Citizens First Bancorp 10-K 2002 FY Annual report

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

FORM 10-K

	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year 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: 0-32041

CITIZENS FIRST BANCORP, INC.
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	38-3573582 (I.R.S. Employer Identification No.)
525 Water Street, Port Huron, Michigan (Address of principal executive offices)	48060 (Zip Code)

Registrant’s telephone number, including area code: (810) 987-8300
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.01 per share
(Title of Class)

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

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

     The aggregate market value of the voting and non-voting common equity held by non-affiliates was $181.8 million, based upon the closing price of $21.41 as quoted on the Nasdaq National Market on June 21, 2002. Solely for purposes of this calculation, the shares held by the directors and executive officers of the registrant are deemed to be held by affiliates.

     As of June 21, 2002, the registrant had 8,736,273 shares of common stock outstanding.

Documents Incorporated by Reference

Portions of the Annual Report to Stockholders for the year ended March 31, 2002 (Part II)
Portions of the Proxy Statement for the Annual Meeting of Stockholders (Part III)

TABLE OF CONTENTS

Employment Agreement

Annual Report

Consent of Plante & Moran LLP

INDEX

		Page
	Part I
Item 1.	Business		1
Item 2.	Properties		31
Item 3.	Legal Proceedings		32
Item 4.	Submission of Matters to a Vote of Securities Holders		32
	Part II
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters		32
Item 6.	Selected Financial Data		32
Item 7.	Management’s Discussion and Analysis of Financial Condition
	and Results of Operations		32
Item 7A.	Quantitative and Qualitative Disclosure about Market Risk		32
Item 8.	Financial Statements and Supplementary Data		32
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial
	Disclosure		32
	Part III
Item 10.	Directors and Executive Officers of the Registrant		33
Item 11.	Executive Compensation		33
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		33
Item 13.	Certain Relationships and Related Transactions		33
	Part IV
Item 14.	Exhibits, Financial Statement Schedules and Reports on Form 8-K		34

Part I

Item 1. Business

General

     Citizens First Bancorp, Inc. (the “Company” or “Citizens First Bancorp”) was organized as a Delaware business corporation at the direction of Citizens First Savings Bank (“Citizens First” or the “Bank”) in October 2000 to become the holding company for Citizens First upon completion of its conversion from the mutual to stock form of ownership. The conversion was completed on March 7, 2001. In connection with the conversion, the Company sold 8,821,075 shares of its common stock, par value $0.01 per share at a purchase price of $10 per share to depositors of the Bank in a subscription offering raising approximately $85.1 million in net conversion proceeds. In addition, the Company issued an additional 705,686 shares, representing 8% of the shares sold in the subscription offering, to Citizens First Foundation, a charitable foundation established by the Bank. The Company has no significant assets, other than all of the outstanding shares of the Bank and the portion of the net proceeds it retained from the offering, and no significant liabilities. Management of the Company and the Bank are substantially similar and the Company neither owns nor leases any property, but instead uses the premises, equipment and furniture of the Bank. Accordingly, the information set forth in this report, including the consolidated financial statements and related financial data, relates primarily to the Bank.

     Citizens First is regulated by the Michigan Office of Financial and Insurance Services and the Federal Deposit Insurance Corporation. Citizens First’s deposits are insured to the maximum allowable amount by the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation. Citizens First has been a member of the Federal Home Loan Bank System since 1938.

     Citizens First operates as a community-oriented financial institution, specializing in the acceptance of retail deposits from the general public in the areas surrounding its 15 full-service banking offices and using those funds, together with funds generated from operations and borrowings, to originate loans. The principal lending activity of Citizens First is the origination of mortgage loans for the purpose of purchasing or refinancing one- to four-family residential property. Citizens First also originates commercial and multi-family real estate loans, construction loans, commercial loans, automobile loans, home equity loans and lines of credit and a variety of consumer loans. Citizens First currently originates one- to four-family mortgage loans primarily for sale in the secondary market, while generally retaining the servicing rights. Citizens First’s revenues are derived principally from the generation of interest and fees on loans originated and, to a lesser extent, interest and dividends on investments. Citizens First’s primary sources of funds are deposits, principal and interest payments on loans and investments and advances from the Federal Home Loan Bank of Indianapolis.

Market Area

     Citizens First’s main office is in Port Huron, Michigan in St. Clair County. Citizens First’s primary deposit gathering and lending areas are concentrated in and around the communities surrounding its 15 full-service offices located in St. Clair, Sanilac, Huron and Lapeer Counties, Michigan. However, Citizens First also makes some loans beyond these areas throughout southeastern Michigan.

     Port Huron, the population center for St. Clair county, is located approximately sixty miles northeast of Detroit and sixty miles east of Flint. St. Clair County, is bounded by the counties of Macomb to the south and west, Lapeer to the west and Sanilac to the north. The eastern boundary of the county is the St. Clair river and Canada. Almost half of the county’s total land area is rural and approximately one-third of the resident labor force commutes to jobs outside of the county. As of 2001, St. Clair County had a population of approximately 166,541, while the other three counties in the Bank’s primary market area had a population of approximately 169,970. The largest employment sectors in this area are manufacturing, services, retail and government. Citizens First’s market area has a higher per capita median household income when compared to Michigan and the United States.

Competition

     Citizens First faces intense competition for the attraction of deposits and origination of loans in its market area. Its most direct competition for deposits has historically come from the several financial institutions operating in Citizens First’s market area and, to a lesser extent, from other financial service companies, such as brokerage firms, credit unions and insurance companies. Citizens First’s competition for loans comes primarily from financial institutions in its market area, and to a lesser extent from other financial service providers, such as mortgage companies and mortgage brokers. Additionally, competition for loans may increase due to the increasing number of non-depository financial service companies entering the mortgage market, such as insurance companies, securities companies and specialty finance companies. Citizens First expects competition to increase in the future as a result of legislative, regulatory and technological changes and the continuing trend of consolidation in the financial services industry. Technological advances, for example, have lowered barriers to market entry, allowed banks to expand their geographic reach by providing services over the Internet and made it possible for non-depository institutions to offer products and services that traditionally have been provided by banks. The Gramm-Leach-Bliley Act, which permits affiliation among banks, securities firms and insurance companies, also has changed the competitive environment in which Citizens First conducts business. Some of the institutions with which Citizens First competes are significantly larger than Citizens First and, therefore, have significantly greater resources. Competition for deposits and the origination of loans could limit Citizens First’s growth in the future.

Lending Activities

     General.Citizens First’s loans are subject to federal and state laws and regulations. Interest rates charged by Citizens First on loans are affected principally by Citizens First’s current asset/liability strategy, the demand for various types of loans, the supply of money available for lending purposes and the rates offered by competitors. These factors are, in turn, affected by general and economic conditions, monetary policies of the federal government, including the Federal Reserve Board, legislative tax policies and governmental budgetary matters.

2

     Loan Portfolio Analysis.The following table sets forth the composition of Citizens First’s loan portfolio in dollar amounts and as a percentage of the portfolio at the dates indicated.

				At March 31,
				2002					2001					2000
						Percent					Percent					Percent
				Amount		of Total			Amount		of Total			Amount		of Total
									(Dollars in thousands)
Real estate loans:
	One- to four-family			$	385,765		51.56	%	$	395,484		57.75	%	$	341,308		58.81	%
	Commercial and multi- family real estate (1)				144,817		19.36			113,715		16.60			83,536		14.40
	Residential construction				27,541		3.68			18,479		2.70			24,750		4.26
	Home equity loans and lines of credit				71,266		9.52			66,687		9.74			56,991		9.82
			Total real estate loans		629,389		84.12			594,365		86.78			506,585		87.29
Consumer loans:
	Vehicles (2)				61,661		8.24			55,490		8.10			41,066		7.08
	Other				15,015		2.01			12,344		1.80			13,882		2.39
			Total consumer loans		76,676		10.25			67,834		9.90			54,948		9.47
Commercial loans					42,137		5.63			22,676		3.32			18,824		3.24
		Total loans			748,202		100.00	%		684,875		100.00	%		580,357		100.00	%
Less:
	Deferred loan origination fees and discounts				1,618					1,595					1,393
	Allowance for loan losses				11,020					10,831					10,461
		Total loans, net		$	735,564				$	672,449				$	568,503

[Additional columns below]

[Continued from above table, first column(s) repeated]

				At March 31,
				1999					1998
						Percent					Percent
				Amount		of Total			Amount		of Total
						(Dollars in thousands)
Real estate loans:
	One- to four-family			$	427,555		70.83	%	$	399,616		71.58	%
	Commercial and multi- family real estate (1)				62,500		10.36			42,805		7.67
	Residential construction				31,040		5.14			31,336		5.61
	Home equity loans and lines of credit				42,417		7.02			44,844		8.03
			Total real estate loans		563,512		93.35			518,601		92.89
Consumer loans:
	Vehicles (2)				7,100		1.18			5,329		0.96
	Other				16,348		2.71			21,361		3.82
			Total consumer loans		23,448		3.89			26,690		4.78
Commercial loans					16,638		2.76			13,011		2.33
		Total loans			603,598		100.00	%		558,302		100.00	%
Less:
	Deferred loan origination fees and discounts				1,800					1,882
	Allowance for loan losses				11,161					7,527
		Total loans, net		$	590,637				$	548,893

(1)	Includes commercial construction loans which at March 31, 2002 and 2001 totaled $9.9 million and $6.5 million, respectively.
(2)	Includes loans secured by automobiles, motorcycles, campers and other recreational vehicles.

3

     Maturity of Loan Portfolio.The following table presents certain information at March 31, 2002 regarding the dollar amount of loans maturing in Citizens First’s portfolio based on their contractual terms to maturity or scheduled amortization, but does not include potential prepayments. Demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts are reported as becoming due in one year or less. Loan balances do not include undisbursed loan proceeds, net deferred loan origination costs and allowance for loan losses.

			At March 31, 2002
					Commercial
			One- to		and				Home Equity
			Four-		Multi-Family		Residential		Loans and						Total
			Family		Real Estate		Construction		Lines of Credit		Consumer		Commercial		Loans
									(In thousands)
Amounts due in:
	One year or less		$	906	$	28,086	$	27,541	$	518	$	3,363	$	22,245	$	82,659
	More than one year to five years			5,118		61,011		—		15,533		62,117		16,887		160,666
	More than five years			379,741		55,720		—		55,215		11,196		3,005		504,877
		Total amount due	$	385,765	$	144,817	$	27,541	$	71,266	$	76,676	$	42,137	$	748,202

     Scheduled contractual principal repayments of loans do not reflect the actual life of the loans. The average life of a loan is substantially less than its contractual term because of prepayments. In addition, due-on-sale clauses on loans generally give Citizens First the right to declare loans immediately due and payable if, among other things, the borrower sells the real property with the mortgage and the loan is not repaid. The average life of a mortgage loan tends to increase, however, when current mortgage loan market rates are substantially higher than rates on existing mortgage loans and, conversely, tends to decrease when rates on existing mortgage loans are substantially higher than current mortgage loan market rates.

     The following table sets forth, at March 31, 2002, the dollar amount of loans contractually due after March 31, 2003, and whether such loans have fixed interest rates or adjustable interest rates.

			Due After March 31, 2003
			Fixed			Adjustable		Total
					(In thousands)
Real estate loans:
	One- to four-family		$	84,735		$	300,124	$	384,859
	Commercial and multi-family real estate			114,143			2,588		116,731
	Home equity			58,475			12,273		70,748
		Total real estate loans		257,353			314,985		572,338
Consumer loans				70,430			2,883		73,313
Commercial loans				11,928			7,964		19,892
		Total loans	$	339,711		$	325,832	$	665,543

     One- to Four-Family Loans.Citizens First’s primary lending activity is the origination of loans secured by one- to four-family residences located in its market area. Citizens First offers various types of adjustable-rate mortgage loans and fixed-rate mortgage loans. At March 31, 2002, 47.9% of Citizens First’s residential mortgage loans had fixed interest rates and 52.1% had adjustable interest rates.

