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EXHIBIT A

PROXY MATERIALS

[To Be Placed On Holding Company Letterhead]

___________, 2009

Dear Shareholders of Citizens Financial Corp.:

We are writing to tell you about an exciting transaction that Citizens Financial Corp. (“Company”) is in the process of undertaking.  The Board of Directors is pleased to announce that it has approved a corporate reorganization that will allow those Company shareholders who hold, in the aggregate, less than 825 Company Common Stock shares to exchange their existing Common Stock shares for newly created Class A Common Stock shares.  Those Company shareholders who hold, in the aggregate, 825 or more Company Common Stock shares will continue to hold their existing Common Stock without change.  This reorganization, which is known as a “going private” transaction, will result in the Company having less than 300 shareholders owning the Company’s existing Common Stock and less than 500 shareholders owning the newly created Class A Common Stock.  As a result of this going private transaction, Citizens Financial Corp. will be able to suspend its SEC reporting obligations, which will allow the Company to save approximately $200,000 annually.

In technical terms, the Company will effect the reorganization by amending its Certificate of Incorporation and immediately thereafter engaging in a merger transaction with a newly created corporation whose sole purpose is to facilitate the going private transaction.  The Amendment to the Certificate of Incorporation will authorize Class A Common Stock shares and Class B Common Stock shares and the merger transaction will convert the Common Stock held by shareholders who hold, in the aggregate, less than 825 Common Stock shares into the right to receive Class A Common Stock shares on a one-share-for-one-share exchange basis.  No Class B Common Stock shares will be issued in connection with the reorganization.

To effect this transaction, the shareholders must vote on and approve an Amendment to the Company’s Certificate of Incorporation and the Agreement of Merger.  Therefore, we are calling a Special Meeting of Shareholders to be held on ___________, 2009 to ask you to vote and approve the Amendment and the Agreement of Merger.  In conjunction with the meeting, you and all other shareholders are receiving the enclosed proxy materials which describe the transaction and a Proxy upon which to cast your vote.

After careful consideration, the Board of Directors of Citizens Financial Corp. unanimously recommends that you vote in favor of the Amendment to the Company’s Certificate of Incorporation and the Agreement of Merger.

We hope that you are excited about this opportunity.  We look forward to seeing you all _________.

Sincerely,

/s/ Max L. Armentrout
Max L. Armentrout
Chairman

CITIZENS FINANCIAL CORP.

211 Third Street

Elkins, West Virginia  26241

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ____________, 2009

TO OUR SHAREHOLDERS:

A Special Meeting of Shareholders of Citizens Financial Corp., a Delaware corporation (“Citizens Financial”), will be held at the offices of Citizens Bank of West Virginia at 211 Third Street, Elkins, West Virginia 26241 at 3:00 p.m., local time, on _____________, 2009, for the following purposes:

(1)           To approve an Amendment to Citizens Financial’s Certificate of Incorporation which provides for the authorization of 4,500,000 shares of Class A Common Stock and 4,500,000 shares of Class B Common Stock;

(2)           To approve an Agreement of Merger by and between Citizens Financial and CFC Merger Corp., a Delaware corporation, (“Merger Corp.”), pursuant to which Merger Corp. will merge with and into Citizens Financial with Citizens Financial being the surviving corporation (the “Merger”), which will reclassify all Citizens Financial Common Stock held by any shareholder who holds, in the aggregate, less than 825 shares into the right to receive Citizens Financial Class A Common Stock on a one-share-for-one-share exchange basis; and

(3)           To transact such other business as may properly come before the meeting or any adjournments thereof.

Only holders of record of Citizens Financial Common Stock, par value $2.00 per share, at the close of business on _____________, 2009 are entitled to notice of the Special Meeting and to vote at the Special Meeting.  As of _____________, there were 1,829,504 shares of Citizens Financial Common Stock outstanding.  The accompanying Proxy Statement is dated _____________, 2009, and is being first mailed to shareholders on or about _____________, 2009.

Shareholders are cordially invited to attend the meeting in person.  Whether planning to attend the meeting or not, shareholders are urged to complete, date and sign the enclosed Proxy and to return it promptly.  Any Proxy given pursuant to this solicitation may be revoked by the person giving it at any time before it is voted at the Special Meeting.  Proxies may be revoked by delivering to Leesa M. Harris, Secretary, 211 Third Street, Elkins, West Virginia 26241, a written notice of revocation bearing a later date than the Proxy, by duly executing and delivering to the Secretary a subsequently dated Proxy relating to the same shares or by attending the Special Meeting and voting in person (although attendance at the Special Meeting will not in and of itself constitute revocation of a Proxy).  The enclosed, addressed envelope requires no postage if mailed in the United States.

	By order of the Board of Directors,
_____________, 2009	/s/ Leesa M. Harris
	Leesa M. Harris
	Secretary

REVOCABLE PROXY

CITIZENS FINANCIAL CORP.

SPECIAL MEETING OF SHAREHOLDERS

__________________, 2009

PLEASE RETURN YOUR PROPERLY COMPLETED PROXY TO THE BANK IN THE ENCLOSED ENVELOPE PRIOR TO THE SPECIAL MEETING

The undersigned appoints Carl J. Antolini, Jr. and Ann W. Knotts Harris, or either of them, with full powers of substitution, to act as proxy for the undersigned and to vote all shares of Common Stock of Citizens Financial Corp.(“Company”), which the undersigned is entitled to vote at the Special Meeting of Shareholders (“Special Meeting”), to be held at the Citizens Bank of West Virginia, 211 Third Street, Elkins, West Virginia 26241, on _____________, 2009 at 3:00 p.m. local time, and at any and all adjournments, as follows:

1.

The approval of the Amendment to the Company’s Certificate of Incorporation (the “Amendment”) pursuant to which the Company’s Certificate of Incorporation will be amended to authorize 4,500,000 shares of Class A Common Stock and 4,500,000 shares of Class B Common Stock.  The Company’s currently authorized 4,500,000 shares of Common Stock will remain unchanged as a result of the Amendment.  In accordance with the Amendment, the Class A Common Stock and Class B Common Stock will bear rights and privileges that are separate and distinct from the existing Company Common Stock and each other.

VOTE YOUR COMMON SHARES:	_____ For the Amendment
	_____ Against the Amendment
	_____ Abstain

2.

The approval of the Agreement of Merger (the “Agreement”) between Citizens Financial Corp., a Delaware corporation, ( “Citizens Financial”) and CFC Merger Corp., a Delaware corporation (“Merger Corp.”) pursuant to which Citizens Financial will be merged with Merger Corp. with Citizens Financial surviving the merger.  In accordance with the Agreement, at the effective time of the transaction, all Citizens Financial Common Stock shares held by any shareholder who holds, in the aggregate, 825 or more Citizens Financial Common Stock shares will remain Common Stock Shares.  All Citizens Financial Common Stock shares held by any shareholder who holds, in the aggregate, less than 825 Common Stock shares will be converted into the right to receive Citizens Financial Class A Common Stock on a one-share-for-one-share exchange basis.  Company shareholders are entitled to assert dissenters’ rights under applicable provisions of Delaware General Corporation Law, Section 262 (a copy of which is attached to the proxy statement as Annex D) in connection with the merger.

VOTE YOUR COMMON SHARES:	_____ For the Agreement of Merger
	_____ Against the Agreement of Merger
	_____ Abstain

This proxy will be voted as directed.  If no instructions are specified, this proxy, if properly executed, will be voted FOR the propositions stated.

3.	In accordance with their discretion, upon all other matters that may properly come before the Special Meeting and any adjournments or postponements thereof.  At the present time, the Board of Directors knows of no other business to be presented at the meeting.

Should the undersigned be present and elect to vote at the Special Meeting or at any adjournment and after notification to the Secretary of the Company at the Meeting of the stockholder’s decision to terminate this proxy, the power of said attorneys and proxies shall be terminated and of no further force and effect.

This proxy is solicited by the Board of Directors.   The undersigned acknowledges receipt from the Company, prior to the execution of this proxy, of a Notice of the Special Meeting and a Proxy Statement dated _____________, 2009.

Dated:  ____________, 2009
Print Name of Shareholder		Print Name of Shareholder
Signature of Shareholder		Signature of Shareholder

Please sign exactly as your name appears on the label on the top right corner of this proxy.  When signing as attorney, executor, administrator, trustee or guardian, please give your full title.  If shares are held jointly, each holder should sign.

