##### Table of Contents



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

FORM 10-Q



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

For the quarterly period ended September 30, 2002



|[   ] | 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 000-23277

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

|                         |  |                                        
|------------------------ |  | ---------------------------------------
|Oregon                   |  | 91-1841688                             
|(State of Incorporation) |  | (I.R.S. Employer Identification Number)

275 Southwest Third Street
Corvallis, Oregon 97339
(Address of principal executive offices)

(541) 752-5161
(Registrants telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

YES [X]     NO [   ]

Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the latest practicable date.

4,084,193 shares as of November 1, 2002, no par.

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TABLE OF CONTENTS



|                             |                                                                                              |                                                                  |  |  |  |  |  | 
|---------------------------- | -------------------------------------------------------------------------------------------- | ---------------------------------------------------------------- |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION
|                             | ITEM 1                                                                                      
|                             |                                                                                              | CONDENSED CONSOLIDATED BALANCE SHEETS                           
|                             |                                                                                              | CONDENSED CONSOLIDATED STATEMENTS OF INCOME                     
|                             |                                                                                              | CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY      
|                             |                                                                                              | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                 
|                             |                                                                                              | Notes to Condensed Consolidated Financial Statements (unaudited)
|                             | ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                             | ITEM 3. QUANTITATIVE & QUALITATIVE ANALYSIS ABOUT MARKET RISK                               
|PART II. OTHER INFORMATION  
|                             | ITEM 1. LEGAL PROCEEDINGS                                                                   
|                             | ITEM 2. CHANGES IN SECURITIES                                                               
|                             | ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                                     
|                             | ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS                                   
|                             | ITEM 5. OTHER INFORMATION                                                                   
|                             | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                    
|SIGNATURES                  
|CERTIFICATIONS              
|Exhibit 99.1                



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##### Table of Contents



CITIZENS BANCORP
FORM 10-Q

September 30, 2002
INDEX


|                             |                                                                                                 |                                                                                                                            |                |    |           |    | 
|---------------------------- | ----------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------- | -------------- | -- | --------- | -- | 
|                             |                                                                                                 |                                                                                                                            |                |    | Page     
|                             |                                                                                                 |                                                                                                                            |                |    | Reference
|                             |                                                                                                 |                                                                                                                            |                |    |          
|PART I                       |                                                                                                 |                                                                                                                            |                |   
|                            
|                            
|                            
|                            
|                             | ITEM 1.  FINANCIAL INFORMATION  UNAUDITED                                                     |                                                                                                                            |                | 3  |          
|                            
|                            
|                            
|                            
|                             |                                                                                                 | Condensed Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001                                       |                |    | 3         |   
|                            
|                            
|                            
|                            
|                             |                                                                                                 | Condensed Consolidated Statements of Income for the three months and the nine
months ended September 30, 2002 and 2001     |                |    | 4         |   
|                            
|                            
|                            
|                            
|                             |                                                                                                 | Condensed Consolidated Statements of Changes in Shareholders Equity for the nine
months ended September 30, 2002 and 2001 |                |    | 5         |   
|                            
|                            
|                            
|                            
|                             |                                                                                                 | Condensed Consolidated Statements of Cash Flows for nine months ended
September 30, 2002 and 2001                          |                |    | 6         |   
|                            
|                            
|                            
|                            
|                             |                                                                                                 | Notes to Condensed Consolidated Financial Statements                                                                       |                |    | 7         |   
|                            
|                            
|                            
|                            
|                             | ITEM 2.  Managements Discussion and Analysis of Financial Condition and Results of
Operations |                                                                                                                            |                | 9  |          
|                            
|                            
|                            
|                            
|                             | ITEM 3.  Quantitative and Qualitative Disclosure about Market Risk                             |                                                                                                                            |                | 14 |          
|                            
|                            
|                            
|                            
|                             | ITEM 4.  Controls and Procedures                                                               |                                                                                                                            |                | 15 |          
|                            
|                            
|                            
|                            
|PART II.  OTHER INFORMATION |                                                                                                 |                                                                                                                            | 16             |   
|                            
|                            
|                            
|                            
|                             | ITEM 1.  Legal Proceedings                                                                     |                                                                                                                            |                | 16 |          
|                            
|                            
|                            
|                            
|                             | ITEM 2.  Changes in Securities                                                                 |                                                                                                                            |                | 16 |          
|                            
|                            
|                            
|                            
|                             | ITEM 3.  Defaults Upon Senior Securities                                                       |                                                                                                                            |                | 16 |          
|                            
|                            
|                            
|                            
|                             | ITEM 4.  Submission of Matters to a Vote of Security Holders                                   |                                                                                                                            |                | 16 |          
|                            
|                            
|                            
|                            
|                             | ITEM 5.  Other Information                                                                     |                                                                                                                            |                | 16 |          
|                            
|                            
|                            
|                            
|                             | ITEM 6.  Exhibits and Reports on Form 8-K                                                      |                                                                                                                            |                | 16 |          
|                            
|                            
|                            
|                            
|                             |                                                                                                 |                                                                                                                            | Signatures     |    |           | 17 | 
|                            
|                            
|                            
|                            
|                             |                                                                                                 |                                                                                                                            | Certifications |    |           | 18 | 

2



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##### Table of Contents






PART I FINANCIAL INFORMATION







ITEM 1
CITIZENS BANCORP AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in Thousands)

