State issuer's revenues for its most recent fiscal year:
$3,385,000

C-1

The aggregate market value of the voting stock held by
non-affiliates of the Registrant at December 17, 1999 was $8,239,770.
For purposes of this determination only, directors and executive
officers of the Registrant have been presumed to be affiliates. The
market value is based upon $14.50 per share, the last sales price as
quoted on the OTC market for December 17, 1999.

The Registrant had 732,299 shares of Common Stock outstanding at
December 17, 1999, not including 21,870 shares held by the
Registrant's Employee Stock Ownership Plan which have not been
allocated to participants.

Transitional Small Business Disclosure Format: Yes ___ No _X_

C-2

DOCUMENTS INCORPORATED BY REFERENCE

The registrant's Annual Report to Stockholders for the year ended
September 30, 1999 is incorporated by reference to Part II of this
Form 10-KSB.

The registrant's proxy statement for its 2000 annual meeting of
stockholders to be held on January 14, 2000 is incorporated by
reference to Part III of this Form 10-KSB.

The Exhibit Index is located at pages C-40 through C-42.

C-3

INDEX

PART I Page

Item 1. Description of Business C-5 - C-37

Item 2. Description of Property C-36 - C-37

Item 3. Legal Proceedings C-37

Item 4. Submission of Matters to a Vote of
Security Holders C-37

PART II

Item 5. Market for Common Equity and Related
Stockholder Matters C-38

Item 6. Management's Discussion and Analysis
or Plan of Operation C-38

Item 7. Financial Statements C-38

Item 8. Changes In and Disagreements With
Accountants on Accounting and
Financial Disclosure C-38

PART III

Item 9. Directors, Executive Officers,
Promoters and Control persons;
Compliance with Section 16(a) of the
Exchange Act C-38

Item 10. Executive Compensation
C-38

Item 11. Security Ownership of Certain
Beneficial Owners and Management C-39

Item 12. Certain Relationships and Related
Transactions C-39

Item 13. Exhibits and Reports on Form 8-K C-39

SIGNATURES C-42

C-4

PART I

ITEM 1. DESCRIPTION OF BUSINESS.

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 stock savings bank. The Company
purchased 100% of the outstanding 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 $662,000. 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
similar to 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 an
historical cost basis with no goodwill or other intangible assets
being recorded.

The Company's assets at September 30, 1999 consist primarily of
the investment in the Bank of $10.0 million. Currently, the Company
does not transact any material business other than through its
subsidiary, the Bank.

BUSINESS OF THE BANK

The Bank is an Illinois-chartered stock savings bank regulated by
the Illinois Commissioner of Savings and Residential Finance (the
"Commissioner"). The Bank was originally chartered in 1879 as a
federally chartered savings and loan association. The deposits of the
Bank are insured up to the applicable limits by the Federal Deposit
Insurance Corporation ("FDIC") under the Savings Association Insurance
Fund ("SAIF"). The Bank's primary market area consists of Marion
County, Illinois, which includes the cities of Carlyle and Centralia.
The Bank maintains two offices, one in Centralia and one in Carlyle,
and provides a full range of retail banking services at each office,
with emphasis on one- to four-family residential mortgage loans,
consumer and commercial loans. At September 30, 1999, the Bank had
total assets, liabilities and stockholders' equity of $48.8 million,
$38.8 million, and $10.0 million, respectively.

The Bank's principal business consists of the acceptance of
retail deposits from the residents and small businesses surrounding
its offices and the investment of those deposits, together with funds

C-5

generated from operations, primarily in one- to four-family
residential mortgage loans. The Bank also invests in multifamily
mortgage, commercial real estate, construction, land development and
other loans. At September 30, 1999, the Bank's gross loan portfolio
totaled $29.1 million or 59.69% of total assets. In addition to its
lending activities, the Bank also invests in U.S. Treasury securities,
government agency securities, local municipal securities and
mortgage-backed securities. At September 30, 1999, the Bank's
securities portfolio totaled $17.3 million or 35.52% of total assets
with $17.1 million classified as available for sale and $216,000
classified as nonmarketable equity securities.

The Bank's revenues are derived principally from interest on its
mortgage, consumer and commercial loans, and, to a lesser extent,
interest and dividends on its securities. The Bank's primary sources
of funds are deposits, Federal Home Loan Bank advances, principal and
interest payments, and principal prepayments on loans. Through its
wholly-owned subsidiary, Centralia SLA, Inc., the Bank engages in the
sale of insurance services.

The executive offices of the Company and Savings Bank are located
at 200 South Poplar Street, Centralia, Illinois 62801 and the
telephone number is (618) 532-1918.

COMPOSITION OF THE LOAN PORTFOLIO. The Bank's historical lending
strategy has focused primarily on the origination of residential
mortgage loans secured by one- to four-family mortgages and consumer
loans to customers with whom the Bank already had a deposit or lending
relationship. Beginning in May, 1994, the Bank began offering
consumer loans, primarily installment loans for the purchase of
automobiles, to the general public. The Bank also originates, from
time to time, multi-family and commercial real estate loans and
commercial non-real estate loans, although such loans presently
constitute a relatively small percentage of the Bank's total loan
portfolio. The following table sets forth in greater detail the
composition of the Bank's loan portfolio by type of loan as of the
dates indicated:

At September 30,
------------------------------------------
1999 1998
---- ----
(In Thousands)
Amount Percent Amount Percent
------ ------- ------ -------
Mortgage Loans:
One- to four-family $ 21,225 72.83% $ 19,037 72.42%
Multi-family 639 2.19% 258 0.98%
Commercial real estate 519 1.78% 1,120 4.26%

C-6

At September 30,
-------------------------------------------
1999 1998
---- ----
(In Thousands)
Amount Percent Amount Percent
------ ------- ------ -------
Other loans secured by
real estate 1,327 4.55% 283 1.07%
------ ---- ------ -----
Total mortgage loans 23,710 81.35% 20,698 78.73%

Commercial and Consumer Loans:
Commercial 1,164 3.99% 625 2.38%
Consumer 3,449 11.84% 4,095 15.58%
Home equity lines of credit 649 2.23% 678 2.58%
Share loans 170 0.59% 193 0.73%
------ ----- ------ -----
Total commercial and
consumer loans 5,432 18.65% 5,591 21.27%
Total loans 29,142 100.00% 26,289 100.00%
====== ======
Less:

Deferred fees -- 6
Unearned income on 1
consumer loans --
Allowance for loan losses 222 171
------ ------
Total loans, net $ 28,920 $ 26,111
====== ======

The Bank had no loans held for sale at September 30, 1999 or
1998. As of September 30, 1999, 34.3% of the Bank's loans had
adjustable interest rates.

The types of loans that the Bank may originate are subject to
federal and state laws and regulations. Interest rates charged by the
Bank are affected by the demand for such loans and the supply of
money available for lending purposes and the rates offered by
competitors. These factors are, in turn, affected by, among other
things, economic conditions, monetary policies of the federal
government, including the Federal Reserve Board and legislative tax
policies.

C-7

LOAN MATURITY

The following table shows the maturity of the Bank's loans at
September 30, 1999. The table does not include the effect of future
loan repayment activity. While the Bank cannot project future loan
prepayment activity, the Bank anticipates that in periods of stable
interest rates, prepayment activity would be lower than prepayment
activity experienced in periods of declining interest rates. In
general, the Bank originates adjustable and fixed-rate one- to
four-family loans with maturities from 15 to 30 years, one-to-four
family loans with balloon features which mature from 1 to 5 years,
multi-family loans with maturities from 1 to 5 years, adjustable-rate
commercial real estate loans with maturities of 20 to 25 years,
commercial loans with maturities of 90 days to one year, and consumer
loans with maturities of 1 to 5 years.

At September 30, 1999
---------------------------------------
Mortgage Commercial Consumer Total
Loans Loans Loans Loans
-------- ---------- -------- -----
(In Thousands)
One year or less $ 1,348 $ 413 $ 430 $ 2,191
======== ===== ======= =======
After one year:
More than one year to five years $ 3,252 $ 662 $ 3,798 $ 7,712
More than five years to ten years 3,816 89 40 3,945
More than ten years 15,294 -- -- 15,294
-------- ------ ------ --------
Total due after
September 30, 2000 $ 22,362 $ 751 $ 3,838 $26,951
======== ===== ======= =======

Interest rate terms on amounts due
after one year:
Fixed $ 12,671 $ 600 $ 3,838 $ 17,109
Adjustable 9,691 151 -- 9,842

ONE- TO FOUR-FAMILY LOANS. The primary lending activity of the
Bank has been the extension of first mortgage residential loans to
enable borrowers to purchase existing one- to four-family homes or to
construct new one- to four-family homes. At September 30, 1999 and
1998, the Bank's gross loan portfolio consisted of approximately $21.2
million, or 72.83%, and $19.0 million, or 72.42%, respectively of
loans secured by one- to four-family residential real estate. The
predominant type of first-mortgage residential loan currently offered
by the Savings Bank to loan customers is an adjustable rate mortgage
that adjusts on either a one-year or three-year basis with a 30 year
amortization.

Balloon loans were the predominant type of residential first
mortgage loan offered by the Savings Bank prior to September, 1994.

C-8

Such loans are amortized over a maximum period of 30 years for
purposes of computing the borrower's monthly mortgage payments. Under
the terms of its standard balloon loan, the Savings Bank is generally
obligated, at the option of the borrower, to refinance the loan at the
time the balloon payment becomes due, provided that the loan is
current at such time. The initial interest rate on each balloon loan
offered by the Savings Bank is fixed at the rate prevailing at the
time that the loan is originated. Most of the balloon loans in the
Savings Bank's portfolio further provide that the interest rate will
not increase by more than one to two percentage points at the end of
each balloon period and that the maximum interest rate will not exceed
the initial rate by more than three percentage points either over the
life of the mortgage or for as long as the home that is being financed
remains owner-occupied.

The Bank has attempted to shift the balance between its ARMs and
balloon loans by ceasing to offer balloon loans to new customers and
encouraging the holders of existing balloon loans to replace such
loans, upon maturity, with ARMs. Management believes that the higher
interest rate ceilings and the interest rate floor included in its
ARMS will result in less interest rate risk to the Bank than the
interest rate risk posed by its balloon loans.

The Bank has extended, and expects to continue to extend, from
time to time, fixed-rate loans to customers who prefer a fixed rate of
interest. The Bank will not originate a fixed-rate loan unless such
loan complies with the underwriting standards of the Federal Home Loan
Mortgage Corporation ("FHLMC") and the FNMA. This will give the Bank
the option of either holding such fixed-rate loans in its portfolio or
selling such loans in the secondary mortgage market.

The Bank's reliance on ARMs and balloon loans, rather than
fixed-rate mortgage loans, makes the Bank's first-mortgage residential
loan portfolio more interest-rate sensitive. However, since the
interest earned on ARMs or on balloon loans which are refinanced on a
one-, three- or five-year cycle varies with prevailing interest rates,
such loans do not offer the Bank as predictable a cash flow as do
longer-term, fixed-rate loans. ARMs and balloon loans which are
subject to refinancing on a one-, three- or five-year cycle may also
carry increased credit risk as the result of the imposition of higher
monthly payments upon borrowers during periods of rising interest
rates. During such periods, the risk of default on such loans may
increase, due to the upward adjustment of interest costs to the
borrower. Management has attempted to minimize such risk by
qualifying borrowers at the maximum rate of interest payable under the
terms of the ARM or the refinanced balloon loan.

The loan-to-value ratio of most single-family first-mortgage
loans made by the Bank is 80%. If the loan-to-value ratio exceeds
85%, the Bank requires private mortgage insurance to cover the excess
over 85%. If private mortgage insurance is obtained, the mortgage is
limited to 95% of the lesser of the appraised value or purchase price.

C-9

The maximum loan-to-value ratio on a loan for the construction of a
new single-family residential home is 80%, and the maximum
loan-to-value ratio on loans on two- to four-family dwellings is 75%.

The Bank requires title insurance, or an attorney's opinion as to
title, and fire and casualty insurance coverage of the property
securing any mortgage loan originated or purchased by the Bank. All
of the Bank's real estate loans contain due-on-sale clauses which
provide that if the mortgagor sells, conveys or alienates the property
underlying the mortgage note, the Bank has the right at its option to
declare the note immediately due and payable without notice.

MULTI-FAMILY RESIDENTIAL LENDING. At September 30, 1999 and
1998, the Bank's gross loan portfolio consisted of approximately
$639,000 or 2.19% and $258,000 or .98% of loans secured by
multi-family residential real estate, respectively. Multi-family real
estate loans are generally limited to 70% of the appraised value of
the property or the selling price, whichever is less. Loans secured
by multi-family real estate are generally larger and, like commercial
real estate loans, involve a greater degree of risk than one- to
four-family residential loans.

COMMERCIAL REAL ESTATE LOANS. The Bank has historically made
commercial real estate loans on a limited basis. At September 30,
1999 and 1998, the Bank's commercial real estate loan portfolio
amounted to $519,000, or 1.78%, and $1,120,000, or 4.26%, respectively
of the Bank's gross loan portfolio. The Bank's practice has been to
underwrite such loans based on its analysis of the amount of cash flow
generated by the business in which the real estate is used and the
resulting ability of the borrower to meet its payment obligations.
Although such loans are secured by a first mortgage on the underlying
property, the Savings Bank also generally seeks to obtain a personal
guarantee of the loan by the owner of the business in which the
property is used.

OTHER LOANS SECURED BY REAL ESTATE. In addition to one- to- four
family first mortgage loans, the Savings Bank also makes loans secured
by real estate in the form of junior mortgages, interim construction
loans, land development and vacant land loans. At September 30, 1999
and 1998, the Bank's loan portfolio consisted of $1.3 million, or
4.55% and $283,000, or 1.07%, respectively of the Bank's gross loan
portfolio. Other real estate loans are made on terms similar to
multi-family and commercial real estate loans.

COMMERCIAL LOANS. As of September 30, 1999 and 1998, the Bank's
gross loan portfolio consisted of approximately $1.2 million or 3.99%
and $625,000, or 2.38%, respectively of commercial loans secured by
accounts receivable, inventory, farm land or outstanding stock issued
by a corporation. The Bank has also made, from time to time,
unsecured personal loans to the sole proprietors of small businesses
on the same terms and conditions on which it makes other unsecured
personal loans.

C-10

CONSUMER LOANS. The Bank originates a variety of consumer loans,
generally consisting of installment loans for the purchase of motor
vehicles and boats, loans to purchase household goods, loans secured
by savings accounts at the Bank and unsecured personal loans. At
September 30, 1999 and 1998, the Bank's portfolio of consumer loans
totaled approximately $4.3 million, or 14.7%, and $5.0 million, or
18.89%, respectively of the Bank's gross loan portfolio. The Bank may
make a loan to finance the purchase of a new and previously untitled
motor vehicle or boat in an amount equal to the lesser of 5% over the
factory invoice price or 90% of the sticker price of the motor vehicle
or boat. Loans for the purchase of used motor vehicles are limited to
the amount of the wholesale price listed for the vehicle in the
National Automobile Dealers' Association used car guide. Any loan for
the purchase of a motor vehicle or boat is secured by the purchased
vehicle or boat and is written to amortize over a maximum period of
between two and five years, depending on the age of the motor vehicle
or boat offered as collateral. Loans to finance the purchase of new
household goods may be made in an amount equal to 100% of the sales
price of such goods. Such loans are secured by the goods purchase.
Loans for the purchase of household goods may be amortized for a
maximum period of five years. Loans secured by a customer's savings
account with the Savings Bank are limited to an amount equal to 90% of
the amount of the deposit. A loan that is secured by a deposit with a
specific maturity date is written with a term matching the maturity
date of the deposit. Unsecured personal loans are limited to $15,000
per borrower and to a term of three to five years. As a practical
matter, such loans do not exceed $10,000 and are amortized over a
period of three years.

LOAN PROCESSING. Upon receipt of a completed loan application
from a prospective borrower, the Savings Bank obtains a credit report
from a credit reporting agency and, depending on the type of loan,
verifies employment, income and other financial information received
from the prospective borrower and requests additional financial
information, if necessary. If a loan in the amount of $50,000 or more
is secured by real estate, the Bank requires an independent appraisal
of the real estate. Real estate securing a loan of $50,000 or less is
appraised only by the Bank's internal appraisal committee. Once such
information and appraisals are complete, the application is submitted
for underwriting by designated staff. The application, together with
the underwriter's recommendations, is then forwarded for review and
action to the President of the Bank, the Loan Committee of the Board
of Directors, or the Board of Directors as a whole, depending on the
size and nature of the loan.

