----

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**UNITED        STATES**

**SECURITIES        AND EXCHANGE COMMISSION**

**WASHINGTON,        D.C. 20549**

**FORM        10-Q**

| For                  the quarterly period ended | September                  30, 2006 |
|-------------------------------------------------|-------------------------------------|

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

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

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| Large                  accelerated filer o | Accelerated                  filer o | Non-accelerated                  filer x |
|--------------------------------------------|--------------------------------------|------------------------------------------|

|   | Class                                        |   | Outstanding                  at                  November 8, 2006 |   |
|--------|----------------------------------------------|--------|-------------------------------------------------------------------|--------|
|   |                                         |   |                                                              |   |
|   | Common                  Stock ($2 par value) |   | 1,829,504                                                         |   |

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**FORM        10-Q**

**CITIZENS        FINANCIAL CORP.**

**Quarter        Ended September 30, 2006**

|                                                                                           |                                                                                                                                                                                                                                         | Page                  No. |
|------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------|
|                                                                                           |                                                                                                                                                                                                                                         |                      |
| Part                  I.   Financial                  Information                    |                                                                                                                                                                                                                                         |
|                                                                                           |                                                                                                                                                                                                                                         |                      |
|                                                                                           | Item                  1. Financial Statements                                                                                                                                                                                                |                      |
|                                                                                           |                                                                                                                                                                                                                                         |                      |
|                                                                                           | Condensed                  Consolidated Balance Sheets September 30, 2006                  and December 31, 2005                                                                                                                             | 3                         |
|                                                                                           |                                                                                                                                                                                                                                         |                      |
|                                                                                           | Condensed                  Consolidated Statements of Income Three Months                  Ended September 30, 2006 and September 30, 2005 and Nine Months                  Ended                  September 30, 2006 and September 30, 2005 | 4                         |
|                                                                                           |                                                                                                                                                                                                                                         |                      |
|                                                                                           | Statements                  of Comprehensive Income/Loss Three Months                  Ended September 30, 2006 and September 30, 2005 and Nine Months                  Ended                  September 30, 2006 and Sept. 30, 2005         | 5                         |
|                                                                                           |                                                                                                                                                                                                                                         |                      |
|                                                                                           | Condensed                  Consolidated Statements of Changes in                  Shareholders' Equity Nine Months Ended September 30, 2006 and September                  30, 2005                                                          | 6                         |
|                                                                                           |                                                                                                                                                                                                                                         |                      |
|                                                                                           | Condensed                  Consolidated Statements of Cash Flows Nine                  Months Ended September 30, 2006 and September 30, 2005                                                                                                | 7                         |
|                                                                                           |                                                                                                                                                                                                                                         |                      |
|                                                                                           | Notes                  to Condensed Consolidated Financial                  Statements                                                                                                                                                       | 8-15                      |
|                                                                                           |                                                                                                                                                                                                                                         |                      |
|                                                                                           | Item                  2. Management's Discussion and Analysis of Financial                  Condition and Results of Operations                                                                                                              | 16-22                     |
|                                                                                           |                                                                                                                                                                                                                                         |                      |
|                                                                                           | Item                  3. Quantitative and Qualitative Disclosures About                  Market Risk                                                                                                                                         | 23                        |
|                                                                                           |                                                                                                                                                                                                                                         |                      |
|                                                                                           | Item                  4. Controls and Procedures                                                                                                                                                                                             | 23                        |
|                                                                                           |                                                                                                                                                                                                                                         |                      |
| Part                  II.   Other                  Information and Index to Exhibits |                                                                                                                                                                                                                                         |
|                                                                                           |                                                                                                                                                                                                                                         |                      |
|                                                                                           | Items                  1 through 6                                                                                                                                                                                                           | 24                        |
|                                                                                           |                                                                                                                                                                                                                                         |                      |
|                                                                                           | Signatures                                                                                                                                                                                                                                   | 25                        |
|                                                                                           |                                                                                                                                                                                                                                         |                      |
|                                                                                           | Certification                  by Executive Officers Pursuant to Sections 302 and 906 of the                  Sarbanes-Oxley Act of 2002                                                                                                     | 26-29                     |

