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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 March 31, 2003            Commission File No.: 0-27740

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

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

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

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

The Registrant had 1,455,155 shares of Common Stock outstanding as of April 30,
2003.





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TABLE OF CONTENTS



|                                             |                                                                                              |                                                                                                    |  |  |  |  |  | 
|-------------------------------------------- | -------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I.  FINANCIAL INFORMATION             
|                                             | Item 1. Financial Statements                                                                
|                                             |                                                                                              | Condensed Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002                  
|                                             |                                                                                              | Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2003 and 2002    
|                                             |                                                                                              | Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002
|                                             |                                                                                              | 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                                                                                  
|                                             | Certifications                                                                              
|Computation of Per Share Earnings           
|906 Certification of Chief Executive Officer
|906 Certfication of Chief Financial Officer 



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##### Table of Contents



TABLE OF CONTENTS

|                               |                |  |                                                            |  |   
|------------------------------ | -------------- |  | ---------------------------------------------------------- |  | --
|PART I - FINANCIAL INFORMATION | PAGE          
|                               |                |  |                                                            |  |   
|                               | Item 1.        |  | Financial Statements                                       |  |   
|                               |                |  |                                                            |  |   
|                               |                |  | Condensed Consolidated Balance Sheets as of                |  |   
|                               |                |  | March 31, 2003 and December 31, 2002                       |  | 1 
|                               |                |  |                                                            |  |   
|                               |                |  | Condensed Consolidated Statements of Income for the        |  |   
|                               |                |  | Three Months Ended March 31, 2003 and 2002                 |  | 2 
|                               |                |  |                                                            |  |   
|                               |                |  | Condensed Consolidated Statements of Cash Flows for the    |  |   
|                               |                |  | Three Months Ended March 31, 2003 and 2002                 |  | 3 
|                               |                |  |                                                            |  |   
|                               |                |  | Notes to Condensed Consolidated Financial Statements       |  | 5 
|                               |                |  |                                                            |  |   
|                               | Item 2.        |  | Managements Discussion and Analysis of Financial          |  |   
|                               |                |  | Condition and Results of Operation                         |  | 7 
|                               |                |  |                                                            |  |   
|                               | Item 3.        |  | Quantitative and Qualitative Disclosures About Market Risk |  | 14
|                               |                |  |                                                            |  |   
|                               | Item 4.        |  | Controls and Procedures                                    |  | 14
|                               |                |  |                                                            |  |   
|PART II - OTHER INFORMATION    |               
|                               |                |  |                                                            |  |   
|                               | Item 1.        |  | Legal Proceedings                                          |  | 15
|                               | Item 2.        |  | Changes in Securities and Use of Proceeds                  |  | 15
|                               | Item 3.        |  | Defaults Upon Senior Securities                            |  | 15
|                               | Item 4.        |  | Submission of
Matters to a Vote of Security Holders        |  | 15
|                               | Item 5.        |  | Other Information                                          |  | 15
|                               | Item 6.        |  | Exhibits and Reports on Form 8-K                           |  | 15
|                               | Signatures     |  |                                                            |  | 16
|                               | Certifications |  |                                                            |  | 17

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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PART I.  FINANCIAL INFORMATION

Citizens First Financial Corp. and Subsidiary
Condensed Consolidated Balance Sheets
As of March 31, 2003 and December 31, 2002
(in thousands)