The Board of Directors of the Bank has established the following
guidelines for loan approval authority for all loans originated by the
Bank: (i) any lending officer of the Bank may approve loans up to
$75,000, (ii) the Bank's President may approve loans up to $125,000,
(iii) the Loan Committee of the Board of Directors may approve loans
up to $300,000, and (iv) the Board of Directors may approve any loan
in excess of $300,000 up to the Bank's applicable legal lending limit.

C-11

LOAN PURCHASES AND SALES. The Bank has occasionally purchased
loans originated by other financial institutions, secured by one- to
four-family residential properties or commercial real estate located
outside of its primary market area. At September 30, 1999 and 1998,
the total balance outstanding on first mortgage loans purchased by the
Bank was $187,000 and $287,000, respectively. At September 30, 1999
and 1998, the Bank did not have any loans held for sale.

DELINQUENCIES

The Bank's collection procedures with respect to delinquent loans
include written notice of delinquency contact by letter or telephone
by Bank personnel. Most loan delinquencies are cured within 90 days
and no legal action is taken. With respect to mortgage loans, if the
delinquency exceeds 180 days, and in the case of consumer loans, if
the delinquency exceeds 90 days, the Bank institutes measures to
enforce its remedies resulting from the default, including the
commencement of foreclosure action of the repossession of collateral.

At September 30, 1999, delinquencies in the Bank's loan portfolio
were as follows:

At September 30, 1999
------------------------------------------------------------------------
30-89 Days (1) 90 Days or More (1) Total Delinquent Loans
-------------- ------------------- ----------------------
Principal Principal Principal
Number Balance Number Balance Number Balance
of Loans of Loans of Loans of Loans of Loans of Loans
-------- --------- -------- ------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Real estate loans 4 $ 91 5 $ 145 9 $ 236
Commercial loans 1 5 -- -- 1 5
Consumer loans 20 135 10 60 30 195
---- ----- ---- ----- ----- -----
25 231 15 205 40 436
==== ===== ==== ===== ===== =====
Delinquent loans 0.79% 0.70% 1.49%
to gross loans ===== ===== =====

</TABLE>

C-12

At September 30, 1998, delinquencies in the Bank's loan portfolio
were as follows:

At September 30, 1998
-----------------------------------------------------------------------------------
30-89 Days (1) 90 Days or More (1) Total Delinquent Loans
----------------------- ------------------------- --------------------------
Principal Principal Principal
Number Balance of Number of Balance of Number of Balance of
of Loans Loans Loans Loans Loans Loans
-------- ---------- -------- ---------- --------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Real estate loans 6 $ 80 12 $ 350 18 $ 430
Commercial loans -- -- -- -- -- --
Consumer loans 11 48 14 60 25 108
---- ---- ---- ----- ---- -----

Delinquent loans
to gross loans 17 128 26 410 43 538
==== ==== ==== ===== ==== =====
0.49% 1.56% 2.05%
</TABLE>

(1) The Bank discontinues the accrual of interest on loans when the
borrower is delinquent as to a contractually due principal or
interest payment and the Bank's management deems collection to be
unlikely. The number of loans and principal balance includes
nonaccrual loans.

NONPERFORMING ASSETS

The Bank places loans that are 90 days or more past due on
nonaccrual status unless such loans are adequately collateralized and
in the process of collection. Accrual of interest on a nonaccrual
loan is resumed only when all contractually past due payments are
brought current and management believes that the outstanding loan
principal and contractually due interest are no longer doubtful of
collection.

Foreclosed properties are recorded at the fair value at the date
of foreclosure. Any subsequent reduction in the fair value of a
foreclosed property, along with expenses to maintain or dispose of a
foreclosed property, is charged against current earnings. As of
September 30, 1999 and 1998, the Bank had no "real estate owned."

C-13

The following table sets forth information with respect to the
Bank's nonperforming assets for the periods indicated.

<TABLE>
<CAPTION>
At September 30,
----------------------------
1999 1998
---- ----
(In Thousands)
<S> <C> <C>
Loans accounted for on a nonaccrual basis
One- to four-family loans $ 145 $ 350
Consumer loans 60 60
----- -----
Total nonaccrual loans 205 410
----- -----
Accruing loans which are contractually past
due 90 days or more:
One- to four-family loans -- --
Consumer loans -- --
----- -----
Total 90 days past due and accruing interest -- --
----- -----
Total nonaccrual and 90 days past due loans 205 $ 410

Real estate owned -- --
----- ======
Total nonperforming assets $ 205 $ 410
====== ======
Total nonperforming assets to total assets 0.42% 0.88%
====== ======
</TABLE>

CLASSIFIED ASSETS. FDIC policies require that each insured
depository institution review and classify its assets on a regular
basis. In addition, in connection with examinations of insured
institutions, regulatory examiners have the authority to identify
problem assets and, if appropriate, require them to be classified.
The Bank reviews and classifies its assets at least quarterly. There
are three classifications for problem assets: substandard, doubtful
and loss. Substandard assets must have one or more defined weaknesses
and are characterized by the distinct possibility that the insured
institution will sustain some loss if the deficiencies are not
corrected. Doubtful assets have the weaknesses of substandard assets,
with the additional characteristic that the weaknesses make collection
or liquidation in full on the basis of currently existing facts,
conditions and values, questionable, and there is a high possibility
of loss. An asset classified as loss is considered uncollectible and
of such little value that continued treatment of the asset as an asset
on the books of the institution is not warranted.

An insured institution is required to establish prudent general
allowances for the loan losses with respect to assets classified as
substandard or doubtful. The institution is required either to charge

C-14

off assets classified as loss or to establish a specific allowance for
100% of the portion of the asset classified as loss.

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

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

ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses is
established through a provision for loan losses based on management's
evaluation of the risks inherent in its loan portfolio and the general
economy. The allowance for loan losses is maintained at an amount
management considers adequate to cover estimated losses in loans
receivable which are deemed probable and estimable based on
information available to management at such time. While management
believes the Bank's allowance for loan losses is sufficient to cover
losses inherent in its loan portfolio at this time, no assurances can
be given that the Bank's level of allowance for loan losses will be
sufficient to cover future loan losses incurred by the Bank or that
future adjustments to the allowance for loan losses will not be
necessary if economic and other conditions differ substantially from
the economic and other conditions used by management to determine the
current level of the allowance for loan losses. The allowance is
based upon a number of factors, including asset classifications,
economic trends, industry experience and trends, industry and
geographic concentrations, estimated collateral values, management's
assessments of the credit risk inherent in the portfolio, historical
loan loss experience, and the Bank's underwriting policies. As of
September 30, 1999 and 1998, the Bank's allowance for loan losses was
0.76% and 0.65%, respectively, of gross loans. The Bank will continue
to monitor and modify its allowance for loan losses as conditions
dictate. Various regulatory agencies, as an integral part of their
examination process, periodically review the Bank's valuation
allowance. These agencies may require the Bank to establish
additional valuation allowances, based on their judgments of the
information available at the time of the examination.

C-15

It is the policy of the Bank to charge off customer loans when it
is determined that they are no longer collectible. The policy for
loans secured by real estate, which comprise the bulk of the Bank's
portfolio, is to establish loss reserves in accordance with the Bank's
loan classification process, based on generally accepted accounting
practices. It is the policy of the Bank to obtain an appraisal on all
real estate acquired through foreclosure at the time of foreclosure.

The following table sets forth activity in the Bank's allowance
for loan losses for the periods set forth in the table.

<TABLE>
<CAPTION>
For the Fiscal Year
Ended September 30,
-------------------------
1999 1998
---- ----
(In Thousands)
<S> <C> <C>
Balance at beginning of period $171 $165
Provision for loan losses 72 63
Recoveries:
Consumer loans 18 4
---- ----
Total recoveries 18 4
---- ----
Charge-offs:
Consumer loans 39 61
---- ----
Total charge-offs 39 61
---- ----
Net charge-offs (21) (57)
---- ----

Balance at end of period $222 $171
==== ====
Ratio of allowance for loan losses to gross
loans outstanding at the end of the period 0.76% 0.65%
Ratio of net charge offs to average loans
outstanding during the period 0.07% 0.21%
Ratio of allowance for loan losses to total
nonperforming lonas at the end of the period 108.29% 41.71%

</TABLE>
The following table sets forth the Bank's allocation of the
allowance for loan losses by category and the percent of the allocated
allowance to the total allowance for each specific loan category. The
portion of the allowance for loan losses allocated to each loan
category does not represent the total available for future losses
which may occur within the loan category since the total allowance for
loan losses is a valuation reserve to the entire loan portfolio.

C-16

At September 30,
----------------------------------------------------------------------------
1999 1998
---- ----
% of % of
As % of Loans in As % of Loans in
Gross Category Gross Category
Loans in to Gross Loans in to Gross
Amount Category Loans Amount Category Loans
------ -------- -------- ------ -------- ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Mortgage Loans:
One- to four-family $52 0.24% 72.83% $62 0.32% 72.42%
Multi-family -- -- 2.19% -- -- 0.98%
Commercial real
estate -- -- 1.78% -- -- 4.26%
Other loans secured
by real estate -- -- 4.55% -- -- 1.07%
---- ---- ------ ---- ----- ------
Total mortgage loans 52 0.24% 81.35% 62 0.32% 78.73%
---- ----- ------ ---- ----- ------
Commercial and
Consumer Loans:
Commercial 26 2.23% 3.99% 17 2.72% 2.38%
Consumer 51 1.48% 11.84% 56 1.37% 15.58%
Home equity lines
of credit -- -- 2.23% -- -- 2.58%
Other consumer -- -- 0.59% -- -- 0.73%
loans ---- ----- ------ ---- ----- ------

Total commercial and
consumer loans 77 1.42% 18.65% 73 1.31% 21.27%
---- ----- ------ ---- ----- ------

Total Allocated 129 0.44% 100.00 135 0.51% 100.00
====== ======
Unallocated 93 0.32% 36 0.14%
----- ----- ---- -----
Total allowance for
loan losses $222 0.76% $171 0.65%
==== ===== ==== =====

</TABLE>

INVESTMENT ACTIVITIES

The investment policies of the Company and the Bank, as
established by the respective Board of Directors, attempts to provide
and maintain liquidity, generate a favorable return on investments
without incurring undue interest rate and credit risk, and complement
the Company's lending activities. The Company classifies all
securities as available for sale. The investment policies provide

C-17

authority to invest in U.S. Treasury and U.S. Government guaranteed
securities, securities backed by federal agencies such as Federal
National Mortgage Association ("FNMA"), Federal Home Loan Mortgage
Corporation ("FHLMC") and the Federal Farm Credit Bureau ("FFCB"),
mortgage-backed securities with maximum maturities of 20 years which
are backed by federal agency securities, obligations of state and
political subdivisions with at least an "A" rating, certificates of
deposit, and securities issued by mutual funds which invest in
securities consistent with the Company's or Bank's allocable
investments. The investment policies provide that the President is
authorized to execute all transactions within specified limits which
are reviewed by the Board of Directors on a monthly basis. From time
to time, the Board of Directors may authorize the President to exceed
the policy limitations. The Bank's Interest Rate Risk Committee
monitors compliance with the Bank's investment policy and generally
meets on a quarterly basis.

At September 30, 1999, the Company had $17.3 million in
investment securities consisting of $.9 million invested in
mortgage-backed securities, $1.0 million in U.S. Treasury, $13.1
million invested in U.S. Government and agency, $1.6 million invested
in obligations of state and political securities, $.5 million invested
in corporate securities and $.2 million invested in FHLB stock.
Investments in mortgage-backed securities involve a risk that actual
prepayments will exceed prepayments estimated over the life of the
security which may result in a loss of any premium paid for such
instruments thereby reducing the net yield on such securities. In
addition, if interest rates increase the market value of such
securities may be adversely affected, which, in turn, would adversely
affect stockholders' equity to the extent such securities are held as
available for sale.

Mortgage-backed securities represent a participation interest in
a pool of single-family or multi-family mortgages, the principal and
interest payments on which are passed from the mortgage originators
through intermediaries (generally federal government-sponsored
enterprises) that pool and repackage the participation interest in the
form of securities to investors such as the Bank. Such federal
government-sponsored enterprises, which guarantee the payment of
principal and interest to investors, include the FHLMC, FNMA and GNMA.
Mortgage-backed securities generally increase the quality of the
Bank's assets by virtue of the guarantees that back them. They are
also more liquid than individual mortgage loans and may be used to
collateralize borrowings or other obligations of the Bank. The Bank
has no investments in collateralized mortgage obligations or real
estate investment conduits.

The following tables set forth certain information regarding the
amortized cost and market values of the Company's securities at the
dates indicated. The Company holds all securities as available for
sale.

C-18

At September 30,
1999 1998
------------------------------ -----------------------------
Amortized Cost
Amortized Cost Fair Value Cost Fair Value
AVAILABLE FOR SALE -------------- ---------- -------------- ------------
(In Thousands)
<S> <C> <C> <C> <C>
U.S. Government and agency $ 1,3182 $13,099 $ 9,752 $ 9,875
U.S. Treasury 1,000 1,002 4,000 4,016
Obligations of states and political 1,642 1,626 1,643 1,684
subdivisions
Mortgage backed securities 880 909 1,288 1,356
Corporate securities 500 482 -- --
------- ------- ------- -------
Total Available for Sale $17,204 $17,118 $16,683 $16,931
======= ======= ======= =======

</TABLE>

At September 30, 1999 and 1998, the Company had investments in
FHLB stock of $216,000 and $215,000, respectively.

The following table sets forth information concerning the
carrying value, weighted average yields, and maturities of the
Company's investment securities at September 30, 1999. Maturities may
differ from contractual maturities in mortgage backed securities
because the mortgages underlying the securities may be called or
repaid without any penalties. Therefore, these securities have been
excluded from the maturity schedule below.

The Federal Home Loan Bank stock is considered a nonmarketable
equity security for reporting purposes. As such, the stock has no
maturity date and therefore has been excluded from the maturity
schedule below.

C-19

Less than
One Year One to Five Years Five to Ten Years Over Ten Years Total
------------------ ------------------ ------------------- ------------------- -------------------
Weighted Weighted Weighted Weighted Weighted
AVAILABLE FOR Fair Average Fair Average Fair Average Fair Average Fair Average
SALE (1) Value Yield (3) Value Yield (3) Value Yield (3) Value Yield (3) Value Yield (3)
------- ---------- ------- ---------- -------- ---------- -------- ---------- -------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government
and agency
securities $1,196 5.20% $8,720 5.90% $3,183 6.34% $ -- -- $13,099 5.91%

U.S.
Treasury 1,002 5.50% -- -- -- -- -- -- 1,002 5.50%

Obligations of
states and
Political sub-
divisions (2) -- -- 141 4.62% 1,291 4.77% $194 4.50% 1,626 4.51%

Corporate -- -- 482 5.75% -- -- -- -- 482 5.75%
------ ------ ------ ----- ------ ----- ---- ----- ------- -----
Total Available
for Sale $2,198 10.70% $9,343 5.88% $4,474 5.89% $194 4.50% $16,209 5.94%
====== ===== ====== ===== ====== ===== ==== ===== ======= =====
</TABLE>

(1) Excludes mortgage-backed securities and FHLB stock.
(2) These investments yield lower interest rates as they
are exempt from federal taxes.
(3) Weighted average yields are calculated based on amortized cost.

DEPOSIT ACTIVITIES AND OTHER SOURCES OF FUNDS

GENERAL. The Company's primary sources of funds for use in
lending and investing and for other general purposes are deposits at
the Bank, Federal Home Loan Bank advances and proceeds from principal
and interest payments on loans, mortgage-backed securities, and
investment securities. Contractual loan repayments are a relatively
stable source of funds, while deposit inflows and outflows and loan
prepayments are significantly influenced by general interest rates and
money market conditions. Borrowings may be used on a short-term basis
to compensate for reductions in the availability of funds from other
sources.

DEPOSIT ACCOUNTS. The Bank attracts deposits within its primary
market area by offering a variety of deposit accounts, including
noninterest bearing checking accounts, negotiable order of withdrawal
("NOW") accounts, money-market accounts, passbook savings accounts and
certificates of deposit. The flow of deposits is influenced
significantly by general economic conditions, changes in money market
and prevailing interest rates, and competition. Management generally
reviews on a weekly basis the interest rates set for its deposit

C-20

accounts. The Bank also relies on customer service and long-standing
relationships with customers to attract and retain deposits.

The following table sets forth the distribution of the Bank's
deposit accounts at the dates indicated and the weighted average
nominal rates on each category of deposits presented.

