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

**FORM      10-QSB**

|   | x |
|--------|---|

|                                                     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES                EXCHANGE ACT OF 1934 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| For                the quarterly period ended September 30,                2007                                                                                                                                                                                                                                                                |

|                                                     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES                EXCHANGE ACT OF 1934 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| For                the transition period from _______ to                _________                                                                                                                                                                                                                                                                |

**                                            CITIZENS      FIRST      CORPORATION**

| **KENTUCKY**                                                                                | **61-0912615**                                      |
|---------------------------------------------------------------------------------------------|-----------------------------------------------------|
| (State                or other jurisdiction ofincorporation                or organization) | (I.R.S.                Employer Identification No.) |

| **1065                Ashley Street**                   |                      |
|---------------------------------------------------------|---------------------------|
| **Bowling                Green, Kentucky**              | **42103**                 |
| (Address                of principal executive offices) | (Zip                Code) |

**(270)      393-0700**

| Check                whether the issuer (1) filed all reports required to be filed by                Section                13 or 15(d) of the Exchange Act during the past 12 months (or for                such                shorter period that the registrant was required to file such reports),                and                (2) has been subject to such filing requirements for the past 90                days.   Yes  x  No  o |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Indicate                by check mark whether the registrant is a shell company (as defined                in                Rule 12b-2 of the Exchange Act).   Yes  o    No  x                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| State                the number of shares outstanding of each of the issuer’s classes of common                equity, as of the latest practicable                date:                                                                                                                                                                                                                                                                                                               |

| **Class**                                           | **Outstanding                at November 14, 2007** |
|-----------------------------------------------------|-----------------------------------------------------|
| Common                Stock, no par value per share | 1,959,583                shares                     |

----

**CITIZENS      FIRST CORPORATION**

**TABLE      OF CONTENTS**

| PART                I – FINANCIAL INFORMATION |                                                                            |
|-----------------------------------------------------|---------------------------------------------------------------------------------|
|                                                |                                                                            |
| ITEM                1                               | FINANCIAL                STATEMENTS                                             | 3 |
|                                                |                                                                            |   |
| ITEM                2                               | MANAGEMENT’S                DISCUSSION AND ANALYSIS OR PLAN OF OPERATION  | 12 |
|                                                |                                                                            |   |
| ITEM                3                               | CONTROLS                AND PROCEDURES                                          | 24 |
|                                                |                                                                            |   |
|                                                |                                                                            |   |
| PART                II                              | OTHER                INFORMATION                                                |   |
|                                                |                                                                            |   |
| ITEM                2                               | UNREGISTERED                SALES OF EQUITY SECURITIES AND USE OF PRCCEEDS | 25 |
|                                                |                                                                            |   |
| ITEM   6                             | EXHIBITS                                                                        | 26 |
|                                                |                                                                            |   |
| SIGNATURES                                          | 27                                                                              |

----

| **Part                1. Financial Information** |
|--------------------------------------------------|

**Item      1. Financial Statements**

| **Citizens                First Corporation**                                                                                                                                                                                                   |                                                |   |                                                                                                                          |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------|
| **Consolidated                Balance Sheets (Unaudited)**                                                                                                                                                                                      |                                                |   |                                                                                                                          |
|                                                                                                                                                                                                                                            | **September                30, 2007**               |   | **December                31, 2006**                                                                                          |
|                                                                                                                                                                                                                                            | **(In                thousands except share data)** |
| **Assets**                                                                                                                                                                                                                                      |
| Cash                and due from financial institutions                                                                                                                                                                                         |  $7,001                                        |   |  $8,715                                                                                                                  |
| Federal                funds sold                                                                                                                                                                                                               | 3,433                                               |   | 21,135                                                                                                                        |
|                                                                                                                                                                                                                                            |                                                |   |                                                                                                                          |
| Cash                and cash equivalents                                                                                                                                                                                                        | 10,434                                              |   | 29,850                                                                                                                        |
|                                                                                                                                                                                                                                            |                                                |   |                                                                                                                          |
| Available                for sale securities                                                                                                                                                                                                    | 39,249                                              |   | 42,613                                                                                                                        |
| Loans                held for sale                                                                                                                                                                                                              | 616                                                 |   | 108                                                                                                                           |
| Loans,                net of allowance of $2,957 and $3,128 at September 30, 2007 and December                31, 2006, respectively                                                                                                            |  246,427                                       |   |  236,439                                                                                                                 |
| Premises                and equipment, net                                                                                                                                                                                                      | 11,710                                              |   | 11,177                                                                                                                        |
| Federal                Home Loan Bank (FHLB) stock, at cost                                                                                                                                                                                     | 1,946                                               |   | 1,946                                                                                                                         |
| Accrued                interest receivable                                                                                                                                                                                                      | 2,910                                               |   | 2,813                                                                                                                         |
| Deferred                income taxes                                                                                                                                                                                                            | 372                                                 |   | 302                                                                                                                           |
| Goodwill                                                                                                                                                                                                                                        | 10,917                                              |   | 10,945                                                                                                                        |
| Core                deposit intangible                                                                                                                                                                                                          | 1,945                                               |   | 2,203                                                                                                                         |
| Bank                owned life insurance                                                                                                                                                                                                        | 6,079                                               |   | -                                                                                                                             |
| Other                assets                                                                                                                                                                                                                     | 524                                                 |   | 379                                                                                                                           |
|                                                                                                                                                                                                                                            |                                                |   |                                                                                                                          |
| Total                assets                                                                                                                                                                                                                     |  $333,129                                      |   |  $338,775                                                                                                                |
|                                                                                                                                                                                                                                            |                                                |   |                                                                                                                          |
| **Liabilities                  and Stockholders' Equity**                                                                                                                                                                                       |
|                                                                                                                                                                                                                                            |                                                |   |                                                                                                                          |
| **Liabilities**                                                                                                                                                                                                                                 |                                                |   |                                                                                                                          |
| Deposits:                                                                                                                                                                                                                                       |                                                |   |                                                                                                                          |
| Non-interest                bearing                                                                                                                                                                                                             | $25,928                                             |   |  $26,544                                                                                                                 |
| Savings,                NOW and money market                                                                                                                                                                                                    | 78,892                                              |   | 95,994                                                                                                                        |
| Time                                                                                                                                                                                                                                            | 173,719                                             |   | 156,837                                                                                                                       |
|                                                                                                                                                                                                                                            |                                                |   |                                                                                                                          |
| Total                deposits                                                                                                                                                                                                                   | 278,539                                             |   | 279,375                                                                                                                       |
|                                                                                                                                                                                                                                            |                                                |   |                                                                                                                          |
| Securities                sold under repurchase agreements                                                                                                                                                                                      | 2,877                                               |   | 3,921                                                                                                                         |
| FHLB                advances                                                                                                                                                                                                                    | 6,457                                               |   | 11,354                                                                                                                        |
| Notes                payable                                                                                                                                                                                                                    | -                                                   |   | 350                                                                                                                           |
| Subordinated                debentures                                                                                                                                                                                                          | 5,000                                               |   | 5,000                                                                                                                         |
| Accrued                interest payable                                                                                                                                                                                                         | 978                                                 |   | 722                                                                                                                           |
| Other                liabilities                                                                                                                                                                                                                | 2,096                                               |   | 1,564                                                                                                                         |
|                                                                                                                                                                                                                                            |                                                |   |                                                                                                                          |
| Total                liabilities                                                                                                                                                                                                                | 295,947                                             |   | 302,286                                                                                                                       |
|                                                                                                                                                                                                                                            |                                                |   |                                                                                                                          |
| **Stockholders'                Equity**:                                                                                                                                                                                                        |                                                |   |                                                                                                                          |
| 6.5%                cumulative preferred stock, no par value; authorized 500 shares;                issued                and outstanding 250 shares at September 30, 2007 and at December                31, 2006,                respectively | 7,659                                               |   | 7,659                                                                                                                         |
| Common                stock, no par value; authorized 5,000,000 shares; issued and outstanding                1,959,583 shares at September 30, 2007 and 1,978,463 shares at December                31, 2006                                   | 26,530                                              |   | 26,573                                                                                                                        |
| Retained                earnings                                                                                                                                                                                                                | 3,382                                               |   | 2,639                                                                                                                         |
| Accumulated                other comprehensive income (loss)                                                                                                                                                                                    | (389)                                               |   |                     (382) |
| Total                stockholders' equity                                                                                                                                                                                                       | 37,182                                              |   | 36,489                                                                                                                        |
| Total                liabilities and stockholders' equity                                                                                                                                                                                       |  $333,129                                      |   |  $338,775                                                                                                                |
| **See                Notes to Consolidated Financial                Statements.**                                                                                                                                                               |