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*Index*

PART        I ITEM 

|                                                                                                                                                                           |   | Sept.                  30, |    | Dec.                  31, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|---------|---------------------------|--------|
|                                                                                                                                                                           |   | 2006                       |    | 2005                      |   |
|                                                                                                                                                                           |   | (Unaudited)                |    | *                         |   |
|                                                                                                                                                                           |   |                       |    |                      |   |
| ASSETS                                                                                                                                                                         |   |                       |    |                      |   |
|                                                                                                                                                                           |   |                       |    |                      |   |
| Cash                  and due from banks                                                                                                                                       |   | $                          | 6,556   |                      | $      | 6,770 |   |
| Federal                  funds sold                                                                                                                                            |   |                       | 1,943   |                      |   | 2,003 |   |
| Securities                  available for sale, at fair value                                                                                                                  |   |                       | 57,871  |                      |   | 66,854 |   |
| Loans,                  less allowance for loan losses of $1,836 and $1,597,                  respectively                                                                     |   |                       | 163,748 |                      |   | 152,136 |   |
| Premises                  and equipment, net                                                                                                                                   |   |                       | 4,199   |                      |   | 4,192 |   |
| Accrued                  interest receivable                                                                                                                                   |   |                       | 1,333   |                      |   | 1,321 |   |
| Other                  assets                                                                                                                                                  |   |                       | 5,065   |                      |   | 4,914 |   |
| Total                  Assets                                                                                                                                                  |   | $                          | 240,715 |                      | $      | 238,190 |   |
|                                                                                                                                                                           |   |                       |    |                      |   |   |   |
|                                                                                                                                                                           |   |                       |    |                      |   |   |   |
| LIABILITIES                  AND SHAREHOLDERS' EQUITY                                                                                                                          |   |                       |    |                      |   |   |   |
|                                                                                                                                                                           |   |                       |    |                      |   |   |   |
| Deposits:                                                                                                                                                                      |   |                       |    |                      |   |   |   |
| Noninterest                  bearing                                                                                                                                           |   | $                          | 24,915  |                      | $      | 28,648 |   |
| Interest                  bearing                                                                                                                                              |   |                       | 170,719 |                      |   | 161,838 |   |
| Total                  deposits                                                                                                                                                |   |                       | 195,634 |                      |   | 190,486 |   |
| Short-term                  borrowings                                                                                                                                         |   |                       | 18,279  |                      |   | 20,512 |   |
| Long-term                  borrowings                                                                                                                                          |   |                       | 3,864   |                      |   | 5,145 |   |
| Other                  liabilities                                                                                                                                             |   |                       | 2,541   |                      |   | 2,434 |   |
| Total                  liabilities                                                                                                                                             |   |                       | 220,318 |                      |   | 218,577 |   |
|                                                                                                                                                                           |   |                       |    |                      |   |   |   |
| Commitments                  and contingencies                                                                                                                                 |   |                       |    |                      |   |   |   |
|                                                                                                                                                                           |   |                       |    |                      |   |   |   |
| SHAREHOLDERS'                  EQUITY                                                                                                                                          |   |                       |    |                      |   |   |   |
|                                                                                                                                                                           |   |                       |    |                      |   |   |   |
| Common                  stock, $2.00 par value, authorized 4,500,000 and 2,250,000 shares,                  issued                  2,250,000 and 750,000 shares, respectively |   |                       | 4,500   |                      |   | 1,500 |   |
| Additional                  paid in capital                                                                                                                                    |   |                       | -       |                      |   | 2,100 |   |
| Retained                  earnings                                                                                                                                             |   |                       | 20,794  |                      |   | 20,704 |   |
| Accumulated                  other comprehensive income/(loss)                                                                                                                 |   |                       | (1,189  | )                         |   | (1,316 | ) |
| Treasury                  stock at cost, 413,808 and 132,012 shares, respectively                                                                                              |   |                       | (3,708  | )                         |   | (3,375 | ) |
| Total                  shareholders' equity                                                                                                                                    |   |                       | 20,397  |                      |   | 19,613 |   |
| Total                  Liabilities and Shareholders' Equity                                                                                                                    |   | $                          | 240,715 |                      | $      | 238,190 |   |

