<PAGE>

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

                                   FORM 10-Q


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

For the quarterly period ended                     March 31, 2002
                              --------------------------------------------------

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


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


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


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


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


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


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

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

                                                       Outstanding at
                         Class                         March 31, 2002
                         -----                         ---------------

          Common Stock ($2 par value)                       648,873

                        This report contains 21 pages.

                                       1
<PAGE>

                                   FORM 10-Q
                            CITIZENS FINANCIAL CORP.
                          Quarter Ended March 31, 2002


                                     INDEX


                                                                      Page No.
                                                                      --------

Part I.   Financial Information

           Condensed Consolidated Balance Sheets
            March 31, 2002 and December 31, 2001........................  3

           Condensed Consolidated Statements of Income
            Three Months Ended
            March 31, 2002 and March 31, 2001...........................  4, 5

           Statements of Comprehensive Income
            Three Months Ended
            March 31, 2002 and March 31, 2001...........................  6

           Condensed Consolidated Statements of
            Changes in Shareholders' Equity
            Three Months Ended
            March 31, 2002 and March 31, 2001...........................  7

           Condensed Consolidated Statements of
            Cash Flows
            Three Months Ended
            March 31, 2002 and March 31, 2001...........................  8

           Notes to Condensed Consolidated
            Financial Statements........................................  9 - 13

           Management's Discussion and Analysis
            of Financial Condition and Results
            of Operations...............................................  14 -19

Part II.  Other Information and Index to Exhibits.......................  20

           Signatures...................................................  21


                                       2
<PAGE>

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

<TABLE>
<CAPTION>
                                                   March 31,   Dec. 31,
                                                     2002       2001
                                                   --------   --------
                                                 (Unaudited)       *
ASSETS
--------

                                                <c>        <c>
Cash and due from banks                            $  4,247   $  4,735
Securities available for sale                        46,194     48,964
Loans, less allowance for loan losses of
  $1,413 and $1,397, respectively                   110,459    107,075
Premises and equipment                                2,797      2,658
Accrued interest receivable                           1,183      1,208
Other assets                                          2,216      2,179
                                                   --------   --------
     Total Assets                                  $167,096   $166,819
                                                   ========   ========

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

Deposits:
   Noninterest bearing                             $ 16,278   $ 17,207
   Interest bearing                                 120,730    114,545
                                                   --------   --------
     Total deposits                                 137,008    131,752
Short-term borrowings                                 9,241     13,922
Long-term borrowings                                    305        788
Other liabilities                                     1,477      1,335
                                                   --------   --------
     Total liabilities                              148,031    147,797
                                                   --------   --------

Commitments and contingencies

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

Common stock, $2.00 par value, authorized
2,250,000 shares, issued 750,000 shares               1,500      1,500
Additional paid in capital                            2,100      2,100
Retained earnings                                    17,145     16,891
Accumulated other comprehensive income                  395        606
Treasury stock at cost, 101,127 shares               (2,075)    (2,075)
                                                   --------   --------
     Total shareholders' equity                      19,065     19,022
                                                   --------   --------
     Total Liabilities and Shareholders' Equity    $167,096   $166,819
                                                   ========   ========

</TABLE>

*From audited financial statements.

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

                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                 Three Months Ended
                                                                                      March 31,
                                                                           ----------------------------
                                                                           2002                    2001
                                                                             (Unaudited)
<S>                                                                   <C>                   <C>
INTEREST INCOME
---------------

Interest and fees on loans                                             $  2,171             $  2,317
Interest and dividends on
 securities:
  Taxable                                                                   570                  597
  Tax-exempt                                                                 75                   65
Interest on federal funds sold                                                2                    3
                                                                       --------             --------
 Total interest income                                                    2,818                2,982
                                                                       --------             --------

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

Interest on deposits                                                        940                1,075
Interest on short-term borrowing                                             73                  118
Interest on long-term borrowing                                               7                   12
                                                                       --------             --------
 Total interest expense                                                   1,020                1,205
                                                                       --------             --------
 Net interest income                                                      1,798                1,777
Provision for loan losses                                                    63                   84
                                                                       --------             --------
 Net interest income after
  provision for loan losses                                               1,735                1,693
                                                                       --------             --------

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

Trust department income                                                      54                   44
Brokerage fees                                                                1                   47
Service fees                                                                138                  131
Insurance commissions                                                         6                    8
Security gains/(losses)                                                       0                    1
Other                                                                        78                   55
                                                                       --------             --------
 Total noninterest income                                                   277                  286
                                                                       --------             --------

