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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-20148
CITIZENS FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Kentucky 61-1187135
(State of Incorporation) (I.R.S. Employer Identification No.)
12910 Shelbyville Road, Louisville, Kentucky 40243
(Address of principal executive offices)
(502) 244-2420
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 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 ~~~~~
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: Class A Stock - 1,716,815 as of
May 11, 2002.
The date of this Report is May 14, 2002.
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Part I - Financial Information; Item 1 - Financial Statements
Citizens Financial Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended March 31 2002 2001
------------------------------------------------------------------------ -------------------- --------------------
Revenues:
Premiums and other considerations $ 8,595,976 $ 7,332,325
Premiums ceded (338,734) (311,532)
------------------------------------------------------------------------ -------------------- --------------------
Net premiums earned 8,257,242 7,020,793
Net investment income 1,467,823 1,684,933
Net realized investment gains (losses) (328,401) 171,896
Other income 51,823 49,945
------------------------------------------------------------------------ -------------------- --------------------
Total Revenues 9,448,487 8,927,567
Policy Benefits and Expenses:
Policyholder benefits 4,776,105 4,700,975
Policyholder benefits ceded (491,128) (283,840)
------------------------------------------------------------------------ -------------------- --------------------
Net benefits 4,284,977 4,417,135
Increase in net benefit reserves 2,286,494 1,003,010
Interest credited on policyholder deposits 187,322 195,546
Commissions 1,694,633 1,758,343
General expenses 1,500,883 1,623,807
Interest expense 81,228 171,651
Policy acquisition costs deferred (570,895) (1,058,813)
Amortization of deferred policy acquisition costs,
value of insurance acquired, and goodwill 450,788 487,742
------------------------------------------------------------------------ -------------------- --------------------
Total Policy Benefits and Expenses 9,915,430 8,598,421
------------------------------------------------------------------------ -------------------- --------------------
Income (Loss) before income tax and cumulative effect (466,943) 329,146
of a change in accounting principle
Income Tax Expense (Benefit) (70,000) 86,000
------------------------------------------------------------------------ -------------------- --------------------
Income (Loss) before cumulative effect of a (396,943) 243,146
change in accounting principle
Cumulative effect from prior years (since January 1, 1999) of
accounting for embedded options --- (311,211)
------------------------------------------------------------------------ -------------------- --------------------
Net Loss $ (396,943) $ (68,065)
------------------------------------------------------------------------ -------------------- --------------------
Per Share Amounts:
Income (Loss) before cumulative effect of a
change in accounting principle $ (0.23) $ 0.14
Cumulative effect from prior years (since January 1, 1999) of
accounting for embedded options --- (0.18)
------------------------------------------------------------------------ -------------------- --------------------
Net Loss $ (0.23) $ (0.04)
------------------------------------------------------------------------ -------------------- --------------------
See Notes to Condensed Consolidated Financial Statements.
Part I; Item 1 (continued)
Citizens Financial Corporation and Subsidiaries
Condensed Consolidated Statements of Financial Condition
March 31, December 31,
2002 2001
------------------------------------------------------------------------ -------------------- --------------------
ASSETS (Unaudited)
Investments:
Securities available for sale, at fair value:
Fixed maturities (amortized cost of $79,857,559
and $75,872,277 in 2002 and 2001 respectively) $ 80,363,013 $ 77,534,516
Equity securities (cost of $6,981,538 and
$7,055,402 in 2002 and 2001, respectively) 8,046,594 8,116,958
Investment real estate 3,414,614 3,438,345
Mortgage loans on real estate 156,000 156,000
Policy loans 4,129,376 4,136,649
Short-term investments 652,192 652,192
------------------------------------------------------------------------ -------------------- --------------------
Total Investments 96,761,789 94,034,660
Cash and cash equivalents 16,203,267 18,433,626
Accrued investment income 1,243,591 1,390,550
Reinsurance recoverable 2,783,352 2,755,680
Premiums receivable 417,248 215,520
Property and equipment 2,822,973 2,862,727
Deferred policy acquisition costs 8,891,436 8,579,423
Value of insurance acquired 4,042,191 4,177,907
Goodwill 755,782 755,782
Federal income tax receivable 2,851,306 2,854,933
Other assets 385,050 536,275
------------------------------------------------------------------------ -------------------- --------------------
Total Assets $ 137,157,985 $ 136,597,083
------------------------------------------------------------------------ -------------------- --------------------
See Notes to Condensed Consolidated Financial Statements.
