<PAGE>

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

                                   FORM 10-Q


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

For the quarterly period ended                     March 31, 2001
                              --------------------------------------------------

Commission file number 2-96144
                       -------


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


                       Delaware                       55-0666598
--------------------------------------------------------------------------------
            (State or other jurisdiction of        (I.R.S. Employer
            incorporation or organization)       Identification No.)


             213 Third Street, Elkins, West Virginia       26241
--------------------------------------------------------------------------------
            (Address of principal executive offices)     (Zip Code)


                                 (304) 636-4095
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


                                Not Applicable
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report.)


  Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.           Yes   X    No_______
                                                       -------


  Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                                            Outstanding at
                Class                       March 31, 2001
                -----                       ---------------

      Common Stock ($2 par value)                650,612


                        This report contains 22 pages.

                                       1
<PAGE>

                                   FORM 10-Q
                           CITIZENS FINANCIAL CORP.
                          Quarter Ended March 31, 2001


                                     INDEX


<TABLE>
<CAPTION>
                                                                                    Page No.
                                                                                    --------
<S>                                                                                 <C>
Part I.   Financial Information

           Condensed Consolidated Balance Sheets
            March 31, 2001 and December 31, 2000................................       3

           Condensed Consolidated Statements of Income
            Three Months Ended March 31, 2001 and March 31, 2000................       4

           Statements of Comprehensive Income
            Three Months Ended March 31, 2001 and March 31, 2000................       6

           Condensed Consolidated Statements of Changes in Shareholders' Equity
            Three Months Ended March 31, 2001 and March 31, 2000................       7

           Condensed Consolidated Statements of Cash Flows
            Three Months Ended March 31, 2001 and March 31, 2000................       8

           Notes to Condensed Consolidated Financial Statements.................       9

           Management's Discussion and Analysis of Financial Condition and
            Results of Operations...............................................       14

Part II.  Other Information and Index to Exhibits..............................        21

           Signatures..........................................................        22
</TABLE>

                                       2
<PAGE>

                        PART I - FINANCIAL INFORMATION
                           CITIZENS FINANCIAL CORP.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                           (In thousands of dollars)

                                                  March 31,   Dec. 31,
                                                     2001       2000
                                                 ----------   --------
                                                 (Unaudited)      *
ASSETS
--------

Cash and due from banks                            $  3,859   $  4,540
Federal funds sold                                    1,950          -
Securities available for sale                        42,365     42,338
Loans, less allowance for loan losses of
  $1,203 and $1,151, respectively                   102,044    101,033
Premises and equipment                                2,475      2,356
Accrued interest receivable                           1,184      1,215
Other assets                                          1,755      2,050
                                                   --------   --------
     Total Assets                                  $155,632   $153,532
                                                   ========   ========

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------

Deposits:
   Noninterest bearing                             $ 18,009   $ 16,694
   Interest bearing                                 108,129    104,825
                                                   --------   --------
     Total deposits                                 126,138    121,519
Short-term borrowings                                 9,062     12,367
Long-term borrowings                                    848        868
Other liabilities                                     1,465      1,388
                                                   --------   --------
     Total liabilities                              137,513    136,142
                                                   --------   --------

Commitments and contingencies

SHAREHOLDERS' EQUITY
--------------------

Common stock, $2.00 par value, authorized
2,250,000 shares, issued 750,000 shares               1,500      1,500
Additional paid in capital                            2,100      2,100
Retained earnings                                    16,099     15,831
Accumulated other comprehensive income                  445        (16)
Treasury stock at cost, 99,388 shares                (2,025)    (2,025)
                                                   --------   --------
     Total shareholders' equity                      18,119     17,390
                                                   --------   --------
     Total Liabilities and Shareholders' Equity    $155,632   $153,532
                                                   ========   ========


*From audited financial statements.

The accompanying notes are an integral part of these financial statements.

                                       3
<PAGE>

                           CITIZENS FINANCIAL CORP.
                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
               (In thousands of dollars, except per share data)

                                                        Three Months Ended
                                                             March 31,
                                                        ------------------
                                                           2001     2000
                                                             (Unaudited)
INTEREST INCOME
---------------

Interest and fees on loans                              $  2,317  $  1,918
Interest and dividends on
 securities:
  Taxable                                                    597       541
  Tax-exempt                                                  65        86
Interest on federal funds sold                                 3        13
                                                        --------  --------
 Total interest income                                     2,982     2,558
                                                        --------  --------

