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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C.
20549

FORM 10-K

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|x                                           | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934   
|------------------------------------------- | ----------------------------------------------------------------------------------------
|                                            |                                                                                         
|For the fiscal year ended December 31, 2002
|                                           
|or                                         
|                                           
|o                                           | 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                                                            
|                                                                    
|(State of Incorporation)                                            
|                                                                    
|213 Third St. Elkins, West Virginia                                 
|                                                                    
|(Address of Principal Executive Offices)                            
|                                                                    
|Registrants Telephone Number, Including Area Code:  (304) 636-4095 
|                                                                    
|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 o
|----- | ----

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 o
|----- | ----

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

|Yes o | No x
|----- | ----

The aggregate market value of Citizens Financial Corp. common stock, representing all of its voting stock that was held by nonaffiliates on the last business day of the registrant's
most recently completed second fiscal quarter (June 30, 2002), was approximately $18,452,000.

As of February 28, 2003, Citizens
Financial Corp. had 750,000 shares of common stock outstanding with a par value of $2.00.

This report contains 74 pages.

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CITIZENS FINANCIAL CORP. FORM 10-K INDEX

|         |         |                                                                                                | Page
|-------- | ------- | ---------------------------------------------------------------------------------------------- | ----
|         |         |                                                                                                |     
|Part I   | Item 1  | Business                                                                                       | 3   
|         | Item 2  | Properties                                                                                     | 11  
|         | Item 3  | Legal Proceedings                                                                              | 12  
|         | Item 4  | Submission of Matters to a Vote of Security Holders                                            | 12  
|         |         |                                                                                                |     
|Part II  | Item 5  | Market for the Registrants Common Stock and Related Shareholders Matters                      | 12  
|         | Item 6  | Selected Financial Data                                                                        | 14  
|         | Item 7  | Managements Discussion and Analysis of Financial Condition and Results of Operations          | 20  
|         | Item 7A | Quantitative and Qualitative Disclosures About Market Risk                                     | 30  
|         | Item 8  | Financial Statements and Supplementary Data                                                    | 33  
|         | Item 9  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure           | 58  
|         |         |                                                                                                |     
|Part III | Item 10 | Directors and Executive Officers of the Registrant                                             | 58  
|         | Item 11 | Executive Compensation                                                                         | 59  
|         | Item 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 61  
|         | Item 13 | Certain Relationships and Related Transactions                                                 | 62  
|         | Item 14 | Controls and Procedures                                                                        | 62  
|         |         |                                                                                                |     
|Part IV  | Item 15 | Exhibits, Financial Statement Schedules and Reports on Form 8-K                                | 63  

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Citizens Financial Corp.Form 10-K, Part I

|Item 1
     Business
|--------------------

Organizational History and Subsidiaries

Citizens Financial Corp., (Citizens or the company), is a $182 million bank holding company providing retail and commercial banking services
primarily in central and eastern West Virginia.  Citizens was incorporated in the State of Delaware in 1986 and is the parent company and sole owner of Citizens National Bank of Elkins, (the bank) and Citizens Financial Services,
LLC.

The bank was organized in West Virginia in 1923, received approval of the Comptroller of the Currency in 1924, and has continuously
operated as a national bank headquartered in Elkins, West Virginia since that time.  In 1987 the stockholders of the bank approved an Agreement and Plan of Reorganization whereby the bank became a wholly-owned subsidiary of Citizens Financial
Corp.  Since its formation, the bank has expanded to a six branch network by acquiring the Tucker County Bank in Parsons, West Virginia in 1984 and the Petersburg, West Virginia office of South Branch Valley National Bank in 2000.  It also
opened branch offices in Beverly, West Virginia in 1992, in Slatyfork, West Virginia in 2000, and in Marlinton, West Virginia in 2002.

Citizens Financial Services was organized in West Virginia in 2000 for the purpose of investing in ProServ Insurance Agency, LLC.  ProServ is a general insurance
agency selling primarily property and casualty insurance and whose members are member banks of the West Virginia Bankers Association.  Citizens Financial Services ownership in ProServ is less than 5%.

Business of Citizens and Subsidiaries

As a bank holding company, Citizens operations have been limited
to the ownership of its subsidiaries.  To date it has not sought to conduct any other form of permitted business activity, nor are there any current plans to do so. Similarly, Citizens Financial Services operations have been, and will
continue to be, limited to its ownership in ProServ.  The financial impact of this venture on Citizens has been extremely minor.

Citizens National Bank, however, provides a wide range of retail and commercial banking services including demand, savings and time deposits; residential, consumer
and commercial loans; letters of credit; safe deposit and wire transfer services; and ATM and telebanking services.  In addition, the bank operates a trust department and has formed relationships which allow it to provide brokerage and
financial planning services as well as fixed rate residential mortgages.

In competing with other financial service providers, the bank
utilizes selective pricing and marketing strategies but primarily relies on developing personal relationships with customers and providing superior customer service. The bank is heavily involved in local charitable, civic, educational and community
development efforts and prides itself on being a responsible corporate citizen.

Lending Activities

One of the objectives held by the banks founders is the granting of loans to creditworthy individuals and businesses, and the bank now provides such services
from 5 of its 6 offices.  In this regard, the bank has developed three

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primary loan portfolios:  real estate, commercial, and consumer. Real estate loans consist of both residential and nonresidential loans. Residential real estate loans are
typically made for the purchase or refinancing of single family homes and are usually secured by a first lien deed of trust.  In general, these loans do not exceed an 80% loan to value ratio as determined by the use of independent appraisals or
evaluations and carry a variable interest rate.  Nearly all residential mortgage loans are made within the banks primary market area and they tend to be in amounts of under $100,000.  Loans, be they for residential real estate or
other purposes, which exceed the established lending limit of the loan officer require approval of the directors loan committee.  Historically, Citizens has not experienced significant losses in this area and these loans are viewed among the
least risky made by the bank.  Nonetheless, these loans, particularly those with larger balances, are subject to periodic review by the banks loan review officer.

Commercial real estate loans consist of commercial mortgages which are generally secured by nonresidential and multifamily (5 or more) residential properties. 
These loans are typically made to local businesses and are subject to many of the same criteria and controls as residential real estate loans.  These loans do tend to be larger than residential real estate loans and usually require approval of
the directors loan committee as a result.  Because of their size and higher degree of risk, these loans are usually subject to more extensive credit analysis prior to being made as well as periodic review by the banks loan review
officer.

The commercial loan portfolio consists of loans to local businesses and are secured by liens on accounts receivable, inventory,
machinery and equipment, or other business assets.  If necessary, personal guarantees of the business owners, key man life insurance, and other forms of collateral are also required although business cash flow represents the primary source of
repayment.  These loans are subject to the risks of the borrowers industry.  Such industries include auto dealerships, lumbering and lumber related businesses, various tourism and hospitality businesses, and retail and wholesale
merchants.  Commercial loans are typically the largest loans made by the bank and are considered to carry a higher level of risk than other types of loans.  Underwriting standards require a comprehensive credit analysis, and the appraisal
of real property and significant machinery, such as lumbering equipment, held as collateral.  Citizens attempts to limit risk by diversifying its commercial loan portfolio within the constraints of its economic market and closely monitors any
concentrations of credit. Periodic credit reviews of commercial loans are performed by the loan review officer.

Consumer loans are made to
individuals for the financing of household and personal needs, often the purchase of a car.  In such cases the car is typically held as collateral although the bank does grant unsecured consumer loans usually for small amounts and with
significantly higher interest rates than otherwise offered.  Cash flow analysis and knowledge of the financial strength and character traits of the borrower are important considerations in granting many consumer loans.  When securing
consumer loans with cars, the value of the car relative to the loan is a key factor and is determined by auto industry guides. Loan terms on consumer loans are typically three to six years, depending on the type of collateral.  Unlike real
estate and commercial loans, few consumer loans require loan committee approval or are subject to review by the loan review officer.  As a result, risk is closely tied to adherence to proper underwriting procedures and the state of the local
economy.

Citizens credit policies and procedures, some of which were previously referred to, are updated periodically and approved
by the board of directors annually.  These policies and procedures are applied uniformly throughout Citizens banking network and are designed to ensure credit quality is maintained while meeting the legitimate credit needs of the
communities Citizens serves.

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Adherence to policies is ensured by testing by both the internal auditor and compliance officer.  Further information on the companys lending activities may be found
in the Managements Discussion and Analysis portion of this report as well as in the Notes to the accompanying consolidated financial statements.

Investment Activities

Funds not needed to satisfy loan demand or other operational needs are invested in a portfolio of securities designed to improve earnings, provide
liquidity, and balance interest sensitivity concerns.  Citizens investment policy is updated periodically and approved by the board of directors annually.  This policy limits securities which may be held to those of the U.S.
government or its agencies having maturities of less than 5 years; bank qualified, investment grade municipal obligations maturing in less than 10 years; investment grade corporate bonds with maturities of 5 years or less; and mortgage backed
obligations of the federal government having a weighted average life of under 10 years.  All purchases and sales of securities, together with municipal and corporate holdings of any single issuer which exceed 10% of capital and any holdings
with a credit quality below investment grade, are reported to the board of directors monthly. No such concentrations or credit quality issues existed at December 31, 2002.

The investment portfolio is managed by the companys chief financial officer who meets with the president on a quarterly basis to discuss investment strategies
and related liquidity and interest sensitivity issues.  Additional information about the companys investing activities is contained in the Managements Discussion and Analysis and in the Notes to the accompanying consolidated
financial statements.

Deposit Functions

Citizens primary source of funding
is provided by its deposit base.  The company offers a variety of deposit products including demand deposit, savings, and time deposits to customers in its market area to satisfy their saving, investing, and retirement needs.  The company
does not solicit or accept out of market or wholesale deposits, nor does it utilize the services of any deposit brokers.  As is the case with its lending activities, some selective pricing and marketing strategies are utilized in an effort to
attract and retain deposits, but developing strong customer relationships and providing superior customer service remain central to the banks success.

Banking Operations

Operationally, Citizens has centralized administrative and support functions in an attempt to achieve consistency and efficiency.  The banks
main office provides services such as bookkeeping, accounting, loan administration and review, compliance, internal audit, marketing, training and development, human resources, and information technology support.  Data processing, while
administered through the main office, is provided through a third party processing company.

Employees

As of February 28, 2003, Citizens National Bank had a staff of 96.5 full-time equivalent employees.  The banks employees are not represented by any union
or other collective bargaining agreement and employee relations are believed to be good.  Neither Citizens Financial Corp. or Citizens Financial Services, LLC have any paid employees.

Competition



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Despite having a generally rural marketplace, Citizens faces a high degree of competition for its services from other
banks, savings institutions, credit unions, insurance companies, mutual funds, security brokers, financial planners, mortgage brokers, credit card companies, and some governmental agencies.  The company believes its focus on providing superior,
personalized services, as well as its ability to offer trust, brokerage, and fixed rate mortgage products, help it prosper within this environment.

Citizens maintains offices in Randolph, Tucker, Grant and Pocahontas Counties, West Virginia where a total of 27 banking offices representing 12 banks are
located.  As of June 30, 2002, the most recent date data is available, Citizens held 19.4% share of the $736,077,000 deposit base in those counties.

Among the newer forms of competition is the use of the internet to provide banking and financial services.  Offered by many mutual funds, brokers and banks,
including several in Citizens market areas, Citizens has identified internet banking as a long-term objective but does not expect to enter this market in the near future due to considerations of cost, security, and demand within the local
marketplace.  Instead, Citizens believes its current focus on superior, personalized service is most appropriate at this time.

Economic Characteristics of Citizens
Marketplace

Citizens serves an area of northcentral and northeastern West Virginia including the counties of Randolph, Tucker, Grant
and Pocahontas.  This market is a largely rural, mountainous region covering approximately 2,876 square miles with a civilian labor force of 26,350.

The economy of this area typically does not experience highs or lows to the same degree as the national economy and is generally less prosperous than the nation as a
whole.  Major industries in the area include lumber and wood products, tourism, and poultry operations.  Other major sources of employment include public schools, hospitals and other health care providers and various forms of local and
state governmental services.  As of December, 2002, the unemployment rate in this market was 7.7% compared to 5.5% for West Virginia and 6.0% nationwide.  Unemployment within the banks marketplace worsened in 2002 due to the closure
of a chicken processing facility in Grant County which resulted in the loss of approximately 480 jobs.  The bank has recognized the risk this poses for its loan portfolio and has adjusted its policies and objectives accordingly. The closed
facility is expected to reopen in 2003 with initial employment of 150 to 175 persons while eventual full production is expected to employ approximately 400.  Average annual wages in the area approximate $23,337 which are below both state and
national levels.  Ongoing roadway improvements are helping to improve access to and transportation within the area and are expected to provide long-term economic benefits.  However, the local economy is not expected to undergo significant
changes in the short-term.

Supervision and Regulation

General

Bank Holding Company
Regulation

Citizens, as a bank holding company, is subject to the restrictions of the Bank Holding Company Act of 1956 (BHCA)
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 (FRB).

The BHCA 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 FRB.  With certain

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exceptions, a bank holding company also is prohibited from acquiring direct or indirect ownership or control of more than five 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.

The FRB, in its Regulation Y, does permit bank holding companies to engage in non-banking activities closely related to banking or managing or controlling
banks.  Some examples of such activities include servicing loans and other extensions of credit; acting as an investment or financial advisor; leasing real or personal property; providing bookkeeping or financially oriented data processing
services; acting as an insurance agent or broker for insurance directly related to an extension of credit; acting as an underwriter for credit life insurance which is directly related to an extension of credit; providing courier services; providing
management consulting services to nonaffiliated banks; providing securities brokerage services related to securities credit activities; underwriting and dealing in government obligations and money market instruments; and providing foreign exchange
advisory and transactional services. Approval of the FRB is necessary to engage in these activities or to make acquisitions of corporations engaging in these activities as the FRB determines whether these acquisitions or activities are in the public
interest.  In addition, by order, and on a case by case basis, the FRB may approve other non-banking activities.

The BHCA also
permits Citizens to purchase or redeem its own securities.  However, Regulation Y provides that prior notice must be given to the FRB if the gross consideration for such purchase or consideration, when aggregated with the net consideration paid
by the company for all such purchases or redemptions during the preceding 12 months, is equal to 10 percent or more of the companys consolidated net worth.  Prior notice is not required if (i) both before and immediately after the
redemption, the bank holding company is well-capitalized; (ii) the bank holding company is well-managed and (iii) the bank holding company is not the subject of any unresolved supervisory issues.

Federal law restricts subsidiary banks of a bank holding company from making certain extensions of credit to the parent bank holding company or to any of its
subsidiaries, from investing in the holding company stock, and limits the ability of a subsidiary bank to take its parent company stock as collateral for the loans of any borrower.  Additionally, federal law prohibits a bank holding company and
its subsidiaries from engaging in certain tie-in arrangements in conjunction with the extension of credit or furnishing of services.

As a
bank holding company doing business in West Virginia, Citizens is also subject to regulation and examination by the West Virginia Division 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 Board of Banking and Financial Institutions for approval.

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.

The Gramm-Leach Bliley Act (also
known as the Financial Services Modernization Act of 1999) permits bank holding companies to become financial holding companies.  This allows them to affiliate with securities firms and insurance companies and to engage in other activities that
are financial in nature.  A bank holding company may become a financial holding company if each of

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its subsidiary banks is well capitalized, is well managed and has at least a satisfactory rating under the Community Reinvestment Act.  No regulatory approval will be
required for a financial holding company to acquire a company, other than a bank or savings association, engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the Federal
Reserve Board.

The Financial Services Modernization Act defines financial in nature to include:  securities underwriting;
dealing and market making; sponsoring mutual funds and investment companies; insurance underwriting and agency; merchant banking activities; and activities that the Federal Reserve Board has determined to be closely related to banking.  A bank
also may engage, subject to limitations on investment, in activities that are financial in nature, other than insurance underwriting, insurance company portfolio investment, real estate development and real estate investment, through a financial
subsidiary of the bank, if the bank is well capitalized, well managed and has at least a satisfactory Community Reinvestment Act rating.  The specific effects of the enactment of the Financial Services Modernization Act on the banking industry
in general and on Citizens in particular have yet to be determined because of that Acts relatively recent adoption.

Bank Subsidiary Regulation

Citizens National Bank, as a national banking association, is subject to supervision, examination and regulation by the Office of the Comptroller of the Currency
(OCC).  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.  The FDIC may terminate a banks deposit insurance upon finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has
violated any applicable law, regulation, rule, order or condition enacted or imposed by the banks regulatory agency.

Credit and Monetary Policies and Related Matters

The bank subsidiaries are affected by the fiscal and monetary policies of the federal government and its agencies, including the FRB.  The FRB regulates
money and credit conditions through open market operations in an effort to manage economic growth and inflation.  This can result in changes to interest rates which can have a significant influence on the growth and distribution of loans,
investments and deposits, as well as interest rates charged on loans, or paid for deposits and yields on investments.  The FRB has had a significant effect on the operating results of commercial banks in the past and is expected to continue to
do so in the future.

Capital Requirements

As a bank holding company Citizens is subject
to FRB risk-based capital guidelines.  The guidelines establish a systematic framework that makes regulatory capital requirements more sensitive to differences in risk profiles among banking organizations, takes off-balance sheet exposures into
account and minimizes disincentives to holding liquid, low-risk assets.  Under the guidelines bank holding companies must maintain capital sufficient to meet both a risk-based asset ratio test and leverage ratio test on a consolidated
basis.  The risk-based ratio is determined by allocating assets and specified off-balance-sheet commitments into four weighted categories, with higher levels of capital being required for categories perceived as representing greater risk. 
Citizens

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National Bank is subject to substantially similar capital requirements adopted by its applicable regulatory agencies.

In 1995, the FRB and other banking agencies issued final rules to implement the portion of Section 305 of the Federal Deposit Insurance Corporation Act of 1991 that
requires banking agencies to revise their risk-based capital standards to ensure that those standards take adequate account of interest rate risk.  This final rule amends the capital standards to specify that the banking agencies will include
in their evaluations of a banks capital adequacy an assessment of the exposure to declines in the economic value of the banks capital due to changes in interest rates.  Citizens satisfies all applicable capital requirements as
detailed in Note 13 to the accompanying consolidated financial statements.