----

| **Citizens                First Corporation**                                      |                                                     |   |             |
|------------------------------------------------------------------------------------|----------------------------------------------------------|--------|------------------|
| **Consolidated                Statements of Income (Unaudited)**                   |                                                     |
| **For                the three months ended September 30**                         | **2007**                                                 |   | **2006**         |
|                                                                               | **(In                thousands, except per share data)** |
| **Interest                and dividend income**                                    |                                                     |   |             |
| Loans                                                                              | $5,078                                                   |   | $3,298           |
| Taxable                securities                                                  | 307                                                      |   | 121              |
| Non-taxable                securities                                              | 140                                                      |   | 21               |
| Federal                funds sold and other                                        | 119                                                      |   | 160              |
| Total                interest and dividend income                                  | 5,644                                                    |   | 3,600            |
| **Interest                expense**                                                |                                                     |   |             |
| Deposits                                                                           | 2,545                                                    |   | 1,238            |
| Securities                sold under agreements to repurchase and other borrowings | 19                                                       |   | 29               |
| FHLB                advances                                                       | 72                                                       |   | 136              |
| Subordinated                debentures                                             | 89                                                       |   | -                |
| Total                interest expense                                              | 2,725                                                    |   | 1,403            |
| **Net                interest income**                                             | 2,919                                                    |   | 2,197            |
| **Provision                for loan losses**                                       | 170                                                      |   | 60               |
| **Net                interest income after provision for loan losses**             | 2,749                                                    |   | 2,137            |
| **Non-interest                income**                                             |                                                     |   |             |
| Service                charges on deposit accounts                                 | 367                                                      |   | 220              |
| Other                service charges and fees                                      | 55                                                       |   | 38               |
| Net                gains on sales of mortgage loans                                | 78                                                       |   | 117              |
| Lease                income                                                        | 52                                                       |   | 61               |
| Income                from company-owned life insurance                            | 73                                                       |   | -                |
| Other                                                                              | 47                                                       |   | 70               |
| Total                non-interest income                                           | 672                                                      |   | 506              |
| **Non-interest                expenses**                                           |                                                     |   |             |
| Salaries                and employee benefits                                      | 1,420                                                    |   | 966              |
| Net                occupancy expense                                               | 252                                                      |   | 176              |
| Equipment                expense                                                   | 203                                                      |   | 129              |
| Advertising                                                                        | 136                                                      |   | 73               |
| Professional                fees                                                   | 128                                                      |   | 92               |
| Data                processing services                                            | 156                                                      |   | 106              |
| Franchise                shares and deposit tax                                    | 105                                                      |   | 60               |
| Core                deposit intangible amortization                                | 86                                                       |   | -                |
| Postage                and office supplies                                         | 75                                                       |   | 29               |
| Telephone                and other communication                                   | 67                                                       |   | 25               |
| Other                                                                              | 252                                                      |   | 156              |
| Total                non-interest expenses                                         | 2,880                                                    |   | 1,812            |
| **Income                before income taxes**                                      | 541                                                      |   | 831              |
| **Provision                for income taxes**                                      | 132                                                      |   | 253              |
| **Net                income**                                                      | $  409                                         |   | $  578 |
| Dividends                declared on preferred stock                               | 131                                                      |   | 131              |
| Net                income available for common stockholders                        | $  278                                         |   | $  447 |
| **Basic                earnings per share**                                        | $0.14                                                    |   | $0.47            |
| **Diluted                earnings per share**                                      | $0.14                                                    |   | $0.38            |
| **See                Notes to Consolidated Financial                Statements.**  |

