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

FORM 10-K

| |  |                                                                                     
| |  | ------------------------------------------------------------------------------------
| |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
|
| |  | For the fiscal year ended March 31, 2002                                            

OR

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

Commission File Number: 0-32041

CITIZENS FIRST BANCORP, INC.
(Exact name of registrant as specified in its charter)

|                                                                                |  |                                                
|------------------------------------------------------------------------------- |  | -----------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization)         |  | 38-3573582
(I.R.S. Employer Identification No.)
|                                                                                |  |                                                
|525 Water Street, Port Huron, Michigan
(Address of principal executive offices) |  | 48060
(Zip Code)                               

Registrants telephone number, including area code: (810) 987-8300
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.01 per share
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-K or any
amendment to this Form 10-K. X

The aggregate market value of the voting and non-voting common equity held
by non-affiliates was $181.8 million, based upon the closing
price of $21.41 as
quoted on the Nasdaq National Market on June 21, 2002. Solely for purposes of
this calculation, the shares held by the directors and executive officers of
the registrant are deemed to be held by affiliates.

As of June 21, 2002,
the registrant had 8,736,273 shares of common stock
outstanding.

Documents Incorporated by Reference

Portions of the Annual Report to
Stockholders for the year ended March 31, 2002 (Part II)
Portions of the Proxy Statement for the Annual Meeting of Stockholders (Part III)





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TABLE OF CONTENTS



|                                                                                                        |  |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|Part I                                                                                                 
|Item 1. Business                                                                                       
|Item 2. Properties                                                                                     
|Item 3. Legal Proceedings                                                                              
|Item 4. Submission of Matters to a Vote of Securities Holders                                          
|Part II                                                                                                
|Item 5. Market for Registrants Common Equity and Related Stockholder Matters                          
|Item 6. Selected Financial Data                                                                        
|Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations          
|Item 7A. Quantitative and Qualitative Disclosure about Market Risk                                     
|Item 8. Financial Statements and Supplementary Data                                                    
|Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure           
|Part III                                                                                               
|Item 10. Directors and Executive Officers of the Registrant                                            
|Item 11. Executive Compensation                                                                        
|Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|Item 13. Certain Relationships and Related Transactions                                                
|Part IV                                                                                                
|Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K                               
|Employment Agreement                                                                                   
|Annual Report                                                                                          
|Consent of Plante & Moran LLP                                                                          



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##### Table of Contents



INDEX

|         |  |                                                                                                |  |  |    |      |  | 
|-------- |  | ---------------------------------------------------------------------------------------------- |  |  | -- | ---- |  | 
|         |  |                                                                                                |  |  |    | Page | 
|         |  | Part I                                                                                         |  |  |    |     
|Item 1.  |  | Business                                                                                       |  |  | 1  |     
|Item 2.  |  | Properties                                                                                     |  |  | 31 |     
|Item 3.  |  | Legal Proceedings                                                                              |  |  | 32 |     
|Item 4.  |  | Submission of Matters to a Vote of Securities Holders                                          |  |  | 32 |     
|         |  | Part II                                                                                        |  |  |    |     
|Item 5.  |  | Market for Registrants Common Equity and Related Stockholder Matters                          |  |  | 32 |     
|Item 6.  |  | Selected Financial Data                                                                        |  |  | 32 |     
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition                                    |  |  |    |     
|         |  | and Results of Operations                                                                      |  |  | 32 |     
|Item 7A. |  | Quantitative and Qualitative Disclosure about Market Risk                                      |  |  | 32 |     
|Item 8.  |  | Financial Statements and Supplementary Data                                                    |  |  | 32 |     
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial                      |  |  |    |     
|         |  | Disclosure                                                                                     |  |  | 32 |     
|         |  | Part III                                                                                       |  |  |    |     
|Item 10. |  | Directors and Executive Officers of the Registrant                                             |  |  | 33 |     
|Item 11. |  | Executive Compensation                                                                         |  |  | 33 |     
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |  |  | 33 |     
|Item 13. |  | Certain Relationships and Related Transactions                                                 |  |  | 33 |     
|         |  | Part IV                                                                                        |  |  |    |     
|Item 14. |  | Exhibits, Financial Statement Schedules and Reports on Form 8-K                                |  |  | 34 |     





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##### Table of Contents






Part I




Item 1. Business

General

Citizens First Bancorp, Inc. (the Company or Citizens First Bancorp)
was organized as a Delaware business corporation at the direction of Citizens
First Savings Bank (Citizens First or the Bank) in October 2000 to become
the holding company for Citizens First upon completion of its conversion from
the mutual to stock form of ownership. The conversion was completed on March 7,
2001. In connection with the conversion, the Company sold 8,821,075 shares of
its common stock, par value $0.01 per share at a purchase price of $10 per
share to depositors of the Bank in a subscription offering raising
approximately $85.1 million in net conversion proceeds. In addition, the
Company issued an additional 705,686 shares, representing 8% of the shares sold
in the subscription offering, to Citizens First Foundation, a charitable
foundation established by the Bank. The Company has no significant assets,
other than all of the outstanding shares of the Bank and the portion of the net
proceeds it retained from the offering, and no significant liabilities.
Management of the Company and the Bank are substantially similar and the
Company neither owns nor leases any property, but instead uses the premises,
equipment and furniture of the Bank. Accordingly, the information set forth in
this report, including the consolidated financial statements and related
financial data, relates primarily to the Bank.

Citizens First is regulated by the Michigan Office of Financial and
Insurance Services and the Federal Deposit Insurance Corporation. Citizens
Firsts deposits are insured to the maximum allowable amount by the Savings
Association Insurance Fund of the Federal Deposit Insurance Corporation.
Citizens First has been a member of the Federal Home Loan Bank System since
1938.

Citizens First operates as a community-oriented financial institution,
specializing in the acceptance of retail deposits from the general public in
the areas surrounding its 15 full-service banking offices and using those
funds, together with funds generated from operations and borrowings, to
originate loans. The principal lending activity of Citizens First is the
origination of mortgage loans for the purpose of purchasing or refinancing one-
to four-family residential property. Citizens First also originates 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. Citizens First currently originates one- to four-family
mortgage loans primarily for sale in the secondary market, while generally
retaining the servicing rights. Citizens Firsts revenues are derived
principally from the generation of interest and fees on loans originated and,
to a lesser extent, interest and dividends on investments. Citizens Firsts
primary sources of funds are deposits, principal and interest payments on loans
and investments and advances from the Federal Home Loan Bank of Indianapolis.

Market Area

Citizens Firsts main office is in Port Huron, Michigan in St. Clair
County. Citizens Firsts primary deposit gathering and lending areas are
concentrated in and around the communities surrounding its 15 full-service
offices located in St. Clair, Sanilac, Huron and Lapeer Counties, Michigan.
However, Citizens First also makes some loans beyond these areas throughout
southeastern Michigan.

Port Huron, the population center for St. Clair county, is located
approximately sixty miles northeast of Detroit and sixty miles east of Flint.
St. Clair County, is bounded by the counties of Macomb to the south and west,
Lapeer to the west and Sanilac to the north. The eastern boundary of the
county is the St. Clair river and Canada. Almost half of the countys total
land area is rural and approximately one-third of the resident labor force
commutes to jobs outside of the county. As of 2001, St. Clair County had a
population of approximately 166,541, while the other three counties in the
Banks primary market area had a population of approximately 169,970. The
largest employment sectors in this area are manufacturing, services, retail and
government. Citizens Firsts market area has a higher per capita median
household income when compared to Michigan and the United States.





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Competition

Citizens First faces intense competition for the attraction of deposits
and origination of loans in its market area. Its most direct competition for
deposits has historically come from the several financial institutions
operating in Citizens Firsts market area and, to a lesser extent, from other
financial service companies, such as brokerage firms, credit unions and
insurance companies. Citizens Firsts competition for loans comes primarily
from financial institutions in its market area, and to a lesser extent from
other financial service providers, such as mortgage companies and mortgage
brokers. Additionally, competition for loans may increase due to the
increasing number of non-depository financial service companies entering the
mortgage market, such as insurance companies, securities companies and
specialty finance companies. Citizens First expects competition to increase in
the future as a result of legislative, regulatory and technological changes and
the continuing trend of consolidation in the financial services industry.
Technological advances, for example, have lowered barriers to market entry,
allowed banks to expand their geographic reach by providing services over the
Internet and made it possible for non-depository institutions to offer products
and services that traditionally have been provided by banks. The
Gramm-Leach-Bliley Act, which permits affiliation among banks, securities firms
and insurance companies, also has changed the competitive environment in which
Citizens First conducts business. Some of the institutions with which Citizens
First competes are significantly larger than Citizens First and, therefore,
have significantly greater resources. Competition for deposits and the
origination of loans could limit Citizens Firsts growth in the future.

Lending Activities

General.Citizens Firsts loans are subject to federal and state laws and
regulations. Interest rates charged by Citizens First on loans are affected
principally by Citizens Firsts current asset/liability strategy, the demand
for various types of loans, the supply of money available for lending purposes
and the rates offered by competitors. These factors are, in turn, affected by
general and economic conditions, monetary policies of the federal government,
including the Federal Reserve Board, legislative tax policies and governmental
budgetary matters.

2



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##### Table of Contents



Loan Portfolio Analysis.The following table sets forth the composition
of Citizens Firsts loan portfolio in dollar amounts and as a percentage of the
portfolio at the dates indicated.



|                   |                                              |                  |                         |         |              |         |      |          |         |       |        |         |                        |          |      |         |        |       |        |          |         |         |         |       |        |       | 
|------------------ | -------------------------------------------- | ---------------- | ----------------------- | ------- | ------------ | ------- | ---- | -------- | ------- | ----- | ------ | ------- | ---------------------- | -------- | ---- | ------- | ------ | ----- | ------ | -------- | ------- | ------- | ------- | ----- | ------ | ----- | 
|                   |                                              |                  |                         |         | At March 31, |        
|                   |                                              |                  |                         |         |              |        
|                   |                                              |                  |                         |         | 2002         |         |      | 2001     |         |       | 2000   |        
|                   |                                              |                  |                         |         |              |         |      |          |         |       |        |        
|                   |                                              |                  |                         |         |              |         |      |          | Percent |       |        |         |                        |          |      | Percent |        |       |        |          |         |         | Percent |      
|                   |                                              |                  |                         |         | Amount       |         |      | of Total |         |       | Amount |         |                        | of Total |      |         | Amount |       |        | of Total |        
|                   |                                              |                  |                         |         |              |         |      |          |         |       |        |         |                        |          |      |         |        |       |        |          |        
|                   |                                              |                  |                         |         |              |         |      |          |         |       |        |         | (Dollars in thousands) |          |      |         |        |       |        |          |         |        
|Real estate loans: |                                              |                  |                         |         |              |         |      |          |         |       |        |         |                        |          |      |         |        |       |        |          |         |         |         |      
|                   | One- to four-family                          |                  | $                       | 385,765 |              |         |      | 51.56    | %       |       | $      | 395,484 |                        |          |      | 57.75   | %      |       | $      | 341,308  |         |         |         | 58.81 | %     
|                   | Commercial and multi-
family real estate (1) |                  |                         | 144,817 |              |         |      | 19.36    |         |       |        | 113,715 |                        |          |      | 16.60   |        |       |        | 83,536   |         |         |         | 14.40 |       
|                   | Residential construction                     |                  |                         | 27,541  |              |         |      | 3.68     |         |       |        | 18,479  |                        |          |      | 2.70    |        |       |        | 24,750   |         |         |         | 4.26  |       
|                   | Home equity loans and
lines of credit        |                  |                         | 71,266  |              |         |      | 9.52     |         |       |        | 66,687  |                        |          |      | 9.74    |        |       |        | 56,991   |         |         |         | 9.82  |       
|                   |                                              |                  |                         |         |              |         |      |          |         |       |        |         |                        |          |      |         |        |      
|                   |                                              |                  | Total real estate loans |         |              | 629,389 |      |          |         | 84.12 |        |         |                        | 594,365  |      |         |        | 86.78 |        |          |         | 506,585 |         |       |        | 87.29 | 
|Consumer loans:    |                                              |                  |                         |         |              |         |      |          |         |       |        |         |                        |          |      |         |        |       |        |          |         |         |         |      
|                   | Vehicles (2)                                 |                  |                         | 61,661  |              |         |      | 8.24     |         |       |        | 55,490  |                        |          |      | 8.10    |        |       |        | 41,066   |         |         |         | 7.08  |       
|                   | Other                                        |                  |                         | 15,015  |              |         |      | 2.01     |         |       |        | 12,344  |                        |          |      | 1.80    |        |       |        | 13,882   |         |         |         | 2.39  |       
|                   |                                              |                  |                         |         |              |         |      |          |         |       |        |         |                        |          |      |         |        |      
|                   |                                              |                  | Total consumer loans    |         |              | 76,676  |      |          |         | 10.25 |        |         |                        | 67,834   |      |         |        | 9.90  |        |          |         | 54,948  |         |       |        | 9.47  | 
|Commercial loans   |                                              |                  | 42,137                  |         |              |         | 5.63 |          |         |       | 22,676 |         |                        |          | 3.32 |         |        |       | 18,824 |          |         |         | 3.24    |      
|                   |                                              |                  |                         |         |              |         |      |          |         |       |        |         |                        |          |      |         |        |      
|                   |                                              | Total loans      |                         |         | 748,202      |         |      |          | 100.00  | %     |        |         | 684,875                |          |      |         | 100.00 | %     |        |          | 580,357 |         |         |       | 100.00 | %    
|                   |                                              |                  |                         |         |              |         |      |          |         |       |        |         |                        |          |      |         |        |       |        |          |        
|Less:              |                                              |                  |                         |         |              |         |      |          |         |       |        |         |                        |          |      |         |        |       |        |          |         |         |         |      
|                   | Deferred loan origination fees
and discounts |                  |                         | 1,618   |              |         |      |          |         |       |        | 1,595   |                        |          |      |         |        |       |        | 1,393    |         |         |         |       |       
|                   | Allowance for loan losses                    |                  |                         | 11,020  |              |         |      |          |         |       |        | 10,831  |                        |          |      |         |        |       |        | 10,461   |         |         |         |       |       
|                   |                                              |                  |                         |         |              |         |      |          |         |       |        |         |                        |          |      |         |        |       |        |          |        
|                   |                                              | Total loans, net |                         | $       | 735,564      |         |      |          |         |       |        | $       | 672,449                |          |      |         |        |       |        | $        | 568,503 |         |         |       |        |      
|                   |                                              |                  |                         |         |              |         |      |          |         |       |        |         |                        |          |      |         |        |       |        |          |        

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                   |                                              |                  |                         |         |              |         |      |          |                        |       |        |         |         |          |      |         |        |       | 
|------------------ | -------------------------------------------- | ---------------- | ----------------------- | ------- | ------------ | ------- | ---- | -------- | ---------------------- | ----- | ------ | ------- | ------- | -------- | ---- | ------- | ------ | ----- | 
|                   |                                              |                  |                         |         | At March 31, |        
|                   |                                              |                  |                         |         |              |        
|                   |                                              |                  |                         |         | 1999         |         |      | 1998     |                       
|                   |                                              |                  |                         |         |              |         |      |          |                       
|                   |                                              |                  |                         |         |              |         |      |          | Percent                |       |        |         |         |          |      | Percent |       
|                   |                                              |                  |                         |         | Amount       |         |      | of Total |                        |       | Amount |         |         | of Total |     
|                   |                                              |                  |                         |         |              |         |      |          |                        |       |        |         |         |          |     
|                   |                                              |                  |                         |         |              |         |      |          | (Dollars in thousands) |      
|Real estate loans: |                                              |                  |                         |         |              |         |      |          |                        |       |        |         |         |          |      |        
|                   | One- to four-family                          |                  | $                       | 427,555 |              |         |      | 70.83    | %                      |       | $      | 399,616 |         |          |      | 71.58   | %     
|                   | Commercial and multi-
family real estate (1) |                  |                         | 62,500  |              |         |      | 10.36    |                        |       |        | 42,805  |         |          |      | 7.67    |       
|                   | Residential construction                     |                  |                         | 31,040  |              |         |      | 5.14     |                        |       |        | 31,336  |         |          |      | 5.61    |       
|                   | Home equity loans and
lines of credit        |                  |                         | 42,417  |              |         |      | 7.02     |                        |       |        | 44,844  |         |          |      | 8.03    |       
|                   |                                              |                  |                         |         |              |         |      |          |                        |       |        |        
|                   |                                              |                  | Total real estate loans |         |              | 563,512 |      |          |                        | 93.35 |        |         |         | 518,601  |      |         |        | 92.89 | 
|Consumer loans:    |                                              |                  |                         |         |              |         |      |          |                        |       |        |         |         |          |      |        
|                   | Vehicles (2)                                 |                  |                         | 7,100   |              |         |      | 1.18     |                        |       |        | 5,329   |         |          |      | 0.96    |       
|                   | Other                                        |                  |                         | 16,348  |              |         |      | 2.71     |                        |       |        | 21,361  |         |          |      | 3.82    |       
|                   |                                              |                  |                         |         |              |         |      |          |                        |       |        |        
|                   |                                              |                  | Total consumer loans    |         |              | 23,448  |      |          |                        | 3.89  |        |         |         | 26,690   |      |         |        | 4.78  | 
|Commercial loans   |                                              |                  | 16,638                  |         |              |         | 2.76 |          |                        |       | 13,011 |         |         |          | 2.33 |        
|                   |                                              |                  |                         |         |              |         |      |          |                        |       |        |        
|                   |                                              | Total loans      |                         |         | 603,598      |         |      |          | 100.00                 | %     |        |         | 558,302 |          |      |         | 100.00 | %    
|                   |                                              |                  |                         |         |              |         |      |          |                        |       |        |         |         |         
|Less:              |                                              |                  |                         |         |              |         |      |          |                        |       |        |         |         |          |      |        
|                   | Deferred loan origination fees
and discounts |                  |                         | 1,800   |              |         |      |          |                        |       |        | 1,882   |         |          |      |         |       
|                   | Allowance for loan losses                    |                  |                         | 11,161  |              |         |      |          |                        |       |        | 7,527   |         |          |      |         |       
|                   |                                              |                  |                         |         |              |         |      |          |                        |       |        |         |         |         
|                   |                                              | Total loans, net |                         | $       | 590,637      |         |      |          |                        |       |        | $       | 548,893 |          |      |         |        |      
|                   |                                              |                  |                         |         |              |         |      |          |                        |       |        |         |         |         



---

|(1) |  | Includes commercial construction loans which at March 31, 2002 and 2001
totaled $9.9 million and $6.5 million, respectively.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------
|(2) |  | Includes loans secured by automobiles, motorcycles, campers and other
recreational vehicles.                                