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

Salaries and employee benefits                                              720                  690
Net occupancy expense                                                        66                   62
Equipment rentals, depreciation
 and maintenance                                                            103                   97
Data processing                                                             125                  110
Director fees                                                                44                   42
Postage                                                                      30                   33
Professional service fees                                                    34                   33
Other                                                                       265                  216
                                                                       --------             --------
 Total noninterest expenses                                               1,387                1,283
                                                                       --------             --------

Income before income taxes                                                  625                  696
Income tax expense                                                          208                  265
                                                                       --------             --------
Net income                                                             $    417             $    431
                                                                       ========             ========
</TABLE>

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

                                       4
<PAGE>

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

<TABLE>
<S>                                                                <C>          <C>
Basic earnings per common share                                    $    .64     $    .66
                                                                   ========     ========
Weighted average shares outstanding                                 648,873      650,612
Dividends per common share                                         $    .25     $    .25
                                                                   ========     ========
</TABLE>

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

                                       5
<PAGE>

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

<TABLE>
<CAPTION>
                                                                      Three Months Ended
                                                                           March 31
                                                                      ------------------
                                                                      2002          2001
                                                                          (Unaudited)
<S>                                                                  <C>          <C>
Net income                                                           $ 417        $  431

Other comprehensive income:
 Gross unrealized gains/(losses) arising
   during the period                                                  (282)          700
 Adjustment for income tax (expense)/benefit                            71          (238)
                                                                    ------        ------
                                                                      (211)          462

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

 Other comprehensive income, net of tax                               (211)          461
                                                                    ------        ------

Comprehensive income                                                $  206        $  892
                                                                    ======        ======
</TABLE>

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

                                       6
<PAGE>

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


<TABLE>
<CAPTION>
                                        Three Months Ended March 31, 2002 and 2001
                                    --------------------------------------------------
                                                      (unaudited)

                                                                         Accumulated                Total
                                  Common Stock   Additional                 Other                   Share-
                                  ------------    Paid-in    Retained   Comprehensive    Treasury   holders'
                                 Shares  Amount   Capital    Earnings      Income         Stock     Equity
                               ----------------------------------------------------------------------------
<S>                            <C>       <C>     <C>         <C>        <C>              <C>        <C>
Balance, January 1, 2001        750,000  $1,500   $2,100     $15,831     $   (16)        $(2,025)   $17,390
Net income                                                       431                                    431
Net change in unrealized
  loss on securities                                                         461                        461
Cash dividends declared
 ($.25 per share)                                               (163)                                  (163)
                               ----------------------------------------------------------------------------
Balance March 31, 2001          750,000  $1,500   $2,100     $16,099     $   445         $(2,025)   $18,119
                               ============================================================================

Balance, January 1, 2002        750,000  $1,500   $2,100     $16,891     $   606         $(2,075)   $19,022
Net income                                                       417                                    417
Net change in unrealized
  gain on securities                                                        (211)                      (211)
Cash dividends declared
 ($.25 per share)                                               (163)                                  (163)
                               ----------------------------------------------------------------------------
Balance March 31, 2002         750,000   $1,500   $2,100     $17,145     $   395         $(2,075)   $19,065
                               ============================================================================
</TABLE>

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

                                       7
<PAGE>

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

                                                        Three Months Ended
                                                             March 31,
                                                        ------------------
                                                          2002      2001
                                                            (Unaudited)
Cash flows from operating activities:
 Net Income                                             $   417   $   431
 Adjustments to reconcile net income to
  cash provided by operating activities:
  Provision for loan losses                                  63        84
  Depreciation and amortization                              89        71
  Amortization and (accretion) on securities                 11       (22)
  (Gain)/loss on sale of securities                           0        (1)
  (Gain)/loss on sale of OREO                                 8       (12)
  (Increase)/decrease in accrued interest receivable         25        31
  (Increase)/decrease in other assets                       (20)      (25)
  Increase/(decrease) in other liabilities                  212        77
                                                        -------   -------
    Cash provided by operating activities                   805       634
                                                        -------   -------