----

| **Citizens                First Corporation**                                      |                                                     |   |               |
|------------------------------------------------------------------------------------|----------------------------------------------------------|--------|--------------------|
| **Consolidated                Statements of Income (Unaudited)**                   |
| **For                the nine months ended September 30**                          | **2007**                                                 |   | **2006**           |
|                                                                               | **(In                thousands, except per share data)** |
| **Interest                and dividend income**                                    |                                                     |   |               |
| Loans                                                                              | $15,216                                                  |   | $9,505             |
| Taxable                securities                                                  | 1,010                                                    |   | 353                |
| Non-taxable                securities                                              | 342                                                      |   | 38                 |
| Federal                funds sold and other                                        | 732                                                      |   | 416                |
| Total                interest and dividend income                                  | 17,300                                                   |   | 10,312             |
| **Interest                expense**                                                |                                                     |   |               |
| Deposits                                                                           | 7,550                                                    |   | 3,391              |
| Securities                sold under agreements to repurchase and other borrowings | 63                                                       |   | 56                 |
| FHLB                advances                                                       | 277                                                      |   | 388                |
| Subordinated                debentures                                             | 265                                                      |   | -                  |
| Total                interest expense                                              | 8,155                                                    |   | 3,835              |
| **Net                interest income**                                             | 9,145                                                    |   | 6,477              |
| **Provision                for loan losses**                                       | 270                                                      |   | 60                 |
| **Net                interest income after provision for loan losses**             | 8,875                                                    |   | 6,417              |
| **Non-interest                income**                                             |                                                     |   |               |
| Service                charges on deposit accounts                                 | 1,109                                                    |   | 585                |
| Other                service charges and fees                                      | 155                                                      |   | 92                 |
| Net                gains on sales of mortgage loans                                | 256                                                      |   | 257                |
| Lease                income                                                        | 157                                                      |   | 166                |
| Income                from company-owned life insurance                            | 78                                                       |   | -                  |
| Other                                                                              | 97                                                       |   | 107                |
| Total                non-interest income                                           | 1,852                                                    |   | 1,207              |
| **Non-interest                expenses**                                           |                                                     |   |               |
| Salaries                and employee benefits                                      | 4,465                                                    |   | 2,741              |
| Net                occupancy expense                                               | 771                                                      |   | 486                |
| Equipment                expense                                                   | 605                                                      |   | 350                |
| Advertising                                                                        | 442                                                      |   | 242                |
| Professional                fees                                                   | 324                                                      |   | 257                |
| Data                processing services                                            | 545                                                      |   | 302                |
| Franchise                shares and deposit tax                                    | 327                                                      |   | 176                |
| Core                deposit intangible amortization                                | 258                                                      |   | -                  |
| Postage                and office supplies                                         | 203                                                      |   | 67                 |
| Telephone                and other communication                                   | 196                                                      |   | 96                 |
| Other                                                                              | 750                                                      |   | 468                |
| Total                non-interest expenses                                         | 8,886                                                    |   | 5,185              |
| **Income                before income taxes**                                      | 1,841                                                    |   | 2,439              |
| **Provision                for income taxes**                                      | 540                                                      |   | 834                |
| **Net                income**                                                      | $  1,301                                       |   | $  1,605 |
| Dividends                declared on preferred stock                               | 389                                                      |   | 389                |
| Net                income available for common stockholders                        | $  912                                         |   | $1,216             |
| **Basic                earnings per share**                                        | $0.46                                                    |   | $1.29              |
| **Diluted                earnings per share**                                      | $0.46                                                    |   | $1.05              |
| **See                Notes to Consolidated Financial                Statements.**  |

----

| **Citizens                First Corporation**                                                                                                                                                |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Condensed                Consolidated Statements of Changes**** ****in                Stockholders' Equity** (**Unaudited**)**For                the nine months ended September 30** |
|                                                                                                                                                                                         |   |   |   |
|                                                                                                                                                                                         | **2007** |   | **2006** |
|                                                                                                                                                                                         | (In                thousands) |
|                                                                                                                                                                                         |   |   |   |
| Balance                January 1                                                                                                                                                             | $36,489 |   | $19,958 |
| Adoption                of FIN 48                                                                                                                                                            | (71) |   | - |
| Net                income                                                                                                                                                                    | 1,301 |   | 1,605 |
| Issuance                of common stock                                                                                                                                                      | 96 |   | 82 |
| Stock-based                compensation                                                                                                                                                      | 182 |   | 211 |
| Purchase                of treasury stock                                                                                                                                                    | (320) |   |   |
| Payment                of common dividend, $0.05 per share                                                                                                                                   | (99) |   | - |
| Payment                of preferred dividends, $1,555.34 per share for 2007 and                2006                                                                                          | (389) |   | (389) |
| Other                comprehensive income (loss), net of tax                                                                                                                                 | (7) |   | 19 |
| Balance                at end of period                                                                                                                                                      | $37,182 |   | $21,486 |
|                                                                                                                                                                                         |   |   |   |
|                                                                                                                                                                                         |

| **Citizens                First Corporation**                                                                                                                    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Condensed                Consolidated Statements of Comprehensive Income**(**Unaudited**)**For                the three months ended September 30**            |
|                                                                                                                                                             |   |   |   |
|                                                                                                                                                             | **2007** |   | **2006** |
|                                                                                                                                                             | (In                thousands) |
|                                                                                                                                                             |   |   |   |
| Net                income                                                                                                                                        | $   409 |   | $  578 |
| Other                comprehensive income (loss), net of tax:                                                                                                    |   |   |   |
| Unrealized                gain (loss) on available for sale securities, net                                                                                      | 399 |   | 338 |
|                                                                                                                                                             |   |   |   |
| Comprehensive                income                                                                                                                              | $    808 |   | $  916 |
|                                                                                                                                                             |   |   |   |
|                                                                                                                                                             |
|                                                                                                                                                             |
|                                                                                                                                                             |
| **Citizens                First Corporation**                                                                                                                    |
| **Condensed                Consolidated Statements of Comprehensive Income                (Unaudited)****For                the nine months ended September 30** |
|                                                                                                                                                             |   |   |   |
|                                                                                                                                                             | **2007** |   | **2006** |
|                                                                                                                                                             | (In                thousands) |
|                                                                                                                                                             |   |   |   |
| Net                income                                                                                                                                        | $                1,301 |   | $  1,605 |
| Other                comprehensive income (loss), net of tax:                                                                                                    |   |   |   |
| Unrealized                gain (loss) on available for sale securities, net                                                                                      | (7) |   | 19 |
|                                                                                                                                                             |   |   |   |
| Comprehensive                income                                                                                                                              | $    1,294 |   | $  1,624 |
|                                                                                                                                                             |   |   |   |
| **See                Notes to Consolidated Financial                Statements.**                                                                                |