Community Reinvestment Act

Bank holding companies and their subsidiary banks are subject to the provisions of the Community Reinvestment Act of 1977 (CRA).  Under the CRA, the
Federal Reserve Board or other appropriate bank regulatory agency is required, in connection with its examination of a bank, to assess such banks record in meeting the credit needs of the communities served by the bank, including low and
moderate income neighborhoods.  In the case of a holding company applying for approval to acquire or charter a bank or other holding company, establish a new branch office or relocate an office, the FRB will assess the record of each subsidiary
of the applicant financial holding company, and such records may be the basis for denying the applications or imposing conditions in connection with approval of the application.  In its most recent CRA examination, Citizens National Bank
received a satisfactory rating.

Financial Institutions Reform, Recovery and Enforcement Act

In 1989, the United States Congress enacted the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).  Under FIRREA depository
institutions insured by the FDIC may now be liable for any losses incurred by, or reasonably expected to be incurred by, the FDIC in connection with the default of an FDIC-insured depository institution, or any assistance provided by the FDIC to an
FDIC-insured depository institution in danger of default.  Default is defined generally as the appointment of a conservator or receiver and in danger of default is defined generally as the existence of certain conditions
indicating that a default is likely to occur in the absence of regulatory assistance.  Citizens, as the sole stockholder of its subsidiary bank, is subject to these provisions.

Under federal law, the OCC may also order the pro rata assessment of shareholders of a national bank whose capital stock has become impaired, by losses or otherwise,
to relieve a deficiency in banks capital stock.  This statute also provides for the enforcement of any such pro rata assessment of shareholders of a national bank to cover such impairment of capital stock by sale, to the extent necessary,
of the capital stock of any assessed shareholder failing to pay the assessment.

Federal Deposit Insurance Corporation Improvement Act of 1991

In December, 1991, Congress enacted the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA), which substantially revised the bank
regulatory and funding provisions of the Federal Deposit Insurance Corporation Act and made revisions to several other banking statues.

FDICIA establishes a new regulatory framework which ties the level of supervisory intervention by bank regulatory authorities primarily to a depository
institutions capital category.  Among other things, FDICIA authorizes regulatory authorities to take prompt corrective action with respect to depository

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institutions that do not meet minimum capital requirements.  FDICIA establishes five capital tiers:  well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized and critically undercapitalized.  Citizens is well capitalized as detailed in Note 13 to the accompanying consolidated financial statements.

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, a maximum ratio of classified assets to
capital, minimum earnings sufficient to absorb losses, a minimum ratio of market value to book value for publicly traded shares and such other standards as the agency deems appropriate.

Reigle-Neal
Interstate Banking Bill

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.  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 Interstate Bill.

Graham-Leach-Bliley Act of 1999

The enactment of the Graham-Leach-Bliley Act of 1999 (GLB) represents a pivotal point in the history of the financial services industry.  GLB sweeps
away large parts of a regulatory framework that had its origins in the Depression Era of the 1930s.  Effective March 11, 2000, new opportunities were available for banks, other depository institutions, insurance companies and securities firms
to enter into combinations that permit a single financial services organization to offer customers a more complete array of financial products and services.  Under GLB banks and bank holding companies must have CRA ratings of satisfactory or
higher to engage in these new activities.  GLB also requires banks to maintain the privacy of customers nonpublic personal information.

Consumer Laws and Regulations

In addition to the banking laws and regulations discussed above, Citizens National Bank is also subject to certain consumer laws and regulations that are designed to
protect consumers in transactions with banks.  Among the more prominent of such laws and regulations are the Truth in Lending Act, the Truth in Savings Act, the Electronic Funds Transfer Act, the Expedited Funds Availability Act, the Equal
Credit Opportunity Act, the Fair Credit Reporting Act, and the Fair Housing Act.  These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions must deal with customers when taking
deposits or making loans to such customers.  Citizens complies with the applicable provisions of these consumer protection laws and regulations as part of their ongoing customer relations.

Effect of Environmental Regulation

The banks primary exposure to environmental risk is through its lending
activities.  In cases when management believes environmental risk potentially exists, the bank mitigates its environmental risk exposures by requiring environmental site assessments at the time of loan origination to confirm collateral quality
as to commercial real estate parcels posing higher than normal potential for environmental impact, as determined by reference to present and past uses of the subject property and adjacent sites.  Environmental assessments are typically required
prior to any foreclosure activity involving nonresidential

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real estate collateral.

With regard to residential real estate
lending, management reviews those loans with inherent environmental risk on an individual basis and makes decisions based on the dollar amount of the loan and the materiality of the specific credit.

Citizens anticipates no material effect on anticipated capital expenditures, earnings or competitive position as a result of compliance with federal, state or local
environmental protection laws or regulations.

International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001 (USA Patriot Act)

The International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001 (the Patriot Act) was adopted in response to the September 11, 2001
terror attacks.  The Patriot Act provides law enforcement with greater powers to investigate terrorism and prevent future terrorist acts.  Among the broad reaching provisions contained in the Patriot Act are several designed to deter
terrorists ability to launder money in the United States and provide law enforcement with additional powers to investigate how terrorists and terrorist organizations are financed.  The Patriot Act creates additional requirements for
banks, which were already subject to similar regulations.  The Patriot Act authorizes the Secretary of the Treasury to require financial institutions to take certain special measures when the Secretary suspects that certain
transactions or accounts are related to money laundering.  These special measures may be ordered when the Secretary suspects that a jurisdiction outside of the United States, a financial institution operating outside of the United States, a
class of transactions involving a jurisdiction outside of the United States or certain types of accounts are of primary money laundering concern.  The special measures may include any of all the following:  (a) require
financial institutions to keep records and report on the transactions or accounts at issue; (b) require financial institutions to obtain and retain information related to the beneficial ownership of any account opened or maintained by foreign
persons; (c) require financial institutions to identify each customer who is permitted to use a payable-through or correspondent account and obtain certain information from each customer permitted to use the account; and (d) prohibit or impose
conditions on the opening or maintaining of correspondent or payable-through accounts.

|Item 2
.     Properties
|-----------------------

Citizens provides its services from offices owned by the bank 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.  In 2003, the bank plans to construct a 3,500 square foot free-standing branch in Marlinton and to expand its existing Petersburg branch by 700 square feet.

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In 2002 the bank purchased two buildings which adjoin its main office property for future expansion.  One such
building is scheduled for demolition in 2003 while the other will be leased to the current tenants until such time as expansion plans are finalized.

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.

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

As of December 31, 2002 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 2002.

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 securities 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, 2003 shareholders of record numbered 489.  The company has no plans to issue any other forms of capital.

Citizens maintains a policy under which it may purchase shares of its own stock for treasury, subject to certain limitations, when the Board of Directors
determines it is in the best interest of the company to do so.  Such shares are purchased on the open market through independent brokers.  At December 31, 2001 and 2002 the number of treasury shares was 101,127 and 103,477,
respectively.  The purchase of these shares has not had a material impact on either capital or liquidity.  No plans currently exist regarding their use and there are no plans regarding future purchases.

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##### Table of Contents

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

|                                        |  | High |       | Low |  
|--------------------------------------- |  | ---- | ----- | --- | -
|                                        |  |      |       |     |  
|First Quarter through February 28, 2003 |  | $    | 45.00 |     | $
|2002                                    |  |      |       |     |  
|First Quarter                           |  | $    | 31.50 |     | $
|Second Quarter                          |  | $    | 32.75 |     | $
|Third Quarter                           |  | $    | 32.60 |     | $
|Fourth Quarter                          |  | $    | 37.98 |     | $
|2001                                    |  |      |       |     |  
|First Quarter                           |  | $    | 27.50 |     | $
|Second Quarter                          |  | $    | 27.60 |     | $
|Third Quarter                           |  | $    | 29.90 |     | $
|Fourth Quarter                          |  | $    | 31.00 |     | $

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.

Citizens
shareholders are entitled to receive dividends when and as declared by its Board of Directors.  Dividends are typically paid quarterly.  Aggregate dividends were $1.40 per share in 2002 and $1.30 per share in 2001.  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 13 to the accompanying
consolidated financial statements.

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##### Table of Contents

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

Selected financial data for the five
years ended December 31, 2002 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.

Selected Financial Data Five Year Summary (in thousands of dollars, except per share data)

|                                                    |  | 2002 |         | 2001 |   | 2000    |  | 1999 |         | 1998 |  
|--------------------------------------------------- |  | ---- | ------- | ---- | - | ------- |  | ---- | ------- | ---- | -
|                                                    |  |      |         |      |   |         |  |      |         |      |  
|BALANCE SHEET DATA:                                 |  |      |         |      |   |         |  |      |         |      |  
|Total assets                                        |  | $    | 182,400 |      | $ | 166,819 |  | $    | 153,532 |      | $
|Securities                                          |  |      | 54,219  |      |   | 48,964  |  |      | 42,337  |      |  
|Loans, net                                          |  |      | 115,187 |      |   | 107,075 |  |      | 101,033 |      |  
|Deposits                                            |  |      | 147,741 |      |   | 131,752 |  |      | 121,519 |      |  
|Total shareholders equity                          |  |      | 20,605  |      |   | 19,022  |  |      | 17,390  |      |  
|SUMMARY OF OPERATIONS:                              |  |      |         |      |   |         |  |      |         |      |  
|Total interest income                               |  | $    | 11,519  |      | $ | 11,830  |  | $    | 11,154  |      | $
|Total interest expense                              |  |      | 3,972   |      |   | 4,677   |  |      | 4,425   |      |  
|                                                    |  |      |         |      |   |         |  |      |         |      |  
|Net interest income                                 |  |      | 7,547   |      |   | 7,153   |  |      | 6,729   |      |  
|Provision for loan losses                           |  |      | 288     |      |   | 347     |  |      | 264     |      |  
|                                                    |  |      |         |      |   |         |  |      |         |      |  
|Net interest income after provision for loan losses |  |      | 7,259   |      |   | 6,806   |  |      | 6,465   |      |  
|Noninterest income                                  |  |      | 1,353   |      |   | 1,131   |  |      | 979     |      |  
|Noninterest expense                                 |  |      | 5,692   |      |   | 5,035   |  |      | 4,582   |      |  
|                                                    |  |      |         |      |   |         |  |      |         |      |  
|Income before income taxes                          |  |      | 2,920   |      |   | 2,902   |  |      | 2,862   |      |  
|Income taxes                                        |  |      | 992     |      |   | 997     |  |      | 973     |      |  
|                                                    |  |      |         |      |   |         |  |      |         |      |  
|Net income                                          |  | $    | 1,928   |      | $ | 1,905   |  | $    | 1,889   |      | $
|                                                    |  |      |         |      |   |         |  |      |         |      |  
|PER SHARE DATA:                                     |  |      |         |      |   |         |  |      |         |      |  
|Net income:                                         |  | $    | 2.98    |      | $ | 2.93    |  | $    | 2.90    |      | $
|                                                    |  |      |         |      |   |         |  |      |         |      |  
|Cash dividends                                      |  | $    | 1.40    |      | $ | 1.30    |  | $    | 1.20    |      | $
|                                                    |  |      |         |      |   |         |  |      |         |      |  

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

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##### Table of Contents

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

|                                         |                                                    | 2002                      |         | 2001                      |   | 2000                      |       
|---------------------------------------- | -------------------------------------------------- | ------------------------- | ------- | ------------------------- | - | ------------------------- | ------
|                                         |                                                    |                           |         |                           |   |                           |       
|                                         |                                                    | Avg Bal                   |         | Interest                  |   | Yield/Rate                |       
|                                         |                                                    |                           |         |                           |   |                           |       
|                                         |                                                    | (in thousands of dollars) |         | (in thousands of dollars) |   | (in thousands of dollars) |       
|Interest Earning Assets:                 |                                                    |                           |         |                           |   |                           |       
|Federal funds sold                       |                                                    | $                         | 2,711   |                           | $ | 45                        |       
|Securities:                              |                                                    |                           |         |                           |   |                           |       
|                                         | Taxable                                            |                           |         | 41,483                    |   |                           | 2,258 
|                                         | Tax-exempt (1)                                     |                           |         | 7,845                     |   |                           | 487   
|Loans (net of unearned interest) (1) (2) |                                                    |                           | 112,713 |                           |   | 8,945                     |       
|                                         |                                                    |                           |         |                           |   |                           |       
|                                         | Total interest earning assets  (1)                 |                           |         | 164,752                   |   |                           | 11,735
|                                         | Nonearning assets:                                 |                           |         |                           |   |                           |       
|                                         | Cash and due from banks                            |                           |         | 4,491                     |   |                           |       
|                                         | Bank premises and equipment, net                   |                           |         | 2,919                     |   |                           |       
|                                         | Other assets                                       |                           |         | 4,504                     |   |                           |       
|                                         | Allowance for loan losses                          |                           |         | (1,366                    | ) |                           |       
|                                         |                                                    |                           |         |                           |   |                           |       
|                                         | Total assets                                       |                           | $       | 175,300                   |   |                           |       
|                                         |                                                    |                           |         |                           |   |                           |       
|                                         | Interest Bearing Liabilities:                      |                           |         |                           |   |                           |       
|                                         | Savings deposits                                   |                           | $       | 24,527                    |   |                           | 379   
|                                         | Time deposits                                      |                           |         | 65,334                    |   |                           | 2,687 
|                                         | NOW accounts                                       |                           |         | 27,947                    |   |                           | 478   
|                                         | Money market accounts                              |                           |         | 5,810                     |   |                           | 84    
|                                         | Borrowings                                         |                           |         | 11,859                    |   |                           | 344   
|                                         |                                                    |                           |         |                           |   |                           |       
|                                         | Total interest bearing liabilities                 |                           |         | 135,477                   |   |                           | 3,972 
|                                         | Noninterest bearing liabilities:                   |                           |         |                           |   |                           |       
|                                         | Demand deposits                                    |                           |         | 18,562                    |   |                           |       
|                                         | Other liabilities                                  |                           |         | 1,498                     |   |                           |       
|                                         | Shareholders equity                               |                           |         | 19,763                    |   |                           |       
|                                         |                                                    |                           |         |                           |   |                           |       
|                                         | Total liabilities and shareholders equity         |                           | $       | 175,300                   |   |                           |       
|                                         |                                                    |                           |         |                           |   |                           |       
|                                         |                                                    |                           |         |                           |   |                           |       
|                                         | Net interest income (1)                            |                           |         |                           |   | $                         | 7,763 
|                                         |                                                    |                           |         |                           |   |                           |       
|                                         | Net interest income to average earning assets  (1) |                           |         |                           |   |                           |       
|                                         |                                                    |                           |         |                           |   |                           |       
|                                         |                                                    |                           |         |                           |   |                           |       

(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.

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##### Table of Contents

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.

|                       |                       | 2002 Compared to 2001     |       | 2001 Compared to 2000    |  
|---------------------- | --------------------- | ------------------------- | ----- | ------------------------ | -
|                       |                       |                           |       |                          |  
|                       |                       | Increase/Decrease Due to  |       | Increase/Decrease Due to |  
|                       |                       |                           |       |                          |  
|                       |                       | (in thousands of dollars) |      
|                       |                       |                           |      
|                       |                       | Volume                    |       | Rate                     |  
|                       |                       |                           |       |                          |  
|Interest earned on:    |                       |                           |       |                          |  
|                       | Federal funds sold    |                           | $     | 28                       |  
|                       | Taxable securities    |                           |       | 252                      |  
|                       | Tax-exempt securities |                           |       | 169                      |  
|                       | Loans                 |                           |       | 551                      |  
|                       |                       |                           |       |                          |  
|Total interest earned  |                       |                           | 1,000 |                          |  
|                       |                       |                           |       |                          |  
|Interest expense on:   |                       |                           |       |                          |  
|                       | Savings deposits      |                           |       | 56                       |  
|                       | Time deposits         |                           |       | 298                      |  
|                       | NOW accounts          |                           |       | 85                       |  
|                       | Money market accounts |                           |       | 3                        |  
|                       | Other borrowing       |                           |       | 34                       |  
|                       |                       |                           |       |                          |  
|Total interest expense |                       |                           | 476   |                          |  
|                       |                       |                           |       |                          |  
|Net interest income    |                       | $                         | 524   |                          | $
|                       |                       |                           |       |                          |  

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##### Table of Contents

Securities Portfolio

Presentation of the amortized
cost of securities as of December 31, 2002 and 2001 may be found in Note 3 to the accompanying consolidated financial statements.

The
following table sets forth the maturities of securities as of December 31, 2002 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).

|                                                                  |       | Within One Year           |       | After One but  Within Five Years |  | After Five but  Within Ten Years |      | After Ten Years |        | Total  | 
|----------------------------------------------------------------- | ----- | ------------------------- | ----- | -------------------------------- |  | -------------------------------- | ---- | --------------- | ------ | ------ | 
|                                                                  |       |                           |       |                                  |  |                                  |      |                 |        |        | 
|                                                                  |       | Amount                    |       | Yield                            |  | Amount                           |      | Yield           |        | Amount | 
|                                                                  |       |                           |       |                                  |  |                                  |      |                 |        |        | 
|                                                                  |       | (in thousands of dollars) |      
|U.S. Treasury and other U.S. government agencies and corporations |       | $                         | 5,243 |                                  |  | 5.71                             | %    | $               | 27,639 |        | 
|State and political subdivisions (1)                              |       |                           | 596   |                                  |  | 4.40                             |      |                 | 3,582  |        | 
|Other securities                                                  |       |                           | 5,231 |                                  |  | 6.43                             |      |                 | 4,683  |        | 
|                                                                  |       |                           |       |                                  |  |                                  |      |                 |        |        | 
|                                                                  | Total |                           | $     | 11,070                           |  |                                  | 5.98 | %               | $      | 35,904 | 
|                                                                  |       |                           |       |                                  |  |                                  |      |                 |        |        | 
|                                                                  |       |                           |       |                                  |  |                                  |      |                 |        |        | 

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.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents

Loan Portfolio

Types of Loans

The distribution of loans by major category as of December 31, 2002 and 2001 may be found in Note 4 to the accompanying consolidated financial statements.  All
loans in the portfolio are domestic in nature.

Loan Maturities and Interest Rate Sensitivity

Note 4 to the accompanying 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, 2002.  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.  A table detailing the amounts of these loans as of December 31, 2002 and 2001 is presented as part of the
managements discussion and analysis section of this report.

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.  Disclosure of the amount of such loans, as well as the amount of income which would have been recognized under their original terms, may be
found in Note 5 to the accompanying consolidated financial statements.  No income was recorded on these loans in 2002.