----

*Index*

CITIZENS        FINANCIAL 

|                                                                 |   | Three                  Months Ended |      | Nine                  Months Ended |   |
|----------------------------------------------------------------------|--------|-------------------------------------|-----------|------------------------------------|--------|
|                                                                 |   | Sept.                  30,          |      | Sept.                  30,         |   |
|                                                                 |   | 2006                                |      | 2005                               |   | 2006 |   | 2005 |   |
|                                                                 |   | (Unaudited)                         |      | (Unaudited)                        |   |
| INTEREST                  INCOME                                     |   |                                |      |                               |   |   |   |   |   |
|                                                                 |   |                                |      |                               |   |   |   |   |   |
| Interest                  and fees on loans                          |   | $                                   | 3,406     |                               | $      | 2,771 |   | $ | 9,571 |   | $ | 7,831 |   |
| Interest                  and dividends on securities:               |   |                                |      |                               |   |   |   |   |   |   |   |   |   |
| Taxable                                                              |   |                                | 472       |                               |   | 447 |   |   | 1,530 |   |   | 1,248 |   |
| Tax-exempt                                                           |   |                                | 75        |                               |   | 82 |   |   | 226 |   |   | 245 |   |
| Interest                  on federal funds sold                      |   |                                | 22        |                               |   | 45 |   |   | 45 |   |   | 86 |   |
| Total                  interest income                               |   |                                | 3,975     |                               |   | 3,345 |   |   | 11,372 |   |   | 9,410 |   |
|                                                                 |   |                                |      |                               |   |   |   |   |   |   |   |   |   |
| INTEREST                  EXPENSE                                    |   |                                |      |                               |   |   |   |   |   |   |   |   |   |
| Interest                  on deposits                                |   |                                | 1,308     |                               |   | 895 |   |   | 3,477 |   |   | 2,374 |   |
| Interest                  on short-term borrowings                   |   |                                | 227       |                               |   | 158 |   |   | 620 |   |   | 354 |   |
| Interest                  on long-term borrowings                    |   |                                | 42        |                               |   | 55 |   |   | 134 |   |   | 126 |   |
| Total                  interest expense                              |   |                                | 1,577     |                               |   | 1,108 |   |   | 4,231 |   |   | 2,854 |   |
| Net                  interest income                                 |   |                                | 2,398     |                               |   | 2,237 |   |   | 7,141 |   |   | 6,556 |   |
| Provision                  for loan losses                           |   |                                | 69        |                               |   | - |   |   | 275 |   |   | 206 |   |
| Net                  interest income after provision for loan losses |   |                                | 2,329     |                               |   | 2,237 |   |   | 6,866 |   |   | 6,350 |   |
|                                                                 |   |                                |      |                               |   |   |   |   |   |   |   |   |   |
| NONINTEREST                  INCOME                                  |   |                                |      |                               |   |   |   |   |   |   |   |   |   |
|                                                                 |   |                                |      |                               |   |   |   |   |   |   |   |   |   |
| Trust                  department income                             |   |                                | 53        |                               |   | 58 |   |   | 149 |   |   | 151 |   |
| Brokerage                  fees                                      |   |                                | 26        |                               |   | 26 |   |   | 90 |   |   | 62 |   |
| Service                  fees                                        |   |                                | 216       |                               |   | 207 |   |   | 625 |   |   | 568 |   |
| Insurance                  commissions                               |   |                                | 9         |                               |   | 12 |   |   | 20 |   |   | 22 |   |
| Security                  gains/(losses)                             |   |                                | -         |                               |   | - |   |   | (18 | ) |   | - |   |
| Secondary                  market loan fees                          |   |                                | 22        |                               |   | 19 |   |   | 87 |   |   | 77 |   |
| Other                                                                |   |                                | 60        |                               |   | 55 |   |   | 210 |   |   | 175 |   |
| Total                  noninterest income                            |   |                                | 386       |                               |   | 377 |   |   | 1,163 |   |   | 1,055 |   |
|                                                                 |   |                                |      |                               |   |   |   |   |   |   |   |   |   |
| NONINTEREST                  EXPENSE                                 |   |                                |      |                               |   |   |   |   |   |   |   |   |   |
|                                                                 |   |                                |      |                               |   |   |   |   |   |   |   |   |   |
| Salaries                  and employee benefits                      |   |                                | 965       |                               |   | 870 |   |   | 2,850 |   |   | 2,714 |   |
| Net                  occupancy expense                               |   |                                | 99        |                               |   | 67 |   |   | 280 |   |   | 253 |   |
| Equipment                  expense                                   |   |                                | 102       |                               |   | 123 |   |   | 339 |   |   | 361 |   |
| Data                  processing                                     |   |                                | 105       |                               |   | 145 |   |   | 411 |   |   | 457 |   |
| Director                  fees                                       |   |                                | 74        |                               |   | 71 |   |   | 204 |   |   | 189 |   |
| Postage                                                              |   |                                | 41        |                               |   | 46 |   |   | 130 |   |   | 131 |   |
| Professional                  service fees                           |   |                                | 61        |                               |   | 45 |   |   | 267 |   |   | 189 |   |
| Stationery                                                           |   |                                | 35        |                               |   | 45 |   |   | 109 |   |   | 124 |   |
| Software                  expense                                    |   |                                | 46        |                               |   | 44 |   |   | 135 |   |   | 168 |   |
| Other                                                                |   |                                | 369       |                               |   | 255 |   |   | 873 |   |   | 743 |   |
| Total                  noninterest expense                           |   |                                | 1,897     |                               |   | 1,711 |   |   | 5,598 |   |   | 5,329 |   |
|                                                                 |   |                                |      |                               |   |   |   |   |   |   |   |   |   |
| Income                  before income taxes                          |   |                                | 818       |                               |   | 903 |   |   | 2,431 |   |   | 2,076 |   |
| Income                  tax expense                                  |   |                                | 268       |                               |   | 291 |   |   | 777 |   |   | 651 |   |
| Net                  income                                          |   | $                                   | 550       |                               | $      | 612 |   | $ | 1,654 |   | $ | 1,425 |   |
| Basic                  and fully diluted earnings per common share*  |   | $                                   | 0.30      |                               | $      | 0.33 |   | $ | 0.90 |   | $ | 0.76 |   |
|                                                                 |   |                                |      |                               |   |   |   |   |   |   |   |   |   |
| Weighted                  average shares outstanding*                |   |                                | 1,837,959 |                               |   | 1,862,439 |   |   | 1,846,391 |   |   | 1,866,357 |   |
|                                                                 |   |                                |      |                               |   |   |   |   |   |   |   |   |   |
| Dividends                  per common share*                         |   | $                                   | 0.12      |                               | $      | 0.10 |   | $ | 0.36 |   | $ | 0.30 |   |

