##### 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 March 31, 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/OR
(Exact name of registrant as specified in its charter)

|                                |  |                                                   
|------------------------------- |  | --------------------------------------------------
|Oregon
(State of Incorporation) |  | 91-1841688
(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.

4,126,273 shares as of April 30, 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                         
|                             |                                                                                              | CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
|                             |                                                                                              | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                     
|                             |                                                                                              | Notes to Consolidated Financial Statements                          
|                             | 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                  



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##### Table of Contents



CITIZENS BANCORP
FORM 10-Q
MARCH 31, 2002
INDEX

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|---------------------------- | ----------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------- |  | --------- | ----- | 
|                             |                                                                                                 |                                                                                                                         |  | Page     
|                             |                                                                                                 |                                                                                                                         |  | Reference
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|PART I                       |                                                                                                 |                                                                                                                         |  |          
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|                             | ITEM 1.  FINANCIAL INFORMATION  UNAUDITED                                                     |                                                                                                                         |  |           |      
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|                             |                                                                                                 | Condensed Consolidated Balance Sheets as of March 31, 2002 and December 31, 2001                                        |  |           | 1     | 
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|                             |                                                                                                 | Condensed Consolidated Statements of Income for the three months ended
March 31, 2002 and 2001                          |  |           | 2     | 
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|                             |                                                                                                 | Condensed Consolidated Statements of Changes in Shareholders Equity for the three
months ended March 31, 2002 and 2001 |  |           | 3     | 
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|                             |                                                                                                 | Condensed Consolidated Statements of Cash Flows for three months ended
March 31, 2002 and 2001                          |  |           | 4     | 
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|                             |                                                                                                 | Notes to Consolidated Financial Statements                                                                              |  |           | 5  6 | 
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|                             | ITEM 2.  Managements Discussion and Analysis of Financial Condition
and Results of Operations |                                                                                                                         |  | 7   12   |      
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|                             | ITEM 3.  Quantitative and Qualitative Disclosure about Market Risk                             |                                                                                                                         |  | 12        |      
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|PART II.  OTHER INFORMATION |                                                                                                 |                                                                                                                         |  |          
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|                             | ITEM 1.  Legal Proceedings                                                                     |                                                                                                                         |  | 13        |      
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|                             | ITEM 2.  Changes in Securities                                                                 |                                                                                                                         |  | 13        |      
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|                             | ITEM 3.  Defaults Upon Senior Securities                                                       |                                                                                                                         |  | 13        |      
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|                             | ITEM 4.  Submission of Matters to a Vote of Security Holders                                   |                                                                                                                         |  | 13        |      
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|                             | ITEM 5.  Other Information                                                                     |                                                                                                                         |  | 13        |      
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|                             | ITEM 6.  Exhibits and Reports on Form 8-K                                                      |                                                                                                                         |  | 13        |      
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|                             | SIGNATURES                                                                                      |                                                                                                                         |  | 14        |      





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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)

