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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549



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FORM 10-K/A

(Amendment No. 2)



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|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------



For the fiscal year ended December 31, 2004



or



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



Commission File No: 2-96144



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CITIZENS FINANCIAL CORP.

(exact name of registrant as specified in its charter)



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|                                         |  |                                        
|---------------------------------------- |  | ---------------------------------------
|Delaware                                 |  | 55-0666598                             
|(State of Incorporation)                 |  | (I.R.S. Employer Identification Number)
|                                         | 
|213 Third St. Elkins, West Virginia      |  | 26241                                  
|(Address of Principal Executive Offices) |  | (Zip Code)                             



Registrants
Telephone Number, Including Area Code: (304) 636-4095



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Securities Registered Pursuant to Section 12(b) of the Act: None



Securities Registered Pursuant to Section 12(g) of the Act: None



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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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,
and will not 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-K or any amendment to this Form
10-K.    Yes  x    No ̈



Indicate by check mark whether the registrant is an
accelerated filer (as defined in Rule 12 of the Act).    Yes ̈No  x



Indicate by check
mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes ̈No  x



The aggregate market value of Citizens Financial Corp. common stock, representing all of its voting stock that was held by nonaffiliates as of the last
business day of Citizens most recently completed second fiscal quarter, approximated $24,042,675.



As of February 28, 2005, Citizens Financial Corp. had 750,000 shares of common stock outstanding with a par value of $2.00.



This Form 10-K/A amends Item 8 of the Companys Form 10-K for the fiscal year ended
December 31, 2004 to include the report of the independent accounting firm that audited the financial statements for Citizens Financial Corp. for the periods ended December 31, 2003 and 2002.



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SIGNATURES



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



|        |  |                              
|------- |  | -----------------------------
|        |  | Citizens Financial Corp.     
|        | 
|8/30/05 |  |                              
|        | 
|        |  | /s/ Thomas K. Derbyshire     
|        |  | Vice President, Treasurer    
|        |  | (Principal Financial Officer)



2



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Item 8. Financial Statements and Supplementary Data



CITIZENS FINANCIAL CORP.

AND SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS

December 31, 2004 and 2003



|                                                                                  |  |      |             |   |      |   |             |  
|--------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                  |  | 2004 |             |   | 2003 |  
|ASSETS                                                                            |  |      |             |   |      |   |             |  
|                                                                                  |  |     
|Cash and due from banks                                                           |  | $    | 5,475,798   |   |      | $ | 5,952,297   |  
|Securities available for sale, at fair value                                      |  |      | 53,038,545  |   |      |   | 60,077,178  |  
|Loans, less allowance for loan losses of $1,378,106 and $1,395,908, respectively  |  |      | 145,422,688 |   |      |   | 134,311,352 |  
|Bank premises and equipment, net                                                  |  |      | 4,223,620   |   |      |   | 3,606,772   |  
|Accrued interest receivable                                                       |  |      | 1,118,499   |   |      |   | 1,096,486   |  
|Other assets                                                                      |  |      | 4,504,223   |   |      |   | 4,084,797   |  
|                                                                                  |  |      |             |   |      |   |             |  
|Total assets                                                                      |  | $    | 213,783,373 |   |      | $ | 209,128,882 |  
|                                                                                  |  |      |             |   |      |   |             |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                              |  |      |             |   |      |   |             |  
|                                                                                  |  |     
|Liabilities                                                                       |  |      |             |   |      |   |             |  
|Deposits:                                                                         |  |      |             |   |      |   |             |  
|Noninterest bearing                                                               |  | $    | 23,461,463  |   |      | $ | 23,511,943  |  
|Interest bearing                                                                  |  |      | 141,839,189 |   |      |   | 138,036,606 |  
|                                                                                  |  |      |             |   |      |   |             |  
|Total deposits                                                                    |  |      | 165,300,652 |   |      |   | 161,548,549 |  
|Short-term borrowings                                                             |  |      | 22,510,155  |   |      |   | 22,066,301  |  
|Long-term borrowings                                                              |  |      | 4,146,232   |   |      |   | 3,402,902   |  
|Other liabilities                                                                 |  |      | 1,603,553   |   |      |   | 1,632,716   |  
|                                                                                  |  |      |             |   |      |   |             |  
|Total liabilities                                                                 |  |      | 193,560,592 |   |      |   | 188,650,468 |  
|                                                                                  |  |      |             |   |      |   |             |  
|Commitments and contingencies                                                     |  |      |             |   |      |   |             |  
|                                                                                  |  |     
|Shareholders equity                                                              |  |      |             |   |      |   |             |  
|Common stock, $2.00 par value, authorized 2,250,000 shares, issued 750,000 shares |  |      | 1,500,000   |   |      |   | 1,500,000   |  
|Additional paid-in capital                                                        |  |      | 2,100,000   |   |      |   | 2,100,000   |  
|Retained earnings                                                                 |  |      | 19,650,112  |   |      |   | 18,965,862  |  
|Accumulated other comprehensive income                                            |  |      | 57,987      |   |      |   | 675,016     |  
|Treasury stock at cost, 126,087 and 118,622 shares, respectively                  |  |      | (3,085,318  | ) |      |   | (2,762,464  | )
|                                                                                  |  |      |             |   |      |   |             |  
|Total shareholders equity                                                        |  |      | 20,222,781  |   |      |   | 20,478,414  |  
|                                                                                  |  |      |             |   |      |   |             |  
|Total liabilities and shareholders equity                                        |  | $    | 213,783,373 |   |      | $ | 209,128,882 |  
|                                                                                  |  |      |             |   |      |   |             |  



See Notes to
Consolidated Financial Statements



3



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CITIZENS FINANCIAL CORP.

AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF INCOME

For The Years Ended December 31, 2004, 2003 and 2002



|                                                          |  |      |            |      |   |            |  |   |           
|--------------------------------------------------------- |  | ---- | ---------- | ---- | - | ---------- |  | - | ----------
|                                                          |  | 2004 |            | 2003 |   | 2002      
|Interest and dividend income                              |  |      |            |      |   |            |  |   |           
|Interest and fees on loans                                |  | $    | 9,474,547  |      | $ | 9,034,533  |  | $ | 8,893,876 
|Interest and dividends on securities:                     |  |      |            |      |   |            |  |   |           
|Taxable                                                   |  |      | 1,634,570  |      |   | 2,019,419  |  |   | 2,258,450 
|Tax-exempt                                                |  |      | 316,046    |      |   | 346,154    |  |   | 321,316   
|Interest on federal funds sold                            |  |      | 17,914     |      |   | 15,455     |  |   | 44,997    
|                                                          |  |      |            |      |   |            |  |   |           
|Total interest and dividend income                        |  |      | 11,443,077 |      |   | 11,415,561 |  |   | 11,518,639
|                                                          |  |      |            |      |   |            |  |   |           
|Interest expense                                          |  |      |            |      |   |            |  |   |           
|Interest on deposits                                      |  |      | 2,645,847  |      |   | 2,826,172  |  |   | 3,628,492 
|Interest on short-term borrowings                         |  |      | 307,654    |      |   | 254,359    |  |   | 278,382   
|Interest on long-term borrowings                          |  |      | 119,649    |      |   | 112,873    |  |   | 65,107    
|                                                          |  |      |            |      |   |            |  |   |           
|Total interest expense                                    |  |      | 3,073,150  |      |   | 3,193,404  |  |   | 3,971,981 
|                                                          |  |      |            |      |   |            |  |   |           
|                                                          |  |      |           
|Net interest income                                       |  |      | 8,369,927  |      |   | 8,222,157  |  |   | 7,546,658 
|Provision for loan losses                                 |  |      | 934,899    |      |   | 324,000    |  |   | 288,272   
|                                                          |  |      |            |      |   |            |  |   |           
|Net interest income after provision for loan losses       |  |      | 7,435,028  |      |   | 7,898,157  |  |   | 7,258,386 
|                                                          |  |      |            |      |   |            |  |   |           
|Noninterest income                                        |  |      |            |      |   |            |  |   |           
|Trust income                                              |  |      | 194,593    |      |   | 253,313    |  |   | 232,197   
|Service fees                                              |  |      | 700,732    |      |   | 658,766    |  |   | 611,391   
|Insurance commissions                                     |  |      | 41,155     |      |   | 55,594     |  |   | 54,386    
|Securities gains, net                                     |  |      | 23,185     |      |   | 276        |  |   |          
|Brokerage fees                                            |  |      | 50,034     |      |   | 30,160     |  |   | 58,313    
|Secondary market loan fees                                |  |      | 62,691     |      |   | 95,050     |  |   | 232,298   
|Other                                                     |  |      | 320,818    |      |   | 199,027    |  |   | 164,896   
|                                                          |  |      |            |      |   |            |  |   |           
|Total noninterest income                                  |  |      | 1,393,208  |      |   | 1,292,186  |  |   | 1,353,481 
|                                                          |  |      |            |      |   |            |  |   |           
|Noninterest expense                                       |  |      |            |      |   |            |  |   |           
|Salaries and employee benefits                            |  |      | 3,591,142  |      |   | 3,493,387  |  |   | 3,023,267 
|Net occupancy expense                                     |  |      | 265,313    |      |   | 238,243    |  |   | 260,432   
|Equipment rentals, depreciation and maintenance           |  |      | 480,443    |      |   | 417,957    |  |   | 426,538   
|Data processing                                           |  |      | 559,238    |      |   | 474,240    |  |   | 454,013   
|Director fees                                             |  |      | 220,861    |      |   | 222,983    |  |   | 183,350   
|Postage expense                                           |  |      | 166,589    |      |   | 157,186    |  |   | 147,165   
|Professional service fees                                 |  |      | 159,251    |      |   | 121,097    |  |   | 87,456    
|Stationery                                                |  |      | 162,858    |      |   | 137,179    |  |   | 135,544   
|Software expense                                          |  |      | 174,774    |      |   | 79,485     |  |   | 62,029    
|Other                                                     |  |      | 964,490    |      |   | 852,747    |  |   | 912,609   
|                                                          |  |      |            |      |   |            |  |   |           
|Total noninterest expense                                 |  |      | 6,744,959  |      |   | 6,194,504  |  |   | 5,692,403 
|                                                          |  |      |            |      |   |            |  |   |           
|Income before income taxes                                |  |      | 2,083,277  |      |   | 2,995,839  |  |   | 2,919,464 
|                                                          |  |      |           
|Income tax expense                                        |  |      | 426,938    |      |   | 983,890    |  |   | 991,907   
|                                                          |  |      |            |      |   |            |  |   |           
|Net income                                                |  | $    | 1,656,339  |      | $ | 2,011,949  |  | $ | 1,927,557 
|                                                          |  |      |            |      |   |            |  |   |           
|Basic and fully diluted earnings per common share         |  | $    | 2.63       |      | $ | 3.14       |  | $ | 2.98      
|                                                          |  |      |            |      |   |            |  |   |           
|Basic and fully diluted average common shares outstanding |  |      | 628,877    |      |   | 641,298    |  |   | 647,720   
|                                                          |  |      |            |      |   |            |  |   |           



See Notes to
Consolidated Financial Statements





4



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CITIZENS FINANCIAL CORP.

AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For The Years Ended December 31, 2004, 2003 and 2002



|                                                                      |  |      |           |   |      |   |           |      |  |   |           |  
|--------------------------------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                                                      |  | 2004 |           |   | 2003 |   |           | 2002 | 
|Net Income                                                            |  | $    | 1,656,339 |   |      | $ | 2,011,949 |      |  | $ | 1,927,557 |  
|                                                                      |  |      |           |   |      |   |           |      |  |   |           |  
|Other comprehensive income:                                           |  |      |           |   |      |   |           |      |  |   |           |  
|Gross unrealized gains/(losses) arising during the period             |  |      | (972,022  | ) |      |   | (916,890  | )    |  |   | 1,087,492 |  
|Adjustment for income tax (expense)/benefit                           |  |      | 369,368   |   |      |   | 348,413   |      |  |   | (449,983  | )
|                                                                      |  |      |           |   |      |   |           |      |  |   |           |  
|                                                                      |  |      | (602,654  | ) |      |   | (568,477  | )    |  |   | 637,509   |  
|                                                                      |  |      |           |   |      |   |           |      |  |   |           |  
|Reclassification adjustment for (gains)/losses included in net income |  |      | (23,185   | ) |      |   | (276      | )    |  |   |          |  
|Adjustment for income tax expense/(benefit)                           |  |      | 8,810     |   |      |   | 105       |      |  |   |          |  
|                                                                      |  |      |           |   |      |   |           |      |  |   |           |  
|                                                                      |  |      | (14,375   | ) |      |   | (171      | )    |  |   |          |  
|                                                                      |  |      |           |   |      |   |           |      |  |   |           |  
|Other comprehensive income, net of tax                                |  |      | (617,029  | ) |      |   | (568,648  | )    |  |   | 637,509   |  
|                                                                      |  |      |           |   |      |   |           |      |  |   |           |  
|Comprehensive Income                                                  |  | $    | 1,039,310 |   |      | $ | 1,443,301 |      |  | $ | 2,565,066 |  
|                                                                      |  |      |           |   |      |   |           |      |  |   |           |  



See Notes to
Consolidated Financial Statements



5



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CITIZENS FINANCIAL CORP.

AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY

For the Years Ended December 31, 2004, 2003 and 2002



|                                                                      |  |              |  |                            |           |                  |   |           |                                           |   |            |                |  |   |                               |   |  |   |            |   |  |   |            |  
|--------------------------------------------------------------------- |  | ------------ |  | -------------------------- | --------- | ---------------- | - | --------- | ----------------------------------------- | - | ---------- | -------------- |  | - | ----------------------------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                                                      |  | Common Stock |  | Additional Paid-In Capital |           | RetainedEarnings |   |           | Accumulated Other Compre - hensive Income |   |            | Treasury Stock |  |   | Total Share - holders Equity |  
|                                                                      |  | Shares       |  | Amount                     |           |                  |   |           |                                          
|Balance, December 31, 2001                                            |  | 750,000      |  | $                          | 1,500,000 |                  | $ | 2,100,000 |                                           | $ | 16,890,758 |                |  | $ | 606,155                       |   |  | $ | (2,074,566 | ) |  | $ | 19,022,347 |  
|                                                                      |  |              |  |                            |           |                  |   |           |                                           |   |            |                |  |   |                               |   |  |   |            |   |  |   |            |  
|Net income - 2002                                                     |  |             |  |                            |          |                  |   |          |                                           |   | 1,927,557  |                |  |   |                              |   |  |   |           |   |  |   | 1,927,557  |  
|Cost of 2,350 shares acquired as treasury stock                       |  |             |  |                            |          |                  |   |          |                                           |   |           |                |  |   |                              |   |  |   | (76,381    | ) |  |   | (76,381    | )
|Cash dividends declared ($1.40 per share)                             |  |             |  |                            |          |                  |   |          |                                           |   | (906,057   | )              |  |   |                              |   |  |   |           |   |  |   | (906,057   | )
|Net change in unrealized gain/(loss) on available for sale securities |  |             |  |                            |          |                  |   |          |                                           |   |           |                |  |   | 637,509                       |   |  |   |           |   |  |   | 637,509    |  
|                                                                      |  |              |  |                            |           |                  |   |           |                                           |   |            |                |  |   |                               |   |  |   |            |   |  |   |            |  
|Balance, December 31, 2002                                            |  | 750,000      |  |                            | 1,500,000 |                  |   | 2,100,000 |                                           |   | 17,912,258 |                |  |   | 1,243,664                     |   |  |   | (2,150,947 | ) |  |   | 20,604,975 |  
|                                                                      |  |              |  |                            |           |                  |   |           |                                           |   |            |                |  |   |                               |   |  |   |            |   |  |   |            |  
|Net income - 2003                                                     |  |             |  |                            |          |                  |   |          |                                           |   | 2,011,949  |                |  |   |                              |   |  |   |           |   |  |   | 2,011,949  |  
|Cost of 15,145 shares acquired as treasury stock                      |  |             |  |                            |          |                  |   |          |                                           |   |           |                |  |   |                              |   |  |   | (611,517   | ) |  |   | (611,517   | )
|Cash dividends declared ($1.50 per share)                             |  |             |  |                            |          |                  |   |          |                                           |   | (958,345   | )              |  |   |                              |   |  |   |           |   |  |   | (958,345   | )
|Net change in unrealized gain/(loss) on available for sale securities |  |             |  |                            |          |                  |   |          |                                           |   |           |                |  |   | (568,648                      | ) |  |   |           |   |  |   | (568,648   | )
|                                                                      |  |              |  |                            |           |                  |   |           |                                           |   |            |                |  |   |                               |   |  |   |            |   |  |   |            |  
|Balance, December 31, 2003                                            |  | 750,000      |  |                            | 1,500,000 |                  |   | 2,100,000 |                                           |   | 18,965,862 |                |  |   | 675,016                       |   |  |   | (2,762,464 | ) |  |   | 20,478,414 |  
|                                                                      |  |              |  |                            |           |                  |   |           |                                           |   |            |                |  |   |                               |   |  |   |            |   |  |   |            |  
|Net income - 2004                                                     |  |             |  |                            |          |                  |   |          |                                           |   | 1,656,339  |                |  |   |                              |   |  |   |           |   |  |   | 1,656,339  |  
|Cost of 7,465 shares acquired as treasury stock                       |  |             |  |                            |          |                  |   |          |                                           |   |           |                |  |   |                              |   |  |   | (322,854   | ) |  |   | (322,854   | )
|Cash dividends declared ($1.55 per share)                             |  |             |  |                            |          |                  |   |          |                                           |   | (972,089   | )              |  |   |                              |   |  |   |           |   |  |   | (972,089   | )
|Net change in unrealized gain/(loss) on available for sale securities |  |             |  |                            |          |                  |   |          |                                           |   |           |                |  |   | (617,029                      | ) |  |   |           |   |  |   | (617,029   | )
|                                                                      |  |              |  |                            |           |                  |   |           |                                           |   |            |                |  |   |                               |   |  |   |            |   |  |   |            |  
|Balance, December 31, 2004                                            |  | 750,000      |  | $                          | 1,500,000 |                  | $ | 2,100,000 |                                           | $ | 19,650,112 |                |  | $ | 57,987                        |   |  | $ | (3,085,318 | ) |  | $ | 20,222,781 |  
|                                                                      |  |              |  |                            |           |                  |   |           |                                           |   |            |                |  |   |                               |   |  |   |            |   |  |   |            |  



