<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D. C. 20549
                                   FORM 10-K
                            ---------------------------------

          [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
                                EXCHANGE ACT OF 1934
            for the fiscal year ended   December 31, 2001
                                        ----------------------
                                        or

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

                         Commission File No:  2-96144
                                              --------

                            CITIZENS FINANCIAL CORP.
             ------------------------------------------------------
             (exact name of registrant as specified in its charter)

        Delaware                                    55-0666598
-----------------------               ---------------------------------------
(State of Incorporation)              (I.R.S. Employer Identification Number)

213 Third St.
Elkins, West Virginia                                 26241
---------------------                 ---------------------------------------
(Address of Principal                              (Zip Code)
 Executive Offices)

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


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

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

     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 ________
                         -------

     The aggregate market value of Citizens Financial Corp. common stock,
representing all of its voting stock that was held by nonaffiliates on March 6,
2002, was approximately $17,210,000.

     As of March 6, 2002, Citizens Financial Corp. had 750,000 shares of
common stock outstanding with a par value of $2.00.

                        This report contains 61 pages.

                                      1
<PAGE>

                      DOCUMENTS INCORPORATED BY REFERENCE

(1) The Company's Form S-4, dated February 19, 1987, is incorporated by
reference in Item 14(c) of Part IV of this report to the extent stated herein.

(2) The Bank's Executive Supplemental Income Agreement, previously filed as an
Exhibit to the Company's Form 10-K dated December 31, 1996, and amended as
filed in the December 31, 1997 Form 10-K, is also incorporated by reference in
Item 11 of Part IV of this report.

(3) The Company's Bylaws, which were previously filed on pages 64-71 of its
Form 10-K dated December 31, 1998, are incorporated by reference in Item 14(c)
of Part IV of this report.

(4) The Company's Articles of Incorporation, previously filed on pages 66-70 of
its Form 10-K dated December 31, 1999 are incorporated by reference in Item
14(c) of Part IV of this report.

(5) The Company's Purchase and Assumption Agreement with South Branch Valley
National Bank for the purchase of its banking facilities, assets and
liabilities located in Petersburg, West Virginia previously filed on pages
71-173 of its Form 10-K dated December 31, 1999 is incorporated by reference in
Item 14(c) of Part IV of this report.

                           CITIZENS FINANCIAL CORP.
                                FORM 10-K INDEX

                                                                        Page
                                                                        ----
Part I   Item 1   Business...............................................   3
         Item 2   Properties.............................................   3
         Item 3   Legal Proceedings......................................   7
         Item 4   Submission of Matters to a Vote
                    of Security Holders..................................   7

Part II  Item 5   Market for the Registrant's Common
                    Stock and Related Shareholders Matters...............   7
         Item 6   Selected Financial Data................................   9
         Item 7   Management's Discussion and Analysis of
                    Financial Condition and Results of Operations........  15
         Item 8   Financial Statements and Supplementary Data............  24
         Item 9   Changes in and Disagreements with Accountants
                    on Accounting and Financial Disclosure...............  48

Part III Item 10  Directors and Executive Officers of
                    the Registrant.......................................  48
         Item 11  Executive Compensation.................................  50
         Item 12  Security Ownership of Certain Beneficial
                    Owners and Management................................  52
         Item 13  Certain Relationships and Related Transactions.........  53

Part IV  Item 14  Exhibits, Financial Statement Schedules and
                    Reports on Form 8-K..................................  54

                                      2
<PAGE>

Citizens Financial Corp.
Form 10-K, Part I
-----------------

Item 1.  Business
-----------------
Item 2.  Properties
-------------------

     The following discussion satisfies the reporting requirements of Items 1
and 2.

                            DESCRIPTION OF CITIZENS
                            -----------------------

Organizational History and Subsidiaries
---------------------------------------

     Citizens Financial Corp., ("Citizens" or "the Company"), was organized as
a Delaware business corporation on September 29, 1986, and its Certificate of
Incorporation was filed with the Delaware Secretary of State on October 2,
1986. Citizens Financial Corp. was formed at the request of the Board of
Directors of Citizens National Bank of Elkins, Randolph County, West Virginia,
for the purpose of becoming a bank holding company within the meaning of
applicable statutory and regulatory authority.

     Citizens National Bank, ("the Bank"), a wholly-owned subsidiary of
Citizens Financial Corp., was organized on November 19, 1923 and has operated
in Elkins, Randolph County, West Virginia, as a national banking association
continuously since that time. On March 21, 1987, the stockholders of Citizens
National Bank approved an Agreement and Plan of Reorganization whereby Citizens
National Bank would become a wholly-owned subsidiary of Citizens Financial
Corp. This reorganization became effective on April 30, 1987.

     On July 17, 2000, Citizens Financial Services, LLC, also a wholly-owned
subsidiary of Citizens Financial Corp., was established for the purpose of
investing in ProServ Insurance Agency, LLC, a general insurance agency selling
primarily property and casualty insurance and whose members are member banks of
the West Virginia Bankers Association. Citizens' ownership in ProServ is less
than 5%.

Employees
---------

     As of December 31, 2001 neither Citizens Financial Corp. or Citizens
Financial Services, LLC, had any paid employees. Citizens National Bank
employed 93 full-time equivalent employees at that date. The Bank's employees
are not represented by any union or other collective bargaining agreement and
the Bank believes its employee relations are good.

Business of Citizens and Citizens National Bank
-----------------------------------------------

     As a bank holding company registered under the Bank Holding Company Act of
1956, as amended, Citizens' present business is the operation of its banking
and insurance subsidiaries. As of December 31, 2001 Citizens' consolidated
assets approximated $166,819,000 and total shareholders' equity approximated
$19,022,000.

                                      3
<PAGE>

     Citizens National Bank is a full-service commercial bank and, as such,
engages in most types of business permitted by law or regulation. Among these
services are the acceptance of time, demand and savings deposits including NOW
accounts, regular savings accounts, money market deposit accounts, fixed-rate
certificates of deposit and club accounts. In addition safe deposit box
rentals, wire transfer services, telebanking services and 24-hour Automated
Teller Machine (ATM) services through several regional and nationwide service
providers.

     The Bank offers a full spectrum of lending services to its customers,
including commercial loans and lines of credit, residential real estate loans,
consumer installment loans and other personal loans. Commercial loans are
generally secured by various collateral, including commercial real estate,
accounts receivable and business machinery and equipment. Residential real
estate loans consist primarily of mortgages on the borrower's personal
residence, and are typically secured by a first lien on the subject property.
Consumer and personal loans are generally secured, often by first liens on
automobiles, consumer goods or depository accounts. A special effort is made to
keep loan products as flexible as possible within the guidelines of prudent
banking practices in terms of interest rate risk and credit risk. Bank lending
personnel adhere to established lending limits and authorities based on each
individual's lending expertise and experience.

     When considering loan requests, the primary factors taken into
consideration by the Bank are the cash flow and financial condition of the
borrower, the value of the underlying collateral, if any, and the character and
integrity of the borrower. These factors are evaluated in a number of ways
including an analysis of financial statements, credit reviews and visits to the
borrower's place of business.

     The Bank also maintains a trust department which acts as trustee under
wills, as executor and administrator of estates, as guardian for estates of
minors and incompetents and serves in various corporate trust capacities.

     As a bank holding company, Citizens is permitted to engage in certain
nonbanking activities which are closely related to banking under the provisions
of the Bank Holding Company Act, the Federal Reserve Boards' Regulation Y and
the Gramm Leach Bliley Act. Beginning in January, 1999 the Bank began providing
brokerage services through a contractual agreement with PrimeVest Financial
Services, Inc. (PrimeVest). Products and services offered through PrimeVest
include stocks, bonds, mutual funds and annuities. These services are not bank
deposits and do not carry FDIC insurance. As such, they do carry a risk of loss
and are intended only for those customers who understand and accept such risk.
Citizens nonbanking subsidiary, Citizens Financial Services, LLC, was
established in 2000 to offer insurance products to customers as permitted by
applicable regulations. As a member of ProServ Insurance Agency, LLC, Citizens
Financial Services, along with all other ProServ members, shares in the income
generated by ProServ. The Bank also provides fixed rate residential mortgage
products through agreements with several mortgage brokers. Under these
agreements the Bank's involvement is limited to processing the loan application
for a fee while loan approval decisions, underwriting and funding are done by
the mortgage brokers.

Statistical Information
-----------------------

     The disclosures required by Securities Act Guide 3 - "Statistical
Disclosure by Bank Holding Companies", are included in Item 6 - Selected
Financial Data, on pages 9 through 15 of this report.

Properties
----------

     The services described above are offered from offices owned by the Bank

                                      4
<PAGE>

including its approximately 16,940 square foot main office located at 213 Third
Street, Elkins, West Virginia. In addition the Bank owns a drive-in facility
directly across from its main office on Third Street and it has owned and
operated a 5,000 square foot full service branch in Parsons, West Virginia
since 1984. In 1992 a branch facility was opened in Beverly, West Virginia
which contains approximately 1,840 square feet. This facility, which is also
owned, provides drive-in and ATM service in addition to traditional deposit and
teller services. Loan services, however, are not provided at the Beverly
branch. During 2000 the Bank acquired and opened a full service facility in
Petersburg, West Virginia containing 2,280 square feet and also constructed
another full service facility in Slatyfork, West Virginia containing 3,200
square feet. All of these facilities are fully utilized for banking purposes
except the Parsons branch which leases approximately 800 square feet to a cable
television company.

     In January 2002, the Bank opened another full-service branch located in
leased space within a supermarket in Marlinton, West Virginia.

     Neither Citizens Financial Corp. or Citizens Financial Services, LLC, owns
or leases any property. To date they have utilized the Bank's facilities and
have not occupied more than a minimal amount of space. Neither company
compensates the Bank in any way for such usage as it is deemed to be
insignificant. Management believes the existing facilities are adequate and
suitable to conduct its business activities into the foreseeable future.

Competition
-----------

     Citizens faces a high degree of competition for all of its services
including five banks in Randolph County, three in Tucker County, five in Grant
and nearby Hardy Counties, and three in Pocahontas County. As of June 30, 2001,
the most recent date for which data is available, Citizens deposits represented
29.0%, 23.3%, 4.1%, and 2.5% of total deposits in Randolph, Tucker, Grant and
Pocahontas Counties respectively.

     Nonbank competition has increased in recent years locally by the
establishment of brokerage companies and the expansion of insurance operations
and credit unions as well as from mutual funds located throughout the country.
The Company has found its brokerage unit and insurance subsidiary has helped it
better meet this competition.

     West Virginia banks are allowed unlimited branch banking throughout the
State. The Interstate Banking and Branch Efficiency Act of 1994 also authorizes
interstate branching by acquisition and consolidation nationwide. These and
similar provisions impacting both the banking and thrift industries may serve
to intensify future competition within Citizens' market.

Supervision and Regulation
--------------------------

     Citizens, as a bank holding company, is subject to the restrictions of the
Bank Holding Company Act of 1956, as amended, and is registered pursuant to its
provisions. As such, Citizens is subject to the reporting requirements of and
examination by the Board of Governors of the Federal Reserve System ("Board of
Governors").

     The Bank Holding Company Act prohibits the acquisition by a bank holding
company of direct or indirect ownership of more than five percent of the voting
shares of any bank within the United States without prior approval of the Board
of Governors. With certain exceptions, a bank holding company also is
prohibited from acquiring direct or indirect ownership or control of more than
five pive percent of the voting shares of any company which is not a bank, and
from engaging directly or indirectly in business unrelated to the business of
banking, or managing or controlling banks.

                                      5
<PAGE>

     As a bank holding company doing business in West Virginia, Citizens is
also subject to regulation and examination by the West Virginia Department of
Banking and must submit annual reports to the Department. Further, any
acquisition application which Citizens must submit to the Board of Governors
must also be submitted to the West Virginia Banking Board for approval.

     In 1994, Congress passed the Reigle-Neal Interstate Banking Bill (the
"Interstate Bill"). The Interstate Bill permits certain interstate banking
activities through a holding company structure, effective September 30, 1995.
It permits interstate branching by merger effective June 1, 1997 unless states
"opt-in" sooner, or "opt-out" before that date. States may elect to permit de
novo branching by specific legislative election. In March 1996, West Virginia
adopted changes to its banking laws so as to permit interstate banking and
branching to the fullest extent permitted by the Interstate Bill. The
Interstate Bill permits consolidation of banking institutions across state
lines and, perhaps, de novo entry. As its provisions become effective, it is
likely that the resulting restructurings and interstate activities will result
in the realization of economies of scale within those institutions with
entities in more than one state. One result could be increased competitiveness,
due to the realization of economies of scale and/or, where permitted, due to de
novo market entrants.

     Under West Virginia banking law, an acquisition or merger is not permitted
if the resulting depository institution or its holding company, including any
depository institutions affiliated therewith, would assume additional deposits
to cause it to control deposits in the State of West Virginia in excess of
twenty five percent (25%) of such total amount of all deposits held by insured
depository institutions in West Virginia. This limitation may be waived by the
Commissioner of Banking for good cause shown.

     Citizens National Bank, as a national banking association, is subject to
supervision, examination and regulation by the Office of the Comptroller of the
Currency. It is also a member of the Federal Reserve System, and as such is
subject to applicable provisions of the Federal Reserve Act and regulations
issued thereunder.

     The deposits of the Bank are insured by the Federal Deposit Insurance
Corporation ("FDIC") to the extent provided by law. Accordingly, the Bank is
also subject to regulation by the FDIC.

     Under the Community Reinvestment Act of 1977, the Comptroller of the
Currency is required to assess the record of all financial institutions
regulated by it to determine if such institutions meet the credit needs of the
community (including low-to-moderate income neighborhoods) served by them and
to take this record into account in its evaluation of any application made by
any such institution for, among other things, approval of a branch or other
deposit facility, office relocation, or the merger with or acquisition of
assets of another bank. The state of West Virginia has a similar statutory
regulation. In its most recent examination the Bank received a satisfactory CRA
rating.

     The Bank is subject to various capital requirements under federal banking
regulations including the Federal Deposit Insurance Corporation Improvement Act
of 1991 (FDICIA). Quantitative measures established by those regulations ensure
minimum capital levels are maintained. Those measures are summarized in Note 12
to the Consolidated Financial Statements which begins on page 43 of this
report. Also contained in that Note are the Bank's regulatory capital ratios at
December 31, 2001. Those ratios show that the Bank satisfied the requirements
necessary to be categorized as well capitalized which is the highest category
established under the regulations. As a well capitalized institution Citizens
is permitted to engage in a wider range of banking activities than may be
permitted otherwise.

                                      6
<PAGE>

     Another requirement of FDICIA is that federal banking agencies must
prescribe regulations relating to various operational areas of banks and bank
holding companies. These include standards for internal audit systems, loan
documentation, information systems, internal controls, credit underwriting,
interest rate exposure, asset growth, compensation, and such other standards as
the agency deems appropriate.

     As a subsidiary bank of a bank holding company, Citizens National Bank is
also subject to certain restrictions imposed by the Federal Reserve Act upon
any extensions of credit to Citizens Financial Corp. or any of its other
subsidiaries, on investments in the stock or other securities of that bank
holding company or its subsidiaries, and on the taking of such stock or
securities as collateral for loans to any borrower.

Item 3.  Legal Proceedings
--------------------------

     As of December 31, 2001 Citizens Financial Corp. was not involved in any
material legal proceedings. The Bank is currently involved in various legal
proceedings which occur in the normal course of business. After consultation
with legal counsel, management believes that all such litigation will be
resolved without materially affecting the Company's financial position or
results of operations. In addition, there are no material proceedings known to
be threatened or contemplated against the Company or its subsidiaries.

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

     No matters were submitted to a vote of security holders of Citizens
Financial Corp. during the fourth quarter of 2001.

Part II
-------

Item 5. Market for Registrant's Common Stock and Related Stockholder Matters
----------------------------------------------------------------------------

     Historically, the stock of Citizens Financial Corp. and, prior to its
formation, the stock of Citizens National Bank, has traded only sporadically.
The stock is not listed on any security exchange, however, a number of
brokerage firms provide an efficient and orderly market for transactions
involving its shares. There are no further plans, understandings, arrangements
or agreements to list the stock on any exchange at this time.

     Citizens has only one class of stock, that being common stock, and all
voting rights are vested in its holders. The shareholders of Citizens are
entitled to one vote for each share of common stock owned on all matters
subject to a vote of shareholders. At February 28, 2002 shareholders of record
numbered 487. The Company has no plans to issue senior securities.

