##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10Q

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

For the quarterly period ended
September 30,
2002                              
          
                          
                Commission File No.: 0-27740

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

|                                                                        |  |                                      
|----------------------------------------------------------------------- |  | -------------------------------------
|DELAWARE
(State or other jurisdiction of
incorporation or organization) |  | 37-1351861
(I.R.S. Employer I.D. No.)

2101 North Veterans Parkway, Bloomington, Illinois 61704
(Address of principal executive offices)

Registrants telephone number: (309) 661-8700

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 past 90 days.

(1)    Yes  x  No
(2)    Yes  x  No

The Registrant had 1,465,983 shares of Common Stock outstanding as of October
31, 2002.





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TABLE OF CONTENTS



|                                                |                                                                                              |                                                                                                       |  |  |  |  |  | 
|----------------------------------------------- | -------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION                 
|                                                | Item 1. Financial Statements                                                                
|                                                |                                                                                              | Condensed Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001                 
|                                                |                                                                                              | Condensed Consolidated Statements of Income for the Nine Months Ended September 30, 2002 and 2001    
|                                                |                                                                                              | Condensed Consolidated Statements of Income for the Three Months Ended September 30, 2002 and 2001   
|                                                |                                                                                              | Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2002 and 2001
|                                                |                                                                                              | Notes to Condensed Consolidated Financial Statements                                                 
|                                                | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operation
|                                                | Item 3. Quantitative and Qualitative Disclosures About Market Risk                          
|                                                | Item 4. Controls and Procedures                                                             
|PART II  OTHER INFORMATION                    
|                                                | Item 1. Legal Proceedings                                                                   
|                                                | Item 2. Changes in Securities and Use of Proceeds                                           
|                                                | Item 3. Defaults Upon Senior Securities                                                     
|                                                | Item 4. Submission of Matters to a Vote of Security Holders                                 
|                                                | Item 5. Other Information                                                                   
|                                                | Item 6. Exhibits and Reports on Form 8-K                                                    
|                                                | Signatures                                                                                  
|Statement Re: Computation of Per Share Earnings
|Certification of C. William Landefeld          
|Certification of Dallas G. Smiley              



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##### Table of Contents



TABLE OF CONTENTS

|                               |  |            |                                                                                      |                                                                                                       |  |      |  | 
|------------------------------ |  | ---------- | ------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------- |  | ---- |  | 
|                               |  |            |                                                                                      |                                                                                                       |  | PAGE |  | 
|                              
|PART I  FINANCIAL INFORMATION |  |            |                                                                                      |                                                                                                      
|                              
|                               |  | Item 1.    | Financial Statements                                                                 |                                                                                                       | 
|                              
|                               |  |            |                                                                                      | Condensed Consolidated Balance Sheets as of
September 30, 2002 and December 31, 2001                  |  | 1    |  | 
|                              
|                               |  |            |                                                                                      | Condensed Consolidated Statements of Income for the
Nine Months Ended September 30, 2002 and 2001     |  | 2    |  | 
|                              
|                               |  |            |                                                                                      | Condensed Consolidated Statements of Income for the
Three Months Ended September 30, 2002 and 2001    |  | 3    |  | 
|                              
|                               |  |            |                                                                                      | Condensed Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 2002 and 2001 |  | 4    |  | 
|                              
|                               |  |            |                                                                                      | Notes to Condensed Consolidated Financial Statements                                                  |  | 6    |  | 
|                              
|                               |  | Item 2.    | Managements Discussion and Analysis of Financial
Condition and Results of Operation | 8                                                                                                     |  |     
|                              
|                               |  | Item 3.    | Quantitative and Qualitative Disclosures About Market Risk                           | 16                                                                                                    |  |     
|                              
|                               |  | Item 4.    | Controls and Procedures                                                              | 17                                                                                                    |  |     
|                              
|PART II  OTHER INFORMATION    |  |            |                                                                                      |                                                                                                      
|                              
|                               |  | Item 1.    | Legal Proceedings                                                                    | 18                                                                                                    |  |     
|                              
|                               |  | Item 2.    | Changes in Securities and Use of Proceeds                                            | 18                                                                                                    |  |     
|                              
|                               |  | Item 3.    | Defaults Upon Senior Securities                                                      | 18                                                                                                    |  |     
|                              
|                               |  | Item 4.    | Submission of Matters to a Vote of Security Holders                                  | 18                                                                                                    |  |     
|                              
|                               |  | Item 5.    | Other Information                                                                    | 18                                                                                                    |  |     
|                              
|                               |  | Item 6.    | Exhibits and Reports on Form 8-K                                                     | 18                                                                                                    |  |     
|                              
|                               |  | Signatures |                                                                                      | 19                                                                                                    |  |     

Statements contained in this Form 10-Q which are not historical facts are
forward-looking statements, as that term is described in the Private Securities
Litigation Reform Act of 1995. The forward-looking statements are generally
identifiable by the use of such words as believes, expects, anticipates,
estimates, projects, intends or similar expressions. Such
forward-looking statements are subject to risk and uncertainties which could
cause actual results to differ materially from those projected. Such risks and
uncertainties include potential change in interest rates, competitive factors
in the financial services industry, general and local economic conditions, the
effect of new legislation and other risks detailed in documents filed by the
Company with the Securities and Exchange Commission from time to time.





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##### Table of Contents









PART I.  FINANCIAL INFORMATION




Citizens First Financial Corp. and Subsidiary
Condensed Consolidated Balance Sheets
As of September 30, 2002 and December 31, 2001
(in thousands)

|                                                                           |                                                                                                    |             |                                                                           |                                            |  |               |         |              |  |         |         | 
|-------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ----------- | ------------------------------------------------------------------------- | ------------------------------------------ |  | ------------- | ------- | ------------ |  | ------- | ------- | 
|                                                                           |                                                                                                    |             |                                                                           |                                            |  | September 30, |         | December 31,
|                                                                           |                                                                                                    |             |                                                                           |                                            |  | 2002          |         | 2001        
|                                                                           |                                                                                                    |             |                                                                           |                                            |  |               |         |              | 
|ASSETS                                                                     |                                                                                                    | (Unaudited) |                                                                           |                                            |  |              
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Cash and due from banks                                                                            |             | $                                                                         | 7,097                                      |  |               | $       | 5,743        | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Interest-bearing deposits and federal funds sold                                                   |             |                                                                           | 12,401                                     |  |               |         | 7,188        | 
|                                                                           |                                                                                                    |             |                                                                           |                                            |  |               |         |              | 
|                                                                           |                                                                                                    |             | Cash and cash equivalents                                                 |                                            |  | 19,498        |         |              |  | 12,931  |        
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Available for sale securities                                                                      |             |                                                                           | 22,565                                     |  |               |         | 15,686       | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Mortgage loans held for sale                                                                       |             |                                                                           | 6,240                                      |  |               |         | 6,910        | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Loans                                                                                              |             |                                                                           | 287,494                                    |  |               |         | 289,264      | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                                                    |             | Allowance for loan losses                                                 |                                            |  | (2,621        | )       |              |  | (2,421  | )      
|                                                                           |                                                                                                    |             |                                                                           |                                            |  |               |         |              | 
|                                                                           |                                                                                                    |             |                                                                           | Net loans                                  |  |               | 284,873 |              |  |         | 286,843 | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Land in real estate joint venture                                                                  |             |                                                                           | 1,021                                      |  |               |         | 1,081        | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Premises and equipment                                                                             |             |                                                                           | 6,899                                      |  |               |         | 7,513        | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Federal Home Loan Bank of Chicago stock                                                            |             |                                                                           | 4,639                                      |  |               |         | 4,461        | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Foreclosed real estate                                                                             |             |                                                                           | 1,925                                      |  |               |         | 618          | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Mortgage
servicing rights, net of valuation allowances of $323,000 and $-0-,
respectively          |             |                                                                           | 375                                        |  |               |         | 787          | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Other assets                                                                                       |             |                                                                           | 4,134                                      |  |               |         | 3,959        | 
|                                                                           |                                                                                                    |             |                                                                           |                                            |  |               |         |              | 
|                                                                           |                                                                                                    |             |                                                                           | Total assets                               |  | $             | 352,169 |              |  | $       | 340,789 | 
|                                                                           |                                                                                                    |             |                                                                           |                                            |  |               |         |              | 
|LIABILITIES AND STOCKHOLDERS EQUITY                                      
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Liabilities                                                                                        |             |                                                                           |                                            |  |               |         |              | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Deposits                                                                                           |             | $                                                                         | 243,310                                    |  |               | $       | 236,643      | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Long-term debt                                                                                     |             |                                                                           | 73,400                                     |  |               |         | 69,643       | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Other liabilities                                                                                  |             |                                                                           | 2,970                                      |  |               |         | 3,050        | 
|                                                                           |                                                                                                    |             |                                                                           |                                            |  |               |         |              | 
|                                                                           |                                                                                                    |             |                                                                           | Total liabilities                          |  |               | 319,680 |              |  |         | 309,336 | 
|                                                                           |                                                                                                    |             |                                                                           |                                            |  |               |         |              | 
|Minority interest in real estate joint venture                             |                                                                                                    |             | 511                                                                       |                                            |  |               | 541     |             
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Commitments and Contingent Liabilities                                     |                                                                                                    |             |                                                                           |                                            |  |               |         |             
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Stockholders Equity                                                      
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Preferred stock, $.01 par value
Authorized and unissued  1,000,000 shares |                                                                                                    |             |                                                                          |                                            |  |               |        |             
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Common stock, $.01 par value; authorized 8,000,000 shares; 2,817,500 shares issued and outstanding |             |                                                                           | 28                                         |  |               |         | 28           | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Additional paid-in-capital                                                                         |             |                                                                           | 27,860                                     |  |               |         | 27,686       | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Retained earnings                                                                                  |             |                                                                           | 25,832                                     |  |               |         | 24,371       | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Accumulated other comprehensive income                                                             |             |                                                                           | 131                                        |  |               |         | 52           | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           | Less:                                                                                              |             |                                                                           |                                            |  |               |         |              | 
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                                                    |             | Treasury shares, 1,346,017 and 1,302,862, respectively                    |                                            |  | (21,792       | )       |              |  | (20,903 | )      
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|                                                                           |                                                                                                    |             | Unallocated employee stock ownership plan
shares, 8,050 and 32,200 shares |                                            |  | (81           | )       |              |  | (322    | )      
|                                                                           |                                                                                                    |             |                                                                           |                                            |  |               |         |              | 
|                                                                           |                                                                                                    |             |                                                                           | Total stockholders equity                 |  |               | 31,978  |              |  |         | 30,912  | 
|                                                                           |                                                                                                    |             |                                                                           |                                            |  |               |         |              | 
|                                                                           |                                                                                                    |             |                                                                           | Total liabilities and stockholders equity |  | $             | 352,169 |              |  | $       | 340,789 | 
|                                                                           |                                                                                                    |             |                                                                           |                                            |  |               |         |              | 