|                                               |                                                                                                           |                                                        |           |                                            |         |           |         |         |              |         |         | 
|---------------------------------------------- | --------------------------------------------------------------------------------------------------------- | ------------------------------------------------------ | --------- | ------------------------------------------ | ------- | --------- | ------- | ------- | ------------ | ------- | ------- | 
|                                               |                                                                                                           |                                                        |           |                                            |         | March 31, |         |         | December 31, |        
|                                               |                                                                                                           |                                                        |           |                                            |         | 2003      |         |         | 2002         |        
|                                               |                                                                                                           |                                                        |           |                                            |         |          
|ASSETS                                         |                                                                                                           | (Unaudited)                                            |           |                                            |         |          
|                                               |                                                                                                           |                                                        |           |                                            |         |           |        
|                                               | Cash and due from banks                                                                                   |                                                        | $         | 6,851                                      |         |           | $       | 10,730  |             
|                                               | Interest-bearing deposits and federal funds sold                                                          |                                                        |           | 27,463                                     |         |           |         | 22,853  |             
|                                               |                                                                                                           |                                                        |           |                                            |         |           |        
|                                               |                                                                                                           | Cash and cash equivalents                              |           |                                            | 34,314  |           |         |         | 33,583       |        
|                                               | Available for sale securities                                                                             |                                                        |           | 19,999                                     |         |           |         | 20,712  |             
|                                               | Mortgage loans held for sale                                                                              |                                                        |           | 3,055                                      |         |           |         | 6,098   |             
|                                               | Loans                                                                                                     |                                                        |           | 277,805                                    |         |           |         | 282,591 |             
|                                               |                                                                                                           | Allowance for loan losses                              |           |                                            | (2,441  | )         |         |         | (3,753       | )      
|                                               |                                                                                                           |                                                        |           |                                            |         |           |        
|                                               |                                                                                                           |                                                        | Net loans |                                            |         | 275,364   |         |         |              | 278,838 |        
|                                               | Land in real estate joint venture                                                                         |                                                        |           | 683                                        |         |           |         | 888     |             
|                                               | Premises and equipment                                                                                    |                                                        |           | 6,613                                      |         |           |         | 6,792   |             
|                                               | Federal Home Loan Bank of Chicago stock                                                                   |                                                        |           | 4,827                                      |         |           |         | 4,697   |             
|                                               | Foreclosed real estate                                                                                    |                                                        |           | 2,958                                      |         |           |         | 1,500   |             
|                                               | Mortgage servicing rights, net of valuation
allowance of $123,000 at March 31, 2003 and
December 31, 2002 |                                                        |           | 379                                        |         |           |         | 407     |             
|                                               | Other assets                                                                                              |                                                        |           | 3,479                                      |         |           |         | 3,541   |             
|                                               |                                                                                                           |                                                        |           |                                            |         |           |        
|                                               |                                                                                                           |                                                        |           | Total assets                               |         | $         | 351,671 |         |              | $       | 357,056 | 
|                                               |                                                                                                           |                                                        |           |                                            |         |           |        
|LIABILITIES AND STOCKHOLDERS EQUITY           |                                                                                                           |                                                        |           |                                            |         |           |         |        
|Liabilities                                    |                                                                                                           |                                                        |           |                                            |         |           |         |        
|                                               | Deposits                                                                                                  |                                                        | $         | 245,546                                    |         |           | $       | 249,163 |             
|                                               | Long-term debt                                                                                            |                                                        |           | 70,750                                     |         |           |         | 72,825  |             
|                                               | Other liabilities                                                                                         |                                                        |           | 3,154                                      |         |           |         | 2,730   |             
|                                               |                                                                                                           |                                                        |           |                                            |         |           |        
|                                               |                                                                                                           |                                                        |           | Total liabilities                          |         |           | 319,450 |         |              |         | 324,718 | 
|                                               |                                                                                                           |                                                        |           |                                            |         |           |        
|Minority interest in real estate joint venture |                                                                                                           |                                                        | 349       |                                            |         |           | 444     |        
|Commitments and Contingent Liabilities         |                                                                                                           |                                                        |           |                                            |         |           |         |        
|Stockholders Equity                           |                                                                                                           |                                                        |           |                                            |         |           |         |        
|                                               | Preferred
stock, $.01 par valueAuthorized 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                                                                                |                                                        |           | 26,766                                     |         |           |         | 27,934  |             
|                                               | Retained earnings                                                                                         |                                                        |           | 27,563                                     |         |           |         | 25,837  |             
|                                               | Accumulated other comprehensive income                                                                    |                                                        |           | 137                                        |         |           |         | 197     |             
|                                               | Less:                                                                                                     |                                                        |           |                                            |         |           |         |         |             
|                                               |                                                                                                           | Treasury shares, 1,360,845 and 1,361,996, respectively |           |                                            | (22,622 | )         |         |         | (22,102      | )      
|                                               |                                                                                                           |                                                        |           |                                            |         |           |        
|                                               |                                                                                                           |                                                        |           | Total stockholders equity                 |         |           | 31,872  |         |              |         | 31,894  | 
|                                               |                                                                                                           |                                                        |           |                                            |         |           |        
|                                               |                                                                                                           |                                                        |           | Total liabilities and stockholders equity |         | $         | 351,671 |         |              | $       | 357,056 | 
|                                               |                                                                                                           |                                                        |           |                                            |         |           |        