At September 30,
-------------------------------------------------------------------------------------------
1999 1998
------------------------------------------ --------------------------------------------
Average Total Average Average Total Average
Balance Deposits Interest Rate Balance Deposits Interest Rate
-------- ---------- ----------- ------- -------- -------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Demand Accounts:
Non-interest bearing $ 1,827 4.86% -- $ 1,451 4.03% --
Interest bearing (NOW) 4,575 12.16% 1.55% 3,712 10.30% 1.75%
Money Market 2,960 7.87% 2.50% 3,550 9.85% 2.84%
Passbook savings 3,604 9.58% 2.08% 3,435 9.53% 2.33%
Time deposits 24,658 65.53% 5.09% 23,892 66.29% 5.71%
------- ------- ----- ------- ------- -----
Total Deposit Accounts $37,624 100.00% 3.92% $36,040 100.00% 4.47%
======= ======= ===== ======= ======= =====
</TABLE>

The following table indicates the amount of the Bank's jumbo
certificates of deposit and other time deposits of $100,000 or more by
time remaining until maturity as of September 30, 1999. Jumbo
certificates of deposit require minimum deposits of $100,000 and rates
paid on such accounts are negotiable. At September 30, 1999, total
jumbo certificates were $2,627,000.

C-21

Time
Maturity Period Deposits
------------------ -------------
(In Thousands)

Less than three months $591
Three through six months 200
Six through twelve months 524
Over twelve months 1,312
------
$2,627
Total ======

BORROWINGS. The Bank may rely on advances from the FHLB of
Chicago in the event of a reduction in available funds from other
sources. The Bank is a member of the FHLB of Chicago, which functions
as a central reserve bank providing credit for savings and loan
associations and other member financial institutions. As a member,
the Bank is required to own capital stock in the FHLB of Chicago and
is authorized to apply for advances on the security of such stock and
certain of its mortgage-based loans and other assets, provided that
certain standards relating to creditworthiness have been met. The
Bank has borrowed from the FHLB of Chicago, from time to time, on an
overnight basis. At September 30, 1999, the Bank had outstanding
borrowings from the FHLB of $1.4 million. At September 30, 1998, the
Bank had no outstanding borrowings from the FHLB.

SUBSIDIARY ACTIVITIES

The Bank has one wholly-owned service corporation, Centralia SLA,
an Illinois corporation. Centralia SLA is engaged in the business of
selling mortgage life, mortgage disability, credit life and credit
disability insurance to mortgage and consumer loan customers of the
Bank. As of September 30, 1999, the Bank's investment in Centralia
SLA amounted to approximately $18,000 or .04% of the Bank's total
assets. Insurance commissions accounted for $12,000 or approximately
2.4% of the Bank's pre-tax income during the year. Management
continues to place less emphasis on the sale of insurance and
anticipates that the amount of such income will continue to decline
over the next few years.

COMPETITION

The Bank's deposit and lending base is presently concentrated in
the city of Centralia and the surrounding area, including Central City
to the north, Wamac to the South, Salem to the east and Hoffman to the
west. This area includes portions of the Illinois counties of

C-22

Washington, Jefferson, Marion and Clinton, which are primarily
agricultural. Population growth in those four counties has remained
relatively flat in recent years. Management believes that, in recent
years, total deposits have grown only modestly and there has been
relatively little new construction or real estate development in the
four-county area. Management further believes that, as a result, any
growth in the mortgage lending business within the area has also been
modest.

The Bank has five principal competitors for deposits and lending
business within the city of Centralia. All five competitors are
branches or subsidiaries of commercial banks. Of these five
competitors, one is affiliated with a multi-bank holding company based
in St. Louis, one is affiliated with a regional bank based in St.
Louis, one is affiliated with a multi-bank holding based in Charlotte,
N.C., and the remaining two are branches of independent community
banks which have their main offices in the neighboring towns of
Hoffman and Irvington. The multi-bank holding companies and regional
bank have substantially greater financial resources and currently
offer a larger array of financial services than the Bank. Each of the
independent banks also has a slightly larger asset base than the Bank.

Given the relative lack of growth in its market area and the
number and greater resources of the banks with which it competes, the
Bank has experienced, and expects to continue to experience, strong
competition in attracting deposits and in its mortgage and consumer
loan business. In order to retain existing and attract new deposits,
the Bank has historically paid deposit rates at the higher end of the
range offered by its competitors. All of the Bank's principal
competitors in Centralia are, moreover, branches or subsidiaries of
commercial banks with deposits insured under the BIF. Unlike the
Bank, such competitors are able to take advantage of the reduction in
the insurance premiums to be paid on BIF-insured deposits.

Management also believes that, in order to compete effectively
for both deposits and lending business, the Bank must enhance the
retail services it offers, so that its range of services is more
comparable to the range offered by its larger competitors. In
providing such services, management hopes to be able to capitalize on
the Bank's ability, as a community bank, to identify and respond more
quickly to local customer needs. The Bank has expanded the retail
services it offers to customers to include, for example, travelers'
checks, money orders, debit cards and ATM services.

PERSONNEL

As of September 30, 1999, the Company had a total of 17 full-time
employees and 3 part-time employees, all of whom were employed at the
Bank level. The Company's employees are not represented by a union or
collective bargaining group. The Company considers its relationship
with its employees to be satisfactory.

C-23

REGULATION

GENERAL

Financial institutions and their holding companies are
extensively regulated under federal and state law by various
regulatory authorities including the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board"), the FDIC and the
Commissioner. The financial performance of the Company and the
Savings Bank may be affected by such regulation, although the extent
to which they may be affected cannot be predicted with a high degree
of certainty.

Federal and state laws and regulations generally applicable to
financial institutions and their holding companies regulate, among
other things, the scope of business, investments, reserves against
deposits, capital levels relative to operations, the nature and amount
of collateral for loans, the establishment of branches, mergers,
consolidations, and dividends. The system of supervision and
regulation applicable to the Company and the Savings Bank establishes
a comprehensive framework for their operations and is intended
primarily for the protection of the FDIC's deposit insurance funds and
the depositors of the Savings Bank, rather than the stockholders of
the Company.

The following references to material statutes and regulations
affecting the Company and the Bank are brief summaries thereof and are
qualified in their entirety by reference to such statutes and
regulations. Any change in applicable law or regulations may have a
material effect on the business of the Company and the Bank.

THE SAVINGS BANK

GENERAL. The Bank is an Illinois-chartered savings bank, the
deposit accounts of which are insured by the SAIF of the FDIC. As a
SAIF-insured, Illinois-chartered savings bank, the Bank is subject to
the examination, supervision, reporting and enforcement requirements
of the Commissioner, as the chartering authority for Illinois savings
banks, and the FDIC, as administrator of the SAIF, and to the statutes
and regulations administered by the Commissioner and the FDIC
governing such matters as capital standards, mergers, establishment of
branch offices, subsidiary investments and activities and general
investment authority. The Bank is required to file reports with the
Commissioner and the FDIC concerning its activities and financial
condition and will be required to obtain regulatory approvals prior to
entering into certain transactions, including mergers with, or
acquisitions of, other financial institutions.

The Commissioner and the FDIC have extensive enforcement
authority over Illinois-chartered savings banks, such as the Bank.
This enforcement authority includes, among other things, the ability
to issue cease-and-desist or removal orders, to assess civil money

C-24

penalties and to initiate injunctive actions. In general, these
enforcement actions may be initiated for violations of laws and
regulations and unsafe and unsound practices.

The Commissioner has established a schedule for the assessment of
"supervisory fees" upon all Illinois savings banks to fund the
operations of the Commissioner. These supervisory fees are computed
on the basis of each savings bank's total assets (including
consolidated subsidiaries) and are payable at the end of each calendar
quarter. A schedule of fees has also been established for certain
filings made by Illinois savings banks with the Commissioner. The
Commissioner also assesses fees for examinations conducted by the
Commissioner's staff, based upon the number of hours spent by the
Commissioner's staff performing the examination.

The system of regulation and supervision applicable to the Bank
establishes a comprehensive framework for its operations and is
intended primarily for the protection of the FDIC's deposit insurance
funds and the depositors of the Bank. Changes in the regulatory
framework could have a material adverse effect on the Bank and its
operations which, in turn, could have a material adverse effect on the
Company.

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

CAPITAL REQUIREMENTS. Under the Illinois Savings Bank Act
("ISBA") and the regulations of the Commissioner, an Illinois savings
bank must maintain a minimum level of total capital equal to the
higher of 4% of total assets or the amount required to maintain
insurance of deposits by the FDIC. The Commissioner has the authority
to require an Illinois savings bank to maintain a higher level of
capital if the Commissioner deems such higher level necessary based on
the savings bank's financial condition, history, management or
earnings prospects.

C-25

FDIC-insured institutions are required to follow certain capital
adequacy guidelines which prescribe minimum levels of capital and
require that institutions meet certain risk-based and leverage capital
requirements. Under the FDIC capital regulations, an FDIC-insured
institution is required to meet the following capital standards: (i)
"Tier 1 capital" in an amount not less than 4% of average total
assets; (ii) "Tier 1 capital" in an amount not less than 4% of
risk-weighted assets; and (iii) "total capital" in an amount not less
than 8% of risk-weighted assets.

FDIC-insured institutions in the strongest financial and
managerial condition (with a composite rating of "1" under the Uniform
Financial Institutions Rating System established by the Federal
Financial Institutions Examination Council) are required to maintain
"Tier 1 capital" equal to at least 4% of total assets (the "leverage
limit" requirement). For all other FDIC-insured institutions, the
minimum leverage limit requirement is 3% of total assets plus at least
an additional 100 to 200 basis points. Tier 1 capital is defined to
include the sum of common stockholders' equity, noncumulative
perpetual preferred stock (including any related surplus), and
minority interests in consolidated subsidiaries, less all intangible
assets (other than qualifying servicing rights, qualifying purchased
credit-card relationships and qualifying supervisory goodwill),
certain identified losses (as defined in the FDIC's regulations) and
investments in certain subsidiaries.

FDIC-insured institutions also are required to adhere to certain
risk-based capital guidelines which are designed to provide a measure
of capital more sensitive to the risk profiles of individual banks.
Under the risk-based capital guidelines, capital is divided into two
tiers: core (Tier 1) capital, as defined above, and supplementary
(Tier 2) capital. Tier 2 capital is limited to 100% of core capital
and includes cumulative perpetual preferred stock, perpetual preferred
stock for which the dividend rate is reset periodically based on
current credit standing, regardless of whether dividends are
cumulative or noncumulative, mandatory convertible securities,
subordinated debt, intermediate preferred stock and the allowance for
possible loan and lease losses. The allowance for possible loan and
lease losses includable in Tier 2 capital is limited to a maximum of
1.25% of risk-weighted assets. Total capital is the sum of Tier 1 and
Tier 2 capital. The risk-based capital framework assigns balance
sheet assets to one of four broad risk categories which are assigned
risk-weights ranging from 0% to 100% based primarily on the degree of
credit risk associated with the obligor. Off-balance sheet items are
converted to an on-balance sheet "credit equivalent" amount utilizing
certain conversion factors. The sum of the four risk-weighted
categories equals risk-weighted assets. The following table presents
the Bank's capital position relative to its capital requirements on
September 30, 1999 and 1998 ($ in thousands).

C-26

To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
-------------------- -------------------- ----------------------
Amount Ratio Amount Ratio Amount Ratio
---------- ------ ---------- ------ ----------- --------
AS OF SEPTEMBER 30, 1999:
<S> <C> <C> <C> <C> <C> <C>
Total Capital (to Risk Weighted Assets)
Consolidated $ 10,014 43.9% $1,825 8.0% N/A
Bank $ 9,769 42.8% $1,825 8.0% $ 2,281 10.0%

Tier I Capital (to Risk Weighted Assets)
Consolidated $ 9,792 42.9% $ 913 4.0% N/A
Bank $ 9,547 41.9% $ 913 4.0% $ 1,369 6.0%

Tier I Capital (to Average Adjusted Assets)
Consolidated $ 9,792 20.3% $1,930 4.0% N/A
Bank $ 9,547 19.8% $1.930 4.0% $ 2,412 5.0%

AS OF SEPTEMBER 30, 1998:

Total Capital (to Risk Weighted Assets)
Consolidated $ 9,546 46.2% $1,655 8.0% N/A
Bank $ 9,239 44.7% $1,655 8.0% $ 2,069 10.0%

Tier I Capital (to Risk Weighted Assets)
Consolidated $ 9,375 45.3% $ 827 4.0% N/A
Bank $ 9,067 43.8% $ 827 4.0% $ 1,241 6.0%

Tier I Capital (to Average Adjusted Assets)
Consolidated $ 9,375 19.8% $1,899 4.0% N/A
Bank $ 9,067 19.4% $1,869 4.0% $ 2,337 5.0%

</TABLE>
DIVIDENDS. Under the ISBA, dividends may be paid by the Bank out
of its net profits (i.e., earnings from current operations,
investments, and other assets plus actual recoveries on loans, net of
current expenses including dividends or interest on deposits,
additions to reserves as required by the Commissioner, actual losses,

C-27

accrued dividends on preferred stock, if any, and all state and
federal taxes). The written approval of the Commissioner must be
obtained, however, before the Bank may declare dividends in any
calendar year in an amount in excess of 50% of its net profits for
that calendar year. In addition, before declaring a dividend on its
capital stock, the Bank must transfer no less than one-half of its net
profits of the preceding half year to its paid-in surplus until it
shall have paid-in surplus equal to 20% of its capital stock.
Finally, the Bank will be unable to pay dividends in an amount which
would reduce its capital below the greater of (i) the amount required
by the FDIC, (ii) the amount required by the Commissioner or (iii) the
amount required for the liquidation account to be established by the
Bank in connection with the Conversion. The Commissioner and the FDIC
also have the authority to prohibit the payment of any dividends by
the Savings Bank if the Commissioner or the FDIC determines that the
distribution would constitute an unsafe or unsound practice.

COMMUNITY REINVESTMENT ACT REQUIREMENTS. The FDIC, the Federal
Reserve Board, the Office of Thrift Supervision ("OTS") and the Office
of the Comptroller of the Currency ("OCC") have jointly issued a final
rule (the "Final Rule") under the Community Reinvestment Act (the
"CRA"). The Final Rule eliminates the existing CRA regulation's
twelve assessment factors and substitutes a performance based
evaluation system. The Final Rule became fully effective July 1,
1997.

Under the Final Rule, an institution's performance in meeting the
credit needs of its entire community, including low- and
moderate-income areas, as required by the CRA, are generally evaluated
under three tests: the "lending test," the "investment test," and the
"service test." However, an independent financial institution with
assets of less than $250 million, or a financial institution with
assets of less than $250 million that is a subsidiary of a holding
company with assets of less than $1 billion, will be evaluated under a
streamlined assessment method based primarily on its lending record.
The streamlined test considers an institution's loan-to-deposit ratio
adjusted for seasonal variation and special lending activities, its
percentage of loans and other lending related activities in the
assessment area, its record of lending to borrowers of different
income levels and businesses and farms of different sizes, the
geographic distribution of its loans, and its record of taking action,
if warranted, in response to written complaints. In lieu of being
evaluated under the three assessment tests or the streamlined test, a
financial institution can adopt a "strategic plan" and elect to be
evaluated on the basis of achieving the goals and benchmarks outlined
in the strategic plan. Management of the Company does not believe
that the new CRA regulations will adversely affect the Savings Bank.

THE COMPANY

GENERAL. On October 5, 1995, the Company became the sole
stockholder of the Bank. As such, the Company is a bank holding

C-28

company. As a bank holding company, the Company is subject to
regulation by the Federal Reserve Board under the Bank Holding Company
Act (BHCA). In accordance with Federal Reserve Board policy, the
Company is expected to act as a source of financial strength to the
Bank and to commit resources to support the Bank in circumstances
where the Company might not do so absent such policy. Under the BHCA,
the Company is subject to periodic examination by the Federal Reserve
Board and is required to file periodic reports of its operations and
such additional information as the Federal Reserve Board may require.
Because the Bank is chartered under Illinois law, the Company is also
subject to registration with, and regulation by, the Commissioner
under the ISBA.

The BHCA requires prior Federal Reserve Board approval for, among
other things, the acquisition by a bank holding company of direct or
indirect ownership or control of more than five percent of the voting
shares or substantially all the assets of any bank, or for a merger or
consolidation of a bank holding company with another bank holding
company. With certain exceptions, the BHCA prohibits a bank holding
company from acquiring direct or indirect ownership or control of
voting shares of any company which is not a bank or bank holding
company and from engaging directly or indirectly in any activity other
than banking or managing or controlling banks or performing services
for its authorized subsidiaries. A bank holding company may, however,
engage in or acquire an interest in a company that engages in
activities which the Federal Reserve Board has determined by
regulation or order to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto.

