FIRST CITIZENS FINANCIAL CORP, DEF 14A, 1996-03-29

FIRST CITIZENS FINANCIAL CORP
DEF 14A, 1996-03-29
SAVINGS INSTITUTION, FEDERALLY CHARTERED

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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
[Amendment No. ___________]

Filed by the Registrant /X/
Filed by a party other than the Registrant / /

Check the appropriate box:

/ / Preliminary proxy statement
/ / Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12

First Citizens Financial Corporation
------------------------------------------------
(Name of Registrant as Specified in Its Charter)

------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):

/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) or Schedule 14A.

/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:

- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):

- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------
(5) Total fee paid:

- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.

/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

(1) Amount previously paid:

- --------------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.:

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(3) Filing party:

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(4) Date filed: March 29, 1996

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<PAGE>

March 28, 1996

Dear Stockholder:

On behalf of the board of directors of First Citizens Financial
Corporation (the "Company"), we invite you to attend the 1996 annual meeting of
stockholders (the "Annual Meeting") to be held on Friday, April 19, 1996 at 9:00
a.m. at the DoubleTree Hotel, 1750 Rockville Pike, Rockville, Maryland.

As described in the accompanying proxy statement, the Annual Meeting
has been called to elect two directors for three-year terms. The board of
directors of the Company recommends that you vote FOR the board of directors'
two nominees for election as directors.

It is important that your shares be represented at the Annual Meeting.
Therefore, whether or not you plan to attend the Annual Meeting, you are
requested to complete, date, sign and return the enclosed proxy card in the
enclosed postage-paid envelope so that it is received prior to the Annual
Meeting.

We appreciate the confidence you have shown in the Company and look
forward to your continued support.

Sincerely yours,

Enos K. Fry Herbert W. Jorgensen
Vice Chairman and Chairman of the Board and
President Chief Executive Officer

Enclosures

<PAGE>

FIRST CITIZENS FINANCIAL CORPORATION
22 Firstfield Road
Gaithersburg, Maryland 20878
(301) 527-2400

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 19, 1996

NOTICE IS HEREBY GIVEN that the 1996 annual meeting of stockholders
(the "Annual Meeting") of First Citizens Financial Corporation (the "Company")
will be held at the DoubleTree Hotel, 1750 Rockville Pike, Rockville, Maryland
on Friday, April 19, 1996 at 9:00 a.m., for the following purposes:

(1) To elect two directors of the Company for three-year terms and
until their successors shall have been elected and qualified;

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

Pursuant to the bylaws, the board of directors has fixed March 1, 1996
as the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting and to all adjournments thereof. Only
stockholders of record at the close of business on that date will be entitled to
notice of and to vote at the Annual Meeting. All stockholders are cordially
invited to attend the Annual Meeting.

In the event that there are not sufficient votes to approve any one or
more of the foregoing proposals at the time of the Annual Meeting, the Annual
Meeting may be adjourned in order to permit further solicitation of proxies by
the Company.

By Order of the Board of Directors

Enos K. Fry Herbert W. Jorgensen
Vice Chairman and Chairman of the Board and
President Chief Executive Officer

Gaithersburg, Maryland
March 28, 1996

Whether or not you plan to attend the Annual Meeting, you are urged to
sign, date and return the enclosed proxy in the accompanying pre-addressed
envelope which requires no postage stamp. Your proxy may be revoked prior to the
voting by filing with the secretary of the Company a written revocation or a
duly executed proxy bearing a later date or by attending the Annual Meeting and
voting in person.

<PAGE>

FIRST CITIZENS FINANCIAL CORPORATION
22 Firstfield Road
Gaithersburg, Maryland 20878
(301) 527-2400

PROXY STATEMENT
1996 ANNUAL MEETING OF STOCKHOLDERS
APRIL 19, 1996

SOLICITATION, VOTING AND REVOCABILITY OF PROXIES

This proxy statement is furnished to stockholders of First Citizens
Financial Corporation (the "Company") in connection with the solicitation by the
board of directors of the Company of proxies to be used at the 1996 annual
meeting of stockholders (the "Annual Meeting"), to be held at the DoubleTree
Hotel, 1750 Rockville Pike, Rockville, Maryland on Friday, April 19, 1996 at
9:00 a.m., and at any adjournments thereof.

If the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon.
Executed but unmarked proxies will be voted FOR the election of the board of
directors' two nominees as directors. If any other matters are properly brought
before the Annual Meeting, the persons named in the accompanying proxy will vote
the shares represented by such proxies on such matters as determined by a
majority of the Company's board of directors. The presence of a stockholder at
the Annual Meeting will not automatically revoke such stockholder's proxy.
Stockholders may, however, revoke a proxy at any time prior to its exercise by
filing with the secretary of the Company a written revocation or a duly executed
proxy bearing a later date or by attending the Annual Meeting and voting in
person.

The cost of solicitation of proxies in the form enclosed herewith will
be borne by the Company. In addition to the solicitation of proxies by mail, the
Company, through its directors, officers and regular employees, may also solicit
proxies personally or by telephone or telegraph. The Company will also request
persons, firms and corporations holding shares in their names, or in the name of
their nominees, to send proxy material to and obtain proxies from beneficial
owners and will reimburse such holders for their reasonable expenses in so
doing. The Company has also retained McCormick & Pryor Ltd., a proxy soliciting
firm, to assist in solicitation of proxies at a fee of $4,500 plus reimbursement
of out-of-pocket expenses. It is anticipated that this proxy statement will be
mailed to stockholders on or about March 28, 1996.

The securities which can be voted at the Annual Meeting consist of
shares of common stock of the Company, par value $.01 per share (the "Common
Stock"). Each share entitles its owner to one vote on all matters. Pursuant to
the Company's certificate of incorporation, there is no cumulative voting in the
election of directors. The close of business on March 1, 1996 has been fixed by
the board of directors as the record date for determination of stockholders
entitled to vote at the meeting. The number of shares of Common Stock
outstanding on the record date was 2,649,182.

<PAGE>

All share amounts contained herein have been adjusted for a 10% stock dividend
paid by the Company in June 1995. The presence, in person or by proxy, of at
least one-third of the outstanding shares of Common Stock is necessary to
constitute a quorum at the Annual Meeting. Stockholders' votes will be tabulated
by the persons appointed by the board of directors to act as inspectors of
election for the Annual Meeting. Abstentions and broker non-votes will be
treated as shares that are present, in person or by proxy, and entitled to vote
for purposes of determining the presence of a quorum at the Annual Meeting.
Broker non-votes will not be counted as a vote cast on any matter presented at
the Annual Meeting.

A copy of the Company's Annual Report to Stockholders and Form 10-K
(without exhibits) for the year ended December 31, 1995 as filed with the
Securities and Exchange Commission (the "SEC") accompanies this Proxy Statement.
The Company will provide copies of the exhibits to the Form 10-K upon payment of
a reasonable fee. Requests should be addressed to First Citizens Financial
Corporation, 22 Firstfield Road, Gaithersburg, Maryland 20878, Attention:
Corporate Secretary.

