<PAGE>
                                                                      Exhibit 13

                  Selected Portions of Report to Stockholders
                     For the Period Ended December 31, 2002

MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS


The Company's common stock is traded on the Nasdaq National Market under the
symbol "CTZN." As of February 7, 2003, the Company had approximately 1,101
holders of record. The Company's common stock began trading on March 7, 2001.

The following table sets forth, for the quarters indicated, the high and low bid
information for the Company's common stock and the dividends paid per share:

<TABLE>
<CAPTION>
                                                                       2002
                                -----------------------------------------------------------------------
                                   1/1 - 3/31             4/1 - 6/30          7/1 - 9/30    10/1 - 12/31
                                ----------------         -----------         -----------     ----------
<S>                             <C>                      <C>                 <C>             <C>
High                            $          19.30         $     23.33         $     22.92     $    21.96
Low                             $          15.88         $     22.23         $     22.18     $    21.76
Dividend Paid(1)                $           0.08         $      0.08         $      0.08     $     0.08


<CAPTION>

                                                                       2001
                                -----------------------------------------------------------------------
                                   1/1 - 3/31             4/1 - 6/30          7/1 - 9/30    10/1 - 12/31
                                ----------------         -----------         -----------     ----------
<S>                             <C>                      <C>                 <C>             <C>
High                                         N/A         $     15.24         $     16.66     $    16.35
Low                                          N/A         $     13.13         $     12.52     $    14.75
Dividend Paid(1)                             N/A                 N/A                 N/A     $     0.08
</TABLE>






(1)To the extent that the table shows dividends were paid with regard to any
quarter, dividends were paid once per quarter.

The Company intends to continue to pay regular quarterly dividends. The
declaration and payment of dividends, however, are subject to the discretion of
the Board of Directors and to compliance requirements under applicable law. For
additional information, see "Regulation and Supervision "in the "Business"
section of the Company's Form 10-K filed with the SEC for the transition period
ended December 31, 2002 and Note 12 to the Company's Consolidated Financial
Statements. Determination of the timing and amount of future dividends, if any,
will depend upon our results of operations, financial condition, cash
requirements, future business prospects, general business conditions and other
factors that the Board of Directors may deem relevant. At this time, the Company
does not believe that there are any restrictions that would currently materially
limit the Company's ability to pay dividends or that the Company believes are
likely to limit materially the future payment of dividends on its common stock.
<PAGE>
SELECTED FINANCIAL DATA

The following selected financial data as of December 31, 2002 and March 31,
2002, 2001, 2000 and 1999, and for the nine months ended December 31, 2002 and
for each of the fiscal years ended March 31, 2002, 2001, 2000 and 1999, have
been derived from our audited Consolidated Financial Statements and the Notes
thereto, together with the report of our independent auditors, which appear
elsewhere in this Report.

This selected financial data might not be a good indicator of our expected
results for the year ending December 31, 2003 or subsequent periods. You should
read the selected financial data together with the Consolidated Financial
Statements and the Notes thereto and with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included elsewhere in this
Report. For a list of some of the factors that may affect our future results,
see the caption "Forward-Looking Statements" under the section "Management's
Discussion and Analysis of Financial Condition and Results of Operations."


<TABLE>
<CAPTION>

                                    AT DEC. 31,              AT MARCH 31, (DOLLAR IN THOUSANDS)
                                   -----------    -------------------------------------------------------
                                      2002          2002             2001           2000         1999
                                     -------       -------         -------         -------      -------
<S>                                <C>            <C>             <C>             <C>           <C>
SELECTED CONSOLIDATED FINANCIAL DATA:

Total assets                       $1,000,184     $ 946,356       $ 855,866       $ 741,570     $ 645,756
Cash and cash equivalents              40,356        57,926          53,618          45,182        16,264
Loans, net                            819,136       735,564         672,449         568,503       590,637
Securities available-for-sale         100,382       118,547          96,053          99,407         6,549
Deposits                              671,830       634,014         581,281         601,008       526,840
FHLB advances                         173,003       151,415         114,931          70,502        54,267
Total equity                          148,155       151,440         149,721          63,259        57,513
Real estate owned, net                    353           953             282              80            75
Total nonperforming assets              2,767         2,746           2,029           1,326           939
</TABLE>


<TABLE>
<CAPTION>
                                9 MONTHS
                               ENDED DEC 31,       FOR THE YEAR ENDED MARCH 31, (DOLLARS IN THOUSANDS)
                               -------------       ----------------------------------------------------
                                   2002             2002             2001          2000          1999
                                 -------           -------         -------       -------        -------
<S>                              <C>               <C>             <C>           <C>            <C>
Total interest income            $45,941           $65,467         $60,517       $51,928        $49,764
Total interest expense            20,129            30,691          34,112        27,063         26,240
                                 -------           -------         -------       -------        -------
Net interest income               25,812            34,776          26,405        24,865         23,524
Provision for loan losses            892               996             780          (483)         3,800
                                 -------           -------         -------       -------        -------
Net interest income after
   provision for loan losses      24,920            33,780          25,625        25,348         19,724
Noninterest income:
   Net gain on sale of
     securities                      108                 -              89             -          6,082
   Other                           6,338             4,721           3,179          (314)         3,949
Noninterest expense               17,340            22,535          24,742        16,248         22,612
                                 -------           -------         -------       -------        -------
Income before income taxes        14,026            15,966           4,151         8,786          7,143
Income taxes                       4,842             5,418             965         2,880            539
                                 -------           -------         -------       -------        -------
Net income                       $ 9,184           $10,548         $ 3,186       $ 5,906        $ 6,604
</TABLE>



        ASSET GROWTH RATE


  For Year Ended March 31,    Ended Dec. 31,
----------------------------  --------------
1999    2000   2001   2002     2002     5YR
6.60   14.84  15.41  10.57     5.69   10.62



        RETURN ON AVERAGE ASSETS


 For Year Ended March 31,      9 Months
                             Ended Dec. 31,
1999    2000   2001   2002    2002     5YR
---------------------------  --------------
1.01    0.85   0.39   1.16    1.26    0.93
<PAGE>
<TABLE>
<CAPTION>
                                            9 MONTHS
                                          ENDED DEC 31, FOR THE YEAR ENDED MARCH 31, (DOLLARS IN THOUSANDS)
                                         -------------  ---------------------------------------------------
                                              2002        2002         2001       2000        1999
                                            -------     --------     --------   --------    --------
PERFORMANCE RATIOS:

<S>                                        <C>         <C>          <C>         <C>         <C>
Average yield on interest-earning assets      6.45%        7.39%       7.78%       7.97%       7.87%
Average rate paid on interest-bearing
   liabilities                                3.38         4.22        4.77        4.44        4.62
Average interest rate spread                  3.07         3.17        3.01        3.53        3.25
Net interest margin                           3.63         3.93        3.40        3.82        3.72
Ratio of interest-earning assets to
   interest-bearing liabilities             119.65       121.71      108.68      106.90      111.30
Net interest income after provision for
   loan losses to noninterest expense       143.71       149.90      103.57      156.01       87.23
Noninterest expense as a percent
   of average assets                          2.44         2.54        3.04        2.35        3.46
Return on average assets                      1.26         1.16        0.39        0.85        1.01
Return on average equity                      8.25         7.00        4.15        9.35       12.29
Ratio of average equity to
   average assets                            15.24        16.49        9.42        9.11        8.23
</TABLE>


<TABLE>
<CAPTION>
                                       AT OR FOR YEAR
                                        ENDED DEC 31,   AT OR FOR YEAR ENDED  MARCH 31, (DOLLARS IN THOUSANDS)
                                       --------------   ------------------------------------------------------
                                            2002               2002      2001        2000        1999
                                        -----------          --------  --------    --------    ---------
<S>                                      <C>                <C>         <C>         <C>         <C>
REGULATORY CAPITAL RATIOS:
Leverage Capital Ratio                      15.40              16.40     16.70        8.50         8.80
Risk-based capital ratio                    20.70              22.00     24.40       13.10        14.20

ASSET QUALITY RATIOS:
Nonperforming loans and troubled
  debt restructurings as a percent
  of total loans                             0.29               0.24      0.26        0.22         0.14
Nonperforming assets and troubled
  debt restructurings as a percent
  of total assets                            0.28               0.29      0.21        0.18         0.15
Allowance for loan losses as a percent
  of total loans                             1.33               1.47      1.58        1.80         1.85
Allowance for loan losses as a percent
  of nonperforming loans and troubled
  debt restructurings                      459.07             614.61    598.40      839.57     1,281.78
Net loans charged-off to average
interest-earning loans                       0.10               0.11      0.06        0.04         0.03
Full service offices at end of period          15                 15        14          14           14
</TABLE>



Note: The data for the fiscal year ended March 31, 2001 is not comparable to
the data for the other periods. In particular, in the fiscal year ended
March 31, 2001, the Company made a one-time charitable contribution in the
amount of $7.1 million to the Citizens Charitable Foundation. Excluding this
contribution and the related tax deduction, net income for that fiscal year
would have been $7.8 million, rather than $3.2 million as shown in the table.
For more information, see "Comparison of Operating Results for the Fiscal Years
Ended March 31, 2002 and March 31, 2001" included in the section entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" elsewhere in this Report.


<TABLE>
<CAPTION>
                                         9 MONTHS
                                        ENDED DEC 31,           FOR THE YEAR ENDED MARCH 31,
                                        -------------    -------------------------------------------
                                           2002           2002         2001       2000        1999
                                        -------------    -------     --------   --------    --------
<S>                                          <C>           <C>         <C>       <C>         <C>
Income per Common Share                      1.14          1.23         N/A        N/A         N/A
Cash Dividends per Common Share              0.24          0.16         N/A        N/A         N/A

</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

GENERAL
Management's discussion and analysis of financial condition and results of
operations is intended to assist in understanding the financial condition and
results of operations of the Company. The information contained in this section
should be read in conjunction with the Company's Consolidated Financial
Statements and accompanying Notes contained in this Annual Report to
Stockholders.