See notes to condensed consolidated financial statements

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

|                                       |                                                                            |                                                              |       |                                                     |           |                             |       |       |                      |  |       | 
|-------------------------------------- | -------------------------------------------------------------------------- | ------------------------------------------------------------ | ----- | --------------------------------------------------- | --------- | --------------------------- | ----- | ----- | -------------------- |  | ----- | 
|                                       |                                                                            |                                                              |       |                                                     |           | For the three months        |       |       | For the three months | 
|                                       |                                                                            |                                                              |       |                                                     |           | ended March 31,             |       |       | ended March 31,      | 
|                                       |                                                                            |                                                              |       |                                                     |           | 2003                        |       |       | 2002                 | 
|                                       |                                                                            |                                                              |       |                                                     |           |                             |       |       |                      | 
|                                       |                                                                            |                                                              |       |                                                     |           | (Unaudited and in thousands |       |       |                      | 
|                                       |                                                                            |                                                              |       |                                                     |           | except share data)          |       |       |                      |  |      
|Interest income                        |                                                                            |                                                              |       |                                                     |           |                             |       |      
|                                       | Interest on loans                                                          |                                                              | $     | 4,576                                               |           |                             | $     | 5,434 |                     
|                                       | Interest
on investments, deposits with banks, federal funds sold and other |                                                              |       | 405                                                 |           |                             |       | 318   |                     
|                                       |                                                                            |                                                              |       |                                                     |           |                             |       |      
|                                       |                                                                            |                                                              |       | Total interest income                               |           |                             | 4,981 |       |                      |  | 5,752 | 
|Interest expense                       |                                                                            |                                                              |       |                                                     |           |                             |       |      
|                                       | Interest on deposits                                                       |                                                              |       | 1,605                                               |           |                             |       | 2,107 |                     
|                                       | Interest on borrowings                                                     |                                                              |       | 790                                                 |           |                             |       | 893   |                     
|                                       |                                                                            |                                                              |       |                                                     |           |                             |       |      
|                                       |                                                                            |                                                              |       | Total interest expense                              |           |                             | 2,395 |       |                      |  | 3,000 | 
|                                       |                                                                            |                                                              |       |                                                     |           |                             |       |      
|                                       |                                                                            |                                                              |       | Net interest income                                 |           |                             | 2,586 |       |                      |  | 2,752 | 
|                                       | Provision for loan losses                                                  |                                                              |       | 85                                                  |           |                             |       | 98    |                     
|                                       |                                                                            |                                                              |       |                                                     |           |                             |       |      
|                                       |                                                                            |                                                              |       | Net interest income after provision for loan losses |           |                             | 2,501 |       |                      |  | 2,654 | 
|                                       |                                                                            |                                                              |       |                                                     |           |                             |       |      
|                                       | Noninterest income                                                         |                                                              |       | 217                                                 |           |                             |       | 225   |                     
|                                       | Service charges on deposit accounts                                        |                                                              |       | 217                                                 |           |                             |       | 225   |                     
|                                       | Net gains on loan sales                                                    |                                                              |       | 344                                                 |           |                             |       | 173   |                     
|                                       | Gain on sale of land in joint venture                                      |                                                              |       | 194                                                 |           |                             |       | 0     |                     
|                                       | Other                                                                      |                                                              |       | 69                                                  |           |                             |       | 96    |                     
|                                       |                                                                            |                                                              |       |                                                     |           |                             |       |      
|                                       |                                                                            |                                                              |       | Total noninterest income                            |           |                             | 824   |       |                      |  | 494   | 
|                                       |                                                                            |                                                              |       |                                                     |           |                             |       |      
|Noninterest expense                    |                                                                            |                                                              |       |                                                     |           |                             |       |      
|                                       |                                                                            | Salaries and employee benefits                               |       |                                                     | 1,042     |                             |       |       | 1,117                | 
|                                       |                                                                            | Net occupancy and equipment expenses                         |       |                                                     | 314       |                             |       |       | 322                  | 
|                                       |                                                                            | Deposit insurance expense                                    |       |                                                     | 19        |                             |       |       | 19                   | 
|                                       |                                                                            | Data processing expense                                      |       |                                                     | 89        |                             |       |       | 77                   | 
|                                       |                                                                            | Minority interest in net income of real estate joint venture |       |                                                     | 97        |                             |       |       |                     | 
|                                       |                                                                            | Other                                                        |       |                                                     | 552       |                             |       |       | 461                  | 
|                                       |                                                                            |                                                              |       |                                                     |           |                             |       |      
|                                       |                                                                            |                                                              |       | Total noninterest expense                           |           |                             | 2,113 |       |                      |  | 1,996 | 
|                                       |                                                                            |                                                              |       |                                                     |           |                             |       |      
|Income before income taxes             |                                                                            |                                                              | 1,212 |                                                     |           |                             | 1,152 |      
|Provision for income taxes             |                                                                            |                                                              | 470   |                                                     |           |                             | 447   |      
|Net income                             |                                                                            |                                                              | 742   |                                                     |           |                             | 705   |      
|Other comprehensive income, net of tax |                                                                            |                                                              |       |                                                     |           |                             |       |      
|                                       | Unrealized depreciation on available for sale securities                   |                                                              |       | (60                                                 | )         |                             |       | (38   | )                   
|                                       |                                                                            |                                                              |       |                                                     |           |                             |       |      
|Comprehensive income                   |                                                                            | $                                                            | 682   |                                                     |           | $                           | 667   |      
|                                       |                                                                            |                                                              |       |                                                     |           |                             |       |      
|Basic earnings per share               |                                                                            | $                                                            | 0.51  |                                                     |           | $                           | 0.48  |      
|                                       |                                                                            | Weighted average shares outstanding                          |       |                                                     | 1,456,651 |                             |       |       | 1,465,135            | 
|Diluted earnings per share             |                                                                            | $                                                            | 0.46  |                                                     |           | $                           | 0.45  |      
|                                       |                                                                            | Weighted average shares outstanding                          |       |                                                     | 1,599,916 |                             |       |       | 1,581,328            | 

