FORM 10-K
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
     (Mark One)

[X]      Annual  Report  Pursuant  to  Section  13 or  15(d)  of the  Securities
         Exchange Act of 1934

                     For the fiscal year ended June 30, 1999

or

[ ]      Transition  Report  Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

For the transition period from _____________ to _______________

Commission File Number 333-29031

                                CITIZENS BANCORP
             (Exact name of registrant as specified in its charter)

                 INDIANA                                   35-2017500
      (State or other Jurisdiction               (I.R.S. Employer Identification
    of Incorporation or Organization)                        Number)


          60 South Main Street
              P.O. Box 635
           Frankfort, Indiana                                 46041
(Address of Principal Executive Offices)                   (Zip Code)

               Registrant's telephone number including area code:
                                 (765) 654-8533

           Securities Registered Pursuant to Section 12(b) of the Act:
                                      None

           Securities Registered Pursuant to Section 12(g) of the Act:
                                      None
                                (Title of Class)

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

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

The aggregate market value of the issuer's voting stock held by  non-affiliates,
as of September 24, 1999 was $10,062,997.

The  number of shares of the  Registrant's  Common  Stock,  without  par  value,
outstanding as of September 24, 1999, was 965,754 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Annual Report to Shareholders  for the year ended June 30, 1999,
are  incorporated by reference into Part II. Portions of the Proxy Statement for
the 1999 Annual Meeting of Shareholders are incorporated in Part III.


                            Exhibit Index on Page E-1
                               Page 1 of 30 Pages
<PAGE>


                                CITIZENS BANCORP
                                    Form 10-K
                                      INDEX
                                                                            Page
                                     PART I
     Item 1.    Business....................................................  3
     Item 2.    Properties.................................................. 25
     Item 3.    Legal Proceedings........................................... 26
     Item 4.    Submission of Matters to a Vote of Security Holders......... 26
     Item 4.5.  Executive Officers of the Registrant........................ 26
PART II
     Item 5.    Market for Registrant's Common Equity and Related
                    Stockholder Matters..................................... 26

     Item 6.    Selected Financial Data..................................... 26
     Item 7.    Management's Discussion and Analysis of Financial
                    Condition and Results of Operations..................... 27
     Item 7A.   Quantitative and Qualitative Disclosures About Market Risk.. 27
     Item 8.    Financial Statements and Supplementary Data................. 27
     Item 9.    Changes in and Disagreements with Accountants on
                    Accounting and Financial Disclosure..................... 27

PART III
     Item 10.   Directors and Executive Officers of Registrant.............. 27
     Item 11.   Executive Compensation...................................... 27

     Item 12.   Security Ownership of Certain Beneficial
                    Owners and Management................................... 27

     Item 13.   Certain Relationships and Related Transactions.............. 27

PART IV

     Item 14.   Exhibits, Financial Statement Schedules,
                    and Reports on Form 8-K................................. 28

SIGNATURES.................................................................. 29



                                     - 2 -
<PAGE>

Item 1.    Business

General

         Citizens Bancorp, an Indiana  corporation (the "Holding Company"),  was
organized in June, 1997. On September 18, 1997, the Holding Company acquired the
common  stock  of  Citizens  Savings  Bank of  Frankfort  ("Citizens")  upon the
conversion  of Citizens  from a federal  mutual  savings bank to a federal stock
savings bank.

         Citizens  was  organized  as  a   state-chartered   building  and  loan
association  in 1916 and currently  conducts its business from one  full-service
office located in Frankfort,  Indiana.  Citizens' principal business consists of
attracting  deposits  from the general  public and  originating  fixed-rate  and
adjustable-rate  loans  secured  primarily  by first  mortgage  liens on one- to
four-family  residential real estate.  Citizens' deposit accounts are insured up
to applicable limits by the Savings  Association  Insurance Fund ("SAIF") of the
Federal  Deposit  Insurance  Corporation  ("FDIC").  Citizens offers a number of
consumer  and  commercial  financial  services.   These  services  include:  (i)
residential  real estate loans;  (ii)  multi-family  loans;  (iii)  construction
loans;  (iv)  nonresidential  real estate  loans;  (v) home equity  loans;  (vi)
single-pay  loans;  (vii) installment  loans;  (viii) automobile loans; (ix) NOW
accounts;  (x) money market demand  accounts  ("MMDAs");  (xi) passbook  savings
accounts;  (xii)  certificates  of  deposit;  and (xiii)  individual  retirement
accounts.

         Loan Portfolio  Data. The following table sets forth the composition of
Citizens'  loan  portfolio  by loan  type  and  security  type  as of the  dates
indicated,   including  a   reconciliation   of  gross  loans  receivable  after
consideration of the allowance for loan losses and loans in process.
<TABLE>
<CAPTION>


                                                                          At June 30,
                                                 --------------------------------------------------------------
                                                        1999                  1998                  1997
                                                 ------------------     ------------------    -----------------
                                                            Percent               Percent               Percent
                                                 Amount    of Total     Amount   of Total     Amount   of Total
                                                 ------    --------     ------   --------     ------   --------
                                                                     (Dollars in thousands)

<S>                                              <C>         <C>       <C>        <C>         <C>       <C>
TYPE OF LOAN
Real estate mortgage loans:
   Residential................................   $41,663     78.45%    $35,928    76.54%      $29,888   77.77%
   Non-residential............................     1,631      3.07       1,770     3.77           824    2.14
   Multi-family...............................     1,711      3.22       1,887     4.02         1,551    4.04
Construction loans:...........................     1,384      2.61         611     1.30         1,420    3.69
Consumer loans:
   Single pay.................................     3,538      6.66       2,815     6.00         1,854    4.82
   Installment ...............................     2,329      4.39       2,219     4.73         1,696    4.41
   Share .....................................       ---       ---         ---      ---            15     .04
   Home equity................................     2,043      3.85       2,176     4.64         2,095    5.45
   Home improvement...........................         3       .01           5      .01             8     .02
                                                 -------    ------     -------   ------       -------  ------
       Gross loans receivable.................   $54,302    102.26%    $47,411   101.01%      $39,351  102.38%
                                                 =======    ======     =======   ======       =======  ======

TYPE OF SECURITY
Residential real estate ......................   $47,516     89.48%    $40,612    86.53%      $35,153   91.45%
Non-residential real estate...................     2,041      3.84       2,143     4.57         1,037    2.70
Multi-family real estate......................     2,033      3.83       2,267     4.83         1,551    4.04
Deposits......................................       149       .28         150      .32           193     .50
Auto   .......................................     1,575      2.97       1,415     3.01         1,176    3.06
Other security................................       483       .91         405      .86           111     .29
Unsecured ....................................       505       .95         419      .89           130     .34
                                                 -------    ------     -------   ------       -------  ------
     Gross loans receivable...................    54,302    102.26      47,411   101.01        39,351  102.38
Deduct:
Deferred loan fees............................       126       .24         110      .23           101     .26
Allowance for loan losses.....................       326       .61         269      .57           212     .55
Loans in process..............................       746      1.41          96      .21           603    1.57
                                                 -------    ------     -------   ------       -------  ------
   Net loans receivable.......................   $53,104    100.00%    $46,936   100.00%      $38,435  100.00%
                                                 =======    ======     =======   ======       =======  ======
Mortgage Loans:
   Adjustable-rate............................   $10,427     23.17%    $11,502    29.06%     $  9,595   29.74%
   Fixed-rate.................................    34,578     76.83      28,083    70.94        22,668   70.26
                                                 -------    ------     -------   ------       -------  ------
     Total....................................   $45,005    100.00%    $39,585   100.00%      $32,263  100.00%
                                                 =======    ======     =======   ======       =======  ======
</TABLE>


                                     - 3 -
<PAGE>

         The following  table sets forth certain  information  at June 30, 1999,
regarding the dollar amount of loans maturing in Citizens' loan portfolio  based
on the contractual terms to maturity.  Demand loans having no stated schedule of
repayments and no stated maturity and overdrafts are reported as due in one year
or less.  This schedule does not reflect the effects of possible  prepayments or
enforcement of due-on-sale  clauses.  Management expects  prepayments will cause
actual maturities to be shorter.

<TABLE>
<CAPTION>

                                        Balance                           Due During Years Ended June 30,
                                    Outstanding at                                     2003       2005      2010       2015
                                       June 30,                                         to         to        to         and
                                         1999           2000       2001       2002     2004       2009      2014     following
                                         ----           ----       ----       ----     ----       ----      ----     ---------
                                                                              (In thousands)
<S>                                     <C>              <C>        <C>        <C>      <C>      <C>       <C>        <C>
Real estate mortgage loans:
   Residential loans..................  $41,663          $21        $24        $51      $343     $4,071    $18,304    $18,849
   Multi-family loans.................    1,711          ---        ---        ---       236         46      1,429        ---
   Non-residential loans..............    1,631            3         61        ---         9         75        470      1,013
Construction loans....................    1,384        1,384        ---        ---       ---        ---        ---        ---
Installment  loans....................    2,329           82        321        515     1,170        203         19         19
Single pay loans......................    3,538        3,537        ---        ---         1        ---        ---        ---
Home equity loans.....................    2,043          ---        ---        ---       ---        ---        ---      2,043
Home improvement loans................        3          ---          3        ---       ---        ---        ---        ---
                                        -------       ------       ----       ----    ------     ------    -------    -------
     Total............................  $54,302       $5,027       $409       $566    $1,759     $4,395    $20,222    $21,924
                                        =======       ======       ====       ====    ======     ======    =======    =======
</TABLE>


      The following  table sets forth, as of June 30, 1999, the dollar amount of
all loans due after one year that have  fixed  interest  rates and  floating  or
adjustable interest rates.
<TABLE>
<CAPTION>
                                                         Due After June 30, 2000
                                     -------------------------------------------------------------
                                     Fixed Rates             Variable Rates                  Total
                                     -----------             --------------                  -----
                                                             (In thousands)
Real estate mortgage loans:
<S>                                     <C>                     <C>                         <C>
   Residential loans.............       $34,522                 $  7,120                    $41,642
   Multi-family loans............           ---                    1,711                      1,711
   Non-residential loans.........            35                    1,593                      1,628
   Construction loans............           ---                      ---                        ---
Installment loans................         2,247                      ---                      2,247
Single pay loans.................             1                      ---                          1
Share loans......................           ---                      ---                        ---
Home equity loans................           ---                    2,043                      2,043
Home improvement loans...........             3                      ---                          3
                                        -------                  -------                    -------
   Total.........................       $36,808                  $12,467                    $49,275
                                        =======                  =======                    =======
</TABLE>



      One- to Four-Family  Residential Loans. Citizens' primary lending activity
consists of originating one- to four-family  residential  mortgage loans secured
by property located in its primary market area.  Citizens  generally  originates
one- to  four-family  residential  mortgage  loans in  amounts  up to 95% of the
lesser of the appraised value or purchase price, with private mortgage insurance
required on loans with a loan-to-value  ratio in excess of 80%. The cost of such
insurance is factored into the annual  percentage  rate on such loans.  Citizens
originates  and  retains  fixed  rate loans  which  provide  for the  payment of
principal  and interest  over a 15- or 20-year  period,  or balloon loans having
terms of up to 20 years with principal and interest payments  calculated using a
30-year amortization period.

      Citizens also offers adjustable-rate  mortgage ("ARM") loans. The interest
rate on ARM loans is indexed to the  one-year  U.S.  Treasury  securities  yield
adjusted to a constant maturity.  Citizens may offer discounted initial interest
rates on ARM loans,  but requires that the borrower  qualify for the ARM loan at
the fully-indexed rate (the index rate plus the margin).  A substantial  portion
of the ARM loans in  Citizens'  portfolio  at June 30, 1999  provide for maximum
rate  adjustments  per  year  and  over  the  life  of the  loan  of 1% and  6%,
respectively. Citizens' residential ARMs are amortized for terms up to 25 years.

      ARM loans decrease the risk  associated  with changes in interest rates by
periodically  repricing,  but  involve  other risks  because as  interest  rates
increase, the underlying payments by the borrower increase,  thus increasing the
potential for default by the borrower.  At the same time, the  marketability  of


                                     - 4 -
<PAGE>

the underlying  collateral may be adversely  affected by higher  interest rates.
Upward  adjustment  of the  contractual  interest  rate is also  limited  by the
maximum  periodic and lifetime  interest rate  adjustment  permitted by the loan
documents,  and,  therefore,  is  potentially  limited in  effectiveness  during
periods of rapidly rising interest rates. At June 30, 1999, approximately 17% of
Citizens'  one-  to  four-family  residential  loans  had  adjustable  rates  of
interest.

      All of the one- to  four-family  residential  mortgage loans that Citizens
originates  include  "due-on-sale"  clauses,  which give  Citizens  the right to
declare a loan  immediately  due and  payable  in the event  that,  among  other
things, the borrower sells or otherwise disposes of the real property subject to
the mortgage and the loan is not repaid. However,  Citizens occasionally permits
assumptions of existing residential mortgage loans on a case-by-case basis.