     Citizens First originates fixed-rate fully amortizing loans with maturities of 10, 15, 20 and 30 years. Management establishes the loan interest rates based on market conditions, with consideration given to the type of the loan and the quality and liquidity of the collateral securing the loan. Citizens First offers mortgage loans that generally conform to Freddie Mac guidelines, as well as jumbo loans, which currently are loans in amounts over $300,700. Fixed-

4

rate conforming loans are generally originated for sale in the secondary market, with servicing rights released. Citizens First will underwrite one- to four-family owner-occupied residential mortgage loans with a loan to value ratio of 97%, provided that private mortgage insurance will generally be required on loans that exceed 80% of the lower of the appraised value or the purchase price of the real estate. In limited instances, Citizens First will originate loans with a loan to value ratio of 103% to sell in the secondary market, with servicing released. Citizens First also offers a seven year balloon mortgage loan, in which the borrower pays a fixed monthly payment for the first seven years, at which point the entire balance of the loan becomes due.

     Citizens First currently also offers adjustable-rate mortgage loans, with an interest rate based on the U.S. Treasury securities index, which adjust annually after a one, three, five or seven year initial fixed period and with terms of up to 30 years. The maximum amount by which the interest rate may be increased or decreased on such loans is generally 2% per year and no more than 5% over the life of the loan. Additionally, Citizens First offers an adjustable-rate loan where the borrower has the option to convert the loan to a fixed rate after a predetermined period of time, without refinancing costs.

     Adjustable-rate mortgage loans help reduce Citizens First’s exposure to changes in interest rates. There are, however, unquantifiable credit risks resulting from the potential of increased costs to be paid by the borrower due to changed rates. During periods of rising interest rates the risk of default on adjustable-rate mortgage loans increases as a result of repricing and the increased payments required by the borrower. In addition, although adjustable-rate mortgage loans help make Citizens First’s asset base more responsive to changes in interest rates, the extent of this interest sensitivity is limited by the annual and lifetime interest rate adjustment limits. Because of these considerations, yields on adjustable-rate mortgage loans may not be sufficient to offset increases in Citizens First’s cost of funds during periods of rising interest rates.

     Citizens First requires all properties securing its mortgage loans to be appraised by an approved independent state-licensed appraiser. Citizens First also requires that fire, casualty, title, hazard and, if appropriate, flood insurance be maintained on most properties securing real estate loans made by Citizens First.

     In an effort to provide financing for low- and moderate-income families, Citizens First offers Federal Housing Authority and Veterans Administration residential mortgage loans to qualified individuals with adjustable- and fixed-rates of interest and terms of up to 30 years. Such loans are secured by one- to four-family residential property and are underwritten using modified underwriting guidelines.

     Residential Construction Loans.Citizens First originates construction loans to individuals for the construction of one- to four-family residences. Citizens First’s residential construction loans generally provide for the payment of interest only during the construction phase, which is usually between six and twelve months. At the end of the construction phase, the loan converts to a permanent mortgage loan. Loans can be made with a maximum loan to value ratio of 95%, provided that the borrower obtains private mortgage insurance on the loan if the loan balance exceeds 80% of the appraised value or sales price, whichever is less, of the secured property. Citizens First will also originate residential construction loans to builders with which Citizens First has an established relationship. Construction loans to individuals are generally made on the same terms as Citizens First’s one- to four-family mortgage loans. At March 31, 2002, the largest outstanding residential construction loan commitment was for $1.5 million, all of which was outstanding. This loan was performing according to its terms at March 31, 2002.

     Before making a commitment to fund a construction loan, Citizens First requires an appraisal of the property by an independent licensed appraiser. Citizens First also reviews and inspects each property before disbursement of funds. Loan proceeds are disbursed after each stage of work is completed. The final 10% of the loan is held until the house is completed.

     Construction lending generally involves a higher degree of risk than single-family permanent mortgage lending because of the greater potential for disagreements between borrowers and builders and the failure of builders to pay subcontractors. Additional risk often exists because of the inherent difficulty in estimating both a property’s value and

5

the estimated cost of the property. If the estimate of construction costs proves to be inaccurate, Citizens First may be required to advance funds beyond the amount originally committed to protect the value of the property. If the estimate of value upon completion proves to be inaccurate, Citizens First may be confronted with a property whose value is insufficient to assure full repayment.

     Commercial and Multi-Family Real Estate Loans.Citizens First originates commercial real estate loans that are generally secured by properties used for business purposes such as small office buildings, industrial facilities or retail facilities primarily located in Citizens First’s primary market area, under the direction of an experienced staff of commercial loan officers. Citizens First also, to a lesser extent, originates multi-family loans that are generally secured by five or more unit apartment buildings in Citizens First’s primary market area.

     Most of the commercial and multi-family real estate loans originated by Citizens First are fully amortizing loans with terms of up to twenty years. Generally, the maximum loan-to-value ratio for such a loan is 80%. In reaching its decision on whether to make a commercial or multi-family real estate loan, Citizens First considers the net operating income of the property, the borrower’s expertise, credit history and profitability and the value of the underlying property. In addition, with respect to commercial real estate rental properties, Citizens First will also consider the term of the lease and the quality of the tenants. Citizens First has generally required that the properties securing these real estate loans have debt service coverage ratios (the ratio of earnings before debt service to debt service) of between 1.10x and 1.30x. Citizens First requires written appraisals prepared by a certified independent appraiser of all properties securing commercial or multi-family real estate loans greater than $250,000, or as required by FIRREA. Additionally, environmental surveys are required prior to funding of certain larger commercial real estate loans in excess of $1.0 million and may be required on commercial real estate loans greater than $500,000 or where a risk of contamination exists. At March 31, 2002, Citizens First’s largest commercial or multi-family real estate loan had an outstanding balance of $4.5 million. The loan is secured by gas stations and convenience stores and was performing according to its terms at March 31, 2002.

     Citizens First also makes construction loans for commercial development projects, including multi-family, commercial properties, single-family subdivisions and condominiums. These loans generally have an interest-only phase during construction then convert to permanent financing. The permanent mortgage loan must be approved at the time the initial approval is made. Disbursement of funds is at the sole discretion of Citizens First and is based on the progress of construction. The maximum loan to value ratio for these loans depends upon the type of commercial development project being undertaken, but generally will not exceed 80%. At March 31, 2002, the largest outstanding commercial construction loan was $5.4 million. This loan is secured by a manufactured housing community and was performing according to its terms at March 31, 2002.

     Multi-family and commercial real estate lending affords Citizens First an opportunity to receive interest at rates higher than those generally available from one- to four-family residential lending. However, loans secured by these properties usually are greater in amount and are more difficult to evaluate and monitor and, therefore, involve a greater degree of risk than one- to four-family residential mortgage loans. Because payments on loans secured by income producing properties are often dependent on the successful operation and management of the properties, repayment of these loans may be affected by adverse conditions in the real estate market or the economy. Citizens First seeks to minimize these risks by generally limiting the maximum loan-to-value ratio to 80% for commercial and multi-family real estate loans and by strictly scrutinizing the financial condition of the borrower, the cash flow of the project, the quality of the collateral and the management of the property securing the loan.

     Home Equity Loans and Lines of Credit.Citizens First offers home equity loans and lines of credit secured by owner-occupied one- to four-family residences. At March 31, 2002, home equity loans and lines of credit totaled $71.3 million or 9.5% of Citizens First’s total loans. Additionally, at March 31, 2002, the unadvanced amounts of home equity lines of credit totaled $18.1 million. The underwriting standards employed by Citizens First for home equity loans and lines of credit include a determination of the applicant’s credit history, an assessment of the applicant’s ability to meet existing obligations and payments on the proposed loan and the value of the collateral securing the loan. Home equity loans will not be made if the borrower’s outstanding monthly debt exceeds 40% of the borrower’s gross monthly

6

income. Loan to value ratios and maximum loan amounts vary depending on the amount of insurance coverage on the underlying property. Generally, home equity loans are made with fixed interest rates and with terms up to 15 years.

     Home equity lines of credit have adjustable rates of interest which are indexed to the prime rate as reported inThe Wall Street Journal. Generally, the maximum combined loan-to-value ratio on home equity lines of credit is 85% and loans may be made up to $500,000. A home equity line of credit may be drawn down by the borrower for an initial period of five years from the date of the loan agreement. During this period, the borrower has the option of paying, on a monthly basis, either principal and interest or only the interest. If not renewed, the borrower has to pay back the amount outstanding under the line of credit over a term not to exceed 15 years, beginning at the end of the five year period.

     Consumer Loans.Citizens First offers a variety of consumer loans, including automobile loans, mobile home loans, other secured loans, collateral loans, personal loans and unsecured loans.

     Citizens First offers fixed-rate automobile loans on a direct and indirect basis with terms of up to 72 months. Citizens First will generally make such loans up to 100% of the retail price for new cars and up to 90% of the retail value as stated in the NADA Used Car Guide for used cars. The interest rates offered depend on the age of the automobile, market conditions and current interest rates.

     In March 1999, Citizens First commenced an indirect consumer lending program, which is managed by an experienced consumer loan officer. Citizens First originates automobile loans through approximately 42 automobile dealers in its primary market area. These dealers provide Citizens First applications to finance new and, to a lesser extent, used vehicles sold by their dealerships. Citizens First has the opportunity to accept or reject each loan. Generally, Citizens First pays a fee to the automobile dealer based on the interest rate on the loan. This fee, or dealer reserve, is paid to the dealer monthly. If a loan is paid off or charged off within a specified time period, Citizens First is credited with 100% of the dealer reserve, which it may withhold from the dealer’s account or credit against future payments to the dealer. For fiscal 2002 and 2001, Citizens First originated $35.8 million and $36.3 million of consumer loans, respectively, of which 10.7% and 6.4% were indirectly originated automobile loans.

     Citizens First also originates consumer loans secured by mobile homes. Historically, such loans were primarily originated indirectly through dealer relationships. However, in recent years management has decided to stop originating such loans on an indirect basis, which has reduced the amount of mobile home originations. As a result, mobile home loans have declined from $10.4 million, or 1.5% of total loans and 7.7% of consumer loans at March 31, 2001 to $8.3 million, or 1.1% of total loans and 10.8% of consumer loans at March 31, 2002. Citizens First originates loans on new or used mobile homes (up to fifteen years old) with terms ranging from seven to fifteen years and with fixed interest rates. Citizens First generally will finance up to a maximum of 90% of the purchase price of the mobile home unit or the retail value as stated in the NADA book, whichever is less.

     Citizens First also originates consumer loans secured by boats, motorcycles, campers and other recreational vehicles. These loans have fixed interest rates and terms ranging from a maximum of five years to fifteen years depending on the type of collateral securing the loan.

     Citizens First offers collateral loans, personal loans and unsecured loans. Collateral loans are generally secured by a savings account or a certificate of deposit. Personal loans generally have a borrowing capacity of $5,000 and a maximum term of four years. Citizens First also makes unsecured personal loans to individuals who have been homeowners for at least four years. These loans will be made up to $10,000 with terms of up to seven years.

     Citizens First believes that it will benefit from the higher yields earned on consumer loans and that the shorter duration of consumer loans will improve Citizens First’s interest rate risk position. However, consumer loans entail greater risk than do residential mortgage loans, particularly in the case of loans that are unsecured or secured by rapidly depreciating assets such as automobiles. In these cases, any repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment of the outstanding loan balance as a result of the greater likelihood of

7

damage, loss or depreciation. The remaining deficiency often does not warrant further substantial collection efforts against the borrower beyond obtaining a deficiency judgment. In addition, consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy. Citizens First expects that it will increase its allowance for loan losses as its consumer loan portfolio grows by charging a provision for loan losses against income.