ELECTION OF DIRECTORS

The board of directors of the Company currently consists of eight
members. The directors are divided into three classes as nearly equal in number
as possible. In general, the term of office of only one class expires in each
year and their successors are elected for terms of three years and until their
successors are elected and qualified. At the Annual Meeting, two directors will
be elected, each for a three-year term. As described below, the board of
directors' nominees are William J. Walsh, III, and H. Deets Warfield, Jr. The
board of directors recommends that you vote FOR the board of directors' two
nominees for election as directors.

Unless otherwise specified on the proxy, it is the intention of the
persons named in the proxy to vote the shares represented by each properly
executed proxy for the election as directors of Messrs. Walsh and Warfield for
three-year terms. The board of directors believes that such nominees will stand
for election and will serve if elected as directors. However, if any person
nominated by the board of directors fails to stand for election or is unable to
accept election, the proxies will be voted for the election of such other person
or persons as a majority of the Company's board of directors may recommend.
Pursuant to the Company's bylaws, directors are elected by plurality vote.

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<PAGE>

Information as to Nominees and Other Directors

The following table sets forth certain information regarding the board
of directors' two nominees for election as directors and those directors who
will continue to serve as such after the Annual Meeting.
<TABLE>
<CAPTION>

Age at Position(s) Held
March 1, Director For Term with the
1996 Since (1) To Expire Company

Nominees:

<S> <C> <C> <C>
William J. Walsh, III ......................... 50 1989 1999 Director

H. Deets Warfield, Jr.......................... 64 1973 1999 Director

Continuing Directors:

Stanley Betts.................................. 71 1976 1997 Director and
Chairman Emeritus

Enos K. Fry.................................... 52 1987 1997
Vice Chairman
and President
Melvin O. Wright............................... 67 1994 1997 Director

Herbert W. Jorgensen........................... 67 1990 1998 Chairman of the
Board and Chief
Executive Officer

N. Richard Kimmel.............................. 66 1986 1998 Vice Chairman

Albert M. Cowell, Jr........................... 64 1987 1998 Director

<FN>
(1) Each of the Company's nominees for director and the continuing directors (except for Messrs. Jorgensen, Walsh and Wright) has
served as a director of the Company since its formation in 1989. Messrs. Jorgensen and Walsh became directors of the Company
in 1990. Mr. Wright became a director of the Company in 1994. Each director of the Company also serves as a director of
Citizens Savings Bank F.S.B. (the "Bank"), the Company's principal subsidiary. The dates shown reflect the year in which these
persons were first elected directors of the Bank.

</FN>
</TABLE>

William J. Walsh, III is a Senior Vice President of Donohoe Real Estate
Services, the leasing and management division of the Donohoe Companies, Inc., a
full-service real estate, development and construction company. He has served as
a director of the Donohoe Companies Inc., as well as Federal Center Plaza Corp.,
a real estate corporation, and is a member of the Executive Committee and past
president of the Apartment and Office Building Association of Washington, D.C.

H. Deets Warfield, Jr. has been president of Damascus Motor Co., Inc., a
Chevrolet dealership in Damascus, Maryland, since 1974, and has been with
Damascus Motor Co., Inc. since 1955. He has been a member of the board of
directors of Farmers & Mechanics National Bank, Frederick, Maryland, since 1974
and also serves on the board of directors of F&M Bancorp. The Depository
Institution Management Interlocks Act imposes restrictions on service as an
officer or
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<PAGE>

director of more than one insured depository institution or depository
institution holding company operating in the same metropolitan statistical area.
Mr. Warfield's service as a director of the Company and the Bank is
grandfathered under the grandfathering provisions of such Act until November
1998.

Stanley Betts is the president and owner of Bogley, Harting & Betts,
Inc., an insurance agency located in Rockville, Maryland. He has been affiliated
with Bogley, Harting & Betts, Inc. since 1953. Mr. Betts was named a vice
chairman of the board of the Bank in 1987 and chairman of the board of the Bank
in 1988. Mr. Betts became chairman of the Company in 1989, and was named chief
executive officer of the Company and the Bank in October 1990. He retired as
chairman and chief executive officer of the Company and the Bank in April 1994
but continues as a director and chairman emeritus.

Enos K. Fry has served in various executive capacities since joining the
Bank in 1974. In 1974, he became vice president of the loan division, and in
1978 he was elected executive vice president. He was promoted to president of
the Bank in 1982. Mr. Fry was elected a director of the Bank in 1987. Mr. Fry
has served as president and a director of the Company since its formation in
1989. He was named a vice chairman of the board of directors of the Company and
the Bank in April 1994.

Melvin O. Wright was formerly a senior vice president and senior
executive with Dean Witter Reynolds, Inc. He became a director of the Company
and the Bank in September 1994. Mr. Wright is currently a trustee and past
chairman of the Securities Industries Institute at Wharton School of Business.
Presently, he is active as a business and financial consultant.

Herbert W. Jorgensen became chairman of the board and chief executive
officer of the Company and the Bank in April 1994. Prior thereto, he served as a
vice chairman of the boards of directors of the Company and the Bank. From 1989
until April 1994, Mr. Jorgensen also served as the Company's outside general
counsel and from 1968 until April 1994 he served as the Bank's outside general
counsel.

N. Richard Kimmel retired in 1989 as secretary and treasurer of Kimmel &
Kimmel, Inc., general contractors. He is now engaged in real estate development
activities through Kimmel Properties. Mr. Kimmel was named a vice chairman of
the Bank in December 1988 and has served as a vice chairman of the Company since
1989.
Albert M. Cowell, Jr. has been president of A. Myron Cowell, Inc., a
masonry contracting firm located in Gaithersburg, Maryland, since 1970. He is a
past director of Montgomery General Hospital in Olney, Maryland; past president
of the Olney Rotary Club; and past director of the Masonry Institute located in
Bethesda, Maryland.

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<PAGE>

Other Executive Officers

The principal occupation during the past five years of the Company's
other executive officers follows:

Charles R. Duda (47) has served as executive vice president and chief
operating officer of the Company and the Bank since March 1994. Mr. Duda joined
the Company and the Bank in January 1994. Mr. Duda was chairman of credit policy
and executive vice president of First American Bankshares, Inc. during 1992 and
1993. From 1989 to 1992, Mr. Duda was the executive vice president and chief
credit officer of First American Metro Corporation.

William C. Scott (50) has served as senior vice president and chief
financial officer of the Company and the Bank since July 1994. Mr. Scott joined
the Company and the Bank in May 1994. From 1991 until joining the Bank, Mr.
Scott consulted with various financial institutions. During 1990 and 1991, Mr.
Scott was chief administrative officer for Sovran/D.C. National Bank. Mr. Scott
is a Certified Public Accountant with over 26 years' experience in financial
management.