Potential Problem Loans

As stated in Note 5 to the accompanying consolidated financial statements, 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 at December 31, 2002.

Loan Concentrations

Information concerning loan concentrations is provided in Note 4 to the accompanying consolidated financial statements.

Summary of Loan Loss Experience

Note 5 to the accompanying consolidated financial statements presents an
analysis of the allowance for loan losses for the years ended December 31, 2002, 2001 and 2000.

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

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##### Table of Contents

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 .27% in 2002, .09% in 2001 and .13% in 2000.

The following table shows an allocation of the allowance for loan losses for the two years ended December 31, 2002 and 2001.

|                                       |       | December 31               |    
|-------------------------------------- | ----- | ------------------------- | ---
|                                       |       |                           |    
|                                       |       | 2002                      |    
|                                       |       |                           |    
|                                       |       | Amount                    |    
|                                       |       |                           |    
|                                       |       | (in thousands of dollars) |    
|Commercial, financial and agricultural |       | $                         | 918
|Real estate - construction             |       |                           | 17 
|Real estate - mortgage                 |       |                           | 164
|Installment and other                  |       |                           | 103
|Unallocated                            |       |                           | 184
|                                       |       |                           |    
|                                       | Total |                           | $  
|                                       |       |                           |    
|                                       |       |                           |    

Deposits

The average daily amount of deposits and the
rates paid on those deposits for the years ended December 31, 2002, 2001 and 2000 were previously presented in the Distribution of Assets, Liabilities and Shareholders Equity; Interest Rates and Interest Differential.

A table summarizing the maturities of time certificates of deposit, including individual retirement accounts, of $100,000 or more as of December 31, 2002
may be found in Note 7 to the accompanying consolidated financial statements.  There were no other time deposits of $100,000 or more at that date.

Return on Equity and Assets

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

|                               |  | Year Ended December 31 |      
|------------------------------ |  | ---------------------- | -----
|                               |  |                        |      
|                               |  | 2002                   |      
|                               |  |                        |      
|Return on average assets       |  |                        | 1.10 
|Return on average equity       |  |                        | 9.77 
|Dividend payout ratio          |  |                        | 46.98
|Average equity to assets ratio |  |                        | 11.27

Short-term Borrowing

Information concerning the companys short-term borrowing is presented in Note 11 to the accompanying consolidated financial statements.

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##### Table of Contents

|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 2002 Annual Report to Shareholders and Form
10-K.  Because 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.  This forward looking information involves uncertainties including those associated with interest rates and the general economic environment, regulations, competitive changes
and other risks.  Forward looking statements can be identified by words such as may, will, expect, anticipate, believe, estimate, plans, intends, or
similar words.  The company does not undertake to update any forward looking statements.  When provided, management intends forward looking information to assist readers in understanding anticipated future operations and management
includes them pursuant to applicable safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Actual results may differ materially.  Amounts and percentages used in this discussion have been rounded.

Results of Operations

Earnings Summary

Net income for the three years ended December 31, 2002, 2001, and 2000 was $1,928,000, $1,905,000 and $1,889,000, respectively.  On a per share basis, both
primary and fully diluted, net income was $2.98, $2.93 and $2.90 in each period, respectively.  The return on average assets was 1.10% in 2002, 1.20% in 2001, and 1.31% in 2000 while the return on average equity was 9.77%, 10.29% and 11.45% in
the same periods.  A more detailed discussion of the factors influencing the companys results of operations and financial condition is presented 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.  Net interest income is impacted by changes in the volume and mix of interest earning assets
and interest bearing liabilities as well as by changes in the interest rates, maturities, and repricing characteristics associated with those assets and 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.

Tax equivalent net interest income totaled $7,763,000 in 2002 compared to $7,320,000 in 2001 and $6,930,000 in 2000 resulting in net interest margins of 4.71%, 4.88%
and 5.01%, respectively.  Net interest margin

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expresses tax equivalent net interest income relative to average earning assets.

With equity markets continuing to perform poorly and the banks ongoing expansion into newer markets, the company continued to seek growth in selected time
deposits as well as other low cost funds such as demand deposits, savings, money market and interest bearing checking accounts in 2002.  This effort resulted in a $14,056,000 increase in average interest bearing liabilities and also allowed
average interest earning assets to rise by $14,815,000.  The impact of this growth, which is known as the volume variance, resulted in a $1,000,000 improvement in interest income and a $476,000 increase in interest expense.  Thus, the net
affect of this growth was a $524,000 increase in net interest income and is the major cause of the higher amount of net interest income recognized in 2002.

As noted earlier, changes in interest rates can also impact net interest income.  Citizens efforts to limit the impact of changing interest rates on net
interest income were quite successful.  This impact is called the rate variance and, like the volume variance, can be specifically computed.  In 2002, lower interest rates had the effect of reducing interest income by $1,261,000 but also
of reducing interest expense by $1,180,000.  The total impact of falling interest rates during the year, then, was to reduce net interest income by just $81,000.  In summary, Citizens net interest income increased in 2002 because the
positive impact of the balance sheet growth exceeded the negative impact of falling interest rates.  Because the improvement in net interest income was not proportionate to the rise in average earning assets, however, the net interest margin
fell.  At 4.71%, however, the net interest margin remains well above the most recently published peer group average of 4.50%.

To a
large degree, this strategy of seeking growth in a falling interest rate environment was a repeat of what occurred in 2001 when tax equivalent net interest income increased by $390,000 as average earning asset growth of $11.6 million caused net
interest income to rise $590,000 while lower interest rates resulted in a $200,000 reduction in net interest income.

Citizens
ability to maintain its level of net interest income is crucial to its financial performance.  Looking forward, the company again expects to pursue its growth strategy in 2003 while interest rates are expected to remain relatively low. 
Reductions in the rates paid on deposits in the later parts of 2002 should help minimize the rate variance. Other variables which are key to the management of net interest income, as well as the methods used to do so, are discussed in the
Market Risk portion of the companys Form 10-K.  Additional details may also be found in the Distribution of Assets, Liabilities and Shareholders Equity: Interest Rate and Interest Differential and Rate
Volume Analysis sections of the Form 10-K.

Provision for Loan Losses

The
provision for loan losses represents managements estimate of the amount to be charged against current earnings to maintain the allowance for loan losses at a level management considers adequate to provide for losses that can be reasonably
anticipated based on quarterly evaluations of the

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##### Table of Contents

loan portfolio.  The provision for loan losses totaled $288,000 in 2002, $347,000 in 2001 and $264,000 in 2000.

Because the amount of the provision for loan losses is a function of managements overall assessment of loan quality and the adequacy of the allowance for loan
losses, we direct you to the Allowance for Loan Losses section of this report where we discuss the estimation methods and assumptions management used in analyzing the allowance, as well as specific comments regarding loan quality,
trends, concentrations and other factors.

Noninterest Income

Defined as all
revenues not related to interest and fee income related to earning assets, noninterest income has taken on greater significance to Citizens for several reasons.  Among these reasons are the rising level of competition from both bank and nonbank
financial services providers, the restrictions that competition may place on the pricing of interest bearing assets and liabilities and the impact of a slow economy on loan demand. Consequently, Citizens has broadened its sources of noninterest
income beyond its traditional banking and trust services to include brokerage, secondary market mortgage processing and insurance services.  As a result, noninterest income as a percentage of total income increased to 10.5% in 2002 compared to
8.7% in 2001 and 8.1% in 2000.  Relative to average total assets, noninterest income was .77% which approximates the national peer average.

Total noninterest income was $1,353,000 in 2002 compared to $1,131,000 in 2001 and $979,000 in 2000.  Much of the $222,000 increase in 2002 is due to the success
of the banks secondary market mortgage program.  This program, which has benefited from low mortgage rates, was started in the fourth quarter of 2001 and generated fee income of $232,000 in 2002 and $57,000 in 2001.  Under this
program the bank processes loan applications for a fee while loan approval decisions, underwriting and loan funding are done by unrelated mortgage companies.

One component of noninterest income, brokerage income, decreased to $58,000 in 2002 compared to $120,000 in 2001 and $95,000 in 2000.  This decrease reflects the
continuing downturn in the equity markets and the customers hesitancy to invest as well as the lack of a licensed broker for several months.  The bank did retain a new broker in January, 2003, and hopes to quickly regain stability within
this program. Other components of noninterest income, including trust income, service fees and other noninterest income all performed well in 2002 reflecting the banks growing customer base.  Noninterest income generated from the one new
office opened in 2002 totaled $20,000 while fees earned by the banks older branches also improved.

In 2001, noninterest income
increased $153,000 reflecting a full year impact of the two branch facilities that were opened during 2000, the momentum and continuity which had been established in the brokerage operation at that time and the opening of the banks secondary
market loan service. Only other noninterest income decreased materially in 2001.  This was the result of decreases in the sale of promotional coins as well as in the amount of gains realized from the sale of repossessed properties.  In
addition, the year 2000 included the one time recognition of $30,000 of

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income when an insurance carrier used for one of the banks employee benefit plans converted from a mutual company to a stock company.

Management expects noninterest income to continue to play an important role in overall profitability in the future but no additional product or service offerings are
planned at this time.

Noninterest Expense

Noninterest expense includes all items
of expense other than interest expense, the provision for loan losses and income taxes.  Historically, Citizens noninterest expense has been higher than its peer average and, with the addition of three new branches including two de novo
branches since 2000, noninterest expense has risen over the last three years.  Total noninterest expense was $5,692,000 in 2002, $5,035,000 in 2001 and $4,582,000 in 2000. Of the $657,000 increase in 2002, $252,000 was related to the opening of
a new branch facility in January.  Two other branches, opened in May and November of 2000, accounted for $352,000 of the total increase of $453,000 in 2001.

Salaries and employee benefits is the largest component of noninterest expense totaling $3,023,000 in 2002, or 53.1% of all noninterest expenses. The increase in
salaries and benefits for the year was $374,000.  Of this amount, $323,000 was the result of increased salaries.  The increase in salaries was unusually large due to a compensation agreement with the banks employee mortgage broker
who received a base salary as well as a percentage of gross commissions generated by the program.  In addition to this, normal merit increases and the need to staff an additional facility also caused salary expense to increase.

The bank provides a very competitive benefit plan to its employees including fully paid medical coverage for employees as well as their spouses and
dependents.  Because this plan is self-funded, lower medical claims in 2002 allowed the total cost of the program to decrease by $65,000.  By contrast, the cost of medical coverage is rising nationally. Unfortunately, this savings was
offset by a rise in pension costs.  Effective January 1, 2003, the bank adopted an Executive and Director Supplemental Retirement Plan.  See Note 10 of the accompanying consolidated financial statements for further details. 
Management does not expect the implementation of this benefit plan to have a significant, negative impact on future earnings.

Higher
janitorial, utility and property insurance costs caused net occupancy expense to rise $15,000, or 6.1%, while an increase in depreciation on equipment and furnishings resulted in a $20,000 increase in equipment expense.  Data processing expense
increased by $50,000 due to an increase in the number of customer accounts being processed as well as the expansion of the banks ATM network.  Management expected these increases and  believes they are reasonable in light of the
expansion.

Other noninterest expense increased by $153,000, or 18.6%, in 2002. This is the result of several factors.  Telephone
costs, particularly line costs to the new facility, increased by $23,000; increased credit inquiries partly from the secondary market mortgage program totaled $27,000; fees paid to the OCC and FDIC rose by $14,000 as a result of asset
growth;

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educational costs increased by $7,000; losses on the sale of foreclosed properties increased $37,000; fees paid to correspondent banks including the Federal Reserve and Federal
Home Loan Bank rose $15,000; and taxes such as franchise tax and business and occupation tax increased $27,000. With the exception of the losses on foreclosed properties, these are all recurring business expenses.

The remaining noninterest expense items including director fees, postage and professional fees all increased in the normal course of business.

In 2001, total noninterest expense increased $453,000 and, as noted previously, $352,000 was related to new branching activity.  It was this expansion
which caused occupancy expense to rise $46,000 and equipment expense to increase $95,000.  Expansion and an increased customer base were also the primary causes of increased data processing and postage costs.

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.

Noninterest expense is expected to increase again in 2003 as plans for another de novo branch and upgrading and expanding an
existing branch are being made. These activities are not expected to depress earnings, however, as current projections indicate net income levels can be maintained barring any unforeseen negative developments.

Income Taxes

Income tax expense for the years 2002, 2001 and 2000 was $992,000, $997,000 and $973,000,
respectively.  Included in these figures are both federal and state income taxes.  These figures represent effective tax rates of 34.0%, 34.4% and 34.0% 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 9 of the accompanying consolidated financial statements provides further information and additional disclosure of the significant components influencing the
companys taxes.

Financial Condition

Summary

Citizens total assets of $182,400,000 at December 31, 2002, were $15,581,000, or 9.3%, more than at December 31, 2001 and reflect strong deposit growth in the
Elkins and Marlinton markets.  Because deposit growth was stronger than that of the loan portfolio, asset growth was split between loans and investment securities.  Average assets for the year were $175,300,000 including average earning
assets of $164,752,000.  A further discussion of the companys major balance sheet categories, as well as liquidity and capital resources, follows.

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Loan Portfolio

Total loans at December 31, 2002 of
$116,668,000 were $8,091,000, or 7.5%, more than at year-end 2001 and represented 64.0% of total assets. Average total loans for the year were $111,642,000.  Most of this increase occurred at the new Marlinton location as well as the nearby
Snowshoe location with both experiencing strong demand for mortgage loans.  As has historically been the case, lending activity was primarily funded by deposit growth.

At $77,937,000, the mortgage portfolio grew by $7,656,000 in 2002 and easily remains the companys largest loan portfolio.  Throughout 2002 demand for
mortgage loans was strong nationwide reflecting the favorable rates available to borrowers.  While many borrowers sought to lock in these low rates by obtaining fixed rate mortgage loans, nearly all of Citizens mortgage loans carry a
variable rate and many have reached their interest rate floor.  Citizens prefers to satisfy the demand for fixed rate mortgages through its secondary market mortgage program which was explained in the noninterest income section of this
discussion.  By using this approach the bank avoids undesirable interest rate risk and maintains its relationships with customers rather than selling those relationships to entities which are unfamiliar to local residents.

Through the efforts of the banks commercial lending and business development personnel, the bank was able to cultivate selected commercial relationships
resulting in a $4,079,000 increase in the commercial loan portfolio to $20,820,000.  These loans are made to a variety of businesses including those in the automobile, lumbering and tourism industries.  Like mortgage loans, most commercial
loans carry a variable interest rate  usually tied to the prime rate.

Unlike mortgage and commercial lending, the companys
portfolio of consumer loans decreased by $2,233,000 in 2002 to $13,657,000.  Demand for consumer loans was weak throughout the banks market area with only the new Marlinton office showing an increase in consumer lending.  This is the
result of two major factors.  First, much of the banks consumer lending is for the purchase of automobiles.  During 2002, many automobile manufacturers offered superior financing plans which not only reduced the banks new car
business but also helped shift used car purchases to the new car market.  Secondly, due to our nations slow economy and weak stock market, the bank tightened credit standards for consumer loans as a means of maintaining credit
quality.

Management expects many of these same factors to influence loan demand in 2003.  However, continued loan growth is expected
in selected markets, and the company expects its gross loan to deposit ratio, which was 79.0% at year-end 2002, to remain stable.  Additional information concerning the companys loan portfolio, including data on loan mix, maturities and
concentrations may be found in Note 4 to the accompanying consolidated financial statements while Note 12 provides a discussion of the banks commitments to lend.

Allowance for Loan Losses
and Credit Quality

To maintain an allowance for loan losses at a level considered

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adequate to provide for losses that can be reasonably anticipated, the company conducts comprehensive, ongoing reviews of its loan portfolio and evaluates the adequacy of the
allowance for loan losses on a quarterly basis.  These evaluations consider the potential loss in specifically identified loans in addition to homogeneous pools of loans.

Loans which are specifically analyzed include all loans with balances in excess of $250,000, all loans past due 90 or more days and those placed on the companys
internally generated watch list.  Management develops this list from various sources including past due loan reports, previous internal and external loan evaluations and knowledge of each borrowers financial situation.  This list
contains loans with possible weaknesses regarding collectibility, performance or the adequacy of collateral.

Loans that management
places on the watch list are given a classification based on their perceived risk using a method similar to that of the banks primary regulatory agency.  After management determines the watch list to be complete, detailed reviews of each
loan are made.  Based on the results of these reviews, specific reserves for potential losses are identified.

Potential losses for
loans not specifically analyzed are quantified by applying historical loss factors to pools of loans.  Separate pools, and separate loss factors, are used for each of the companys major loan portfolios.  The bank may assign
additional loss exposure for changes in economic conditions, trends in past due loans, changes in lending policies or staff, concentrations of credit, unused lines or letters of credit and other factors.  Finally, because these methods carry
inherent imprecision and subjectivity, the company establishes an additional reserve for losses that are likely to exist at the evaluation date but may not have been quantified by the specific, pooled, or other analyses.  The company aggregates
these unallocated losses with the losses identified in the specific, pooled, and other analyses.  Based on this aggregate total, the allowance for loan losses is adjusted as necessary through a provision for loan losses.

At December 31, 2002, Citizens allowance for loan losses totaled $1,386,000, or 1.19% of gross loans compared to $1,398,000, or 1.29%, at
December 31, 2001.  Although the size of the loan portfolio increased by $8,091,000 in the last twelve months, past due and nonperforming loans, particularly those seriously past due, have improved as shown in the table below:

|                                                       |                                        | December 31               |      
|------------------------------------------------------ | -------------------------------------- | ------------------------- | -----
|                                                       |                                        |                           |      
|                                                       |                                        | 2002                      |      
|                                                       |                                        |                           |      
|                                                       |                                        | (in thousands of dollars) |      
|Nonaccrual loans                                       |                                        | $                         | 14   
|Loans past due 90 days or more still accruing interest |                                        |                           | 57   
|Restructured loans                                     |                                        |                           |     
|                                                       |                                        |                           |      
|                                                       | Total nonperforming loans              |                           |      
|                                                       |                                        |                           |      
|Loans past due 30-89 days                              |                                        |                           | 2,151
|                                                       |                                        |                           |      
|                                                       | Total past due and nonperforming loans |                           | $    
|                                                       |                                        |                           |      

This improvement resulted from strengthened
loan procedures including

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more active involvement of loan officers in the collection of loans, tightening credit standards and reducing loan volume goals in areas experiencing particular economic
difficulties.  The company instituted these stronger procedures  as a means of maintaining credit quality and, despite any signs of weakness in the economy, management believes it has been successful in this effort.