Please complete, date, sign, and mail this proxy in the enclosed postage-prepaid envelope.

 

PROXY STATEMENT

SPECIAL MEETING OF SHAREHOLDERS

___________________ 2009

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CITIZENS FINANCIAL CORP.

ELKINS, WEST VIRGINIA

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION; PASSED UPON THE MERITS OR FAIRNESS OF THE TRANSACTION; OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS DOCUMENT.  ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

TABLE OF CONTENTS

		PAGE
Certain Definitions		1
Summary Term Sheet		1
Questions and Answers About the Meeting		9
Special Factors		13
	Background and Purpose of the Amendment and the Merger Proposal	13
	Effects of the Amendment	14
	Effects of the Merger	17
	Certain U.S. Federal Income Tax Consequences	19
	Recommendation of the Board of Directors; Fairness of the Amendment and the Merger Proposal	20
	Opinion of Financial Advisor	23
Summary Financial Information		27
Statement Regarding Forward-Looking Information		29
Introduction		30
	General	30
	Annual Report and Quarterly Report of Examination	30
	Voting of Shares	30
	Quorum	30
	Proxies	31
	Company Officers and Directors	31
	Affiliated Party Business Relationships	32
	Conduct of Citizens Financial’s Business After the Merger	33
	Opinion of Financial Advisor	33
	Security Ownership of Certain Beneficial Owners and Management	38
Proposal One - Approval of the Amendment to the Certificate of Incorporation		39
	Summary	39
	Reasons for the Amendment	40
	Effect on Shareholders	40
	Existing Common Stock Rights and Privileges	40
	Class A Common Stock Rights and Privileges	40
	Class B Common Stock Rights and Privileges	41
Proposal Two – Approval of the Agreement of Merger		43
	Summary	43

EFFECT ON SHAREHOLDERS .  (Page 44)

If approved at the Special Meeting, the Agreement of Merger will affect Citizens Financial shareholders as follows after completion:

Shareholder as of Effective Time		Net Effect After Merger
Shareholders holding, in the aggregate, 825 or more shares of Citizens Financial Common Stock		Shares of Common Stock will continue to be outstanding.
Shareholders holding, in the aggregate, less than 825 shares of Citizens Financial Common Stock		Shares of Common Stock will be converted into the right to receive newly created Class A Common Stock on a one-share-for-one-share exchange basis.

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EXHIBIT B

FAIRNESS OPINION

 

 

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HOWE BARNES HOEFER & ARN ETT   207 Jefferson Square Austin, Texas 78731 512 495 9890

 

September 15, 2009

 

Board of Directors

Citizens Financial Corp.

213 Third Street

Elkins, West Virginia 26241

Members of the Board:

You have requested our opinion as to the fairness, from a financial point of view, to the holders of the outstanding shares of common stock of Citizens Financial Corp. (“Citizens Financial”) of the terms of the proposed merger of Citizens Financial with CFC Merger Corp. (“Merger Corp”) with Citizens being the surviving corporation (the “Merger”) pursuant to the Agreement of Merger (the “Agreement.”)

 

Pursuant to the Agreement, all Citizens Financial common stock shares held by any shareholder who holds in the aggregate, 825 or more Citizens Financial common stock shares will remain common stock shares.  All Citizens Financial common stock shares held by any shareholder   who holds, in the aggregate, less than 825 common stock shares will be converted into the right to receive Citizens Financial Class A common stock on a one-share-for-one-share exchange basis.  The Class A common stock will have rights and privileges separate and distinct from the existing common stock which are summarized below:

§

The Class A common stock will be allowed voting rights only if the shareholders are being asked to approve a merger, consolidation, conversion, sale of assets other than in the regular course of business, voluntary dissolution of the corporation, or as required by law.  The Class A common stock will not enjoy general voting rights, including the right to participate in the annual election of directors.

§

If Citizens Financial declares dividends, dividends must be paid on the Class A common stock before dividends may be paid on the existing common stock.  If dividends are paid, the dividends paid on the Class A common stock will enjoy a 5% premium over and above what is paid on the existing common stock.

§

In the event Citizens Financial is party to a merger, share exchange, sale of assets other than in the regular course of business, voluntary dissolution of Citizens Financial, or other change in control which will result in the merger, sale, dissolution or effective dissolution of Citizens Financial, the Class A common stock will be converted into common stock shares and will be treated equally in all respects with the existing common stock.

EXHIBIT B

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Board of Directors Citizens Financial Corp. September 15, 2009 Page 2

 

§

The Class A common stock has a right of first refusal in favor of Citizens Financial.  The first of first refusal requires a Class A common stock shareholder to notify Citizens Financial in writing of the terms of any transfer or sale of the Class A common stock.  Following receipt of the written notice, Citizens Financial has five business days to either request additional information regarding the sale or to immediately exercise its right of first refusal and purchase the shares of Class A common stock that are subject to the proposed transfer or sale upon the same terms as the proposed transfer or sale.

§

The Class A common stock will have a liquidation preference over the existing common stock and the Class B common stock.  In the event of a liquidation, the Class A common stock holders will be entitled to receive liquidation assets equal to those assets received by the common stock shareholders or the book value of the corporation’s common stock, whichever is greater.

All capitalized items used in this paragraph shall have the meanings ascribed to them in the Agreement.  The terms of the Merger are more fully set forth in the Agreement.

For purposes of this opinion and in connection with our review of the proposed transaction, we have, among other things:

2.

Participated in discussions with representatives of Citizens Financial concerning its financial condition, businesses, assets, earnings, prospects, and such senior management's views as to its future financial performance;

2.

Reviewed the terms of the Agreement;

3.

Reviewed certain financial statements, both audited (where available) and un-audited, and related financial information of Citizens Financial, including those included in its annual reports for the past two years and its quarterly reports for the past two years as well as other internally generated reports relating to asset/liability management, asset quality, and similar documents;

4.

Reviewed certain financial forecasts and projections of Citizens Financial, prepared by their respective management teams, as well as the amount and timing of the cost savings expected to result from the Merger furnished to us by Citizens Financial;

EXHIBIT B

 

 

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Board of Directors Citizens Financial Corp. September 15, 2009 Page 3

 

5.

Reviewed reported market prices and historical trading activity of Citizens Financial common stock;

6.

Reviewed certain aspects of the financial performance of Citizens Financial and compared such financial performance of Citizens Financial, together with stock market data relating to Citizens Financial common stock, with similar data available for certain other financial institutions and certain of their publicly traded securities;

10.

Compared the proposed financial terms of the Merger with the financial terms of certain other going private transactions that we deemed to be relevant;

11.

Participated in certain discussions and negotiations among representatives of Citizens Financial and their financial and legal advisors; and

12.

Reviewed such other information and performed such other studies and analyses as we considered relevant.

In giving our opinion, we have assumed and relied, without independent verification, upon the accuracy and completeness of all of the financial and other information that has been provided to us by Citizens Financial, and its representatives, and of the publicly available information that was reviewed by us. We are not experts in the evaluation of allowances for loan losses and have not independently verified such allowances, and have relied on and assumed that the allowance for loan losses set forth in the balance sheet of Citizens Financial at June 30, 2009 was adequate to cover such losses and complied fully with applicable law, regulatory policy and sound banking practice as of the date of such financial statements. We were not retained to and we did not conduct a physical inspection of any of the properties or facilities of Citizens Financial, did not make any independent evaluation or appraisal of the assets, liabilities or prospects of Citizens Financial, were not furnished with any such evaluation or appraisal, and did not review any individual credit files. Our opinion is necessarily based on economic, market, and other conditions as in effect on, and the information made available to us as of, the date hereof. Accordingly, it is important to understand that although subsequent developments may affect its opinion, we do not have any obligation to further update, revise, or reaffirm its opinion. We express no opinion on matters of a legal, regulatory, tax or accounting nature of the Merger or the ability of the Merger, as set forth in the Agreement, to be consummated. No opinion is expressed as to whether any alternative transaction might be more favorable to holders of Citizens Financial’s common stock than the Merger.

Howe Barnes Hoefer & Arnett, Inc. (“Howe Barnes”), as part of its investment banking business, is regularly engaged in the valuation of banks and bank holding companies, thrifts and thrift holding companies, and various other financial services companies, in connection with mergers and acquisitions, initial and secondary offerings of securities, and valuations for other purposes. In rendering this fairness opinion, we have acted on behalf of the Board of Directors of Citizens Financial and will receive a fee for our services, which is payable upon delivery of this opinion.