See Notes to
Consolidated Financial Statements



6



---

CITIZENS FINANCIAL CORP.

AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2004, 2003 and 2002



|                                                                                  |  |      |             |   |      |   |             |      |  |   |             |  
|--------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | ---- |  | - | ----------- | -
|                                                                                  |  | 2004 |             |   | 2003 |   |             | 2002 | 
|CASH FLOWS FROM OPERATING ACTIVITIES                                              |  |      |             |   |      |   |             |      |  |   |             |  
|Net income                                                                        |  | $    | 1,656,339   |   |      | $ | 2,011,949   |      |  | $ | 1,927,557   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |      |             |   |      |   |             |      |  |   |             |  
|Depreciation and amortization                                                     |  |      | 404,329     |   |      |   | 344,218     |      |  |   | 351,939     |  
|Provision for loan losses                                                         |  |      | 934,899     |   |      |   | 324,000     |      |  |   | 288,272     |  
|Deferred income tax expense                                                       |  |      | 66,829      |   |      |   | 40,796      |      |  |   | 43,922      |  
|Amortization of security premiums, net of accretion of security discounts         |  |      | 281,443     |   |      |   | 286,743     |      |  |   | 71,653      |  
|Amortization of goodwill                                                          |  |      | 13,399      |   |      |   | 13,399      |      |  |   | 13,399      |  
|Securities gains, net                                                             |  |      | (23,185     | ) |      |   | (276        | )    |  |   |            |  
|(Gain)/loss on sale of equipment and other assets                                 |  |      | (24,053     | ) |      |   | 1,082       |      |  |   | 38,913      |  
|(Increase)/decrease in accrued interest receivable                                |  |      | (22,013     | ) |      |   | 65,055      |      |  |   | 46,681      |  
|Increase in other assets                                                          |  |      | (473,268    | ) |      |   | (107,213    | )    |  |   | (173,499    | )
|Increase/(decrease) in other liabilities                                          |  |      | 349,015     |   |      |   | 99,101      |      |  |   | (4,264      | )
|                                                                                  |  |      |             |   |      |   |             |      |  |   |             |  
|Net cash provided by operating activities                                         |  |      | 3,163,734   |   |      |   | 3,078,854   |      |  |   | 2,604,573   |  
|                                                                                  |  |      |             |   |      |   |             |      |  |   |             |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                              |  |      |             |   |      |   |             |      |  |   |             |  
|Proceeds from sales of securities available for sale                              |  |      | 2,382,766   |   |      |   | 1,128,852   |      |  |   |            |  
|Proceeds from maturities and calls of securities available for sale               |  |      | 16,636,865  |   |      |   | 14,060,000  |      |  |   | 11,564,400  |  
|Principal payments received on securities available for sale                      |  |      | 2,914,405   |   |      |   | 5,509,591   |      |  |   | 1,449,661   |  
|Purchases of securities available for sale                                        |  |      | (16,148,868 | ) |      |   | (27,760,122 | )    |  |   | (17,252,886 | )
|Loans made to customers, net                                                      |  |      | (12,375,235 | ) |      |   | (19,559,618 | )    |  |   | (8,186,883  | )
|Purchases of bank premises and equipment                                          |  |      | (1,032,823  | ) |      |   | (747,697    | )    |  |   | (840,301    | )
|Purchase of life insurance contracts                                              |  |      |            |   |      |   |            |      |  |   | (2,000,000  | )
|Proceeds from sale of other real estate and other assets                          |  |      | 443,313     |   |      |   | 19,736      |      |  |   | 145,142     |  
|Purchase of real estate                                                           |  |      | (105,000    | ) |      |   |            |      |  |   |            |  
|                                                                                  |  |      |             |   |      |   |             |      |  |   |             |  
|Net cash used in investing activities                                             |  |      | (7,284,577  | ) |      |   | (27,349,258 | )    |  |   | (15,120,867 | )
|                                                                                  |  |      |             |   |      |   |             |      |  |   |             |  



See Notes to
Consolidated Financial Statements

(Continued)



7



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CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued

For the Years Ended December 31, 2004, 2003 and 2002



|                                                                       |  |      |            |   |      |   |            |      |  |   |            |  
|---------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                       |  | 2004 |            |   | 2003 |   |            | 2002 | 
|CASH FLOWS FROM FINANCING ACTIVITIES                                   |  |      |            |   |      |   |            |      |  |   |            |  
|Net increase in demand deposit, NOW, money market and savings accounts |  |      | 1,438,095  |   |      |   | 8,226,815  |      |  |   | 9,334,531  |  
|Net increase in time deposits                                          |  |      | 2,314,008  |   |      |   | 5,580,743  |      |  |   | 6,654,525  |  
|Net increase/(decrease) in short-term borrowings                       |  |      | 443,854    |   |      |   | 11,671,556 |      |  |   | (3,526,930 | )
|Proceeds from long-term borrowings                                     |  |      | 3,100,000  |   |      |   | 3,000,000  |      |  |   | 2,000,000  |  
|Repayments of long-term borrowings                                     |  |      | (2,356,670 | ) |      |   | (1,475,666 | )    |  |   | (908,955   | )
|Dividends paid                                                         |  |      | (972,089   | ) |      |   | (958,345   | )    |  |   | (906,057   | )
|Acquisition of treasury stock                                          |  |      | (322,854   | ) |      |   | (611,517   | )    |  |   | (76,381    | )
|                                                                       |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash provided by financing activities                              |  |      | 3,644,344  |   |      |   | 25,433,586 |      |  |   | 12,570,733 |  
|                                                                       |  |      |            |   |      |   |            |      |  |   |            |  
|Increase/(decrease) in cash and cash equivalents                       |  |      | (476,499   | ) |      |   | 1,163,182  |      |  |   | 54,439     |  
|                                                                       |  |      |           
|Cash and cash equivalents:                                             |  |      |            |   |      |   |            |      |  |   |            |  
|                                                                       |  |      |           
|Beginning                                                              |  |      | 5,952,297  |   |      |   | 4,789,115  |      |  |   | 4,734,676  |  
|                                                                       |  |      |            |   |      |   |            |      |  |   |            |  
|Ending                                                                 |  | $    | 5,475,798  |   |      | $ | 5,952,297  |      |  | $ | 4,789,115  |  
|                                                                       |  |      |            |   |      |   |            |      |  |   |            |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                      |  |      |            |   |      |   |            |      |  |   |            |  
|                                                                       |  |      |           
|Cash payments for:                                                     |  |      |            |   |      |   |            |      |  |   |            |  
|Interest on deposits and on other borrowings                           |  | $    | 3,095,290  |   |      | $ | 3,272,713  |      |  | $ | 4,031,808  |  
|                                                                       |  |      |            |   |      |   |            |      |  |   |            |  
|Income taxes                                                           |  | $    | 647,834    |   |      | $ | 1,015,938  |      |  | $ | 959,815    |  
|                                                                       |  |      |            |   |      |   |            |      |  |   |            |  
|SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES    |  |      |            |   |      |   |            |      |  |   |            |  
|                                                                       |  |      |           
|Other real estate and other assets acquired in settlement of loans     |  | $    | 329,000    |   |      | $ | 111,127    |      |  | $ | 76,803     |  
|                                                                       |  |      |            |   |      |   |            |      |  |   |            |  
|Unrealized gain(loss) on securities available for sale                 |  | $    | (995,214   | ) |      | $ | (917,166   | )    |  | $ | 1,087,492  |  
|                                                                       |  |      |            |   |      |   |            |      |  |   |            |  



