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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended September 30, 2005



Commission file number 2-96144



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CITIZENS FINANCIAL CORP.

(Exact name of registrant as specified in its charter)



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|                                                              |  |                                    
|------------------------------------------------------------- |  | -----------------------------------
|Delaware                                                      |  | 55-0666598                         
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. EmployerIdentification 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.)



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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 by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act).    Yes ̈No  x



Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).    Yes ̈No  x



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



|                            |  |                       
|--------------------------- |  | ----------------------
|Class                       |  | Outstanding at 11/9/05
|Common Stock ($2 par value) |  | 618,663               



This report contains 30
pages.



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##### Table of Contents

FORM 10-Q

CITIZENS FINANCIAL CORP.

Quarter Ended September 30, 2005



INDEX



|         |  |                                                                                                                                                                          |  |         
|-------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------
|         |  |                                                                                                                                                                          |  | Page No.
|Part I.  |  | Financial Information                                                                                                                                                    |  |         
|         |  |                                                                                                                                                                         
|         |  | Item 1.
Financial Statements                                                                                                                                             |  |         
|         |  |                                                                                                                                                                         
|         |  | Condensed Consolidated Balance Sheets September 30, 2005 and December 31, 2004                                                                                           |  | 3       
|         |  |                                                                                                                                                                         
|         |  | Condensed Consolidated Statements of Income Three Months Ended September 30, 2005 and September 30, 2004 and Nine Months Ended September 30, 2005 and September 30, 2004 |  | 4       
|         |  |                                                                                                                                                                         
|         |  | Statements of Comprehensive Income Three Months Ended September 30, 2005 and September 30, 2004 and Nine Months Ended September 30, 2005 and September 30, 2004          |  | 5       
|         |  |                                                                                                                                                                         
|         |  | Condensed Consolidated Statements of Changes in Shareholders Equity Nine Months Ended September 30, 2005 and September 30, 2004                                         |  | 6       
|         |  |                                                                                                                                                                         
|         |  | Condensed Consolidated Statements of Cash Flows Nine Months Ended September 30, 2005 and September 30, 2004                                                              |  | 7       
|         |  |                                                                                                                                                                         
|         |  | Notes to Condensed Consolidated Financial Statements                                                                                                                     |  | 8-14    
|         |  |                                                                                                                                                                         
|         |  | Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                            |  | 15-23   
|         |  |                                                                                                                                                                         
|         |  | 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                                                                   |  |         



2



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##### Table of Contents

PART I ITEM I - FINANCIAL INFORMATION

CITIZENS FINANCIAL CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of dollars)



|                                                                                  |  |               |         |   |              |   |         |  
|--------------------------------------------------------------------------------- |  | ------------- | ------- | - | ------------ | - | ------- | -
|                                                                                  |  | Sept. 30,2005 |         |   | Dec. 31,2004 |  
|                                                                                  |  | (Unaudited)   |         |   | *            |  
|ASSETS                                                                            |  |               |         |   |              |   |         |  
|                                                                                  |  |              
|Cash and due from banks                                                           |  | $             | 6,279   |   |              | $ | 5,476   |  
|Federal funds sold                                                                |  |               | 5,896   |   |              |   | 0       |  
|Securities available for sale, at fair value                                      |  |               | 62,293  |   |              |   | 53,038  |  
|Loans, less allowance for loan losses of $1,535 and $1,378, respectively          |  |               | 151,340 |   |              |   | 145,423 |  
|Premises and equipment                                                            |  |               | 4,143   |   |              |   | 4,224   |  
|Accrued interest receivable                                                       |  |               | 1,167   |   |              |   | 1,118   |  
|Other assets                                                                      |  |               | 4,712   |   |              |   | 4,504   |  
|                                                                                  |  |               |         |   |              |   |         |  
|Total Assets                                                                      |  | $             | 235,830 |   |              | $ | 213,783 |  
|                                                                                  |  |               |         |   |              |   |         |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                              |  |               |         |   |              |   |         |  
|                                                                                  |  |              
|Deposits:                                                                         |  |               |         |   |              |   |         |  
|Noninterest bearing                                                               |  | $             | 24,887  |   |              | $ | 23,462  |  
|Interest bearing                                                                  |  |               | 160,823 |   |              |   | 141,839 |  
|Total deposits                                                                    |  |               | 185,710 |   |              |   | 165,301 |  
|Short-term borrowings                                                             |  |               | 21,914  |   |              |   | 22,510  |  
|Long-term borrowings                                                              |  |               | 5,744   |   |              |   | 4,146   |  
|Other liabilities                                                                 |  |               | 1,907   |   |              |   | 1,603   |  
|                                                                                  |  |               |         |   |              |   |         |  
|Total liabilities                                                                 |  |               | 215,275 |   |              |   | 193,560 |  
|                                                                                  |  |               |         |   |              |   |         |  
|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                                                                 |  |               | 20,515  |   |              |   | 19,650  |  
|Accumulated other comprehensive income/(loss)                                     |  |               | (327    | ) |              |   | 58      |  
|Treasury stock at cost, 129,187 and 126,087 shares, respectively                  |  |               | (3,233  | ) |              |   | (3,085  | )
|                                                                                  |  |               |         |   |              |   |         |  
|Total shareholders equity                                                        |  |               | 20,555  |   |              |   | 20,223  |  
|                                                                                  |  |               |         |   |              |   |         |  
|Total Liabilities and Shareholders Equity                                        |  | $             | 235,830 |   |              | $ | 213,783 |  
|                                                                                  |  |               |         |   |              |   |         |  

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|* | From audited financial statements.
|- | ----------------------------------



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



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##### Table of Contents

CITIZENS FINANCIAL CORP.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands of dollars, except per share data)