      At June 30,  1999,  approximately  $41.7  million,  or 78.5% of  Citizens'
portfolio  of  loans,  consisted  of  one-  to  four-family  residential  loans.
Approximately  $98,000,  or .24% of total  residential  loans,  were included in
non-performing  assets  as of that  date.  See "--  Non-Performing  and  Problem
Assets."

      Multi-Family Loans. At June 30, 1999,  approximately $1.7 million, or 3.2%
of  Citizens'  total loan  portfolio,  consisted  of mortgage  loans  secured by
multi-family  dwellings  (those  consisting of more than four units).  Citizens'
multi-family  loans are  generally  written as  one-year  adjustable  rate loans
indexed to the one-year U.S. Treasury rate or to its internal loan rate which is
established from time-to-time.  Citizens writes  multi-family loans with maximum
Loan-to-Value  ratios of 80%. Citizens' largest multi-family loan as of June 30,
1999 was $1.3 million and was secured by an apartment  complex in Frankfort.  On
the same date,  there were no  multi-family  loans  included  in  non-performing
assets.

      Multi-family  loans,  like  nonresidential  real estate  loans,  involve a
greater  risk than do  residential  loans.  See "--  Nonresidential  Real Estate
Loans" below.

      Construction  Loans.  Citizens offers  construction  loans with respect to
residential and nonresidential real estate and, in certain cases, to builders or
developers constructing such properties on a speculative basis (i.e., before the
builder/developer  obtains  a  commitment  from a  buyer).  At  June  30,  1999,
approximately $1.4 million, or 2.6% of Citizens' total loan portfolio, consisted
of construction loans. The largest  construction loan at June 30, 1999, totaling
$250,000, was secured by a single-family residence near Frankfort.  Citizens had
no construction loans included in non-performing assets on that date.

      Construction  loans are generally  written as six-month,  fixed-rate loans
with  interest  calculated  on the amount  disbursed  under the loan and payable
monthly.  Citizens  generally  requires  an  80%  Loan-to-Value  Ratio  for  its
construction  loans.  Inspections  are made  prior to any  disbursement  under a
construction  loan, and Citizens does not normally  charge  commitment  fees for
construction loans.

      While  providing  Citizens  with a  comparable,  and in some cases higher,
yield than a  conventional  mortgage loan,  construction  loans involve a higher
level of risk.  For  example,  if a project is not  completed  and the  borrower
defaults,  Citizens may have to hire another  contractor to complete the project
at a higher  cost.  Also,  a project may be  completed,  but may not be salable,
resulting in the borrower defaulting and Citizens taking title to the project.

      Nonresidential  Real Estate Loans.  Citizens'  nonresidential  real estate
loans  are  secured  by  churches,   office  buildings,   and  other  commercial
properties.  Citizens generally originates  non-residential real estate loans as
one-year  adjustable rate loans indexed to the one-year U.S. Treasury securities
yield adjusted to a constant  maturity,  and which are written for maximum terms
of 20  years  with  maximum  Loan-to-Value  ratios  of 75%.  At June  30,  1999,
Citizens'  largest  nonresidential  loan  was  $966,000  and was  secured  by an
extended stay motel in Columbus,  Indiana. At June 30, 1999,  approximately $1.6
million, or 3.1% of Citizens' total loan portfolio,  consisted of nonresidential
real estate loans.  On the same date,  approximately  $35,000 in  nonresidential
real estate loans were included in non-performing assets.

      Loans secured by nonresidential real estate generally are larger than one-
to  four-family  residential  loans  and  involve  a  greater  degree  of  risk.
Nonresidential  real estate loans often  involve  large loan  balances to single
borrowers  or groups of related  borrowers.  Payments on these loans depend to a
large degree on results of operations  and  management of the properties and may
be affected to a greater extent by adverse  conditions in the real estate market
or the economy in general.  Accordingly, the nature of the loans makes them more
difficult for management to monitor and evaluate.

      Consumer Loans.  Citizens'  consumer loans,  consisting  primarily of home
equity  loans,  personal  installment  loans and "single  pay" loans  aggregated
approximately  $7.9  million  at June  30,  1999,  or 14.9%  of its  total  loan
portfolio.  Citizens consistently originates consumer loans to meet the needs of
its customers and to assist in meeting its asset/liability management goals. All
of Citizens'  consumer  loans,  except loans secured by deposits and home equity
loans,  are fixed-rate loans with terms that vary from six months (for unsecured


                                     - 5 -
<PAGE>

installment loans) to 60 months (for home improvement loans and loans secured by
new  automobiles).  At June 30,  1999,  93.6% of Citizens'  consumer  loans were
secured by collateral. Citizens' loans secured by deposits are made up to 90% of
the original  account balance and, at June 30, 1999,  accrued at a rate of 8.0%.
This rate may change but will always be at least 1% over the underlying passbook
or  certificate  of deposit rate.  Interest on loans secured by deposits is paid
semi-annually.

      Citizens  also  offers home  equity  lines of credit and home  improvement
loans secured by real estate.  The interest rate on a home equity line of credit
is  ordinarily  tied to the  prime  rate with a margin  of  positive  2.0% and a
maximum interest rate of 18%.  Citizens does not always hold a first mortgage on
its home equity  lines of credit,  although it does hold a first  mortgage  with
respect to approximately 90% of such loans in its portfolio. Citizens ordinarily
offers  fixed-rate home improvement loans secured by real estate with a term not
to exceed five years.  Citizens  restricts the amount that a customer may borrow
under an equity line of credit to $100,000,  subject to the general  restriction
applicable to all second  mortgage loans that limits the amount it may loan to a
borrower to an amount that, when added to any existing  mortgage loans, does not
exceed 80% of the appraised value of the collateral property.

         At June 30, 1999,  Citizens had outstanding  approximately $2.0 million
of home equity loans, with unused lines of credit totaling  approximately  $2.96
million.   Home  equity  loans  in  the  amount  of  $38,000  were  included  in
non-performing assets on that date.

      Consumer loans may entail greater risk than  residential  mortgage  loans,
particularly in the case of consumer loans which are unsecured or are secured by
rapidly  depreciable  assets,  such as  automobiles.  Further,  any  repossessed
collateral for a defaulted  consumer loan may not provide an adequate  source of
repayment  of  the  outstanding  loan  balance.   In  addition,   consumer  loan
collections depend on the borrower's  continuing financial  stability,  and thus
are more likely to be affected by adverse personal  circumstances.  Furthermore,
the  application  of various  federal and state laws,  including  bankruptcy and
insolvency  laws, may limit the amount which can be recovered on such loans.  At
June  30,  1999,   consumer   loans   amounting  to  $64,000  were  included  in
non-performing assets. See "-- Non-Performing and Problem Assets."

      Single-Pay Loans.  Citizens offers single-pay loans,  which are short-term
loans secured by real estate,  automobiles or other types of collateral that are
payable with a single payment rather than by installment.  Typically, single-pay
loans  secured by real estate are written with terms of one year or less,  while
single-pay  loans secured by other types of collateral  are written for terms of
90 days to six months. Of the approximately  $3.5 million of single-pay loans in
Citizens' portfolio as of June 30, 1999, approximately $1.8 million were secured
by  residential  mortgages  and  $392,000  were secured by land.  The  remaining
approximately  $1.3  million  of loans in this  category  were  consumer  loans,
typically  secured by automobiles or subordinate  liens on real estate.  At June
30, 1999, Citizens had no delinquent single-pay loans in its portfolio.

      Origination,  Purchase  and  Sale  of  Loans.  Citizens  historically  has
originated its mortgage loans pursuant to its own  underwriting  standards which
do not conform  with the  standard  criteria of the Federal  Home Loan  Mortgage
Corporation  ("FHLMC") or the Federal  National  Mortgage  Association  ("FNMA")
because  Citizens  does not  require  current  property  surveys in most  cases.
Citizens may begin originating fixed-rate residential mortgage loans for sale to
the  FHLMC  on a  servicing-retained  basis in the  future.  In the  event  that
Citizens  originates loans for sale to the FHLMC in the secondary  market,  such
loans will be originated in accordance  with the  guidelines  established by the
FHLMC and will be sold promptly after they are originated.

      Citizens  confines its loan  origination  activities  primarily to Clinton
County. At June 30, 1999, Citizens had loans totaling  approximately $487,000 in
the aggregate  secured by property  located  outside of Indiana.  Citizens' loan
originations are generated from referrals from existing  customers,  real estate
brokers,  and  newspaper  and  periodical  advertising.  Loan  applications  are
underwritten and processed at Citizens' office.

      Citizens'  loan  approval  process is  intended  to assess the  borrower's
ability to repay the loan,  the  viability  of the loan and the  adequacy of the
value of the  property  that will  secure  the loan.  To assess  the  borrower's
ability  to repay,  Citizens  studies  the  employment  and credit  history  and
information  on  the  historical  and  projected  income  and  expenses  of  its
mortgagors.  All  mortgage  loans are  approved  by  Citizens'  Loan  Committee.
Consumer  loans up to $15,000 may be approved by a Loan Officer.  Consumer loans
for more than  $15,000  must be  approved  by the  senior  loan  officer  or the
President.

      Citizens generally  requires  appraisals on all real property securing its
loans and requires an attorney's  opinion and a valid lien on the mortgaged real
estate.  Appraisals for all real property  securing mortgage loans are performed
by independent  appraisers who are  state-licensed.  Citizens  requires fire and
extended coverage insurance in amounts at least equal to the principal amount of
the loan and also requires flood insurance to protect the property  securing its


                                     - 6 -
<PAGE>

interest if the property is in a flood plain.  Citizens also generally  requires
private mortgage insurance for all residential mortgage loans with Loan-to-Value
Ratios of greater than 80%.  Citizens  requires  escrow  accounts for  insurance
premiums and taxes for loans that require private mortgage insurance.

      Citizens'  underwriting  standards  for  consumer  loans are  intended  to
protect against some of the risks inherent in making  consumer  loans.  Borrower
character, paying habits and financial strengths are important considerations.

         The following  table shows  Citizens'  loan  origination  and repayment
activity during the periods indicated:
<TABLE>
<CAPTION>

                                                                               Year Ended June 30,
                                                             -----------------------------------------------------
                                                                1999                  1998                  1997
                                                             ---------             ---------              --------
                                                                                 (In thousands)
<S>                                                            <C>                   <C>                  <C>
Loans Originated:
     Real estate mortgage loans:
       Residential loans..................................     $17,405               $14,353              $  9,253
       Nonresidential loans...............................          57                   122                   202
       Multi-family loans.................................         ---                 1,563                   102
     Construction loans...................................       2,199                 2,385                 2,503
     Installment loans....................................       1,716                 1,993                 1,434
     Single pay loans.....................................       7,183                 4,082                 2,818
     Share loans..........................................         ---                   ---                     5
     Home equity loans....................................       1,167                 1,265                 1,156
     Home improvement loans...............................         ---                   ---                   ---
         Total originations...............................      29,727                25,763                17,473
     Loans purchased......................................          61                 2,494                   ---
Reductions:
     Principal loan repayments............................     (23,578)              (19,696)              (13,251)
     Loans sold...........................................         ---                   ---                   (91)
     Transfers from loans to real estate owned............         ---                   ---                   ---
                                                             ---------             ---------              --------
         Total reductions.................................     (23,578)              (19,696)              (13,342)
     Decrease in other items (1)..........................         (42)                  (60)                  (88)
                                                             ---------             ---------              --------
     Net increase (decrease) .............................   $   6,168             $   8,501              $  4,043
                                                             =========             =========              ========
</TABLE>


(1) Other items consist of amortization of deferred loan  origination  costs and
the provision for losses on loans.

     Citizens' residential loan originations during the year ended June 30, 1999
totaled $17.4  million,  compared to $14.4 million and $9.3 million in the years
ended June 30, 1998 and 1997, respectively.

      Origination  and Other Fees.  Citizens  realizes income from late charges,
checking account service  charges,  and fees for other  miscellaneous  services.
Citizens  currently charges  origination fees on its mortgage loans of 1% of the
loan  amount,  up to  $100,000,  and .5% of the amount of the loan that  exceeds
$100,000.  Citizens also may charge  points on a mortgage loan as  consideration
for a lower interest rate,  although it does so  infrequently.  Late charges are
generally  assessed if payment is not received within a specified number of days
after it is due. The grace period depends on the individual loan documents.

Non-Performing and Problem Assets

      After a  mortgage  loan  becomes  15 days past due,  Citizens  delivers  a
delinquency  notice to the  borrower.  When loans are 30 to 60 days in  default,
Citizens sends  additional  delinquency  notices and makes  personal  contact by
telephone with the borrower to establish acceptable  repayment  schedules.  When
loans become 60 days in default, Citizens again contacts the borrower, this time
in person, to establish acceptable repayment schedules.  When a mortgage loan is
90 days  delinquent,  Citizens will have either entered into a workout plan with
the borrower or referred the matter to its attorney for  collection.  Management
is authorized  to commence  foreclosure  proceedings  for any loan upon making a
determination that it is prudent to do so.

      Citizens  reviews  mortgage loans on a regular basis and places such loans
on a non-accrual  status when they become 90 days  delinquent.  Generally,  when
loans are placed on a non-accrual  status,  unpaid  accrued  interest is written
off, and further income is recognized only to the extent received.