See Notes to
Consolidated Financial Statements



8



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Notes to Consolidated Financial Statements



Note 1. Significant Accounting Policies



Nature of business: Citizens Financial Corp. (Citizens or the company or we) was incorporated as a bank holding
company in 1987. Our wholly-owned bank subsidiary, Citizens National Bank of Elkins (the bank) provides retail and commercial loan, deposit, trust and brokerage services to customers in Randolph, Tucker, Grant and Pocahontas Counties of
West Virginia and nearby areas. Our other wholly-owned subsidiary, Citizens Financial Services, LLC, was formed for the purpose of investing in ProServ Insurance Agency, LLC, a general insurance agency selling property and casualty insurance
established by the West Virginia Bankers Association. Citizens Financial Services became inactive in 2003.



Basis of financial statement presentation:Our accounting and reporting policies conform to U.S. generally accepted accounting principles and to
general practices within the banking industry.



Use of
estimates:In preparing consolidated financial statements in conformity with U.S. generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the
date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate
to the determination of the allowance for loan losses, and the valuation of deferred tax assets.



Principles of consolidation: The accompanying consolidated financial statements include the accounts of Citizens Financial Corp. and both of its
wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.



Presentation of cash flows: For purposes of reporting cash flows, cash and cash equivalents includes cash on hand, balances due from banks
(including cash items in process of clearing) and federal funds sold. Cash flows from demand deposits, NOW accounts and savings accounts are reported net since their original maturities are less than three months. Cash flows from loans and
certificates of deposit and other time deposits are also reported net.



Securities: All of our debt and equity investment securities are classified as available-for-sale and carried at fair value, with unrealized gains and losses, net of tax, reported as a separate component of comprehensive income until
realized. Gains and losses on the sale of available-for-sale securities are determined using the specific identification method. Premiums and discounts are recognized as interest income using the interest method over the period to maturity. Declines
in the fair value of available for sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, we consider (1) the length of time and
the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) our intent and ability to retain our investment in the issuer for a period of time sufficient to allow for any
anticipated recovery in fair value.



Loans and allowance for
loan losses: All of our loans are expected to be held for the foreseeable future or until maturity or pay-off and are reported at their outstanding unpaid principal balance net of the allowance for loan losses, unearned discounts and any
deferred origination fees or costs. Unearned discounts are recognized as income over the life of the loan by methods which approximate the interest method. Loan fees and origination costs are deferred and amortized as adjustments to the related
loans yield over its contractual life. Otherwise, interest income is accrued daily based on the principal amount outstanding.



A loan is considered impaired when, based on current information and events, it is probable that we will be unable to collect the scheduled payments of
principal or interest when due according to the contractual terms of the loan agreement. Factors we consider in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest
payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. The significance of payment delays and payment shortfalls is determined on a case-by-case basis, taking into
consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrowers prior payment record, and the amount of the shortfall in relation to the principal and
interest owed. Impairment is measured on a loan by loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loans effective interest rate, the loans obtainable market
price, or the fair value of the collateral if the loan is collateral dependent.



Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, we do not separately identify individual consumer and residential loans for impairment disclosures, unless such
loans are the subject of a restructuring agreement.



9



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Loans are generally placed on nonaccrual status when principal or interest is more than 90 days past due
unless the loan is both well secured and in the process of collection. Interest on nonaccrual loans is recognized on the cash basis.



The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. The allowance is
increased by provisions charged to operating expense and reduced by net charge-offs. The bank makes continuous credit reviews of the loan portfolio and considers current economic conditions, historical loan loss experience, review of specific
problem loans and other factors in determining the adequacy of the allowance for loan losses. Loans are charged against the allowance for loan losses when management believes that the collectibility of the principal is unlikely. This evaluation is
inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available.



Bank premises and equipment: Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed primarily by
the straight-line method over the estimated useful lives of the assets. Repairs and maintenance expenditures are charged to operating expense as incurred. Major improvements and additions to premises and equipment are capitalized.



Other real estate: Other real estate consists of real estate held for
resale which are acquired through foreclosure on loans secured by such real estate. At the time of acquisition, these properties are recorded at fair value with any writedown charged to the allowance for loan losses. After foreclosure, valuations
are periodically performed by management and the real estate is carried at the lower of carrying amount or fair value less cost to sell. Expenses incurred in connection with operating these properties are charged to operating expenses as incurred
but depreciation is not recorded on property held for sale. Gains and losses on the sales of these properties are credited or charged to operating income in the year of the transaction.



Intangible assets:Intangible assets represent purchased assets that lack physical substance but can be distinguished
from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in a combination with a related contract, asset, or liability. Intangible assets are tested at least annually
for impairment.



Securities sold under agreements to
repurchase: We generally account for securities sold under agreements to repurchase as collateralized financing transactions. Securities, generally U.S. government and federal agency securities, pledged as collateral under these financing
arrangements cannot be sold or repledged by the secured party.



Pension benefits:The bank has a noncontributory, defined benefit pension plan covering substantially all employees. The plan provides benefits that are based on employees five year average final compensation and years of
service. Our funding policy is to make the minimum annual contributions required by regulation. Pension costs are actuarially determined and charged to expense.



Postretirement benefits: The bank also provides certain health care and life insurance benefits for all retired employees that meet certain
eligibility requirements. The banks share of the estimated costs that will be paid after retirement is generally being accrued by charges to expense over the employees active service periods to the dates they are fully eligible for
benefits, except that the banks unfunded cost at January 1, 1993 is being accrued primarily on a straight-line basis through the year ending 2013.



Income taxes:Deferred tax assets and liabilities are determined based on 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 and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of enactment. Valuation allowances are established when deemed necessary to reduce deferred tax assets to the amount expected to be realized.



Basic and fully diluted earnings per share: Basic and fully diluted
earnings per common share is computed based upon the weighted average shares outstanding. The weighted average shares outstanding were 628,877, 641,298 and 647,720 for the years ended December 31, 2004, 2003 and 2002, respectively. We did not have
any potentially dilutive securities during that time.



Trust
department: Assets held in an agency or fiduciary capacity by the banks trust department are not assets of the bank and are not included in the accompanying consolidated balance sheets. Trust department income is recognized on the cash
basis in accordance with customary banking practice. Reporting such income on a cash basis rather than the accrual basis does not affect net income materially.



10



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Off-Balance-Sheet Credit Related Financial Instruments. In the ordinary course of business, we may
enter into commitments to extend credit, including commercial letters of credit, and standby letters of credit. Such financial instruments are recorded when they are funded.



Derivative Instruments and Hedging Activities:The bank recognizes all derivatives on the balance sheet at fair
value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives will either be offset against the change in fair value
of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivatives change in fair value is immediately
recognized in earnings.



Advertising:Advertising costs
are expensed as they are incurred.



Reclassifications:Certain accounts in the consolidated financial statements for 2003 and 2002, as previously presented, have been reclassified to conform to current year classifications.