3



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##### Table of Contents



Maturity of Loan Portfolio.The following table
presents certain information at March 31, 2002 regarding the dollar amount
of loans maturing in Citizens Firsts portfolio based on their contractual
terms to maturity or scheduled amortization, but does not include
potential prepayments. Demand loans, loans having no stated schedule of
repayments and no stated maturity, and overdrafts are reported as becoming
due in one year or less. Loan balances do not include undisbursed loan
proceeds, net deferred loan origination costs and allowance for loan
losses.

|                |                                  |                  |   |                   |         |  |              |            |         |              |   |        |                 |             |   |                |        |  |            |        |        |       |   |        |        |  |   |         |         | 
|--------------- | -------------------------------- | ---------------- | - | ----------------- | ------- |  | ------------ | ---------- | ------- | ------------ | - | ------ | --------------- | ----------- | - | -------------- | ------ |  | ---------- | ------ | ------ | ----- | - | ------ | ------ |  | - | ------- | ------- | 
|                |                                  |                  |   | At March 31, 2002 |        
|                |                                  |                  |   |                   |        
|                |                                  |                  |   |                   |         |  |              | Commercial |         |              |   |        |                 |             |   |                |        |  |            |        |        |       |   |        |        |  |   |         |        
|                |                                  |                  |   | One- to           |         |  | and          |            |         |              |   |        |                 | Home Equity |   |                |        |  |            |        |        |       |   |        |        |  |  
|                |                                  |                  |   | Four-             |         |  | Multi-Family |            |         | Residential  |   |        | Loans and       |             |   |                |        |  |            |        |        |       |   | Total  |       
|                |                                  |                  |   | Family            |         |  | Real Estate  |            |         | Construction |   |        | Lines of Credit |             |   | Consumer       |        |  | Commercial |        |        | Loans |  
|                |                                  |                  |   |                   |         |  |              |            |         |              |   |        |                 |             |   |                |        |  |            |        |        |       |  
|                |                                  |                  |   |                   |         |  |              |            |         |              |   |        |                 |             |   | (In thousands) |        |  |            |        |        |       |   |        |        |  |   |         |        
|Amounts due in: |                                  |                  |   |                   |         |  |              |            |         |              |   |        |                 |             |   |                |        |  |            |        |        |       |   |        |        |  |   |        
|                | One year or less                 |                  | $ | 906               |         |  | $            | 28,086     |         |              | $ | 27,541 |                 |             | $ | 518            |        |  | $          | 3,363  |        |       | $ | 22,245 |        |  | $ | 82,659  |        
|                | More than one year to five years |                  |   | 5,118             |         |  |              | 61,011     |         |              |   |       |                 |             |   | 15,533         |        |  |            | 62,117 |        |       |   | 16,887 |        |  |   | 160,666 |        
|                | More than five years             |                  |   | 379,741           |         |  |              | 55,720     |         |              |   |       |                 |             |   | 55,215         |        |  |            | 11,196 |        |       |   | 3,005  |        |  |   | 504,877 |        
|                |                                  |                  |   |                   |         |  |              |            |         |              |   |        |                 |             |   |                |        |  |            |        |        |      
|                |                                  | Total amount due |   | $                 | 385,765 |  |              | $          | 144,817 |              |   | $      | 27,541          |             |   | $              | 71,266 |  |            | $      | 76,676 |       |   | $      | 42,137 |  |   | $       | 748,202 | 
|                |                                  |                  |   |                   |         |  |              |            |         |              |   |        |                 |             |   |                |        |  |            |        |        |      

Scheduled contractual principal repayments of loans do not reflect the
actual life of the loans. The average life of a loan is substantially less
than its contractual term because of prepayments. In addition, due-on-sale
clauses on loans generally give Citizens First the right to declare loans
immediately due and payable if, among other things, the borrower sells the real
property with the mortgage and the loan is not repaid. The average life of a
mortgage loan tends to increase, however, when current mortgage loan market
rates are substantially higher than rates on existing mortgage loans and,
conversely, tends to decrease when rates on existing mortgage loans are
substantially higher than current mortgage loan market rates.

The following table sets forth, at March 31, 2002, the dollar amount of
loans contractually due after March 31, 2003, and whether such loans have fixed
interest rates or adjustable interest rates.

|                   |                                         |                         |        |                          |         |                |            |         |         |       |        |         |         | 
|------------------ | --------------------------------------- | ----------------------- | ------ | ------------------------ | ------- | -------------- | ---------- | ------- | ------- | ----- | ------ | ------- | ------- | 
|                   |                                         |                         |        | Due After March 31, 2003 |        
|                   |                                         |                         |        |                          |        
|                   |                                         |                         |        | Fixed                    |         |                | Adjustable |         |         | Total |       
|                   |                                         |                         |        |                          |         |                |            |         |         |       |       
|                   |                                         |                         |        |                          |         | (In thousands) |           
|Real estate loans: |                                         |                         |        |                          |         |                |            |         |         |       |        |        
|                   | One- to four-family                     |                         | $      | 84,735                   |         |                | $          | 300,124 |         |       | $      | 384,859 |        
|                   | Commercial and multi-family real estate |                         |        | 114,143                  |         |                |            | 2,588   |         |       |        | 116,731 |        
|                   | Home equity                             |                         |        | 58,475                   |         |                |            | 12,273  |         |       |        | 70,748  |        
|                   |                                         |                         |        |                          |         |                |            |         |         |      
|                   |                                         | Total real estate loans |        |                          | 257,353 |                |            |         | 314,985 |       |        |         | 572,338 | 
|Consumer loans     |                                         |                         | 70,430 |                          |         |                | 2,883      |         |         |       | 73,313 |        
|Commercial loans   |                                         |                         | 11,928 |                          |         |                | 7,964      |         |         |       | 19,892 |        
|                   |                                         |                         |        |                          |         |                |            |         |         |      
|                   |                                         | Total loans             |        | $                        | 339,711 |                |            | $       | 325,832 |       |        | $       | 665,543 | 
|                   |                                         |                         |        |                          |         |                |            |         |         |      

One- to Four-Family Loans.Citizens Firsts primary lending activity is
the origination of loans secured by one- to four-family residences located in
its market area. Citizens First offers various types of adjustable-rate
mortgage loans and fixed-rate mortgage loans. At March 31, 2002, 47.9% of
Citizens Firsts residential mortgage loans had fixed interest rates and 52.1%
had adjustable interest rates.

Citizens First originates fixed-rate fully amortizing loans with
maturities of 10, 15, 20 and 30 years. Management establishes the loan
interest rates based on market conditions, with consideration given to the type
of the loan and the quality and liquidity of the collateral securing the loan.
Citizens First offers mortgage loans that generally conform to Freddie Mac
guidelines, as well as jumbo loans, which currently are loans in amounts over
$300,700. Fixed-

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rate conforming loans are generally originated for sale in
the secondary market, with servicing rights released. Citizens First will
underwrite one- to four-family owner-occupied residential mortgage loans with a
loan to value ratio of 97%, provided that private mortgage insurance will
generally be required on loans that exceed 80% of the lower of the appraised
value or the purchase price of the real estate. In limited instances, Citizens
First will originate loans with a loan to value ratio of 103% to sell in the
secondary market, with servicing released. Citizens First also offers a seven
year balloon mortgage loan, in which the borrower pays a fixed monthly payment
for the first seven years, at which point the entire balance of the loan
becomes due.

Citizens First currently also offers adjustable-rate mortgage loans, with
an interest rate based on the U.S. Treasury securities index, which adjust
annually after a one, three, five or seven year initial fixed period and with
terms of up to 30 years. The maximum amount by which the interest rate may be
increased or decreased on such loans is generally 2% per year and no more than
5% over the life of the loan. Additionally, Citizens First offers an
adjustable-rate loan where the borrower has the option to convert the loan to a
fixed rate after a predetermined period of time, without refinancing costs.

Adjustable-rate mortgage loans help reduce Citizens Firsts exposure to
changes in interest rates. There are, however, unquantifiable credit risks
resulting from the potential of increased costs to be paid by the borrower due
to changed rates. During periods of rising interest rates the risk of default
on adjustable-rate mortgage loans increases as a result of repricing and the
increased payments required by the borrower. In addition, although
adjustable-rate mortgage loans help make Citizens Firsts asset base more
responsive to changes in interest rates, the extent of this interest
sensitivity is limited by the annual and lifetime interest rate adjustment
limits. Because of these considerations, yields on adjustable-rate mortgage
loans may not be sufficient to offset increases in Citizens Firsts cost of
funds during periods of rising interest rates.

Citizens First requires all properties securing its mortgage loans to be
appraised by an approved independent state-licensed appraiser. Citizens First
also requires that fire, casualty, title, hazard and, if appropriate, flood
insurance be maintained on most properties securing real estate loans made by
Citizens First.

In an effort to provide financing for low- and moderate-income families,
Citizens First offers Federal Housing Authority and Veterans Administration
residential mortgage loans to qualified individuals with adjustable- and
fixed-rates of interest and terms of up to 30 years. Such loans are secured by
one- to four-family residential property and are underwritten using modified
underwriting guidelines.

Residential Construction Loans.Citizens First originates construction
loans to individuals for the construction of one- to four-family residences.
Citizens Firsts residential construction loans generally provide for the
payment of interest only during the construction phase, which is usually
between six and twelve months. At the end of the construction phase, the loan
converts to a permanent mortgage loan. Loans can be made with a maximum loan
to value ratio of 95%, provided that the borrower obtains private mortgage
insurance on the loan if the loan balance exceeds 80% of the appraised value or
sales price, whichever is less, of the secured property. Citizens First will
also originate residential construction loans to builders with which Citizens
First has an established relationship. Construction loans to individuals are
generally made on the same terms as Citizens Firsts one- to four-family
mortgage loans. At March 31, 2002, the largest outstanding residential
construction loan commitment was for $1.5 million, all of which was
outstanding. This loan was performing according to its terms at March 31,
2002.

Before making a commitment to fund a construction loan, Citizens First
requires an appraisal of the property by an independent licensed appraiser.
Citizens First also reviews and inspects each property before disbursement of
funds. Loan proceeds are disbursed after each stage of work is completed. The
final 10% of the loan is held until the house is completed.

Construction lending generally involves a higher degree of risk than
single-family permanent mortgage lending because of the greater potential for
disagreements between borrowers and builders and the failure of builders to pay
subcontractors. Additional risk often exists because of the inherent
difficulty in estimating both a propertys value and

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the estimated cost of the
property. If the estimate of construction costs proves to be inaccurate,
Citizens First may be required to advance funds beyond the amount originally
committed to protect the value of the property. If the estimate of value upon
completion proves to be inaccurate, Citizens First may be confronted with a
property whose value is insufficient to assure full repayment.

Commercial and Multi-Family Real Estate Loans.Citizens First originates
commercial real estate loans that are generally secured by properties used for
business purposes such as small office buildings, industrial facilities or
retail facilities primarily located in Citizens Firsts primary market area,
under the direction of an experienced staff of commercial loan officers.
Citizens First also, to a lesser extent, originates multi-family loans that are
generally secured by five or more unit apartment buildings in Citizens Firsts
primary market area.

Most of the commercial and multi-family real estate loans originated by
Citizens First are fully amortizing loans with terms of up to twenty years.
Generally, the maximum loan-to-value ratio for such a loan is 80%. In reaching
its decision on whether to make a commercial or multi-family real estate loan,
Citizens First considers the net operating income of the property, the
borrowers expertise, credit history and profitability and the value of the
underlying property. In addition, with respect to commercial real estate
rental properties, Citizens First will also consider the term of the lease and
the quality of the tenants. Citizens First has generally required that the
properties securing these real estate loans have debt service coverage ratios
(the ratio of earnings before debt service to debt service) of between 1.10x
and 1.30x. Citizens First requires written appraisals prepared by a certified
independent appraiser of all properties securing commercial or multi-family
real estate loans greater than $250,000, or as required by FIRREA.
Additionally, environmental surveys are required prior to funding of certain
larger commercial real estate loans in excess of $1.0 million and may be
required on commercial real estate loans greater than $500,000 or where a risk
of contamination exists. At March 31, 2002, Citizens Firsts largest
commercial or multi-family real estate loan had an outstanding balance of $4.5
million. The loan is secured by gas stations and convenience stores and was
performing according to its terms at March 31, 2002.

Citizens First also makes construction loans for commercial development
projects, including multi-family, commercial properties, single-family
subdivisions and condominiums. These loans generally have an interest-only
phase during construction then convert to permanent financing. The permanent
mortgage loan must be approved at the time the initial approval is made.
Disbursement of funds is at the sole discretion of Citizens First and is based
on the progress of construction. The maximum loan to value ratio for these
loans depends upon the type of commercial development project being undertaken,
but generally will not exceed 80%. At March 31, 2002, the largest outstanding
commercial construction loan was $5.4 million. This loan is secured by a
manufactured housing community and was performing according to its terms at
March 31, 2002.

Multi-family and commercial real estate lending affords Citizens First an
opportunity to receive interest at rates higher than those generally available
from one- to four-family residential lending. However, loans secured by these
properties usually are greater in amount and are more difficult to evaluate and
monitor and, therefore, involve a greater degree of risk than one- to
four-family residential mortgage loans. Because payments on loans secured by
income producing properties are often dependent on the successful operation and
management of the properties, repayment of these loans may be affected by
adverse conditions in the real estate market or the economy. Citizens First
seeks to minimize these risks by generally limiting the maximum loan-to-value
ratio to 80% for commercial and multi-family real estate loans and by strictly
scrutinizing the financial condition of the borrower, the cash flow of the
project, the quality of the collateral and the management of the property
securing the loan.

Home Equity Loans and Lines of Credit.Citizens First offers home equity
loans and lines of credit secured by owner-occupied one- to four-family
residences. At March 31, 2002, home equity loans and lines of credit totaled
$71.3 million or 9.5% of Citizens Firsts total loans. Additionally, at March
31, 2002, the unadvanced amounts of home equity lines of credit totaled $18.1
million. The underwriting standards employed by Citizens First for home equity
loans and lines of credit include a determination of the applicants credit
history, an assessment of the applicants ability to meet existing obligations
and payments on the proposed loan and the value of the collateral securing the
loan. Home equity loans will not be made if the borrowers outstanding monthly
debt exceeds 40% of the borrowers gross monthly

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income. Loan to value ratios
and maximum loan amounts vary depending on the amount of insurance coverage on
the underlying property. Generally, home equity loans are made with fixed
interest rates and with terms up to 15 years.

Home equity lines of credit have adjustable rates of interest which are
indexed to the prime rate as reported inThe Wall Street Journal. Generally,
the maximum combined loan-to-value ratio on home equity lines of credit is 85%
and loans may be made up to $500,000. A home equity line of credit may be
drawn down by the borrower for an initial period of five years from the date of
the loan agreement. During this period, the borrower has the option of paying,
on a monthly basis, either principal and interest or only the interest. If not
renewed, the borrower has to pay back the amount outstanding under the line of
credit over a term not to exceed 15 years, beginning at the end of the five
year period.

Consumer Loans.Citizens First offers a variety of consumer loans,
including automobile loans, mobile home loans, other secured loans, collateral
loans, personal loans and unsecured loans.

Citizens First offers fixed-rate automobile loans on a direct and indirect
basis with terms of up to 72 months. Citizens First will generally make such
loans up to 100% of the retail price for new cars and up to 90% of the retail
value as stated in the NADA Used Car Guide for used cars. The interest rates
offered depend on the age of the automobile, market conditions and current
interest rates.

In March 1999, Citizens First commenced an indirect consumer lending
program, which is managed by an experienced consumer loan officer. Citizens
First originates automobile loans through approximately 42 automobile dealers
in its primary market area. These dealers provide Citizens First applications
to finance new and, to a lesser extent, used vehicles sold by their
dealerships. Citizens First has the opportunity to accept or reject each loan.
Generally, Citizens First pays a fee to the automobile dealer based on the
interest rate on the loan. This fee, or dealer reserve, is paid to the dealer
monthly. If a loan is paid off or charged off within a specified time period,
Citizens First is credited with 100% of the dealer reserve, which it may
withhold from the dealers account or credit against future payments to the
dealer. For fiscal 2002 and 2001, Citizens First originated $35.8 million and
$36.3 million of consumer loans, respectively, of which 10.7% and 6.4% were
indirectly originated automobile loans.

Citizens First also originates consumer loans secured by mobile homes.
Historically, such loans were primarily originated indirectly through dealer
relationships. However, in recent years management has decided to stop
originating such loans on an indirect basis, which has reduced the amount of
mobile home originations. As a result, mobile home loans have declined from
$10.4 million, or 1.5% of total loans and 7.7% of consumer loans at March 31,
2001 to $8.3 million, or 1.1% of total loans and 10.8% of consumer loans at
March 31, 2002. Citizens First originates loans on new or used mobile homes
(up to fifteen years old) with terms ranging from seven to fifteen years and
with fixed interest rates. Citizens First generally will finance up to a
maximum of 90% of the purchase price of the mobile home unit or the retail
value as stated in the NADA book, whichever is less.

Citizens First also originates consumer loans secured by boats,
motorcycles, campers and other recreational vehicles. These loans have fixed
interest rates and terms ranging from a maximum of five years to fifteen years
depending on the type of collateral securing the loan.

Citizens First offers collateral loans, personal loans and unsecured
loans. Collateral loans are generally secured by a savings account or a
certificate of deposit. Personal loans generally have a borrowing capacity of
$5,000 and a maximum term of four years. Citizens First also makes unsecured
personal loans to individuals who have been homeowners for at least four years.
These loans will be made up to $10,000 with terms of up to seven years.

Citizens First believes that it will benefit from the higher yields earned
on consumer loans and that the shorter duration of consumer loans will improve
Citizens Firsts interest rate risk position. However, consumer loans entail
greater risk than do residential mortgage loans, particularly in the case of
loans that are unsecured or secured by rapidly depreciating assets such as
automobiles. In these cases, any repossessed collateral for a defaulted
consumer loan may not provide an adequate source of repayment of the
outstanding loan balance as a result of the greater likelihood of

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damage, loss
or depreciation. The remaining deficiency often does not warrant further
substantial collection efforts against the borrower beyond obtaining a
deficiency judgment. In addition, consumer loan collections are dependent on
the borrowers continuing financial stability, and thus are more likely to be
adversely affected by job loss, divorce, illness or personal bankruptcy.
Citizens First expects that it will increase its allowance for loan losses as
its consumer loan portfolio grows by charging a provision for loan losses
against income.

Commercial Loans.Citizens First, under the direction of an experienced
staff of commercial loan officers, makes commercial business loans primarily in
its market area to a variety of professionals, sole proprietorships and small
businesses. Citizens First offers a variety of commercial lending products,
including term loans for fixed assets, working capital, lines of credit and
loans with a single principal payment at maturity. Additionally, Citizens
First originates Small Business Administration guaranteed loans. Citizens
First offers secured commercial term loans, with terms of up to ten years and
the payment of which is dependent on future earnings. Business lines of credit
have adjustable rates of interest with terms of up to three years. Loans that
require a one-time payment of principal at its termination will be originated
on terms of up to three years provided the borrower is paying interest at least
semi-annually or up to one year if the borrower will pay all of the interest
due upon maturity. Business loans with variable rates of interest are
generally indexed to the prime rate as reported in The Wall Street Journal.
Citizens First also makes unsecured commercial loans. At March 31, 2002, such
loans totaled $22.0 million, or 11.6% of commercial loans. At March 31, 2002,
Citizens Firsts largest outstanding commercial loan was a $6.2 million working
capital line of credit. Additionally, at March 31, 2002, Citizens Firsts
largest outstanding commercial loan commitment was a $10.0 million line of
credit. Both of these loans were performing according to their terms at March
31, 2002.