FORWARD-LOOKING STATEMENTS
The Company or the Bank may from time to time make written or oral
"forward-looking statements." These forward-looking statements may be contained
in this Annual Report to Stockholders, in the Company's Form 10-K filed with
the Securities and Exchange Commission (the "SEC"), in other filings with the
SEC and in other communications by the Company and the Bank, which are made in
good faith pursuant to the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements include, without
limitation, statements with respect to anticipated future operating and
financial performance, including revenue creation, lending origination,
operating efficiencies, loan sales, charge-offs, loan loss allowances and
provisions, growth opportunities, interest rates, acquisition and divestiture
opportunities, capital and other expenditures and synergies, efficiencies, cost
savings and funding and other advantages expected to be realized from various
activities. The words, "may, "could," "should," "would," "will", "believe,"
"anticipate," "estimate," "expect," "intend," "plan," "project," "predict,"
"continue," and similar expressions are intended to identify forward-looking
statements.

Forward-looking statements include statements with respect to the Company's
beliefs, plans, strategies, objectives, goals, expectations, anticipations,
estimates or intentions that are subject to significant risks or uncertainties
or that are based on certain assumptions. Future results and the actual effect
of plans and strategies are inherently uncertain, and actual results could
differ materially from those anticipated in the forward-looking statements,
depending upon various important factors, risks or uncertainties. The following
factors, many of which are subject to change based on various other factors,
including factors beyond the Company's control, and other factors, including
others discussed in this Annual Report to Stockholders, in the Company's Form
10-K, other factors identified in the Company's other filings with the SEC, as
well as other factors identified by management from time to time, could have a
material adverse effect on the Company, the Bank and their subsidiaries and
their operations or cause their financial performance to differ materially from
the plans, objectives, expectations, estimates or intentions expressed in the
Company's or the Bank's forward-looking statements:


-    The strength of the United States economy in general and the strength of
     the local economies in which the Company and the Bank conduct operations
     which may be less favorable than expected and may result in, among other
     things, a deterioration in the credit quality and value of the Company's
     assets.

-    The economic impact of past and any future terrorist attacks, acts of war
     or threats of war and the response of the United States to any of these
     threats or attacks.

-    The effects of, and changes in, federal, state and local laws, regulations,
     rules and policies including laws, regulations, rules and policies
     affecting taxes, banking, securities, insurance and monetary and financial
     matters.

-    The effects of, and changes in, trade, monetary and fiscal policies and
     laws, including interest rate and other policies of the Federal Reserve
     Board and policies of the United States Treasury.

-    Inflation, interest rates, market and monetary fluctuations, including the
     effects of changes in the rate of prepayments of the Bank's assets.

-    The quality or composition of the Bank's loan portfolio.

-    Demand for loan products and services.

-    Deposit flows.

-    The ability of the Company and the Bank to compete with other financial
     institutions due to increases in competitive pressures in the financial
     services sector.

-    The ability of the Company to obtain new customers and to retain existing
     customers.

-    The timely development of, and acceptance of, products and services of the
     Company and the Bank and the perceived overall value of these products and
     services by users, including the features, pricing and quality compared to
     competitors' products and services.



<PAGE>



-    The willingness of users to substitute competitors' products and services
     for the Company's and the Bank's products and services.

-    The Company's and the Bank's success in gaining regulatory approval of
     their products and services, when required.

-    The impact of technological changes implemented by the Company and the Bank
     and by other parties, including third party vendors, which may be more
     difficult or more expensive than anticipated or which may have unforeseen
     consequences to the Company and its customers. In this regard, in October
     2002, Citizens First entered into an agreement with Fiserv Solutions, Inc.
     ("Fiserv") relating to Fiserv's ITI software package. Citizens First
     believes that the Fiserv ITI software package, together with planned
     upgrades to the Bank's PCs and data line connectivity, should provide it
     with significant processing improvements that it believes will allow
     enhanced customer service and efficiencies within the Bank. There can be no
     assurance, however, that the planned computer conversion will not be more
     difficult or expensive than anticipated or have unforeseen consequences.
     For additional information about the planned computer conversion, see
     "Planned Computer Conversion" in the Company's "Business" section of its
     Form 10-K filed with the SEC for the transition period ended December 31,
     2002.

-    The ability of the Company to develop and maintain secure and reliable
     electronic systems.

-    The ability of the Company to retain key executives and employees and the
     difficulty that the Company may experience in replacing key executives and
     employees in an effective manner.

-    Consumer spending and saving habits which may change in a manner that
     adversely affects the Company's business.

-    Business combinations and the integration of acquired businesses which
     may be more difficult or expensive than expected.

-    Unanticipated litigation or disputes and the costs, effects and outcomes of
     existing or future litigation or disputes.

-    The effects of, and changes in, accounting principles, guidelines, policies
     and practices, as may be adopted by state and federal regulatory agencies
     and the Financial Accounting Standards Board.

-    The ability of the Company to manage the risks associated with the
     foregoing as well as anticipated.

This list of important factors is not exclusive. These risks and uncertainties
should be considered in evaluating forward-looking statements, and undue
reliance should not be placed on these statements. Neither the Company nor the
Bank undertakes - and each specifically disclaims any obligation - to update any
forward-looking statement, whether written or oral, that may be made from time
to time by or on behalf of the Company or the Bank or to release publicly the
result of any revisions that may be made to any forward-looking statements,
including revisions to reflect events or circumstances after the date of such
statements or to reflect the occurrence of anticipated or unanticipated events.

OPERATING STRATEGY

Citizens First is a community-oriented financial institution, offering a wide
range of deposit and loan products to its customers. In recent years, Citizens
First's strategy has been one of controlled balance sheet growth and broader
diversification of its loan products and loan portfolio. Beginning in
1995,Citizens First determined that it would originate its fixed-rate
one-to-four-family residential mortgage loans primarily for sale, while
generally retaining the servicing rights as to those mortgages. Since that time,
Citizens First has emphasized originating residential mortgage loans, commercial
and multi-family real estate loans, construction loans, commercial loans,
automobile loans, home equity loans and lines of credit and a variety of
consumer loans. It has also emphasized increasing sources of noninterest income.





<PAGE>

CRITICAL ACCOUNTING POLICIES

Management has established various accounting policies that govern how
accounting principles generally accepted in the United States of America are
used to prepare the Company's financial statements. The Company's significant
accounting policies are described in the Notes to the Consolidated Financial
Statements of this Annual Report to Stockholders. Certain accounting policies
require management to make estimates and assumptions about matters that are
highly uncertain and as to which different estimates and assumptions would have
a material impact on the carrying value of certain of the Company's assets and
liabilities, on the Company's net income and on the Company's overall financial
condition and results of operations. The estimates and assumptions management
uses are based on historical experience and other factors, which management
believes to be reasonable under the circumstances. Actual results could differ
significantly as a result of these estimates and assumptions, and different
estimates and assumptions could have a material impact on the carrying value of
certain of the Company's assets and liabilities, on the Company's net income and
on the Company's overall financial condition and results of operations for
future reporting periods. Management believes that the Company's "critical
accounting policies" relate to the Bank's allowance for loan losses and its
valuation of its mortgage servicing rights. These policies are described in more
detail below.

ALLOWANCE FOR LOAN LOSSES. Citizens First recognizes that losses will be
experienced from originating loans and that the risk of loss will vary with,
among other factors, the type of loan being made, the creditworthiness of the
borrower over the term of the loan, general economic conditions and, in the case
of a secured loan, the quality of the security for the loan. To reflect the
perceived risk associated with the Bank's loan portfolio, the Bank maintains an
allowance for loan losses to absorb potential losses from loans in its loan
portfolio. As losses are estimated to have occurred, management establishes a
provision for loan losses, which is then charged directly against earnings. Loan
losses are charged against the allowance when management believes the
uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any,
are credited to the allowance.

The allowance for loan losses represents management's estimate of probable
losses based on information as of the date of the financial statements.
Management evaluates whether the Bank's loan loss allowance is adequate at least
quarterly by assessing the expected losses inherent in its loan portfolio.
Management first reviews perceived higher risk loans, such as commercial and
multi-family real estate loans and loans with significant balances, and
establishes an allowance for those loans. Second, management reviews loans that
have deteriorated below certain levels of credit risk, including impaired, or
likely uncollectible loans, and loans that have been classified as "watch list"
loans, and attributes a specified loan loss allowance to these reviewed loans.
For additional information regarding how management determines whether a loan is
impaired, or likely uncollectible, see Note 1 to the Company's Consolidated
Financial Statements. Third, an appropriate level of loan loss is then
determined for the remaining balance of the loan portfolio by applying varying
loan loss factors. Management then analyzes whether the combined loan loss
allowance is adequate by considering other factors that may have an impact on
the performance of the loan portfolio, such as trends in real estate and
collateral values, and adjusts the overall loan loss allowance. For additional
information on how management determines the allowance for loan losses, see
"Allowance for Loan Losses "in the "Business " section of the Company's Form
10-K relating to the transition period ended December 31, 2002 that was filed
with the SEC.

No assurances can be given that Citizens First's level of allowance for loan
losses will be sufficient to cover future loan losses incurred by Citizens First
or that future adjustments to the allowance for loan losses will be unnecessary
if economic and other conditions differ substantially from the economic and
other conditions used by management to determine the current level of the
allowance for loan losses or if historical trends change. Nevertheless,
management believes that, based on information currently available, Citizens
First's allowance for loan losses is sufficient to cover losses inherent in its
loan portfolio at this time. In addition, it is uncertain whether various
regulatory agencies, as an integral part of their examination process and in
reviewing Citizens First's loan portfolio, will request that Citizens First
increase its allowance for loan losses. Citizens First believes, however, that
it has established its existing loan loss allowance in conformity with generally
accepted accounting principles. These agencies could, nevertheless, require
Citizens First to provide additions to the allowance for loan losses based upon
judgments of the agencies that are different from the judgments of management.
For additional information about the regulation and supervision applicable to
Citizens First and the Bancorp, see "Regulation and Supervision" in the
"Business" section of the Company's Form 10-K relating to the transition period
ended December 31, 2002 that was filed with the SEC.



<PAGE>




In the last few years, although the percentage of the loan loss allowance to
total loans has decreased, the Bank has increased the total amount of its
allowance for loan losses to a level that it believes is consistent with that of
other comparable financial institutions. For information on the Company's
allowance for loan losses over the last five years, see "Historical Analysis of
Loan Loss Allowance" in the "Business" section of the Company's Form 10-K
relating to the transition period ended December 31, 2002 that was filed with
the SEC. Because the estimates and assumptions underlying Citizens First's
allowance for loan losses are inherently uncertain, different estimates and
assumptions could require a material increase in the allowance for loan losses.
Any material increase in the allowance in the allowance for loan losses could
have a material adverse effect on Citizens First's net income and results of
operations.