|                                     |                                                                                                                                      |  |                |         |                   |  |   |         |  
|------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------ |  | -------------- | ------- | ----------------- |  | - | ------- | -
|                                     |                                                                                                                                      |  | March 31, 2002 |         | December 31, 2001
|                                     |                                                                                                                                      |  |                |         |                  
|Assets                               |                                                                                                                                      |  |                |         |                   |  |   |        
|                                     | Cash and due from banks                                                                                                              |  | $              | 11,967  |                   |  | $ | 15,054  |  
|                                     | Interest bearing deposits in banks                                                                                                   |  |                | 23,617  |                   |  |   | 11,717  |  
|                                     | Securities available for sale                                                                                                        |  |                | 57,847  |                   |  |   | 56,932  |  
|                                     | Securities held to maturity                                                                                                          |  |                | 10,307  |                   |  |   | 10,051  |  
|                                     | Federal Home Loan Bank stock                                                                                                         |  |                | 861     |                   |  |   | 846     |  
|                                     | Loans held for sale                                                                                                                  |  |                | 479     |                   |  |   | 419     |  
|                                     | Loans                                                                                                                                |  |                | 171,869 |                   |  |   | 172,923 |  
|                                     | Allowance for credit losses                                                                                                          |  |                | (2,206  | )                 |  |   | (2,146  | )
|                                     |                                                                                                                                      |  |                |         |                   |  |   |        
|                                     | Net Loans                                                                                                                            |  | $              | 169,663 |                   |  | $ | 170,777 |  
|                                     | Premises and equipment                                                                                                               |  |                | 5,415   |                   |  |   | 5,464   |  
|                                     | Accrued interest receivable                                                                                                          |  |                | 2,273   |                   |  |   | 2,087   |  
|                                     | Cash surrender value of life insurance                                                                                               |  |                | 3,619   |                   |  |   | 3,552   |  
|                                     | Other assets                                                                                                                         |  |                | 1,574   |                   |  |   | 1,630   |  
|                                     | Total assets                                                                                                                         |  | $              | 287,622 |                   |  | $ | 278,529 |  
|                                     |                                                                                                                                      |  |                |         |                   |  |   |        
|Liabilities and Shareholders Equity |                                                                                                                                      |  |                |         |                   |  |   |        
|Liabilities                          |                                                                                                                                      |  |                |         |                   |  |   |        
|                                     | Deposits:                                                                                                                            |  |                |         |                   |  |   |         |  
|                                     | Demand                                                                                                                               |  | $              | 41,514  |                   |  | $ | 40,533  |  
|                                     | Savings and interest bearing demand                                                                                                  |  |                | 120,047 |                   |  |   | 118,331 |  
|                                     | Time                                                                                                                                 |  |                | 71,961  |                   |  |   | 72,957  |  
|                                     |                                                                                                                                      |  |                |         |                   |  |   |        
|                                     | Total deposits                                                                                                                       |  | $              | 233,522 |                   |  | $ | 231,821 |  
|                                     | Repurchase agreements                                                                                                                |  |                | 19,956  |                   |  |   | 14,298  |  
|                                     | Other borrowings                                                                                                                     |  |                | 2,129   |                   |  |   | 282     |  
|                                     | Accrued interest payable                                                                                                             |  |                | 180     |                   |  |   | 209     |  
|                                     | Other liabilities                                                                                                                    |  |                | 1,026   |                   |  |   | 2,395   |  
|                                     |                                                                                                                                      |  |                |         |                   |  |   |        
|                                     | Total liabilities                                                                                                                    |  | $              | 256,813 |                   |  | $ | 249,005 |  
|Shareholders Equity                 |                                                                                                                                      |  |                |         |                   |  |   |        
|                                     | Common stock (no par value); authorized 10,000,000 shares;
Issued and outstanding: 2002  4,139,419 shares;
2001 - 4,105,308 shares; |  |                | 20,121  |                   |  |   | 19,785  |  
|                                     | Retained earnings                                                                                                                    |  |                | 10,600  |                   |  |   | 9,478   |  
|                                     | Accumulated other comprehensive income                                                                                               |  |                | 88      |                   |  |   | 261     |  
|                                     |                                                                                                                                      |  |                |         |                   |  |   |        
|                                     | Total shareholders equity                                                                                                           |  | $              | 30,809  |                   |  | $ | 29,524  |  
|                                     | Total liabilities and shareholders equity                                                                                           |  | $              | 287,622 |                   |  | $ | 278,529 |  
|                                     |                                                                                                                                      |  |                |         |                   |  |   |        