----

| **Citizens                First Corporation**                                                                                                   |                                    |                   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|------------------------|
| **Condensed                Consolidated Statements of Cash Flows                (Unaudited)**                                                   |
| **For                the nine months ended September 30**                                                                                       | **2007**                                | **2006**               |
|                                                                                                                                            | (** **In                thousands) |
| **Operating                activities:**                                                                                                        |                                    |
| Net  income                                                                                                                           | $  1,301                      | $  1,605     |
| Items                not requiring (providing) cash:                                                                                            |                                    |                   |
| Depreciation                and amortization                                                                                                    | 595                                     | 396                    |
| Stock-based                compensation expense                                                                                                 | 182                                     | 211                    |
| Provision                for loan losses                                                                                                        | 270                                     | 60                     |
| Amortization                of premiums and discounts on securities                                                                             | (129)                                   | 4                      |
| Gain                on sale of premises and equipment                                                                                           | (11)                                    | (49)                   |
| Deferred                income taxes                                                                                                            | (115)                                   | 382                    |
| Sale                of mortgage loans held for sale                                                                                             | 16,209                                  | 18,391                 |
| Origination                of mortgage loans for sale                                                                                           |  (16,460)                          |  (18,470)         |
| Gains                on sales of loans                                                                                                          | (256)                                   | (257)                  |
| Net                loss on sale of other real estate owned                                                                                      | 16                                      | 8                      |
| FHLB                stock dividends received                                                                                                    | -                                       | (28)                   |
| Changes                in:                                                                                                                      |                                    |                   |
| Interest                receivable                                                                                                              | (98)                                    |  (240)            |
| Other                assets                                                                                                                     | 365                                     | (364)                  |
| Interest                payable and other liabilities                                                                                           | 909                                     | (491)                  |
| Net                cash used in operating  activities                                                                                 | 2,778                                   | 1,158                  |
| **Investing                activities:**                                                                                                        |                                    |                   |
| Loan                originations and payments, net                                                                                              | (10,729)                                | (3,965)                |
| Purchases                of premises and equipment                                                                                              | (1,117)                                 | (1,990)                |
| Proceeds                from sale of premises and equipment                                                                                     | -                                       | 285                    |
| Purchase                of available-for-sale securities                                                                                        | (14,774)                                | (1,935)                |
| Proceeds                from maturities of available-for-sale securities                                                                        | 18,256                                  | 449                    |
| Proceeds                from sale of other real estate owned                                                                                    | 393                                     | 42                     |
| Payment                related to purchase of Commonwealth Mortgage and                Southern KY Land Title, Inc., net of stock issued   |   (288)                       | (309)                  |
| Purchase                of bank-owned life insurance policies                                                                                   | (6,000)                                 | -                      |
| Purchase                of FHLB stock                                                                                                           | -                                       | (30)                   |
| Net                cash used in investing activities                                                                                            | (14,259)                                |   (7,453)    |
| **Financing                activities:**                                                                                                        |                                    |                   |
| Net                change in demand deposits, money market, NOW, and savings                accounts                                            | (17,718)                                | (2,201)                |
| Net                change in time deposits                                                                                                      | 16,882                                  | 7,449                  |
| Net                change in other borrowings                                                                                                   | (350)                                   | 250                    |
| Proceeds                from FHLB advances                                                                                                      | 9,500                                   | 12,000                 |
| Repayment                of FHLB advances                                                                                                       | (14,397)                                | (16,183)               |
| Net                change in repurchase agreements                                                                                              | (1,044)                                 | 1,569                  |
| Purchase                of treasury stock                                                                                                       | (320)                                   | -                      |
| Dividends                paid on preferred stock                                                                                                | (389)                                   | (389)                  |
|     Dividends                paid on common stock                                                                           | (99)                                    | -                      |
| Net                cash provided by financing activities                                                                                        | (7,935)                                 | 2,495                  |
| **Increase                in cash and cash equivalents**                                                                                        | (19,416)                                | (3,800)                |
| Cash                and cash equivalents, beginning of year                                                                                     | 29,850                                  | 15,743                 |
| **Cash                and cash equivalents, end of quarter**                                                                                    |   $10,434                     |   $11,943    |
|                                                                                                                                            |                                    |                   |
| Supplemental                Cash Flows  Information:                                                                                  |                                    |                   |
| Interest                paid                                                                                                                    | $7,890                                  | $3,749                 |
| Income                taxes paid                                                                                                                | $                640                    | $   745 |
| Loans                transferred to other real estate                                                                                           | $                471                    | $   140 |
| Stock                issued for contingent payment related to purchase ofCommonwealth                Mortgage and Southern Ky. Land Title, Inc. | $   96                   | 82                     |
| Deferred                revenue related to a sale leaseback transaction                                                                         | $   12                   | -                      |
| **See                Notes to Consolidated Financial Statements.**                                                                              |                                    |                   |

----

**Notes      to Unaudited Condensed Consolidated Financial Statements**

**(1)      Basis of Presentation**

** **

**(2)      Adoption of New Accounting Standards **

*Accounting for Certain Hybrid Financial Instruments-an amendment to      FASB Statements No. 133 and 140*

*Accounting for Purchases of Life Insurance - Determining the Amount That      Could Be Realized in Accordance with FASB Technical Bulletin No. 85-4      (Accounting for Purchases of Life Insurance). *

----

***Effect      of newly issued but not yet effective accounting standards      -***

*Fair Value      Measurements*

*Accounting for Deferred Compensation and Postretirement Benefit Aspects      of      Endorsement Split-Dollar Life Insurance Arrangements*

*The Fair Value Option for      Financial Assets and Financial Liabilities.  *

**(3)      Stock Option Plans**

|                                                                          | **2007**               | **2006**               |
|-------------------------------------------------------------------------------|------------------------|------------------------|
| Dividend                yields                                                | 1.00%                  | 0%                     |
| Volatility                factors of expected market price of common stock    | 25.67%                 | 21.39%                 |
| Risk-free                interest rates                                       | 5.10%                  | 4.58%                  |
| Expected                life of options                                       | 7                Years | 7                Years |
| Weighted-average                fair value of options granted during the year | $4.57                  | $                6.74  |

|   |  | The                dividend yield was estimated using historical dividends paid and                market                value information for the Company’s stock.   All other                things being equal, an increase in dividend yield will decrease fair                value                per option in future granting of                options. |
|--------|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  | The                volatility was estimated using historical volatility for periods                approximating the expected option                life. |
|--------|----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |  | The                risk-free interest rate was developed using the U.S. Treasury yield                curve                for periods equal to the expected life of the options on the grant                date.  An increase in the risk-free interest rate will increase                stock compensation expense in future granting of                options. |
|--------|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                              | **2007**   | **2006**                                                  |
|---------------------------------------------------|------------|-----------------------------------------------------------|
|                                              | **Shares** | **Weighted-****Average                Exercise****Price** | **Shares** | **Weighted-****Average                Exercise****Price** |
|                                              |       |                                                      |   |   |
| Outstanding,                beginning of year     | 148,197    | $15.37                                                    | 100,383 | $13.64 |
| Granted                                           | 7,000      | $13.00                                                    | 48,300 | $18.97 |
| Exercised                                         | -          | -                                                         | — | — |
| Forfeited                                         | 4,515      | $16.38                                                    | (486) | $15.72 |
| Expired                                           | -          | -                                                         | — | — |
| Outstanding,                end of period         | 150,682    | $15.23                                                    | 148,197 | $15.37 |
| Options                exercisable, end of period | 104,424    | $14.43                                                    | 57,787 | $13.97 |

**(4)  Earnings      Per Share**

***Dollars**in Thousands, except per share data***

|                                                                                              | **Quarter                ended September 30,  2007** |                              | **Quarter                ended September 30, 2006** |
|---------------------------------------------------------------------------------------------------|----------------------------------------------------------------|-----------------------------------|-----------------------------------------------------|
|                                                                                              |   **Income**                                         | **Weighted****Average****Shares** |  **Per                Share****Amount**        |   |   **Income** | **Weighted-****Average****Shares** |  **Per                Share****Amount** |
| **Basic                earnings per share**                                                       |                                                           |                              |                                                |   |   |   |   |
| Net                income                                                                         | $                409                                           |                              |                                                |   | $                           578 |   |   |
| Less:                Dividends on preferred stock                                                 | (131)                                                          |                              |                                                |   | (131) |   |   |
|                                                                                              |                                                           |                              |                                                |   |   |   |   |
| Net                income available to common shareholders                                        | 278                                                            | 1,975,887                         | $      0.14           |   | 447 | 943,463 | $      0.47 |
|                                                                                              |                                                           |                              |                                                |   |   |   |   |
| **Effect                of dilutive securities**                                                  |                                                           |                              |                                                |   |   |   |   |
| Convertible                preferred stock                                                        | -                                                              | -                                 |                                                |   | 131 | 568,890 |   |
| Stock                options                                                                      | -                                                              | -                                 |                                                |   | - | 22,882 |   |
|                                                                                              |                                                           |                              |                                                |   |   |   |   |
| Diluted                earnings per share                                                         |                                                           |                              |                                                |   |   |   |   |
|                                                                                              |                                                           |                              |                                                |   |   |   |   |
| Net                income available to common shareholders and assumed                conversions | $                278                                           | 1,975,887                         | $                     0.14 |   | $                           578 | 1,535,235 | $      0.38 |