     Commercial Loans.Citizens First, under the direction of an experienced staff of commercial loan officers, makes commercial business loans primarily in its market area to a variety of professionals, sole proprietorships and small businesses. Citizens First offers a variety of commercial lending products, including term loans for fixed assets, working capital, lines of credit and loans with a single principal payment at maturity. Additionally, Citizens First originates Small Business Administration guaranteed loans. Citizens First offers secured commercial term loans, with terms of up to ten years and the payment of which is dependent on future earnings. Business lines of credit have adjustable rates of interest with terms of up to three years. Loans that require a one-time payment of principal at its termination will be originated on terms of up to three years provided the borrower is paying interest at least semi-annually or up to one year if the borrower will pay all of the interest due upon maturity. Business loans with variable rates of interest are generally indexed to the prime rate as reported inThe Wall Street Journal. Citizens First also makes unsecured commercial loans. At March 31, 2002, such loans totaled $22.0 million, or 11.6% of commercial loans. At March 31, 2002, Citizens First’s largest outstanding commercial loan was a $6.2 million working capital line of credit. Additionally, at March 31, 2002, Citizens First’s largest outstanding commercial loan commitment was a $10.0 million line of credit. Both of these loans were performing according to their terms at March 31, 2002.

     When making commercial business loans, Citizens First considers the financial statements of the borrower, Citizens First’s lending history with the borrower, the debt service capabilities of the borrower, the projected cash flows of the business, and the value of the collateral. Commercial business loans are generally secured by a variety of collateral, primarily accounts receivable, inventory and equipment, and are generally supported by personal guarantees. Depending on the collateral used to secure the loans, commercial loans are made in amounts of up to 100% of the value of the collateral securing the loan.

     Unlike residential mortgage loans, which generally are made on the basis of the borrower’s ability to make repayment from his or her employment or other income, and which are secured by real property whose value tends to be more easily ascertainable, commercial loans are of higher risk and typically are made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business. As a result, the availability of funds for the repayment of commercial loans may depend substantially on the success of the business itself. Further, any collateral securing such loans may depreciate over time, may be difficult to appraise and may fluctuate in value.

     Loans to One Borrower.The maximum amount that Citizens First may lend to one borrower is limited by regulation. At March 31, 2002, Citizens First’s regulatory limit on loans to one borrower was $12.9 million or $21.5 million for loans approved by two-thirds of the Board of Directors. At that date, Citizens First’s largest amount of outstanding loans to one borrower, including the borrower’s related interests, was approximately $20.3 million and consisted of ten commercial, industrial and retail properties. Additionally, at March 31, 2002, Citizens First’s largest outstanding commitment to one borrower was approximately $21.0 million, approximately $20.3 million of which was outstanding, and consisted of commercial, industrial and retail properties. All of these loans were performing according to their original terms at March 31, 2002.

     Loan Approval Procedures and Authority.Citizens First’s lending activities follow written, non-discriminatory, underwriting standards and loan origination procedures established by Citizens First’s Board of Directors and management.

     Residential real estate loans greater than $700,000 but less than $1.0 million require the approval of the Mortgage Loan Committee, which consists of the President and Chief Executive Officer, Senior Vice President, Retail Banking, a Vice President and an Assistant Vice President. Residential real estate loans between $1.0 million and $2.0 million require approval of the Officer’s Credit Committee which consists of the President and Chief Executive Officer,

8

the Senior Vice President, Commercial Banking, certain commercial officers and other officers as designated. Loans in excess of $2.0 million require approval of the Director’s Loan Committee which consists of three directors, the President and Chief Executive Officer and the Senior Vice President, Commercial Banking. Additionally, various officers and underwriters of Citizens First have been delegated authority to approve different types of real estate loans. The approval authorities range from the authority of certain staff underwriters to approve residential mortgage loans up to $125,000 to the authority of the President and Chief Executive Officer to approve any real estate loan up to $1.0 million. In addition, certain employees may combine their authority to jointly approve a loan that exceeds their individual lending authority.

     Consumer loans greater than $700,000 require the approval of the entire Board of Directors. Additionally, various bank personnel have been delegated authority to approve consumer loans. The President and Chief Executive Officer may individually approve any consumer loan up to $700,000.

     All commercial and commercial real estate loans in excess of $5.0 million require the approval of the Board of Directors. Commercial and commercial real estate loans between $2.0 and $5.0 million require the approval of the Directors Loan Committee. Commercial and commercial real estate loans between $500,000 and $2.0 million require the approval of the Officers Credit Committee. Additionally, various bank personnel have been delegated authority to approve loans less than $500,000. Officers may combine their authority to jointly approve a loan that exceeds their individual lending authority.

     Loan Originations, Purchases and Sales.Citizens First’s lending activities are conducted by its salaried and commissioned loan personnel and through its relationship with dealers. Currently, Citizens First has contractual relationships with approximately 42 vehicle dealers, all of which originate automobile loans for Citizens First. Citizens First underwrites and funds such loans. These automobile dealers accounted for approximately 10.7% and 6.4% of the consumer loans, and 84.7% and 80.3% of the automobile loans, originated by Citizens First in fiscal 2002 and 2001, respectively . The automobile dealers are compensated based on the interest rate on the loan offered. This fee, or dealer reserve, is paid to the dealer monthly.

     Except in connection with its indirect automobile lending, Citizens First relies on advertising, referrals from realtors and customers, and personal contact by Citizens First’s staff to originate loans. Citizens First does not use loan correspondents or other third-parties to originate loans. Citizens First generally does not purchase either participation interests in loans or whole loans. Citizens First’s ability to originate adjustable-rate and fixed-rate loans is dependent upon the relative customer demand for such loans, which is affected by the current and expected future level of interest rates.

     Generally, all fixed-rate loans which conform to the underwriting standards specified by Freddie Mac are originated for sale in the secondary market to Freddie Mac, and to a lesser extent private investors. Additionally, Citizens First may sell loans in the secondary market to Fannie Mae. To date, no loans have been sold to Fannie Mae. Citizens First generally retains the servicing rights on the loans sold. Citizens First currently has a best efforts contract with a third party, under which Citizens First is not required to replace loans which fail to close for any reason. Additionally, Citizens First has entered into forward contracts with Freddie Mac in the past and at March 31, 2002, Citizens had outstanding forward contracts to sell loans of approximately $6.1 million. Sales of loans are made without recourse to Citizens First if the borrower defaults. Citizens First generally originates adjustable-rate loans for its portfolio but will from time to time sell such loans in the secondary market based on prevailing market interest rate conditions, liquidity needs and Citizens First’s interest rate risk position.

9

     The following table sets forth Citizens First’s loan originations, sales and principal repayments for the periods indicated:

					For the Year Ended March 31,
					2002		2001		2000
							(In thousands)
Loans at beginning of period					$	684,875	$	580,357	$	603,598
	Originations:
		Real estate:
			One- to four-family			187,765		185,227		110,854
			Commercial and multi-family real estate			41,078		42,203		37,812
			Residential construction			50,045		39,838		37,625
			Home equity loans and lines of credit			43,911		28,280		31,723
				Total real estate loans		322,799		295,548		218,014
			Consumer			35,834		36,363		43,732
			Commercial			107,293		41,229		30,713
				Total loans originated		465,926		373,140		292,459
Deduct:
	Principal loan repayments and prepayments					212,816		200,766		122,773
		Loan sales				189,783		67,856		192,927
			Sub-total			402,599		268,622		315,700
Net loan activity						63,327		104,518		(23,241	)
		Loans at end of period (1)			$	748,202	$	684,875	$	580,357

(1) Loans at end of period include loans in process of $13.7 million, $13.7 million and $11.4 million for fiscal years 2002, 2001 and 2000, respectively.

     Loan Commitments.Citizens First issues loan commitments to its prospective borrowers conditioned on the occurrence of certain events. Commitments are made in writing on specified terms and conditions and are honored for up to 30 days from approval for residential real estate loans and 180 days on commercial and multi-family real estate loans. At March 31, 2002, Citizens First had loan commitments and unadvanced loans and lines of credit totaling $170.2 million. See note 13 of the notes to financial statements included in the Annual Report to Stockholders incorporated by reference into this Form 10-K.

     Loan Fees.In addition to interest earned on loans, Citizens First receives income from fees in connection with loan originations, loan modifications, late payments and for miscellaneous services related to its loans. Income from these activities varies from period to period depending upon the volume and type of loans made and competitive conditions.

     Citizens First charges loan origination fees, which are calculated as a percentage of the amount borrowed, subject to a minimum amount. As required by applicable accounting principles, loan origination fees, discount points and certain loan origination costs are deferred and recognized over the contractual remaining lives of the related loans on a level yield basis. At March 31, 2002, Citizens First had $1.6 million of net deferred loan fees.

     Nonperforming Assets and Delinquencies.When a borrower fails to make a required loan payment, Citizens First attempts to cure the deficiency by contacting the borrower and seeking the payment. A late notice is mailed after 16 days of delinquency for residential mortgage loans. In most cases, deficiencies are cured promptly. After that, Citizens First attempts to contact the borrower by either telephone, letter or in person in order to determine the cause of

10

the delinquency and to arrange for curing the default. Generally, after the 90th day of delinquency, Citizens First commences foreclosure proceedings under the terms of the security instrument and applicable law.

     When a borrower on a consumer or commercial loan fails to make a required loan payment, a late notice is mailed after 10 days of delinquency and Citizens First follows up with a letter and a phone call to the borrower. Additional contact and correspondence continues until the 90th day of delinquency at which point Citizens First may take action to repossess the property securing the loan.

     Management informs the Board of Directors monthly of the amount of loans delinquent more than 60 days, all loans in foreclosure, and all foreclosed and repossessed property that Citizens First owns.

     Citizens First ceases accruing interest on loans when principal or interest payments are delinquent 90 days or more unless the loan is adequately collateralized and in the process of collection. Once the accrual of interest on a loan is discontinued, all interest previously accrued is reversed against current period interest income once management determines that interest is uncollectible.

			At March 31,
			2002			2001			2000			1999			1998
						(Dollars in thousands)
Non-accruing loans:
	Real estate		$	1,437		$	1,156		$	954		$	157		$	578
	Consumer			61			220			64			212			207
	Commercial			295			434			228			495			576
		Total (1)		1,793			1,810			1,246			864			1,361
Real estate owned (2)				953			282			80			75			75
		Total nonperforming assets	$	2,746		$	2,092		$	1,326		$	939		$	1,436
Total nonperforming loans as a percentage of total loans				0.24	%		0.26	%		0.21	%		0.14	%		0.24	%
Total nonperforming loans as a percentage of total assets				0.19	%		0.21	%		0.17	%		0.13	%		0.22	%

(1)	Total non-accruing loans equals total nonperforming loans.
(2)	Real estate owned balances are shown net of related loss allowances and include repossessed automobiles which at March 31, 2002, totaled $62,000.

     Interest income that would have been recorded for the year ended March 31, 2002 had nonaccruing loans been current according to their original terms amounted to approximately $103,100. Interest related to these loans was not included in interest income for the year ended March 31, 2002.

11

     The following table sets forth the delinquencies in Citizens First’s loan portfolio as of the dates indicated.

			At March 31, 2002										At March 31, 2001
			60-89 Days					90 Days or More					60-89 Days					90 Days or More
			Number		Principal			Number		Principal			Number		Principal			Number		Principal
			of		Balance of			of		Balance of			of		Balance of			of		Balance of
			Loans		Loans			Loans		Loans			Loans		Loans			Loans		Loans
										(Dollars in thousands)
Real Estate Loans:
	One- to four-family			18	$	2,263			10	$	1,161			3	$	271			13	$	1,156
	Residential construction			3		401			2		276			—		—			—		—
	Home equity loans and lines of credit			4		130			—		—			12		146			8		109
	Consumer loans			13		109			8		61			6		104			9		111
Commercial loans				2		888			2		295			—		—			2		434
		Total		40	$	3,791			22	$	1,793			21	$	521			32	$	1,810
Delinquent loans to total loans						0.51	%				0.24	%				0.08	%				0.26	%

			At March 31, 2000
			60-89 Days					90 Days or More
			Number		Principal			Number		Principal
			of		Balance of			of		Balance of
			Loans		Loans			Loans		Loans
			(Dollars in thousands)
Real Estate Loans:
	One- to four-family			7	$	912			14	$	954
	Residential construction			2		197			—		—
	Home equity loans and lines of credit			3		30			—		—
	Consumer loans			16		190			3		64
Commercial loans				5		258			2		228
		Total		33	$	1,587			19	$	1,246
Delinquent loans to total loans						0.27	%				0.21	%

     Real Estate Owned.Real estate acquired by Citizens First as a result of foreclosure and real estate acquired by deed-in-lieu of foreclosure is classified as real estate owned until sold. Under Michigan law, there is generally a six-month redemption period with respect to one- to four-family residential properties during which the borrower has the right to repurchase the property. When property is acquired it is recorded at the lower of its cost, which is the unpaid principal balance of the loan plus foreclosure costs, or fair market value at the date of foreclosure, establishing a new cost basis. Holding costs and declines in fair value after acquisition of the property result in charges against income. At March 31, 2002, Citizens First had $953,000 in real estate owned, which consisted of 6 one-to four-family residences and 17 vehicles.