See notes to condensed consolidated financial statements

1



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##### Table of Contents






Citizens First Financial Corp. and Subsidiary
Condensed Consolidated Statements of Income

|                                        |                                                          |                                                                     |                              |                                                     |           |                             |        |                    |           |       |        | 
|--------------------------------------- | -------------------------------------------------------- | ------------------------------------------------------------------- | ---------------------------- | --------------------------------------------------- | --------- | --------------------------- | ------ | ------------------ | --------- | ----- | ------ | 
|                                        |                                                          |                                                                     |                              |                                                     |           | For the nine                |        | For the nine      
|                                        |                                                          |                                                                     |                              |                                                     |           | months ended                |        | months ended      
|                                        |                                                          |                                                                     |                              |                                                     |           | September 30, 2002          |        | September 30, 2001
|                                        |                                                          |                                                                     |                              |                                                     |           |                             |        |                   
|                                        |                                                          |                                                                     |                              |                                                     |           | (Unaudited and in thousands
|                                        |                                                          |                                                                     |                              |                                                     |           | except share data)         
|                                        |                                                          | Interest on loans                                                   |                              | $                                                   | 15,728    |                             |        | $                  | 17,473    |      
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          | Interest on investments, deposits with banks,                       |                              |                                                     |           |                             |        |                    |           |      
|                                        |                                                          |                                                                     | federal funds sold and other |                                                     |           | 1,139                       |        |                    |           | 1,215 |       
|                                        |                                                          |                                                                     |                              |                                                     |           |                             |        |                   
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          |                                                                     |                              | Total interest income                               |           |                             | 16,867 |                    |           |       | 18,688 | 
|                                       
|                                       
|                                       
|                                       
|Interest expense:                       |                                                          |                                                                     |                              |                                                     |           |                             |        |                   
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          | Interest on deposits                                                |                              |                                                     | 5,959     |                             |        |                    | 8,645     |      
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          | Interest on borrowings                                              |                              |                                                     | 2,699     |                             |        |                    | 2,677     |      
|                                        |                                                          |                                                                     |                              |                                                     |           |                             |        |                   
|                                        |                                                          |                                                                     |                              | Total interest expense                              |           |                             | 8,658  |                    |           |       | 11,322 | 
|                                        |                                                          |                                                                     |                              |                                                     |           |                             |        |                   
|                                        |                                                          |                                                                     |                              | Net interest income                                 |           |                             | 8,209  |                    |           |       | 7,366  | 
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          | Provision for loan losses                                           |                              |                                                     | 725       |                             |        |                    | 540       |      
|                                        |                                                          |                                                                     |                              |                                                     |           |                             |        |                   
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          |                                                                     |                              | Net interest income after provision for loan losses |           |                             | 7,484  |                    |           |       | 6,826  | 
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          | Noninterest income:                                                 |                              |                                                     |           |                             |        |                    |           |      
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          | Service charges on deposit accounts                                 |                              |                                                     | 707       |                             |        |                    | 666       |      
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          | Net realized losses on sale of available for sale securities        |                              |                                                     | (71       | )                           |        |                    | 0         |      
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          | Net gains on loan sales                                             |                              |                                                     | 505       |                             |        |                    | 563       |      
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          | Impairment
of mortgage security rights                              |                              |                                                     | (323      | )                           |        |                    | 0         |      
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          | Gain on sale of land in joint venture                               |                              |                                                     | 269       |                             |        |                    | 341       |      
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          | Other                                                               |                              |                                                     | 229       |                             |        |                    | 288       |      
|                                        |                                                          |                                                                     |                              |                                                     |           |                             |        |                   
|                                        |                                                          |                                                                     |                              | Total noninterest income                            |           |                             | 1,316  |                    |           |       | 1,858  | 
|                                        |                                                          |                                                                     |                              |                                                     |           |                             |        |                   
|Noninterest expense:                    |                                                          |                                                                     |                              |                                                     |           |                             |        |                   
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          | Salaries and employee benefits                                      |                              |                                                     | 3,274     |                             |        |                    | 3,316     |      
|                                        |                                                          | Net occupancy and equipment expenses                                |                              |                                                     | 952       |                             |        |                    | 989       |      
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          | Deposit insurance expense                                           |                              |                                                     | 59        |                             |        |                    | 59        |      
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          | Data processing expense                                             |                              |                                                     | 243       |                             |        |                    | 198       |      
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          | Other                                                               |                              |                                                     | 1,241     |                             |        |                    | 1,333     |      
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          | Minority interest in net income of real estate joint venture        |                              |                                                     | 128       |                             |        |                    | 167       |      
|                                        |                                                          |                                                                     |                              |                                                     |           |                             |        |                   
|                                        |                                                          |                                                                     |                              | Total noninterest expense                           |           |                             | 5,897  |                    |           |       | 6,062  | 
|                                        |                                                          |                                                                     |                              |                                                     |           |                             |        |                   
|Income before income tax                |                                                          |                                                                     | 2,903                        |                                                     |           |                             | 2,622  |                   
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          | Income tax expense                                                  |                              |                                                     | 1,127     |                             |        |                    | 1,018     |      
|                                        |                                                          |                                                                     |                              |                                                     |           |                             |        |                   
|Net income                              |                                                          | $                                                                   | 1,776                        |                                                     |           | $                           | 1,604  |                   
|                                        |                                                          |                                                                     |                              |                                                     |           |                             |        |                   
|                                       
|                                       
|                                       
|                                       
|Other comprehensive income, net of tax: |                                                          |                                                                     |                              |                                                     |           |                             |        |                   
|                                       
|                                       
|                                       
|                                       
|                                        | Unrealized appreciation on available for
sale securities |                                                                     |                              | 36                                                  |           |                             |        | 98                 |          
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          | Less: Reclassification adjustment for losses included
In net income |                              |                                                     | (43       | )                           |        |                    | 0         |      
|                                        |                                                          |                                                                     |                              |                                                     |           |                             |        |                   
|                                       
|                                       
|                                       
|                                       
|Comprehensive income                    |                                                          | $                                                                   | 1,855                        |                                                     |           | $                           | 1,702  |                   
|                                        |                                                          |                                                                     |                              |                                                     |           |                             |        |                   
|Basic earnings per share                |                                                          | $                                                                   | 1.21                         |                                                     |           | $                           | 1.07   |                   
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          | Weighted average shares outstanding                                 |                              |                                                     | 1,470,772 |                             |        |                    | 1,503,533 |      
|                                       
|                                       
|                                       
|                                       
|Diluted earnings per share              |                                                          | $                                                                   | 1.12                         |                                                     |           | $                           | 1.02   |                   
|                                       
|                                       
|                                       
|                                       
|                                        |                                                          | Weighted average shares outstanding                                 |                              |                                                     | 1,593,820 |                             |        |                    | 1,573,223 |      