                                     - 7 -
<PAGE>

      Non-performing  Assets.  At June  30,  1999,  $197,000,  or .33% of  total
assets,  were  non-performing  (restructured and non-accruing loans) compared to
$170,000,  or .32% of  total  assets  at  June  30,  1998.  At  June  30,  1999,
residential  loans  and  consumer  loans  accounted  for  $98,000  and  $64,000,
respectively,  of non-accruing loans.  Citizens had no Real Estate Owned ("REO")
properties as of June 30, 1999.

      The table  below  sets  forth the  amounts  and  categories  of  Citizens'
non-performing  assets (non-accruing loans,  foreclosed real estate and troubled
debt  restructurings)  for the last three years. It is Citizens' policy that all
earned but uncollected interest on all loans be reviewed monthly to determine if
any portion thereof should be classified as uncollectible  for any loan past due
in excess  of 90 days.  Delinquent  loans  that are 90 days or more past due are
considered non-performing assets.

<TABLE>
<CAPTION>


                                                                            At June 30,
                                                           -------------------------------------------------
                                                            1999                1998                    1997
                                                            ----                ----                    ----
                                                                     (Dollars in thousands)
Non-performing assets:
<S>                                                          <C>                 <C>                    <C>
   Non-accruing loans..................................      $162                $131                   $303
   Troubled debt restructurings........................        35                  39                     41
     Total non-performing loans........................       197                 170                    344
   Foreclosed real estate..............................       ---                 ---                    ---
                                                             ----                ----                   ----
     Total non-performing assets.......................      $197                $170                   $344
                                                             ====                ====                   ====

Non-performing loans to total loans....................      0.37%               0.36%                  0.89%

Non-performing assets to total assets..................      0.33%               0.32%                  0.74%
</TABLE>


      Interest on loans was $6,000, $4,000, and $8,000 less than would have been
reported for the years ended June 30, 1999, 1998 and 1997, respectively,  if the
non-performing  loans summarized above had been current in accordance with their
original terms.  Citizens  received $3,000 in interest on  non-performing  loans
during the year ended June 30, 1999.

      At June  30,  1999,  Citizens  held  loans  delinquent  from 30 to 59 days
totaling approximately $665,000. Other than these loans and the other delinquent
loans disclosed  elsewhere in this section,  Citizens was not aware of any other
loans, the borrowers of which were experiencing financial difficulties.

                                     - 8 -
<PAGE>

     Delinquent  Loans.  The following  table sets forth certain  information at
June 30, 1999, 1998, and 1997, relating to delinquencies in Citizens' portfolio.
Delinquent loans that are 90 days or more past due are considered non-performing
assets.
<TABLE>
<CAPTION>

                                       At June 30, 1999                                At June 30, 1998
                           ----------------------------------------------     ---------------------------------------------
                                60-89 Days             90 Days or More           60-89 Days            90 Days or More
                           ---------------------  -----------------------     --------------------  -----------------------
                                      Principal                Principal                Principal                Principal
                            Number    Balance of   Number      Balance of      Number   Balance of   Number     Balance of
                           of Loans     Loans     of Loans        Loans      of Loans     Loans     of Loans       Loans
                           --------   ----------  --------     ----------    --------   ----------  --------    -----------
                                                                 (Dollars in thousands)
Residential
<S>                             <C>     <C>            <C>         <C>            <C>     <C>          <C>          <C>
   mortgage loans..........     8       $196           3           $98            8       $244         6            $84
Nonresidential
   mortgage loans..........   ---        ---         ---           ---          ---        ---       ---            ---
Installment loans..........     7         41           8            26            7         35         8             40
Single pay loans...........   ---        ---         ---           ---          ---        ---         1              2
Home equity loans..........   ---        ---           3            38            3         40         1              5
Home improvement loans.....   ---        ---         ---           ---          ---        ---       ---            ---
                             ----       ----        ----          ----         ----       ----      ----           ----
   Total...................    15       $237          14          $162           18       $319        16           $131
                            =====       ====        ====          ====         ====       ====      ====           ====
Delinquent loans to
   total loans.............                                        .75%                                             .96%
                                                                   ===                                              ===
</TABLE>


                                         At June 30, 1997
                             ----------------------------------------------
                                  60-89 Days          90 Days or More
                             -------------------    -----------------------
                                      Principal                  Principal
                             Number   Balance of     Number      Balance of
                            of Loans    Loans       of Loans       Loans
                            --------    -----       --------       -----

Residential
   mortgage loans..........     1        $10             5         $130
Nonresidential
   mortgage loans..........     1         24           ---          ---
Installment loans..........     2         16             6           37
Single pay loans...........   ---        ---             1           84
Home equity loans..........   ---        ---             5           52
Home improvement loans.....   ---        ---           ---          ---
                             ----       ----          ----         ----
   Total...................     4        $50            17         $303
                            =====       ====          ====         ====
Delinquent loans to
   total loans.............                                         .92%
                                                                   ====


                                     - 9 -
<PAGE>


      Classified assets.  Federal regulations and Citizens' Asset Classification
Policy provide for the classification of loans and other assets such as debt and
equity   securities   considered  by  the  OTS  to  be  of  lesser   quality  as
"substandard," "doubtful" or "loss" assets. An asset is considered "substandard"
if it is inadequately  protected by the current net worth and paying capacity of
the obligor or of the collateral pledged, if any.  "Substandard"  assets include
those  characterized  by the "distinct  possibility"  that the institution  will
sustain "some loss" if the deficiencies are not corrected.  Assets classified as
"doubtful"   have  all  of  the   weaknesses   inherent   in  those   classified
"substandard,"  with the added  characteristic  that the weaknesses present make
"collection or liquidation in full," on the basis of currently  existing  facts,
conditions,  and values, "highly questionable and improbable." Assets classified
as "loss" are those  considered  "uncollectible"  and of such little  value that
their continuance as assets without the establishment of a specific loss reserve
is not warranted.

      An insured  institution  is required to establish  general  allowances for
loan  losses in an amount  deemed  prudent by  management  for loans  classified
substandard or doubtful,  as well as for other problem loans. General allowances
represent loss allowances  which have been established to recognize the inherent
risk associated with lending activities,  but which, unlike specific allowances,
have  not  been  allocated  to  particular  problem  assets.   When  an  insured
institution  classifies  problem  assets as  "loss,"  it is  required  either to
establish  a specific  allowance  for losses  equal to 100% of the amount of the
asset so classified or to charge off such amount. An institution's determination
as to  the  classification  of its  assets  and  the  amount  of  its  valuation
allowances is subject to review by the OTS which can order the  establishment of
additional general or specific loss allowances.

      At June 30, 1999, the aggregate amount of Citizens' classified assets, and
of its general and specific loss allowances were as follows:

                                                             At June 30, 1999
                                                             ----------------
                                                              (In thousands)

  Substandard assets...........................................      $129
  Doubtful assets..............................................       ---
  Loss assets..................................................       ---
                                                                     ----
      Total classified assets..................................      $129
                                                                     ====
  General loss allowances......................................      $326
  Specific loss allowances.....................................       ---
                                                                     ----
      Total allowances.........................................      $326
                                                                     ====

      Citizens  regularly  reviews its loan  portfolio to determine  whether any
loans require classification in accordance with applicable regulations.

Allowance for Loan Losses

      The allowance for loan losses is maintained through the provision for loan
losses,  which  is  charged  to  earnings.  The  provision  for loan  losses  is
determined  in  conjunction  with  Citizens'  review and  evaluation  of current
economic  conditions  (including  those of its  lending  area),  changes  in the
character and size of the loan portfolio,  loan delinquencies (current status as
well as past and  anticipated  trends) and adequacy of collateral  securing loan
delinquencies,  historical and estimated net  charge-offs,  and other  pertinent
information  derived  from a review of the loan  portfolio.  In the  opinion  of
management,  Citizens'  allowance for loan losses is adequate to absorb probable
losses inherent in the loan portfolio at June 30, 1999. However, there can be no
assurance  that  regulators,  when  reviewing  Citizens'  loan  portfolio in the
future,  will not require  increases in its  allowances  for loan losses or that
changes in economic conditions will not adversely affect its loan portfolio.



                                     - 10 -
<PAGE>

      Summary of Loan Loss  Experience.  The following table analyzes changes in
the allowance during the past three fiscal years ended June 30, 1999.
<TABLE>
<CAPTION>
                                                                 Year Ended June 30,
                                                    ------------------------------------------------
                                                    1999                1998                    1997
                                                    -----              -------                 ------
                                                             (Dollars in thousands)
<S>                                                  <C>                 <C>                    <C>
Balance at beginning of period.................      $269                $212                   $138
Charge-offs:
   Residential mortgage loans..................       ---                 ---                    ---
   Nonresidential mortgage loans...............       ---                 ---                    ---
   Multi-family loans..........................       ---                 ---                    ---
   Construction loans..........................       ---                 ---                    ---
   Installment loans...........................       (12)                (12)                   (11)
   Single pay loans............................        (1)                 (5)                    ---
   Share loans.................................       ---                 ---                    ---
   Home equity loans...........................       ---                 ---                    ---
   Home improvement loans......................       ---                 ---                    ---
                                                     ----                ----                   ----
     Total charge-offs.........................       (13)                (17)                   (11)
                                                     ----                ----                   ----
Recoveries:
   Residential mortgage........................       ---                 ---                    ---
   Single pay..................................       ---                 ---                      2
   Installment.................................         5                   2                    ---
                                                     ----                ----                   ----
     Total recoveries..........................         5                   2                      2
                                                     ----                ----                   ----
Net (charge-offs) recoveries...................        (8)                (15)                    (9)
Provision for losses on loans..................        65                  72                     83
                                                     ----                ----                   ----
Balance at end of period.......................      $326                $269                   $212
                                                     ====                ====                   ====
Allowance for loan losses as a percent of
total loans outstanding........................      0.61%               0.57%                  0.55%
Ratio of net (charge-offs) recoveries
to average loans outstanding...................      (.02)               (.03)                  (.03)
</TABLE>


      Allocation of Allowance for Loan Losses.  The following  table presents an
analysis of the  allocation of Citizens'  allowance for loan losses at the dates
indicated.  The allocation of the allowance to each category is not  necessarily
indicative  of future  loss in any  particular  category  and does not  restrict
Citizens' use of the allowance to absorb losses in other categories.

<TABLE>
<CAPTION>
                                                                            At June 30,
                                         ---------------------------------------------------------------------------------
                                                 1999                          1998                           1997
                                         ----------------------         --------------------          --------------------
                                                       Percent                       Percent                        Percent
                                                      of loans                      of loans                       of loans
                                                       in each                       in each                        in each
                                                      category                      category                       category
                                                      to total                      to total                       to total
                                         Amount         loans           Amount        loans            Amount        loans
                                         ------         -----           ------        -----            ------        -----
                                                                       (Dollars in thousands)
<S>                                       <C>         <C>                 <C>       <C>                   <C>       <C>
Balance at end of
period applicable to:
   Real estate mortgage loans:
     Residential......................    $119        76.73%              $105      75.78%                $81       75.96%
     Nonresidential...................       5         3.00                  4       3.73                   3        2.09
     Multi-family.....................       5         3.15                  6       3.98                   4        3.94
   Construction loans.................      28         2.55                 14       1.29                  27        3.61
   Installment loans..................      86         4.29                 66       4.68                  53        4.31
   Share loans........................     ---          ---                ---        ---                 ---         .04
   Home equity loans..................      10         3.76                  9       4.59                   8        5.32
   Home improvement loans.............     ---          .01                ---        .01                 ---         .02
   Single pay loans...................      73         6.51                 65       5.94                  36        4.71
                                          ----       ------               ----     ------                ----      ------
   Total..............................    $326       100.00%              $269     100.00%               $212      100.00%
                                          ====       ======               ====     ======                ====      ======
</TABLE>

                             - 11 -
<PAGE>



Investments

     Investments.  Citizens'  investment portfolio consists of equity securities
and Federal  Home Loan Bank  ("FHLB")  stock.  At June 30,  1999,  approximately
$807,000,  or 1.4%,  of Citizens'  total assets  consisted of such  investments.
Citizens also had $1.6 million in interest-earning deposits as of that date.

      The following  table sets forth the amortized cost and the market value of
Citizens' investment portfolio at the dates indicated.