Significant New Accounting Pronouncements:In January 2003, the Financial Accounting Standards Board
(FASB) issued FASB Interpretation No. 46, Consolidation of Variable Interest Entities(FIN 46). This Interpretation provides guidance with respect to the identification of variable interest entities when
the assets, liabilities, non-controlling interests, and results of operations of a variable interest entity need to be included in a Companys consolidated financial statements. Due to significant implementation issues, the FASB modified the
wording of FIN 46 and issued FIN 46R in December of 2003. Because we have no investments in variable interest entities the adoption of FIN 46 and FIN 46R did not have a material effect on our financial position, results of operations or liquidity.



In December 2003, the Accounting Standards Executive Committee
(AcSEC) of the American Institute of Certified Public Accountants issued Statement of Position (SOP) 03-3, Accounting for Certain Loans and Debt Securities Acquired in a Transfer.The SOP is effective for
loans acquired in fiscal years beginning after December 15, 2004. The scope of the SOP applies to unhealthy problem loans that have been acquired, either individually, in a portfolio, or in a business acquisition. The SOP addresses
accounting for differences between contractual cash flows and cash flows expected to be collected from an investors initial investment in loans or debt securities (loans) acquired in a transfer if those differences are attributable, at least
in part, to credit quality. We intend to adopt the provisions of SOP 03-3 effective January 1, 2005 and do not expect the initial implementation to have a significant effect on our financial position, results of operations or liquidity.



On March 9, 2004, the SEC Staff issued Staff Accounting Bulletin No. 105,
Application of Accounting Principles to Loan Commitments(SAB 105). SAB 105 clarifies existing accounting practices relating to the valuation of issued loan commitments, including interest rate lock commitments
(IRLC), subject to SFAS No. 149 and Derivative Implementation Group Issue C13, Scope Exceptions: When a Loan Commitment is Included in the Scope of Statement 133.The provisions of SAB 105 were effective for loan
commitments entered into after March 31, 2004. Although we adopted the provisions of SAB 105, its provisions affect only the timing of the recognition of mortgage banking income. Therefore, we do not anticipate that this guidance will have a
material adverse effect on our financial position, results of operations or liquidity.



In May 2004, the FASB issued FASB Staff Position (FSP) 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003(the Act). This Staff Position provides guidance on the accounting for the effects of the Act for employers that sponsor postretirement health care plans that provide prescription drug benefits. We do not anticipate that the effects
of the Act will materially affect our financial position, results of operations or our liquidity.



Emerging Issues Task Force Issue No. (EITF) 03-1 The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investmentswas issued and is effective March 31, 2004. The EITF 03-1 provides guidance for determining the meaning of other-than-temporarily impaired and its application to certain debt and equity securities within the scope of Statement of
Financial Accounting Standards No. 115 Accounting for Certain Investments in Debt and Equity Securities(SFAS No. 115) and investments accounted for under the cost method. The guidance requires that investments which
have declined in valued due to credit concerns or solely due to changes in interest rates must be recorded as other-than-temporarily impaired unless we can assert and demonstrate our intention to hold the security for a period of time sufficient to
allow for a recovery of fair value up to or beyond the cost of the investment which might mean maturity. This issue also requires disclosures assessing the ability and intent to hold investments in instances in which an investor determines that an
investment with a fair value less than cost is not other-than-temporarily impaired. On September 30, 2004, the Financial Accounting Standards Board decided to delay the effective date for the measurement and recognition guidance contained in Issue
03-1 although this delay does not suspend the requirement to recognize other-than-temporary impairments as required by existing authoritative literature. Since none of our investments is other-than-temporarily impaired neither Issue 03-1 nor other
existing authoritative literature had a material impact on our financial condition, results of operations or liquidity.



11



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EITF No. 03-16, Accounting for Investments in Limited Liability Companieswas ratified
by the FASB and is effective for reporting periods beginning after June 15, 2004. The EITF provides guidance on whether an LLC should be viewed as similar to a corporation or similar to a partnership for purposes of determining whether
noncontrolling investments in an LLC should be accounted for using the cost method or the equity method. In 2000 we formed Citizens Financial Services, LLC for the purpose of investing in ProServ Insurance Agency, LLC which was a general insurance
agency selling primarily property and casualty insurance. ProServ was established by the West Virginia Bankers Association and our ownership in it was less than 5%. In 2003, Citizens Financial Services, LLC became inactive and it now has no assets
or liabilities. As a result, the adoption of EITF No. 03-16 has not had a material effect on our financial position, results of operations, or liquidity.



In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment.This
Statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods and services, primarily employee services, and is effective for interim or annual periods beginning after June 15,
2005. Because we have no plans or other agreements under which we exchange our equity instruments for services we do not expect the adoption of this Statement to have a material effect on our financial position, results of operations or liquidity.



Note 2. Cash Concentrations



At December 31, 2004 we had cash concentrations totaling $2,997,308 with the
Federal Reserve Bank of Richmond. These funds, as well as deposits with other correspondent banks, are generally unsecured and have limited insurance under current banking insurance regulations.



Note 3. Securities



The amortized cost, unrealized gains, unrealized losses and estimated fair values of securities at December 31, 2004 and
2003, are summarized below. All such securities are available for sale.



|                                                                       |  |                |            |            |   |                                       |  |   |         |  |   |           
|---------------------------------------------------------------------- |  | -------------- | ---------- | ---------- | - | ------------------------------------- |  | - | ------- |  | - | ----------
|                                                                       |  | 2004          
|                                                                       |  | AmortizedCost  |            | Unrealized |   | Carrying Value (Estimated Fair Value)
|                                                                       |  | Gains          |            | Losses     |  
|U.S. Government agencies and corporations                              |  | $              | 34,534,656 |            | $ | 174,092                               |  | $ | 177,476 |  | $ | 34,531,272
|Mortgage backed securities - U.S. Government agencies and corporations |  |                | 6,441,688  |            |   | 10,962                                |  |   | 75,160  |  |   | 6,377,490 
|Federal Reserve Bank stock, restricted                                 |  |                | 108,000    |            |   |                                      |  |   |        |  |   | 108,000   
|Federal Home Loan Bank stock, restricted                               |  |                | 795,300    |            |   |                                      |  |   |        |  |   | 795,300   
|Corporate debt securities                                              |  |                | 3,086,808  |            |   | 5,300                                 |  |   | 34,333  |  |   | 3,057,775 
|Tax exempt state and political subdivisions                            |  |                | 7,978,564  |            |   | 203,336                               |  |   | 13,192  |  |   | 8,168,708 
|                                                                       |  |                |            |            |   |                                       |  |   |         |  |   |           
|Total securities available for sale                                    |  | $              | 52,945,016 |            | $ | 393,690                               |  | $ | 300,161 |  | $ | 53,038,545
|                                                                       |  |                |            |            |   |                                       |  |   |         |  |   |           
|                                                                       |  | 2003          
|                                                                       |  | Amortized Cost |            | Unrealized |   | Carrying Value (Estimated Fair Value)
|                                                                       |  | Gains          |            | Losses     |  
|U.S. Government agencies and corporations                              |  | $              | 32,742,572 |            | $ | 732,717                               |  | $ | 43,471  |  | $ | 33,431,818
|Mortgage backed securities - U.S. Government agencies and corporations |  |                | 9,454,437  |            |   | 28,670                                |  |   | 63,501  |  |   | 9,419,606 
|Federal Reserve Bank stock, restricted                                 |  |                | 108,000    |            |   |                                      |  |   |        |  |   | 108,000   
|Federal Home Loan Bank stock, restricted                               |  |                | 852,900    |            |   |                                      |  |   |        |  |   | 852,900   
|Corporate debt securities                                              |  |                | 6,840,204  |            |   | 135,852                               |  |   | 17,832  |  |   | 6,958,224 
|Tax exempt state and political subdivisions                            |  |                | 8,990,322  |            |   | 319,477                               |  |   | 3,169   |  |   | 9,306,630 
|                                                                       |  |                |            |            |   |                                       |  |   |         |  |   |           
|Total securities available for sale                                    |  | $              | 58,988,435 |            | $ | 1,216,716                             |  | $ | 127,973 |  | $ | 60,077,178
|                                                                       |  |                |            |            |   |                                       |  |   |         |  |   |           