See notes to condensed consolidated financial statements

2



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##### Table of Contents






Citizens First Financial Corp. and Subsidiary
Condensed Consolidated Statements of Income

|                                               |                                                          |                                                                            |                                         |                                                     |           |                             |       |                    |           |     |       | 
|---------------------------------------------- | -------------------------------------------------------- | -------------------------------------------------------------------------- | --------------------------------------- | --------------------------------------------------- | --------- | --------------------------- | ----- | ------------------ | --------- | --- | ----- | 
|                                               |                                                          |                                                                            |                                         |                                                     |           | For the three               |       | For the three     
|                                               |                                                          |                                                                            |                                         |                                                     |           | months ended                |       | months ended      
|                                               |                                                          |                                                                            |                                         |                                                     |           | September 30, 2002          |       | September 30, 2001
|                                               |                                                          |                                                                            |                                         |                                                     |           |                             |       |                   
|                                               |                                                          |                                                                            |                                         |                                                     |           | (Unaudited and in thousands
|                                               |                                                          |                                                                            |                                         |                                                     |           | except share data)         
|Interest income:                               |                                                          |                                                                            |                                         |                                                     |           |                             |       |                   
|                                              
|                                              
|                                              
|                                              
|                                               |                                                          | Interest on loans                                                          |                                         | $                                                   | 5,121     |                             |       | $                  | 5,687     |    
|                                              
|                                              
|                                              
|                                              
|                                               |                                                          | Interest on investments, deposits with banks,
federal funds sold and other |                                         |                                                     | 423       |                             |       |                    | 407       |    
|                                               |                                                          |                                                                            |                                         |                                                     |           |                             |       |                   
|                                               |                                                          |                                                                            |                                         | Total interest income                               |           |                             | 5,544 |                    |           |     | 6,094 | 
|                                              
|                                              
|                                              
|                                              
|Interest expense:                              |                                                          |                                                                            |                                         |                                                     |           |                             |       |                   
|                                              
|                                              
|                                              
|                                              
|                                               |                                                          | Interest on deposits                                                       |                                         |                                                     | 1,867     |                             |       |                    | 2,820     |    
|                                              
|                                              
|                                              
|                                              
|                                               |                                                          | Interest on borrowings                                                     |                                         |                                                     | 908       |                             |       |                    | 877       |    
|                                               |                                                          |                                                                            |                                         |                                                     |           |                             |       |                   
|                                               |                                                          |                                                                            |                                         | Total interest expense                              |           |                             | 2,775 |                    |           |     | 3,697 | 
|                                               |                                                          |                                                                            |                                         |                                                     |           |                             |       |                   
|                                               |                                                          |                                                                            |                                         | Net interest income                                 |           |                             | 2,769 |                    |           |     | 2,397 | 
|                                               |                                                          | Provision for loan losses                                                  |                                         |                                                     | 495       |                             |       |                    | 180       |    
|                                               |                                                          |                                                                            |                                         |                                                     |           |                             |       |                   
|                                               |                                                          |                                                                            |                                         | Net interest income after provision for loan losses |           |                             | 2,274 |                    |           |     | 2,217 | 
|                                               |                                                          |                                                                            |                                         |                                                     |           |                             |       |                   
|                                               |                                                          | Noninterest income:                                                        |                                         |                                                     |           |                             |       |                    |           |    
|                                              
|                                              
|                                              
|                                              
|                                               |                                                          |                                                                            | Service charges on deposit accounts     |                                                     |           | 245                         |       |                    |           | 207 |      
|                                              
|                                              
|                                              
|                                              
|                                               |                                                          |                                                                            | Net gains on loan sales                 |                                                     |           | 164                         |       |                    |           | 240 |      
|                                              
|                                              
|                                              
|                                              
|                                               |                                                          |                                                                            | Impairment
of mortgage servicing rights |                                                     |           | (323                        | )     |                    |           | 0   |      
|                                              
|                                              
|                                              
|                                              
|                                               |                                                          |                                                                            | Gain on sale of land in joint venture   |                                                     |           | 269                         |       |                    |           | 108 |      
|                                              
|                                              
|                                              
|                                              
|                                               |                                                          |                                                                            | Other                                   |                                                     |           | 10                          |       |                    |           | 101 |      
|                                               |                                                          |                                                                            |                                         |                                                     |           |                             |       |                   
|                                               |                                                          |                                                                            |                                         | Total noninterest income                            |           |                             | 365   |                    |           |     | 656   | 
|                                               |                                                          |                                                                            |                                         |                                                     |           |                             |       |                   
|Noninterest expense:                           |                                                          |                                                                            |                                         |                                                     |           |                             |       |                   
|                                              
|                                              
|                                              
|                                              
|                                               |                                                          | Salaries and employee benefits                                             |                                         |                                                     | 1,065     |                             |       |                    | 1,144     |    
|                                              
|                                              
|                                              
|                                              
|                                               |                                                          | Net occupancy and equipment expenses                                       |                                         |                                                     | 315       |                             |       |                    | 368       |    
|                                              
|                                              
|                                              
|                                              
|                                               |                                                          | Deposit insurance expense                                                  |                                         |                                                     | 20        |                             |       |                    | 20        |    
|                                              
|                                              
|                                              
|                                              
|                                               |                                                          | Data processing expense                                                    |                                         |                                                     | 79        |                             |       |                    | 58        |    
|                                              
|                                              
|                                              
|                                              
|                                               |                                                          | Other                                                                      |                                         |                                                     | 412       |                             |       |                    | 486       |    
|                                              
|                                              
|                                              
|                                              
|                                               |                                                          | Minority interest in net income of real estate joint venture               |                                         |                                                     | 128       |                             |       |                    | 51        |    
|                                               |                                                          |                                                                            |                                         |                                                     |           |                             |       |                   
|                                               |                                                          |                                                                            |                                         | Total noninterest expense                           |           |                             | 2,019 |                    |           |     | 2,127 | 
|                                               |                                                          |                                                                            |                                         |                                                     |           |                             |       |                   
|Income before income tax                       |                                                          |                                                                            | 620                                     |                                                     |           |                             | 746   |                   
|                                              
|                                              
|                                              
|                                              
|                                               |                                                          | Income tax expense                                                         |                                         |                                                     | 241       |                             |       |                    | 290       |    
|                                               |                                                          |                                                                            |                                         |                                                     |           |                             |       |                   
|Net income                                     |                                                          | $                                                                          | 379                                     |                                                     |           | $                           | 456   |                   
|                                              
|                                              
|                                              
|                                              
|Other comprehensive income (loss), net of tax: |                                                          |                                                                            |                                         |                                                     |           |                             |       |                   
|                                              
|                                              
|                                              
|                                              
|                                               | Unrealized appreciation on available for sale securities |                                                                            |                                         | 139                                                 |           |                             |       | 73                 |          
|                                              
|                                              
|                                              
|                                              
|                                               |                                                          |                                                                            |                                         |                                                     |           |                             |       |                   
|Comprehensive income                           |                                                          | $                                                                          | 518                                     |                                                     |           | $                           | 529   |                   
|                                               |                                                          |                                                                            |                                         |                                                     |           |                             |       |                   
|Basic earnings per share                       |                                                          | $                                                                          | 0.26                                    |                                                     |           | $                           | 0.30  |                   
|                                              
|                                              
|                                              
|                                              
|                                               |                                                          | Weighted average shares outstanding                                        |                                         |                                                     | 1,470,502 |                             |       |                    | 1,512,128 |    
|                                              
|                                              
|                                              
|                                              
|Diluted earnings per share                     |                                                          | $                                                                          | 0.24                                    |                                                     |           | $                           | 0.28  |                   
|                                              
|                                              
|                                              
|                                              
|                                               |                                                          | Weighted average shares outstanding                                        |                                         |                                                     | 1,602,200 |                             |       |                    | 1,612,541 |    