<TABLE>
<CAPTION>
                                                                            At June 30,
                                        ----------------------------------------------------------------------------------
                                                  1999                          1998                          1997
                                        ---------------------          ----------------------         --------------------
                                        Amortized      Market          Amortized     Market           Amortized     Market
                                          Cost          Value            Cost         Value             Cost         Value
                                          ----          -----            ----         -----             ----         -----
                                                                              (In thousands)
<S>                                        <C>          <C>                 <C>          <C>              <C>          <C>
Available for Sale:
   Equity securities..................     $419         $388                $309         $315             $161         $161
FHLB stock............................      419          419                 352          352              332          332
                                           ----         ----                ----         ----             ----         ----
     Total investments................     $838         $807                $661         $667             $493         $493
                                           ====         ====                ====         ====             ====         ====
</TABLE>

Sources of Funds

      General.  Deposits have  traditionally  been  Citizens'  primary source of
funds for use in lending and  investment  activities.  In addition to  deposits,
Citizens derives funds from scheduled loan payments, investment maturities, loan
prepayments,  retained earnings, income on earning assets and borrowings.  While
scheduled  loan  payments  and income on earning  assets are  relatively  stable
sources  of  funds,  deposit  inflows  and  outflows  can  vary  widely  and are
influenced  by  prevailing  interest  rates,  market  conditions  and  levels of
competition.  The deposits  shown below  include  approximately  $2.7 million in
public funds deposited by various state,  county and local governments which may
fluctuate  depending  upon  prevailing  interest  rates and the rates offered by
Citizens'  competitors.  Borrowings from the FHLB of Indianapolis may be used in
the short-term to compensate  for  reductions in deposits or deposit  inflows at
less than projected levels.

      Deposits.  Citizens  attracts  deposits  principally  from within  Clinton
County,   Indiana   through  the  offering  of  a  broad  selection  of  deposit
instruments, including fixed-rate passbook accounts, NOW accounts, variable rate
money market accounts, fixed-term certificates of deposit, individual retirement
accounts and savings  accounts.  Citizens does not actively solicit or advertise
for deposits outside of Clinton County,  and substantially all of its depositors
are residents of that county.  Deposit  account  terms vary,  with the principal
differences  being the minimum  balance  required,  the amount of time the funds
remain on deposit and the interest  rate.  Citizens does not pay broker fees for
any deposits it receives.

      Citizens establishes the interest rates paid, maturity terms, service fees
and withdrawal  penalties on a periodic basis.  Determination of rates and terms
are predicated on funds  acquisition and liquidity  requirements,  rates paid by
competitors, growth goals, and applicable regulations. Citizens relies, in part,
on customer service and  long-standing  relationships  with customers to attract
and retain its deposits.  Citizens also closely prices its deposits to the rates
offered by its competitors.

      The flow of  deposits  is  influenced  significantly  by general  economic
conditions,  changes in money  market and other  prevailing  interest  rates and
competition. The variety of deposit accounts that Citizens offers has allowed it
to be competitive in obtaining funds and to respond with  flexibility to changes
in  consumer  demand.   Citizens  has  become  more  susceptible  to  short-term
fluctuations  in deposit  flows as  customers  have  become more  interest  rate
conscious.  Citizens  manages  the pricing of its  deposits in keeping  with its
asset/liability   management  and   profitability   objectives.   Based  on  its
experience,  management  believes  that  Citizens'  passbook,  NOW and MMDAs are
relatively  stable  sources of  deposits.  However,  the  ability to attract and
maintain certificates of deposit, and the rates Citizens pays on these deposits,
have been and will continue to be significantly affected by market conditions.

      An analysis of Citizens' deposit accounts by type,  maturity,  and rate at
June 30, 1999, is as follows:


                             - 12 -
<PAGE>

<TABLE>
<CAPTION>


                                                                    Minimum        Balance at                          Weighted
                                                                    Opening         June 30,            % of            Average
Type of Account                                                     Balance           1999            Deposits           Rate
-----------------------------------------------------------------------------------------------------------------------------
                                                                             (Dollars in thousands)
Withdrawable:
<S>                                                             <C>                    <C>              <C>               <C>
   Fixed rate, passbook accounts..............................  $      50              $6,473           17.51%            3.03%
   Variable rate, money market................................      2,500               2,885            7.80             3.04
   NOW accounts...............................................         50               4,610           12.47             1.47
                                                                                      -------          ------
     Total withdrawable.......................................                         13,968           37.78             2.52

Certificates (original terms):
   3 months or less...........................................      1,000               2,481            6.71             4.89
   6 months...................................................      1,000               1,806            4.88             4.26
   12 months..................................................      1.000               1,602            4.33             4.32
   13 months..................................................      5,000                 422            1.14             5.39
   18 months..................................................      1,000                 461            1.25             4.72
   23 months..................................................      5,000               6,344           17.16             5.23
   30 months .................................................      1,000                 790            2.14             4.90
   36 months..................................................      1,000                 889            2.40             5.02
   Other certificates.........................................      1,000               4,693           12.69             6.12
                                                                                      -------          ------
Total certificates............................................                         19,488           52.70             5.20
IRA's:
   Variable rate, money market................................         50                 108            0.29             3.18
   6 months...................................................      1,000                  47            0.13             4.10
   12 months..................................................      1.000                  97            0.26             4.29
   18 months..................................................      1,000                  17            0.05             4.88
   23 months..................................................      1,000               2,331            6.30             5.28
   36 months..................................................      1,000                 706            1.91             4.90
   Other certificates.........................................      1,000                 214            0.58             5.72
                                                                                      -------          ------
Total IRA's...................................................                          3,520            9.52             5.12
                                                                                      -------          ------
Total deposits................................................                        $36,976          100.00%            4.18
                                                                                      =======          ======
</TABLE>


      The following  table sets forth by various  interest rate  categories  the
composition of Citizens' time deposits at the dates indicated:

<TABLE>
<CAPTION>
                                                                       At June 30,
                                                 ---------------------------------------------------
                                                   1999                  1998                  1997
                                                  -------              -------               -------
                                                                    (In thousands)
<S>                                              <C>                 <C>                  <C>
4.00 to 4.99%...............................      $10,037             $  2,483             $   3,593
5.00 to 5.99%...............................        9,304               13,961                15,702
6.00 to 6.99%...............................        3,449                3,440                 2,604
7.00 to 7.99%...............................          105                  105                   120
8.00 to 8.99%...............................            5                    5                     5
                                                  -------              -------               -------
   Total....................................      $22,900              $19,994               $22,024
                                                  =======              =======               =======
</TABLE>




                             - 13 -
<PAGE>

     The average  amount of, and average  interest  rate paid on, the  following
deposits  categories  which  were in  excess of ten  percent  of  average  total
deposits are as follows:

<TABLE>
<CAPTION>
                                                      Years ended June 30,
                          ------------------------------------------------------------------------------
                                 1999                         1998                        1997
                          ---------------------       ----------------------       ---------------------
                          Average      Average         Average      Average        Average      Average
                          Balance     Rate Paid        Balance     Rate Paid       Balance     Rate Paid
                          -------     ---------        -------     ---------       -------     ---------
<S>                       <C>            <C>           <C>           <C>           <C>            <C>
Passbook accounts         $6,283         3.05%         $6,687        3.23%         $6,679         3.24%
NOW accounts               4,732         1.78           4,433        2.17           4,081         2.12
Money market accounts      3,070         3.12           3,217        3.30           3,303         3.30
Time deposit accounts     22,488         5.44          21,799        5.58          22,374         5.49
</TABLE>


     The following table  represents,  by various interest rate categories,  the
amounts of time deposits  maturing during each of the three years following June
30, 1999. Matured certificates, which have not been renewed as of June 30, 1999,
have been allocated based upon certain rollover assumptions.
<TABLE>
<CAPTION>

                                                            Amounts at June 30, 1999
                                  ----------------------------------------------------------------------------
                                  One Year                 Two                  Three             Greater Than
                                   or Less                Years                 Years              Three Years
                                   -------               ------                ------                ------
                                                                 (In thousands)
<S>                                 <C>                  <C>                     <C>                <C>
4.00 to 4.99%................       $6,336               $3,041                  $660               $   ---
5.00 to 5.99%................        4,860                3,435                   300                   709
6.00 to 6.99%................          288                  840                 1,933                   388
7.00 to 7.99%................            5                  100                   ---                   ---
8.00 to 8.99%................          ---                  ---                   ---                     5
                                   -------               ------                ------                ------
   Total.....................      $11,489               $7,416                $2,893                $1,102
                                   =======               ======                ======                ======
</TABLE>


     The following table indicates the amount of Citizens' other certificates of
deposit of  $100,000  or more by time  remaining  until  maturity as of June 30,
1999.

                                                               At June 30, 1999
                                                               ----------------
    Maturity Period                                             (In thousands)
    Three months or less.....................................        $2,995
    Greater than three months through six months.............           354
    Greater than six months through twelve months............           100
    Over twelve months.......................................         1,524
                                                                     ------
         Total...............................................        $4,973
                                                                     ======



                                     - 14 -
<PAGE>

      The following  table sets forth the dollar  amount of savings  deposits in
the various types of deposits that Citizens offers at the dates  indicated,  and
the amount of increase or decrease in such  deposits as compared to the previous
period.

<TABLE>
<CAPTION>
                                                                                    DEPOSIT ACTIVITY
                                                   --------------------------------------------------------------------------------
                                                    Balance                     Increase        Balance                  Increase
                                                      at                       (Decrease)         at                    (Decrease)
                                                   June 30,          % of         from         June 30,       % of         from
                                                     1999          Deposits       1998           1998       Deposits       1997
                                                   ---------      ---------     ---------      --------     ---------    ----------
                                                                                (Dollars in thousands)
Withdrawable:
<S>                                                   <C>            <C>            <C>          <C>         <C>            <C>
   Fixed rate, passbook accounts.................     $6,473         17.51%         $52          $6,421      18.85%         $(484)
   Variable rate, money market...................      2,885          7.80          (34)          2,919       8.57           (251)
   NOW accounts..................................      4,610         12.47           40           4,570      13.41            498
                                                     -------        ------       ------         -------     ------        -------
     Total withdrawable..........................     13,968         37.78           58          13,910      40.83           (237)
Certificates (original terms):
   3 months......................................      2,481          6.71        1,783             698       2.05           (376)
   6 months......................................      1,806          4.88           72           1,734       5.09         (2,400)
   12 months.....................................      1,602          4.33        1,026             576       1.69           (390)
   13 months.....................................        422          1.14       (2,095)          2,517       7.39            147
   18 months.....................................        461          1.25           44             417       1.22           (170)
   23 months.....................................      6,344         17.16        1,922           4,422      12.98            268
   30 months ....................................        790          2.14          (86)            876       2.57           (270)
   36 months.....................................        889          2.40          (35)            924       2.71            (23)
   Other certificates............................      4,693         12.69          (18)          4,711      13.83          1,145
                                                     -------        ------       ------         -------     ------        -------
Total certificates...............................     19,488         52.70        2,613          16,875      49.53         (2,069)
IRA's
   Variable rate, money market...................        108          0.29          (55)            163       0.48            (21)
   6 months......................................         47          0.13           17              30       0.09             (4)
   12 months.....................................         97          0.26          (24)            121       0.36            (30)
   18 months.....................................         17          0.05            1              16       0.05             (3)
   23 months.....................................      2,331          6.30          413           1,918       5.63            340
   36 months ....................................        706          1.91         (181)            887       2.60           (270)
   Other certificates............................        214          0.58           67             147       0.43              6
                                                     -------        ------       ------         -------     ------        -------
   Total IRA's...................................      3,520          9.52          238           3,282       9.64             18
                                                     -------        ------       ------         -------     ------        -------
Total deposits...................................    $36,976        100.00%      $2,909         $34,067     100.00%       $(2,288)
                                                     =======        ======       ======         =======     ======        =======
</TABLE>


                                     - 15 -
<PAGE>

      Total deposits at June 30, 1999 were approximately $37.0 million, compared
to approximately $34.1 million at June 30, 1998.  Citizens' deposit base depends
somewhat upon the  manufacturing  sector of Clinton County's  economy.  Although
Clinton  County's   manufacturing  sector  is  relatively  diversified  and  not
significantly  dependent upon any industry,  a loss of a material portion of the
manufacturing  workforce could  adversely  affect  Citizens'  ability to attract
deposits  due  to  the  loss  of  personal  income   attributable  to  the  lost
manufacturing jobs and the attendant loss in service industry jobs.

      In the unlikely event of Citizens'  liquidation after the Conversion,  all
claims of creditors  (including those of deposit account holders,  to the extent
of their deposit  balances)  would be paid first followed by distribution of the
liquidation  account  to  certain  deposit  account  holders,  with  any  assets
remaining thereafter  distributed to the Holding Company as the sole shareholder
of Citizens.

      Borrowings.  Citizens'  focuses on generating  high quality loans and then
seeking the best source of funding from deposits,  investments or borrowings. At
June 30, 1999,  Citizens had  borrowings  in the amount of $7.0 million from the
FHLB of Indianapolis which bear fixed and variable interest rates and are due at
various dates through October,  2008.  Citizens is required to maintain eligible
loans in its  portfolio of at least 170% of  outstanding  advances as collateral
for advances from the FHLB of  Indianapolis.  Citizens does not  anticipate  any
difficulty in obtaining  advances  appropriate to meet its  requirements  in the
future.