See notes to condensed consolidated financial statements

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

|                     |                                                 |            |                                                                           |                                  |  |                              |       |     |                |         |       | 
|-------------------- | ----------------------------------------------- | ---------- | ------------------------------------------------------------------------- | -------------------------------- |  | ---------------------------- | ----- | --- | -------------- | ------- | ----- | 
|                     |                                                 |            |                                                                           |                                  |  | For the three                |       |     | For the three  |        
|                     |                                                 |            |                                                                           |                                  |  | months ended                 |       |     | months ended   |        
|                     |                                                 |            |                                                                           |                                  |  | March 31, 2003               |       |     | March 31, 2002 |        
|                     |                                                 |            |                                                                           |                                  |  |                              |       |     |                |        
|                     |                                                 |            |                                                                           |                                  |  | (Unaudited and in thousands) |       |     |                |         |      
|Operating activities |                                                 |            |                                                                           |                                  |  |                              |       |    
|                     | Net income                                      |            | $                                                                         | 742                              |  |                              | $     | 705 |               
|                     | Adjustments to reconcile net income to net cash |            |                                                                           |                                  |  |                              |       |     |               
|                     |                                                 |            | Provided (used) by operating activities:                                  |                                  |  |                              |       |     |                |         |      
|                     |                                                 |            | Provision for loan losses                                                 |                                  |  | 85                           |       |     |                | 98      |      
|                     |                                                 |            | ESOP compensation expense                                                 |                                  |  |                             |       |     |                | 104     |      
|                     |                                                 |            | Investment securities amortization, net                                   |                                  |  | 53                           |       |     |                | 19      |      
|                     |                                                 |            | Minority interest in net income of real estate joint venture              |                                  |  | 97                           |       |     |                |        |      
|                     |                                                 |            | Gain on sale of land in real estate joint venture                         |                                  |  | (194                         | )     |     |                |        |      
|                     |                                                 |            | Net loss on sale of foreclosed property                                   |                                  |  | 3                            |       |     |                | 41      |      
|                     |                                                 |            | Net gains on sale of mortgage loans                                       |                                  |  | (344                         | )     |     |                | (173    | )    
|                     |                                                 |            | Amortization of mortgage servicing rights                                 |                                  |  | 84                           |       |     |                | 17      |      
|                     |                                                 |            | Depreciation                                                              |                                  |  | 183                          |       |     |                | 187     |      
|                     |                                                 |            | Mortgage loans originated for sale                                        |                                  |  | (18,275                      | )     |     |                | (11,300 | )    
|                     |                                                 |            | Proceeds from sale of mortgage loans                                      |                                  |  | 21,606                       |       |     |                | 13,535  |      
|                     |                                                 |            | Federal Home Loan Bank dividends                                          |                                  |  | (130                         | )     |     |                | (65     | )    
|                     |                                                 | Change in: |                                                                           |                                  |  |                              |       |     |                |        
|                     |                                                 |            |                                                                           | Other assets                     |  |                              | 62    |     |                |         | 151   | 
|                     |                                                 |            |                                                                           | Other liabilities                |  |                              | 208   |     |                |         | 165   | 
|                     |                                                 |            |                                                                           |                                  |  |                             
|                     |                                                 |            | Net cash provided by operating activities                                 |                                  |  | 4,180                        |       |     |                | 3,484   |      
|                     |                                                 |            |                                                                           |                                  |  |                             
|Investing Activities |                                                 |            |                                                                           |                                  |  |                              |       |    
|                     |                                                 |            | Purchase of securities available for sale                                 |                                  |  | (3,846                       | )     |     |                | (2,307  | )    
|                     |                                                 |            | Proceeds from maturities and principal paydowns                           |                                  |  |                              |       |     |                |         |      
|                     |                                                 |            |                                                                           | on securities available for sale |  |                              | 4,408 |     |                |         | 1,520 | 
|                     |                                                 |            | Net changes in loans                                                      |                                  |  | 1,528                        |       |     |                | 4,140   |      
|                     |                                                 |            | Proceeds from sale of foreclosed property                                 |                                  |  | 400                          |       |     |                | 550     |      
|                     |                                                 |            | Purchases of premises and equipment                                       |                                  |  | (4                           | )     |     |                | (19     | )    
|                     |                                                 |            | Investment in land in real estate joint venture                           |                                  |  | (28                          | )     |     |                | (71     | )    
|                     |                                                 |            | Proceeds from sale of land real estate joint venture                      |                                  |  | 427                          |       |     |                |        |      
|                     |                                                 |            | Net investment (distribution) of minority interest portion of real estate |                                  |  |                              |       |     |                |         |      
|                     |                                                 |            |                                                                           | joint venture                    |  |                              | (192  | )   |                |         | 36    | 
|                     |                                                 |            |                                                                           |                                  |  |                             
|                     |                                                 |            | Net cash provided by investing activities                                 |                                  |  | 2,693                        |       |     |                | 3,849   |      
|                     |                                                 |            |                                                                           |                                  |  |                             

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|                                               |                                                  |                                                              |        |        |        |   |        |        |        |  
|---------------------------------------------- | ------------------------------------------------ | ------------------------------------------------------------ | ------ | ------ | ------ | - | ------ | ------ | ------ | -
|Financing Activities                           |                                                  |                                                              |        |        |        |   |        |       
|                                               |                                                  | Net change in deposits                                       |        | $      | (3,617 | ) |        | $      | 9,684  |  
|                                               |                                                  | Proceeds from borrowings                                     |        |        |       |   |        |        | 11,800 |  
|                                               |                                                  | Repayment of borrowings                                      |        |        | (2,075 | ) |        |        | (7,893 | )
|                                               |                                                  | Purchase of treasury stock shares                            |        |        | (1,155 | ) |        |        | (540   | )
|                                               |                                                  | Cash dividends paid on common stock                          |        |        | (153   | ) |        |        | (105   | )
|                                               |                                                  | Exercise of stock options                                    |        |        | 604    |   |        |        | 25     |  
|                                               |                                                  | Net changes in advances by borrowers for taxes and insurance |        |        | 254    |   |        |        | 222    |  
|                                               |                                                  |                                                              |        |        |        |   |        |       
|                                               | Net cash provided (used) by financing activities |                                                              |        | (6,142 | )      |   |        | 13,193 |       
|                                               |                                                  |                                                              |        |        |        |   |        |       
|Net change in cash and cash equivalents        |                                                  |                                                              | 731    |        |        |   | 20,526 |       
|Cash and cash equivalents, beginning of period |                                                  |                                                              | 33,583 |        |        |   | 12,931 |       
|                                               |                                                  |                                                              |        |        |        |   |        |       
|Cash and cash equivalents, end of period       |                                                  | $                                                            | 34,314 |        |        | $ | 33,457 |       
|                                               |                                                  |                                                              |        |        |        |   |        |       
|Additional cash flows information:             |                                                  |                                                              |        |        |        |   |        |       
|                                               | Interest paid                                    |                                                              | $      | 2,710  |        |   | $      | 3,087  |       
|                                               | Income tax paid                                  |                                                              | $      | 555    |        |   | $      | 45     |       
|                                               | Loans transferred to foreclosed property         |                                                              | $      | 1,861  |        |   | $      | 742    |       