INTEREST EXPENSE
----------------

Interest on deposits                                       1,075       870
Interest on short-term borrowing                             118        58
Interest on long-term borrowing                               12        56
                                                        --------  --------
 Total interest expense                                    1,205       984
                                                        --------  --------
 Net interest income                                       1,777     1,574
Provision for loan losses                                     84        45
                                                        --------  --------
 Net interest income after
  provision for loan losses                                1,693     1,529
                                                        --------  --------

NONINTEREST INCOME
------------------

Trust department income                                       44        41
Brokerage fees                                                47        14
Service fees                                                 131        83
Insurance commissions                                          8         8
Security gains/(losses)                                        1        (3)
Other                                                         55        43
                                                        --------  --------
 Total noninterest income                                    286       186
                                                        --------  --------

NONINTEREST EXPENSE
-------------------

Salaries and employee benefits                               690       573
Net occupancy expense                                         62        44
Equipment rentals, depreciation
 and maintenance                                              97        75
Data processing                                              110        91
Postage                                                       33        24
Legal and professional                                        43        44
Other                                                        248       275
                                                        --------  --------
 Total noninterest expenses                                1,283     1,126
                                                        --------  --------

Income before income taxes                                   696       589
Income tax expense                                           265       179
                                                        --------  --------
Net income                                              $    431  $    410
                                                        ========  ========

The accompanying notes are an integral part of these financial statements.

                                       4
<PAGE>

                           CITIZENS FINANCIAL CORP.
                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
               (In thousands of dollars, except per share data)
                                  (Continued)


Basic earnings per common share                          $    .66  $    .63
                                                         ========  ========
Weighted average shares outstanding                       650,612   653,694
Dividends per common share                               $    .25  $    .20
                                                         ========  ========

The accompanying notes are an integral part of these financial statements.

                                       5
<PAGE>

                           CITIZENS FINANCIAL CORP.
                      STATEMENTS OF COMPREHENSIVE INCOME
                           (In thousands of dollars)

                                                  Three Months Ended
                                                        March 31
                                                  -------------------
                                                  2001           2000
                                                      (Unaudited)

Net income                                        $ 431         $ 410

Other comprehensive income:
 Gross unrealized gains/(losses) arising
  during the period                                 700          (175)
 Adjustment for income tax (expense)/benefit       (238)           59
                                                  -----         -----
                                                    462          (116)


 Less:  Reclassification adjustment for
  (gains)/losses included in net income              (1)            3
 Adjustment for income tax expense/(benefit)          0            (1)
                                                  -----         -----
                                                     (1)            2

 Other comprehensive income, net of tax             461          (114)
                                                  -----         -----

Comprehensive income                              $ 892         $ 296
                                                  =====         =====

The accompanying notes are an integral part of these financial statements.

                                       6
<PAGE>

                            CITIZENS FINANCIAL CORP.
      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                           (In thousands of dollars)

<TABLE>
<CAPTION>
                                                              Three Months Ended March 31, 2001 and 2000
                                                     ---------------------------------------------------------
                                                                            (unaudited)
                                                                                                  Accumulated                Total
                                                       Common Stock     Additional                   Other                  Share-
                                                     ----------------    Paid-in     Retained   Comprehensive   Treasury   holders'
                                                      Shares   Amount    Capital     Earnings       Income        Stock     Equity
                                                     -------------------------------------------------------------------------------
<S>                                                  <C>       <C>       <C>         <C>        <C>             <C>        <C>
Balance, January 1, 2000                             750,000   $1,500     $2,100      $14,723       $(525)       $(1,844)  $15,954
Net income                                                                                410                                  410
Net change in unrealized loss on securities                                                          (114)                    (114)
Purchase of 3,720 shares of treasury stock                                                                          (135)     (135)
Cash dividends declared ($.20 per share)                                                 (131)                                (131)
                                                     -------------------------------------------------------------------------------

Balance March 31, 2000                               750,000   $1,500     $2,100      $15,002       $(639)       $(1,979)  $15,984
                                                     ===============================================================================

Balance, January 1, 2001                             750,000   $1,500     $2,100      $15,831       $ (16)       $(2,025)  $17,390
Net income                                                                                431                                  431
Net change in unrealized loss on securities                                                           461                      461
Cash dividends declared ($.25 per share)                                                 (163)                                (163)
                                                     -------------------------------------------------------------------------------

Balance March 31, 2001                               750,000   $1,500     $2,100      $16,099       $ 445        $(2,025)  $18,119
                                                     ===============================================================================
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                       7
<PAGE>

                           CITIZENS FINANCIAL CORP.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (In thousands of dollars)