Cash flows from investing activities:
 Principal payments, available for sale securities          243        67
 Proceeds from sales of available for
  sale securities                                             0       506
 Proceeds from maturities and calls,
  available for sale securities                           2,234     3,505
 Purchases of available for sale securities                   0    (3,383)
 Purchases of premises and equipment                       (223)     (186)
 Proceeds from sale of other real estate owned               15        90
 (Increase)/decrease in loans                            (3,492)   (1,095)
                                                        -------   -------
   Cash used in investing activities                     (1,223)     (496)
                                                        -------   -------

Cash flows from financing activities:
 Cash dividends paid                                       (163)     (163)
 Increase/(decrease) in short-term borrowing             (4,681)   (3,305)
 Increase/(decrease) in long-term borrowing                (482)      (20)
 Increase/(decrease) in time deposits                       990     2,212
 Increase/(decrease) in other deposits                    4,266     2,407
                                                        -------   -------
   Cash provided by/(used in) financing activities          (70)    1,131
                                                        -------   -------

Net increase/(decrease) in cash and cash equivalents       (488)    1,269
Cash and cash equivalents at beginning of period          4,735     4,540
                                                        -------   -------

Cash and cash equivalents at end of period              $ 4,247   $ 5,809
                                                        =======   =======

Supplemental disclosure of cash flow information:
 Cash paid during the period for:
 Interest                                               $ 1,070   $ 1,214
 Income taxes                                           $    33   $    29
Supplemental Schedule of Noncash Investing
 and Financing Activities:
 Other real estate and other assets acquired in
   settlement of loans                                  $    45   $     0

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

                                       8
<PAGE>

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


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

     The accounting and reporting policies of Citizens Financial Corp. and
Subsidiaries ("Citizens" or "the Company") conform to accounting principles
generally accepted in the United States of America and to general policies
within the financial services industry. The preparation of financial statements
in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the period. Actual results could differ from
those estimates.

     The condensed consolidated statements contained herein include the accounts
of Citizens Financial Corp. and its wholly-owned subsidiaries Citizens National
Bank ("the Bank") and Citizens Financial Services, LLC. All significant
intercompany balances and transactions have been eliminated. The information
contained in the financial statements is unaudited except where indicated. In
the opinion of management, all adjustments for a fair presentation of the
results of the interim periods have been made. All such adjustments were of a
normal, recurring nature. The results of operations for the three months ended
March 31, 2002 are not necessarily indicative of the results to be expected for
the full year. The financial statements and notes included herein should be read
in conjunction with those included in Citizens' 2001 Annual Report to
Shareholders and Form 10-K.

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


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

     Certain accounts in the condensed consolidated financial statements for
2001, as previously presented, have been reclassified to conform with current
year classifications.

                                       9
<PAGE>

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

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

<TABLE>
<CAPTION>
                                                  March 31, 2002
                                 -----------------------------------------------


                                                                       Carrying
                                                                        Value
                                                                      (Estimated
                                   Amortized   Unrealized  Unrealized    Fair
                                     Cost         Gains      Losses     Value)
--------------------------------------------------------------------------------
                                                     (Unaudited)
<S>                               <C>          <C>         <C>         <C>
Available for sale:
U.S. Government agencies
  and corporations..............   $  21,527     $     384   $     98  $  21,813
Mortgage backed securities-
  U.S. Government agencies
  and corporations..............       3,411             4         76      3,339
Corporate debt securities.......      12,897           365         23     13,239
Tax exempt state and political
  subdivisions..................       7,116           153         71      7,198
Federal Reserve Bank stock......         108             0          0        108
Federal Home Loan Bank stock....         497             0          0        497
                                   ---------     ---------   --------  ---------
  Total securities available
    for sale....................   $  45,556     $     906   $    268  $  46,194
                                   =========     =========   ========  =========



<CAPTION>
                                              December 31, 2001*
                         -------------------------------------------------------

                                                                       Carrying
                                                                        Value
                                                                      (Estimated
                                 Amortized   Unrealized    Unrealized    Fair
                                   Cost        Gains         Losses     Value)
                         -------------------------------------------------------
                                                         *
--------------------------------------------------------------------------------
<S>                              <C>         <C>           <C>        <C>
Available for sale:
U.S. Government agencies
  and corporations..............   $  21,539   $   576     $     70     $ 22,045
Mortgage-backed securities -
  U.S. Government agencies
  and corporations..............       3,659         9           53        3,615
Corporate debt securities.......      14,897       480           21       15,356
Tax exempt state and political
  subdivisions..................       7,219        76           79        7,216
Federal Reserve Bank stock......         108         0            0          108
Federal Home Loan Bank stock....         624         0            0          624
                                   ---------   -------     --------     --------
Total securities available
  for sale......................   $  48,046   $ 1,141     $    223     $ 48,964
                                   =========   =======     ========     ========
</TABLE>