See notes to condensed consolidated financial statements

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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 March 31, 2003 and December 31, 2002, and the consolidated statements of
income and cash flows for the three months ended March 31, 2003 and 2002. 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 three months ended March 31, 2003 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 17, 2003, included in the Companys 2002 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 three months ended March 31, 2003 and 2002.
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.      Stock Options

The Company has a stock-based employee compensation plan, which is described
more fully in Notes to Financial Statements included in the December 31, 2002
Annual Report to shareholders. The Company accounts for this plan under the
recognition and measurement principles of APB Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations. No stock-based
employee compensation cost is reflected in net income, as all options granted
under the plan had an exercise price equal to the market value of the
underlying common stock on the grant date. The following table illustrates the
effect on net income and earnings per share if the Company had applied the fair
value provisions of Statement of Financial Accounting Standards (SFAS) No. 123,
Accounting for Stock-Based Compensation, to stock-based employee compensation.

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|                                                                                                                     |                       |   |                    |      |  |                    |     |      | 
|-------------------------------------------------------------------------------------------------------------------- | --------------------- | - | ------------------ | ---- |  | ------------------ | --- | ---- | 
|                                                                                                                     |                       |   | Three Months Ended |      |  | Three Months Ended |    
|                                                                                                                     |                       |   | March 31, 2003     |      |  | March 31, 2002     |    
|                                                                                                                     |                       |   |                    |      |  |                    |    
|Net income, as reported                                                                                              |                       | $ | 742                |      |  | $                  | 705 |     
|Less:
Total stock-based employee compensation cost determined under the
fair value based method, net of income taxes |                       |   | (24                | )    |  |                    | (24 | )   
|                                                                                                                     |                       |   |                    |      |  |                   
|Pro forma net income                                                                                                 |                       | $ | 718                |      |  | $                  | 681 |     
|                                                                                                                     |                       |   |                    |      |  |                   
|Earnings per share:                                                                                                  |                       |   |                    |      |  |                    |     |     
|                                                                                                                     | Basic  as reported   |   | $                  | 0.51 |  |                    | $   | 0.48 | 
|                                                                                                                     | Basic  pro forma     |   | $                  | 0.49 |  |                    | $   | 0.46 | 
|                                                                                                                     | Diluted  as reported |   | $                  | 0.46 |  |                    | $   | 0.45 | 
|                                                                                                                     | Diluted  pro forma   |   | $                  | 0.45 |  |                    | $   | 0.43 | 

5.   Recent Accounting Pronouncement

In November 2002, the FASB issued Interpretation No. 45,Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others
(FIN 45). FIN 45 will change current practice in the accounting for and disclosure
of guarantees. Guarantees meeting the characteristics described in FIN 45 are required to be
initially recorded at fair value, which is different from the general current practice of
recording a liability only when a loss is probable and reasonably estimable, as those terms are
defined in FASB Statement No. 5,Accounting for Contingencies. FIN 45 also requires a guarantor
to make new disclosures for virtually all guarantees even if the likelihood of the guarantors
having to make payments under the guarantee is remote.

In general, FIN 45 applies to contracts or indemnification agreements that
contingently require the guarantor to make payments to the guaranteed party based on changes in
an underlying asset, liability, or an equity
security of the guaranteed party such as financial standby letters of credit.

Disclosure requirements of FIN 45 are effective for financial statements of interim or annual periods ending after December 31, 2002. The initial recognition and measurement provisions are applicable on a prospective basis to guarantees issued or modified after December
31, 2002, irrespective of the guarantors fiscal year-end. The guarantors previous accounting for guarantees issued prior to the date of FIN 45 initial applications should not be revised or restated to reflect the provisions of FIN 45.

The Company adopted FIN 45 on January 1, 2003. The adoption of FIN 45 does not currently have a material
impact on the Companys consolidated financial statements.

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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 MARCH 31, 2003 and DECEMBER 31, 2002

Total assets decreased from $357.1 million at December 31, 2002 to $351.7
million at March 31, 2003. The $5.4 million or 1.5% decrease was primarily due
to the decrease in loans and loans for sale.

Cash and cash equivalents increased from $33.6 million at December 31, 2002 to
$34.3 million at March 31, 2003 an increase of $700,000 or 2.1%.

Available for sale securities decreased from $20.7 million at December 31, 2002
to $20.0 million at March 31, 2003, a decrease of $700,000 or 3.3%. The
decrease was primarily due to the principal repayments of investment securities
during the first three months of 2003.

Loans, net of allowance for loan losses and including loans held for sale,
decreased from $284,936,000 at December 31, 2002 to $278,419,000 at March 31,
2003, a decrease of $6,517,000 or 2.3%. The decrease was primarily due to a
$5.1 million decrease in residential real estate loans. The Company sells
primarily fixed rate residential loans in the secondary market (primarily to
the Federal Home Loan Mortgage Corporation) as a source of income from gains on
sale and servicing fees and as a means of controlling interest rate risk. The
Company experienced a continuing high volume in refinanced residential loans
during the first three months of 2003 due to lower interest rates. Many of
these loans (the majority of which were originated as fixed rate loans) were
sold in the secondary market. The Company serviced $105.1 million and $103.7
million at March 31, 2003 and December 31, 2002, respectively.

The Company has a significant concentration in construction and commercial real
estate loans related to the real estate market in Bloomington-Normal.
Management believes that due to the continued strength of this market, this
concentration does not pose a significant risk to the Company.