Benjamin O. Delaney, Jr. (50) has served as president of First Citizens
Mortgage Corporation, the Bank's mortgage banking subsidiary, since December
1983. Prior thereto, Mr. Delaney was a vice president with Annapolis Federal
Savings and Loan Association. While at Annapolis Federal, Mr. Delaney was in
charge of its lending operations and service corporation subsidiary.

David H. Bowman (36) has served as senior vice president, real estate
division of the Bank, since March 1993. Mr. Bowman joined the Bank in September
1991 as vice president of the real estate division. From June 1989 to June 1991,
Mr. Bowman was President of TC Land, Inc., a Virginia land development company.
Just prior to joining the Bank, Mr. Bowman acted as a consultant to the RTC
Northeast Consolidated Office.

Timothy E. Hall (50) has served as senior vice president, corporate
lending division of the Bank, since August 1994. Mr. Hall joined the Bank in
March 1994. From 1990 through 1992, Mr. Hall was a regional executive with First
National Bank of Maryland and from 1992 to 1994 was group vice president, deputy
director - real estate resolution group, at First American Bank. Mr. Hall served
as president of GMD Corporation, a real estate syndicator, from September 1988
to April 1990. In December 1990, Mr. Hall filed for personal bankruptcy as a
consequence of his liability under a guarantee, by him and others, of a $100
million line of credit obtained by GMD Corporation. Eisinger-Hall Associates, a
general partnership, of which Mr. Hall was a general partner, filed for
bankruptcy in January 1991 in connection with certain real estate investments
made by that entity.

LuAnn Loeber (40) has served as senior vice president, community
banking division of the Bank since October 1995. From 1991 until joining the
Bank, Ms. Loeber was an independent consultant to financial institutions. Prior
to working as a consultant, she held positions as director of management
information systems with Fleet Financial Group, senior vice president of small
business lending and corporate services with Bank of New England, and vice
president and manager of cash management with First Union.

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<PAGE>

Mark Schissler (35) has served as a senior vice president, human
resources of the Bank since November 1995. Mr. Schissler joined the Bank as vice
president, human resources in July 1994. From 1989 until joining the Bank, Mr.
Schissler served in various positions, including regional human resources
officer and commercial banking executive, at First National Bank of Maryland.

J. Terry Thomas (52) has served as senior vice president, consumer lending
division of the Bank, since February 1995. Mr. Thomas joined the Bank as vice
president, consumer lending division, in March 1994. Mr. Thomas was group vice
president, consumer lending risk management, for First American Metro
Corporation from 1991 to 1994. He was vice president and manager of the consumer
lending division of First American Bank of Maryland from 1986 to 1991.

Corporate Governance and Other Matters

The board of directors has appointed an audit committee whose members
currently consist of Messrs. Betts, Walsh, Warfield and Wright. The function of
the audit committee is to review the annual financial statements of the Company,
the scope of the annual audit and the independent accountant's letter to
management concerning the effectiveness of the Company's internal financial and
accounting controls and management's response thereto. In addition, the
committee reviews and recommends to the board of directors the firm to be
engaged as independent auditors. The audit committee held three meetings in
1995. Neither the Company nor Citizens has a separate compensation committee of
the board.

The entire board of directors of the Company acts as a nominating
committee for selecting management's nominees for election as directors and has
made its nominations for the 1996 Annual Meeting. The Company's bylaws require
that stockholder nominations for directors be made pursuant to timely notice in
writing to the secretary of the Company. To be timely, notice must be delivered
to, or mailed to and received at, the principal executive offices of the Company
not less than 30 days nor more than 90 days prior to the date of the Annual
Meeting, unless notice or public disclosure of the date of the meeting occurs
less than 45 days prior to the meeting, in which event stockholders may deliver
such notice not later than the tenth day following the day on which notice of
the date of the meeting was mailed or public disclosure thereof was made. Public
disclosure of the date of the Annual Meeting was made on February 29, 1996 by
the issuance of a press release and on March 1, 1996 by the filing of a Current
Report on Form 8-K with the SEC. A stockholder's notice of nomination must set
forth certain information specified in Article III, Section 13 of the Company's
bylaws concerning each person the stockholder proposes to nominate for election
and the nominating stockholder. Stockholder nominations for the Annual Meeting
were required to be received on or before March 20, 1996. No such nominations
were received. The Company's bylaws provide that no person may be elected as a
director unless nominated in accordance with the procedures set forth in the
bylaws.

During 1995, no incumbent director of the Company attended less than
75% of the total number of meetings of the board of directors of the Company and
the total number of meetings held by all committees of the board on which he
served.

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<PAGE>

Compensation of Directors

During 1995, the Company's board of directors held nine meetings and
Citizens' board of directors held 13 meetings. No separate board fees were paid
to directors for attending meetings of the Company's board of directors during
1995. Each director of the Company also serves as a director of the Bank. In
1995, non-employee directors of the Bank were each paid an annual retainer of
$12,500, except for the Bank's non-employee vice chairman who received $17,500
and the chairman emeritus/director who received $25,000. In addition, during
1995, non-employee directors of the Bank received $750 for each board of
directors meeting of the Bank attended and $450 for each meeting of committees
of the board of directors of the Bank attended (or $225 if these committees met
on the same day as the board of directors). During 1995, the Bank also paid
premiums on term life insurance for the Bank's non-employee directors. The
annual premium expense was $99 for each non-employee director. Employee
directors of the Bank do not receive fees for attendance at board or committee
meetings.

Pursuant to the Company's Directors' Stock Option Plan, any new
non-employee directors of the Company each receive a grant of a non-qualifying
option under the Plan for 6,063 shares of Common Stock upon the first
anniversary of their election as non-employee directors of the Company (reduced
by any director options granted to such person under the 1986 Stock Option Plan.
Pursuant to the Company's 1986 Stock Option Plan, each non-employee director
elected to the board of directors of the Company is eligible to receive a
one-time grant of a ten-year non-qualifying option for 1,908 shares upon
election to office, to the extent shares remain under the 1986 Plan.)
Subsequently elected vice chairmen will receive additional option grants of
6,063 shares each upon their election as vice chairmen. Subsequently elected
chairmen will receive additional option grants for 12,127 shares each upon their
election to such position, reduced by any option granted to them while serving
as a vice chairman of the board. In each case, the grant is subject to the
person not serving at the time of grant as an officer or employee of the Company
or any of its subsidiaries. The per share exercise price of such options equals
the fair market value of a share of Company Common Stock on the date of grant.
At December 31, 1995, a total of 47,839 shares remained available for grant
under the Directors' Stock Option Plan. Pursuant to the Directors' Stock Option
Plan, Mr. Wright received a one-time grant of the non-qualifying ten-year option
for 4,155 shares of Common Stock (6,063 shares less the option for 1,908 shares
he received under the 1986 Stock Option Plan at the time of his initial election
to the Board) on September 1, 1995, the first anniversary of his initial
election to the board of directors.