See notes to condensed consolidated financial statements

3



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##### Table of Contents






CITIZENS FIRST FINANCIAL CORP. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows

|                     |                                                 |            |                                                                                  |                   |  |                              |      |                    |  |         |      |  
|-------------------- | ----------------------------------------------- | ---------- | -------------------------------------------------------------------------------- | ----------------- |  | ---------------------------- | ---- | ------------------ |  | ------- | ---- | -
|                     |                                                 |            |                                                                                  |                   |  | For the nine                 |      | For the nine      
|                     |                                                 |            |                                                                                  |                   |  | months ended                 |      | months ended      
|                     |                                                 |            |                                                                                  |                   |  | September 30, 2002           |      | September 30, 2001
|                     |                                                 |            |                                                                                  |                   |  |                              |      |                   
|                     |                                                 |            |                                                                                  |                   |  | (Unaudited and in thousands)
|Operating activities |                                                 |            |                                                                                  |                   |  |                              |      |                   
|                    
|                    
|                    
|                    
|                     | Net income                                      |            | $                                                                                | 1,776             |  |                              | $    | 1,604              | 
|                    
|                    
|                    
|                    
|                     | Adjustments to reconcile net income to net cash |            |                                                                                  |                   |  |                              |      |                    | 
|                    
|                    
|                    
|                    
|                     |                                                 |            | provided (used) by operating activities:                                         |                   |  |                              |      |                    |  |         |     
|                    
|                    
|                    
|                    
|                     |                                                 |            | Provision for loan losses                                                        |                   |  | 725                          |      |                    |  | 540     |     
|                    
|                    
|                    
|                    
|                     |                                                 |            | ESOP compensation expense                                                        |                   |  | 416                          |      |                    |  | 338     |     
|                    
|                    
|                    
|                    
|                     |                                                 |            | Incentive plan compensation expense                                              |                   |  | 0                            |      |                    |  | 179     |     
|                    
|                    
|                    
|                    
|                     |                                                 |            | Losses on sale of available for sale securities                                  |                   |  | 71                           |      |                    |  | 0       |     
|                    
|                    
|                    
|                    
|                     |                                                 |            | Investment securities amortization, net                                          |                   |  | 93                           |      |                    |  | 78      |     
|                    
|                    
|                    
|                    
|                     |                                                 |            | Minority interest in net income of real estate joint venture                     |                   |  | 128                          |      |                    |  | 167     |     
|                    
|                    
|                    
|                    
|                     |                                                 |            | Gain on sale of land in real estate joint venture                                |                   |  | (269                         | )    |                    |  | (341    | )   
|                    
|                    
|                    
|                    
|                     |                                                 |            | Net loss on sale of foreclosed property                                          |                   |  | 18                           |      |                    |  | 9       |     
|                    
|                    
|                    
|                    
|                     |                                                 |            | Net gains on sale of mortgage loans                                              |                   |  | (505                         | )    |                    |  | (563    | )   
|                     |                                                 |            | Impairment
of mortgage servicing rights                                          |                   |  | 323                          |      |                    |  | 0       |     
|                    
|                    
|                    
|                    
|                     |                                                 |            | Amortization
of mortgage servicing rights                                        |                   |  | 204                          |      |                    |  | 126     |     
|                    
|                    
|                    
|                    
|                     |                                                 |            | Net gains from sale of premises and equipment                                    |                   |  | (26                          | )    |                    |  | 0       |     
|                    
|                    
|                    
|                    
|                     |                                                 |            | Depreciation                                                                     |                   |  | 557                          |      |                    |  | 608     |     
|                    
|                    
|                    
|                    
|                     |                                                 |            | Mortgage loans originated for sale                                               |                   |  | (35,721                      | )    |                    |  | (26,136 | )   
|                    
|                    
|                    
|                    
|                     |                                                 |            | Proceeds from sale of mortgage loans                                             |                   |  | 36,781                       |      |                    |  | 27,663  |     
|                    
|                    
|                    
|                    
|                     |                                                 |            | Federal Home Loan Bank dividends                                                 |                   |  | (178                         | )    |                    |  | (227    | )   
|                    
|                    
|                    
|                    
|                     |                                                 | Change in: |                                                                                  |                   |  |                              |      |                    |  |        
|                    
|                    
|                    
|                    
|                     |                                                 |            |                                                                                  | Other assets      |  |                              | (394 | )                  |  |         | (188 | )
|                    
|                    
|                    
|                    
|                     |                                                 |            |                                                                                  | Other liabilities |  |                              | 223  |                    |  |         | 146  |  
|                     |                                                 |            |                                                                                  |                   |  |                              |      |                   
|                     |                                                 |            | Net cash provided by operating activities                                        |                   |  | 4,222                        |      |                    |  | 4,003   |     
|                     |                                                 |            |                                                                                  |                   |  |                              |      |                   
|                    
|                    
|                    
|                    
|Investing Activities |                                                 |            |                                                                                  |                   |  |                              |      |                   
|                     |                                                 |            | Purchase of securities available for sale                                        |                   |  | (15,443                      | )    |                    |  | (7,475  | )   
|                    
|                    
|                    
|                    
|                     |                                                 |            | Proceeds from maturities and principal paydowns
on securities available for sale |                   |  | 3,407                        |      |                    |  | 8,301   |     
|                    
|                    
|                    
|                    
|                     |                                                 |            | Proceeds from sales of securities available for sale                             |                   |  | 5,120                        |      |                    |  | 0       |     
|                    
|                    
|                    
|                    
|                     |                                                 |            | Net changes in loans                                                             |                   |  | (1,282                       | )    |                    |  | (3,191  | )   
|                    
|                    
|                    
|                    
|                     |                                                 |            | Proceeds from sale of foreclosed property                                        |                   |  | 1,202                        |      |                    |  | 243     |     
|                    
|                    
|                    
|                    
|                     |                                                 |            | Purchases of premises and equipment                                              |                   |  | (67                          | )    |                    |  | (146    | )   
|                    
|                    
|                    
|                    
|                     |                                                 |            | Proceeds from sale of premises and equipment                                     |                   |  | 150                          |      |                    |  | 0       |     
|                    
|                    
|                    
|                    
|                     |                                                 |            | Investment in land in real estate joint venture                                  |                   |  | (203                         | )    |                    |  | (296    | )   
|                    
|                    
|                    
|                    
|                     |                                                 |            | Proceeds from sale of land real estate joint venture                             |                   |  | 532                          |      |                    |  | 784     |     
|                    
|                    
|                    
|                    
|                     |                                                 |            | Proceeds from the minority interest portion of real
estate joint venture         |                   |  | 0                            |      |                    |  | 0       |     
|                    
|                    
|                    
|                    
|                     |                                                 |            | Net distribution to minority interest portion of real estate
joint venture       |                   |  | (158                         | )    |                    |  | (216    | )   
|                     |                                                 |            |                                                                                  |                   |  |                              |      |                   
|                     |                                                 |            | Net cash used by investing activities                                            |                   |  | (6,742                       | )    |                    |  | (1,996  | )   
|                     |                                                 |            |                                                                                  |                   |  |                              |      |                   