Part I; Item 1 (continued)
Citizens Financial Corporation and Subsidiaries
Condensed Consolidated Statements of Financial Condition
March 31, December 31,
2002 2001
------------------------------------------------------------------------ -------------------- --------------------
LIABILITIES AND SHAREHOLDERS' EQUITY (Unaudited)
Liabilities:
Policy Liabilities:
Future policy benefits $ 91,644,028 $ 89,337,560
Policyholder deposits 15,922,845 15,917,731
Policy and contract claims 1,504,510 1,442,356
Unearned premiums 255,780 252,730
Other 185,319 289,400
------------------------------------------------------------------------ -------------------- --------------------
Total Policy Liabilities 109,512,482 107,239,777
Notes payable 6,766,667 7,095,834
Accrued expenses and other liabilities 1,921,460 1,748,753
Deferred federal income tax 89,321 510,236
------------------------------------------------------------------------ -------------------- --------------------
Total Liabilities 118,289,930 116,594,600
Commitments and Contingencies
Shareholders' Equity:
Common stock, 6,000,000 shares authorized;
1,716,815 shares issued and outstanding
in 2001 and 2000, respectively 1,716,815 1,716,815
Additional paid-in capital 7,285,938 7,285,938
Accumulated other comprehensive income 1,019,620 1,757,105
Retained earnings 8,845,682 9,242,625
------------------------------------------------------------------------ -------------------- --------------------
Total Shareholders' Equity 18,868,055 20,002,483
------------------------------------------------------------------------ -------------------- --------------------
Total Liabilities and Shareholders' Equity $ 137,157,985 $ 136,597,083
------------------------------------------------------------------------ -------------------- --------------------
See Notes to Condensed Consolidated Financial Statements.
Part I; Item 1 (continued)
Citizens Financial Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31 2002 2001
------------------------------------------------------------------------ -------------------- --------------------
Cash Flows from Operations:
Net loss $ (396,943) $ (68,065)
Adjustments to reconcile net loss to cash from operations:
Increase in benefit reserves 2,316,777 1,007,411
Increase (decrease) in claim liabilities 62,154 (123,041)
(Increase) decrease in reinsurance recoverable (27,672) 30,223
Interest credited on policyholder deposits 187,322 195,546
Provision for amortization and depreciation, net of deferrals (43,198) (481,524)
Amortization of premium and accretion of discount on
securities purchased, net (7,394) (14,340)
Net realized investment (gains) losses 328,401 (171,896)
Decrease in accrued investment income 146,959 93,904
Change in other assets and liabilities 40,946 (135,152)
Increase (decrease) in deferred federal income tax liability (41,000) 173,000
Decrease in federal income taxes receivable 3,627 1,157,743
Cumulative effect of a change in accounting principle --- 311,211
------------------------------------------------------------------------ -------------------- --------------------
Net Cash provided by Operations 2,569,979 1,975,020
Cash Flows from Investment Activities:
Cost of securities acquired (8,961,804) (2,992,896)
Investments sold or matured 4,720,959 8,457,895
Investment management fees (41,968) (151,753)
Additions to property and equipment, net (13,423) (18,311)
Other investing activities, net 7,273 76,973
------------------------------------------------------------------------ -------------------- --------------------
Net Cash provided by (used in) Investment Activities (4,288,963) 5,371,908
Cash Flows from Financing Activities:
Policyholder deposits 169,524 255,335
Policyholder withdrawals (351,732) (548,928)
Payments on notes payable - bank (329,167) (200,000)
------------------------------------------------------------------------ -------------------- --------------------
Net Cash used in Financing Activities (511,375) (493,593)
------------------------------------------------------------------------ -------------------- --------------------
Net Increase (Decrease) in Cash and Cash Equivalents (2,230,359) 6,853,335
Cash and Cash Equivalents at Beginning of Period 18,433,626 20,093,774
------------------------------------------------------------------------ -------------------- --------------------
------------------------------------------------------------------------ -------------------- --------------------
Cash and Cash Equivalents at End of Period $ 16,203,267 $ 26,947,109
------------------------------------------------------------------------ -------------------- --------------------
See Notes to Condensed Consolidated Financial Statements.