<TABLE>
<CAPTION>
                                                        Three Months Ended
                                                             March 31,
                                                        ------------------
                                                          2001      2000
                                                           (Unaudited)
<S>                                                     <C>       <C>
Cash flows from operating activities:
 Net Income                                             $   431   $   410
 Adjustments to reconcile net income to
  cash provided by operating activities:
  Provision for loan losses                                  84        45
  Depreciation and amortization                              71        50
  Amortization and accretion on securities                  (22)       11
  (Gain)/loss on sale of securities                          (1)        3
  (Gain)/loss on sale of OREO                               (12)       20
  (Increase)/decrease in accrued interest receivable         31      (111)
  (Increase)/decrease in other assets                       (25)     (256)
  Increase/(decrease) in other liabilities                   77       220
                                                        -------   -------
    Cash provided by operating activities                   634       392
                                                        -------   -------

Cash flows from investing activities:
 Principal payments, available for sale securities           67        76
 Proceeds from sales of available for
  sale securities                                           506     1,496
 Proceeds from maturities and calls,
  available for sale securities                           3,505        50
 Purchases of available for sale securities              (3,383)   (4,812)
 Purchases of premises and equipment                       (186)      (42)
 Proceeds from sale of other real estate owned               90       257
 (Increase) in loans                                     (1,095)     (432)
                                                        -------   -------
   Cash used in investing activities                       (496)   (3,407)
                                                        -------   -------

Cash flows from financing activities:
 Cash dividends paid                                       (163)     (131)
 Acquisition of treasury stock                                0      (135)
 Decrease in short-term borrowing                        (3,305)   (1,132)
 Increase/(decrease) in long-term borrowing                 (20)    1,062
 Increase/(decrease) in time deposits                     2,212      (846)
 Increase/(decrease) in other deposits                    2,407     4,133
                                                        -------   -------
   Cash provided by financing activities                  1,131     2,951
                                                        -------   -------

Net Increase/(decrease) in cash and cash equivalents      1,269       (64)
Cash and cash equivalents at beginning of period          4,540     5,699
                                                        -------   -------

Cash and cash equivalents at end of period              $ 5,809   $ 5,635
                                                        =======   =======

Supplemental disclosure of cash flow information:
 Cash paid during the period for:
 Interest                                               $ 1,214   $ 1,001
 Income Taxes                                           $    29   $     6
Supplemental Schedule of Noncash Investing
 and Financing Activities:
 Other real estate and other assets acquired in
   settlement of loans                                  $     0   $    82
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                       8
<PAGE>

                    CITIZENS FINANCIAL CORP. AND SUBSIDIARY
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BASIS OF PRESENTATION
         ---------------------

     The accounting and reporting policies of Citizens Financial Corp. and
Subsidiaries ("Citizens" or "the Company") conform to generally accepted
accounting principles and to general policies within the financial services
industry. The preparation of financial statements in conformity generally
accepted accounting principles 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 period.
Actual results could differ from those estimates.

     The condensed consolidated statements contained herein include the accounts
of Citizens Financial Corp. and its wholly-owned subsidiaries Citizens National
Bank ("the Bank") and Citizens Financial Services, LLC. All significant
intercompany balances and transactions have been eliminated. The information
contained in the financial statements is unaudited except where indicated. In
the opinion of management, all adjustments for a fair presentation of the
results of the interim periods have been made. All such adjustments were of a
normal, recurring nature. The results of operations for the three months ended
March 31, 2001 are not necessarily indicative of the results to be expected for
the full year. The financial statements and notes included herein should be read
in conjunction with those included in Citizens' 2000 Annual Report to
Shareholders and Form 10-K.


NOTE 2 - RECLASSIFICATIONS
         -----------------

     Certain accounts in the condensed consolidated financial statements for
2000, as previously presented, have been reclassified to conform with current
year classifications.