|                                                    |  |                                 |         |                                |   |         |  |      |         |  |   |        
|--------------------------------------------------- |  | ------------------------------- | ------- | ------------------------------ | - | ------- |  | ---- | ------- |  | - | -------
|                                                    |  | Three Months EndedSeptember 30, |         | Nine Months EndedSeptember 30,
|                                                    |  | 2005                            |         | 2004                           |   | 2005    |  | 2004
|                                                    |  | (Unaudited)                     |         | (Unaudited)                   
|INTEREST INCOME                                     |  |                                 |         |                                |   |         |  |      |         |  |   |        
|                                                    |  |                                 |         |                               
|Interest and fees on loans                          |  | $                               | 2,771   |                                | $ | 2,376   |  | $    | 7,831   |  | $ | 6,981  
|Interest and dividends on securities:               |  |                                 |         |                                |   |         |  |      |         |  |   |        
|Taxable                                             |  |                                 | 447     |                                |   | 390     |  |      | 1,248   |  |   | 1,265  
|Tax-exempt                                          |  |                                 | 82      |                                |   | 76      |  |      | 245     |  |   | 241    
|Interest on federal funds sold                      |  |                                 | 45      |                                |   | 9       |  |      | 86      |  |   | 15     
|                                                    |  |                                 |         |                                |   |         |  |      |         |  |   |        
|Total interest income                               |  |                                 | 3,345   |                                |   | 2,851   |  |      | 9,410   |  |   | 8,502  
|                                                    |  |                                 |         |                                |   |         |  |      |         |  |   |        
|INTEREST EXPENSE                                    |  |                                 |         |                                |   |         |  |      |         |  |   |        
|                                                    |  |                                 |         |                               
|Interest on deposits                                |  |                                 | 895     |                                |   | 669     |  |      | 2,374   |  |   | 1,966  
|Interest on short-term borrowings                   |  |                                 | 158     |                                |   | 87      |  |      | 354     |  |   | 218    
|Interest on long-term borrowings                    |  |                                 | 55      |                                |   | 34      |  |      | 126     |  |   | 90     
|                                                    |  |                                 |         |                                |   |         |  |      |         |  |   |        
|Total interest expense                              |  |                                 | 1,108   |                                |   | 790     |  |      | 2,854   |  |   | 2,274  
|                                                    |  |                                 |         |                                |   |         |  |      |         |  |   |        
|Net interest income                                 |  |                                 | 2,237   |                                |   | 2,061   |  |      | 6,556   |  |   | 6,228  
|Provision for loan losses                           |  |                                 |        |                                |   | 150     |  |      | 206     |  |   | 835    
|                                                    |  |                                 |         |                                |   |         |  |      |         |  |   |        
|Net interest income after provision for loan losses |  |                                 | 2,237   |                                |   | 1,911   |  |      | 6,350   |  |   | 5,393  
|                                                    |  |                                 |         |                                |   |         |  |      |         |  |   |        
|NONINTEREST INCOME                                  |  |                                 |         |                                |   |         |  |      |         |  |   |        
|                                                    |  |                                 |         |                               
|Trust department income                             |  |                                 | 58      |                                |   | 49      |  |      | 151     |  |   | 120    
|Brokerage fees                                      |  |                                 | 26      |                                |   | 15      |  |      | 62      |  |   | 45     
|Service fees                                        |  |                                 | 207     |                                |   | 184     |  |      | 568     |  |   | 535    
|Insurance commissions                               |  |                                 | 12      |                                |   | 8       |  |      | 22      |  |   | 22     
|Security gains/(losses)                             |  |                                 |        |                                |   | 4       |  |      |        |  |   | 23     
|Secondary market loan fees                          |  |                                 | 19      |                                |   | 15      |  |      | 77      |  |   | 43     
|Other                                               |  |                                 | 55      |                                |   | 105     |  |      | 175     |  |   | 237    
|                                                    |  |                                 |         |                                |   |         |  |      |         |  |   |        
|Total noninterest income                            |  |                                 | 377     |                                |   | 380     |  |      | 1,055   |  |   | 1,025  
|                                                    |  |                                 |         |                                |   |         |  |      |         |  |   |        
|NONINTEREST EXPENSE                                 |  |                                 |         |                                |   |         |  |      |         |  |   |        
|                                                    |  |                                 |         |                               
|Salaries and employee benefits                      |  |                                 | 870     |                                |   | 828     |  |      | 2,714   |  |   | 2,594  
|Net occupancy expense                               |  |                                 | 67      |                                |   | 64      |  |      | 253     |  |   | 192    
|Equipment rentals, depreciation and maintenance     |  |                                 | 123     |                                |   | 139     |  |      | 361     |  |   | 363    
|Data processing                                     |  |                                 | 145     |                                |   | 142     |  |      | 457     |  |   | 412    
|Director fees                                       |  |                                 | 71      |                                |   | 54      |  |      | 189     |  |   | 167    
|Postage                                             |  |                                 | 46      |                                |   | 49      |  |      | 131     |  |   | 131    
|Professional service fees                           |  |                                 | 45      |                                |   | 48      |  |      | 189     |  |   | 126    
|Stationery                                          |  |                                 | 45      |                                |   | 40      |  |      | 124     |  |   | 122    
|Software expense                                    |  |                                 | 44      |                                |   | 61      |  |      | 168     |  |   | 118    
|Other                                               |  |                                 | 255     |                                |   | 290     |  |      | 743     |  |   | 739    
|                                                    |  |                                 |         |                                |   |         |  |      |         |  |   |        
|Total noninterest expense                           |  |                                 | 1,711   |                                |   | 1,715   |  |      | 5,329   |  |   | 4,964  
|                                                    |  |                                 |         |                                |   |         |  |      |         |  |   |        
|Income before income taxes                          |  |                                 | 903     |                                |   | 576     |  |      | 2,076   |  |   | 1,454  
|Income tax expense                                  |  |                                 | 291     |                                |   | 136     |  |      | 651     |  |   | 327    
|                                                    |  |                                 |         |                                |   |         |  |      |         |  |   |        
|Net income                                          |  | $                               | 612     |                                | $ | 440     |  | $    | 1,425   |  | $ | 1,127  
|                                                    |  |                                 |         |                                |   |         |  |      |         |  |   |        
|Basic and fully diluted earnings per common share   |  | $                               | .98     |                                | $ | .70     |  | $    | 2.29    |  | $ | 1.79   
|                                                    |  |                                 |         |                                |   |         |  |      |         |  |   |        
|Weighted average shares outstanding                 |  |                                 | 620,813 |                                |   | 625,903 |  |      | 622,119 |  |   | 628,283
|                                                    |  |                                 |         |                               
|Dividends per common share                          |  | $                               | .30     |                                | $ | .30     |  | $    | .90     |  | $ | .90    
|                                                    |  |                                 |         |                                |   |         |  |      |         |  |   |        



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



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##### Table of Contents

CITIZENS FINANCIAL CORP.

STATEMENTS OF COMPREHENSIVE INCOME

(In thousands of dollars)



|                                                                            |  |                                 |      |   |                                |   |      |      |  |   |       |   |  |   |       |  
|--------------------------------------------------------------------------- |  | ------------------------------- | ---- | - | ------------------------------ | - | ---- | ---- |  | - | ----- | - |  | - | ----- | -
|                                                                            |  | Three Months EndedSeptember 30, |      |   | Nine Months EndedSeptember 30, |  
|                                                                            |  | 2005                            |      |   | 2004                           |   |      | 2005 |  |   | 2004  |  
|                                                                            |  | (Unaudited)                     |      |   | (Unaudited)                    |  
|Net income                                                                  |  | $                               | 612  |   |                                | $ | 440  |      |  | $ | 1,425 |   |  | $ | 1,127 |  
|Other comprehensive income/(loss):                                          |  |                                 |      |   |                                |   |      |      |  |   |       |   |  |   |       |  
|Gross unrealized gains/(losses) arising during the period                   |  |                                 | (222 | ) |                                |   | 507  |      |  |   | (620  | ) |  |   | (621  | )
|Adjustment for income tax (expense)/benefit                                 |  |                                 | 84   |   |                                |   | (192 | )    |  |   | 235   |   |  |   | 236   |  
|                                                                            |  |                                 |      |   |                                |   |      |      |  |   |       |   |  |   |       |  
|                                                                            |  |                                 | (138 | ) |                                |   | 315  |      |  |   | (385  | ) |  |   | (385  | )
|                                                                            |  |                                 |      |  
|Less: Reclassification adjustment for (gains)/losses included in net income |  |                                 |     |   |                                |   | (4   | )    |  |   |      |   |  |   | (23   | )
|Adjustment for income tax expense/(benefit)                                 |  |                                 |     |   |                                |   | 2    |      |  |   |      |   |  |   | 9     |  
|                                                                            |  |                                 |      |   |                                |   |      |      |  |   |       |   |  |   |       |  
|                                                                            |  |                                 |     |   |                                |   | (2   | )    |  |   |      |   |  |   | (14   | )
|Other comprehensive income/(loss), net of tax                               |  |                                 | (138 | ) |                                |   | 317  |      |  |   | (385  | ) |  |   | (371  | )
|                                                                            |  |                                 |      |   |                                |   |      |      |  |   |       |   |  |   |       |  
|Comprehensive income                                                        |  | $                               | 474  |   |                                | $ | 757  |      |  | $ | 1,040 |   |  | $ | 756   |  
|                                                                            |  |                                 |      |   |                                |   |      |      |  |   |       |   |  |   |       |  



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



5



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##### Table of Contents

CITIZENS FINANCIAL CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY

(In thousands of dollars)



|                                                 |  |                                               |  |                           |       |                  |   |       |                                             |   |        |               |  |   |                          |   |  |   |        |   |  |   |        |  
|------------------------------------------------ |  | --------------------------------------------- |  | ------------------------- | ----- | ---------------- | - | ----- | ------------------------------------------- | - | ------ | ------------- |  | - | ------------------------ | - |  | - | ------ | - |  | - | ------ | -
|                                                 |  | Nine Months Ended September 30, 2005 and 2004 | 
|                                                 |  | (unaudited)                                   | 
|                                                 |  | Common Stock                                  |  | Additional Paid-inCapital |       | RetainedEarnings |   |       | AccumulatedOther ComprehensiveIncome/(Loss) |   |        | TreasuryStock |  |   | TotalShareholdersEquity |  
|                                                 |  | Shares                                        |  | Amount                    |       |                  |   |       |                                            
|Balance, January 1, 2004                         |  | 750,000                                       |  | $                         | 1,500 |                  | $ | 2,100 |                                             | $ | 18,966 |               |  | $ | 675                      |   |  | $ | (2,762 | ) |  | $ | 20,479 |  
|Net income                                       |  |                                               |  |                           |       |                  |   |       |                                             |   | 1,127  |               |  |   |                          |   |  |   |        |   |  |   | 1,127  |  
|Net change in unrealized gain/loss on securities |  |                                               |  |                           |       |                  |   |       |                                             |   |        |               |  |   | (371                     | ) |  |   |        |   |  |   | (371   | )
|Cash dividends declared ($.90 per share)         |  |                                               |  |                           |       |                  |   |       |                                             |   | (567   | )             |  |   |                          |   |  |   |        |   |  |   | (567   | )
|Purchase of 7,450 shares of treasury stock       |  |                                               |  |                           |       |                  |   |       |                                             |   |        |               |  |   |                          |   |  |   | (322   | ) |  |   | (322   | )
|                                                 |  |                                               |  |                           |       |                  |   |       |                                             |   |        |               |  |   |                          |   |  |   |        |   |  |   |        |  
|Balance September 30, 2004                       |  | 750,000                                       |  | $                         | 1,500 |                  | $ | 2,100 |                                             | $ | 19,526 |               |  | $ | 304                      |   |  | $ | (3,084 | ) |  | $ | 20,346 |  
|                                                 |  |                                               |  |                           |       |                  |   |       |                                             |   |        |               |  |   |                          |   |  |   |        |   |  |   |        |  
|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 ($.90 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 |  
|                                                 |  |                                               |  |                           |       |                  |   |       |                                             |   |        |               |  |   |                          |   |  |   |        |   |  |   |        |  