EXHIBIT B

 

 

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Board of Directors Citizens Financial Corp. September 15, 2009 Page 4

 

Howe Barnes’ opinion as expressed herein is limited to the fairness, from a financial point of view, of the merger consideration to be received by holders of Citizens Financial’s common stock and does not address Citizens Financial’s underlying business decision to proceed with the Merger. We have been retained on behalf of the Board of Directors of Citizens Financial, and our opinion does not constitute a recommendation to any director of Citizens Financial as to how such director should vote with respect to the Agreement. In rendering this opinion, we express no opinions with respect to the amount or nature of any compensation to any officers, directors, or employees of Citizens Financial, or any class of such persons relative to the consideration to be received by the holders of the common stock of the Citizens Financial in the transaction or with respect to the fairness of any such compensation.

Except as provided above, during the two years preceding the date of the opinion we have not had a material relationship with Citizens Financial where compensation was received or that we contemplate will be received after closing of the transaction.

Except as hereinafter provided, this opinion may not be disclosed, communicated, reproduced, disseminated, quoted or referred to at any time, to any third party or in any manner or for any purpose whatsoever without our prior written consent, which consent will not be unreasonably withheld, based upon review by us of the content of any such public reference, which shall be satisfactory to us in our reasonable judgment. This letter is addressed and directed to the Board of Directors of Citizens Financial in your consideration of the Merger and is not intended to be and does not constitute a recommendation to any shareholder as to how such shareholder should vote with respect to the Merger.  This opinion was approved by the fairness opinion committee of Howe Barnes.

Subject to the foregoing and based on our experience as investment bankers, our activities as described above, and other factors we have deemed relevant, we are of the opinion as of the date hereof that the terms of the proposed Merger are is fair, from a financial point of view, to the holders of Citizens Financial’s common stock.

	Sincerely,
	/s/ Howe Barnes Hoefer & Arnett, Inc.
	Howe Barnes Hoefer & Arnett, Inc.

EXHIBIT B

 

 

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CITIZENS FINANCIAL CORP.

ELKINS, WEST VIRGINIA

 

 

Documentation Report Relating to the

Fairness of the Proposed Merger of

Citizens Financial Corp.

With and Into CFC Merger Corp.

 

 

 

EXHIBIT B

 

 

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Table of Contents

	Section
Discussion	1
Selected Comparable Transactions	2
Historical Financial Analysis	3
Historical Stock Trading Analysis	4

 

 

EXHIBIT B

 

 

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CITIZENS FINANCIAL CORP.

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DISCUSSION

DESCRIPTION OF ASSIGNMENT

Citizens Financial Corp., Elkins, West Virginia ("Citizens Financial") has engaged Howe Barnes Hoefer & Arnett, Inc. to determine whether the terms of the proposed merger of Citizens Financial with and into CFC Merger Corp. ("Merger Corp") with Citizens Financial being the surviving corporation (the "Merger") pursuant to the Agreement of Merger (the "Agreement") are fair to the shareholders of Citizens Financial, from a financial point of view. The following presents our general observations and conclusions as a result of our analysis.

Structure of Transaction. Subject to the terms and conditions of the Agreement, Pursuant to the Agreement, all Citizens Financial common stock shares held by any shareholder who holds in the aggregate, 825 or more Citizens Financial common stock shares will remain common stock shares. All Citizens Financial common stock shares held by any shareholder who holds, in the aggregate, less than 825 common stock shares will be converted into the right to receive Citizens Financial Class A common stock on a one-share-for-one-share exchange basis. The Class A common stock will have rights and privileges separate and distinct from the existing common stock which are summarized below:

■

The Class A common stock will be allowed voting rights only if the shareholders are being asked to approve a merger, consolidation, conversion, sale of assets other than in the regular course of business, voluntary dissolution of the corporation, or as required by law. The Class A common stock will not enjoy general voting rights, including the right to participate in the annual election of directors.

■

If Citizens Financial declares dividends, dividends must be paid on the Class A common stock before dividends may be paid on the existing common stock. If dividends are paid the dividends paid on the Class A common stock will enjoy a 5% premium over and above what is paid on the existing common stock.

 

■

In the event Citizens Financial is party to a merger, share exchange, sale of assets other than in the regular course of business, voluntary dissolution of Citizens Financial, or other change in control which will result in the merger, sale, dissolution or effective dissolution of Citizens Financial, the Class A common stock will be converted into common stock shares and will be treated equally in all respects with the existing common stock.

 

 

EXHIBIT B

 

1

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CITIZENS FINANCIAL CORP.

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■

The Class A common stock has a right of first refusal in favor of Citizens Financial. The first of first refusal requires a Class A common stock shareholder to notify Citizens Financial in writing of the terms of any transfer or sale of the Class A common stock. Following receipt of the written notice, Citizens Financial has five business days to either request additional information regarding the sale or to immediately exercise its right of first refusal and purchase the shares of Class A common stock that are subject to the proposed transfer or sale upon the same terms as the proposed transfer or sale.

■

The Class A common stock will have a liquidation preference over the existing common stock and the Class B common stock. In the event of a liquidation, the Class A common stock holders will be entitled to receive liquidation assets equal to those assets received by the common stock shareholders or the book value of the corporation's common stock, whichever is greater.

The terms of the Merger are more fully set forth in the Agreement and all capitalized items used in this paragraph shall have the meanings ascribed to them in the Agreement.

As a result of this reorganization or "going-private" transaction, Citizens Financial will have less than 300 shareholders owning Citizen Financial's existing common stock and less than 500 shareholders owning the newly created Class A common stock. Citizens Financial's management believes it will be able to suspend its SEC reporting obligations, which will allow Citizens Financial to save $200,000 to $300,000 annually.

Analysis of Comparable Going Private Transactions. We reviewed certain publicly available information regarding 17 selected going private transactions (the "Guideline Transactions") announced from June 30, 2005 to September 11, 2009 involving U.S. banking organizations. The transactions included in the group are shown on the following page and in Section 2. The data was obtained from public filings.

 

 

EXHIBIT B

 

2

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CITIZENS FINANCIAL CORP.

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Going Private Transactions

 

						Date		Dividend		Liquidation
Company		City		State		Announced		Premium		Rights
Southcrest Financial Group, Inc.		Thomaston		GA		9/11/2009		10%		Preference over common
Piedmont Community Bank Group, Inc.		Grey		GA		5/6/2009		5%		Equal to common
Thomasville Bancshares, Inc.		Thomasville		GA		11/26/2008		Equal to common		Preference over common
First Freedom Bancshares, Inc.		Lebanon		TN		10/12/2008
Class A Common								3%		Equal to common
Class B Common								5%		Equal to common
Series A Preferred								10%		Preference over common
Mountain Valley Bancshares, Inc.		Cleveland		GA		8/8/2008		5%
Treaty Oak Bancorp, Inc.		Austin		TX		11/15/2007		Equal to common		Preference over common
Tri-State 1st Banc, Inc.		East Liverpool		OH		11/9/2007		Equal to common		Preference over common
CB Financial Corp.		Wilson		NC		10/25/2007		Greater of $0.04 or same as common		Preference over common
Southern Heritage Bancshares, Inc.		Cleveland		TN		10/19/2007
Class A Common								3%		Equal to common
Class B Common								5%		Equal to common
Series A Preferred								10%		Greater of common stock or book value
Chestatee Bancshares, Inc.		Dawsonville		GA		10/19/2007
Class A Preferred								5%		Equal to common
Class B Preferred								Greater of 5% prem. on Class A Preferred or $0.10 per share annually		Equal to common
FMB Equibanc, Inc.		Statesboro		GA		10/3/2007		10%		Preference over common
First Ipswich Bancorp		Ipswich		MA		9/11/2007		Equal to common		Preference over common
Southeast Bancshares, Inc.		Athens		TN		8/15/2007
Class A Common								3%		Equal to common
Class B Common								5%		Equal to common

 

 

EXHIBIT B

3

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CITIZENS FINANCIAL CORP.