VALUATION OF MORTGAGE SERVICING RIGHTS. The Bank routinely sells its originated
residential mortgage loans to investors, mainly Freddie Mac. Although Citizens
First sells the mortgage loans, it frequently retains the servicing rights, or
the rights to collect payments and otherwise service these loans, for an
administrative or servicing fee. The mortgage loans that the Bank services for
others are not included as assets in the Company's consolidated statement of
financial condition. Loans serviced for others were approximately $322.0 million
and $246.2 million at December 31, 2002 and March 31, 2002, respectively.


Citizens First's mortgage servicing rights relating to loans serviced for others
represent an asset of the Bank. This asset is initially capitalized and included
in other assets on the Company's balance sheet. The mortgage servicing rights
are then amortized into noninterest income in proportion to, and over the period
of, the estimated future net servicing income of the underlying mortgage
servicing rights. There are a number of factors, however, that can affect the
ultimate value of the mortgage servicing rights to the Bank, including the
estimated prepayment speed of the loan and the discount rate used to present
value the loan. For example, if the mortgage loan is prepaid, the Bank will
receive fewer servicing fees, meaning that the present value of the mortgage
servicing rights is less than the carrying value of those rights on the Bank's
balance sheet. Therefore, in an attempt to reflect an accurate expected value to
the Bank of the mortgage servicing rights, the Bank receives a valuation of its
mortgage servicing rights from an independent third party. The independent third
party's valuation of the mortgage servicing rights is based on relevant
characteristics of the Bank's loan servicing portfolio, such as loan terms,
interest rates and recent prepayment experience, as well as current market
interest rate levels, market forecasts and other economic conditions. Based upon
the independent third party's valuation of the Bank's mortgage servicing rights,
management then establishes a valuation allowance to quantify the likely
impairment of the value of the mortgage servicing rights to the Bank. The
estimates of prepayment speeds and discount rates are inherently uncertain, and
different estimates could have a material impact on the Company's net income and
results of operations. The valuation allowance is evaluated and adjusted
quarterly by management to reflect changes in the fair value of the underlying
mortgage servicing rights based on market conditions.


The balances of the Bank's capitalized mortgage servicing rights, net of
valuation allowance, included in the Company's other assets at December 31, 2002
and March 31, 2002 were $1,939,000 and $1,959,000, respectively. These balances
approximate the fair value of the Bank's mortgage servicing rights at these
dates. The fair values of the Bank's mortgage servicing rights were determined
using annual constant prepayment speeds of 33.93% and 15.38% and discount rates
of 7.02% and 8.04% at December 31, 2002 and March 31, 2002, respectively.
(Constant prepayment speeds are a statistical measure of the historical or
expected prepayment of principal on a mortgage.) Different estimates of the
prepayment speeds and discount rates or different assumptions could have a
material impact on the value of the mortgage servicing rights and, therefore, on
the Company's valuation allowance. These estimates and assumptions, in turn,
could have a material impact on the Company's assets, net income and results of
operations, and, accordingly, the Company considers the Bank's valuation of
mortgage servicing rights to be a "critical accounting policy." For further
discussion of the Bank's valuation allowance and valuation of mortgage servicing
rights, including a table setting forth the valuation allowances established by
management with regard to the Bank's mortgage servicing rights for the previous
three periods, see Note 6 to the Company's Consolidated Financial Statements. As
can be seen in that table, as market interest rates have declined over this
three-year period, prepayments have increased and discount rates have declined.
As a result of the combined effect of these conditions, the expected value of
the Bank's mortgage servicing rights has decreased and management has,
accordingly, increased its valuation allowance for the Bank's mortgage servicing
rights.

<PAGE>


COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED DECEMBER 31,2002 AND
THE NINE MONTHS ENDED DECEMBER 31,2001

The Company changed its fiscal year so that its fiscal year now ends on December
31st,rather than on March 31st. As a result, the Company has filed with the SEC
a transition report on Form 10-K for the nine months ended December 31, 2002,
and audited financial statements as of and for the nine months ended December
31, 2002 are included with the Company's audited Consolidated Financial
Statements. To facilitate understanding the Company's results of operations for
the nine months ended December 31, 2002, however, the following table sets forth
the Company's audited results of operations for the nine months ended December
31, 2002 and the Company's unaudited results of operations for the nine months
ended December 31, 2001:






<TABLE>
<CAPTION>
                                                                   For the                    For the
                                                               9 Months Ended              9 Months Ended
                                                                Dec. 31, 2002              Dec. 31, 2001
                                                                  (audited)                 (unaudited)
                                                                --------------            --------------
<S>                                                          <C>                       <C>
INTEREST INCOME
Loans                                                        $      41,584             $      43,380

Interest-bearing deposits                                              242                       525
Securities:


Tax-exempt                                                             373                       367
Taxable                                                              3,742                     5,726
                                                             --------------            --------------
Total interest income                                               45,941                    49,998

INTEREST EXPENSE
Deposits                                                            13,172                    17,991
FHLB advances                                                        6,957                     5,960
                                                             --------------            --------------
Total interest expense                                              20,129                    23,951
                                                             --------------            --------------
NET INTEREST INCOME - Before provision for loan losses              25,812                    26,047
PROVISION FOR LOAN LOSSES                                              892                       747
                                                             --------------            --------------
NET INTEREST INCOME                                                 24,920                    25,300

NONINTEREST INCOME
Service charges and other fees                                       3,077                     1,671
Loan servicing fees                                                    440                       513
Net gain on sale of loans                                            2,202                       667
Gain on sale of investment securities                                  108                        11
Other                                                                  619                       399
                                                             --------------            --------------
Total noninterest income                                             6,446                     3,261


NONINTEREST EXPENSES
Compensation, payroll taxes, and employee benefits                   8,284                     7,952
Office occupancy and equipment                                       2,510                     2,667
Advertising and business promotion                                     641                       450
Stationery, printing, and supplies                                   1,220                     1,125
Data processing                                                        272                       324
Deposit statement preparation and collections                          555                       554
Professional fees                                                      930                       623
Appraisal fees                                                         722                       703
Other                                                                2,206                     2,234
                                                             --------------            --------------
Total noninterest expenses                                          17,340                    16,632
                                                             --------------            --------------
INCOME - Before federal income tax expense                          14,026                    11,929
FEDERAL INCOME TAX EXPENSE                                           4,842                     4,056
                                                             --------------            --------------
NET INCOME                                                   $       9,184             $       7,873
                                                             ==============            ==============
BASIC EARNINGS PER COMMON SHARE                              $        1.14             $        0.91
                                                             ==============            ==============
DILUTED EARNINGS PER COMMON SHARE                            $        1.14             $        0.91
                                                             ==============            ==============
</TABLE>




<PAGE>


Net Income

Net income increased $1.3 million, or 16.7%, for the nine months ended December
31, 2002 to $9.2 million, resulting in net earnings of $1.14 per share. The
increase in net income for the nine months was primarily due to a $3.2 million,
or 97.7% increase in noninterest income, partially offset by a $708,000 increase
in noninterest expenses, which was primarily due to a $332,000 increase in
compensation, payroll taxes and employee benefits and a $307,000 increase in
professional fees, along with a $786,000 increase in federal income taxes.
Contributing to the increase in noninterest income were a $1.5 million, or
230.1%, increase in net gain on sale of loans and a $1.4 million, or 84.1%,
increase in service charges and other fees. These increases are explained in
more detail below.

Net Interest Income

Net interest income, before provision for loan loss, decreased by $235,000, or
0.9%, to $25.8 million for the nine months ended December 31, 2002, from $26.0
million for the nine months ended December 31, 2001. The decrease in net
interest income, before provision for loan loss, consisted primarily of:

-    a $4.1 million, or 8.1%, decrease in total interest income to $45.9
     million for the nine months ended December 31, 2002, from $50.0 million for
     the nine months ended December 31, 2001, which is explained in detail
     below, offset by:


-    a $3.8 million, or 16.0%, decrease in total interest expense to $20.1
     million for the nine months ended December 31, 2002, from $24.0 million for
     the nine months ended December 31, 2001, which is explained in detail
     below.

The $4.1 million decrease in total interest income for the nine months ended
December 31, 2002, compared to the nine months ended December 31, 2001, was
comprised primarily of:


-    a $1.8 million, or 4.1%, decrease in interest income on loans, primarily
     due to a 111 basis point reduction in average yields on loans, partially
     offset by the increased average principal balance of loans outstanding,

-    a $2.0 million, or 34.6%, decrease in interest income on taxable
     securities, primarily due to a 142 basis point reduction in the average
     yield on securities, and


-    a $283,000,or 53.9%, decrease in income from interest-bearing deposits,
     primarily due to a 221 basis point decrease in average interest rates on
     those deposits.


Average interest earning assets increased $75.4 million primarily due to a $79.7
million, or 11.1%, increase in the average balance of loans, which occurred as a
result of the growth in deposits, the decrease in cash and cash equivalents and
the increase in Federal Home Loan Bank advances.


The $3.8 million decrease in total interest expense for the nine months ended
December 31, 2002, compared to the nine months ended December 31, 2001, was
comprised primarily of:


-    a $3.8 million, or 29.9%, decrease in interest expense on certificates of
     deposit, due to a $35.0 million, or 11.0%, decrease in the average balance
     of certificates of deposit, combined with a 112 basis point average rate
     decrease on those certificates of deposit,



-    a $1.1 million, or 19.6%,aggregate increase in interest expense on
     savings, NOW and MMDA accounts, partially offset by:




-    a $1.0 million, or 16.7%, increase in interest expense on Federal Home
     Loan Bank advances to $7.0 million for the nine months ended December 31,
     2002 from $6.0 million at December 31, 2001, primarily due to a $32.7
     million increase in the average balance of Federal Home Loan Bank advances,
     which was partially offset by a 39 basis point decrease in average interest
     rates on those advances.