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



6



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##### Table of Contents

CITIZENS FINANCIAL CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of dollars)



|                                                                              |  |                                |         |   |      |   |         |  
|----------------------------------------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------- | -
|                                                                              |  | Nine Months EndedSeptember 30, |        
|                                                                              |  | 2005                           |         |   | 2004 |  
|                                                                              |  | (Unaudited)                    |        
|Cash flows from operating activities:                                         |  |                                |         |   |      |   |         |  
|Net Income                                                                    |  | $                              | 1,425   |   |      | $ | 1,127   |  
|Adjustments to reconcile net income to cash provided by operating activities: |  |                                |         |   |      |   |         |  
|Provision for loan losses                                                     |  |                                | 206     |   |      |   | 835     |  
|Depreciation and amortization                                                 |  |                                | 309     |   |      |   | 314     |  
|Amortization and accretion on securities                                      |  |                                | 170     |   |      |   | 219     |  
|Gain on sale on securities                                                    |  |                                |        |   |      |   | (23     | )
|Loss on disposal of equipment                                                 |  |                                | 11      |   |      |   | 10      |  
|Gain on sale of OREO                                                          |  |                                | (1      | ) |      |   | (44     | )
|(Increase)/decrease in accrued interest receivable                            |  |                                | (48     | ) |      |   | 65      |  
|(Increase)/decrease in other assets                                           |  |                                | 56      |   |      |   | (80     | )
|Increase in other liabilities                                                 |  |                                | 538     |   |      |   | 323     |  
|                                                                              |  |                                |         |   |      |   |         |  
|Cash provided by operating activities                                         |  |                                | 2,666   |   |      |   | 2,746   |  
|                                                                              |  |                                |         |   |      |   |         |  
|Cash flows from investing activities:                                         |  |                                |         |   |      |   |         |  
|Proceeds from principal payments received on securities available for sale    |  |                                | 1,832   |   |      |   | 2,356   |  
|Proceeds from maturities and calls of securities available for sale           |  |                                | 6,966   |   |      |   | 13,108  |  
|Proceeds from sale of securities available for sale                           |  |                                | 453     |   |      |   | 2,044   |  
|Purchases of securities available for sale                                    |  |                                | (18,460 | ) |      |   | (10,418 | )
|Purchases of premises and equipment                                           |  |                                | (229    | ) |      |   | (959    | )
|Proceeds from sale of other real estate                                       |  |                                | 43      |   |      |   | 214     |  
|Purchase of real estate                                                       |  |                                |        |   |      |   | (105    | )
|Increase in loans                                                             |  |                                | (7,275  | ) |      |   | (11,641 | )
|                                                                              |  |                                |         |   |      |   |         |  
|Cash used in investing activities                                             |  |                                | (16,670 | ) |      |   | (5,401  | )
|                                                                              |  |                                |         |   |      |   |         |  
|Cash flows from financing activities:                                         |  |                                |         |   |      |   |         |  
|Cash dividends paid                                                           |  |                                | (560    | ) |      |   | (567    | )
|Acquisition of treasury stock                                                 |  |                                | (148    | ) |      |   | (322    | )
|Increase/(decrease) in short-term borrowing                                   |  |                                | (596    | ) |      |   | (4,118  | )
|Proceeds from long-term borrowing                                             |  |                                | 3,500   |   |      |   | 3,100   |  
|Repayment of long-term borrowing                                              |  |                                | (1,902  | ) |      |   | (1,678  | )
|Increase in time deposits                                                     |  |                                | 8,109   |   |      |   | 2,893   |  
|Increase in other deposits                                                    |  |                                | 12,300  |   |      |   | 3,689   |  
|                                                                              |  |                                |         |   |      |   |         |  
|Cash provided by financing activities                                         |  |                                | 20,703  |   |      |   | 2,997   |  
|                                                                              |  |                                |         |   |      |   |         |  
|Net increase in cash and cash equivalents                                     |  |                                | 6,699   |   |      |   | 342     |  
|Cash and cash equivalents at beginning of period                              |  |                                | 5,476   |   |      |   | 5,952   |  
|                                                                              |  |                                |         |   |      |   |         |  
|Cash and cash equivalents at end of period                                    |  | $                              | 12,175  |   |      | $ | 6,294   |  
|                                                                              |  |                                |         |   |      |   |         |  
|Supplemental disclosure of cash flow information:                             |  |                                |         |   |      |   |         |  
|Cash payments for:                                                            |  |                                |         |   |      |   |         |  
|Interest on deposits and other borrowings                                     |  | $                              | 2,803   |   |      | $ | 2,298   |  
|Income taxes                                                                  |  | $                              | 559     |   |      | $ | 379     |  
|Supplemental schedule of noncash investing and financing activities:          |  |                                |         |   |      |   |         |  
|Other real estate and other assets acquired in settlement of loans            |  | $                              | 315     |   |      | $ | 329     |  



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



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CITIZENS FINANCIAL CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1 - BASIS OF PRESENTATION



The accounting and reporting policies of Citizens Financial Corp. and
Subsidiary (Citizens, the company or we) 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 subsidiary Citizens National Bank (the bank). 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
nine months ended September 30, 2005 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 2004
Annual Report to Shareholders and Form 10-K.



NOTE 2  SIGNIFICANT NEW ACCOUNTING PRONOUNCEMENTS



In May 2005, the Financial Accounting Standards Board (FASB) issued Statement No. 154, (SFAS No. 154) Accounting Changes and Error Corrections - A Replacement of APB
Opinion No. 20 and FASB Statement No. 3. The new standard changes the requirements for the accounting for and reporting of a change in accounting principle. Among other changes, SFAS No. 154 requires that a voluntary change in
accounting principle be applied retrospectively with all prior period financial statements presented on the new accounting principle, unless it is impracticable to do so. SFAS No. 154 also provides that (1) a change in method of
depreciating or amortizing a long-lived nonfinancial asset be accounted for as a change in estimate (prospectively) that was effected by a change in accounting principle, and (2) correction of errors in previously issued financial statements
should be termed a restatement. The new standard is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company does not anticipate this revision will have a
material effect on its financial statements.



On
December 16, 2004, FASB issued Statement No. 123R (revised 2004), Share-Based Payment, (FAS 123R) that addresses the accounting for share-based payment transactions in which a company receives employee services in exchange for
either equity instruments of the company or liabilities that are based on the fair value of the companys equity instruments or that may be settled by the issuance of such equity instruments. FAS 123R eliminates the ability to account for
share-based compensation transactions using the intrinsic method and requires that such transactions be accounted for using



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a fair-value-based method and recognized as expense in the consolidated statement of income. The effective date of FAS 123R (as amended by the SEC) is for
annual periods beginning after June 15, 2005. The provisions of FAS 123R do not have an impact on the Corporations results of operations at the present time.



In March 2005, the SEC issued Staff Accounting Bulleting No. 107 (SAB 107). SAB 107 expresses the views of the SEC
staff regarding the interaction of FAS 123R and certain SEC rules and regulations and provides the SEC staffs view regarding the valuation of share-based payment arrangements for public companies. SAB 107 does not impact the Corporations
results of operations at the present time.