     Citizens maintains a policy under which it may purchase shares of its' own
stock for treasury, subject to certain limitations, when it is deemed to be in
the best interest of the Company to do so. Such shares are purchased on the
open market through independent brokers. At December 31, 2000 and 2001 the
number of treasury shares was 99,388 and 101,127, respectively. These shares
are included in the total number of shares issued, as disclosed above, and no
plans currently exist regarding their use and there are no plans regarding
future purchases.

     The following table presents the high and low market prices for Citizens'
common stock for the periods indicated.

                                      7
<PAGE>

                                      High       Low
                                      ----       ---
First Quarter through
February 28, 2002                    $30.40     $29.50

2001
----
First Quarter                        $27.50     $27.00
Second Quarter                       $27.60     $26.00
Third Quarter                        $29.90     $27.10
Fourth Quarter                       $31.00     $28.75

2000
----
First Quarter                        $40.00     $35.00
Second Quarter                       $33.00     $25.00
Third Quarter                        $31.50     $25.00
Fourth Quarter                       $31.00     $26.25

     The prices listed above are based upon information available to Citizens'
management through those brokers which deal in the Company's stock as well as
through certain Internet quotation services and are believed to accurately
represent the amount at which its stock was traded during the periods
indicated. Prices reflect amounts paid by purchasers of the stock and,
therefore, may include commissions or fees paid to brokers. The amounts of such
commissions or fees, if any, are not known to management. No attempt was made
by management to ascertain the prices for every sale made during these periods.
The decrease in stock price which occurred in 2000 was discussed in the
management's discussion and analysis section of the Company's 2000 Form 10-K
filing.

     Citizens shareholders are entitled to receive dividends when and as
declared by its Board of Directors. Dividends are typically paid quarterly.
Aggregate dividends were $1.30 per share in 2001 and $1.20 per share in 2000.
Payment of dividends by Citizens is dependent upon payment of dividends to it
by the subsidiary bank. The ability of the Bank to pay dividends is subject to
certain limitations imposed by national banking laws as outlined in Note 12 to
the Consolidated Financial Statements on page 43 of this report.

                                      8
<PAGE>

Item 6.  Selected Financial Data
--------------------------------

     Selected financial data for the five years ended December 31, 2001 is
presented in the following table. This summary should be read in conjunction
with the consolidated financial statements and related notes included in Item 8
of this report.

Citizens Financial Corp.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
Selected Financial Data Five Year Summary
(in thousands of dollars, except per share data)
---------------------------------------------------------------------------------
                                 2001      2000       1999       1998      1997
---------------------------------------------------------------------------------
<S>                          <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
Total assets.................$ 166,819  $ 153,532  $ 137,297  $ 136,701  $132,132
Securities...................   48,964     42,337     41,562     43,812    38,519
Loans, net...................  107,075    101,033     85,665     85,709    86,400
Deposits.....................  131,752    121,519    110,232    113,464   110,401
Total shareholders' equity...   19,022     17,390     15,954     16,649    16,095

SUMMARY OF OPERATIONS:
Total interest income........$  11,830  $  11,154  $  10,058  $  10,336  $ 10,314
Total interest expense.......    4,677      4,425      3,963      4,108     4,014
                             ---------  ---------  ---------  ---------  --------

Net interest income..........    7,153      6,729      6,095      6,228     6,300
Provision for loan losses....      347        264        714        120       236
                             ---------  ---------  ---------  ---------  --------

Net interest income after
  provision for loan losses..    6,806      6,465      5,381      6,108     6,064
Noninterest income...........    1,131        979        701        555       563
Noninterest expense..........    5,035      4,582      4,491      4,242     4,052
                             ---------  ---------  ---------  ---------  --------

Income before income taxes...    2,902      2,862      1,591      2,421     2,575
Income taxes.................      997        973        490        821       934
                             ---------  ---------  ---------  ---------  --------
Net income...................$   1,905  $   1,889  $   1,101  $   1,600  $  1,641
                             =========  =========  =========  =========  ========

PER SHARE DATA:
Net income:..................    $2.93      $2.90      $1.67      $2.41     $2.40
                                 =====      =====      =====      =====     =====

Cash dividends...............    $1.30      $1.20      $1.10      $1.00     $ .90
                                 =====      =====      =====      =====     =====
</TABLE>

     Additional information required under Securities Act Industry Guide 3 for
Bank Holding Companies follows:

                                      9
<PAGE>

          Distribution of Assets, Liabilities & Shareholders' Equity;
                   Interest Rates and Interest Differential

<TABLE>
<CAPTION>
                                                       2001                               2000
                                          -------------------------------    -------------------------------
                                          Avg Bal   Interest   Yield/Rate    Avg Bal   Interest   Yield/Rate
                                          -------------------------------    -------------------------------
                                              (in thousands of dollars)           (in thousands of dollars)
Interest Earning Assets:
<S>                                       <C>         <C>         <C>         <C>          <C>        <C>
Federal funds sold                        $  1,421    $    45     3.17%       $     965    $   61     6.32%
Securities:
   Taxable                                  37,153      2,280     6.14           37,165     2,281     6.14
   Tax-exempt (1)                            5,209        371     7.12            6,847       503     7.35
Loans (net of unearned interest) (1) (2)   106,154      9,300     8.76           93,339     8,510     9.12
                                          ----------------------------        ----------------------------
 Total interest earning assets  (1)        149,937     11,996     8.00          138,316    11,355     8.21

Nonearning assets:
   Cash and due from banks                   3,978                                3,800
   Bank premises and equipment, net          2,580                                1,635
   Other assets                              3,174                                1,651
   Allowance for loan losses                (1,254)                              (1,085)
                                          --------                            ---------
Total assets                              $158,415                            $ 144,317
                                          ========                            =========

Interest Bearing Liabilities:
   Savings deposits                       $ 21,469        422     1.97        $  21,124       477     2.26
   Time deposits                            59,208      3,083     5.21           52,044     2,644     5.08
   NOW accounts                             24,082        595     2.47           22,083       600     2.72
   Money market accounts                     5,669        119     2.10            5,964       123     2.06
   Borrowings                               10,993        457     4.16           10,481       581     5.54
                                          ----------------------------        ----------------------------
   Total interest bearing liabilities      121,421      4,676     3.85          111,696     4,425     3.96

Noninterest bearing liabilities:
   Demand deposits                          16,754                               15,357
   Other liabilities                         1,729                                  768
   Shareholders' equity                     18,511                               16,496
                                          --------                            ---------
Total liabilities and
   shareholder's equity                   $158,415                            $ 144,317
                                          ========                            =========

Net interest income (1)                                ------                              ------
                                                       $7,320                              $6,930
                                                       ======                              ======

Net interest income to average earning assets  (1)                4.88%                               5.01%
                                                                  ====                                ====

<CAPTION>

                                                                   1999
                                                      -------------------------------
                                                      Avg Bal   Interest   Yield/Rate
                                                      -------------------------------
Interest Earning Assets:                                (in thousands of dollars)
<S>                                                   <C>          <C>         <C>
Federal funds sold                                    $   1,432    $    73     5.10%
Securities:
   Taxable                                               35,438      2,117     5.97
   Tax-exempt (1)                                         7,543        551     7.31
Loans (net of unearned interest) (1) (2)                 86,630      7,522     8.68
                                                      -----------------------------
 Total interest earning assets  (1)                     131,043     10,263     7.83

Nonearning assets:
   Cash and due from banks                                4,153
   Bank premises and equipment, net                       1,445
   Other assets                                           1,955
   Allowance for loan losses                             (1,001)
                                                      ---------
Total assets                                          $ 137,595
                                                      =========

Interest Bearing Liabilities:
   Savings deposits                                   $  21,220        478     2.25
   Time deposits                                         52,294      2,546     4.87
   NOW accounts                                          20,152        471     2.25
   Money market accounts                                  5,780        116     2.01
   Borrowings                                             6,903        352     5.10
                                                      -----------------------------
   Total interest bearing liabilities                   106,349      3,963     3.73

Noninterest bearing liabilities:
   Demand deposits                                       13,923
   Other liabilities                                        767
   Shareholders' equity                                  16,556
                                                      ---------
Total liabilities and
   shareholder's equity                               $ 137,595
                                                      =========
Net interest income (1)                                            -------
                                                                   $ 6,300
                                                                   =======

Net interest income to average earning assets  (1)                             4.81%
                                                                               ====
</TABLE>

(1) Yields on tax-exempt holdings are expressed on a tax equivalent
basis using a 34% tax rate.

(2) For the purpose of these computations, nonaccruing loans are
included in the amounts of average loans outstanding.

                                      10
<PAGE>

                             Rate Volume Analysis

 The following table sets forth a summary on the changes in interest
earned and interest expense detailing the amounts attributable to (i)
changes in volume (change in the average volume times the prior
year's average rate), (ii) changes in rate (change in the average
rate times the prior year's average volume).  The changes in
rate/volume (change in the average volume times the change in the
average rate), has been allocated to the changes in volume and
changes in rate in proportion to the relationship of the absolute
dollar amounts of the change in each.

<TABLE>
<CAPTION>
                                               2001 Compared to 2000                2000 Compared to 1999
                                            Increase  (Decrease) Due to            Increase  (Decrease) Due to
                                            -----------------------------          ----------------------------
                                                              (in thousands of dollars)
                                            Volume     Rate       Total            Volume     Rate        Total
                                            -----------------------------          -----------------------------
<S>                                         <C>        <C>        <C>              <C>        <C>         <C>
Interest earned on:
   Federal funds sold                       $   22     $  (38)    $   (16)         $ (27)     $   15      $  (12)
   Taxable securities                           (1)        -           (1)           103          61         164
   Tax-exempt securities                      (117)       (15)       (132)           (51)          3         (48)
   Loans                                     1,136       (346)        790            598         391         989
                                            -----------------------------          -----------------------------
Total interest earned                        1,040       (399)        641            623         470       1,093
                                            -----------------------------          -----------------------------
Interest expense on:
   Savings deposits                              7        (62)        (55)            (2)          1          (1)
   Time deposits                               370         69         439            (12)        110          98
   NOW accounts                                 52        (57)         (5)            48          81         129
   Money market accounts                        (6)         2          (4)             4           3           7
   Other borrowing                              27       (151)       (124)           185          44         229
                                            -----------------------------          -----------------------------
Total interest expense                         450       (199)        251            223         239         462

                                            -----------------------------          -----------------------------
Net interest income                         $  590     $ (200)    $   390          $ 400      $  231      $  631
                                            =============================          =============================
</TABLE>

                                      11
<PAGE>

                             Securities Portfolio

     Presentation of the amortized cost of securities as of December 31, 2001
and 2000 may be found in Note 3 to the Consolidated Financial Statements which
begins on page 32 of this report.

     The following table sets forth the maturities of securities as of December
31, 2001 and the weighted average yields of such securities (calculated on the
basis of the amortized cost and effective yields weighted for the scheduled
maturity of each security).

<TABLE>
<CAPTION>
                            Within One         After One but        After Five but        After Ten             Total
                               Year          Within Five Years     Within Ten Years         Years
                          ------------------------------------------------------------------------------------------------
                          Amount   Yield      Amount   Yield        Amount   Yield      Amount   Yield      Amount   Yield
                          ------------------------------------------------------------------------------------------------
<S>                       <C>      <C>       <C>       <C>         <C>       <C>        <C>      <C>        <C>      <C>
                                                         (in thousands of dollars)
 U.S. Treasury and
   other U.S. government
   agencies and
   corporations           $ 3,493   6.17%     $21,706   5.16%       $   -       -         $ -       -  %    $25,198   5.30%
 State and political
   subdivisions (1)         1,543   6.71        1,784   8.33         3,890    5.66          -       -         7,219   6.54
 Other securities           5,511   6.19        9,386   6.83            -       -          732     5.82      15,629   6.56
                          -------   ----      -------   ----        ------    ----        ----     ----     -------   ----
   Total                  $10,547   6.26%     $32,876   5.81%       $3,890    5.66%       $732     5.82%    $48,046   5.91%
                          =======             =======               ======                ====              =======
</TABLE>

 The portfolio contains no securities of any single issuer in which the
aggregate amortized cost of such securities exceeds ten percent of
shareholders' equity.

(1) Tax-equivalent adjustments, using a rate of 34%, have been made in
    calculating yields on obligations of state and political subdivisions.

                                      12
<PAGE>

Loan Portfolio
--------------

Types of Loans
--------------

     The distribution of loans by major category as of December 31, 2001 and
2000 may be found in Note 4 to the Consolidated Financial Statements which
begins on page 34 of this report. All loans in the portfolio are domestic in
nature.

Loan Maturities and Interest Rate Sensitivity
---------------------------------------------

     Note 4 to the Consolidated Financial Statements also provides data
concerning the contractual maturities of loans, including commercial,
financial and agricultural loans as well as real estate construction loans, as
of December 31, 2001. Also provided are the amounts due after one year
classified as fixed rate and variable rate loans.

Risk Elements
-------------

Nonperforming Loans
-------------------

     Nonperforming loans consist of loans in nonaccrual status, loans which are
past due 90 days or more and still accruing interest and restructured loans.
The following table sets forth the amounts of such loans as of the dates
indicated:

                                            December 31
                                    -------------------------
                                         2001        2000
                                    -------------------------
                                    (in thousands of dollars)
Nonaccrual loans                        $ 30         $181
Loans past due 90 days or more
  still accruing interest                337           22
Restructured loans                        -            -
                                        ----         ----
  Total                                 $367         $203
                                        ====         ====

     Loans are generally placed on nonaccrual status when they are past due 90
days as to principal or interest unless they are both well secured and in the
process of collection. The following table provides a summary of information
pertaining to nonaccrual loans as of December 31, 2001:

                                              (in thousands)
Total nonaccrual loans                            $ 30
Interest income which would have been
  recorded under original terms                      1
Interest income recorded during the year             5

Potential Problem Loans
-----------------------

     As of December 31, 2001, the Company identified no loans which it
classified as impaired due to doubts about the borrowers ability to repay as
called for in the loan documents as stated in Note 5 to the Consolidated
Financial Statements found on page 36 of this report.

                                      13
<PAGE>

Loan Concentrations
-------------------

     Information concerning loan concentrations is provided in Note 4 to the
Consolidated Financial Statements which begins on page 34 of this report.

Summary of Loan Loss Experience
-------------------------------

     Note 5 to the Consolidated Financial Statements, which begins on page 36
of this report, presents an analysis of the allowance for loan losses for the
years ended December 31, 2001, 2000 and 1999.

     The amount charged to the provision for loan losses and the related
balance in the allowance for loan losses is based upon periodic evaluations of
the loan portfolio by management. These evaluations consider several factors
including, but not limited to, its analysis of overall loan quality, changes in
the mix and size of the loan portfolio, previous loss experience, general
economic conditions and information about specific borrowers.

     The ratio of net losses to average loans outstanding was .09% in 2001,
..13% in 2000 and .94% in 1999.

     The following table shows an allocation of the allowance for loan losses
for the two years ended December 31, 2001 and 2000.

                                           December 31
                            --------------------------------------------
                                    2001                 2000
                            --------------------------------------------
                                       Percent of           Percent of
                                      Loans in Each        Loans in Each
                                      Category to           Category to
                             Amount   Total Loans   Amount  Total Loans
                            --------------------------------------------
                                        (in thousands of dollars)
Commercial, financial and
  agricultural              $  621        17%      $  313        15%
Real estate - construction      29         3           35         2
Real estate - mortgage         412        65          438        69
Installment and other          127        15           62        14
Unallocated                    209        N/A         303       N/A
                            ------       ----      ------       ----
  Total                     $1,398       100%      $1,151       100%
                            ======       ====      ======       ====

Deposits
--------

     The average daily amount of deposits and the rates paid on those deposits
for the years ended December 31, 2001, 2000 and 1999 were previously presented
in the Distribution of Assets, Liabilities and Shareholders' Equity; Interest
Rates and Interest Differential. That table may be found on page 10 of this
report.

     A table summarizing the maturities of time certificates of deposit,
including individual retirement accounts, of $100,000 or more as of December
31, 2001 may be found in Note 7 to the Consolidated Financial Statements which
begins on page 37 of this report. There were no other time deposits of $100,000
or more at that date.

                                      14
<PAGE>

Return on Equity and Assets
---------------------------

     The following table shows consolidated operating and capital ratios for
the periods indicated.