      The following  table presents  certain  information  relating to Citizens'
borrowings at or for the years ended June 30, 1999, 1998 and 1997.
<TABLE>
<CAPTION>
                                                                                    At or for the Year
                                                                                      Ended June 30,
                                                                       -------------------------------------------
                                                                       1999                1998               1997
                                                                       ----                ----               ----
                                                                                    (Dollars in thousands)
FHLB Advances:
<S>                                                                    <C>                 <C>               <C>
   Outstanding at end of period...............................         $7,000              $3,500            $4,000
   Average balance outstanding for period.....................          5,808               1,731             3,212
   Maximum amount outstanding at any
     month-end during the period..............................          7,000               3,500             5,000
   Weighted average interest rate
     during the period........................................           5.68%               4.96%             5.41%
   Weighted average interest rate
     at end of period.........................................           5.63                6.21              6.51
</TABLE>


Selected Ratios

      The following table presents  certain  selected ratios for the years ended
June 30, 1999, 1998 and 1997.
<TABLE>
<CAPTION>

                                                        Year Ended June 30,
                                             ---------------------------------------
                                             1999              1998             1997
                                             ----              ----             ----
<S>                                          <C>               <C>               <C>
Return on assets.........................    1.43%             1.69%             .82%
Return on equity.........................    5.53              6.67             6.81
Dividend payout ratio....................   26.44               ---              ---
Average equity to average assets.........   25.80             25.38            11.98
</TABLE>


Service Corporation Subsidiaries

      OTS  regulations  permit  federal  savings  associations  to invest in the
capital  stock,   obligations  or  other   specified   types  of  securities  of
subsidiaries  (referred to as "service  corporations") and to make loans to such
subsidiaries  and joint ventures in which such  subsidiaries are participants in
an  aggregate  amount not  exceeding  2% of the  association's  assets,  plus an
additional 1% of assets if the amount over 2% is used for specified community or
inner-city  development  purposes.  In  addition,   federal  regulations  permit
associations to make specified types of loans to such  subsidiaries  (other than
special purpose finance  subsidiaries)  in which the association  owns more than
10% of the stock, in an aggregate amount not exceeding 50% of the  association's
regulatory capital if the association's regulatory capital is in compliance with
applicable  regulations.  A savings  association  that  acquires  a  non-savings
association  subsidiary,  or that  elects  to  conduct a new  activity  within a


                                     - 16 -
<PAGE>

subsidiary,  must  give the FDIC  and the OTS at least 30 days  advance  written
notice.  The FDIC  may,  after  consultation  with the OTS,  prohibit  specified
activities if it determines  such  activities pose a serious threat to the SAIF.
Moreover,  a savings  association  must deduct  from  capital,  for  purposes of
meeting the core capital,  tangible capital and risk-based capital requirements,
its entire  investment in and loans to a subsidiary  engaged in  activities  not
permissible for a national bank (other than  exclusively  agency  activities for
its customers or mortgage banking subsidiaries).

      Citizens  currently  owns  one  subsidiary,   Citizens  Loan  and  Service
Corporation ("CLSC"), which primarily engages in the purchase and development of
tracts of  undeveloped  land.  Because CLSC engages in  activities  that are not
permissible  for  a  national  bank,  OTS  regulations  prohibit  Citizens  from
including its investment in CLSC in its calculation of regulatory capital.  CLSC
purchases  undeveloped land,  constructs  improvements and infrastructure on the
land,  and  then  sells  lots to  builders,  who  construct  homes  for  sale to
homebuyers. CLSC ordinarily receives payment when title is transferred.

      CLSC owns a 104-acre  tract of  contiguous  land on which it is  presently
developing 59 acres.  CLSC intends to complete the  development of the remainder
of the  property in  approximately  ten years.  The 59 acres that are  presently
being developed will include 64 building lots known as the Southridge  Addition,
and 89 building lots known as the Meadow Brook Addition. Both of these Additions
have been annexed into the Town of Frankfort.  Citizens  purchased  this land in
1989 intending to develop these housing additions.  However, following enactment
of the Financial  Institutions  Reform Recovery and Enforcement Act of 1989, the
FDIC directed  Citizens to transfer its interest in these  developments to CLSC,
which Citizens did, effective June 30, 1994. Phase I of the development includes
33 completed  lots in the Southridge  Addition,  of which 23 lots have been sold
and on which 23 houses  have been  completed,  and 26 lots in the  Meadow  Brook
Addition,  of which 8 lots  have  been  sold and on  which 8  houses  have  been
completed.  The Southridge lots have been priced generally at $19,000 to $22,000
each,  with completed homes selling  generally for $90,000 to $120,000,  and the
Meadow  Brook  lots have been  priced  generally  at  $23,000  to  $26,000  with
completed  homes  expected to sell  generally  for  $100,000 to  $150,000.  CLSC
intends to develop the remaining 31 lots in the Southridge Addition beginning in
2000.  Phase II and Phase III of the Meadow  Brook  development,  consisting  of
approximately  63 lots,  are still in the  design  stage.  CLSC also  intends to
develop a 25-acre tract located in Frankfort,  with homes generally  selling for
$175,000 to $300,000. This project is in the early stages of development.

      CLSC intends  ultimately to develop the remaining  20-acre parcel of land,
known as the Mann tract,  that it presently  owns. The development of this land,
which  is part  of the  104-acre  tract  discussed  above,  likely  will  not be
completed for  approximately  10 years. The Mann tract is presently being leased
for farming purposes.  CLSC has no present intentions to acquire additional land
for development purposes.

      CLSC incurred a loss of $300 for the year ended June 30, 1999. CLSC earned
a profit of  $164,000  for the year ended June 30, 1998 and $11,000 for the year
ended June 30, 1997.  At June 30, 1999,  Citizens had an  investment  in CLSC of
$633,000  and  loans  outstanding  to CLSC  of  approximately  $281,000  with an
interest  rate  set  at the  prime  rate.  The  Holding  Company's  consolidated
statements of income included  elsewhere  herein include the operations of CLSC.
All  intercompany   balances  and  transactions  have  been  eliminated  in  the
consolidation.

Employees

      As of June 30, 1999, Citizens employed 13 persons on a full-time basis and
3 persons on a part-time basis. None of Citizens'  employees is represented by a
collective  bargaining group and management  considers its employee relations to
be good.

      Citizens' employee benefits for full-time  employees include,  among other
things,  a Pentegra Group (formerly known as Financial  Institutions  Retirement
Fund)  defined  benefit  pension  plan,  a  noncontributory,   multiple-employer
comprehensive  pension  plan (the  "Pension  Plan"),  and  hospitalization/major
medical, long-term disability insurance and life insurance.

      Management  considers its employee  benefits to be competitive  with those
offered by other financial institutions and major employers in its area.

                                     - 17 -
<PAGE>

                                   COMPETITION

      Citizens  originates most of its loans to and accepts most of its deposits
from residents of Clinton  County,  Indiana.  Citizens is subject to competition
from various financial  institutions,  including state and national banks, state
and federal savings associations, credit unions, and certain nonbanking consumer
lenders  that  provide  similar  services in Clinton  County with  significantly
larger resources than are available to Citizens.  In total, there are five other
financial  institutions  located in Clinton County.  Citizens also competes with
money market funds with respect to deposit accounts and with insurance companies
with respect to individual retirement accounts.

      The primary  factors  influencing  competition  for  deposits are interest
rates,  service and convenience of office locations.  Citizens competes for loan
originations  primarily  through the efficiency and quality of the services that
it  provides  borrowers  and  through  interest  rates  and loan  fees  charged.
Competition  is affected by, among other  things,  the general  availability  of
lendable funds,  general and local economic  conditions,  current  interest rate
levels, and other factors that Citizens cannot readily predict.

                                   REGULATION

General

      As a federally chartered,  SAIF-insured  savings association,  Citizens is
subject to extensive  regulation by the OTS and the FDIC. For example,  Citizens
must obtain OTS  approval  before it may engage in certain  activities  and must
file reports with the OTS regarding its activities and financial condition.  The
OTS periodically  examines  Citizens' books and records and, in conjunction with
the FDIC in certain  situations,  has examination and enforcement  powers.  This
supervision  and  regulation  are  intended  primarily  for  the  protection  of
depositors and federal deposit  insurance  funds.  The OTS recently  amended its
assessment  regulations to require assessments to be determined generally on the
basis of an institution's size,  condition and the complexity of its operations.
Citizens'  semi-annual  assessment owed to the OTS under this revised regulation
is approximately $10,000.

      Citizens  is also  subject  to  federal  and state  regulation  as to such
matters as loans to officers,  directors,  or principal  shareholders,  required
reserves,  limitations as to the nature and amount of its loans and investments,
regulatory  approval of any merger or consolidation,  issuance or retirements of
securities,  and  limitations  upon  other  aspects of  banking  operations.  In
addition,  Citizens'  activities  and  operations  are  subject  to a number  of
additional  detailed,  complex and sometimes  overlapping federal and state laws
and regulations.  These include state usury and consumer credit laws, state laws
relating to fiduciaries,  the Federal Truth-In-Lending Act and Regulation Z, the
Federal Equal Credit Opportunity Act and Regulation B, the Fair Credit Reporting
Act, the Community  Reinvestment Act,  anti-redlining  legislation and antitrust
laws.

      The  U.S.  Congress  is  currently   considering  broad  financial  reform
legislation  intended to modernize the financial  services  industry.  Under the
pending  legislation,  bank  holding  companies  may be  authorized,  subject to
certain conditions,  to acquire manufacturing and other nonfinancial  companies,
and nonfinancial  companies may be authorized to acquire banks. Other provisions
of the  pending  legislation  could  affect the types of  activities  in which a
unitary  savings and loan  holding  company,  such as the Holding  Company,  may
engage. In addition,  previous versions of banking reform legislation considered
by  Congress  included   provisions  that  would  require  all  federal  savings
associations,  including  Citizens,  to  convert  to  either  a state  bank or a
national  bank and would  require  savings and loan holding  companies to become
bank holding  companies.  Because  Congress is currently  considering  different
versions of the proposed  legislation,  it cannot be  determined  which of these
conflicting  provisions might be included in any final  legislation  approved by
Congress or how such legislation, if enacted, would affect the activities of the
Holding Company or Citizens.

Savings and Loan Holding Company Regulation

      As the holding company for Citizens, the Holding Company is regulated as a
"non-diversified  savings and loan  holding  company"  within the meaning of the
Home Owners' Loan Act of 1933,  as amended  ("HOLA"),  and subject to regulatory
oversight of the Director of the OTS. As such, the Holding Company is registered
with the OTS and thereby subject to OTS regulations,  examinations,  supervision
and  reporting  requirements.  As a  subsidiary  of a savings  and loan  holding
company,  Citizens is subject to certain  restrictions  in its dealings with the
Holding Company and with other companies affiliated with the Holding Company.

                                     - 18 -
<PAGE>

      In general, the HOLA prohibits a savings and loan holding company, without
prior  approval of the Director of the OTS,  from  acquiring  control of another
savings  association or savings and loan holding  company or retaining more than
5% of the voting shares of a savings  association or of another  holding company
which is not a subsidiary.  The HOLA also restricts the ability of a director or
officer  of the  Holding  Company,  or any  person who owns more than 25% of the
Holding Company's stock,  from acquiring control of another savings  association
or savings and loan holding company without  obtaining the prior approval of the
Director of the OTS.

      The Holding Company's Board of Directors  presently intends to operate the
Holding Company as a unitary savings and loan holding  company.  OTS regulations
generally do not  restrict  the  permissible  business  activities  of a unitary
savings and loan holding company.

      Notwithstanding  the above rules as to permissible  business activities of
unitary  savings  and  loan  holding  companies,   if  the  savings  association
subsidiary of such a holding  company fails to meet the Qualified  Thrift Lender
("QTL") test,  then such unitary  holding  company  would become  subject to the
activities  restrictions  applicable to multiple holding companies.  (Additional
restrictions  on securing  advances from the FHLB also apply.) At June 30, 1999,
Citizens'  asset  composition  was in excess of that  required  to  qualify as a
Qualified Thrift Lender.

      If the  Holding  Company  were  to  acquire  control  of  another  savings
association  other  than  through a merger or other  business  combination  with
Citizens, the Holding Company would thereupon become a multiple savings and loan
holding  company.  Except where such acquisition is pursuant to the authority to
approve  emergency  thrift   acquisitions  and  where  each  subsidiary  savings
association meets the QTL test, the activities of the Holding Company and any of
its subsidiaries (other than Citizens or other subsidiary savings  associations)
would  thereafter be subject to further  restrictions.  The HOLA provides  that,
among other things,  no multiple  savings and loan holding company or subsidiary
thereof  which is not a savings  association  shall  commence or continue  for a
limited  period of time  after  becoming  a multiple  savings  and loan  holding
company or subsidiary  thereof,  any business activity other than (i) furnishing
or performing  management  services for a subsidiary savings  association,  (ii)
conducting an insurance agency or escrow business,  (iii) holding,  managing, or
liquidating assets owned by or acquired from a subsidiary  savings  association,
(iv) holding or managing  properties  used or occupied by a  subsidiary  savings
association,  (v) acting as trustee under deeds of trust,  (vi) those activities
previously  directly  authorized by the FSLIC by regulation as of March 5, 1987,
to be  engaged in by  multiple  holding  companies,  or (vii)  those  activities
authorized  by the Federal  Reserve  Board (the "FRB") as  permissible  for bank
holding  companies,  unless the Director of the OTS by  regulation  prohibits or
limits such activities for savings and loan holding companies.  Those activities
described in (vii) above must also be approved by the Director of the OTS before
a multiple holding company may engage in such activities.