                                       9
<PAGE>

NOTE 3 - SECURITIES
         ----------

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

<TABLE>
<CAPTION>
                                                 March 31, 2001
                                -----------------------------------------------

                                                                      Carrying
                                                                       Value
                                                                     (Estimated
                                 Amortized   Unrealized  Unrealized     Fair
                                   Cost        Gains       Losses      Value)
-------------------------------------------------------------------------------
                                                  (Unaudited)
<S>                             <C>          <C>         <C>         <C>
Available for sale:
U.S. Government agencies
  and corporations............   $ 19,667     $   308      $     0    $ 19,975
Mortgage backed securities-
  U.S. Government agencies
  and corporations............      1,098           0            6       1,092
Corporate debt securities.....     14,906         342           57      15,191
State and political
  subdivisions................      5,287          88            0       5,375
Federal Reserve Bank stock....        108           0            0         108
Federal Home Loan Bank stock..        624           0            0         624
                                 --------     --------     --------   --------
  Total securities available
    for sale..................   $ 41,690     $    738     $     63   $ 42,365
                                 ========     ========     ========   ========




<CAPTION>
                                        December 31, 2000*
                                -----------------------------------------------

                                                                      Carrying
                                                                        Value
                                                                     (Estimated
                                 Amortized   Unrealized  Unrealized      Fair
                                   Cost        Gains       Losses       Value)
-------------------------------------------------------------------------------
<S>                             <C>          <C>         <C>         <C>
Available for sale:
U.S. Government agencies
  and corporations.............  $ 20,232    $     107     $     81   $ 20,258
Mortgage-backed securities -
  U.S. Government agencies
  and corporations.............     1,166            0           23      1,143
Corporate debt securities......    14,895          148          193     14,850
State and political
  subdivisions.................     5,336           33           14      5,355
Federal Reserve Bank stock.....       108            0            0        108
Federal Home Loan Bank stock...       624            0            0        624
                                 --------     --------     --------   --------
Total securities available
  for sale.....................  $ 42,361     $    288     $    311   $ 42,338
                                 ========     ========     ========   ========
</TABLE>

  The maturities, amortized cost and estimated fair values of the Bank's
securities at March 31, 2001 are summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                            Available for sale
                                                          ---------------------
                                                          Amortized  Estimated
                                                            Cost     Fair Value
                                                          ---------  ----------
<S>                                                       <C>        <C>
Due within 1 year                                          $  9,947   $ 10,003
Due after 1 but within 5 years                               30,602     31,211
Due after 5 but within 10 years                                 409        419
Due after 10 years                                                0          0
Equity securities                                               732        732
                                                           --------   --------
                                                           $ 41,690   $ 42,365
                                                           ========   ========
</TABLE>

                                       10
<PAGE>

     Mortgage backed securities have remaining contractual maturities ranging
from 3 to 4 years and are reflected in the maturity distribution schedule shown
above based on their anticipated average life to maturity, which ranges from 2
to 3 years. The Company's equity securities are required to be held for
membership in the Federal Reserve and Federal Home Loan Bank; memberships which
are expected to continue indefinitely.

     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 for the three month periods ended March 31, 2001 and
2000 are as follows (in thousands):

<TABLE>
<CAPTION>
                                      Proceeds From             Gross Realized
                                -----------------------------   ---------------
                                        Calls and   Principal
                                 Sales  Maturities   Payments    Gains   Losses
                                -----------------------------   ---------------
<S>                             <C>     <C>         <C>         <C>      <C>
March 31, 2001:
Securities available for sale   $  506    $  3,505   $     67   $    1   $    0
                                ======    ========   ========   ======   ======

March 31, 2000:
Securities available for sale   $1,496    $     50   $     76   $    0   $    3
                                ======    ========   ========   ======   ======
</TABLE>

     At March 31, 2001 and December 31, 2000 securities with an amortized cost
of $18,839,000 and $18,327,000, respectively, with estimated fair values of
$19,148,000 and $18,351,000, respectively, were pledged to secure public
deposits, securities sold under agreements to repurchase, and for other purposes
required or permitted by law.

     At March 31, 2001, the Company had a concentration within its corporate
debt securities classification which included obligations of financial services
industry companies with global operations having an approximate amortized cost
of $4,736,000 and an estimated fair value of $4,838,000. There were no
concentrations with any one issuer.

*From audited financial statements.


NOTE 4 - LOANS
         -----

     Total loans are summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                            March 31, 2001   December 31, 2000
                                            ---------------  ------------------
                                              (Unaudited)            *
<S>                                         <C>              <C>
Commercial, financial and agricultural            $ 15,396            $ 14,631
Real estate - construction                           2,477               2,032
Real estate - mortgage                              69,363              70,065
Installment loans to individuals                    14,858              14,402
Other                                                1,215               1,151
                                                  --------            --------
  Total loans                                      103,309             102,281
Net deferred loan origination costs                    (59)                (61)
Less unearned income                                    (3)                (36)
                                                  --------            --------
  Total loans net of unearned income and
    net deferred loan origination costs            103,247             102,184
Less allowance for loan losses                       1,203               1,151
                                                  --------            --------
  Loans, net                                      $102,044            $101,033
                                                  --------            --------
</TABLE>