----

***Dollars      in Thousands, except per share data***

|                                                                                              | **Nine                months ended September 30,  2007** |                              | **Nine                months ended September 30, 2006** |
|---------------------------------------------------------------------------------------------------|--------------------------------------------------------------------|-----------------------------------|---------------------------------------------------------|
|                                                                                              |   **Income**                                             | **Weighted****Average****Shares** |  **Per                Share****Amount**            |   |   **Income** | **Weighted-****Average****Shares** |  **Per                Share****Amount** |
| **Basic                earnings per share**                                                       |                                                               |                              |                                                    |   |   |   |   |
| Net                income                                                                         | $                1,301                                             |                              |                                                    |   | $                           1,605 |   |   |
| Less:                Dividends on preferred stock                                                 | (389)                                                              |                              |                                                    |   | (389) |   |   |
|                                                                                              |                                                               |                              |                                                    |   |   |   |   |
| Net                income available to common shareholders                                        | 912                                                                | 1,981,092                         | $      0.46               |   | 1,216 | 940,621 | $      1.29 |
|                                                                                              |                                                               |                              |                                                    |   |   |   |   |
| Effect                of dilutive securities                                                      |                                                               |                              |                                                    |   |   |   |   |
| Convertible                preferred stock                                                        | -                                                                  | -                                 |                                                    |   | 389 | 568,890 |   |
| Stock                options                                                                      | -                                                                  | -                                 |                                                    |   | - | 23,891 |   |
|                                                                                              |                                                               |                              |                                                    |   |   |   |   |
| **Diluted                earnings per share**                                                     |                                                               |                              |                                                    |   |   |   |   |
|                                                                                              |                                                               |                              |                                                    |   |   |   |   |
| Net                income available to common shareholders and assumed                conversions | $912                                                               | 1,981,092                         | $                     0.46     |   | $                           1605 | 1,533,402 | $      1.05 |

----

**Item      2. Management’s Discussion and Analysis or Plan of      Operation**

**Forward-Looking      Statements**

**Results      of Operations**

----

|                                      |   |  **2007** |  **2006** | **Increase/**** (Decrease)** |
|-------------------------------------------|--------|----------------|----------------|-----------------------------------|
|                                      |   |           |           |                              |
| Net                interest income        |   | 3.58%          | 4.36%          | (0.78%)                           |
| Provision                for loan losses  |   | 0.11%          | 0.04%          | 0.07%                             |
| Non-interest                income        |   | 0.73%          | 0.81%          | (0.08%)                           |
| Non                interest expenses      |   | 3.48%          | 3.49%          | (0.01%)                           |
| Provision                for income taxes |   | 0.21%          | 0.56%          | (0.35%)                           |
| Net                income                 |   | 0.51%          | 1.08%          | (0.57%)                           |

**Net      Interest Income**

----

| **Average                Consolidated Balance Sheets and Net Interest Analysis*(Dollars in                thousands)*** |
|-------------------------------------------------------------------------------------------------------------------------|
| **Nine                months ended September 30,**                                                                      |   | **2007** |   |   | **2006** |   |
|                                                                                                                    | **Average****Balance** | **Income**/**Expense** | **Average****Rate** | **Average****Balance** | **Income/****Expense** | **Average****Rate** |
| Earning                assets:                                                                                          |   |   |   |   |   |   |
| Federal                funds sold                                                                                       | $  15,987 | $  636 | 5.32% | $10,567 | $       388 | 4.91% |
| Available-for-sale                securities (1)                                                                        |   |   |   |   |   |   |
| Taxable                                                                                                                 | 27,614 | 1,013 | 4.90% | 11,666 | 359 | 4.11% |
| Nontaxable                (1)                                                                                           | 11,942 | 517 | 5.79% | 1,241 | 51 | 5.49% |
| Federal                Home Loan Bank stock                                                                             | 1,946 | 94 | 6.46% | 665 | 28 | 5.63% |
| Loans,                net (2)                                                                                           | 247,799 | 15,216 | 8.21% | 159,845 | 9,505 | 7.95% |
| Total                interest earning assets                                                                            | 305,288 | 17,476 | 7.65% | 183,984 | 10,331 | 7.51% |
| Non-interest                earning assets                                                                              | 36,027 |   |   | 15,010 |   |   |
| **Total                Assets**                                                                                         |  $                341,315 |   |   | $198,994 |   |   |
|                                                                                                                    |   |   |   |   |   |   |
| Interest-bearing                liabilities:                                                                            |   |   |   |   |   |   |
| Interest-bearing                transaction accounts                                                                    | $  81,159 | $  1,092 | 1.80% | $  48,415 | $  439 | 1.21% |
| Savings                accounts                                                                                         | 6,993 | 68 | 1.30% | 3,126 | 29 | 1.24% |
| Time                deposits                                                                                            | 172,007 | 6,390 | 4.97% | 93,387 | 2,923 | 4.18% |
| Total                interest-bearing deposits                                                                          | 260,159 | 7,550 | 3.88% | 144,928 | 3,391 | 3.13% |
| Federal                funds purchased                                                                                  | - | - | - | 3 | - | 5.09% |
| Notes                payable                                                                                            | 131 | 8 | 8.29% | - | - | - |
| Securities                sold under repurchase agreements                                                              | 3,063 | 55 | 2.39% | 3,705 | 56 | 2.02% |
| FHLB                borrowings                                                                                          | 7,534 | 277 | 4.92% | 12,411 | 388 | 4.18% |
| Subordinated                debentures                                                                                  | 5,000 | 265 | 7.10% | - | - | - |
| Total                interest-bearing liabilities                                                                       | 275,887 | 8,155 | 3.95% | 161,047 | 3,835 | 3.18% |
| Non-interest                bearing deposits                                                                            | 26,668 |   |   | 15,880 |   |   |
| Other                liabilities                                                                                        | 1,817 |   |   | 1,335 |   |   |
| Total                liabilities                                                                                        | 304,372 |   |   | 178,262 |   |   |
| Shareholders’                equity                                                                               | 36,943 |   |   | 20,732 |   |   |
| **Total                Liabilities and                Shareholders’   Equity**                     | $  341,315 |   |   | $198,994 |   |   |
| Net                interest income                                                                                      |   | $                9,321 |   |   | $                6,496 |   |
| Net                interest spread (1)                                                                                  |   |   | 3.70% |   |   | 4.33% |
| Net                interest margin  (1) (3)                                                                   |   |   | 4.08% |   |   | 4.72% |
| Return                on average assets ratio                                                                           |   |   | 0.51% |   |   | 1.08% |
| Return                on average equity ratio                                                                           |   |   | 4.71% |   |   | 10.35% |
| Average                equity to assets ratio                                                                           |   |   | 10.82% |   |   | 10.42% |
| _______________                                                                                                         |   |   |   |   |   |   |