The allowance for loan losses is established through a provision for loan
losses based on managements evaluation of the risks inherent in the loan
portfolio and the general economy. The allowance for loan losses is maintained
at an amount management considers adequate to cover estimated loses in loans
receivable which are deemed probable and can be estimated based on information
available to management at such time. While management believes the allowance
for loan losses is sufficient to cover future loan losses inherent in its loan
portfolio at this time, no assurances can be given that the level of the
allowance for loan losses will be sufficient to cover future loan losses
incurred or that future adjustments to the allowance for loan losses will not
be necessary if economic and other conditions differ substantially from the
economic and other conditions used by management to determine the current level
of the allowance for loan losses. The allowance is based upon a number of
factors, including asset classification, economic trends, industry experience
and trends, industry and geographic concentrations, estimated collateral value,
managements assessments of the credit risk inherent in the portfolio,
historical loan loss experience, and the Companys

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underwriting policies. Management will continue to monitor and modify the
allowance for loan losses as conditions dictate. Various regulatory agencies,
as an integral part of their examination process, periodically review the
allowance for loan losses. These agencies may require additional valuation
allowances, based on their judgments of the information available at the time
of the examination.

It is the policy of the Company to charge off loans when it is determined that
they are no longer collectible. The policy for loans secured by real estate,
which comprises the bulk of the loan portfolio, is to establish loss reserves
in accordance with the loan classification process, based on generally accepted
accounting practices. It is the Companys policy to obtain an appraisal or
evaluation on all real estate acquired through foreclosure at the time of
foreclosure.

The allowance for loan losses decreased from $3,753,000 at December 31, 2002 to
$2,441,000 at March 31, 2003, a decrease of $1,312,000 or 35.0%. The decrease
was primarily due to a $1.4 million write-down of a $3.3 million loan, which
was transferred into foreclosed assets in the first quarter of 2003. The loan
on a retail development was classified as non-accrual at December 31, 2002 and
had a reserve of $1.4 million.

The Companys non-performing and potential problem loans decreased from
$11,264,000 at December 31, 2002 to $8,307,000 at March 31, 2003, a decrease of
$2,957,000 or 26.3%. The decrease was primarily attributable to the foreclosure
of the $3.3 million loan noted above for a retail development that was
classified as non-accrual at December 31, 2002. The non-performing and
potential problem loans were considered impaired as of March 31, 2003 and
December 31, 2002.

Non-performing loans, which are loans past due 90 days or more and non-accruing
loans, decreased from $6,163,000 at December 31, 2002 to $5,433,000 at March
31, 2003. The ratio of the Companys allowance for loan losses to total
non-performing loans was 44.9% and 60.9% at March 31, 2003 and December 31,
2002, respectively. Management believes that the problems with these borrowers
are identified and not indicative of the loan portfolio in total.

Loans delinquent greater than 90 days decreased from $1,753,000 at December 31,
2002 to $1,033,000 at March 31, 2003, a decrease of $720,000 or 41.1%. The
decrease was due primarily to the transfer of approximately of $990,000 of
loans classified as delinquent at December 31, 2002 to nonaccrual status at
March 31, 2003. Loans delinquent greater than 90 days at March 31, 2003
consist of 19 loans that are substantially collateralized and for which the
Company believes that it has adequately reserved for any potential loss. The
total is comprised principally of 13 residential mortgages with a balance of
$843,000 and one commercial and industrial loan with a balance of $187,000. The
largest loan delinquent greater than 90 days has a balance of $206,000.

Nonaccruing loans decreased from $4,410,000 at December 31, 2002 to $4,400,000
at March 31, 2003, a decrease of $10,000 or 0.2%. During the first quarter of
2003, a $3.3 million loan, which had been classified as nonaccrual at December
31, 2002, was foreclosed and transferred to foreclosed assets. As of March 31,
2003, the total is comprised principally of 13 construction and land
development loans with a balance of $2,237,000, 7 residential loans with a
balance of $1,157,000, 4 commercial & industrial loans with a balance of
$427,000 and 2 nonresidential real estate loans with a balance of $395,000. For
all of the non-accruing loans, the Company believes that it has adequately
reserved for any potential loss.

Potential problem loans are loans that are not classified as nonaccrual or 90
days or more delinquent, but due to factors regarding the borrower, the loan or
the economy may represent a possible loss to the Company. Potential problem
loans decreased from $5,102,000 at December 31, 2002 to $2,874,000 at March 31,
2003, a decrease of $2,228,000 or 43.7%. The Company has established loan loss
reserves of $517,000 at March 31, 2003 for potential problem loans. As of March
31, 2003, $1,261,000 of the total potential problem loans relates to one
borrower. The borrower is a commercial developer who is a concern to the
Company because of the concentration of loans to one borrower and the delays in
the completion and sale of certain of his developments. Reserves of $350,000
have been established for the potential problem loans to this borrower. The
remaining potential problem loans have a balance of $1,613,000 and consist of 9
residential loans with a balance of $1,183,000, 1 nonresidential real
estate loan of
$279,000,1 commercial and industrial loan of $133,000 and 2 consumer loans of
$18,000. Reserves of $167,000 have been established for these remaining
potential problem loans. These reserves are included in the reserves discussed
above.

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Other assets especially mentioned (OAEM) loans increased from $12,590,000 at
December 31, 2002 to $14,679,000 at March 31, 2003, an increase of $2,089,000
or 16.6%. OAEM loans are loans that are not classified as nonaccrual,
delinquent or potential problem, but still require monitoring by the Company
due to factors regarding the borrower, the loan or the economy. At March 31,
2003 $12,432,000 of this balance relates to loans to one borrower. It is the
same commercial developer discussed above who because of the concentration of
loans to one borrower and delays in completion and sale of certain of his
developments has caused certain of his loans to be classified as OAEM loans.
The remaining $2,247,000 of OAEM loans consist primarily of 5 commercial &
industrial loans with a balance of $1,138,000, 2 nonresidential real estate
loans with a balance of $574,000 and 9 residential real estate loans with a
balance of $524,000.