PROVISION FOR LOAN LOSSES

The provision for loan losses increased $145,000, or 19.4%, from $747,000 for
the nine months ended December 31, 2001 to $892,000 for the nine months ended
December 31, 2002. The increased provision for loan losses is the result of a
$621,000 increase in non-performing loans and the $476,000, or 134.5%, increase
in net charge-offs for the nine months ended December 31, 2002 compared to the
nine months ended December 31, 2001. As a result of the increase in
non-performing loans and net charge-offs, management felt an increased provision
was warranted. Despite the increased provision, the loan loss allowance as a
percentage of total loans decreased from 1.53% at December 31, 2001 to 1.33% at
December 31, 2002, and the allowance for loan losses as a percentage of
non-performing loans decreased from 555.1% at December 31, 2001 to 459. 1% at
December 31, 2002, in each case primarily as a result of the significant
increase in the size of the Bank's loan portfolio. Management considers its
allowance for loan losses to be one of its critical accounting policies, meaning
that in order to determine the
<PAGE>
allowance and provision for loan losses, management must make estimates and
assumptions about matters that are highly uncertain and as to which different
estimates and assumptions would have a material impact on the Company's net
income and on the Company's overall financial condition and results of
operations. For more information, see the caption "Critical Accounting Policies"
in this section of "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

NONINTEREST INCOME

Noninterest income increased by $3.2 million, or 97.7%, from $3.3 million for
the nine months ended December 31, 2001 to $6.4 million for the nine months
ended December 31, 2002. The increase was primarily due to the following
changes between the nine month period ended December 31,2001 and the nine month
period ended December 31, 2002:

-   a $1.5 million, or 230.1%, increase in net gain on sales of loans, due to
    increased sales of fixed rate one- to four-family loans, which occurred as
    a result of an increased volume of refinancings. (The rights to service
    these loans and the income associated with those rights were retained by
    Citizens First.) The following factors contributed to the increased sale of
    loans from the nine months ended December 31,2001 to the nine months ended
    December 31,2002:

    -   During the nine months ended December 31, 2002,the Bank originated
        $347.1 million of one- to four-family residential mortgage loans, an
        increase of $68.1 million, or 24.4%, from $279.0 million of one-to
        four-family residential mortgage loans originated by the Bank for the
        nine months ended December 31, 2001.

    -   At December 31, 2002, the Bank had $1.6 million of one- to four-family
        residential mortgage loans held for sale, an increase of $247,000, or
        18.9%, from $1.3 million of one-to four-family residential mortgage
        loans held for sale by the Bank at December 31, 2001.

    -   a $1.4 million, or 84.1%,increase in service charges and other fees, due
        to additional fees charged to retail deposit accountholders as a result
        of the change to the fee structure of retail deposit products that the
        Bank implemented in the summer of 2001 and due to increased numbers of
        deposit accounts.

    -   a $220,000, or 55.1%, increase in other noninterest income.

    -   a $97,000, or 881.8%,increase in gain on sale of securities, due to the
        sale of additional securities in order to fund loan growth.

These increases in noninterest income were partially offset by a $73,000, or
14.2%, decrease in loan servicing fees, due to an increased number of
refinancings as a result of lower market interest rates.

NONINTEREST EXPENSE

Non-interest expense increased $708,000, or 4.3%, to $17.3 million for the nine
months ended December 31, 2002, from $16.6 million for the nine months ended
December 31, 2001, primarily due to the following:

-   An increase of $332,000, or 4.2%,in compensation, payroll taxes and employee
    benefit expenses, due to an increase in commissions to lending personnel as
    a result of increased loan volumes and increased costs for the ESOP due to
    an increase in the average closing price of the Company's stock from the
    prior period,

-   a $307,000, or 49.3%, increase in legal and audit fees, due to the
    increased costs associated with being a public company, including
    compliance costs associated with the enactment of the Sarbanes-Oxley Act of
    2002, and additional advice sought for employee benefit programs and data
    processing system changes,

    -   a $191,000, or 42.4%, increase in advertising and business promotion
        expense, due to increased advertising efforts by the Bank, and

    -   a $95,000, or 8.4%, increase in printing and supplies, partially due to
        additional required disclosure documents associated with mortgage
        lending.

These increases in non-interest expenses were partially offset by the following
decreases in non-interest expenses:

-   a $157,000, or 5.9%, decrease in office occupancy and equipment expenses,
    which primarily occurred because of more equipment and furniture purchases
    in the previous period made in connection with remodeling of the Bank's
    branch offices, and

-   a nominal $52,000, or 16.0%, decrease in data processing expenses.


<PAGE>

We plan to complete the renovation of the interiors of the remaining branch
offices that began in 2002 to make them more conducive to sales and service.
This investment, along with other upcoming investments in training and the
planned computer conversion, is expected to increase office occupancy and other
expenses in the near term. For additional information about the planned computer
conversion, see "Planned Computer Conversion" in the Company's "Business"
section of the Form 10-K filed with the SEC for the transition period ended
December 31, 2002.

INCOME TAXES

Federal income taxes for the nine months ended December 31,2002 were $4.8
million, an increase of $786,000, or 19.4%, from $4.1 million for the nine
months ended December 31, 2001. The effective tax rates for 2002 and 2001 were
34.5% and 34.0%, respectively.

COMPARISON OF OPERATING RESULTS FOR THE FISCAL YEARS ENDED MARCH 31,2002 AND
MARCH 31,2001

NET INCOME

Net income increased $7.4 million, or 231.1%, for the fiscal year ended March
31, 2002 to $10.5 million, resulting in net earnings of $1.23 per share. The
increase in net income for the fiscal year was primarily due to a 31.7% increase
in net interest margin and a $7.1 million contribution expense and an
accompanying reduction to the tax provision of $2.4 million in the prior period
due to the formation of Citizens First Foundation. Excluding the prior year's
contribution, net income for that fiscal year would have been $7.8 million,
which would have been an increase of $2.7 million, or 34.5%, from $7.8 million
to $10.5 million. Contributing to the increase were an $8.4 million, or 31.7%,
increase in net interest income, before provision for loan loss, and a $1.5
million, or 44.5%, increase in non-interest income, primarily due to an increase
in service charges and other fees.

NET INTEREST INCOME

Net interest income, before provision for loan loss, increased by $8.4 million,
or 31.7%, to $34.8 million for the fiscal year ended March 31,2002, from $26.4
million for the fiscal year ended March 31, 2001. Total interest income
increased $5.0 million, or 8.2%,to $65.5 million for the fiscal year ended
March 31, 2002, from $60.5 million for the fiscal year ended March 31,2001.
Interest income increased $8.5 million, primarily due to increases in the
average balance of loans and securities, but was offset partially by a $3.5
million decrease in interest income, primarily due to lower average market
interest rates. Interest earning assets increased $108.2 million, primarily due
to an $82.0 million, or 12.6%, increase in the average balance of loans, and a
$34.2 million, or 38.1%, increase in the average balance of securities from
funds invested as a result of the growth in deposits and the increase in
Federal Home Loan Bank advances.

Total interest expense decreased $3.4 million, or 10.0%,to $30.7 million for the
fiscal year ended March 31, 2002, from $34.1 million for the fiscal year ended
March 31, 2001, due to an 80 basis point reduction in overall market interest
rates. This decrease was primarily the result of 11 interest rate reductions
over the period. A $45.7 million, or 12.5%, decrease in the average balance of
certificates of deposit, combined with a 74 basis point rate decrease
contributed $4.9 million of the $5.8 million reduction to retail deposit
expense. This was offset by a $2.4 million, or 42.1%, increase in interest
expense on Federal Home Loan Bank advances to $8.1 million for the fiscal year
ended March 31, 2002, from $5.7 million in the fiscal year ended March 31,
2001. The increase in interest expense on Federal Home Loan Bank advances was
primarily due to a $40.3 million increase in the average balance of Federal Home
Loan Bank advances, partially offset by lower market interest rates.

PROVISION FOR LOAN LOSSES

The provision for loan losses increased $216,000, or 27.7%, from $780,000 for
the fiscal year ended March 31, 2001 to $996,000 for the fiscal year ended
March 31, 2002. The addition to the allowance for loan losses for the fiscal
year ended March 31, 2002 reflected management's determination to maintain the
overall loan loss allowance in consideration of its applied methodology, the
assessment of the composition of and trends in non-accruing loans, the increase
in net charge-offs for the fiscal year and the growth in the loan portfolio.
Even though the increase in non-accruing one- to four-family loans was offset
by the better than anticipated performance of commercial real estate,
commercial and consumer loans, management believed that the increased provision
was warranted considering the increased number of those types of loans, which,
despite better than expected performance, bear a higher degree of risk than
one- to four-family loans. Despite the increased provision, the loan loss
allowance as a percentage of total loans decreased from 1.58% at March 31, 2001
to 1.47% at March 31, 2002. The allowance for loan losses as a percentage of
nonperforming loans increased from 598.4% at March 31, 2001 to 614.6% at March
31, 2002. Management considers its provision for loan losses to be one of its
critical or significant accounting policies, meaning that in order to determine
the provision for loan losses, management must make estimates and assumptions
about matters that are highly uncertain and as to which different estimates and
assumptions would have a material impact on the Company's net income and the
Company's overall financial condition and results of operations. For more
information, see the caption "Critical Accounting Policies in this section of
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
<PAGE>
NONINTEREST INCOME

Noninterest income increased by $1.5 million, or 44.5%, from $3.3 million in
the fiscal year ended March 31, 2001 to $4.7 million in the fiscal year ended
March 31, 2002. The increase was primarily due to a $1.0 million, or 64.2%,
increase in service charges and other fees, primarily due to additional fees
charged to retail deposit accountholders as a result of a change to the fee
structure of retail deposit products. Income from mortgage banking activities,
which included loan servicing and sales of loans, increased $591,000, or 61.9%,
from $955,000 in the fiscal year ended March 31, 2001 to $1.5 million in the
fiscal year ended March 31, 2002, due to increased sales of fixed rate one- to
four-family loans, which occurred as a result of increased refinancings.