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Going Private Transactions

 

						Date		Dividend		Liquidation
Company		City		State		Announced		Premium		Rights
First Commerce Bancorp		Lewisburg		TN		5/29/2007
Class A Common								3%		Equal to common
Class B Common								5%		Equal to common
First McMinnville Corp.		McMinnville		TN		5/25/2007		7%		Equal to common
Legends Financial Holdings, Inc.		Clarksville		TN		3/2/2006
Class A Common								3%		Equal to common
Class B Common								5%		Equal to common
First Community Corporation		Rogersville		TN		9/27/2005
Class A Preferred								5%		Preference over common
Class B Preferred								10%		Preference over common

We reviewed the terms of the transactions and the characteristics of the new classifications of common and preferred stocks and compared them with the terms of the Merger and the newly created Class A common stock. The dividend premium for the new classifications of common and preferred stocks ranged from zero to 10% with a median of 5%. In this instance, the Class A common stock will receive a 5% premium on the dividends paid to holders of Class A common stock, which falls within the range of values in the Guideline Transactions, which supports the fairness of the transaction.

Historical Financial Analysis. We prepared an overview of the historical financial performance of Citizens Financial, as shown in Section 3.

Trading Analysis. We reviewed the closing per share market prices and volumes for Citizens Financial common stock, which is thinly traded on the OTC Bulletin Board on a daily basis from March 11, 2009 to September 11, 2009. A price and volume chart for Citizens Financial for the period between March 11, 2009 and September 11, 2009 is contained in Section 4. For the period between March 11, 2009 and September 11, 2009, the price of Citizens Financial common stock has ranged from a low of S4.15 to a high of $9.00. The average closing price for the period was $7.05, the closing price on September 11, 2009 was $8.18 per share and the average daily trading volume for Citizens Financial was 310 shares.

 

 

EXHIBIT B

 

4

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CITIZENS FINANCIAL CORP.

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In conducting our review and in arriving at our opinion, we have relied upon and assumed the accuracy and completeness of the financial and other information provided to us or publicly available, and we have not assumed any responsibility for independent verification of the same. We have relied upon the management of Citizens Financial as to the reasonableness of the financial and operating forecasts and projections (and the assumptions and bases therefore) provided to us, and we have assumed that such forecasts and projections reflect the best currently available estimates and judgment of the management of Citizens Financial. We did not make or obtain any evaluations or appraisals of the assets or liabilities of Citizens Financial.

CONCLUSION

In reaching our opinion, we took into consideration the financial benefits of the proposed transaction to the shareholders of Citizens Financial. Based on the projected cost savings from suspending SEC reporting obligations, the comparative analysis with selected going private transactions and assuming the accuracy and completeness of the information and data provided to us by Citizens Financial, it is our opinion that, as of September 15, 2009, the terms of the proposed transaction are fair to the shareholders of Citizens Financial, from a financial point of view.

 

 

EXHIBIT B

 

5

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Going Private Transactions

Date

Dividend

Liquidation

Other

Company

City

State

Announced

Premium

Rights

Features

Southcrest Financial Group, Inc.

Thomaston

OA

9/11/2009

10%

Preference over common

Piedmont Community Bank Group, Inc.

Grey

GA

5/6/2009

5%

Equal to common

Thomasville Bancshares, Inc.

Thomasville

GA

11/26/2008

Equal to common

Preference over common

First Freedom Bancshares, Inc.

Lebanon

TN

10/12/2008

Class A Common

3%

Equal to common

Class B Common

5%

Equal to common

Series A Preferred

10%

Preference over common

Mountain Valley Bancshares, Inc.

Cleveland

GA

8/8/2008

5%

Treaty Oak Bancorp, Inc.

Austin

TX

11/15/2007

Equal to common

Preference over common

Put option

Tri-State 1st Banc, Inc.

East Liverpool

OH

11/9/2007

Equal to common

Preference over common

Redeem at greater of$17.00 or 1.35x tangible book

CB Financial Corp.

Wilson

NC

10/25/2007

Greater of $0.04 or same as common

Preference over common

Southern Heritage Bancshares, Inc.

Cleveland

TN

10/19/2007

Class A Common

3%

Equal to common

Class B Common

5%

Equal to common

Series A Preferred

10%

Greater of common stock or book value

Chestatee Bancshares, Inc.

Dawsonville

GA

10/19/2007

Class A Preferred

5%

Equal to common

Class B Preferred

Greater of 5% prem. on Class A Preferred or $0.10 per share annually

Equal to common

FMB Equibanc, Inc.

Statesboro

GA

10/3/2007

10%

Preference over common

First Ipswich Bancorp

Ipswich

MA

9/11/2007

Equal to common

Preference over common

Southeast Bancshares, Inc.

Athens

TN

8/15/2007

Class A Common

3%

Equal to common

Class B Common

5%

Equal to common

First Commerce Bancorp

Lewisburg

TN

5/29/2007

Class A Common

3%

Equal to common

Class B Common

5%

Equal to common

First McMinnville Corp.

McMinnville

TN

5/25/2007

7%

Equal to common

Legends Financial Holdings, Inc.

Clarksville

TN

3/2/2006

Class A Common

3%

Equal to common

Class B Common

5%

Equal to common

First Community Corporation

Rogersville

TN

9/27/2005

Class A Preferred

5%

Preference over common

Class B Preferred

10%

Preference over common

EXHIBIT B

 

 

---

 

SEC Performance Ratios

Citizens Financial Corp

211-213 Third Street

Elkins, WV 26241

		Current YTD				2008 FYE				2007 FYE				2006 FYE				2005 FYE
		As Reported				As Reported				As Reported				As Reported				As Reported
VALUATION RATIOS
P/E Ratio - Basic			13.0678				13.9809				19.9051				17.2170				5.2179
P/E Ratio - Diluted			13.0678				13.9809				19.9051				17.2170				5.2179
Price/Core EPS			N/A				N/A				19.7616				17.1604				5.2179
Price/LTM Core EPS			N/A				N/A				19.7616				17.1604				5.2179
Price/Book Value			0.7006				0.6144				0.9763				1.7593				1.8538
Price/Tangible Book Value			0.7006				0.6144				0.9763				1.7593				1.8538
Price/Assets			0.0638				0.0453				0.0834				0.1458				0.1526
Price/Total Deposits			0.0855				0.0588				0.1022				0.1815				0.1908
Book Value/Share			11.7753				11.3921				11.5227				11.0838				9.2602
Tangible Book Value/Share			11.7753				11.3921				11.5227				11.0838				9.2602
Market Capitalization			15,093				12,807				20,582				35,675				36,359
Volume/LTM Average Volume			236.22				85.35				76.03				75.02				62.94
PROFITABILITY RATIOS
Return on Average Assets			0.81				0.34				0.42				0.87				0.90
Return on Average Equity			9.87				4.23				4.94				10.29				10.02
Return on Average Common Equity			N/A				N/A				N/A				N/A				N/A
Return on Assets - As Reported			N/A				0.35				0.42				0.87				0.90
Return on Equity - As Reported			N/A				4.24				4.94				10.29				10.02
Return on Common Equity - As Reported			N/A				N/A				N/A				N/A				N/A
Income before Extra Items/Avg Assets			0.81				0.34				0.42				0.87				0.90
Income before Extra Items/Avg Equity			9.87				4.23				4.94				10.29				10.02
Operating Profit/Average Assets			1.15				0.39				0.52				1.28				1.31
Operating Profit/Average Equity			14.07				4.86				6.06				15.09				14.57
Total Interest Income/AEA			5.38				6.01				6.90				6.81				6.09
Total Interest Expense/AEA			1.87				2.53				2.93				2.60				1.90
Net Interest Income/AEA			3.51				3.48				3.97				4.21				4.18
Net Interest Margin - As Reported			3.79				3.68				4.12				4.31				4.29
Noninterest Income/AEA			1.17				0.78				0.79				0.73				0.69
Overhead Expense/AEA			3.23				3.07				3.44				3.40				3.35
Net Overhead Expense/AEA			2.06				2.29				2.65				2.67				2.66
Interest Income/Average Assets			5.13				5.68				6.50				6.41				5.73
Interest Expense/Average Assets			1.78				2.39				2.76				2.45				1.79
Net Interest Income/Average Assets			3.34				3.29				3.74				3.97				3.94
Noninterest Income/Average Assets			1.12				0.74				0.75				0.69				0.65
Noninterest Expense/Average Assets			3.08				2.90				3.25				3.20				3.15
Net Operating Expense/Average Assets			1.96				2.15				2.32				2.51				2.50
Yield/Cost Spread			3.12				3.02				3.41				3.74				3.83
Int Exp/Avg Int-bearing Liabilities			2.26				2.98				3.48				3.07				2.25
Efficiency Ratio			69.10				72.01				72.33				68.73				68.72