|                                     |                                                                                                                               |  |                    |         |                   |  |   |         |  
|------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | ----------------- |  | - | ------- | -
|                                     |                                                                                                                               |  | September 30, 2002 |         | December 31, 2001
|                                     |                                                                                                                               |  |                    |         |                  
|Assets                               |                                                                                                                               |  |                    |         |                   |  |   |        
|                                     | Cash and due from banks                                                                                                       |  | $                  | 16,429  |                   |  | $ | 15,054  |  
|                                     | Interest bearing deposits in banks                                                                                            |  |                    | 17,486  |                   |  |   | 11,717  |  
|                                     | Securities available for sale                                                                                                 |  |                    | 70,920  |                   |  |   | 56,932  |  
|                                     | Securities held to maturity                                                                                                   |  |                    | 11,093  |                   |  |   | 10,051  |  
|                                     | Federal Home Loan Bank stock                                                                                                  |  |                    | 360     |                   |  |   | 846     |  
|                                     | Loans held for sale                                                                                                           |  |                    | 1,605   |                   |  |   | 419     |  
|                                     | Loans                                                                                                                         |  |                    | 179,558 |                   |  |   | 172,923 |  
|                                     | Allowance for credit losses                                                                                                   |  |                    | (2,361  | )                 |  |   | (2,146  | )
|                                     |                                                                                                                               |  |                    |         |                   |  |   |        
|                                     | Net Loans                                                                                                                     |  | $                  | 177,197 |                   |  | $ | 170,777 |  
|                                     | Premises and equipment                                                                                                        |  |                    | 5,785   |                   |  |   | 5,464   |  
|                                     | Accrued interest receivable                                                                                                   |  |                    | 2,455   |                   |  |   | 2,087   |  
|                                     | Cash surrender value of life insurance                                                                                        |  |                    | 3,719   |                   |  |   | 3,552   |  
|                                     | Other assets                                                                                                                  |  |                    | 2,150   |                   |  |   | 1,630   |  
|                                     |                                                                                                                               |  |                    |         |                   |  |   |        
|                                     | Total assets                                                                                                                  |  | $                  | 309,199 |                   |  | $ | 278,529 |  
|                                     |                                                                                                                               |  |                    |         |                   |  |   |        
|Liabilities and Shareholders Equity |                                                                                                                               |  |                    |         |                   |  |   |        
|Liabilities                          |                                                                                                                               |  |                    |         |                   |  |   |        
|                                     | Deposits:                                                                                                                     |  |                    |         |                   |  |   |         |  
|                                     | Demand                                                                                                                        |  | $                  | 43,482  |                   |  | $ | 40,533  |  
|                                     | Savings and interest bearing demand                                                                                           |  |                    | 130,659 |                   |  |   | 118,331 |  
|                                     | Time                                                                                                                          |  |                    | 59,628  |                   |  |   | 72,957  |  
|                                     |                                                                                                                               |  |                    |         |                   |  |   |        
|                                     | Total deposits                                                                                                                |  | $                  | 233,769 |                   |  | $ | 231,821 |  
|                                     | Repurchase agreements                                                                                                         |  |                    | 39,573  |                   |  |   | 14,298  |  
|                                     | Other borrowings                                                                                                              |  |                    | 1,733   |                   |  |   | 282     |  
|                                     | Accrued interest payable                                                                                                      |  |                    | 101     |                   |  |   | 209     |  
|                                     | Other liabilities                                                                                                             |  |                    | 906     |                   |  |   | 2,395   |  
|                                     |                                                                                                                               |  |                    |         |                   |  |   |        
|                                     | Total liabilities                                                                                                             |  | $                  | 276,802 |                   |  | $ | 249,005 |  
|                                     |                                                                                                                               |  |                    |         |                   |  |   |        
|Shareholders Equity                 |                                                                                                                               |  |                    |         |                   |  |   |        
|                                     | Common stock (no par value); authorized 10,000,000 shares;
Issued and outstanding: 2002  4,084,131;
2001  4,116,385 shares; |  |                    | 19,458  |                   |  |   | 19,785  |  
|                                     | Retained earnings                                                                                                             |  |                    | 13,267  |                   |  |   | 9,478   |  
|                                     | Accumulated other comprehensive income                                                                                        |  |                    | 392     |                   |  |   | 261     |  
|                                     |                                                                                                                               |  |                    |         |                   |  |   |        
|                                     | Total shareholders equity                                                                                                    |  | $                  | 33,117  |                   |  | $ | 29,524  |  
|                                     |                                                                                                                               |  |                    |         |                   |  |   |        
|                                     | Total liabilities and shareholders equity                                                                                    |  | $                  | 309,199 |                   |  | $ | 278,529 |  
|                                     |                                                                                                                               |  |                    |         |                   |  |   |        

See accompanying notes

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##### Table of Contents






CITIZENS BANCORP AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousand, except per share amounts)

|                                                      |  |                   |           |                    |  |      |           |      |  |   |           |   |  |   |           |  
|----------------------------------------------------- |  | ----------------- | --------- | ------------------ |  | ---- | --------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                      |  | Nine Months Ended |           | Three Months Ended
|                                                      |  | September 30,     |           | September 30,     
|                                                      |  |                   |           |                   
|                                                      |  | 2002              |           | 2001               |  | 2002 |           | 2001
|                                                      |  |                   |           |                    |  |      |           |     
|Interest Income:                                      |  |                   |           |                    |  |      |           |      |  |   |           |   |  |   |           |  
|Loans                                                 |  | $                 | 10,830    |                    |  | $    | 11,431    |      |  | $ | 3,734     |   |  | $ | 3,793     |  
|Interest on deposits and federal funds sold           |  |                   | 230       |                    |  |      | 382       |      |  |   | 84        |   |  |   | 145       |  
|Securities available for sale                         |  |                   | 1,965     |                    |  |      | 2,009     |      |  |   | 548       |   |  |   | 663       |  
|Securities held to maturity                           |  |                   | 347       |                    |  |      | 342       |      |  |   | 126       |   |  |   | 129       |  
|                                                      |  |                   |           |                    |  |      |           |      |  |   |           |   |  |   |           |  
|Total interest income                                 |  | $                 | 13,372    |                    |  | $    | 14,164    |      |  | $ | 4,492     |   |  | $ | 4,730     |  
|Interest Expense:                                     |  |                   |           |                    |  |      |           |      |  |   |           |   |  |   |           |  
|Deposits                                              |  |                   | 2,229     |                    |  |      | 4,181     |      |  |   | 675       |   |  |   | 1,274     |  
|Other borrowings                                      |  |                   | 13        |                    |  |      | 34        |      |  |   | 4         |   |  |   | 10        |  
|Repurchase agreements                                 |  |                   | 333       |                    |  |      | 362       |      |  |   | 168       |   |  |   | 124       |  
|                                                      |  |                   |           |                    |  |      |           |      |  |   |           |   |  |   |           |  
|Total interest expense                                |  | $                 | 2,575     |                    |  | $    | 4,577     |      |  | $ | 847       |   |  | $ | 1,408     |  
|Net Interest Income                                   |  | $                 | 10,747    |                    |  | $    | 9,587     |      |  | $ | 3,645     |   |  | $ | 3,322     |  
|Provision for credit losses                           |  |                   | (314      | )                  |  |      | (369      | )    |  |   | (167      | ) |  |   | (123      | )
|Net interest income after provision for credit losses |  | $                 | 10,483    |                    |  | $    | 9,218     |      |  | $ | 3,478     |   |  | $ | 3,199     |  
|Non-interest Income:                                  |  |                   |           |                    |  |      |           |      |  |   |           |   |  |   |           |  
|Service charges on deposit accounts                   |  |                   | 1,198     |                    |  |      | 1,145     |      |  |   | 408       |   |  |   | 378       |  
|Gain on sales of investments available for sale       |  |                   | 95        |                    |  |      | 0         |      |  |   | 37        |   |  |   | 0         |  
|Other                                                 |  |                   | 1,366     |                    |  |      | 1,124     |      |  |   | 572       |   |  |   | 397       |  
|                                                      |  |                   |           |                    |  |      |           |      |  |   |           |   |  |   |           |  
|Total non-interest income                             |  | $                 | 2,659     |                    |  | $    | 2,269     |      |  | $ | 1,017     |   |  | $ | 775       |  
|Non-interest Expense:                                 |  |                   |           |                    |  |      |           |      |  |   |           |   |  |   |           |  
|Salaries and employee benefits                        |  |                   | 4,094     |                    |  |      | 3,724     |      |  |   | 1,385     |   |  |   | 1,261     |  
|Occupancy and equipment                               |  |                   | 971       |                    |  |      | 960       |      |  |   | 297       |   |  |   | 331       |  
|Other                                                 |  |                   | 2,128     |                    |  |      | 2,132     |      |  |   | 717       |   |  |   | 694       |  
|                                                      |  |                   |           |                    |  |      |           |      |  |   |           |   |  |   |           |  
|Total non-interest expense                            |  | $                 | 7,193     |                    |  | $    | 6,816     |      |  | $ | 2,399     |   |  | $ | 2,286     |  
|Income before income taxes                            |  | $                 | 5,949     |                    |  | $    | 4,671     |      |  | $ | 2,096     |   |  | $ | 1,688     |  
|                                                      |  |                   |           |                    |  |      |           |      |  |   |           |   |  |   |           |  
|Income taxes                                          |  |                   | (2,160    | )                  |  |      | (1,816    | )    |  |   | (750      | ) |  |   | (710      | )
|Net income                                            |  | $                 | 3,789     |                    |  | $    | 2,855     |      |  | $ | 1,346     |   |  | $ | 978       |  
|                                                      |  |                   |           |                    |  |      |           |      |  |   |           |   |  |   |           |  
|Per share data:                                       |  |                   |           |                    |  |      |           |      |  |   |           |   |  |   |           |  
|Basic and diluted earnings per share                  |  | $                 | 0.92      |                    |  | $    | 0.68      |      |  | $ | 0.33      |   |  | $ | 0.23      |  
|Weighted average number of common
Shares outstanding  |  |                   | 4,119,744 |                    |  |      | 4,177,396 |      |  |   | 4,089,416 |   |  |   | 4,189,499 |  
|Return on Average Assets                              |  |                   | 1.74      | %                  |  |      | 1.49      | %    |  |   | 1.77      | % |  |   | 1.47      | %