12



---

The tables below provide summaries of securities which were in an unrealized loss position at December
31, 2004 and 2003, all of which are available for sale. As of December 31, 2004, these securities had a total fair value of $27,317,619 and carried unrealized losses of $300,161 or 1.10%. Of these securities, $3,673,258 of mortgage backed securities
issued by U.S. government agencies and corporations with unrealized losses of $71,877 have been in a continuous loss position for the past twelve months. We believe these unrealized losses are the result of changing interest rates and that the
implied faith and credit of the U.S. Government which the issuers enjoy, along with our intent and ability to hold the investments to maturity, provide strong evidence that we will fully recover our investment. In addition, no losses have been
recognized on the $12,801,298 of securities that carried unrealized losses at December 31, 2003.



|                                                                       |  |                     |            |                   |   |            |  |                  |           |            |   |                  |  |   |            |  |   |        
|---------------------------------------------------------------------- |  | ------------------- | ---------- | ----------------- | - | ---------- |  | ---------------- | --------- | ---------- | - | ---------------- |  | - | ---------- |  | - | -------
|                                                                       |  | 2004               
|                                                                       |  | Less Than 12 Months |            | 12 Months or More |   | Total     
|                                                                       |  | Fair Value          |            | UnrealizedLosses  |   | Fair Value |  | UnrealizedLosses |           | Fair Value |   | UnrealizedLosses
|U.S. Government agencies and corporations                              |  | $                   | 19,381,025 |                   | $ | 177,476    |  | $                |          |            | $ |                 |  | $ | 19,381,025 |  | $ | 177,476
|Mortgage backed securities - U.S. Government agencies and corporations |  |                     | 841,384    |                   |   | 3,283      |  |                  | 3,673,258 |            |   | 71,877           |  |   | 4,514,642  |  |   | 75,160 
|Federal Reserve Bank stock, restricted                                 |  |                     |           |                   |   |           |  |                  |          |            |   |                 |  |   |           |  |   |       
|Federal Home Loan Bank stock, restricted                               |  |                     |           |                   |   |           |  |                  |          |            |   |                 |  |   |           |  |   |       
|Corporate debt securities                                              |  |                     | 2,052,475  |                   |   | 34,333     |  |                  |          |            |   |                 |  |   | 2,052,475  |  |   | 34,333 
|Tax exempt state and political subdivisions                            |  |                     | 1,369,477  |                   |   | 13,192     |  |                  |          |            |   |                 |  |   | 1,369,477  |  |   | 13,192 
|                                                                       |  |                     |            |                   |   |            |  |                  |           |            |   |                  |  |   |            |  |   |        
|Total                                                                  |  | $                   | 23,644,361 |                   | $ | 228,284    |  | $                | 3,673,258 |            | $ | 71,877           |  | $ | 27,317,619 |  | $ | 300,161
|                                                                       |  |                     |            |                   |   |            |  |                  |           |            |   |                  |  |   |            |  |   |        
|                                                                       |  | 2003               
|                                                                       |  | Less Than 12 Months |            | 12 Months or More |   | Total     
|                                                                       |  | Fair Value          |            | UnrealizedLosses  |   | Fair Value |  | UnrealizedLosses |           | Fair Value |   | UnrealizedLosses
|U.S. Government agencies and corporations                              |  | $                   | 4,978,911  |                   | $ | 43,471     |  | $                |          |            | $ |                 |  | $ | 4,978,911  |  | $ | 43,471 
|Mortgage backed securities - U.S. Government agencies and corporations |  |                     | 5,506,310  |                   |   | 63,501     |  |                  |          |            |   |                 |  |   | 5,506,310  |  |   | 63,501 
|Federal Reserve Bank stock, restricted                                 |  |                     |           |                   |   |           |  |                  |          |            |   |                 |  |   |           |  |   |       
|Federal Home Loan Bank stock, restricted                               |  |                     |           |                   |   |           |  |                  |          |            |   |                 |  |   |           |  |   |       
|Corporate debt securities                                              |  |                     | 1,588,200  |                   |   | 17,832     |  |                  |          |            |   |                 |  |   | 1,588,200  |  |   | 17,832 
|Tax exempt state and political subdivisions                            |  |                     | 727,877    |                   |   | 3,169      |  |                  |          |            |   |                 |  |   | 727,877    |  |   | 3,169  
|                                                                       |  |                     |            |                   |   |            |  |                  |           |            |   |                  |  |   |            |  |   |        
|Total                                                                  |  | $                   | 12,801,298 |                   | $ | 127,973    |  | $                |          |            | $ |                 |  | $ | 12,801,298 |  | $ | 127,973
|                                                                       |  |                     |            |                   |   |            |  |                  |           |            |   |                  |  |   |            |  |   |        



The maturities,
amortized cost and estimated fair values of securities at December 31, 2004 are summarized as follows:



|                                 |  |               |            |                                    |   |           
|-------------------------------- |  | ------------- | ---------- | ---------------------------------- | - | ----------
|                                 |  | AmortizedCost |            | CarryingValue(EstimatedFair Value)
|Due within one year              |  | $             | 8,438,144  |                                    | $ | 8,518,619 
|Due after one through five years |  |               | 42,400,984 |                                    |   | 42,379,983
|Due after five through ten years |  |               | 1,202,588  |                                    |   | 1,236,643 
|Equity securities                |  |               | 903,300    |                                    |   | 903,300   
|                                 |  |               |            |                                    |   |           
|Total                            |  | $             | 52,945,016 |                                    | $ | 53,038,545
|                                 |  |               |            |                                    |   |           



Mortgage backed
securities have remaining contractual maturities ranging from 3 to 11.5 years and are reflected in the maturity distribution schedule based on their anticipated average life to maturity, which ranges from 1.12 to 6.06 years. Accordingly, discounts
are accreted and premiums are amortized over the anticipated life to maturity of the specific obligation.



13



---

The proceeds from sales, calls and maturities of securities, including principal payments received on
mortgage backed securities, and the related gross gains and losses realized are as follows:



|                              |  |               |           |                      |   |                    |  |       |           |        |   |        |  |   |       
|----------------------------- |  | ------------- | --------- | -------------------- | - | ------------------ |  | ----- | --------- | ------ | - | ------ |  | - | ------
|                              |  | Proceeds From |           | Gross Realized      
|Years Ended December 31,      |  | Sales         |           | Calls and Maturities |   | Principal Payments |  | Gains |           | Losses
|2004                          |  |               |           |                      |   |                    |  |       |           |        |   |        |  |   |       
|Securities available for sale |  | $             | 2,382,766 |                      | $ | 16,636,865         |  | $     | 2,914,405 |        | $ | 36,783 |  | $ | 13,598
|                              |  |               |           |                      |   |                    |  |       |           |        |   |        |  |   |       
|2003                          |  |               |           |                      |   |                    |  |       |           |        |   |        |  |   |       
|Securities available for sale |  | $             | 1,128,852 |                      | $ | 14,060,000         |  | $     | 5,509,591 |        | $ | 3,421  |  | $ | 3,145 
|                              |  |               |           |                      |   |                    |  |       |           |        |   |        |  |   |       
|2002                          |  |               |           |                      |   |                    |  |       |           |        |   |        |  |   |       
|Securities available for sale |  | $             |          |                      | $ | 11,564,400         |  | $     | 1,449,661 |        | $ |       |  | $ |      
|                              |  |               |           |                      |   |                    |  |       |           |        |   |        |  |   |       



At December 31, 2004
and 2003 securities carried at $26,557,056 and $27,062,537, respectively, with estimated fair values of $26,628,824 and $27,920,377, respectively, were pledged to secure public deposits, securities sold under agreements to repurchase, and for other
purposes required or permitted by law.



At December 31, 2004,
we had a concentration within our corporate debt securities classification which included obligations of banking and financial services industry companies with global operations having an approximate carrying value of $2,304,836 and an estimated
fair value of $2,290,525. There were no concentrations with any one issuer.



Federal Reserve Bank stock and Federal Home Loan Bank stock are equity securities which are included in securities available for sale in the accompanying consolidated financial statements. Such securities are carried
at cost, since they may only be sold back to the respective issuer or another member at par value.