See accompanying notes

1



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##### Table of Contents






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

|                                                     |                                                       |   |                    |       |      |   |           |       | 
|---------------------------------------------------- | ----------------------------------------------------- | - | ------------------ | ----- | ---- | - | --------- | ----- | 
|                                                     |                                                       |   | Three Months Ended
|                                                     |                                                       |   | March 31,         
|                                                     |                                                       |   |                   
|                                                     |                                                       |   | 2002               |       | 2001
|                                                     |                                                       |   |                    |       |     
|Interest Income:                                     |                                                       |   |                    |       |      |   |           |      
|                                                     | Loans                                                 |   | $                  | 3,464 |      |   | $         | 3,815 | 
|                                                     | Interest bearing deposits                             |   |                    | 70    |      |   |           | 101   | 
|                                                     | Securities available for sale                         |   |                    | 594   |      |   |           | 679   | 
|                                                     | Securities held to maturity                           |   |                    | 107   |      |   |           | 90    | 
|                                                     | Other interest income                                 |   |                    | 82    |      |   |           | 0     | 
|                                                     |                                                       |   |                    |       |      |   |           |      
|                                                     | Total interest income                                 |   | $                  | 4,317 |      |   | $         | 4,685 | 
|Interest Expense:                                    |                                                       |   |                    |       |      |   |           |      
|                                                     | Deposits                                              |   |                    | 821   |      |   |           | 1,503 | 
|                                                     | Borrowed funds                                        |   |                    | 6     |      |   |           | 13    | 
|                                                     | Repurchase agreements                                 |   |                    | 73    |      |   |           | 125   | 
|                                                     |                                                       |   |                    |       |      |   |           |      
|                                                     | Total interest expense                                |   | $                  | 900   |      |   | $         | 1,641 | 
|                                                     | Net Interest Income                                   |   | $                  | 3,417 |      |   | $         | 3,044 | 
|Provision for credit losses                          |                                                       |   | (63                | )     |      |   | (123      | )    
|                                                     | Net interest income after provision for credit losses |   | $                  | 3,354 |      |   | $         | 2,921 | 
|Non-interest Income:                                 |                                                       |   |                    |       |      |   |           |      
|                                                     | Service charges on deposit accounts                   |   |                    | 395   |      |   |           | 385   | 
|                                                     | Other                                                 |   |                    | 404   |      |   |           | 356   | 
|                                                     |                                                       |   |                    |       |      |   |           |      
|                                                     | Total non-interest income                             |   | $                  | 799   |      |   | $         | 741   | 
|Non-interest Expense:                                |                                                       |   |                    |       |      |   |           |      
|                                                     | Salaries and employee benefits                        |   |                    | 1,316 |      |   |           | 1,283 | 
|                                                     | Occupancy and equipment                               |   |                    | 328   |      |   |           | 310   | 
|                                                     | Other                                                 |   |                    | 634   |      |   |           | 645   | 
|                                                     |                                                       |   |                    |       |      |   |           |      
|                                                     | Total non-interest expense                            |   | $                  | 2,278 |      |   | $         | 2,238 | 
|                                                     | Income before income taxes                            |   | $                  | 1,875 |      |   | $         | 1,424 | 
|                                                     |                                                       |   |                    |       |      |   |           |      
|Income taxes                                         |                                                       |   | (753               | )     |      |   | (478      | )    
|                                                     | Net income                                            |   | $                  | 1,122 |      |   | $         | 946   | 
|                                                     |                                                       |   |                    |       |      |   |           |      
|Per share data:                                      |                                                       |   |                    |       |      |   |           |      
|Basic and diluted earnings per share                 |                                                       | $ | 0.27               |       |      | $ | 0.23      |      
|Weighted average number of common shares outstanding |                                                       |   | 4,153,265          |       |      |   | 4,183,726 |      
|Return on average assets                             |                                                       |   | 1.61               | %     |      |   | 1.54      | %    