Part I; Item 1 (continued)
Citizens Financial Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q in conformity with
accounting principles generally accepted in the United States. The accompanying
unaudited condensed financial statements reflect all adjustments which are, in
the opinion of management, necessary to a fair presentation of the results for
the interim periods. All such adjustments are of a normal recurring nature. For
further information, refer to the December 31, 2001 consolidated financial
statements and footnotes included in the Company's annual report on Form 10-K.
Note 2 - COMPREHENSIVE INCOME
The components of comprehensive income, net of related tax, for the three months
ended March 31, 2002 and 2001 are as follows:
----------------------------------
Three Months Ended March 31,
COMPREHENSIVE INCOME: 2002 2001
------------------------------------------- ----------------- ----------------
Net Loss $ (396,943) $ (68,065)
Net unrealized gain (loss) on securities (737,785) 63,054
------------------------------------------- ----------------- ----------------
Comprehensive Loss $ (1,134,728) $ (5,011)
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Note 3 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Effective January 1, 2001, the Company adopted Financial Accounting Standards
Board Statement (SFAS) No. 133, "Accounting for Derivative Instruments and
Hedging Activities", as amended by SFAS Nos. 137 and 138. This statement
requires that all derivatives be recognized as either assets or liabilities in
the balance sheet at their fair value, and sets forth the manner in which gains
or losses thereon are to be recorded. The treatment of such gains and losses is
dependent upon the type of exposure, if any, for which the derivative is
designed as a hedge. Currently, the Company has not designated any derivatives
as hedges. In accordance with SFAS 133, as of January 1, 2001, the Company
recorded a $311,211 transition adjustment loss. This adjustment represents the
cumulative market value change (since January 1, 1999) of options embedded
within convertible bonds, along with a recalculation of discount accretion for
the related host bonds and corresponding income tax impacts. The net transition
adjustment includes a $539,090 gross market value decline, $67,558 of discount
accretion, and a $160,321 income tax benefit.
Note 4 - NET REALIZED INVESTMENT GAINS, NET OF EXPENSES
The Company recorded pretax reductions to the carrying value of available for
sale securities totaling $513,007 and $7,145 for the three months ended March
31, 2002 and 2001, respectively, relating to declines in value which were
considered by management to be other than temporary. These amounts are reported
as reductions of net realized investment gains. The Company also nets certain
direct, incremental investment management fees against net realized investment
gains presented in the Condensed Consolidated Statements of Income. Such costs
are based directly on or, are primarily associated with, realized capital gains.
Costs netted against realized investment gains total $2,875 and $26,889 for the
three months ended March 31, 2002 and 2001, respectively.
Part I; Item 1 (continued)
Note 5 - INCOME TAXES
Current taxes are provided based on estimates of the projected effective annual
tax rate. Deferred taxes reflect the net effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
Note 6 - SEGMENT INFORMATION
The Company's operations are managed along five principal insurance product
lines: Home Service Life, Broker Life, Preneed Life, Dental, and Other Health.
Products in all five lines are sold through independent agency operations. Home
Service Life consists primarily of traditional life insurance coverage sold in
amounts of $10,000 and under to middle and lower income individuals. This
distribution channel is characterized by a significant amount of agent contact
with customers throughout the year. Broker Life product sales consist primarily
of simplified issue and graded-benefit policies in amounts of $10,000 and under.
Other products in this segment which are not aggressively marketed include:
group life, universal life, annuities and participating life coverages. Preneed
Life products are sold to individuals in connection with prearrangement of their
funeral and include single premium and multi-pay policies with coverages
generally in amounts of $10,000 and less. These policies are generally sold to
older individuals at increased premium rates. Dental products are term coverages
generally sold to small and intermediate size employer groups. Other Health
products include various accident and health coverages sold to individuals and
employer groups. Segment information as of March 31, 2002 and 2001, and for the
periods then ended is as follows:
----------------------------------
Three Months Ended March 31,
REVENUE: 2002 2001
-------------------------------------------- ----------------- ----------------
Home Service Life $ 2,316,284 $ 2,338,761
Broker Life 1,553,223 1,791,298
Preneed Life 3,527,266 2,137,321
Dental 2,012,898 2,099,652
Other Health 367,217 388,639
-------------------------------------------- ----------------- ----------------
Segment Totals 9,776,888 8,755,671
Realized investment gains (losses) (328,401) 171,896
-------------------------------------------- ----------------- ----------------
Total Revenue $ 9,448,487 $ 8,927,567
-------------------------------------------- ----------------- ----------------
Below are the net investment income amounts which are included in the revenue
totals above.