See accompanying notes

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##### Table of Contents






CITIZENS BANCORP AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS
OF CHANGES IN SHAREHOLDERS EQUITY
(Unaudited)
(Dollars in Thousands)

|                                        |                                                                   |  |                                               |   |        |   |          |   |               |   |               |   |       |   |             |     |  |   |        |     | 
|--------------------------------------- | ----------------------------------------------------------------- |  | --------------------------------------------- | - | ------ | - | -------- | - | ------------- | - | ------------- | - | ----- | - | ----------- | --- |  | - | ------ | --- | 
|                                        |                                                                   |  | Nine Months Ended September 30, 2002 and 2001
|                                        |                                                                   |  |                                              
|                                        |                                                                   |  |                                               |   |        |   |          |   |               |   |               |   |       |   | Accumulated |     |  |   |       
|                                        |                                                                   |  | Number of                                     |   |        |   |          |   |               |   |               |   | Other |   |             |     | 
|                                        |                                                                   |  | Common                                        |   | Common |   |          |   |               |   | Comprehensive |   |       |   |            
|                                        |                                                                   |  | Shares                                        |   | Stock  |   | Retained |   | Income (Loss) |   |               |   |      
|                                        |                                                                   |  | Outstanding                                   |   | Amount |   | Earnings |   | Total         |   | Total        
|                                        |                                                                   |  |                                               |   |        |   |          |   |               |   |              
|Balance, at December 31, 2000           |                                                                   |  | 4,137,630                                     |   |        | $ | 20,085   |   |               | $ | 6,971         |   |       | $ | 7           |     |  | $ | 27,063 |    
|COMPREHENSIVE INCOME:                   |                                                                   |  |                                               |   |        |   |          |   |               |   |               |   |       |   |             |     |  |   |        |    
|Net Income                              |                                                                   |  |                                              |   |        |   |         |   |               |   | 2,855         |   |       |   |            |     |  |   | 2,855  |    
|Other comprehensive income, net of tax: |                                                                   |  |                                               |   |        |   |          |   |               |   |               |   |       |   |             |     |  |   |        |    
|                                        | Unrealized loss on securities, net of
reclassification adjustment |  |                                               |  |        |   |          |  |               |   |               |  |       |   |             | 712 |  |   |        | 712 | 
|Comprehensive Income                    |                                                                   |  |                                              |   |        |   |         |   |               |   |              |   |       |   |            |     |  |   | 3,567  |    
|Issuance of common stock                |                                                                   |  | 51,869                                        |   |        |   | 569      |   |               |   |              |   |       |   |            |     |  |   | 569    |    
|Repurchase of common stock              |                                                                   |  | (73,114                                       | ) |        |   | (747     | ) |               |   |              |   |       |   |            |     |  |   | (747   | )  
|                                        |                                                                   |  |                                               |   |        |   |          |   |               |   |               |   |       |   |             |     |  |   |        |    
|Balance, at September 30, 2001          |                                                                   |  | 4,116,385                                     |   |        | $ | 19,907   |   |               | $ | 9,826         |   |       | $ | 719         |     |  | $ | 30,452 |    
|Balance, at December 31, 2001           |                                                                   |  | 4,105,308                                     |   |        | $ | 19,785   |   |               | $ | 9,478         |   |       | $ | 261         |     |  | $ | 29,524 |    
|COMPREHENSIVE INCOME:                   |                                                                   |  |                                               |   |        |   |          |   |               |   |               |   |       |   |             |     |  |   |        |    
|Net Income                              |                                                                   |  |                                              |   |        |   |         |   |               |   | 3,789         |   |       |   |            |     |  |   | 3,789  |    
|Other comprehensive income, net of tax: |                                                                   |  |                                               |   |        |   |          |   |               |   |               |   |       |   |             |     |  |   |        |    
|                                        | Unrealized gain on securities, net of
reclassification adjustment |  |                                               |  |        |   |          |  |               |   |               |  |       |   |             | 131 |  |   |        | 131 | 
|Comprehensive Income                    |                                                                   |  |                                              |   |        |   |         |   |               |   |              |   |       |   |            |     |  |   | 3,920  |    
|Issuance of common stock                |                                                                   |  | 61,589                                        |   |        |   | 644      |   |               |   |              |   |       |   |            |     |  |   | 644    |    
|Repurchase of common stock              |                                                                   |  | (82,811                                       | ) |        |   | (972     | ) |               |   |              |   |       |   |            |     |  |   | (972   | )  
|Stock options exercised                 |                                                                   |  | 45                                            |   |        |   | 1        |   |               |   |              |   |       |   |            |     |  |   | 1      |    
|                                        |                                                                   |  |                                               |   |        |   |          |   |               |   |               |   |       |   |             |     |  |   |        |    
|Balance, at September 30, 2002          |                                                                   |  | 4,084,131                                     |   |        | $ | 19,458   |   |               | $ | 13,267        |   |       | $ | 392         |     |  | $ | 33,117 |    

See accompanying notes

5



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##### Table of Contents






CITIZENS BANCORP AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited), (Dollars in thousands)