----

**Rate/Volume      Analysis**

|                                                                       | **Nine                Months Ended**      |
|----------------------------------------------------------------------------|-------------------------------------------|
| ***(Dollars                in thousands)***                                | **September                30,**          |
|                                                                       | **2007                vs. 2006**          |
|                                                                       | **Variance                Attributed to** |
|                                                                       |                                      | **Rate** |   | **Volume** |   | **Net** |
| Interest-earning                assets:                                    |                                      |   |   |   |   |   |
| Federal                funds sold                                          |                                      | $                49 |   | $  199 |   | $                248 |
| Available-for-sale-securities:                                             |                                      |   |   |   |   |   |
| Taxable                                                                    |                                      | 163 |   | 491 |   | 654 |
| Nontaxable                (1)                                              |                                      | 26 |   | 440 |   | 466 |
| FHLB                stock                                                  |                                      | 12 |   | 54 |   | 66 |
| Loans,                net                                                  |                                      | 481 |   | 5,230 |   | 5,711 |
| Total                net change in income on earning assets                |                                      | 731 |   | 6,414 |   | 7,145 |
|                                                                       |                                      |   |   |   |   |   |
| Interest-bearing                liabilities:                               |                                      |   |   |   |   |   |
| Interest-bearing                transaction accounts                       |                                      | 356 |   | 297 |   | 653 |
| Savings                accounts                                            |                                      | 3 |   | 36 |   | 39 |
| Time                deposits                                               |                                      | 1,006 |   | 2,461 |   | 3,467 |
| Securities                sold under repurchase agreements                 |                                      | 9 |   | (10) |   | (1) |
| FHLB                borrowings                                             |                                      | 42 |   | (153) |   | (111) |
| Notes                payable                                               |                                      | - |   | 8 |   | 8 |
| Subordinated                debentures                                     |                                      | - |   | 265 |   | 265 |
| Total                net change in expense on interest-bearing liabilities |                                      | 1,416 |   | 2,904 |   | 4,320 |
|                                                                       |                                      |   |   |   |   |   |
| Net                change in net interest income                           |                                      | $  (685) |   | $                3,510 |   | $2,825 |
|                                                                       |                                      |   |   |   |   |   |
| Percentage                change                                           |                                      | (24.2)% |   | 124.2% |   | 100.0% |

**Provision      for Loan Losses**

**Non-Interest      Income**

----

| *(                Dollars In Thousands)*                              | **September                30, 2007** | **September                30,  2006** | **Increase****(Decrease)**                                                                                                                                                                                                                              |
|-----------------------------------------------------------------------|---------------------------------------|--------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Service                charges on deposit accounts                    | $1,109                                | $585                                             |     $524                                                                                                                                                                                                                            |
| Other                service charges and fees                         | 155                                   | 92                                               |          63                                                                                                                                                                                                |
| Net                gains on the sales of mortgage loans held for sale | 256                                   | 257                                              | (1)                                                                                                                                                                                                                                                     |
| Title                premium fees                                     | 47                                    | 46                                               |                                          1 |
| Lease                income                                           | 157                                   | 166                                              | (9)                                                                                                                                                                                                                                                     |
| Income                from company-owned life insurance               | 78                                    | -                                                |                                                       78  |
| Other                                                                 | 50                                    | 61                                               | (11)                                                                                                                                                                                                                                                    |
|                                                                  | $1,852                                | $1,207                                           |                                   $                645                        |

**Non-Interest      Expense**

----

| *(In                Thousands)*                     | **September                30, 2007** | **September                30, 2006** | **Increase****(Decrease)**        |
|-----------------------------------------------------|---------------------------------------|---------------------------------------|-----------------------------------|
| Salaries                and employee benefits       | $4,465                                | $2,741                                | $1,724                            |
| Net                occupancy expense                | 771                                   | 486                                   |      285 |
| Equipment                expense                    | 605                                   | 350                                   | 255                               |
| Advertising                                         | 442                                   | 242                                   | 200                               |
| Professional                fees                    | 324                                   | 257                                   | 67                                |
| Data                processing services             | 545                                   | 302                                   | 243                               |
| Franchise                shares and deposit tax     | 327                                   | 176                                   | 151                               |
| Core                deposit intangible amortization | 258                                   | -                                     | 258                               |
| Postage                and office supplies          | 203                                   | 67                                    | 136                               |
| Telephone                and other communication    | 196                                   | 96                                    | 100                               |
| Other                operating expenses             | 750                                   | 468                                   | 282                               |
|                                                | $8,886                                | $5,185                                | $3,701                            |

**Income      Taxes**

*Accounting for      Uncertainty in Income Taxes*

**Balance      Sheet Review**

**Overview**

**Loans**

----

| *Dollars                in thousands*      | **                      September 30,** | **%                of**        | **December                31,**                                                                                   | **%                of**             |
|--------------------------------------------|-----------------------------------------------------------------------|--------------------------------|-------------------------------------------------------------------------------------------------------------------|-------------------------------------|
|                                       | **2007**                                                              | **Total                Loans** | **2006**                                                                                                          | **Total                Loans**      |
| Commercial                and agricultural | $   77,550                                             |  31.10%                   | 61,112                                                                                                            |  25.51%                        |
| Commercial                real estate      |      95,754                                  |  38.40%                   |                                 97,198 |  40.57%                        |
| Residential                real estate     |      60,604                                  |  24.30%                   |                         64,623                                                 |  26.98%                        |
| Consumer                                   |      15,476                                  |   6.20%              |                         16,634                                                 |    6.94%             |
|                                       |                     $249,384                      |   100.00%            |      $239,567                                                                            |                   100.00% |

| **Loan                Maturities**               |                                                                                                                            |   **                     After One****                     But    Within**                                                       |                                                                                                                                                                                                         |                                                                                                       |
|--------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------|
| **September                30, 2007**            | **Within                One Year**                                                                                              | **Five                Years**                                                                                                                                                                               | **After                Five Years**                                                                                                                                                                          | **Total**                                                                                                  |
| *Dollars  in                thousands* |                                                                                                                            |                                                                                                                                                                                                        |                                                                                                                                                                                                         |                                                                                                       |
|                                             |                                                                                                                            |                                                                                                                                                                                                        |                                                                                                                                                                                                         |                                                                                                       |
|  Commercial              and agricultural   |                                   $ 38,679 |                                                $26,547     |                            $12,324                                                                                                                    |                           $77,550              |
|  Commercial              real estate        | 33,461                                                                                                                          |                     25,956                                                                                                                                                              |                                  36,337 |                             95,754   |
| Residential                real estate           | 7,426                                                                                                                           |                                                10,352 |                              42,826                                                                                                         |                               60,604      |
|  Consumer                                   |               4,262                                       |                                                10,168 |                                1,046                                                                                              |                               15,476 |
| Total                                            |                          $83,828                                                   | $73,023                                                                                                                                                                                                     | $92,533                                                                                                                                                                                                      | $249,384                                                                                                   |