Foreclosed assets held for sale increased from $1,500,000 at December 31, 2002
to $2,958,000 at March 31, 2003, an increase of $1,458,000 or 97.2%. The
increase was due to the foreclosure of a $3.3 million loan for a retail
development during the first quarter of 2003. The Bank charged-off $1.4 million
through the allowance for loan losses when the property was transferred from
loans to foreclosed assets held for sale. The repossessed building is
substantially leased. Another financial institution, which had a loan on the
same development, foreclosed on their portion in 2002. Properties being
transferred to foreclosed assets are appraised or evaluated and, if required,
loss reserves are established by management.

Mortgage servicing rights decreased from $407,000 at December 31, 2002 to
$379,000 at March 31, 2003, a decrease of $28,000 or 6.9%. The decrease was due
to the amortization of $84,000 of mortgage servicing rights, offset by newly
capitalized assets of $56,000. Loans serviced for others totaled $105.1 million
and $103.7 million at March 31, 2003 and December 31,
2002, respectively.

Deposits decreased from $249.2 million at December 31, 2002 to $245.5 million
at March 31, 2003, a decrease of $3.7 million or 1.5%. The decrease was
primarily due to a decrease of $3.4 million in certificates of deposit. Because
of its higher level of cash and cash equivalents, the Company did not
aggressively compete for deposits and as a result there was a decrease in
certificates of deposit.

Long-term debt decreased from $72.8 million at December 31, 2002 to $70.8
million at March 31, 2003, a decrease of $2.0 million or 2.8%, due to
maturities during the first quarter of 2003.

Other liabilities increased from $2,730,000 at December 31, 2002 to $3,154,000
at March 31, 2003, an increase of $424,000 or 15.5%. The increase was primarily
due to a an increases of $254,000 in advances from borrowers for taxes and
insurance and $105,000 in accounts payable.

Total stockholders equity decreased by $22,000, from $31,894,000 at December
31, 2002 to $31,872,000 at March 31, 2003. The decrease resulted from the
purchase of treasury shares of $1,155,000, payment of $153,000 in dividends to
shareholders, and a decrease in unrealized appreciation on available-for sale
securities of $60,000, offset by the earnings of the Company of $742,000 for
the three months ended March 31, 2003 and exercised stock options of $604,000.

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COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2003 and MARCH 31, 2002

GENERAL
Net income for the three months ended March 31, 2003 increased by $37,000 from
$705,000 for the three months ended March 31, 2002 to $742,000 for the three
months ended March 31, 2003. The increase was due primarily to an increase in
the net gains on loan sales and the gain on sale of land in joint venture, offset by a decrease in net interest income.

INTEREST INCOME
Interest on loans decreased by $858,000 or 15.8%, from $5,434,000 for the three
months ended March 31, 2002 to $4,576,000 for the three months ended March 31,
2003. Interest on loans decreased due to a decrease in the average yield on
loans outstanding of 69 basis points and a $11.2 million decrease in the
average balance of outstanding loans.

Interest on investments increased from $318,000 for the three months ended
March 31, 2002 to $405,000 for the three months ended March 31, 2003, an
increase of $87,000 or 27.4%. The increase was primarily due to a $19.5 million
increase in the average balance of investment securities, FHLB stock and
interest-bearing deposits, offset by a 97 basis point decrease in the average
yield of these assets in 2003.

INTEREST EXPENSE
Interest on deposits decreased by $502,000 or 23.8%, from $2,107,000 for the
three months ended March 31, 2002 to $1,605,000 for the three months ended
March 31, 2003. The decrease was primarily due to a 96 basis point decrease in
the average cost of deposits, offset by a $6.7 million increase in the average
balance of deposits.

The interest on long-term debt decreased by $103,000 or 11.5%, from $893,000
for the three months ended March 31, 2002 to $790,000 for the three months
ended March 31, 2003 as a result of a 56 basis point decrease in the average
cost of borrowings.

PROVISION FOR LOAN LOSSES
The provision for loan losses was $85,000 for the three months ended March 31,
2003 and $98,000 for the three months ended March 31, 2002, a decrease of
$13,000 or 13.3%.

NONINTEREST INCOME
Total noninterest income increased by $330,000 or 66.8%, from $494,000 for the
three months ended March 31, 2002 to $824,000 for the three months ended March
31, 2003. The increase was due primarily to increases in gains on loan sales
and gain on sale of land in joint venture. Net gains on loan sales increased by
$171,000. The increase was due to the increase in loan sales in the first
quarter of 2003 resulting from the lower interest rate environment. The
$194,000 increase in net gain on sale of land in joint venture resulted from
lot sales in the first quarter of 2003. There were no lot sales in the first
quarter of 2002.

NONINTEREST EXPENSE
Total noninterest expense increased from $1,996,000 for the three moths ended
March 31, 2002 to $2,113,000 for the three months ended March 31, 2003, an
increase of $117,000 or 5.9%. Other noninterest expense increased by $93,000
primarily because of higher expenses related to delinquent loans and
repossessed assets and higher professional fees related to a new overdraft
protection deposit product. There was an increase of $95,000 in the minority
income of a real estate joint venture because of lot sales in 2003. There were
no lot sales in the first quarter of 2002.