Directors of the Company or the Bank are eligible to participate in a
Directors Retirement Plan adopted by the Company in 1995. The 1995 Directors
Retirement Plan replaced a prior plan adopted by the Company and the Bank in
1994. Directors of the Company or the Bank, as well as a director or an advisory
director of any successor entity to the Company or the Bank, who have completed
at least three years of service as a director of the Company or the Bank are
eligible to receive annual retirement payments under the 1995 Directors
Retirement Plan. The annual retirement payment equals the annual retainer
payable to directors (or chairman or vice chairman, as applicable) in effect at
the time of a Qualified Retirement (as defined), reduced by an amount equal to
the retirement benefit received under the Bank's pension plan (but not the
Bank's 401(k) plan) for any director who served as a full-time employee of the
Company or any subsidiary thereof. The annual retirement payments are payable
for a period equal to the number of full years, plus whole months, of service at
the time of a Qualified Retirement but in no event longer than 10 years.

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<PAGE>

Notwithstanding the foregoing, any person who served as a director of the Bank
on December 21, 1991, and who executed the supervisory agreement entered into by
the Bank with the Office of Thrift Supervision (the "OTS") (which agreement was
subsequently terminated by the OTS), and who otherwise meets the eligibility
requirements, is entitled to receive retirement payments for 10 years,
regardless of the actual length of service to the Company or the Bank. If an
eligible director serves as a director emeritus or chairman emeritus of the
Company or the Bank, or both, after a qualified retirement, such director also
is entitled to receive 50% of the annual retainer then paid to a director or
chairman and 50% of the regular meeting attendance fee for each meeting of the
board of directors actually attended by such director emeritus or chairman
emeritus.

Under the 1995 Directors Retirement Plan, service as a director of
either the Company or the Bank or as a director of both is counted in
determining the retirement period, but concurrent service as a director of both
the Company and the Bank is counted as the same period of service. In the case
of a person serving as a director of both the Company and the Bank, such
director does not become entitled to receive retirement payments under the Plan
until such director has ceased to be director of both the Company and the Bank
by reason of a Qualified Retirement. A "Qualified Retirement" under the Plan
includes: (i) the failure of a director of the Company or the Bank to be
renominated by reason of age, (ii) resignation by reason of physical or other
disability, (iii) resignation or a determination not to stand for reelection
after attaining the age of 65 or older, (iv) death while serving as a director
of the Company or the Bank, (v) resignation or retirement in the event that
continued service becomes prohibited under the Depository Institution Management
Interlocks Act, or (vi) ceasing to be a director in connection with a "change in
control" (as defined under OTS regulations). The board of directors of the
Company may terminate or amend the Plan at any time without any further
liability on the part of the Company, unless a change in control of the Company
or the Bank has occurred; however, in no event may vested retirement benefits to
retired directors be reduced or terminated.

Under a director deferred fee plan adopted by the Company and the Bank
in November 1995, effective commencing in 1996, directors of the Company and the
Bank are permitted to defer all or a portion of their director and committee
fees until they cease to be directors. Directors of the Company and the Bank
currently receive fees only for attending meetings of the board of directors of
the Bank or committees thereof. Interest is credited on the director's deferred
account on each December 15 at an annual rate compounded monthly equal to the
"Prime Rate" of interest published by Dow Jones & Company, Inc. in The Wall
Street Journal on the first publication date of the calendar year. The interest
crediting rate adjusts annually on the first day of each year. A director's
deferred account balance, including interest, generally is payable to the
director upon termination of service as a director, in the event of a director's
disability or following a change in control of the Company or the Bank. A
director may elect to receive a lump sum payment of his deferral account balance
or to receive payment over ten years. If the ten-year payment period is elected,
the amount of the accrued benefit payment will be calculated using the interest
crediting rate on the date the benefit payment commences. In the event of
financial hardship (as defined in the plan) a director may receive early payment
of his account balance. For 1996, Mr. Cowell has elected to defer 80 percent of
his annual retainer and all committee fees; Mr. Warfield has elected to defer
his annual retainer and all of the fees he receives; and Mr. Wright has elected
to defer his annual retainer. In the event of a director's death, if life
insurance is obtained on the life of any director, the plan also provides for a
death benefit equal to the projected age 70 benefit based on the director's
deferral account balance and projected further deferrals until age 70. If life
insurance is not obtained on the life of the

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<PAGE>

director, the benefit equals the deferral account balance on the date of death
of such director. Any death benefits are payable in 120 equal monthly
installments commencing following the director's death. The Bank has purchased
such life insurance on the lives of the director participants in the plan.
The director deferred fee plan is subject to non-objection by OTS.

EXECUTIVE COMPENSATION AND OTHER INFORMATION

Summary of Cash and Certain Other Compensation

The following table shows, for the years ended December 31, 1995, 1994
and 1993, the cash compensation paid by the Bank, as well as certain other
compensation paid or accrued for those years, to the Company's chief executive
officer and each of the three other highest paid executive officers of the
Company whose total annual salary and bonus exceeded $100,000 (the "named
executive officers"). The Company has not paid any compensation to its executive
officers since its formation in 1989. Each of the executive officers of the
Company currently holds a position with, and receives compensation from, the
Bank.

Summary Compensation Table

Long-Term
Compensation
Annual Compensation Awards
Securities
Underlying All Other
Name and Salary Bonus Options Compensation
Principal Position(s) Year ($) ($) (#) ($)
- --------------------- ---- --------- -------- --------- ------

<S> <C> <C> <C> <C> <C> <C>
Herbert W. Jorgensen (1) 1995 $124,000 $35,000 10,000 $3,300(2)
----
Chairman of the Board and 1994 67,307 0 11,550 3,150
----
Chief Executive Officer of 1993 N/A N/A 22,344 N/A
----
the Company and the Bank

Enos K. Fry 1995 182,941 54,882 10,000 3,314(2)
----
Vice Chairman and 1994 182,941 10,000 0 2,814
----
President of the Company 1993 174,230 8,712 0 3,954
----
and the Bank

Benjamin O. Delaney, Jr. 1995 150,000 0 7,500 2,340(2)
----
President, First Citizens 1994 150,000 40,000 0 2,488
----
Mortgage Corporation 1993 140,070 35,000 0 3,448
----

Charles R. Duda 1995 125,000 31,250 7,500 2,813(2)
----
Executive Vice President 1994 112,981 7,500 23,100 0
----
and Chief Operating Officer 1993 N/A N/A N/A N/A
----
of the Company and the
Bank

<FN>

(1) Mr. Jorgensen became chairman and chief executive officer of the Company and the Bank in April 1994.
(2) The amounts shown reflect matching contributions made by the Bank to the account of the named executive
officers under the Bank's 401(k) plan for 1995.