----------------------------------
Three Months Ended March 31,
INVESTMENT INCOME: 2002 2001
------------------------------------------ ----------------- ----------------
Home Service Life $ 476,831 $ 563,048
Broker Life 587,537 712,522
Preneed Life 375,560 374,771
Dental 7,022 9,965
Other Health 20,873 24,627
------------------------------------------ ----------------- ----------------
Segment Totals $ 1,467,823 $ 1,684,933
------------------------------------------ ----------------- ----------------
Part I; Item 1 (continued)
The Company evaluates performance based on several factors, of which the primary
financial measure is segment profit. Segment profit represents pretax earnings,
except net realized investment gains and interest expense are excluded. A
significant portion of the Company's realized investment gains are generated
from investments in equity securities. The equities portfolio averaged (on a
cost basis) approximately $7,018,000 and $12,838,000 during the three months
ended March 31, 2002 and 2001, respectively.
----------------------------------
Three Months Ended March 31,
SEGMENT PROFIT (LOSS): 2002 2001
-------------------------------------------- ----------------- ----------------
Home Service Life $ (3,604) $ 169,668
Broker Life 38,593 214,447
Preneed Life (216,053) (174,235)
Dental 156,757 95,498
Other Health (33,007) 23,523
-------------------------------------------- ----------------- ----------------
Segment Totals (57,314) 328,901
Realized investment gains (losses) (328,401) 171,896
Interest expense 81,228 171,651
-------------------------------------------- ----------------- ----------------
Income (Loss) before Federal Income Tax $ (466,943) $ 329,146
-------------------------------------------- ----------------- ----------------
Depreciation and amortization amounts below consist of depreciation expense
along with amortization of the value of insurance acquired and deferred policy
acquisition costs. The first quarter of 2001 also includes approximately $29,000
and goodwill amortization. As further described in Note 8, beginning in 2002,
goodwill amortization is no longer permitted.
-----------------------------------
Three Months Ended March 31,
DEPRECIATION AND AMORTIZATION: 2002 2001
-------------------------------------------- ----------------- -----------------
Home Service Life $ 159,270 $ 177,635
Broker Life 160,706 158,680
Preneed Life 180,950 206,380
Dental 14,844 18,000
Other Health 11,930 16,594
-------------------------------------------- ----------------- -----------------
Segment Totals $ 527,700 $ 577,289
-------------------------------------------- ----------------- -----------------
Segment asset totals are determined based on policy liabilities outstanding in
each segment.
----------------- ----------------
March 31, December 31,
ASSETS: 2002 2001
--------------------------------------------- ----------------- ----------------
Home Service Life $ 44,533,792 $ 44,818,038
Broker Life 54,383,735 54,954,194
Preneed Life 35,734,312 34,138,535
Dental 581,199 726,728
Other Health 1,924,947 1,959,588
--------------------------------------------- ----------------- ----------------
Segment Totals $ 137,157,985 $ 136,597,083
--------------------------------------------- ----------------- ----------------
Part I; Item 1 (continued)
Note 7 - LITIGATION
United Liberty Life Insurance Company ("United Liberty"), which the Company
acquired in 1998, is defending an action in an Ohio state court brought by two
policyholders. The Complaint refers to a particular class of life insurance
policies that United Liberty issued over a period of years ending around 1971.
It alleges that United Liberty's dividend payments on these policies from 1993
through 1999 were less than the required amount. It does not specify the amount
of the alleged underpayment but implies a maximum of about $850,000. The
plaintiffs also allege that United Liberty is liable to pay punitive damages,
also in an unspecified amount, for breach of an implied covenant of good faith
and fair dealing to the plaintiffs in relation to the dividends. The action has
been certified as a class action on behalf of all policyholders whose policies
were issued in Ohio and were still in force in 1993. United Liberty has denied
the material allegations of the Complaint and is defending the action
vigorously. Pre-trial discovery is continuing. United Liberty has filed a motion
for summary judgment to which the plaintiffs have not yet responded. Although
United Liberty has requested mediation of the action, the plaintiffs would not
agree to the request for mediation until United Liberty made an offer to settle
the case. Consequently, United Liberty has offered to settle the matter for
payments over time, which would include attorneys' fees, and which would be
contingent upon an exchange or reformation of the insurance policies currently
owned by the members of the class for policies with an increased premium and a
set dividend. At this stage of the litigation, the Company is unable to
determine whether an unfavorable outcome of the action is likely to occur or,
alternatively, whether the chance of such an outcome is remote. Therefore, at
this time, management has no basis for estimating potential losses, if any. In
addition, the Company is party to other lawsuits in the normal course of
business. Management believes recorded claims liabilities are adequate to ensure
these other suits will be resolved without material financial impact to the
Company.