|                                                                     |                                                                                   |                                                    |   |                   |      |      |   |         |      |  
|-------------------------------------------------------------------- | --------------------------------------------------------------------------------- | -------------------------------------------------- | - | ----------------- | ---- | ---- | - | ------- | ---- | -
|                                                                     |                                                                                   |                                                    |   | Nine Months Ended
|                                                                     |                                                                                   |                                                    |   | September 30,    
|                                                                     |                                                                                   |                                                    |   |                  
|                                                                     |                                                                                   |                                                    |   | 2002              |      | 2001
|                                                                     |                                                                                   |                                                    |   |                   |      |     
|Cash Flows from Operating Activities                                 |                                                                                   |                                                    |   |                   |      |      |   |        
|                                                                     | Net income                                                                        |                                                    | $ | 3,789             |      |      | $ | 2,855   |     
|                                                                     | Adjustments to reconcile net income to net
Cash provided by operating activities: |                                                    |   |                   |      |      |   |         |     
|                                                                     |                                                                                   | Provision for credit losses                        |   |                   | 314  |      |   |         | 369  |  
|                                                                     |                                                                                   | Depreciation and amortization                      |   |                   | 449  |      |   |         | 477  |  
|                                                                     |                                                                                   | Gains on sales of securities available for sale    |   |                   | (95  | )    |   |         | 0    |  
|                                                                     |                                                                                   | Stock dividends received                           |   |                   | (26  | )    |   |         | (40  | )
|                                                                     |                                                                                   | (Increase) decrease in accrued interest receivable |   |                   | (368 | )    |   |         | (663 | )
|                                                                     |                                                                                   | Increase (decrease) in accrued interest payable    |   |                   | (108 | )    |   |         | (5   | )
|                                                                     |                                                                                   | Other                                              |   |                   | (579 | )    |   |         | (100 | )
|                                                                     |                                                                                   |                                                    |   |                   |      |      |   |        
|                                                                     | Net cash provided by operating activities                                         |                                                    |   | 3,376             |      |      |   | 2,893   |     
|Cash Flows from Investing Activities                                 |                                                                                   |                                                    |   |                   |      |      |   |        
|                                                                     | Net increase in interest bearing deposits in banks                                |                                                    |   | (5,769            | )    |      |   | (12,066 | )   
|                                                                     | Proceeds from maturities of available for sale securities                         |                                                    |   | 21,835            |      |      |   | 21,000  |     
|                                                                     | Proceeds from sales of available for sale securities                              |                                                    |   | 6,534             |      |      |   | 0       |     
|                                                                     | Proceeds from maturities of securities held to maturity                           |                                                    |   | 330               |      |      |   | 550     |     
|                                                                     | Purchases of securities available for sale                                        |                                                    |   | (41,834           | )    |      |   | (23,758 | )   
|                                                                     | Purchases of securities held to maturity                                          |                                                    |   | (1,362            | )    |      |   | (1,777  | )   
|                                                                     | Increase in loans made to customers, net of principal collections                 |                                                    |   | (7,814            | )    |      |   | (9,477  | )   
|                                                                     | Purchases of premises and equipment and other                                     |                                                    |   | (747              | )    |      |   | (511    | )   
|                                                                     | Purchase of officers life insurance                                              |                                                    |   | 0                 |      |      |   | (3,000  | )   
|                                                                     |                                                                                   |                                                    |   |                   |      |      |   |        
|                                                                     | Net cash used in investing activities                                             |                                                    |   | (28,827           | )    |      |   | (29,039 | )   
|Cash Flows from Financing Activities                                 |                                                                                   |                                                    |   |                   |      |      |   |        
|                                                                     | Net increase in deposits                                                          |                                                    |   | 1,948             |      |      |   | 21,353  |     
|                                                                     | Net increase in repurchase agreements and other borrowings                        |                                                    |   | 26,726            |      |      |   | 6,291   |     
|                                                                     | Payment of dividends, net of dividends reinvested                                 |                                                    |   | (876              | )    |      |   | (921    | )   
|                                                                     | Repurchase of common stock                                                        |                                                    |   | (972              | )    |      |   | (747    | )   
|                                                                     |                                                                                   |                                                    |   |                   |      |      |   |        
|                                                                     | Net cash provided by financing activities                                         |                                                    |   | 26,826            |      |      |   | 25,976  |     
|                                                                     | Net (decrease) increase in cash and due from banks                                |                                                    | $ | 1,375             |      |      |   | ($170   | )   
|Cash and Due from Banks                                              |                                                                                   |                                                    |   |                   |      |      |   |        
|                                                                     | Beginning of period                                                               |                                                    |   | 15,054            |      |      |   | 11,218  |     
|                                                                     | End of period                                                                     |                                                    | $ | 16,429            |      |      | $ | 11,048  |     
|                                                                     |                                                                                   |                                                    |   |                   |      |      |   |        
|Supplemental Disclosure of Cash Flow Information                     |                                                                                   |                                                    |   |                   |      |      |   |        
|                                                                     | Interest paid                                                                     |                                                    |   | 2,683             |      |      |   | 4,582   |     
|                                                                     | Income taxes paid                                                                 |                                                    |   | 2,025             |      |      |   | 1,280   |     
|Supplemental Schedule of Non-cash Investing and Financing Activities |                                                                                   |                                                    |   |                   |      |      |   |        
|                                                                     | Fair value adjustment of securities available for sale, net of tax                |                                                    |   | 131               |      |      |   | 712     |     
|                                                                     | Issuance of common stock through dividend reinvestment plan                       |                                                    |   | 644               |      |      |   | 569     |     

See accompanying notes

6



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##### Table of Contents






CITIZENS BANCORP
Notes to Condensed Consolidated Financial Statements (unaudited)



|1. |  | BASIS OF PRESENTATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The interim condensed consolidated financial statements include the accounts
of Citizens Bancorp (Bancorp), a bank holding company and its wholly owned
subsidiary, Citizens Bank (Bank) after elimination of intercompany
transactions and balances. Substantially all activity of Citizens Bancorp is
conducted through its subsidiary bank.                                                                                                                                                                                                                                                                                        
|  
|   |  | The interim financial statements are unaudited but have been prepared in
accordance with accounting principles generally accepted in the United States
of America for interim condensed financial information and with instructions
to form 10-Q. Accordingly, the condensed interim financial statements do not
include all of the information and footnotes required by accounting
principles generally accepted in the United States of America. In the
opinion of management, all adjustments, consisting only of normal recurring
accruals, necessary for a fair presentation for the interim periods included
herein have been made.
|  
|   |  | The interim condensed consolidated financial statements should be read in
conjunction with the December 31, 2001 consolidated financial statements,
including notes there to, included in Bancorps 2001 Annual Report to
shareholders.                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|2. |  | USE OF ESTIMATES IN THE PREPARATION OF FINANCIALS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   |  | The preparation of financial statements, in conformity with accounting
principles generally accepted in the United States of America, requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.                                                                                                                                                       
|  
|3. |  | SHAREHOLDERS EQUITY AND NET INCOME PER COMMON SHARE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   |  | The Board of Directors declared a $.37 per share dividend to Bancorp
shareholders of record on November 14, 2001, payable on January 10, 2002.
Through the Dividend Reinvestment Plan (DRIP) 61,589 shares were purchased at
a price of $10.47 per share.                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   |  | Basic earnings per share are based on the average number of common shares
outstanding, assuming no dilution. Diluted earnings per common share are
computed assuming the exercise of stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                       

|                                     |            |  |             |       |               |  |           |           |  |  |   |      | 
|------------------------------------ | ---------- |  | ----------- | ----- | ------------- |  | --------- | --------- |  |  | - | ---- | 
|                                     |            |  | Net Income  |       | Shares        |  | Per Share
|                                     |            |  | (Numerator) |       | (Denominator) |  | Amount   
|                                     |            |  |             |       |               |  |          
|Nine months ended September 30, 2002 |            |  |             |       |               |  |           |           |  |  |   |     
|Basic earnings per share:            |            |  |             |       |               |  |           |           |  |  |   |     
|                                     | Net Income |  | $           | 3,789 |               |  |           | 4,119,744 |  |  | $ | 0.92 | 
|Effect of dilutive securities:       |            |  |             |       |               |  |           |           |  |  |   |     
|                                     | Options    |  |             |      |               |  |           | 1,799     |  |  |   | -0-  | 
|Diluted earnings per share:          |            |  |             |       |               |  |           |           |  |  |   |     
|                                     | Net Income |  | $           | 3,789 |               |  |           | 4,121,543 |  |  | $ | 0.92 | 
|Nine months ended September 30, 2001 |            |  |             |       |               |  |           |           |  |  |   |     
|Basic earnings per share:            |            |  |             |       |               |  |           |           |  |  |   |     
|                                     | Net Income |  | $           | 2,855 |               |  |           | 4,177,396 |  |  | $ | 0.68 | 
|Effect of dilutive securities:       |            |  |             |       |               |  |           |           |  |  |   |     
|                                     | Options    |  |             |      |               |  |           | -0-       |  |  |   | -0-  | 
|Diluted earnings per share:          |            |  |             |       |               |  |           |           |  |  |   |     
|                                     | Net Income |  | $           | 2,855 |               |  |           | 4,177,396 |  |  | $ | 0.68 | 