When making commercial business loans, Citizens First considers the
financial statements of the borrower, Citizens Firsts lending history with the
borrower, the debt service capabilities of the borrower, the projected cash
flows of the business, and the value of the collateral. Commercial business
loans are generally secured by a variety of collateral, primarily accounts
receivable, inventory and equipment, and are generally supported by personal
guarantees. Depending on the collateral used to secure the loans, commercial
loans are made in amounts of up to 100% of the value of the collateral securing
the loan.

Unlike residential mortgage loans, which generally are made on the basis
of the borrowers ability to make repayment from his or her employment or other
income, and which are secured by real property whose value tends to be more
easily ascertainable, commercial loans are of higher risk and typically are
made on the basis of the borrowers ability to make repayment from the cash
flow of the borrowers business. As a result, the availability of funds for
the repayment of commercial loans may depend substantially on the success of
the business itself. Further, any collateral securing such loans may
depreciate over time, may be difficult to appraise and may fluctuate in value.

Loans to One Borrower.The maximum amount that Citizens First may lend to
one borrower is limited by regulation. At March 31, 2002, Citizens Firsts
regulatory limit on loans to one borrower was $12.9 million or $21.5 million
for loans approved by two-thirds of the Board of Directors. At that date,
Citizens Firsts largest amount of outstanding loans to one borrower, including
the borrowers related interests, was approximately $20.3 million and consisted
of ten commercial, industrial and retail properties. Additionally, at March
31, 2002, Citizens Firsts largest outstanding commitment to one borrower was
approximately $21.0 million, approximately $20.3 million of which was
outstanding, and consisted of commercial, industrial and retail properties.
All of these loans were performing according to their original terms at March
31, 2002.

Loan Approval Procedures and Authority.Citizens Firsts lending
activities follow written, non-discriminatory, underwriting standards and loan
origination procedures established by Citizens Firsts Board of Directors and
management.

Residential real estate loans greater than $700,000 but less than $1.0
million require the approval of the Mortgage Loan Committee, which consists of
the President and Chief Executive Officer, Senior Vice President, Retail
Banking, a Vice President and an Assistant Vice President. Residential real
estate loans between $1.0 million and $2.0 million require approval of the
Officers Credit Committee which consists of the President and Chief Executive
Officer,

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the Senior Vice President, Commercial Banking, certain commercial officers and
other officers as designated. Loans in excess of $2.0 million require approval
of the Directors Loan Committee which consists of three directors, the
President and Chief Executive Officer and the Senior Vice President, Commercial
Banking. Additionally, various officers and underwriters of Citizens First
have been delegated authority to approve different types of real estate loans.
The approval authorities range from the authority of certain staff underwriters
to approve residential mortgage loans up to $125,000 to the authority of the
President and Chief Executive Officer to approve any real estate loan up to
$1.0 million. In addition, certain employees may combine their authority to
jointly approve a loan that exceeds their individual lending authority.

Consumer loans greater than $700,000 require the approval of the entire
Board of Directors. Additionally, various bank personnel have been delegated
authority to approve consumer loans. The President and Chief Executive Officer
may individually approve any consumer loan up to $700,000.

All commercial and commercial real estate loans in excess of $5.0 million
require the approval of the Board of Directors. Commercial and commercial real
estate loans between $2.0 and $5.0 million require the approval of the
Directors Loan Committee. Commercial and commercial real estate loans between
$500,000 and $2.0 million require the approval of the Officers Credit
Committee. Additionally, various bank personnel have been delegated authority
to approve loans less than $500,000. Officers may combine their authority to
jointly approve a loan that exceeds their individual lending authority.

Loan Originations, Purchases and Sales.Citizens Firsts lending
activities are conducted by its salaried and commissioned loan personnel and
through its relationship with dealers. Currently, Citizens First has
contractual relationships with approximately 42 vehicle dealers, all of which
originate automobile loans for Citizens First. Citizens First underwrites and
funds such loans. These automobile dealers accounted for approximately 10.7%
and 6.4% of the consumer loans, and 84.7% and 80.3% of the automobile loans,
originated by Citizens First in fiscal 2002 and 2001, respectively . The
automobile dealers are compensated based on the interest rate on the loan
offered. This fee, or dealer reserve, is paid to the dealer monthly.

Except in connection with its indirect automobile lending, Citizens First
relies on advertising, referrals from realtors and customers, and personal
contact by Citizens Firsts staff to originate loans. Citizens First does not
use loan correspondents or other third-parties to originate loans. Citizens
First generally does not purchase either participation interests in loans or
whole loans. Citizens Firsts ability to originate adjustable-rate and
fixed-rate loans is dependent upon the relative customer demand for such loans,
which is affected by the current and expected future level of interest rates.

Generally, all fixed-rate loans which conform to the underwriting
standards specified by Freddie Mac are originated for sale in the secondary
market to Freddie Mac, and to a lesser extent private investors. Additionally,
Citizens First may sell loans in the secondary market to Fannie Mae. To date,
no loans have been sold to Fannie Mae. Citizens First generally retains the
servicing rights on the loans sold. Citizens First currently has a best
efforts contract with a third party, under which Citizens First is not required
to replace loans which fail to close for any reason. Additionally, Citizens
First has entered into forward contracts with Freddie Mac in the past and at
March 31, 2002, Citizens had outstanding forward contracts to sell loans of
approximately $6.1 million. Sales of loans are made without recourse to
Citizens First if the borrower defaults. Citizens First generally originates
adjustable-rate loans for its portfolio but will from time to time sell such
loans in the secondary market based on prevailing market interest rate
conditions, liquidity needs and Citizens Firsts interest rate risk position.

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The following table sets forth Citizens Firsts loan originations, sales
and principal repayments for the periods indicated:

|                             |                                           |                            |                                         |                         |         |                              |         |         |         |                |         |         |         |         |         | 
|---------------------------- | ----------------------------------------- | -------------------------- | --------------------------------------- | ----------------------- | ------- | ---------------------------- | ------- | ------- | ------- | -------------- | ------- | ------- | ------- | ------- | ------- | 
|                             |                                           |                            |                                         |                         |         | For the Year Ended March 31, |        
|                             |                                           |                            |                                         |                         |         |                              |        
|                             |                                           |                            |                                         |                         |         | 2002                         |         |         | 2001    |                |         | 2000    |        
|                             |                                           |                            |                                         |                         |         |                              |         |         |         |                |         |         |        
|                             |                                           |                            |                                         |                         |         |                              |         |         |         | (In thousands) |         |         |         |         |        
|Loans at beginning of period |                                           | $                          | 684,875                                 |                         |         | $                            | 580,357 |         |         | $              | 603,598 |        
|                             | Originations:                             |                            |                                         |                         |         |                              |         |         |         |                |         |         |        
|                             |                                           | Real estate:               |                                         |                         |         |                              |         |         |         |                |         |         |         |        
|                             |                                           |                            | One- to four-family                     |                         |         | 187,765                      |         |         |         | 185,227        |         |         |         | 110,854 |        
|                             |                                           |                            | Commercial and multi-family real estate |                         |         | 41,078                       |         |         |         | 42,203         |         |         |         | 37,812  |        
|                             |                                           |                            | Residential construction                |                         |         | 50,045                       |         |         |         | 39,838         |         |         |         | 37,625  |        
|                             |                                           |                            | Home equity loans and lines of credit   |                         |         | 43,911                       |         |         |         | 28,280         |         |         |         | 31,723  |        
|                             |                                           |                            |                                         |                         |         |                              |         |         |        
|                             |                                           |                            |                                         | Total real estate loans |         |                              | 322,799 |         |         |                | 295,548 |         |         |         | 218,014 | 
|                             |                                           |                            | Consumer                                |                         |         | 35,834                       |         |         |         | 36,363         |         |         |         | 43,732  |        
|                             |                                           |                            |                                         |                         |         |                              |         |         |        
|                             |                                           |                            | Commercial                              |                         |         | 107,293                      |         |         |         | 41,229         |         |         |         | 30,713  |        
|                             |                                           |                            |                                         |                         |         |                              |         |         |        
|                             |                                           |                            |                                         | Total loans originated  |         |                              | 465,926 |         |         |                | 373,140 |         |         |         | 292,459 | 
|                             |                                           |                            |                                         |                         |         |                              |         |         |        
|Deduct:                      |                                           |                            |                                         |                         |         |                              |         |         |         |                |         |        
|                             | Principal loan repayments and prepayments |                            |                                         | 212,816                 |         |                              |         | 200,766 |         |                |         | 122,773 |        
|                             |                                           | Loan sales                 |                                         |                         | 189,783 |                              |         |         | 67,856  |                |         |         | 192,927 |        
|                             |                                           |                            |                                         |                         |         |                              |         |         |        
|                             |                                           |                            | Sub-total                               |                         |         | 402,599                      |         |         |         | 268,622        |         |         |         | 315,700 |        
|                             |                                           |                            |                                         |                         |         |                              |         |         |        
|Net loan activity            |                                           |                            | 63,327                                  |                         |         |                              | 104,518 |         |         |                | (23,241 | )      
|                             |                                           |                            |                                         |                         |         |                              |         |         |        
|                             |                                           | Loans at end of period (1) |                                         | $                       | 748,202 |                              |         | $       | 684,875 |                |         | $       | 580,357 |        
|                             |                                           |                            |                                         |                         |         |                              |         |         |        



---

|(1) |  | Loans at end of period include loans in process of $13.7 million, $13.7
million and $11.4 million for fiscal years 2002, 2001 and 2000,
respectively.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------

Loan Commitments.Citizens First issues loan commitments to its
prospective borrowers conditioned on the occurrence of certain events.
Commitments are made in writing on specified terms and conditions and are
honored for up to 30 days from approval for residential real estate loans and
180 days on commercial and multi-family real estate loans. At March 31, 2002,
Citizens First had loan commitments and unadvanced loans and lines of credit
totaling $170.2 million. See note 13 of the notes to financial statements
included in the Annual Report to Stockholders incorporated by reference into
this Form 10-K.

Loan Fees.In addition to interest earned on loans, Citizens First
receives income from fees in connection with loan originations, loan
modifications, late payments and for miscellaneous services related to its
loans. Income from these activities varies from period to period depending
upon the volume and type of loans made and competitive conditions.

Citizens First charges loan origination fees, which are calculated as a
percentage of the amount borrowed, subject to a minimum amount. As required by
applicable accounting principles, loan origination fees, discount points and
certain loan origination costs are deferred and recognized over the contractual
remaining lives of the related loans on a level yield basis. At March 31,
2002, Citizens First had $1.6 million of net deferred loan fees.

Nonperforming Assets and Delinquencies.When a borrower fails to make a
required loan payment, Citizens First attempts to cure the deficiency by
contacting the borrower and seeking the payment. A late notice is mailed after
16 days of delinquency for residential mortgage loans. In most cases,
deficiencies are cured promptly. After that, Citizens First attempts to
contact the borrower by either telephone, letter or in person in order to
determine the cause of

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the delinquency and to arrange for curing the default.
Generally, after the 90th day of delinquency, Citizens First commences
foreclosure proceedings under the terms of the security instrument and
applicable law.

When a borrower on a consumer or commercial loan fails to make a required
loan payment, a late notice is mailed after 10 days of delinquency and Citizens
First follows up with a letter and a phone call to the borrower. Additional
contact and correspondence continues until the 90th day of delinquency at which
point Citizens First may take action to repossess the property securing the
loan.

Management informs the Board of Directors monthly of the amount of loans
delinquent more than 60 days, all loans in foreclosure, and all foreclosed and
repossessed property that Citizens First owns.

Citizens First ceases accruing interest on loans when principal or
interest payments are delinquent 90 days or more unless the loan is adequately
collateralized and in the process of collection. Once the accrual of interest
on a loan is discontinued, all interest previously accrued is reversed against
current period interest income once management determines that interest is
uncollectible.

|                                                          |             |                            |      |              |       |  |      |                        |       |      |      |     |       |  |      |      |     |  |      |     |       | 
|--------------------------------------------------------- | ----------- | -------------------------- | ---- | ------------ | ----- |  | ---- | ---------------------- | ----- | ---- | ---- | --- | ----- |  | ---- | ---- | --- |  | ---- | --- | ----- | 
|                                                          |             |                            |      | At March 31,
|                                                          |             |                            |      |             
|                                                          |             |                            |      | 2002         |       |  | 2001 |                        |       | 2000 |      |     | 1999  |  |      | 1998 |    
|                                                          |             |                            |      |              |       |  |      |                        |       |      |      |     |       |  |      |      |    
|                                                          |             |                            |      |              |       |  |      | (Dollars in thousands) |       |      |      |     |      
|Non-accruing loans:                                       |             |                            |      |              |       |  |      |                        |       |      |      |     |       |  |      |      |     |  |      |    
|                                                          | Real estate |                            | $    | 1,437        |       |  | $    | 1,156                  |       |      | $    | 954 |       |  | $    | 157  |     |  | $    | 578 |      
|                                                          | Consumer    |                            |      | 61           |       |  |      | 220                    |       |      |      | 64  |       |  |      | 212  |     |  |      | 207 |      
|                                                          | Commercial  |                            |      | 295          |       |  |      | 434                    |       |      |      | 228 |       |  |      | 495  |     |  |      | 576 |      
|                                                          |             |                            |      |              |       |  |      |                        |       |      |      |     |       |  |     
|                                                          |             | Total (1)                  |      |              | 1,793 |  |      |                        | 1,810 |      |      |     | 1,246 |  |      |      | 864 |  |      |     | 1,361 | 
|Real estate owned (2)                                     |             |                            | 953  |              |       |  | 282  |                        |       |      | 80   |     |       |  | 75   |      |     |  | 75   |    
|                                                          |             |                            |      |              |       |  |      |                        |       |      |      |     |       |  |     
|                                                          |             | Total nonperforming assets |      | $            | 2,746 |  |      | $                      | 2,092 |      |      | $   | 1,326 |  |      | $    | 939 |  |      | $   | 1,436 | 
|                                                          |             |                            |      |              |       |  |      |                        |       |      |      |     |       |  |     
|Total nonperforming loans as a percentage of total loans  |             |                            | 0.24 | %            |       |  | 0.26 | %                      |       |      | 0.21 | %   |       |  | 0.14 | %    |     |  | 0.24 | %  
|Total nonperforming loans as a percentage of total assets |             |                            | 0.19 | %            |       |  | 0.21 | %                      |       |      | 0.17 | %   |       |  | 0.13 | %    |     |  | 0.22 | %  



---

|(1) |  | Total non-accruing loans equals total nonperforming loans.                                                                                       
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------
|(2) |  | Real estate owned balances are shown net of related loss allowances and
include repossessed automobiles which at March 31, 2002, totaled $62,000.

Interest income that would have been recorded for the year ended March 31,
2002 had nonaccruing loans been current according to their original terms
amounted to approximately $103,100. Interest related to these loans was not
included in interest income for the year ended March 31, 2002.

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The following table sets forth the delinquencies in Citizens Firsts loan portfolio as of the dates indicated.

|                                |                                       |       |   |                   |    |  |                   |       |       |            |   |    |                 |  |      |                        |       |  |            |    |    |        |      |     |            |  |   |    |    |  |      |       |       | 
|------------------------------- | ------------------------------------- | ----- | - | ----------------- | -- |  | ----------------- | ----- | ----- | ---------- | - | -- | --------------- |  | ---- | ---------------------- | ----- |  | ---------- | -- | -- | ------ | ---- | --- | ---------- |  | - | -- | -- |  | ---- | ----- | ----- | 
|                                |                                       |       |   | At March 31, 2002 |    |  | At March 31, 2001 |      
|                                |                                       |       |   |                   |    |  |                   |      
|                                |                                       |       |   | 60-89 Days        |    |  | 90 Days or More   |       |       | 60-89 Days |   |    | 90 Days or More | 
|                                |                                       |       |   |                   |    |  |                   |       |       |            |   |    |                 | 
|                                |                                       |       |   | Number            |    |  | Principal         |       |       | Number     |   |    | Principal       |  |      | Number                 |       |  | Principal  |    |    | Number |      |     | Principal  | 
|                                |                                       |       |   | of                |    |  | Balance of        |       |       | of         |   |    | Balance of      |  |      | of                     |       |  | Balance of |    |    | of     |      |     | Balance of | 
|                                |                                       |       |   | Loans             |    |  | Loans             |       |       | Loans      |   |    | Loans           |  |      | Loans                  |       |  | Loans      |    |    | Loans  |      |     | Loans      | 
|                                |                                       |       |   |                   |    |  |                   |       |       |            |   |    |                 |  |      |                        |       |  |            |    |    |        |      |     |            | 
|                                |                                       |       |   |                   |    |  |                   |       |       |            |   |    |                 |  |      | (Dollars in thousands) |       |  |            |    |    |        |      |     |            |  |   |    |   
|Real Estate Loans:              |                                       |       |   |                   |    |  |                   |       |       |            |   |    |                 |  |      |                        |       |  |            |    |    |        |      |     |            |  |   |    |    |  |      |      
|                                | One- to four-family                   |       |   | 18                |    |  | $                 | 2,263 |       |            |   | 10 |                 |  | $    | 1,161                  |       |  |            | 3  |    |        | $    | 271 |            |  |   | 13 |    |  | $    | 1,156 |      
|                                | Residential construction              |       |   | 3                 |    |  |                   | 401   |       |            |   | 2  |                 |  |      | 276                    |       |  |            |   |    |        |      |    |            |  |   |   |    |  |      |      |      
|                                | Home equity loans and
lines of credit |       |   | 4                 |    |  |                   | 130   |       |            |   |   |                 |  |      |                       |       |  |            | 12 |    |        |      | 146 |            |  |   | 8  |    |  |      | 109   |      
|                                | Consumer loans                        |       |   | 13                |    |  |                   | 109   |       |            |   | 8  |                 |  |      | 61                     |       |  |            | 6  |    |        |      | 104 |            |  |   | 9  |    |  |      | 111   |      
|Commercial loans                |                                       |       | 2 |                   |    |  | 888               |       |       |            | 2 |    |                 |  | 295  |                        |       |  |           |    |    |        |     |     |            |  | 2 |    |    |  | 434  |      
|                                |                                       |       |   |                   |    |  |                   |       |       |            |   |    |                 |  |      |                        |       |  |            |    |    |        |      |    
|                                |                                       | Total |   |                   | 40 |  |                   | $     | 3,791 |            |   |    | 22              |  |      | $                      | 1,793 |  |            |    | 21 |        |      | $   | 521        |  |   |    | 32 |  |      | $     | 1,810 | 
|                                |                                       |       |   |                   |    |  |                   |       |       |            |   |    |                 |  |      |                        |       |  |            |    |    |        |      |    
|Delinquent loans to total loans |                                       |       |   |                   |    |  | 0.51              | %     |       |            |   |    |                 |  | 0.24 | %                      |       |  |            |    |    |        | 0.08 | %   |            |  |   |    |    |  | 0.26 | %    
|                                |                                       |       |   |                   |    |  |                   |       |       |            |   |    |                 |  |      |                        |       |  |            |    |    |        |      |     |            |  |   |   

|                                |                                       |       |   |                        |    |  |                 |     |       |        |   |    |            |  |      |     |       | 
|------------------------------- | ------------------------------------- | ----- | - | ---------------------- | -- |  | --------------- | --- | ----- | ------ | - | -- | ---------- |  | ---- | --- | ----- | 
|                                |                                       |       |   | At March 31, 2000      |   
|                                |                                       |       |   |                        |   
|                                |                                       |       |   | 60-89 Days             |    |  | 90 Days or More |    
|                                |                                       |       |   |                        |    |  |                 |    
|                                |                                       |       |   | Number                 |    |  | Principal       |     |       | Number |   |    | Principal  | 
|                                |                                       |       |   | of                     |    |  | Balance of      |     |       | of     |   |    | Balance of | 
|                                |                                       |       |   | Loans                  |    |  | Loans           |     |       | Loans  |   |    | Loans      | 
|                                |                                       |       |   |                        |    |  |                 |     |       |        |   |    |            | 
|                                |                                       |       |   | (Dollars in thousands) |   
|Real Estate Loans:              |                                       |       |   |                        |    |  |                 |     |       |        |   |    |            |  |      |    
|                                | One- to four-family                   |       |   | 7                      |    |  | $               | 912 |       |        |   | 14 |            |  | $    | 954 |      
|                                | Residential construction              |       |   | 2                      |    |  |                 | 197 |       |        |   |   |            |  |      |    |      
|                                | Home equity loans and
lines of credit |       |   | 3                      |    |  |                 | 30  |       |        |   |   |            |  |      |    |      
|                                | Consumer loans                        |       |   | 16                     |    |  |                 | 190 |       |        |   | 3  |            |  |      | 64  |      
|Commercial loans                |                                       |       | 5 |                        |    |  | 258             |     |       |        | 2 |    |            |  | 228  |    
|                                |                                       |       |   |                        |    |  |                 |     |       |        |   |   
|                                |                                       | Total |   |                        | 33 |  |                 | $   | 1,587 |        |   |    | 19         |  |      | $   | 1,246 | 
|                                |                                       |       |   |                        |    |  |                 |     |       |        |   |   
|Delinquent loans to total loans |                                       |       |   |                        |    |  | 0.27            | %   |       |        |   |    |            |  | 0.21 | %  
|                                |                                       |       |   |                        |    |  |                 |     |       |        |   |    |            | 