NONINTEREST EXPENSE

Non-interest expense decreased $2.2 million, or 8.9%, from $24.7 million at
March 31, 2001 to $22.5 million at March 31, 2002, primarily due to the $7.1
million contribution expense in the prior period due to the formation of
Citizens First Foundation at the time of the conversion of the Bank from a
mutual savings bank to a stock savings bank. Without the prior period
contribution expense, noninterest expense would have increased $4.9 million, or
27.4%, from $17.7 million for the fiscal year ended March 31, 2001 to $22.5
million for the fiscal year ended March 31, 2002. Compensation and benefit
expense increased $2.1 million, or 24.2%, primarily due to an addition of
staff, an increase in commissions to lending personnel as a result of increased
loan volumes and the increased cost for the ESOP due to a full year's accrual
versus only one month for the previous fiscal year and due to the higher share
price of the Company's stock. Legal and audit fees increased $498,000, or
122.1%, due to the increased costs associated with becoming a public company,
other public reporting expenses, and additional costs related to compliance
with recent regulatory changes regarding consumer privacy and the Bank's change
in retail deposit products offered. Advertising and business promotion expense
increased $94,000, or 18.1%. The opening of a new office in Lexington and the
remodeling of our Marysville branch were among the more visible steps we took
in the fiscal year ended March 31, 2002 to better serve our market area.
Stationery, printing and supplies expenses increased $329,000, or 28.7%,
deposit statement preparation increased $155,000, or 26.1% and appraisal fee
expense increased $359,000, or 74.3% due to increased loan application volume.
Other non-interest expenses increased $1.0 million, or 51.9% as a result of the
engagement of consultants to perform compensation reviews, operational
efficiency studies, a facilities review and overall technology review.

INCOME TAXES

Federal income taxes for the fiscal year ended March 31, 2002 were $5.4
million, an increase of $4.5 million, or 461.5%, from $965,000 for the fiscal
year ended March 31, 2001. The effective tax rates for the fiscal year ended
March 31, 2002 and the fiscal year ended March 31, 2001 were 33.9% and 23.2%,
respectively. The lower effective tax rate in the fiscal year ended March 31,
2001 was primarily attributable to the reduction of a deferred tax asset
valuation allowance of $500,000. The valuation allowance was originally
established related to the utilization of a contribution deduction
carry-forward resulting from a contribution to the Citizens First Savings
Charitable Foundation in 1998. Under the Internal Revenue Code, Citizens First
may only deduct up to 10% of its consolidated taxable income before the
charitable contribution in any one-year. The excess of the deductible amount is
deductible over each of the five succeeding taxable years, subject to a 10%
limitation each year. The valuation allowance was reversed based on estimates
that the contribution deduction carry-forward is expected to be fully utilized
based on the increase in income resulting from the proceeds received in the
Bank's mutual to stock conversion.

COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 2002 AND MARCH 31, 2002

TOTAL ASSETS

Total assets increased $53.8 million, or 5.7%, to $1.0 billion at December
31, 2002 from $946.4 million at March 31, 2002, primarily due to:

-   a $83.6 million, or 11.4%, increase in loans, which is explained in more
    detail below,

-   a $5.0 million, or 49.9%, increase in premises and equipment, due to the
    purchase and remodeling of the Bank's new Lexington office, additional
    capital improvements as a result of remodeling of our other Bank branches
    and the acquisition of additional land in the Bank's market area,

-   a $3.9 million, or 56.3%, increase in cash and due from depository
    institutions, due to ordinary day-to-day fluctuations in these assets,

-   a $1.4 million, or 1136%, increase in loans held for sale, due to an
    increase in refinancings as a result of lower market interest rates and due
    to differences in timing of loan sales, and


<PAGE>

-   a $1.7 million, or 22.3%, increase in Federal Home Loan Bank stock, due to
    increased borrowings from the Federal Home Loan Bank of Indianapolis, which,
    in turn, required an increased investment in Federal Home Loan Bank stock.

The increases in assets described above were partially offset by the following
decreases in assets at December 31, 2002, as compared to assets at March 31,
2002:

-   an $18.2 million, or 15.3%, net decrease in securities available for
    sale, consisting primarily of:

    -   a $19.4 million decrease in United States government agency
        securities, and
    -   a $9.2 million decrease in corporate securities, partially offset by:
    -   a $6.9 million increase in tax-exempt Michigan municipal bonds, and

-   a $21.5 million, or 42.2%, decrease in interest bearing deposits in other
    depository institutions.

These decreases in securities available for sale were primarily due to the sale
of securities to fund loan growth. Similarly, the decrease in interest bearing
deposits in other depository institutions was mainly to fund loan growth.
Citizens First's net loans to assets ratio at December 31, 2002 was 81.9%
compared to 77.7% at March 31, 2002, as a result of the $83.6 million increase
in loans referred to above. The increase in loans was a result of Citizens
First's operating strategy of controlled balance sheet growth and consisted
primarily of:

-   a $29.1 million, or 7.6%, increase in one- to four-family mortgage loans to
    $414.9 million, due to an increased number of jumbo loans held to maturity,

-   a $34.6 million, or 23.9%, increase in commercial real estate loans to
    $179.4 million,

-   a $18.2 million, or 43.2%, increase in commercial loans to $60.3 million,

-   a $1.5 million, or 2.1%, increase in home equity loans and lines of credit
    to $72.7 million, and

-   a $6.2 million, or a 41.3%, increase in other consumer loans to $21.2
    million.

The increase in commercial and commercial real estate loans was primarily due to
the development of new business relationships and growth of existing clients.
The increase in consumer loans was due to the Bank offering promotional interest
rates. These loan increases were offset by the following decreases in loans at
December 31, 2002, as compared to at March 31, 2002:

-   a nominal $275,000, or 0.5%, decrease in automobile loans to $61.4 million,
    and

-   a $5.7 million, or 20.8%, decrease in construction loans to $21.8 million.

TOTAL LIABILITIES

Total liabilities increased $57.1 million, or 7.2%, from $794.9 million at
March 31, 2002 to $852.0 million at December 31, 2002. The increase was
primarily due to the following:

-   a $37.8 million, or 6.0%, increase in deposits from $634.0 million at March
    31, 2002 to $671.8 million at December 31, 2002, and

-   a $21.6 million, or 14.3%, increase in Federal Home Loan Bank advances from
    $151.4 million at March 31, 2002 to $173.0 million at December 31, 2002 -
    the increase in borrowings from the Federal Home Loan Bank was because
    additional borrowings were made to take advantage of the low rates being
    offered.

These increases in liabilities were offset by:

-   a $2.3 million, or 24.1%, decrease in accrued interest and other
    liabilities, due to changes in market interest rates and decreased holdings
    of tax and insurance payments held in escrow as a result of the timing of
    required tax and insurance premium payments.
<PAGE>
The overall increases in deposits and borrowings from the Federal Home Loan Bank
were primarily invested in loans. The increases in deposits and borrowings from
the Federal Home Loan Bank were a result of Citizens First's operating strategy
of controlled balance sheet growth. The $37.8 million increase in deposits at
December 31, 2002 compared to at March 31, 2002 was comprised of the following
components:

-   an increase in interest bearing deposits of $45.5 million, or 7.5%, driven
    by:

    -   a $43.6 million, or 27.6%, growth in money market deposit accounts,
    -   a $20.7 million, or 26.9%, growth in NOW checking accounts, partially
        offset by:
    -   a $17.5 million, or 6.0%, decrease in certificates of deposit.


The increases in the money market deposit accounts and the NOW checking accounts
were primarily due to lower overall rates in other short-term accounts and
certificates of deposit and due to growth in business deposit accounts, which
resulted primarily from our ongoing effort to attract and retain deposit
relationships with businesses throughout our market area.

The increase in interest bearing deposits at December 31, 2002, as compared to
at March 31, 2002, was partially offset by:


-   a $7.7 million, or 25.3%, decline in noninterest bearing deposits, which
    consist mainly of a decline in checking accounts maintained by business
    customers.

QUALITY OF ASSETS

Non-performing loans were 0.24% of total assets at December 31, 2002, compared
to 0.19% at March 31, 2002. Non-performing loans increased $621,000, or 34.6%,
to $2.4 million at December 31, 2002 from $1.8 million at March 31, 2002. This
increase in non-performing loans was primarily due to a $439,000 increase in
non-performing real estate loans and a $121,000 increase in non-performing
consumer loans as a result of poorer general economic conditions, and a nominal
$61,000 increase in non-performing commercial loans. Non-performing assets,
which includes not only non-performing loans, but also real estate owned by the
Bank after foreclosure, increased $21,000 to $2.8 million, or 0.28% of total
assets, at December 31, 2002, as compared to $2.7 million, or 0.29%, of total
assets at March 31, 2002. This increase in non-performing assets was due to the
increase in non-performing loans described above partially offset by a $600,000
decrease in other real estate owned. The allowance for loan losses was $11.1
million at December 31, 2002 and March 31, 2002, or 1.33% of total loans and
459.1% of non-performing loans at December 31, 2002, as compared to 1.47% of
total loans and 614.6% of non-performing loans at March 31, 2002. The Company's
allowance for loan losses is a critical accounting policy that involves
estimates and assumptions about matters that are highly uncertain. Use of a
different amount for the allowance could have a material impact on the
Company's financial statements. For more information on how the amount of this
allowance is determined, please see the caption "Critical Accounting Policies"
in this section "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

STOCKHOLDERS' EQUITY

Stockholders' equity decreased $3.3 million from $151.4 million at March 31,
2002 to $148.2 million, as a result of the addition of net income of $9.2
million and a $1.0 million increase due to the allocation of ESOP shares, more
than offset by the repurchase of 546,738 shares at a cost of $11.3 million, a
$271,000 decrease in accumulated other comprehensive income from the unrealized
loss on securities and total dividends of $1.9 million paid during the period
from April 1, 2002 through December 31, 2002.

<PAGE>

AVERAGE BALANCES, INTEREST AND AVERAGE YIELDS/COST

The following table presents certain information for the periods indicated
regarding average balances of interest-earning assets and interest-bearing
liabilities, as well as the total dollar amounts of interest income from average
interest-earning assets and the total dollar amounts of interest expense on
average interest-bearing liabilities and the resulting average yields and costs.
The yields and costs for the periods indicated are derived by dividing income or
expense by the average balances of assets or liabilities, respectively, for the
years presented. Average balances of assets and liabilities were derived from
monthly balances of those assets and liabilities.