7



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##### Table of Contents



|                                      |            |  |             |       |               |  |           |           |  |  |   |      | 
|------------------------------------- | ---------- |  | ----------- | ----- | ------------- |  | --------- | --------- |  |  | - | ---- | 
|                                      |            |  | Net Income  |       | Shares        |  | Per Share
|                                      |            |  | (Numerator) |       | (Denominator) |  | Amount   
|                                      |            |  |             |       |               |  |          
|Three months ended September 30, 2002 |            |  |             |       |               |  |           |           |  |  |   |     
|Basic earnings per share:             |            |  |             |       |               |  |           |           |  |  |   |     
|                                      | Net Income |  | $           | 1,346 |               |  |           | 4,089,416 |  |  | $ | 0.33 | 
|Effect of dilutive securities:        |            |  |             |       |               |  |           |           |  |  |   |     
|                                      | Options    |  |             |       |               |  |           | 1,678     |  |  |   | -0-  | 
|Diluted earnings per share:           |            |  |             |       |               |  |           |           |  |  |   |     
|                                      | Net Income |  | $           | 1,346 |               |  |           | 4,091,094 |  |  | $ | 0.33 | 
|Three months ended September 30, 2001 |            |  |             |       |               |  |           |           |  |  |   |     
|Basic earnings per share:             |            |  |             |       |               |  |           |           |  |  |   |     
|                                      | Net Income |  | $           | 978   |               |  |           | 4,189,499 |  |  | $ | 0.23 | 
|Effect of dilutive securities:        |            |  |             |       |               |  |           |           |  |  |   |     
|                                      | Options    |  |             |       |               |  |           |          |  |  |   |     | 
|Diluted earnings per share:           |            |  |             |       |               |  |           |           |  |  |   |     
|                                      | Net Income |  | $           | 978   |               |  |           | 4,189,499 |  |  | $ | 0.23 | 



|   |  | The option price of all outstanding options at September 30, 2001 was in
excess of the average market price of the stock for the three months and the
nine months ended September 30, 2001, making them anti-dilutive for those
periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | All per share amounts have been restated to retroactively reflect stock
dividends, stock purchased and stock splits previously reported.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|4. |  | CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | Unfunded loan commitments totaled $29.4 million as of September 30, 2002 and
$25.9 million as of December 31, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|5. |  | RECENT ACCOUNTING PRONOUNCEMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   |  | In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations. This statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. This statement is effective for all
fiscal years beginning after June 15, 2002. The Company does not anticipate
that the adoption of SFAS No. 143 will have a material effect on its
financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | In August 2001 the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. The statement addresses financial accounting
and reporting for the impairment or disposal of long-lived assets. This
statement was effective January 1, 2002, and had no effect on the Companys
financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   |  | Statement of Financial Accounting Standards (SFAS) No. 147, Acquisitions of
Certain Financial Institutions  an amendment of FASB Statements No. 72 and
144 and FASB Interpretation No. 9. The provisions of this Statement that
relate to the application of the purchase method of accounting apply to all
acquisitions of financial institutions, except transactions between two or
more mutual enterprises. This Statement removes acquisitions of financial
institutions from the scope of both Statement 72 and Interpretation 9 and
requires that those transactions be accounted for in accordance with FASB
Statements No. 141, Business Combinations, and No. 142, Goodwill and Other
Intangible Assets. In addition, this Statement amends FASB Statement No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, to include in
its scope long-term customer-relationship intangible assets of financial
institutions such as depositor- and borrower-relationship intangible assets
and credit cardholder intangible assets. This Statement is effective for
acquisitions for which the date of acquisition is on or after October 1,
2002. The Company does not anticipate that the Statement will have a material
effect on its financial position or results of operations.

8



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ITEM 2

MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

In addition to historical information, this report contains certain forward
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. This statement is included for the purpose of availing
Bancorp the protection of the safe harbor provisions of this Act. The forward
looking statements contained in this report are subject to factors, risks and
uncertainties that may cause actual results to differ materially from those
projected. Factors that might result in such material difference include, but
are not limited to economic conditions, the regulatory environment, rapidly
changing technology, new legislation, competitive factors, the interest rate
environment and the overall condition of the banking industry. Forward looking
statements can be identified by such words as estimate, believe, expect,
intend, anticipate, should, may, will, or other similar words or
phrases. Although Bancorp believes that the expectations reflected in such
forward looking statements are reasonable, it can give no assurances that such
expectations will prove to have been correct. Readers are therefore cautioned
not to place undue reliance on such forward looking statements, which reflect
managements analysis only as of the date of the statement. Bancorp does not
intend to update these forward looking statements other than in its periodic
filings under applicable security laws.

OVERVIEW

Citizens Bank (the Bank) was chartered October 1, 1957 (charter #333) by the
State of Oregon as a commercial bank. Since its beginning with a single office
in Corvallis, Citizens Bank has expanded to an additional nine locations in the
four counties of Benton, Linn, Lane, and Yamhill. Branches are located in the
communities of Corvallis, Philomath, Albany, Junction City, Veneta,
McMinnville, and Harrisburg.

At the January 2002 Board of Directors meeting, the Board approved a plan to
expand our branch network into Dallas, Oregon. We are excited about our
potential to do business in Dallas and believe that our market penetration will
be strong. The Company has located a site for the branch at 583 SE Jefferson
Street, Dallas, Oregon. The branch opened in a temporary building in October
2002 with construction of a permanent building expected to commence soon.

Management and the Board of Directors have approved the closure of the Banks
University Office located at 855 NW Kings Blvd., Corvallis, Oregon, on January
31, 2003. The leased facility in which the branch has been operating is in
disrepair. The Bank has been unable to re-negotiate the lease terms in order to
economically support the extensive and necessary repairs. Additionally, parking
is inadequate and unsafe for customers. Alternative sites in the vicinity of
the University branch were pursued to no avail. Two other existing branches are
located within a 1.6 mile radius of the University branch and can fully service
the University branch customers. All existing staff will be reassigned within
the Bank.

Citizens Bancorp (Bancorp), an Oregon Corporation and financial holding
company, was formed in 1996 for the purpose of becoming the holding company of
Citizens Bank. Bancorp is headquartered in Corvallis, Oregon. Its principal
business activities are conducted through its full-service, commercial bank
subsidiary, Citizens Bank.

Bancorp operates through a two-tiered corporate structure. At the holding
company level the affairs of Bancorp are overseen by a Board of Directors
elected by the shareholders of Bancorp at the annual meeting of shareholders.
The business of the Bank is overseen by a Board of Directors elected by
Bancorp, the sole owner of the Bank. As of the date of this Form 10-Q the
respective members of the Board of Directors of the Bank and the Board of
Directors of Bancorp are identical.

Bancorps culture focuses on the tenets of collaborative leadership, branch
autonomy, assertive business development, a positive working environment, a
commitment to the community, outstanding customer service, and relationship
banking. Management believes that a healthy culture together with a
progressive management style will result in constantly improved shareholder
value.

Bancorps primary goal is to improve shareholder value through increased
earnings while maintaining a high level of safety and soundness. Bancorp is
committed to independence and long-term performance strategies.

9



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##### Table of Contents



The long-term benefit to Bancorp of its cultural and management style is
consistent growth and development of the Bank over time. Risk levels have been
greatly reduced because of expertise in loan, investment, operational, and
human resource management.