See accompanying notes

2



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##### Table of Contents






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

|                                        |                               |  |                                            |   |        |   |          |   |               |   |        |   |             |   |     |      |   |   |        |      |  
|--------------------------------------- | ----------------------------- |  | ------------------------------------------ | - | ------ | - | -------- | - | ------------- | - | ------ | - | ----------- | - | --- | ---- | - | - | ------ | ---- | -
|                                        |                               |  | Three Months Ended March 31, 2002 and 2001
|                                        |                               |  |                                           
|                                        |                               |  | Number of                                  |   |        |   |          |   |               |   |        |   | Accumulated |   |     |      |  
|                                        |                               |  | Common                                     |   | Common |   |          |   |               |   | Other  |   |            
|                                        |                               |  | Shares                                     |   | Stock  |   | Retained |   | Comprehensive |   |        |   |            
|                                        |                               |  | Outstanding                                |   | Amount |   | Earnings |   | Income (Loss) |   | Total 
|                                        |                               |  |                                            |   |        |   |          |   |               |   |       
|Balance, at December 31, 2000           |                               |  | 4,137,630                                  |   |        | $ | 20,085   |   |               | $ | 6,971  |   |             | $ | 7   |      |   | $ | 27,063 |     
|COMPREHENSIVE INCOME:                   |                               |  |                                            |   |        |   |          |   |               |   |        |   |             |   |     |      |   |   |        |     
|Net Income                              |                               |  |                                           |   |        |   |         |   |               |   | 946    |   |             |   |    |      |   |   | 946    |     
|Other comprehensive income, net of tax: |                               |  |                                            |   |        |   |          |   |               |   |        |   |             |   |     |      |   |   |        |     
|                                        | Unrealized gain on securities |  |                                            |  |        |   |          |  |               |   |        |  |             |   |     | 235  |   |   |        | 235  |  
|Comprehensive Income                    |                               |  |                                           |   |        |   |         |   |               |   |       |   |             |   |    |      |   |   | 1,181  |     
|Issuance of common stock                |                               |  | 51,869                                     |   |        |   | 569      |   |               |   |       |   |             |   |    |      |   |   | 569    |     
|                                        |                               |  |                                            |   |        |   |          |   |               |   |        |   |             |   |     |      |   |   |        |     
|Balance, at March 31, 2001              |                               |  | 4,189,499                                  |   |        | $ | 20,654   |   |               | $ | 7,917  |   |             | $ | 242 |      |   | $ | 28,813 |     
|Balance, at December 31, 2001           |                               |  | 4,105,308                                  |   |        | $ | 19,785   |   |               | $ | 9,478  |   |             | $ | 261 |      |   | $ | 29,524 |     
|COMPREHENSIVE INCOME:                   |                               |  |                                            |   |        |   |          |   |               |   |        |   |             |   |     |      |   |   |        |     
|Net Income                              |                               |  |                                           |   |        |   |         |   |               |   | 1,122  |   |             |   |    |      |   |   | 1,122  |     
|Other comprehensive income, net of tax: |                               |  |                                            |   |        |   |          |   |               |   |        |   |             |   |     |      |   |   |        |     
|                                        | Unrealized loss on securities |  |                                            |  |        |   |          |  |               |   |        |  |             |   |     | (173 | ) |   |        | (173 | )
|Comprehensive Income                    |                               |  |                                           |   |        |   |         |   |               |   |       |   |             |   |    |      |   |   | 949    |     
|Issuance of common stock                |                               |  | 61,589                                     |   |        |   | 644      |   |               |   |       |   |             |   |    |      |   |   | 644    |     
|Repurchase of common stock              |                               |  | (27,523                                    | ) |        |   | (309     | ) |               |   |       |   |             |   |    |      |   |   | (309   | )   
|Stock options exercised                 |                               |  | 45                                         |   |        |   | 1        |   |               |   |       |   |             |   |    |      |   |   | 1      |     
|                                        |                               |  |                                            |   |        |   |          |   |               |   |        |   |             |   |     |      |   |   |        |     
|Balance, at March 31, 2002              |                               |  | 4,139,419                                  |   |        | $ | 20,121   |   |               | $ | 10,600 |   |             | $ | 88  |      |   | $ | 30,809 |     