Note 4. Loans



Loans
are summarized as follows:



|                                             |  |              |             |   |      |   |             |  
|-------------------------------------------- |  | ------------ | ----------- | - | ---- | - | ----------- | -
|                                             |  | December 31, |            
|                                             |  | 2004         |             |   | 2003 |  
|Commercial, financial and agricultural       |  | $            | 23,830,943  |   |      | $ | 25,417,272  |  
|Real estate - construction                   |  |              | 8,759,576   |   |      |   | 5,962,346   |  
|Real estate - mortgage                       |  |              | 101,083,039 |   |      |   | 89,111,232  |  
|Installment loans                            |  |              | 10,733,860  |   |      |   | 12,396,169  |  
|Other                                        |  |              | 2,471,622   |   |      |   | 2,868,205   |  
|                                             |  |              |             |   |      |   |             |  
|Total loans                                  |  |              | 146,879,040 |   |      |   | 135,755,224 |  
|                                             |  |             
|Less allowance for loan losses               |  |              | 1,378,106   |   |      |   | 1,395,908   |  
|Net deferred loan origination fees and costs |  |              | (78,246     | ) |      |   | (47,964     | )
|                                             |  |              |             |   |      |   |             |  
|Loans, net                                   |  | $            | 145,422,688 |   |      | $ | 134,311,352 |  
|                                             |  |              |             |   |      |   |             |  



Included in the above
balance of net loans are nonaccrual loans of $0 and $15,766 at December 31, 2004 and 2003, respectively. If interest on those nonaccrual loans had been accrued, such income would have approximated $0, $1,604 and $4,738 for the years ended December
31, 2004, 2003 and 2002, respectively.



The bank makes loans to
its directors, executive officers and their related interests in the normal course of business. The following presents the activity with respect to these loans for the years ended December 31, 2004 and 2003:



|                   |  |      |            |   |      |   |            |  
|------------------ |  | ---- | ---------- | - | ---- | - | ---------- | -
|                   |  | 2004 |            |   | 2003 |  
|Balance, beginning |  | $    | 2,490,673  |   |      | $ | 3,277,361  |  
|Additions          |  |      | 2,395,882  |   |      |   | 1,886,362  |  
|Amounts collected  |  |      | (1,570,092 | ) |      |   | (2,673,050 | )
|                   |  |      |            |   |      |   |            |  
|Balance, ending    |  | $    | 3,316,463  |   |      | $ | 2,490,673  |  
|                   |  |      |            |   |      |   |            |  



14



---

The following represents the maturities and sensitivities of loans to changes in interest rates at
December 31, 2004, without regard to scheduled periodic principal repayments on amortizing loans:



|                                       |  |                 |            |                              |   |                 |  |       |             |  |   |            
|-------------------------------------- |  | --------------- | ---------- | ---------------------------- | - | --------------- |  | ----- | ----------- |  | - | -----------
|                                       |  | Due Within 1 Yr |            | Due After 1 But Within 5 Yrs |   | Due After 5 Yrs |  | Total
|Commercial, financial and agricultural |  | $               | 4,717,945  |                              | $ | 9,537,445       |  | $     | 9,575,553   |  | $ | 23,830,943 
|Real estate - construction             |  |                 | 5,105,875  |                              |   | 1,920,930       |  |       | 1,732,771   |  |   | 8,759,576  
|Real estate - mortgage                 |  |                 | 1,237,560  |                              |   | 4,018,433       |  |       | 95,827,046  |  |   | 101,083,039
|Installment loans                      |  |                 | 1,131,019  |                              |   | 8,914,439       |  |       | 688,402     |  |   | 10,733,860 
|Other                                  |  |                 | 164,039    |                              |   | 669,638         |  |       | 1,637,945   |  |   | 2,471,622  
|                                       |  |                 |            |                              |   |                 |  |       |             |  |   |            
|Total                                  |  | $               | 12,356,438 |                              | $ | 25,060,885      |  | $     | 109,461,717 |  | $ | 146,879,040
|                                       |  |                 |            |                              |   |                 |  |       |             |  |   |            



Loans due after one year with:



|               |  |   |            
|-------------- |  | - | -----------
|Variable rates |  | $ | 106,916,142
|Fixed rates    |  |   | 27,606,460 
|               |  |   |            
|Total          |  | $ | 134,522,602
|               |  |   |            



Concentrations of
credit risk: Citizens National Bank of Elkins grants installment, commercial and residential loans to customers in central and eastern West Virginia in striving to maintain a diversified loan portfolio. Nonetheless, concentrations of credit,
defined as loans to a customer, the customers related parties, or to a number of customers operating in the same industry, which in the aggregate total 25% or more of capital can occur. At December 31, 2004, we had four such concentrations.



Direct and indirect extensions of credit to automobile
dealers, consisting of floor plan loans and other commercial loans which are generally secured by liens on the subject inventories or equipment, totaled $8,494,884. Extensions of credit to companies operating in the lumber industry and their related
parties totaled $9,015,850. These loans are generally made for the purpose of financing logging equipment and are typically secured by liens on the subject equipment. Extensions of credit to companies in the hotel/motel industry totaled $6,860,700.
These loans are usually made to finance the purchase, operation or improvement of hotels and motels and are generally secured by liens on the subject property. Finally extensions of credit for real estate development projects, typically in nearby
ski resorts, were $6,470,199. Additional collateral such as pledges of accounts receivable, real estate, or personal guarantees may also be required when granting these credits. The bank evaluates each such customers credit worthiness on a
case-by-case basis. The amount of collateral obtained is based upon these credit evaluations.



Note 5. Allowance for Loan Losses



An analysis of the allowance for loan losses for the years ended December 31, 2004, 2003 and 2002, is as follows:



|                                       |  |      |           |      |   |           |  |   |          
|-------------------------------------- |  | ---- | --------- | ---- | - | --------- |  | - | ---------
|                                       |  | 2004 |           | 2003 |   | 2002     
|Balance, beginning of year             |  | $    | 1,395,908 |      | $ | 1,385,625 |  | $ | 1,397,528
|                                       |  |      |           |      |   |           |  |   |          
|Charge offs:                           |  |      |           |      |   |           |  |   |          
|Commercial, financial and agricultural |  |      | 1,030,651 |      |   | 128,511   |  |   | 134,250  
|Real estate - mortgage                 |  |      | 35,597    |      |   | 24,390    |  |   | 56,296   
|Installment                            |  |      | 98,263    |      |   | 189,782   |  |   | 137,436  
|                                       |  |      |           |      |   |           |  |   |          
|Total                                  |  |      | 1,164,511 |      |   | 342,683   |  |   | 327,982  
|                                       |  |      |           |      |   |           |  |   |          
|Recoveries:                            |  |      |           |      |   |           |  |   |          
|Commercial, financial and agricultural |  |      | 191,439   |      |   | 21,200    |  |   | 3,430    
|Real estate - mortgage                 |  |      | 210       |      |   | 208       |  |   | 752      
|Installment                            |  |      | 20,161    |      |   | 7,558     |  |   | 23,625   
|                                       |  |      |           |      |   |           |  |   |          
|Total                                  |  |      | 211,810   |      |   | 28,996    |  |   | 27,807   
|                                       |  |      |           |      |   |           |  |   |          
|Net charge-offs:                       |  |      | 952,701   |      |   | 313,717   |  |   | 300,175  
|Provision for loan losses              |  |      | 934,899   |      |   | 324,000   |  |   | 288,272  
|                                       |  |      |           |      |   |           |  |   |          
|Balance, end of year                   |  | $    | 1,378,106 |      | $ | 1,395,908 |  | $ | 1,385,625
|                                       |  |      |           |      |   |           |  |   |          



15



---

The following summary provides additional information regarding impaired, nonaccrual and past due loans:



|                                                        |  |              |         |      |   |        
|------------------------------------------------------- |  | ------------ | ------- | ---- | - | -------
|                                                        |  | December 31,
|                                                        |  | 2004         |         | 2003
|Impaired loans without a valuation allowance            |  | $            |        |      | $ |       
|Impaired loans with a valuation allowance               |  |              | 48,053  |      |   |       
|                                                        |  |              |         |      |   |        
|Total impaired loans                                    |  | $            | 48,053  |      | $ |       
|                                                        |  |              |         |      |   |        
|Valuation allowance related to impaired loans           |  | $            | 24,270  |      | $ |       
|Total nonaccrual loans                                  |  | $            |        |      | $ | 15,766 
|Total loans past due ninety days or more still accruing |  | $            | 559,358 |      | $ | 351,817



|                                                             |  |                         |        |      |   |      |  |   |  
|------------------------------------------------------------ |  | ----------------------- | ------ | ---- | - | ---- |  | - | -
|                                                             |  | Year Ended December 31,
|                                                             |  | 2004                    |        | 2003 |   | 2002
|Average investment in impaired loans                         |  | $                       | 49,193 |      | $ |     |  | $ | 
|Interest income recognized on impaired loans                 |  | $                       | 2,536  |      | $ |     |  | $ | 
|Interest income recognized on a cash basis on impaired loans |  | $                       | 2,343  |      | $ |     |  | $ | 



No additional funds
are committed to be advanced in connection with impaired loans.