* From audited financial statements

                                       11
<PAGE>

NOTE 5 - ALLOWANCE FOR LOAN LOSSES
         -------------------------

     Analyses of the allowance for loan losses are presented below (in
thousands):

<TABLE>
<CAPTION>
                                                  Three Months Ended
                                                       March 31,
                                                 ---------------------
                                                   2001          2000
<S>                                              <C>            <C>
Balance at beginning of period                   $1,151         $1,011
                                                 ------         ------

Loans charged off:
 Commercial and industrial                            1              0
 Real estate - mortgage                               0              1
 Consumer and other                                  39             19
 Credit card                                          0              0
                                                 ------         ------
  Total                                              40             20
                                                 ------         ------

Recoveries:
 Commercial and industrial                            3             18
 Real estate - mortgage                               0              1
 Consumer and other                                   5              5
 Credit card                                          0              3
                                                 ------         ------
  Total recoveries                                    8             27
                                                 ------         ------

Net losses (recoveries)                              32             (7)

Provision for loan losses                            84             45
                                                 ------         ------
Balance at end of period                         $1,203         $1,063
                                                 ======         ======
</TABLE>


NOTE 6- COMMITMENTS AND CONTINGENCIES
        -----------------------------

     The Company is not aware of any commitments or contingencies which may
reasonably be expected to have a material impact on operating results, liquidity
or capital resources. Known commitments and contingencies include the
maintenance of reserve balances with the Federal Reserve, various legal actions
arising in the normal course of business and commitments to extend credit.

NOTE 7 - 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 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.

                                       12
<PAGE>

<TABLE>
<CAPTION>
Financial instruments whose contract    March 31, 2001   December 31, 2000
   amounts represent credit risk          (unaudited)            *
          (in thousands)
--------------------------------------  --------------   -----------------
<S>                                     <C>              <C>
Commitments to extend credit                $18,068            $16,544
Standby letters of credit                       337                167
                                            -------            -------
  Total                                     $18,405            $16,711
                                            =======            =======
</TABLE>

     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.

* From audited financial statements.

NOTE 8 - EARNINGS PER SHARE
         ------------------

     Basic earnings per share is based on the weighted average number of shares
outstanding during the period. For the three months ended March 31, 2001 and
2000 the weighted average number of shares were 650,612 and 653,694,
respectively. During the periods ended March 31, 2001 and 2000 the Company did
not have any dilutive securities.

                                       13
<PAGE>

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS


     The following discussion and analysis presents the significant changes in
financial condition and the results of operations of Citizens Financial Corp.
and Subsidiaries for the periods indicated. This discussion and analysis should
be read in conjunction with the Company's 2000 Annual Report to Shareholders and
Form 10-K. Since the primary business activities of Citizens Financial Corp. are
conducted through the Bank, this discussion focuses primarily on the financial
condition and operations of the Bank. This discussion may contain forward
looking statements based on management's current expectations. Such forward
looking information may involve uncertainties including those associated with
interest rate and general economic environments, regulations, competitive
changes, and other risks. The Company does not undertake to update any such
forward looking statements that may be made. When provided, forward looking
information is intended to assist readers in understanding anticipated future
operations and are included pursuant to applicable safe harbor provisions of the
Private Securities Litigation Reform Act of 1995; actual results may differ.
Amounts and percentages used in this discussion have been rounded.

RESULTS OF OPERATIONS
---------------------


EARNINGS SUMMARY
----------------

     Net income for the first quarter of 2001 was $431,000, up $21,000 from the
first quarter of 2000 reflecting a continued strong net interest margin and
increases in noninterest income. On a per share basis earnings rose from $.63 to
$.66. Return on average assets and return on average equity of 1.15% and 9.85%,
respectively, were below first quarter 2000 levels due to the Company's balance
sheet growth following the opening of two new branches. Details concerning the
Company's results of operations are discussed in the following sections of this
report.

NET INTEREST INCOME
-------------------

     Net interest income represents 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 affected by changes in balance sheet
composition and interest rates. 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 improved from $1,625,000 in the first
quarter of 2000 to $1,819,000 in the first quarter of this year, mostly due to
higher levels of earning assets. In particular, average loan volume for the
quarter increased by $15,394,000 which reflects not only the addition of two new
branch facilities but also strong loan demand throughout the year 2000 at
existing facilities. In total, average earning assets of $144,998,000 for the
first quarter of 2001 are $13,733,000 more than in the first quarter of 2000. By
contrast, the two new facilities and an inflow of savings and time deposits
during the first quarter of 2001, caused average interest bearing liabilities to
increase $9,844,000 to $116,478,000.