<TABLE>
<CAPTION>
                                                      For the Nine Months Ended December 31, (Dollars in thousands)
                                             -------------------------------------------------------------------------------------
                                                              2002                                         2001
                                             -----------------------------------------     ---------------------------------------
                                              Average                     Average          Average                     Average
                                              Balance      Interest      Yield/Rate(1)     Balance      Interest     Yield/Rate(1)
                                             --------      --------      -------------     -------      --------     -------------
<S>                                           <C>            <C>            <C>             <C>           <C>          <C>
INTEREST EARNING ASSETS:
Loans (2)                                     $796,562       $ 41,584         6.96%         $716,828      $ 43,380         8.07%

INVESTMENT SECURITIES (3):                     107,670          3,725         4.61           127,505         5,768         6.03
FHLB Stock                                       8,467            390         6.14             6,991           325         6.20
FED Funds Sold                                       -              -         -                    -             -         -
Interest-bearing deposits                       36,668            242         0.88            22,652           525         3.09
                                              --------       --------       ------          --------      --------       ------
Total interest-earning assets                  949,367         45,941         6.45           873,976        49,998         7.63
                                              --------       --------       ------          --------      --------       ------
Noninterest-earning assets                      24,684                                        32,663
                                              --------                                      --------
Total assets                                  $974,051                                      $906,639
                                              ========                                      ========

INTEREST-BEARING LIABILITIES:
Deposits:
   Savings                                    $ 80,612       $    608         1.01%         $ 79,794      $  1,374         2.30%
   NOW                                          89,406            767         1.14            70,401           920         1.74
   MMDA                                        175,410          2,959         2.25           117,419         3,095         3.51
   Certificates of deposit                     283,802          8,838         4.15           318,844        12,602         5.27
                                              --------       --------       ------          --------      --------       ------
Total interest-bearing deposits                629,230         13,172         2.79           586,458        17,991         4.09
FHLB advances and other borrowings             164,199          6,957         5.65           131,477         5,960         6.04
                                              --------       --------       ------          --------      --------       ------
Total interest-bearing liabilities             793,429         20,129         3.38           717,935        23,951         4.45
Non-interest-bearing deposits                   22,044                                        26,209
Other noninterest-bearing liabilities           10,130                                        10,104
                                              --------                                      --------
Total liabilities                              825,603                                       754,248
Equity                                         148,448                                       152,391
                                              --------                                      --------
Total liabilities and equity                  $974,051                                      $906,639
                                              ========                                      ========
Net interest-earning assets                   $155,938                                      $156,041
                                              ========                                      ========
Net interest income                                         $ 25,812                                      $ 26,047
                                                            ========                                      ========
Interest rate spread (4)                                                     3.07%                                         3.18%
Net interest margin as a percentage
   of interest-earning assets (5)                                            3.63%                                         3.97%
Ratio of interest-earning assets
   to interest-bearing liabilities                                         119.65%                                       121.73%
</TABLE>





(1) The average yields/rates for the nine months ended December 31, 2002 and the
    nine months ended December 31, 2001 have been annualized to show average
    yields/rates per annum based on the assumption of annualized interest income
    or interest expense, as applicable.

(2) Balances are net of deferred loan origination costs, but include deferred
    loan origination and other fees, undisbursed proceeds of construction loans
    in process and nonperforming loans.

(3) Includes investment securities available-for-sale and held-to-maturity.

(4) Net interest rate spread represents the difference between the weighted
    average yield on interest-earning assets and the weighted average cost of
    interest-bearing liabilities.

(5) Net interest margin represents net interest income as a percentage of
    average interest-earning assets.
<PAGE>
AVERAGE BALANCES,INTEREST AND AVERAGE YIELDS/COST


<TABLE>
<CAPTION>
                                                             For the Fiscal Years Ended March 31, (Dollars in thousands)
                                                  ---------------------------------------------------------------------------------
                                                                 2002                                      2001
                                                  ---------------------------------------    --------------------------------------
                                                  Average                     Average        Average                      Average
                                                  Balance     Interest       Yield/Rate      Balance      Interest      Yield/Rate
                                                  -------     --------       ----------      -------      --------      ----------
<S>                                              <C>          <C>             <C>            <C>          <C>           <C>
INTEREST EARNING ASSETS:
Loans (1)                                          $733,097       $ 56,798         7.75%     $651,084      $ 52,491         8.06%

INVESTMENT SECURITIES (2):                          123,894          7,272         5.87        89,742         6,080         6.77
FHLB Stock                                            6,828            466         6.83         5,651           345         6.11
FED Funds Sold                                            -              -         -            1,193            64         5.36
Interest-bearing deposits                            22,103            931         4.21        30,056         1,537         5.11
                                                   --------       --------       ------      --------      --------       ------
Total interest-earning assets                       885,922         65,467         7.39       777,726        60,517         7.78
                                                   --------       --------       ------      --------      --------       ------
Noninterest-earning assets                           27,312                                    37,420
                                                   --------                                  --------
Total assets                                       $913,234                                  $815,146
                                                   ========                                  ========
INTEREST-BEARING LIABILITIES:
Deposits:
   Savings                                         $ 79,401       $  1,533         1.93%     $ 89,418      $  2,136         2.39%
   NOW                                               73,099          1,359         1.86        71,453         1,440         2.02
   MMDA                                             124,754          4,104         3.29        98,709         4,338         4.39
   Certificate of deposit                           320,013         15,562         4.86       365,663        20,471         5.60
                                                   --------       --------       ------      --------      --------       ------
Total interest-bearing deposits                     597,267         22,558         3.78       625,243        28,385         4.54
FHLB advances and other borrowings                  130,645          8,133         6.23        90,348         5,725         6.34
                                                   --------       --------       ------      --------      --------       ------
Total interest-bearing liabilities                  727,912         30,691         4.22       715,591        34,110         4.77
Non-interest-bearing deposits                        24,812                                    17,567
Other noninterest-bearing liabilities                 9,929                                     5,196
                                                   --------                                  --------
Total liabilities                                   762,653                                   738,354
Equity                                              150,581                                    76,792
                                                   --------                                  --------
Total liabilities and equity                       $913,234                                  $815,146
                                                   ========                                  ========
Net interest-earning assets                        $158,010                                  $ 62,135
                                                   ========                                  ========
Net interest income                                               $ 34,776                                 $ 26,407
                                                                  ========                                 ========
Interest rate spread (3)                                                           3.17%                                    3.01%
Net interest margin as a percentage
   of interest-earning assets (4)                                                  3.93%                                    3.40%
Ratio of interest-earning assets
   to interest-bearing
liabilities                                                                      121.71%                                  108.68%
</TABLE>


(1) Balances are net of deferred loan origination costs, but include deferred
    loan origination and other fees, undisbursed proceeds of construction loans
    in process and nonperforming loans.
(2) Includes investment securities available-for-sale and held-to-maturity.
(3) Net interest rate spread represents the difference between the weighted
    average yield on interest-earning assets and the weighted average cost of
    interest-bearing liabilities.
(4) Net interest margin represents net interest income as a percentage of
    average interest-earning assets.


<PAGE>
RATE/VOLUME ANALYSIS

The following table presents the extent to which changes in interest rates and
changes in the volume of interest-earning assets and interest-bearing
liabilities have affected Citizens First's interest income and interest expense
during the periods indicated. Information is provided in each category of assets
and liabilities with respect to: (i) changes in interest income or interest
expense attributable to changes in interest rate (changes in interest rate
multiplied by prior volume of the applicable asset or liability); (ii) changes
in interest income or interest expense attributable to changes in the volume of
the applicable asset or liability (changes in volume multiplied by prior
interest rate); and (iii) the net change in interest income or interest expense
(the sum of the prior columns, which is also equal to changes in interest rate
multiplied by changes in volume of the applicable asset or liability). The
changes attributable to the combined impact of volume and rate have been
allocated on a proportional basis between changes in interest rate and volume
of the applicable asset or liability.


<TABLE>
<CAPTION>
                                                                                        (Dollars in thousands)
                                                           -------------------------------------------------------------------------
                                                              9 Months Ended Dec. 31, 2002           Year Ended March 31, 2002
                                                                      Compared to                            Compared to
                                                              9 Months Ended Dec. 31, 2001           Year Ended March 31, 2001
                                                               Increase (Decrease) Due to            Increase (Decrease) Due to
                                                           ----------------------------------    -----------------------------------
                                                              Rate       Volume        Net        Rate        Volume        Net
                                                           -------      -------      -------     -------      -------      -------
<S>                                                        <C>          <C>          <C>         <C>          <C>          <C>
INTEREST-EARNING ASSETS:
Loans                                                      $(6,621)     $ 4,825      $(1,796)     $(2,305)      $ 6,612      $ 4,307
Investment securities                                       (1,146)        (897)      (2,043)      (1,122)       2,314        1,192
FHLB stock                                                      (4)          69           65           49           72          121
FED funds sold                                                   -            -            -            -          (64)         (64)
Interest-earning deposits                                     (608)         325         (283)        (199)        (407)        (606)
                                                           -------      -------      -------      -------      -------      -------
Total interest-earning assets                               (8,379)       4,322       (4,057)      (3,577)       8,527        4,950
                                                           -------      -------      -------      -------      -------      -------
INTEREST-BEARING LIABILITIES:
Deposits:
   Savings                                                    (780)          14         (766)        (364)        (239)        (603)
   NOW                                                        (401)         248         (153)        (114)          33          (81)
   MMDA                                                     (1,665)       1,529         (136)      (1,379)       1,145         (234)
   Certificates of deposit                                  (2,379)      (1,385)      (3,764)      (2,353)      (2,556)      (4,909)
                                                           -------      -------      -------      -------      -------      -------
Total deposits                                              (5,225)         406       (4,819)      (4,210)      (1,617)      (5,827)
FHLB advances and other borrowings                            (486)       1,483          997         (101)       2,553        2,408
                                                           -------      -------      -------      -------      -------      -------
Total interest-bearing liabilities                          (5,711)       1,889       (3,822)      (4,311)         936       (3,419)
                                                           -------      -------      -------      -------      -------      -------
Increase (decrease) in net interest income                 $(2,668)     $ 2,433      $  (235)     $   734      $ 7,591      $ 8,369
                                                           =======      =======      =======      =======      =======      =======
</TABLE>


Includes securities available-for-sale on a tax equivalent basis.

LIQUIDITY AND CAPITAL RESOURCES

GENERAL

Based on the following, Citizens First considers its liquidity and capital
resources sufficient to meet its outstanding short-term and long-term needs.