                                   Year Ended December 31
                                 --------------------------
                                  2001      2000      1999
                                 --------------------------
Return on average assets          1.20%     1.31%      .80%
Return on average equity         10.29     11.45      6.65
Dividend payout ratio            44.37     41.38     65.87
Average equity to assets ratio   11.69     11.43     12.03

Short-term Borrowing
--------------------

     Information concerning the Company's short-term borrowing is presented in
Note 10 to the Consolidated Financial Statements which begins on page 42 of
this report.

Item 7.  Management's  Discussion and Analysis of Financial Condition and
-------------------------------------------------------------------------
          Results of Operations
          ---------------------

     The following discussion and analysis presents the significant changes in
the financial condition and results of operations of Citizens Financial Corp.
and its subsidiaries, Citizens National Bank of Elkins, and Citizens Financial
Services, LLC, for the periods indicated. This discussion and analysis should
be read in conjunction with the Company's 2001 Annual Report to Shareholders
and Form 10-K. Since the primary business activities of Citizens Financial
Corp. are conducted through the Bank, this discussion focuses primarily on the
financial condition and operations of the Bank. This discussion may contain
forward looking statements based upon management's current expectations. Such
forward looking information may involve uncertainties including those
associated with interest rates and the general economic environment,
regulations, competitive changes, and other risks. The Company does not
undertake to update such forward looking statements that may be made. When
provided, forward looking information is intended to assist readers in
understanding anticipated future operations and are included pursuant to
applicable safe harbor provisions of the Private Securities Litigation Reform
Act of 1995; actual results may differ. Amounts and percentages used in this
discussion have been rounded.

Results of Operations
---------------------

Earnings Summary
----------------

     For the second consecutive year the Company has realized record earnings.
Net income of $1,905,000 in 2001 exceeded the $1,889,000 earned in 2000 and
$1,101,000 earned in 1999. On a per share basis, earnings were $2.93 in 2001,
$2.90 in 2000, and $1.67 in 1999. The return on average assets for the three
years, respectively, was 1.20%, 1.31%, and .80% while the return on average
equaty was 10.29%, 11.45%, and 6.65%.

     The 2001 results benefited from growth in the earning asset base, strong
net interest income and rising noninterest income. Unusually high loan charge
offs caused income in 1999 to fall below typical levels. These and other
factors influencing the Company's results of operations and

                                      15
<PAGE>

financial condition are addressed in the following sections of this report.

Net Interest Income
-------------------

     Net interest income is the primary component of Citizens' earnings. It is
the difference between interest and fee income generated by interest earning
assets and interest expense incurred to carry interest bearing liabilities. The
Bank attempts to maximize net interest income by determining the optimal
product mix in light of current and expected yields on assets, cost of funds
and economic conditions while maintaining an acceptable degree of risk.

     Among the primary factors which impact net interest income are changes in
the balance sheet composition and interest rates. Both of these factors changed
significantly over the 1999-2001 period with earning assets growing by more
than 14% while the rising interest rate environment of 2000 was followed by
falling rates in 2001. Despite these changes, Citizens maintained a superior
net interest margin of 4.88% in 2001, 5.01% in 2000, and 4.81% in 1999 on
tax-equivalent net interest income of $7,320,000, $6,930,000 and $6,300,000,
respectively.

     The increase in net interest income in 2001 is mainly due to an increase
in earning assets of $11.6 million and loans specifically. However, the falling
interest rates caused the yield on earning assets to decrease 21 basis points
to 8.00% which ultimately caused the drop in the net interest margin. This
effect was partly offset by an 11 basis point drop in the cost of interest
bearing liabilities to 3.85%.

     In 2000 the Bank also benefited from rising levels of earning assets.
Unlike 2001, however, both the yield on earning assets and the cost of interest
bearing liabilities increased by 38 and 23 basis points, respectively. With
this spread between earnings on assets and the cost of liabilities becoming
wider, net interest margin increased.

     Citizens ability to maintain its level of net interest income is crucial
to its financial performance. Key variables to managing net interest income, as
well as the methods used to do so, are discussed in the Interest Rate
Sensitivity portion of this report.

Noninterest Income
------------------

     Noninterest income includes all revenues not included in interest and fee
income related to earning assets and is becoming increasingly important to
Citizens earnings. Total noninterest income of $1,131,000 in 2001 is up from
$979,000 in 2000 and $701,000 in 1999. As a percentage of total income,
noninterest income was 8.7%, 8.1% and 6.5%, respectively.

     Much of the increase in 2001, including those in service fees and
insurance commissions, reflects an increase in the Bank's customer base
following the addition of two new branch facilities during 2000. Significant
increases totaling $119,000 occurred in minimum balance fees, overdraft fees,
and ATM fees. Brokerage fees also increased by approximately 26% in 2001
reflecting strong annuity sales, particularly in the first half of the year.
Continuing sluggish markets may cause lower revenues in 2002, however.
Commissions from the sales of insurance increased to $56,000 in 2001 while
trust revenues remained about the same

                                      16
<PAGE>

as in 2000. Other noninterest income decreased by $45,000 to $204,000 as the
sale of promotional coins fell as did the amount of gains realized from the
sale of repossessed properties. In addition, during 2000 the Company recognized
income of $30,000 when an insurance carrier used for one of the Bank's employee
benefit plans converted from a mutual company to a stock company. These
decreases were somewhat offset by a $51,000 increase in fees relating to the
processing of secondary market mortgage loans. The Bank entered a new secondary
market program in October 2001 and has been very pleased with the results. The
Bank's involvement in the program is limited to processing the loan application
for a fee while loan approval decisions, underwriting and the funding of the
loans are done by unrelated mortgage brokers.

     Noninterest income improved in 2000 due not only to the branch expansions
which occurred during the year but also the implementation of a new fee
schedule during 1999. It was these two factors which caused overdraft fees to
increase by $87,000 during the year. Improvements in brokerage fees, which was
in just its second year of operation in 2000, of $36,000 and the sale of
promotional items, totaling $49,000, along with gains on the sale of
repossessed properties also contributed to the increase.

Noninterest Expense
-------------------

     Noninterest expense includes all items of expense other than interest
expense, the provision for loan losses, and income taxes. With the opening of
two new branch facilities during 2000, noninterest expense was expected to rise
in 2001 as the full year impact of these branches would be felt. In fact, this
was the case as total noninterest expense rose 9.9% to $5,035,000 in 2001 from
$4,582,000 in 2000 and $4,491,000 in 1999. Of the 2001 increase of $453,000,
$352,000 was related to the two new branches.

     The largest component of noninterest expense continues to be salaries and
benefits which increased by $337,000 to $2,649,000 in 2001. Of this $198,000
was related to the full year impact of the new branch facilities, while the
remainder is due to increases in salaries and the cost of group insurance
programs company wide. Occupancy expense and equipment expense increased by
$46,000 and $95,000, respectively, in 2001 also due largely to the effect of
the new facilities where depreciation, utilities, janitorial and maintenance
costs rose by a combined $90,000. Data processing costs, many of which are
based on the number of accounts processed, and postage expense were similarly
impacted by the addition of the branches.

     Professional service expenses decreased for the second consecutive year in
2001 as costs related to loan matters, which peaked in 1999 when significant
charge-offs occurred, continued to fall. Other noninterest expense also fell
during the year, despite increases in expenses related to the new branch
activities, as expenses related to the acquisition, maintenance, and sale of
foreclosed properties dropped by $141,000.

     While the branches established throughout 2000 did have a significant
impact on noninterest expense, overall they contributed $115,000 to pretax
income in 2001 as loan and deposit growth was greater than expected resulting
in better than anticipated net interest income. With the establishment of
another branch in 2002 noninterest expense is expected to increase again.
However, provided this new facility reaches its

                                      17
<PAGE>

expected loan and deposit levels, the impact on income is expected to be
minimal. Subsequent or additional growth is expected to improve profitability.

     In the year 2000 total noninterest expense increased by $91,000, just 2%,
which was entirely due to the new branching activity.

Income Taxes
------------

     Income tax expense for the years 2001, 2000, and 1999 was $997,000,
$973,000, and $490,000, respectively. Included in these figures are both
federal and state income taxes. These figures represent effective tax rates of
34.4%, 34.0%, and 30.8% in the respective years. The Company has not been
subject to the federal alternative minimum tax during any of the periods
covered by this report. Note 8 of the accompanying consolidated financial
statements provides further information and additional disclosure of the
significant components influencing the Company's taxes.

Financial Condition
-------------------

Summary
-------

     Total assets of $166,819,000 at December 31, 2001 are approximately
$13,287,000 more than at December 31, 2000 as the Company's primary funds
sources, deposits and repurchase agreements, increased approximately $12.3
million while capital also grew by $1.6 million. Average assets for the year
were $158,415,000 while average earning assets were $149,937,000. A further
discussion of the Company's major balance sheet categories, liquidity, and
interest rate sensitivity, as well as the impact of inflation on the Company,
follows.

Loan Portfolio
--------------

     Total loans at December 31, 2001 of $108,577,000 were $6,295,000 more than
at year-end 2000 representing a growth rate of 6.15% which may be attributed to
the success of the Bank's two new locations where loan growth totaled $7.0
million.

     Mortgage lending easily remains the Bank's largest portfolio totaling
$73,996,000 at year-end 2001 of which $48,644,000 were residential mortgages.
Mortgage demand in the Bank's market area was good in 2001 although many
consumers preferred fixed rate mortgages over the adjustable rate mortgages
traditionally offered by the Bank. As a result, a number of the Bank's
residential mortgage loans were refinanced and newly originated mortgages were
suppressed. As explained in the discussion of noninterest income, the Bank has
entered into a fixed rate mortgage program with several underwriters as a means
of retaining and enhancing customer relationships and fee income. Through
year-end this program has been very successful.

     Lacking this fixed rate mortgage program for much of the year, special
efforts were made to develop commercial lending activity. In 2001, this was
aided by falling interest rates as many commercial loans carry interest terms
which are tied to the prime rate. At December 31, 2001, total commercial loans
of $18,460,000 were $2,713,000 more than at year-end 2000.

                                      18
<PAGE>

In addition, loans made to commercial entities which are secured by real estate
of $21,993,000 are included in the mortgage loan portfolio. This brings total
loans for commercial activity, including those secured by real estate, to
approximately $40,453,000.

     Consumer lending increased by approximately 11.3%, or $1.6 million, to
$16,025,000 at year-end 2001. The majority of the Bank's consumer loans are
used to finance the purchase of automobiles. As was the case in 2000,
competition from auto manufacturers has made it difficult for the Bank to
compete for new car loans. However, the Bank has been successful in its efforts
to finance late model used cars, particularly in some of its newer markets.

     In 2002 the Bank expects to focus its loan efforts once again on those
areas where it has success in 2001, commercial and certain types of consumer
lending. The establishment of another branch facility is expected to provide
approximately 45% of total loan growth. With the expectation of continued
softness in the economy the gross loan to deposit ratio will likely remain near
its current level of 82.4%.

     Additional information concerning the Company's loan portfolio, including
loan mix and maturities, may be found in Note 4 to the accompanying financial
statements while Note 11 provides a discussion of the Bank's commitments to
extend credit.

Allowance for Loan Losses
-------------------------

     Management maintains an allowance for possible loan losses at a level it
considers adequate to provide for losses that can be reasonably anticipated.
This is done by a process of continual review of the loan portfolio, specific
loans, and various factors which may impact them. A discussion of these
factors, and the process by which they are used, is presented in Note 1 to the
financial statements.

     At December 31, 2001, 2000 and 1999, the allowance for loan losses was
$1,398,000, $1,151,000, and $1,011,000, respectively. At these levels the
allowance represented 1.29%, 1.13%, and 1.17% of total loans. Nonaccrual loans
and loans past due 90 days or more which were still accruing interest totaled
$367,000 at year-end 2001.

     After an unusual year in 1999, net charge offs returned to more normal
levels in 2000 and 2001 when net charge-offs were $125,000 and $101,000,
respectively. Provisions for loan losses for the year 2001 were $347,000. Note
5 to the financial statements contains a detailed analysis of the allowance for
loan losses for each of the last three years.

Securities Portfolio and Federal Funds Sold
-------------------------------------------

     The Bank's securities portfolio uses funds not needed to satisfy loan
demand to improve earnings while at the same time providing liquidity and
balancing interest sensitivity concerns. All securities are classified as
available for sale.

     The value of the Company's security portfolio increased by more than $6.6
million to $48,964,000 at year-end 2001. Much of this increase occurred during
the fourth quarter of the year when deposit growth was

                                      19
<PAGE>

continuing and loan demand was leveling off. The year-long drop in interest
rates also helped increase the fair market value of the portfolio, which is
largely comprised of fixed rate debt instruments. At December 31, 2001, the
portfolio's fair value exceeded its amortized cost by $918,000.

     The composition of the portfolio did not change significantly in 2001 with
U.S. Agency securities and investment grade corporate debt instruments
comprising 44.8% and 31.0% of the total amortized cost, respectively. At
December 31, 2001 Agency securities totaled $21,539,000, up $1.3 million, while
corporate securities totaled $14,897,000. Holdings of mortgage backed
securities issued by U.S. Government agencies were increased during the latter
part of the year by approximately $3,000,000 and totaled $3,659,000, or 7.6% of
the total portfolio at year-end. With an average life of 3.19 years and an
expected yield of 5.00%, these purchases provide favorable returns and
acceptable extension and interest rate risk characteristics. Municipal
securities also increased by $1,883,000 to $7,219,000 at year-end 2001. All of
the Bank's municipal securities are bank qualified and, with the exception of
certain local issues, are insured and carry "A" ratings.

     The Company continues to manage the portfolio so that a laddered maturity
over a 5 year period is achieved. As of December 31, 2001, the average maturity
of the portfolio was 2.68 years and it carried a tax equivalent yield of 5.91%.
Securities, especially U.S. Agency securities, with a book value of $19.2
million as of December 31, 2001, were pledged to secured deposits of public
funds and to facilitate overnight repurchase agreements.

     During 2002 the Company expects to continue its current portfolio
management techniques although holdings of corporate debt securities, of which
$5.5 million mature in 2002, may be reduced given the nation's current economic
condition.

     The Bank generally tries to minimize its involvement in the overnight
federal funds market. Nonetheless, at any given time the execution of specific
investing or funding strategies, or fluctuations in deposit and loan balances,
may require the bank to sell, or buy, funds on an overnight basis. During the
year 2001 the Bank maintained average federal funds sold of $1,421,000 although
no overnight funds were sold as of December 31, 2001. Conversely, federal funds
purchased were $2,831,000 at year-end and averaged $347,000 for the year.

Deposits and Other Funding Sources
----------------------------------

     In recent years attracting deposits has been difficult for many banks,
including Citizens. During 2001 the Bank made a special effort to attract
deposits. This effort, together with unfavorable stock market conditions, and
the ability of the Banks' two newest branches to attract $5,032,000 in
additional deposits during the year, helped increase total deposits by $10.2
million to $131,752,000 at December 31, 2001.

     Approximately 70% of the Bank's deposit growth occurred in the second half
of the year and was primarily centered in certificates of deposit which
increased by $6,827,000 during the year as a whole. Significant growth also
occurred in interest bearing checking accounts of $1.6 million and savings
accounts of $956,000. While it cannot be known with certainty,

                                      20
<PAGE>

management expects these funds, particularly the time deposits, to provide a
reliable source of funding through the foreseeable future. In 2002, the Bank
again expects to focus efforts on deposit generation and believes the addition
of its Marlinton facility will greatly assist these efforts.

     In addition to overnight borrowings, the Bank's short-term borrowings at
year-end 2001 included $11,091,000 in repurchase agreements which have been
established with local entities. These agreements, which have been maintained
for a number of years, carried an average balance during the year of
$9,820,000. The Company's long-term borrowings of $788,000 and $868,000 at
December 31, 2001 and 2000, respectively, are used to fund certain loan
projects. No long-term debt was acquired during the year and no plans to
acquire additional long-term financing currently exist.

Capital Resources
-----------------

     Citizens' capital base increased in 2001 to $19,022,000, or 11.4% of total
assets as a result of the year's strong earnings and the increase in the market
value of the available for sale security portfolio. Dividends for the year
totaled $1.30 per share, a $.10 increase over 2000. This represents a dividend
payout ratio of 44.4%. An analysis of the Company's capital may be found in the
accompanying Statement of Changes in Shareholders' Equity.