Real Estate Owned.Real estate acquired by Citizens First as a result of
foreclosure and real estate acquired by deed-in-lieu of foreclosure is
classified as real estate owned until sold. Under Michigan law, there is
generally a six-month redemption period with respect to one- to four-family
residential properties during which the borrower has the right to repurchase
the property. When property is acquired it is recorded at the lower of its
cost, which is the unpaid principal balance of the loan plus foreclosure costs,
or fair market value at the date of foreclosure, establishing a new cost basis.
Holding costs and declines in fair value after acquisition of the property
result in charges against income. At March 31, 2002, Citizens First had
$953,000 in real estate owned, which consisted of 6 one-to four-family
residences and 17 vehicles.

Asset Classification.Regulators have adopted various regulations and
practices regarding problem assets of savings institutions. Under such
regulations, examiners have authority to identify problem assets during
examinations and, if appropriate, require them to be classified.

There are three classifications for problem assets: substandard, doubtful
and loss. Substandard assets have one or more defined weaknesses and are
characterized by the distinct possibility that the insured institution will
sustain some loss if the deficiencies are not corrected. Doubtful assets have
the weaknesses of substandard assets with the additional characteristic that
the weaknesses make collection or liquidation in full on the basis of currently
existing facts, conditions

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and values questionable, and there is a high
possibility of loss. An asset classified as loss is considered uncollectible
and of such little value that continuance as an asset of the institution is not
warranted. If an asset or portion thereof is classified as loss, the insured
institution establishes specific allowances for loan losses for the full amount
of the portion of the asset classified as loss. All or a portion of general
loan loss allowances established to cover probable losses related to assets
classified substandard or doubtful can be included in determining an
institutions regulatory capital, while specific valuation allowances for loan
losses generally do not qualify as regulatory capital. Assets that do not
currently expose the insured institution to sufficient risk to warrant
classification in one of the aforementioned categories but possess weaknesses
are designated special mention. Citizens First monitors special mention
assets. Citizens Firsts Asset/Liability Management Committee, which consists
of the President and Chief Executive Officer and three senior vice presidents,
classifies assets on a monthly basis based upon delinquency reports, real
estate owned, asset review summaries and assets brought to their attention by
senior officers.

The following table sets forth the Banks classified assets at March 31,
2002.

|                   |                                       |       |   |        |   |  |           |   |   |             |        |   |                 |  |     |                        |     |        |           |    |    |       |     |           |         |  |   |   |    |  |       |     |       | 
|------------------ | ------------------------------------- | ----- | - | ------ | - |  | --------- | - | - | ----------- | ------ | - | --------------- |  | --- | ---------------------- | --- | ------ | --------- | -- | -- | ----- | --- | --------- | ------- |  | - | - | -- |  | ----- | --- | ----- | 
|                   |                                       |       |   | Loss   |   |  | Doubtful  |   |   | Substandard |        |   | Special Mention | 
|                   |                                       |       |   |        |   |  |           |   |   |             |        |   |                 | 
|                   |                                       |       |   | Number |   |  |           |   |   |             | Number |   |                 |  |     |                        |     | Number |           |    |    |       |     |           | Number  |  |   |   |    | 
|                   |                                       |       |   | of     |   |  | Principal |   |   | of          |        |   | Principal       |  |     | of                     |     |        | Principal |    |    | of    |     | Principal |        
|                   |                                       |       |   | Loans  |   |  | Balance   |   |   | Loans       |        |   | Balance         |  |     | Loans                  |     |        | Balance   |    |    | Loans |     |           | Balance | 
|                   |                                       |       |   |        |   |  |           |   |   |             |        |   |                 |  |     |                        |     |        |           |    |    |       |     |           |         | 
|                   |                                       |       |   |        |   |  |           |   |   |             |        |   |                 |  |     | (Dollars in thousands) |     |        |           |    |    |       |     |           |        
|Real estate loans: |                                       |       |   |        |   |  |           |   |   |             |        |   |                 |  |     |                        |     |        |           |    |    |       |     |           |         |  |   |   |    |  |       |    
|                   | One- to four-family                   |       |   |       |   |  | $         |  |   |             |        |  |                 |  | $   |                       |     |        |           | 17 |    |       | $   | 1,625     |         |  |   |  |    |  | $     |    |      
|                   | Commercial and multi-family           |       |   |       |   |  |           |  |   |             |        |  |                 |  |     |                       |     |        |           |   |    |       |     |          |         |  |   | 4 |    |  |       | 629 |      
|                   | Residential construction              |       |   |       |   |  |           |  |   |             |        |  |                 |  |     |                       |     |        |           |   |    |       |     |          |         |  |   |  |    |  |       |    |      
|                   | Home equity loans and
lines of credit |       |   |       |   |  |           |  |   |             |        |  |                 |  |     |                       |     |        |           |   |    |       |     |          |         |  |   |  |    |  |       |    |      
|Consumer loans:    |                                       |       |   |        |   |  |           |   |   |             |        |   |                 |  |     |                        |     |        |           |    |    |       |     |           |         |  |   |   |    |  |       |    
|                   | Vehicles                              |       |   |       |   |  |           |  |   |             |        |  |                 |  |     |                       |     |        |           | 3  |    |       |     | 26        |         |  |   |  |    |  |       |    |      
|                   | Other                                 |       |   |       |   |  |           |  |   |             |        |  |                 |  |     |                       |     |        |           | 5  |    |       |     | 41        |         |  |   |  |    |  |       |    |      
|Commercial loans   |                                       |       |  |        |   |  |          |   |   |             | 2      |   |                 |  | 295 |                        |     |        | 2         |    |    |       | 261 |           |         |  | 7 |   |    |  | 3,952 |    
|                   |                                       |       |   |        |   |  |           |   |   |             |        |   |                 |  |     |                        |     |        |           |    |    |       |     |          
|                   |                                       | Total |   |        |  |  |           | $ |  |             |        |   | 2               |  |     | $                      | 295 |        |           |    | 27 |       |     | $         | 1,953   |  |   |   | 11 |  |       | $   | 4,581 | 
|                   |                                       |       |   |        |   |  |           |   |   |             |        |   |                 |  |     |                        |     |        |           |    |    |       |     |          

Allowance for Loan Losses.In originating loans, the Bank recognizes that
losses will be experienced on loans and that the risk of loss will vary with,
among other things, 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. The Bank
maintains an allowance for loan losses to absorb losses inherent in the loan
portfolio. The allowance for loan losses represents managements estimate of
probable losses based on information available as of the date of the financial
statements.

Citizen Firsts methodology for assessing the adequacy of its loan loss
allowance consists of management assessing the expected losses inherent in the
loan portfolio by first performing a detailed review of multi-family real
estate, commercial real estate and other loans with significant balances. Such
loans are assigned higher credit risk ratings upon their origination. A
detailed credit quality review is also performed for other loans which have
deteriorated below certain levels of credit risk or which have been classified
or identified as watch list loans. A specified loss allowance is attributed to
such reviewed loans. An appropriate level of loss allowance is then determined
for the remaining balance of the loan portfolio by applying estimated projected
loss factors to each specific type of loan category in the portfolio with
varying loss factors being applied to specific sub-categories of loans within
such broader categories. The estimated loss factors applied are primarily
determined by management based on recent loan loss experience, industry
averages and trends in loan delinquencies and nonaccruals for each type of
loan. The determination of the estimated loss factors applied to each type of
loan is determined based on information known to management at such time and
projections by management based on such information and, therefore, actual loss
ratios experienced in the future could vary from those

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projected. After the
review yields an aggregate amount of loss allowance attributable to specific
loans and the application of the loss factors to the remaining balance of loans
by type, management analyzes the adequacy of such combined amount of loan loss
allowance 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, trends and forecasts for the national and local economies and the
geographic dispersion of borrowers. Based on this analysis, management then
adjusts the overall allowance which may result in an unallocated portion of the
loan loss allowance. This necessity for the unallocated portion of the
allowance occurs because other factors affecting the determination of probable
losses inherent in the loan portfolio may exist which are not necessarily
captured by the application of estimated loss factors. The existence of an
unallocated portion of the loan loss allowance reflects managements view that
the allowance should have a margin that recognizes the imprecision underlying
the process of estimating expected credit losses and the adequacy of the loan
loss allowance. Determination of the probable losses inherent in the
portfolio, which are not necessarily captured by the allocated methodology
discussed above, involves the exercise of judgment. Recent factors which were
considered in the evaluation of the adequacy of Citizens Firsts unallocated
loan loss reserve include the relative lack of loss experience with indirect
automobile loans, and increases in commercial real estate, commercial and
construction loans. Management also considers industry norms and the
expectations from rating agencies and banking regulators in determining the
adequacy of the allowance.

During fiscal 1999, in recognition of its strategy of increasing
multi-family real estate, commercial real estate, commercial and consumer
(particularly indirect automobile) loans, the overall increase in the risk
inherent in a loan portfolio with an increased amount of such loans and the
relative lack of loss experience with those types of loans, management
reevaluated its loan loss allowance methodology. As a result, management
determined to increase the loss factors it applied to its commercial real
estate, commercial and consumer loans and also determined that it should
maintain an overall loan loss allowance which would be at historically higher
levels as a percentage of total loans and which would be closer to the loan
loss allowance averages maintained by commercial banks operating in Michigan.
Based on the revised methodology, the loan loss allowance was increased to
$11.1 million or 1.85% of total loans at March 31, 1999 of which $2.1 million
was unallocated to any specific loan category. However, despite an increase in
the aggregate balance of commercial and consumer loans since fiscal 1999,
non-accruing and delinquent commercial and consumer loans have been lower than
was expected, which has resulted in a reduction in the loan loss allowance to
1.47% of total loans at March 31, 2002.

Although management believes that it uses the best information available
to establish the allowance for loan losses, future adjustments to the allowance
for loan losses may be necessary and results of operations could be adversely
affected if circumstances differ substantially from the assumptions used in
making the determinations. Furthermore, while Citizens First believes it has
established its existing allowance for loan losses in conformity with generally
accepted accounting principles, there can be no assurance that regulators, in
reviewing Citizens Firsts loan portfolio, will not request Citizens First to
increase its allowance for loan losses. Any material increase in the allowance
for loan losses may adversely affect Citizens Firsts financial condition and
results of operations.

14



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##### Table of Contents



The following table presents an analysis of Citizens Firsts allowance for
loan losses.

|                                                        |             |                         |        |                        |        |   |        |      |      |      |        |      |      |   |          |      |      |   |        |      |      |  
|------------------------------------------------------- | ----------- | ----------------------- | ------ | ---------------------- | ------ | - | ------ | ---- | ---- | ---- | ------ | ---- | ---- | - | -------- | ---- | ---- | - | ------ | ---- | ---- | -
|                                                        |             |                         |        | Year Ended March 31,   |       
|                                                        |             |                         |        |                        |       
|                                                        |             |                         |        | 2002                   |        |   | 2001   |      |      | 2000 |        |      | 1999 |   |          | 1998 |     
|                                                        |             |                         |        |                        |        |   |        |      |      |      |        |      |      |   |          |      |     
|                                                        |             |                         |        | (Dollars in thousands) |       
|Allowance for loan losses,
beginning of year            |             | $                       | 10,831 |                        |        | $ | 10,461 |      |      | $    | 11,161 |      |      | $ | 7,527    |      |      | $ | 6,982  |     
|Charged-off loans:                                      |             |                         |        |                        |        |   |        |      |      |      |        |      |      |   |          |      |      |   |        |     
|                                                        | Real estate |                         |        | (12                    | )      |   |        | (5   | )    |      |        | (5   | )    |   |          |     |      |   |        | (4   | )   
|                                                        | Consumer    |                         |        | (870                   | )      |   |        | (342 | )    |      |        | (230 | )    |   |          | (50  | )    |   |        | (187 | )   
|                                                        | Commercial  |                         |        | (291                   | )      |   |        | (142 | )    |      |        |     |      |   |          | (117 | )    |   |        |     |     
|                                                        |             |                         |        |                        |        |   |        |      |      |      |        |      |      |   |         
|                                                        |             | Total charged-off loans |        |                        | (1,173 | ) |        |      | (489 | )    |        |      | (235 | ) |          |      | (167 | ) |        |      | (191 | )
|                                                        |             |                         |        |                        |        |   |        |      |      |      |        |      |      |   |         
|Recoveries on loans previously
charged off:             |             |                         |        |                        |        |   |        |      |      |      |        |      |      |   |          |      |      |   |        |     
|                                                        | Real estate |                         |        |                       |        |   |        |     |      |      |        | 6    |      |   |          |     |      |   |        | 1    |     
|                                                        | Consumer    |                         |        | 263                    |        |   |        | 23   |      |      |        | 12   |      |   |          | 1    |      |   |        | 21   |     
|                                                        | Commercial  |                         |        | 103                    |        |   |        | 56   |      |      |        |     |      |   |          |     |      |   |        |     |     
|                                                        |             |                         |        |                        |        |   |        |      |      |      |        |      |      |   |         
|                                                        |             | Total recoveries        |        |                        | 366    |   |        |      | 79   |      |        |      | 18   |   |          |      | 1    |   |        |      | 22   |  
|                                                        |             |                         |        |                        |        |   |        |      |      |      |        |      |      |   |         
|Net loans charged-off                                   |             |                         | (807   | )                      |        |   | (410   | )    |      |      | (217   | )    |      |   | (166     | )    |      |   | (169   | )   
|Provision for loan losses                               |             |                         | 996    |                        |        |   | 780    |      |      |      | (483   | )    |      |   | 3,800    |      |      |   | 714    |     
|                                                        |             |                         |        |                        |        |   |        |      |      |      |        |      |      |   |         
|Allowance for loan losses,
end of period                |             | $                       | 11,020 |                        |        | $ | 10,831 |      |      | $    | 10,461 |      |      | $ | 11,161   |      |      | $ | 7,527  |     
|                                                        |             |                         |        |                        |        |   |        |      |      |      |        |      |      |   |         
|Net loans charged-off to average
interest-earning loans |             |                         | 0.11   | %                      |        |   | 0.06   | %    |      |      | 0.04   | %    |      |   | 0.03     | %    |      |   | 0.03   | %   
|Allowance for loan losses
to total loans                |             |                         | 1.47   | %                      |        |   | 1.58   | %    |      |      | 1.80   | %    |      |   | 1.85     | %    |      |   | 1.35   | %   
|Allowance for loan losses to
nonperforming loans        |             |                         | 614.61 | %                      |        |   | 598.40 | %    |      |      | 839.57 | %    |      |   | 1,291.78 | %    |      |   | 553.06 | %   
|Net loans charged-off to
allowance for loan losses      |             |                         | 7.32   | %                      |        |   | 3.79   | %    |      |      | 2.07   | %    |      |   | 1.49     | %    |      |   | 2.25   | %   
|Recoveries to charge-offs                               |             |                         | 31.20  | %                      |        |   | 16.16  | %    |      |      | 7.66   | %    |      |   | 0.60     | %    |      |   | 11.52  | %   

15



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##### Table of Contents



The following table presents the approximate allocation of the allowance
for loan losses by loan category at the dates indicated. Management believes
that the allowance can be allocated by category only on an approximate basis.
The allocation of the allowance to each category is not indicative of future
losses and does not restrict the use of any of the allowance to absorb losses
in any category.



|            |                                 |   |                        |        |  |           |           |        |       |          |       |        |   |   |           |        |           |       |       |          |   |  |       |        |  
|----------- | ------------------------------- | - | ---------------------- | ------ |  | --------- | --------- | ------ | ----- | -------- | ----- | ------ | - | - | --------- | ------ | --------- | ----- | ----- | -------- | - |  | ----- | ------ | -
|            |                                 |   | At March 31,           |       
|            |                                 |   |                        |       
|            |                                 |   | 2002                   |        |  | 2001      |          
|            |                                 |   |                        |        |  |           |          
|            |                                 |   |                        |        |  |           | % of      |        |       | Percent  |       |        |   |   |           |        | % of      |       |       | Percent  |  
|            |                                 |   |                        |        |  |           | Allowance |        |       | of Loans |       |        |   |   |           |        | Allowance |       |       | of Loans |  
|            |                                 |   |                        |        |  |           | in each   |        |       | in Each  |       |        |   |   |           |        | in each   |       |       | in Each  |  
|            |                                 |   |                        |        |  |           | Category  |        |       | Category |       |        |   |   |           |        | Category  |       |       | Category |  
|            |                                 |   |                        |        |  |           | to Total  |        |       | to Total |       |        |   |   |           |        | to Total  |       |       | to Total |  
|            |                                 |   | Amount                 |        |  | Allowance |           |        | Loans |          |       | Amount |   |   | Allowance |        |           | Loans |      
|            |                                 |   |                        |        |  |           |           |        |       |          |       |        |   |   |           |        |           |       |      
|            |                                 |   | (Dollars in thousands) |       
|Real estate |                                 | $ | 4,980                  |        |  |           | 45.19     | %      |       |          | 84.12 | %      |   | $ | 5,425     |        |           |       | 50.09 | %        |   |  | 86.78 | %     
|Consumer    |                                 |   | 4,130                  |        |  |           | 37.48     |        |       |          | 10.25 |        |   |   | 4,082     |        |           |       | 37.69 |          |   |  | 9.90  |       
|Commercial  |                                 |   | 1,096                  |        |  |           | 9.94      |        |       |          | 5.63  |        |   |   | 845       |        |           |       | 7.80  |          |   |  | 3.32  |       
|Unallocated |                                 |   | 814                    |        |  |           | 7.39      |        |       |          |      |        |   |   | 479       |        |           |       | 4.42  |          |   |  |      |       
|            |                                 |   |                        |        |  |           |           |        |       |          |       |        |   |   |           |        |           |      
|            | Total allowance for loan losses |   | $                      | 11,020 |  |           |           | 100.00 | %     |          |       | 100.00 | % |   | $         | 10,831 |           |       |       | 100.00   | % |  |       | 100.00 | %
|            |                                 |   |                        |        |  |           |           |        |       |          |       |        |   |   |           |        |           |      