See accompanying notes

3



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##### Table of Contents






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

|                                                                     |                                                                                   |                                                 |   |                    |      |      |   |        |      |  
|-------------------------------------------------------------------- | --------------------------------------------------------------------------------- | ----------------------------------------------- | - | ------------------ | ---- | ---- | - | ------ | ---- | -
|                                                                     |                                                                                   |                                                 |   | Three Months Ended
|                                                                     |                                                                                   |                                                 |   | March 31,         
|                                                                     |                                                                                   |                                                 |   |                   
|                                                                     |                                                                                   |                                                 |   | 2002               |      | 2001
|                                                                     |                                                                                   |                                                 |   |                    |      |     
|Cash Flows from Operating Activities                                 |                                                                                   |                                                 |   |                    |      |      |   |       
|                                                                     | Net income                                                                        |                                                 | $ | 1,122              |      |      | $ | 946    |     
|                                                                     | Adjustments to reconcile net income to net
Cash provided by operating activities: |                                                 |   |                    |      |      |   |        |     
|                                                                     |                                                                                   | Provision for credit losses                     |   |                    | 63   |      |   |        | 123  |  
|                                                                     |                                                                                   | Depreciation and amortization                   |   |                    | 162  |      |   |        | 158  |  
|                                                                     |                                                                                   | Stock dividends received                        |   |                    | (15  | )    |   |        | (12  | )
|                                                                     |                                                                                   | Increase in accrued interest receivable         |   |                    | (186 | )    |   |        | (242 | )
|                                                                     |                                                                                   | Increase (decrease) in accrued interest payable |   |                    | (29  | )    |   |        | 22   |  
|                                                                     |                                                                                   | Other                                           |   |                    | 307  |      |   |        | 95   |  
|                                                                     |                                                                                   |                                                 |   |                    |      |      |   |       
|                                                                     | Net cash provided by operating activities                                         |                                                 | $ | 1,424              |      |      | $ | 1,090  |     
|Cash Flows from Investing Activities                                 |                                                                                   |                                                 |   |                    |      |      |   |       
|                                                                     | Net increase in interest bearing deposits in banks                                |                                                 |   | (11,900            | )    |      |   | (4,004 | )   
|                                                                     | Proceeds from maturities of available for sale securities                         |                                                 |   | 8,000              |      |      |   | 9,000  |     
|                                                                     | Proceeds from maturities of securities held to maturity                           |                                                 |   | 0                  |      |      |   | 455    |     
|                                                                     | Purchases of securities available for sale                                        |                                                 |   | (9,275             | )    |      |   | (5,011 | )   
|                                                                     | Purchases of securities held to maturity                                          |                                                 |   | (253               | )    |      |   | (511   | )   
|                                                                     | (Increase) decrease in loans made to customers, net of principal collections      |                                                 |   | 1,021              |      |      |   | (6,085 | )   
|                                                                     | Purchases of premises and equipment and other                                     |                                                 |   | (125               | )    |      |   | (145   | )   
|                                                                     |                                                                                   |                                                 |   |                    |      |      |   |       
|                                                                     | Net cash provided by investing activities                                         |                                                 | $ | (12,532            | )    |      | $ | (6,301 | )   
|Cash Flows from Financing Activities                                 |                                                                                   |                                                 |   |                    |      |      |   |       
|                                                                     | Net increase in deposits                                                          |                                                 |   | 1,701              |      |      |   | 2,603  |     
|                                                                     | Net increase (decrease) in repurchase agreements and other borrowings             |                                                 |   | 7,505              |      |      |   | (70    | )   
|                                                                     | Payment of dividends, net of dividends reinvested                                 |                                                 |   | (877               | )    |      |   | (921   | )   
|                                                                     | Repurchase of common stock                                                        |                                                 |   | (309               | )    |      |   | 0      |     
|                                                                     | Exercised stock options                                                           |                                                 |   | 1                  |      |      |   | 0      |     
|                                                                     |                                                                                   |                                                 |   |                    |      |      |   |       
|                                                                     | Net cash provided by (used in) financing activities                               |                                                 | $ | 8,021              |      |      | $ | 1,612  |     
|                                                                     | Net decrease in cash and due from banks                                           |                                                 | $ | (3,087             | )    |      | $ | (3,599 | )   
|Cash and Due from Banks                                              |                                                                                   |                                                 |   |                    |      |      |   |       
|                                                                     | Beginning of period                                                               |                                                 |   | 15,054             |      |      |   | 11,218 |     
|                                                                     | End of period                                                                     |                                                 | $ | 11,967             |      |      | $ | 7,619  |     
|                                                                     |                                                                                   |                                                 |   |                    |      |      |   |       
|Supplemental Disclosure of Cash Flow Information                     |                                                                                   |                                                 |   |                    |      |      |   |       
|                                                                     | Interest paid                                                                     |                                                 |   | 929                |      |      |   | 1,619  |     
|Supplemental Schedule of Non-cash Investing and Financing Activities |                                                                                   |                                                 |   |                    |      |      |   |       
|                                                                     | Fair value adjustment of available for sale, net of tax                           |                                                 |   | (173               | )    |      |   | 235    |     
|                                                                     | Issuance of common stock through dividend reinvestment plan                       |                                                 |   | 644                |      |      |   | 569    |     