Note 8 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, "Business Combinations", and No. 142,
"Goodwill and Other Intangible Assets", effective for fiscal years beginning
after December 15, 2001. Under the new rules, goodwill will no longer be
amortized but will be subject to annual impairment tests in accordance with the
Statements. Other intangible assets will continue to be amortized over their
useful lives. The Company adopted the new rules on accounting for goodwill and
other intangible assets in the first quarter of 2002. Application of the
nonamortization provisions of the Statement is expected to increase net income
approximately $90,000 ($0.05 per share) per year. During 2002, the Company will
perform the first of the required impairment tests of goodwill as of January 1,
2002 and has not yet determined what the effect of these tests will be on the
earnings and financial position of the Company.
Part I; Item 2 - Management's Discussion and Analysis
FINANCIAL POSITION. Shareholders' equity totaled approximately $18,868,000 and
$20,002,000 at March 31, 2002 and December 31, 2001, respectively. These
balances reflect an approximate 6% decrease for the three months ended March 31,
2002. As described above, the comprehensive loss totaled approximately
$1,135,000 and $5,000 for the three months ended March 31, 2002 and 2001,
respectively. A significant portion of the 2002 comprehensive loss is
attributable to changes in the value of the Company's fixed maturity and equity
portfolios. Equity securities comprised approximately 6% of the Company's total
assets as of March 31, 2002 and December 31, 2001. Accordingly, as also
described below, the Company's financial position can be significantly affected
by movements in the equities markets. Equity portfolio positions decreased
$74,000 on a cost basis and $70,000 on a market value basis, during the first
three months of 2002. Fixed maturity portfolio positions increased $3,985,000 on
an amortized cost basis and increased $2,828,000 on a market value basis during
the same period. This difference resulted primarily from increasing interest
rates during the quarter. Cash and cash equivalent positions also decreased
approximately $2,230,000 during the quarter ended March 31, 2002.
The Company does not believe significant changes have occurred in the
qualitative or quantitative market risks for its investment securities since
December 31, 2001. However, an increasing interest rate environment would tend
to reduce the market value of existing fixed maturity investments while also
providing the opportunity for higher reinvestment yields on short term
investments and new cash flow.
OPERATIONS. Net premiums and other considerations increased approximately
$1,236,000, or 18% during the first quarter of 2002 compared to the first
quarter of 2001. Preneed Life and Home Service Life premium increases were
approximately $1,387,000 and $64,000, respectively, while Broker Life and Dental
each experienced modest decreases. The Preneed Life segment growth is
attributable primarily to continued expansion into independently owned funeral
homes and a joint marketing agreement with a casket distributor. Preneed Life
growth also accounts for more than seventy-five percent of the Increase in Net
Benefit Reserves for the quarter. Broker Life and Dental premium reductions are
primarily attributable to increased competition in the broker market, and the
mid-2001 loss of certain dental groups which had above average claim rates. The
Other Health segment represents approximately 4% of total premium.
Pretax earnings (loss) (before the cumulative effect of a new accounting
principle) decreased approximately $796,000 to $(467,000) for the three months
ended March 31, 2002, primarily due to an approximate $500,000 decrease in
realized investment gains. Pretax Segment Profit (Loss) (excluding realized
investment gains and interest expense) for the first three months of 2002 was
approximately $(57,000), compared to $329,000 for the first three months of
2001. This decrease resulted primarily from a decline in investment yields and
increased mortality rates, partially offset by improved Dental profitability.
Below are the approximate, annualized pretax investment income and total return
yields for the three months ended March 31, 2002 and 2001.