</FN>
</TABLE>

-9-

<PAGE>

Option Grants

The following table contains information with respect to stock option
grants under the Company's Employee Stock Option Plan made during 1995 to each
of the named executive officers of the company. All options granted in 1995 were
ten-year non-qualified options.

<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year

Potential Realizable
Value at Assumed
Annual Rates of Stock
Individual Grants Price Appreciation for
Option Term (1)

% of Total
Options Exercise
Options Granted to or Base
Granted Employees Price Expiration
Name (#) (2) In Fiscal Year ($/Sh) (3) Date 5% ($) 10% ($)
-------------- -------------- ---------- -------------- ------

<S> <C> <C> <C> <C> <C> <C> <C>
Herbert W. Jorgensen 10,000 8.88% $17.25 11/15/05 $108,675 $274,275
Enos K. Fry 10,000 8.88 17.25 11/15/05 108,675 274,275
Benjamin O. Delaney, Jr. 7,500 6.66 17.25 11/15/05 81,506 205,706
Charles R. Duda 7,500 6.66 17.25 11/15/05 81,506 205,706

<FN>

(1) Estimated market value of underlying securities at assumed annual rates
of stock price appreciation for option term minus the
exercise or base price.
(2) These options vested immediately.
(3) In each case, the exercise price equaled the fair market value of the
Company's Common Stock on the date of grant, determined in accordance
with the Employee Stock Option Plan.
</FN>
</TABLE>

Options Exercises and Holdings

The following table sets forth information with respect to each of the
named executive officers of the Company concerning the exercise of stock options
during 1995, the number of securities underlying unexercised options at the 1995
year-end and the 1995 year-end value of all unexercised in-the-money options
held by such individuals.

-10-

<PAGE>

Aggregated Option Exercises in Last Fiscal Year
and FY-End Option Values

Value of
Securities
Number of Securities Underlying
Underlying Unexercised
Unexercised In-the-Money
Options Options at FY-
at FY-End (#) End
($) (1)

Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
- ---- --------------- ------------ ------------- -------------

<S> <C> <C> <C> <C> <C> <C>
Herbert W. Jorgensen 0 0 45,802/0 $408,920/0
Enos K. Fry 0 0 46,382/0 656,004/0
Benjamin O. Delaney, Jr. 0 0 34,180/0 481,359/0
Charles R. Duda (2) 0 0 30,600/0 192,150/0

<FN>

(1) Market value of underlying securities at year-end minus the exercise or
base price.
(2) In December 1995, the Stock Option Committee accelerated the vesting of
options for 15,400 shares granted to Mr. Duda in April 1994.
</FN>
</TABLE>

Pension Plan

The Bank maintains a pension plan for the benefit of full-time
employees. Effective January 1, 1989, the benefit is based upon 1% of an
employee's final average earnings up to covered compensation (the FICA-taxable
wage base) times years of credited service, plus 1.65% of the employee's final
average earnings in excess of covered compensation times years of credited
service (to a maximum of 35 years). The following table illustrates annual
pension benefits under the Bank's pension plan at age 65 for various levels of
average remuneration and years of service. Annual pension benefits are currently
subject to a statutory maximum of $120,800, subject to cost-of-living
adjustments. Additionally, for years beginning on or after 1994, compensation in
excess of $150,000 (subject to cost-of-living increases) may not be used in
calculation of retirement benefits.

-11-

<PAGE>

Pension Plan Table

Years of Service

Remuneration 15 20 25 30 35
- ------------ -- -- --

Messrs. Jorgensen, Fry, Delaney and Duda had 2, 22, 12 and 2 years,
respectively, of credited service under the pension plan. Pursuant to
supplemental retirement agreements entered into with Messrs. Fry and Delaney,
Messrs. Fry and Delany are entitled to receive certain supplemental retirement
benefits. See "Employment and Other Agreements".

Employment and Other Agreements

In January 1995, the Company and the Bank entered into new employment
agreements with Enos K. Fry and Charles R. Duda, as amended on September 7,
1995. Pursuant to these employment agreements, Mr. Fry serves as president and
Mr. Duda serves as chief operating officer of the Company and the Bank. The
initial terms of the employment agreements ended on December 31, 1995. The
Company and the Bank may give written notice of an offer to renew the employment
agreements for one additional year on or before September 30 of each year, in
the event they desire to renew the agreements, and the employee has 15 days
within which to accept or decline any renewal offer. The employment agreements
were renewed in 1995 for additional terms of one year each expiring on December
31, 1996. (In the event of a "change in control" (as defined in OTS regulations)
of the Company or the Bank, the terms of the employment agreements convert from
one year terms to three year terms commencing on the date the change in control
occurs). Messrs. Fry and Duda's salaries for 1996 are $182,941 and $125,000,
respectively. The salary of the employee may not be decreased without the
employee's consent. Pursuant to the employment agreements, Messrs. Fry and Duda
are eligible to receive bonuses as determined in the discretion of the boards of
directors of the Company and of the Bank of up to 50% of the employee's annual
salary. Messrs. Fry and Duda are also eligible to participate in retirement and
other benefit plans that the Company or the Bank may adopt for the benefit of
executive employees.

The employment agreements with Messrs. Fry and Duda may be terminated
by the boards of directors of the Company and the Bank at any time. The employee
would not be entitled to any benefits under his employment agreement if his
employment were terminated for "cause", as defined in the agreement. If the
employee is terminated "without cause", the employee would be entitled to
receive a lump sum cash payment as liquidated damages equal to the employee's
then-current salary (discounted to present value). If during the term of the
employment agreements a "change in control" occurs and the employee's employment
is terminated, voluntarily or involuntarily, in connection with or within one
year after the change in control (other than by reason of normal retirement,
permanent and total disability or death), the employee would be entitled to
receive a severance payment equal to (i) one year's current salary (discounted
to present value), if the employee's employment is voluntarily terminated
without "good reason" (as defined) or (ii) three times the employee's average
annual compensation which was payable by the Bank and includible in the
employee's gross income for Federal income tax purposes (excluding for this
purpose any income associated with the exercise of stock options) with respect
to the five most recent taxable years of

-12-

<PAGE>

the employee ending prior to such change in control (or such portion of such
period during which the employee was a full-time employee of the Company or the
Bank discounted to present value), if the employees' termination was either
voluntary with "good reason" or involuntary. In the event of termination of
employment without cause or following a change in control, the employee also
would be entitled to be paid for all accrued and unused vacation and sick days,
to continue to participate for the remaining term of the employment agreement in
all retirement and other employee benefit plans maintained by the Bank (to the
extent permissible under the terms of the plans and applicable law) and to have
all director and officer liability insurance and indemnification continue in
effect until the running of applicable statutes of limitations. The employee may
elect to defer the payment of any liquidated damage or severance amounts, in
accordance with the terms of the employment agreements. It is currently
estimated that, in the event of an involuntary termination of employment or a
voluntary termination with "good reason" following a change in control, the
severance amounts payable to Messrs. Fry and Duda would be approximately
$543,526 and $385,066 respectively.