     Asset Classification.Regulators have adopted various regulations and practices regarding problem assets of savings institutions. Under such regulations, examiners have authority to identify problem assets during examinations and, if appropriate, require them to be classified.

     There are three classifications for problem assets: substandard, doubtful and loss. Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions

12

and values questionable, and there is a high possibility of loss. An asset classified as loss is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted. If an asset or portion thereof is classified as loss, the insured institution establishes specific allowances for loan losses for the full amount of the portion of the asset classified as loss. All or a portion of general loan loss allowances established to cover probable losses related to assets classified substandard or doubtful can be included in determining an institution’s regulatory capital, while specific valuation allowances for loan losses generally do not qualify as regulatory capital. Assets that do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are designated “special mention.” Citizens First monitors “special mention” assets. Citizens First’s Asset/Liability Management Committee, which consists of the President and Chief Executive Officer and three senior vice presidents, classifies assets on a monthly basis based upon delinquency reports, real estate owned, asset review summaries and assets brought to their attention by senior officers.

     The following table sets forth the Bank’s classified assets at March 31, 2002.

			Loss				Doubtful				Substandard				Special Mention
			Number				Number				Number				Number
			of		Principal		of		Principal		of		Principal		of		Principal
			Loans		Balance		Loans		Balance		Loans		Balance		Loans			Balance
									(Dollars in thousands)
Real estate loans:
	One- to four-family			—	$	—		—	$	—		17	$	1,625		—		$	—
	Commercial and multi-family			—		—		—		—		—		—		4			629
	Residential construction			—		—		—		—		—		—		—			—
	Home equity loans and lines of credit			—		—		—		—		—		—		—			—
Consumer loans:
	Vehicles			—		—		—		—		3		26		—			—
	Other			—		—		—		—		5		41		—			—
Commercial loans				—		—		2		295		2		261		7			3,952
		Total		—	$	—		2	$	295		27	$	1,953		11		$	4,581

     Allowance for Loan Losses.In originating loans, the Bank recognizes that losses will be experienced on loans and that the risk of loss will vary with, among other things, the type of loan being made, the creditworthiness of the borrower over the term of the loan, general economic conditions and, in the case of a secured loan, the quality of the security for the loan. The Bank maintains an allowance for loan losses to absorb losses inherent in the loan portfolio. The allowance for loan losses represents management’s estimate of probable losses based on information available as of the date of the financial statements.

     Citizen First’s methodology for assessing the adequacy of its loan loss allowance consists of management assessing the expected losses inherent in the loan portfolio by first performing a detailed review of multi-family real estate, commercial real estate and other loans with significant balances. Such loans are assigned higher credit risk ratings upon their origination. A detailed credit quality review is also performed for other loans which have deteriorated below certain levels of credit risk or which have been classified or identified as watch list loans. A specified loss allowance is attributed to such reviewed loans. An appropriate level of loss allowance is then determined for the remaining balance of the loan portfolio by applying estimated projected loss factors to each specific type of loan category in the portfolio with varying loss factors being applied to specific sub-categories of loans within such broader categories. The estimated loss factors applied are primarily determined by management based on recent loan loss experience, industry averages and trends in loan delinquencies and nonaccruals for each type of loan. The determination of the estimated loss factors applied to each type of loan is determined based on information known to management at such time and projections by management based on such information and, therefore, actual loss ratios experienced in the future could vary from those

13

projected. After the review yields an aggregate amount of loss allowance attributable to specific loans and the application of the loss factors to the remaining balance of loans by type, management analyzes the adequacy of such combined amount of loan loss allowance by considering other factors that may have an impact on the performance of the loan portfolio, such as trends in real estate and collateral values, trends and forecasts for the national and local economies and the geographic dispersion of borrowers. Based on this analysis, management then adjusts the overall allowance which may result in an unallocated portion of the loan loss allowance. This necessity for the unallocated portion of the allowance occurs because other factors affecting the determination of probable losses inherent in the loan portfolio may exist which are not necessarily captured by the application of estimated loss factors. The existence of an unallocated portion of the loan loss allowance reflects management’s view that the allowance should have a margin that recognizes the imprecision underlying the process of estimating expected credit losses and the adequacy of the loan loss allowance. Determination of the probable losses inherent in the portfolio, which are not necessarily captured by the allocated methodology discussed above, involves the exercise of judgment. Recent factors which were considered in the evaluation of the adequacy of Citizens First’s unallocated loan loss reserve include the relative lack of loss experience with indirect automobile loans, and increases in commercial real estate, commercial and construction loans. Management also considers industry norms and the expectations from rating agencies and banking regulators in determining the adequacy of the allowance.

     During fiscal 1999, in recognition of its strategy of increasing multi-family real estate, commercial real estate, commercial and consumer (particularly indirect automobile) loans, the overall increase in the risk inherent in a loan portfolio with an increased amount of such loans and the relative lack of loss experience with those types of loans, management reevaluated its loan loss allowance methodology. As a result, management determined to increase the loss factors it applied to its commercial real estate, commercial and consumer loans and also determined that it should maintain an overall loan loss allowance which would be at historically higher levels as a percentage of total loans and which would be closer to the loan loss allowance averages maintained by commercial banks operating in Michigan. Based on the revised methodology, the loan loss allowance was increased to $11.1 million or 1.85% of total loans at March 31, 1999 of which $2.1 million was unallocated to any specific loan category. However, despite an increase in the aggregate balance of commercial and consumer loans since fiscal 1999, non-accruing and delinquent commercial and consumer loans have been lower than was expected, which has resulted in a reduction in the loan loss allowance to 1.47% of total loans at March 31, 2002.

     Although management believes that it uses the best information available to establish the allowance for loan losses, future adjustments to the allowance for loan losses may be necessary and results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations. Furthermore, while Citizens First believes it has established its existing allowance for loan losses in conformity with generally accepted accounting principles, there can be no assurance that regulators, in reviewing Citizens First’s loan portfolio, will not request Citizens First to increase its allowance for loan losses. Any material increase in the allowance for loan losses may adversely affect Citizens First’s financial condition and results of operations.

14

     The following table presents an analysis of Citizens First’s allowance for loan losses.

			Year Ended March 31,
			2002			2001			2000			1999			1998
			(Dollars in thousands)
Allowance for loan losses, beginning of year			$	10,831		$	10,461		$	11,161		$	7,527		$	6,982
Charged-off loans:
	Real estate			(12	)		(5	)		(5	)		—			(4	)
	Consumer			(870	)		(342	)		(230	)		(50	)		(187	)
	Commercial			(291	)		(142	)		—			(117	)		—
		Total charged-off loans		(1,173	)		(489	)		(235	)		(167	)		(191	)
Recoveries on loans previously charged off:
	Real estate			—			—			6			—			1
	Consumer			263			23			12			1			21
	Commercial			103			56			—			—			—
		Total recoveries		366			79			18			1			22
Net loans charged-off				(807	)		(410	)		(217	)		(166	)		(169	)
Provision for loan losses				996			780			(483	)		3,800			714
Allowance for loan losses, end of period			$	11,020		$	10,831		$	10,461		$	11,161		$	7,527
Net loans charged-off to average interest-earning loans				0.11	%		0.06	%		0.04	%		0.03	%		0.03	%
Allowance for loan losses to total loans				1.47	%		1.58	%		1.80	%		1.85	%		1.35	%
Allowance for loan losses to nonperforming loans				614.61	%		598.40	%		839.57	%		1,291.78	%		553.06	%
Net loans charged-off to allowance for loan losses				7.32	%		3.79	%		2.07	%		1.49	%		2.25	%
Recoveries to charge-offs				31.20	%		16.16	%		7.66	%		0.60	%		11.52	%

15

     The following table presents the approximate allocation of the allowance for loan losses by loan category at the dates indicated. Management believes that the allowance can be allocated by category only on an approximate basis. The allocation of the allowance to each category is not indicative of future losses and does not restrict the use of any of the allowance to absorb losses in any category.

		At March 31,
		2002								2001
				% of			Percent					% of			Percent
				Allowance			of Loans					Allowance			of Loans
				in each			in Each					in each			in Each
				Category			Category					Category			Category
				to Total			to Total					to Total			to Total
		Amount		Allowance			Loans			Amount		Allowance			Loans
		(Dollars in thousands)
Real estate		$	4,980		45.19	%		84.12	%	$	5,425		50.09	%		86.78	%
Consumer			4,130		37.48			10.25			4,082		37.69			9.90
Commercial			1,096		9.94			5.63			845		7.80			3.32
Unallocated			814		7.39			—			479		4.42			—
	Total allowance for loan losses	$	11,020		100.00	%		100.00	%	$	10,831		100.00	%		100.00	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

		At March 31,
		2000
				% of			Percent
				Allowance			of Loans
				in each			in Each
				Category			Category
				to Total			to Total
		Amount		Allowance			Loans
		(Dollars in thousands)
Real estate		$	5,717		54.65	%		87.29	%
Consumer			3,120		29.83			9.47
Commercial			784		7.49			3.24
Unallocated			840		8.03			—
	Total allowance for loan losses	$	10,461		100.00	%		100.00	%

		At March 31,
		1999									1998
				% of			Percent					% of			Percent
				Allowance			of Loans					Allowance			of Loans
				in each			in Each					in each			in Each
				Category			Category					Category			Category
				to Total			to Total					to Total			to Total
		Amount		Allowance			Loans			Amount		Allowance			Loans
							(Dollars in thousands)
Real estate		$	6,440		57.70	%		93.35	%	$	2,332		30.98	%		92.89	%
Consumer			1,853		16.60			3.89			1,430		19.00			4.78
Commercial			720		6.45			2.76			646		8.58			2.33
Unallocated			2,148		19.25			—			3,119		41.44			—
	Total allowance for loan losses	$	11,161		100.00	%		100.00	%	$	7,527		100.00	%		100.00	%

Securities Investment Activities

     Under Michigan law and regulation, Citizens First has authority to purchase a wide range of investment securities. As a result of federal banking laws, however, financial institutions such as Citizens First may not engage as principals in any activities that are not permissible for a national bank, unless the Federal Deposit Insurance Corporation has determined that the investments would not pose a significant risk to the Savings Association Insurance Fund and Citizens First is in compliance with applicable capital standards.

     Citizens First’s Board of Directors has the overall responsibility for Citizens First’s investment portfolio. The Board of Directors has authorized the Investment Committee of the Board of Directors to execute the investment strategies as prescribed by the Board of Directors. The Board of Directors also receives a monthly portfolio report. The Investment Committee is authorized to delegate investment and compliance duties to an Investment consultant and/or Investment Manager. The Investment Manager is authorized to make investment decisions consistent with Citizens

16

First’s investment policy and the recommendations of Citizens First’s Investment Committee and is primarily responsible for daily investment activities.