----

*Index*

CITIZENS

|                                                                                                          |   | Three                  Months Ended |    | Nine                  Months Ended |   |
|---------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|---------|------------------------------------|--------|
|                                                                                                          |   | Sept.                  30           |    | Sept.                  30          |   |
|                                                                                                          |   | 2006                                |    | 2005                               |   | 2006 |   | 2005 |   |
|                                                                                                          |   | (Unaudited)                         |    | (Unaudited)                        |   |
|                                                                                                          |   |                                |    |                               |   |   |   |   |   |
| Net                  income                                                                                   |   | $                                   | 550     |                               | $      | 612 |   | $ | 1,654 |   | $ | 1,425 |   |
|                                                                                                          |   |                                |    |                               |   |   |   |   |   |   |   |   |   |
| Other                  comprehensive income:                                                                  |   |                                |    |                               |   |   |   |   |   |   |   |   |   |
| Gross                  unrealized gains/(losses)arising during the period                                     |   |                                | 555     |                               |   | (222 | ) |   | 187 |   |   | (620 | ) |
| Adjustment                  for income tax (expense)/benefit                                                  |   |                                | (211    | )                                  |   | 84 |   |   | (71 | ) |   | 235 |   |
|                                                                                                          |   |                                | 344     |                               |   | (138 | ) |   | 116 |   |   | (385 | ) |
|                                                                                                          |   |                                |    |                               |   |   |   |   |   |   |   |   |   |
| Less:                  Reclassification adjustment for (gains)/losses included in net                  income |   |                                | -       |                               |   | - |   |   | 18 |   |   | - |   |
| Adjustment                  for income tax expense/(benefit)                                                  |   |                                | -       |                               |   | - |   |   | (7 | ) |   | - |   |
|                                                                                                          |   |                                | -  |                               |   | - |   |   | 11 |   |   | - |   |
| Other                  comprehensive income/(loss), net of tax                                                |   |                                | 344     |                               |   | (138 | ) |   | 127 |   |   | (385 | ) |
|                                                                                                          |   |                                |    |                               |   |   |   |   |   |   |   |   |   |
| Comprehensive                  income/(loss)                                                                  |   | $                                   | 894     |                               | $      | 474 |   | $ | 1,781 |   | $ | 1,040 |   |

----

*Index*

ITIZENS

|                                                                                    |   | Nine                        Months Ended September 30, 2006 and 2005 |      |
|-----------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|-----------|
|                                                                                    |   | (unaudited)                                                          |      |
|                                                                                    |   |                                                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                    |   |                                                                 |      |   |   |   |   |   |   | Accumulated |   |   |   | Total |   |
|                                                                                    |   |                                                                 |      |   |   | Additional |   |   |   | Other |   |   |   | Share- |   |
|                                                                                    |   | Common                        Stock                                  |      | Paid-in |   | Retained |   | Comprehensive |   | Treasury |   | holders' |   |
|                                                                                    |   | Shares                                                               |      | Amount |   | Capital |   | Earnings |   | Income/(Loss) |   | Stock |   | Equity |   |
|                                                                                    |   |                                                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                        January 1, 2006                                         |   |                                                                 | 750,000   |   | $ | 1,500 |   | $ | 2,100 |   | $ | 20,704 |   | $ | (1,316 | ) | $ | (3,375 | ) | $ | 19,613 |   |
| Net                        income                                                       |   |                                                                 | -         |   |   | - |   |   | - |   |   | 1,654 |   |   | - |   |   | - |   |   | 1,654 |   |
| Net                        change in unrealized gain/loss on securities                 |   |                                                                 | -         |   |   | - |   |   | - |   |   | - |   |   | 127 |   |   | - |   |   | 127 |   |
| Cash                        dividends declared ($0.36                        per share) |   |                                                                 | -         |   |   | - |   |   | - |   |   | (664 | ) |   | - |   |   | - |   |   | (664 | ) |
| Purchase                        of 17,772 shares of treasury stock                      |   |                                                                 | -         |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (333 | ) |   | (333 | ) |
| Stock                        split effected in the form of a 200% stock dividend        |   |                                                                 | 1,500,000 |   |   | 3,000 |   |   | (2,100 | ) |   | (900 | ) |   | - |   |   | - |   |   | - |   |
|                                                                                    |   |                                                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                        September 30, 2006                                      |   |                                                                 | 2,250,000 |   | $ | 4,500 |   | $ | - |   | $ | 20,794 |   | $ | (1,189 | ) | $ | (3,708 | ) | $ | 20,397 |   |
|                                                                                    |   |                                                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                    |   |                                                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                        January 1, 2005                                         |   |                                                                 | 750,000   |   | $ | 1,500 |   | $ | 2,100 |   | $ | 19,650 |   | $ | 58 |   | $ | (3,085 | ) | $ | 20,223 |   |
| Net                        income                                                       |   |                                                                 | -         |   |   | - |   |   | - |   |   | 1,425 |   |   | - |   |   | - |   |   | 1,425 |   |
| Net                        change in unrealized gain/loss on securities                 |   |                                                                 | -         |   |   | - |   |   | - |   |   | - |   |   | (385 | ) |   | - |   |   | (385 | ) |
| Cash                        dividends declared ($0.30                        per share) |   |                                                                 | -         |   |   | - |   |   | - |   |   | (560 | ) |   | - |   |   | - |   |   | (560 | ) |
| Purchase                        of 3,100 shares of treasury stock                       |   |                                                                 | -         |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (148 | ) |   | (148 | ) |
|                                                                                    |   |                                                                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                        September 30, 2005                                      |   |                                                                 | 750,000   |   | $ | 1,500 |   | $ | 2,100 |   | $ | 20,515 |   | $ | (327 | ) | $ | (3,233 | ) | $ | 20,555 |   |