A bank holding company is a legal entity separate and distinct
from its subsidiary bank or banks. Normally, the major source of a
holding company's revenue is dividends a holding company receives from
its subsidiary banks. The right of a bank holding company to
participate as a stockholder in any distribution of assets of its
subsidiary banks upon their liquidation or reorganization or otherwise
is subject to the prior claims of creditors of such subsidiary banks.
The subsidiary banks are subject to claims by creditors for long-term
and short-term debt obligations, including substantial obligations for
federal funds purchased and securities sold under repurchase
agreements, as well as deposit liabilities. Under the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, in the
event of a loss suffered by the FDIC in connection with a banking
subsidiary of a bank holding company (whether due to a default or the
provision of FDIC assistance), other banking subsidiaries of the
holding company could be assessed for such loss.

Federal laws limit the transfer of funds by a subsidiary bank to
its holding company in the form of loans or extensions of credit,
investments, or purchases of assets. Transfers of this kind are
limited to ten percent of a bank's capital and surplus with respect to
each affiliate and to twenty percent to all affiliates in the
aggregate, and are also subject to certain collateral requirements.

C-29

These transactions, as well as other transactions between a subsidiary
bank and its holding company, must also be on terms substantially the
same as, or at least as favorable as, those prevailing at the time for
comparable transactions with non-affiliated companies or, in the
absence of comparable transactions, on terms or under circumstances,
including credit standards, that would be offered to, or would apply
to, non-affiliated companies.

CAPITAL REQUIREMENTS. The Federal Reserve Board has adopted
capital adequacy guidelines for bank holding companies (on a
consolidated basis) substantially similar to those of the FDIC for the
Savings Bank. The Company's Tier 1 and total capital significantly
exceed the Federal Reserve Board's capital adequacy requirements.

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

OTHER REGULATIONS.

FDICIA. FDICIA was enacted on December 19, 1991. In addition to
providing for the recapitalization of the Bank Insurance Fund ("BIF")
of the FDIC, FDICIA represents a comprehensive and fundamental change
to banking supervision. FDICIA imposes relatively detailed standards
and mandates the development of additional regulations governing
nearly every aspect of the operations, management and supervision of
banks and bank holding companies like the Company and the Bank.

As required by FDICIA, and subsequently amended by the Riegle
Community Development and Regulatory Improvement Act of 1994, the
federal banking regulators adopted (effective August 9, 1995)
interagency guidelines establishing standards for safety and soundness
for depository institutions on matters such as internal controls, loan
documentation, credit underwriting, interest-rate risk exposure, asset
growth, and compensation and other benefits (the "Guidelines"). In
addition, the federal banking regulators have proposed asset quality
and earnings standards to be added to the Guidelines. The agencies
expect to request a compliance plan from an institution whose failure
to meet one or more of the standards is of such severity that it could
threaten the safe and sound operation of the institution. FDIC
regulations enacted under FDICIA also require all depository
institutions to be examined annually by the banking regulators and
depository institutions having $500 million or more in total assets to
have an annual independent audit, an audit committee comprised solely
of outside directors, and to hire outside auditors to evaluate the
institution's internal control structure and procedures and compliance
with laws and regulations relating to safety and soundness. The FDIC,
in adopting the regulations, reiterated its belief that every
depository institution, regardless of size, should have an annual
independent audit and an independent audit committee.

C-30

FDICIA requires the banking regulators to take prompt corrective
action with respect to depository institutions that fall below certain
capital levels and prohibits any depository institution from making
any capital distribution that would cause it to be considered
undercapitalized. Regulations establishing five capital categories of
well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized and critically undercapitalized became
effective December 19, 1992. Institutions that are not adequately
capitalized may be subjected to a broad range of restrictions on their
activities and will be required to submit a capital restoration plan
which, to be accepted by the regulators, must be guaranteed in part by
any company having control of the institution. Only well capitalized
institutions and adequately capitalized institutions receiving a
waiver from the FDIC will be permitted to accept brokered deposits,
and only those institutions eligible to accept brokered deposits may
provide pass-through deposit insurance for participants in employee
benefit plans. In other respects, FDICIA provides for enhanced
supervisory authority, including greater authority for the appointment
of a conservator or receiver for undercapitalized institutions.

A range of other regulations adopted as a result of FDICIA
include requirements applicable to closure of branches; additional
disclosures to depositors with respect to terms and interest rates
applicable to deposit accounts; requirements for the banking agencies
to adopt uniform regulations for extensions of credit secured by real
estate; modification of accounting standards to conform to generally
accepted accounting principles including the reporting of off-balance
sheet items and supplemental disclosure of estimated fair market value
of assets and liabilities in financial statements filed with the
banking regulators; increased penalties in making or failing to file
assessment reports with the FDIC; greater restrictions on extensions
of credit to directors, officers and principal stockholders; and
increased reporting requirements on agricultural loans and loans to
small businesses.

As required by FDICIA, the FDIC has established a risk-based
assessment system for the deposit insurance provided to depositors at
depository institutions whereby assessments to each institution are
calculated upon the probability that the insurance fund will incur a
loss with respect to the institution, the likely amount of such loss,
and the revenue needs of the insurance fund. Under the system,
deposit insurance premiums are based upon an institution's assignment
to one of three capital categories and a further assignment to one of
three supervisory subcategories within each capital category. The
result is a nine category assessment system with initial assessment
rates ranging from twenty-three cents to thirty-one cents per one
hundred dollars of deposits in an institution. The classification of
an institution into a category will depend, among other things, on the
results of off-site surveillance systems, capital ratio, and CAMELS
rating (a supervisory rating of capital, asset quality, management,
earnings, liquidity and sensitivity to market risk).

C-31

THE CDR ACT. On September 23, 1994, the Riegle Community
Development and Regulatory Improvement Act of 1994 (the "CDR Act") was
enacted. The CDR Act includes more than 50 regulatory relief
provisions designed to streamline the regulatory process for banks and
thrifts and to eliminate certain duplicative regulations and paperwork
requirements established after, and largely as a result of, the
savings and loan debacle. Well-run community banks with less than
$250 million in assets will be examined every 18 months rather than
annually. The application process for forming a bank holding company
has been greatly reduced. Also, the requirement that call report data
be published in local newspapers has been eliminated.

Also, the CDR Act establishes dual programs and provides funding
in the amount of $382 million to provide for development services,
lending and investment in distressed urban and rural areas by
community development financial institutions and banks. In addition,
the CDR Act includes provisions relating to flood insurance reform,
money laundering, regulation of high-cost mortgages, and small
business and commercial real estate loan securitization.

THE BRANCHING ACT. On September 29, 1994, the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (the
"Branching Act") was enacted. Under the Branching Act, beginning
September 29, 1995, adequately capitalized and adequately managed bank
holding companies are allowed to acquire banks across state lines,
without regard to whether the transaction is prohibited by state law,
however, they are required to maintain the acquired institutions as
separately chartered institutions. Any state law relating to the
minimum age of target banks (not to exceed five years) will be
preserved. Under the Branching Act, the Federal Reserve Board will
not be permitted to approve any acquisition if, after the acquisition,
the bank holding company would control more than 10% of the deposits
of insured depository institutions nationwide or 30% or more of the
deposits in the state where the target bank is located. The Federal
Reserve Board could approve an acquisition, notwithstanding the 30%
limit, if the state waives the limit either by statute, regulation or
order of the appropriate state official.

In addition, under the Branching Act beginning on June 1, 1997,
banks are permitted to merge with one another across state lines and
thereby create a main bank with branches in separate states. After
establishing branches in a state through an interstate merger
transaction, the bank could establish and acquire additional branches
at any location in the state where any bank involved in the merger
could have established or acquired branches under applicable federal
or state law.

The responsible federal agency will not be permitted to approve
any merger if, after the merger, the resulting entity would control
more than 10% of the deposits of insured depository institutions
nationwide or 30% or more of the deposits in any state affected by the
merger. The responsible agency could approve a merger,

C-32

notwithstanding the 30% limit, if the home state waives the limit
either by statute, regulation or order of the appropriate state
official.

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

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

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

C-33

IMPACT OF NEW ACCOUNTING STANDARDS

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

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

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

YEAR 2000 COMPLIANCE

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

C-34

software issues required to be addressed to assure year 2000
compliance. The Company began by assessing the issues related to the
year 2000 and the potential for those issues to adversely affect the
Company's operations and those of its subsidiaries.

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

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

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

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

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

C-35

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

EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth certain information as of
September 30, 1999 with respect to the executive officers of the
Company and the Savings Bank.

NAME AGE POSITION
------------------ ----- --------------------------------------

K. Gary Reynolds 48 President & Chief Executive Officer of
the Company and the Savings Bank

Stephen J. Greene 41 Vice President of the Savings Bank
Larry D. Griffin 52 Branch Manager, Centralia Savings Bank

K. Gary Reynolds has been the president and chief executive
officer of the Savings Bank since May, 1994 and the president and
chief executive officer of the Company since its formation. Prior to
that time, he was an examiner with the OCC.

Stephen J. Greene has been a vice president of the Savings Bank
since January, 1995. Mr. Greene was an examiner with the OCC from
November, 1993 to December, 1994. Prior to that time, he was a vice
president of Mercantile Bank of Centralia, N.A. where his
responsibilities included managing a $25 million loan portfolio
consisting of residential real estate loans and consumer loans.

Larry D. Griffin has been the manager and loan officer of the
Carlyle branch since his employment in February 1997. Prior to that
time, he was employed by Banker's Systems, Inc. as an account
executive for over 15 years, where he was responsible for providing
regulatory assistance and legal documentation to financial
institutions throughout central and southern Illinois.

ITEM 2.
DESCRIPTION OF PROPERTY

The following table sets forth information concerning the main
office and the branch office of the Bank at September 30, 1999. At
September 30, 1999, the Company's premises had an aggregate net book
value of approximately $337,000.

C-36

<TABLE>
<CAPTION>
Lease
Year Expiration Net Book
Location Opened Owned/Leased Date Value
-------- ------ ------------ ----------- ----------------
(In Thousands)
<S> <C> <C> <C> <C>
Main Office
-----------
200 South Poplar Street 1975 Owned N/A $ 97
Centralia, Illinois

Branch office
-------------
801 12th Street 1996(1) Owned N/A 240
Carlyle, Illinois ----
$337
====
</TABLE>

(1) The Carlyle branch was purchased during September 1996. The
branch's original opening date was 1989.

ITEM 3.
LEGAL PROCEEDINGS

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

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

ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of security holders, through
the solicitation of proxies or otherwise, during the quarter ended
September 30, 1999.

C-37

PART II

ITEM 5.
MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

Information relating to the market for Registrant's common stock
and related stockholder matters appears under "Corporate Information"
in the 1999 Annual Report to stockholders and is incorporated herein
by reference.

ITEM 6.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The above captioned information appears under the caption
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the 1999 Annual Report to Stockholders and
is incorporated herein by reference.

ITEM 7.
FINANCIAL STATEMENTS

The consolidated financial statements of CSB Financial Group,
Inc. and subsidiary as of September 30, 1999 and 1998, together with
the report of McGladrey & Pullen, LLP appears in the 1999 Annual
Report to Stockholders and is incorporated herein by reference.

ITEM 8.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEM 9.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

The information relating to directors and executive officers of
the Registrant is incorporated herein by reference to the Registrant's
Proxy Statement for the Annual Meeting of Stockholders to be held on
January 14, 2000.

ITEM 10.
EXECUTIVE COMPENSATION

The information relating to executive compensation is
incorporated herein by reference to the Registrant's Proxy Statement
for the Annual Meeting of Stockholders to be held on January 14, 2000.

C-38

ITEM 11.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information relating to security ownership of certain
beneficial owners and management is incorporated herein by reference
to the Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on January 14, 2000.

ITEM 12.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information relating to certain relationships and related
transactions is incorporated herein by reference to the Registrant's
Proxy Statement for the Annual Meeting of Stockholders to be held on
January 14, 2000.

ITEM 13.
EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

See Exhibit Index below and exhibits attached.

(b) Form 8-K

No Reports on Form 8-K were filed during the last quarter of the
fiscal year covered by this Form 10-KSB.

EXHIBIT PAGE
NO. EXHIBIT NO.
------ ------------------------------------------ ------

3.1 Certificate of Incorporation of CSB -
Financial Group, Inc. (incorporated herein
by reference to Exhibit 3.1 to the
Registrant's Registration Statement on Form
SB-2 as originally filed on March 1, 1995,
Registration No. 33-89842)

3.2 Bylaws of CSB Financial Group, Inc. -
(incorporated herein by reference to
Exhibit 3.2 to the Registrant's
Registration Statement on Form SB-2 as
originally filed on March 1, 1995,
Registration No. 33-89842)

4.1 Specimen Stock Certificate of CSB Financial -
Group, Inc. (incorporated herein by
reference to Exhibit 1 to the Registrant's
Registration Statement on Form 8-A filed on
August 21, 1995, Registration No. 0-26650)

C-39

4.2 Articles IV, V, VI, XIV and XVI of CSB -
Financial Group, Inc.'s Certificate of
Incorporation (see Exhibit 3.1 above)

4.3 Articles II and IV of CSB Financial Group, -
Inc.'s Bylaws (see Exhibit 3.2 above)

4.4 Rights Agreement dates June 13, 1997 -
between CSB Financial Group, Inc. and
Registrar and Transfer Company, as Rights
Agent. Included as Exhibit A to such
Rights Agreement is a form of Rights
Certificate (incorporated herein by
reference to Exhibit 1 to the Registrant's
Registration statement in form 8-A filed on
June 13, 1997)

10.1 Centralia Savings Bank Employee Stock -
Ownership Plan (incorporated herein by
reference to Exhibit 10.1 to the
Registrant's Registration Statement on Form
SB-2 as originally filed on March 1, 1995,
Registration No. 33-89842)

10.2 Credit Agreement between CSB Financial -
Group, Inc. and Centralia Savings Bank
Employee Stock Ownership Plan (incorporated
herein by reference to Exhibit 10.2 to the
Registrant's Registration Statement on Form
SB-2 as originally filed on March 1, 1995,
Registration No. 33-89842)

10.3 CSB Financial Group, Inc. 1995 Stock Option -
and Incentive Plan (incorporated herein by
reference to Exhibit 10.3 to the
Registrant's Registration Statement on Form
SB-2 as originally filed on March 1, 1995,
Registration No. 33-89842)

10.4 CSB Financial Group, Inc. 1997 Nonqualified -
Stock Option Plan (incorporated herein by
reference to Exhibit 10.4 to Form 10-KSB
for the period ending September 30, 1997 as
originally filed on December 29, 1997)

10.5 CSB Financial Group, Inc. Management -
Development and Recognition Plan and Trust
Agreement, as amended (incorporated herein
by reference to Exhibit 10.4 to Form 10-KSB
for the period ending September 30, 1997 as
originally filed on December 29, 1997)

C-40

10.6 Employment Agreement between Centralia -
Savings Bank and K. Gary Reynolds
(incorporated herein by reference to
Exhibit 10.7 to the Registrant's
Registration Statement on Form SB-2 as
originally filed on March 1, 1995,
Registration No. 33-89842)

13.1 CSB Financial Group, Inc. 1999 Annual C-44
Report to Stockholders

21.1 Subsidiaries of the Registrant -
(incorporated herein by reference to
Exhibit 21.1 to the Registrant's
Registration Statement on Form SB-2 as
originally filed on March 1, 1995,
Registration No. 33-89842)

23.1 Consent of McGladrey & Pullen, LLP -

27.1 Financial Data Schedule -

C-41

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

CSB FINANCIAL GROUP, INC.
(Registrant)

Date: December 23, 1999 By: /s/ K. Gary Reynolds
-----------------------------------
K. Gary Reynolds, President,
Chief Executive Officer and Director

In accordance with the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.