     The primary objectives of Citizens First’s investment portfolio are to provide liquidity necessary to meet day-to-day, cyclical and long-term requirements for funds; to invest funds not currently needed to fulfill loan demands; and provide a flow of dependable earnings with minimum risk arising from potential changes in interest rates or from concentration of investments in a particular issuer or sector. Investment decisions are based upon Citizens First’s cash and borrowed funds position; the quality, maturity, stability, and earnings of loans; the nature and stability of deposits; and Citizens First’s excess capital.

     Under Citizens First’s investment policy, the investment portfolio is to be composed of investments in marketable obligations in the form of bonds, notes, or debentures which are salable under ordinary circumstances with reasonable promptness at fair value. Citizens First’s investment policy prohibits investment in stock of any corporation or securities which are convertible into stock at the option of the issuer. The policy also prohibits investments in futures, options, private placements, collateralized mortgage obligations and derivatives. Debt securities authorized for investment by the investment policy include U.S. Treasury securities; government agency securities; corporate securities; municipal securities; certificates of deposit; bankers acceptances; demand obligations; repurchase agreements; and commercial paper.

     The investment policy provides that all bonds, when purchased, must be of investment grade as determined by at least one nationally recognized securities rating organization and generally must carry a rating of “A/Mig2” or better or the equivalent or “A1/P1” for commercial paper. Citizens First’s investment policy limits investments in non-U.S. Treasury securities to no more than five percent of the value of the investment portfolio for any one issue and ten percent of the value of the investment portfolio for any one issuer. Also, the total amount of investment securities of the issuer may not exceed twenty percent of Citizens First’s capital, surplus, and subordinated notes and debentures.

     Generally accepted accounting principles require that securities be categorized as either “held to maturity,” “trading securities” or “available for sale,” based on management’s intent as to the ultimate disposition of each security. Debt securities may be classified as “held to maturity” and reported in financial statements at amortized cost only if the reporting entity has the positive intent and ability to hold those securities to maturity. Securities that might be sold in response to changes in market interest rates, changes in the security’s prepayment risk, increases in loan demand, or other similar factors cannot be classified as “held to maturity.” Debt and equity securities held for current resale are classified as “trading securities.” These securities are reported at fair value, and unrealized gains and losses on the securities would be included in earnings. Citizens First does not currently use or maintain a trading account. Debt and equity securities not classified as either “held to maturity” or “trading securities” are classified as “available for sale.” These securities are reported at fair value, and unrealized gains and losses on the securities are excluded from earnings and reported, net of deferred taxes, as a separate component of equity. Citizens First currently classifies all of its securities as available for sale.

     At March 31, 2002, Citizens First did not own any securities, other than U.S. Government and agency securities, that had an aggregate book value in excess of 10% of Citizens First’s stockholders’ equity at that date.

17

     The following table sets forth certain information regarding the amortized cost and fair value of Citizens First’s securities at the dates indicated.

			At March 31,
			2002				2001				2000
			Amortized		Fair		Amortized		Fair		Amortized		Fair
			Cost		Value		Cost		Value		Cost		Value
			(In thousands)
Debt securities available-for-sale:
	Obligations of U.S. Treasury and U.S. government agencies		$	19,586	$	20,388	$	39,818	$	40,898	$	47,255	$	47,150
	Obligations of state and political subdivisions			14,056		14,568		10,804		11,339		3,612		3,630
	Corporate Securities			74,126		73,874		43,326		43,816		43,663		43,508
	Mortgaged-backed Securities			4,878		4,932		—		—		—		—
		Total		112,646		113,762		93,948		96,053		94,530		94,288
Equity securities available-for-sale:
	Federal Home Loan Mortgage Corporation Preferred Stock			5,002		4,785		—		—		—		—
	Total equity securities available-for-sale			5,002		4,785		—		—		—		—
		Total debt and equity securities	$	117,648	$	118,547	$	93,948	$	96,053	$	94,530	$	94,288

     The following table sets forth Citizens First’s securities activities for the periods indicated.

		For the Year Ended March 31,
		2002			2001			2000
Securities:
	Securities, beginning of period (1)	$	96,053		$	94,288		$	2,003
	Purchases		128,623			48,506			95,287
	Sales		(35,040	)		(15,516	)		—
	Maturities		(70,290	)		(33,858	)		(3,000	)
	Increase in net premium		407			286			240
	Increase (decrease) in unrealized gain		(1,206	)		2,347			(242	)
	Net increase (decrease) in investment securities		22,494			1,765			92,285
	Securities, end of period	$	118,547		$	96,053		$	94,288

(1) Includes securities available-for-sale including those transferred from held-to-maturity concurrently with the adoption of SFAS No. 133 in the period ended March 31, 2000.

18

     The table below sets forth certain information regarding the carrying value, weighted average yields and contractual maturities of Citizens First’s debt securities as of March 31, 2002.

				At March 31, 2002
									More than One Year					More than Five Years
				One Year or Less					to Five Years					to Ten Years
						Weighted					Weighted					Weighted
				Carrying		Average			Carrying		Average			Carrying		Average
				Value		Yield			Value		Yield			Value		Yield
				(Dollars in thousands)
Available-for-sale securities:
	Municipal securities (1)			$	3,247		2.05	%	$	3,444		5.91	%	$	7,385		5.18	%
	Obligations of the U.S.
		Treasury and government agencies and corporation			6,579		7.06	%		13,809		7.01	%		—		—
		Other investments			11,996		7.26	%		43,049		5.36	%		9,895		4.31	%
		Mortgaged-backed securities			—		—			—		—			—		—
		Equity securities			—		—			—		—			—		—
			Total securities at fair value	$	21,822		6.42	%	$	60,302		5.77	%	$	17,280		4.68	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

				At March 31, 2002
				More than Ten Years					Mortgaged-Backed					Equity		Total
						Weighted					Weighted							Weighted
				Carrying		Average			Carrying		Average			Carrying		Carrying		Average
				Value		Yield			Value		Yield			Value		Value		Yield
				(Dollars in thousands)
Available-for-sale securities:
	Municipal securities (1)			$	492		5.33	%		—		—			—	$	14,568		4.63	%
	Obligations of the U.S.
		Treasury and government agencies and corporation			—		—			—		—			—		20,388		7.03	%
		Other investments			8,934		6.72	%		—		—			—		73,874		5.69	%
		Mortgaged-backed securities			—		—		$	4,932		5.84	%		—		4,932		5.84	%
		Equity securities			—		—			—		—		$	4,785		4,785		—
			Total securities at fair value	$	9,426		6.65	%	$	4,932		5.84	%	$	4,785	$	118,547		5.80	%

(1) Weighted average yield data for municipal securities is presented on a tax equivalent basis based on an assumed tax rate of 34%.

19

Deposit Activities and Other Sources of Funds

     General.Deposits are the major external source of funds for Citizens First’s lending and other investment activities. In addition, Citizens First generates funds internally from loan principal repayments and prepayments and maturing securities. Scheduled loan repayments are a relatively stable source of funds, while deposit inflows, outflows and loan prepayments are influenced significantly by general interest rates and money market conditions. Citizens First may use borrowings from the Federal Home Loan Bank of Indianapolis to compensate for reductions in the availability of funds from other sources. Currently, Citizens First has no other borrowing arrangements aside from the Federal Home Loan Bank.

     Deposit Accounts.Nearly all of Citizens First’s depositors reside in Michigan. Citizens First offers a wide variety of deposit accounts with a range of interest rates and terms. Citizens First’s deposit accounts consist of a variety of savings accounts, checking and NOW accounts, certificates of deposit, individual retirement accounts and money market accounts. The maturities of Citizens First’s certificate of deposit accounts range from seven days to six years. Deposit account terms vary with the principal differences being the minimum deposit balance, early withdrawal penalties, limits on the number of transactions and the interest rate. Citizens First reviews its deposit mix on a monthly basis and its pricing weekly.

     In October 1999, Citizens First began offering a wide range of commercial deposit products and checking accounts to cities, towns and municipal school districts located within Citizens First’s primary market area. At March 31, 2002, Citizens First was working with approximately 43 municipalities. At March 31, 2002, these entities accounted for approximately $19.2 million of Citizens First’s certificates of deposit and $23.4 million of Citizens First’s money market accounts. Such municipal and governmental deposits tend to be more interest rate sensitive than other consumer deposit accounts and are typically subject to competitive bidding processes. Additionally, the balance of such deposit accounts tend to fluctuate more than consumer deposit accounts due to the budgeting and tax collection timing of the municipal entity. Accordingly, such municipal deposits tend to be more volatile than consumer deposits and no assurance can be made that Citizens First will be able to maintain the levels of such accounts in future periods.

     Citizens First believes it is competitive in the interest rates it offers on its deposit products. Citizens First determines the rates paid based on a number of factors, including rates paid by competitors, Citizens First’s need for funds and cost of funds, borrowing costs and movements of market interest rates. Citizens First does not utilize brokers to obtain deposits and at March 31, 2002 had no brokered deposits.

20

     The following table presents the deposit activity of Citizens First for the periods indicated:

	For the Year Ended March 31,
	2002		2001			2000
Beginning balance	$	581,281	$	601,008		$	526,840
Increase (decrease) before interest credited		30,175		(47,184	)		50,698
Interest credited		22,558		27,457			23,470
Net (decrease) increase		52,733		(19,727	)		74,168
Ending balance	$	634,014	$	581,281		$	601,008

     At March 31, 2002, Citizens First had $66.1 million in certificate accounts in amounts of $100,000 or more maturing as follows:

				Weighted
				Average
Maturity Period		Amount		Rate
		(Dollars in thousands)
Three months or less		$	26,720		2.43	%
Over 3 through 6 months			9,418		5.66
Over 6 through 12 months			15,735		4.44
Over 12 months			14,259		5.73
	Total	$	66,132

21

     The following table presents by various rate categories, the amount of certificates of deposit outstanding at the dates indicated and the periods to maturity of the certificates of deposit outstanding at March 31, 2002.

			Period to Maturity from March 31, 2002								At March 31,
			Less		One		Two		Over
			than One		to Two		to Three		Three
			Year		Years		Years		Years		2002		2001		2000
					(Dollars in thousands)
Certificates of deposit:
	0 to 2.00%		$	71,057	$	—	$	1	$	—	$	71,058	$	320	$	4,562
	2.01 to 4.00%			48,568		9,707		4,418		117		62,810		17,429		22,020
	4.01 to 5.00%			17,016		4,901		7,197		14,410		43,524		32,657		53,981
	5.01 to 6.00%			26,691		4,241		4,236		4,283		39,451		86,054		162,295
	6.01 to 7.00%			33,385		3,492		14,896		12,718		64,491		169,932		81,732
	7.01 to 8.00%			5,393		—		1,540		1,043		7,976		8,416		73
	Over 8.00%			—		—		—		—		—		—		—
		Total certificate accounts	$	202,110	$	22,341	$	32,288	$	32,571	$	289,310	$	314,808	$	324,663

     Borrowings.Citizens First has the ability to use advances from the Federal Home Loan Bank of Indianapolis to supplement its supply of lendable funds and to meet deposit withdrawal requirements. The Federal Home Loan Bank of Indianapolis functions as a central reserve bank providing credit for savings banks and certain other member financial institutions. As a member of the Federal Home Loan Bank of Indianapolis, Citizens First is required to own capital stock in the Federal Home Loan Bank of Indianapolis and is authorized to apply for advances on the security of the capital stock and certain of its mortgage loans and other assets, principally securities that are obligations of, or guaranteed by, the U.S. Government or its agencies, provided certain creditworthiness standards have been met. Advances are made under several different credit programs. Each credit program has its own interest rate and range of maturities. Depending on the program, limitations on the amount of advances are based on the financial condition of the member institution and the adequacy of collateral pledged to secure the credit. At March 31, 2002, Citizens First had the ability to borrow a total of approximately $264.6 million from the Federal Home Loan Bank of Indianapolis, of which $151.4 million was borrowed at such date.