4



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##### Table of Contents



|                                                         |                                           |   |                                                              |       |   |                              |        |                    |   |         |   | 
|-------------------------------------------------------- | ----------------------------------------- | - | ------------------------------------------------------------ | ----- | - | ---------------------------- | ------ | ------------------ | - | ------- | - | 
|                                                         |                                           |   |                                                              |       |   | For the nine                 |        | For the nine      
|                                                         |                                           |   |                                                              |       |   | months ended                 |        | months ended      
|                                                         |                                           |   |                                                              |       |   | September 30, 2002           |        | September 30, 2001
|                                                         |                                           |   |                                                              |       |   |                              |        |                   
|                                                         |                                           |   |                                                              |       |   | (Unaudited and in thousands)
|Financing Activities                                     |                                           |   |                                                              |       |   |                              |        |                   
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         |                                           |   | Net change in deposits                                       |       | $ | 6,667                        |        |                    | $ | 7,895   |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         |                                           |   | Proceeds from borrowings                                     |       |   | 11,800                       |        |                    |   | 31,000  |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         |                                           |   | Repayment of borrowings                                      |       |   | (8,043                       | )      |                    |   | (34,255 | )
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         |                                           |   | Purchase of treasury stock shares                            |       |   | (1,052                       | )      |                    |   | (364    | )
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         |                                           |   | Cash dividends paid on common stock                          |       |   | (315                         | )      |                    |   | (267    | )
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         |                                           |   | Exercise of stock options                                    |       |   | 162                          |        |                    |   | 16      |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         |                                           |   | Net changes in advances by borrowers for taxes and insurance |       |   | (132                         | )      |                    |   | (419    | )
|                                                         |                                           |   |                                                              |       |   |                              |        |                   
|                                                         | Net cash provided by financing activities |   |                                                              | 9,087 |   |                              |        | 3,606              |  
|                                                         |                                           |   |                                                              |       |   |                              |        |                   
|Net change in cash and cash equivalents                  |                                           |   | 6,567                                                        |       |   |                              | 5,613  |                   
|                                                        
|                                                        
|                                                        
|                                                        
|Cash and cash equivalents, beginning of period           |                                           |   | 12,931                                                       |       |   |                              | 11,015 |                   
|                                                         |                                           |   |                                                              |       |   |                              |        |                   
|Cash and cash equivalents, end of period                 |                                           | $ | 19,498                                                       |       |   | $                            | 16,628 |                   
|                                                         |                                           |   |                                                              |       |   |                              |        |                   
|Additional cash flows information:                       |                                           |   |                                                              |       |   |                              |        |                   
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Interest paid                             |   | $                                                            | 8,504 |   |                              | $      | 11,232             |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Income tax paid                           |   | $                                                            | 1,103 |   |                              | $      | 682                |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Loans transferred to foreclosed property  |   | $                                                            | 2,527 |   |                              | $      | 428                |  
|                                                        
|                                                        
|                                                        
|                                                        
|See notes to condensed consolidated financial statements |                                           |   |                                                              |       |   |                              |        |                   

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##### Table of Contents






Citizens First Financial Corp.

Notes to Condensed Consolidated Financial Statements

1.     Background Information

Citizens First Financial Corp. (the Company) was incorporated in January 1996
and on May 1, 1996 acquired all of the outstanding shares of common stock of
Citizens Savings Bank (the Bank) upon the Banks conversion from a federally
chartered mutual savings bank to a federally chartered stock savings bank. The
Company purchased 100% of the outstanding capital stock of the Bank using 50%
of the net proceeds from the Companys initial stock offering which was
completed on May 1, 1996. In April 1999, the Bank was converted from a
federally chartered savings bank to an Illinois state savings bank.

The Company sold 2,817,500 shares of common stock in the initial offering at
$10.00 per share, including 225,400 shares purchased by the Banks Employee
Stock Ownership Plan (the ESOP). The ESOP shares were acquired by the Bank
with proceeds from a Company loan totaling $2,254,000. The net proceeds of the
offering totaled $27,012,000; $28,175,000 less $1,163,000 in underwriting
commissions and other expenses. The Companys stock is traded on the NASDAQ
National Market under the symbol CFSB.

2.     Statement of Information Furnished

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with Form 10-Q instructions and Rule 10-01 of
Regulation S-X, and in the opinion of management reflect all adjustments
necessary to present a fair statement of the consolidated financial position as
of September 30, 2002 and December 31, 2001, and the consolidated statements of
income and cash flows for the nine and three months ended September 30, 2002
and 2001. All adjustments to the financial statements were of a normal
recurring nature. These results have been determined on the basis of
accounting principles generally accepted in the United States of America. The
results of operations for the nine and three months ended September 30, 2002
are not necessarily indicative of the results to be expected for the entire
fiscal year.

The condensed consolidated financial statements are those of the Company and
the Bank. These condensed consolidated financial statements should be read in
conjunction with the audited financial statements and notes thereto, dated
January 30, 2002, included in the Companys 2001 Annual Report to Shareholders.

3.     Earnings Per Share

Basic earnings per share have been computed based upon the weighted average
common shares outstanding for the nine and three months ended September 30,
2002 and 2001. Diluted earnings per share reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the Company.

4.     Current
Accounting Issues

In July, 2001, SFAS No. 143,
Accounting for Asset Retirement Obligations was issued.
SFAS No. 143 establishes standards for accounting and reporting of
obligations associated with the retirement of tangible long-lived
assets and associated asset retirement costs. SFAS No. 143 is
effective for years beginning after June 15, 2002. Management does
not expect the adoption of this standard to have a material impact on
the Company.

In October 2001, SFAS No. 144,
Accounting for Impairment or Disposal of Long-Lived
Assets was issued. Under SFAS No. 144, long-lived assets to be
sold within one year must be separately identified and carried at the
lower of carrying value or fair value less costs to sell.

6



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##### Table of Contents



Long-lived assets expected to be held
longer than one year are subject to depreciation and must be written
down to fair value upon impairment. Long-lived assets no longer
expected to be sold within one year, such as foreclosed real estate, must be
written down to the lower of current fair value or fair value at the
date of foreclosure adjusted to reflect depreciation since
acquisition. SFAS No. 144 was implemented by the Company in January
2002. The adoption of this statement did not have an impact on the
Company.

7



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##### Table of Contents






ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

GENERAL

Citizens First Financial Corp. (the Company) is the holding company for
Citizens Savings Bank (the Bank). The Bank was originally chartered in 1888
by the State of Illinois and in 1989 became a federally chartered savings bank.
The Banks principal business consists of the acceptance of retail deposits
from the general public in the area surrounding its main and branch offices and
the investment of these deposits, together with funds generated from operations
and borrowings into loans and investment securities. The Bank originates
one-to-four family residential mortgages, commercial, multi-family,
construction and land, commercial real estate, agricultural, consumer and other
loans. The Bank has a wholly-owned service corporation, CSL Service
Corporation (CSL), which is an Illinois-chartered corporation that has
invested in Williamsburg LLC (Williamsburg), a real estate development joint
venture. CSL is a 50% owner of Williamsburg, which has two other investors. The
accounts of Williamsburg are consolidated into the Companys financial
statements. The 50% of Williamsburg not owned by CSL is recorded as a minority
interest.

COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2002 and DECEMBER 31, 2001

Total assets increased from $340.8 million at December 31, 2001 to $352.2
million at September 30, 2002. The $11.4 million or 3.3% increase was
primarily due to the increase in interest-bearing demand deposits, which is
included in cash and cash equivalents, available for sale securities,
partially offset by a decline in loans.

Cash and cash equivalents increased from $12.9 million at December 31, 2001 to
$19.5 million at September 30, 2002 an increase of $6.6 million or 51.2%. This
increase resulted from an increase in deposits and borrowings.

Available for sale securities increased from $15.7 million at December 31, 2001
to $22.6 million at September 30, 2002, an increase of $6.9 million or 43.9%.
The increase was primarily due to the purchase of investment securities during
the first nine months of 2002.

Loans, net of allowance for loan losses and including loans held for sale,
decreased from $293.8 million at December 31, 2001 to $291.1 million at
September 30, 2002, a decrease of $2.7 million or 0.9%.

The Company maintains an allowance for loan losses to absorb losses inherent in
the loan portfolio. The allowance for losses increased from $2,421,000 at
December 31, 2001 to $2,621,000 at September 30, 2002, an increase of $200,000
or 8.3%. An allowance for possible loan losses is established based on
managements best judgment, which involves a continuing review of prevailing
national and local economic conditions, changes in the size and composition of
the portfolio and review of individual problem credits. Growth of the loan
portfolio, loss experience, economic conditions, delinquency levels, credit
mix, and selected credits are factors that affect judgments concerning the
adequacy of the allowance. Actual losses on loans are charged against the
allowance.