----

*Index*

CITIZE

|                                                                                                            |   | Nine                  Months Ended |    |
|-----------------------------------------------------------------------------------------------------------------|--------|------------------------------------|---------|
|                                                                                                            |   | September                  30,     |    |
|                                                                                                            |   | 2006                               |    | 2005 |   |
| Cash                  flows from operating activities:                                                          |   | (Unaudited)                        |    |
| Net                  Income                                                                                     |   | $                                  | 1,654   |   | $ | 1,425 |   |
| Adjustments                  to reconcile net income to cash provided by operating                  activities: |   |                               |    |   |   |   |   |
| Provision                  for loan losses                                                                      |   |                               | 275     |   |   | 206 |   |
| Depreciation                  and amortization                                                                  |   |                               | 272     |   |   | 309 |   |
| Amortization                  on securities                                                                     |   |                               | 55      |   |   | 170 |   |
| Loss                  on disposal of equipment                                                                  |   |                               | -       |   |   | 11 |   |
| Loss                  on sale of securities                                                                     |   |                               | 18      |   |   | - |   |
| (Gain)/loss                  on sale of other real estate owned                                                 |   |                               | 89      |   |   | (1 | ) |
| Increase                  in accrued interest receivable                                                        |   |                               | (12     | ) |   | (48 | ) |
| Decrease                  in other assets                                                                       |   |                               | 150     |   |   | 56 |   |
| Increase                  in other liabilities                                                                  |   |                               | 29      |   |   | 538 |   |
| Cash                  provided by operating activities                                                          |   |                               | 2,530   |   |   | 2,666 |   |
|                                                                                                            |   |                               |    |   |   |   |   |
| Cash                  flows from investing activities:                                                          |   |                               |    |   |   |   |   |
| Principal                  payments, available for sale securities                                              |   |                               | 1,510   |   |   | 1,832 |   |
| Proceeds                  from sales of available for sale securities                                           |   |                               | 3,694   |   |   | 6,966 |   |
| Proceeds                  from maturities and calls, available for sale securities                              |   |                               | 11,500  |   |   | 453 |   |
| Purchases                  of available for sale securities                                                     |   |                               | (7,590  | ) |   | (18,460 | ) |
| Purchases                  of premises and equipment                                                            |   |                               | (270    | ) |   | (229 | ) |
| Proceeds                  from sale of other real estate owned                                                  |   |                               | 158     |   |   | 43 |   |
| Increase                  in loans                                                                              |   |                               | (12,445 | ) |   | (7,275 | ) |
| Cash                  used in investing activities                                                              |   |                               | (3,443  | ) |   | (16,670 | ) |
|                                                                                                            |   |                               |    |   |   |   |   |
| Cash                  flows from financing activities:                                                          |   |                               |    |   |   |   |   |
| Cash                  dividends paid                                                                            |   |                               | (664    | ) |   | (560 | ) |
| Acquisition                  of treasury stock                                                                  |   |                               | (333    | ) |   | (148 | ) |
| Decrease                  in short-term borrowing                                                               |   |                               | (2,233  | ) |   | (596 | ) |
| Acquisition                  of long-term borrowing                                                             |   |                               | -       |   |   | 3,500 |   |
| Repayment                  of long-term borrowing                                                               |   |                               | (1,281  | ) |   | (1,902 | ) |
| Increase                  in time deposits                                                                      |   |                               | 8,747   |   |   | 8,109 |   |
| Increase/(decrease)                  in other deposits                                                          |   |                               | (3,599  | ) |   | 12,300 |   |
| Cash                  provided by financing activities                                                          |   |                               | 639     |   |   | 20,703 |   |
|                                                                                                            |   |                               |    |   |   |   |   |
| Net                  increase/(decrease) in cash and cash equivalents                                           |   |                               | (274    | ) |   | 6,699 |   |
| Cash                  and cash equivalents at beginning of period                                               |   |                               | 8,773   |   |   | 5,476 |   |
|                                                                                                            |   |                               |    |   |   |   |   |
| Cash                  and cash equivalents at end of period                                                     |   | $                                  | 8,499   |   | $ | 12,175 |   |
|                                                                                                            |   |                               |    |   |   |   |   |
| Supplemental                  disclosure of cash flow information:                                              |   |                               |    |   |   |   |   |
| Cash                  paid during the period for:                                                               |   |                               |    |   |   |   |   |
| Interest                                                                                                        |   | $                                  | 4,081   |   | $ | 2,803 |   |
| Income                  taxes                                                                                   |   |                               | 971     |   |   | 559 |   |
|                                                                                                            |   |                               |    |   |   |   |   |
| Supplemental                  Schedule of Noncash Investing and Financing Activities:                           |   |                               |    |   |   |   |   |
| Other                  real estate and other assets acquired in settlement of                  loans            |   | $                                  | 559     |   | $ | 315 |   |

----

*Index*

CITIZE

----

*Index*

|                                                                                                   |   | September                  30, 2006 |   |
|--------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|
|                                                                                                   |   |                                |   |   |   |   |   |   |   |
|                                                                                                   |   | AmortizedCost                       |   | UnrealizedGains |   | UnrealizedLosses |   | CarryingValue(EstimatedFairValue) |   |
|                                                                                                   |   | (Unaudited)                         |   |
|                                                                                                   |   |                                |   |   |   |   |   |   |   |
| **Available                  for sale:**                                                               |   |                                |   |   |   |   |   |   |   |
| U.S.                  Government agencies and corporations.                                            |   | $                                   | 40,912 |   | $ | - |   | $ | 493 |   | $ | 40,419 |   |
| Mortgage                  backed securities-U.S. Government agencies and                  corporations |   |                                | 7,785  |   |   | - |   |   | 221 |   |   | 7,564 |   |
| Corporate                  debt securities                                                             |   |                                | 752    |   |   | - |   |   | 3 |   |   | 749 |   |
| Tax                  exempt state and political subdivisions                                           |   |                                | 8,440  |   |   | 19 |   |   | 65 |   |   | 8,394 |   |
| Federal                  Reserve Bank stock                                                            |   |                                | 108    |   |   | - |   |   | - |   |   | 108 |   |
| Federal                  Home Loan Bank stock                                                          |   |                                | 637    |   |   | - |   |   | - |   |   | 637 |   |
| Total                  securities available for sale                                                   |   | $                                   | 58,634 |   | $ | 19 |   | $ | 782 |   | $ | 57,871 |   |