[Additional columns below]

[Continued from above table, first column(s) repeated]

|            |                                 |   |                        |        |  |           |           |        |       |          |       |        |  
|----------- | ------------------------------- | - | ---------------------- | ------ |  | --------- | --------- | ------ | ----- | -------- | ----- | ------ | -
|            |                                 |   | At
March 31,           |       
|            |                                 |   |                        |       
|            |                                 |   | 2000                   |       
|            |                                 |   |                        |       
|            |                                 |   |                        |        |  |           | % of      |        |       | Percent  |      
|            |                                 |   |                        |        |  |           | Allowance |        |       | of Loans |      
|            |                                 |   |                        |        |  |           | in each   |        |       | in Each  |      
|            |                                 |   |                        |        |  |           | Category  |        |       | Category |      
|            |                                 |   |                        |        |  |           | to Total  |        |       | to Total |      
|            |                                 |   | Amount                 |        |  | Allowance |           |        | Loans |         
|            |                                 |   |                        |        |  |           |           |        |       |         
|            |                                 |   | (Dollars in
thousands) |       
|Real estate |                                 | $ | 5,717                  |        |  |           | 54.65     | %      |       |          | 87.29 | %     
|Consumer    |                                 |   | 3,120                  |        |  |           | 29.83     |        |       |          | 9.47  |       
|Commercial  |                                 |   | 784                    |        |  |           | 7.49      |        |       |          | 3.24  |       
|Unallocated |                                 |   | 840                    |        |  |           | 8.03      |        |       |          |      |       
|            |                                 |   |                        |        |  |           |           |        |      
|            | Total allowance for loan losses |   | $                      | 10,461 |  |           |           | 100.00 | %     |          |       | 100.00 | %
|            |                                 |   |                        |        |  |           |           |        |      

|            |                                 |   |              |        |  |           |           |        |       |          |                        |        |   |   |           |       |           |       |       |          |   |  |       |        |  
|----------- | ------------------------------- | - | ------------ | ------ |  | --------- | --------- | ------ | ----- | -------- | ---------------------- | ------ | - | - | --------- | ----- | --------- | ----- | ----- | -------- | - |  | ----- | ------ | -
|            |                                 |   | At March 31, |       
|            |                                 |   |              |       
|            |                                 |   | 1999         |        |  |           | 1998      |       
|            |                                 |   |              |        |  |           |           |       
|            |                                 |   |              |        |  |           | % of      |        |       | Percent  |                        |        |   |   |           |       | % of      |       |       | Percent  |  
|            |                                 |   |              |        |  |           | Allowance |        |       | of Loans |                        |        |   |   |           |       | Allowance |       |       | of Loans |  
|            |                                 |   |              |        |  |           | in each   |        |       | in Each  |                        |        |   |   |           |       | in each   |       |       | in Each  |  
|            |                                 |   |              |        |  |           | Category  |        |       | Category |                        |        |   |   |           |       | Category  |       |       | Category |  
|            |                                 |   |              |        |  |           | to Total  |        |       | to Total |                        |        |   |   |           |       | to Total  |       |       | to Total |  
|            |                                 |   | Amount       |        |  | Allowance |           |        | Loans |          |                        | Amount |   |   | Allowance |       |           | Loans |      
|            |                                 |   |              |        |  |           |           |        |       |          |                        |        |   |   |           |       |           |       |      
|            |                                 |   |              |        |  |           |           |        |       |          | (Dollars in thousands) |        |   |   |           |       |           |       |       |         
|Real estate |                                 | $ | 6,440        |        |  |           | 57.70     | %      |       |          | 93.35                  | %      |   | $ | 2,332     |       |           |       | 30.98 | %        |   |  | 92.89 | %     
|Consumer    |                                 |   | 1,853        |        |  |           | 16.60     |        |       |          | 3.89                   |        |   |   | 1,430     |       |           |       | 19.00 |          |   |  | 4.78  |       
|Commercial  |                                 |   | 720          |        |  |           | 6.45      |        |       |          | 2.76                   |        |   |   | 646       |       |           |       | 8.58  |          |   |  | 2.33  |       
|Unallocated |                                 |   | 2,148        |        |  |           | 19.25     |        |       |          |                       |        |   |   | 3,119     |       |           |       | 41.44 |          |   |  |      |       
|            |                                 |   |              |        |  |           |           |        |       |          |                        |        |   |   |           |       |           |      
|            | Total allowance for loan losses |   | $            | 11,161 |  |           |           | 100.00 | %     |          |                        | 100.00 | % |   | $         | 7,527 |           |       |       | 100.00   | % |  |       | 100.00 | %
|            |                                 |   |              |        |  |           |           |        |       |          |                        |        |   |   |           |       |           |      

Securities Investment Activities

Under Michigan law and regulation, Citizens First has authority to
purchase a wide range of investment securities. As a result of federal banking
laws, however, financial institutions such as Citizens First may not engage as
principals in any activities that are not permissible for a national bank,
unless the Federal Deposit Insurance Corporation has determined that the
investments would not pose a significant risk to the Savings Association
Insurance Fund and Citizens First is in compliance with applicable capital
standards.

Citizens Firsts Board of Directors has the overall responsibility for
Citizens Firsts investment portfolio. The Board of Directors has authorized
the Investment Committee of the Board of Directors to execute the investment
strategies as prescribed by the Board of Directors. The Board of Directors
also receives a monthly portfolio report. The Investment Committee is
authorized to delegate investment and compliance duties to an Investment
consultant and/or Investment Manager. The Investment Manager is authorized to
make investment decisions consistent with Citizens

16



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##### Table of Contents



Firsts investment policy
and the recommendations of Citizens Firsts Investment Committee and is
primarily responsible for daily investment activities.

The primary objectives of Citizens Firsts investment portfolio are to
provide liquidity necessary to meet day-to-day, cyclical and long-term
requirements for funds; to invest funds not currently needed to fulfill loan
demands; and provide a flow of dependable earnings with minimum risk arising
from potential changes in interest rates or from concentration of investments
in a particular issuer or sector. Investment decisions are based upon Citizens
Firsts cash and borrowed funds position; the quality, maturity, stability, and
earnings of loans; the nature and stability of deposits; and Citizens Firsts
excess capital.

Under Citizens Firsts investment policy, the investment portfolio is to
be composed of investments in marketable obligations in the form of bonds,
notes, or debentures which are salable under ordinary circumstances with
reasonable promptness at fair value. Citizens Firsts investment policy
prohibits investment in stock of any corporation or securities which are
convertible into stock at the option of the issuer. The policy also prohibits
investments in futures, options, private placements, collateralized mortgage
obligations and derivatives. Debt securities authorized for investment by the
investment policy include U.S. Treasury securities; government agency
securities; corporate securities; municipal securities; certificates of
deposit; bankers acceptances; demand obligations; repurchase agreements; and
commercial paper.

The investment policy provides that all bonds, when purchased, must be of
investment grade as determined by at least one nationally recognized securities
rating organization and generally must carry a rating of A/Mig2 or better or
the equivalent or A1/P1 for commercial paper. Citizens Firsts investment
policy limits investments in non-U.S. Treasury securities to no more than five
percent of the value of the investment portfolio for any one issue and ten
percent of the value of the investment portfolio for any one issuer. Also, the
total amount of investment securities of the issuer may not exceed twenty
percent of Citizens Firsts capital, surplus, and subordinated notes and
debentures.

Generally accepted accounting principles require that securities be
categorized as either held to maturity, trading securities or available
for sale, based on managements intent as to the ultimate disposition of each
security. Debt securities may be classified as held to maturity and reported
in financial statements at amortized cost only if the reporting entity has the
positive intent and ability to hold those securities to maturity. Securities
that might be sold in response to changes in market interest rates, changes in
the securitys prepayment risk, increases in loan demand, or other similar
factors cannot be classified as held to maturity. Debt and equity securities
held for current resale are classified as trading securities. These
securities are reported at fair value, and unrealized gains and losses on the
securities would be included in earnings. Citizens First does not currently
use or maintain a trading account. Debt and equity securities not classified
as either held to maturity or trading securities are classified as
available for sale. These securities are reported at fair value, and
unrealized gains and losses on the securities are excluded from earnings and
reported, net of deferred taxes, as a separate component of equity. Citizens
First currently classifies all of its securities as available for sale.

At March 31, 2002, Citizens First did not own any securities, other than
U.S. Government and agency securities, that had an aggregate book value in
excess of 10% of Citizens Firsts stockholders equity at that date.

17



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##### Table of Contents



The following table sets forth certain information regarding the amortized
cost and fair value of Citizens Firsts securities at the dates indicated.

|                                      |                                                           |                                  |   |                |         |  |       |        |         |           |   |        |        |  |   |           |        |  |       |        |        |  |   |        |        | 
|------------------------------------- | --------------------------------------------------------- | -------------------------------- | - | -------------- | ------- |  | ----- | ------ | ------- | --------- | - | ------ | ------ |  | - | --------- | ------ |  | ----- | ------ | ------ |  | - | ------ | ------ | 
|                                      |                                                           |                                  |   | At March 31,   |        
|                                      |                                                           |                                  |   |                |        
|                                      |                                                           |                                  |   | 2002           |         |  | 2001  |        |         | 2000      |  
|                                      |                                                           |                                  |   |                |         |  |       |        |         |           |  
|                                      |                                                           |                                  |   | Amortized      |         |  | Fair  |        |         | Amortized |   |        | Fair   |  |   | Amortized |        |  | Fair  |       
|                                      |                                                           |                                  |   | Cost           |         |  | Value |        |         | Cost      |   |        | Value  |  |   | Cost      |        |  | Value |       
|                                      |                                                           |                                  |   |                |         |  |       |        |         |           |   |        |        |  |   |           |        |  |       |       
|                                      |                                                           |                                  |   | (In thousands) |        
|Debt securities available-for-sale:   |                                                           |                                  |   |                |         |  |       |        |         |           |   |        |        |  |   |           |        |  |       |        |        |  |   |       
|                                      | Obligations of U.S. Treasury and
U.S. government agencies |                                  | $ | 19,586         |         |  | $     | 20,388 |         |           | $ | 39,818 |        |  | $ | 40,898    |        |  | $     | 47,255 |        |  | $ | 47,150 |       
|                                      | Obligations of state and political subdivisions           |                                  |   | 14,056         |         |  |       | 14,568 |         |           |   | 10,804 |        |  |   | 11,339    |        |  |       | 3,612  |        |  |   | 3,630  |       
|                                      | Corporate Securities                                      |                                  |   | 74,126         |         |  |       | 73,874 |         |           |   | 43,326 |        |  |   | 43,816    |        |  |       | 43,663 |        |  |   | 43,508 |       
|                                      | Mortgaged-backed Securities                               |                                  |   | 4,878          |         |  |       | 4,932  |         |           |   |       |        |  |   |          |        |  |       |       |        |  |   |       |       
|                                      |                                                           |                                  |   |                |         |  |       |        |         |           |   |        |        |  |   |           |        | 
|                                      |                                                           | Total                            |   |                | 112,646 |  |       |        | 113,762 |           |   |        | 93,948 |  |   |           | 96,053 |  |       |        | 94,530 |  |   |        | 94,288 | 
|                                      |                                                           |                                  |   |                |         |  |       |        |         |           |   |        |        |  |   |           |        | 
|Equity securities available-for-sale: |                                                           |                                  |   |                |         |  |       |        |         |           |   |        |        |  |   |           |        |  |       |        |        |  |   |       
|                                      | Federal Home Loan Mortgage Corporation Preferred Stock    |                                  |   | 5,002          |         |  |       | 4,785  |         |           |   |       |        |  |   |          |        |  |       |       |        |  |   |       |       
|                                      |                                                           |                                  |   |                |         |  |       |        |         |           |   |        |        |  |   |           |        | 
|                                      | Total equity securities available-for-sale                |                                  |   | 5,002          |         |  |       | 4,785  |         |           |   |       |        |  |   |          |        |  |       |       |        |  |   |       |       
|                                      |                                                           |                                  |   |                |         |  |       |        |         |           |   |        |        |  |   |           |        | 
|                                      |                                                           | Total debt and equity securities |   | $              | 117,648 |  |       | $      | 118,547 |           |   | $      | 93,948 |  |   | $         | 96,053 |  |       | $      | 94,530 |  |   | $      | 94,288 | 
|                                      |                                                           |                                  |   |                |         |  |       |        |         |           |   |        |        |  |   |           |        | 

The following table sets forth Citizens Firsts securities activities for
the periods indicated.

|            |                                                  |  |                              |         |   |      |   |         |      |  |   |        |  
|----------- | ------------------------------------------------ |  | ---------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------ | -
|            |                                                  |  | For the Year Ended March 31, |        
|            |                                                  |  |                              |        
|            |                                                  |  | 2002                         |         |   | 2001 |   |         | 2000 | 
|            |                                                  |  |                              |         |   |      |   |         |      | 
|Securities: |                                                  |  |                              |         |   |      |   |         |      |  |   |       
|            | Securities, beginning of period (1)              |  | $                            | 96,053  |   |      | $ | 94,288  |      |  | $ | 2,003  |  
|            | Purchases                                        |  |                              | 128,623 |   |      |   | 48,506  |      |  |   | 95,287 |  
|            | Sales                                            |  |                              | (35,040 | ) |      |   | (15,516 | )    |  |   |       |  
|            | Maturities                                       |  |                              | (70,290 | ) |      |   | (33,858 | )    |  |   | (3,000 | )
|            | Increase in net premium                          |  |                              | 407     |   |      |   | 286     |      |  |   | 240    |  
|            | Increase (decrease) in unrealized gain           |  |                              | (1,206  | ) |      |   | 2,347   |      |  |   | (242   | )
|            |                                                  |  |                              |         |   |      |   |         |     
|            | Net increase (decrease) in investment securities |  |                              | 22,494  |   |      |   | 1,765   |      |  |   | 92,285 |  
|            |                                                  |  |                              |         |   |      |   |         |     
|            | Securities, end of period                        |  | $                            | 118,547 |   |      | $ | 96,053  |      |  | $ | 94,288 |  
|            |                                                  |  |                              |         |   |      |   |         |     



---

|(1) |  | Includes securities available-for-sale including those transferred from
held-to-maturity concurrently with the adoption of SFAS No. 133 in the
period ended March 31, 2000.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

18



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##### Table of Contents



The table below sets forth certain information regarding the carrying
value, weighted average yields and contractual maturities of Citizens Firsts
debt securities as of March 31, 2002.



|                               |                          |                                                  |                                |       |                        |        |  |               |          |      |              |       |                    |         |  |                      |          |      |   |         |       |        |          |      |      |      |  
|------------------------------ | ------------------------ | ------------------------------------------------ | ------------------------------ | ----- | ---------------------- | ------ |  | ------------- | -------- | ---- | ------------ | ----- | ------------------ | ------- |  | -------------------- | -------- | ---- | - | ------- | ----- | ------ | -------- | ---- | ---- | ---- | -
|                               |                          |                                                  |                                |       | At March 31, 2002      |       
|                               |                          |                                                  |                                |       |                        |       
|                               |                          |                                                  |                                |       |                        |        |  |               |          |      |              |       | More than One Year |         |  | More than Five Years |         
|                               |                          |                                                  |                                |       | One Year or Less       |        |  | to Five Years |          |      | to Ten Years |      
|                               |                          |                                                  |                                |       |                        |        |  |               |          |      |              |      
|                               |                          |                                                  |                                |       |                        |        |  |               | Weighted |      |              |       |                    |         |  | Weighted             |          |      |   |         |       |        | Weighted |     
|                               |                          |                                                  |                                |       | Carrying               |        |  | Average       |          |      | Carrying     |       |                    | Average |  |                      | Carrying |      |   | Average |      
|                               |                          |                                                  |                                |       | Value                  |        |  | Yield         |          |      | Value        |       |                    | Yield   |  |                      | Value    |      |   | Yield   |      
|                               |                          |                                                  |                                |       |                        |        |  |               |          |      |              |       |                    |         |  |                      |          |      |   |         |      
|                               |                          |                                                  |                                |       | (Dollars in thousands) |       
|Available-for-sale securities: |                          |                                                  |                                |       |                        |        |  |               |          |      |              |       |                    |         |  |                      |          |      |   |         |       |        |          |     
|                               | Municipal securities (1) |                                                  | $                              | 3,247 |                        |        |  | 2.05          | %        |      | $            | 3,444 |                    |         |  | 5.91                 | %        |      | $ | 7,385   |       |        |          | 5.18 | %   
|                               | Obligations of the U.S.  |                                                  |                                |       |                        |        |  |               |          |      |              |       |                    |         |  |                      |          |      |   |         |       |        |          |      |     
|                               |                          | Treasury and government
agencies and corporation |                                |       | 6,579                  |        |  |               | 7.06     | %    |              |       | 13,809             |         |  |                      | 7.01     | %    |   |         |      |        |          |      |     |     
|                               |                          | Other investments                                |                                |       | 11,996                 |        |  |               | 7.26     | %    |              |       | 43,049             |         |  |                      | 5.36     | %    |   |         | 9,895 |        |          |      | 4.31 | %   
|                               |                          | Mortgaged-backed securities                      |                                |       |                       |        |  |               |         |      |              |       |                   |         |  |                      |         |      |   |         |      |        |          |      |     |     
|                               |                          | Equity securities                                |                                |       |                       |        |  |               |         |      |              |       |                   |         |  |                      |         |      |   |         |      |        |          |      |     |     
|                               |                          |                                                  |                                |       |                        |        |  |               |          |      |              |       |                    |         |  |                      |          |      |   |         |      
|                               |                          |                                                  | Total securities at fair value |       | $                      | 21,822 |  |               |          | 6.42 | %            |       | $                  | 60,302  |  |                      |          | 5.77 | % |         | $     | 17,280 |          |      |      | 4.68 | %
|                               |                          |                                                  |                                |       |                        |        |  |               |          |      |              |       |                    |         |  |                      |          |      |   |         |      