In November 1995, the Company and the Bank entered into a new
employment agreement with Mr. Jorgensen, pursuant to which Mr. Jorgensen serves
as chief executive officer of the Company and the Bank, as amended. The initial
term of Mr. Jorgensen's employment agreement commenced on January 1, 1996 and
currently ends on December 31, 1996. Mr. Jorgensen's employment agreement is
subject to annual renewal on the same basis as the employment agreements with
Messrs. Fry and Duda. Other provisions of Mr. Jorgensen's employment agreement
are substantially the same as the employment agreements with Messrs. Fry and
Duda, except that Mr. Jorgensen would be entitled to receive a severance payment
equal to three years' current salary and bonus (discounted to present value) in
the event his employment were terminated in 1996 either involuntarily or
voluntarily with "good reason" in connection with or within one year following a
change in control of the Company or the Bank, or approximately $473,106 (but not
to exceed three times the employee's average compensation from the Company and
the Bank for the five calendar years preceding the year in which a change in
control occurs, less one dollar.) The employment agreement with Mr. Jorgensen is
subject to non-objection by OTS.

First Citizens Mortgage Corporation ("FCMC"), the Bank's mortgage
banking subsidiary, has entered into an employment agreement with Mr. Delaney
dated as of January 1, 1994, as amended, pursuant to which Mr. Delaney serves as
president of FCMC. The initial term of Mr. Delaney's employment agreement was
for three years ending on December 31, 1996. FCMC may renew the employment
agreement for one additional year on each December 31 during the term of the
agreement, unless Mr. Delaney gives contrary written notice prior to such
renewal date. Mr. Delaney's employment agreement was renewed in 1995 and
currently expires on December 31, 1998. Mr. Delaney's salary for 1996 under his
employment agreement is $150,000, and is subject to annual cost of living
increases and performance or merit increases as determined by the board of
directors of FCMC. Mr. Delaney would not be entitled to any benefits under his
employment agreement if his employment were terminated for "cause", as defined
in the employment agreement. If the employee is terminated "without cause", the
employee would be entitled to receive a lump sum cash payment as liquidated
damages equal to the employee's then-current salary applied to the remaining
term of the agreement (discounted to present value). Such payment would be
approximately $417,446, based on his salary in effect for 1996. He would also be
entitled to have all director and officer liability insurance and
indemnification continue in effect until the running of applicable statutes of
limitations. In no event may the aggregate of such payments, however, exceed
three times Mr.

-13-

<PAGE>

Delaney's average annual compensation for the five most recent taxable years.
Mr. Delaney would also be entitled to receive a similar severance payment in the
event his employment was terminated voluntarily with "good reason" or
involuntarily after a change in control of the Company or the Bank.

The Bank and FCMC, respectively, have entered into, subject to
non-objection by OTS, supplemental retirement agreements with Messrs. Fry and
Delaney, as amended, under which Messrs. Fry and Delaney are to receive annual
payments equal to 70 percent and 60 percent, respectively, of their respective
final two-year average annual cash compensation, less amounts payable to them
under certain qualified retirement plans, for a period of 15 years or life
(whichever is longer) commencing following their retirement after age 65. Mr.
Fry has agreed to perform consulting services to the Bank and Mr. Delaney to
FCMC during the 60-month period immediately following retirement from active
employment for up to 120 hours per year. No supplemental retirement benefit will
be paid for any month during which Mr. Fry or Mr. Delaney, as applicable, is
employed by a "substantial competitor" (as defined). If either Mr. Fry or Mr.
Delaney voluntarily terminates his employment before attaining age 65 for any
reason other than for "good reason" (as defined), he will be entitled to receive
a prorated supplemental retirement benefit (reduced by five percent for each
full year by which his age is less than 55 years) commencing at age 65 but he
will be subject to a noncompetition agreement for a period of 36 months after
such termination. If Mr. Fry or Mr. Delaney's employment is terminated for cause
(as defined) before age 65, he will forfeit his right to the supplemental
retirement benefit. If the Bank or FCMC, as the case may be, terminates the
employment of Mr. Fry or Mr. Delaney before age 65 other than for cause, or he
terminates his employment for "good reason", he will be entitled to the prorated
supplemental retirement benefit beginning at age 65. If Mr. Fry or Mr. Delaney
dies before the supplemental benefit becomes payable, the beneficiary would
receive 180 monthly payments beginning on the first day of the month following
the date of death, equal to the monthly amount the decedent would have received
at age 65.

Report on Executive Compensation of the
Boards of Directors of the Company and the Bank
and the Company's Stock Option Committee

Decisions on executive compensation are made by the Bank's board of
directors, except for the grant of stock options. The Company's Stock Option
Committee, consisting of three of the Company's non-employee directors, makes
all decisions concerning stock option grants. The decisions of the Stock Option
Committee are taken into account by the board of directors of the Bank in
determining overall compensation levels for executive officers.

-14-

<PAGE>

The executive compensation policies of the Company and the Bank are
intended to provide competitive levels of compensation designed to integrate pay
with achievement of performance goals. Underlying this objective are the
following concepts: an individual pay-for-performance policy that differentiates
compensation levels based on corporate and individual performance, motivating
key senior officers to achieve strategic business objectives and rewarding them
for that achievement, providing competitive compensation levels to enable the
Company and the Bank to compete for and retain talented executives who are
critical to the Company's long-term success, and aligning the interests of
executives with the long-term interests of the Company's stockholders.

Compensation paid to the Company's executive officers in fiscal 1995
consisted of the following components:

Base Salary. The board of directors of the Bank reviews executive base
salaries annually. In determining the level of salaries for 1995, the Bank's
board of directors considered, among other factors, individual performance, the
number of employees and departments supervised, the individual's contribution to
the success of the Bank and the Bank's earnings performance.

Incentive Bonuses. Incentive bonuses paid to executive officers for
1996 were calculated under the Bank's 1995 Management Incentive Compensation
Plan, which was implemented in 1995 to provide an opportunity for senior
management to share in the rewards of successful Bank performance. Under the
Plan, incentive bonuses for the president and the chief operating officer were
based on attainment of a net income goal for the Bank. The determination of
bonuses for other executive officers was based on two criteria: achievement of
the Bank's net income goal (50%) and achievement of department operating goals
(50%). Potential incentive bonus payments ranged from up to 25% of base pay for
the president, 20% of base pay for the chief operating officer and up to 15% for
the other executive officers, with a possible 5% increase in the bonus amount
with each 5% increase in the Bank's net income over budget. Actual incentive
bonuses paid determined in accordance with the foregoing criteria for 1995
ranged from 15% to 30% of base salary.