8



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##### Table of Contents



Non-performing loans, which are loans which are past due 90 days or more, and
non-accruing loans, decreased from $5,790,000 at December 31, 2001 to
$3,526,000 at September 30, 2002, a decrease of $2,264,000 or 39.1%. The ratio
of the Companys allowance for loan losses to total non-performing loans was
74.3% and 41.8% at September 30, 2002 and December 31, 2001, respectively.

Loans delinquent greater than 90 days and still accruing interest, decreased
from $2,613,000 at December 31, 2001 to $1,377,000 at September 30, 2002, a
decrease of $1,236,000. The collateral for these loans is primarily 1-4 family
mortgages. The decrease was primarily attributable to the repayment of
$1,057,000 in loans to one commercial borrower.

Non-accruing loans decreased from $3,177,000 at December 31, 2001 to $2,149,000
at September 30, 2002, a decrease of $1,028,000. As of September 30, 2002,
$1,534,000 of the total non-accruing loans pertains to two borrowers. The first
borrower, with loans for $1,045,000, is a developer, which had $4.2 million in
loans with the Company for the development of 27 residential properties. In
August 2000, the developer filed for bankruptcy protection. A bankruptcy
trustee is handling the disposition of the developers assets. During 2000, the
Company charged off $2.8 million of the loans outstanding to the developer.
Subsequent to September 30, 2002, the bank received an additional payment of
$942,000 from the bankruptcy trustee for this loan, leaving a balance
of $103,000. Based on the assets held by the trustee and the
Companys expected portion of these remaining assets, management believes that
there will be no additional losses relative to the developer. The second
borrower is a developer with $489,000 in loans. The collateral for these loans
are single-family homes and residential lots. The Bank has established a loss
reserve of $120,000 for these loans. Based on the value of the collateral,
management believes that an adequate loss reserve has been established for
these loans. The remaining non-accrual loans, with a balance of $615,000,
consist primarily of $173,000 of real estate construction loans and $321,000 of
1-4 family real estate loans. For all of the non-accrual loans, the Company
believes that it has adequately reserve for any potential loss. The decrease
in non-accrual loans was primarily due to the foreclosure and disposition of
approximately $700,000 of loans to a contractor that had been classified as
non-accrual at December 31, 2001 and the receipt from the bankruptcy trustee of
approximately $590,000 in partial payment on the loans to the borrower
discussed above.

9



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##### Table of Contents



Potential problem loans decreased from $4,941,000 at December 31, 2001 to
$4,052,000 at September 30, 2002, a decrease of $889,000. As of September 30,
2002, the total relates to two borrowers. A borrower with a commercial
mortgage for a retail development and a residential contractor have potential
problem loans of $3,334,000 and $718,000, respectively. At September 30, 2002,
the loan for the retail development is not delinquent. The building that serves
as the Companys collateral is leased and, in addition, the borrower has
personally guaranteed the loan. During the third quarter of 2002, the
borrower filed a lawsuit for the removal of the personal guarantee
from this loan. Another financial institution has initiated
foreclosure proceedings on loans related to the same retail development. The
Bank has established a loss reserve of $500,000 for this loan. Based on the
value of the collateral, management believes that an adequate loss reserve has
been established for this loan. The loans to the residential contractor are
current. However, due to previous payment problems with this borrower these
loans have been classified as potential problem loans. The Bank has established
a reserve of $137,000 for the loans to the residential contractor. Based on the
value of the collateral and the borrowers income, management does not
anticipate additional losses on these loans.

Land in real estate joint venture decreased from $1,081,000 at December 31,
2001 to $1,021,000 at September 30, 2002, a decrease of $60,000 or 5.6%. The
decrease was due to sales of property offset by capital improvements to the
real estate development.

Foreclosed real estate increased from $618,000 at December 31, 2001 to
$1,925,000 at September 30, 2002, an increase of $1,307,000 or 211.5%. The
balance is comprised of primarily 1-4 family residences. Properties being
transferred to foreclosed assets are appraised or evaluated and, if required,
loss reserves are established by management.

Mortgage servicing rights decreased
from $787,000 at December 31, 2001 to $375,000 at September 30, 2002,
a decrease of $412,000 or 52.4%. The decrease was due to the
amortization of $204,000 of mortgage servicing rights and an
identified impairment of $323,000, offset by newly capitalized assets
of $115,000. The amortization and impairment were a result of
increased prepayment speeds due to decreases in interest rates. The
decline in long-term interest rates resulted in an increase in the
projected rate at which loans serviced for others are expected to
prepay, thereby shortening their expected lives. When the mortgage
servicing rights were valued in the current environment with shorter
lives, the assets had less value, and an impairment was identified.
The impairment of $323,000 was charged against current earnings. At
September 30, 2002 loans serviced for others included $96.5 million
in one-to-four family residential mortgages.

Deposits increased from $236.6 million at December 31, 2001 to $243.3 million
at September 30, 2002, an increase of $6.7 million or 2.8%. The increase was
primarily due to an increase of $8.2 million in money market deposits. During
the period of low interest rates and stock market volatility in 2002, customers
preferred the liquidity and stability of the money market account.

Long-term debt increased from $69.6 million at December 31, 2001 to $73.4
million at September 30, 2002, an increase of $3.8 million or 5.5%.

Total stockholders equity increased by $1.1 million or 3.6%, from $30.9
million at December 31, 2001 to $32.0 million at September 30, 2002. The
increase resulted from the earnings of the Company of $1,776,000 for the nine
months ended September 30, 2002, the recognition of ESOP shares of $416,000,
exercised stock options of $162,000, offset by the purchase of treasury shares
of $889,000 and the payment of $315,000 in dividends to shareholders.

10



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COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
and SEPTEMBER 30, 2001

GENERAL

Net income for the nine months ended September 30, 2002 increased by $172,000
or 10.7%, from $1,604,000 for the nine months ended September 30, 2001 to
$1,776,000 for the nine months ended September 30, 2002. The increase was
primarily due to an increase in net interest income offset by an increase in
the provision for loan losses and an impairment charge for mortgage
servicing rights.

INTEREST INCOME

Interest on loans decreased by $1,745,000 or 10.0%, from $17,473,000 for the
nine months ended September 30, 2001 to $15,728,000 for the nine months ended
September 30, 2002. Interest on loans decreased due to a 90 basis point
decrease in the average yield on loans offset by a $4.8 million increase in the
average balance of loans.

Interest on investments decreased from $1,215,000 for the nine months ended
September 30, 2001 to $1,139,000 for the nine months ended September 30, 2002,
a decrease of $76,000 or 6.3%. The decrease was due to a 257 basis point
decrease in the average yield of interest-bearing demand deposits, FHLB stock
and investment securities in 2002 offset by a $13.8 million increase in the
average balance of these investments.

INTEREST EXPENSE

Interest on deposits decreased by $2,686,000 or 31.1%, from $8,645,000 for the
nine months ended September 30, 2001 to $5,959,000 for the nine months ended
September 30, 2002. The decrease was due to a 170 basis point decrease in the
average cost of deposits offset by a $8.4 million increase in the average
balance of deposits.

Interest on long-term debt increased by $22,000 or 0.8%, from $2,677,000 for
the nine months ended September 30, 2001 to $2,699,000 for the nine months
ended September 30, 2002. There was an 82 basis point decrease in the average
cost of borrowing offset by a $10.1 million increase in the average balance of
long-term debt.

PROVISION FOR LOAN LOSSES

The provision for loan losses increased to $725,000 for the nine months ended
September 30, 2002, from $540,000 for the nine months ended September 30, 2001,
an increase of $185,000 or 34.3%. The provision for both periods reflects
managements analysis of the Companys loan portfolio based on information,
which is currently available to it at such time. In particular, management
considers the level of non-performing loans and potential problem loans. While
management believes that the allowance for loan losses is sufficient based on
information currently available, no assurances can be made that future events
or conditions or regulatory directives will not result in increased provisions
for loan losses or additions to the Banks allowance for losses which may
adversely affect net income.

NONINTEREST INCOME

Total noninterest income decreased by $542,000 or 29.2%, from $1,858,000 for
the nine months ended September 30, 2001 to $1,316,000 for the nine months
ended September 30, 2002. The decrease was primarily due to a decrease of
$58,000 in net loan sale gains, a $323,000 mortgage servicing rights
impairment, a decrease of $72,000 in gains on sale of land
in joint venture and a $71,000 net realized loss on the sale of available for
sale securities in 2002. The mortgage servicing rights impairment was
due to the high level of mortgage loan prepayment activity in
2002.