     The following table presents certain information regarding Citizens First’s borrowed funds at or for the periods ended on the dates indicated:

		Year Ended March 31,
		2002			2001			2000
Federal Home Loan Bank advances and other borrowings:
	Average balance outstanding		130,645		$	90,345		$	72,675
	Maximum amount outstanding at any month-end during the period		155,093			115,004			97,370
	Balance outstanding at end of period		151,415			114,931			70,502
	Weighted average interest rate during the period		6.23	%		6.34	%		5.94	%
	Weighted average interest rate end of period		5.79	%		6.35	%		6.08	%

Personnel

     As of March 31, 2002, Citizens First had 220 full-time employees and 20 part-time employees, none of whom is represented by a collective bargaining unit. Citizens First believes its relationship with its employees is good.

22

Trust Services

     Established in 1999, Citizens First maintains the Asset Management and Trust Department which provides trust and investment services to individuals, partnerships, corporations and institutions and also acts as a fiduciary of estates and conservatorships and as a trustee under various wills, trusts and other plans. The trust department allows the Bank to provide investment opportunities and fiduciary services to both current and prospective customers. Consistent with Citizens First’s operating strategy, Citizens First will continue to emphasize the growth of its trust service operations to grow assets and increase fee-based income. Citizens First has implemented several policies governing the practices and procedures of the trust department, including policies relating to maintaining confidentiality of trust records, investment of trust property, handling conflicts of interest, and maintaining impartiality. At March 31, 2002, the trust department managed 182 accounts with aggregate assets of $97.3 million, of which the largest relationship totaled $36.0 million, or 37.0% of the trust department’s total assets.

Subsidiaries

     Citizens Financial Services, Inc.Citizens Financial Services, Inc., formerly 525 Riverside Corporation, was established in 1974 as a Michigan-chartered service corporation. Although Citizens Financial Services previously participated in real estate development currently it only has an investment in the stock of a life insurance company and acts as the parent corporation for CFS Title Agency. CFS Title Agency, a Michigan Corporation, was established in 1998 as a joint venture between Citizens First and Lawyers Title Insurance Agency, a Virginia corporation, to provide title insurance for customers of Citizens First. Citizens Financial Services also offers, through its insurance agency, CFS Insurance Agency, a Michigan corporation, a variety of life insurance and annuity products and may in the future offer other personal insurance products through an affiliation arrangement with a third party insurance agency. At March 31, 2002, Citizens Financial Services had assets totaling $1.8 million. For the years ended March 31, 2002 and March 31, 2001, Citizens Financial Services had generated net income after taxes of $228,000 and $206,000, respectively.

REGULATION AND SUPERVISION

General

     As a savings and loan holding company, Citizens First Bancorp is required by federal law to file reports with, and otherwise comply with, the rules and regulations of the Office of Thrift Supervision. Citizens First is a Michigan-chartered state savings bank and a member of the Federal Home Loan Bank System and, with respect to deposit insurance, of the Savings Association Insurance Fund managed by the Federal Deposit Insurance Corporation. The Commissioner of the Michigan Office of Financial and Insurance Services and/or the Federal Deposit Insurance Corporation conduct periodic examinations to test Citizens First’s safety and soundness and compliance with various regulatory requirements. This regulation and supervision establishes a comprehensive framework of activities in which an institution can engage and is intended primarily for the protection of the insurance fund and depositors. The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of adequate loan loss reserves for regulatory purposes. Any change in such regulatory requirements and policies, whether by the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, the Michigan Office of Financial and Insurance Services or the U.S. Congress, could have a material adverse impact on Citizens First Bancorp, Citizens First and their operations. Certain of the regulatory requirements applicable to Citizens First and to Citizens First Bancorp are referred to below or elsewhere in this Form 10-K. The description of statutory provisions and regulations applicable to savings institutions and their holding companies included in this Form 10-K does not purport to be a complete description of such statutes and regulations and their effects on Citizens First and Citizens First Bancorp.

Michigan Bank Regulation

     Michigan savings banks are regulated and supervised by the Commissioner of the Michigan Office of Financial and Insurance Services. Michigan-chartered savings banks are subject to an examination, not less than once every 18

23

months, by the Michigan Commissioner either with or without notice. The approval of the Michigan Commissioner is required for certain activities for a savings bank to merge with another institution, to reorganize, to issue stock or to undertake many other activities.

     Certain powers that Michigan-chartered savings banks can exercise under the law are summarized below.

     Business Activities.The activities of state savings banks are governed by state law and regulations. These laws and regulations delineate the nature and extent of the investments and activities in which state institutions may engage. In particular, many types of lending authority for state institutionse.g., commercial, non-residential real property loans and consumer loans, are limited to a specified percentage of the institution’s capital or assets.

     Loans to One Borrower.Michigan law provides that stock savings banks may not provide loans or extensions of credit to a person in excess of 15% of the capital and surplus of the stock savings bank. The limit, however, may be increased to 25% of capital and surplus if approval of two-thirds of the bank’s board of directors is granted. If the Michigan Commissioner determines that the interests of a group of more than one person, co-partnership, association or corporation are so interrelated that they should be considered as a unit for the purpose of extending credit, the total loans and extensions of credit of that group shall be combined. At March 31, 2002, Citizens First did not have any loans with one borrower that exceeded its regulatory limit.

     A number of loans are exempted from the above limitations. They include among others loans on commercial paper, loans to financial institutions, and loans secured by bonds, notes and certificates of indebtedness.

     Dividends.Dividends may be paid out of a Michigan-chartered savings bank’s net income then on hand after deducting all bad debts. A Michigan savings bank may only pay dividends on its common stock if the savings bank has a surplus amounting to not less than 20% of its capital after the payment of the dividend. If a bank has a surplus less than the amount of its capital, it may not declare or pay any dividend until an amount equal to at least 10% of net income for the preceding one-half year (in the case of quarterly or semi-annual dividends) or at least 10% of net income of the preceding two consecutive half-year periods (in the case of annual dividends) has been transferred to surplus. A savings bank with the approval of the Michigan Commissioner and by a vote of shareholders owning two-thirds of the stock entitled to vote may increase its capital stock by a declaration of a stock dividend on the capital stock. A savings bank may pay dividends on its preferred stock at a rate as may be applicable without limitation. Federal law may affect also affect the ability of a Michigan savings bank to pay dividends.

     Branching Activities.Michigan savings banks, such as Citizens First, have the authority under Michigan law to establish branches anywhere in the State of Michigan, as well as in any other U.S. state or foreign country, subject to receipt of all required regulatory approvals (including the approval of the Michigan Banking Commissioner and the Federal Deposit Insurance Corporation).

     Commissioner Assessments.Michigan savings banks are required to pay supervisory fees to the Michigan Commissioner to fund the operations of the Michigan Banking Commissioner. The amount of supervisory fees paid by a bank is based upon a formula involving the bank’s total assets, as reported to the Michigan Commissioner. The assessments for the fiscal year ended March 31, 2002 totaled $16,140.

     Enforcement.Under Michigan law, the Michigan Commissioner has broad enforcement authority over state chartered banks and, under certain circumstances, affiliated parties, insiders, and agents. If a Michigan savings bank does not operate in accordance with the regulations, policies and directives of the Michigan Commissioner or is engaging, has engaged, or is about to engage in an unsafe or unsound practice in conducting the business of the bank, the Michigan Commissioner may issue and serve upon the bank a notice of charges with respect to the practice or violation. The Michigan Commissioner’s enforcement authority includes: cease and desist orders, receivership, conservatorship, removal and suspension of officers and directors, assessment of monetary penalties, emergency closures, liquidation, and the power to issue orders and declaratory rulings to enforce the Savings Bank Act provisions.

24

Federal Regulation

     Capital Requirements.Under Federal Deposit Insurance Corporation regulations, federally-insured state-chartered banks that are not members of the Federal Reserve System (“state non-member banks”), such as Citizens First, are required to comply with minimum leverage capital requirements. For an institution determined by the Federal Deposit Insurance Corporation to not be anticipating or experiencing significant growth and to be in general a strong banking organization, rated composite 1 under the Uniform Financial Institutions Ranking System (the rating system) established by the Federal Financial Institutions Examination Council, the minimum capital leverage requirement is a ratio of Tier 1 capital to total assets of 3%. For all other institutions, the minimum leverage capital ratio is not less than 4%. Tier 1 capital is the sum of common stockholders’ equity, noncumulative perpetual preferred stock (including any related surplus) and minority investments in certain subsidiaries, less intangible assets (except for certain servicing rights and credit card relationships).

     Citizens First must also comply with the Federal Deposit Insurance Corporation risk-based capital guidelines. Risk-based capital ratios are determined by allocating assets and specified off-balance sheet items to four risk-weighted categories ranging from 0% to 100%, with higher levels of capital being required for the categories perceived as representing greater risk. For example, under the Federal Deposit Insurance Corporation’s risk-weighting system, cash and securities backed by the full faith and credit of the U.S. Government are given a 0% risk weight, loans secured by one- to four-family residential properties generally have a 50% risk weight and commercial loans have a risk weighting of 100%.

     State non-member banks must maintain a minimum ratio of total capital to risk-weighted assets of at least 8%, of which at least one-half must be Tier 1 capital. Total capital consists of Tier 1 capital plus Tier 2 or supplementary capital items, which include allowances for loan losses in an amount of up to 1.25% of risk-weighted assets, cumulative preferred stock, a portion of the net unrealized gain on equity securities and other capital instruments.

     The Federal Deposit Insurance Corporation has adopted a regulation providing that it will take into account the exposure of a bank’s capital and economic value to changes in interest rate risk in assessing a bank’s capital adequacy.

     Prompt Corrective Regulatory Action.Federal law requires, among other things, that federal banking authorities take certain supervisory actions against undercapitalized institutions, the severity of which depends upon the institution’s degree of undercapitalization. Generally, an institution that has a ratio of total capital to risk weighted assets of less than 8%, a ratio of Tier 1 (core) capital to risk-weighted assets of less than 4% or a ratio of core capital to total assets of less than 4% (3% or less for institutions with the highest examination rating) is considered to be “undercapitalized.” An institution that has a total risk-based capital ratio less than 6%, a Tier 1 capital ratio of less than 3% or a leverage ratio that is less than 3% is considered to be “significantly undercapitalized” and an institution that has a tangible capital to assets ratio equal to or less than 2% is deemed to be “critically undercapitalized.” Subject to a narrow exception, the Federal Deposit Insurance Corporation is required to appoint a receiver or conservator for an institution that is “critically undercapitalized.” The regulation also provides that a capital restoration plan must be filed with the Federal Deposit Insurance Corporation within 45 days of the date an institution receives notice that it is “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized.” Compliance with the plan must be guaranteed by any parent holding company. In addition, numerous mandatory supervisory actions become immediately applicable to an undercapitalized institution, including, but not limited to, increased monitoring by regulators and restrictions on growth, capital distributions and expansion. The Federal Deposit Insurance Corporation could also take any one of a number of discretionary supervisory actions, including the issuance of a capital directive and the replacement of senior executive officers and directors.

     Federal law generally prohibits a depository institution from making any capital distribution (including payment of a dividend) or paying any management fee to its holding company if the depository institution would thereafter be undercapitalized. The Federal Deposit Insurance Corporation may prevent an insured bank from paying dividends if the bank is in default of payment of any assessment due to the Federal Deposit Insurance Corporation. In addition, the

25

Federal Deposit Insurance Corporation may prohibit the payment of dividends by a bank if such payment is determined, by reason of the financial condition of the bank, to be an unsafe and unsound banking practice.

     Insurance of Deposit Accounts.Citizens First is a member of the Savings Association Insurance Fund. The Federal Deposit Insurance Corporation maintains a risk-based assessment system by which institutions are assigned to one of three categories based on their capitalization and one of three subcategories based on examination ratings and other supervisory information. An institution’s assessment rate depends upon the categories to which it is assigned. Assessment rates for insured institutions are determined semiannually by the Federal Deposit Insurance Corporation and currently range from zero basis points for the healthiest institutions to 27 basis points of assessable deposits for the riskiest.