      The  Director of the OTS may also  approve  acquisitions  resulting in the
formation of a multiple  savings and loan holding company which controls savings
associations  in more than one state,  if the multiple  savings and loan holding
company involved controls a savings  association which operated a home or branch
office in the state of the association to be acquired as of March 5, 1987, or if
the  laws of the  state in which  the  association  to be  acquired  is  located
specifically permit associations to be acquired by state-chartered  associations
or savings and loan holding  companies  located in the state where the acquiring
entity is located (or by a holding  company that controls  such  state-chartered
savings associations).  Also, the Director of the OTS may approve an acquisition
resulting in a multiple  savings and loan holding  company  controlling  savings
associations  in more than one  state in the case of  certain  emergency  thrift
acquisitions.

      Indiana  law  permits  federal  and  state  savings   association  holding
companies with their home offices  located outside of Indiana to acquire savings
associations  whose home offices are located in Indiana and savings  association
holding  companies with their principal  place of business in Indiana  ("Indiana
Savings  Association Holding Companies") upon receipt of approval by the Indiana
Department of Financial  Institutions.  Moreover,  Indiana  Savings  Association
Holding  Companies  may acquire  savings  associations  with their home  offices
located outside of Indiana and savings  association holding companies with their
principal place of business  located outside of Indiana upon receipt of approval
by the Indiana Department of Financial Institutions.

      No subsidiary  savings  association of a savings and loan holding  company
may declare or pay a dividend on its permanent or  nonwithdrawable  stock unless
it  first  gives  the  Director  of the  OTS 30  days  advance  notice  of  such
declaration  and payment.  Any dividend  declared  during such period or without
giving notice shall be invalid.



                                     - 19 -
<PAGE>

Federal Home Loan Bank System

      Citizens is a member of the FHLB of  Indianapolis,  which is one of twelve
regional  FHLBs.  Each FHLB serves as a reserve or central  bank for its members
within its  assigned  region.  It is funded  primarily  from funds  deposited by
savings  associations  and  proceeds  derived  from  the  sale  of  consolidated
obligations of the FHLB system.  It makes loans to members  (i.e.,  advances) in
accordance with policies and procedures established by the Board of Directors of
the FHLB.  All FHLB advances  must be fully secured by sufficient  collateral as
determined  by  the  FHLB.  The  Federal  Housing  Finance  Board  ("FHFB"),  an
independent   agency,   controls  the  FHLB  System,   including   the  FHLB  of
Indianapolis.

      As a member,  Citizens is required to purchase and  maintain  stock in the
FHLB of Indianapolis  in an amount equal to at least 1% of its aggregate  unpaid
residential  mortgage loans, home purchase contracts,  or similar obligations at
the beginning of each year. At June 30, 1999,  Citizens'  investment in stock of
the FHLB of Indianapolis was $419,000.  The FHLB imposes various  limitations on
advances  such as limiting  the amount of certain  types of real  estate-related
collateral to 30% of a member's capital and limiting total advances to a member.
Interest rates charged for advances vary  depending  upon maturity,  the cost of
funds to the FHLB of Indianapolis and the purpose of the borrowing.

      The FHLBs are  required to provide  funds for the  resolution  of troubled
savings  associations  and to contribute to affordable  housing programs through
direct loans or interest subsidies on advances targeted for community investment
and  low-  and  moderate-income  housing  projects.   These  contributions  have
adversely  affected the level of FHLB dividends paid and could continue to do so
in the future.  For the fiscal year ended June 30, 1999,  dividends  paid by the
FHLB of Indianapolis to Citizens totaled  approximately  $29,000,  for an annual
rate of 8.03%.

Insurance of Deposits

      Deposit Insurance.  The FDIC is an independent federal agency that insures
the  deposits,  up to  prescribed  statutory  limits,  of banks and  thrifts and
safeguards  the safety and soundness of the banking and thrift  industries.  The
FDIC  administers  two separate  insurance  funds,  the Bank Insurance Fund (the
"BIF") for  commercial  banks and state  savings  banks and the SAIF for savings
associations such as Citizens and banks that have acquired deposits from savings
associations.  The FDIC is required to maintain designated levels of reserves in
each fund.  As of September  30,  1996,  the reserves of the SAIF were below the
level  required  by  law,  primarily  because  a  significant   portion  of  the
assessments  paid into the SAIF  have been used to pay the cost of prior  thrift
failures,  while the  reserves of the BIF met the level  required by law in May,
1995.  However,  on September 30, 1996,  provisions designed to recapitalize the
SAIF and  eliminate the premium  disparity  between the BIF and SAIF were signed
into law. See "-- Assessments" below.

      Assessments.   The  FDIC  is  authorized  to  establish   separate  annual
assessment rates for deposit insurance for members of the BIF and members of the
SAIF.  The FDIC may  increase  assessment  rates for either fund if necessary to
restore the fund's  ratio of reserves  to insured  deposits to the target  level
within a reasonable  time and may  decrease  these rates if the target level has
been met. The FDIC has established a risk-based  assessment system for both SAIF
and BIF members.  Under this system,  assessments vary depending on the risk the
institution poses to its deposit insurance fund. An institution's  risk level is
determined  based on its  capital  level  and the  FDIC's  level of  supervisory
concern about the institution.

      On September 30, 1996, President Clinton signed into law legislation which
included  provisions  designed  to  recapitalize  the  SAIF  and  eliminate  the
significant  premium  disparity between the BIF and the SAIF. Under the new law,
Citizens was charged a one-time  special  assessment  equal to $.657 per $100 in
assessable  deposits  at March  31,  1995.  Citizens  recognized  this  one-time
assessment as a non-recurring operating expense of $211,000 ($127,000 after tax)
during the three-month  period ending September 30, 1996, and Citizens paid this
assessment on November 27, 1996. The  assessment  was fully  deductible for both
federal and state  income tax  purposes.  Beginning  January 1, 1997,  Citizens'
annual  deposit  insurance  premium  was  reduced  from  .23% to .0644% of total
assessable deposits. BIF institutions pay lower assessments than comparable SAIF
institutions  because  BIF  institutions  pay only 20% of the rate being paid by
SAIF  institutions  on their deposits with respect to obligations  issued by the
federally-chartered  corporation which provided some of the financing to resolve
the thrift  crisis in the 1980's  ("FICO").  The 1996 law also  provides for the
merger  of the SAIF and the BIF by 1999,  but not  until  such  time as bank and
thrift  charters  are  combined.  Until  the  charters  are  combined,   savings
associations  with SAIF  deposits may not transfer  deposits into the BIF system
without  paying  various  exit and entrance  fees,  and SAIF  institutions  will
continue to pay higher FICO assessments. Such exit and entrance fees need not be
paid if a SAIF institution  converts to a bank charter or merges with a bank, as
long as the resulting bank continues to pay applicable insurance  assessments to
the SAIF, and as long as certain other conditions are met.



                                     - 20 -
<PAGE>

Savings Association Regulatory Capital

      Currently,  savings  associations  are subject to three  separate  minimum
capital-to-assets  requirements:  (i) a leverage limit,  (ii) a tangible capital
requirement,  and (iii) a risk-based  capital  requirement.  The leverage  limit
requires that savings  associations  maintain  "core  capital" of at least 3% of
total  assets.  The OTS recently  adopted a regulation,  which became  effective
April 1, 1999,  that  requires  savings  associations  that  receive the highest
supervisory  rating for safety and  soundness to maintain  "core  capital" of at
least 3% of total  assets.  All other  savings  associations  must maintain core
capital of at least 4% of total  assets.  Core capital is  generally  defined as
common shareholders' equity (including retained income), noncumulative perpetual
preferred  stock and related  surplus,  certain  minority  equity  interests  in
subsidiaries,  qualifying  supervisory  goodwill,  purchased  mortgage servicing
rights and purchased credit card relationships  (subject to certain limits) less
nonqualifying  intangibles.  Under the tangible capital  requirement,  a savings
association  must maintain  tangible  capital (core capital less all  intangible
assets except  purchased  mortgage  servicing rights which may be included after
making the above-noted  adjustment in an amount up to 100% of tangible  capital)
of at least 1.5% of total assets. Under the risk-based capital  requirements,  a
minimum amount of capital must be maintained by a savings association to account
for the  relative  risks  inherent  in the type and amount of assets held by the
savings  association.  The  risk-based  capital  requirement  requires a savings
association to maintain  capital  (defined  generally for these purposes as core
capital plus general  valuation  allowances  and  permanent or maturing  capital
instruments such as preferred stock and  subordinated  debt less assets required
to be deducted) equal to 8.0% of risk-weighted  assets.  Assets are ranked as to
risk in one of four categories (0-100%). A credit risk-free asset, such as cash,
requires no risk-based  capital,  while an asset with a significant credit risk,
such as a non-accrual loan, requires a risk factor of 100%.  Moreover, a savings
association must deduct from capital,  for purposes of meeting the core capital,
tangible capital and risk-based capital  requirements,  its entire investment in
and loans to a subsidiary  engaged in activities not  permissible for a national
bank (other than  exclusively  agency  activities  for its customers or mortgage
banking  subsidiaries).  At June 30, 1999,  Citizens was in compliance  with all
capital requirements imposed by law.

      The OTS has  promulgated  a rule  which  sets  forth the  methodology  for
calculating an interest rate risk  component to be used by savings  associations
in calculating  regulatory  capital.  The OTS has delayed the  implementation of
this rule, however.  The rule requires savings  associations with "above normal"
interest rate risk  (institutions  whose portfolio equity would decline in value
by more than 2% of assets in the event of a hypothetical 200-basis-point move in
interest rates) to maintain  additional capital for interest rate risk under the
risk-based  capital  framework.  If the OTS were to implement  this  regulation,
Citizens  would be  exempt  from its  provisions  because  it has less than $300
million  in assets  and its  risk-based  capital  ratio  exceeds  12%.  Citizens
nevertheless  measures  its  interest  rate  risk  in  conformity  with  the OTS
regulation and, as of June 30, 1999,  Citizens'  interest rate risk was slightly
outside the parameters set forth in the regulation.

      If an association is not in compliance with the capital requirements,  the
OTS is required to prohibit asset growth and to impose a capital  directive that
may  restrict,  among other  things,  the  payment of  dividends  and  officers'
compensation. In addition, the OTS and the FDIC generally are authorized to take
enforcement actions against a savings association that fails to meet its capital
requirements. These actions may include restricting the operations activities of
the association,  imposing a capital directive, cease and desist order, or civil
money  penalties,  or imposing harsher measures such as appointing a receiver or
conservator or forcing the association to merge into another institution.

Prompt Corrective Regulatory Action

      The  Federal  Deposit  Insurance  Corporation   Improvement  Act  of  1991
("FedICIA")   requires,   among  other  things,  that  federal  bank  regulatory
authorities take "prompt corrective action" with respect to institutions that do
not meet minimum capital requirements.  For these purposes,  FedICIA establishes
five capital tiers: well capitalized, adequately capitalized,  undercapitalized,
significantly  undercapitalized,  and critically  undercapitalized.  At June 30,
1999,  Citizens was  categorized as "well  capitalized,"  meaning that its total
risk-based  capital  ratio  exceeded  10%, its Tier I risk-based  capital  ratio
exceeded  6%,  its  leverage  ratio  exceeded  5%,  and it was not  subject to a
regulatory order, agreement or directive to meet and maintain a specific capital
level for any capital measure.

      The FDIC may order savings associations which have insufficient capital to
take corrective actions. For example, a savings association which is categorized
as  "undercapitalized"  would be  subject  to  growth  limitations  and would be
required  to submit a capital  restoration  plan,  and a  holding  company  that
controls  such a savings  association  would be required to  guarantee  that the
savings   association   complies  with  the  restoration  plan.   "Significantly
undercapitalized"   savings   associations   would  be  subject  to   additional
restrictions.  Savings  associations  deemed  by  the  FDIC  to  be  "critically
undercapitalized"  would  be  subject  to  the  appointment  of  a  receiver  or
conservator.

                                     - 21 -
<PAGE>

Dividend Limitations

     The OTS recently  adopted a regulation,  which became effective on April 1,
1999, that revised the  restrictions  that apply to "capital  distributions"  by
savings associations. The amended regulation defines a capital distribution as a
distribution of cash or other property to a savings  association's  owners, made
on account of their ownership.  This definition includes a savings association's
payment  of  cash  dividends  to  shareholders,  or  any  payment  by a  savings
association  to  repurchase,  redeem,  retire,  or otherwise  acquire any of its
shares or debt instruments that are included in total capital, and any extension
of credit to finance an  affiliate's  acquisition  of those shares or interests.
The amended regulation does not apply to dividends  consisting only of a savings
association's shares or rights to purchase such shares.