Stock Options. The Company provides a long-term incentive through the
Company's Stock Option Plans. Key employees, including executive officers, are
eligible to receive stock option grants. Awards are intended to provide
incentives for executive officers and key employees to enhance long-term
corporate performance, as reflected in stock price, thereby increasing
stockholder value, and to provide non-cash compensation to such individuals as
part of their overall compensation package. During 1995, the Stock Option
Committee made option grants to executive officers to coincide with the
following officer levels: chief executive officer - 10,000; president - 10,000;
executive vice president and the president of FCMC - 7,500; senior vice
presidents - l,000 and vice presidents - 750. The Stock Option Committee also
voted to make annual option grants to persons holding such titles on December 31
of each year at a per share exercise price equal to the fair market value of a
share of Company Common Stock on the date of grant of the options.

-15-

<PAGE>

Other. In addition to the compensation paid to executive officers as
described above, executive officers receive, along with and on the same terms as
other employees, certain benefits pursuant to the Bank's pension plan and
matching contributions under the Bank's 401(k) plan. The Bank and FCMC also have
entered into supplemental retirement agreements with two executive officers. See
"Employment and Other Agreements".

CEO Compensation. The annual salary for the chairman and chief
executive officer of the Bank was increased from $100,000 to $135,000 commencing
on April 21, 1995. For 1995, the board of directors also awarded Mr. Jorgensen a
bonus of $35,000. During 1995, Mr. Jorgensen also was granted a stock option for
10,000 shares of Common Stock. The per share exercise price was $17.25, which
equaled the fair market value of a share of the Company's Common Stock on the
date of grant. In setting the chief executive officer's annual salary at
$135,000, the board of directors of the Bank took into consideration the
substantial increase in the amount of time required by the position; the
salaries paid chief executive officers of similar-sized banks; and the overall
performance of the Bank, including the substantial reduction in the level of
non-performing assets, and the increase in the Bank's profitability.

Boards of Directors Stock Option Committee
of the Company and the Bank of the Company

Herbert W. Jorgensen, Chairman Albert M. Cowell, Jr., Chairman
Enos K. Fry H. Deets Warfield, Jr.
N. Richard Kimmel Melvin O. Wright
Stanley Betts
Albert M. Cowell, Jr.
William J. Walsh, III
H. Deets Warfield, Jr.
Melvin O. Wright

Compensation Committee Interlocks and Insider Participation

Messrs. Jorgensen and Fry serve on the boards of directors of the Company
and Bank. As such, they participate in executive officer compensation decisions.
Neither Mr. Jorgensen nor Mr. Fry vote on or participate in decisions on their
own compensation. Mr. Betts, who is a member of the board of directors of the
Company and the Bank, is a former chief executive officer of the Company and the
Bank.
Mr. Jorgensen is an attorney with the law firm of Heise Jorgensen &
Stefanelli P.A., which performs various legal work for the Company and the Bank.
During 1995, the Bank paid $241,600 in legal fees to Heise Jorgensen &
Stefanelli P.A. Mr. Jorgensen also was president of Fenton Title Company during
1995. The Bank paid $199,375 in fees to Fenton Title Company during 1995 in
connection with home equity loan settlement services performed for customers of
the Bank by that company. The Company believes the fees paid to the law firm of
Heise Jorgensen & Stefanelli P.A. and Fenton Title Company were no less
favorable to the Bank than fees that would have been paid

-16-

<PAGE>

to other firms providing comparable services. Mr. Jorgensen does not do legal
work for either the Company or the Bank. Effective March 11, 1996, Mr. Jorgensen
retired as president of Fenton Title Company.

In 1995, the Bank submitted nine of its insurance policies for bid to
several insurance agencies. Following review of the proposals, Bogley, Harting &
Betts, Inc. was awarded the bid for four of the policies on which it was the
lowest bidder. Total premiums paid to this agency were $116,875. Of such amount,
$9,784 reflects commissions earned by Bogley, Harting & Betts, Inc. Stanley
Betts is the president and owner of Bogley, Harting & Betts, Inc.

In 1988, the Bank made a residential mortgage loan to N. Richard
Kimmel, vice chairman of the Company and the Bank, at an interest rate of 7.75%,
which was 1% below the rate then offered to the public. The Bank also waived a
portion of the loan origination fee. Such loan was made in accordance with
applicable Federal regulations existing at that time, which permitted the waiver
of loan origination fees and preferential-rate loans to insiders. The highest
amount outstanding on this loan since January 1, 1995 was $609,419. The unpaid
principal balance at February 15, 1996 was $590,413.

Stock Performance Graph

The following graph shows a five-year comparison of cumulative to total
returns for the Company, the Nasdaq-US Composite Index and the Nasdaq-Financial
Composite Index.

COMPARISON Of FIVE-YEAR CUMULATIVE TOTAL RETURN
FIRST CITIZENS FINANCIAL CORPORATION, NASDAQ-US AND NASDAQ-FINANCIAL

[This space contains a line graph depicting the performance of First Citizens
Financial Corporation as compared to the Nasdaq-US Composite Index and the
Nasdaq-Financial Composite Index for the years 1990 through 1995.]

Assumes $100 invested on December 31, 1990 with full reinvestment of
dividends, if any.

-17-

<PAGE>

Section 16(a) Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and officers to file with the SEC initial reports of
ownership of the Company's equity securities and to file subsequent reports when
there are changes in such ownership. Based on a review of reports submitted to
the Company in 1995, the Company believes that all Section 16(a) filing
requirements for that year applicable to the Company's directors and officers
were complied with on a timely basis.

Certain Transactions

The Company, through the Bank, makes loans to its directors, officers
and other employees for the financing of their homes, as well as deposit
account-secured, other consumer and commercial loans. In the ordinary course of
business, the Bank also makes loans to relatives and affiliates of the Company's
directors, officers and employees. It is the belief of management that these
loans are made in the ordinary course of business and neither involve more than
the normal risk of collectibility nor present other unfavorable features. All
loans to such persons are made on substantially the same terms (including
interest rates and collateral) as those prevailing at the time for comparable
transactions with non-affiliated persons.

For a description of certain transactions involving the Company and
certain of its directors, see "Compensation Committee Interlocks and Insider
Participation".

INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors has appointed Arthur Andersen LLP to act as the
Company's independent public accountants for 1996. Representatives of Arthur
Andersen will be present at the Annual Meeting. They will be given an
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions.

Arthur Andersen LLP was first appointed to act as the Company's
independent public accountants for 1995. KPMG Peat Marwick LLP had previously
served as the Company's independent public accountants. During the Company's two
most recent fiscal years and any subsequent interim period preceding the change
in independent accountants, there were no disagreements with KPMG Peat Marwick
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure. The Company did not, during its two
most recent fiscal years and any subsequent interim period prior to engaging
Arthur Andersen LLP, consult that firm regarding (i) either (a) the application
of accounting principles to a specific transaction, either completed or
proposed, or (b) the type of audit opinion that might be rendered on the
Company's financial statements; or (ii) any matter that was either the subject
of a disagreement with KPMG Peat Marwick or a "reportable event" (as defined in
SEC regulations).