Bancorps primary market focus is to provide commercial bank services to
businesses, professionals, and individuals. Bancorp emphasizes the development
of meaningful customer relationships and a high level of service. Its
employees are well-trained banking professionals who are committed to these
objectives.

The Bank offers deposit accounts, safe-deposit boxes, consumer loans,
commercial loans, agricultural loans, and commercial and residential real
estate loans. Commercial loans include operating lines of credit, equipment
and real estate financing, capital needs, and other traditional financing
products.

The Bank has a growing emphasis in financing farm operations, equipment, and
property. The Bank has also emphasized loans to professionals with its
professional line of credit products. The Banks loan portfolio has some
concentrations in real estate secured loans, primarily commercial properties.
The Bank also operates a small residential mortgage loan origination department
that originates loans and sells them into the secondary market.

Deposit products include regular and package checking accounts, savings
accounts, certificates of deposit, money market accounts, and IRA accounts. The
Bank offers debit cards, check guarantee cards, and ATM cards as well as credit
cards as part of its retail banking services.

The Bank offers extended banking hours in selected locations as well as
Saturday banking. ATM machines are also available at ten (10) locations
offering 24-hour transaction services, including cash withdrawals, deposits,
account transfers, and balance inquiries. The Bank also offers its customers a
24-hour automated telephone service that offers account transfers and balance
inquiries. The Banks on-line banking product offers services to both
individuals and business account customers. Business customers have a
comprehensive cash management option. All online users have the availability of
the bill payment feature. The Bank expects to continually enhance its on-line
banking product while maintaining its quality people to people customer
service. Citizens on-line banking can be reached at www.CitizensEBank.com.

Bancorp reported net income of $1,346,000 in the third quarter ending September
30, 2002, or $.33 per common share, an increase of 37.6% from the third quarter
net income of $978,000 in 2001 or $.23 per common share. For the first nine
months of 2002, Bancorp earned $3,789,000, or $.92 per common share, an
increase of 32.7% from the nine month 2001 earnings of $2,855,000 or $.68 per
common share. The net increase in both periods is primarily attributed to the
decrease in interest expense on deposits.

LOAN PORTFOLIO

The composition of the loan portfolio was as follows (in thousands):

|                                  |              |   |                    |        |                   |   |         |        | 
|--------------------------------- | ------------ | - | ------------------ | ------ | ----------------- | - | ------- | ------ | 
|                                  |              |   | September 30, 2002 |        | December 31, 2001
|                                  |              |   |                    |        |                  
|Commercial                        |              | $ | 23,539             |        |                   | $ | 22,589  |       
|Agriculture                       |              |   | 15,499             |        |                   |   | 14,727  |       
|Real Estate                       |              |   |                    |        |                   |   |         |       
|                                  | Construction |   |                    | 17,058 |                   |   |         | 17,885 | 
|                                  | 1-4 Family   |   |                    | 30,870 |                   |   |         | 29,248 | 
|                                  | Other        |   |                    | 89,277 |                   |   |         | 85,024 | 
|Consumer Loans                    |              |   | 3,820              |        |                   |   | 4,061   |       
|                                  |              |   |                    |        |                   |   |         |       
|                                  |              |   | 180,063            |        |                   |   | 173,534 |       
|Less: net deferred loan fees      |              |   | (505               | )      |                   |   | (611    | )     
|Total Loans                       |              | $ | 179,558            |        |                   | $ | 172,923 |       
|Less: allowance for credit losses |              |   | (2,361             | )      |                   |   | (2,146  | )     
|                                  |              |   |                    |        |                   |   |         |       
|Net Loans                         |              | $ | 177,197            |        |                   | $ | 170,777 |       
|                                  |              |   |                    |        |                   |   |         |       

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Transactions in the allowance for credit losses were as follows for the nine
months ended September 30, 2002:

|                                |  |      |       |      |  |   |       |  
|------------------------------- |  | ---- | ----- | ---- |  | - | ----- | -
|                                |  | 2002 |       | 2001
|                                |  |      |       |     
|Balance at beginning of period  |  | $    | 2,146 |      |  | $ | 1,510 |  
|Provision charged to operations |  |      | 314   |      |  |   | 369   |  
|Loans recovered                 |  |      | 9     |      |  |   | 4     |  
|Loans charged off               |  |      | (108  | )    |  |   | (66   | )
|                                |  |      |       |      |  |   |       |  
|Balance at end of period        |  | $    | 2,361 |      |  | $ | 1,817 |  
|                                |  |      |       |      |  |   |       |  

It is the policy of the Bank to place loans on nonaccrual after they become 90
days past due unless the loans are well secured and in the process of
collection. The Bank may place loans that are not contractually past due or
that are deemed fully collateralized on nonaccrual status as a management tool
to actively oversee specific loans.

Loans on nonaccrual status as of September 30, 2002 and December 31, 2001 were
approximately $136,000 and $703,000 respectively. Loans past due 90 days or
more on which the Bank continued to accrue interest were approximately $176,000
at September 30, 2002 and $330,000 at December 31, 2001. There were no loans
with modified terms as of September 30, 2002.

INVESTMENT SECURITIES

The amortized cost and estimated book value of the investment securities held
by the Bank, including unrealized gains and losses, at September 30, 2002 and
December 31, 2001, are as follows (in thousands):

|                                                |  |                                                                |        |                      |        |                      |        |   |        |   |     |   |     | 
|----------------------------------------------- |  | -------------------------------------------------------------- | ------ | -------------------- | ------ | -------------------- | ------ | - | ------ | - | --- | - | --- | 
|September 30, 2002                              |  | Amortized Cost                                                 |        | Estimated Fair Value |        | Unrealized Gain, net
|                                                |  |                                                                |        |                      |        |                     
|Available for Sale                              |  |                                                                |        |                      |        |                      |        |   |        |   |     |  
|U.S. Treasury Securities                        |  |                                                                |        |                      |        |                      |        |   |        |   |     |  
|                                                |  | (Including securities of government agencies
and corporations) |        | $                    | 70,278 |                      |        | $ | 70,920 |   |     | $ | 642 | 
|Held
to Maturity                                |  |                                                                |        |                      |        |                      |        |   |        |   |     |  
|Obligations of State and Political Subdivisions |  | $                                                              | 11,093 |                      |        | $                    | 11,747 |   |        | $ | 654 |  

|                                                |  |                                                                |        |                |        |                      |        |                      |        |   |     |   |     | 
|----------------------------------------------- |  | -------------------------------------------------------------- | ------ | -------------- | ------ | -------------------- | ------ | -------------------- | ------ | - | --- | - | --- | 
|                                                |  | December 31, 2001                                              |        | Amortized Cost |        | Estimated Fair Value |        | Unrealized Gain, net
|                                                |  |                                                                |        |                |        |                      |        |                     
|Available for Sale                              |  |                                                                |        |                |        |                      |        |                      |        |   |     |  
|U.S. Treasury Securities                        |  |                                                                |        |                |        |                      |        |                      |        |   |     |  
|                                                |  | (Including securities of government agencies
and corporations) |        | $              | 56,504 |                      |        | $                    | 56,932 |   |     | $ | 428 | 
|Held to Maturity                                |  |                                                                |        |                |        |                      |        |                      |        |   |     |  
|Obligations of State and Political Subdivisions |  | $                                                              | 10,051 |                |        | $                    | 10,244 |                      |        | $ | 193 |  

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MATERIAL CHANGES IN FINANCIAL CONDITION

Changes in the balance sheet for the nine months ended September 30, 2002
include an increase in total assets, primarily in loans, securities available
for sale and interest bearing deposits in banks, and an increase in liabilities
primarily in repurchase agreements, demand, savings and interest bearing demand
deposits.