Among the banks three major loan portfolios, historical data suggests the largest portfolio, real estate loans, carries the least amount of credit risk
while proportionately greater risk is found in the much smaller commercial loan portfolio.  As of December 31, 2002, approximately 66% of the allowance for loan losses may be attributed to perceived risk within the commercial loan portfolio
compared to only 44% last year.  Included in this portfolio are concentrations of loans in the automobile and lumber industries as explained in Note 4 to the accompanying consolidated financial statements.  The increased risk is primarily
attributed to a deterioration in the financial condition of certain automobile  dealers.  The company has significant experience in lending to these industries, however, and is satisfied that it has properly identified the risk in these
loans.  Risk associated with the real estate and installment portfolios approximate 13% and 8% of the allowance, respectively.  The unallocated portion of the portfolio comprises the remaining 13% of the allowance compared to 15% at
December 31, 2001.

Net charge-offs for 2002 did increase to $300,000 from $101,000 in 2001.  For the most part, this is the result of
the failure of one commercial loan, which was not in either the automobile or lumber industry, causing a charge-off of $134,000.  This risk was specifically identified in the companys regular loan review process.  Additional analysis
of the allowance for loan losses may be found in Note 5 to the accompanying consolidated financial statements.

Securities Portfolio and Federal Funds Sold

The banks securities portfolio totaled $54,219,000 at December 31, 2002, which was 29.7% of total assets and $5,255,000 more than at year-end 2001.  On
average, securities were $51,691,000 in 2002.  Rising deposit levels funded the increase.  The bank uses its securities portfolio as a means to employ funds not needed to satisfy loan demand in order to improve earnings while at the same
time providing liquidity and balancing interest sensitivity concerns.  All securities are classified as available for sale.

The bank
continues to follow its practice of constructing a short-term laddered portfolio of U.S. government agency securities, bank qualified municipal debt, government agency mortgage backed securities and investment grade corporate debt.  Due to the
economic and financial conditions facing many corporations, the bank purchased only one corporate obligation in 2002.  Instead, focus was placed on U.S. agency and agency backed mortgage securities which carry less credit risk.  Purchases
of these items were limited to those with short durations to reduce interest rate risk, however.  Municipal holdings, with the exception of certain local issues, are insured and carry A ratings.

As of December 31, 2002, the securities portfolio has a weighted average life of 2.49 years and a tax-equivalent yield of 5.27%.  Management

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expects its investing practices will likely follow these same strategies in 2003. Please refer to Note 3 to the accompanying consolidated financial statements for additional
data about the securities portfolio including information on amortized cost, fair value, maturities, pledging and more.

The bank generally
tries to minimize its involvement in the overnight federal funds market preferring to fully utilize available funds for higher yielding loan and security alternatives while relying on maturing securities, loan repayments and deposit growth for
liquidity.  Nonetheless, at any given time, the execution of specific investing or funding strategies, or normal fluctuations in deposit and loan balances, may require the bank to sell, or buy, funds on an overnight basis.  One such
investing strategy was the banks decision to purchase $2,000,000 of bank owned life insurance (BOLI) during the third quarter of 2002.  Funds used to make this purchase were temporarily held in federal funds sold as management analyzed
several different plans and carriers.  The purchase of this insurance product was made to fund certain retirement benefits for board members and executive officers who qualified and is reflected in the other assets section of the companys
balance sheet.  Further information on this plan is presented in Note 10 to the accompanying consolidated financial statements.

As of the report date, the bank had no federal funds sold and $1,277,000 in overnight borrowings. For the year, federal funds sold averaged $2,711,000 while federal
funds purchased averaged $382,000.

Deposits and Other Funding Sources

Citizens
experienced strong deposit growth in 2002 especially in the Elkins and Marlinton markets.  Total deposits at December 31, 2002, of $147,741,000 represented 81.00% of total assets and were up $15,989,000 from the previous year-end.  This
12.1% increase is the result of aggressive marketing in our newer locations, the promotion of specific benefits available in certain deposit products and, management believes, the continued poor performance of the equity markets and equity mutual
funds.

Noninterest bearing deposits increased $2,835,000 during the year while interest bearing deposits rose $13,154,000. 
Among the interest bearing deposits offered by the bank, several were quite successful in 2002.  Savings accounts, money market accounts and interest bearing checking accounts all offer stability and a high degree of liquidity and increased by
$6,499,000 during the year despite the low yields they offer. Time deposits are a common alternative to equity investments when equities perform poorly as they did in 2002.  Total time deposits increased $6,655,000 in 2002 including $2,514,000
in deposits of less than $100,000 and $4,141,000 in deposits of $100,000 or more, or jumbo deposits.

Although customers remain
hesitant to invest in long-term certificates of deposit, the bank was particularly successful in promoting its three year certificates.  These certificates, which allow the customer to add to, or withdraw from, the account as well as to take
advantage of higher rates should they be offered, were very popular with new customers and those who had existing certificates maturing.  As a result, three year certificates increased by over $6.6 million.  Management believes these three
year

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certificates represent a stable source of low cost funds.

The
increase in jumbo certificates was larger than expected and, since the bank does not solicit these deposits, is likely related to the poor performance of the equity markets and the continuing expansion of our branch network.  As shown in Note 7
to the accompanying consolidated financial statements, 42% of these certificates mature in 2003.  While the loss of these certificates could reduce liquidity, the bank has historically maintained good relationships with these customers and
significant withdrawals have not been common.  Additional information on the banks liquidity is presented later in this report in the discussion of liquidity.

While management expects deposits to increase again in 2003, particularly in certain markets, the rate of growth is expected to slow.

In addition to deposits, the bank uses certain borrowings to fund its lending and operating activities.  Short-term borrowings include overnight funds purchased,
which were $1,277,000 at year-end and repurchase agreements with several local entities.  These repurchase agreements totaled $9,118,000 at December 31, 2002 and have been maintained for a number of years.  Long-term borrowings of
$1,879,000 increased by $1,091,000 during the year and are comprised of various borrowings from the Federal Home Loan Bank of Pittsburgh for the purpose of funding specific loans.  In 2002, $2,000,000 of such borrowings were obtained to fund a
commercial loan.  Currently, the bank has no plans to acquire additional debt although the benefits of doing so when appropriate lending opportunities exist will be considered.

Capital
Resources

Citizens has historically maintained a very strong capital position and at $20,605,000, capital was 11.3% of total assets at
December 31, 2002. During the year capital increased by $1,583,000 due to the retention of earnings and an increase in the market value of the available for sale securities portfolio.  Dividends for the year totaled $1.40 per share compared to
$1.30 per share in 2001.  At these levels the dividend payout ratios were 47.0% in 2002 and 44.4% in 2001.

The companys stock
remains thinly traded on the over the counter market under the symbol CIWV.  A total of 31,900 shares were traded during the year including the companys purchase of 2,350 shares of treasury stock.  Treasury stock purchases are made
from time to time on the open market as permitted under the companys stock repurchase policy when the Board of Directors considers it to be in the best interest of the company to do so.  Such purchases had no adverse impact on either
capital or liquidity.  The price of the companys stock ranged from $29.06 to $37.98 and ended the year at $36.10.

As explained
in Note 13 to the accompanying consolidated financial statements, the company continues to exceed all regulatory capital requirements and dividend policy, which is a factor of earnings and the financial condition of the company, is expected to
comply with applicable regulations.  A further analysis of the companys capital may be found in the accompanying Statement of Changes in Stockholders Equity.  Currently,

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management is not aware of any trends or uncertainties which may be expected to impair the companys capital position.

Liquidity

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.  Management believes that efficiently managing liquidity minimizes the banks involvement in the
overnight federal funds markets and enhances earnings.  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. In addition, external sources of liquidity are also available from correspondent banks.  Unused lines of credit with these banks approximate $63,000,000 and are available to provide liquidity in the event it is needed.

Tests utilizing expected loan, deposit and investment security levels are regularly performed to project liquidity needs.  Although these expected
levels can change, at December 31, 2002, these tests indicate the bank has sufficient liquidity to satisfy anticipated needs over the next twelve months.  The company has not, and does not expect to, raise funds through brokered deposits,
wholesale certificates of deposit, internet services, or other nontraditional sources.  At the present time, management is unaware of any matters which are likely to impair the companys liquidity.

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

|Item 7A.
     Quantitative and Qualitative Disclosures About Market Risk
|------------------------------------------------------------------------

The primary form of market risk facing Citizens is interest rate risk. This is the risk that changes in the interest rates earned on loans, securities and other
interest earning assets as well as in the interest rates paid on interest bearing liabilities could negatively impact

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earnings.  The company has an active asset/liability management committee which attempts to minimize this risk.  This is done by controlling the mix and maturities of
interest sensitive assets and liabilities.

The bank uses several techniques to monitor and control interest rate risk including gap
analysis, interest rate shock testing and simulation modeling.  Gap analysis is a static measure and does not consider future changes in the volume of rate sensitive assets and 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.  The companys gap position at December 31,
2002 is presented in the following table:

GAP Analysis Table (in thousands)

|                            |  | 1 year |         | 2 years |   | 3 years |    | 4 years |        | 5 years |   | 5+years |   | Total |       
|--------------------------- |  | ------ | ------- | ------- | - | ------- | -- | ------- | ------ | ------- | - | ------- | - | ----- | ------
|                            |  |        |         |         |   |         |    |         |        |         |   |         |   |       |       
|Rate Sensitive Assets       |  |        |         |         |   |         |    |         |        |         |   |         |   |       |       
|Securities                  |  | $      | 11,297  |         | $ | 12,991  |    | $       | 9,861  |         | $ | 8,900   |   | $     | 5,769 
|Loans                       |  |        | 79,764  |         |   | 13,028  |    |         | 6,571  |         |   | 3,693   |   |       | 2,858 
|                            |  |        |         |         |   |         |    |         |        |         |   |         |   |       |       
|Total                       |  | $      | 91,061  |         | $ | 26,019  |    | $       | 16,432 |         | $ | 12,593  |   | $     | 8,627 
|Rate Sensitive Liabilities  |  |        |         |         |   |         |    |         |        |         |   |         |   |       |       
|Deposits                    |  | $      | 93,798  |         | $ | 15,526  |    | $       | 16,134 |         | $ | 1,121   |   | $     | 1,120 
|Borrowings                  |  |        | 11,057  |         |   | 691     |    |         | 241    |         |   | 6       |   |       | 154   
|                            |  |        |         |         |   |         |    |         |        |         |   |         |   |       |       
|Total                       |  | $      | 104,855 |         | $ | 16,217  |    | $       | 16,375 |         | $ | 1,127   |   | $     | 1,274 
|GAP                         |  | $      | (13,794 | )       | $ | 9,802   |    | $       | 57     |         | $ | 11,466  |   | $     | 7,353 
|Cumulative GAP              |  | $      | (13,794 | )       | $ | (3,992  | )  | $       | (3,935 | )       | $ | 7,531   |   | $     | 14,884
|GAP:Total Assets            |  |        | (7.56   | )%      |   | 5.37    | %  |         | .03    | %       |   | 6.29    | % |       | 4.03  
|Cumulative GAP:Total Assets |  |        | (7.56   | )%      |   | (2.19   | )% |         | (2.16  | )%      |   | 4.13    | % |       | 8.16  

Because gap is a static
analysis, its near-term measure can be more meaningful than its longer-term measures.  As the table shows, over the next year $13,794,000 more rate sensitive liabilities than rate sensitive assets are subject to repricing.  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 2003.  In this environment,
gap theory indicates Citizens earnings could fall.

The company also performs interest rate shock tests on a quarterly basis.  Such
tests project net interest income given an immediate and sustained change in interest rates of 100, 200 and 300 basis points applied to all interest earning assets and interest sensitive liabilities.  At December 31, 2002, these tests indicate
a sustained increase in interest rates of 300 basis points would reduce net interest income by 10.99%.  The tests show a decrease in rates of the same amount would also cause a reduction in net interest income of 6.42%.  This is because
some interest rates now being paid on deposits are less than 3 percent and could not fall by 300 basis points while the return generated by earning assets could fall by that amount.  Although this is contrary to gap theory, the interest rate
shock tests do help define the boundaries of interest rate risk.

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.  Some rate changes are tied to

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changes in indexes such as the prime rate and cannot be controlled by the bank.  Other rates, such as those paid on savings and money market accounts, are controlled by the
bank.  The banks ability to control the rates paid on these types of deposits in a key tool in the management of interest rate risk which is not captured by either gap analysis or rate shock testing.  For this reason simulation
modeling is also used to project earnings under various assumptions relative to interest rates and the level and mix of interest earning assets and interest bearing liabilities.

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|Item 8.
     Financial Statements and Supplementary Data
|--------------------------------------------------------

CITIZENS FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS December 31, 2002 and 2001

|                                                                                  |                                            | 2002 |             | 2001        |  
|--------------------------------------------------------------------------------- | ------------------------------------------ | ---- | ----------- | ----------- | -
|                                                                                  |                                            |      |             |             |  
|ASSETS                                                                            |                                            |      |             |             |  
|Cash and due from banks                                                           |                                            | $    | 4,789,115   |             | $
|Securities available for sale                                                     |                                            |      | 54,219,132  |             |  
|Loans, less allowance for loan losses of $1,385,625 and $1,397,528, respectively  |                                            |      | 115,186,861 |             |  
|Bank premises and equipment, net                                                  |                                            |      | 3,145,961   |             |  
|Accrued interest receivable                                                       |                                            |      | 1,161,541   |             |  
|Other assets                                                                      |                                            |      | 3,897,779   |             |  
|                                                                                  |                                            |      |             |             |  
|                                                                                  | Total assets                               |      | $           | 182,400,389 |  
|                                                                                  |                                            |      |             |             |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                              |                                            |      |             |             |  
|Liabilities                                                                       |                                            |      |             |             |  
|Deposits:                                                                         |                                            |      |             |             |  
|                                                                                  | Noninterest bearing                        |      | $           | 20,042,463  |  
|                                                                                  | Interest bearing                           |      |             | 127,698,528 |  
|                                                                                  |                                            |      |             |             |  
|                                                                                  | Total deposits                             |      |             | 147,740,991 |  
|Short-term borrowings                                                             |                                            |      | 10,394,745  |             |  
|Long-term borrowings                                                              |                                            |      | 1,878,568   |             |  
|Other liabilities                                                                 |                                            |      | 1,781,110   |             |  
|                                                                                  |                                            |      |             |             |  
|                                                                                  | Total liabilities                          |      |             | 161,795,414 |  
|                                                                                  |                                            |      |             |             |  
|Commitments and contingencies                                                     |                                            |      |             |             |  
|Shareholders equity                                                              |                                            |      |             |             |  
|Common stock, $2.00 par value, authorized 2,250,000 shares, issued 750,000 shares |                                            |      | 1,500,000   |             |  
|Additional paid-in capital                                                        |                                            |      | 2,100,000   |             |  
|Retained earnings                                                                 |                                            |      | 17,912,258  |             |  
|Accumulated other comprehensive income                                            |                                            |      | 1,243,664   |             |  
|Treasury stock at cost, 103,477 and 101,127 shares, respectively                  |                                            |      | (2,150,947  | )           |  
|                                                                                  |                                            |      |             |             |  
|                                                                                  | Total shareholders equity                 |      |             | 20,604,975  |  
|                                                                                  |                                            |      |             |             |  
|                                                                                  | Total liabilities and shareholders equity |      | $           | 182,400,389 |  
|                                                                                  |                                            |      |             |             |  
|                                                                                  |                                            |      |             |             |  

See Notes to Consolidated Financial Statements

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CITIZENS FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME For The Years Ended
December 31, 2002, 2001 and 2000

|                                                  |                                                     | 2002 |           | 2001       |   | 2000      |           
|------------------------------------------------- | --------------------------------------------------- | ---- | --------- | ---------- | - | --------- | ----------
|                                                  |                                                     |      |           |            |   |           |           
|Interest income                                   |                                                     |      |           |            |   |           |           
|                                                  | Interest and fees on loans                          |      | $         | 8,893,876  |   | $         | 9,259,327 
|                                                  | Interest and dividends on securities:               |      |           |            |   |           |           
|                                                  | Taxable                                             |      |           | 2,258,450  |   |           | 2,280,396 
|                                                  | Tax-exempt                                          |      |           | 321,316    |   |           | 244,993   
|                                                  | Interest on federal funds sold                      |      |           | 44,997     |   |           | 44,777    
|                                                  |                                                     |      |           |            |   |           |           
|                                                  | Total interest income                               |      |           | 11,518,639 |   |           | 11,829,493
|                                                  |                                                     |      |           |            |   |           |           
|Interest expense                                  |                                                     |      |           |            |   |           |           
|                                                  | Interest on deposits                                |      |           | 3,628,492  |   |           | 4,219,704 
|                                                  | Interest on short-term borrowings                   |      |           | 278,382    |   |           | 411,669   
|                                                  | Interest on long-term borrowings                    |      |           | 65,107     |   |           | 45,353    
|                                                  |                                                     |      |           |            |   |           |           
|                                                  | Total interest expense                              |      |           | 3,971,981  |   |           | 4,676,726 
|                                                  |                                                     |      |           |            |   |           |           
|                                                  | Net interest income                                 |      |           | 7,546,658  |   |           | 7,152,767 
|                                                  | Provision for loan losses                           |      |           | 288,272    |   |           | 347,380   
|                                                  |                                                     |      |           |            |   |           |           
|                                                  | Net interest income after provision for loan losses |      |           | 7,258,386  |   |           | 6,805,387 
|                                                  |                                                     |      |           |            |   |           |           
|Noninterest income                                |                                                     |      |           |            |   |           |           
|                                                  | Trust income                                        |      |           | 232,197    |   |           | 204,843   
|                                                  | Service fees                                        |      |           | 611,391    |   |           | 545,307   
|                                                  | Insurance commissions                               |      |           | 54,386     |   |           | 55,503    
|                                                  | Securities gains (losses)                           |      |           |           |   |           | 1,133     
|                                                  | Brokerage fees                                      |      |           | 58,313     |   |           | 120,408   
|                                                  | Secondary market loan fees                          |      |           | 232,298    |   |           | 57,088    
|                                                  | Other                                               |      |           | 164,896    |   |           | 146,968   
|                                                  |                                                     |      |           |            |   |           |           
|                                                  | Total noninterest income                            |      |           | 1,353,481  |   |           | 1,131,250 
|                                                  |                                                     |      |           |            |   |           |           
|Noninterest expense                               |                                                     |      |           |            |   |           |           
|                                                  | Salaries and employee benefits                      |      |           | 3,023,267  |   |           | 2,648,880 
|                                                  | Net occupancy expense                               |      |           | 260,432    |   |           | 245,437   
|                                                  | Equipment rentals, depreciation and maintenance     |      |           | 426,538    |   |           | 406,440   
|                                                  | Data processing                                     |      |           | 454,013    |   |           | 403,570   
|                                                  | Director fees                                       |      |           | 183,350    |   |           | 174,516   
|                                                  | Postage expense                                     |      |           | 147,165    |   |           | 130,965   
|                                                  | Professional service fees                           |      |           | 87,456     |   |           | 75,278    
|                                                  | Stationery                                          |      |           | 135,544    |   |           | 127,901   
|                                                  | Other                                               |      |           | 974,638    |   |           | 821,816   
|                                                  |                                                     |      |           |            |   |           |           
|                                                  | Total noninterest expense                           |      |           | 5,692,403  |   |           | 5,034,803 
|                                                  |                                                     |      |           |            |   |           |           
|Income before income taxes                        |                                                     |      | 2,919,464 |            |   | 2,901,834 |           
|                                                  | Income tax expense                                  |      |           | 991,907    |   |           | 997,099   
|                                                  |                                                     |      |           |            |   |           |           
|                                                  | Net income                                          |      | $         | 1,927,557  |   | $         | 1,904,735 
|                                                  |                                                     |      |           |            |   |           |           
|Basic and fully diluted earnings per common share |                                                     | $    | 2.98      |            | $ | 2.93      |           
|                                                  |                                                     |      |           |            |   |           |           
|Average common shares outstanding                 |                                                     |      | 647,720   |            |   | 650,032   |           
|                                                  |                                                     |      |           |            |   |           |           
|                                                  |                                                     |      |           |            |   |           |           