|                                                                                                   |   | December                  31, 2005* |   |
|--------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|
|                                                                                                   |   |                                |   |   |   |   |   |   |   |
|                                                                                                   |   | AmortizedCost                       |   | UnrealizedGains |   | UnrealizedLosses |   | CarryingValue(EstimatedFairValue) |   |
|                                                                                                   |   | (Unaudited)                         |   |
|                                                                                                   |   |                                |   |   |   |   |   |   |   |
| **Available                  for sale:**                                                               |   |                                |   |   |   |   |   |   |   |
| U.S.                  Government agencies and corporations.                                            |   | $                                   | 50,561 |   | $ | 4 |   | $ | 719 |   | $ | 49,846 |   |
| Mortgage                  backed securities-U.S. Government agencies and                  corporations |   |                                | 7,005  |   |   | 1 |   |   | 203 |   |   | 6,803 |   |
| Corporate                  debt securities                                                             |   |                                | 1,271  |   |   | - |   |   | 20 |   |   | 1,251 |   |
| Tax                  exempt state and political subdivisions                                           |   |                                | 8,280  |   |   | 35 |   |   | 65 |   |   | 8,250 |   |
| Federal                  Reserve Bank stock                                                            |   |                                | 108    |   |   | - |   |   | - |   |   | 108 |   |
| Federal                  Home Loan Bank stock                                                          |   |                                | 596    |   |   | - |   |   | - |   |   | 596 |   |
| Total                  securities available for sale.                                                  |   | $                                   | 67,821 |   | $ | 40 |   | $ | 1,007 |   | $ | 66,854 |   |

----

*Index*

|                                                                                                    |   | September                  30, 2006            |   |
|---------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                                                                                    |   | Securities                  Available for Sale |   |
|                                                                                                    |   | Less                  Than 12 Months           |   | 12                  Months or More |   | Total |   |
|                                                                                                    |   | Fair                                           |   | Unrealized |   | Fair |   | Unrealized |   | Fair |   | Unrealized |   |
|                                                                                                    |   | Value                                          |   | Losses |   | Value |   | Losses |   | Value |   | Losses |   |
| U.S.                  Government agencies and corporations                                              |   | $                                              | 8,495  |   | $ | 50 |   | $ | 27,072 |   | $ | 443 |   | $ | 35,567 |   | $ | 493 |   |
| Mortgage                  backed securities- U.S. Government agencies and                  corporations |   |                                           | 2,461  |   |   | 30 |   |   | 5,001 |   |   | 191 |   |   | 7,462 |   |   | 221 |   |
| Corporate                  debt securities                                                              |   |                                           | -      |   |   | - |   |   | 749 |   |   | 3 |   |   | 749 |   |   | 3 |   |
| Tax                  exempt state and political subdivisions                                            |   |                                           | 3,749  |   |   | 19 |   |   | 2,522 |   |   | 46 |   |   | 6,271 |   |   | 65 |   |
| Total                  securities available for sale                                                    |   | $                                              | 14,705 |   | $ | 99 |   | $ | 35,344 |   | $ | 683 |   | $ | 50,049 |   | $ | 782 |   |

|                                                                                                    |   | December                  31, 2005*            |   |
|---------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                                                                                    |   | Securities                  Available for Sale |   |
|                                                                                                    |   | Less                  Than 12 Months           |   | 12                  Months or More |   | Total |   |
|                                                                                                    |   | Fair                                           |   | Unrealized |   | Fair |   | Unrealized |   | Fair |   | Unrealized |   |
|                                                                                                    |   | Value                                          |   | Losses |   | Value |   | Losses |   | Value |   | Losses |   |
| U.S.                  Government agencies and corporations                                              |   | $                                              | 26,649 |   | $ | 258 |   | $ | 19,810 |   | $ | 461 |   | $ | 46,459 |   | $ | 719 |   |
| Mortgage                  backed securities- U.S. Government agencies and                  corporations |   |                                           | 3,283  |   |   | 72 |   |   | 3,397 |   |   | 132 |   |   | 6,680 |   |   | 204 |   |
| Corporate                  debt securities                                                              |   |                                           | -      |   |   | - |   |   | 1,251 |   |   | 19 |   |   | 1,251 |   |   | 19 |   |
| Tax                  exempt state and political subdivisions                                            |   |                                           | 3,454  |   |   | 42 |   |   | 952 |   |   | 23 |   |   | 4,406 |   |   | 65 |   |
| Total                  securities available for sale                                                    |   | $                                              | 33,386 |   | $ | 372 |   | $ | 25,410 |   | $ | 635 |   | $ | 58,796 |   | $ | 1,007 |   |