At September 30, 2002, total assets increased 11.0% or approximately $30.7
million over total assets at December 31, 2001. Major components of the change
in assets were:



| |  |  | $1.4 million increase in cash and due from banks           
| | - |  | -----------------------------------------------------------
|
| |  |  | $5.8 million increase in interest bearing balances in banks
|
| |  |  | $15.0 million increase in investment securities            
|
| |  |  | $6.4 million increase in net loans                         

Loans were generally made to customers within the Companys market area. The
increases were funded by an increase in deposits and other borrowings.

The Company experienced a growth in deposits, repurchase agreements, and other
borrowings which represent treasury tax and loan deposits during the nine
months ended September 30, 2002, specifically as follows:



| |  |  | $2.9 million increase in demand deposits                                                   
| | - |  | -------------------------------------------------------------------------------------------
|
| |  |  | $12.3 million increase in savings and interest bearing deposits                            
|
| |  |  | $13.3 million decrease in time certificates of deposits                                    
|
| |  |  | $25.3 million increase in repurchase agreements                                            
|
| |  |  | $1.5 million increase in other borrowings, consisting of the treasury tax and loan deposits

Management believes the growth in deposits and repurchase agreements is a
result of continuing penetration into the market area as a result of its
emphasis on customer service, its relationship style of banking and on
continuing difficulties in the stock market. The decrease in time certificates
of deposits was a result of managements decision not to pay above-market rates
for time deposits in competition with other financial institutions when
liquidity was well within its established asset-liability management
guidelines. The increase in other borrowings is attributable to an increase in
tax deposits.

MATERIAL CHANGES IN RESULTS OF OPERATIONS

The Company reported net income of approximately $3,789,000 or $.92 per common
share, for the nine months ended September 30, 2002, compared to net income of
approximately $2,855,000 or $.68 per common share, for the same period in 2001.
This represents an increase in net income of 32.7%. Net income for the
quarter ended September 30, 2002, was approximately $1,346,000 or $.33 net
income per common share, compared to net income of approximately $978,000, or
$.23 per common share, for the same period in 2001. This represents an
increase in net income of 37.6%. The increases during both periods were
primarily attributable to a decrease in interest expense.

Total interest income decreased approximately $792,000 or 5.6% for the nine
months and $238,000 or 5.0% for the three months ended September 30, 2002 as
compared to the same periods in 2001. These decreases for both the nine-month
and three-month periods were primarily the result of a decrease in interest
income on loans and security investments. The decrease is directly related to
the overall decrease in market rates from the comparable periods in 2001, which
offset the earnings on increased levels of loans and investments.

Total interest expense decreased approximately $2,002,000 or 43.7% for the nine
months and $561,000 or 39.8% for the three months ended September 30, 2002 as
compared to the same periods in 2001. The decrease in interest expense for
these periods was the result of lower interest rates paid on deposits resulting
from overall market rate decreases compared to the same periods in 2001, and
from a change in the mix of deposits, as the level of time deposits decreased,
as discussed above. The effect of the rate decrease was greater than the
increased interest expense related to higher levels of deposits.

Net interest income for the nine months and three months ended September 30,
2002 was up $1,160,000 or 12.1% and $323,000 or 9.7%, respectively, from the
comparable periods in 2001, as the average rate differences on interest bearing
liabilities exceeded the rate differences on interest earning assets.

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Total non-interest income increased approximately $390,000 or 17.2% for the
nine months and $242,000 or 31.2% for the three months ended September 30, 2002
as compared to the same periods in 2001. The primary increases in both periods
were due to the gain on sale of investment securities available for sale,
earnings on insurance contracts on executive officers purchased in late 2001,
an increase in merchant bankcard income, ATM fees, and service charges on
deposit accounts resulting from increases in volume and customer relationships.

Total non-interest expense increased $377,000 or 5.5% for the nine months and
$113,000 or 4.9% for the three months ended September 30, 2002, as compared to
the same periods in 2001. Non-interest expense increased as a result of
routine adjustments in staff salaries, salary expense related to the hiring of
a manager and loan officer for the planned Dallas branch, and expenses
associated with technology enhancements, products and occupancy.

CREDIT LOSS PROVISION

The Bank maintains an allowance for credit losses on loans that occur from time
to time as an incidental part of the business of banking. Loans are charged
against this allowance for credit losses which is adjusted periodically to
reflect changing loan volumes, risk potential in the portfolio and general
economic conditions. Additions to the allowance for credit losses are made
through a charge against income.

During the first nine months ended September 30, 2002, the Bank funded the
allowance for credit losses $314,000 from operations as compared to $369,000
for the same nine month period in 2001. For the three month period ending
September 30, 2002, the Bank funded the allowance for credit losses $167,000 as
compared to $123,000 for the same three month period in 2001. Management bases
the Banks provision for credit losses on its analysis of delinquencies, loan
types, loan classifications, and other factors affecting the loan portfolio.
The increase in the level of the allowance at September 30, 2002 compared to
December 31, 2001 is directly related to a slight increase in the level of
past-due and classified loans. The Bank experienced $108,000 in credit losses
and $9,000 in recoveries for the nine months ended September 30, 2002 and
$66,000 in net losses for the same period ended September 30, 2001.
Historically, the Banks loan charge-off levels have been very low compared to
its peers. Management believes that the allowance for credit losses at
September 30, 2002 of $2,361,000 or 1.31% of total loans is adequate.

The provision for credit losses represents charges made to operating expenses
to maintain an appropriate allowance for credit losses. Management considers
various factors in establishing an appropriate allowance. These factors
include an assessment of the financial condition of the borrower, a
determination of the borrowers ability to service the debt from cash flow, a
conservative assessment of the value of the underlying collateral, the
condition of the specific industry of the borrower, the economic health of the
local community, a comprehensive analysis of the levels and trends of loan
types, and a review of past due and classified loans.

It is Bank policy that once each quarter, Bank management makes recommendations
to the Board regarding the adequacy of the Banks allowance for credit losses
and the amount of the provision that should be charged against earnings for the
next three months. Managements recommendations are based on an internal loan
review process to determine specific potential loss factors on classified
loans, risk factor of loan grades, historical loss factors derived from actual
net charge-off experience, trends in non-performing loans and other potential
risks in the loan portfolio such as industry concentration, the local economy
and the volume of loans.

Management uses a loan grading system wherein loan officers assign a risk grade
to each of their loans at inception and at intervals based on receipt of
financial information, renewal, or when there is an indication that a credit
may have improved or weakened. The risk grades in the loan portfolio are used
in determining a factor that is used in analyzing the adequacy of the allowance
for credit losses.

The Banks policy is to charge off loans when, in managements opinion, the
loan or a portion of the loan is deemed uncollectible following a concerted
collection effort. Management continues to pursue collection after a loan is
charged-off until all possibilities for collection have been exhausted.

LIQUIDITY AND CAPITAL RESOURCES

Bancorps subsidiary, the Bank, has adopted policies to maintain a relatively
liquid position to enable it to respond to changes in the Banks financial
environment. Generally, the Banks major sources of liquidity are customer

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deposits, sales and maturities of securities, the use of borrowing lines with
correspondent banks including Federal Home Loan bank borrowings, loan
repayments and net cash provided by operating activities.