     In addition to the assessment for deposit insurance, institutions are required to make payments on bonds issued in the late 1980s by the Financing Corporation to recapitalize the predecessor to the Savings Association Insurance Fund. Beginning January 1, 2000, these assessments were shared by the Savings Association Insurance Fund and the Bank Insurance Fund members. During calendar 2002, these assessments approximated 1.82 basis points of assessable deposits.

     The Federal Deposit Insurance Corporation has authority to increase insurance assessments. A significant increase in Savings Association Insurance Fund insurance premiums would likely have an adverse effect on the operating expenses and results of operations of Citizens First. Management cannot predict what insurance assessment rates will be in the future.

     Transactions with Related Parties.Citizens First’s authority to engage in transactions with “affiliates” (e.g., any company that controls or is under common control with an institution, including Citizens First Bancorp and its non-savings institution subsidiaries) is limited by federal law. Federal law places quantitative restrictions on such transactions and imposes specified collateral requirements for certain transactions. The purchase of low quality assets from affiliates is generally prohibited. Transactions with affiliates must be on terms and under circumstances that are at least as favorable to the institution as those prevailing at the time for comparable transactions with non-affiliated companies.

     Citizens First’s authority to extend credit to executive officers, directors and 10% shareholders (“insiders”), as well as entities such persons control, is also governed by federal law. Among other restrictions, such loans are generally required to be made on terms substantially the same as those offered to unaffiliated individuals and not involve more than the normal risk of repayment.

     Standards for Safety and Soundness.The federal banking agencies have adopted Interagency Guidelines prescribing Standards for Safety and Soundness. The guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. The guidelines address internal controls and information systems, internal audit system, credit underwriting, loan documentation, interest rate risk exposure, asset growth, asset quality, earnings and compensation, and fees and benefits. If the appropriate federal banking agency determines that a savings institution fails to meet any standard prescribed by the guidelines, the agency may require the institution to submit an acceptable plan to achieve compliance with the standard.

     Investment Activities.Since the enactment of the Federal Deposit Insurance Corporation Improvement Act, all state-chartered Federal Deposit Insurance Corporation insured banks, including savings banks, have generally been limited to activities as principal and equity investments of the type and in the amount authorized for national banks, notwithstanding state law. The Federal Deposit Insurance Corporation Improvement Act and the Federal Deposit Insurance Corporation permit exceptions to these limitations. For example, the Federal Deposit Insurance Corporation is authorized to permit such institutions to engage in state authorized activities or investments that do not meet this

26

standard (other than direct equity investments) for institutions that meet all applicable capital requirements if it is determined that such activities or investments do not pose a significant risk to the Savings Association Insurance Fund.

     Interstate Branching.Beginning June 1, 1997, federal law permitted the responsible federal banking agencies to approve merger transactions between banks located in different states, regardless of whether the merger would be prohibited under the law of the two states. The law also permitted a state to “opt in” to the provisions of the Interstate Banking Act before June 1, 1997, and permitted a state to “opt out” of the provisions of the Interstate Banking Act by adopting appropriate legislation before that date. Michigan did not “opt out” of the provisions of the Interstate Banking Act. Accordingly, beginning June 1, 1997, a Michigan savings bank, such as Citizens First, could acquire an institution by merger in a state other than Michigan unless the other state had opted out. The Interstate Banking Act also authorizesde novo branching into another state if the host state enacts a law expressly permitting out of state banks to establish such branches within its borders.

     Federal Enforcement.The Federal Deposit Insurance Corporation has primary federal enforcement responsibility over state non-member banks, such as Citizens First, and has the authority to bring actions against the institution and all institution-affiliated parties, including stockholders, and any attorneys, appraisers and accountants who knowingly or recklessly participate in wrongful action likely to have an adverse effect on an insured institution. Formal enforcement action may range from the issuance of a capital directive or cease and desist order to removal of officers and/or directors to institution of receivership, conservatorship or termination of deposit insurance. Civil penalties cover a wide range of violations and can amount to $25,000 per day, or even $1 million per day in especially egregious cases. Federal law also establishes criminal penalties for certain violations.

Federal Home Loan Bank System

     Citizens First is a member of the Federal Home Loan Bank System, which consists of 12 regional Federal Home Loan Banks. The Federal Home Loan Bank provides a central credit facility primarily for member institutions. Citizens First, as a member of the Federal Home Loan Bank of Indianapolis, is required to acquire and hold shares of capital stock in that Federal Home Loan Bank in an amount at least equal to 1.0% of the aggregate principal amount of its unpaid residential mortgage loans and similar obligations at the beginning of each year, or 1/20 of its advances (borrowings) from the Federal Home Loan Bank, whichever is greater. Citizens First was in compliance with this requirement with an investment in Federal Home Loan Bank stock at March 31, 2002 of $7.5 million.

Federal Reserve System

     The Federal Reserve Board regulations require savings institutions to maintain non-interest-earning reserves against their transaction accounts (primarily NOW and regular checking accounts). The regulations generally provide that reserves be maintained against aggregate transaction accounts as follows: for accounts aggregating $41.3 million or less (subject to adjustment by the Federal Reserve Board) the reserve requirement is 3%; and for accounts aggregating greater than $41.3 million, the reserve requirement is $1.239 million plus 10% (subject to adjustment by the Federal Reserve Board between 8% and 14%) against that portion of total transaction accounts in excess of $41.3 million. The first $5.7 million of otherwise reservable balances (subject to adjustments by the Federal Reserve Board) are exempted from the reserve requirements. Citizens First complies with the foregoing requirements.

Holding Company Regulation

     Federal law allows a state savings bank that qualifies as a “Qualified Thrift Lender,” discussed below, to elect to be treated as a savings association for purposes of the savings and loan holding company provisions of the Home Owners’ Loan Act. Such election allows its holding company to be regulated as a savings and loan holding company by the Office of Thrift Supervision rather than as a bank holding company by the Federal Reserve Board. Citizens First has made such election and is regulated as a savings and loan holding company within the meaning of the Home Owners’ Loan Act. As such, Citizens First Bancorp is registered with the Office of Thrift Supervision and has adhered to the

27

Office of Thrift Supervision’s regulations, reporting requirements and examination and enforcement authority. Among other things, this authority permits the Office of Thrift Supervision to restrict or prohibit activities that are determined to be a serious risk to the subsidiary savings institution.

     Citizens First Bancorp is a nondiversified unitary savings and loan holding company within the meaning of federal law. Unitary savings and loan holding companies not existing or applied for before May 4, 1999, such as Citizens First Bancorp, are restricted to activities permissible for financial holding companies under the law or for multiple savings and loan holding companies. A financial holding company may engage in activities that are financial in nature, incidental to financial activities or complementary to a financial activity. A multiple savings and loan holding company is generally limited to activities permissible for financial holding companies and certain additional activities authorized by Office of Thrift Supervision regulation.

     A savings and loan holding company is prohibited from, directly or indirectly, acquiring more than 5% of the voting stock of another savings institution or savings and loan holding company without prior written approval of the Office of Thrift Supervision and from acquiring or retaining control of a depository institution that is not insured by the Federal Deposit Insurance Corporation. In evaluating applications by holding companies to acquire savings institutions, the Office of Thrift Supervision considers the financial and managerial resources and future prospects of the holding company and institution involved, the effect of the acquisition on the risk to the deposit insurance funds, the convenience and needs of the community and competitive factors.

     The Office of Thrift Supervision may not approve any acquisition that would result in a multiple savings and loan holding company controlling savings institutions in more than one state, subject to two exceptions: (1) the approval of interstate supervisory acquisitions by savings and loan holding companies and (2) the acquisition of a savings institution in another state if the laws of the state of the target savings institution specifically permit such acquisitions. The states vary in the extent to which they permit interstate savings and loan holding company acquisitions.

     Although savings and loan holding companies are not subject to specific capital requirements or specific restrictions on the payment of dividends or other capital distributions, federal regulations do prescribe such restrictions on subsidiary institutions as previously described. Citizens First must notify the Office of Thrift Supervision 30 days before declaring any dividend to Citizens First Bancorp. In addition, the financial impact of a holding company on its subsidiary institution is a matter that is evaluated by the Office of Thrift Supervision and the agency has authority to order cessation of activities or divestiture of subsidiaries deemed to pose a threat to the safety and soundness of the institution.

     QTL Test.To be regulated as a savings and loan holding company by the Office of Thrift Supervision (rather than as a bank holding company by the Federal Reserve Board), Citizens First must qualify as a Qualified Thrift Lender. To be a Qualified Thrift Lender, Citizens First must either qualify as a “domestic building and loan association” under the Internal Revenue Code or maintain at least 65% of its “portfolio assets” (total assets less: (1) specified liquid assets up to 20% of total assets; (2) intangibles, including goodwill; and (3) the value of property used to conduct business) in certain “qualified thrift investments” (primarily residential mortgages and related investments, including certain mortgage-backed securities) in at least 9 months out of each 12 month period.

     A savings institution that fails the qualified thrift lender test is subject to certain operating restrictions and may be required to convert to a bank charter. As of March 31, 2002, Citizens First met the qualified thrift lender test.

     Change in Bank Control Act.The acquisition of 10% or more of the outstanding common stock of Citizens First Bancorp may trigger the provisions of the Change in Bank Control Act. The Change in Bank Control Act generally requires persons (including companies) who at any time intend to acquire control of a savings and loan holding company to provide 60 days prior written notice and certain financial and other information to the Office of Thrift Supervision. The statute and underlying regulations authorize the Office of Thrift Supervision to disapprove a proposed acquisition on certain specified grounds.

28

     Under certain circumstances, a similar filing may be necessary with the Federal Deposit Insurance Corporation prior to the acquisition of indirect control of Citizens First.

     Regulatory and Legislative Change.Citizens First and Citizens First Bancorp are extensively regulated and supervised. Regulations, which affect Citizens First on a daily basis, may be changed at any time, and the interpretation of the relevant law and regulations may also change because of new interpretations by the authorities who interpret those laws and regulations. Any change in the regulatory structure or the applicable statutes or regulations, whether by the State of Michigan, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation or the U.S. Congress, could have a material impact on Citizens First Bancorp, Citizens First, its operations or the conversion.

Federal Securities Laws

     Citizens First Bancorp has filed with the Securities and Exchange Commission a registration statement under the Securities Act for the registration of the common stock to be issued in the conversion. Upon completion of the conversion, Citizens First Bancorp’s common stock will be registered with the Securities and Exchange Commission under the Securities Exchange Act. Citizens First Bancorp will then have to observe the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act.

     The registration under the Securities Act of shares of the common stock to be issued in the conversion does not cover the resale of those shares. Shares of the common stock purchased by persons who are not affiliates of Citizens First Bancorp may be resold without registration. The resale restrictions of Rule 144 under the Securities Act govern shares purchased by an affiliate of Citizens First Bancorp. As defined under Rule 144, an affiliate of Citizens First Bancorp is a person that directly or indirectly controls, is controlled by, or is under common control with Citizens First Bancorp. Generally, executive officers and directors will be considered affiliates of Citizens First Bancorp. If Citizens First Bancorp meets the current public information requirements of Rule 144 under the Securities Act, each affiliate of Citizens First Bancorp which complies with the other conditions of Rule 144 (including those that require the affiliate’s sale to be aggregated with those of other persons) would be able to sell in the public market, without registration, a number of shares not to exceed, in any three-month period, the greater of (1) 1% of the outstanding shares of Citizens First Bancorp or (2) the average weekly volume of trading in such shares during the preceding four calendar weeks. Provision may be made in the future by Citizens First Bancorp to permit affiliates to have their shares registered for sale under the Securities Act under specific circumstances.

FEDERAL AND STATE TAXATION

Federal Income Taxation

     General.Citizens First Bancorp and Citizens First report their income on a fiscal year basis using the accrual method of accounting. The federal income tax laws apply to Citizens First Bancorp and Citizens First in the same manner as to other corporations with some exceptions, including particularly Citizens First’s reserve for bad debts discussed below. The following discussion of tax matters is intended only as a summary and does not purport to be a comprehensive description of the tax rules applicable to Citizens First or Citizens First Bancorp. Citizens First’s federal income tax returns have been either audited or closed under the statute of limitations through tax year 1996. For its 2002 tax year, Citizens First’s maximum federal income tax rate was 35%.