In November 2004, the Emerging
Issues Task Force (EITF) published Issue 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments. The Task Force discussed the meaning of other-than-temporary impairment and its
application to certain investments carried at cost. The Task Force requested that the FASB staff consider other impairment models within U.S. Generally Accepted Accounting Principles (GAAP) when developing its views. The Task Force also
requested that the scope of the impairment issue be expanded to include equity investments and investments subject to FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities, and that the issue be
addressed by the Task Force as a separate EITF issue. At the EITF meeting, the Task Force reached a consensus on one issue that certain quantitative and qualitative disclosures should be required for securities accounted for under Statement 115 that
are impaired at the balance sheet date but for which an other-than-temporary impairment has not been recognized. The Board ratified the consensus on that one issue at its November 25, 2004 meeting. In September 2004, the Financial
Accounting Standards Board (FASB) directed the FASB staff to issue two proposed FASB Staff Positions (FSP): Proposed FSP EITF Issue 03-1-a, which provides guidance for the application of paragraph 16 of EITF Issue 03-1 to
debt securities that are impaired because of interest rate and/or sector spread increases, and Proposed FSP EITF Issue 03-1-b, which delays the effective date of Issue 03-1 for debt securities that are impaired because of interest rate and/or sector
spread increases. In June 2005, the FASB reached a decision whereby they declined to provide additional guidance on the meaning of other-than-temporary impairment. The Board directed the FASB staff to issue EITF 03-1a as final and to draft a
new FSP that will replace EITF 03-01. The final FSP (retitled FAS 115-1, The Meaning of Other-Than-Temporary Impairment and it Application to Certain Investments) would be effective for other-than-temporary impairment analysis conducted
in periods beginning after September 15, 2005. The Corporation does not anticipate this revision will have a material effect on its financial statements



NOTE 3 - RECLASSIFICATIONS



Certain accounts in the condensed consolidated financial statements for 2004, as previously presented, have been reclassified to conform with current year
classifications.



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NOTE 4 - SECURITIES



The amortized cost, unrealized gains, unrealized losses and estimated fair
values of securities at September 30, 2005 and December 31, 2004 are summarized as follows (in thousands):



|                                                                     |  |                    |        |                 |   |                  |  |                                   |     |  |   |       
|-------------------------------------------------------------------- |  | ------------------ | ------ | --------------- | - | ---------------- |  | --------------------------------- | --- |  | - | ------
|                                                                     |  | September 30, 2005
|                                                                     |  | AmortizedCost      |        | UnrealizedGains |   | UnrealizedLosses |  | CarryingValue(EstimatedFairValue)
|                                                                     |  | (Unaudited)       
|Available for sale:                                                  |  |                    |        |                 |   |                  |  |                                   |     |  |   |       
|U.S. Government agencies and corporations                            |  | $                  | 45,061 |                 | $ | 21               |  | $                                 | 461 |  | $ | 44,621
|Mortgage backed securities-U.S. Government agencies and corporations |  |                    | 6,751  |                 |   | 3                |  |                                   | 120 |  |   | 6,634 
|Corporate debt securities                                            |  |                    | 1,279  |                 |   |                 |  |                                   | 21  |  |   | 1,258 
|Tax exempt state and political subdivisions                          |  |                    | 8,956  |                 |   | 85               |  |                                   | 34  |  |   | 9,007 
|Federal Reserve Bank stock                                           |  |                    | 108    |                 |   |                 |  |                                   |    |  |   | 108   
|Federal Home Loan Bank stock                                         |  |                    | 665    |                 |   |                 |  |                                   |    |  |   | 665   
|                                                                     |  |                    |        |                 |   |                  |  |                                   |     |  |   |       
|Total securities available for sale                                  |  | $                  | 62,820 |                 | $ | 109              |  | $                                 | 636 |  | $ | 62,293
|                                                                     |  |                    |        |                 |   |                  |  |                                   |     |  |   |       
|                                                                     | 
|                                                                     |  | December 31, 2004*
|                                                                     |  | AmortizedCost      |        | UnrealizedGains |   | UnrealizedLosses |  | CarryingValue(EstimatedFairValue)
|                                                                     |  | *                 
|Available for sale:                                                  |  |                    |        |                 |   |                  |  |                                   |     |  |   |       
|U.S. Government agencies and corporations                            |  | $                  | 34,535 |                 | $ | 174              |  | $                                 | 178 |  | $ | 34,531
|Mortgage-backed securities-U.S. Government agencies and corporations |  |                    | 6,441  |                 |   | 11               |  |                                   | 75  |  |   | 6,377 
|Corporate debt securities                                            |  |                    | 3,087  |                 |   | 5                |  |                                   | 34  |  |   | 3,058 
|Tax exempt state and political subdivisions                          |  |                    | 7,979  |                 |   | 203              |  |                                   | 13  |  |   | 8,169 
|Federal Reserve Bank stock                                           |  |                    | 108    |                 |   | 0                |  |                                   | 0   |  |   | 108   
|Federal Home Loan Bank stock                                         |  |                    | 795    |                 |   | 0                |  |                                   | 0   |  |   | 795   
|                                                                     |  |                    |        |                 |   |                  |  |                                   |     |  |   |       
|Total securities available for sale                                  |  | $                  | 52,945 |                 | $ | 393              |  | $                                 | 300 |  | $ | 53,038
|                                                                     |  |                    |        |                 |   |                  |  |                                   |     |  |   |       



The tables below
provide summaries of securities available for sale which were in an unrealized loss position at September 30, 2005 and December 31, 2004. As of September 30, 2005, these securities had a total fair value of $45,472,000 and carried
unrealized losses of $636,000, or 1.40%. Securities which have been in a loss position for the past year total $14,345,000. The unrealized loss pertaining to these securities is $316,000 or 2.20%. The majority of these losses are on securities which
carry the implied faith and credit of the U.S. government. Those which do not include corporate and municipal instruments. With the exception of one municipal which is not rated, all of these instruments carry A ratings from the major credit rating
agencies. We intend to hold the nonrated issue, as well as all the others, to maturity. No losses have been recognized on the $27,318,000 of securities that carried unrealized losses at December 31, 2004.



|                                                                     |  |                               |        |                   |   |           |  |                  |        |           |   |                  |  |   |        |  |   |    
|-------------------------------------------------------------------- |  | ----------------------------- | ------ | ----------------- | - | --------- |  | ---------------- | ------ | --------- | - | ---------------- |  | - | ------ |  | - | ---
|                                                                     |  | September 30, 2005           
|                                                                     |  | Securities Available for Sale
|                                                                     |  | Less Than 12 Months           |        | 12 Months or More |   | Total    
|                                                                     |  | FairValue                     |        | UnrealizedLosses  |   | FairValue |  | UnrealizedLosses |        | FairValue |   | UnrealizedLosses
|U.S. Government agencies and corporations                            |  | $                             | 26,773 |                   | $ | 282       |  | $                | 8,326  |           | $ | 179              |  | $ | 35,099 |  | $ | 461
|Mortgage backed securities-U.S. Government agencies and corporations |  |                               | 3,012  |                   |   | 28        |  |                  | 3,484  |           |   | 92               |  |   | 6,496  |  |   | 120
|Federal Reserve Bank stock                                           |  |                               |       |                   |   |          |  |                  |       |           |   |                 |  |   |       |  |   |   
|Federal Home Loan Bank stock                                         |  |                               |       |                   |   |          |  |                  |       |           |   |                 |  |   |       |  |   |   
|Corporate debt securities                                            |  |                               |       |                   |   |          |  |                  | 1,258  |           |   | 21               |  |   | 1,258  |  |   | 21 
|Tax exempt state and political subdivisions                          |  |                               | 1,342  |                   |   | 10        |  |                  | 1,277  |           |   | 24               |  |   | 2,619  |  |   | 34 
|                                                                     |  |                               |        |                   |   |           |  |                  |        |           |   |                  |  |   |        |  |   |    
|Total securities available for sale                                  |  | $                             | 31,127 |                   | $ | 320       |  | $                | 14,345 |           | $ | 316              |  | $ | 45,472 |  | $ | 636
|                                                                     |  |                               |        |                   |   |           |  |                  |        |           |   |                  |  |   |        |  |   |    