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                               |                          |                                                  |                                |     |                        |       |  |                  |          |      |          |   |       |         |  |          |          |      |   |          |       |       |         |        |        |         |          |      |      |      |  
|------------------------------ | ------------------------ | ------------------------------------------------ | ------------------------------ | --- | ---------------------- | ----- |  | ---------------- | -------- | ---- | -------- | - | ----- | ------- |  | -------- | -------- | ---- | - | -------- | ----- | ----- | ------- | ------ | ------ | ------- | -------- | ---- | ---- | ---- | -
|                               |                          |                                                  |                                |     | At March 31, 2002      |      
|                               |                          |                                                  |                                |     |                        |      
|                               |                          |                                                  |                                |     | More than Ten Years    |       |  | Mortgaged-Backed |          |      | Equity   |   |       | Total   | 
|                               |                          |                                                  |                                |     |                        |       |  |                  |          |      |          |   |       |         | 
|                               |                          |                                                  |                                |     |                        |       |  |                  | Weighted |      |          |   |       |         |  | Weighted |          |      |   |          |       |       |         |        |        |         | Weighted |     
|                               |                          |                                                  |                                |     | Carrying               |       |  | Average          |          |      | Carrying |   |       | Average |  |          | Carrying |      |   | Carrying |       |       | Average |       
|                               |                          |                                                  |                                |     | Value                  |       |  | Yield            |          |      | Value    |   |       | Yield   |  |          | Value    |      |   | Value    |       |       | Yield   |       
|                               |                          |                                                  |                                |     |                        |       |  |                  |          |      |          |   |       |         |  |          |          |      |   |          |       |       |         |       
|                               |                          |                                                  |                                |     | (Dollars in thousands) |      
|Available-for-sale securities: |                          |                                                  |                                |     |                        |       |  |                  |          |      |          |   |       |         |  |          |          |      |   |          |       |       |         |        |        |         |          |     
|                               | Municipal securities (1) |                                                  | $                              | 492 |                        |       |  | 5.33             | %        |      |          |  |       |         |  |         |          |      |   |         |       |       | $       | 14,568 |        |         |          | 4.63 | %   
|                               | Obligations of the U.S.  |                                                  |                                |     |                        |       |  |                  |          |      |          |   |       |         |  |          |          |      |   |          |       |       |         |        |        |         |          |      |     
|                               |                          | Treasury and government
agencies and corporation |                                |     |                       |       |  |                  |         |      |          |   |      |         |  |          |         |      |   |          |      |       |         |        | 20,388 |         |          |      | 7.03 | %   
|                               |                          | Other investments                                |                                |     | 8,934                  |       |  |                  | 6.72     | %    |          |   |      |         |  |          |         |      |   |          |      |       |         |        | 73,874 |         |          |      | 5.69 | %   
|                               |                          | Mortgaged-backed securities                      |                                |     |                       |       |  |                  |         |      |          | $ | 4,932 |         |  |          | 5.84     | %    |   |          |      |       |         |        | 4,932  |         |          |      | 5.84 | %   
|                               |                          | Equity securities                                |                                |     |                       |       |  |                  |         |      |          |   |      |         |  |          |         |      |   | $        | 4,785 |       |         |        | 4,785  |         |          |      |     |     
|                               |                          |                                                  |                                |     |                        |       |  |                  |          |      |          |   |       |         |  |          |          |      |   |          |       |       |         |       
|                               |                          |                                                  | Total securities at fair value |     | $                      | 9,426 |  |                  |          | 6.65 | %        |   | $     | 4,932   |  |          |          | 5.84 | % |          | $     | 4,785 |         |        | $      | 118,547 |          |      |      | 5.80 | %
|                               |                          |                                                  |                                |     |                        |       |  |                  |          |      |          |   |       |         |  |          |          |      |   |          |       |       |        



---

|(1) |  | Weighted average yield data for municipal securities is presented on a
tax equivalent basis based on an assumed tax rate of 34%.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------

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Deposit Activities and Other Sources of Funds

General.Deposits are the major external source of funds for Citizens
Firsts lending and other investment activities. In addition, Citizens First
generates funds internally from loan principal repayments and prepayments and
maturing securities. Scheduled loan repayments are a relatively stable source
of funds, while deposit inflows, outflows and loan prepayments are influenced
significantly by general interest rates and money market conditions. Citizens
First may use borrowings from the Federal Home Loan Bank of Indianapolis to
compensate for reductions in the availability of funds from other sources.
Currently, Citizens First has no other borrowing arrangements aside from the
Federal Home Loan Bank.

Deposit Accounts.Nearly all of Citizens Firsts depositors reside in
Michigan. Citizens First offers a wide variety of deposit accounts with a
range of interest rates and terms. Citizens Firsts deposit accounts consist
of a variety of savings accounts, checking and NOW accounts, certificates of
deposit, individual retirement accounts and money market accounts. The
maturities of Citizens Firsts certificate of deposit accounts range from seven
days to six years. Deposit account terms vary with the principal differences
being the minimum deposit balance, early withdrawal penalties, limits on the
number of transactions and the interest rate. Citizens First reviews its
deposit mix on a monthly basis and its pricing weekly.

In October 1999, Citizens First began offering a wide range of commercial
deposit products and checking accounts to cities, towns and municipal school
districts located within Citizens Firsts primary market area. At March 31,
2002, Citizens First was working with approximately 43 municipalities. At
March 31, 2002, these entities accounted for approximately $19.2 million of
Citizens Firsts certificates of deposit and $23.4 million of Citizens Firsts
money market accounts. Such municipal and governmental deposits tend to be
more interest rate sensitive than other consumer deposit accounts and are
typically subject to competitive bidding processes. Additionally, the balance
of such deposit accounts tend to fluctuate more than consumer deposit accounts
due to the budgeting and tax collection timing of the municipal entity.
Accordingly, such municipal deposits tend to be more volatile than consumer
deposits and no assurance can be made that Citizens First will be able to
maintain the levels of such accounts in future periods.

Citizens First believes it is competitive in the interest rates it offers
on its deposit products. Citizens First determines the rates paid based on a
number of factors, including rates paid by competitors, Citizens Firsts need
for funds and cost of funds, borrowing costs and movements of market interest
rates. Citizens First does not utilize brokers to obtain deposits and at March
31, 2002 had no brokered deposits.

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The following table presents the deposit activity of Citizens First for
the periods indicated:

|                                             |  |                              |         |  |      |   |         |      |  |   |         | 
|-------------------------------------------- |  | ---------------------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                                             |  | For the Year Ended March 31, |        
|                                             |  |                              |        
|                                             |  | 2002                         |         |  | 2001 |   |         | 2000 | 
|                                             |  |                              |         |  |      |   |         |      | 
|Beginning balance                            |  | $                            | 581,281 |  |      | $ | 601,008 |      |  | $ | 526,840 | 
|Increase (decrease) before interest credited |  |                              | 30,175  |  |      |   | (47,184 | )    |  |   | 50,698  | 
|Interest credited                            |  |                              | 22,558  |  |      |   | 27,457  |      |  |   | 23,470  | 
|                                             |  |                              |         |  |      |   |         |      | 
|Net (decrease) increase                      |  |                              | 52,733  |  |      |   | (19,727 | )    |  |   | 74,168  | 
|                                             |  |                              |         |  |      |   |         |      | 
|Ending balance                               |  | $                            | 634,014 |  |      | $ | 581,281 |      |  | $ | 601,008 | 
|                                             |  |                              |         |  |      |   |         |      | 

At March 31, 2002, Citizens First had $66.1 million in certificate
accounts in amounts of $100,000 or more maturing as follows:

|                         |       |        |                        |        |      |  |          |   | 
|------------------------ | ----- | ------ | ---------------------- | ------ | ---- |  | -------- | - | 
|                         |       |        |                        |        |      |  | Weighted |  
|                         |       |        |                        |        |      |  | Average  |  
|Maturity Period          |       | Amount |                        |        | Rate | 
|                         |       |        |                        |        |      | 
|                         |       |        | (Dollars in thousands) |       
|Three months or less     |       | $      | 26,720                 |        |      |  | 2.43     | %
|Over 3 through 6 months  |       |        | 9,418                  |        |      |  | 5.66     |  
|Over 6 through 12 months |       |        | 15,735                 |        |      |  | 4.44     |  
|Over 12 months           |       |        | 14,259                 |        |      |  | 5.73     |  
|                         |       |        |                        |        |      |  |         
|                         | Total |        | $                      | 66,132 |      |  |          |   | 
|                         |       |        |                        |        |      |  |         

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The following table presents by various rate categories, the amount of
certificates of deposit outstanding at the dates indicated and the periods to
maturity of the certificates of deposit outstanding at March 31, 2002.

|                         |               |                            |   |                                        |         |  |              |                        |        |          |   |        |        |  |   |        |        |  |      |        |         |      |   |         |         |  |   |         |         | 
|------------------------ | ------------- | -------------------------- | - | -------------------------------------- | ------- |  | ------------ | ---------------------- | ------ | -------- | - | ------ | ------ |  | - | ------ | ------ |  | ---- | ------ | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                         |               |                            |   | Period to Maturity from March 31, 2002 |         |  | At March 31, |                       
|                         |               |                            |   |                                        |         |  |              |                       
|                         |               |                            |   | Less                                   |         |  | One          |                        |        | Two      |   |        | Over   |  |   |        |        |  |      |        |         |      |   |         |         | 
|                         |               |                            |   | than One                               |         |  | to Two       |                        |        | to Three |   |        | Three  |  |   |        |        |  |      |        |         |      |   |         |         | 
|                         |               |                            |   | Year                                   |         |  | Years        |                        |        | Years    |   |        | Years  |  |   | 2002   |        |  | 2001 |        |         | 2000 |  
|                         |               |                            |   |                                        |         |  |              |                        |        |          |   |        |        |  |   |        |        |  |      |        |         |      |  
|                         |               |                            |   |                                        |         |  |              | (Dollars in thousands) |        |          |   |        |        |  |   |        |        |  |      |        |        
|Certificates of deposit: |               |                            |   |                                        |         |  |              |                        |        |          |   |        |        |  |   |        |        |  |      |        |         |      |   |         |         |  |   |        
|                         | 0 to 2.00%    |                            | $ | 71,057                                 |         |  | $            |                       |        |          | $ | 1      |        |  | $ |       |        |  | $    | 71,058 |         |      | $ | 320     |         |  | $ | 4,562   |        
|                         | 2.01 to 4.00% |                            |   | 48,568                                 |         |  |              | 9,707                  |        |          |   | 4,418  |        |  |   | 117    |        |  |      | 62,810 |         |      |   | 17,429  |         |  |   | 22,020  |        
|                         | 4.01 to 5.00% |                            |   | 17,016                                 |         |  |              | 4,901                  |        |          |   | 7,197  |        |  |   | 14,410 |        |  |      | 43,524 |         |      |   | 32,657  |         |  |   | 53,981  |        
|                         | 5.01 to 6.00% |                            |   | 26,691                                 |         |  |              | 4,241                  |        |          |   | 4,236  |        |  |   | 4,283  |        |  |      | 39,451 |         |      |   | 86,054  |         |  |   | 162,295 |        
|                         | 6.01 to 7.00% |                            |   | 33,385                                 |         |  |              | 3,492                  |        |          |   | 14,896 |        |  |   | 12,718 |        |  |      | 64,491 |         |      |   | 169,932 |         |  |   | 81,732  |        
|                         | 7.01 to 8.00% |                            |   | 5,393                                  |         |  |              |                       |        |          |   | 1,540  |        |  |   | 1,043  |        |  |      | 7,976  |         |      |   | 8,416   |         |  |   | 73      |        
|                         | Over 8.00%    |                            |   |                                       |         |  |              |                       |        |          |   |       |        |  |   |       |        |  |      |       |         |      |   |        |         |  |   |        |        
|                         |               |                            |   |                                        |         |  |              |                        |        |          |   |        |        |  |   |        |        |  |      |        |        
|                         |               | Total certificate accounts |   | $                                      | 202,110 |  |              | $                      | 22,341 |          |   | $      | 32,288 |  |   | $      | 32,571 |  |      | $      | 289,310 |      |   | $       | 314,808 |  |   | $       | 324,663 | 
|                         |               |                            |   |                                        |         |  |              |                        |        |          |   |        |        |  |   |        |        |  |      |        |        

Borrowings.Citizens First has the ability to use advances from the
Federal Home Loan Bank of Indianapolis to supplement its supply of lendable
funds and to meet deposit withdrawal requirements. The Federal Home Loan Bank
of Indianapolis functions as a central reserve bank providing credit for
savings banks and certain other member financial institutions. As a member of
the Federal Home Loan Bank of Indianapolis, Citizens First is required to own
capital stock in the Federal Home Loan Bank of Indianapolis and is authorized
to apply for advances on the security of the capital stock and certain of its
mortgage loans and other assets, principally securities that are obligations
of, or guaranteed by, the U.S. Government or its agencies, provided certain
creditworthiness standards have been met. Advances are made under several
different credit programs. Each credit program has its own interest rate and
range of maturities. Depending on the program, limitations on the amount of
advances are based on the financial condition of the member institution and the
adequacy of collateral pledged to secure the credit. At March 31, 2002,
Citizens First had the ability to borrow a total of approximately $264.6
million from the Federal Home Loan Bank of Indianapolis, of which $151.4
million was borrowed at such date.

The following table presents certain information regarding Citizens
Firsts borrowed funds at or for the periods ended on the dates indicated:

|                                                      |                                                               |  |                      |         |   |      |   |         |      |  |   |        |  
|----------------------------------------------------- | ------------------------------------------------------------- |  | -------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------ | -
|                                                      |                                                               |  | Year Ended March 31, |        
|                                                      |                                                               |  |                      |        
|                                                      |                                                               |  | 2002                 |         |   | 2001 |   |         | 2000 | 
|                                                      |                                                               |  |                      |         |   |      |   |         |      | 
|Federal Home Loan Bank advances and other borrowings: |                                                               |  |                      |         |   |      |   |         |      |  |   |       
|                                                      | Average balance outstanding                                   |  |                      | 130,645 |   |      | $ | 90,345  |      |  | $ | 72,675 |  
|                                                      | Maximum amount outstanding at any month-end during the period |  |                      | 155,093 |   |      |   | 115,004 |      |  |   | 97,370 |  
|                                                      | Balance outstanding at end of period                          |  |                      | 151,415 |   |      |   | 114,931 |      |  |   | 70,502 |  
|                                                      | Weighted average interest rate during the period              |  |                      | 6.23    | % |      |   | 6.34    | %    |  |   | 5.94   | %
|                                                      | Weighted average interest rate end of period                  |  |                      | 5.79    | % |      |   | 6.35    | %    |  |   | 6.08   | %

Personnel

As of March 31, 2002, Citizens First had 220 full-time employees and 20
part-time employees, none of whom is represented by a collective bargaining
unit. Citizens First believes its relationship with its employees is good.

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Trust Services

Established in 1999, Citizens First maintains the Asset Management and
Trust Department which provides trust and investment services to individuals,
partnerships, corporations and institutions and also acts as a fiduciary of
estates and conservatorships and as a trustee under various wills, trusts and
other plans. The trust department allows the Bank to provide investment
opportunities and fiduciary services to both current and prospective customers.
Consistent with Citizens Firsts operating strategy, Citizens First will
continue to emphasize the growth of its trust service operations to grow assets
and increase fee-based income. Citizens First has implemented several policies
governing the practices and procedures of the trust department, including
policies relating to maintaining confidentiality of trust records, investment
of trust property, handling conflicts of interest, and maintaining
impartiality. At March 31, 2002, the trust department managed 182 accounts
with aggregate assets of $97.3 million, of which the largest relationship
totaled $36.0 million, or 37.0% of the trust departments total assets.

Subsidiaries

Citizens Financial Services, Inc.Citizens Financial Services, Inc.,
formerly 525 Riverside Corporation, was established in 1974 as a
Michigan-chartered service corporation. Although Citizens Financial Services
previously participated in real estate development currently it only has an
investment in the stock of a life insurance company and acts as the parent
corporation for CFS Title Agency. CFS Title Agency, a Michigan Corporation,
was established in 1998 as a joint venture between Citizens First and Lawyers
Title Insurance Agency, a Virginia corporation, to provide title insurance for
customers of Citizens First. Citizens Financial Services also offers, through
its insurance agency, CFS Insurance Agency, a Michigan corporation, a variety
of life insurance and annuity products and may in the future offer other
personal insurance products through an affiliation arrangement with a third
party insurance agency. At March 31, 2002, Citizens Financial Services had
assets totaling $1.8 million. For the years ended March 31, 2002 and March 31,
2001, Citizens Financial Services had generated net income after taxes of
$228,000 and $206,000, respectively.

REGULATION AND SUPERVISION

General

As a savings and loan holding company, Citizens First Bancorp is required
by federal law to file reports with, and otherwise comply with, the rules and
regulations of the Office of Thrift Supervision. Citizens First is a
Michigan-chartered state savings bank and a member of the Federal Home Loan
Bank System and, with respect to deposit insurance, of the Savings Association
Insurance Fund managed by the Federal Deposit Insurance Corporation. The
Commissioner of the Michigan Office of Financial and Insurance Services and/or
the Federal Deposit Insurance Corporation conduct periodic examinations to test
Citizens Firsts safety and soundness and compliance with various regulatory
requirements. This regulation and supervision establishes a comprehensive
framework of activities in which an institution can engage and is intended
primarily for the protection of the insurance fund and depositors. The
regulatory structure also gives the regulatory authorities extensive discretion
in connection with their supervisory and enforcement activities and examination
policies, including policies with respect to the classification of assets and
the establishment of adequate loan loss reserves for regulatory purposes. Any
change in such regulatory requirements and policies, whether by the Office of
Thrift Supervision, the Federal Deposit Insurance Corporation, the Michigan
Office of Financial and Insurance Services or the U.S. Congress, could have a
material adverse impact on Citizens First Bancorp, Citizens First and their
operations. Certain of the regulatory requirements applicable to Citizens
First and to Citizens First Bancorp are referred to below or elsewhere in this
Form 10-K. The description of statutory provisions and regulations applicable
to savings institutions and their holding companies included in this Form 10-K
does not purport to be a complete description of such statutes and regulations
and their effects on Citizens First and Citizens First Bancorp.

Michigan Bank Regulation

Michigan savings banks are regulated and supervised by the Commissioner of
the Michigan Office of Financial and Insurance Services. Michigan-chartered
savings banks are subject to an examination, not less than once every 18

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months, by the Michigan Commissioner either with or without notice. The
approval of the Michigan Commissioner is required for certain activities for a
savings bank to merge with another institution, to reorganize, to issue stock
or to undertake many other activities.

Certain powers that Michigan-chartered savings banks can exercise under
the law are summarized below.

Business Activities.The activities of state savings banks are governed
by state law and regulations. These laws and regulations delineate the nature
and extent of the investments and activities in which state institutions may
engage. In particular, many types of lending authority for state institutions
e.g., commercial, non-residential real property loans and consumer loans, are
limited to a specified percentage of the institutions capital or assets.