                                       14
<PAGE>

     In addition to the favorable impact provided by these volume changes, the
Bank was able to maintain its spread, or difference between the yield on earning
assets and the cost of interest bearing liabilities. For the first quarter of
2001, the Company's yield on earning assets of 8.46% was 47 basis points higher
than in the first quarter of 2000. Similarly, its cost of interest bearing
liabilities increased 48 basis points to 4.19%. The combined effect of these
volume and rate changes allowed the Company to achieve a tax equivalent net
interest margin of 5.09% in the reporting quarter which is 11 basis points
higher than in the first quarter of 2000.

NONINTEREST INCOME
------------------

     Noninterest income, which includes all revenues not included in interest
and fee income relating to earning assets, has risen significantly from $186,000
in the first quarter of 2000 to $286,000 in the first quarter of the current
year. Of this $100,000 increase, $30,000 may be attributed to the opening of the
two new branches. The remaining $70,000 is due to higher overdraft fees at
previously existing branches of $21,000, a $33,000 increase in fees from the
Banks' brokerage operations, and $11,000 in gains realized on the sale of
foreclosed real estate. This improvement in noninterest income, along with the
Banks' strong net interest income, has offset the increase in noninterest
expense resulting from the operation of the two new branches which is discussed
in the next section of this report.

NONINTEREST EXPENSE
-------------------

     Noninterest expense includes all items of expense other than interest
expense, the provision for loan losses, and income taxes. Total noninterest
expense for the first quarter of 2001 of $1,283,000 was $157,000, or 13.9%, in
excess of the first quarter of 2000. This equals the amount of noninterest
expense incurred during the quarter at the two newly opened branches. As shown
in the accompanying statements of income, this increase is spread across nearly
all categories of noninterest expense except the "other" category. Other
noninterest expense includes items such as director fees, stationery and
supplies, telephone and education costs. While many of these items increased
following the Banks' expansion in the year 2000, total other noninterest expense
fell $27,000 as expenses related to holding, maintaining and selling foreclosed
properties decreased by approximately $44,000. Of those areas which experienced
an increase the most significant was salaries and employee benefits, up $117,000
to $690,000. In addition to the impact of the new branch personnel, the cost of
the Company's partially self funded medical insurance program increased $57,000
due to high claims expenses. Provisions of this program do limit the Company's
annual liability for such claims, however.

INCOME TAXES
------------

     The Company's provision for income taxes, which totaled $265,000 in the
first quarter of 2001 and $179,000 in the first quarter of 2000, includes both
federal and state income taxes. The increase in taxes results from higher pretax
income and the recognition of deferred tax benefits in 2000. The Company was not
subject to the federal alternative minimum tax during the periods presented and
does not expect to be subject to it in the foreseeable future.

                                       15
<PAGE>

FINANCIAL CONDITION
-------------------


SUMMARY
-------

     Total assets at March 31, 2001 of $155,632,000 were up from $153,532,000 at
year end 2000 reflecting an increase in deposits which primarily occurred in
March. Average assets for the quarter were $152,603,000 of which 95.0% were
earning assets. A further discussion of the Banks' major balance sheet
categories, as well as liquidity, interest rate sensitivity, and the impact of
inflation, follows.

LOAN PORTFOLIO
--------------

     After a strong 2000, loan demand weakened in the first quarter of 2001
along with a softer economy, falling stock prices and lowered consumer
confidence. Total loans of $103,309,000 still managed to grow $1,028,000 since
year end 2000, however. This placed the Company's gross loan to deposit ratio at
81.9% as of March 31, 2001. The composition and characteristics of the portfolio
have not changed significantly with mortgage loans, particularly variable rate
mortgage loans, remaining as the largest component of the loan portfolio.

     A series of interest rate cuts made by the Federal Reserve during the first
quarter and into the second quarter of 2001 may help stimulate the economy and
cause loan demand to increase once again. In addition, spring and summer
typically experience more loan demand than the winter months, especially from
home buyers and owners wishing to make improvements to their homes. The
potential impact of rising loan demand on liquidity, and the falling interest
rates on the Company's profits, are discussed in the Liquidity and Interest Rate
Sensitivity section of this report.

     The Bank is also 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
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. At March 31, 2001 commitments to extend credit,
including unused lines of credit, totaled $18,068,000 while letters of credit
totaled $337,000.