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|                                                                     |  |                     |        |                   |   |           |  |                  |       |           |   |                  |  |   |        |  |   |    
|-------------------------------------------------------------------- |  | ------------------- | ------ | ----------------- | - | --------- |  | ---------------- | ----- | --------- | - | ---------------- |  | - | ------ |  | - | ---
|                                                                     |  | December 31, 2004* 
|                                                                     |  | Less Than 12 Months |        | 12 Months or More |   | Total    
|                                                                     |  | FairValue           |        | UnrealizedLosses  |   | FairValue |  | UnrealizedLosses |       | FairValue |   | UnrealizedLosses
|U.S. Government agencies and corporations                            |  | $                   | 19,381 |                   | $ | 178       |  | $                |      |           | $ |                 |  | $ | 19,381 |  | $ | 178
|Mortgage backed securities-U.S. Government agencies and corporations |  |                     | 841    |                   |   | 3         |  |                  | 3,673 |           |   | 72               |  |   | 4,514  |  |   | 75 
|Federal Reserve Bank stock                                           |  |                     |       |                   |   |          |  |                  |      |           |   |                 |  |   |       |  |   |   
|Federal Home Loan Bank stock                                         |  |                     |       |                   |   |          |  |                  |      |           |   |                 |  |   |       |  |   |   
|Corporate debt securities                                            |  |                     | 2,052  |                   |   | 34        |  |                  |      |           |   |                 |  |   | 2,052  |  |   | 34 
|Tax exempt state and political subdivisions                          |  |                     | 1,370  |                   |   | 13        |  |                  |      |           |   |                 |  |   | 1,370  |  |   | 13 
|                                                                     |  |                     |        |                   |   |           |  |                  |       |           |   |                  |  |   |        |  |   |    
|Total securities available for sale                                  |  | $                   | 23,644 |                   | $ | 228       |  | $                | 3,673 |           | $ | 72               |  | $ | 27,317 |  | $ | 300
|                                                                     |  |                     |        |                   |   |           |  |                  |       |           |   |                  |  |   |        |  |   |    



The maturities,
amortized cost and estimated fair values of the banks securities at September 30, 2005 are summarized as follows (in thousands):



|                                |  |                    |        |                     |   |       
|------------------------------- |  | ------------------ | ------ | ------------------- | - | ------
|                                |  | Available for sale
|                                |  | AmortizedCost      |        | EstimatedFair Value
|Due within 1 year               |  | $                  | 13,760 |                     | $ | 13,704
|Due after 1 but within 5 years  |  |                    | 46,504 |                     |   | 46,012
|Due after 5 but within 10 years |  |                    | 1,783  |                     |   | 1,804 
|Due after 10 years              |  |                    |       |                     |   |      
|Equity securities               |  |                    | 773    |                     |   | 773   
|                                |  |                    |        |                     |   |       
|                                |  | $                  | 62,820 |                     | $ | 62,293
|                                |  |                    |        |                     |   |       



Mortgage backed
securities have remaining contractual maturities ranging from 1.25 years to 10.75 years and are reflected in the maturity distribution schedule shown above based on their anticipated average life to maturity, which ranges from 0.97 to 5.55 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 nine month periods ended September 30, 2005 and 2004 are as follows (in thousands):



|                              |  |               |       |                      |       |                    |        |   |       |  |   |    |  |   |   
|----------------------------- |  | ------------- | ----- | -------------------- | ----- | ------------------ | ------ | - | ----- |  | - | -- |  | - | --
|                              |  | Proceeds From |       | Gross Realized      
|                              |  | Sales         |       | Calls and Maturities |       | Principal Payments |       
|                              |  |               |       |                      | Gains |                    | Losses
|September 30, 2005:           |  |               |       |                      |       |                    |        |   |       |  |   |    |  |   |   
|Securities available for sale |  | $             | 453   |                      | $     | 6,966              |        | $ | 1,832 |  | $ |   |  | $ |  
|                              |  |               |       |                      |       |                    |        |   |       |  |   |    |  |   |   
|September 30, 2004:           |  |               |       |                      |       |                    |        |   |       |  |   |    |  |   |   
|Securities available for sale |  | $             | 2,044 |                      | $     | 13,108             |        | $ | 2,356 |  | $ | 37 |  | $ | 14
|                              |  |               |       |                      |       |                    |        |   |       |  |   |    |  |   |   



At September 30,
2005 and December 31, 2004 securities with an amortized cost of $28,591,000 and $26,557,000, respectively, with estimated fair values of $28,322,000 and $26,629,000, respectively, were pledged to secure public deposits, securities sold under
agreements to repurchase, and for other purposes required or permitted by law.



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As of September 30, 2005, our securities portfolio contained no concentrations within any specific
industry or issuer. A concentration did exist at December 31, 2004 when securities of companies engaged in the banking and financial services sector had an approximate amortized cost of $2,305,000 and an estimated fair value of $2,291,000.
There were, however, no concentrations within any one issuer.

---

|* | From audited financial statements.
|- | ----------------------------------



NOTE 5 - LOANS



Total loans are summarized as follows (in thousands):



|                                             |  |                    |         |   |                   |   |         |  
|-------------------------------------------- |  | ------------------ | ------- | - | ----------------- | - | ------- | -
|                                             |  | September 30, 2005 |         |   | December 31, 2004 |  
|                                             |  | (Unaudited)        |         |   | *                 |  
|Commercial, financial and agricultural       |  | $                  | 26,718  |   |                   | $ | 23,831  |  
|Real estate - construction                   |  |                    | 10,294  |   |                   |   | 8,759   |  
|Real estate - mortgage                       |  |                    | 104,329 |   |                   |   | 101,083 |  
|Installment loans                            |  |                    | 9,657   |   |                   |   | 10,734  |  
|Other                                        |  |                    | 1,951   |   |                   |   | 2,472   |  
|                                             |  |                    |         |   |                   |   |         |  
|Total loans                                  |  |                    | 152,949 |   |                   |   | 146,879 |  
|Net deferred loan origination fees and costs |  |                    | (74     | ) |                   |   | (78     | )
|                                             |  |                    |         |   |                   |   |         |  
|Total                                        |  |                    | 152,875 |   |                   |   | 146,801 |  
|Less allowance for loan losses               |  |                    | (1,535  | ) |                   |   | (1,378  | )
|                                             |  |                    |         |   |                   |   |         |  
|Loans, net                                   |  | $                  | 151,340 |   |                   | $ | 145,423 |  
|                                             |  |                    |         |   |                   |   |         |  

---

|* | From audited financial statements
|- | ---------------------------------



At September 30, 2005 our recorded investment in impaired loans was $641,000. The valuation allowance assigned to these loans totaled $294,000. Our
average investment in the impaired loans was $644,000 during the quarter. The amount of interest income recorded on them in the third quarter was $12,000 while the amount of interest collected was $14,000.



Impaired loans at December 31, 2004 were $48,000.



There were no loans in a nonaccrual status at
September 30, 2005 or December 31, 2004.



NOTE 6 - ALLOWANCE FOR LOAN LOSSES



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



|                               |  |                                  |       |                                 |   |       |  |      |       |  |   |      
|------------------------------ |  | -------------------------------- | ----- | ------------------------------- | - | ----- |  | ---- | ----- |  | - | -----
|                               |  | Three Months Ended September 30, |       | Nine Months Ended September 30,
|                               |  | 2005                             |       | 2004                            |   | 2005  |  | 2004
|                               |  | (Unaudited)                      |       | (Unaudited)                    
|Balance at beginning of period |  | $                                | 1,542 |                                 | $ | 1,170 |  | $    | 1,378 |  | $ | 1,396
|                               |  |                                  |       |                                 |   |       |  |      |       |  |   |      
|Loans charged off:             |  |                                  |       |                                 |   |       |  |      |       |  |   |      
|Commercial and industrial      |  |                                  |      |                                 |   | 96    |  |      |      |  |   | 1,031
|Real estate - mortgage         |  |                                  |      |                                 |   | 36    |  |      |      |  |   | 36   
|Installment and other          |  |                                  | 16    |                                 |   | 37    |  |      | 80    |  |   | 66   
|                               |  |                                  |       |                                 |   |       |  |      |       |  |   |      
|Total                          |  |                                  | 16    |                                 |   | 169   |  |      | 80    |  |   | 1,133
|                               |  |                                  |       |                                 |   |       |  |      |       |  |   |      
|Recoveries:                    |  |                                  |       |                                 |   |       |  |      |       |  |   |      
|Commercial and industrial      |  |                                  | 1     |                                 |   | 147   |  |      | 6     |  |   | 191  
|Real estate - mortgage         |  |                                  |      |                                 |   | 0     |  |      | 1     |  |   | 0    
|Installment and other          |  |                                  | 8     |                                 |   | 8     |  |      | 24    |  |   | 17   
|                               |  |                                  |       |                                 |   |       |  |      |       |  |   |      
|Total recoveries               |  |                                  | 9     |                                 |   | 155   |  |      | 31    |  |   | 208  
|                               |  |                                  |       |                                 |   |       |  |      |       |  |   |      
|Net losses                     |  |                                  | 7     |                                 |   | 14    |  |      | 49    |  |   | 925  
|Provision for loan losses      |  |                                  |      |                                 |   | 150   |  |      | 206   |  |   | 835  
|                               |  |                                  |       |                                 |   |       |  |      |       |  |   |      
|Balance at end of period       |  | $                                | 1,535 |                                 | $ | 1,306 |  | $    | 1,535 |  | $ | 1,306
|                               |  |                                  |       |                                 |   |       |  |      |       |  |   |      