See Notes to Consolidated Financial Statements

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CITIZENS FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For
The Years Ended December 31, 2002, 2001 and 2000

|                            |                                                                              | 2002 |           | 2001      |   | 2000      |         
|--------------------------- | ---------------------------------------------------------------------------- | ---- | --------- | --------- | - | --------- | --------
|                            |                                                                              |      |           |           |   |           |         
|Net Income                  |                                                                              | $    | 1,927,557 |           | $ | 1,904,735 |         
|Other comprehensive income: |                                                                              |      |           |           |   |           |         
|                            | Gross unrealized gains/(losses) arising during the period                    |      |           | 1,087,492 |   |           | 943,514 
|                            | Adjustment for income tax (expense)/benefit                                  |      |           | (449,983  | ) |           | (320,795
|                            |                                                                              |      |           |           |   |           |         
|                            |                                                                              |      | 637,509   |           |   | 622,719   |         
|                            |                                                                              |      |           |           |   |           |         
|                            | Less:  Reclassification adjustment for (gains)/losses included in net income |      |           |          |   |           | (1,133  
|                            | Adjustment for income tax expense/(benefit)                                  |      |           |          |   |           | 386     
|                            |                                                                              |      |           |           |   |           |         
|                            |                                                                              |      |          |           |   | (747      | )       
|                            |                                                                              |      |           |           |   |           |         
|                            | Other comprehensive income, net of tax                                       |      |           | 637,509   |   |           | 621,972 
|                            |                                                                              |      |           |           |   |           |         
|Comprehensive Income        |                                                                              | $    | 2,565,066 |           | $ | 2,526,707 |         
|                            |                                                                              |      |           |           |   |           |         

See Notes to Consolidated Financial Statements

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CITIZENS FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS
EQUITY For the Years Ended December 31, 2002, 2001 and 2000

|                           |                                                                       | Common Stock |         | Additional Paid-In Capital |   | Retained Earnings |   | Accumulated Other Compre-hensive Income |           | Treasury Stock |   | Total Shareholders Equity |          
|-------------------------- | --------------------------------------------------------------------- | ------------ | ------- | -------------------------- | - | ----------------- | - | --------------------------------------- | --------- | -------------- | - | -------------------------- | ---------
|                           |                                                                       |              |        
|                           |                                                                       | Shares       |         | Amount                     |  
|                           |                                                                       |              |         |                            |   |                   |   |                                         |           |                |   |                            |          
|Balance, December 31, 1999 |                                                                       |              | 750,000 |                            | $ | 1,500,000         |   | $                                       | 2,100,000 |                | $ | 14,722,747                 |          
|                           |                                                                       |              |         |                            |   |                   |   |                                         |           |                |   |                            |          
|                           | Net income                                                            |              |         |                           |   |                   |  |                                         |           |               |   |                            | 1,889,243
|                           | Cost of 5,220 shares acquired as treasury stock                       |              |         |                           |   |                   |  |                                         |           |               |   |                            |         
|                           | Cash dividends declared ($1.20 per share)                             |              |         |                           |   |                   |  |                                         |           |               |   |                            | (781,434 
|                           | Net change in unrealized gain (loss) on available for sale securities |              |         |                           |   |                   |  |                                         |           |               |   |                            |         
|                           |                                                                       |              |         |                            |   |                   |   |                                         |           |                |   |                            |          
|Balance, December 31, 2000 |                                                                       |              | 750,000 |                            |   | 1,500,000         |   |                                         | 2,100,000 |                |   | 15,830,556                 |          
|                           |                                                                       |              |         |                            |   |                   |   |                                         |           |                |   |                            |          
|                           | Net income                                                            |              |         |                           |   |                   |  |                                         |           |               |   |                            | 1,904,735
|                           | Cost of 1,739 shares acquired as treasury stock                       |              |         |                           |   |                   |  |                                         |           |               |   |                            |         
|                           | Cash dividends declared ($1.30 per share)                             |              |         |                           |   |                   |  |                                         |           |               |   |                            | (844,533 
|                           | Net change in unrealized gain (loss) on available for sale securities |              |         |                           |   |                   |  |                                         |           |               |   |                            |         
|                           |                                                                       |              |         |                            |   |                   |   |                                         |           |                |   |                            |          
|Balance, December 31, 2001 |                                                                       |              | 750,000 |                            |   | 1,500,000         |   |                                         | 2,100,000 |                |   | 16,890,758                 |          
|                           |                                                                       |              |         |                            |   |                   |   |                                         |           |                |   |                            |          
|                           | Net income                                                            |              |         |                           |   |                   |  |                                         |           |               |   |                            | 1,927,557
|                           | Cost of 2,350 shares acquired as treasury stock                       |              |         |                           |   |                   |  |                                         |           |               |   |                            |         
|                           | Cash dividends declared ($1.40 per share)                             |              |         |                           |   |                   |  |                                         |           |               |   |                            | (906,057 
|                           | Net change in unrealized gain (loss) on available for sale securities |              |         |                           |   |                   |  |                                         |           |               |   |                            |         
|                           |                                                                       |              |         |                            |   |                   |   |                                         |           |                |   |                            |          
|Balance, December 31, 2002 |                                                                       |              | 750,000 |                            | $ | 1,500,000         |   | $                                       | 2,100,000 |                | $ | 17,912,258                 |          
|                           |                                                                       |              |         |                            |   |                   |   |                                         |           |                |   |                            |          

See Notes to Consolidated Financial Statements

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CITIZENS FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years
Ended December 31, 2002, 2001 and 2000

|                                     |                                                                                   | 2002 |   | 2001        |   | 2000 |            
|------------------------------------ | --------------------------------------------------------------------------------- | ---- | - | ----------- | - | ---- | -----------
|                                     |                                                                                   |      |   |             |   |      |            
|CASH FLOWS FROM OPERATING ACTIVITIES |                                                                                   |      |   |             |   |      |            
|                                     | Net income                                                                        |      | $ | 1,927,557   |   | $    | 1,904,735  
|                                     | Adjustments to reconcile net income to net cash provided by operating activities: |      |   |             |   |      |            
|                                     | Depreciation                                                                      |      |   | 351,939     |   |      | 300,690    
|                                     | Provision for loan losses                                                         |      |   | 288,272     |   |      | 347,380    
|                                     | Deferred income tax expense (benefit)                                             |      |   | 43,922      |   |      | (61,607    
|                                     | Amortization of security premiums, net of accretion of security discounts         |      |   | 71,653      |   |      | 6,653      
|                                     | Amortization of goodwill                                                          |      |   | 13,399      |   |      | 13,399     
|                                     | Securities (gains) losses                                                         |      |   |            |   |      | (1,133     
|                                     | Other (gains) losses                                                              |      |   | 38,913      |   |      | (679       
|                                     | (Increase) decrease in accrued interest receivable                                |      |   | 46,681      |   |      | 6,583      
|                                     | Increase in other assets                                                          |      |   | (173,499    | ) |      | (254,011   
|                                     | Increase (decrease) in other liabilities                                          |      |   | (4,264      | ) |      | (52,799    
|                                     |                                                                                   |      |   |             |   |      |            
|                                     | Net cash provided by operating activities                                         |      |   | 2,604,573   |   |      | 2,209,211  
|                                     |                                                                                   |      |   |             |   |      |            
|CASH FLOWS FROM INVESTING ACTIVITIES |                                                                                   |      |   |             |   |      |            
|                                     | Proceeds from sales of securities available for sale                              |      |   |            |   |      | 506,785    
|                                     | Proceeds from maturities and calls of securities available for sale               |      |   | 11,564,400  |   |      | 12,065,000 
|                                     | Principal payments received on securities available for sale                      |      |   | 1,449,661   |   |      | 520,449    
|                                     | Purchases of securities available for sale                                        |      |   | (17,252,886 | ) |      | (18,782,411
|                                     | Loans made to customers, net                                                      |      |   | (8,186,883  | ) |      | (6,701,105 
|                                     | Purchases of bank premises and equipment                                          |      |   | (840,301    | ) |      | (615,316   
|                                     | Purchase of life insurance contracts                                              |      |   | (2,000,000  | ) |      |           
|                                     | Proceeds from sale of other real estate and other assets                          |      |   | 145,142     |   |      | 178,391    
|                                     |                                                                                   |      |   |             |   |      |            
|                                     | Net cash used in investing activities                                             |      |   | (15,120,867 | ) |      | (12,828,207
|                                     |                                                                                   |      |   |             |   |      |            

(Continued)

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CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued For the Years Ended December 31, 2002, 2001 and 2000

|                                                                    |                                                                        | 2002 |   | 2001       |   | 2000 |           
|------------------------------------------------------------------- | ---------------------------------------------------------------------- | ---- | - | ---------- | - | ---- | ----------
|                                                                    |                                                                        |      |   |            |   |      |           
|CASH FLOWS FROM FINANCING ACTIVITIES                                |                                                                        |      |   |            |   |      |           
|                                                                    | Net increase in demand deposit, NOW, money market and savings accounts |      |   | 9,334,531  |   |      | 3,406,483 
|                                                                    | Net increase in time deposits                                          |      |   | 6,654,525  |   |      | 6,826,581 
|                                                                    | Net increase (decrease) in short-term borrowings                       |      |   | (3,526,930 | ) |      | 1,554,976 
|                                                                    | Proceeds from long-term borrowings                                     |      |   | 2,000,000  |   |      |          
|                                                                    | Repayments of long-term borrowings                                     |      |   | (908,955   | ) |      | (80,163   
|                                                                    | Dividends paid                                                         |      |   | (906,057   | ) |      | (844,533  
|                                                                    | Acquisition of treasury stock                                          |      |   | (76,381    | ) |      | (49,999   
|                                                                    |                                                                        |      |   |            |   |      |           
|                                                                    | Net cash provided by financing activities                              |      |   | 12,570,733 |   |      | 10,813,345
|                                                                    |                                                                        |      |   |            |   |      |           
|                                                                    | Increase (decrease) in cash and cash equivalents                       |      |   | 54,439     |   |      | 194,349   
|Cash and cash equivalents:                                          |                                                                        |      |   |            |   |      |           
|                                                                    | Beginning                                                              |      |   | 4,734,676  |   |      | 4,540,327 
|                                                                    |                                                                        |      |   |            |   |      |           
|                                                                    | Ending                                                                 |      | $ | 4,789,115  |   | $    | 4,734,676 
|                                                                    |                                                                        |      |   |            |   |      |           
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                   |                                                                        |      |   |            |   |      |           
|                                                                    | Cash payments for:                                                     |      |   |            |   |      |           
|                                                                    | Interest on deposits and on other borrowings                           |      | $ | 4,031,808  |   | $    | 4,671,941 
|                                                                    |                                                                        |      |   |            |   |      |           
|                                                                    | Income taxes                                                           |      | $ | 959,815    |   | $    | 1,030,186 
|                                                                    |                                                                        |      |   |            |   |      |           
|SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES |                                                                        |      |   |            |   |      |           
|                                                                    | Other real estate and other assets acquired in settlement of loans     |      | $ | 76,803     |   | $    | 311,813   
|                                                                    |                                                                        |      |   |            |   |      |           
|                                                                    |                                                                        |      |   |            |   |      |           

See Notes to Consolidated Financial Statements

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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 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 consolidated 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.  All of the banks securities are classified as available for sale.

Trading securities -
There are no securities classified as trading in the accompanying consolidated 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.

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

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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 and is also subject to annual impairment testing.  Unamortized goodwill totaled
$166,372 and $179,771 at December 31, 2002 and 2001, respectively.  Additional information on accounting for goodwill is presented later in this Note in the discussion of New Accounting Pronouncements.

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

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 and fully diluted earnings per share:  Basic
and fully diluted earnings per common share is computed based upon the weighted average shares outstanding.  The weighted average shares outstanding were 647,720, 650,032 and 651,995 for the years ended December 31, 2002, 2001 and 2000,
respectively.  During the years ended December 31, 2002, 2001 and 2000, 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

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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.

New Accounting Pronouncements: In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS 142), which addresses the accounting and reporting for acquired goodwill and other intangible assets. Under the provisions of SFAS 142, goodwill and certain other
intangible assets with indefinite useful lives are no longer amortized into net income over an estimated life, but rather are tested at least annually for impairment based on specific guidance provided in the new standard.  However, SFAS 142
did not supercede Statement of Financial Accounting Standards No. 72, Accounting for Certain Acquisitions of Banking or Thrift Institutions (SFAS 72), and therefore, any goodwill accounted for in accordance with SFAS 72 will continue to
be amortized and will also be subject to impairment testing under SFAS 142.  The company has adopted the provisions of SFAS 142 by performing the required impairment testing.  No impairment losses have been recognized in the accompanying
consolidated financial statements as a result of those tests.

In October 2002, the FASB issued Statement of Financial Accounting Standards No. 147, Acquisition of Certain Financial Institutions
(SFAS 147).  SFAS 147 is effective for relevant acquisitions on and after October 1, 2002 and removes acquisitions of financial institutions from the scope of SFAS 72 requiring that these transactions be accounted for in accordance
with FASB Statement No. 141, Business Combinations, and SFAS 142.  In addition, SFAS 147 clarifies that the acquisition of a less-than-whole financial institution (e.g. a branch acquisition) that meets the definition of a business should be
accounted for as a business combination, otherwise the transaction should be accounted for as an acquisition of net assets that does not result in the recognition of goodwill.  SFAS 147 also amends FASB Statement No. 144, Accounting for
Impairment or Disposal of Long-Lived Assets, to include in its scope long-term customer relationship intangible assets.  The adoption of SFAS 147 did not impact the companys financial position or its results of operations for the periods
presented in these consolidated financial statements.

Reclassifications:Certain accounts in the consolidated financial statements for 2001 and
2000, as previously presented, have been reclassified to conform to current year classifications.

Note 2.  Cash Concentrations

At December 31, 2002 and 2001, the bank had no cash concentrations.

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Note 3.  Securities

The amortized cost, unrealized gains, unrealized losses and
estimated fair values of securities at December 31, 2002 and 2001, are summarized as follows:

|                    |                                                                        | 2002           |       
|------------------- | ---------------------------------------------------------------------- | -------------- | ------
|                    |                                                                        |                |       
|                    |                                                                        | Amortized Cost |       
|                    |                                                                       
|                    | Gains                                                                  |                | Losses
|                    |                                                                        |                |       
|Available for sale: |                                                                        |                |       
|                    | U.S. Government agencies and corporations                              |                | $     
|                    | Mortgage-backed securities - U.S. Government agencies and corporations |                |       
|                    | Federal Reserve Bank stock                                             |                |       
|                    | Federal Home Loan Bank stock                                           |                |       
|                    | Corporate debt securities                                              |                |       
|                    | Tax exempt state and political subdivisions                            |                |       
|                    |                                                                        |                |       
|                    | Total securities available for sale                                    |                | $     
|                    |                                                                        |                |       
|                    |                                                                        |                |       



|                    |                                                                        | 2001           |  
|------------------- | ---------------------------------------------------------------------- | -------------- | -
|                    |                                                                        |                |  
|                    |                                                                        | Amortized Cost |  
|                    |                                                                        |                |  
|                    |                                                                        | Gains          |  
|                    |                                                                        |                |  
|Available for sale: |                                                                        |                |  
|                    | U.S. Government agencies and corporations                              |                | $
|                    | Mortgage-backed securities - U.S. Government agencies and corporations |                |  
|                    | Federal Reserve Bank stock                                             |                |  
|                    | Federal Home Loan Bank stock                                           |                |  
|                    | Corporate debt securities                                              |                |  
|                    | Tax exempt state and political subdivisions                            |                |  
|                    |                                                                        |                |  
|                    | Total securities available for sale                                    |                | $
|                    |                                                                        |                |  
|                    |                                                                        |                |  

The maturities, amortized cost and estimated fair values of the companys securities at December 31, 2002 are summarized as
follows:

|                                 |       | Available for Sale |           
|-------------------------------- | ----- | ------------------ | ----------
|                                 |       |                    |           
|                                 |       | Amortized Cost     |           
|                                 |       |                    |           
|Due within one year              |       | $                  | 11,069,885
|Due after one through five years |       |                    | 35,903,536
|Due after five through ten years |       |                    | 4,595,402 
|Due after ten years              |       |                    |          
|Equity securities                |       |                    | 644,400   
|                                 |       |                    |           
|                                 | Total |                    | $         
|                                 |       |                    |           
|                                 |       |                    |           

Mortgage backed securities have remaining contractual maturities ranging from 2 to 18 years and are reflected in the maturity distribution schedule
based on their anticipated average life to maturity, which ranges from 0.95 to 4.22 years.  Accordingly, discounts are accreted and premiums are amortized over the anticipated average life to maturity of the specific obligation.