/s/ K. Gary Reynolds
-----------------------------------------
K. Gary Reynolds, President, Chief
Executive Officer and Director (Principal
Executive Officer, Principal Financial
Officer and Principal Accounting Officer)

/s/ A. John Byrne
-----------------------------------------
A. John Byrne, Director

/s/ Wesley N. Breeze
-----------------------------------------
Wesley N. Breeze, Director

/s/ Michael Donnewald
-----------------------------------------
Michael Donnewald, Director

/s/ Larry M. Irvin
-----------------------------------------
Larry M. Irvin, Director

/s/ W. Harold Monken
-----------------------------------------
W. Harold Monken, Director

C-42

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

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

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

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

C-43

CSB FINANCIAL GROUP, INC.
200 SOUTH POPLAR
CENTRALIA, ILLINOIS 62801
(618) 532-1918

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

Dear Fellow Shareholders:

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

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

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

In May 1999, the Company changed data processing servicers. The cost
of the conversion of data to another servicer was significant. These
costs were attributable to 12% of the noninterest expenses for the
year. Of course, this change was made for three primary reasons: (1)
to provide our customer base with enhanced services at a reasonable
cost, (2) to ensure continued data processing capabilities during the
century date change, and (3) to reduce our labor costs. We expect the
data processing expenses to remain at prior year's levels, while
providing more products and service benefits to our customers. One
such service enhancement that saves time and labor for our checking
account customers is the implementation of the imaging system for

C-44

checking accountholders. This system provides a digital-image of
every check and deposit on a customer's monthly checking account
statement for easy retrieval and storage. When customers experienced
the convenience of this statement, which was pre-punched to fit a
provided binder, many commented they would not be satisfied with any
other type of statement. The customer can also arrange to have a
monthly statement prepared that combines the banking activities of
several accounts on one statement.

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

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

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

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

C-45

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

Sincerely,

/s/ A. John Byrne

A. John Byrne
Chairman of the Board

/s/ K. Gary Reynolds

K. Gary Reynolds
President and Chief Executive Officer

C-46

-----------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION & RESULTS OF OPERATIONS
------------------------------------------------

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

GENERAL

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

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

COMPARISON OF OPERATING RESULTS FOR THE FISCAL YEARS ENDED SEPTEMBER
30, 1999 AND 1998

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

The Company's net income for the fiscal year ended September 30,
1999 was $299,000 as compared to $345,000 for the fiscal year ended

C-47

September 30, 1998. This represents a $46,000, or 13.3%, decrease in
net income.

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

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

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

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

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

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

NON-INTEREST EXPENSE. The Company's non-interest expense for the
fiscal year ended September 30, 1999 was $1,347,000, as compared to
$1,273,000 for the fiscal year ended September 30, 1998. The $74,000,
or 5.81%, increase in non-interest expense is principally due to

C-48

additional costs incurred in the conversion of data processing service
centers.

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

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

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

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

COMPARISON OF FINANCIAL CONDITION AS OF SEPTEMBER 30, 1999 AND 1998

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

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

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

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

C-49

for residential mortgage loans amounted to $7.6 million as compared to
$5.2 million in originations for the prior fiscal year.

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

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

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

C-50

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

For the Fiscal Year
Ended September 30,
-----------------------------------
1999 1998
--------------- -----------------
(In Thousands)
-----------------------------------
<S> <C> <C>
Allowance at beginning of period $171 $165
Provision for loan losses 72 63
Recoveries:
Consumer loans 18 4
---- ----
Total recoveries 18 4
---- ----
Charge-offs:
Consumer loans 39 61
---- ----
Total charge-offs 39 61
---- ----
Net charge-offs (21) (57)
---- ----
Balance at end of period $222 $171
==== ====

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

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

DEPOSITS. At September 30, 1999, total deposits amounted to
$36.9 million, or 75.44%, of total assets. Total deposits increased

C-51

$1.1 million, or 2.93% from September 30, 1998. The increase resulted
from an increase of $947,000, $407,000 and $20,000 in time deposits
greater than $100,000, savings and demand deposits, respectively,
offset by a $323,000 decrease in other time deposits.

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

RETURN ON EQUITY AND ASSETS

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

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

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

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

AVERAGE BALANCE SHEET

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

C-52

FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------------
1999 1998
-------------------------------- ---------------------------------
(IN THOUSANDS)
---------------------------------------------------------------------
AVERAGE INTEREST & YIELD/ AVERAGE INTEREST & YIELD/
BALANCE DIVIDENDS COST BALANCE DIVIDENDS COST
------- ---------- ------ ------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Interest-earnings assets:
Mortgage loans (5) $ 22,506 $ 1,634 7.26% $ 20,201 $ 1,630 8.07%
Commercial loans (5) 1,968 210 10.67% 961 96 9.99%
Consumer loans (5) 4,045 391 9.67% 5,736 461 8.04%
---------- -------- ---------- ----------
Total loans, net $ 28,519 $ 2,235 7.84% $ 26,898 $ 2,187 8.13%

Mortgage-backed securities (3) $ 1,046 $ 85 8.13% $ 1,048 $ 98 9.35%
Investment securities (2)(3) 15,312 871 5.69% 15,712 943 6.00%
Daily interest-bearing deposits 617 48 7.78% 706 62 8.78%
FHLB stock 214 14 6.54% 213 14 6.57%
---------- -------- ---------- ----------
Total interest-earning
assets $ 45,708 $ 3,253 7.12% $ 44,577 $ 3,304 7.41%
Non-interest earning assets:
Office properties and equipment,
net $ 630 $ 603
Real estate, net 7 5
Other non-interest earning assets 1,911 2,377
----------- ----------
Total assets $ 48,256 $ 47,562
=========== ==========
Interest-bearing liabilities:
Passbook accounts $ 3,604 $ 74 2.05% $ 3,435 $ 82 2.39%
NOW accounts 4,575 86 1.88% 3,712 69 1.86%
Money market accounts 2,960 99 3.34% 3,550 134 3.77%
Certificates of deposit 24,658 1,274 5.17% 23,892 1,353 5.66%
---------- --------- ---------- -----------
Total deposits $ 35,797 $ 1,533 4.28% $ 34,589 $ 1,638 4.74%
FHLB Advances 34 2 5.88% - - -
--------- --------- ---------- -----------
Total interest-bearing
liabilities $ 35,831 $ 1,535 4.28% $ 34,589 $ 1,638 4.74%

C-53

FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------------
1999 1998
-------------------------------- ---------------------------------
(IN THOUSANDS)
---------------------------------------------------------------------
AVERAGE INTEREST & YIELD/ AVERAGE INTEREST & YIELD/
BALANCE DIVIDENDS COST BALANCE DIVIDENDS COST
------- ---------- ------ ------- ---------- ------
Non-interest bearing liabilities:
Non-interest bearing deposits $ 1,827 $ 1,451
Other liabilities 378 890
--------- ---------
Total liabilities $ 38,036 $ 36,930
Stockholders' equity 10,220 10,632
--------- ---------
Total liabilities and
stockholders' equity $ 48,256 $ 47,562
========= =========
Net interest income $ 1,718 $ 1,666
========= ===========
Interest rate spread (4) 2.84% 2.67%
Net interest margin (1) 3.76% 3.74%
Ratio of average interest-earning
assets to average interest-bearing
liabilities 127.57% 128.88%

</TABLE>

(1) Net interest income as a percentage of average interest-earning
assets.
(2) Includes available for sale investment securities.
(3) Interest is classified as interest income on securities in the
Consolidated Statement of Income.
(4) Difference between weighted average yield on interest-earning
assets and weighted average cost of interest-bearing liabilities.
(5) Average volume includes nonaccrual loans.

RATE AND VOLUME ANALYSIS

The following table sets forth the effects of changing interest
rates and volumes of interest earning assets and interest bearing
liabilities on net interest income for the Company. The combined
rate-volume variances are included in the total volume variance. In
addition to this schedule, a two year average balance sheet and an
analysis of net interest income setting forth (i) average assets,
liabilities and stockholder's equity; (ii) interest income earned on
interest earning assets and interest expense incurred on
interest-bearing liabilities; (iii) average yields earned on
interest-earning assets and average rates incurred on interest-bearing
liabilities; (iv) the net interest margin (i.e. the average yield
earned on interest earning assets less the average rate incurred on
interest-bearing liabilities); and (v) the net yield on

C-54

interest-earning assets (i.e. net interest income divided by average
interest-earning assets).

<TABLE>
<CAPTION>
1999 Compared to 1998 1998 Compared to 1997
Increase (Decrease) Due to Increase (Decrease) Due to
Rate Volume Net Rate Volume Net
--------- --------- ------- ------- ---------- -------
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Mortgage loans $ (163) $ 167 $ 4 $ 80 $ 6 $ 86
Commercial loans 7 107 114 15 (18) (3)
Consumer loans 93 (163) (70) (43) (17) (60)
--------- ------- ------- ------ ------- -------
Total loans (63) 111 48 52 (29) 23

Mortgage-backed securities (13) - (13) (3) (34) (37)
Investment and other
securities (49) (23) (72) 29 91 120
Interest-bearing deposits (7) (7) (14) 83 (139) (56)
FHLB stock - - - (1) 2 1
--------- ------- ------- ------ ------- -------
Total net change
income on interest-
earning assets (132) 81 (51) 160 (109) 51
--------- ------- ------- ------ ------- -------

Interest-bearing liabilities:
Passbook (11) 3 (8) (6) (4) (10)
Interest-bearing demand
(NOW) accounts 1 16 17 - (26) (26)
Money market deposit
accounts (15) (20) (35) 23 (10) 13
Certificates of deposit (117) 38 (79) (76) 95 19
FHLB Advances - 2 2 - - -
--------- -------- ------- ------ ------- -------
Total net change in
expense on interest-
bearing liabilities (142) 39 (103) (59) 55 (4)
--------- ------- ------- ------ ------- -------
Net change in
interest income $ 10 $ 42 $ 52 $ 219 $ (164) $ 55
========= ======= ======= ====== ======== =======

</TABLE>

C-55

ASSET AND LIABILITY MANAGEMENT

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

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

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

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

In recent years, the Company's assets have been comprised
primarily of one-to-four-family residential mortgage balloon payment
notes along with long-term investment and mortgage-backed securities,
while its liabilities have been comprised primarily of short-term
certificates of deposit. The majority of the Company's balloon
payment notes have maturities of three years, while a small number
have maturities of either one or five years. The balloon payment

C-56

notes are not interest-rate sensitive in a rapidly increasing
interest-rate environment because the interest rate remains fixed for
up to five years regardless of an increase in market interest rates.
Furthermore, although the interest rate on the balloon payment notes
may be changed if the note is renewed at the end of the term, the
balloon payment notes have interest rate caps of one or two percentage
points over the initial rate of interest. Consequently, if interest
rates increase by an amount exceeding the interest rate cap during the
term of the note, the Company may be forced to renew the notes at
interest rates below the prevailing market rate.

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

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

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

LIQUIDITY AND CAPITAL RESOURCES

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

The primary investing activity of the Company is the origination
of one-to-four-family residential mortgage loans. During each of the
fiscal years ended September 30, 1999 and 1998, the Company originated
one-to-four-family residential mortgage loans in the amount of $7.6

C-57

million and $5.2 million, respectively. These activities were funded
primarily by Federal Home Loan Bank advances and deposit growth.

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

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

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

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

C-58

43.90% compared to the minimum ratio required of 8.0% and a Tier 1
capital to average assets ratio of 20.29% compared to the minimum
ratio required of 4.0%.

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

IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS

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

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

RECENT REGULATORY DEVELOPMENTS

C-59

reserves to total insured deposits equal to 1.25%. In 1995, the BIF
reached this 1.25% reserve level, and the FDIC announced a reduction
in BIF premiums for most banks. Based on this reduction, the highest
rated institutions (approximately 92 percent of the nearly 11,000
BIF-insured banks) will pay the statutory annual minimum of $2,000 for
FDIC insurance. Rates for all other institutions were reduced to $.04
per $100 as well, leaving a premium range of $.03 to $.27 per $100
instead of the previous $.04 to $.31 per $100. Currently, SAIF-member
institutions pay deposit insurance premiums based on a schedule of
$0.00 to $0.27 per $100 of deposits.

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

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

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

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

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

C-60

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

C-61

applicable state law) subject to the same conditions that apply to
national bank investments in financial subsidiaries.

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

EFFECT OF INFLATION AND CHANGING PRICES

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

YEAR 2000 COMPLIANCE

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

C-62

C-63

CSB FINANCIAL GROUP, INC.

Consolidated Financial Statements
With Independent Auditor's Report

Years Ended September 30, 1999 and 1998

C-64

CSB FINANCIAL GROUP, INC.

Contents

INDEPENDENT AUDITOR'S REPORT C-63

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated balance sheets C-64 and
C-65

Consolidated statements of income C-66

Consolidated statements of stockholders' equity C-67 and
C-68

Consolidated statements of cash flows C-69 and
C-70

Notes to consolidated financial statements C-71 -
C-89

C-65

INDEPENDENT AUDITOR'S REPORT

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

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

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

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

/s/ McGladrey & Pullen, LLP

Champaign, Illinois
October 28, 1999

C-66

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
September 30, 1999 and 1998
(in thousands, except share data)
<TABLE>
<CAPTION>

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

(Continued)
</TABLE>

C-67

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS, continued
September 30, 1999 and 1998
(in thousands, except share data)

1999 1998
---- ----
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
<S> <C> <C>
Deposits:

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

COMMITMENTS, CONTINGENCIES AND CREDIT RISK
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; 100,000
shares authorized; none is issued and
outstanding - -
Common stock, $0.01 par value; authorized
2,000,000 shares; 10 10
1,035,000 shares issued
Paid-in capital 7,829 7,823
Retained earnings 6,683 6,384
Accumulated other comprehensive income (53) 154
Unearned employee stock ownership plan shares (160) (180)
Management recognition plan (514) (551)
------- -------
13,795 13,640
Less cost of treasury stock;
1999 302,701 shares;
1998 302,080 shares (3,517) (3,511)
------- -------
TOTAL STOCKHOLDERS' EQUITY 10,278 10,129
------- -------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $48,920 $46,423
======= =======

See Notes to Consolidated Financial Statements.

C-68

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
Years Ended September 30, 1999 and 1998
(in thousands, except share data)

1999 1998
---- ----
Interest income:
Loans and fees on loans $ 2,235 $2,187
Securities:
Taxable 880 988
Nontaxable 76 53
Other 62 76
------ ------
3,253 3,304
------ ------
Interest expense:
Deposits 1,533 1,638
Borrowings 2 --
------ ------
1,535 1,638
------ ------
NET INTEREST INCOME 1,718 1,666
72 63
Provision for loan losses ------ ------

NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,646 1,603
------ ------
Noninterest income:
Service charges on deposits 82 81
Gain on sale of securities -- 5
Other 50 48
------ ------
132 134
------ ------
Noninterest expense:
Compensation and employee benefits 651 631
Occupancy and equipment 106 89
Data processing 158 103
SAIF deposit insurance 21 22
Professional fees 80 83
Other 331 345
------ ------
1,347 1,273
------ ------
INCOME BEFORE INCOME TAXES 431 464
Income taxes 132 119
------ ------
NET INCOME $ 299 $ 345
====== ======
Earnings per share:
Basic $ 0.42 $ 0.43
====== ======
Diluted $ 0.41 $ 0.42
====== ======
</TABLE>
See Notes to Consolidated Financial Statements.

C-69

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

Preferred Common Paid-In
Stock Stock Capital
--------- ------ -------
<S> <C> <C> <C>

Balance at September 30, 1997 $ - $ 10 $ 7,813

Net income - - -
Comprehensive Income:
Change in unrealized gain (loss) on securities
available for sale, net of tax of $26 - - -
Realized gain on securities sold during the
year, net of tax of $2
Comprehensive income
Employee stock ownership plan shares allocated - - 10
Management recognition plan shares allocated - - -
Purchase of treasury stock - - -
----- ---- ------

Balance at September 30, 1998 - 10 7,823

Net income - - -
Comprehensive Income:
Change in unrealized gain (loss) on securities
available for sale, net of tax of $(127) - - -
Comprehensive income - - -
Employee stock ownership plan shares allocated - - 6
Management recognition plan shares allocated - - -
Purchase of treasury stock - - -

Balance at September 30, 1999 $ - $ 10 $7,829
===== ==== ======

</TABLE>

See Notes to Consolidated Financial Statements.