See accompanying notes

4



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##### Table of Contents






CITIZENS BANCORP
Notes to 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 generally accepted accounting principles 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 generally accepted accounting
principles. 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 general
accounting principles, 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   
|                                  |            |  |             |       |               |  |          
|Three months ended March 31, 2002 |            |  |             |       |               |  |           |           |  |  |   |     
|Basic earnings per share:         |            |  |             |       |               |  |           |           |  |  |   |     
|                                  | Net Income |  | $           | 1,122 |               |  |           | 4,153,265 |  |  | $ | 0.27 | 
|Effect of dilutive securities:    |            |  |             |       |               |  |           |           |  |  |   |     
|                                  | Options    |  |             |      |               |  |           | 2,244     |  |  |   | -0-  | 
|Diluted earnings per share:       |            |  |             |       |               |  |           |           |  |  |   |     
|                                  | Net Income |  | $           | 1,122 |               |  |           | 4,155,509 |  |  | $ | 0.27 | 
|Three months ended March 31, 2001 |            |  |             |       |               |  |           |           |  |  |   |     
|Basic earnings per share:         |            |  |             |       |               |  |           |           |  |  |   |     
|                                  | Net Income |  | $           | 946   |               |  |           | 4,183,726 |  |  | $ | 0.23 | 
|Effect of dilutive securities:    |            |  |             |       |               |  |           |           |  |  |   |     
|                                  | Options    |  |             |      |               |  |           | -0-       |  |  |   | -0-  | 
|Diluted earnings per share:       |            |  |             |       |               |  |           |           |  |  |   |     
|                                  | Net Income |  | $           | 946   |               |  |           | 4,183,726 |  |  | $ | 0.23 | 

5



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##### Table of Contents





| |  |  | The option price of all outstanding options at March 31, 2001 was in
excess of the market price of the stock at that date, making them
anti-dilutive.
| |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | 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 $40.0 million as of March 31, 2002 and
$25.9 million as of December 31, 2001.
| |  |  | ---------------------------------------------------------------------------------------------------------------

5. RECENT ACCOUNTING PRONOUNCEMENTS



| |  |  | In June 2001, the FASB also 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.
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 is effective for fiscal years beginning
after December 15, 2001. The Company does not anticipate that the adoption
of SFAS Nos. 141, 142, 143 and 144 will have a material effect on its
financial position or results of operations.
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6



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##### Table of Contents






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. Plans are now under way to build
a new office there, our eleventh. We are excited about our potential to do
business in Dallas. We believe that our market penetration will be strong.

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.

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.

7



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##### Table of Contents



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
MasterCard and VISA 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 $1,122,000 for the three months ended March 31,
2002, or $.27 per common share, compared to net income of $946,000, or $.23 per
share for the same period in 2001. The net increase is primarily attributable
to the decrease in interest expense on deposits.

LOAN PORTFOLIO

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

|                                  |            |   |                |        |                   |   |         |        | 
|--------------------------------- | ---------- | - | -------------- | ------ | ----------------- | - | ------- | ------ | 
|                                  |            |   | March 31, 2002 |        | December 31, 2001
|                                  |            |   |                |        |                  
|Commercial                        |            | $ | 24,096         |        |                   | $ | 22,589  |       
|Agriculture                       |            |   | 13,708         |        |                   |   | 14,727  |       
|Real Estate
Construction          |            |   | 15,242         |        |                   |   | 17,885  |       
|                                  | 1-4 Family |   |                | 28,384 |                   |   |         | 29,248 | 
|                                  | Other      |   |                | 87,006 |                   |   |         | 85,024 | 
|Consumer Loans                    |            |   | 4,024          |        |                   |   | 4,061   |       
|                                  |            |   |                |        |                   |   |         |       
|                                  |            |   | 172,460        |        |                   |   | 173,534 |       
|Less: net deferred loan fees      |            |   | (591           | )      |                   |   | (611    | )     
|Total Loans                       |            | $ | 171,869        |        |                   | $ | 172,923 |       
|Less: allowance for credit losses |            |   | (2,206         | )      |                   |   | (2,146  | )     
|                                  |            |   |                |        |                   |   |         |       
|Net Loans                         |            | $ | 169,663        |        |                   | $ | 170,777 |       
|                                  |            |   |                |        |                   |   |         |       