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NOTE 7 - DEPOSITS



The following is a summary of interest bearing deposits by type (in thousands):



|                                            |  |                |         |               |   |        
|------------------------------------------- |  | -------------- | ------- | ------------- | - | -------
|                                            |  | Sept. 30, 2005 |         | Dec. 31, 2004
|                                            |  | (Unaudited)    |         | *            
|Interest bearing checking                   |  | $              | 43,433  |               | $ | 31,231 
|Money market accounts                       |  |                | 6,885   |               |   | 7,000  
|Savings accounts                            |  |                | 25,814  |               |   | 26,662 
|Certificates of deposit under $100,000      |  |                | 52,915  |               |   | 48,619 
|Certificates of deposit of $100,000 or more |  |                | 31,776  |               |   | 28,327 
|                                            |  |                |         |               |   |        
|Total                                       |  | $              | 160,823 |               | $ | 141,839
|                                            |  |                |         |               |   |        

---

|* | From audited financial statements
|- | ---------------------------------



NOTE 8 - BORROWINGS



Short-term borrowings consist of securities sold under agreements to repurchase (repurchase agreements) and, when required, overnight advances under a
line of credit with the Federal Home Loan Bank of Pittsburgh (FHLB).



Long-term borrowings are also obtained from the FHLB to finance specific lending activities.



NOTE 9 - EMPLOYEE BENEFIT PLANS



The components of net periodic benefit cost of our pension and other benefit plans are presented below (in thousands):



|                                   |  |                                 |      |   |                |   |      |      |  |   |      |   |  |   |    |  
|---------------------------------- |  | ------------------------------- | ---- | - | -------------- | - | ---- | ---- |  | - | ---- | - |  | - | -- | -
|                                   |  | Nine Months Ended September 30, |     
|                                   |  | Pension Benefits                |      |   | Other Benefits |  
|                                   |  | 2005                            |      |   | 2004           |   |      | 2005 |  |   | 2004 |  
|                                   |  | (Unaudited)                     |      |   | (Unaudited)    |  
|Service cost                       |  | $                               | 74   |   |                | $ | 61   |      |  | $ | 18   |   |  | $ | 21 |  
|Interest cost                      |  |                                 | 201  |   |                |   | 156  |      |  |   | 23   |   |  |   | 25 |  
|Expected return on plan assets     |  |                                 | (256 | ) |                |   | (219 | )    |  |   |     |   |  |   | 0  |  
|Amortization of prior service cost |  |                                 | (13  | ) |                |   | (11  | )    |  |   | 16   |   |  |   | 16 |  
|Amortization of net (gain) loss    |  |                                 | 35   |   |                |   | 10   |      |  |   | (4   | ) |  |   | (3 | )
|Amortization of transition asset   |  |                                 |     |   |                |   | 0    |      |  |   |     |   |  |   | 0  |  
|                                   |  |                                 |      |   |                |   |      |      |  |   |      |   |  |   |    |  
|Net periodic (benefit) cost        |  | $                               | 41   |   |                | $ | (3   | )    |  | $ | 53   |   |  | $ | 59 |  
|                                   |  |                                 |      |   |                |   |      |      |  |   |      |   |  |   |    |  



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We expect to contribute approximately $65,000 to our pension plan in 2005. No contributions are expected
to be made to our other postretirement plans.



NOTE 10 - 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 11 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK



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



|                                                                   |  |                    |        |                   |   |       
|------------------------------------------------------------------ |  | ------------------ | ------ | ----------------- | - | ------
|Financial instruments whose contract amounts represent credit risk |  | September 30, 2005 |        | December 31, 2004
|(in thousands)                                                     |  | (unaudited)        |        | *                
|Commitments to extend credit                                       |  | $                  | 23,986 |                   | $ | 29,967
|Standby letters of credit                                          |  |                    | 466    |                   |   | 468   
|                                                                   |  |                    |        |                   |   |       
|Total                                                              |  | $                  | 24,452 |                   | $ | 23,435
|                                                                   |  |                    |        |                   |   |       



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

---

|* | From audited financial statements.
|- | ----------------------------------



NOTE 12 - EARNINGS PER SHARE



Basic earnings per share is based on the weighted average number of shares outstanding during the period. For the nine months ended September 30,
2005 and 2004 the weighted average number of shares were 622,119 and 628,283, respectively. The weighted average number of shares outstanding during the three month periods then ended were 620,813 and 625,903. During the periods ended
September 30, 2005 and 2004 the company did not have any dilutive securities.



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Part 1 Item 2

MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS



INTRODUCTION



The following discussion and analysis presents the significant changes in financial condition and results of operations of Citizens Financial Corp. and
its subsidiary, Citizens National Bank of Elkins, for the periods indicated. It should be read in conjunction with the consolidated financial statements and accompanying notes thereto, which are included elsewhere in this document. Readers are also
encouraged to obtain our Annual Report on Form 10-K for additional information. You may obtain our Form 10-K through various internet sites including www.cnbelkins.com. Amounts and percentages used in this discussion have been rounded.



Description of Business



Citizens Financial Corp. is a $236 million Delaware corporation
headquartered in Elkins, WV. From there our wholly-owned subsidiary, Citizens National Bank of Elkins, provides loan, deposit, trust, brokerage and other banking and banking related services to customers in northcentral and eastern West Virginia and
nearby areas through six branch offices. We conduct no business other than the ownership of our subsidiary bank.



FORWARD LOOKING STATEMENTS



This report contains forward looking statements which reflect our current expectations based on information available to us. These forward looking
statements involve uncertainties related to the general economic conditions in our nation and other broad based issues such as interest rates and regulations as well as to other factors which may be more specific to our own operations. Examples of
such factors may include our ability to attract and retain key personnel, implementing new technological systems, providing new products to meet changing customer and competitive demands, our ability to successfully manage growth strategies,
controlling costs, maintaining our net interest margin, maintaining good credit quality, and others. Forward looking statements can be identified by words such as may, will, expect, anticipate,
believe, estimate, plans, intends, or similar words. We do not attempt to update any forward looking statements. When provided, we intend forward looking information to assist readers in understanding
anticipated future operations and we include them pursuant to applicable safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although we believe the expectations reflected in our forward looking statements are reasonable,
actual results could differ materially.



CRITICAL ACCOUNTING POLICIES



Our consolidated
financial statements are prepared in accordance with accounting principles generally accepted in the United States of America and follow general practices within the financial services industry.



Application of these principles requires us to make estimates, assumptions,
and judgments that affect the amounts reported in our financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements and could change as new
information becomes available. Consequently, later financial statements could reflect different estimates, assumptions, and judgments.



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Some policies rely more heavily on the use of estimates, assumptions, and judgments than others and,
therefore, have a greater possibility of producing results that could be materially different than originally reported. Our most significant accounting policies, including an explanation of how assets and liabilities are valued, may be found in Note
1 to the consolidated financial statements in our 2004 Annual Report on Form 10-K.



The allowance for loan losses represents our estimate of probable credit losses inherent in the loan portfolio. Determining the amount of the allowance requires significant judgment and the use of estimates related to
the amount and timing of expected future cash flows on impaired loans, the estimated amount of losses in pools of homogeneous loans and the effect of various economic and business factors, all of which may be subject to significant change. Due to
these uncertainties, as well as the sensitivity of our financial statements to the assumptions and estimates needed to determine the allowance, we have identified the determination of the allowance for loan losses as a critical accounting estimate.
As such, it could be subject to revision as new information becomes available. Should this occur, changes to the provision for loan losses, which may increase or decrease future earnings, may be necessary. A discussion of the methods we use to
determine our allowance for loan losses is presented later in this report.



OVERVIEW



Through the
first nine months of 2005 our assets grew by approximately $22,047,000 to $235,830,000. This is primarily the result of a $7,745,000 increase in time deposits. We also have experienced what we believe is a temporary increase in interest bearing
checking accounts of approximately $7.6 million resulting from certain transactions of a local business customer. It is our understanding these funds will be utilized by the business in the near future.



We expected to utilize the increase in core deposits to fund loan growth.
During the first quarter several large loan payoffs suppressed our loan totals. Nonetheless, on a year-to-date basis gross loans have increased $6,070,000 to $152,949,000. While loan payoffs may occur from time to time, we believe that opportunities
to sustain our loan growth remain in the foreseeable future. In the interim, our excess deposit inflow has been invested in short-term securities and, due to the flat nature of the yield curve and the temporary nature of some deposits, federal funds
sold.