     The Federal Reserve's risk-based capital guidelines provide for the
relative weighting of both on-balance-sheet and off-balance-sheet items based
on their degree of risk. The Company continues to exceed all regulatory capital
requirements as shown in Note 12 to the financial statements. Management is
unaware of any trends or uncertainties, nor do any plans exist, which may
materially impair or alter its capital position.

     The Company's stock remains thinly traded on the over the counter market
under the symbol CIWV. A total of 20,500 shares were traded during the year
including the Company's purchase of 1,739 shares of treasury stock. The price
of the stock ranged from $26 to $31 per share, ending the year at $29.50 per
share.

Liquidity and Interest Rate Sensitivity
---------------------------------------

     The objective of the Company's liquidity management program is to ensure
the continuous availability of funds to meet the withdrawal demands of
customers, the credit needs of borrowers, and to provide for other operational
needs. Liquidity is provided by various internal sources including unpledged
investment securities, federal funds sold, loan repayments and the ability to
maintain a stable or growing deposit base.

     Each quarter, management tests the Bank's ability to satisfy its
anticipated liquidity demands over the next twelve months based on expected
loan, deposit, and investment security levels. As of December 31, 2001, this
test shows liquidity is adequate to meet expected needs. In the event deposit
growth is not sufficient to satisfy loan demand, or otherwise fund earning
assets and meet operating needs, the Bank has the ability to borrow from its
correspondent banks. At December 31, 2001, the Bank has unused lines of credit
with these sources approximating $62,000,000. As noted previously, the Bank
typically minimizes its involvement in overnight borrowings and has no plans to
acquire additional long-term debt.

                                      21
<PAGE>

     The objective of the Company's interest rate sensitivity management
program also known as asset/liabilaty management, is to maximize net interest
income while minimizing the risk of adverse effects from changing interest
rates. This is done by controlling the mix and maturities of interest sensitive
assets and liabilities. The Bank has established an asset/liability committee
for this purpose. The Bank uses several techniques to monitor and control
interest rate risk including gap analysis, interest rate shock testing and
other forms of simulation modeling.

     Gap analysis is a static measure and does not consider future changes in
the volume of rate sensitive assets or liabilities or the possibility that
interest rates of various products may not change by the same amount or at the
same time. Therefore, certain assumptions must be made in constructing the gap.
The Company monitors its gap on a monthly basis. As of December 31, 2001, the
Company's one year gap is negative. This indicates that more liabilities than
assets are subject to repricing over the next year. Traditional theory
indicates that in a falling interest rate environment this could result in
increased earnings. However, many economists believe interest rates are nearing
their low point and could begin moving up sometime in 2002. In this
environment, gap theory indicates Citizens earnings could fall.

     In situations such as this rate shock analysis, which the Company performs
quarterly, can be useful. Such tests project net interest income given an
immediate and sustained change in interest rates applied to all interest
earning assets and interest sensitive liabilities and help define boundaries of
interest rate risk. As gf December 31, 2001, these tests project that an
immediate and sustained increase in rates of 300 basis points would cause net
interest income to fall 12.99% or $1,033,000 which is within management's
parameters.

     In all likelihood, an immediate and sustained change in interest rates of
this type would not occur since, as noted earlier, interest rates of various
products do not change alike. For this reason the Company also uses simulation
models to monitor interest rate risk and prepare income projections and budgets.

Impact of Inflation
-------------------

     The consolidated financial statements and related data included in this
report were prepared in accordance with accounting principles generally
accepted in the United States of America, which require the Company's financial
position and results of operations to be measured in terms of historical
dollars except for the available for sale security portfolio. Consequently, the
relative value of money generally is not considered. Nearly all of the
Company's assets and liabilities are monetary in nature and, as a result,
interest rates and competition in the market area tend to have a more
significant impact on the Company's performance than the effect of inflation.

     However, inflation does affect noninterest expenses such as personnel
costs and the cost of services and supplies used by the Company. Management
attempts to offset such increases by controlling the level of noninterest
expenditures and increasing levels of noninterest income. Because

                                      22
<PAGE>

inflation rates have generally been low during the time covered by the
accompanying financial statements, the impact of inflation on the Company's
earnings has not been significant.

                                      23
<PAGE>

                            CITIZENS FINANCIAL CORP.
                                AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
December 31, 2001 and 2000

<TABLE>
<CAPTION>
ASSETS                                                               2001          2000
                                                              ------------   ------------
<S>                                                           <C>            <C>
Cash and due from banks                                       $  4,734,676   $  4,540,327
Securities available for sale                                   48,964,467     42,337,429
Loans, less allowance for loan losses of $1,397,528 and
   $1,150,900, respectively                                    107,074,843    101,032,931
Bank premises and equipment, net                                 2,657,880      2,356,202
Accrued interest receivable                                      1,208,222      1,214,805
Other assets                                                     2,178,782      2,049,923
                                                              ------------   ------------
         Total assets                                         $166,818,870   $153,531,617
                                                              ============   ============

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Deposits:
   Noninterest bearing                                        $ 17,207,329   $ 16,694,201
   Interest bearing                                            114,544,606    104,824,670
                                                              ------------   ------------
         Total deposits                                        131,751,935    121,518,871
Short-term borrowings                                           13,921,675     12,366,699
Long-term borrowings                                               787,523        867,686
Other liabilities                                                1,335,390      1,388,189
                                                              ------------   ------------

      Total liabilities                                        147,796,523    136,141,445
                                                              ------------   ------------

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                                               16,890,758     15,830,556
Accumulated other comprehensive income                             606,155        (15,817)
Treasury stock at cost, 101,127 and
   99,388 shares, respectively                                  (2,074,566)    (2,024,567)
                                                              ------------   ------------

      Total shareholders' equity                                19,022,347     17,390,172
                                                              ------------   ------------

      Total liabilities and shareholders' equity              $166,818,870   $153,531,617
                                                              ============   ============
</TABLE>

                See Notes to Consolidated Financial Statements.

                                     24
<PAGE>

                          CITIZENS FINANCIAL CORP.
                              AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
For The Years Ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>

                                                       2001            2000             1999
                                                    -----------      ----------     -----------
<S>                                                 <C>              <C>            <C>
Interest income
   Interest and fees on loans                       $ 9,259,327     $ 8,479,351     $ 7,504,063
   Interest and dividends on securities:
      Taxable                                         2,280,396       2,281,492       2,117,266
      Tax-exempt                                        244,993         332,024         363,941
   Interest on federal funds sold                        44,777          61,113          72,919
                                                    -----------     -----------     -----------
      Total interest income                          11,829,493      11,153,980      10,058,189
                                                    -----------     -----------     -----------

Interest expense
   Interest on deposits                               4,219,704       3,843,844       3,610,532
   Interest on short-term borrowings                    411,669         530,119         340,047
   Interest on long-term borrowings                      45,353          50,557          12,351
                                                    -----------     -----------     -----------
      Total interest expense                          4,676,726       4,424,520       3,962,930
                                                    -----------     -----------     -----------

      Net interest income                             7,152,767       6,729,460       6,095,259
   Provision for loan losses                            347,380         263,969         714,152
                                                    -----------     -----------     -----------
      Net interest income after provision
         for loan losses                              6,805,387       6,465,491       5,381,107
                                                    -----------     -----------     -----------

Noninterest income
   Trust income                                         204,843         206,345         176,014
   Service fees                                         545,307         424,264         324,449
   Insurance commissions                                 55,503          17,653          28,629
   Securities gains (losses)                              1,133         (14,201)         16,437
   Brokerage                                            120,408          95,368          58,947
   Other                                                204,056         249,144          96,115
                                                    -----------     -----------     -----------
      Total noninterest income                        1,131,250         978,573         700,591
                                                    -----------     -----------     -----------

Noninterest expense
   Salaries and employee benefits                     2,648,880       2,312,076       2,334,317
   Net occupancy expense                                245,437         199,098         177,417
   Equipment rentals, depreciation and
      maintenance                                       406,440         311,786         314,808
   Data processing                                      403,570         354,166         369,590
   Director fees                                        133,116         103,604         108,250
   Postage expense                                      130,965          98,161          74,846
   Professional service fees                            116,678         178,120         211,416
   Other                                                949,717       1,024,698         900,427
                                                    -----------     -----------     -----------
      Total noninterest expense                       5,034,803       4,581,709       4,491,071
                                                    -----------     -----------     -----------
Income before income taxes                            2,901,834       2,862,355       1,590,627

   Income tax expense                                   997,099         973,112         489,970
                                                    -----------     -----------     -----------
      Net income                                    $ 1,904,735     $ 1,889,243     $ 1,100,657
                                                    ===========     ===========     ===========
Basic earnings per common share                     $      2.93     $      2.90     $      1.67
                                                    ===========     ===========     ===========
Average common shares outstanding                       650,032         651,995         658,910
                                                    ===========     ===========     ===========

</TABLE>

                See Notes to Consolidated Financial Statements

                                    25
<PAGE>

                                CITIZENS FINANCIAL CORP.
                                   AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For The Years Ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>

                                                                    2001           2000            1999
                                                                ------------   -------------   --------------

<S>                                                             <C>           <C>             <C>

Net Income                                                      $  1,904,735    $  1,889,243    $  1,100,657
                                                                ------------   -------------   --------------

Other comprehensive income:
   Gross unrealized gains/(losses) arising during the period         943,514         757,100      (1,220,223)
   Adjustment for income tax (expense)/benefit                      (320,795)       (257,417)        419,290
                                                                ------------   -------------   --------------
                                                                     622,719         499,683        (800,933)
                                                                ------------   -------------   --------------

   Less: Reclassification adjustment for (gains)/losses
            included in net income                                    (1,133)         14,201         (16,437)
   Adjustment for income tax expense/(benefit)                           386          (4,828)          5,588
                                                                ------------   -------------   --------------
                                                                        (747)          9,373         (10,849)
                                                                ------------   -------------   --------------

   Other comprehensive income, net of tax                            621,972         509,056        (811,782)
                                                                ------------   -------------   --------------

Comprehensive Income                                            $  2,526,707    $  2,398,299    $    288,875
                                                                ============   =============   ==============

</TABLE>

                  See Notes to Consolidated Financial Statements

                                      26
<PAGE>

                           CITIZENS FINANCIAL CORP.
                               AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Years Ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>
                                                                                           Accumulated
                                                                                              Other                       Total
                                            Common Stock        Additional                   Compre-                      Share
                                       -----------------------   Paid-In      Retained       hensive     Treasury        holders'
                                          Shares      Amount     Capital      Earnings       Income        Stock          Equity
                                       ----------  ----------- ------------  -----------  ------------  ------------   -----------
<S>                                       <C>      <C>           <C>         <C>         <C>          <C>             <C>
Balance, December 31, 1998                750,000  $ 1,500,000  $ 2,100,000  $14,345,301  $    286,909  $ (1,582,894)  $16,649,316
                                       ----------  ----------- ------------  -----------  ------------  ------------   -----------

   Net income                                -            -            -       1,100,657          -             -        1,100,657

   Cost of 5,735 shares acquired
      as treasury stock                      -            -            -            -             -         (260,688)     (260,688)

   Cash dividends declared
      ($1.10 per share)                      -            -            -        (723,211)         -             -         (723,211)

   Net change in unrealized
      gain (loss) on available
      for sale securities                    -            -            -            -         (811,782)         -         (811,782)
                                       ----------  ----------- ------------  -----------  ------------  ------------   -----------
Balance, December 31, 1999                750,000    1,500,000    2,100,000   14,722,747      (524,873)   (1,843,582)   15,954,292
                                       ----------  ----------- ------------  -----------  ------------  ------------   -----------
   Net income                                -            -            -       1,889,243          -             -        1,889,243

   Cost of 5,220 shares acquired
      as treasury stock                      -            -            -            -             -         (180,985)     (180,985)

   Cash dividends declared
      ($1.20 per share)                      -            -            -        (781,434)         -             -         (781,434)

   Net change in unrealized
      gain (loss) on available
      for sale securities                    -            -            -            -          509,056          -          509,056
                                       ----------  ----------- ------------  -----------  ------------  ------------   -----------
Balance, December 31, 2000                750,000    1,500,000    2,100,000   15,830,556       (15,817)   (2,024,567)   17,390,172
                                       ----------  ----------- ------------  -----------  ------------  ------------   -----------
   Net income                                -            -            -       1,904,735          -             -        1,904,735

   Cost of 1,739 shares acquired
      as treasury stock                      -            -            -            -             -          (49,999)      (49,999)

   Cash dividends declared
      ($1.30 per share)                      -            -            -        (844,533)         -             -         (844,533)

   Net change in unrealized
      gain (loss) on available
      for sale securities                    -            -            -            -          621,972          -          621,972
                                       ----------  ----------- ------------  -----------  ------------  ------------   -----------
Balance, December 31, 2001                750,000  $ 1,500,000  $ 2,100,000  $16,890,758  $    606,155   $(2,074,566)  $19,022,347
                                       ==========  =========== ============ ============  ============  ============   ===========
</TABLE>

                  See Notes to Consolidated Financial Statements

                                      27
<PAGE>

                                   CITIZENS FINANCIAL CORP.
                                       AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>
                                                                 2001           2000          1999
                                                              ------------  ------------   -----------
<S>                                                           <C>            <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                                 $  1,904,735   $ 1,889,243   $ 1,100,657
   Adjustments to reconcile net income to net
      cash provided by operating activities:
   Depreciation                                                    300,690       210,400       194,079
   Provision for loan losses                                       347,380       263,969       714,152
   Deferred income tax expense (benefit)                           (61,607)       (7,961)       16,224
   Amortization of security premiums, net
      of accretion of security discounts                             6,653        (7,891)      158,118
   Amortization of goodwill and organization costs                  13,399         7,816         5,283
   Securities (gains) losses                                        (1,133)       14,201       (16,437)
   Other (gains) losses                                               (679)       (3,214)       36,441
   (Increase) decrease in accrued interest receivable                6,583      (179,622)      226,410
   (Increase) in other assets                                     (254,011)     (357,815)     (314,246)
   Increase (decrease) in other liabilities                        (52,799)      393,467        46,349
                                                              ------------  ------------   -----------
   Net cash provided by operating activities                     2,209,211     2,222,593     2,167,030
                                                              ------------  ------------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from maturities and calls of securities
     held to maturity                                                 -             -        1,190,000
   Proceeds from sales of securities available for sale            506,785     4,452,748     3,527,373
   Proceeds from maturities and calls of securities
     available for sale                                         12,065,000     7,465,000     9,470,000
   Principal payments received on securities available
     for sale                                                      520,449       272,317       370,338
   Purchases of securities available for sale                  (18,782,411)  (12,200,682)  (13,686,085)
   Loans made to customers, net                                 (6,701,105)  (16,575,751)   (2,043,858)
   Purchases of bank premises and equipment                       (615,316)   (1,175,474)     (134,030)
   Proceeds from sale of other real estate and other assets        178,391       937,721     1,078,252
                                                              ------------  ------------   -----------
   Net cash used in investing activities                       (12,828,207)  (16,824,121)     (228,010)
                                                              ------------  ------------   -----------
</TABLE>

                                  (Continued)

                                      28
<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
For the Years Ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>
                                                                    2001            2000            1999
                                                                -----------     -----------     -----------
<S>                                                             <C>             <C>             <C>
CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase (decrease) in demand deposit, NOW, money
     market and savings accounts                                  3,406,483       5,301,152        (376,564)
   Net increase (decrease) in time deposits                       6,826,581       5,985,406      (2,854,768)
   Net increase in short-term borrowings                          1,554,976       3,193,738       1,401,994
   Proceeds from long-term borrowings                                  -                -         3,144,278
   Repayments of long-term borrowings                               (80,163)        (74,959)        (70,096)
   Dividends paid                                                  (844,533)       (781,434)       (723,211)
   Acquisition of treasury stock                                    (49,999)       (180,985)       (260,688)
                                                                -----------     -----------     -----------

   Net cash provided by financing activities                     10,813,345      13,442,918         260,945
                                                                -----------     -----------     -----------

   Increase (decrease) in cash and cash equivalents                 194,349      (1,158,610)      2,199,965

Cash and cash equivalents:
   Beginning                                                      4,540,327       5,698,937       3,498,972
                                                                -----------     -----------     -----------

   Ending                                                       $ 4,734,676     $ 4,540,327     $ 5,698,937
                                                                ===========     ===========     ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

   Cash payments for:
     Interest on deposits and on other borrowings               $ 4,671,941     $ 4,373,238     $ 3,984,921
                                                                ===========     ===========     ===========

     Income taxes                                               $ 1,030,186     $   883,000     $   530,975
                                                                ===========     ===========     ===========

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
   AND FINANCING ACTIVITIES

   Other real estate and other assets acquired in
     settlement of loans                                        $   311,813     $   943,389     $ 1,373,829
                                                                ===========     ===========     ===========

   Transfer of securities from held to maturity to available
     for sale                                                   $     -         $      -        $ 7,180,676
                                                                ===========     ===========     ===========
</TABLE>


            See Notes to Consolidated Financial Statements

                                      29
<PAGE>

Notes to Consolidated Financial Statements

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES

     Nature of business: Citizens Financial Corp. (Citizens) was incorporated
on April 30, 1987. The wholly-owned bank subsidiary, Citizens National Bank of
Elkins (the Bank), is a commercial bank with operations in Randolph, Tucker,
Grant and Pocahontas Counties of West Virginia. The Bank provides retail and
commercial loans, deposit, trust and brokerage services to customers in those
counties and nearby areas. During the year ended December 31, 2000, Citizens
Financial Corp. established a wholly-owned insurance subsidiary, Citizens
Financial Services, LLC, for the purpose of investing in ProServ Insurance
Agency, LLC. ProServ is a general insurance agency selling primarily property
and casualty insurance and was established by the West Virginia Bankers
Association. Along with the other member banks, Citizens shares in the income
and commissions of ProServ. Citizens' ownership in ProServ is less than 5%.