Loans to One Borrower.Michigan law provides that stock savings banks may
not provide loans or extensions of credit to a person in excess of 15% of the
capital and surplus of the stock savings bank. The limit, however, may be
increased to 25% of capital and surplus if approval of two-thirds of the banks
board of directors is granted. If the Michigan Commissioner determines that
the interests of a group of more than one person, co-partnership, association
or corporation are so interrelated that they should be considered as a unit for
the purpose of extending credit, the total loans and extensions of credit of
that group shall be combined. At March 31, 2002, Citizens First did not have
any loans with one borrower that exceeded its regulatory limit.

A number of loans are exempted from the above limitations. They include
among others loans on commercial paper, loans to financial institutions, and
loans secured by bonds, notes and certificates of indebtedness.

Dividends.Dividends may be paid out of a Michigan-chartered savings
banks net income then on hand after deducting all bad debts. A Michigan
savings bank may only pay dividends on its common stock if the savings bank has
a surplus amounting to not less than 20% of its capital after the payment of
the dividend. If a bank has a surplus less than the amount of its capital, it
may not declare or pay any dividend until an amount equal to at least 10% of
net income for the preceding one-half year (in the case of quarterly or
semi-annual dividends) or at least 10% of net income of the preceding two
consecutive half-year periods (in the case of annual dividends) has been
transferred to surplus. A savings bank with the approval of the Michigan
Commissioner and by a vote of shareholders owning two-thirds of the stock
entitled to vote may increase its capital stock by a declaration of a stock
dividend on the capital stock. A savings bank may pay dividends on its
preferred stock at a rate as may be applicable without limitation. Federal law
may affect also affect the ability of a Michigan savings bank to pay dividends.

Branching Activities.Michigan savings banks, such as Citizens First,
have the authority under Michigan law to establish branches anywhere in the
State of Michigan, as well as in any other U.S. state or foreign country,
subject to receipt of all required regulatory approvals (including the approval
of the Michigan Banking Commissioner and the Federal Deposit Insurance
Corporation).

Commissioner Assessments.Michigan savings banks are required to pay
supervisory fees to the Michigan Commissioner to fund the operations of the
Michigan Banking Commissioner. The amount of supervisory fees paid by a bank
is based upon a formula involving the banks total assets, as reported to the
Michigan Commissioner. The assessments for the fiscal year ended March 31,
2002 totaled $16,140.

Enforcement.Under Michigan law, the Michigan Commissioner has broad
enforcement authority over state chartered banks and, under certain
circumstances, affiliated parties, insiders, and agents. If a Michigan savings
bank does not operate in accordance with the regulations, policies and
directives of the Michigan Commissioner or is engaging, has engaged, or is
about to engage in an unsafe or unsound practice in conducting the business of
the bank, the Michigan Commissioner may issue and serve upon the bank a notice
of charges with respect to the practice or violation. The Michigan
Commissioners enforcement authority includes: cease and desist orders,
receivership, conservatorship, removal and suspension of officers and
directors, assessment of monetary penalties, emergency closures, liquidation,
and the power to issue orders and declaratory rulings to enforce the Savings
Bank Act provisions.

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Federal Regulation

Capital Requirements.Under Federal Deposit Insurance Corporation
regulations, federally-insured state-chartered banks that are not members of
the Federal Reserve System (state non-member banks), such as Citizens First,
are required to comply with minimum leverage capital requirements. For an
institution determined by the Federal Deposit Insurance Corporation to not be
anticipating or experiencing significant growth and to be in general a strong
banking organization, rated composite 1 under the Uniform Financial
Institutions Ranking System (the rating system) established by the Federal
Financial Institutions Examination Council, the minimum capital leverage
requirement is a ratio of Tier 1 capital to total assets of 3%. For all other
institutions, the minimum leverage capital ratio is not less than 4%. Tier 1
capital is the sum of common stockholders equity, noncumulative perpetual
preferred stock (including any related surplus) and minority investments in
certain subsidiaries, less intangible assets (except for certain servicing
rights and credit card relationships).

Citizens First must also comply with the Federal Deposit Insurance
Corporation risk-based capital guidelines. Risk-based capital ratios are
determined by allocating assets and specified off-balance sheet items to four
risk-weighted categories ranging from 0% to 100%, with higher levels of capital
being required for the categories perceived as representing greater risk. For
example, under the Federal Deposit Insurance Corporations risk-weighting
system, cash and securities backed by the full faith and credit of the U.S.
Government are given a 0% risk weight, loans secured by one- to four-family
residential properties generally have a 50% risk weight and commercial loans
have a risk weighting of 100%.

State non-member banks must maintain a minimum ratio of total capital to
risk-weighted assets of at least 8%, of which at least one-half must be Tier 1
capital. Total capital consists of Tier 1 capital plus Tier 2 or supplementary
capital items, which include allowances for loan losses in an amount of up to
1.25% of risk-weighted assets, cumulative preferred stock, a portion of the net
unrealized gain on equity securities and other capital instruments.

The Federal Deposit Insurance Corporation has adopted a regulation
providing that it will take into account the exposure of a banks capital and
economic value to changes in interest rate risk in assessing a banks capital
adequacy.

Prompt Corrective Regulatory Action.Federal law requires, among other
things, that federal banking authorities take certain supervisory actions
against undercapitalized institutions, the severity of which depends upon the
institutions degree of undercapitalization. Generally, an institution that
has a ratio of total capital to risk weighted assets of less than 8%, a ratio
of Tier 1 (core) capital to risk-weighted assets of less than 4% or a ratio of
core capital to total assets of less than 4% (3% or less for institutions with
the highest examination rating) is considered to be undercapitalized. An
institution that has a total risk-based capital ratio less than 6%, a Tier 1
capital ratio of less than 3% or a leverage ratio that is less than 3% is
considered to be significantly undercapitalized and an institution that has a
tangible capital to assets ratio equal to or less than 2% is deemed to be
critically undercapitalized. Subject to a narrow exception, the Federal
Deposit Insurance Corporation is required to appoint a receiver or conservator
for an institution that is critically undercapitalized. The regulation also
provides that a capital restoration plan must be filed with the Federal Deposit
Insurance Corporation within 45 days of the date an institution receives notice
that it is undercapitalized, significantly undercapitalized or critically
undercapitalized. Compliance with the plan must be guaranteed by any parent
holding company. In addition, numerous mandatory supervisory actions become
immediately applicable to an undercapitalized institution, including, but not
limited to, increased monitoring by regulators and restrictions on growth,
capital distributions and expansion. The Federal Deposit Insurance Corporation
could also take any one of a number of discretionary supervisory actions,
including the issuance of a capital directive and the replacement of senior
executive officers and directors.

Federal law generally prohibits a depository institution from making any
capital distribution (including payment of a dividend) or paying any management
fee to its holding company if the depository institution would thereafter be
undercapitalized. The Federal Deposit Insurance Corporation may prevent an
insured bank from paying dividends if the bank is in default of payment of any
assessment due to the Federal Deposit Insurance Corporation. In addition, the

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Federal Deposit Insurance Corporation may prohibit the payment of dividends by
a bank if such payment is determined, by reason of the financial condition of
the bank, to be an unsafe and unsound banking practice.

Insurance of Deposit Accounts.Citizens First is a member of the Savings
Association Insurance Fund. The Federal Deposit Insurance Corporation
maintains a risk-based assessment system by which institutions are assigned to
one of three categories based on their capitalization and one of three
subcategories based on examination ratings and other supervisory information.
An institutions assessment rate depends upon the categories to which it is
assigned. Assessment rates for insured institutions are determined
semiannually by the Federal Deposit Insurance Corporation and currently range
from zero basis points for the healthiest institutions to 27 basis points of
assessable deposits for the riskiest.

In addition to the assessment for deposit insurance, institutions are
required to make payments on bonds issued in the late 1980s by the Financing
Corporation to recapitalize the predecessor to the Savings Association
Insurance Fund. Beginning January 1, 2000, these assessments were shared by
the Savings Association Insurance Fund and the Bank Insurance Fund members.
During calendar 2002, these assessments approximated 1.82 basis points of
assessable deposits.

The Federal Deposit Insurance Corporation has authority to increase
insurance assessments. A significant increase in Savings Association Insurance
Fund insurance premiums would likely have an adverse effect on the operating
expenses and results of operations of Citizens First. Management cannot
predict what insurance assessment rates will be in the future.

Transactions with Related Parties.Citizens Firsts authority to engage
in transactions with affiliates (e.g., any company that controls or is under
common control with an institution, including Citizens First Bancorp and its
non-savings institution subsidiaries) is limited by federal law. Federal law
places quantitative restrictions on such transactions and imposes specified
collateral requirements for certain transactions. The purchase of low quality
assets from affiliates is generally prohibited. Transactions with affiliates
must be on terms and under circumstances that are at least as favorable to the
institution as those prevailing at the time for comparable transactions with
non-affiliated companies.

Citizens Firsts authority to extend credit to executive officers,
directors and 10% shareholders (insiders), as well as entities such persons
control, is also governed by federal law. Among other restrictions, such loans
are generally required to be made on terms substantially the same as those
offered to unaffiliated individuals and not involve more than the normal risk
of repayment.

Standards for Safety and Soundness.The federal banking agencies have
adopted Interagency Guidelines prescribing Standards for Safety and Soundness.
The guidelines set forth the safety and soundness standards that the federal
banking agencies use to identify and address problems at insured depository
institutions before capital becomes impaired. The guidelines address internal
controls and information systems, internal audit system, credit underwriting,
loan documentation, interest rate risk exposure, asset growth, asset quality,
earnings and compensation, and fees and benefits. If the appropriate federal
banking agency determines that a savings institution fails to meet any standard
prescribed by the guidelines, the agency may require the institution to submit
an acceptable plan to achieve compliance with the standard.

Investment Activities.Since the enactment of the Federal Deposit
Insurance Corporation Improvement Act, all state-chartered Federal Deposit
Insurance Corporation insured banks, including savings banks, have generally
been limited to activities as principal and equity investments of the type and
in the amount authorized for national banks, notwithstanding state law. The
Federal Deposit Insurance Corporation Improvement Act and the Federal Deposit
Insurance Corporation permit exceptions to these limitations. For example, the
Federal Deposit Insurance Corporation is authorized to permit such institutions
to engage in state authorized activities or investments that do not meet this

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standard (other than direct equity investments) for institutions that meet all
applicable capital requirements if it is determined that such activities or
investments do not pose a significant risk to the Savings Association Insurance
Fund.

Interstate Branching.Beginning June 1, 1997, federal law permitted the
responsible federal banking agencies to approve merger transactions between
banks located in different states, regardless of whether the merger would be
prohibited under the law of the two states. The law also permitted a state to
opt in to the provisions of the Interstate Banking Act before June 1, 1997,
and permitted a state to opt out of the provisions of the Interstate Banking
Act by adopting appropriate legislation before that date. Michigan did not
opt out of the provisions of the Interstate Banking Act. Accordingly,
beginning June 1, 1997, a Michigan savings bank, such as Citizens First, could
acquire an institution by merger in a state other than Michigan unless the
other state had opted out. The Interstate Banking Act also authorizes de novo
branching into another state if the host state enacts a law expressly
permitting out of state banks to establish such branches within its borders.

Federal Enforcement.The Federal Deposit Insurance Corporation has
primary federal enforcement responsibility over state non-member banks, such as
Citizens First, and has the authority to bring actions against the institution
and all institution-affiliated parties, including stockholders, and any
attorneys, appraisers and accountants who knowingly or recklessly participate
in wrongful action likely to have an adverse effect on an insured institution.
Formal enforcement action may range from the issuance of a capital directive or
cease and desist order to removal of officers and/or directors to institution
of receivership, conservatorship or termination of deposit insurance. Civil
penalties cover a wide range of violations and can amount to $25,000 per day,
or even $1 million per day in especially egregious cases. Federal law also
establishes criminal penalties for certain violations.

Federal Home Loan Bank System

Citizens First is a member of the Federal Home Loan Bank System, which
consists of 12 regional Federal Home Loan Banks. The Federal Home Loan Bank
provides a central credit facility primarily for member institutions. Citizens
First, as a member of the Federal Home Loan Bank of Indianapolis, is required
to acquire and hold shares of capital stock in that Federal Home Loan Bank in
an amount at least equal to 1.0% of the aggregate principal amount of its
unpaid residential mortgage loans and similar obligations at the beginning of
each year, or 1/20 of its advances (borrowings) from the Federal Home Loan
Bank, whichever is greater. Citizens First was in compliance with this
requirement with an investment in Federal Home Loan Bank stock at March 31,
2002 of $7.5 million.

Federal Reserve System

The Federal Reserve Board regulations require savings institutions to
maintain non-interest-earning reserves against their transaction accounts
(primarily NOW and regular checking accounts). The regulations generally
provide that reserves be maintained against aggregate transaction accounts as
follows: for accounts aggregating $41.3 million or less (subject to adjustment
by the Federal Reserve Board) the reserve requirement is 3%; and for accounts
aggregating greater than $41.3 million, the reserve requirement is $1.239
million plus 10% (subject to adjustment by the Federal Reserve Board between 8%
and 14%) against that portion of total transaction accounts in excess of $41.3
million. The first $5.7 million of otherwise reservable balances (subject to
adjustments by the Federal Reserve Board) are exempted from the reserve
requirements. Citizens First complies with the foregoing requirements.

Holding Company Regulation

Federal law allows a state savings bank that qualifies as a Qualified
Thrift Lender, discussed below, to elect to be treated as a savings
association for purposes of the savings and loan holding company provisions of
the Home Owners Loan Act. Such election allows its holding company to be
regulated as a savings and loan holding company by the Office of Thrift
Supervision rather than as a bank holding company by the Federal Reserve Board.
Citizens First has made such election and is regulated as a savings and loan
holding company within the meaning of the Home Owners Loan Act. As such,
Citizens First Bancorp is registered with the Office of Thrift Supervision and
has adhered to the

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Office of Thrift Supervisions regulations, reporting requirements and
examination and enforcement authority. Among other things,
this authority permits the Office of Thrift Supervision to restrict or prohibit
activities that are determined to be a serious risk to the subsidiary savings
institution.

Citizens First Bancorp is a nondiversified unitary savings and loan
holding company within the meaning of federal law. Unitary savings and loan
holding companies not existing or applied for before May 4, 1999, such as
Citizens First Bancorp, are restricted to activities permissible for financial
holding companies under the law or for multiple savings and loan holding
companies. A financial holding company may engage in activities that are
financial in nature, incidental to financial activities or complementary to a
financial activity. A multiple savings and loan holding company is generally
limited to activities permissible for financial holding companies and certain
additional activities authorized by Office of Thrift Supervision regulation.

A savings and loan holding company is prohibited from, directly or
indirectly, acquiring more than 5% of the voting stock of another savings
institution or savings and loan holding company without prior written approval
of the Office of Thrift Supervision and from acquiring or retaining control of
a depository institution that is not insured by the Federal Deposit Insurance
Corporation. In evaluating applications by holding companies to acquire
savings institutions, the Office of Thrift Supervision considers the financial
and managerial resources and future prospects of the holding company and
institution involved, the effect of the acquisition on the risk to the deposit
insurance funds, the convenience and needs of the community and competitive
factors.

The Office of Thrift Supervision may not approve any acquisition that
would result in a multiple savings and loan holding company controlling savings
institutions in more than one state, subject to two exceptions: (1) the
approval of interstate supervisory acquisitions by savings and loan holding
companies and (2) the acquisition of a savings institution in another state if
the laws of the state of the target savings institution specifically permit
such acquisitions. The states vary in the extent to which they permit
interstate savings and loan holding company acquisitions.

Although savings and loan holding companies are not subject to specific
capital requirements or specific restrictions on the payment of dividends or
other capital distributions, federal regulations do prescribe such restrictions
on subsidiary institutions as previously described. Citizens First must notify
the Office of Thrift Supervision 30 days before declaring any dividend to
Citizens First Bancorp. In addition, the financial impact of a holding company
on its subsidiary institution is a matter that is evaluated by the Office of
Thrift Supervision and the agency has authority to order cessation of
activities or divestiture of subsidiaries deemed to pose a threat to the safety
and soundness of the institution.

QTL Test.To be regulated as a savings and loan holding company by the
Office of Thrift Supervision (rather than as a bank holding company by the
Federal Reserve Board), Citizens First must qualify as a Qualified Thrift
Lender. To be a Qualified Thrift Lender, Citizens First must either qualify as
a domestic building and loan association under the Internal Revenue Code or
maintain at least 65% of its portfolio assets (total assets less: (1)
specified liquid assets up to 20% of total assets; (2) intangibles, including
goodwill; and (3) the value of property used to conduct business) in certain
qualified thrift investments (primarily residential mortgages and related
investments, including certain mortgage-backed securities) in at least 9 months
out of each 12 month period.

A savings institution that fails the qualified thrift lender test is
subject to certain operating restrictions and may be required to convert to a
bank charter. As of March 31, 2002, Citizens First met the qualified thrift
lender test.

Change in Bank Control Act.The acquisition of 10% or more of the
outstanding common stock of Citizens First Bancorp may trigger the provisions
of the Change in Bank Control Act. The Change in Bank Control Act generally
requires persons (including companies) who at any time intend to acquire
control of a savings and loan holding company to provide 60 days prior written
notice and certain financial and other information to the Office of Thrift
Supervision. The statute and underlying regulations authorize the Office of
Thrift Supervision to disapprove a proposed acquisition on certain specified
grounds.

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Under certain circumstances, a similar filing may be necessary with the
Federal Deposit Insurance Corporation prior to the acquisition of indirect
control of Citizens First.

Regulatory and Legislative Change.Citizens First and Citizens First
Bancorp are extensively regulated and supervised. Regulations, which affect
Citizens First on a daily basis, may be changed at any time, and the
interpretation of the relevant law and regulations may also change because of
new interpretations by the authorities who interpret those laws and
regulations. Any change in the regulatory structure or the applicable statutes
or regulations, whether by the State of Michigan, the Office of Thrift
Supervision, the Federal Deposit Insurance Corporation or the U.S. Congress,
could have a material impact on Citizens First Bancorp, Citizens First, its
operations or the conversion.

Federal Securities Laws

Citizens First Bancorp has filed with the Securities and Exchange
Commission a registration statement under the Securities Act for the
registration of the common stock to be issued in the conversion. Upon
completion of the conversion, Citizens First Bancorps common stock will be
registered with the Securities and Exchange Commission under the Securities
Exchange Act. Citizens First Bancorp will then have to observe the
information, proxy solicitation, insider trading restrictions and other
requirements under the Securities Exchange Act.