NONINTEREST EXPENSE

Total noninterest expense decreased by $165,000 or 2.7%, from $6,062,000 for
the nine months ended September 30, 2001 to $5,897,000 for the nine months
ended September 30, 2002. The decrease was primarily
attributable to a $39,000
decrease in the minority interest in net income of a real estate joint venture,
a $42,000 decrease in salaries and employee benefits due to the completion in
2001 of an employee stock-based incentive program and a $92,000 decrease in
other noninterest expense primarily due to a $60,000 decrease in other
professional fees.

11



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##### Table of Contents



INCOME TAX EXPENSE

Total income tax expense was $1,127,000 for the nine months ended September 30,
2002, compared to $1,018,000 for the nine months ended September 30, 2001. The
increase is attributable to an increase in taxable income for the nine months
ended September 30, 2002. The effective tax rate was 38.8% for the nine months
ended September 30, 2002 and 2001.

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002
and SEPTEMBER 30, 2001

GENERAL

Net income for the three months ended September 30, 2002 decreased by $77,000
from $456,000 for the three months ended September 30, 2001 to $379,000 for
the three months ended September 30, 2002. The decrease was due primarily to
the $76,000 change in the net gains on loan sales, an impairment of
mortgage servicing rights of $323,000, and a $315,000
increase in the provision for loan losses offset by a $372,000 increase in net
interest income and increased net income from the real estate joint venture.

INTEREST INCOME

Interest on loans decreased by $566,000 or 10.0%, from $5,687,000 for the three
months ended September 30, 2001 to $5,121,000 for the three months ended
September 30, 2002. Interest on loans decreased due to a decrease in the
average yield on loans outstanding of 81 basis points offset by $2.6 million
increase in the average balance of outstanding loans.

Interest on investments increased from $407,000 for the three months ended
September 30, 2001 to $423,000 for the three months ended September 30, 2002,
an increase of $16,000 or 3.9%. The increase was due to a $12.9 million
increase in the average balance of investment securities, FHLB stock and
interest-bearing deposits offset by a 196 basis point decrease in the average
yield of these assets in 2002.

INTEREST EXPENSE

Interest on deposits decreased by $953,000 or 33.8%, from $2,820,000 for the
three months ended September 30, 2001 to $1,867,000 for the three months ended
September 30, 2002. The decrease was primarily due to a 188 basis point
decrease in the average cost of deposits, offset by a $4.2 million increase in
the average balance of deposits.

The interest on long-term debt increased by $31,000 or 3.5%, from $877,000 for
the three months ended September 30, 2001 to $908,000 for the three months
ended September 30, 2002 as a result of a $9.7 million increase in average
borrowings, offset by a 74 basis point decrease in the average cost of
borrowings.

PROVISION FOR LOAN LOSSES

The provision for loan losses was $495,000 for the three months ended September
30, 2002 and $180,000 for the three months ended September 30, 2001, an
increase of $315,000 or 175.0%. The increase was primarily to reserve
for additional anticipated losses on loans to borrowers that had
previously been identified as substandard.

NONINTEREST INCOME

Total noninterest income decreased by
$291,000 or 44.3%, from $656,000 for the three months ended September
30, 2001 to $365,000 for the three months ended September 30, 2002.
The decrease was due primarily to a decrease in gains on loan sales
and the impairment of mortgage servicing rights. Net gains on
loan sales decreased by $76,000. The $323,000 impairment of mortgage
servicing rights was due to a high level of mortgage loan prepayment
activity in the third quarter of 2002. Other noninterest income
decreased primarily due to decreased sold loan servicing fees.

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NONINTEREST EXPENSES

Total noninterest expense decreased from $2,127,000 for the three moths ended
September 30, 2001 to $2,019,000 for the three months ended September 30, 2002,
a decrease of $108,000 or 5.1%. The decrease was primarily attributable to
decreases for the three months ended September 30, 2002 of $79,000 in salaries
and employee benefits expenses and $53,000 in net occupancy and equipment
expenses.

INCOME TAX EXPENSE

Total income tax expense was $241,000 for the three months ended September 30,
2002, compared to $290,000 for the three months ended September 30, 2001, a
decrease of $49,000 or 16.9%. The decrease was attributable to the decreased
taxable income for the three months ended September 30, 2002. The effective tax
rate was 38.9% for the three months ended September 30, 2002 and 2001.

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CRITICAL ACCOUNTING POLICIES

The notes to the consolidated financial statements contain a summary of the
Companys significant accounting policies, including significant
estimates, presented on pages 23 through 25 of
the Annual Report to Shareholders for the year ended December 31, 2001. Certain
of these policies are important for the portrayal of the Companys financial
condition, since they require management to make difficult, complex or
subjective judgments, some of which may relate to matters that are inherently
uncertain. Management believes that its critical accounting policies
and significant estimates include
determining the allowance for loan losses, the valuation of loan servicing
rights and the valuation of foreclosed real estate.

Allowance for Loan Losses

The allowance for loan losses is a significant estimate that can and does
change based on managements assumptions about specific borrowers and current
general and economic and business conditions, among other factors. Management
reviews the adequacy of the allowance for loan losses on at least a quarterly
basis. The evaluation by management includes consideration of past loss
experience, changes in the composition of the loan portfolio, the current
economic condition and amount of loans outstanding, identified problem loans
and the probability of collecting all amounts due.

The determination of the adequacy of the allowance for loan losses is based on
estimates that are particularly susceptible to significant changes in the
economic environment and market conditions. A worsening or protracted economic
decline would increase the likelihood of additional losses due to credit and
market risk and could create the need for additional loss reserves.

Mortgage Servicing Rights

The Company recognizes the rights to service loans as separate assets in the
consolidated balance sheet. The total cost of loans when sold is allocated
between loans and loan servicing rights based on the relative fair value of
each. Mortgage servicing rights are subsequently carried at the lower of the
initial carrying value, adjusted for amortization or fair value. Mortgage
servicing rights are evaluated for impairment based on the fair value of those
rights. Factors included in the calculation of fair value of the loan servicing
rights include estimating the present value of future net cash flows, market
loan prepayment speeds for similar loans, discount rates, servicing costs, and
other economic factors. Servicing rights are amortized over the estimated
period of net servicing revenue. It is likely that these economic factors will
change over the life of the mortgage servicing rights, resulting in different
valuations of the mortgage servicing rights. The differing valuations will
affect the carrying value of the mortgage servicing rights on the consolidated
balance sheet as well as the income recorded from mortgage servicing in the
income statement. As of September 30, 2002 and December 31, 2001, mortgage
servicing rights had carrying values of $375,000 and $761,000,
respectively, net of valuation allowances of $323,000 and $-0-,
respectively.

Foreclosed Real Estate

Foreclosed real estate is carried at the lower of cost or fair value less
estimated selling costs. Management estimates the fair value of the properties
based on current appraisal information. Fair value estimates are particularly
susceptible to significant changes in the economic environment, market
conditions, and the real estate market. A worsening or protracted economic
decline would increase the likelihood of a decline in property values and could
create the need to write down the properties through current operations.

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LIQUIDITY AND CAPITAL RESOURCES

The Companys primary sources of funds are deposits, principal and interest
payments on loans and securities, sales of loans and securities and FHLB
advances. While maturing and scheduled amortization of loans are predictable
sources of funds, deposit outflows and mortgage prepayments are greatly
influenced by general interest rates, economic conditions and competition. The
Banks liquidity requirement, which may be varied at the direction of the
Banks regulators depending on economic conditions and deposit flows, is based
upon a percentage of the Banks deposits and short-term borrowings.

At September 30, 2002, the Bank exceeded all of its regulatory capital
requirements with Tier 1 capital of $30.4 million, or 8.8% of average total
assets, which is above the required level of $13.8 million or 4.0%; and
risk-based capital of $33.0 million or 13.4% of risk-weighted assets, which is
above the required level of $19.7 million or 8.0%.

The Companys most liquid assets are cash and interest-bearing demand accounts.
The level of these accounts is dependent on the operating, financing, lending
and investing activities during any given period. At September 30, 2002 cash
and interest-bearing deposits totaled $19.5 million.