8



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##### Table of Contents



Transactions in the allowance for credit losses were as follows for the three
months ended March 31:

|                                |  |      |       |      |  |   |       |  
|------------------------------- |  | ---- | ----- | ---- |  | - | ----- | -
|                                |  | 2002 |       | 2001
|                                |  |      |       |     
|Balance at beginning of period  |  | $    | 2,146 |      |  | $ | 1,510 |  
|Provision charged to operations |  |      | 63    |      |  |   | 123   |  
|Loans recovered                 |  |      | 3     |      |  |   | 3     |  
|Loans charged off               |  |      | (6    | )    |  |   | (25   | )
|                                |  |      |       |      |  |   |       |  
|Balance at end of period        |  | $    | 2,206 |      |  | $ | 1,611 |  
|                                |  |      |       |      |  |   |       |  

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 March 31, 2002 and December 31, 2001 were
approximately $359,000 and $703,000 respectively. Loans past due 90 days or
more on which the Bank continued to accrue interest were approximately $21,000
at March 31, 2002 and $330,000 at December 31, 2001. There were no loans with
modified terms as of March 31, 2002.

INVESTMENT SECURITIES

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

|                                                                                        |  |                |        |            |  |           |           |  |            |   |     |  | 
|--------------------------------------------------------------------------------------- |  | -------------- | ------ | ---------- |  | --------- | --------- |  | ---------- | - | --- |  | 
|                                                                                        |  |                |        |            |  |           | Estimated |  | Unrealized
|March 31, 2002                                                                          |  | Amortized Cost |        | Fair Value |  | Gain, net
|                                                                                        |  |                |        |            |  |          
|Available for Sale                                                                      |  |                |        |            |  |           |           |  |            |   |     | 
|U.S. Treasury Securities
(Including securities of government agencies
and corporations) |  |                |        |            |  |           |           |  |            |   |     | 
|Total                                                                                   |  | $              | 57,702 |            |  | $         | 57,847    |  |            | $ | 145 | 
|Held to Maturity                                                                        |  |                |        |            |  |           |           |  |            |   |     | 
|Obligations of State and Political Subdivisions                                         |  | $              | 10,307 |            |  | $         | 10,424    |  |            | $ | 117 | 

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

9



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MATERIAL CHANGES IN FINANCIAL CONDITION

Changes in the balance sheet for the three months ended March 31, 2002 include
an increase in total assets, primarily in interest bearing deposits in banks
and an increase in liabilities, primarily in repurchase agreements.

At March 31, 2002, total assets increased 3.26% or approximately $9.1 million
over total assets at December 31, 2001. Major components of the change in
assets were:



| |  |  | $11.9 million increase in interest bearing accounts in banks
| | - |  | ------------------------------------------------------------
|
| |  |  | $1.2 million increase in investment securities              
|
| |  |  | $1.1 million decrease in net loans                          

The increase in interest bearing accounts in banks and investment securities
was funded by an increase in deposits, repurchase agreements and other
borrowings. The decrease in loans was a result of payoffs of several large
commercial real estate loans in the first quarter ended March 31, 2002.
Management expects to see a net increase in loans in 2002.

The Company experienced a growth in deposits, repurchase agreements, and other
borrowings which represent treasury tax and loan deposits, during the first
quarter ended March 31, 2002, specifically as follows:



| |  |  | Demand deposits increased $1.0 million                                                    
| | - |  | ------------------------------------------------------------------------------------------
|
| |  |  | Savings and interest bearing deposits increased $1.7 million                              
|
| |  |  | Time certificates of deposits decreased $1.0 million                                      
|
| |  |  | Repurchase agreements increased $5.7 million                                              
|
| |  |  | Other borrowings, consisting of the treasury tax and loan deposits, increased $1.8 million

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 and relationship style of banking. The increase in
other borrowings is attributable to an increase in tax deposits by customers.