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

|                         |                               | Proceeds From |   | Gross Realized       | 
|------------------------ | ----------------------------- | ------------- | - | -------------------- | 
|                         |                               |               |   |                      | 
|Years Ended December 31, |                               | Sales         |   | Calls and Maturities | 
|                         |                               |               |   |                      | 
|2002                     |                               |               |   |                      | 
|                         | Securities available for sale |               | $ |                     | 
|                         |                               |               |   |                      | 
|2001                     |                               |               |   |                      | 
|                         | Securities available for sale |               | $ | 506,785              | 
|                         |                               |               |   |                      | 
|2000                     |                               |               |   |                      | 
|                         | Securities available for sale |               | $ | 4,452,748            | 
|                         |                               |               |   |                      | 

At December 31, 2002 and 2001 securities carried at $19,210,179 and
$19,208,568, respectively, with estimated fair values of $20,171,096 and $19,760,967, 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, 2002, 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 $2,740,791 and an estimated fair value of $2,903,700.  There were no concentrations with any one issuer.

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

Note 4.  Loans

Loans are summarized as follows:

|                                             |                                                                                     | December 31, |            
|-------------------------------------------- | ----------------------------------------------------------------------------------- | ------------ | -----------
|                                             |                                                                                     |              |            
|                                             |                                                                                     | 2002         |            
|                                             |                                                                                     |              |            
|Commercial, financial and agricultural       |                                                                                     | $            | 20,819,588 
|Real estate - construction                   |                                                                                     |              | 2,688,643  
|Real estate - mortgage                       |                                                                                     |              | 77,936,759 
|Installment loans                            |                                                                                     |              | 13,656,644 
|Other                                        |                                                                                     |              | 1,565,990  
|                                             |                                                                                     |              |            
|Total loans                                  |                                                                                     |              | 116,667,624
|Net deferred loan origination fees and costs |                                                                                     |              | (92,840    
|Less unearned income                         |                                                                                     |              | (2,298     
|                                             |                                                                                     |              |            
|                                             | Total loans net of unearned income and net deferred loan origination fees and costs |              |            
|Less allowance for loan losses               |                                                                                     |              | 1,385,625  
|                                             |                                                                                     |              |            
|                                             | Loans, net                                                                          |              | $          
|                                             |                                                                                     |              |            

Included in the above balance of net loans are nonaccrual loans
amounting to $13,972 and $29,757 at December 31, 2002 and 2001, respectively.  If interest on nonaccrual loans had been accrued, such income would have approximated $4,738, $1,122 and $4,974 for the years ended December 31, 2002, 2001 and
2000, 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, 2002 and 2001, outstanding loans of this nature totaled $4,251,912 and $4,299,370, respectively.

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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, 2002 and 2001:

|                   |                   | 2002 |           | 2001     |  
|------------------ | ----------------- | ---- | --------- | -------- | -
|                   |                   |      |           |          |  
|Balance, beginning |                   | $    | 4,165,503 |          | $
|                   | Additions         |      |           | 803,596  |  
|                   | Amounts collected |      |           | (864,606 | )
|                   |                   |      |           |          |  
|Balance, ending    |                   | $    | 4,104,493 |          | $
|                   |                   |      |           |          |  

The following represents the maturities and sensitivities of loans to
changes in interest rates at December 31, 2002, without regard to scheduled periodic principal repayments on amortizing loans:

|                                       |                | Due Within 1 Yr |           | Due After 1 But Within 5 Yrs |   | Due After 5 Yrs |  | Total |           
|-------------------------------------- | -------------- | --------------- | --------- | ---------------------------- | - | --------------- |  | ----- | ----------
|                                       |                |                 |           |                              |   |                 |  |       |           
|Commercial, financial and agricultural |                | $               | 2,200,675 |                              | $ | 6,363,213       |  | $     | 12,255,700
|Real estate - construction             |                |                 | 1,940,648 |                              |   | 300,000         |  |       | 447,995   
|Real estate - mortgage                 |                |                 | 1,133,499 |                              |   | 4,248,041       |  |       | 72,555,219
|Net installment loans                  |                |                 | 1,116,798 |                              |   | 12,000,282      |  |       | 539,564   
|Other                                  |                |                 | 125,418   |                              |   | 1,389,945       |  |       | 50,627    
|                                       |                |                 |           |                              |   |                 |  |       |           
|                                       |                | $               | 6,517,038 |                              | $ | 24,301,481      |  | $     | 85,849,105
|                                       |                |                 |           |                              |   |                 |  |       |           
|Loans due after one year with:         |                |                 |           |                              |   |                 |  |       |           
|                                       | Variable rates |                 | $         | 84,154,984                   |   |                 |  |       |           
|                                       | Fixed rates    |                 |           | 25,995,602                   |   |                 |  |       |           
|                                       |                |                 |           |                              |   |                 |  |       |           
|                                       | Total          |                 | $         | 110,150,586                  |   |                 |  |       |           
|                                       |                |                 |           |                              |   |                 |  |       |           
|                                       |                |                 |           |                              |   |                 |  |       |           

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.  Nonetheless, concentrations of credit, defined as loans to a customer, the customers related parties, or to a
number of customers operating in the same industry, which in the aggregate total 25% or more of capital can occur.  At December 31, 2002, the company had two such concentrations.

Direct and indirect extensions of credit to automobile dealers, consisting of floor plan loans and other commercial loans which are generally secured by liens on the subject inventories or
equipment, totaled approximately $10,961,000.  Additional collateral such as pledges of accounts receivable, real estate, or personal guarantees may also be required when granting these credits.  Extensions of credit to companies operating
in the lumber industry and their related parties approximated $8,228,000.  These loans are generally made for the purpose of financing logging equipment and are typically secured by liens on the subject equipment.  Additional security,
such as that previously noted, may also be required.  The bank evaluates each such customers credit worthiness on a case-by-case basis.  The amount of collateral obtained is based upon these credit evaluations.

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Note 5.  Allowance for Loan Losses

An analysis of the allowance for loan losses for
the years ended December 31, 2002, 2001 and 2000, is as follows:

|                                       |       | 2002 |           | 2001    |   | 2000      |        
|-------------------------------------- | ----- | ---- | --------- | ------- | - | --------- | -------
|                                       |       |      |           |         |   |           |        
|Balance, beginning of year             |       | $    | 1,397,528 |         | $ | 1,150,900 |        
|                                       |       |      |           |         |   |           |        
|Losses:                                |       |      |           |         |   |           |        
|Commercial, financial and agricultural |       |      | 134,250   |         |   | 27,384    |        
|Real estate - mortgage                 |       |      | 56,296    |         |   | 11,657    |        
|Installment                            |       |      | 137,436   |         |   | 116,411   |        
|                                       |       |      |           |         |   |           |        
|                                       | Total |      |           | 327,982 |   |           | 155,452
|                                       |       |      |           |         |   |           |        
|Recoveries:                            |       |      |           |         |   |           |        
|Commercial, financial and agricultural |       |      | 3,430     |         |   | 35,946    |        
|Real estate - mortgage                 |       |      | 752       |         |   | 100       |        
|Installment                            |       |      | 23,625    |         |   | 18,654    |        
|                                       |       |      |           |         |   |           |        
|                                       | Total |      |           | 27,807  |   |           | 54,700 
|                                       |       |      |           |         |   |           |        
|Net losses                             |       |      | 300,175   |         |   | 100,752   |        
|Provision for loan losses              |       |      | 288,272   |         |   | 347,380   |        
|                                       |       |      |           |         |   |           |        
|Balance, end of year                   |       | $    | 1,385,625 |         | $ | 1,397,528 |        
|                                       |       |      |           |         |   |           |        

The company had no loans that were considered impaired at
December 31, 2002 and 2001.

The company regularly reviews the credit quality of all loans with balances of $250,000 or more.  When credit weaknesses
are found, specific reserves are established. If no such weaknesses are found, these loans are grouped with other, smaller balance loans of a similar type, either real estate, commercial, or consumer, and reserves are established for each group type
as called for by SFAS Nos. 114 and 118 using historical and peer group loss data.

Note 6.  Bank Premises and Equipment

The major categories of bank premises and equipment and accumulated depreciation at December 31, 2002 and 2001, are summarized as follows:

|                                 |  | 2002 |           | 2001 |  
|-------------------------------- |  | ---- | --------- | ---- | -
|                                 |  |      |           |      |  
|Land                             |  | $    | 523,103   |      | $
|Buildings and improvements       |  |      | 3,859,650 |      |  
|Furniture and equipment          |  |      | 2,270,507 |      |  
|                                 |  |      |           |      |  
|                                 |  |      | 6,653,260 |      |  
|Less accumulated depreciation    |  |      | 3,507,299 |      |  
|                                 |  |      |           |      |  
|Bank premises and equipment, net |  | $    | 3,145,961 |      | $
|                                 |  |      |           |      |  

Depreciation expense for the years ended December 31, 2002, 2001 and
2000, totaled $351,939, $300,690 and $210,400, respectively.

Note 7.  Deposits

The following is a summary
of interest bearing deposits by type as of December 31, 2002 and 2001:

|                                            |       | 2002 |            | 2001        |  
|------------------------------------------- | ----- | ---- | ---------- | ----------- | -
|                                            |       |      |            |             |  
|NOW and Super NOW accounts                  |       | $    | 27,221,236 |             | $
|Money market accounts                       |       |      | 6,381,846  |             |  
|Savings accounts                            |       |      | 25,044,022 |             |  
|Certificates of deposit under $100,000      |       |      | 48,119,359 |             |  
|Certificates of deposit of $100,000 or more |       |      | 20,932,065 |             |  
|                                            |       |      |            |             |  
|                                            | Total |      | $          | 127,698,528 |  
|                                            |       |      |            |             |  
|                                            |       |      |            |             |  

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Interest expense on deposits is summarized below:

|                                            |       | 2002 |           | 2001      |   | 2000      |          
|------------------------------------------- | ----- | ---- | --------- | --------- | - | --------- | ---------
|                                            |       |      |           |           |   |           |          
|NOW and Super NOW accounts                  |       | $    | 477,876   |           | $ | 595,606   |          
|Money market accounts                       |       |      | 84,284    |           |   | 118,779   |          
|Savings accounts                            |       |      | 378,933   |           |   | 422,258   |          
|Certificates of deposit under $100,000      |       |      | 1,918,574 |           |   | 2,241,704 |          
|Certificates of deposit of $100,000 or more |       |      | 768,825   |           |   | 841,357   |          
|                                            |       |      |           |           |   |           |          
|                                            | Total |      | $         | 3,628,492 |   | $         | 4,219,704
|                                            |       |      |           |           |   |           |          
|                                            |       |      |           |           |   |           |          

The following is a summary of the maturity distribution of certificates of deposit in amounts of $100,000 or more as of December 31,
2002:

|                          |       | Amount |            | Percent    | 
|------------------------- | ----- | ------ | ---------- | ---------- | 
|                          |       |        |            |            | 
|Three months or less      |       | $      | 5,286,168  |            | 
|Three through six months  |       |        | 1,251,489  |            | 
|Six through twelve months |       |        | 2,352,253  |            | 
|Over twelve months        |       |        | 12,042,155 |            | 
|                          |       |        |            |            | 
|                          | Total |        | $          | 20,932,065 | 
|                          |       |        |            |            | 

A summary of the maturities for all time deposits as of December 31, 2002, follows:

|Year |  | Amount |           
|---- |  | ------ | ----------
|     |  |        |           
|2003 |  | $      | 35,262,820
|2004 |  |        | 15,525,476
|2005 |  |        | 16,133,768
|2006 |  |        | 920,689   
|2007 |  |        | 1,208,671 
|     |  |        |           
|     |  | $      | 69,051,424
|     |  |        |           

At December 31, 2002, deposits of related parties including directors,
executive officers, and their related interests of Citizens Financial Corp. and subsidiaries approximated $3,293,000.

Note 8.  Derivative Instruments

The bank has offered a product known as the Index Powered CD to its customers since 2001.  This is a five year certificate of deposit which, if held to maturity, provides the customer with
guaranteed return of principal and interest which is linked to the performance of the Standard and Poors 500 Index over the term of the certificate of deposit.  As of December 31, 2002 and 2001 the notional value of these deposits was
$710,906 and $30,000, respectively.

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

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

This interest rate swap also represents a derivative contract and is accounted for as a fair value hedge under SFAS 133.  As such, it
is  carried as an asset at fair value with changes in value being recognized in current earnings.  The impact of the companys derivative activities on pretax income was $(10,488) in 2002 and $0 in 2001.

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Note 9.  Income Taxes

The components of applicable income tax expense (benefit) for
the years ended December 31, 2002, 2001 and 2000, are as follows:

|         |         | 2002 |         | 2001    |  | 2000      |        
|-------- | ------- | ---- | ------- | ------- |  | --------- | -------
|         |         |      |         |         |  |           |        
|Current: |         |      |         |         |  |           |        
|         | Federal |      | $       | 792,896 |  | $         | 914,185
|         | State   |      |         | 155,089 |  |           | 144,521
|         |         |      |         |         |  |           |        
|         |         |      | 947,985 |         |  | 1,058,706 |        
|         |         |      |         |         |  |           |        
|Deferred |         |      |         |         |  |           |        
|         | Federal |      |         | 39,299  |  |           | (55,122
|         | State   |      |         | 4,623   |  |           | (6,485 
|         |         |      |         |         |  |           |        
|         |         |      | 43,922  |         |  | (61,607   | )      
|         |         |      |         |         |  |           |        
|         | Total   |      | $       | 991,907 |  | $         | 997,099
|         |         |      |         |         |  |           |        
|         |         |      |         |         |  |           |        

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, 2002 and
2001, are as follows:

|                          |                                     | 2002 |          | 2001     |  
|------------------------- | ----------------------------------- | ---- | -------- | -------- | -
|                          |                                     |      |          |          |  
|Deferred tax assets:      |                                     |      |          |          |  
|                          | Allowance for loan losses           |      | $        | 376,911  |  
|                          | Accrued income and expenses         |      |          | 9,850    |  
|                          | Depreciation                        |      |          | 24,006   |  
|                          | Net loan origination fees and costs |      |          | 35,279   |  
|                          |                                     |      |          |          |  
|                          |                                     |      | 446,046  |          |  
|                          |                                     |      |          |          |  
|Deferred tax liabilities: |                                     |      |          |          |  
|                          | Accretion on securities             |      |          | (97,957  | )
|                          | Employee benefit plans              |      |          | (31,569  | )
|                          | Net unrealized gain on securities   |      |          | (762,246 | )
|                          |                                     |      |          |          |  
|                          |                                     |      | (891,772 | )        |  
|                          |                                     |      |          |          |  
|                          | Net deferred tax asset (liability)  |      | $        | (445,726 | )
|                          |                                     |      |          |          |  

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, 2002, 2001 and 2000, is as follows:

|                                          |                                                | 2002   |         | 2001     |   | 2000   |     
|----------------------------------------- | ---------------------------------------------- | ------ | ------- | -------- | - | ------ | ----
|                                          |                                                |        |         |          |   |        |     
|                                          |                                                | Amount |         | Percent  |   | Amount |     
|                                          |                                                |        |         |          |   |        |     
|Computed tax at applicable statutory rate |                                                | $      | 992,618 |          |   | 34.0   |     
|                                          | Increase (decrease) in taxes resulting from:   |        |         |          |   |        |     
|                                          | Tax-exempt interest                            |        |         | (142,742 | ) |        | (4.9
|                                          | State income taxes, net of federal tax benefit |        |         | 102,359  |   |        | 3.5 
|                                          | Other, net                                     |        |         | 39,672   |   |        | 1.4 
|                                          |                                                |        |         |          |   |        |     
|                                          | Applicable income taxes                        |        | $       | 991,907  |   |        | 34.0
|                                          |                                                |        |         |          |   |        |     
|                                          |                                                |        |         |          |   |        |     

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Note 10.  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.

|                                               |  | Pension Benefit 2002 |           | Pension Benefit 2001 |   | Pension Benefit 2000 |  
|---------------------------------------------- |  | -------------------- | --------- | -------------------- | - | -------------------- | -
|                                               |  |                      |           |                      |   |                      |  
|Change in benefit obligation                   |  |                      |           |                      |   |                      |  
|Benefit obligation at beginning of year        |  | $                    | 3,193,336 |                      | $ | 2,869,295            |  
|Service cost                                   |  |                      | 88,114    |                      |   | 61,676               |  
|Interest cost                                  |  |                      | 231,209   |                      |   | 224,280              |  
|Change in discount rate                        |  |                      | 84,397    |                      |   | 175,494              |  
|Experience loss/(gain)                         |  |                      | 73,221    |                      |   | 7,349                |  
|Benefits paid                                  |  |                      | (148,461  | )                    |   | (144,758             | )
|                                               |  |                      |           |                      |   |                      |  
|Benefit obligation at end of year              |  | $                    | 3,521,816 |                      | $ | 3,193,336            |  
|                                               |  |                      |           |                      |   |                      |  
|Change in plan assets                          |  |                      |           |                      |   |                      |  
|Fair value of plan assets at beginning of year |  | $                    | 3,922,053 |                      | $ | 4,344,521            |  
|Actual return (loss) on plan assets            |  |                      | (495,647  | )                    |   | (277,710             | )
|Employer contribution                          |  |                      |          |                      |   |                     |  
|Plan participants contributions               |  |                      |          |                      |   |                     |  
|Benefits paid                                  |  |                      | (148,461  | )                    |   | (144,758             | )
|                                               |  |                      |           |                      |   |                      |  
|Fair value of plan assets at end of year       |  | $                    | 3,277,945 |                      | $ | 3,922,053            |  
|                                               |  |                      |           |                      |   |                      |  
|Funded status                                  |  | $                    | (243,871  | )                    | $ | 728,717              |  
|Unrecognized net actuarial (gain) loss         |  |                      | 1,174,001 |                      |   | 150,373              |  
|Unrecognized prior service benefit             |  |                      | (112,791  | )                    |   | (131,159             | )
|Unrecognized net obligation at transition      |  |                      | (23,809   | )                    |   | (46,930              | )
|                                               |  |                      |           |                      |   |                      |  
|Prepaid benefit cost                           |  | $                    | 793,530   |                      | $ | 701,001              |  
|                                               |  |                      |           |                      |   |                      |  
|Weighted-average assumptions as of December 31 |  |                      |           |                      |   |                      |  
|Discount rate                                  |  |                      | 7.00      | %                    |   | 7.25                 | %
|Expected return on plan assets                 |  |                      | 8.50      | %                    |   | 8.50                 | %
|Rate of compensation increase                  |  |                      | 4.00      | %                    |   | 4.25                 | %
|Components of net periodic benefit cost        |  |                      |           |                      |   |                      |  
|Service cost                                   |  | $                    | 88,114    |                      | $ | 61,676               |  
|Interest cost                                  |  |                      | 231,209   |                      |   | 224,280              |  
|Expected return on plan assets                 |  |                      | (370,363  | )                    |   | (363,067             | )
|Net amortization and deferral                  |  |                      | (41,489   | )                    |   | (62,530              | )
|                                               |  |                      |           |                      |   |                      |  
|Net periodic benefit cost                      |  | $                    | (92,529   | )                    | $ | (139,641             | )
|                                               |  |                      |           |                      |   |                      |  

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 allows participating employees to contribute up to $11,000 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, 2002, 2001 and 2000, were $57,000, $51,000 and
$59,000, respectively.