Liquidity is the Company's ability to meet its current and future needs for
cash. Citizens First further defines liquidity as the ability to have funds
available, without incurring excessive cost, to respond to the needs of
depositors and borrowers and to satisfy its financial commitments, as well as
maintaining the flexibility to take advantage of investment opportunities. Many
factors affect a bank's ability to meet its liquidity needs, including variation
in the markets served, the bank's asset-liability mix, its reputation and credit
standing in the market and general economic conditions.
<PAGE>
Citizens First's primary sources of funds consist of deposits, loan repayments,
payments of interest on loans, proceeds from the sale of loans originated for
sale, maturities and sales of investment securities and borrowings from the
Federal Home Loan Bank, cash on hand and cash on deposit. While maturities and
scheduled amortization of loans and securities are predictable sources of funds,
deposit flows, loan prepayments, and mortgage loan originations and sales are
greatly influenced by general interest rates, economic conditions and
competition. Additionally, dividends from the Bank may be a source of funding
for the Company. The Bank is subject to regulatory requirements regarding these
dividends. These regulatory requirements are further discussed in the section
entitled "Business" under the caption "Regulation and Supervision" of the
Company's Form 10-K filed with the SEC for the transition period ended December
31, 2002 and in Note 12 to the Company's Consolidated Financial Statements.



Citizens First and the Company primarily use their funds for the following:

-    To originate mortgages and other new loans,

-    To fund withdrawals of deposits and to pay interest on deposits,

-    To fund takedowns on loan commitments and letters of credit,

-    To invest in securities, including Federal Home Loan Bank stock,


-    To pay principal and interest on its borrowings, including interest on
     Federal Home Loan Bank advances,

-    To fund any capital expenditures, which, for the upcoming fiscal year, are
     expected to include renovation of the interiors of the remaining branch
     offices that began in 2002 and the planned computer conversion (for
     additional information about the planned computer conversion, see "Planned
     Computer Conversion" in the Company's "Business" section of the Company's
     Form 10-K filed with the SEC for transition period ended December 31,2002),

-    To pay dividends to its shareholders, and

-    To fund repurchases of the Company's stock pursuant to common stock
     repurchase plans approved by the Company's Board of Directors from time to
     time, which repurchase plans are described in detail below.

Liquidity management is both a daily and long-term responsibility of management.
Citizens First adjusts its investments in liquid assets based upon management's
assessment of (1) expected loan demand, (2) expected deposit flows,(3) yields
available on interest-earning assets and costs of interest-bearing liabilities,
and (4) the objectives of its asset/liability management program, which are to
balance and control the risks and financial position of Citizens First. Excess
liquid assets are invested generally in interest-earning overnight deposits and
short-and intermediate-term U. S. Government and agency obligations.


Citizens First's most liquid assets are cash and due from depository
institutions as well as securities maturing in one year or less. The levels of
these assets are dependent on Citizens First's operating, financing, lending and
investing activities during any given period. At December 31, 2002, cash and
deposits in other depository institutions totaled $40.4 million and
available-for-sale securities totaled $100.4 million. In addition, at December
31, 2002, Citizens First had the ability to borrow a total of approximately
$223.0 million from the Federal Home Loan Bank of Indianapolis. On that date,
Citizens First had advances outstanding from the Federal Home Loan Bank of
Indianapolis of $173.0 million.


OPERATING ACTIVITIES

Citizens First originates fixed-rate mortgage loans conforming to Freddie Mac
guidelines generally for sale in the secondary market. The proceeds of these
sales provide the Bank with funds for both additional lending and liquidity to
meet its current obligations. Citizens First sold $188.0 million of fixed-rate
mortgage loans during the nine months ended December 31, 2002, $191.4 million of
these loans during the fiscal year ended March 31, 2002 and $68.4 million of
these loans during the fiscal year ended March 31, 2001.

<PAGE>




INVESTING ACTIVITIES

The primary investing activities of Citizens First are the origination of loans,
the purchase and sale of securities and capital expenditures. The following
table shows those activities engaged in by Citizens First during the nine months
ended December 31, 2002, the fiscal year ended March 31, 2002 and the fiscal
year ended March 31 2001:

<TABLE>
<CAPTION>

                                                                         (Dollars in millions)
                                               ---------------------------------------------------------------------------
                                                  For the 9 Months           For the Fiscal               For the Year
                                                Ended Dec. 31, 2002      Ended March 31, 2002        Ended March 31, 2002
                                                -------------------      --------------------        --------------------
<S>                                              <C>                       <C>                       <C>
Loan originations                                  $          534.8          $          465.9          $           373.1
Maturities of securities                                       22.7                      70.3                       33.9
Sale of securities                                              7.0                      35.0                       15.5
Purchase of securities                                         12.1                     128.6                       48.5
</TABLE>


For the fiscal year ending December 31, 2003, upcoming capital expenditures are
expected to include renovation of the interiors of the remaining branch offices
that began in 2002 and the planned computer conversion. For additional
information about the planned computer conversion, see "Planned Computer
Conversion" in the Company's "Business" section of the Company's Form 10-K filed
with the SEC with regard to the transition period ended December 31, 2002.

FINANCING ACTIVITIES

Financing activities consist primarily of activity in deposit accounts, Federal
Home Loan Bank advances, payment of dividends to the Company's shareholders and
repurchase of the Company's stock pursuant to various common stock repurchase
programs approved by the Company's Board of Directors from time to time.
Citizens First experienced a net increase in total deposits of $37.8 million, a
net increase in total deposits of $52.7 million and a net decrease in total
deposits of $19.7 million for the nine months ended December 31,2002,the fiscal
year ended March 31, 2002 and the fiscal year ended March 31, 2001,
respectively. Deposit flows are affected by market interest rates, the interest
rates and products offered by Citizens First and its competitors and other
factors. Citizens First generally manages the pricing of its deposits to be
competitive with other local banks and to increase core deposit relationships.
Occasionally, Citizens First offers promotional rates on certain deposit
products in order to attract deposits. During the nine months ended December 31,
2002, the twelve months ended March 31, 2002 and the twelve months ended March
31, 2001, Federal Home Loan Bank advances increased $21.6 million, $36.5 million
and $44.4 million respectively. Federal Home Loan Bank advances are
collateralized by mortgage loans and investment securities under a blanket
collateral agreement. For additional information about Federal Home Loan Bank
advances, see Note 8 to the Company's Consolidated Financial Statements. The
increases in Federal Home Loan Bank advances were used to fund Citizens First's
increase in its loan portfolio.

At December 31, 2002, Citizens First had outstanding unfunded commitments to
originate loans or to refinance existing loans of $109.5 million, $43.0 million
of which had fixed interest rates. These loans are generally to be secured by
properties located in its market area. Citizens First anticipates that it will
have sufficient funds available to meet its current loan commitments. Loan
commitments have, in recent periods, been funded through cash and cash
equivalents, increased deposits, sales of loans and sales and maturities of
securities or through Federal Home Loan Bank borrowings. In addition,
certificates of deposit that are scheduled to mature in one year or less from
December 31, 2002 total $143.3 million. To the extent that Citizens First needs
to fund maturing certificates of deposit, they will also be funded through cash
and cash equivalents, increased deposits, sales of loans and sales and
maturities of securities or through Federal Home Loan Bank borrowings. Based on
past experience, however, management believes that a significant portion of
these certificates of deposit will remain with Citizens First.

During the nine months ended December 31, 2002 and the year fiscal ended March
31, 2002, dividends were paid to shareholders in the amounts of $1.9 million and
$1.4 million, respectively. The Company intends to continue to pay regular
quarterly dividends. (The Company's initial public offering was completed in
March 2001, so no dividends were paid during the fiscal year ended March
31,2001.) The declaration and payment of dividends, however, are subject to the
discretion of the Board of Directors and to compliance requirements under
applicable law. For additional information, see "Regulation and Supervision" in
the "Business" section of the Company's Form 10-K filed with the SEC for the
transition period ended December 31, 2002 and Note 12 to the Company's
Consolidated Financial Statements. Determination of the timing and amount of
future dividends, if any, will depend upon our results of operations, financial
condition, cash requirements, future business prospects, general business
conditions and other factors that the Board of Directors may deem relevant. At
this time, the Company does not believe that there are any restrictions that
would currently materially limit the Company's ability to pay dividends or that
the Company believes are likely to limit materially the future payment of
dividends on its common stock.



<PAGE>




On September 26, 2002, the Company's Board of Directors approved a plan to
repurchase up to 428,701, or 5%, of its outstanding shares of its common stock.
Under the common stock repurchase plan, the Company may purchase shares of its
common stock in the open market at prevailing prices or in privately negotiated
transactions from time to time depending upon market conditions and other
factors. As of December 31, 2002, the Company had repurchased 70,400 shares of
its common stock pursuant to this repurchase plan at a weighted average price of
$20.17 per share. In addition, by the end of July 2002, the Company announced
that it had completed the repurchase of 476,338 shares of its outstanding common
stock, at an average price of $20.72 per share pursuant to another repurchase
program. This repurchase program was in addition to a prior repurchase program
completed in December 2001, pursuant to which the Company repurchased 476,388
shares of its outstanding common stock, at an average price of $15.66 per share.
Repurchased shares are held in treasury and may be used in connection with
employee benefits and other general corporate purposes. Management does not
believe that these past purchases have had, nor are future purchases expected to
have, a significant impact on the Company's liquidity. For more information on
the Company's stock repurchase programs, see Note 15 to the Company's
Consolidated Financial Statements.


REGULATORY CAPITAL REQUIREMENTS
Citizens First is subject to various regulatory capital requirements
administered by the Federal Deposit Insurance Corporation, including a
risk-based capital measure. The risk-based capital guidelines include both a
definition of capital and a framework for calculating risk-weighted assets by
assigning balance sheet assets and off-balance sheet items to broad risk
categories. At December 31, 2002, Citizens First exceeded all of its regulatory
capital requirements. Citizens First is considered "well capitalized" under
regulatory guidelines. See Note 11 to the Company's Consolidated Financial
Statements and the discussion in the "Business" section of the Company's Form
10-K filed with the SEC for the transition period ended December 31, 2002 under
the caption "Regulation and Supervision."