MATERIAL CHANGES IN RESULTS OF OPERATIONS

The Company reported net income of approximately $1,122,000 or $.27 per common
share, for the three months ended March 31, 2002, compared to net income of
approximately $946,000 or $.23 per common share, for the same period in 2001.
This represents an increase in net income of 18.6 percent. The increase during
this period was primarily attributable to a decrease in interest expense.

Total interest income decreased approximately $368,000 or 7.9% for the three
months ended March 31, 2002 as compared to the same period in 2001. The change
for the three-month period was primarily a result of a decrease in interest
income on loans and security investments. The decrease in directly related to
the overall decrease in market interest rates from the comparable period in
2001.

Total interest expense decreased approximately $741,000 or 45.2 percent for the
three months ended March 31, 2002 as compared to the same periods in 2001. The
decrease in interest expense for this period was the result of lower interest
paid on deposits resulting from overall market rate decreases compared to the
same period in 2001.

Total non-interest income increased approximately $58,000 or 7.8% for the three
months ended March 31, 2002 as compared to the same period in 2001. The
primary increases were due to 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 $40,000 or 1.8 percent for the three
months ended March 31, 2002, as compared to the same period in 2001.
Non-interest expense increased as a result of routine adjustments in staff
salaries, and benefits along with expenses associated with technology
enhancements and products.

10



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##### Table of Contents



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 three months ended March 31, 2002 the Bank funded the
allowance for credit losses $63,000 from operations as compared to $123,000 for
the same three-month period of 2001. The Bank decreased the provision for
credit losses based on its analysis of delinquencies, loan types, loan
classifications, and other factors affecting the loan portfolio at March 31,
2002. The Bank experienced $6,000 in credit losses and $3,000 in recoveries
for the three months ended March 31, 2002 and $22,000 in net losses for the
same period ended March 31, 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 March 31, 2002 of $2,206,000 or 1.28% 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 reserve
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
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 three 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 March 31, 2002, shareholders equity totaled $30,809,000 as compared to
$29,524,000 at December 31, 2001, an increase of 4.4%. This increase in equity
was primarily due to the Companys net income.

11



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##### Table of Contents



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 April 30, 2002 Bancorps issued and
outstanding shares totaled 4,126,273, so the maximum number of shares issuable
under the Incentive Stock Option Plan was 165,051 on that date. As of April
30, 2002, options for 82,500 shares had been granted, options for 45 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 April 30, 2002
Bancorps issued and outstanding shares totaled 4,126,273, so the maximum
number of shares issuable under the Stock Bonus Plan was 41,263 on that date.
As of April 30, 2002 no stock had been issued under this Plan.

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

|                                |  |             |   |             |  |                |    |                   |  |  |       |   |  |  |       |  
|------------------------------- |  | ----------- | - | ----------- |  | -------------- | -- | ----------------- |  |  | ----- | - |  |  | ----- | -
|                                |  | Adequately  |   | Well        |  | Bancorp       
|                                |  | Capitalized |   | Capitalized |  |               
|                                |  | Standards   |   | Standards   |  | March 31, 2002 |    | December 31, 2001
|                                |  |             |   |             |  |                |    |                  
|Tier 1 Leverage Ratio           |  |             | 4 | %           |  |                | 5  | %                 |  |  | 10.98 | % |  |  | 10.48 | %
|Tier 1 Risk Based Capital Ratio |  |             | 4 | %           |  |                | 6  | %                 |  |  | 15.50 | % |  |  | 15.08 | %
|Total Risk Based Capital Ratio  |  |             | 8 | %           |  |                | 10 | %                 |  |  | 16.61 | % |  |  | 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 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.

12



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##### Table of Contents






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

13



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##### Table of Contents






SIGNATURES

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

|                   |    |                                                           
|------------------ | -- | ----------------------------------------------------------
|Date: May 13, 2002 |    | /s/   William V. Humphreys                                
|                   |   
|                   | By | William V. Humphreys
President and
Chief Executive Officer

|                   |     |                                                                 
|------------------ | --- | ----------------------------------------------------------------
|Date: May 13, 2002 |     | /s/   Lark E. Wysham                                            
|                   |    
|                   | By: | Lark E. Wysham
Senior Vice President and
Chief Financial Officer

14