 

Highline Financial, LLC

 

EXHIBIT B

---

 

SEC Performance Ratios

Citizens Financial Corp

211-213 Third Street

Elkins, WV 26241

		Current YTD				2008 FYE				2007 FYE				2006 FYE				2005 FYE
		As Reported				As Reported				As Reported				As Reported				As Reported
Core Efficiency Ratio			70.39				72.01				72.33				68.73				68.72
Noninterest Income/Total Revenue			17.92				11.49				10.32				9.69				10.16
Net Overhead Exp/Net Int Margin			58.76				65.73				66.80				63.31				63.58
Salary Expense/Total Revenues			24.11				23.39				21.81				23.10				25.78
Dividend Payout Ratio (%)			20.83				79.89				84.93				50.33				48.63
Dividend Yield			3.39				5.71				4.27				2.92				9.32
LTM Payout Ratio (%)			44.35				79.89				84.93				50.33				48.63
LTM Dividends			0.28				0.40				0.48				0.57				1.60
Effective Tax Rate			26.04				8.67				18.52				31.42				31.16
CAPITAL ADEQUACY RATIOS
Tier 1 Capital Ratio (%)			N/A				11.77				11.57				11.87				12.32
Total Capital Ratio (%)			N/A				12.99				12.52				12.95				13.30
Leverage Ratio (%)			N/A				7.70				8.75				8.49				8.46
Total Capital/Asset for Leverage (%)			N/A				8.49				9.47				9.26				9.13
Tangible Equity			21,543				20,842				21,081				20,278				19,613
Tier 1 Capital			N/A				21,690				21,565				20,540				20,084
Total Capital			N/A				23,922				23,328				22,413				21,681
Risk-weighted Assets			N/A				184,157				186,326				173,073				163,015
Assets for Leverage			N/A				281,688				246,457				241,932				237,399
Tangible Equity /Tangible Assets			9.11				7.38				8.55				8.35				8.23
% Change in Tangible Equity			2.89				-1.13				3.96				3.39				-3.01
% Change in Tier 1 Capital			N/A				0.58				4.99				2.27				0.31
% Change in Total Capital			N/A				2.55				4.08				3.38				1.31
Goodwill/Equity			N/A				N/A				N/A				N/A				N/A
Total Intangible Assets/Equity			N/A				N/A				N/A				N/A				N/A
Total Debt/Equity			155.96				189.00				106.14				115.12				130.81
Long-term Debt/Equity			35.57				35.77				11.12				13.41				18.25
Long-term Debt/Total Debt			22.81				18.93				10.48				11.65				13.95
Nonperf Loans/Core Capital + Reserve			N/A				24.18				20.12				9.85				2.75
ASSET QUALITY RATIOS
Nonperforming Loans/GL			0.10				3.25				2.72				1.31				0.39
Unreserved Nonperf Lns/GL			-1.34				2.00				1.70				0.20				-0.65
Loans Past Due 90+ Days/GL			N/A				0.18				0.12				0.00				0.35
Nonaccrual Loans/GL			0.10				3.07				2.60				1.31				0.04
Restructured Loans/GL			N/A				0.00				0.00				N/A				N/A
NPAs/(Loans + OREO)			0.18				N/A				N/A				N/A				N/A
NPAs/Equity			1.37				27.75				22.26				10.89				3.04

Highline Financial, LLC

EXHIBIT B

 

 

---

 

SEC Performance Ratios

Citizens Financial Corp

211-213 Third Street

Elkins, WV 26241

		Current YTD				2008 FYE				2007 FYE				2006 FYE				2005 FYE
		As Reported				As Reported				As Reported				As Reported				As Reported
NPAs (Net of Loan Loss Rsrv)/Equity			-9.41				17.04				13.90				1.65				-5.10
Nonperforming Assets/TA			0.13				2.05				1.90				0.91				0.25
Nonperforming Loans/TA			0.07				2.05				1.90				0.91				0.25
OREO/TA			0.06				N/A				N/A				N/A				N/A
Loan Loss Reserve/GL			1.44				1.25				1.02				1.11				1.04
Loan Loss Reserve/Nonperf Loans			1,470.89				38.59				37.57				84.83				267.95
Loan Loss Reserve/Nonperf Assets			785.14				38.59				37.57				84.83				267.95
Equity + Loan Loss Reserve/Assets			10.10				8.17				9.26				9.12				8.90
Net Charge-offs/Ln Loss Reserve			17.38				66.76				107.37				7.85				3.51
Net Charge-offs/Avg Loans			0.23				0.85				1.11				0.09				0.04
Loan Loss Provision/Avg Loans			0.34				1.12				1.05				0.26				0.18
Loan Loss Provision/Net Charge-offs			145.54				131.48				94.19				287.76				491.07
LIQUIDITY RATIOS
Total Loans/Total Deposits			90.12				80.82				84.92				84.57				79.87
Noninterest-bearing Deposits/TD			14.53				13.59				13.87				13.79				15.04
Total Nonearning Assets/Total Assets			5.14				5.42				6.93				6.99				7.22
Total Earning Assets/Total Assets			95.84				95.37				93.79				93.78				93.45
Avg Earning Asst/Avg Int-bear Liab			120.56				117.92				118.98				118.29				118.42

Highline Financial, LLC

EXHIBIT B

 

 

---

 

SEC Financials

Citizens Financial Corp

211-213 Third Street

Elkins, WV 26241

Current YTD

2008 FYE

2007 FYE

2006 FYE

2005 FYE

As Reported

As Reported

As Reported

As Reported

As Reported

BALANCE SHEET

Assets

Cash and Cash Equivalents:

3,244

13,381

7,062

6,095

8,773

Cash and Due from Banks

3,103

3,943

7,050

6,065

6,770

Fed Funds Sold & Secs Purchased

N/A

N/A

N/A

0

2,003

Interest-bearing Deposits in Banks

141

9,438

12

30

N/A

Other Cash and Equivalents

N/A

N/A

N/A

N/A

N/A

Total Securities:

65,176

82,051

58,559

59,746

66,854

Investment Secs Available for Sale

45,636

59,284

51,048

50,642

59,347

Investment Secs Held-to-Maturity

N/A

N/A

N/A

N/A

N/A

MBS Available for Sale

17,887

21,575

6,561

8,226

6,803

MBS Held-to-Maturity

N/A

N/A

N/A

N/A

N/A

FHLB Stock

N/A

N/A

842

770

596

Trading Account Assets

N/A

N/A

N/A

N/A

N/A

Restricted Investments

1,653

N/A

N/A

N/A

N/A

Other Securities

N/A

1,192

108

108

108

Total Cash and Securities

68,420

95,432

65,621

65,841

75,627

Total Loans, Gross

161,237

177,953

172,702

168,091

153,733

Less: Allowance for Ln & Lse Losses

2,324

2,232

1,763

1,873

1,597

Total Loans, Net

158,913

175,721

170,939

166,218

152,136

Total Interest Earning Assets

226,554

269,442

231,273

227,867

222,590

Customer Acceptance Liability

N/A

N/A

N/A

N/A

N/A

Credit Card Receivables

N/A

N/A

N/A

N/A

N/A

Premises and Fixed Assets

2,651

4,106

4,260

4,331

4,192

Other Real Estate Owned

138

N/A

N/A

N/A

N/A

Acquired Real Estate

N/A

N/A

N/A

N/A

N/A

Intangible Assets:

N/A

N/A

N/A

N/A

N/A

Goodwill

N/A

N/A

N/A

N/A

N/A

Loan Servicing Rights

N/A

N/A

N/A

N/A

N/A

Other Intangible Assets

N/A

N/A

N/A

N/A

N/A

Total Other Assets

6,261

7,275

5,774

6,591

6,234

Loans Held for Sale

N/A

N/A

N/A

N/A

N/A

Accrued Interest Receivable

1,049

1,410

1,385

1,393

1,321

Deferred Income Taxes

N/A

N/A

N/A

N/A

N/A

Bank Owned Life Insurance

N/A

N/A

N/A

N/A

N/A

Income Taxes Receivable

N/A

N/A

N/A

N/A

N/A

Cash Surrender Value Life Ins Policy

N/A

N/A

N/A

N/A

N/A

Other Assets

5,212

5,865

4,389

5,198

4,913

Total Assets

236,383

282,534

246,595

242,980

238,190

Highline Financial, LLC

EXHIBIT B

 