***Asset        Quality and the****Allowance for Loan        Losses***

|                                                             | **September  30,                2007** | **December                31, 2006** |
|------------------------------------------------------------------|--------------------------------------------------|--------------------------------------|
| *(Dollars                in Thousands)*                          |                                             |                                 |
| Non-performing                loans                              | $                2,003                           | $  1,131                   |
| Non-performing                assets                             | 2,263                                            | 1,330                                |
| Allowance                for loan losses                         | 2,957                                            | 3,128                                |
| Non-performing                assets to total loans              | 0.91%                                            | 0.56%                                |
| Non-performing                assets to total assets             | 0.68%                                            | 0.39%                                |
| Net                charge-offs to average total loans            | 0.18%                                            | 0.06%                                |
| Allowance                for loan losses to non-performing loans | 147.63%                                          | 276.57%                              |
| Allowance                for loan losses to total loans          | 1.19%                                            | 1.31%                                |

----

**Summary      of Loan Loss Experience**

|                                                                    | **September                30, 2007** | **September  30,                2006**                                                     |
|-------------------------------------------------------------------------|---------------------------------------|------------------------------------------------------------------------------------------------------|
| *(Dollars                in thousands)*                                 |                                  |                                                                                                 |
| Balance,                beginning of year                               | $3,128                                |                              $1,957 |
| Provision                for loan losses                                | 270                                   | 60                                                                                                   |
| Amounts                charged off:                                     |                                  |                                                                                                 |
| Commercial                                                              | (158)                                 | (74)                                                                                                 |
| Commercial                real estate                                   | (49)                                  | -                                                                                                    |
| Residential                real estate                                  | (162)                                 | (28)                                                                                                 |
| Consumer                                                                | (146)                                 | (23)                                                                                                 |
| Total                loans charged off:                                 | (515)                                 | (125)                                                                                                |
| Recoveries                of  amounts previously charged off: |                                  |                                                                                                 |
| Commercial                                                              | 39                                    | 37                                                                                                   |
| Commercial                real estate                                   | 16                                    | -                                                                                                    |
| Residential                real estate                                  | -                                     | -                                                                                                    |
| Consumer                                                                | 19                                    | 2                                                                                                    |
| Total                recoveries                                         | 74                                    | 39                                                                                                   |
| Net                (charge-offs) recoveries                             | (441)                                 | (86)                                                                                                 |
| Balance,                end of period                                   | $2,957                                | $          1,931                                   |

----

| **Allocation                of Allowance for Loan Loss** |
|----------------------------------------------------------|
|                                                     |
|                                                     |
|                                                     | **September                30, 2007** | **December                31, 2006** | **September                30, 2006** |
|                                                     |    Amount | %                ofLoans                in Each Category to Total Loans |    Amount | %                ofLoans                in Each Category to Total Loans |    Amount | %                ofLoans                in Each Category to Total Loans |
|                                                     | *(Dollars in                thousands)* |
| Residential                real estate                   | $     530 | 24.30% |  $690 | 26.98% |  $      539 | 31.03% |
| Consumer                and other loans                  | 225 | 6.20% | 272 | 6.94% | 198 | 5.93% |
| Commercial                and agriculture                | 1,016 | 31.10% | 660 | 25.51% | 610 | 36.71% |
| Commercial                real estate                    | 1,152 | 38.40% | 1,344 | 40.57% | 584 | 31.03% |
| Unallocated                                              | 34 | 0.00% | 162 |     0.00% | 0 |     0.00% |
| Total                allowance for loan losses           | $  2,957 | 100.00% | $  3,128 |    100.00% | $     1,931 |     100.00% |

**Securities**

|                                               | **September                30, 2007**   | **December                31, 2006** |
|----------------------------------------------------|-----------------------------------------|--------------------------------------|
|                                               | *(Dollars                in thousands)* |
|                                               |                                    |                                 |
| U.S.                Government agencies            | $  16,248                     | $                  29,495  |
| Mortgage-backed                securities          | 8,484                                   | 4,869                                |
| Municipal                securities                | 14,517                                  | 8,249                                |
| Total                available-for-sale securities | $                39,249                 | $  42,613                  |

----

|                                                                                                                                                                                                                                                  |                                                                                 |                                                                |                                    |                                                                                       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------|---------------------------------------------------------------------|-----------------------------------------|--------------------------------------------------------------------------------------------|
| ** September                30, 2007**                                                                                                                                                                                                           |                                                                                 | **Over**                                                            | **Over**                                |                                                                                       |   |   |
| * Dollars                in thousands*                                                                                                                                                                                                           |                                                                                 | **One                Year**                                         | **Five                Years**           | **Over**                                                                                   |   |   |
|                                                                                                                                                                                                                                                  | **One                Year**                                                          | **Through**                                                         | **Through**                             | **Ten**                                                                                    | **Total** | **Market** |
|                                                                                                                                                                                                                                                  | **or                Less**                                                           | **Five                Years**                                       | **Ten                Years**            | **Years**                                                                                  | **Maturities** | **Value** |
|                                                    U.S. Government agencies | $6,475              | $      3,000                          |    $6,989                |                  $         -   |                  $   16,464      | $  16,248 |
|                                  Mortgage-backed securities:(1)                                                                                                  |       -                                                |                         160 |                    1,212 |                    7,320                                                    |                     8,692 |      8,484 |
| Municipal                securities                                                                                                                                                                                                                   |     438                                                          |          643           |                    5,201 |                    8,401                                                    |                  14,683 |     14,517 |
|   Total                available- for sale -securities                                                                                                                                                                                      | $ 6,913                                                                         | $                  3,803                                  | $13,402                                 | $                15,721                                                                    | $39,839 | $                39,249 |
|                                                                                                                                                                                                                                                  |                                                                                 |                                                                |                                    |                                                                                       |   |   |
| Percent                of total                                                                                                                                                                                                                       | 17.4%                                                                                | 9.5%                                                                | 33.6%                                   | 39.5%                                                                                      | 100.0% |   |
| Weighted                average yield(2)                                                                                                                                                                                                              | 5.07%                                                                                | 5.03%                                                               | 4.58%                                   | 5.30%                                                                                      | 5.01% |   |