Income for the first nine months of 2005 was $1,425,000;
an increase of $298,000 from the same period of 2004. This is mostly due to a reduction in the provision for loan losses, which was unusually high last year due to the charge off of a large commercial loan. We have also benefited from higher net
interest income this year. Higher noninterest expense, however, has partially offset these benefits. For the third quarter, income rose from $440,000 to $612,000 also reflecting a lower provision and higher net interest income. Noninterest expense
for the quarter held steady which also helped improve our results.



As a result of our improved performance earnings per share for the nine months has increased by $.50 to $2.29. Our return on average assets has also risen to .86%. A more detailed discussion of the factors impacting our results of
operations and financial condition follows.



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RESULTS OF OPERATIONS



NET INTEREST INCOME



Net interest income is the primary component of our 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. We
attempt 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 first nine months of this year net interest income totaled
$6,556,000, up $328,000 or 5.3% from the same period last year. Third quarter net interest income also increased, from $2,061,000 to $2,237,000.



The reason for this improvement rests with a $908,000 increase in interest income due to both an increase in average earning assets and higher yields
being realized on them. Our average earning asset base has grown by $12,050,000 to $209,459,000 while our yield has gone up 25 basis points to 6.11%. At the same time, however, a $10,671,000 increase in our interest bearing liabilities coupled with
a 34 basis point increase in our cost of funds caused interest expense to rise by $580,000.



Often, net interest income is expressed as a percentage of average earning assets and referred to as net interest margin. For the first nine months of this year our net interest margin was 4.29%, slightly less than
the 4.32% recorded in the first three quarters of last year. The most recent peer group data from June 30, 2005 indicated the peer group average is 4.28%. Additional information about interest rate risk is presented later in this report.



PROVISION FOR LOAN LOSSES



The provision for loan losses is managements estimate of the amount
which must be charged against current earnings in order to maintain the allowance for loan losses at a level considered adequate to provide for losses which are inherent in the loan portfolio. This amount is determined through quarterly evaluations
of the loan portfolio. Our evaluation of the allowance at September 30, 2005 indicated it was adequate without adding any additional provision in the third quarter. For this reason, no provision for loan losses was recorded in the third
quarter. For the year-to-date, the provision totals $206,000. Last year, when we charged off a large commercial loan during the second quarter, our provision through September 30 was $835,000, including $150,000 in the third quarter.



This reduction in the provision for loan losses is a
significant cost savings to the bank and has helped support this years earnings increase. Because the provision is determined by assessing the adequacy of the allowance for loan losses, which itself relies on significant use of judgments and
estimates, the provision for loan loss expense may increase or decrease in the future. The factors we consider in establishing the provision for loan losses, and in analyzing the allowance for loan losses, are discussed later in this report.



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NONINTEREST INCOME



Noninterest income includes all revenues other than interest and fees earned on earning assets. Total noninterest income
through September 30, 2005 of $1,055,000 was $30,000 more than the first three quarters of last year. Absent last years security gains of $23,000, which is a nonrecurring item, the increase would have been $53,000. For the third quarter,
noninterest income was nearly level at $377,000 this year and $380,000, including a $4,000 security gain, last year.



We have experienced improvements this year in trust department income due to an increase in assets under management, service fees due to an expanded ATM
network, brokerage fees where consistency in the broker position has generated increased business, and secondary market loan fees as a result of restructuring the revenue sharing agreement with the loan originator. Other noninterest income dropped
by $62,000 primarily as a result of one time gains on the sale of foreclosed properties totaling $51,000 last year.



NONINTEREST EXPENSE



Noninterest expense includes all items of expense other than interest expense, the provision for loan losses, and income taxes. Total noninterest expense
through September 30, 2005 was $5,329,000, up $365,000 or 7.4%, from last September 30. On a quarterly basis, noninterest expense actually fell $4,000 to $1,711,000. Our ability to limit these expenses will continue to have a significant
impact on our profitability in the future.



Personnel costs are
the largest component of noninterest expense and also account for the largest increase when compared to September 30, 2004, rising $120,000. This increase is largely due to rising benefit costs as salaries have increased by just $13,000. Among
our benefit plans, the cost related to our group insurance plans, including our self-funded group medical plan, has increased $106,000. Our pension, which previously generated benefits under applicable accounting standards, is now generating expense
thereby increasing costs $46,000. In addition, reduced loan production has limited the deferral of certain labor costs resulting in an additional $40,000 of expense. Offsetting these increases was an $84,000 reduction in the cost of retirement
programs benefiting directors and certain officers. During the third quarter, personnel costs rose a proportional $42,000 due again to higher benefit costs. Salaries for the quarter were down by $10,000.



Although well contained in the third quarter, year-to-date occupancy expenses
have risen $61,000 to $253,000 reflecting higher repairs, property insurance, utility costs and real estate taxes. Our third party data processing costs were also well contained in the third quarter rising just $3,000. For the year-to-date, however,
these costs have risen $45,000 as a result of upgrades occurring midway through 2004. Effective February, 2006, we will be changing our primary data processor. This change is expected to generate savings in excess of $150,000 annually. In addition,
we are considering a change in our ATM processing which could save another $50,000. Professional service fees were also well contained in the quarter falling $3,000, but show a $63,000 increase year-to-date. This is primarily the



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result of early 2005 costs related to Section 404 of the Sarbanes Oxley Act. Since that time our required implementation date for Section 404 has
been delayed and we have been reassessing our approach to it. Nonetheless, since Section 404 still applies to us, we will once again incur these higher costs in the future.



The remaining components of noninterest expense, including equipment costs, director fees, postage, stationery, and other,
have not shown significant changes through September 30. Other noninterest expense did decrease by $35,000 in the third quarter, however.



Overall, while the level of noninterest expense we have incurred through the third quarter is up $365,000 from last year, we are encouraged by the fact
that this is still less than expected and by the savings we anticipate next year, particularly in data processing.



INCOME TAXES



Our provision for income tax expense includes both federal and state income taxes. Total taxes for the nine months of 2005 were $651,000, or 31.3% of
pretax income. Total taxes for the three months ended September 30, 2005 were $291,000, or 32.2%. With the exception of income earned on loans to and bonds issues by municipalities and income from certain life insurance policies, all of our
income is taxable. We have not been subject to the alternative minimum tax during any of the periods covered by this report.



Income tax expense was significantly lower last year due to unusually high loan charge offs.



FINANCIAL CONDITION



LOAN PORTFOLIO



After experiencing a $2.1 million decrease in the first quarter, our loan portfolio has grown by $8.2 million in the last
two quarters to total $152,949,000. As expected, this growth has centered in the commercial and mortgage portfolios.



Our commercial portfolio now totals $26,718,000, up $2,887,000 from year end. This reflects increased efforts to develop more complete relationships with
some of our better commercial customers.



Our mortgage
portfolio has risen by $3,246,000 this year. Included in this total are both residential and nonresidential mortgages. The nonresidential portion typically involves commercial projects secured by land. We continue to experience good demand for these
types of loans particularly in our Elkins and Snowshoe markets. In addition, we have participated in several nonlocal loans of this type. Total nonresidential real estate loans are now $40.7 million, up $2.6 million from year end. Loans of this
nature typically carry variable interest rates tied to prime.



Our residential mortgages include both traditional home mortgage loans and home equity loans. The majority of our home mortgage loans carry adjustable rates. With the continuing popularity of fixed rate mortgages, our mortgage portfolio has
dropped approximately $400,000 this year to $54.8 million. This is, however, up from $53.7 million at June 30. For customers



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who desire a fixed rate mortgage we continue to offer them through the Federal Home Loan Bank of Pittsburgh as well as other outlets. Originations of these
loans, which are not retained in our portfolio, totaled $9,409,000 through September 30. The home equity portion of our residential mortgage portfolio has been very popular and now totals $8.8 million, compared to $8.2 million at year end.



Our consumer lending portfolio continues to suffer from
competition from auto companies, credit cards and even home equity products such as our own. As of September 30, the consumer portfolio of $9,657,000 was down $214,000 for the quarter and $1,077,000 since year end. We expect to offer special
year end auto financing programs during the fourth quarter in an effort to bolster our consumer portfolio. In addition, we are now undertaking a study to assess each of our loan types, our desired involvement in them, and how we can best participate
in those lending efforts. We believe this study may result in new products or product structures in the near future.