     Basis of financial statement presentation and accounting estimates: The
accounting and reporting policies of Citizens Financial Corp. and its wholly
owned subsidiaries conform to accounting principles generally accepted in the
United States of America and to general practices within the banking industry.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.

     Principles of consolidation: The accompanying consolidated financial
statements include the accounts of Citizens Financial Corp. and its wholly
owned subsidiaries, Citizens National Bank of Elkins and Citizens Financial
Services, LLC. 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: Debt and equity securities are classified as "held to
maturity", "available for sale" or "trading" according to management's intent.
The appropriate classification is determined at the time of purchase of each
security and re-evaluated at each reporting date.

     Securities held to maturity - There are no securities classified as "held
     ---------------------------
to maturity" in the accompanying financial statements.

     Securities available for sale - Securities not classified as "held to
     -----------------------------
maturity" or as "trading" are classified as "available for sale". Securities
classified as "available for sale" are those securities the Bank intends to
hold for an indefinite period of time, but not necessarily to maturity.
"Available for sale" securities are reported at fair value. Unrealized gains or
losses, adjusted for applicable income taxes, are reported as a separate
component of shareholders' equity.

     Trading securities - There are no securities classified as "trading" in
     ------------------
the accompanying financial statements.

     Realized gains and losses on sales of securities are recognized on the
specific identification method. Amortization of premiums and accretion of
discounts are computed using the effective interest method.

     Loans and allowance for loan losses: Loans are stated at the amount of
unpaid principal, reduced by unearned discount and an allowance for loan
losses. Interest is recognized on an amortized basis.

                                      30
<PAGE>

     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 subsidiary 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.

     A loan is impaired when, based on current information and events, it is
probable that the Bank will be unable to collect all amounts due in accordance
with the contractual terms of the specific loan agreement. Impaired loans,
other than certain large groups of smaller-balance homogeneous loans that are
collectively evaluated for impairment, are reported at the present value of
expected future cash flows discounted using the loan's original effective
interest rate or, alternatively, at the loan's observable market price, or at
the fair value of the loan's collateral if the loan is collateral dependent.
The method selected to measure impairment is made on a loan-by-loan basis,
unless foreclosure is deemed to be probable, in which case the fair value of
the collateral method is used.

     Interest is accrued daily on impaired loans unless the loan is placed on
nonaccrual status. Impaired loans are placed on nonaccrual status when the
payments of principal and interest are in default for a period of 90 days,
unless the loan is both well secured and in the process of collection. Interest
on nonaccrual loans is recognized primarily using the cost-recovery method.

     Loan origination fees and certain direct loan origination costs are
deferred and amortized as adjustments of the related loan yield over its
contractual life.

     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 was 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. Gains and losses on the sales of these
properties are credited or charged to operating income in the year of the
transaction.

     Sales of these properties which are financed by the subsidiary bank and
meet the criteria of covered transactions remain classified as other real
estate until such time as principal payments have been received to warrant
classification as a real estate loan.

     Goodwill: Goodwill is being amortized on a straight-line basis over a
period of fifteen years. Unamortized goodwill totaled $179,771 and $193,170 at
December 31, 2001 and 2000, respectively.

     Effective January 1, 2002, the Company must recognize goodwill as required
under recently issued Statement of Financial Accounting Standards Number 142 -
Goodwill and other Intangible Assets (SFAS 142). SFAS 142 requires the Company
to periodically recalculate the value of goodwill previously acquired and
recognize any decline in value immediately as a charge to income. An exception
to this accounting treatment is provided for in SFAS 142 when the fair value of
the liabilities assumed are greater than the fair value of assets acquired. In
this situation, the Company must follow the original guidance in Statement of
Financial Accounting Standards Number 72, Accounting for Certain Acquisitions
of Banking or Thrift Institutions (SFAS 72). Under the guidance provided by
SFAS 72, the Company will continue to amortize the goodwill over the original
term, unless subsequent recalculations determine a shorter period is warranted.
The Company does not anticipate the adoption of SFAS 142 will have a material
effect of future earnings of the Company.

     Pension plan: The subsidiary bank has a defined benefit pension plan
covering substantially all employees. Pension costs are actuarially determined
and charged to expense.

                                      31
<PAGE>

     Postretirement benefits: The subsidiary bank 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.

     The consolidated provision for income taxes includes federal and state
income taxes and is based on pretax income reported in the consolidated
financial statements, adjusted for transactions that may never enter into the
computation of income taxes payable.

     Basic earnings per share: Basic earnings per common share is computed
based upon the weighted average shares outstanding. The weighted average shares
outstanding were 650,032, 651,995 and 658,910 for the years ended December 31,
2001, 2000 and 1999, respectively. During the years ended December 31, 2001,
2000 and 1999, the Company did not have any potentially dilutive securities.

     Trust department: Assets held in an agency or fiduciary capacity by the
subsidiary bank's trust department are not assets of the Bank and are not
included in the accompanying 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.

     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 will be immediately
recognized in earnings.

     Reclassifications: Certain accounts in the consolidated financial
statements for 2000 and 1999, as previously presented, have been reclassified
to conform to current year classifications.

NOTE 2.  CASH CONCENTRATIONS

     At December 31, 2001 and 2000, the Bank had no cash concentrations.

NOTE 3. SECURITIES

     The amortized cost, unrealized gains, unrealized losses and estimated fair
values of securities at December 31, 2001 and 2000, are summarized as follows:

                                      32
<PAGE>

<TABLE>
<CAPTION>
                                                                         2001
                                                 -------------------------------------------------------
                                                                                             Carrying
                                                                                               Value
                                                                     Unrealized            (Estimated
                                                   Amortized    ----------------------        Fair
                                                     Cost         Gains      Losses           Value)
                                                 ------------   ----------  ----------   ---------------
<S>                                             <C>            <C>          <C>           <C>
Available for sale:
  U.S. Government agencies and corporations     $  21,539,277  $   576,571  $   70,642    $   22,045,206
  Mortgage-backed securities - U.S. Government
    agencies and corporations                       3,658,600        8,972      52,969         3,614,603
  Federal Reserve Bank stock                          108,000         -           -              108,000
  Federal Home Loan Bank stock                        623,800         -           -              623,800
  Corporate debt securities                        14,897,242      479,821      20,568        15,356,495
  Tax exempt state and political subdivisions       7,219,131       76,095      78,863         7,216,363
                                                -------------  -----------  ----------    --------------

     Total securities available for sale        $  48,046,050  $ 1,141,459  $  223,042    $   48,964,467
                                                =============  ===========  ==========    ==============
</TABLE>

<TABLE>
<CAPTION>
                                                                           2000
                                                   ------------------------------------------------------
                                                                                              Carrying
                                                                                                Value
                                                                       Unrealized            (Estimated
                                                     Amortized    ----------------------       Fair
                                                       Cost         Gains      Losses          Value)
                                                   ------------   ----------  ----------  ---------------

<S>                                               <C>            <C>          <C>          <C>
Available for sale:
  U.S. Government agencies and corporations       $  20,232,537  $  107,161   $  81,701    $   20,257,997
  Mortgage-backed securities - U.S. Government
    agencies and corporations                         1,165,972        -         23,276         1,142,696
  Federal Reserve Bank stock                            108,000        -           -              108,000
  Federal Home Loan Bank stock                          623,800        -           -              623,800
  Corporate debt securities                          14,895,043     147,510     192,588        14,849,965
  Tax exempt state and political subdivisions         5,336,041      33,267      14,337         5,354,971
                                                  -------------  ----------   ---------    --------------

     Total securities available for sale          $  42,361,393  $  287,938   $ 311,902    $   42,337,429
                                                  =============  ==========   =========    ==============
</TABLE>

  The maturities, amortized cost and estimated fair values of the Company's
securities at December 31, 2001 are summarized as follows:

                                       Available for Sale
                                     --------------------------
                                                     Carrying
                                                       Value
                                                    (Estimated
                                      Amortized        Fair
                                        Cost          Value)
                                    ------------   ------------
Due within one year                 $ 10,547,794   $ 10,708,348
Due after one through five years      32,876,100     33,684,514
Due after five through ten years       3,890,356      3,839,805
Due after ten years                         -              -
Equity securities                        731,800        731,800
                                    ------------   ------------

     Total                          $ 48,046,050   $ 48,964,467
                                    ============   ============

   Mortgage backed securities have remaining contractual maturities ranging
from 3 to 20 years and are reflected in the maturity distribution schedule
based on their anticipated average life to maturity, which ranges from 1.6 to
4.2 years.  Accordingly, discounts are accreted and premiums are amortized over
the anticipated life to maturity of the specific obligation.



                                     33
<PAGE>

  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:

<TABLE>
<CAPTION>
                                                    Proceeds From                   Gross Realized
                                       -----------------------------------------   ---------------------
        Years Ended                                   Calls and       Principal
        December 31,                      Sales       Maturities      Payments       Gains      Losses
--------------------------------       -----------   -------------   -----------   ---------   ---------
<S>                                    <C>           <C>             <C>           <C>         <C>
2001
   Securities available for sale       $   506,785   $  12,065,000   $   520,449   $   1,133   $    -
                                       ===========   =============   ===========   =========   =========

2000
   Securities available for sale       $ 4,452,748   $   7,465,000   $   272,317   $     -     $  14,201
                                       ===========   =============   ===========   =========   =========

1999
   Securities held to maturity         $      -      $   1,190,000   $      -      $     -     $    -
   Securities available for sale         3,527,373       9,470,000       370,338      16,437        -
                                       -----------   -------------   -----------   ---------   ---------
                                       $ 3,527,373   $  10,660,000   $   370,338   $  16,437   $    -
                                       ===========   =============   ===========   =========   =========
</TABLE>

     At December 31, 2001 and 2000 securities carried at $19,208,568 and
$18,326,562, respectively, with estimated fair values of $19,760,967 and
$18,351,047, 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, 2001, the Company had a concentration within its corporate
debt securities classification which included obligations of banking and
financial services industry companies with global operations having an
approximate carrying value of $5,736,936 and an estimated fair value of
$5,903,250. 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 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:

<TABLE>
<CAPTION>
                                                           December 31,
                                                  ----------------------------
                                                       2001            2000
                                                  -------------   ------------
<S>                                               <C>             <C>
Commercial, financial and agricultural            $  18,459,860   $ 15,746,846
Real estate - construction                            3,753,382      2,032,381
Real estate - mortgage                               70,242,145     70,064,727
Installment loans                                    16,025,084     14,401,988
Other                                                    96,157         35,323
                                                  -------------   ------------
Total loans                                         108,576,628    102,281,265

Net deferred loan origination fees and costs           (101,897)       (60,901)
Less unearned income                                     (2,360)       (36,533)
                                                  -------------   ------------
   Total loans net of unearned income and net
   deferred loan origination fees and costs         108,472,371    102,183,831
Less allowance for loan losses                        1,397,528      1,150,900
                                                  -------------  -------------

   Loans, net                                     $ 107,074,843  $ 101,032,931
                                                  =============  =============
</TABLE>

                                     34
<PAGE>

     Included in the above balance of net loans are nonaccrual loans amounting
to $29,757 and $180,535 at December 31, 2001 and 2000, respectively. If
interest on nonaccrual loans had been accrued, such income would have
approximated $1,122, $4,974 and $3,777 for the years ended December 31, 2001,
2000 and 1999, respectively.

     In the past, the subsidiary bank has made loans, in the normal course of
business, to its directors, executive officers and their related interests, and
will continue to make such loans in the future. At December 31, 2001 and 2000,
outstanding loans of this nature totaled $4,299,370 and $4,866,436,
respectively.

     The following presents the activity with respect to related party loans
aggregating $60,000 or more to directors, executive officers, and their related
interests of Citizens Financial Corp. and subsidiaries during the years ended
December 31, 2001 and 2000:

                                     2001             2000
                               ------------     ------------
Balance, beginning             $  4,800,157     $  4,338,985
     Additions                    1,299,003        4,240,661
     Amounts collected           (1,933,657)      (3,779,489)
                               ------------     ------------

Balance, ending                $  4,165,503     $  4,800,157
                               ============     ============

     The following represents contractual loan maturities at December 31, 2001
without regard to scheduled periodic principal repayments on amortizing loans:

<TABLE>
<CAPTION>
                                                           Due After 1
                                              Due          But Within            Due
                                           Within 1 Yr        5 Yrs         After 5 Yrs        Total
                                          -------------    ------------    -------------    -------------

<S>                                       <C>              <C>             <C>              <C>
Commercial, financial and agricultural    $   2,303,278    $  5,089,746    $  11,066,836    $  18,459,860
Real estate - construction                    1,930,181       1,796,200           27,001        3,753,382
Real estate - mortgage                        1,567,775       5,937,919       62,736,451       70,242,145
Net installment loans                         1,718,753      13,199,841        1,106,490       16,025,084
Other                                            55,345          21,705           19,107           96,157
                                          -------------    ------------    -------------    -------------
                                          $   7,575,332    $ 26,045,411    $  74,955,885    $ 108,576,628
                                          =============    ============    =============    =============
Loans due after one year with:
          Variable rates                  $  70,736,371
          Fixed rates                        30,264,925
                                          -------------
          Total                           $ 101,001,296
                                          =============
</TABLE>

     Concentrations of credit risk: The Company's banking subsidiary, 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.

     As of December 31, 2001, Citizens National Bank had direct and indirect
extensions of credit to automobile dealers totaling approximately $8,505,000.
These loans consist of automobile floor plan loans and commercial loans which
are generally secured by liens on the pledges of accounts receivable,
inventories or personal guarantees. The Bank evaluates each such customer's
credit worthiness on a case-by-case basis. The amount of collateral obtained is
based upon management's credit evaluation.

                                     35
<PAGE>

NOTE 5.    ALLOWANCE FOR LOAN LOSSES

     An analysis of the allowance for loan losses for the years ended December
31, 2001, 2000 and 1999, is as follows:

                                           2001         2000          1999
                                       ------------  ------------  ------------

Balance, beginning of year             $  1,150,900  $  1,011,479  $  1,109,595
                                       ------------  ------------  ------------
Losses:
Commercial, financial and agricultural       27,384        42,750       760,374
Real estate - mortgage                       11,657        67,248        88,526
Installment                                 116,411        62,409        76,363
Credit cards                                   -              -          51,713
                                       ------------  ------------  ------------
   Total                                    155,452       172,407       976,976
                                       ------------  ------------  ------------

Recoveries:
Commercial, financial and agricultural       35,946        22,689        99,476
Real estate - mortgage                          100         4,824        43,680
Installment                                  18,654        20,346        14,762
Credit cards                                   -              -           6,790
                                       ------------  ------------  ------------
   Total                                     54,700        47,859       164,708
                                       ------------  ------------  ------------
Net losses                                  100,752       124,548       812,268
Provision for loan losses                   347,380       263,969       714,152
                                       ------------  ------------  ------------
Balance, end of year                   $  1,397,528  $  1,150,900  $  1,011,479
                                       ============  ============  ============

     The Company had no loans that were considered impaired at
December 31, 2001. At December 31, 2000, the Company's total recorded investment
in impaired loans approximated $591,056 for which the required allowance for
loan losses was $100,000 as determined in accordance with accounting principles
generally accepted in the United States of America.