Note 6.
Bank Premises and Equipment



The major categories of bank
premises and equipment and accumulated depreciation and amortization at December 31, 2004 and 2003, are summarized as follows:



|                                               |  |      |           |      |   |          
|---------------------------------------------- |  | ---- | --------- | ---- | - | ---------
|                                               |  | 2004 |           | 2003
|Land                                           |  | $    | 773,103   |      | $ | 773,103  
|Buildings and improvements                     |  |      | 4,817,385 |      |   | 4,116,190
|Furniture and equipment                        |  |      | 2,714,250 |      |   | 2,454,828
|                                               |  |      |           |      |   |          
|Total bank premises and equipment              |  |      | 8,304,738 |      |   | 7,344,121
|                                               |  |     
|Less accumulated depreciation and amortization |  |      | 4,081,118 |      |   | 3,737,349
|                                               |  |      |           |      |   |          
|Bank premises and equipment, net               |  | $    | 4,223,620 |      | $ | 3,606,772
|                                               |  |      |           |      |   |          



Depreciation and
amortization expense for the years ended December 31, 2004, 2003 and 2002, totaled $404,329, $344,218 and $351,939, respectively.



Note 7. Deposits



The following is a summary of interest bearing deposits by type as of December 31, 2004 and 2003:



|                                            |  |      |             |      |   |            
|------------------------------------------- |  | ---- | ----------- | ---- | - | -----------
|                                            |  | 2004 |             | 2003
|Interest bearing checking accounts          |  | $    | 31,230,582  |      | $ | 27,354,631 
|Money market accounts                       |  |      | 7,000,480   |      |   | 8,690,222  
|Savings accounts                            |  |      | 26,661,952  |      |   | 27,359,587 
|Certificates of deposit under $100,000      |  |      | 48,619,214  |      |   | 48,063,014 
|Certificates of deposit of $100,000 or more |  |      | 28,326,961  |      |   | 26,569,152 
|                                            |  |      |             |      |   |            
|Total                                       |  | $    | 141,839,189 |      | $ | 138,036,606
|                                            |  |      |             |      |   |            



Interest expense on
deposits is summarized below:



|                                            |  |      |           |      |   |           |  |   |          
|------------------------------------------- |  | ---- | --------- | ---- | - | --------- |  | - | ---------
|                                            |  | 2004 |           | 2003 |   | 2002     
|Interest bearing checking accounts          |  | $    | 347,520   |      | $ | 328,861   |  | $ | 477,876  
|Money market accounts                       |  |      | 37,609    |      |   | 59,686    |  |   | 84,284   
|Savings accounts                            |  |      | 126,818   |      |   | 164,352   |  |   | 378,933  
|Certificates of deposit under $100,000      |  |      | 1,262,552 |      |   | 1,491,065 |  |   | 1,918,574
|Certificates of deposit of $100,000 or more |  |      | 871,348   |      |   | 782,208   |  |   | 768,825  
|                                            |  |      |           |      |   |           |  |   |          
|Total                                       |  | $    | 2,645,847 |      | $ | 2,826,172 |  | $ | 3,628,492
|                                            |  |      |           |      |   |           |  |   |          



16



---

The following is a summary of the maturity distribution of certificates of deposit in amounts of $100,000
or more as of December 31, 2004:



|                          |  |        |            |         |        |  
|------------------------- |  | ------ | ---------- | ------- | ------ | -
|                          |  | Amount |            | Percent |       
|Three months or less      |  | $      | 1,737,054  |         | 6.13   | %
|Three through six months  |  |        | 3,160,591  |         | 11.16  | %
|Six through twelve months |  |        | 9,019,776  |         | 31.84  | %
|Over twelve months        |  |        | 14,409,540 |         | 50.87  | %
|                          |  |        |            |         |        |  
|Total                     |  | $      | 28,326,961 |         | 100.00 | %
|                          |  |        |            |         |        |  



A summary of the maturities for all
time deposits as of December 31, 2004, follows:



|           |  |        |           
|---------- |  | ------ | ----------
|Year       |  | Amount
|2005       |  | $      | 37,356,396
|2006       |  |        | 22,252,669
|2007       |  |        | 9,535,773 
|2008       |  |        | 1,014,164 
|2009       |  |        | 914,008   
|After 2009 |  |        | 5,873,165 
|           |  |        |           
|Total      |  | $      | 76,946,175
|           |  |        |           

At December 31, 2004, deposits of related parties including directors, executive officers,
and their related interests of Citizens Financial Corp. and subsidiaries approximated $4,565,801.



Note 8. Derivative Instruments



The bank has offered a product known as the Index Powered CD to its customers since 2001. This is a five year certificate of deposit which, if held to maturity, provides the customer with guaranteed return of principal and interest which is
linked to the performance of the Standard and Poors 500 Index over the term of the certificate of deposit. As of December 31, 2004 and 2003 the notional value of these deposits was $909,278 and $893,629, respectively.



The linkage of the interest earned on the certificate of deposit and the return of the index
is considered an equity option and is accounted for as an embedded derivative under Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133). As required by SFAS 133,
the fair value of the embedded derivative is deducted from the certificate of deposit creating a discount that is amortized to interest expense using the effective interest method over the term of the certificate of deposit. The corresponding equity
option is carried as a liability at fair value with changes in the value recognized in current earnings.



To manage the market risk associated with this product, the bank enters into interest rate swap agreements with the Federal Home Loan Bank of Pittsburgh (FHLB) for the notional amount of the certificate of
deposit. Under this agreement the bank pays either fixed or variable interest to the FHLB quarterly over the term of the certificate of deposit and the FHLB pays the bank the amount of interest due the customer at maturity.



This interest rate swap also represents a derivative contract and is accounted for as a fair
value hedge under SFAS 133. As such, it is carried as an asset at fair value with changes in value being recognized in current earnings. The impact of our derivative activities on pretax income was $(34,232) in 2004, $(28,199) in 2003 and $(10,488)
in 2002.





17



---

Report of Independent Registered Public Accounting Firm



To the Board of Directors

Citizens Financial Corp. and Subsidiaries

Elkins, West Virginia



We have audited the consolidated balance sheet of Citizens Financial Corp.
and Subsidiaries as of December 31, 2004, and the related consolidated statements of income, comprehensive income, changes in shareholders equity and cash flows for the year then ended. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Citizens Financial Corp. and Subsidiaries for the years ended December 31, 2003 and 2002 were
audited by other auditors whose report, dated January 9, 2004, expressed an unqualified opinion on those statements.



We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 audit provides a reasonable basis for
our opinion.



In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the financial position of Citizens Financial Corp. and Subsidiaries as of December 31, 2004, and the results of their operations and their cash flows for the year then ended in
conformity with U.S. generally accepted accounting principles.



Yount, Hyde & Barbour, P.C.



Winchester, Virginia

January 7, 2005



18



---

Report of Independent Registered Public Accounting Firm



To the Board of Directors

Citizens Financial Corp. and Subsidiaries

Elkins, West Virginia



We have audited the accompanying consolidated balance sheet of Citizens
Financial Corp. and its subsidiaries as of December 31, 2003 and the related consolidated statements of income, comprehensive income, changes in shareholders equity and cash flows for each of the two years in the period ended December 31,
2003. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 financial position of Citizens Financial Corp. and its subsidiaries as of December 31, 2003 and 2002, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.



ARNETT & FOSTER, P.L.L.C.



Charleston, West Virginia

January 9, 2004



19