CREDIT QUALITY AND ALLOWANCE FOR LOAN LOSSES



We maintain our allowance for loan losses at a level we consider adequate to provide for losses that we believe to be
inherent in the loan portfolio. This determination is based on quarterly evaluations in which a specific analysis and a pooled analysis are computed. The specific analysis is used to individually assign an allowance to larger balance, nonhomogenous
loans; typically commercial loans. The pooled analysis is used to quantify the loss on pools of smaller balance, homogenous loans such as residential mortgages and consumer loans. The pooled analysis considers such factors as historical loss
experience, delinquency levels, current and anticipated economic conditions, concentrations of credit and changes in lending policies and staff. Because these analyses determine the adequacy of the allowance for loan losses they also determine the
provision for loans losses that must be charged to earnings.



As of September 30, our allowance for loan losses was $1,535,000, or 1.00% of gross loans. Based on our analysis, we believe this allowance properly addresses the risk that could be identified in our portfolio as of September 30.
As noted above, the amount charged to the provision for loan losses is a function of the adequacy of the allowance. In our case, maintaining the allowance at $1,535,000 did not require us to make any provision for loan losses in the third quarter.



Included in our allowance at September 30 is $294,000 for
losses related to loans specifically analyzed, $478,000 for losses related to pools of homogeneous loans, $354,000 for loan concentrations in the auto, lumber and lodging industries as well as $409,000 for the consideration of various other factors
such as trends in bankruptcies and past due loans, staff changes and other economic factors. Laws which will make it more difficult to file bankruptcy will go into effect in October, 2005. Recent bankruptcy filings in our market area do exceed
historical levels and have been mathematically considered in the evaluation of our allowance as of September 30. Nonetheless, based upon information available to us, we do not expect the impact of losses resulting from bankruptcies to be
material. Through the first nine months of this year, total net loan losses have been just $49,000.



Based on information known to us, we believe our analysis is comprehensive and our allowance is adequate as of the report date. However, there can be no
assurance that additional provisions for loan losses will



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not be required in the future as a result of changes in the assumptions which underlie our estimates and judgments or changes in economic conditions.



SECURITIES PORTFOLIO AND FEDERAL FUNDS
SOLD



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



Throughout 2005, the size of our securities portfolio has risen as deposit
growth has exceeded loan growth. During the first nine months of the year we have made securities purchases of $18,460,000 while maturities, paydowns and securities sales have totaled just $9,251,000. As a result, the carrying value of the portfolio
has increased $9,255,000 since year end to $62,293,000.



Our
securities portfolio is primarily composed of U.S. Agency bonds with lesser holdings of investment grade municipals and corporate issues. The great majority of our purchases in 2005 have been callable agency issues. Due to the relatively flat nature
of the yield curve the average life of the portfolio is short at just 2.2 years. Because we have received some temporary funds, and in light of the available yields, we have also kept more funds in overnight investments. Total overnight investments
at September 30 were $5,896,000 while the year-to-date average has been $3,824,000. Overnight borrowings, on the other hand, have averaged just $164,000.



DEPOSITS AND OTHER FUNDING SOURCES



Deposit growth through the first nine months of this year of $20,409,000 has been significantly more than expected, partly due to the receipt of what we
believe to be temporary deposits approximating $7.6 million. Absent this deposit growth is still a very strong $12.8 million.



While noninterest bearing deposits have increased by $1.4 million, it is in the interest bearing accounts where growth has been greatest. Interest bearing
checking accounts have increased $12.2 million, including the temporary funds of $7.6 million. This leaves a permanent funding growth of $4.6 million which has been greatly aided by the acquisition of a new relationship with a local county agency.



We have also seen growth in our CD portfolio. In this area we
have offered several products with competitive pricing terms and mid and long-term maturities in order to limit current repricing risk as well as exposure to rising interest rates in the future. In addition, all of our CDs have the unique feature we
call step in, step up, step out which appeals to our customers and builds the overall deposit relationship. Year-to-date CD growth has totaled $7.7 million including $3.4 million in jumbo CDs and $4.3 million in other CDs.



In addition to deposits, we also utilize several types of borrowings to fund
our assets. Repurchase agreements with local businesses and municipalities have been an important funding source recently. Some of our repos are awarded on a competitive bid system so it is possible that we may not be able to retain them
indefinitely. However, due to the parameters typically included in the bid requirements, we are well positioned to maintain them. Overall, despite some seasonal fluctuations, we have found our repos to be a reliable source of funds.



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When appropriate, we also use long-term borrowings to fund our activities, usually specific commercial
loan projects. These borrowings are structured such that their cash flow patterns are similar to the corresponding loan to maintain an acceptable net interest spread. At September 30, 2005, our long-term borrowings totaled $5.7 million. This
includes $3.5 million obtained in 2005 specifically for the purpose of locking in an interest rate spread. Generally, however, we expect to continue to fund our activities through internal sources.



CAPITAL RESOURCES



Total capital as a percentage of assets has fallen from 9.46% at year end to
8.72% at September 30. Absent the temporary deposit growth, the capital to asset ratio would approximate 9.00%. Our regulatory capital ratios are also well in excess of required minimums.



We believe our capital base is more than adequate to provide for current
operating needs and expected future growth. We are not aware of any commitments or contingencies which are likely to materially alter our capital position.



LIQUIDITY



The objective of our 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 sources including unpledged investment securities, federal funds sold, loan repayments, a stable and growing deposit base and, when necessary,
external borrowings.



We monitor liquidity on a regular basis
by preparing projected balance sheets and analyzing our sources and uses of funds. Historically, we have satisfied our liquidity needs through internal sources of funds with the exception of certain loans which have been funded by borrowing funds
from the Federal Home Loan Bank of Pittsburgh. Currently, we have access to approximately $95,135,000 through various FHLB programs.



Our current projections indicate we have ample liquidity to meet our anticipated funding needs through internal sources such as those noted above.



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 our 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 our 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 our performance than the effect of inflation.



However, inflation does affect noninterest expenses such as personnel



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costs and the cost of services and supplies we use. We attempt to offset increasing costs by controlling the level of noninterest expenditures and increasing
levels of noninterest income. Because inflation rates have generally been low during the time covered by the accompanying consolidated financial statements, the impact of inflation on our earnings has not been significant.



Part I Item 3

Quantitative and Qualitative Disclosures About Market Risk



Market risk is the risk of loss arising from adverse changes in the fair
value of financial instruments due to changes in interest rates, exchange rates and equity prices. Our primary market risk is interest rate risk which results from timing differences in the repricing of assets, liabilities and off-balance-sheet
instruments although some amount of interest rate risk is inherent and appropriate in banking. We attempt to control interest rate risk through our asset/liability committee which is comprised of members of senior management and other management
personnel.



Several techniques are used to manage our interest
rate risk. On a weekly basis we examine our loan and deposit rates relative to those of our competitors and to our goals. We compute our repricing gap monthly to provide general guidance as to the impact rising or falling interest rates may have on
earnings. However, interest rate shock testing and simulation modeling, which are prepared quarterly, are our primary interest rate risk management tools.



At September 30, 2005, we measured the impact an immediate and sustained change in interest rates of 100, 200 and 300 basis points, applied to all of
our earning assets and interest bearing liabilities, would have on our net interest income over the next twelve month period. These tests indicate that net interest income can be expected to change by less than 2% for each 100 basis point change in
interest rates in our current rising rate environment.



Part I Item 4

Controls and Procedures



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



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PART II - OTHER INFORMATION



Item 1. Legal Proceedings :



As of September 30, 2005 Citizens Financial Corp. was not involved in any material legal proceedings. We are, however, involved in various legal proceedings which occur in the normal course of business. Based on
consultation with legal counsel, management believes that all such litigation will be resolved without materially affecting our financial position or results of operations. In addition, there are no material proceedings known to be threatened or
contemplated against Citizens Financial Corp. or Citizens National Bank.



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:



Effective October 1, 2005, we engaged the independent public accounting firm of S.R. Snodgrass of Wheeling, West Virginia to perform
our internal audit function through December 31, 2006. Previously, this function was fulfilled by one on staff auditor. That auditor resigned on August 10, 2005.



Item 6. Exhibits:



| | (a) | 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



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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: 11/9/05 |  | /s/ Robert J. Schoonover                                                      
|              |  | Robert J. Schoonover President Chief Executive Officer                        
|              | 
|Date: 11/9/05 |  | /s/ Thomas K. Derbyshire                                                      
|              |  | Thomas K. Derbyshire Vice President, Treasurer
and Principal Financial Officer



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