     For purposes of SFAS Nos. 114 and 118, the Company considers groups of
smaller-balance, homogeneous loans to include: mortgage loans secured by
residential property, other than those which significantly exceed the
subsidiary bank's typical residential mortgage loan amount (currently those in
excess of $100,000); small balance commercial loans (currently those less than
$50,000); and installment loans to individuals, exclusive of those loans in
excess of $50,000.

     For the years ended December 31, 2000 and 1999, the Company recognized
approximately $62,889 and $59,060, respectively, in interest income on impaired
loans. Using the cash basis method of accounting, the Company would have
recognized approximately the same amount of interest income on such loans.

NOTE 6. BANK PREMISES AND EQUIPMENT

     The major categories of bank premises and equipment and accumulated
depreciation at December 31, 2001 and 2000, are summarized as follows:

                                              2001            2000
                                          ------------    ------------
Land                                      $    397,092    $    397,092
Buildings and improvements                   3,467,594       3,444,636
Furniture and equipment                      1,957,814       1,850,759
                                          ------------    ------------
                                             5,822,500       5,692,487

Less accumulated depreciation                3,164,620       3,336,285
                                          ------------    ------------
Bank premises and equipment, net          $  2,657,880    $  2,356,202
                                          ============    ============

     Depreciation expense for the years ended December 31, 2001, 2000 and 1999,
totaled $300,690, $210,400 and $194,079, respectively.

                                     36
<PAGE>

NOTE 7.   DEPOSITS

     The following is a summary of interest bearing deposits by type as of
December 31, 2001 and 2000:

                                    2001           2000
                                -------------  -------------
NOW and Super NOW accounts      $  15,443,694  $  13,855,723
Money market accounts               5,537,115      5,187,510
Savings accounts                   31,166,898     30,211,119
Certificates of deposit
   under $100,000                  45,605,698     42,383,730
Certificates of deposit
   of $100,000 or more             16,791,201     13,186,588
                                -------------  -------------

Total                           $ 114,544,606  $ 104,824,670
                                =============  =============

Interest expense on deposits is summarized below:

                                    2001           2000           1999
                                -------------  -------------  -------------
NOW and Super NOW accounts      $     248,413  $     244,148  $     241,943
Money market accounts                 118,779        123,397        115,536
Savings accounts                      765,431        832,725        707,127
Certificates of deposit
   under $100,000                   2,245,724      2,000,343      1,924,776
Certificates of deposit
   of $100,000 or more                841,357        643,231        621,150
                                -------------  -------------  -------------

Total                           $   4,219,704  $   3,843,844  $   3,610,532
                                =============  =============  =============

     The following is a summary of the maturity distribution of certificates of
deposit in amounts of $100,000 or more as of December 31, 2001:

                                    Amount        Percent
                                -------------  ------------
Three months or less            $   4,875,782       29%
Three through six months            3,809,923       23%
Six through twelve months           3,631,552       22%
Over twelve months                  4,473,944       26%
                                -------------  ------------

Total                           $  16,791,201      100%
                                =============  ============

A summary of the maturities for all time deposits as of December 31, 2001,
follows:

Year                               Amount
----                            -------------

2002                            $  39,634,507
2003                               14,929,772
2004                                6,275,277
2005                                  758,353
2006                                  798,990
                                -------------

                                $  62,396,899
                                =============

     At December 31, 2001, deposits of related parties including directors,
executive officers, and their related interests of Citizens Financial Corp. and
subsidiaries approximated $6,018,239.


                                     37
<PAGE>

NOTE 8. INCOME TAXES

     The components of applicable income tax expense (benefit) for the years
ended December 31, 2001, 2000 and 1999 are as follows:

                                    2001            2000           1999
                                -------------  -------------  -------------
Current:
   Federal                      $     914,185  $     848,650  $     390,037
   State                              144,521        132,423         83,709
                                -------------  -------------  -------------

                                    1,058,706        981,073        473,746
                                -------------  -------------  -------------
Deferred
   Federal                            (55,122)        (7,123)        14,517
   State                               (6,485)          (838)         1,707
                                -------------  -------------  -------------
                                      (61,607)        (7,961)        16,224
                                -------------  -------------  -------------
Total                           $     997,099  $     973,112  $     489,970
                                =============  =============  =============

     Deferred income taxes reflect the impact of "temporary differences"
between amounts of assets and liabilities for financial reporting purposes and
such amounts as measured for tax purposes. Deferred tax assets and liabilities
represent the future tax return consequences of temporary differences, which
will either be taxable or deductible when the related assets and liabilities
are recovered or settled.

     The tax effects of temporary differences which give rise to the Company's
deferred tax assets and liabilities as of December 31, 2001 and 2000, are as
follows:

                                     2001           2000
                                -------------  -------------
Deferred tax assets:
   Allowance for loan losses    $     381,434  $     278,216
   Employee benefit plans                -             8,844
   Accrued income and expenses          8,085         19,883
   Depreciation                        33,683         26,330
   Net loan origination fees
     and costs                         38,715         23,142
   Net unrealized loss on
     securities                          -             8,148
                                -------------  -------------
                                      461,917        364,563
                                -------------  -------------

Deferred tax liabilities:
   Accretion on securities            (76,491)       (57,581)
   Employee benefit plans             (24,985)          -
   Net unrealized gain on
      securities                     (312,262)          -
                                -------------  -------------
                                     (413,738)       (57,581)
                                -------------  -------------

   Net deferred tax asset       $      48,179  $     306,982
                                =============  =============

     A reconciliation between the amount of reported income tax expense and the
amount computed by multiplying the statutory income tax rate by book pretax
income for the years ended December 31, 2001, 2000 and 1999, is as follows:

<TABLE>
<CAPTION>
                                                        2001               2000               1999
                                                ------------------- ------------------ ------------------
                                                   Amount   Percent   Amount   Percent   Amount   Percent
                                                ---------   ------- ---------  ------- ---------  -------
<S>                                             <C>          <C>    <C>         <C>    <C>         <C>
Computed tax at applicable statutory rate       $ 986,624    34.0   $ 973,201   34.0   $ 540,813   34.0
  Increase (decrease) in taxes resulting from:
  Tax-exempt interest                            (110,098)   (3.8)   (132,983)  (4.7)   (135,043)  (8.5)
  State income taxes, net of federal
     tax benefit                                   95,384     3.3      87,399    3.1      55,248    3.5
  Other, net                                       25,189     0.9      45,495    1.6      28,952    1.8
                                                ---------   ------- ---------  ------- ---------  -------

    Applicable income taxes                     $ 997,099    34.4   $ 973,112   34.0   $ 489,970   30.8
                                                =========  ======== =========  ======= =========  =======
</TABLE>


                                     38
<PAGE>

NOTE 9.  EMPLOYEE BENEFIT PLANS

     Pension Plan: Citizens National Bank has a defined benefit pension plan
covering all employees who meet the eligibility requirements. To be eligible,
an employee must be 21 years of age and have completed one year of continuous
service. The Plan provides benefits based on the participant's years of service
and highest consecutive five year average annual earnings. The Bank's funding
policy is to make the minimum annual contribution that is required by
applicable regulations.

<TABLE>
<CAPTION>
                                                     Pension       Pension       Pension
                                                     Benefit       Benefit       Benefit
                                                      2001           2000          1999
                                                  -----------    ----------    ----------
<S>                                              <C>            <C>            <C>
Change in benefit obligation
Benefit obligation at beginning of year          $  2,869,295   $ 2,917,738   $ 3,091,266
Service cost                                           61,676        79,857        97,536
Interest cost                                         224,280       216,029       214,210
Change in discount rate                               175,494          -         (385,160)
Experience loss/(gain)                                  7,349      (210,520)       37,578
Benefits paid                                        (144,758)     (133,809)     (137,692)
                                                 ------------   -----------   -----------
Benefit obligation at end of year                $  3,193,336   $ 2,869,295   $ 2,917,738
                                                 ============   ===========   ===========

Change in plan assets

Fair value of plan assets at beginning of year   $  4,344,521   $ 4,227,792   $ 4,150,004
Actual return (loss) on plan assets                  (277,710)      250,538       215,480
Employer contribution                                    -             -             -
Plan participants' contributions                         -             -             -
Benefits paid                                        (144,758)     (133,809)     (137,692)
                                                 ------------   -----------   -----------
Fair value of plan assets at end of year         $  3,922,053   $ 4,344,521   $ 4,227,792
                                                 ============   ===========   ===========

Funded status                                    $    728,717   $ 1,475,226   $ 1,310,054
Unrecognized net actuarial gain                       150,373      (694,288)     (612,407)
Unrecognized prior service benefit                   (131,159)     (149,527)     (167,895)
Unrecognized net obligation at transition             (46,930)      (70,051)      (93,172)
                                                 ------------   -----------   -----------
Prepaid benefit cost                             $    701,001   $   561,360   $   436,580
                                                 ============   ===========   ===========

Weighted-average assumptions as of December 31

Discount rate                                           7.25%         8.00%         8.00%
Expected return on plan assets                          8.50%         8.50%         8.50%
Rate of compensation increase                           4.25%         5.00%         5.00%

Components of net periodic benefit cost

Service cost                                     $     61,676   $    79,857   $    97,536
Interest cost                                         224,280       216,029       214,210
Expected return on plan assets                       (363,067)     (353,329)     (346,911)
Net amortization and deferral                         (62,530)      (67,337)      (41,489)
                                                 ------------   -----------   -----------
Net periodic benefit cost                        $   (139,641)  $  (124,780)  $   (76,654)
                                                 ============   ===========   ===========
</TABLE>

    401(k) Plan:  The Bank has a 401(k) profit-sharing plan for the benefit of
all employees who have attained the age of 21 and completed one year of
continuous service.  The Plan as amended allows participating employees to
contribute up to 15% of their annual compensation and permits the Bank to make
discretionary non-matching contributions to the Plan in such amount as the
Board may determine to be appropriate.  Contributions made to the Plan by the
Bank for the years ended December 31, 2001, 2000 and 1999, were $51,000,
$59,000 and $23,000, respectively.

                                     39
<PAGE>

    Postretirement Benefit Plans:  Citizens National Bank sponsors a
postretirement healthcare plan and a postretirement life insurance plan for
all retired employees that meet certain eligibility requirements.  Both plans
are contributory with retiree contributions that are adjustable based on
various factors, some of which are discretionary.  The plans are unfunded.
Other information relative to these plans follows:

<TABLE>
<CAPTION>
                                                  Health Care    Health Care    Health Care
                                                      Plan           Plan           Plan
                                                     2001           2000           1999
                                                 ------------   ------------   ------------
<S>                                              <C>            <C>            <C>
Change in benefit obligation

Benefit obligation at beginning of year          $    405,213   $    387,693   $    399,876
Service cost                                           17,426         16,883         16,119
Interest cost                                          27,038         25,811         25,201
Change in discount rate                                  -              -              -
Experience loss/(gain)                                 30,707            811        (25,245)
Net amortization and deferral                            -              -              -
Benefits paid                                         (33,994)       (25,985)       (28,258)
                                                 ------------   ------------   ------------
Benefit obligation at end of year                $    446,390   $    405,213   $    387,693
                                                 ============   ============   ============

Change in plan assets

Fair value of plan assets at beginning of year   $       -      $       -      $       -
Actual return on plan assets                             -              -              -
Employer contribution                                    -              -              -
Plan participants' contributions                       33,994         25,985         28,258
Experience (loss)/gain                                   -              -              -
Benefits paid                                         (33,994)       (25,985)       (28,258)
                                                 ------------   ------------   ------------
Fair value of plan assets at end of year         $       -      $       -      $       -
                                                 ============   ============   ============

Funded status                                    $   (446,390)  $   (405,213)  $   (387,693)
Unrecognized net actuarial gain                       (52,191)       (85,761)       (89,860)
Unrecognized prior service benefit                       -              -              -
Unrecognized net obligation at transition             188,216        205,327        222,438
                                                 ------------   ------------   ------------
Prepaid (accrued) benefit cost                   $   (310,365)  $   (285,647)  $   (255,115)
                                                 ============   ============   ============

Weighted-average assumptions as of December 31

Discount rate                                           7.25%          7.25%          6.75%
Expected return on plan assets                          7.00%          7.00%          7.00%
Rate of compensation increase                           -              -              -

Components of net periodic benefit cost

Service cost                                     $     17,426   $     16,883   $     16,119
Interest cost                                          27,038         25,811         25,201
Expected return on plan assets                         (2,863)        (3,288)        (1,662)
Net amortization and deferral                          17,111         17,111         17,111
Recognized net actuarial loss                            -              -              -
                                                 ------------   ------------   ------------
Net periodic benefit cost                        $     58,712   $     56,517   $     56,769
                                                 ============   ============   ============
</TABLE>

                                     40
<PAGE>

<TABLE>
<CAPTION>
     Life          Life         Life
 Insurance     Insurance     Insurance
     Plan        Plan           Plan          Total        Total        Total
   2001          2000          1999            2001         2000         1999
-----------   -----------   -----------    -----------  -----------  -----------
<S>           <C>           <C>             <C>          <C>          <C>
$   83,540    $   93,331    $   93,697      $  488,753   $  481,024   $  493,573
     3,542         4,018         3,860          20,968       20,901       19,979
     5,760         6,506         6,048          32,798       32,317       31,249
      -             -             -               -            -            -
   (40,679)      (16,539)       (6,854)         (9,972)     (15,728)     (32,099)
      -             -             -               -            -            -
    (3,499)       (3,776)       (3,420)        (37,493)     (29,761)     (31,678)
-----------   -----------   -----------     -----------  -----------  -----------
$   48,664    $   83,540    $   93,331      $  495,054   $  488,753   $  481,024
===========   ===========   ===========     ===========  ===========  ===========

$     -       $     -       $     -         $     -      $     -      $     -
      -             -             -               -            -            -
      -             -             -               -            -            -
     3,499         3,776         3,420          37,493       29,761       31,678
      -             -             -               -            -            -
    (3,776)       (3,776)       (3,420)        (37,770)     (29,761)     (31,678)
-----------   -----------   -----------     -----------  -----------  -----------
$     (277)   $      -      $      -        $     (277)  $      -     $      -
===========   ===========   ===========     ===========  ===========  ===========

$  (48,664)   $  (83,540)   $  (93,331)     $ (495,054)  $ (488,753)  $ (481,024)
   (71,804)      (32,664)      (16,592)       (123,995)    (118,425)    (106,452)
      -             -             -               -            -            -
    42,177        46,012        49,847         230,393      251,339      272,285
-----------   -----------   -----------     -----------  -----------  -----------
$  (78,291)   $  (70,192)   $  (60,076)     $ (388,656)  $ (355,839)  $ (315,191)
===========   ===========   ===========     ===========  ===========  ===========

     7.25%         7.25%         6.75%
     7.00%         7.00%         7.00%
     4.00%         4.00%         4.00%

$    3,542    $    4,018    $    3,860      $   20,968   $   20,901   $   19,979
     5,760         6,506         6,048          32,798       32,317       31,249
    (1,539)         (467)          (25)         (4,402)      (3,755)      (1,687)
     3,835         3,835         3,835          20,946       20,946       20,946
      -             -             -               -            -            -
-----------   -----------   -----------     -----------  -----------  -----------
$   11,598    $   13,892    $   13,718      $   70,310   $   70,409   $   70,487
===========   ===========   ===========     ===========  ===========  ===========
</TABLE>

                                     41
<PAGE>

     For measurement purposes, the maximum monthly benefit of $100 payable per
eligible retiree under the postretirement health care plan was assumed with no
future increases.  Accordingly, an assumed 1 percentage point annual increase
or decrease in health care cost trend rates would not impact the health care
plan's accumulated postretirement benefit obligation at December 31, 2001 or
the aggregate of the service and interest cost components of the health care
plan's net postretirement benefit cost for the year ended December 31, 2001.

     Executive Supplemental Income Plan  The liability accrued for the Executive
Supplemental Income Plan at December 31, 2001 and 2000 was $235,849 and
$221,918, respectively, which is included in other liabilities.  In addition,
the Bank has purchased certain insurance contracts to fund the liabilities
arising under this plan.  At December 31, 2001 and 2000, the cash surrender
value of these insurance contracts was $279,553 and $232,246, respectively.
Expenses associated with the Plan at December 31, 2001, 2000 and 1999 were
$23,222, $32,348 and $27,842, respectively.