Executive Supplemental Income Plan:  Subsequent to an amendment in the banks pension benefit formula in 1995, it offered an
Executive Supplemental Income Plan to certain senior officers, some of whom are now retired.  The liability accrued for this Plan at December 31, 2002 and 2001 was $242,229 and $235,849, respectively, and is included in other

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liabilities.  The funding of these liabilities is provided by certain insurance contracts which the bank has purchased.  At December 31, 2002 and 2001, the cash
surrender value of these insurance contracts was $326,634 and $279,553, respectively.  Expenses associated with the Plan at December 31, 2002, 2001 and 2000 were $16,423, $23,222 and $32,348, respectively.

Executive and Director Supplemental Retirement Plan:Effective January 1, 2003, the bank entered into a non-qualified supplemental executive and director retirement plan with various
officers and directors of the bank which provides them with income benefits payable at retirement age or death.  Retirement benefits to be accumulated prior to death are determined annually under a defined contribution formula that requires the
income from investments in underlying life insurance contracts to exceed a predetermined opportunity cost, with this excess being accumulated to the benefit of the eligible participant.  This excess portion is then accumulated annually until
the person is eligible for retirement, at which time it is paid out annually in 10 equal installments.  An additional retirement benefit equal to the excess earnings over opportunity costs as determined each year after retirement is paid to the
participant annually until death. Under either the executive or director plans, if the return on the underlying investment in life insurance contracts does not exceed the related opportunity costs, no benefits are due or payable to any participant
upon retirement.  In connection with this plan, the bank purchased, in 2002, life insurance contracts with a deposit of $2,000,000.  These underlying life insurance contracts have a cash surrender value at December 31, 2002 of $2,034,000,
which is reflected in other assets in the consolidated financial statements.  No liabilities existed as of December 31, 2002.

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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:

|                                               |  | Health Care Plan 2002 |          | Health Care Plan 2001 |   | Health Care Plan 2000 |  
|---------------------------------------------- |  | --------------------- | -------- | --------------------- | - | --------------------- | -
|                                               |  |                       |          |                       |   |                       |  
|Change in benefit obligation                   |  |                       |          |                       |   |                       |  
|Benefit obligation at beginning of year        |  | $                     | 446,390  |                       | $ | 405,213               |  
|Service cost                                   |  |                       | 18,131   |                       |   | 17,426                |  
|Interest cost                                  |  |                       | 29,399   |                       |   | 27,038                |  
|Change in discount rate                        |  |                       |         |                       |   |                      |  
|Experience loss/(gain)                         |  |                       | 13,701   |                       |   | 30,707                |  
|Net amortization and deferral                  |  |                       |         |                       |   |                      |  
|Benefits paid                                  |  |                       | (26,334  | )                     |   | (33,994               | )
|                                               |  |                       |          |                       |   |                       |  
|Benefit obligation at end of year              |  | $                     | 481,287  |                       | $ | 446,390               |  
|                                               |  |                       |          |                       |   |                       |  
|Change in plan assets                          |  |                       |          |                       |   |                       |  
|Fair value of plan assets at beginning of year |  | $                     |         |                       | $ |                      |  
|Actual return on plan assets                   |  |                       |         |                       |   |                      |  
|Employer contribution                          |  |                       |         |                       |   |                      |  
|Plan participants contributions               |  |                       | 26,334   |                       |   | 33,994                |  
|Experience (loss)/gain                         |  |                       |         |                       |   |                      |  
|Benefits paid                                  |  |                       | (26,334  | )                     |   | (33,994               | )
|                                               |  |                       |          |                       |   |                       |  
|Fair value of plan assets at end of year       |  | $                     |         |                       | $ |                      |  
|                                               |  |                       |          |                       |   |                       |  
|Funded status                                  |  | $                     | (481,287 | )                     | $ | (446,390              | )
|Unrecognized net actuarial gain                |  |                       | (38,030  | )                     |   | (52,191               | )
|Unrecognized prior service benefit             |  |                       |         |                       |   |                      |  
|Unrecognized net obligation at transition      |  |                       | 171,105  |                       |   | 188,216               |  
|                                               |  |                       |          |                       |   |                       |  
|Prepaid (accrued) benefit cost                 |  | $                     | (348,212 | )                     | $ | (310,365              | )
|                                               |  |                       |          |                       |   |                       |  
|Weighted-average assumptions as of December 31 |  |                       |          |                       |   |                       |  
|Discount rate                                  |  |                       | 7.00     | %                     |   | 7.25                  | %
|Expected return on plan assets                 |  |                       | 7.00     | %                     |   | 7.00                  | %
|Rate of compensation increase                  |  |                       |         |                       |   |                      |  
|Components of net periodic benefit cost        |  |                       |          |                       |   |                       |  
|Service cost                                   |  | $                     | 18,131   |                       | $ | 17,426                |  
|Interest cost                                  |  |                       | 29,399   |                       |   | 27,038                |  
|Expected return on plan assets                 |  |                       | (460     | )                     |   | (2,863                | )
|Net amortization and deferral                  |  |                       | 17,111   |                       |   | 17,111                |  
|Recognized net actuarial loss                  |  |                       |         |                       |   |                      |  
|                                               |  |                       |          |                       |   |                       |  
|Net periodic benefit cost                      |  | $                     | 64,181   |                       | $ | 58,712                |  
|                                               |  |                       |          |                       |   |                       |  

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|                                               |  | Life Insurance Plan 2002 |         | Life Insurance Plan 2001 |   | Life Insurance Plan 2000 |   | Total 2002 |         | Total 2001 |   | Total 2000 |  
|---------------------------------------------- |  | ------------------------ | ------- | ------------------------ | - | ------------------------ | - | ---------- | ------- | ---------- | - | ---------- | -
|                                               |  |                          |         |                          |   |                          |   |            |         |            |   |            |  
|Change in benefit obligation                   |  |                          |         |                          |   |                          |   |            |         |            |   |            |  
|Benefit obligation at beginning of year        |  | $                        | 48,664  |                          | $ | 83,540                   |   | $          | 93,331  |            | $ | 495,054    |  
|Service cost                                   |  |                          | 1,989   |                          |   | 3,542                    |   |            | 4,018   |            |   | 20,120     |  
|Interest cost                                  |  |                          | 3,120   |                          |   | 5,760                    |   |            | 6,506   |            |   | 32,519     |  
|Change in discount rate                        |  |                          |        |                          |   |                         |   |            |        |            |   |           |  
|Experience loss/(gain)                         |  |                          | (985    | )                        |   | (40,679                  | ) |            | (16,539 | )          |   | 12,716     |  
|Net amortization and deferral                  |  |                          |        |                          |   |                         |   |            |        |            |   |           |  
|Benefits paid                                  |  |                          | (3,499  | )                        |   | (3,499                   | ) |            | (3,776  | )          |   | (29,833    | )
|                                               |  |                          |         |                          |   |                          |   |            |         |            |   |            |  
|Benefit obligation at end of year              |  | $                        | 49,289  |                          | $ | 48,664                   |   | $          | 83,540  |            | $ | 530,576    |  
|                                               |  |                          |         |                          |   |                          |   |            |         |            |   |            |  
|Change in plan assets                          |  |                          |         |                          |   |                          |   |            |         |            |   |            |  
|Fair value of plan assets at beginning of year |  | $                        |        |                          | $ |                         |   | $          |        |            | $ |           |  
|Actual return on plan assets                   |  |                          |        |                          |   |                         |   |            |        |            |   |           |  
|Employer contribution                          |  |                          |        |                          |   |                         |   |            |        |            |   |           |  
|Plan participants contributions               |  |                          | 3,499   |                          |   | 3,499                    |   |            | 3,776   |            |   | 29,833     |  
|Experience (loss)/gain                         |  |                          |        |                          |   |                         |   |            |        |            |   |           |  
|Benefits paid                                  |  |                          | (2,340  | )                        |   | (3,776                   | ) |            | (3,776  | )          |   | (28,674    | )
|                                               |  |                          |         |                          |   |                          |   |            |         |            |   |            |  
|Fair value of plan assets at end of year       |  | $                        | 1,159   |                          | $ | (277                     | ) | $          |        |            | $ | 1,159      |  
|                                               |  |                          |         |                          |   |                          |   |            |         |            |   |            |  
|Funded status                                  |  | $                        | (49,289 | )                        | $ | (48,664                  | ) | $          | (83,540 | )          | $ | (530,576   | )
|Unrecognized net actuarial gain                |  |                          | (68,712 | )                        |   | (71,804                  | ) |            | (32,664 | )          |   | (106,742   | )
|Unrecognized prior service benefit             |  |                          |        |                          |   |                         |   |            |        |            |   |           |  
|Unrecognized net obligation at transition      |  |                          | 38,342  |                          |   | 42,177                   |   |            | 46,012  |            |   | 209,447    |  
|                                               |  |                          |         |                          |   |                          |   |            |         |            |   |            |  
|Prepaid (accrued) benefit cost                 |  | $                        | (79,659 | )                        | $ | (78,291                  | ) | $          | (70,192 | )          | $ | (427,871   | )
|                                               |  |                          |         |                          |   |                          |   |            |         |            |   |            |  
|Weighted-average assumptions as of December 31 |  |                          |         |                          |   |                          |   |            |         |            |   |            |  
|Discount rate                                  |  |                          | 7.00    | %                        |   | 7.25                     | % |            | 7.25    | %          |   |            |  
|Expected return on plan assets                 |  |                          | 7.00    | %                        |   | 7.00                     | % |            | 7.00    | %          |   |            |  
|Rate of compensation increase                  |  |                          | 4.00    | %                        |   | 4.00                     | % |            | 4.00    | %          |   |            |  
|Components of net periodic benefit cost        |  |                          |         |                          |   |                          |   |            |         |            |   |            |  
|Service cost                                   |  | $                        | 1,989   |                          | $ | 3,542                    |   | $          | 4,018   |            | $ | 20,120     |  
|Interest cost                                  |  |                          | 3,120   |                          |   | 5,760                    |   |            | 6,506   |            |   | 32,519     |  
|Expected return on plan assets                 |  |                          | (4,077  | )                        |   | (1,539                   | ) |            | (467    | )          |   | (4,537     | )
|Net amortization and deferral                  |  |                          | 3,835   |                          |   | 3,835                    |   |            | 3,835   |            |   | 20,946     |  
|Recognized net actuarial loss                  |  |                          |        |                          |   |                         |   |            |        |            |   |           |  
|                                               |  |                          |         |                          |   |                          |   |            |         |            |   |            |  
|Net periodic benefit cost                      |  | $                        | 4,867   |                          | $ | 11,598                   |   | $          | 13,892  |            | $ | 69,048     |  
|                                               |  |                          |         |                          |   |                          |   |            |         |            |   |            |  

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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, 2002 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, 2002.

Note 11.  Other
Borrowings

Short-Term Borrowings:  During 2002 and 2001, 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, 2002 and 2001, securities with an amortized cost of $11,118,622 and $12,610,745, respectively, and estimated fair values of $11,622,979 and $12,963,391, 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:

|                                              |  | 2002                  |            | 2001           |  
|--------------------------------------------- |  | --------------------- | ---------- | -------------- | -
|                                              |  |                       |            |                |  
|                                              |  | Repurchase  Agreement |            | Line of Credit |  
|                                              |  |                       |            |                |  
|Amount outstanding at December 31             |  | $                     | 9,117,745  |                | $
|Weighted average interest rate at December 31 |  |                       | 2.51       | %              |  
|Maximum month-end amount outstanding          |  | $                     | 11,761,453 |                | $
|Average daily amount outstanding              |  | $                     | 9,794,700  |                | $
|Weighted average interest rate for the year   |  |                       | 2.78       | %              |  

Long-Term Borrowings:The companys
long-term borrowings of $1,878,568 and $787,523 at December 31, 2002 and 2001, respectively, consist of advances from the FHLB which are used to finance specific lending activities.  The weighted average interest rate on these borrowings at
December 31, 2002 was 4.03%.  The weighted average interest rate for the year ending December 31, 2002 was 3.87%.

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

|Year                |  | Amount |          
|------------------- |  | ------ | ---------
|                    |  |        |          
|2003                |  | $      | 662,701  
|2004                |  |        | 691,260  
|2005                |  |        | 241,226  
|2006                |  |        | 6,642    
|2007                |  |        | 153,665  
|2008 and thereafter |  |        | 123,074  
|                    |  |        |          
|                    |  | $      | 1,878,568
|                    |  |        |          

Note 12.  Commitments and Contingencies

At December 31, 2002 and 2001, the subsidiary bank maintained required reserve balances with the Federal Reserve Bank of Richmond approximating $1,335,000 and $1,061,000, 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.

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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 |  | 2002            |           
|                                                                   |  |                 |           
|Commitments to extend credit                                       |  | $               | 21,837,663
|Standby letters of credit                                          |  |                 | 544,315   
|                                                                   |  |                 |           
|                                                                   |  | $               | 22,381,978
|                                                                   |  |                 |           

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 13.  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 2003,
the net retained profits available for distribution to Citizens Financial Corp. as dividends without regulatory approval approximate $1,955,000 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.

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, 2002, 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 banks category.

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

|                                         |  | Actual |        | For Capital Adequacy Purposes |  | To Be Well Capitalized Under Prompt Corrective Action Provisions |  
|---------------------------------------- |  | ------ | ------ | ----------------------------- |  | ---------------------------------------------------------------- | -
|                                         |  |        |        |                               |  |                                                                  |  
|                                         |  | Amount |        | Ratio                         |  | Amount                                                           |  
|                                         |  |        |        |                               |  |                                                                  |  
|As of December 31, 2002:                 |  |        |        |                               |  |                                                                  |  
|Total Capital (to Risk Weighted Assets)  |  | $      | 20,567 |                               |  | 13.61                                                            | %
|Tier I Capital (to Risk Weighted Assets) |  |        | 19,181 |                               |  | 12.69                                                            | %
|Tier I Capital (to Average Assets)       |  |        | 19,181 |                               |  | 10.50                                                            | %
|As of December 31, 2001:                 |  |        |        |                               |  |                                                                  |  
|Total Capital (to Risk Weighted Assets)  |  | $      | 19,618 |                               |  | 16.40                                                            | %
|Tier I Capital (to Risk Weighted Assets) |  |        | 18,220 |                               |  | 15.24                                                            | %
|Tier I Capital (to Average Assets)       |  |        | 18,220 |                               |  | 10.99                                                            | %

Note 14.  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.

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

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commitments and standby letters of credit are deemed insignificant, and therefore, the estimated fair values and carrying values are not shown below.

Derivative Financial Instruments:  The fair values of the interest rate swaps are based on quoted market prices of like products.