     The  amended  regulation  exempts  certain  savings  associations  from the
requirement  under the previous  regulation that all savings  associations  file
either  a notice  or an  application  with the OTS  before  making  any  capital
distribution.  As revised, the regulation requires a savings association to file
an application for approval of a proposed capital  distribution  with the OTS if
the association is not eligible for expedited  treatment under OTS's application
processing  rules, or the total amount of all capital  distributions,  including
the proposed capital distribution, for the applicable calendar year would exceed
an amount  equal to the savings  association's  net income for that year to date
plus the savings  association's  retained net income for the preceding two years
(the "retained net income standard").  At June 30, 1999,  Citizens' retained net
income  standard  was  $1,994,000.  A  savings  association  must  also  file an
application for approval of a proposed  capital  distribution  if, following the
proposed  distribution,  the  association  would  not  be  at  least  adequately
capitalized  under  the OTS  prompt  corrective  action  regulations,  or if the
proposed  distribution  would violate a prohibition  contained in any applicable
statute,  regulation,  or agreement  between the  association and the OTS or the
FDIC.

     The amended regulation requires a savings association to file a notice of a
proposed  capital  distribution  in lieu of an application if the association or
the proposed  capital  distribution do not meet the conditions  described above,
and:  (1) the  savings  association  will not be at least well  capitalized  (as
defined  under the OTS  prompt  corrective  action  regulations)  following  the
capital  distribution;  (2) the capital distribution would reduce the amount of,
or retire any part of the savings  association's  common or preferred  stock, or
retire any part of debt instruments such as notes or debentures  included in the
association's  capital  under the OTS  capital  regulation;  or (3) the  savings
association  is a  subsidiary  of a savings and loan  holding  company.  Because
Citizens is a  subsidiary  of a savings and loan  holding  company,  this latter
provision requires that, at a minimum,  Citizens must file a notice with the OTS
30 days before making any capital distributions to the Holding Company.

     In addition to these regulatory restrictions,  Citizens' Plan of Conversion
imposes  additional  limitations on the amount of capital  distributions  it may
make to the  Holding  Company.  The  Plan of  Conversion  requires  Citizens  to
establish and maintain a liquidation account for the benefit of Eligible Account
Holders and Supplemental  Eligible  Account Holders and prohibits  Citizens from
making capital  distributions  to the Holding  Company if its net worth would be
reduced below the amount required for the liquidation account.

Limitations on Rates Paid for Deposits

      Regulations  promulgated by the FDIC pursuant to FedICIA place limitations
on the ability of insured depository  institutions to accept, renew or roll over
deposits by offering rates of interest which are  significantly  higher than the
prevailing  rates of interest on deposits  offered by other  insured  depository
institutions having the same type of charter in the institution's  normal market
area. Under these regulations,  "well-capitalized"  depository  institutions may
accept,  renew or roll  such  deposits  over  without  restriction,  "adequately
capitalized"  depository  institutions  may accept,  renew or roll such deposits
over with a waiver from the FDIC (subject to certain restrictions on payments of
rates) and "undercapitalized"  depository  institutions may not accept, renew or
roll such deposits over. The  regulations  contemplate  that the  definitions of
"well capitalized,"  "adequately capitalized" and "undercapitalized" will be the
same as the  definition  adopted by the  agencies to  implement  the  corrective
action  provisions of FedICIA.  Citizens does not believe that these regulations
will have a materially adverse effect on its current operations.

Safety and Soundness Standards

      On February 2, 1995, the federal banking agencies adopted final safety and
soundness  standards for all insured  depository  institutions.  The  standards,
which were issued in the form of guidelines rather than  regulations,  relate to
internal   controls,   information   systems,   internal  audit  systems,   loan
underwriting  and  documentation,  compensation  and interest rate exposure.  In
general,  the standards are designed to assist the federal  banking  agencies in
identifying and addressing  problems at insured depository  institutions  before
capital becomes impaired.  If an institution fails to meet these standards,  the
appropriate  federal  banking  agency may  require the  institution  to submit a
compliance  plan.  Failure to submit a compliance plan may result in enforcement
proceedings.  On August 27,  1996,  the  federal  banking  agencies  added asset
quality and earning standards to the safety and soundness guidelines.



                                     - 22 -
<PAGE>

Real Estate Lending Standards

      OTS  regulations  require  savings  associations to establish and maintain
written  internal  real estate  lending  policies.  Each  association's  lending
policies  must  be  consistent  with  safe  and  sound  banking   practices  and
appropriate  to the size of the  association  and the  nature  and  scope of its
operations.   The  policies  must  establish   loan  portfolio   diversification
standards;  establish prudent underwriting  standards,  including  loan-to-value
limits, that are clear and measurable;  establish loan administration procedures
for the  association's  real  estate  portfolio;  and  establish  documentation,
approval,   and  reporting   requirements   to  monitor   compliance   with  the
association's  real estate  lending  policies.  The  association's  written real
estate lending policies must be reviewed and approved by the association's Board
of Directors at least annually. Further, each association is expected to monitor
conditions  in its real  estate  market  to  ensure  that its  lending  policies
continue to be appropriate for current market conditions.

Loans to One Borrower

      Under OTS regulations,  Citizens may not make a loan or extend credit to a
single or related group of borrowers in excess of 15% of its unimpaired  capital
and surplus.  Additional amounts may be lent, not in excess of 10% of unimpaired
capital and surplus,  if such loans or extensions of credit are fully secured by
readily marketable collateral,  including certain debt and equity securities but
not including real estate.  In some cases, a savings  association may lend up to
30 percent of  unimpaired  capital and surplus to one  borrower  for purposes of
developing domestic residential housing, provided that the association meets its
regulatory  capital  requirements  and the OTS authorizes the association to use
this expanded  lending  authority.  At June 30, 1999,  Citizens did not have any
loans or  extensions  of credit to a single or  related  group of  borrowers  in
excess  of  its   lending   limits.   Citizens   does  not   believe   that  the
loans-to-one-borrower  limits  will have a  significant  impact on its  business
operations or earnings.

Qualified Thrift Lender

      Savings  associations  must  meet a QTL test.  If  Citizens  maintains  an
appropriate   level  of  qualified  thrift   investments   ("QTIs")   (primarily
residential    mortgages   and   related    investments,    including    certain
mortgage-related  securities)  and otherwise  qualifies as a QTL,  Citizens will
continue to enjoy full borrowing  privileges from the FHLB of Indianapolis.  The
required  percentage of QTIs is 65% of portfolio  assets  (defined as all assets
minus  intangible  assets,  property used by the  association  in conducting its
business and liquid  assets equal to 10% of total  assets).  Certain  assets are
subject to a  percentage  limitation  of 20% of portfolio  assets.  In addition,
savings  associations may include shares of stock of the FHLBs,  FNMA, and FHLMC
as QTIs.  Compliance  with the QTL test is determined on a monthly basis in nine
out of every twelve months. As of June 30, 1999, Citizens was in compliance with
its QTL requirement, with approximately 92% of its assets invested in QTIs.

      A savings association which fails to meet the QTL test must either convert
to a bank (but its deposit  insurance  assessments and payments will be those of
and paid to the SAIF) or be subject to the following  penalties:  (i) it may not
enter into any new activity except for those permissible for a national bank and
for a savings  association;  (ii) its branching  activities  shall be limited to
those  of a  national  bank;  (iii) it shall  not be  eligible  for any new FHLB
advances; and (iv) it shall be bound by regulations applicable to national banks
respecting  payment of  dividends.  Three years  after  failing the QTL test the
association must (i) dispose of any investment or activity not permissible for a
national  bank and a savings  association  and (ii) repay all  outstanding  FHLB
advances.  If such a savings  association  is  controlled  by a savings and loan
holding  company,  then such holding  company  must,  within a  prescribed  time
period,  become  registered as a bank holding  company and become subject to all
rules  and  regulations   applicable  to  bank  holding   companies   (including
restrictions as to the scope of permissible business activities).

Acquisitions or Dispositions and Branching

      The Bank  Holding  Company  Act  specifically  authorizes  a bank  holding
company, upon receipt of appropriate regulatory approvals, to acquire control of
any savings association or holding company thereof wherever located.  Similarly,
a savings and loan  holding  company may  acquire  control of a bank.  Moreover,
federal  savings  associations  may  acquire  or  be  acquired  by  any  insured
depository  institution.   Regulations  promulgated  by  the  FRB  restrict  the
branching authority of savings associations  acquired by bank holding companies.
Savings  associations  acquired by bank  holding  companies  may be converted to
banks if they continue to pay SAIF premiums,  but as such they become subject to
branching and activity restrictions applicable to banks.

                                     - 23 -
<PAGE>

      Subject  to  certain  exceptions,  commonly-controlled  banks and  savings
associations  must reimburse the FDIC for any losses suffered in connection with
a failed  bank or  savings  association  affiliate.  Institutions  are  commonly
controlled  if one is owned by another or if both are owned by the same  holding
company.  Such claims by the FDIC under this provision are subordinate to claims
of depositors,  secured creditors,  and holders of subordinated debt, other than
affiliates.

      The OTS has adopted  regulations which permit nationwide  branching to the
extent  permitted by federal  statute.  Federal  statutes permit federal savings
associations to branch outside of their home state if the association  meets the
domestic  building  and loan  test in  ss.7701(a)(19)  of the Code or the  asset
composition  test of ss.7701(c) of the Code.  Branching that would result in the
formation of a multiple  savings and loan holding  company  controlling  savings
associations  in more  than one  state is  permitted  if the law of the state in
which the savings association to be acquired is located specifically  authorizes
acquisitions of its state-chartered associations by state-chartered associations
or their  holding  companies  in the state where the  acquiring  association  or
holding company is located. Moreover, Indiana banks and savings associations are
permitted  to  acquire  other  Indiana  banks and  savings  associations  and to
establish branches throughout Indiana.

      Finally,  the Riegle-Neal  Interstate Banking and Branching Efficiency Act
of 1994 (the "Riegle-Neal  Act") permits bank holding companies to acquire banks
in other  states and,  with state  consent  and subject to certain  limitations,
allows banks to acquire  out-of-state  branches either through merger or de novo
expansion.  The State of Indiana  enacted  legislation  establishing  interstate
branching  provisions for Indiana  state-chartered  banks  consistent with those
established by the Riegle-Neal Act (the "Indiana  Branching  Law").  The Indiana
Branching Law authorizes Indiana banks to branch interstate by merger or de novo
expansion,  provided that such  transactions  are not permitted to  out-of-state
banks  unless the laws of their home  states  permit  Indiana  banks to merge or
establish de novo banks on a reciprocal  basis. The Indiana Branching Law became
effective March 15, 1996.

Transactions with Affiliates

      Citizens is subject to Sections 22(h),  23A and 23B of the Federal Reserve
Act,  which  restrict  financial   transactions  between  banks  and  affiliated
companies.  The statute  limits  credit  transactions  between a bank or savings
association and its executive officers and its affiliates,  prescribes terms and
conditions for bank affiliate transactions deemed to be consistent with safe and
sound  banking  practices,  and  restricts  the  types  of  collateral  security
permitted in connection with a bank's extension of credit to an affiliate.

Federal Securities Law

      The shares of Common  Stock of the Holding  Company  have been  registered
with the SEC under the  Securities  Exchange Act of 1934,  as amended (the "1934
Act").  The Holding Company is subject to the information,  proxy  solicitation,
insider  trading  restrictions  and other  requirements  of the 1934 Act and the
rules of the SEC thereunder. After three years following Citizens' conversion to
stock form,  if the  Holding  Company  has fewer than 300  shareholders,  it may
deregister  its  shares  under  the 1934  Act and  cease  to be  subject  to the
foregoing requirements.

      Shares of Common Stock held by persons who are  affiliates  of the Holding
Company may not be resold without  registration  unless sold in accordance  with
the resale  restrictions  of Rule 144 under the 1933 Act. If the Holding Company
meets the current public information requirements under Rule 144, each affiliate
of the  Holding  Company  who  complies  with the other  conditions  of Rule 144
(including  those that require the affiliate's  sale to be aggregated with those
of certain other persons)  would be able to sell in the public  market,  without
registration,  a number of shares not to exceed, in any three-month  period, the
greater of (i) 1% of the  outstanding  shares of the Holding Company or (ii) the
average  weekly  volume of trading in such  shares  during  the  preceding  four
calendar weeks.

Community Reinvestment Act Matters

      Federal law requires  that ratings of  depository  institutions  under the
Community Reinvestment Act of 1977 ("CRA") be disclosed. The disclosure includes
both a  four-unit  descriptive  rating  -  outstanding,  satisfactory,  needs to
improve,  and  substantial  noncompliance  -  and  a  written  evaluation  of an


                                     - 24 -
<PAGE>

institution's  performance.  Each FHLB is required  to  establish  standards  of
community  investment  or service that its members must  maintain for  continued
access to long-term  advances from the FHLBs.  The standards take into account a
member's  performance under the CRA and its record of lending to first-time home
buyers.  The OTS has designated  Citizens'  record of meeting  community  credit
needs as outstanding, which is the highest available designation.