|                                             |   | Available                  for sale |   |
|--------------------------------------------------|--------|-------------------------------------|--------|
|                                             |   | Amortized                           |   | Estimated |   |
|                                             |   | Cost                                |   | Fair                  Value |   |
|                                             |   |                                |   |   |   |
| Due                  within 1 year               |   | $                                   | 17,532 |   | $ | 17,370 |   |
| Due                  after 1 but within 5 years  |   |                                | 39,942 |   |   | 39,348 |   |
| Due                  after 5 but within 10 years |   |                                | 415    |   |   | 408 |   |
| Equity                  securities               |   |                                | 745    |   |   | 745 |   |
|                                             |   | $                                   | 58,634 |   | $ | 57,871 |   |

|                                           |   | Proceeds                  From |   | Gross                  Realized |   |
|------------------------------------------------|--------|--------------------------------|--------|---------------------------------|--------|
|                                           |   |                           |   | Calls                  and      |   | Principal |   |   |   |   |   |
|                                           |   | Sales                          |   | Maturities                      |   | Payments |   | Gains |   | Losses |   |
|                                           |   |                           |   |                            |   |   |   |   |   |   |   |
| **September                  30, 2006:**       |   |                           |   |                            |   |   |   |   |   |   |   |
| Securities                  available for sale |   | $                              | 3,694  |                            | $      | 11,500 |   | $ | 1,510 |   | $ | - |   | $ | 18 |   |
|                                           |   |                           |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |
| **September                  30, 2005:**       |   |                           |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities                  available for sale |   | $                              | 453    |                            | $      | 6,966 |   | $ | 1,832 |   | $ | - |   | $ | - |   |

----

*Index*

|                                                          |   | September                  30, 2006 |    | December                  31, 2005 |   |
|---------------------------------------------------------------|--------|-------------------------------------|---------|------------------------------------|--------|
|                                                          |   | (Unaudited)                         |    | *                                  |   |
|                                                          |   |                                |    |                               |   |
| Commercial,                  financial and agricultural       |   | $                                   | 25,288  |                               | $      | 26,589 |   |
| Real                  estate - construction                   |   |                                | 12,102  |                               |   | 10,559 |   |
| Real                  estate - home equity                    |   |                                | 8,506   |                               |   | 8,796 |   |
| Real                  estate - residential mortgage           |   |                                | 59,375  |                               |   | 55,128 |   |
| Real                  estate - commercial mortgage            |   |                                | 48,318  |                               |   | 40,944 |   |
| Installment                  loans                            |   |                                | 10,512  |                               |   | 9,726 |   |
| Other                                                         |   |                                | 1,526   |                               |   | 2,051 |   |
| Total                  loans                                  |   |                                | 165,627 |                               |   | 153,793 |   |
| Net                  deferred loan origination fees and costs |   |                                | (39     | )                                  |   | (56 | ) |
| Unearned                  income                              |   |                                | (4      | )                                  |   | (4 | ) |
| Total                                                         |   |                                | 165,584 |                               |   | 153,733 |   |
| Less                  allowance for loan losses               |   |                                | 1,836   |                               |   | 1,597 |   |
| Loans,                  net                                   |   | $                                   | 163,748 |                               | $      | 152,136 |   |

|                                            |   | Three                  Months Ended |   | Nine                  Months Ended |   |
|-------------------------------------------------|--------|-------------------------------------|--------|------------------------------------|--------|
|                                            |   | September                  30,      |   | September                  30,     |   |
|                                            |   | 2006                                |   | 2005                               |   | 2006 |   | 2005 |   |
|                                            |   |                                |   |                               |   |   |   |   |   |
| Balance                  at beginning of period |   | $                                   | 1,778  |                               | $      | 1,542 |   | $ | 1,597 |   | $ | 1,378 |   |
|                                            |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
| Loans                  charged off:             |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
| Commercial                  and industrial      |   |                                | 2      |                               |   | - |   |   | 26 |   |   | - |   |
| Real                  estate - mortgage         |   |                                | -      |                               |   | - |   |   | - |   |   | - |   |
| Consumer                  and other             |   |                                | 14     |                               |   | 16 |   |   | 21 |   |   | 80 |   |
| Total                                           |   |                                | 16     |                               |   | 16 |   |   | 47 |   |   | 80 |   |
|                                            |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
| Recoveries:                                     |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
| Commercial                  and industrial      |   |                                | 2      |                               |   | 1 |   |   | 2 |   |   | 6 |   |
| Real                  estate - mortgage         |   |                                | -      |                               |   | - |   |   | - |   |   | 1 |   |
| Consumer                  and other             |   |                                | 3      |                               |   | 8 |   |   | 9 |   |   | 24 |   |
| Total                  recoveries               |   |                                | 5      |                               |   | 9 |   |   | 11 |   |   | 31 |   |
|                                            |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
| Net                  losses                     |   |                                | 11     |                               |   | 7 |   |   | 36 |   |   | 49 |   |
|                                            |   |                                |   |                               |   |   |   |   |   |   |   |   |   |
| Provision                  for loan losses      |   |                                | 69     |                               |   | - |   |   | 275 |   |   | 206 |   |
| Balance                  at end of period       |   | $                                   | 1,836  |                               | $      | 1,535 |   | $ | 1,836 |   | $ | 1,535 |   |