The analysis of liquidity should also include a review of the changes that
appear in the consolidated statement of cash flows for the first nine months of
2002. The statement of cash flows includes operating, investing and financing
categories. Operating activities include net income which is adjusted for
non-cash items and increases or decreases in cash due to certain changes in
assets and liabilities. Investing activities consist primarily of both
proceeds from maturities and purchases of securities, and the net growth in
loans. Financing activities present the cash flows associated with the Banks
deposit accounts.

Management believes that the Banks existing sources of liquidity will enable
the Bank to fund its requirements in the normal course of business.

As of September 30, 2002, shareholders equity totaled $33,117,000 as compared
to $29,524,000 at December 31, 2001, an increase of 12.2%. This increase in
equity was primarily due to the Companys net income.

The total number of shares of Bancorps common stock that may be issued upon
the exercise of all options granted under the Incentive Stock Option Plan may
not exceed in the aggregate four percent (4%) of Bancorps issued and
outstanding shares of common stock. As of October 31, 2002 Bancorps issued
and outstanding shares totaled 4,084,193, so the maximum number of shares
issuable under the Incentive Stock Option Plan was 163,368 on that date. As of
October 31, 2002, options for 82,500 shares had been granted, options for 107
shares exercised, and options for 500 shares expired under this Plan.

The total number of shares of Bancorps common stock that may be issued under
the Stock Bonus Plan may not exceed in the aggregate one percent (1%) of
Bancorps issued and outstanding shares of common stock. As of October 31,
2001 Bancorps issued and outstanding shares totaled 4,084,193, so the maximum
number of shares issuable under the Stock Bonus Plan was 40,842 on that date.
As of October 31, 2002 no stock had been issued under this Plan.

Capital ratios for the Company were as follows as of the dates indicated:

|                                |  |           |   |                    |  |                   |       |   |  |  |       |  
|------------------------------- |  | --------- | - | ------------------ |  | ----------------- | ----- | - |  |  | ----- | -
|                                |  | Minimum   |   | Bancorp           
|                                |  | Capital   |   |                   
|                                |  | Standards |   | September 30, 2002 |  | December 31, 2001
|                                |  |           |   |                    |  |                  
|Tier 1 Leverage Ratio           |  |           | 4 | %                  |  |                   | 10.74 | % |  |  | 10.48 | %
|Tier 1 Risk Based Capital Ratio |  |           | 4 | %                  |  |                   | 15.77 | % |  |  | 15.08 | %
|Total Risk Based Capital Ratio  |  |           | 8 | %                  |  |                   | 16.91 | % |  |  | 16.19 | %




ITEM 3. QUANTITATIVE & QUALITATIVE ANALYSIS ABOUT MARKET RISK

Interest rate, credit, and operations risks are the most significant market
risks impacting the Banks performance. The Bank relies on loan review,
prudent loan underwriting standards and an adequate allowance for credit losses
to mitigate credit risk.

The Bank uses an asset/liability management simulation model to measure
interest rate risk. The model quantifies interest rate risk through simulating
forecasted net interest income over a 12 month time period under various rate
scenarios, as well as monitoring the change in the present value of equity
under the same rate scenarios. The present value of equity is defined as the
difference between the market value of current assets less current liabilities.
By measuring the change in the present value of equity under different rate
scenarios, management is able to identify interest rate risk that may not be
evident in simulating changes in forecasted net interest income.

The Bank is currently slightly asset sensitive, meaning that interest earning
assets mature or reprice more quickly than interest-bearing liabilities in a
given period. An increase or decrease in market rates of interest will not
materially impact net interest income.

It should be noted that the simulation model does not take into account future
management actions that could be undertaken if there were a change in actual
market interest rate during the year. Also, certain assumptions are required
to perform modeling simulations that my have significant impact on the results.
These include

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assumptions regarding the level of interest rates and balance changes on
deposit products that do not have stated maturities. These assumptions have
been developed through a combination of industry standards and future expected
pricing behavior. The model also includes assumptions about changes in the
composition or mix of the balance sheet. The results derived from the
simulation model could vary significantly by external factors such as changes
in the prepayment assumptions, early withdrawals of deposits and competition.
Management has assessed these risks and believes that there has been no
material change since December 31, 2001.

ITEM 4. CONTROLS AND PROCEDURES

Based on their most recent evaluation which was completed within 90 days of the
filing of this Form 10-Q, the Companys Chief Executive Officer and Chief
Financial Officer believe the Companys disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) are effective. There were not
any significant changes in internal controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.

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PART II. OTHER INFORMATION




ITEM 1. LEGAL PROCEEDINGS

None




ITEM 2. CHANGES IN SECURITIES

None




ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None




ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

None




ITEM 5. OTHER INFORMATION

None




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



| | (a) |  | Exhibits                                                                                                                        
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | 99.1    Certifications pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
| | (b) |  | Reports on Form 8-K                                                                                                             
|
| |     |  | None                                                                                                                            

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SIGNATURES

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

|                        |                                                            |                         
|----------------------- | ---------------------------------------------------------- | ------------------------
|Date: November 12, 2002 | By:                                                        | /s/ William V. Humphreys
|                        |                                                           
|                        | William V. Humphreys
President and Chief Executive Officer

|                        |                                                                  |                   
|----------------------- | ---------------------------------------------------------------- | ------------------
|Date: November 12, 2002 | By:                                                              | /s/ Lark E. Wysham
|                        |                                                                 
|                        | Lark E. Wysham
Senior Vice President and
Chief Financial Officer

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CERTIFICATIONS

I, William V. Humphreys, President and Chief Executive Officer of Citizens
Bancorp (the Company), certify that:

1. I have reviewed this quarterly report on Form 10-Q of the Company;

2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Company as of, and for, the periods presented in this quarterly report;

4. The Companys other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Company and we have: a) designed
such disclosure controls and procedures to ensure that material information
relating to the Company, including any consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which
this quarterly report is being prepared; b) evaluated the effectiveness of the
Companys disclosure controls and procedures as of a date within 90 days prior
to the filing date of this quarterly report (the Evaluation Date); and c)
presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The Companys other certifying officer and I have disclosed, based on
our most recent evaluation, to the Companys auditors and the audit committee
of the Companys board of directors (or persons performing the equivalent
function): a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Companys ability to record,
process, summarize and report financial data and have identified for the
Companys auditors any material weaknesses in internal controls; and b) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the Companys internal controls; and

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

Date: November 12, 2002

/s/ William V. Humphreys
William V. Humphreys
President and Chief Executive Officer

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I, Lark E. Wysham, Senior Vice President and Chief Financial Officer of
Citizens Bancorp (the Company), certify that:

1. I have reviewed this quarterly report on Form 10-Q of the Company;

2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Company as of, and for, the periods presented in this quarterly report;

4. The Companys other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Company and we have: a) designed
such disclosure controls and procedures to ensure that material information
relating to the Company, including any consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which
this quarterly report is being prepared; b) evaluated the effectiveness of the
Companys disclosure controls and procedures as of a date within 90 days prior
to the filing date of this quarterly report (the Evaluation Date); and c)
presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The Companys other certifying officer and I have disclosed, based on
our most recent evaluation, to the Companys auditors and the audit committee
of the Companys board of directors (or persons performing the equivalent
function): a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Companys ability to record,
process, summarize and report financial data and have identified for the
Companys auditors any material weaknesses in internal controls; and b) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the Companys internal controls; and

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

Date: November 12, 2002

/s/ Lark E. Wysham
Lark E. Wysham
Senior Vice President and Chief Financial Officer

19