C-70

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

Unearned
Accumulated Employee
Other Stock Management
Retained Comprehensive Ownership Recognition Treasury
Earnings Income Plan Shares Plan Stock Total
-------- ------------- ----------- ----------- -------- -----
<S> <C> <C> <C> <C> <C>
$6,039 $110 $(202) $(589) $(1,529) $11,652
345 - - - - 345
- 47 - - - 47
- (3) - - - (3)
---- -----
- 44 - - - 389
---- -----
- - 22 - - 32
- - - 38 - 38
- - - - (1,982) (1,982)
------ ---- ---- ---- ------- -------
6,384 154 (180) (551) (3,511) 10,129

299 - - - - 299
- (207) - - - (207)
---- ------
- (207) - - - 92
---- ------
- - 20 - - 26
- - - 37 - 37
- - - - (6) (6)
------ ---- ----- ----- ------- -------
$6,683 $(53) $(160) $(514) $(3,517) $10,278
====== ==== ===== ===== ======= =======

</TABLE>

C-71

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended September 30, 1999 and 1998
(in thousands)

1999 1998
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 299 $ 345
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 72 63
Provision for depreciation 49 38
Amortization of intangible assets 61 60
Employee stock ownership plan compensation expense 26 32
Management recognition plan compensation expense 37 38
Deferred income taxes 2 -
Gain on sale of securities - (5)
Loss on sale of other real estate owned - 3
Amortization and accretion of securities 11 (1)
Change in assets and liabilities:
(Increase) in accrued interest receivable (14) (14)
(Increase) decrease in other assets (142) 46
Increase in other liabilities 22 117
------ ------
NET CASH FLOWS FROM OPERATING ACTIVITIES 423 722
------ ------

CASH FLOWS FROM INVESTING ACTIVITIES

Securities available for sale:
Purchases (7,143) (13,004)
Proceeds from sales 500 5,154
Proceeds from maturities and paydowns 6,111 7,772
Nonmarketable equity securities:
Purchases of nonmarketable equity securities (1) (5)
Loan originations, net of principal payments on loans (2,881) 981
Proceeds from the sale of other real estate owned - 3
Purchases of premises and equipment (125) (43)
------ ------
NET CASH FLOWS FROM INVESTING ACTIVITIES (3,539) 858
====== ======

(Continued)

C-72

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Years Ended September 30, 1999 and 1998
(in thousands)

1999 1998
---- ----
CASH FLOWS FROM FINANCING ACTIVITIES

Net increase (decrease) in demand deposits and savings
accounts $ 427 $ (538)
Net increase (decrease) in time deposits 624 (193)
Purchase of treasury stock (6) (1,982)
Proceeds from Federal Home Loan Bank advances 1,400 -
------- -------
NET CASH FLOWS FROM FINANCING ACTIVITIES 2,445 (2,713)
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (671) (1,133)

Cash and cash equivalents, beginning of year 1,542 2,675
------- -------
Cash and cash equivalents, end of year $ 871 $ 1,542
======= =======
Cash paid during the year for:
Interest $ 1,526 $ 1,626
======= =======
Income taxes, net of refunds $ 59 $ 15
======= =======
Supplemental Disclosures of Investing and
Financing Activities:
Change in unrealized gain (loss) on securities available
for sale $ (334) $ 70
======= ======
Change in deferred income taxes attributable to the
unrealized gain (loss) on securities available for sale $ (127) $ 26
======= ======

Loans originated to facilitate sale of other real estate owned $ - $ 21
======= ======

See Notes to Consolidated Financial Statements.

</TABLE>

C-73

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

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

C-74

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------

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

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

NONMARKETABLE EQUITY SECURITIES Nonmarketable equity securities
consist of the Bank's required investment in the capital stock of the
Federal Home Loan Bank. This investment is carried at cost as the
fair value is not readily determinable.

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

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

Loans are considered impaired when, based on current information and
events, it is probable the Company will not be able to collect all
amounts due. The portion of the allowance for loans losses applicable
to impaired loans would be computed based on the present value of the
estimated future cash flows of interest and principal discounted at
the loan's effective interest rate or on the fair value of the
collateral for collateral dependent loans. The entire change in
present value of expected cash flows of impaired loans or of
collateral value is reported as part of the provision for loan losses

C-75

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------

expense in the same manner in which impairment initially was
recognized or as a reduction in the amount of provision for loan
losses expense that otherwise would be reported. Management had not
classified any loans as impaired as of September 30, 1999 or 1998.

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

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

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

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

C-76

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------

expense is the tax payable or refundable for the period plus or minus
the change during the period in deferred tax assets and liabilities.

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

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

EFFECT OF NEW ACCOUNTING STANDARDS

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

C-77

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------

Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
Enterprise" (FAS 134) changes the way mortgage banking firms account
for certain securities and other interests they retain after
securitizing mortgage loans that were held for sale. The Statement is
effective for financial statements for the first fiscal quarter
beginning after December 15, 1998. The Company does not securitize
mortgages and is not a Mortgage Banking Enterprise and therefore, FAS
134 will not have an impact on the consolidated financial statements.

NOTE 2. SECURITIES

Amortized cost and fair values of securities available for sale are as
follows:

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

September 30, 1998
------------------
Obligations of states and political
subdivisions $ 1,643 $ 44 $ 3 $ 1,684
U.S. Government and agency 9,752 123 - 9,875
U.S. Treasury 4,000 16 - 4,016
Mortgage backed securities 1,288 73 5 1,356
------- ---- ---- -------
$16,683 $256 $ 8 $16,931
======= ==== ==== =======
</TABLE>

The amortized cost and fair value of securities available for sale, by
contractual maturity, are shown below. Maturities may differ from
contractual maturities in mortgage-backed securities because the
mortgages underlying the securities may be called or repaid without

C-78

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------

any penalties. Therefore, these securities are not included in the
maturity categories in the following maturity summary:

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

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

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

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

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

Years Ended
September 30,
----------------------
1999 1998
---- ----
Gross gains $ - 6
Gross losses - (1)
---- --
NET GAIN $ - 5
==== ==

C-79

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------

NOTE 3. LOANS

Loans are summarized as follows:

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

Commercial and consumer loans:
Commercial loans 1,164 625
Consumer loans 3,449 4,095
Home equity lines of credit 649 678
Share loans 170 193
------- -------
TOTAL COMMERCIAL AND CONSUMER LOANS 5,432 5,591
------- -------

Less:
Allowance for loan losses (222) (171)
Deferred loan fees - (6)
Unearned income on consumer loans - (1)
------- -------
(222) (178)
------- -------
LOANS, NET $28,920 $26,111
======= =======

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

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

In the normal course of business, the Bank makes loans to its
executive officers, directors and employees, and to companies and

C-80

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------

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

Balance as of October 1, 1998 $ 1,050

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

NOTE 4. ALLOWANCE FOR LOAN LOSSES

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

Year Ended September 30
-----------------------
1999 1998
---- ----
Balance, beginning $171 $165

Provision charged to income 72 63
Charge-offs (39) (61)
Recoveries 18 4
---- ----
Balance, ending $222 $171
==== ====

C-81

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------

NOTE 5. PREMISES AND EQUIPMENT

Premises and equipment consist of:
September 30,
-------------

1999 1998
---- ----

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

NOTE 6. DEPOSITS

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

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

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

C-82

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------

NOTE 7. ADVANCES FROM THE FEDERAL HOME LOAN BANK

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

NOTE 8. INCOME TAXES

Income taxes consist of:

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

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

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

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

C-83

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------

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

Income tax expense differed as follows:

Year Ended
September
30,
------------
1999 1998
---- ----
Maximum statutory rate applied to earnings
before income tax $151 $162
Increase in income taxes resulting from:
Tax exempt interest income (27) (19)
Other 8 (24)
---- ----
$132 $119
==== ====

C-84

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------

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

<TABLE>
<CAPTION>
Year Ended September 30,
-----------------------------
1999 1998
---- ----
<S> <C> <C>
Allowance for loan losses - book $ 86 $ 66
Illinois net operating loss carryforward 37 22
Unrealized loss on securities available for sale 33 -
------ ------
TOTAL DEFERRED TAX ASSETS 156 88
------ ------

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

NET DEFERRED TAX LIABILITIES $ (145) $ (270)
====== ======
</TABLE>

NOTE 9. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company provides disclosure of fair value information about
financial instruments, whether or not recognized in the balance sheet,
for which it is practicable to estimate that value. In cases where
quoted market prices are not available, fair values are based on
estimates using present value or other valuation techniques. Those
techniques are significantly affected by the assumptions used,
including the discount rate and estimates of future cash flows. In
that regard, the derived fair value estimates cannot be substantiated
by comparison to independent markets and, in many cases, could not be

C-85

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------

realized in immediate settlement of the instrument. Certain financial
instruments and all nonfinancial instruments are excluded from the
disclosure. Accordingly, the aggregate fair value amounts presented
do not represent the underlying value of the Company and its
subsidiary.

The following table reflects a comparison of carrying values and the
fair values of the financial instruments:
<TABLE>
<CAPTION>

September 30, 1999 September 30, 1998
---------------------------- -------------------------------
Carrying Fair Carrying Fair
Value Value Value Value
----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents $ 871 $ 871 $ 1,542 $ 1,542
Securities available for sale 17,118 17,118 16,931 16,931
Nonmarketable equity securities 216 216 215 215
Accrued interest receivable 318 318 304 304
Loans 28,920 27,770 26,111 26,013

Liabilities:
Deposits 36,906 36,996 35,855 35,909
Advances from FHLB 1,400 1,400 - -
Accrued interest payable 21 21 12 12
</TABLE>

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

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

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

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

C-86

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------

quality. The carrying value of accrued interest receivable
approximates its fair value.

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

ADVANCES FROM THE FEDERAL HOME LOAN BANK The carrying amounts of
advances on the line of credit from the Federal Home Loan Bank
approximates their fair values.

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

NOTE 10. CAPITAL RATIOS

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

Quantitative measures established by regulation to ensure capital
adequacy require the Company to maintain minimum amounts and ratios
(set forth in the table below) of total and Tier I capital (as defined
in the regulations) to risk-weighted assets (as defined), and of Tier
I capital (as defined) to average assets (as defined). Management

C-87

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------

believes, as of September 30, 1999, that the Company meets all capital
adequacy requirements to which it is subject.

As of September 30, 1999, the most recent notification from the
Federal Deposit Insurance Corporation categorized the Bank as well
capitalized under the regulatory framework for prompt corrective
action. To be categorized as adequately capitalized, the Bank must
maintain minimum total risk-based, Tier I risk-based, and Tier I
leverage ratios as set forth in the table. There are no conditions or
events since that notification that management believes have changed
the Bank's category.

<TABLE>
<CAPTION>
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
------ ----------------- ------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
AS OF SEPTEMBER 30, 1999:
Total Capital (to Risk Weighted Assets)
Consolidated $10,014 43.9% $1,825 8.0% N/A
Bank $ 9,769 42.8% $1,825 8.0% $2,281 10.0%
Tier I Capital (to Risk Weighted Assets)
Consolidated $ 9,792 42.9% $ 913 4.0% N/A
Bank $ 9,547 41.9% $ 913 4.0% $1,369 6.0%
Tier I Capital (to Average
Adjusted Assets)
Consolidated $ 9,792 20.3% $1,930 4.0% N/A
Bank $ 9,547 19.8% $1,930 4.0% $2,412 5.0%

AS OF SEPTEMBER 30, 1998:

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

</TABLE>

C-88

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------

NOTE 11. OFFICER, DIRECTOR AND EMPLOYEE BENEFIT PLANS

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

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

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

Shares allocated 19,530 17,029
Shares released to be allocated 1,849 1,842
Unreleased shares (Fair value as of
September 30, 1999 and 1998 $195 and $281) 20,021 22,529
------ ------
41,400 41,400
====== ======

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

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

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

C-89

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------

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

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

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

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

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

C-90

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------

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

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

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

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

<TABLE>
<CAPTION>
September 30,
------------------------------------------------------------

1999 1998
---- -----

Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
------ --------- ------ ---------
<S> <C> <C> <C> <C>
Options outstanding, beginning 61,750 $ 9.75 51,750 $ 9.22
of the year
Options granted - - 10,000 12.51
Options exercised - - - -
------ ------ ------- -----
Options outstanding, end of year 61,750 $ 9.75 61,750 $ 9.75
====== ======= ====== ======

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

</TABLE>

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

C-91

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------

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

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

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

Diluted earnings per share:
As reported $0.41 $0.42
Proforma 0.37 0.37

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

Number
Options Outstanding Exercisable
------------------------------------------

Weighted
Average
Remaining
Exercise Number Contractual Number
Price Outstanding Life Exercisable
======== =========== ========== ===========

$ 9.08 25,875 6.7 15,525
9.36 25,875 7.1 10,350
12.51 10,000 8.0 2,000
------ ------

61,750 27,875
====== ======

C-92

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------

NOTE 12. COMMITMENTS, CONTINGENCIES AND CREDIT RISK

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

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

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

C-93

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------

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

</TABLE>

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

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

<TABLE>
<CAPTION>
------------------------
CORPORATE INFORMATION
------------------------
<S> <C>
HOLDING COMPANY STOCK INFORMATION
CSB Financial Group, Inc. The Common Stock of the Holding
200 South Poplar Street Company was quoted on the Nasdaq
Centralia, Illinois 62801 "SmallCap" market under the
symbol "CSBF" until December 31,
1998, at which time the Company
SUBSIDIARIES transferred the quotation to the
Centralia Savings Bank Bulletin Board under the same
200 South Poplar Street symbol.
Centralia, Illinois 62801
On October 5, 1995, the Company
Centralia SLA, Inc. issued 1,035,000 shares of its
200 South Poplar Street Common Stock at a purchase price
Centralia, Illinois 62801 of $8.00 per share in connection
with the conversion of the
Savings Bank from a state
chartered mutual savings bank to

C-94

a state chartered capital stock
savings bank. The closing price
per share for the Holding
Company's Common Stock as
reported on the OTC Bulletin
Board market on November 26,
1999 was $11.25. The Holding
Company has not paid cash
dividends on its Common Stock.

STOCK PRICING HISTORY
The following table sets forth
the high and low sales prices as
reported on the Nasdaq
"SmallCap" and OTC Bulletin
Board market during the past
year.

FISCAL 1999 HIGH LOW
----------- ---- ---
First $10.50 $8.75
Quarter

Second $ 9.25 $8.875
Quarter

Third $12.875 $9.125
Quarter

Fourth $10.625 $9.875
Quarter

FORM 10-KSB ANNUAL REPORT questions, please contact
Copies of CSB Financial Group, Registrar by mail or phone:
Inc.'s Form
10-KSB annual report as filed Registrar and Transfer Company
with the Securities and Exchange 10 Commerce Drive
Commission and other published Cranford, New Jersey 07016
reports may be obtained without
charge by writing our corporate
headquarters: ANNUAL MEETING
The annual meeting of
CSB Financial Group, Inc. stockholders of CSB Financial
200 South Poplar Street Group, Inc. will be held on
Centralia, Illinois 62801 January 14, 2000 at 10:00 a.m.
Attention: K. Gary Reynolds at 801 12th Street, Carlyle,
Illinois.

REGISTRAR AND TRANSFER AGENT
The Registrar and Transfer INDEPENDENT AUDITORS
Company ("Registrar") maintains McGladrey & Pullen, LLP
all stockholder records. 1806 Fox Drive
Registrar handles stock transfer Champaign, Illinois 61820
and registration, address
changes, corrections/changes in
taxpayer identification numbers, SPECIAL COUNSEL
and Form 1099 tax reporting Schiff Hardin & Waite
questions. If you require 7200 Sears Tower
assistance or have any Chicago, Illinois 60606

</TABLE>
C-95

________________________________________

DIRECTORS
CSB FINANCIAL GROUP, INC.
AND
CENTRALIA SAVINGS BANK
________________________________________

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

A. John Byrne
Retired

Michael Donnewald
President, Donnewald Distributing Co.