ALLOWANCE FOR LOAN LOSSES
-------------------------

     Management maintains an allowance for possible loan losses at a level it
considers adequate to provide for losses that can be reasonably anticipated.
This is done by a process of continual review of the loan portfolio, specific
loans, and various factors which may impact them.

     The March 31, 2001 allowance for loan losses of $1,203,000 is 1.16% of
gross loans. During the quarter the Bank experienced $32,000 in net charge offs
while making provisions for loan losses of $84,000. As the table which follows
illustrates, loans which are more than 90 days past due and nonaccruing loans
are minimal. The balance in other real estate owned of $472,000 is entirely
comprised of covered transactions. These properties were previously foreclosed
on by the Bank but have since been sold. The purchasers in these transactions
obtained financing for the purchase from the Bank and have less than 10% equity
in the property at this time. As of March 31, 2001, all of the loans associated
with the sale of these

                                       16
<PAGE>

properties are current and no other foreclosed real estate is held by the Bank.

              Summary of Past Due Loans and Nonperforming Assets
              --------------------------------------------------
                                (in thousands)

<TABLE>
<CAPTION>
                                        March 31            December 31
                                  --------------------      -----------
                                   2001           2000          2000
                                      (unaudited)
<S>                               <C>            <C>        <C>
Loans past due 90 or more days
 still accruing interest          $    6         $    4        $   22
                                  ======         ======        ======

Nonperforming assets:
 Nonaccruing loans                $  120         $  124        $  181
 Other real estate owned             472            367           555
                                  ------         ------        ------
                                  $  592         $  491        $  736
                                  ======         ======        ======
</TABLE>

SECURITIES PORTFOLIO AND FEDERAL FUNDS SOLD
-------------------------------------------

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

     The composition and characteristics of the portfolio did not undergo any
significant changes during the first quarter of the year. The portfolio
continues to be comprised primarily of U.S. Agency and investment grade
corporate debt instruments with lesser holdings of municipal and government
agency mortgage backed instruments as well as Federal Home Loan Bank and Federal
Reserve stock. Despite the lower yields now available in these type of fixed
rate debt securities, the Bank plans to continue its approach of using them to
employ a laddered maturity of five years or less believing this approach helps
minimize interest rate risk. Typically this approach would also ensure a steady
stream of liquidity. However, due to pledging requirements, maturing securities
will provide only limited liquidity in the year 2001. Liquidity issues are
discussed elsewhere in this report.

     The most significant change in the securities portfolio during the quarter
involved the impact of lower interest rates on its fair value. Because the
portfolio is comprised of fixed rate instruments, the fair value of the
portfolio increased and is now $675,000 in excess of its amortized cost.

     The Bank generally tries to minimize its involvement in the overnight
federal funds sold market, instead relying on the continually maturing
securities portfolio to provide the liquidity needed to fund loans or meet
deposit withdraw demands. 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.

     At March 31, 2001 the balance of federal funds sold was $1,950,000. The
average federal funds sold balance during the quarter was $292,000. There were
no federal funds sold at year-end 2000.

                                       17
<PAGE>

DEPOSITS AND OTHER FUNDING SOURCES
----------------------------------

     Like many banks, Citizens has found deposit growth over the past several
years to be a major challenge. Deposit growth of $4.6 million during the first
quarter, however, was very encouraging. Included in this amount is $1.1 million
from the recently opened Snowshoe branch. This growth was broad based covering
both noninterest bearing and interest bearing accounts including interest
bearing checking, money market and time deposits. The greatest increase was in
time deposits which were up $2.2 million from their year end 2000 level.
Management believes this growth is due to several factors. Among them are market
specific pricing practices, a successful IRA promotion, and consumers reaction
to the recent stock market downturn.

     A byproduct of this deposit growth has been a reduced need for overnight
borrowings. In fact, the Company's overnight funding position has gone from
$3,326,000 borrowed at December 31, 2000 to $1,950,000 sold at March 31, 2001.
The remaining short-term borrowings of $9,062,000 are in the form of repurchase
agreements with three local customers. The Bank has maintained these agreements
for a number of years and two of them, with March 31, 2001 balances of $4.6
million, will mature on June 30, 2001. Management believes there is a strong
probability the customers will renew these agreements with the Bank at that
time. In the event the Bank is unable to retain these funds, alternative funding
sources are available and no liquidity problems are foreseen.

     In addition to these short-term borrowings the Bank maintains the same
long-term borrowings with the Federal Home Loan Bank of Pittsburgh as it did at
December 31, 2000.