The registration under the Securities Act of shares of the common stock to
be issued in the conversion does not cover the resale of those shares. Shares
of the common stock purchased by persons who are not affiliates of Citizens
First Bancorp may be resold without registration. The resale restrictions of
Rule 144 under the Securities Act govern shares purchased by an affiliate of
Citizens First Bancorp. As defined under Rule 144, an affiliate of Citizens
First Bancorp is a person that directly or indirectly controls, is controlled
by, or is under common control with Citizens First Bancorp. Generally,
executive officers and directors will be considered affiliates of Citizens
First Bancorp. If Citizens First Bancorp meets the current public information
requirements of Rule 144 under the Securities Act, each affiliate of Citizens
First Bancorp which complies with the other conditions of Rule 144 (including
those that require the affiliates sale to be aggregated with those of other
persons) would be able to sell in the public market, without registration, a
number of shares not to exceed, in any three-month period, the greater of (1)
1% of the outstanding shares of Citizens First Bancorp or (2) the average
weekly volume of trading in such shares during the preceding four calendar
weeks. Provision may be made in the future by Citizens First Bancorp to permit
affiliates to have their shares registered for sale under the Securities Act
under specific circumstances.

FEDERAL AND STATE TAXATION

Federal Income Taxation

General.Citizens First Bancorp and Citizens First report their income on
a fiscal year basis using the accrual method of accounting. The federal income
tax laws apply to Citizens First Bancorp and Citizens First in the same manner
as to other corporations with some exceptions, including particularly Citizens
Firsts reserve for bad debts discussed below. The following discussion of tax
matters is intended only as a summary and does not purport to be a
comprehensive description of the tax rules applicable to Citizens First or
Citizens First Bancorp. Citizens Firsts federal income tax returns have been
either audited or closed under the statute of limitations through tax year
1996. For its 2002 tax year, Citizens Firsts maximum federal income tax rate
was 35%.

Bad Debt Reserves.For fiscal years beginning before December 31, 1996,
thrift institutions that qualified under certain definitional tests and other
conditions of the Internal Revenue Code were permitted to use certain favorable
provisions to calculate their deductions from taxable income for annual
additions to their bad debt reserve. A reserve could be established for bad
debts on qualifying real property loans, generally secured by interests in real
property improved or to be improved, under the percentage of taxable income
method or the experience method. The reserve for nonqualifying loans was
computed using the experience method.

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##### Table of Contents



Federal legislation enacted in 1996 repealed the reserve method of
accounting for bad debts and the percentage of taxable income method for tax
years beginning after 1995 and required savings institutions to recapture or
take into income certain portions of their accumulated bad debt reserves.
Approximately $6.6 million of Citizens Firsts accumulated bad debt reserves
would not be recaptured into taxable income unless Citizens First makes a
non-dividend distribution to Citizens First Bancorp as described below.

Distributions.If Citizens First makes non-dividend distributions to
Citizens First Bancorp, they will be considered to have been made from Citizens
Firsts unrecaptured tax bad debt reserves, including the balance of its
reserves as of December 31, 1988, to the extent of the non-dividend
distributions, and then from Citizens Firsts supplemental reserve for losses
on loans, to the extent of those reserves, and an amount based on the amount
distributed, but not more than the amount of those reserves, will be included
in Citizens Firsts taxable income. Non-dividend distributions include
distributions in excess of Citizens Firsts current and accumulated earnings
and profits, as calculated for federal income tax purposes, distributions in
redemption of stock, and distributions in partial or complete liquidation.
Dividends paid out of Citizens Firsts current or accumulated earnings and
profits will not be so included in Citizens Firsts taxable income.

The amount of additional taxable income triggered by a non-dividend
distribution is an amount that, when reduced by the tax attributable to the
income, is equal to the amount of the distribution. Therefore, if Citizens
First makes a non-dividend distribution to Citizens First Bancorp,
approximately one and one-half times the amount of the distribution not in
excess of the amount of the reserves would be includable in income for federal
income tax purposes, assuming a 35% federal corporate income tax rate.
Citizens First does not intend to pay dividends that would result in a
recapture of any portion of its bad debt reserves.

State Taxation

The State of Michigan imposes a Single Business Tax (the SBT), which is
an annual value-added tax imposed on the privilege of doing business in the
state. Every person with business activity in Michigan is subject to the tax.
Most organizations exempt from federal income tax are also exempt from the SBT.
The major components of the SBT are compensation, depreciation and federal
taxable income, increased by net operating losses, if any, utilized in arriving
at federal taxable income. For tax years beginning before 2000, the SBT base
is decreased by the cost of depreciable tangible assets acquired during the
year. For tax years beginning after 1999, an investment tax credit is claimed
for the acquisition of depreciable tangible assets. Effective January 1, 1999,
the SBT rate is 2.2% and will be phased out during a 23-year period.

Delaware State Taxation.As a Delaware holding company not earning income
in Delaware, the Company is exempted from Delaware Corporate income tax but is
required to file an annual report with and pay an annual franchise tax to the
State of Delaware.

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ITEM 2. PROPERTIES

Citizens First currently conducts its business through its main office
located in Port Huron, Michigan, and fourteen other full-service banking
offices, all of which it owns. Citizens First also operates ATM machines at
six other locations.

|                                                  |       |          |             |     |                |                 |                |       | 
|------------------------------------------------- | ----- | -------- | ----------- | --- | -------------- | --------------- | -------------- | ----- | 
|                                                  |       |          |             |     |                |                 | Net Book Value |      
|                                                  |       |          | Original    |     |                | of Property     |               
|                                                  |       |          | Year Leased |     |                | or Leasehold    |               
|                                                  |       |          | or          |     |                | Improvements at |               
|Location                                          |       | Acquired |             |     | March 31, 2002 |                
|                                                  |       |          |             |     |                |                
|Main/Executive Office:                            |       |          |             |     |                | (In thousands)  |               
|                                                  |       |          |             |     |                |                 |                |      
|525 Water Street
Port Huron, Michigan 48060       |       |          | 1978        |     |                | $               | 1,995          |      
|                                                  |       |          |             |     |                |                 |                |      
|Branch Offices:                                   |       |          |             |     |                |                 |                |      
|                                                  |       |          |             |     |                |                 |                |      
|1527 Hancock
Port Huron, Michigan 48060           |       |          | 1971        |     |                |                 | 1,052          |      
|                                                  |       |          |             |     |                |                 |                |      
|48 S. Elk Street
Sandusky, Michigan 48471         |       |          | 1972        |     |                |                 | 76             |      
|                                                  |       |          |             |     |                |                 |                |      
|123 N. Port Crescent
Bad Axe, Michigan 48413      |       |          | 1973        |     |                |                 | 118            |      
|                                                  |       |          |             |     |                |                 |                |      
|270 Clinton Avenue
St. Clair, Michigan 48079      |       |          | 1974        |     |                |                 | 86             |      
|                                                  |       |          |             |     |                |                 |                |      
|301 Summer Street
Algonac, Michigan 48001         |       |          | 1975        |     |                |                 | 109            |      
|                                                  |       |          |             |     |                |                 |                |      
|380 N. Cedar Street
Imlay City, Michigan 48444    |       |          | 1975        |     |                |                 | 186            |      
|                                                  |       |          |             |     |                |                 |                |      
|2015 Gratiot Boulevard
Marysville, Michigan 48040 |       |          | 1976        |     |                |                 | 116            |      
|                                                  |       |          |             |     |                |                 |                |      
|3136 Lapeer Road
Port Huron, Michigan 48060       |       |          | 1976        |     |                |                 | 283            |      
|                                                  |       |          |             |     |                |                 |                |      
|37 N. Howard
Croswell, Michigan 48422             |       |          | 1980        |     |                |                 | 78             |      
|                                                  |       |          |             |     |                |                 |                |      
|204 S. Huron
Harbor Beach, Michigan 48441         |       |          | 1980        |     |                |                 | 46             |      
|                                                  |       |          |             |     |                |                 |                |      
|210 S. Parker
Marine City, Michigan 48039         |       |          | 1987        |     |                |                 | 61             |      
|                                                  |       |          |             |     |                |                 |                |      
|807 S. Main Street
Lapeer, Michigan 48446         |       |          | 1993        |     |                |                 | 51             |      
|                                                  |       |          |             |     |                |                 |                |      
|4778 24th Avenue
Fort Gratiot, Michigan 48060     |       |          | 1998        |     |                |                 | 89             |      
|                                                  |       |          |             |     |                |                 |                |      
|5536 Main Street
Lexington, Michigan 48450        |       |          | 2002        |     |                |                 | 380            |      
|                                                  |       |          |             |     |                |                 |                |      
|Other Properties:                                 |       |          |             |     |                |                 |                |      
|                                                  |       |          |             |     |                |                 |                |      
|550 Water Street
Port Huron, Michigan 48060 (1)   |       |          | 1986        |     |                |                 | 45             |      
|                                                  |       |          |             |     |                |                 |                |      
|555 Water Street
Port Huron, Michigan 48060 (2)   |       |          | 1998        |     |                |                 | 773            |      
|                                                  |       |          |             |     |                |                 |                |      
|500 Water Street
Port Huron, Michigan 48060 (3)   |       |          | 2000        |     |                |                 | 339            |      
|Suite 105                                         |       |          |             |     |                |                 |                |      
|                                                  |       |          |             |     |                |                 |                |      
|624 W. Nepessing Street
Lapeer, Michigan 48446    |       |          | 2001        | (4) |                |                 | 2              |      
|                                                  |       |          |             |     |                |                 |               
|                                                  | Total |          |             |     |                |                 | $              | 5,885 | 
|                                                  |       |          |             |     |                |                 |               



---

|(1) |  | The property, which Citizens First owns, consists of a drive-up ATM
facility.                                                                                                                                         
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) |  | The property, which Citizens First owns, houses Citizens Firsts trust
and financial services operations.                                                                                                             
|(3) |  | The property, which Citizens First owns, consists of a drive-up banking
center.                                                                                                                                       
|(4) |  | The property, which Citizens First leases, serves as a loan production
office. The lease on the property expires in 2003, at which point
Citizens First has the option to renew for three additional one-year
periods.

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ITEM 3. LEGAL PROCEEDINGS

Periodically, there have been various claims and lawsuits involving the
Bank, such as claims to enforce liens, condemnation proceedings on properties
in which the Bank holds security interests, claims involving the making and
servicing of real property loans and other issues incident to the Banks
business. Such routine legal proceedings, in the aggregate, are believed by
management to be immaterial to the financial condition or operations of the
Company.




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.




PART II




ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Information relating to the market for the Registrants common equity and
related stockholder matters appears under Market For Registrants Common
Equity and Related Stockholder Matters in the Registrants 2002 Annual Report
to Stockholders and is incorporated herein by reference. Information relating
to the dividend restrictions for the Registrants common stock appears under
Regulation and Supervision.




ITEM 6. SELECTED FINANCIAL DATA

The above-captioned information appears under Financial Highlights in
the Registrants 2002 Annual Report to Stockholders and is incorporated herein
by reference.




ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The above-captioned information appears under the heading Managements
Discussion and Analysis of Financial Condition and Results of Operations in
the Registrants 2002 Annual Report to Stockholders and is incorporated herein
by reference.




ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The above-captioned information appears under the heading Quantitative
and Qualitative Disclosures about Market Risk in the Registrants 2002 Annual
Report to Stockholders and is incorporated herein by reference.




ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements of Citizens First Bancorp, Inc. and
its subsidiaries, together with the report thereon by Plante & Moran, LLP
appears in the Registrants 2002 Annual Report to Stockholders and are
incorporated herein by reference.




ITEM 9. CHANGE IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

None.

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##### Table of Contents






PART III




ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information relating to Directors and Executive Officers of the
Registrant is incorporated herein by reference to the Section captioned
Proposal 1  Election of Directors in the Registrants Proxy Statement for
the Annual Meeting of Stockholders to be held on August 13, 2002. Reference is
made to the cover page of this Form 10-K and to the section captioned Section
16(a) Beneficial Ownership Reporting Compliance for information regarding
compliance with Section 16(a) of the Exchange Act.




ITEM 11. EXECUTIVE COMPENSATION

The information relating to executive compensation is incorporated herein
by reference to the sections captioned Executive Compensation and Proposal 1
- Election of Directors  Directors Compensation in the Registrants Proxy
Statement for the Annual Meeting of Stockholders to be held on August 13, 2002.




ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER
MATTERS

The information relating to security ownership of certain beneficial
owners and management is incorporated herein by reference to the section
captioned Stock Ownership in the Registrants Proxy Statement for the Annual
Meeting of Stockholders to be held on August 13, 2002.

Equity Compensation Plan Information

|                                                       |  |                      |           |  |                   |  |   |                      |  |  |           | 
|------------------------------------------------------ |  | -------------------- | --------- |  | ----------------- |  | - | -------------------- |  |  | --------- | 
|Plan category                                          |  | Number of securities |           |  | Weighted-average  |  |   | Number of securities | 
|                                                       |  | to be issued upon    |           |  | exercise price of |  |   | remaining available  | 
|                                                       |  | exercise of          |           |  | outstanding       |  |   | for future issuance  | 
|                                                       |  | outstanding          |           |  | options, warrants |  |   | under equity         | 
|                                                       |  | options, warrants    |           |  | and rights        |  |   | compensation plans   | 
|                                                       |  | and rights           |           |  |                   |  |   | (excluding           | 
|                                                       |  |                      |           |  |                   |  |   | securities           | 
|                                                       |  |                      |           |  |                   |  |   | reflected in column  | 
|                                                       |  |                      |           |  |                   |  |   | (a))                 | 
|                                                       |  | (a)                  |           |  | (b)               |  |   | (c)                  | 
|                                                       |  |                      |           |  |                   |  |   |                      | 
|                                                      
|Equity compensation
plans approved by
security holders |  |                      | 1,429,014 |  |                   |  |  |                      |  |  | 1,429,014 | 
|Total                                                  |  |                      | 1,429,014 |  |                   |  |  |                      |  |  | 1,429,014 | 

The Company does not maintain any equity compensation plans that have not
been approved by security holders.




ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information relating to certain relationships and related transactions
is incorporated herein by reference to the section captioned Transactions with
Management in the Registrants Proxy Statement for the Annual Meeting of
Stockholders to be held on August 13, 2002.

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##### Table of Contents






PART IV




ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

|    |  |  |     |  |  |                     
|--- |  |  | --- |  |  | --------------------
|(a) |  |  | (1) |  |  | Financial Statements



| |  |  | Independent Auditors Report                                                                  
| | - |  | ----------------------------------------------------------------------------------------------
|
| |  |  | Consolidated Balance Sheets as of March 31, 2002 and 2001                                     
|
| |  |  | Consolidated Statements of Income for the Years Ended March 31, 2002, 2001
and 2000           
|
| |  |  | Consolidated Statements of Changes in Equity for the Years Ended March 31, 2002,
2001 and 2000
|
| |  |  | Consolidated Statements of Cash Flows for the Years Ended March 31, 2002, 2001,
and 2000      
|
| |  |  | Notes to Consolidated Financial Statements                                                    



| | (2) |  | Financial Statement Schedules                                                                                                                                                                 
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | All financial statement schedules are omitted because they are not required or applicable, or the required information is shown in
the consolidated financial statements or the notes thereto.
|
| | (3) |  | Exhibits                                                                                                                                                                                      

| |  |  |      |  |  |                                                                                                                  
| |  |  | ---- |  |  | -----------------------------------------------------------------------------------------------------------------
| |  |  | 3.1  |  |  | Certificate of Incorporation of Citizens First Bancorp, Inc. (1)                                                 
| |  |  | 3.2  |  |  | Bylaws of Citizens First Bancorp, Inc. (1)                                                                       
| |  |  | 4.0  |  |  | Draft Stock Certificate of Citizens First Bancorp, Inc. (1)                                                      
| |  |  | 10.1 |  |  | Form of Citizens First Savings Bank Employee Severance Compensation Plan (1)                                     
| |  |  | 10.2 |  |  | Form of Citizens First Savings Bank Supplemental Executive Retirement Plan (1)                                   
| |  |  | 10.3 |  |  | Form of Citizens First Savings Bank Directors Deferred Fee Agreement (1)                                        
| |  |  | 10.4 |  |  | Employment Agreement between Citizens First Bancorp, Inc. and Marshall J. Campbell                               
| |  |  | 10.5 |  |  | Change in Control Agreement between Citizens First Savings Bank and Randy J. Cutler (2)                          
| |  |  | 10.6 |  |  | Change in Control Agreement between Citizens First Savings Bank and Timothy D. Regan (2)                         
| |  |  | 10.7 |  |  | Change in Control Agreement between Citizens First Savings Bank and Stephen J. Armstrong (2)                     
| |  |  | 10.8 |  |  | Citizens First Bancorp, Inc. 2001 Stock-Based Incentive Plan (3)                                                 
| |  |  | 13.0 |  |  | 2002 Annual Report to Stockholders                                                                               
| |  |  | 21.0 |  |  | Subsidiary Information is incorporated herein by reference to Part I, Item 1, Business   Subsidiary Activities
| |  |  | 23.0 |  |  | Consent of Plante & Moran LLP                                                                                    
| |  |  |     

|(1) |  | Incorporated by reference into this
document from the Exhibits to the Form S-1, Registration
Statement and amendments thereto, initially filed with
the Securities and Exchange Commission on November 3,
2000, Registration No. 333-49234.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

34



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##### Table of Contents



|(2) |  | Incorporated by reference into this
document from the Exhibits to the Form 10-Q as filed
with the Securities and Exchange Commission on August
14, 2001 (Registration No. 0-32041).
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) |  | Incorporated by reference into this
document from the Appendix to the Proxy Statement as
filed with the Securities and Exchange Commission on
September 30, 2001.                  



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

35



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##### Table of Contents



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

|                    |  |  |                              |                                                                                                          
|------------------- |  |  | ---------------------------- | ---------------------------------------------------------------------------------------------------------
|                    |  |  | Citizens First Bancorp, Inc.
|                   
|Date: June 27, 2002 |  |  | By:                          | /s/ Marshall J. CampbellMarshall J. Campbell
Chairman of the Board, President
and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons in the capacities and on the
dates indicated.

|                                                     |  |                                                                                            |  |              
|---------------------------------------------------- |  | ------------------------------------------------------------------------------------------ |  | -------------
|/s/ Marshall J. CampbellMarshall J. Campbell         |  | Chairman of the Board, President
and Chief Executive Officer
(principal executive officer) |  | June 27, 2002
|                                                    
|/s/ Timothy D. ReganTimothy D. Regan                 |  | Secretary, Treasurer
and Director (principal
accounting and financial officer)             |  | June 27, 2002
|                                                    
|/s/ Ronald W. CooleyRonald W. Cooley                 |  | Director                                                                                   |  | June 27, 2002
|                                                    
|/s/ Walid DemashkiehWalid Demashkieh                 |  | Director                                                                                   |  | June 27, 2002
|                                                    
|/s/ Christopher A. KellermanChristopher A. Kellerman |  | Director                                                                                   |  | June 27, 2002
|                                                    
|/s/ Larry J. Moeller, Sr.Larry J. Moeller, Sr.       |  | Director                                                                                   |  | June 27, 2002





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##### Table of Contents



Exhibit Index

|               |  |                                                                                   
|-------------- |  | ----------------------------------------------------------------------------------
|Exhibit Number |  | Exhibit Description                                                               
|               |  |                                                                                   
|10.4           |  | Employment Agreement between Citizens First Bancorp, Inc. and
Marshall J. Campbell
|               |  |                                                                                   
|13             |  | 2002 Annual Report to Stockholders                                                
|               |  |                                                                                   
|23             |  | Consent of Plante & Moran LLP