     The maturities, amortized cost and estimated fair values of the Bank's
securities at March 31, 2002 are summarized as follows (in thousands):

                                                    Available for sale
                                                   ---------------------
                                                   Amortized  Estimated
                                                     Cost     Fair Value
                                                   ---------  ----------

Due within 1 year                                    $ 9,639     $ 9,788
Due after 1 but within 5 years                        30,647      31,193
Due after 5 but within 10 years                        4,665       4,608
Due after 10 years                                         0           0
Equity securities                                        605         605
                                                     -------     -------
                                                     $45,556     $46,194
                                                     =======     =======

                                      10
<PAGE>

     Mortgage backed securities have remaining contractual maturities ranging
from 3 to 14 years and are reflected in the maturity distribution schedule shown
above based on their anticipated average life to maturity, which ranges from 1
to 4 years. The Company's equity securities are required to be held for
membership in the Federal Reserve and Federal Home Loan Bank and are shown at
cost since they may only be sold to the respective issuer or another member at
par.

     The proceeds from sales, calls and maturities of securities, including
principal payments received on mortgage backed securities, and the related gross
gains and losses realized for the three month periods ended March 31, 2002 and
2001 are as follows (in thousands):

                                        Proceeds From           Gross Realized
                                -----------------------------  -----------------
                                        Calls and   Principal
                                Sales   Maturities  Payments     Gains   Losses
                                -----------------------------  -----------------
March 31, 2002:
Securities available for sale   $    0   $  2,234    $    243   $   0    $   0
                                ======   ========    ========   ======   ======

March 31, 2001:
Securities available for sale   $  506   $  3,505    $     67   $    1   $    0
                                ======   ========    ========   ======   ======

     At March 31, 2002 and December 31, 2001 securities with an amortized cost
of $21,246,000 and $19,209,000, respectively, with estimated fair values of
$21,529,000 and $19,761,000, respectively, were pledged to secure public
deposits, securities sold under agreements to repurchase, and for other purposes
required or permitted by law.

     At March 31, 2002, the Company had a concentration within its corporate
debt securities classification which included obligations of financial services
industry companies with global operations having an approximate amortized cost
of $3,735,000 and an estimated fair value of $3,858,000. There were no
concentrations with any one issuer.

*From audited financial statements.


NOTE 4 - LOANS
         -----

     Total loans are summarized as follows (in thousands):

                                            March 31, 2002   December 31, 2001
                                            ---------------  ------------------
                                              (Unaudited)            *

Commercial, financial and agricultural          $ 19,044          $ 16,741
Real estate - construction                         4,544             3,753
Real estate - mortgage                            71,512            70,242
Installment loans to individuals                  15,121            16,025
Other                                              1,780             1,815
                                                --------          --------
  Total loans                                    112,001           108,576
Net deferred loan origination costs                 (120)             (102)
Less unearned income                                  (9)               (2)
                                                --------          --------
  Total loans net of unearned income and
    net deferred loan origination costs          111,872           108,472
Less allowance for loan losses                     1,413             1,397
                                                --------          --------
  Loans, net                                    $110,459          $107,075
                                                --------          --------

* From audited financial statements

                                      11
<PAGE>

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

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

                                                   Three Months Ended
                                                        March 31,
                                                 ---------------------
                                                   2002           2001

Balance at beginning of period                   $1,397         $1,151
                                                 ------         ------

Loans charged off:
 Commercial and industrial                            0              1
 Real estate - mortgage                              19              0
 Consumer and other                                  30             39
                                                 ------         ------
   Total                                             49             40
                                                 ------         ------

Recoveries:
 Commercial and industrial                            0              3
 Real estate - mortgage                               0              0
 Consumer and other                                   2              5
                                                 ------         ------
   Total recoveries                                   2              8
                                                 ------         ------

Net losses                                           47             32

Provision for loan losses                            63             84
                                                 ------         ------
Balance at end of period                         $1,413         $1,203
                                                 ======         ======

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

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

NOTE 7 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
         -------------------------------------------------

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

Financial instruments whose contract    March 31, 2002   December 31, 2001
amounts represent credit risk             (unaudited)            *
        (in thousands)
--------------------------------------  --------------   -----------------
Commitments to extend credit                $21,323             $20,977
Standby letters of credit                       633                 427
                                            -------             -------
   Total                                    $21,956             $21,404
                                            =======             =======

     The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and
standby letters of credit is represented by the contractual amount of

                                      12
<PAGE>

those instruments. The Bank uses the same credit policies in making commitments
and conditional obligations as it does for on-balance sheet instruments.