CAPITAL RESOURCES
-----------------

     Total capital of $18,119,000 at March 31, 2001 is 11.6% of assets and
$729,000 more than at year end 2000 as a result of the retention of $268,000 in
earnings and a $461,000 net of tax increase in the value of the Company's
available for sale security portfolio. Dividends for the quarter of $.25 per
share were increased from $.20 per share in the first quarter of 2000.

     The Federal Reserve's risk-based capital guidelines provide for the
relative weighting of both on-balance-sheet and off-balance-sheet items based on
their degree of risk. The Company continues to exceed all regulatory capital
requirements as shown in the table below and knows of no trends or uncertainties
which may materially impair or alter its capital position.

<TABLE>
<CAPTION>
                        Minimum Capital Standard Ratios
-------------------------------------------------------------------------------
                                               Citizens             Regulatory
                                            Financial Corp.        Requirements
-------------------------------------------------------------------------------
<S>                                         <C>                    <C>
Total capital to risk weighted assets           16.79%                8.00%
Tier I capital to risk weighted assets          15.71%                4.00%
Tier I capital to adjusted total assets         11.46%                4.00%
</TABLE>

LIQUIDITY AND INTEREST RATE SENSITIVITY
---------------------------------------

     The objective of the Company's liquidity management program is to ensure
the continuous availability of funds to meet the withdrawal demands of
customers, the credit needs of borrowers, and to provide for other operational
needs. Liquidity is provided by various internal sources

                                       18
<PAGE>

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.

     Each quarter management tests the Banks' ability to satisfy its anticipated
liquidity demands over the next twelve months. Since year end 2000, stronger
deposit growth and slower loan demand have resulted in an improved liquidity
position. In addition, the increase in the value of the security portfolio makes
it possible to generate liquidity by the sale of unpledged securities if
necessary. No such sales are anticipated, however. As noted earlier, several
repurchase agreements will mature on June 30, 2001. While management believes it
will most likely retain these funds, alternative sources of funding have been
identified in the event they are needed.

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

     Gap analysis is a static measure and does not consider future changes in
volume of rate sensitive assets or liabilities or the possibility that interest
rates of various products may not change by the same amount or at the same time.
Therefore, certain assumptions must be made in constructing the gap. The Company
monitors its gap on a monthly basis. As of March 31, 2001, the Company's one
year gap is negative 2.35% of total assets. This indicates that more liabilities
than assets are subject to repricing over the next year. Traditional theory
indicates that in a falling interest rate environment this could result in
increased earnings.

     On a quarterly basis the Company utilizes interest rate shock testing to
further manage interest rate risk. Such tests project net interest income given
an immediate and sustained change in interest rates applied to all interest
earning assets and interest sensitive liabilities. Although such test contain
some of the same shortcomings as gap analysis, they are very useful in defining
boundaries of interest rate risk exposure. As of March 31, 2001, these tests
project that an immediate and sustained increase in rates of 200 basis points
would cause net interest income to fall 3.42%. Conversely, a 200 basis point
decrease in rates is estimated to cause net interest income to increase 2.44%.
These measures are within management's parameters.

     In addition to these tests, the Bank also used simulation models to monitor
interest rate risk and prepare income projections.

IMPACT OF INFLATION
-------------------

     The consolidated financial statements and related data included in this
report were prepared in accordance with generally accepted accounting
principles, 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

                                       19
<PAGE>

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 financial
statements, the impact of inflation on the Company's earnings has not been
significant.

                                       20
<PAGE>

                          PART II - OTHER INFORMATION


Item 1.  Legal Proceedings:
         -----------------

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

Item 2.  Changes in Securities:  None.
         ---------------------

Item 3.  Defaults upon Senior Securities:  None.
         -------------------------------

Item 4.  Submission of Matters to a Vote of Security Holders:  None.
         ---------------------------------------------------

Item 5.  Other Information:  None
         -----------------

Item 6.  Exhibits and Reports on Form 8-K:
         --------------------------------

         (a)   Exhibits:  None.

         (b)   Reports on Form 8-K:  None.

                                       21
<PAGE>

                                  SIGNATURES

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


                                        CITIZENS FINANCIAL CORP.



Date:    5/10/2001                      /s/ Robert J. Schoonover
      ----------------                  -------------------------------
                                         Robert J. Schoonover
                                         President
                                         Chief Executive Officer



Date:    5/10/2001                      /s/ Thomas K. Derbyshire
      ----------------                  -------------------------------
                                         Thomas K. Derbyshire
                                         Treasurer
                                         Principal Financial Officer

                                       22