NOTE 10.  OTHER BORROWINGS

     Short-Term Borrowings:  During 2001 and 2000, the Company's short-term
borrowings consisted of securities sold under agreements to repurchase
(repurchase agreements) and advances under a line of credit with the Federal
Home Loan Bank of Pittsburgh (FHLB).  Interest is paid on the repurchase
agreements based on either fixed or variable rates as determined upon
origination.  At December 31, 2001 and 2000, securities with an amortized cost
of $12,610,745 and $12,480,939, respectively, and estimated fair values of
$12,963,391 and $12,482,350, respectively, were pledged to secure the
repurchase agreements.

     As a member of the FHLB, the subsidiary bank has access to various lines of
credit under programs administered by the FHLB.  Borrowings under these
arrangements bear interest at the interest rate posted by the FHLB on the day
of the borrowing and are subject to change daily.  The lines of credit are
secured by a blanket lien on all unpledged and unencumbered assets.

     The following information is provided relative to these obligations:

<TABLE>
<CAPTION>
                                                       2001                          2000
                                            ---------------------------   ---------------------------
                                               Repurchase    Line of       Repurchase      Line of
                                               Agreement      Credit        Agreement      Credit
                                            ---------------  ----------   ------------   ------------
<S>                                           <C>             <C>         <C>            <C>
Amount outstanding at December 31             $  11,090,675   2,831,000   $  9,040,699   $  3,326,000

Weighted average interest rate at December 31         2.99%       2.09%          5.71%          6.81%

Maximum month-end amount outstanding          $  13,098,393   2,831,000   $ 10,370,965   $  3,765,000

Average daily amount outstanding              $   9,820,363     346,718   $  8,946,696   $    630,109

Weighted average interest rate for the year           4.02%       4.95%          5.46%          6.56%
</TABLE>

     Long-Term Borrowings: The Company's long-term borrowings of $787,523 and
$867,686 at December 31, 2001 and 2000, respectively, consist of advances from
the FHLB which are used to finance specific lending activities.  Interest is
paid at the rate of 5.43% for the year ended December 31, 2001.

     A summary of the maturities of the Company's long-term borrowings for the
next five years is as follows:

 Year                       Amount
------                    ----------
 2002                     $  486,093
 2003                          5,719
 2004                          6,011
 2005                          6,319
 2006                          6,642
 2007 and thereafter         276,739
                          ----------

                          $  787,523
                          ==========

                                      42
<PAGE>

NOTE 11.  COMMITMENTS AND CONTINGENCIES

     At December 31, 2001 and 2000, the subsidiary bank maintained required
reserve balances with the Federal Reserve Bank of Richmond approximating
$1,061,000 and $940,000, respectively. The Bank does not earn interest on such
reserve balances.

     Litigation: The Company is involved in various legal actions arising in
the ordinary course of business. In the opinion of counsel, the outcome of
these matters will not have a significant adverse effect on the Company.

     Financial Instruments With Off-Balance-Sheet Risk: The subsidiary bank is
a party to financial instruments with off-balance-sheet risk in the normal
course of business to meet the financing needs of its customers. These
financial instruments include commitments to extend credit and standby letters
of credit. Those instruments involve, to varying degrees, elements of credit
and interest rate risk in excess of the amount recognized in the consolidated
balance sheets. The contract amounts of those instruments reflect the extent of
involvement the Bank has in particular classes of financial instruments.

                                           Contract Amount
Financial instruments whose contract -----------------------------
   amounts represent credit risk         2001            2000
--------------------------------     -------------   -------------
Commitments to extend credit         $  20,977,493   $  16,544,127
Standby letters of credit                  426,647         167,452
                                     -------------   -------------
                                     $  21,404,140   $  16,711,579
                                     =============   =============

     The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and
standby letters of credit is represented by the contractual amount of those
instruments. The Bank uses the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet instruments.

     Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. The Bank evaluates each customer's credit
worthiness on a case-by-case basis. The amount of collateral obtained, if
deemed necessary by the Bank upon extension of credit, is based on management's
credit evaluation. Collateral held varies but may include accounts receivable,
inventory, equipment or real estate.

     Standby letters of credit are conditional commitments issued by the Bank
to guarantee the performance of a customer to a third party. Those guarantees
are primarily issued to support private borrowing arrangements. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loans. These letters of credit are generally uncollateralized.

NOTE 12.  SHAREHOLDERS' EQUITY AND RESTRICTIONS ON DIVIDENDS

     The primary source of funds for the dividends paid by Citizens Financial
Corp. is dividends received from its banking subsidiary, Citizens National
Bank. Dividends paid by the subsidiary bank are subject to restrictions by
banking regulations. The most restrictive provision requires approval by the
Office of the Comptroller of the Currency if dividends declared in any year
exceed the year's net income, as defined, plus the retained net profits of the
two preceding years. During 2002, the net retained profits available for
distribution to Citizens Financial Corp. as dividends without regulatory
approval approximate $1,924,819 plus net income of the subsidiary bank for the
interim periods through the date of declaration.

     The Bank is subject to various regulatory capital requirements
administered by the federal banking agencies. Under capital adequacy guidelines
and the regulatory framework for prompt corrective action, the Bank must meet
specific capital guidelines that involve quantitative measures of the Bank's
assets, liabilities and certain off-balance-sheet items as calculated under
regulatory accounting practices. The Bank's capital amounts and classification
are also subject to qualitative judgments by the regulators about components,
risk weightings and other factors.

                                      43
<PAGE>

     Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to
average assets (as defined). Management believes, as of December 31, 2001, that
the Bank meets all capital adequacy requirements to which it is subject.

     The most recent notification from the Office of the Comptroller of the
Currency categorized the Bank as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well capitalized
the Bank must maintain minimum total risk-based, Tier I risk-based, and Tier I
leverage ratios as set forth in the table below. There are no conditions or
events since that notification that management believes have changed the
institution's category.

     The Bank's actual capital amounts and ratios are presented in the following
table (in thousands).

<TABLE>
<CAPTION>
                                                                            To Be Well Capitalized
                                                         For Capital        Under Prompt Corrective
                                   Actual             Adequacy Purposes        Action Provisions
                           ----------------------   --------------------   -------------------------
                             Amount       Ratio       Amount     Ratio        Amount         Ratio
                           ---------     --------   ---------   --------   -----------      --------
<S>                         <C>           <C>       <C>          <C>       <C>               <C>
As of December 31,
   2001:
Total Capital              $  19,618      16.40%    $   9,567    8.00%     $    11,959       10.00%
   (to Risk Weighted
   Assets)
Tier I Capital                18,220      15.24%        4,784    4.00%           7,176        6.00%
   (to Risk Weighted
   Assets)
Tier I Capital                18,220      10.99%        6,630    4.00%           9,944        6.00%
   (to Average Assets)

As of December 31,
   2000:
Total Capital              $  18,351      17.25%    $   8,508    8.00%     $    10,635       10.00%
   (to Risk Weighted
   Assets)
Tier I Capital                17,200      16.17%        4,254    4.00%           6,381        6.00%
   (to Risk Weighted
   Assets)
Tier I Capital                17,200      11.46%        6,006    4.00%           9,009        6.00%
   (to Average Assets)
</TABLE>

NOTE 13. FAIR VALUE OF FINANCIAL INSTRUMENTS

     The following summarizes the methods and significant assumptions used by
the Company in estimating its fair value disclosures for financial instruments.

     Cash and due from banks: The carrying values of cash and due from banks
approximate their estimated fair values.

     Federal funds sold: The carrying values of federal funds sold approximate
their estimated fair values.

     Securities: Estimated fair values of securities are based on quoted market
prices, where available. If quoted market prices are not available, estimated
fair values are based on quoted market prices of comparable securities.

     Loans: The estimated fair values for loans are computed based on scheduled
future cash flows of principal and interest, discounted at interest rates
currently offered for loans with similar terms to borrowers of similar credit
quality. No prepayments of principal are assumed.

     Accrued interest receivable and payable: The carrying values of accrued
interest receivable and payable approximate their estimated fair values.

                                      44
<PAGE>

     Deposits: The estimated fair values of demand deposits (i.e. noninterest
bearing checking, NOW, Super NOW) money market, savings and other variable rate
deposits approximate their carrying values. Fair values of fixed maturity
deposits are estimated using a discounted cash flow methodology at rates
currently offered for deposits with similar remaining maturities. Any
intangible value of long-term relationships with depositors is not considered
in estimating the fair values disclosed.

     Short-term borrowings: The carrying values of short-term borrowings
approximate their estimated fair values.

     Long-term borrowings: The fair values of long-term borrowings are
estimated by discounting scheduled future payments of principal and interest at
current rates available on borrowings with similar terms.

     Off-balance-sheet instruments: The fair values of commitments to extend
credit and standby letters of credit are estimated using the fees currently
charged to enter into similar agreements, taking into account the remaining
terms of the agreements and the present credit standing of the counterparties.
The amounts of fees currently charged on commitments and standby letters of
credit are deemed insignificant, and therefore, the estimated fair values and
carrying values are not shown below.

     The carrying values and estimated fair values of the Company's financial
instruments are summarized below:

<TABLE>
<CAPTION>
                                        December 31, 2001                 December 31, 2000
                                   -----------------------------     -----------------------------
                                                     Estimated                         Estimated
                                     Carrying          Fair            Carrying           Fair
                                       Value           Value             Value           Value
                                   -------------   -------------     -------------   -------------
<S>                                <C>             <C>               <C>             <C>
Financial assets:
    Cash and due from banks        $   4,734,676   $   4,734,676     $   4,540,327   $   4,540,327
    Securities available for sale     48,964,467      48,964,467        42,337,429      42,337,429
    Loans                            107,074,843     111,578,178       101,032,931      96,780,225
    Accrued interest receivable        1,208,222       1,208,222         1,214,805       1,214,805
                                   -------------   -------------     -------------   -------------
                                   $ 161,982,208   $ 166,485,543     $ 149,125,492   $ 144,872,786
                                   =============   =============     =============   =============
Financial liabilities:
    Deposits                       $ 131,751,935   $ 132,740,001     $ 121,518,871   $ 121,517,690
    Short-term borrowings             13,921,675      13,921,675        12,366,699      12,366,699
    Long-term borrowings                 787,523         787,523           867,686         867,686
    Accrued interest payable             405,184         405,184           400,399         400,399
                                   -------------   -------------     -------------   -------------
                                   $ 146,866,317   $ 147,854,383     $ 135,153,655   $ 135,152,474
                                   =============   =============     =============   =============
</TABLE>

NOTE 14. CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY

     Information relative to the Parent Company's balance sheets at
December 31, 2001 and 2000, and the related statements of income and cash flows
for the years ended December 31, 2001, 2000 and 1999, are presented below.

                                                     December 31,
                                               ----------------------------
Balance Sheets                                      2001           2000
--------------                                 -------------   ------------
Assets
Cash                                           $       5,333   $      6,265
Investment in subsidiaries                        19,012,715     17,383,907
Due from subsidiary                                    4,299           -
                                               -------------   ------------
   Total assets                                $  19,022,347   $ 17,390,172
                                               =============   ============
Shareholders' equity
Common stock, $2.00 par value, 2,250,000
   shares authorized, issued 750,000 shares    $   1,500,000   $  1,500,000
Additional paid-in capital                         2,100,000      2,100,000
Retained earnings                                 16,890,758     15,830,556
Accumulated other comprehensive income               606,155        (15,817)
Treasury stock at cost, 101,127 and 99,388
   shares, respectively                           (2,074,566)    (2,024,567)
                                               -------------   ------------
   Total shareholders' equity                  $  19,022,347   $ 17,390,172
                                               =============   ============



                                      45
<PAGE>

                                       For the Years Ended December 31,
                                    -----------------------------------------
Statements of Income                    2001          2000           1999
--------------------                -----------   ------------   ------------
Income - dividends from
   subsidiary bank                  $   902,599   $    976,360   $    989,047
Expenses - operating                      4,700          4,300          4,400
                                    -----------   ------------   ------------
Income before equity in
   undistributed income of
   subsidiary bank and insurance
   subsidiary                           897,899        972,060        984,647
Equity in undistributed income of
   subsidiaries                       1,006,836        917,183        116,010
                                    -----------   ------------   ------------

Net income                          $ 1,904,735   $  1,889,243   $  1,100,657
                                    ===========   ============   ============

                                    For the Years Ended December 31,
                                ------------------------------------------
Statements of Cash Flows            2001           2000          1999
------------------------        -------------  ------------ --------------
Cash Flows from Operating
   Activities
Net income                      $  1,904,735   $ 1,889,243   $ 1,100,657
Adjustments to reconcile net
   income to net cash provided
    by operating activities:
Equity in undistributed
   (income) of subsidiaries       (1,006,836)     (917,183)     (116,010)
Increase in amount due from
   subsidiary                         (4,299)         -             -
                                -------------  ------------  -------------
Cash provided by operating
   activities                        893,600       972,060       984,647
                                -------------  ------------  -------------
Cash Flows from Investing
   Activities
Investment in insurance
   subsidiary                           -           (7,100)         -
                                -------------  ------------  -------------
Cash (used in) investing
   activities                           -           (7,100)         -
                                -------------  ------------  -------------
Cash Flows from Financing
   Activities
Dividends paid to
   shareholders                     (844,533)     (781,434)     (723,211)
Acquisition of treasury
   stock                             (49,999)     (180,985)     (260,688)
                                -------------  ------------  -------------
Cash (used in) financing
   activities                       (894,532)     (962,419)     (983,899)
                                -------------  ------------  -------------
Increase (decrease) in cash             (932)        2,541           748

Cash:
   Beginning                           6,265         3,724         2,976
                                -------------  ------------  -------------
   Ending                       $      5,333   $     6,265   $     3,724
                                =============  ============  =============

                                      46
<PAGE>

                           [LOGO OF ARNETT & FOSTER]


                         INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
Citizens Financial Corp.
   and Subsidiaries
Elkins, West Virginia

     We have audited the accompanying consolidated balance sheets of Citizens
Financial Corp. and its subsidiaries as of December 31, 2001 and 2000, and the
related consolidated statements of income, comprehensive income, changes in
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 2001. 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, 2001 and 2000, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States of America.

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

                                /s/ Arnett & Foster, P.L.L.c.

Charleston, West Virginia
January 11, 2002

                                      47
<PAGE>

Item 9.  Changes in and Disagreements with Accountants on Accounting and
------------------------------------------------------------------------
          Financial Disclosure
          --------------------

     No reportable items.

PART III
--------

Item 10.  Directors and Executive Officers of the Registrant
------------------------------------------------------------

     The number of directors of the Company may consist of not less than five
nor more than twenty-five persons in accordance with the Company's Articles of
Incorporation. The number of directors is fixed by resolution of a majority
vote of the shareholders. Currently, the number of directors of the Company is
fixed at nine. Directors are divided into three classes and serve a staggered
three year term. The following table sets forth the names of the persons who
have served as directors of Citizens Financial Corp. for the year ended
December 31, 2001, as well as those appointed to serve in that capacity
subsequent to December 31, 2001, their ages and principal occupations, the
length of their service to Citizens Financial Corp. and the expiration of their
present term.

                     Principal
                     Occupation                                Present
                     During Past            Director           Term
 Name and Age        Five Years             Since (1)          Expires
 ------------        -----------            ---------          -------

 Robert N. Alday     President,             September, 1986    April, 2003
 86                  Phil Williams
                     Coal Company

 Max L. Armentrout   President, and         September, 1986    April, 2002 (2)
 64                  Chairman of the Board
                     Laurel Lands Corp.;
                     Chairman of the
                     Board, Citizens
                     Financial Corp.

 William J. Brown    President, Hess        February,  2000    April, 2004
 55                  Oil Co., Inc.
                     Co-Owner,Elkins
                     Builders Supply, LLC

 Edward L. Campbell  Co-Owner,              February, 2000     April, 2004
 62                  Retired, Campbell's
                     Market

 Raymond L. Fair     Attorney-at-Law        September, 1986    April, 2002 (2)
 74

 John F. Harris      Retired,               September, 1986    April, 2002  (2)
 74                  Transportation
                     Industry; Senior
                     Vice President,
                     Citizens National Bank


                                      48
<PAGE>

                        Principal
                        Occupation                          Present
                        During Past       Director          Term
Name and Age            Five Years        Since (1)         Expires
------------            -----------       ---------         -------

Cyrus K. Kump           President,        June, 1992        April, 2003
55                      Kump Enterprises
                        Kerr Real Estate

Robert J. Schoonover    President and     April, 1998       April, 2004
62                      Chief Executive
                        Officer, Citizens
                        Financial Corp.
                        and Citizens
                        National Bank

L. T. Williams          Consultant,       September, 1986   April, 2002 (2)
71                      Retired, Elkins
                        Builders Supply

(1)   All of the above named directors, with the exception of Mr. Alday,
      have also served as directors of Citizens National Bank for the past
      five years on a continuous basis. Mr. Alday has not served Citizens
      National Bank in any official capacity.