----

*Index*

|                                                         |   | Sept.                  30, 2006 |    | December                  31, 2005 |   |
|--------------------------------------------------------------|--------|---------------------------------|---------|------------------------------------|--------|
|                                                         |   | (Unaudited)                     |    | *                                  |   |
|                                                         |   |                            |    |                               |   |
| Interest                  bearing checking                   |   | $                               | 48,375  |                               | $      | 44,668 |   |
| Money                  market accounts                       |   |                            | 5,922   |                               |   | 7,645 |   |
| Savings                  accounts                            |   |                            | 22,841  |                               |   | 24,688 |   |
| Certificates                  of deposit under $100,000      |   |                            | 57,779  |                               |   | 52,579 |   |
| Certificates                  of deposit of $100,000 or more |   |                            | 35,802  |                               |   | 32,258 |   |
| Total                                                        |   | $                               | 170,719 |                               | $      | 161,838 |   |

|                                                            |   | Sept.30,                  2006 |   | December                  31, 2005 |   |
|-----------------------------------------------------------------|--------|--------------------------------|--------|------------------------------------|--------|
|                                                            |   | (Unaudited)                    |   | *                                  |   |
| Short-term                  borrowings:                         |   |                           |   |                               |   |
| Securities                  sold under agreements to repurchase |   |                           |   |                               |   |
| Total                                                           |   | $                              | 18,279 |                               | $      | 20,512 |   |
|                                                            |   |                           |   |                               |   |   |   |
| Long-term                  borrowings:                          |   |                           |   |                               |   |   |   |
| Advances                  from FHLB                             |   | $                              | 3,864  |                               | $      | 5,145 |   |

|                                            |   | Nine                  Months Ended September 30, |   |
|-------------------------------------------------|--------|--------------------------------------------------|--------|
|                                            |   | Pension                  Benefits                |   | Other                  Benefits |   |
|                                            |   | 2006                                             |   | 2005 |   | 2006 |   | 2005 |   |
|                                            |   |                                             |   |   |   |   |   |   |   |
| Service                  cost                   |   | $                                                | 84     |   | $ | 74 |   | $ | 18 |   | $ | 18 |   |
| Interest                  cost                  |   |                                             | 204    |   |   | 201 |   |   | 24 |   |   | 23 |   |
| Expected                  return on plan assets |   |                                             | (247   | ) |   | (256 | ) |   | - |   |   | - |   |
| Net                  amortization and deferral  |   |                                             | 59     |   |   | 22 |   |   | 12 |   |   | 12 |   |
| Net                  periodic cost              |   | $                                                | 100    |   | $ | 41 |   | $ | 54 |   | $ | 53 |   |

----

*Index*

| Financial                  instruments whose contract                 |   | Sept.                  30, 2006 |   | December                  31, 2005 |   |
|-----------------------------------------------------------------------|--------|---------------------------------|--------|------------------------------------|--------|
|  amounts                  represent credit                  risk |   | (unaudited)                     |   | *                                  |   |
| (in                  thousands)                                       |   |                            |   |                               |   |
| Commitments                  to extend credit                         |   | $                               | 22,152 |                               | $      | 26,920 |   |
| Standby                  letters of credit                            |   |                            | 287    |                               |   | 559 |   |
| Total                                                                 |   | $                               | 22,439 |                               | $      | 27,479 |   |

----

*Index*

----

*Index*

----

*Index*

Part        1 It

----

*Index*

----

*Index*

----

*Index*

----

*Index*

----

*Index*

----

*Index*

----

*Index*

**PartI        Item 3**

**Quantitative        and Qualitative Disclosures About Market Risk**

**Part        I Item 4**

**Controls        and Procedures**

----

*Index*

**PARTII        - OTHER INFORMATION**

| Item                  1.  | Legal                  Proceedings                  :                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|---------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                      | As                  of September 30, 2006 Citizens Financial Corp. was involved in                  various                  legal proceedings which occur in the normal course of business.                  We believe                  all such litigation will be resolved without materially affecting                  our                  financial position or results of operations. There are no other                  material                  proceedings known to be threatened or contemplated against either                  Citizens                  Financial Corp. or Citizens National Bank. |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Item                  1A. | Risk                  Factors:                  There have been no material changes in the                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                      | Risk                  factors discussed in Item 1A of our December 31, 2005 Form                  10-K.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Item                  2.  | Unregistered                  Sales of Equity Securities and Use of Proceeds:                  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:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                      | The                  following exhibits are filed with this report:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                      | Exhibit                  No.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | Description                  of Exhibit |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |
|                      | 31.1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Certification                  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.                  Section 1350 |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |
|                      | 31.2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Certification                  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.                  Section 1350 |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |
|                      | 32.1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Certification                  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.                  Section 1350 |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |
|                      | 32.2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Certification                  Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.                  Section 1350 |

----

*Index*

SIGN

|   |     |   | CITIZENS                    FINANCIAL CORP.      |
|--------|----------|--------|--------------------------------------------------|
|   |     |   |                                             |
|   |     |   |                                             |
| Date:  | 11/08/06 |   | /s/                    Robert J. Schoonover      |
|   |     |   | Robert                    J. Schoonover          |
|   |     |   | President                                        |
|   |     |   | Chief                    Executive Officer       |
|   |     |   |                                             |
|   |     |   |                                             |
| Date:  | 11/08/06 |   | /s/                    Thomas K. Derbyshire      |
|   |     |   | Thomas                    K. Derbyshire          |
|   |     |   | Vice                    President, Treasurer and |
|   |     |   | Principal                    Financial Officer   |

----