 

---

 

SEC Financials

Citizens Financial Corp

211-213 Third Street

Elkins, WV 26241

Current YTD

200S FYE

2007 FYE

2006 FYE

2005 FYE

As Reported

As Reported

As Reported

As Reported

As Reported

Liabilities

Total Deposits:

176,337

217,429

201,296

196,543

190,486

Total Domestic Deposits:

176,337

217,429

201,296

196,543

190,486

Noninterest-bearing Deposits

25,619

29,552

27,920

27,103

28,648

Interest-bearing Deposits

150,718

187,876

173,377

169,440

161,838

Total Foreign Deposits:

N/A

N/A

N/A

N/A

N/A

Noninterest-bearing Deposits

N/A

N/A

N/A

N/A

N/A

Interest-bearing Deposits

N/A

N/A

N/A

N/A

N/A

Total Borrowings:

33,599

39,391

22,375

23,345

25,656

Short-term Borrowings

25,936

31,935

20,030

20,626

22,076

Short-term FHLB Advances

0

409

375

793

1,565

Federal Funds Purch & Sec Sold

25,936

30,286

15,658

16,395

19,080

Commercial Paper

N/A

N/A

N/A

N/A

N/A

Other Short-term Borrowings

0

1,240

3,998

3,438

1,431

Long-term Borrowings

7,663

7,456

2,344

2,719

3,580

Long-term FHLB Advances

7,663

7,456

2,344

2,719

3,580

Senior Debt

N/A

N/A

N/A

N/A

N/A

Subordinated Debt

N/A

N/A

N/A

N/A

N/A

Trust Preferred Securities

N/A

N/A

N/A

N/A

N/A

Other Long-term Borrowings

N/A

N/A

N/A

N/A

N/A

Total Interest-bearing Liabilities

184,317

227,267

195,752

192,785

187,494

Acceptances Outstanding

N/A

N/A

N/A

N/A

N/A

Advance Payments by Borrowers

N/A

N/A

N/A

N/A

N/A

Total Other Liabilities

4,904

4,873

1,843

2,814

2,434

Accrued Interest Payable

N/A

N/A

N/A

N/A

N/A

Income Tax Payable

N/A

N/A

N/A

N/A

N/A

Dividends Declared, Not Yet Paid

N/A

N/A

N/A

N/A

N/A

All Other Liabilities

4,904

4,873

1,843

2,814

2,434

Total Liabilities

214,840

261,693

225,514

222,702

218,577

Total Mezzanine Items

0

N/A

N/A

N/A

N/A

Mandatory Redeem Pre Stk

N/A

N/A

N/A

N/A

N/A

Total Contingencies

0

0

0

0

0

Minority Interest

N/A

N/A

N/A

N/A

N/A

Other Contingencies

0

N/A

N/A

N/A

N/A

Other Mezzanine Items

N/A

N/A

N/A

N/A

N/A

Equity

Total Preferred Stock

0

0

0

0

0

Preferred Stock

N/A

N/A

N/A

N/A

N/A

Redeemable Preferred Stock

N/A

N/A

N/A

N/A

N/A

Common Stock & Surplus

N/A

N/A

N/A

N/A

N/A

Common Stock (Aggregate Par Value)

4,500

4,500

4,500

4,500

1,500

Additional Paid in Capital

N/A

N/A

N/A

0

2,100

Common Stock Warrants

N/A

N/A

N/A

N/A

N/A

Retained Earnings

21,945

21,110

20,999

20,843

20,705

Accumulated Other Comprehensive Inc

-1,070

-937

-586

-1,233

-1,316

Highline Financial, LLC

EXHIBIT B

 

 

---

 

SEC Financials

 

Citizens Financial Corp

211-213 Third Street

Elkins, WV 26241

		Current YTD				2008 FYE				2007 FYE				2006 FYE				2005 FYE
		As Reported				As Reported				As Reported				As Reported				As Reported
Net Unrealized Gain/Loss on Securities			-1,070				-937				-586				-1,233				-1,316
Cumulative Foreign Currency Translation Adj			N/A				N/A				N/A				N/A				N/A
Less:Treasury Stock			3,832				3,832				3,832				3,832				3,375
ESOP			N/A				N/A				N/A				N/A				N/A
Deferred Compensation			N/A				N/A				N/A				N/A				N/A
Other Equity			0				N/A				N/A				N/A				N/A
Total Equity			21,543				20,842				21,081				20,278				19,613
Total Liabilities and Equity			236,383				282,534				246,595				242,980				238,190
Total Shares Outstanding			1,829,504				1,829,504				1,829,504				1,829,504				2,117,988
Treasury Shares Outstanding			420				420				420				420				132
Preferred Shares Outstanding			N/A				N/A				N/A				N/A				N/A
INCOME STATEMENT
Interest Income
Interest and Fees on Loans			5,121				11,945				13,431				12,934				10,745
Interest and Fees on Commercial Loans			N/A				N/A				N/A				N/A				N/A
Interest and Fees on Consumer Loans			N/A				N/A				N/A				N/A				N/A
Interest and Dividends on Securities			N/A				3,075				2,426				2,349				2,108
Interest and Dividends on Secs Avail for Sale			N/A				N/A				N/A				N/A				N/A
Interest and Dividends on Secs Held to Maturity			N/A				N/A				N/A				N/A				N/A
Interest and Dividends on Tax Investment Secs			1,110				N/A				N/A				N/A				N/A
Interest and Dividends on Tax Exempt Investme			408				N/A				N/A				N/A				N/A
Inton Fed Funds Sold & Sec Purch			0				28				14				21				123
Interest on Commercial Paper			N/A				N/A				N/A				N/A				N/A
Interest on Trading Account Secs			N/A				N/A				N/A				N/A				N/A
Interest on Deposits with Banks			40				128				96				48				N/A
Interest and Dividends on FHLB Stock			N/A				N/A				N/A				N/A				N/A
Other Interest Income			0				1				0				-1				0
Total Interest Income			6,679				15,177				15,967				15,351				12,976
Interest Expense
Interest on Deposits			1,943				5,681				5,962				4,882				3,377
Interest Exp on Short Term Borrowings			235				462				684				801				502
Interest Exp on Federal Funds Purchased			N/A				N/A				N/A				N/A				N/A
Interest Exp on Long Term Borrowings			146				247				135				173				178
Ineterest Exp on Borrowed Funds			N/A				N/A				N/A				N/A				N/A
Other Interest Expense			0				0				0				0				-1
Total Interest Expense			2,324				6,390				6,781				5,856				4,056
Net Interest Income			4,355				8,787				9,186				9,495				8,920
Provision for Loan Losses			294				1,959				1,783				423				275
Net Interest Income after Provision			4,061				6,828				7,403				9,072				8,645

Highline Financial, LLC

EXHIBIT B

 

 

---

 