The carrying values and estimated fair values of the companys financial instruments are summarized below:

|                       |                               | December 31, 2002 |             | December 31, 2001    |  
|---------------------- | ----------------------------- | ----------------- | ----------- | -------------------- | -
|                       |                               |                   |             |                      |  
|                       |                               | Carrying Value    |             | Estimated Fair Value |  
|                       |                               |                   |             |                      |  
|Financial assets:      |                               |                   |             |                      |  
|                       | Cash and due from banks       |                   | $           | 4,789,115            |  
|                       | Securities available for sale |                   |             | 54,219,132           |  
|                       | Loans                         |                   |             | 115,186,861          |  
|                       | Accrued interest receivable   |                   |             | 1,161,541            |  
|                       |                               |                   |             |                      |  
|                       |                               | $                 | 175,356,649 |                      | $
|                       |                               |                   |             |                      |  
|Financial liabilities: |                               |                   |             |                      |  
|                       | Deposits                      |                   | $           | 147,740,991          |  
|                       | Short-term borrowings         |                   |             | 10,394,745           |  
|                       | Long-term borrowings          |                   |             | 1,878,568            |  
|                       | Accrued interest payable      |                   |             | 345,357              |  
|                       |                               |                   |             |                      |  
|                       |                               | $                 | 160,359,661 |                      | $
|                       |                               |                   |             |                      |  
|Financial Instruments: |                               |                   |             |                      |  
|                       | Interest rate swap agreements |                   | $           | 65,307               |  
|                       |                               |                   |             |                      |  

Note 15.  Condensed Financial Statements of Parent Company

Information relative to the Parent Companys balance sheets at December 31, 2002 and 2001, and the related statements of income and cash flows for the years ended December 31, 2002, 2001 and
2000, are presented below.

|                                                                                  |                            | December 31, |           
|--------------------------------------------------------------------------------- | -------------------------- | ------------ | ----------
|                                                                                  |                            |              |           
|Balance Sheets                                                                    |                            | 2002         |           
|                                                                                  |                            |              |           
|Assets                                                                            |                            |              |           
|Cash                                                                              |                            | $            | 2,976     
|Investment in subsidiaries                                                        |                            |              | 20,598,700
|Due from subsidiary                                                               |                            |              | 3,299     
|                                                                                  |                            |              |           
|                                                                                  | Total assets               |              | $         
|                                                                                  |                            |              |           
|Shareholders equity                                                              |                            |              |           
|Common stock, $2.00 par value, 2,250,000 shares authorized, issued 750,000 shares |                            | $            | 1,500,000 
|Additional paid-in capital                                                        |                            |              | 2,100,000 
|Retained earnings                                                                 |                            |              | 17,912,258
|Accumulated other comprehensive income                                            |                            |              | 1,243,664 
|Treasury stock at cost, 103,477 and 101,127 shares, respectively                  |                            |              | (2,150,947
|                                                                                  |                            |              |           
|                                                                                  | Total shareholders equity |              | $         
|                                                                                  |                            |              |           

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|                                                                                         |  | For the Years Ended December 31, |          
|---------------------------------------------------------------------------------------- |  | -------------------------------- | ---------
|                                                                                         |  |                                  |          
|Statements of Income                                                                     |  | 2002                             |          
|                                                                                         |  |                                  |          
|Income - dividends from subsidiary bank                                                  |  | $                                | 983,581  
|Expenses - operating                                                                     |  |                                  | 4,500    
|                                                                                         |  |                                  |          
|Income before equity in undistributed income of subsidiary bank and insurance subsidiary |  |                                  | 979,081  
|Equity in undistributed income of subsidiaries                                           |  |                                  | 948,476  
|                                                                                         |  |                                  |          
|Net income                                                                               |  | $                                | 1,927,557
|                                                                                         |  |                                  |          

|                                                                                  |           | For the Years Ended December 31, |          
|--------------------------------------------------------------------------------- | --------- | -------------------------------- | ---------
|                                                                                  |           |                                  |          
|Statements of Cash Flows                                                          |           | 2002                             |          
|                                                                                  |           |                                  |          
|Cash Flows from Operating Activities                                              |           |                                  |          
|Net income                                                                        |           | $                                | 1,927,557
|Adjustments to reconcile net income to net cash provided by operating activities: |           |                                  |          
|Equity in undistributed income of subsidiaries                                    |           |                                  | (948,476 
|(Increase) decrease in amount due from subsidiary                                 |           |                                  | 1,000    
|                                                                                  |           |                                  |          
|Cash provided by operating activities                                             |           |                                  | 980,081  
|                                                                                  |           |                                  |          
|Cash Flows from Investing Activities                                              |           |                                  |          
|Investment in insurance subsidiary                                                |           |                                  |         
|                                                                                  |           |                                  |          
|Cash used in investing activities                                                 |           |                                  |         
|                                                                                  |           |                                  |          
|Cash Flows from Financing Activities                                              |           |                                  |          
|Dividends paid to shareholders                                                    |           |                                  | (906,057 
|Acquisition of treasury stock                                                     |           |                                  | (76,381  
|                                                                                  |           |                                  |          
|Cash used in financing activities                                                 |           |                                  | (982,438 
|                                                                                  |           |                                  |          
|Increase (decrease) in cash                                                       |           |                                  | (2,357   
|Cash:                                                                             |           |                                  |          
|                                                                                  | Beginning |                                  |          
|                                                                                  |           |                                  |          
|                                                                                  | Ending    |                                  | $        
|                                                                                  |           |                                  |          

56



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##### Table of Contents

[LOGO OF ARNETT & FOSTER](Certified Public Accountants, P.L.L.C.)

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, 2002 and 2001, 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, 2002.  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, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the
United States of America.

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

Charleston, West Virginia January 10, 2003

57



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##### Table of Contents

|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. As of December 31, 2002, the number of directors of the company is fixed at nine.  In April, 2003, however, shareholders will be asked to increase that number to ten as Mr. John Yeager, who has served on the board of directors of
the bank since April, 1999, is expected to be added to the board of Citizens.  Mr. Yeager is a certified public accountant who meets the criteria of an audit committee financial expert under the Sarbanes Oxley Act and is expected to serve on
the audit committee in that capacity pending shareholder approval of his directorship.  If elected, Mr. Yeagers initial term will be for a three year period ending in April, 2006.  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, 2002, their ages and principal occupations, the length of their service
to Citizens Financial Corp. and the expiration of their present term.

|Name and Age          |  | Principal Occupation During Past Five  Years                                                             |  | Director Since (1) |  | Present Term Expires
|--------------------- |  | -------------------------------------------------------------------------------------------------------- |  | ------------------ |  | --------------------
|                      |  |                                                                                                          |  |                    |  |                     
|Robert N. Alday 87    |  | President, Phil Williams Coal Company                                                                    |  | September, 1986    |  | April, 2003  (2)    
|Max L. Armentrout 65  |  | President, and Chairman of the Board Laurel Lands Corp.; Chairman of the Board, Citizens Financial Corp. |  | September, 1986    |  | April, 2005         
|William J. Brown 56   |  | President, Hess Oil Co., Inc. Co-Owner,Elkins Builders Supply, LLC                                       |  | February, 2000     |  | April, 2004         
|Edward L. Campbell 63 |  | Co-Owner, Retired, Campbells Market                                                                     |  | February, 2000     |  | April, 2004         
|Raymond L. Fair 75    |  | Attorney-at-Law                                                                                          |  | September, 1986    |  | April, 2005         
|John F. Harris 75     |  | Retired, Transportation Industry; Senior Vice President, Citizens National Bank                          |  | September, 1986    |  | April, 2005         
|Cyrus K. Kump 56      |  | President, Kump Enterprises Kerr Real Estate                                                             |  | June, 1992         |  | April, 2003  (2)    

58



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##### Table of Contents

|Name and Age            |  | Principal Occupation During Past Five  Years                                               |  | Director Since (1) |  | Present Term Expires
|----------------------- |  | ------------------------------------------------------------------------------------------ |  | ------------------ |  | --------------------
|                        |  |                                                                                            |  |                    |  |                     
|Robert J. Schoonover 63 |  | President and Chief Executive Officer, Citizens Financial Corp. and Citizens National Bank |  | April, 1998        |  | April, 2004         
|L. T. William 72        |  | Consultant, Retired, Elkins Builders Supply                                                |  | September, 1986    |  | April, 2005         



|(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. Alday and Kump have been nominated to stand for reelection to an additional 3 year term expiring in April, 2006.                                                                                                                           

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.

|Name and Age            |  | Present Position                      |  | Principal Occupation and Banking Experience During the Last Five Years                                  
|----------------------- |  | ------------------------------------- |  | --------------------------------------------------------------------------------------------------------
|                        |  |                                       |  |                                                                                                         
|Max L. Armentrout 65    |  | Chairman of the Board                 |  | President and Chairman of the Board, Laurel Lands Corp.; Chairman of the Board, Citizens Financial Corp.
|Robert J. Schoonover 63 |  | President and Chief Executive Officer |  | President and Chief Executive Officer, Citizens Financial Corp. and Citizens National Bank              
|Raymond L. Fair 75      |  | Vice President                        |  | Attorney-at-Law; Director, Citizens Financial Corp.                                                     
|Thomas K. Derbyshire 44 |  | Vice President and Treasurer          |  | Vice President and Chief Financial Officer, Citizens National Bank                                      
|Leesa M. Harris 39      |  | Secretary                             |  | Vice President and Trust Officer, Citizens National Bank; Executive Secretary, Citizens National Bank   



|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 2002, 2001 and 2000.  No other executive officer received total annual salary and bonus exceeding $100,000.

SUMMARY COMPENSATION TABLE

|Name and Principal Position |  | Year |      | Salary $ |  | Bonus   |  | Other Annual Compensation $ |  
|--------------------------- |  | ---- | ---- | -------- |  | ------- |  | --------------------------- | -
|                            |  |      |      |          |  |         |  |                             |  
|Robert J. Schoonover,       |  |      | 2002 |          |  | 106,235 |  |                             | 
|President & CEO             |  |      | 2001 |          |  | 95,231  |  |                             | 
|                            |  |      | 2000 |          |  | 88,144  |  |                             | 

59



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##### Table of Contents

|(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 of $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 $600 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.

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          |  
|-------------------- | ------- | ------------------------ | -
|                     |         |                          |  
|Assumed Remuneration |         | 15 yrs. Credited Service |  
|                     |         |                          |  
|$                    | 20,000  |                          | $
|                     | 40,000  |                          |  
|                     | 60,000  |                          |  
|                     | 80,000  |                          |  
|                     | 100,000 |                          |  
|                     | 120,000 |                          |  

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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 | 29
|-------------------- | --
|Thomas K. Derbyshire | 11

*         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, 2002, 2001 and 2000 may be found in Note 10
to the accompanying consolidated financial statements.

Executive Supplemental Income Plan

The bank has entered into a nonqualified supplemental income plan with certain senior officers as described in Note 10 to the accompanying consolidated financial
statements.  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.

Executive and Director Supplemental Retirement Plan

Effective January 1, 2003, the bank entered into a
nonqualified executive and director supplemental retirement plan with its directors and those officers who qualified. As explained in Note 10 to the accompanying consolidated financial statements, the plan is designated to provide death benefits to
the bank and the participants beneficiary and, provided certain costs are recovered, retirement benefits to the plan participants.

|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
February 28, 2003.

|Name and Address of Beneficial Owner                               |  | Amount and Nature of Beneficial Ownership |        | Percent of Class | 
|------------------------------------------------------------------ |  | ----------------------------------------- | ------ | ---------------- | 
|                                                                   |  |                                           |        |                  | 
|The Bank of New York 925 Patterson Plank Road  Secaucus, NJ  07094 |  |                                           | 37,925 |                  | 
|                                                                   |  |                                           |        |                  | 

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##### Table of Contents

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 February 28, 2003.

|                                                |  | Shares of Stock Beneficially Owned |        | Percent of Ownership | 
|----------------------------------------------- |  | ---------------------------------- | ------ | -------------------- | 
|                                                |  |                                    |        |                     
|Name                                            |  | Direct                             |        | Indirect             | 
|                                                |  |                                    |        |                      | 
|Robert N. Alday                                 |  |                                    | 500    |                      | 
|Max L. Armentrout                               |  |                                    | 24,310 |                      | 
|William J. Brown                                |  |                                    | 750    |                      | 
|Edward L. Campbell                              |  |                                    | 500    |                      | 
|Raymond L. Fair                                 |  |                                    | 3,828  |                      | 
|John F. Harris                                  |  |                                    | 500    |                      | 
|Cyrus K. Kump                                   |  |                                    | 500    |                      | 
|Robert J. Schoonover                            |  |                                    | 500    |                      | 
|L. T. Williams                                  |  |                                    | 1,750  |                      | 
|Thomas K. Derbyshire                            |  |                                    | 70     |                      | 
|Directors and executive officers of the Bank    |  |                                    | 4,825  |                      | 
|All Directors and executive officers as a group |  |                                    | 38,033 |                      | 

|(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.                                                                                                                                      
|    |                                                                                                                                                                                       
|(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 (vice president or higher) of the subsidiary bank but not of the company.  Such persons number
thirteen.

|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.

As of December 31, 2002, outstanding loan balances to related parties totaled
$4,104,000 or 19.92 percent of equity capital with  unused lines of credit of $4,437,000  or 21.53 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

62



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##### Table of Contents

competitive bids.  Information related to loans granted to related parties in excess of $60,000 is contained in Note 4 to the accompanying consolidated financial
statements.  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
Financial Corp. or Citizens National Bank in 2002 which exceeds 5 percent of either partys gross revenue.

|Item 14.
     Controls and Procedures
|-------------------------------------

Within 90 days prior to filing this
Annual Report on Form 10-K, the company, under the supervision and with the participation of management, including the chief executive officer and principal financial officer, carried out an evaluation of the effectiveness of the design and
operation of the companys disclosure controls and procedures pursuant to Exchange Act Rules 13a-14 and 15-d-14.  Based upon that evaluation, the chief executive officer and principal financial officer concluded that the companys
disclosure controls and procedures are effective in timely alerting them to material information relating to the company which is required to be included in the companys periodic SEC filings.  Subsequent to the date of that evaluation,
there have been no significant changes in the companys internal controls or in other factors that could significantly offset internal controls, nor were any corrective actions required with regard to significant deficiencies or material
weaknesses.

Part IV

|Item 15.
     Exhibits, Financial Statement Schedules and Reports on Form 8-K
|-----------------------------------------------------------------------------
|                                                                             
|(a)                                                                          
|                                                                             
|(b)                                                                          
|                                                                             
|(c)                                                                          
|                                                                             
|(d)                                                                          
|                                                                             

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|Description                                                                 |                                                                                                 | S-K 601 Table Reference |    | Sequential Page Number |    
|--------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | ----------------------- | -- | ---------------------- | ---
|                                                                            |                                                                                                 |                         |    |                        |    
|Plan of acquisition, reorganization, arrangement, liquidation or succession |                                                                                                 | 2                       |    | N/A                    |    
|Articles or incorporation and bylaws:                                       |                                                                                                 | 3                       |    | N/A                    |    
|                                                                            | (i)  Articles of Incorporation                                                                  |                         | 3  | (i)                    | (e)
|                                                                            | (ii) Bylaws                                                                                     |                         | 3  | (ii)                   | (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                      |    | 69                     |    
|Published report regarding matters submitted to vote of security holders    |                                                                                                 | 22                      |    | 70                     |    
|Consents of experts and counsel                                             |                                                                                                 | 23                      |    | 72                     |    
|Power of attorney                                                           |                                                                                                 | 24                      |    | N/A                    |    
|Additional exhibits                                                         |                                                                                                 | 99                      |    | (b)                    |    
|                                                                            | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 |                         | 99 | (a)                    | 73 
|                                                                            | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 |                         | 99 | (b)                    | 74 

|(a) | The computation of minimum standard capital ratios, which are shown on page 54 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 non banking 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.                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(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.                                                                                                                                                                                                                                                                                                                                                                                                                                         

64



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##### Table of Contents

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.

| | CITIZENSFINANCIALCORP.
| | ----------------------
| |                       
| | By                    
| |                       
| |                       
| | Date:                 
| |                       
| |                       
| | By                    
| |                       
| |                       
| | Date:                 

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/ MAXL. ARMENTROUT    |  | Chairman of the Board and Director |  | 3/12/03         
|                        |  |                                    |  |                 
|Max L. Armentrout       |  |                                    |  |                 
|                        |  |                                    |  |                 
|                        |  | Director                           |  |                 
|                        |  |                                    |  | ________________
|Robert N. Alday         |  |                                    |  |                 
|                        |  |                                    |  |                 
|                        |  |                                    |  |                 
|/s/ WILLIAMJ. BROWN     |  | Director                           |  | 3/12/03         
|                        |  |                                    |  |                 
|William J. Brown        |  |                                    |  |                 
|                        |  |                                    |  |                 
|                        |  |                                    |  |                 
|/s/ EDWARDL. CAMPBELL   |  | Director                           |  | 3/12/03         
|                        |  |                                    |  |                 
|Edward L. Campbell      |  |                                    |  |                 
|                        |  |                                    |  |                 
|                        |  |                                    |  |                 
|/s/ RAYMONDL. FAIR      |  | Director                           |  | 3/12/03         
|                        |  |                                    |  |                 
|Raymond L. Fair         |  |                                    |  |                 
|                        |  |                                    |  |                 
|                        |  |                                    |  |                 
|/s/ JOHNF. HARRIS       |  | Director                           |  | 3/12/03         
|                        |  |                                    |  |                 
|John F. Harris          |  |                                    |  |                 
|                        |  |                                    |  |                 
|                        |  |                                    |  |                 
|/s/ CYRUSK. KUMP        |  | Director                           |  | 3/12/03         
|                        |  |                                    |  |                 
|Cyrus K. Kump           |  |                                    |  |                 
|                        |  |                                    |  |                 
|                        |  |                                    |  |                 
|/s/ ROBERTJ. SCHOONOVER |  | Director                           |  | 3/12/03         
|                        |  |                                    |  |                 
|Robert J. Schoonover    |  |                                    |  |                 
|                        |  |                                    |  |                 
|                        |  |                                    |  |                 
|/s/ L. T. WILLIAMS      |  | Director                           |  | 3/12/03         
|                        |  |                                    |  |                 
|L. T. Williams          |  |                                    |  |                 

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##### Table of Contents

Citizens Financial Corp.

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002

I, Robert J. Schoonover, certify that:

|1.                         | I have reviewed this annual report on Form 10-K of Citizens Financial Corp.;                                                                                                                                                                                                                                                                                                  
|-------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|2.                         | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements are made, not misleading with respect to the period covered by this annual report;                                                       
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|3.                         | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report.                                                                         
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|4.                         | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                                                                      
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|                           | a.                                                                                                                                                                                                                                                                                                                                                                            
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|                           | b.                                                                                                                                                                                                                                                                                                                                                                            
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|                           | c.                                                                                                                                                                                                                                                                                                                                                                            
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|5.                         | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors:                                                                                                                                                                                 
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|                           | a.                                                                                                                                                                                                                                                                                                                                                                            
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|                           | b.                                                                                                                                                                                                                                                                                                                                                                            
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|6.                         | The registrants other certifying officer and I have indicated in this annual report whether there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|Date:              3/12/03 |                                                                                                                                                                                                                                                                                                                                                                               
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|                           | /s/ ROBERTJ. SCHOONOVER                                                                                                                                                                                                                                                                                                                                                       
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|                           | Robert J. Schoonover President and Chief Executive Officer                                                                                                                                                                                                                                                                                                                    
|                           |                                                                                                                                                                                                                                                                                                                                                                               

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Citizens Financial Corp.

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002

I, Thomas K. Derbyshire, certify that:

|1.                         | I have reviewed this annual report on Form 10-K of Citizens Financial Corp.;                                                                                                                                                                                                                                                                                                  
|-------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|2.                         | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements are made, not misleading with respect to the period covered by this annual report;                                                       
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|3.                         | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report.                                                                         
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|4.                         | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                                                                      
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|                           | a.                                                                                                                                                                                                                                                                                                                                                                            
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|                           | b.                                                                                                                                                                                                                                                                                                                                                                            
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|                           | c.                                                                                                                                                                                                                                                                                                                                                                            
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|5.                         | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors:                                                                                                                                                                                 
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|                           | a.                                                                                                                                                                                                                                                                                                                                                                            
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|                           | b.                                                                                                                                                                                                                                                                                                                                                                            
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|6.                         | The registrants other certifying officer and I have indicated in this annual report whether there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|Date:              3/12/03 |                                                                                                                                                                                                                                                                                                                                                                               
|                           | /s/ THOMASK. DERBYSHIRE                                                                                                                                                                                                                                                                                                                                                       
|                           |                                                                                                                                                                                                                                                                                                                                                                               
|                           | Thomas K. Derbyshire Vice President, Treasurer and Chief Financial Officer                                                                                                                                                                                                                                                                                                    
|                           |                                                                                                                                                                                                                                                                                                                                                                               

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SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15 (d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED
SECURITIESPURSUANT 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 17, 2003.

68