(2)  Messrs. Armentrout, Fair, Harris and Williams have been nominated to
      stand for reelection to an additional 3 year term expiring in April,
      2005.

      Set forth below are the executive officers of Citizens Financial Corp.,
their age, present position and relations that have existed with affiliates and
others during the past five years.

                                         Principal Occupation and
                       Present           Banking Experience During
Name and Age           Position          the Last Five Years
------------           --------          -------------------------

Max L. Armentrout      Chairman of       President and Chairman of
64                     the Board         the Board, Laurel Lands Corp.;
                                         Chairman of the Board,
                                         Citizens Financial Corp.

Robert J. Schoonover   President and     President and Chief Executive
62                     Chief Executive   Officer, Citizens National Bank
                       Officer

Raymond L. Fair        Vice President    Attorney-at-Law; Director,
74                                       Citizens Financial Corp.

Thomas K. Derbyshire   Vice President    Vice President and Chief Financial
43                     and Treasurer     Officer, Citizens National Bank

Leesa M. Harris        Secretary         Vice President and Trust Officer,
38                                       Citizens National Bank; Executive
                                         Secretary, Citizens National Bank


                                      49
<PAGE>

Item 11.  Executive Compensation
--------------------------------

     The executive officers of Citizens Financial Corp. serve without
compensation from the Company. They are, however, compensated by Citizens
National Bank for serving as Bank officers with the exception of Messrs.
Armentrout and Fair who are not employed by the Bank. The following table sets
forth the compensation of the Company's CEO for the years 2001, 2000 and 1999.
No executive officers received total annual salary and bonus exceeding $100,000.

                       SUMMARY COMPENSATION TABLE

                                                            Other Annual
        Name and                      Salary                Compensation
    Principal Position        Year      $          Bonus         $
-------------------------------------------------------------------------
Robert J. Schoonover,        2001     95,231         -     12,350 (1) (2)
President & CEO              2000     88,144         -     16,981 (1) (2)
                             1999     85,077         -     13,377 (1) (2)

(1)   The Bank's group life and health insurance program, which is paid
      for by the Bank, is made available to all full-time employees and does
      not discriminate in favor of directors or officers; however, in
      accordance with IRS Code Section 79, the cost of group term life
      insurance coverage for an individual in excess of $50,000 is added to
      the individual's earnings and is included in this figure. Also included
      in this figure are board fees earned and the Company's contributions to
      the individuals 401(k) retirement savings program to which the
      individual has a vested interest.

(2)   The Bank's contributions to the pension plan, a defined benefit plan, are
      not and cannot be calculated separately for specific participants. No
      contributions were made by the Bank in the years presented. The Bank's
      executive supplemental income plan provides retirement benefits
      conditioned upon continued employment until retirement or the satisfaction
      of early retirement criteria. Participants are deemed to receive no
      compensation until such conditions are satisfied.

      Neither the Company nor the Bank maintain any form of stock option, stock
appreciation rights, or other long-term compensation plans. Directors of the
registrant are compensated for meetings attended in the amount gf $100 per
meeting. Directors of the Bank receive $500 per meeting. Under normal
circumstances, the Board of Citizens Financial Corp. meets quarterly while the
Citizens National Bank Board meets monthly. Directors who are members of the
Bank's loan committee, which meets weekly, receive $400 per month. In addition,
the chairman of Citizens Financial Corp. receives $1,500 per month for service
in that capacity, while the vice-president receives $700. The senior
vice-president of the Bank receives $1,250 monthly for his services. No
employment contracts or change in control arrangements exist between any
executive officer and the registrant, or it's subsidiaries.

      Compensation of the bank's executive officers, including its president, is
determined by the personnel committee. The committee is comprised of five
outside directors. Compensation levels are determined after consideration is
given to net income objectives and cost of living factors. This process is
consistent with that used to determine the compensation levels of all other
employees. No specific criteria exist which relates executive compensation to
corporate performance and executives receive no preferential consideration in
the establishment of compensation.


                                      50
<PAGE>

Pension Benefits
----------------

     Citizens Financial Corp. and Citizens Financial Services, LLC, having no
employees, have no retirement program, but Citizens National Bank has a pension
program for its eligible employees. This pension plan is a qualified retirement
plan and is available to all full-time employees, including officers, who meet
the eligibility requirements. Directors do not participate in this plan.
Pensions for all participants are based on five-year average final
compensation. Annual compensation for the pension plan includes overtime pay
and bonuses. Credits are received for each year of participation at the
following rates: 1 percent of the first $9,600.00 of the 5-year average final
compensation and 1.5 percent of such average final compensation in excess of
$9,600.00, all multiplied by years of service up to a 25-year maximum. The
pension benefits are payable to participants on a monthly basis in the form of
a joint and 50 percent survivor annuity for all married participants who do not
elect otherwise, or in the form of a single life annuity for all other
participants or survivors. Joint and 100 percent survivorship, single life
annuity or 120 payments guaranteed are other optional forms of distribution.

     The following table represents the normal pension, beginning at age
sixty-five, based upon assumed final pay and years of credited services:

                                        Annual Benefits
                      ----------------------------------------------------
                       15 yrs.               20 yrs.              25 yrs.
  Assumed              Credited              Credited             Credited
Remuneration           Service               Service              Service
--------------------------------------------------------------------------
$20,000               $ 3,780               $ 5,040              $ 6,300
 40,000                 8,280                11,040               13,800
 60,000                12,780                17,040               21,300
 80,000                17,280                23,040               28,800
100,000                21,780                29,040               36,300
120,000                26,280                35,040               43,800

     The estimated credited years of service for the executive officers of
Citizens Financial Corp. in the pension plan of Citizens National Bank are as
follows:

                       Years of Credited Service*
                      -------------------------
Robert J. Schoonover                   28
Thomas K. Derbyshire                   10

     * Max L. Armentrout and Raymond L. Fair are not participants in the
pension plan of Citizens National Bank.

401-(k) Plan
------------

     The Bank has established a 401-(k) plan for the benefit of all employees
who meet eligibility requirements. A description of the Plan, the eligibility
requirements and the contributions made to the Plan by the Bank for the years
ended December 31, 2001, 2000 and 1999 may be found in Note 9 to the
Consolidated Financial Statements which begins on page 39 of this report.

Executive Supplemental Income Plan
----------------------------------

     The Bank has entered into a nonqualified supplemental income plan with
certain senior officers as described in Note 9 to the Consolidated Financial
Statements which



                                      51
<PAGE>

begins on page 39 of this report. A copy of the Plan, and the
amendments thereto, are incorporated herein by reference to the exhibits
contained in the Company's Forms 10-K dated December 31, 1997 and 1996.

Item 12. Security Ownership of Certain Beneficial Owners and Management
-----------------------------------------------------------------------

     The following table lists each shareholder who is the beneficial owner
of more than 5% of the Company's common stock, the only class of stock
outstanding, as of March 6, 2002.

Name and Address               Amount and Nature of          Percent
of Beneficial Owner            Beneficial Ownership          of Class
-------------------            --------------------          --------

Legg Mason Wood Walker, Inc.          36,710                   5.66%
c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY  11717

The Bank of New York                  36,475                   5.62%
925 Patterson Plank Rd.
Secaucus, NJ 07094

     The following table sets forth the amount and percentage of stock of
Citizens Financial Corp. beneficially owned by each director and executive
officer of the Company, and by all directors and executive officers as a group,
as of March 6, 2002.

                        Shares of Stock Beneficially Owned
                        ----------------------------------      Percent of
Name                    Direct       Indirect        Total      Ownership
----                    ------       --------        -----      ---------

Robert N. Alday            500        20,200 (1)    20,700        3.19%
Max L. Armentrout       23,990         4,000 (2)    27,990        4.31%
William J. Brown           750           750 (3)     1,500         .23%
Edward L. Campbell         500           150 (4)       650         .10%
Raymond L. Fair          3,828         4,200 (5)     8,028        1.24%
John F. Harris             500         5,500 (6)     6,000         .92%
Cyrus K. Kump              500         1,750 (7)     2,250         .35%
Robert J. Schoonover       500           100 (8)       600         .09%
L. T. Williams           1,750             0         1,750         .27%
Thomas K. Derbyshire        70             0            70         .01%
Directors and
  executive officers of
  the Bank               4,825         8,405        13,230        2.04%
All Directors and
  executive officers
  as a group            37,713        45,055        82,768       12.76%

(1)   Mr. Alday's indirect ownership includes 6,800 shares owned by his
      wife and 13,400 shares which he votes for the Phil Williams Coal Company.

(2)   These 4,000 shares are owned by Mr. Armentrout's wife.

(3)   Includes 250 shares owned jointly with his wife and 500 shares held
      in custody for their children.

(4)   Includes 100 shares owned jointly with his wife and 50 shares owned
      by his wife.

(5)   These 4,200 shares are owned by Mr. Fair's wife.



                                      52
<PAGE>

(6)   These 5,500 shares are owned jointly with his wife.

(7)   Includes 1,000 shares owned by his wife and 750 shares held in custody
      for their children.

(8)   These 100 shares are owned jointly with his wife.

(9)   This figure represents the ownership of persons who are directors or
      officers of the subsidiary bank but not of the Company. Such persons
      number eleven.

Item 13.  Certain Relationships and Related Transactions
--------------------------------------------------------

     Management personnel of Citizens Financial Corp. have had and expect to
continue to have banking transactions with Citizens National Bank in the
ordinary course of business. Extensions of credit to such persons are made in
the ordinary course of business on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons. It is the opinion of management that these
transactions do not involve more than a normal risk of collectibility or
present other unfavorable features.

     During the year 2001, the highest aggregate indebtedness of all executive
officers and directors of the holding company, its subsidiaries, and their
related interest was $6,079,000 or 31.96 percent of the equity capital of
Citizens Financial Corp. As of December 31, 2001, outstanding loan balances to
related parties totaled $4,166,000 or 21.90 percent of equity capital with
unused lines of credit of $871,000 or 4.58 percent of the equity capital of
Citizens Financial Corp. outstanding to these parties.

     Other than loans originated in the normal course of business by the Bank,
none of the directors, executive officers, 5 percent or more beneficial
stockholders or their immediate family members have an interest or are involved
in any transactions with Citizens Financial Corp. or Citizens National Bank in
which the amount involved exceeds $60,000, or was not subject to the usual
terms or conditions, or was not determined by competitive bids. Information
related to loans granted to related parties in excess of $60,000 is contained
in Note 4 to the Consolidated Financial Statements, which begins on page 34 of
this report. Similarly, no director, executive officer or 5 percent or more
beneficial stockholder has an equity interest in excess of 10 percent in a
business or professional entity that has made payments to or received payments
from Citizens Financaal Corp. or Citizens National Bank in 2001 which exceeds 5
percent of either party's gross revenue.


                                      53
<PAGE>

Part IV
-------

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K
-------------------------------------------------------------------------

(a)   (1) and (2) Financial Statements and Financial Statement Schedules.
      All financial statements and financial statement schedules required to
      be filed by Item 8 of this Form or by Regulation S-X which are
      applicable to the registrant have  been presented in the financial
      statements, notes thereto, in management's discussion and analysis of
      financial condition and results of operations or elsewhere where
      appropriate.
      (3)  Listing of Exhibits - see Index to Exhibits on page 54.

(b)   Reports on Form 8-K - No reports on Form 8-K were filed during the fourth
      quarter of 2001.

(c)   Exhibits - see index to Exhibits on page 54 of this Form 10-K.

(d)   Consolidated Financial Statement Schedules - All other schedules
      for which provision is made in the applicable accounting regulation of
      the Securities and Exchange Commission are not required under the
      related instructions or are inapplicable or pertain to items as to which
      the required disclosures have been made elsewhere in the financial
      statements and notes thereto, and therefore have been omitted.

Item 14(c)  Index to Exhibits
-----------------------------
                                            S-K 601          Sequential
Description                             Table Reference      Page Number
-----------                             ---------------      -----------

Plan of acquisition, reorganization,
 arrangement, liquidation or succession       2                  N/A
Articles or incorporation and bylaws:         3                  N/A
 (a) Articles of Incorporation                                   (e)
 (b) Bylaws                                                      (d)
Instruments defining the rights of security
  holders including indentures                4                  N/A
Voting trust agreements                       9                  N/A
Material contracts                           10                  (c)
Statement Re: Computation of per
 share earnings                              11                  (a)
Statements Re: Computation of ratios         12                  (a)
Letter re: change in certifying accountant   16                  N/A
Letter re: change in accounting principles   18                  N/A
Subsidiaries of the registrant               21                   58
Published report regarding matters submitted
 to vote of security holders                 22                 59-60
Consents of experts and counsel              23                   61
Power of attorney                            24                  N/A
Additional exhibits                          99                  (b)

(a)   The computation of minimum standard capital ratios, which are shown
      on page 44 of this filing, was done as specified in applicable
      regulatory guidelines. All other ratios presented may be clearly
      determined from the material contained in this filing.

(b)   List of permitted nonbanking activities previously filed on pages
      47-49 of Form S-4 Registration Statement of Citizens Financial Corp.,
      SEC File No. 33-11423, dated February 19, 1987 is incorporated by
      reference into this filing.


                                      54
<PAGE>

(c)   The Bank's Executive Supplemental Income Agreement as previously
      filed on pages 74 - 80 of its Form 10-K dated December 31, 1995 and
      thereafter amended and filed on page 62 of the Company's Form 10-K dated
      December 31, 1996, is incorporated by reference into this filing. Also
      incorporated by reference is the Company's Purchase and Assumption
      Agreement with South Branch Valley National Bank for the purchase of its
      banking facilities, assets and liabilities located in Petersburg, West
      Virginia dated December 17, 1999 and filed on pages 71-113 of the
      Company's Form 10-K dated December 31, 1999.

(d)   The Company's Bylaws, which were previously filed on pages 64-71 of
      its Form 10-K dated December 31, 1998, are incorporated by reference
      into this filing.

(e)   The Company's Articles of Incorporation, which were previously filed
      on pages 66-70 of its Form 10-K dated December 31, 1999, are
      incorporated by reference into this filing.



                                     55
<PAGE>

                                  Signatures

     Pursuant to the requirements of Section 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                               Citizens Financial Corp.

                            By  /s/ Robert J. Schoonover
                               -------------------------------------
                               Robert J. Schoonover
                               President and Chief Executive Officer

                            By  /s/ Thomas K. Derbyshire
                               ----------------------------------------
                               Thomas K. Derbyshire
                               Treasurer and Principal Financial Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

        Signature                    Title                          Date
        ---------                    -----                          ----

 /s/ Max L. Armentrout           Chairman of the Board            3/12/02
-------------------------        and Director                     -------
     Max L. Armentrout

                                 Director
-------------------------                                         -------
     Robert N. Alday

 /s/ William J. Brown            Director                         3/12/02
-------------------------                                         -------
     William J. Brown

 /s/ Edward L. Campbell          Director                         3/13/02
-------------------------                                         -------
     Edward L. Campbell

 /s/ Raymond L. Fair             Director                         3/12/02
-------------------------                                         -------
     Raymond L. Fair

 /s/ John F. Harris              Director                         3/12/02
-------------------------                                         -------
     John F. Harris

 /s/ Cyrus K. Kump               Director                         3/12/02
-------------------------                                         -------
     Cyrus K. Kump

 /s/ Robert J. Schoonover        Director                         3/12/02
-------------------------                                         -------
     Robert J. Schoonover

 /s/ L. T. Williams              Director                         3/12/02
-------------------------                                         -------
     L. T. Williams

                                      56


<PAGE>

    SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
 SECTION 15 (d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
                       PURSUANT TO SECTION 12 OF THE ACT
                       ---------------------------------

The entire annual report and proxy materials mailed to the Company's
stockholders has been furnished to the Commission for its information under
separate cover, in paper format, concurrent with submission to stockholders on
March 15, 2002.

                                      57