SEC Financials

Citizens Financial Corp

211-213 Third Street

Elkins, WV 26241

Current YTD

2008 FYE

2007 FYE

2006 FYE

2005 FYE

As Reported

As Reported

As Reported

As Reported

As Reported

Noninterest Income

Service Charges on Deposits

498

1,143

1,018

852

772

Trust Income

126

306

231

207

201

Loan Servicing Income and Fees

N/A

N/A

N/A

N/A

N/A

Trading Account Income

N/A

N/A

N/A

N/A

N/A

Credit Card Fees

N/A

N/A

N/A

N/A

N/A

Debit Card Fees

N/A

N/A

N/A

N/A

N/A

Overdraft Charges

N/A

N/A

N/A

N/A

N/A

Discount Interchange Revenue

N/A

N/A

N/A

N/A

N/A

Earnings Investment in Life Insurance

N/A

N/A

N/A

N/A

N/A

Insurance

23

N/A

N/A

N/A

N/A

Real Estate Commissions

N/A

N/A

N/A

N/A

N/A

Real Estate Management Fees

N/A

N/A

N/A

N/A

N/A

Secondary Market Origination Fees

N/A

N/A

N/A

N/A

N/A

Securitization Income

N/A

N/A

N/A

N/A

N/A

Transaction Processing Fees

N/A

N/A

N/A

N/A

N/A

Merchant Card Services

N/A

N/A

N/A

N/A

N/A

Non Deposit Investment Product Fees

N/A

N/A

N/A

N/A

N/A

VISA Share Redemption

N/A

N/A

N/A

N/A

N/A

Bank Owned Life Insurance Income

N/A

N/A

N/A

N/A

N/A

Foreign Exchange Income

N/A

N/A

N/A

N/A

N/A

Gain/Loss on Sale of Loans

N/A

N/A

N/A

N/A

N/A

Brokerage Income

43

160

160

117

79

Gain/Loss on Sale of OREO

N/A

N/A

N/A

N/A

N/A

Other Noninterest Income

768

361

428

472

416

Total Noninterest Income

1,458

1,970

1,837

1,648

1,468

Total Revenues

8,137

17,147

17,804

16,999

14,444

Noninterest Expense

Salaries and Employee Benefits

1,962

4,011

3,883

3,926

3,723

Occupancy and Equipment

381

795

812

823

817

Foreclosed Property Expense

N/A

35

441

N/A

N/A

Amortization on Intangibles

N/A

N/A

N/A

N/A

N/A

Amortization on Interest Only Strip

N/A

N/A

N/A

N/A

N/A

ATM

N/A

N/A

N/A

N/A

N/A

Legal & Professional Fees

144

427

421

350

245

FDIC Premiums

243

N/A

N/A

N/A

N/A

Postage

70

N/A

N/A

N/A

N/A

Data Processing

336

565

517

524

599

Directors Fees

137

N/A

N/A

N/A

N/A

Other Noninterest Expense

744

1,913

1,899

2,036

1,754

Total Noninterest Expense

4,017

7,746

7,973

7,659

7,139

G&A Expense

4,017

7,711

7,532

7,659

7,139

Operating Profit

1,502

1,052

1,267

3,061

2,975

Securities Gains (Losses)

86

-49

2

-18

0

Nonrecurring Income

-163

N/A

N/A

N/A

N/A

 

Highline Financial, LLC

 

EXHIBIT B

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SEC Financials

Citizens Financial Corp

211-213 Third Street

Elkins, WV 26241

		Current YTD				2008 FYE				2007 FYE				2006 FYE				2005 FYE
		As Reported				As Reported				As Reported				As Reported				As Reported
Nonrecurring Expense			N/A				N/A				N/A				N/A				N/A
Total Nonrecurring Items			163				N/A				N/A				N/A				N/A
Income Before Taxes			1,425				1,003				1,269				3,043				2,975
Provision for Income Taxes			371				87				235				956				927
Aftertax Nonrecurring Items			106				N/A				N/A				N/A				N/A
Income Before Extraordinary Items			1,054				916				1,034				2,087				2,047
Extraordinary Items			N/A				N/A				N/A				N/A				N/A
Net Income			1,054				916				1,034				2,087				2,047
Comprehensive Income			921				566				1,681				2,169				673
Memorandum:
Net Income Applic to Common Shares			1,054				916				1,034				2,087				2,047
Core Income			1,104				948				1,033				2,099				2,047
Net Interest Income, PTE			N/A				9,300				9,530				9,721				9,143
Net Income Before Taxes, FTE			1,425				1,516				1,613				3,269				3,198
Taxable Equivalent Adjustment			N/A				513				344				226				223
Average Shares O/S - Basic			1,829,504				1,829,504				1,829,504				1,842,662				622,188
Average Shares 0/S - Diluted			1,829,504				1,829,504				1,829,504				1,842,662				622,188
Total Dividends Paid:			219				732				878				1,048				993
Preferred Dividends			0				0				0				0				0
Common Dividends			219				732				878				1,048				993
Dividends per Share-Common Stock			0.12				0.40				0.48				0.57				1.60
EPS As Reported - Basic			0.58				0.50				0.57				1.13				3.29
EPS As Reported - Diluted			0.58				0.50				0.57				1.13				3.29
EPS Before Extra Items - Basic			0.58				0.50				0.57				1.13				3.29
EPS - Basic			0.58				0.50				0.57				1.13				3.29
EPS Before Extra Items - Diluted			0.58				0.50				0.57				1.13				3.29
EPS - Diluted			0.58				0.50				0.57				1.13				3.29
Core EPS			0.60				0.52				0.56				1.14				3.29
Core LTM EPS			N/A				N/A				0.57				1.14				3.29
LTM EPS Before Extra Items - Diluted			0.63				0.50				0.57				1.13				3.29
LTM EPS After Extra Items - Diluted			0.63				0.50				0.57				1.13				3.29
Subchapter S			N/A			No				No				No				No

Highline Financial, LLC

EXHIBIT B

 

 

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SEC Financials

 

Citizens Financial Corp

211-213 Third Street

Elkins, WV 26241

		Current YTD				2008 FYE				2007 FYE				2006 FYE				2005 FYE
		As Reported				As Reported				As Reported				As Reported				As Reported
CASH FLOW STATEMENT
Cash and Cash Equiv., beginning of the year			13,381				7,062				6,095				N/A				N/A
Cash Flows from Operating Activities			2,039				3,141				3,056				N/A				N/A
Cash Flows from Investing Activities			34,072				-29,239			^,993					N/A				N/A
Cash Flows from Financing Activities			-45,248				32,417				2,905				N/A				N/A
Net Inc/Dec in Cash and Cash Equiv.			-10,137				6,319				967				N/A				N/A
Cash and Cash Equiv., end of the year			3,244				13,381				7,062				N/A				N/A
AVERAGE BALANCES
Average Securities			72,940				71,748				59,130				61,822				60,165
Average Loans, Gross			172,896				175,544				170,263				162,252				149,177
Average Earning Assets			248,411				252,644				231,559				225,451				213,149
Average Assets			260,636				267,014				245,527				239,464				226,455
Average Interest-bearing Deposits			199,948				188,879				172,324				164,372				153,067
Average Interest-bearing Liabilities			206,050				214,246				194,618				190,587				180,000
Average Equity			21,357				21,639				20,913				20,284				20,421
ASSET QUALITY
Loans Fast Due 90+ Days			N/A				313				206				0				538
Nonaccrual Loans			158				5,471				4,487				2,208				58
Restructured Loans			N/A				0				0				N/A				N/A
Nonperforming Loans			158				5,784				4,693				2,208				596
Other Real Estate Owned			138				N/A				N/A				N/A				N/A
Total Nonperforming Assets			296				5,784				4,693				2,208				596
Charge-offs			218				1,771				1,935				162				90
Recoveries			-16				-281				A2				-15				-34
Net Charge-offs			202				1,490				1,893				147				56

 

Highline Financial, LLC

EXHIBIT B

 

 

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EXHIBIT B

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EXHIBIT C

CERTIFICATION OF COUNSEL

 

 

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G ERRISH M C C REARY S MITH, PC

Attorneys

Greyson E. Tuck

Email: gtuck@gerrish.com

700 Colonial Road, Suite 200

Memphis, Tennessee  38117

P. O. Box 242120

Memphis, Tennessee  38124-2120

Telephone:  (901) 767-0900

Facsimile:  (901) 684-2339

 

November 6, 2009

PERSONAL AND CONFIDENTIAL

Mr. Perry J. Hindin

Special Counsel

Securities and Exchange Commission

Division of Corporate Finance

Mail Stop 3628

Washington, DC 20549-3628

Re:	Citizens Financial Corp.

Schedule 13E-3

Filed on September 25, 2009

File Number 005-82993

Dear Mr. Hindin:

Formal Opinion of Counsel

The Securities and Exchange Commission (“SEC”) has asked counsel to Citizens Financial Corp. of Elkins, West Virginia (“Company”) to provide a Formal Opinion of Counsel certifying the Common Stock and the newly authorized Class A Common Stock that will be issued to certain Company shareholders in connection with its Rule 13E-3 going private transaction are separate classes of securities under Delaware Law.  In addition, we have been asked to provide a legal analysis as to why the Company’s existing Common Stock and the newly created Class A Common Stock are separate classes of stock for purposes of determining eligibility to deregister under Section 12 of the Securities Act of 1934.