----------------- -----------------
Three Months Ended March 31 2002 2001
-------------------------------------------- ----------------- -----------------
Investment Income $ 1,467,823 $1,684,933
Realized and Unrealized Losses (1,481,686) (511,128)
-------------------------------------------- ----------------- -----------------
Total Return $ (13,863) $1,173,805
-------------------------------------------- ----------------- -----------------
Average Cash and Investments $112,716,671 $113,070,808
Investment Income Yield - Annualized 5.21% 5.96%
Total Return - Annualized (0.05)% 4.15%
The change in the Company's effective income tax rate is due to the lack of tax
loss carryback potential for a portion of the Company's operations.
CASH FLOW AND LIQUIDITY. Cash flow from operations totaled $2,570,000 for the
quarter ended March 31, 2002 compared to $1,975,000 for the same period in the
prior year. This increase is primarily attributable to growth in Preneed Life
business. The $4,289,000 of cash used by investing activities for the quarter
ended March 31, 2002 resulted primarily from investing the proceeds of Preneed
Life sales in fixed maturity securities. The $511,000 of cash used in financing
activities during the first quarter of 2002 is primarily attributable to bank
loan principal repayments along with annuity and Universal Life account
withdrawals.
Part I; Item 2 - Management's Discussion and Analysis (continued)
FORWARD-LOOKING INFORMATION.
All statements, trend analyses and other information contained in this report
relative to markets for the Company's products and trends in the Company's
operations or financial results, as well as other statements including words
such as "anticipate", "believe", "plan", "estimate", "expect", "intend", and
other similar expressions, constitute forward-looking statements under the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to known and unknown risks, uncertainties and other
factors which may cause actual results to be materially different from those
contemplated by the forward-looking statements. Such factors include, among
other things:
|X| the market value of the Company's investments, including stock market
performance and prevailing interest rate levels;
|X| customer and agent response to new products, distribution channels and
marketing initiatives, including exposure to unrecoverable advanced
commissions;
|X| mortality, morbidity, lapse rates, and other factors which may affect
the profitability of the Company's insurance products;
|X| regulatory changes or actions, including those relating to regulation
of insurance products and insurance companies;
|X| ratings assigned to the Company and its subsidiaries by independent
rating organizations which the Company believes are important to the
sale of its products;
|X| general economic conditions and increasing competition which may affect
the Company's ability to sell its products;
|X| the Company's ability to achieve anticipated levels of operating
efficiencies and meet cash requirements based upon projected liquidity
sources;
|X| unanticipated adverse litigation outcomes; and
|X| changes in the Federal income tax laws and regulations which may affect
the relative tax advantages of some of the Company's products.
There can be no assurance that other factors not currently anticipated by
management will not also materially and adversely affect the Company's results
of operations.
Part I; Item 3 - Quantitative and Qualitative Disclosures about Market Risk
The primary changes in quantitative market risks during the three months ended
March 31, 2002 are discussed in Part I, Item 2 above.
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
a). Exhibit 11. Statement re: computation of per share earnings.
b). none
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CITIZENS FINANCIAL CORPORATION
/s/ Darrell R. Wells
BY:
--------------------------------------------
Darrell R. Wells
President and Chief Executive Officer
/s/ Brent L. Nemec
BY:
--------------------------------------------
Brent L. Nemec
Treasurer and Principal Accounting Officer
Date: May 14, 2002
EXHIBIT INDEX
------------------- ------------------------------------------------------------
Exhibit No. Description
------------------- ------------------------------------------------------------
11 Statement re: computation of per share earnings
EXHIBIT 11
Citizens Financial Corporation and Subsidiaries
Computation of Per Share Earnings
(Unaudited)
Three Months Ended March 31 2002 2001
--------------------------------------------------------------------------- ----------------- ----------------
Numerator(s):
Income (Loss) before cumulative effect of
a change in accounting principle $ (396,943) $ 243,146
Cumulative effect of a change in accounting principle --- (311,211)
--------------------------------------------------------------------------- ----------------- ----------------
Net Loss $ (396,943) $ (68,065)
--------------------------------------------------------------------------- ----------------- ----------------
Denominator:
Weighted average common shares 1,716,815 1,758,215
Earnings Per Share:
Income (Loss) before cumulative effect of
a change in accounting principle $ (0.23) $ 0.14
Cumulative effect of a change in accounting principle --- (0.18)
--------------------------------------------------------------------------- ----------------- ----------------
Net Loss $ (0.23) $ (0.04)
--------------------------------------------------------------------------- ----------------- ----------------