* From audited financial statements.

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

     Basic earnings per share is based on the weighted average number of shares
outstanding during the period. For the three months ended March 31, 2002 and
2001 the weighted average number of shares were 648,873 and 650,612,
respectively. During the periods ended March 31, 2002 and 2001 the Company did
not have any dilutive securities.

                                      13
<PAGE>

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


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

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


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

     Net income for the first quarter of 2002 of $417,000 was $14,000 below the
first quarter of 2001 total and met Company expectations. Return on average
assets for the quarter of 1.02% was below the first quarter 2001 return of 1.15%
largely due to the growth the Company experienced as a result of establishing de
novo branches in November, 2000 and January, 2002. Additional details concerning
the Company's results of operations are discussed in the following sections of
this report.

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

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

     For the quarter, net interest income totaled $1,798,000, up slightly from
$1,777,000 in the first quarter of 2001. On a tax-equivalent basis net interest
income was $1,851,000 compared to $1,819,000 in the first quarter of 2001.

     Despite this increase the falling interest rate environment experienced
during the last twelve months has caused the yield on earning assets to fall
from $8.46% in the first quarter of 2001 to 7.43% in the first quarter of 2002.
The yield on commercial loans, which is often tied to the prime rate, has fallen
199 basis points while the yield on the Bank's real estate loan portfolio and
security portfolio decreased by 125 and 66 basis points, respectively.

                                      14
<PAGE>

     In order to maintain its net interest income the Bank has attempted to
reduce its cost of funds. Lower rates on savings, money market, and interest
bearing checking accounts, as well as some certificates of deposit, allowed the
Bank to reduce its cost of funds from 4.19% in the first quarter of 2001 to
3.22% this quarter. While those efforts at controlling the cost of funds have
been quite successful, the ratio of tax-equivalent net interest income to
earning assets, or net interest margin, has fallen from 5.09% to 4.79% in the
first quarter of 2001 and 2002, respectively, due to an $11.7 million increase
in the earning asset base and more aggressive deposit pricing strategies in the
Bank's newer markets.

     Although this net interest margin is lower than the Bank has recently
enjoyed, it remains well above peer averages. With the economy appearing to be
at the bottom of the interest rate cycle, management is hopeful the yield on
earning assets and net interest margin will stabilize. However, because the rise
in interest rates is expected to be slow, and the Bank expects to continue its
deposit pricing practices over the near term, a return to net interest margins
in excess of 5.00% is not likely during 2002.

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

     Noninterest income, which includes all revenues not included in interest
and fee income relating to earning assets, totaled $277,000 during the first
quarter of 2002 compared to $286,000 during the first quarter of 2001. Revenues
from the Bank's fixed rate mortgage program, which began during the fourth
quarter of 2001 and is discussed in the Company's December 31, 2001 Form 10-K,
were significant totaling $39,000. This exceeded expectations and helped
counteract a drop in brokerage fees resulting from the need to replace the
Bank's licensed broker. With the brokerage program fully staffed once again,
management expects brokerage fees to return to historical levels during the
remainder of the year.

     Other than the fixed rate mortgage and brokerage programs, noninterest
income was generally in line with both expectations and prior year results.

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

     Noninterest expense includes all items of expense other than interest
expense, the provision for loan losses, and income taxes. Total noninterest
expense for the quarter of $1,387,000 was $104,000, or 8.1%, in excess of the
first quarter of 2001. Personnel expense increased $30,000 to $720,000 due to
the addition of branch staff and personnel related to the mortgage and brokerage
programs, as well as to normal salary adjustments. Other noninterest expense
increased by $49,000 to $265,000 primarily due to increased operating demands of
a larger branch network and a $15,000 increase in costs relating to the
maintenance and sale of foreclosed properties. With core processing costs based
on the number of accounts, branch and customer base growth contributed to higher
data processing costs as did an expansion of the Bank's ATM network. The
remaining categories of noninterest expense did not change significantly from
the prior year.