Delaware Corporate Law

Delaware Corporate Law § 151, Classes and Series of Stock; Redemption; Rights, provides Delaware corporations the authority to issues one or more classes of stock.  Specifically, Delaware Corporate Law § 151 provides:

EXHIBIT C

 

 

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Mr. Perry Hindin

Page 3

November 6, 2009

 

Every corporation may issue one or more classes of stock or one or more series of stock with any class thereof, any or all of which classes may be stock with par value or stock without par value in which classes or series may have such voting powers, full or limited, or no voting powers, and such designations, preferences, and relative participating, optional or other special rights, and qualifications, limitations or restrictions thereof, as shall be stated and expressed in the certificate of incorporation or of any amendment thereto, or in the resolution or resolutions providing for the issue of such stock adopted by the board of directors pursuant to authority expressly vested in it by the provisions of its certificate of incorporation…

Delaware’s corporate statutes do not provide a definition for “class” of stock.  However, the above statute provides a corporation may have one or more classes of stock, and such classes will be recognized as separate classes of stock if the certificate of incorporation, or any amendment thereto, sets forth the various powers associated with the class of stock, including, but not limited to, the voting powers, designation, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof.

The amendment to the Company’s certificate of incorporation adopted by the Company’s Board of Directors to be submitted to the Company’s shareholders, if adopted and effected, will result in separate classes of stock under Delaware Corporate Law.  The amendment will retain the Company’s existing Common Stock and will create a new Class A Common Stock.  The rights and privileges of each of these two Classes of Common Stock is set forth below.

EXISTING COMMON STOCK RIGHTS AND PRIVILEGES

Following the Effective Time of the Amendment, the Company’s existing Common Stock will continue to enjoy the same rights and privileges that are currently associated with the Common Stock.  These rights and privileges include:

·

VOTING RIGHTS – The Company’s existing Common Stock has full voting rights.  All Common Stock shareholders are entitled to vote on any and all matters that may come before a vote of the Company’s shareholders.  This includes the right to participate in the annual election of directors.

·

DIVIDENDS – The Company’s existing Common Stock is entitled to receive dividends as may be declared from time to time by the Company’s Board of Directors.  The Company’s existing Common Stock does not cumulate dividends, and there is no obligation on behalf of the Company’s Board of Directors to pay dividends on the Common Stock.

EXHIBIT C

 

 

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Mr. Perry Hindin

Page 4

November 6, 2009

 

·

CONVERSION – Not applicable.  The Company’s Common Stock is not convertible to any other class of Company stock.

·

REDEMPTION – The Company’s existing Common Stock has no redemption features.

·

RIGHT OF FIRST REFUSAL – The Company’s existing Common Stock has no right of first refusals.  The foregoing does not limit any Company shareholders from individually contracting such rights.

·

LIQUIDATION PREFERENCE – The Company’s existing Common Stock does not have a liquidation preference because there is currently only one class of Company Stock.  Following the transaction, the existing Common Stock will have last preference in Company liquidation rights.

CLASS A COMMON STOCK RIGHTS AND PRIVILEGES

The Amendment provides the Class A Common Stock will have rights and privileges separate and distinct from the existing Common Stock and the Class B Common Stock.  The Class A Common Stock will enjoy the following rights and privileges:

·

VOTING RIGHTS – The Class A Common Stock will be allowed voting rights only if the shareholders are being asked to approve a merger, consolidation, conversion, sale of assets other than in the regular course of business, voluntary dissolution of the corporation, or as required by law.  The Class A Common Stock will not enjoy general voting rights, including the right to participate in the annual election of directors.

·

DIVIDENDS – If the Company declares dividends, dividends must be paid on the Class A Common Stock before dividends may be paid on the existing Common Stock.  However, the Company shall be under no obligation to pay dividends, and dividends are not cumulative.  If dividends are paid, the dividends paid on the Class A Common Stock will enjoy a 5% premium over and above what is paid on the Common Stock.

·

CONVERSION – In the event the Company is party to a merger, share exchange, sale of assets other than in the regular course of business, voluntary dissolution of the Company, or other change in control which will result in the merger, sale, dissolution or effective dissolution of the Company, the Class A Common Stock will be converted into Common Stock shares and will be treated equally in all respects with the existing Common Stock.

·

REDEMPTION – The Class A Common Stock will have no redemption rights.

EXHIBIT C

 

 

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Mr. Perry Hindin

Page 5

November 6, 2009

 

·

RIGHT OF FIRST REFUSAL – The Class A Common Stock has a right of first refusal in favor of the Company.  Generally, this right of first refusal requires a Class A Common Stock shareholder to notify the Company in writing of the terms of any transfer or sale of the Class A Common Stock.  Following receipt of the written notice, the Company has five (5) business days to either request additional information regarding the sale or to immediately exercise its right of first refusal and purchase the shares of Class A Common Stock that are subject to the proposed transfer or sale upon the same terms as the proposed transfer or sale.  If the transfer is to be made without consideration (i.e. a gift), the Company shall have the right to purchase the shares for an amount determined by the Board to be the fair value of the shares.  The Company retains the right to not exercise its right of first refusal, which will allow the Class A Common Stock shareholder to sell or transfer the shares in accordance with the terms of the proposed transfer or offer.  Any Class A Common Stock shares transferred in violation of the right of first refusal is void and of no effect and will not be recognized by the Company.

·

LIQUIDATION PREFERENCE – The Class A Common Stock will have a liquidation preference over the existing Common Stock and the Class B Common Stock.  In the event of a liquidation, the Class A Common Stock shareholders will be entitled to receive liquidation assets equal to those assets received by the Common Stock shareholders or the book value of the corporation’s Common Stock, whichever is greater.

Citizens Financial Corp.
Stock Comparison Chart
Characteristic	Common	Common A
Voting Rights	Full voting rights	As required by law and for a Merger/Share Exchange
Dividends	As declared	5% premium over common dividends with payment before all other shares
Liquidation Preference	Last Preference	Priority over all others Distribution – same as common or book value of common, whichever is greater
Conversion to Common Stock	N/A	Conversion to common at change in control
Transfer Restrictions	No	Yes – Holding Company has right of first refusal
Redemption	None	None

EXHIBIT C

 

 

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Mr. Perry Hindin

Page 6

November 6, 2009

 

The Company’s existing Common Stock and the Class A Common Stock are separate classes of stock under Delaware Corporate Law for several reasons, based on their separate and distinct rights and privileges.  First, the two classes of stock enjoy distinct voting privileges.  Specifically, the existing Common Stock has full voting rights.  The Class A Common Stock has voting rights only in the case of a change in control of the Company or as required by Delaware Law.

In addition to the differences in voting rights, the classes of stock enjoy distinct dividend privileges.  Specifically, the existing Common Stock enjoys dividends as may be declared by the Board of Directors.  The Class A Common Stock enjoys a 5% premium and a preference in payment over the Common Stock.

Finally, these two stocks are separate classes of stock because of the holder’s right to distribute them free of a right of first refusal.  The existing Common Stock may be treated freely without a right of first refusal.  However, the Class A Common Stock may not be sold without first offering the shares to the Company.

The differences in voting rights, dividends and the right of first refusal in the favor of the Company are sufficient differences in the two classes of stock to warrant them separate classes under Delaware Corporate Law.

Federal Securities Law

Section 15D of the Securities Exchange Act of 1934 defines a “class” of securities as those that are “substantially similar in character and the holders of which enjoy substantially similar rights and privileges”.  The existing Common Stock and the newly created Class A Common Stock are separate classes of securities in light of this definition because these two classes do not possess substantially similar rights and privileges.

Specifically, the holders of the existing Common Stock enjoy the right to vote on any matter that may come before the shareholders. The holders of the Class A Common Stock are afforded voting rights only if the corporation is voting on a change in control or as is required by Delaware Corporate Law.

Moreover, the holders of the newly created Class A Common Stock will enjoy dividend rights that are superior (not similar) to those enjoyed by the holders of the existing Common Stock.  Specifically, the holders of the newly created Class A Common Stock will enjoy a 5% premium over and above any dividends that may be paid on the existing Common Stock.  In addition, the holders of the newly created Class A Common Stock will receive a preference in the payment of such dividends.

Finally, the holders of the existing Common Stock and the newly created Class A Common Stock do not have substantially similar rights when it comes to their ability to sell their shares.  Specifically, the holders of the existing Common Stock are free to trade their shares as they wish.  The holders of the newly created Class A Common Stock may sell their shares to a third party only after the corporation has exercised its right of first refusal.

EXHIBIT C

 

 

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Mr. Perry Hindin

Page 7

November 6, 2009

 

The Company’s existing Common Stock and the newly created Class A Common Stock are separate classes of securities under the Securities Exchange Act of 1934 because they do not enjoy substantially similar rights and privileges.

Sincerely,

Greyson E. Tuck

Greyson E. Tuck

GET:cas

 

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