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

W. Harold Monken
Auto Dealer, Centralia, Illinois

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

OFFICERS
CSB FINANCIAL GROUP, INC.
________________________________________

K. Gary Reynolds
President and Chief Executive Officer
________________________________________

OFFICERS
CENTRALIA SAVINGS BANK
________________________________________

K. Gary Reynolds
President and Chief Executive Officer

Stephen J. Greene
Vice President

Joanne S. Ticknor
Secretary and Treasurer

C-96

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, 2000
---------------

( ) 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
of incorporation or organization) Number)

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, 2000
----------------------------- ----------------------------------
Common Stock, Par Value $0.01 732,299

C-97

CONTENTS
<S> <C>
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

- Consolidated Balance Sheets C-99 and C-100

- Consolidated Statements of Income and Comprehensive C-101 - C-105
Income

- Consolidated Statements of Cash Flows C-106 and C-107

- Notes to Consolidated Financial Statements C-108 - C-114

Item 2. Management's Discussion and Analysis of Financial Condition C-117 - C-121
and Results of Operations

PART II. OTHER INFORMATION

Item 1. Legal Proceedings C-122

Item 2. Changes in Securities C-122

Item 3. Defaults Upon Senior Securities C-122

Item 4. Submission of Matters to a Vote of Security Holders C-122

Item 5. Other Information C-122

Item 6. Exhibits and Reports on Form 8-K C-122

SIGNATURES

</TABLE>

C-98

CSB FINANCIAL GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
March 31, 2000 and September 30, 1999
(in thousands, except share data)
(Unaudited)

March 31, September 30,
ASSETS 2000 1999
------ ---------- -------------

Cash and cash equivalents . . . . . $ 1,444 $ 871
Securities:
Available for sale . . . . . . 15,798 17,118
Nonmarketable equity securities
216 216
Loans . . . . . . . . . . . . . . . 30,110 29,142
Allowance for loan losses . . . . . (220) (222)
-------- ---------
Loans, net . . . . . . . 29,890 28,920
Premises and equipment . . . . . . 659 683
Accrued interest receivable . . . . 336 318
Intangible assets . . . . . . . . . 509 539
Other assets . . . . . . . . . . . 208 255
-------- --------
Total assets . . . . . . $ 49,060 $ 48,920
======== ========

C-99

<TABLE>
<CAPTION>
CSB FINANCIAL GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
March 31, 2000 and September 30, 1999
(in thousands, except share data)
(Unaudited)
March 31, September 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 2000 1999
------------------------------------- --------- --------------
<S> <C> <C>
LIABILITIES:
Deposits:
Demand . . . . . . . . . . . . . . . . . . . . . . . $ 8,946 $ 8,563
Savings . . . . . . . . . . . . . . . . . . . . . . . 3,553 3,794
Time deposits > $100,000 . . . . . . . . . . . . . . . . 3,090 2,627
Other time deposits . . . . . . . . . . . . . . . . . 22,992 21,922
--------- --------
Total deposits . . . . . . . . . . . 38,581 36,906
Advances from the Federal Home Loan Bank . . . . . . . . . . . -- 1,400
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . 163 191
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . 23 145
--------- -------
Total liabilities . . . . . . . . . . 38,767 38,642

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 10 10
1,035,000 shares issued . . . . . . . . . . . 6,822 6,683
Paid-in capital . . . . . . . . . . . . . . . . . . . (210) (53)
Retained earnings . . . . . . . . . . . . . . . . . . (150) (160)
Accumulated other comprehensive income (loss) . . . . (496) (514)
Unearned employee stock ownership plan shares . . . . ------- ---------
Management recognition plan . . . . . . . . . . . . . 13,810 13,795
Less cost of treasury stock; 302,701 shares at March
31, 2000 and September 30, 1999 . . . . . . . . . . (3,517) (3,517)
-------- --------
Total stockholders' equity . . . . . 10,293 10,278

Total liabilities and stockholders' equity . . $ 49,060 $ 48,920
======== ========
</TABLE>

See Notes to Consolidated Financial Statements.

C-100

CSB FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
SIX MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)
Six
Months Ended
March 31,
------------
2000 1999
------ ------
<S> <C> <C>
Interest income:
Loans and fees on loans . . . . . . . . . . . . . . . . . . . . . . $1,153 $1,094
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 539 528
------- ------
Total interest income . . . . . . . . . . . . . . . . . . 1,692 1,622
------- -----

Interest expense:
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 782 797
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 --
------ -----
Total interest expense . . . . . . . . . . . . . . . . . 818 797
------- -----

Net interest income . . . . . . . . . . . . . . . . . . . 874 825
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . 17 36
------- -----
Net interest income after provision for loan losses 857 789
------- -----

Non-interest income:
Service charges on deposits . . . . . . . . . . . . . . . . . . . . 50 39
Gain on sale of securities, net . . . . . . . . . . . . . . . . . . 1 --
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 25
------- -----
Total non-interest income . . . . . . . . . . . . . . . . 68 64
------- -----

Non-interest expense:
Compensation and employee benefits . . . . . . . . . . . . . . . . . 336 326
Occupancy and equipment . . . . . . . . . . . . . . . . . . . . . . 52 47
Data processing . . . . . . . . . . . . . . . . . . . . . . . . . . 84 73
Audit, legal and other professional . . . . . . . . . . . . . . . . 122 46
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 178
------- -----
Total non-interest expense . . . . . . . . . . . . . . . 765 670
------- --------

Income before income taxes . . . . . . . . . . . . . . . 160 183
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 54
------- --------

Net income . . . . . . . . . . . . . . . . . . . . . . . $ 139 $ 129
======= ========

C-101

Earnings per share
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.19 $ 0.18
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ======= =======
$ 0.19 $ 0.18
======= =======
Weighted average shares outstanding
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 722,941 717,178
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ======= =======
747,187 728,356
======= =======
</TABLE>

See Notes to Consolidated Financial Statements.

C-102

CSB FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
SIX MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)

Six
Months Ended
March 31,
----------------

2000 1999
------ -----

Net income . . . . . . . . . . . . . . . . . $ 139 $ 129
Change in unrealized gain on securities
available for sale, net of tax of $(97) and
$(31) . . . . . . . . . . . . . . . . . . . . (157) (51)
-------- --------
Comprehensive income . . . . . . . . . . . . $ (18) $ 78
======== ========

See Notes to Consolidated Financial Statements.

C-103

CSB FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)

Three
Months Ended
March 31,
-----------------
2000 1999
---- ----
Interest income:
Loans and fees on loans . . . . . . $ 582 $ 564
Securities . . . . . . . . . . . . . 266 254
----- ------
Total interest expense . . . 848 818
===== ======
Interest expense:
Deposits . . . . . . . . . . . . . . 392 392
Borrowings . . . . . . . . . . . . . 20 --
----- ------
Total interest expense 412 392
===== ======
Net interest income . . . . 436 426
Provision for loan losses . . . . . . . . . . 3 18
----- -----
Net interest income after
provision for loan losses 433 408
===== =====
Noninterest income:
Service charges on deposits . . . . 24 19
Gain on sale of securities, net . . 1 --
Other 9 10
----- -----
Total noninterest income . . 34 29
===== =====
Nointerest expense:
Compensation and employee benefits . 167 157
Occupancy and equipment . . . . . . 31 23
Data processing . . . . . . . . . . 32 48
Audit, legal and other professional 78 15
Other 72 82
Total noninterest expense . 380 325
Income before income taxes 87 112
Income taxes . . . . . . . . . . . . . . . . 32 31
Net income . . . . . . . . $ 55 $ 81
Earnings per share $ 0.08 $ 0.11
Basic . . . . . . . . . . . . . . . $ 0.08 $ 0.11
Diluted . . . . . . . . . . . . . . $ 0.07 $ 0.11
Weighted average shares outstanding
Basic . . . . . . . . . . . . . . . 723,249 717,349
Diluted . . . . . . . . . . . . . . 751,273 728,527

See Notes to Consolidated Financial Statements.

C-104

CSB FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended March 31, 2000 and 1999
(Unaudited, in thousands, except per share data)

Six
Months Ended
March 31,
-----------------

2000 1999
---- -----

Net income . . . . . . . . . . . . . . . . . $ 55 $ 81
Change in unrealized gain on securities a
available for sale, net of tax of
$ (59) and $ (30) . . . . . . . . . . (97) (49)
------ -------

Comprehensive income . . . . . . . . . . . . $ (42) $ 32
====== =======

See Notes to Consolidated Financial Statements.

C-105

CSB FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED, IN THOUSANDS)

Six
Months Ended
March 31,
----------------

2000 1999
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 139 $ 129

Adjustments to reconcile net income to net cash provided by operating
activities:

Provision for loan losses 17 36
Provision for depreciation 35 21
Deferred income taxes (25) (4)
Amortization of intangible assets 30 31
Employee stock ownership plan compensation
expense 15 13
Management recognition plan compensation expense 18 18
Gain on sale of securities (1) --
Amortization and accretion on securities 1 6
Change in assets and liabilities:
(Increase) in accrued interest receivable (18) (2)
(Decrease) in other liabilities (28) (28)
------ ------
Net cash provided by operating activities . . . . . . 230 270
------ ------

Cash Flows from Investing Activities:
Securities available for sale:

Purchases . . . . . . . . . . . . . . . . . . . . . . . . (1,783) (3,453)
Proceeds from sales . . . . . . . . . . . . . . . . . . . 1,794 --
Proceeds from maturities and paydowns . . . . . . . . . . 1,055 4,741
Proceeds from sales of nonmarketable equity
securities . . . . . . . . . . . . . . . . . . . . . . . . -- 4
(Increase) in loans . . . . . . . . . . . . . . . . . . . (987) (2,478)

C-106

CSB FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED, IN THOUSANDS)

Six
Months Ended
March 31,
-----------------
2000 1999
------ ------

Purchase of premises and equipment . . . . . . . . . . . . (11) (8)
------- -------
Net cash provided by (used in) investing
activities . . . . . . . . . . . . . . . . . . . . . . 68 (1,194)
------- -------
Cash Flows from Financing Activities:
Increase in deposits . . . . . . . . . . . . . . . . . . . . . $1,675 $1,323
Repayment of FHLB advances . . . . . . . . . . . . . . . . . . (1,400) - -
Purchase of treasury stock . . . . . . . . . . . . . . . . . . - - (5)
------- -------

Net cash provided by financing activities . . . . . . 275 1,318
------- -------
Increase in cash and cash equivalents . . . . . . . . 573 394

Cash and cash equivalents at beginning of period . . . . . . . . . . . 871 1,542
------- -------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . $1,444 $1,936
======= =======
Supplemental Disclosures:
Cash paid for:

Interest . . . . . . . . . . . . . . . . . . . . . . . . . $ 791 $ 797
Income taxes . . . . . . . . . . . . . . . . . . . . . . . $ 9 $ 9

Change in gross unrealized gain/loss on securities available
for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (254) $ (82)
Change in deferred taxes on unrealized gain/loss on securities
available for sale . . . . . . . . . . . . . . . . . . . . . . $ 97 $ 31

</TABLE>
See Notes to Consolidated Financial Statements.

C-107

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 Marion 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 was traded on the NASDAQ Small Caps
market under the symbol "CSBF" until December 31, 1998, at which time
the Company transferred the quotation of its common stock to the OTC
Bulletin Board under the same symbol.

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, 1999. 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

C-108

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, 2000, the results of operations for the three months ended
March 31, 2000 and 1999, and the results of operations and cash flows
for the six months ended March 31, 2000 and 1999. All adjustments to
the financial statements were normal and recurring in nature.

Operating results for the six months ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the
year ending September 30, 2000.

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.

C-109

CSB FINANCIAL GROUP, INC.

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

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

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

2000 1999
----- ----

Net income available to common shareholders $ 139 $ 129

Basic diluted potential common shares:
Weighted average shares outstanding . 713,005 710,968
Management recognition plan shares vested 9,936 6,210
------- -------

Basic average shares outstanding . . . . 722,941 717,178
------- -------

Diluted potential common shares:
Management recognition plan shares 7,452 11,178
granted, but not vested
Stock option equivalents . . . . . . . 16,794 --
------- -------

Diluted average shares outstanding . . . 747,187 728,356
------- -------
Basic earnings per share . . . . . . . . $ 0.19 $ 0.18
======= ========
Diluted earnings per share . . . . . . . $ 0.19 $ 0.18
======= ========

C-110

CSB FINANCIAL GROUP, INC.

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

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

2000 1999
---- ----

Net income available to common shareholders $ 55 $ 81

Basic diluted potential common shares:
Weighted average shares outstanding. . 713,313 711,139
Management recognition plan shares vested 9,936 6,210
------- -------

Basic weighted average shares outstanding 723,249 717,349
------- -------
Diluted potential common shares:
Management recognition plan shares granted, 7,452 11,178
but not vested
Stock option equivalents . . . . . . . 20,572 - -
Diluted average shares outstanding . . . 751,273 728,527
Basic earnings per share . . . . . . . . $ 0.08 $ 0.11
======== ========

Diluted earnings per share . . . . . . . $ 0.07 $ 0.08
======== ========

NOTE 4. EMPLOYEE STOCK OWNERSHIP PLAN

The ESOP acquired 82,800 shares of the Company's stock for future
allocation to employees as part of the mutual to stock conversion
process. 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.

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

C-111

CSB FINANCIAL GROUP, INC.

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

expense for the ESOP of $15 and $13 for the six months ended March 31,
2000 and 1999, 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, 2000 and September 30, 1999, the ESOP held
18,785 and 20,021, respectively, of non-committed shares with a fair
value of $274 and $195, respectively.

NOTE 5. STOCK OPTION PLAN

The Company has a stock option plan (SOP) which was established
in 1996 with 103,500 shares of common stock. The options are 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, 2000, 61,750 options had been
granted.

A Nonqualified Stock Option Plan (NSOP) was established in 1997
with 103,500 shares of common stock. The options are 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, 2000, no options
had been granted.

NOTE 6. MANAGEMENT RECOGNITION PLAN

The Management Recognition Plan ("MRP") was approved October 10,
1996 and amended on January 9, 1997. 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

C-112

CSB FINANCIAL GROUP, INC.

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

grant date, and 20% on the anniversary date thereof for the following
four years. As of March 31, 2000, 17,388 shares have been awarded and
remain outstanding to officers, directors, and employees. MRP
compensation expense was $18 for the six months ended March 31, 2000
and 1999. Compensation expense is recognized over the vesting period
for shares awarded under the plan.

NOTE 7. RECLASSIFICATIONS

Certain reclassifications have been made to the balances for the
period ending March 31, 1999, with no effect on net income, to be
consistent with the classifications adopted for March 31, 2000.

NOTE 8. NEW ACCOUNTING STANDARDS

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

Accounting for Mortgage-Backed Securities Retained after the
Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
Enterprise Statement of Financial Accounting Standard No. 134,
"Accounting for Mortgage-Backed Securities Retained after the
Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
Enterprise" (FAS 134) changes the way mortgage banking firms account
for certain securities and other interests they retain after
securitizing mortgage loans that were held for sale. The Statement is

C-113

CSB FINANCIAL GROUP, INC.

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

effective for financial statements for the first fiscal quarter
beginning after December 15, 1998. The Company does not securitize
mortgages and is not a Mortgage Banking Enterprise and therefore, FAS
134 will not have an impact on the consolidated financial statements.

C-114

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. 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 Company'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 Company 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 Company's business strategy is to operate the bank as a well
capitalized, profitable and independent community savings bank
dedicated to financing home ownership and consumer needs in its
primary market area. The Company 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

C-115

CSB FINANCIAL GROUP, INC.

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

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 Company 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.

MERGER

On January 26, 2000, the Company signed a definitive agreement
with Midland States Bancorp, Inc. Under the terms of the agreement,
Midland States Bancorp, Inc. has agreed to purchase all of the issued
and outstanding shares of common stock of CSB Financial Group, Inc.
for an aggregate cash consideration of $11.7 million, or $16.00 per
share, subject to certain adjustments. This transaction is expected
to be completed by July 31, 2000.

LIQUIDITY AND CAPITAL RESOURCES

The Company'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 Company 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 Company's
liquidity needs for the immediate future.

A portion of the Company'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 Company's
operating, investing, lending, and financing activities during any
given period. At March 31, 2000 and September 30, 1999, cash and cash
equivalents totaled $1,444 and $871, respectively. The increase in
cash and cash equivalents is due to an increase in deposits and the
sale of investment securities to repay borrowings and fund loan
growth.

Liquidity management is both a daily and long-term function of
business management. If the Company requires funds beyond its ability

C-116

CSB FINANCIAL GROUP, INC.

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

to generate them internally, the Company may borrow additional funds
from the FHLB. At March 31, 2000, the Company had no outstanding
advances from the FHLB.

At March 31, 2000, the Company had $1.8 million of outstanding
commitments on revolving lines of credit.

REGULATORY CAPITAL

Federally insured savings associations are required to maintain a
minimum level of regulatory capital. The Company and its subsidiary
have capital ratios which substantially exceed all regulatory
requirements. The Company's capital ratios are shown below.

March 31, September 30, Minimum
2000 1999 Requirements
--------- ------------- ------------
<S> <C> <C> <C>
Total capital to risk weighted assets 39.1% 43.9% 8.0%
Tier I capital to risk weighted assets 38.2% 42.9% 4.0%
Tier I capital to average assets 20.3% 20.3% 4.0%
</TABLE>

FINANCIAL CONDITION

Total assets increased $140 to $49,060 at March 31, 2000 from
$48,920 at September 30, 1999. The increase resulted from an increase
of $573 in cash and cash equivalents due to sales, calls and
maturities of investments and a net increase in deposit accounts of
$1,675, offset by an increase in loans of $970 and repayment of FHLB
Advances of $1,400.

Gross loans have increased $968 from $29,142 at September 30,
1999 to $30,110 at March 31, 2000. The growth in the loan portfolio
is comprised primarily of commercial lending.

Securities decreased $1,320 since September 30, 1999. The
decrease is due to maturities of U.S. Treasury securities, sale of
mortgage backed securities and an overall decline in market values.
All securities are held as available for sale.

C-117

CSB FINANCIAL GROUP, INC.