     Management had anticipated this increase and total noninterest expenses
were slightly under budget for the quarter. No material changes in these expense
items are anticipated during the balance of 2002.

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

     Income tax expense, including both federal and state income taxes,

                                      15
<PAGE>

totaled $208,000, or 33.3% of pretax income, during the first quarter of 2002
and $265,000 during the first quarter of 2001. The Company was not subject to
the federal alternative minimum tax during the periods covered by this report
and does not expect to be subject to it in the foreseeable future.

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

SUMMARY
-------

     Total assets at March 31, 2002 of $167,096,000 were up just $277,000 from
year-end 2001. However, underlying this modest increase was deposit growth of
$5,256,000 and a reduction in borrowed funds of $5,164,000. A further discussion
of the Bank's major balance sheet categories, as well as liquidity, interest
rate sensitivity, and the impact of inflation, follows.

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

     Gross loans at March 31, 2002 of $112,001,000 were $3,425,000 more than at
year-end 2001, which is an annualized growth rate of 12.62%. This growth
occurred primarily in the mortgage and commercial portfolios and was aided by
$725,000 of loan growth at the Marlinton office which opened in January, 2002.
Installment lending to consumers, where the Bank enjoyed some success financing
used cars in 2001, has slowed considerably with the installment portfolio
falling $904,000 during the quarter. This reflects more restrictive auto lending
standards although a general slowdown in consumer borrowing also appears to be
occurring. Still, the Bank's gross loan to deposit ratio of 81.75% is in line
with expectations.

Additional information concerning the Company's loan portfolio is presented in
Note 4.

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

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

     The March 31, 2002 allowance for loan losses totaled $1,413,000 or 1.26% of
gross loans. Net charge-offs for the quarter were $47,000 while provisions for
future loan losses totaled $63,000. At the report date, loans past due 90 days
or more which were still accruing interest and nonaccrual loans totaled
$213,000, or .19% of gross loans which is below peer group averages and is down
from $367,000 at year-end 2001. Management is not aware of any trends or
uncertainties involving the loan portfolio which are likely to materially impair
credit quality, capital or earnings.

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

     The Bank's security portfolio uses funds not needed to satisfy loan demand
to improve earnings, provide liquidity, and balance interest sensitivity issues.
All securities are classified as available for sale.

     The carrying value of the Bank's security portfolio at March 31, 2002 was
$46,194,000, down from $48,964,000 at year-end 2001.  This was the result of
utilizing maturing securities, which totaled $2,234,000 during the

                                       16
<PAGE>

quarter, to fund loans. No securities were purchased during the quarter.

     The composition and characteristics of the portfolio did not undergo any
significant changes during the first quarter of the year.  The portfolio
continues to be comprised primarily of U.S. Agency and investment grade
corporate debt instruments with lesser holdings of municipal and government
agency mortgage backed instruments as well as Federal Home Loan Bank and Federal
Reserve stock.  Please refer to Note 3 for additional details regarding the
security portfolio.

     The Bank generally tries to minimize its involvement in the overnight
federal funds market preferring to fully utilize available funds for higher
yielding loan and security alternatives while relying on maturing securities,
loan repayments and deposit growth for liquidity. Nonetheless, at any given time
the execution of specific investing or funding strategies, or normal
fluctuations in deposit and loan balances, may require the bank to sell, or buy,
funds on an overnight basis. As of the report date the Bank had no federal funds
sold but did maintain $539,000 in overnight borrowings which is down from
$2,831,000 at year-end. For the quarter, federal funds sold averaged $442,000
while federal funds purchased averaged $619,000.

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

     Total deposits of $137,008,000 at March 31, 2002 are up $5,256,000, or
3.99%, since year-end 2001. A significant amount of this growth has occurred at
the newly opened Marlinton facility which had total deposits of $2,486,000 at
quarter-end. A great deal of this growth is core deposit growth as interest
bearing checking and savings accounts increased by $3.5 million and $1.2
million, respectively. The remaining growth is primarily found in certificates
of deposit although the rate of certificate growth has slowed from 2001.

     Short-term borrowings include overnight funds, discussed earlier, and
repurchase agreements.  The repurchase agreements totaled $8,702,000 at March
31, 2002, down from $11,091,000 at year-end and are not expected to return to
their previous levels absent the addition of new repurchase customers.  The Bank
also reduced its long-term borrowings with the Federal Home Loan Bank of
Pittsburgh from $788,000 to $305,000 during the quarter.