     Bad Debt Reserves.For fiscal years beginning before December 31, 1996, thrift institutions that qualified under certain definitional tests and other conditions of the Internal Revenue Code were permitted to use certain favorable provisions to calculate their deductions from taxable income for annual additions to their bad debt reserve. A reserve could be established for bad debts on qualifying real property loans, generally secured by interests in real property improved or to be improved, under the percentage of taxable income method or the experience method. The reserve for nonqualifying loans was computed using the experience method.

29

     Federal legislation enacted in 1996 repealed the reserve method of accounting for bad debts and the percentage of taxable income method for tax years beginning after 1995 and required savings institutions to recapture or take into income certain portions of their accumulated bad debt reserves. Approximately $6.6 million of Citizens First’s accumulated bad debt reserves would not be recaptured into taxable income unless Citizens First makes a “non-dividend distribution” to Citizens First Bancorp as described below.

     Distributions.If Citizens First makes “non-dividend distributions” to Citizens First Bancorp, they will be considered to have been made from Citizens First’s unrecaptured tax bad debt reserves, including the balance of its reserves as of December 31, 1988, to the extent of the “non-dividend distributions,” and then from Citizens First’s supplemental reserve for losses on loans, to the extent of those reserves, and an amount based on the amount distributed, but not more than the amount of those reserves, will be included in Citizens First’s taxable income. Non-dividend distributions include distributions in excess of Citizens First’s current and accumulated earnings and profits, as calculated for federal income tax purposes, distributions in redemption of stock, and distributions in partial or complete liquidation. Dividends paid out of Citizens First’s current or accumulated earnings and profits will not be so included in Citizens First’s taxable income.

     The amount of additional taxable income triggered by a non-dividend distribution is an amount that, when reduced by the tax attributable to the income, is equal to the amount of the distribution. Therefore, if Citizens First makes a non-dividend distribution to Citizens First Bancorp, approximately one and one-half times the amount of the distribution not in excess of the amount of the reserves would be includable in income for federal income tax purposes, assuming a 35% federal corporate income tax rate. Citizens First does not intend to pay dividends that would result in a recapture of any portion of its bad debt reserves.

State Taxation

     The State of Michigan imposes a Single Business Tax (the “SBT”), which is an annual value-added tax imposed on the privilege of doing business in the state. Every person with business activity in Michigan is subject to the tax. Most organizations exempt from federal income tax are also exempt from the SBT. The major components of the SBT are compensation, depreciation and federal taxable income, increased by net operating losses, if any, utilized in arriving at federal taxable income. For tax years beginning before 2000, the SBT base is decreased by the cost of depreciable tangible assets acquired during the year. For tax years beginning after 1999, an investment tax credit is claimed for the acquisition of depreciable tangible assets. Effective January 1, 1999, the SBT rate is 2.2% and will be phased out during a 23-year period.

     Delaware State Taxation.As a Delaware holding company not earning income in Delaware, the Company is exempted from Delaware Corporate income tax but is required to file an annual report with and pay an annual franchise tax to the State of Delaware.

30

ITEM 2. PROPERTIES

     Citizens First currently conducts its business through its main office located in Port Huron, Michigan, and fourteen other full-service banking offices, all of which it owns. Citizens First also operates ATM machines at six other locations.

					Net Book Value
		Original			of Property
		Year Leased			or Leasehold
		or			Improvements at
Location		Acquired			March 31, 2002
Main/Executive Office:					(In thousands)
525 Water Street Port Huron, Michigan 48060			1978		$	1,995
Branch Offices:
1527 Hancock Port Huron, Michigan 48060			1971			1,052
48 S. Elk Street Sandusky, Michigan 48471			1972			76
123 N. Port Crescent Bad Axe, Michigan 48413			1973			118
270 Clinton Avenue St. Clair, Michigan 48079			1974			86
301 Summer Street Algonac, Michigan 48001			1975			109
380 N. Cedar Street Imlay City, Michigan 48444			1975			186
2015 Gratiot Boulevard Marysville, Michigan 48040			1976			116
3136 Lapeer Road Port Huron, Michigan 48060			1976			283
37 N. Howard Croswell, Michigan 48422			1980			78
204 S. Huron Harbor Beach, Michigan 48441			1980			46
210 S. Parker Marine City, Michigan 48039			1987			61
807 S. Main Street Lapeer, Michigan 48446			1993			51
4778 24th Avenue Fort Gratiot, Michigan 48060			1998			89
5536 Main Street Lexington, Michigan 48450			2002			380
Other Properties:
550 Water Street Port Huron, Michigan 48060 (1)			1986			45
555 Water Street Port Huron, Michigan 48060 (2)			1998			773
500 Water Street Port Huron, Michigan 48060 (3)			2000			339
Suite 105
624 W. Nepessing Street Lapeer, Michigan 48446			2001	(4)		2
	Total				$	5,885

(1)	The property, which Citizens First owns, consists of a drive-up ATM facility.
(2)	The property, which Citizens First owns, houses Citizens First’s trust and financial services operations.
(3)	The property, which Citizens First owns, consists of a drive-up banking center.
(4)	The property, which Citizens First leases, serves as a loan production office. The lease on the property expires in 2003, at which point Citizens First has the option to renew for three additional one-year periods.

31

ITEM 3. LEGAL PROCEEDINGS

     Periodically, there have been various claims and lawsuits involving the Bank, such as claims to enforce liens, condemnation proceedings on properties in which the Bank holds security interests, claims involving the making and servicing of real property loans and other issues incident to the Bank’s business. Such routine legal proceedings, in the aggregate, are believed by management to be immaterial to the financial condition or operations of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Information relating to the market for the Registrant’s common equity and related stockholder matters appears under “Market For Registrant’s Common Equity and Related Stockholder Matters” in the Registrant’s 2002 Annual Report to Stockholders and is incorporated herein by reference. Information relating to the dividend restrictions for the Registrant’s common stock appears under “Regulation and Supervision.”

ITEM 6. SELECTED FINANCIAL DATA

     The above-captioned information appears under “Financial Highlights” in the Registrant’s 2002 Annual Report to Stockholders and is incorporated herein by reference.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

     The above-captioned information appears under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Registrant’s 2002 Annual Report to Stockholders and is incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The above-captioned information appears under the heading “Quantitative and Qualitative Disclosures about Market Risk” in the Registrant’s 2002 Annual Report to Stockholders and is incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The Consolidated Financial Statements of Citizens First Bancorp, Inc. and its subsidiaries, together with the report thereon by Plante & Moran, LLP appears in the Registrant’s 2002 Annual Report to Stockholders and are incorporated herein by reference.

ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL

DISCLOSURE

     None.

32

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information relating to Directors and Executive Officers of the Registrant is incorporated herein by reference to the Section captioned “Proposal 1 — Election of Directors” in the Registrant’s Proxy Statement for the Annual Meeting of Stockholders to be held on August 13, 2002. Reference is made to the cover page of this Form 10-K and to the section captioned “Section 16(a) Beneficial Ownership Reporting Compliance” for information regarding compliance with Section 16(a) of the Exchange Act.

ITEM 11. EXECUTIVE COMPENSATION

     The information relating to executive compensation is incorporated herein by reference to the sections captioned “Executive Compensation” and “Proposal 1 - - Election of Directors — Directors’ Compensation” in the Registrant’s Proxy Statement for the Annual Meeting of Stockholders to be held on August 13, 2002.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED

STOCKHOLDER MATTERS

     The information relating to security ownership of certain beneficial owners and management is incorporated herein by reference to the section captioned “Stock Ownership” in the Registrant’s Proxy Statement for the Annual Meeting of Stockholders to be held on August 13, 2002.

Equity Compensation Plan Information

Plan category	Number of securities		Weighted-average		Number of securities
	to be issued upon		exercise price of		remaining available
	exercise of		outstanding		for future issuance
	outstanding		options, warrants		under equity
	options, warrants		and rights		compensation plans
	and rights				(excluding
					securities
					reflected in column
					(a))
	(a)		(b)		(c)
Equity compensation plans approved by security holders		1,429,014		—		1,429,014
Total		1,429,014		—		1,429,014

     The Company does not maintain any equity compensation plans that have not been approved by security holders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information relating to certain relationships and related transactions is incorporated herein by reference to the section captioned “Transactions with Management” in the Registrant’s Proxy Statement for the Annual Meeting of Stockholders to be held on August 13, 2002.

33

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) (1) Financial Statements

• Independent Auditors’ Report

• Consolidated Balance Sheets as of March 31, 2002 and 2001

• Consolidated Statements of Income for the Years Ended March 31, 2002, 2001 and 2000

• Consolidated Statements of Changes in Equity for the Years Ended March 31, 2002, 2001 and 2000

• Consolidated Statements of Cash Flows for the Years Ended March 31, 2002, 2001, and 2000

• Notes to Consolidated Financial Statements

(2)	Financial Statement Schedules
	All financial statement schedules are omitted because they are not required or applicable, or the required information is shown in the consolidated financial statements or the notes thereto.
(3)	Exhibits

3.1	Certificate of Incorporation of Citizens First Bancorp, Inc. (1)
3.2	Bylaws of Citizens First Bancorp, Inc. (1)
4.0	Draft Stock Certificate of Citizens First Bancorp, Inc. (1)
10.1	Form of Citizens First Savings Bank Employee Severance Compensation Plan (1)
10.2	Form of Citizens First Savings Bank Supplemental Executive Retirement Plan (1)
10.3	Form of Citizens First Savings Bank Director’s Deferred Fee Agreement (1)
10.4	Employment Agreement between Citizens First Bancorp, Inc. and Marshall J. Campbell
10.5	Change in Control Agreement between Citizens First Savings Bank and Randy J. Cutler (2)
10.6	Change in Control Agreement between Citizens First Savings Bank and Timothy D. Regan (2)
10.7	Change in Control Agreement between Citizens First Savings Bank and Stephen J. Armstrong (2)
10.8	Citizens First Bancorp, Inc. 2001 Stock-Based Incentive Plan (3)
13.0	2002 Annual Report to Stockholders
21.0	Subsidiary Information is incorporated herein by reference to Part I, Item 1, “Business — Subsidiary Activities”
23.0	Consent of Plante & Moran LLP

(1) Incorporated by reference into this document from the Exhibits to the Form S-1, Registration Statement and amendments thereto, initially filed with the Securities and Exchange Commission on November 3, 2000, Registration No. 333-49234.

34

(2)	Incorporated by reference into this document from the Exhibits to the Form 10-Q as filed with the Securities and Exchange Commission on August 14, 2001 (Registration No. 0-32041).
(3)	Incorporated by reference into this document from the Appendix to the Proxy Statement as filed with the Securities and Exchange Commission on September 30, 2001.

(b)	Reports on Form 8-K
	None.

35

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Citizens First Bancorp, Inc.
Date: June 27, 2002	By:	/s/ Marshall J. Campbell Marshall J. Campbell Chairman of the Board, President and Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated.

/s/ Marshall J. Campbell Marshall J. Campbell	Chairman of the Board, President and Chief Executive Officer (principal executive officer)	June 27, 2002
/s/ Timothy D. Regan Timothy D. Regan	Secretary, Treasurer and Director (principal accounting and financial officer)	June 27, 2002
/s/ Ronald W. Cooley Ronald W. Cooley	Director	June 27, 2002
/s/ Walid Demashkieh Walid Demashkieh	Director	June 27, 2002
/s/ Christopher A. Kellerman Christopher A. Kellerman	Director	June 27, 2002
/s/ Larry J. Moeller, Sr. Larry J. Moeller, Sr.	Director	June 27, 2002

Exhibit Index

Exhibit Number	Exhibit Description
10.4	Employment Agreement between Citizens First Bancorp, Inc. and Marshall J. Campbell
13	2002 Annual Report to Stockholders
23	Consent of Plante & Moran LLP