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

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH
31, 1999

NET INCOME - The Company's net income for the three months ended March
31, 2000 was $55 compared to $81 for the three months ended March 31,
1999. The principal cause of the decrease in net income resulted from
an increase in professional fees related to the pending sale of the
Company. This decrease was mitigated by a modest increase in net
interest margin and a slight reduction of other noninterest expense.

INTEREST INCOME - Interest income increased for the three months ended
March 31, 2000 by $30 to $848 from $818 for the three months ended
March 31, 1999. The increase is due to consistent yields and 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, 2000 by $20 to $412 from $392 for the three months
ended March 31, 1999. The increase in interest expense is solely
attributed to interest expense on borrowed funds that were not
necessary in 1999.

NET INTEREST INCOME - Net interest income for the three months ended
March 31, 2000 increased by $10 to $436 from $426 for the three months
ended March 31, 1999. The increase is attributable to the increase in
the Company's average balance of loans for the respective period.

NONINTEREST EXPENSE - Noninterest expense increased for the three
months ended March 31, 2000 by $55 to $380 from $325 for the three
months ended March 31, 1999. Compensation cost increased for the
quarter by $10 and audit, legal and other professional costs increased
$63. These increases were partially offset by a $16 decrease in data
processing expenses and a $10 decrease in other noninterest expense.

SIX MONTHS ENDED MARCH 31, 2000 COMPARED TO SIX MONTHS ENDED MARCH 31,
1999

NET INCOME -The Company's net income for the six months ended March
31, 2000 was $139 compared to $129 for the six months ended March 31,
1999. The increase is mainly attributable to an increase in net
interest income, offset by an increase in noninterest expenses.

C-118

CSB FINANCIAL GROUP, INC.

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

INTEREST INCOME - Interest income increased $70 from $1,622 to $1,692
or by 4.32%, during the six months ended March 31, 2000 compared to
the respective period of 1999. This increase resulted from an
increase in the average balance of interest earning assets and a
consistent yield.

INTEREST EXPENSE - Interest expense increased $21 or 2.63%, to $818
for the six months ended March 31, 2000 from $797 for the same period
in 1999. The increase in interest expense on borrowings of $36 was
offset by a decrease in interest expense on deposits of $15 due to
decreasing cost of funds which is consistent with market conditions.

NET INTEREST INCOME - Net interest income for the six months ended
March 31, 2000 was $874 compared to $825 for the six months ended
March 31, 1999. The increase is attributable to an increase in loans
and deposits during the period combined with a slight increase in the
net interest margin.

NONINTEREST EXPENSE - Noninterest expense increased for the six months
ended March 31, 2000 by $95 to $765 from $670 for the six months ended
March 31, 1999. Audit, legal and other professional costs increased
$76 due to the pending merger. In addition, compensation costs
increased $10 and data processing costs increased $11. These increases
were partially offset by a $7 decrease in other noninterest expense.

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, 2000 and
1999, the provision for loan losses was $17 and $36, respectively.

ALLOWANCE FOR LOAN LOSSES - The allowance for loan losses was $220 or
.73% of loans receivable at March 31, 2000, compared to $222, or .76%
of loans receivable at September 30, 1999. The level of nonperforming
loans was .40% of total loans at March 31, 2000 compared to .70% as of
September 30, 1999. Based on the relationship of the allowance for
loan losses to total loans and classified assets and the focus on
identifying and resolving problem loan situations, management believes
the allowance for loan losses is adequate.

C-119

CSB FINANCIAL GROUP, INC.

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

Net charge-offs amounted to $19 during the first six months of
fiscal year 2000, compared to net charge-offs of $11 during the first
six months of fiscal year 1999.

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, 2000 and September 30, 1999, management had not identified
any loans as impaired.

NONPERFORMING ASSETS

At March 31, 2000, the Bank had $121 of nonperforming assets,
representing .25% of total assets. On September 30, 1999, the Bank
had $205 of nonperforming assets, representing .42% of total assets.

C-120

CSB FINANCIAL GROUP, INC.

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

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.

C-121

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 2. CHANGES IN SECURITIES

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8K

Exhibits:

None.

Reports on Form 8K:

Form 8K was filed on January 27, 2000 announcing that CSB
Financial Group, Inc. had signed a definitive Merger Agreement
providing for Midland States Bancorp's acquisition of CSB
Financial Group, Inc.

C-122

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 15, 2000 /s/ K. Gary Reynolds
--------------- -------------------------------
K. Gary Reynolds
Chief Executive Officer and Director

Date: May 15, 2000 /s/ Joanne Ticknor
--------------- -------------------------------
Joanne Ticknor
Secretary and Treasurer

C-123

APPENDIX D: SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW

262 APPRAISAL RIGHTS. (a) Any stockholder of a corporation of
this State who holds shares of stock on the date of the making of a
demand pursuant to subsection (d) of this section with respect to such
shares, who continuously holds such shares through the effective date
of the merger or consolidation, who has otherwise complied with
subsection (d) of this section and who has neither voted in favor of
the merger or consolidation nor consented thereto in writing pursuant
to Section 228 of this title shall be entitled to an appraisal by the
Court of Chancery of the fair value of the stockholder's shares of
stock under the circumstances described in subsections (b) and (c) of
this section. As used in this section, the word "stockholder" means a
holder of record of stock in a stock corporation and also a member of
record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or
other instrument issued by a depository representing an interest in
one or more shares, or fractions thereof, solely of stock of a
corporation, which stock is deposited with the depository.

(b) Appraisal rights shall be available for the shares of any
class or series of stock of a constituent corporation in a merger or
consolidation to be effected pursuant to Section 251 (other than a
merger effected pursuant to Section 251(g) of this title), Section
252, Section 254, Section 257, Section 258, Section 263 or Section 264
of this title:

(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series
of stock, which stock, or depository receipts in respect thereof,
at the record date fixed to determine the stockholders entitled
to receive notice of and to vote at the meeting of stockholders
to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a
national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or
(ii) held of record by more than 2,000 holders; and further
provided that no appraisal rights shall be available for any
shares of stock of the constituent corporation surviving a merger
if the merger did not require for its approval the vote of the
stockholders of the surviving corporation as provided in
subsection (f) of Section 251 of this title.

(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for the
shares of any class or series of stock of a constituent
corporation if the holders thereof are required by the terms of
an agreement of merger or consolidation pursuant to Section 251,
252, 254, 257, 258, 263 and 264 of this title to accept for such
stock anything except:

D-1

a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or depository
receipts in respect thereof;

b. Shares of stock of any other corporation, or
depository receipts in respect thereof, which shares of
stock (or depository receipts in respect thereof) or
depository receipts at the effective date of the merger or
consolidation will be either listed on a national
securities exchange or designated as a national market
system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. or held of
record by more than 2,000 holders;

c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs
a. and b. of this paragraph; or

d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or
fractional depository receipts described in the foregoing
subparagraphs a., b. and c. of this paragraph.

(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under Section 253 of this
title is not owned by the parent corporation immediately prior to
the merger, appraisal rights shall be available for the shares of
the subsidiary Delaware corporation.

(c) Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall be
available for the shares of any class or series of its stock as a
result of an amendment to its certificate of incorporation, any merger
or consolidation in which the corporation is a constituent corporation
or the sale of all or substantially all of the assets of the
corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth
in subsections (d) and (e) of this section, shall apply as nearly as
is practicable.

(d) Appraisal rights shall be perfected as follows:

(1) If a proposed merger or consolidation for which
appraisal rights are provided under this section is to be
submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting, shall
notify each of its stockholders who was such on the record date
for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof
that appraisal rights are available for any or all of the shares
of the constituent corporations, and shall include in such notice
a copy of this section. Each stockholder electing to demand the

D-2

appraisal of such stockholder's shares shall deliver to the
corporation, before the taking of the vote on the merger or
consolidation, a written demand for appraisal of such
stockholder's shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand
the appraisal of such stockholder's shares. A proxy or vote
against the merger or consolidation shall not constitute such a
demand. A stockholder electing to take such action must do so by
a separate written demand as herein provided. Within 10 days
after the effective date of such merger or consolidation, the
surviving or resulting corporation shall notify each stockholder
of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the
merger or consolidation of the date that the merger or
consolidation has become effective; or

(2) If the merger or consolidation was approved pursuant to
Section 228 or Section 253 of this title, each constituent
corporation, either before the effective date of the merger or
consolidation or within ten days thereafter, shall notify each of
the holders of any class or series of stock of such constituent
corporation who are entitled to appraisal rights of the approval
of the merger or consolidation and that appraisal rights are
available for any or all shares of such class or series of stock
of such constituent corporation, and shall include in such notice
a copy of this section; provided that, if the notice is given on
or after the effective date of the merger or consolidation, such
notice shall be given by the surviving or resulting corporation
to all such holders of any class or series of stock of a
constituent corporation that are entitled to appraisal rights.
Such notice may, and, if given on or after the effective date of
the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days
after the date of mailing of such notice, demand in writing from
the surviving or resulting corporation the appraisal of such
holder's shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and
that the stockholder intends thereby to demand the appraisal of
such holder's shares. If such notice did not notify stockholders
of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice
before the effective date of the merger or consolidation
notifying each of the holders of any class or series of stock of
such constituent corporation that are entitled to appraisal
rights of the effective date of the merger or consolidation or
(ii) the surviving or resulting corporation shall send such a
second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is
sent more than 20 days following the sending of the first notice,
such second notice need only be sent to each stockholder who is

D-3

entitled to appraisal rights and who has demanded appraisal of
such holder's shares in accordance with this subsection. An
affidavit of the secretary or assistant secretary or of the
transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of
fraud, be prima facie evidence of the facts stated therein. For
purposes of determining the stockholders entitled to receive
either notice, each constituent corporation may fix, in advance,
a record date that shall be not more than 10 days prior to the
date the notice is given, provided, that if the notice is given
on or after the effective date of the merger or consolidation,
the record date shall be such effective date. If no record date
is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next
preceding the day on which the notice is given.

(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any
stockholder who has complied with subsections (a) and (d) hereof and
who is otherwise entitled to appraisal rights, may file a petition in
the Court of Chancery demanding a determination of the value of the
stock of all such stockholders. Notwithstanding the foregoing, at any
time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective
date of the merger or consolidation, any stockholder who has complied
with the requirements of subsections (a) and (d) hereof, upon written
request, shall be entitled to receive from the corporation surviving
the merger or resulting from the consolidation a statement setting
forth the aggregate number of shares not voted in favor of the merger
or consolidation and with respect to which demands for appraisal have
been received and the aggregate number of holders of such shares. Such
written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is
received by the surviving or resulting corporation or within 10 days
after expiration of the period for delivery of demands for appraisal
under subsection (d) hereof, whichever is later.

(f) Upon the filing of any such petition by a stockholder,
service of a copy thereof shall be made upon the surviving or
resulting corporation, which shall within 20 days after such service
file in the office of the Register in Chancery in which the petition
was filed a duly verified list containing the names and addresses of
all stockholders who have demanded payment for their shares and with
whom agreements as to the value of their shares have not been reached
by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if
so ordered by the Court, shall give notice of the time and place fixed
for the hearing of such petition by registered or certified mail to
the surviving or resulting corporation and to the stockholders shown

D-4

on the list at the addresses therein stated. Such notice shall also be
given by 1 or more publications at least 1 week before the day of the
hearing, in a newspaper of general circulation published in the City
of Wilmington, Delaware or such publication as the Court deems
advisable. The forms of the notices by mail and by publication shall
be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.

(g) At the hearing on such petition, the Court shall determine
the stockholders who have complied with this section and who have
become entitled to appraisal rights. The Court may require the
stockholders who have demanded an appraisal for their shares and who
hold stock represented by certificates to submit their certificates of
stock to the Register in Chancery for notation thereon of the pendency
of the appraisal proceedings; and if any stockholder fails to comply
with such direction, the Court may dismiss the proceedings as to such
stockholder.

(h) After determining the stockholders entitled to an appraisal,
the Court shall appraise the shares, determining their fair value
exclusive of any element of value arising from the accomplishment or
expectation of the merger or consolidation, together with a fair rate
of interest, if any, to be paid upon the amount determined to be the
fair value. In determining such fair value, the Court shall take into
account all relevant factors. In determining the fair rate of
interest, the Court may consider all relevant factors, including the
rate of interest which the surviving or resulting corporation would
have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the
Court may, in its discretion, permit discovery or other pretrial
proceedings and may proceed to trial upon the appraisal prior to the
final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or
resulting corporation pursuant to subsection (f) of this section and
who has submitted such stockholder's certificates of stock to the
Register in Chancery, if such is required, may participate fully in
all proceedings until it is finally determined that such stockholder
is not entitled to appraisal rights under this section.

(i) The Court shall direct the payment of the fair value of the
shares, together with interest, if any, by the surviving or resulting
corporation to the stockholders entitled thereto. Interest may be
simple or compound, as the Court may direct. Payment shall be so made
to each such stockholder, in the case of holders of uncertificated
stock forthwith, and the case of holders of shares represented by
certificates upon the surrender to the corporation of the certificates
representing such stock. The Court's decree may be enforced as other
decrees in the Court of Chancery may be enforced, whether such
surviving or resulting corporation be a corporation of this State or
of any state.

D-5

(j) The costs of the proceeding may be determined by the Court
and taxed upon the parties as the Court deems equitable in the
circumstances. Upon application of a stockholder, the Court may order
all or a portion of the expenses incurred by any stockholder in
connection with the appraisal proceeding, including, without
limitation, reasonable attorney's fees and the fees and expenses of
experts, to be charged pro rata against the value of all the shares
entitled to an appraisal.

(k) From and after the effective date of the merger or
consolidation, no stockholder who has demanded appraisal rights as
provided in subsection (d) of this section shall be entitled to vote
such stock for any purpose or to receive payment of dividends or other
distributions on the stock (except dividends or other distributions
payable to stockholders of record at a date which is prior to the
effective date of the merger or consolidation); provided, however,
that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written
withdrawal of such stockholder's demand for an appraisal and an
acceptance of the merger or consolidation, either within 60 days after
the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval
of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding
in the Court of Chancery shall be dismissed as to any stockholder
without the approval of the Court, and such approval may be
conditioned upon such terms as the Court deems just.

(l) The shares of the surviving or resulting corporation to
which the shares of such objecting stockholders would have been
converted had they assented to the merger or consolidation shall have
the status of authorized and unissued shares of the surviving or
resulting corporation. (Last amended by Ch. 339, L. '98, eff. 7-1-98.)

D-6

REVOCABLE PROXY

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF CSB FINANCIAL GROUP, INC.

The undersigned hereby appoint(s) W. Harold Monken and A. John
Byrne, or either of them, as proxies for the undersigned, with full
power of substitution, and hereby authorize(s) them or either of them
to act and to vote all the shares of common stock of CSB Financial
Group, Inc. held by the undersigned on June 8, 2000, at the special
meeting of stockholders to be held at 801 12th Street, Carlyle,
Illinois, on July 14, 2000, at 10:00 a.m., local time, or at any
adjournment or postponement of the meeting. Said proxies are directed
to vote as instructed on the matters shown on this card and otherwise
at their discretion. Receipt of a copy of the notice of said meeting
and proxy statement are hereby acknowledged.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTIONS
ARE GIVEN, THIS PROXY WILL BE VOTED FOR THE APPROVAL AND ADOPTION OF
THE MERGER AGREEMENT.

(Please sign, date and mail in the enclosed return envelope.)

PLEASE MARK YOUR VOTE IN THE BOX IN THE FOLLOWING MANNER USING DARK
INK ONLY /X/

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS

1. To approve and adopt the agreement and plan of merger, dated as
of January 26, 2000, by and among Midland States Bancorp, Inc., CSB
Acquisition Corporation (a wholly owned subsidiary of Midland) and CSB
Financial Group, Inc., as more fully described in the accompanying
proxy statement.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
___ FOR approval ___ AGAINST ___ ABSTAIN from
and adoption of the approval and adoption vote on the merger
merger agreement of the merger agreement agreement
</TABLE>
2. In his/her discretion, a proxy is authorized to vote upon such
other business as may properly come before the meeting; PROVIDED,
HOWEVER, if a proposal to adjourn the meeting is properly presented, a
proxy will not have discretion to vote in favor of the adjournment
proposal any shares of common stock which have been voted against
approval and adoption of the merger agreement.

Dated:_______________, 2000 _________________________
Signature of Stockholder

__________________________
Signature of Stockholder
(if held jointly)

IMPORTANT: Please sign
exactly as your name or names
appear on the left. If stock
is held jointly, all joint
owners must sign. Executors,
administrators, trustees,
guardians, custodians,
corporate officers and others
signing in a representative
capacity should put their full
title.

PLEASE CHECK THE FOLLOWING BOX
IF YOU PLAN TO ATTEND THE
MEETING. ____