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

     The Company's capital remains very strong at $19,065,000, or 11.41% of
total assets, at March 31, 2002 compared to $19,022,000 at year-end 2001. While
capital increased as a result of earnings during the quarter, rising interest
rates caused a reduction in the unrealized gain on the available for sale
security portfolio. The payment of dividends of $.25 per share, the same as in
the first quarter of 2001, also impacted capital.

     The Company's capital strength is further illustrated in the table below
which shows it continues to easily exceed all regulatory capital requirements.
Further, management knows of no trends or uncertainties which may materially
impair or alter its capital position.

                                            Minimum Capital Standard Ratios
                                           ---------------------------------
                                               Citizens         Regulatory
                                            Financial Corp.    Requirements
                                           -----------------  --------------
Total capital to risk weighted assets                 16.41%           8.00%
Tier I capital to risk weighted assets                15.25%           4.00%
Tier I capital to adjusted total assets               11.14%           4.00%

                                       17
<PAGE>

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

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

     A reduction in borrowed funds during the first quarter did not impair
liquidity as deposit growth and the use of maturing securities was sufficient to
provide for all funding needs and return the Bank to a nearly neutral overnight
funding position.  Based on anticipated loan and deposit levels over the next
twelve months, management expects to be able to satisfy demands for liquidity
primarily from internal sources although certain larger loan projects may be
funded through borrowings.  The use of such external funding, estimated at
quarter-end to approximate $2 million, would improve the ability to generate
liquidity through maturing investment securities and provide greater flexibility
in balance sheet management.

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

     As of March 31, 2002, the Company has more liabilities subject to repricing
over the next twelve months than assets subject to repricing over the same time
period.  This condition is known as a negative gap.  Given economists current
expectation of slowly rising interest rates, this condition would normally be
considered detrimental to earnings.  However, gap theory requires that a number
of assumptions be made including when the rates on products might change.
Citizens maintains a large and growing volume of savings, money market and
interest bearing checking accounts with rates that could be changed at any time.
However, rates on these products are typically quite stable and lag rises in
rates within the broader economy.  Thus, management does not expect earnings to
be negatively impacted to a material degree should interest rates rise.

     Because gap analysis contains shortcomings such as this, Citizens also uses
rate shock analysis and simulation modeling to monitor and control interest rate
risk.  Rate shock tests project net interest income given an immediate and
sustained change in interest rates applied to all interest earning assets and
interest sensitive liabilities and help define boundaries of interest rate risk.
As of March 31, 2002, these tests project that an immediate and sustained change
in interest rates of +/- 300 basis points would not cause net interest income to
change by more than the parameters established by Company policy.  Such policy
limits the change in net interest income to 5% for any given 100 basis change in
interest rates.  In all likelihood, however, an immediate and sustained change
in interest rates of this type would not occur since interest rates of various
products do not change alike.  Nonetheless, management is attempting to further
reduce interest rate risk by attracting longer term sources of funds such as
certificates of deposit, and the selective use of borrowed funds for certain
loan projects as discussed earlier.

                                       18
<PAGE>

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

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

     However, inflation does affect noninterest expenses such as personnel costs
and the cost of services and supplies used by the Company.  Management attempts
to offset such increases by controlling the level of noninterest expenditures
and increasing levels of noninterest income.  Because inflation rates have
generally been low during the time covered by the accompanying financial
statements, the impact of inflation on the Company's earnings has not been
significant.

                                       19
<PAGE>

                          PART II - OTHER INFORMATION


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

     As of March 31, 2002 Citizens Financial Corp. was not involved in any
material legal proceedings. The Bank is currently involved in various legal
proceedings which occur in the normal course of business. After consultation
with legal counsel, management believes that all such litigation will be
resolved without materially affecting the Company's financial position or
results of operations. In addition, there are no material proceedings known to
be threatened or contemplated against the Company or its subsidiaries.

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

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

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

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

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

          (a)  Exhibits:    None.

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

                                       20
<PAGE>

                                  SIGNATURES


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


                                        CITIZENS FINANCIAL CORP.


Date:      5/8/02                         /s/ Robert J. Schoonover
      -------------------               -------------------------------
                                          Robert J. Schoonover
                                          President
                                          Chief Executive Officer



Date:      5/8/02                         /s/ Thomas K. Derbyshire
      -------------------               -------------------------------
                                           Thomas K. Derbyshire
                                           Treasurer
                                           Principal Financial Officer

                                       21