IMPACT OF NEW ACCOUNTING STANDARDS

Statement of Financial Accounting Standards No.147, Acquisitions of Certain
Financial Institutions, (SFAS 147), effective October 1, 2002, supercedes SFAS
72 and requires the acquisition of financial institutions to be accounted for in
accordance with SFAS 141, Business Combinations, and SFAS 142, Goodwill and
Other Intangible Assets. In addition, SFAS 147 amends SFAS 144, Accounting for
the Impairment or Disposal of Long-Lived Assets, to include in its scope
long-term customer-relationship intangible assets of financial institutions. The
adoption of SFAS 147 will not have an effect on the Company's financial
statements.


Statement of Financial Accounting Standards No.148, Accounting for Stock-Based
Compensation - Transition and Disclosure (SFAS 148), effective for fiscal years
ending December 15,2002, amends FASB Statement No.123. Accounting for
Stock-Based Compensation. SFAS 148 provides alternative methods of transition
for a voluntary change to the fair value method of accounting for stock-based
employee compensation and also requires more prominent and more frequent
disclosures in financial statements about the effects of stock-based
compensation. The adoption of SFAS 148 will not have an effect on the Company's
financial statements.

EFFECT OF INFLATION AND CHANGING PRICES

The Company's Consolidated Financial Statements and related financial data
presented have been prepared in accordance with generally accepted accounting
principles in the United States of America, which require the measurement of
financial position and operating results in terms of historical dollars, without
considering the change in the relative purchasing power of money over time due
to inflation. The impact of inflation is reflected in the increased cost of the
Bank's operations and in increased loan amounts and in increased interest rates
(which must include a real rate of return and an additional amount to reflect
expected inflation over the term of the loan). Unlike most industrial companies,
virtually all of the assets and liabilities of a financial institution are
monetary in nature. As a result, interest rates generally have a more
significant impact on a financial institution's performance than do general
levels of inflation. Interest rates do not necessarily move in the same
direction or to the same extent as the prices of goods and services.


<PAGE>

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Citizens First's primary market risk exposure is interest rate risk. Sudden
fluctuations in market interest rates are inherently uncertain and could have a
negative impact on the earnings of Citizens First to the extent that the
interest rates on assets and liabilities do not change at the same speed, to the
same extent or on the same basis. For example, Citizens First's assets include a
large number of fixed-rate mortgage loans. As a result, during periods of rising
interest rates, there is a risk that Citizens First's interest expense will
increase faster than its interest income.

Citizens First's principal objectives regarding interest rate risk management
are to evaluate regularly the interest rate risk inherent in certain balance
sheet accounts, to determine the level of risk appropriate given Citizens
First's financial condition and outlook, operating environment, capital and
liquidity requirements and performance objectives and to manage interest rate
risk consistent with the Bank's Board of Directors' approved guidelines.

Citizens First has an Asset/Liability Management Committee that is responsible
for accomplishing the principal objectives of interest rate risk management. The
Committee regularly reviews the Bank's guidelines and strategies affecting the
Bank's asset/liability management related activities to determine if they are
adequate based on estimated market risk sensitivity, policy limits set by the
Bank's Board and overall market interest rate levels and trends. The Committee
is composed of members of management and the Bank's Board of Directors and
regularly meets to review the Bank's asset/liability mix. It also reports
trends, interest rate risk position and results of current interest rate risk
management strategies and recommends any changes to strategies to the Board of
Directors quarterly. In recent years, Citizens First has used the following
strategies to manage interest rate risk: (1) emphasizing the origination of
adjustable-rate loans and the sale of longer-term, fixed-rate loans; (2)
emphasizing shorter term consumer loans; (3) maintaining a high quality
portfolio of short to intermediate term securities; (4) maintaining high levels
of liquidity; and (5) using Federal Home Loan Bank advances to better structure
the maturities of its interest rate sensitive liabilities.

Adverse market interest rate changes between the time that a customer receives a
rate-lock commitment on a mortgage and when the fully funded mortgage loan is
sold to an investor can erode the value of that mortgage. Citizens First enters
into forward sales contracts in order to mitigate this particular interest rate
risk. Citizens First accepts credit risk in forward sales contracts should the
other party default, in which case Citizens First would be compelled to sell the
mortgages to another party at the current market price. Therefore, if market
interest rates increased from the date of the forward sales contract and the
other party defaulted, Citizens First would most likely have to sell the
mortgage to another party at a lower price, which would reduce earnings or
create losses on this mortgage. More recently, Citizens First has used some of
its excess liquidity to increase its loan and securities portfolios. As
liquidity is reduced, Citizens First's sensitivity to interest rate movements is
expected to increase.

The notional and estimated fair value of the Bank's forward sales contracts used
to manage risk positions associated with residential mortgage loans were as
follows:

<TABLE>
<CAPTION>
                                        (Dollars in thousands)
                                     ----------------------------
                                        Notional       Estimated
                                         Amount        Fair Value
                                     ------------     -----------
<S>                                  <C>              <C>
Dec. 31, 2002                        $     25,700     $        32
March 31, 2002                       $      6,100     $        15
March 31, 2001                       $      7,890     $        49
</TABLE>

Forward sales contracts as of December 31, 2002 have settlement dates of less
than 90 days. The weighted average settlement interest rate for these contracts
was 5.95%.

Citizens First uses a simulation model based on discounted cash flows to measure
the potential impact on its net interest income of hypothetical changes in
market interest rates. The model forecasts the Bank's net interest income for
the next twelve months assuming that there are no changes in interest rates or
the mix of assets and liabilities on the balance sheet from the end of the prior
period. After this initial forecast, the model subjects the balance sheet to
instantaneous and sustained rate changes of 100 and 200 basis points to the
treasury yield curve. In order to determine the possible effect of the rate
changes, the model uses various assumptions. Among others, these assumptions
include assumptions regarding the following:

-    the shape of the yield curve;

-    the pricing characteristics of and pricing decisions regarding loans based
     on previous rates charged by the Bank;





<PAGE>




-    changes in deposits and borrowings based on previous rates charged by the
     Bank and other competitive conditions;

-    reinvestments of cash flows from assets and liabilities based on current
     market interest rates;


-    the lack of any changes in the mix of assets and liabilities on the balance
     sheet;

-    the degree to which certain assets and liabilities with similar maturities
     or periods to repricing react to changes in market interest rates based on
     particular characteristics of those assets and liabilities;

-    expected prepayment rates on loans and investments based on industry
     standards and the current interest rate environment;

-    certificates of deposit and other deposit flows based on expected maturity
     dates; and

-    expected growth based on the Bank's projections.


The tables below set forth, as of December 31, 2002 and March 31, 2001,
estimated net interest income and the estimated changes in Citizens First's net
interest income for the next twelve month period that could occur as a result of
instantaneous changes in market interest rates of 100 and 200 basis points:

<TABLE>
<CAPTION>
                                                                 Estimated Change in Annual Net Interest Income
                                                                   At December 31, 2002 (Dollars in thousands)
                                                            ------------------------------------------------------
Increase/(Decrease) in Market Interest
Rates in Basis Points (Rate Shock)                              Amount               $ Change            % Change
-----------------------------------------------------       -----------            -----------         -----------
<S>                                                         <C>                      <C>                    <C>
200                                                         $    37,397              $    582               1.58
100                                                              37,203                   388               1.05
Static                                                           36,815                    -                0.00
-100                                                             36,102                  (713)             (1.94)
-200                                                             35,330                (1,485)             (4.03)

</TABLE>


The above table indicates that in the event of a sudden and sustained decline in
prevailing market interest rates, Citizens First's net interest income would be
expected to decrease.


<TABLE>
<CAPTION>


                                                                Estimated Change in Annual Net Interest Income
                                                                    At March 31, 2002 (Dollars in thousands)
                                                            ------------------------------------------------------
Increase/(Decrease) in Market Interest
Rates in Basis Points (Rate Shock)                             Amount                $ Change            % Change
-----------------------------------------------------       -----------            -----------         -----------
<S>                                                         <C>                      <C>                    <C>
200                                                         $    38,699              $  1,308               3.50
100                                                              38,149                   758               2.03
Static                                                           37,391                    -                  -
-100                                                             36,790                  (601)             (1.61)
-200                                                             35,740                (1,651)             (4.42)
</TABLE>





The Bank's interest rate risk position has improved at December 31, 2002
compared with its risk position at March 31, 2002 in the sense that in the event
of a sudden and sustained increase or decrease in market interest rates, at
December 31, 2002, there would be less overall volatility in net interest
income. The improvement is primarily the result of the Bank's increased number
of refinancings and subsequent sales of long-term, fixed-rate, one-to
four-family mortgage loans and the Bank's continued emphasis on originating
shorter duration, higher yielding commercial and consumer loans. The Bank also
was able to reprice many of its retail deposit products as a result of the low
level of market interest rates. The Bank also renewed advances from the Federal
Home Loan Bank and extended the maturity dates.

<PAGE>


As noted above, computation of the prospective effect of hypothetical interest
rate changes is based on a number of assumptions. The calculation of the
interest rate sensitivity of the Company could vary significantly if different
assumptions were used, or if the Company's response to changes in interest rates
included changes in the mix of assets and liabilities in its balance sheet.
Other shortcomings also exist in the table. These shortcomings include the
following, among others:

-    Although certain assets may have similar maturities or repricing
     characteristics, they may react in different degrees to changes in interest
     rates.

-    The interest rates on certain types of assets and liabilities may fluctuate
     in advance of changes in market interest rates, while interest rates on
     other types of assets and liabilities may lag behind changes in market
     interest rates.

-    Certain assets, such as adjustable-rate, residential mortgage loans, have
     features that restrict changes in interest rates on a short-term basis and
     over the life of the asset.

-    In the event of a change in interest rates, expected rates of repayments on
     loans and early withdrawals from time deposits could deviate significantly
     from those assumed in calculating the table.

-    If interest rates increased, it is also possible that the increased
     mortgage payments required of certain borrowers could result in an increase
     in delinquencies and defaults.

-    Changes in interest rates could also affect the volume and profitability of
     the Bank's lending operations.

As a result of these and other shortcomings in the model determining the
prospective effects of interest rate changes, the computations in the table
should not be relied upon as indicative of actual results in the event of
changes in market interest rates. Further, the computations do not reflect any
actions that management may undertake to respond to changes in interest rates.