INCOME TAX EXPENSE
Total income tax expense was $470,000 for the three months ended March 31,
2003, compared to $447,000 for the three months ended March 31, 2002, an
increase of $23,000 or 5.1%. The increase was attributable to the increased
taxable income for the three months ended March 31, 2003. The effective tax
rate was 38.8% for the three months ended March 31, 2003 and 2002.

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CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting standards
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses and the related disclosure of contingent
assets and liabilities. Actual results could differ from those estimates under
different assumptions and conditions. 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 March 31, 2003 and December 31, 2002, mortgage
servicing rights had carrying values of $379,000 and $470,000, respectively,
net of valuation allowances of $123,000 at each date.

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 March 31, 2003, the Bank exceeded all of its regulatory capital requirements
with Tier 1 capital of $31.1 million, or 8.9% of average total assets, which is
above the required level of $14.0 million or 4.0%; and risk-based capital of
$33.5 million or 14.0% of risk-weighted assets, which is above the required
level of $19.1 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 March 31, 2003 cash and
interest-bearing deposits totaled $34.3 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 March 31, 2003, the Bank had outstanding advances with the FHLB of $67.0
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 $54.9 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 March 31, 2003 the Bank had commitments to originate loans and unused lines
of credit totaling $22.4 million. Certificate accounts which are scheduled to
mature in one year or less from March 31, 2003 totaled $101.4 million. The
Bank anticipates that it will have sufficient funds to meet its current
commitments and maturing deposits.

CURRENT ACCOUNTING ISSUES

The Financial Accounting Standards Board (FASB) adopted Statement of
Financial Accounting Standards (SFAS) No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure. This Statement amends FASB Statement
No. 123, Accounting for Stock-Based Compensation. SFAS No. 148 provides
alternative methods of transition for a voluntary change to the fair value
based method of accounting for stock-based employee compensation. In addition,
SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require more
prominent and more frequent disclosures in financial statements about the
effects of stock-based compensation.

Under the provisions of SFAS No. 123, companies that adopted the fair value
based method were required to apply that method prospectively for new stock
option awards. This contributed to a ramp-up effect on stock-based
compensation expense in the first few years following adoption, which caused
concern for companies and investors because of the lack of consistency in
reported results. To address that concern, SFAS No. 148 provides two
additional methods of transition that reflect an entitys full complement of
stock-based compensation expense immediately upon adoption, thereby eliminating
the ramp-up effect.

SFAS No. 148 also improves the clarity and prominence of disclosures about the
proforma effects of using the fair value based method of accounting for
stock-based compensation for all companies  regardless of the accounting
method used  by requiring that the data be presented more prominently and in a
more user-friendly format in the footnotes to the financial statements. In
addition, SFAS No. 148 improves the timeliness of those disclosures by
requiring that this information be included in interim as well as annual
financial

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statements. In the past, companies were required to make proforma disclosures
only in annual financial statements.

The transition guidance and annual disclosure provisions of SFAS No. 148 are
effective for fiscal years ending after December 15, 2002, with earlier
application permitted in certain circumstances. The interim disclosure
provisions are effective for financial reports containing financial statements
for interim periods beginning after December 15, 2002.

The FASB has stated it intends to issue a new statement on accounting for
stock-based compensation and will require companies to expense stock options
using a fair value based method at date of grant. The implementation for this
proposed state statement is not known.

In November 2002, the FASB issued Interpretation No. 45, Guarantors Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others(FIN 45). FIN 45 will change current practice in the
accounting for and disclosure of guarantees. Guarantees meeting the
characteristics described in FIN 45 are required to be initially recorded at
fair value, which is different from the general current practice of recording a
liability only when a loss is probable and reasonably estimable, as those terms
are defined in FASB Statement No. 5, Accounting for Contingencies. FIN 45 also
requires a guarantor to make new disclosures for virtually all guarantees even
if the likelihood of the guarantors having to make payments under the
guarantee is remote.

In general, FIN 45 applies to contracts or indemnification agreements that
contingently require the guarantor to make payments to the guaranteed party
based on changes in an underlying asset, liability, or an equity security of
the guaranteed party such as financial standby letters of credit.

Disclosure requirements of FIN 45 are effective for financial statements of
interim or annual periods ending after December 31, 2002. The initial
recognition and measurement provisions are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002, irrespective of the
guarantors fiscal year-end. The guarantors previous accounting for
guarantees issued prior to the date of FIN 45 initial applications should not
be revised or restated to reflect the provisions of FIN 45.

The Company adopted FIN 45 on January 1, 2003. The adoption of FIN 45 does not
currently have a material impact on the Companys consolidated financial
statements.

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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 months ended March 31, 2003 and 2002.

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, 2002. Please refer to the Companys 2002 Form
10-K for further discussion of the Companys market and interest rate risk.




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.

14



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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 March 31, 2003: None

15



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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: May 14, 2003 |  | /s/ C. William Landefeld

                 
    C. William Landefeld
|                   |  | President                                                           
|                   |  |                                                                     
|Date: May 14, 2003 |  | /s/ Dallas G. Smiley

                 
    Dallas G. Smiley        
|                   |  | Chief Financial Officer                                             

16



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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: May 14, 2003 |  | /s/ C. William Landefeld

C. William Landefeld
|                   |  | Chief Executive Officer                       

17



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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: May 14, 2003 |  | /s/ Dallas G. Smiley

Dallas G. Smiley
|                   |  | Chief Financial Officer               

18



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##### Table of Contents



Exhibit Index

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

19