**Deposits**

| **Maturity                of Time Deposit**s **of $100,000 or                more**  |   |                                  |                                       |
|-------------------------------------------------------------------------------------------|--------|---------------------------------------|--------------------------------------------|
| *Dollars                In Thousands*                                      |   | **September                30, 2007** | **December                31, 2006**  |
|                                                                                      |   |                                  |                                       |
| Three                months or less                                                       |   | $14,978                               | $  6,515                         |
| Over                three through six months                                              |   | 5,934                                 | 9,884                                      |
| Over                six through twelve months                                             |   | 27,246                                | 17,154                                     |
| Over                one year through three years                                          |   | 2,864                                 | 10,802                                     |
| Over                three years                                                           |   | 3,361                                 | 880                                        |
| Total                                                                                     |   | $   54,383             | $  45,235                        |

**Borrowings**

*FHLB      Advances.*

| *Dollars                In Thousands* |                             |     |       |
|---------------------------------------|----------------------------------|----------|------------|
| **Type**                              | **Maturity**                     | **Rate** | **Amount** |
| Fixed                                 | October                27, 2008  | 4.83%    | 500        |
| Fixed                                 | February                1, 2009  | 5.07%    | 463        |
| Fixed                                 | July                31, 2009     | 5.14%    | 2,000      |
| Fixed                                 | February                16, 2010 | 2.91%    | 2,000      |
| Fixed                                 | August                28, 2012   | 4.25%    | 500        |
| Fixed                                 | July                1, 2013      | 2.96%    | 725        |
| Fixed                                 | January                1, 2018   | 3.95%    | 176        |
| Fixed                                 | July                1, 2023      | 3.95%    | 93         |
|                                  |                             |     | 500        |
|                                  |                             |     | $6,457     |

----

*Other      Borrowings.  *

| *Dollars                in Thousands*                                                                                            |                                  |
|----------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|
|                                                                                                                             | **September                30, 2007** |
| ** Federal                funds purchased and repurchase agreements:**                                                      |                                  |
| Balance                at period end                                                                                             | $2,877                                |
| Weighted                average rate at period end                                                                               | 2.39%                                 |
| Average                balance during the nine months ended September 30, 2007                                                   | $3,063                                |
| Weighted                average rate for the nine months ending September 30, 2007 during                the                year | 2.39%                                 |
| Maximum                month-end balance                                                                                         | $3,665                                |

**Liquidity**

**Capital      Resources**

----

|                                               | **September                30, 2007** | **December                31, 2006** | **Regulatory                Minimum** |
|----------------------------------------------------|---------------------------------------|--------------------------------------|---------------------------------------|
| **Tier                I leverage ratio**           | 9.05%                                 | 11.96%                               | 4.00%                                 |
| **Tier                I risk-based capital ratio** | 11.22%                                | 11.52%                               | 4.00%                                 |
| **Total                risk-based capital ratio**  | 12.34%                                | 12.77%                               | 8.00%                                 |

|                                               | **September                30,****2007** | **December                31, 2006** | **Regulatory                Minimum** | **“Well-capitalized”                Minimum** |
|----------------------------------------------------|------------------------------------------|--------------------------------------|---------------------------------------|-----------------------------------------------------------|
| **Tier                I leverage ratio**           | 9.11%                                    | 12.14%                               | 4.00%                                 | 5.00%                                                     |
| **Tier                I risk-based capital ratio** | 11.10%                                   | 11.70%                               | 4.00%                                 | 6.00%                                                     |
| **Total                risk-based capital ratio**  | 12.22%                                   | 12.95%                               | 8.00%                                 | 10.00%                                                    |

**Quantitative      and Qualitative Disclosures about Market Risk**

.

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**Item      3. Controls and      Procedures**

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**Part      II.**

**Item      2. Unregistered Sales of Equity Securities and Use of      Proceeds**

**Item      703.  Purchases of Equity Securities by the Issuer and Affiliated      Purchasers**

| **ISSUER                PURCHASES OF EQUITY SECURITIES** |
|----------------------------------------------------------|
| Period                                                   | (a)                Total Number of Shares Purchased | (b)                Average Price Paid     Per Share | (c)                Total Number of Shares Purchased as Part of Publicly Announced Plans                or                Programs (1) | (d)                Maximum  Number of  Shares that may be purchased Under                the Plans |
| August  1-August                31, 2007       | 25,000                shares | $12.75/share | 25,000                shares | 100,000                shares |

----

**Item      6. Exhibits**

| 3.1 | Restated Articles of Incorporation of Citizens First Corporation,                as                amended (incorporated by reference to Exhibit 3.1 of the Company’s                Registration Statement on Form SB-2 (No.                333-103238)). |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2 | Articles of Amendment to Amended and Restated Articles of                Incorporation of Citizens First Corporation (incorporated by reference                to                Exhibit 3. 3 of the Registrant’s Form 10-QSB dated June 30,                2004). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.3 | Articles of Amendment to Amended and Restated Articles of                Incorporation of Citizens First Corporation (incorporated by reference                to                Exhibit 3. 1 of the Registrant’s Form 8-K filed June 5,                2007). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.4 | Amended and Restated Bylaws of Citizens First Corporation                (incorporated by reference to Exhibit 3 of the Registrant's Form 8-K                filed October 22, 2007). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.2 | Articles of Amendment to Amended and Restated Articles of                Incorporation of Citizens First Corporation (see Exhibit                3.2). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.3 |  Articles of Amendment to Amended and Restated Articles of                Incorporation of Citizens First Corporation (see Exhibit                3.3). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.5 | Copy of Registrant’s Agreement Pursuant to Item 601 (b)(4)(iii)(A) of                Regulation S-K dated March 30, 2007 with respect to certain debt                instruments (incorporated by reference to Exhibit 4.4 of the Company’s                Form 10-KSB dated December 31, 2006). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.1 |  Certification of Chief Executive Officer pursuant to Section                302 of the Sarbanes-Oxley Act. |
|------|------------------------------------------------------------------------------------------------------------------|

| 31.2 |  Certification of Chief Financial Officer pursuant to Section                302 of the Sarbanes-Oxley Act. |
|------|------------------------------------------------------------------------------------------------------------------|

----

|   |                             |   | **CITIZENS                FIRST CORPORATION**                       |
|--------|----------------------------------|--------|---------------------------------------------------------------------|
|   |                             |   |                                                                |
|   |                             |   |                                                                |
| Date:  | November                14, 2007 |   | /s/                Mary D. Cohron                                   |
|   |                             |   | Mary                D. Cohron                                       |
|   |                             |   | President                and Chief Executive Officer                |
|   |                             |   | (Chief                 Executive Officer)                      |
|   |                             |   |                                                                |
|   |                             |   |                                                                |
|   |                             |   |                                                                |
|   | November                14, 2007 |   | /s/                Steve Marcum                                     |
|   |                             |   | Steve                Marcum                                         |
|   |                             |   | Executive                Vice President and Chief Financial Officer |
|   |                             |   | (Chief                Financial and Accounting Officer)             |