                                    TAXATION

Federal Taxation

      Historically,  savings associations, such as Citizens, have been permitted
to compute bad debt deductions  using either the bank  experience  method or the
percentage of taxable income method. However, for years beginning after December
31, 1995, no savings association may use the percentage of taxable income method
of computing  its allowable bad debt  deduction for tax purposes.  Instead,  all
savings associations are required to compute their allowable deduction using the
experience method. As a result of the repeal of the percentage of taxable income
method,  reserves taken after 1987 using the percentage of taxable income method
generally  must be included  in future  taxable  income over a six-year  period,
although  a  two-year  delay  may  be  permitted  for  associations   meeting  a
residential   mortgage  loan   origination   test.   Citizens   will   recapture
approximately  $3,000  with each tax  return  filed  through  the June 30,  2002
federal tax return.  In addition,  the pre-1988  reserve,  for which no deferred
taxes have been  recorded,  need not be  recaptured  into income  unless (i) the
savings  association  no longer  qualifies as a bank under the Code, or (ii) the
savings association pays out excess dividends or distributions.

      Depending on the composition of its items of income and expense, a savings
association may be subject to the alternative minimum tax. A savings association
must pay an  alternative  minimum  tax on the  amount  (if any) by which  20% of
alternative minimum taxable income ("AMTI"),  as reduced by an exemption varying
with AMTI,  exceeds the regular tax due.  AMTI  equals  regular  taxable  income
increased or decreased by certain tax  preferences  and  adjustments,  including
depreciation  deductions in excess of that allowable for alternative minimum tax
purposes, tax-exempt interest on most private activity bonds issued after August
7, 1986  (reduced by any related  interest  expense  disallowed  for regular tax
purposes), the amount of the bad debt reserve deduction claimed in excess of the
deduction  based on the  experience  method  and 75% of the  excess of  adjusted
current  earnings over AMTI (before this  adjustment and before any  alternative
tax net  operating  loss).  AMTI may be reduced only up to 90% by net  operating
loss  carryovers,  but  alternative  minimum  tax paid can be  credited  against
regular tax due in later years.

      For federal  income tax purposes,  Citizens has been  reporting its income
and expenses on the accrual method of accounting.  Citizens'  federal income tax
returns have not been audited in recent years.

State Taxation

      Citizens is subject to Indiana's Financial Institutions Tax ("FIT"), which
is imposed at a flat rate of 8.5% on "adjusted  gross income."  "Adjusted  gross
income," for purposes of FIT,  begins with taxable  income as defined by Section
63 of the Code and,  thus,  incorporates  federal  tax law to the extent that it
affects  the  computation  of taxable  income.  Federal  taxable  income is then
adjusted by several Indiana modifications.  Other applicable state taxes include
generally applicable sales and use taxes plus real and personal property taxes.

      Citizens' state income tax returns have not been audited in recent years.

Item 2.   Properties.

         The  following  table  provides  certain  information  with  respect to
Citizens' office as of June 30, 1999:

<TABLE>
<CAPTION>
                                                                             Net Book
                                                                             Value of
                                                                             Property,            Approximate
    Description          Owned or           Year            Total           Furniture &             Square
    and Address           leased           Opened         Deposits           Fixtures               Footage
    -----------           ------           ------         --------           --------               -------
                                                   (Dollars in thousands)
<S>                        <C>              <C>            <C>                 <C>                  <C>
60 South Main Street       Owned            1977           $36,976             $567                 13,924
Frankfort, IN 46041
</TABLE>

      Citizens owns  computer and data  processing  equipment  which it uses for
transaction processing, loan origination,  and accounting. The net book value of
Citizens' electronic data processing equipment was approximately $64,000 at June
30, 1999.



                                     - 25 -
<PAGE>

      Citizens  operates one automated teller machine ("ATM"),  which is located
in the vestibule of its office.  Citizens' ATM participates in the Cirrus(R) and
MagicLine(R) networks.

     Citizens has also contracted for the data processing and reporting services
of BISYS, Inc. in Houston,  Texas. The cost of these data processing services is
approximately $11,500 per month.

     Citizens has contracted with the FHLB of  Indianapolis  for item processing
for a fee of approximately $3,000 per month.

Item 3.  Legal Proceedings.

         Neither  the  Holding  Company  nor  Citizens is a party to any pending
legal  proceedings,  other than  routine  litigation  incidental  to the Holding
Company's or Citizens' business.

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

     On  October  13,  1998,   Citizens  Bancorp  held  its  Annual  Meeting  of
Shareholders.  Two  directors  were  elected  to terms  expiring  in 2001 by the
following votes:

         Perry W. Lewis        For:       791,942        Withheld:     600
         John J. Miller        For:       785,947        Withheld:   6,595

         The terms of office of the  following  directors  of  Citizens  Bancorp
continued after the Shareholder Meeting:

         Name                                          Term Expiring
         ----                                          -------------
         Robert F. Ayres                                  1999
         Billy J. Wray                                    1999
         Fred W. Carter                                   2000

Item 4.5.  Executive Officers of the Registrant.

         The executive officers of the Holding Company are identified below. The
executive  officers of the Holding  Company are elected  annually by the Holding
Company's Board of Directors.

         Name                                 Position with Holding Company
         ----                                 -----------------------------
         Fred W. Carter                       Chairman of the Board, President
                                                  and Chief Executive Officer
         Stephen D. Davis                     Treasurer
         Cindy S. Chambers                    Secretary

     Fred W. Carter (age 67) has served as President and Chief Executive Officer
of Citizens  and CLSC since 1972,  and of the Holding  Company  since 1997.  Mr.
Carter has been an employee of Citizens since 1966 and is the father of Cindy S.
Chambers, Citizens' Secretary and Customer Service Manager.

     Cindy S.  Chambers  (age 44) has served as  Citizens'  Corporate  Secretary
since 1988 and as Citizens'  Customer Service Manager since 1982. She has served
as the Holding  Company's  Secretary  since 1997 and is the  daughter of Fred W.
Carter, Citizens' President and Chief Executive Officer.

     Stephen D. Davis (age 43) has served as Citizens' Controller since 1989 and
as the Holding Company's Treasurer since 1997.

                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Shareholder Matters.

     The  information  required by this item is incorporated by reference to the
material under the heading "Shareholder Information--Market Information" on page
41 of the Holding  Company's  Annual Report to  Shareholders  for the year ended
June 30, 1999 (the "Shareholder Annual Report").

Item 6.  Selected Financial Data.

     The  information  required by this item is incorporated by reference to the
material under the heading "Selected Consolidated Financial Data" on pages 3 and
4 of the Shareholder Annual Report.



                                     - 26 -
<PAGE>

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operation.

     The  information  required by this item is incorporated by reference to the
material  under the heading  "Management's  Discussion and Analysis of Financial
Condition and Results of Operations" on pages 4 to 17 of the Shareholder  Annual
Report.

Item 7A.  Quantitative  and  Qualitative  Analysis of  Financial  Condition  and
Results of Operations.

     The  information  required by this item is incorporated by reference to the
material under the caption "Asset/Liability Management" on pages 15 to 17 of the
Shareholder Annual Report.

Item 8.       Financial Statements and Supplementary Data.

     The Holding Company's  Consolidated  Financial Statements and Notes thereto
contained on pages 18 to 38 of the  Shareholder  Annual Report are  incorporated
herein by reference.

Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure.

     The Holding Company  previously  reported the information  required by this
item in its interim  report on Form 10-Q for the period  ended  March 31,  1999,
which was filed with the Commission on May 17, 1999.

                                    PART III

Item 10.      Directors and Executive Officers of the Registrant.

     The  information  required  by this  item  with  respect  to  directors  is
incorporated  by  reference  to  pages  2 to 8 of the  Holding  Company's  Proxy
Statement for its 1999 annual shareholder  meeting (the "1999 Proxy Statement").
Information concerning the Holding Company's executive officers who are not also
directors is included in Item 4.5 in Part I of this report.

     The information required by this item with respect to the Holding Company's
compliance  with  Section  16(a)  of the  Securities  Exchange  Act of  1934  is
incorporated by reference to page 9 of the 1999 Proxy Statement.

Item 11.      Executive Compensation.

     The   information   required  by  this  item  with   respect  to  executive
compensation  is  incorporated  by  reference  to pages 5 to 8 of the 1999 Proxy
Statement.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

     The information required by this item is incorporated by reference to pages
1 to 4 of the 1999 Proxy Statement.

Item 13.  Certain Relationships and Related Transactions.

     The information required by this item is incorporated by reference to pages
7 to 8 of the 1999 Proxy Statement.



                                     - 27 -
<PAGE>

                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a)      List the following documents filed as part of the report:

                                                                   Page in 1999
                                                                    Shareholder
         Financial Statements                                      Annual Report
         --------------------                                      -------------
         Report of Olive LLP Independent Auditors                       18

         Consolidated Balance Sheet as of June 30, 1999 and 1998        19

         Consolidated Statement of Income for each of the years
              in the three year period ended June 30, 1999              20

         Consolidated Statement of Shareholders' Equity
              for each of the years in the three year period
              ended June 30, 1999                                       21

         Consolidated Statement of Cash Flows for each
              of the years in the three year period
              ended June 30, 1999                                       22

         Notes to Consolidated Financial Statements                     23

(b)      Reports on Form 8-K.

         The  Holding  Company  did not file any  reports on Form 8-K during the
quarter ended June 30, 1999.

(c)      The exhibits filed herewith or incorporated by reference herein are set
         forth on the Exhibit Index on page E-1.

(d)      All  schedules  are omitted as the required  information  either is not
         applicable or is included in the Consolidated  Financial  Statements or
         related notes.

                                     - 28 -
<PAGE>

                                   SIGNATURES

         Pursuant to the  requirement  of Section 13 or 15(d) of the  Securities
Exchange Act of 1934, as amended,  the Registrant has duly caused this report to
be signed on behalf of the undersigned, thereto duly authorized.

                                                 CITIZENS BANCORP


Date:  September 28, 1999                        By: /s/ Fred W. Carter
                                                 -----------------------------
                                                 Fred W. Carter, President and
                                                 Chief Executive Officer


         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Registrant  and in the capacities  indicated on this 28th day of September,
1999.

     Signatures                         Title                          Date

(1)  Principal Executive Officer:



     /s/ Fred W. Carter                                     )
     --------------------------                             )
     Fred W. Carter                 President and           )
                                    Chief Executive Officer )
                                                            )
                                                            )
(2)  Principal Financial and                                )
     Accounting Officer:                                    )
                                                            )
                                                            )
     /s/ Stephen D. Davis           Treasurer               )
     --------------------------                             )
     Stephen D. Davis                                       )
                                                            )
                                                            )September 28, 1999
                                                            )
(3)  The Board of Directors:                                )
                                                            )
                                                            )
     /s/ Robert F. Ayres            Director                )
     --------------------------                             )
     Robert F. Ayres                                        )
                                                            )
                                                            )
     /s/ Fred W. Carter             Director                )
     --------------------------                             )
     Fred W. Carter                                         )
                                                            )
                                                            )
     /s/ Perry W. Lewis             Director                )
     --------------------------                             )
     Perry W. Lewis                                         )



                                     - 29 -
<PAGE>

                                                            )
                                                            )
     /s/ John J. Miller                                     )
     --------------------------                             )
     John J. Miller                 Director                )
                                                            )September 28, 1999
                                                            )
     /s/ Billy J. Wray              Director                )
     --------------------------                             )
     Billy J. Wray                                          )
                                                            )

<PAGE>


                                  EXHIBIT INDEX

Exhibit No.                                              Description

3           (1)  Registrant's  Articles of  Incorporation  are  incorporated  by
            reference to Exhibit 3(1) to the Registration  Statement on Form S-1
            (Registration No. 333-29031) (the "Registration Statement")

(2)         Registrant's  Code of  By-Laws  are  incorporated  by  reference  to
            Exhibit 3(2) to the Registration Statement

10(4)       Citizens  Bancorp  Employee Stock Ownership Plan and Trust Agreement
            is  incorporated  by reference to Exhibit 10(4) to the  Registrant's
            Form 10-K for the period ended June 30, 1997 (the "1997 Form 10-K")

(5)         Employment  Agreement between Citizens Savings Bank of Frankfort and
            Fred W. Carter is  incorporated by reference to Exhibit 10(5) to the
            Registration Statement

(6)         Director  Deferred  Compensation  Agreement  --  Fred W.  Carter  is
            incorporated  by  reference  to  Exhibit  10(6) to the  Registration
            Statement

(7)         Executive  Supplemental  Retirement  Agreement  -- Fred W. Carter is
            incorporated  by  reference  to  Exhibit  10(7) to the  Registration
            Statement

(8)         Executive  Supplemental  Retirement Agreement -- Stephen D. Davis is
            incorporated  by  reference  to  Exhibit  10(8) to the  Registration
            Statement

(9)         Executive Supplemental  Retirement Agreement -- Cindy S. Chambers is
            incorporated  by  reference  to  Exhibit  10(9) to the  Registration
            Statement

(10)        Exempt  Loan  and  Share  Purchase  Agreement  between  Trust  under
            Citizens  Bancorp  Employee Stock Ownership Plan and Trust Agreement
            and Citizens  Bancorp is incorporated by reference to Exhibit 10(10)
            of the 1997 Form 10-K

13          Registrant's  Annual  Report  to  Shareholders  for its 1999  annual
            shareholders meeting

21          Subsidiaries of the Registrant

23          Consent of Independent Auditor

27          Financial Data Schedule