The Company has other sources of liquidity if a need for additional funds
arises, including FHLB advances, loan sales, brokered deposits and Fed funds.
At September 30, 2002, the Bank had outstanding advances with the FHLB of $69.2
million. The FHLB maintains two limitations on borrowing availability based on
(1) FHLB stock ownership and (2) total assets. The Bank currently meets the
stock limitation; however, this limit may be raised by the purchase of
additional FHLB stock. Based on the total assets limitations, the Bank may
increase its borrowings with the FHLB by approximately $52.1 million. The
ability to borrow this amount would require meeting regulatory mandated loan
and collateral limits. Depending upon market conditions and the pricing of
deposit products and FHLB borrowings, the Bank may utilize FHLB advances to
fund loan originations.

At September 30, 2002 the Bank had commitments to originate loans and unused
lines of credit totaling $29.1 million. Certificate accounts which are
scheduled to mature in one year or less from September 30, 2002 totaled $107.7
million. The Bank anticipates that it will have sufficient funds to meet its
current commitments and maturing deposits.

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Item 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Sources of market risk include interest rate risk, foreign currency exchange
rate risk, commodity price risk and equity price risk. The Company is only
subject to interest rate risk. The Company purchased no financial instruments
for trading purposes during the three and nine months ended September 30, 2002
and 2001.

The principal objective of the Companys interest rate risk management function
is to evaluate the interest rate risk included in balance sheet accounts,
determine the level of risk appropriate given the Companys business strategy,
operating environment, capital and liquidity requirements and performance
objectives, and manage the risk consistent with Board of Director approved
guidelines. Through such management, the Company seeks to reduce the
vulnerability of its operations to changes in interest rates. The Company
monitors its interest rate risk as such risk relates to its operating
strategies. The Companys Board of Directors reviews the Companys interest
rate risk position on a quarterly basis. The Companys Asset/Liability
Committee is comprised of the Companys senior management under the direction
of the Board of Directors, with the Committee responsible for reviewing with
the Board of Directors its activities and strategies, the effect of those
strategies on the Companys net interest margin, the market value of the
portfolio and the effect that changes in the interest rates will have on the
Companys portfolio and its exposure limits. The extent of the movement of
interest rates is an uncertainty that could have a negative impact on the
earnings of the Company.

In recent years, the Company has utilized the following strategies to manage
interest rate risk: (1) originating for investment adjustable-rate residential
mortgage and fixed-rate one-to-four family loans with maturities of 10 years or
less; (2) generally selling fixed-rate one-to-four family loans with maturities
exceeding 10 years in the secondary market without recourse and on a servicing
retained basis; (3) increasing its origination of shorter term and/or
adjustable rate commercial loans; and (4) investing in shorter term investment
securities which may generally bear lower yields as compared to longer term
investments, but which may better position the Company for increases in market
interest rates.

The Companys interest rate and market risk profile has not materially changed
from the year ended December 31, 2001. Please refer to the Companys 2001 Form
10-K for further discussion of the Companys market and interest rate risk.

16



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Item 4. CONTROLS AND PROCEDURES



| | (a) |  | Disclosure controls and procedures. Within 90 days before filing
this report, we evaluated the effectiveness of the design and operation of our
disclosure controls and procedures. Our disclosure controls and procedures are
the controls and other procedures that we designed to ensure that we record,
process, summarize and report in a timely manner the information we must
disclose in reports that we file with or submit to the SEC. C. William
Landefeld, our President and Chief Executive Officer, and Dallas G. Smiley, our
Senior Vice President and Chief Financial Officer, reviewed and participated in
this evaluation. Based on this evaluation, Messrs. Landefeld and Smiley
concluded that, as of the date of their evaluation, our disclosure controls
were effective.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Internal controls. Since the date of the evaluation described above,
there have not been any significant changes in our internal accounting controls
or in other factors that could significantly affect those controls.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

17



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##### Table of Contents






PART II.  OTHER INFORMATION






| |  | Item 1. Legal Proceedings
| |  | -------------------------



| |                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company is not involved in any legal proceedings of a material nature
at this time other than those occurring in the ordinary course of
business, which in the aggregate involve amounts which are believed by
management to be immaterial to the financial condition of the Company.






| |  | Item 2. Changes in Securities and Use of Proceeds
| |  | -------------------------------------------------

Not applicable.






| |  | Item 3. Defaults Upon Senior Securities
| |  | ---------------------------------------

Not applicable.






| |  | Item 4. Submission of Matters to a Vote of Security Holders
| |  | -----------------------------------------------------------

Not applicable






| |  | Item 5. Other Information
| |  | -------------------------

Not applicable.






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

a. Exhibits



| |  |  | 11.0 Statement re: Computation of Per Share Earnings
(filed herewith)
| |  |  | ---------------------------------------------------------------------
|
| |  |  | 99.1 Certification of C. William Landefeld                           
|
| |  |  | 99.2 Certification of Dallas G. Smiley                               

b. Reports on Form 8-K

Citizens First Financial Corp. filed the following Form 8-K
during the quarter ended September 30, 2002: None

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##### Table of Contents






SIGNATURES

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

|      |  |                   |  |                                                              
|----- |  | ----------------- |  | -------------------------------------------------------------
|      |  |                   |  | Citizens First Financial Corp.                               
|     
|Date: |  | November 14, 2002 |  | /s/ C. William Landefeld
C. William Landefeld
President      
|     
|Date: |  | November 14, 2002 |  | /s/ Dallas G. Smiley
Dallas G. Smiley
Chief Financial Officer

19



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##### Table of Contents



CERTIFICATIONS

I, C. William Landefeld, Chief Executive Officer, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of
Citizens First Financial Corp.;                                                                                                                                                                                                                                         
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;                   
|
| | 4. |  | The registrants other certifying officers and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
the registrant and we have:                                                                                                     



| |  | a) | designed such disclosure controls and procedures
to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly
during the period in which this quarterly report is being
prepared;
| |  | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b) | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
Evaluation Date); and                                                                                                  
|
| |  | c) | presented in this quarterly report our
conclusions about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the Evaluation
Date;                                                                                                                        



| | 5. |  | The registrants other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrants
auditors and the audit committee of registrants board of directors
(or persons performing the equivalent function):
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | a) | all significant deficiencies in the design or
operation of internal controls which could adversely affect
the registrants ability to record, process, summarize and
report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and
| |  | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b) | any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrants internal controls; and                                                                                                                                        
|



| | 6. |  | The registrants other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  |                                                                      
|----------------------- |  | ---------------------------------------------------------------------
|Date: November 14, 2002 |  | /s/ C. William Landefeld
C. William Landefeld
Chief Executive Officer

20



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##### Table of Contents



I, Dallas G. Smiley, Chief Financial Officer, certify that:



| | 7.  |  | I have reviewed this quarterly report on Form 10-Q of
Citizens First Financial Corp.;                                                                                                                                                                                                                                         
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 8.  |  | Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
|
| | 9.  |  | Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;                   
|
| | 10. |  | The registrants other certifying officers and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
the registrant and we have:                                                                                                     



| |  | d) | designed such disclosure controls and procedures
to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly
during the period in which this quarterly report is being
prepared;
| |  | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | e) | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
Evaluation Date); and                                                                                                  
|
| |  | f) | presented in this quarterly report our
conclusions about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the Evaluation
Date;                                                                                                                        
|



| | 11. |  | The registrants other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrants
auditors and the audit committee of registrants board of directors
(or persons performing the equivalent function):
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | c) | all significant deficiencies in the design or
operation of internal controls which could adversely affect
the registrants ability to record, process, summarize and
report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and
| |  | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | d) | any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrants internal controls; and                                                                                                                                        
|



| | 12. |  | The registrants other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       |  |                                                              
|---------------------- |  | -------------------------------------------------------------
|Date:November 14, 2002 |  | /s/ Dallas G. Smiley
Dallas G. Smiley
Chief Financial Officer

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Exhibit Index

|     |  |                                                  |  |  |    |  |  | 
|---- |  | ------------------------------------------------ |  |  | -- |  |  | 
|11.0 |  | Statement re:  Computation of Per Share Earnings |  |  | 23 | 
|    
|    
|    
|    
|99.1 |  | Certification of C. William Landefeld            |  |  | 25 | 
|    
|    
|    
|    
|99.2 |  | Certification of Dallas G. Smiley                |  |  | 26 | 

22