-18-

<PAGE>

STOCK OWNED BY MANAGEMENT

The following table sets forth information as of March 1, 1996 with
respect to the shares of Common Stock beneficially owned by each director of the
Company, each named executive officer of the Company and by all directors and
executive officers as a group. All persons shown in the table have sole
investment or voting power, except as otherwise indicated.

Name and Position(s) Amount and Nature of Percent of Common
with the Company Beneficial Ownership(1) Stock Outstanding

<S> <C> <C>
Herbert W. Jorgensen 72,524(2)(3) 2.69%
Chairman of the Board
and Chief Executive Officer

Enos K. Fry 66,279(3) 2.46
Vice Chairman and President

N. Richard Kimmel 167,957(4) 6.28
Vice Chairman

Stanley Betts 63,452(5) 2.36
Director and Chairman Emeritus

Albert M. Cowell, Jr. 35,351(6) 1.33
Director

William J. Walsh, III 21,388 *
Director

H. Deets Warfield, Jr. 34,422(3) 1.29
Director

Melvin O. Wright 7,163 *
Director

Charles R. Duda 31,700 1.18
Executive Vice President and
Chief Operating Officer

Benjamin O. Delaney, Jr. 36,673 1.37
President, First Citizens
Mortgage Corporation

All directors and executive 536,909 18.34
officers as a group
(10 persons)

<FN>

*Less than 1%.
(1) In accordance with Rule 13d-3 under the Securities Exchange Act of 1934,
as amended, a person is deemed to be the beneficial owner of a security
for purposes of the Rule if he or she has or shares voting power or
investment power with respect to such security or has the right to
acquire such ownership within 60 days after March 1, 1996. This table
includes 278,314 shares of Common Stock subject to outstanding options
which are exercisable within 60 days of March 1, 1996. Of such shares,
Mr. Jorgensen holds options to purchase 45,802 shares; Mr. Fry holds
options to purchase 46,382 shares; Mr. Kimmel holds options
-19-

<PAGE>

to purchase 24,252 shares; Mr. Betts holds options to purchase 36,471
shares; Messrs. Cowell, Walsh and Warfield each hold options to purchase 18,188
shares; Mr. Wright holds options to purchase 6,063 shares; Mr. Duda holds
options to purchase 30,600 shares; and Mr. Delaney holds options to purchase
34,180 shares.
(2) Includes 10,694 shares held by Mr. Jorgensen as trustee of the Heise
Jorgensen & Stefanelli P.A. Profit Sharing Plan and Trust and 7,637 shares held
by Fenton Title Company. Mr. Jorgensen served as president of Fenton Title
Company during 1995. Effective March 11, 1996, Mr. Jorgensen retired as
President of Fenton Title Company.
(3) Includes 3,777 shares, 612 shares, and 10,382 shares, respectively,
owned individually by the director's spouse.
(4) Includes 26,823 shares held by the Kimmel Grandchildren Trust, of which
Mr. Kimmel serves as trustee.
(5) Includes 2,546 shares held by Bogley, Harting & Betts, Inc., of which
Mr. Betts is the president.
(6) Includes 10,785 shares held by two trust funds for which Mr. Cowell
serves as trustee.
</FN>
<CAPTION>
</TABLE>
PRINCIPAL HOLDERS OF VOTING SECURITIES

The following table sets forth information as of March 1, 1996 with
respect to the ownership of shares of Company Common Stock by each person
believed by management to be the beneficial owner of more than 5% of the
Company's outstanding Common Stock. The information is based on the most recent
Schedule 13D filed on behalf of such persons or other information made available
to the Company. Except as otherwise indicated, the reporting persons have stated
that they possess sole voting and sole dispositive power over the entire number
of shares reported.

Percent of
Name and Address of Amount and Nature of Common Stock
Beneficial Owner Beneficial Ownership Outstanding

<S> <C> <C>
Able Associates, Inc.
Box 180 306,218 11.56%
Swarthmore, Pennsylvania 19081

N. Richard Kimmel
15821 Crabbs Branch Way 167,957 6.28%
Rockville, Maryland 20855

<FN>

(1) The Company's certificate of incorporation prohibited, until after
December 24, 1991, any person or company from directly or indirectly
offering to acquire or acquiring beneficial ownership of more than 10% of
any class of equity security of the Company. Thereafter, no person may
offer to acquire 10% or more of the outstanding voting stock of the
Company unless the offer shall first have been approved by the Company's
board of directors or the person making the offer shall have received
required regulatory approvals to consummate the proposed acquisition of
shares, and no person may acquire 10% or more of the outstanding voting
stock of the Company unless the acquisition has been approved prior to
its consummation by the affirmative vote of stockholders holding at least
two-thirds of the outstanding shares. Pursuant to the certificate of
incorporation, any shares beneficially owned by any person in excess of
such 10% limit in effect until December 24, 1991 shall be considered
"excess shares" and shall not be voted by any person or counted as voting
shares in connection with any matter submitted to stockholders for a
vote. The Company believes that 44,662 of the shares held by Able
Associates, Inc. should be considered "excess shares", which, pursuant to
the terms of the certificate of incorporation, may not be voted or
counted as voting shares in connection with any matter submitted to
stockholders for a vote.

-20-

<PAGE>

[Footnote (1) continued from prior page]

In June 1993, Able Associates, Inc. and Dale L. Reese, Able Associates,
Inc.'s sole stockholder, entered into a rebuttal agreement with the OTS
with respect to Able Associates' ownership of shares of Company Common
Stock. The rebuttal agreement, in general, provides that Able Associates
and Dale Reese will not, unless they shall have first filed a notice
under the Change in Control Act , or an application under the Savings and
Loan Holding Company Act, as appropriate and either shall have obtained
approval of the application or clearance of the notice in accordance with
applicable Federal Regulations: (i) seek or accept representation of more
than one member of the board of directors of the Company or the Bank;
(ii) have or seek to have any representative serve as chairman of the
board of directors, or chairman of an executive or similar committee of
the Company or the Bank's board of directors or as president or chief
executive officer of the Company or the Bank; (iii) engage in any
intercompany transaction with the Company, the Bank or their affiliates;
(iv) propose a director in opposition to nominees proposed by the
management of the Company or the Bank for the board of directors of the
Company or the Bank, other than as permitted under (i) above; (v) solicit
proxies or participate in any solicitation of proxies with respect to any
matter presented to the stockholders of the Company other than in support
of, or in opposition to, a solicitation conducted on behalf of management
of the Company; and (vi) do any of the following, except as necessary
solely in connection with the performance by any representative of Able
Associates as a member of the Company or the Bank's board of directors:
(a) influence or attempt to influence in any respect the loan and credit
decisions or policies of the Company or the Bank, the pricing of
services, any personnel decision, the location of any offices, branching,
the hours of operation or similar activities of the Company or the Bank;
(b) influence or attempt to influence the dividend policies and practices
of the Company or the Bank or any decisions or policies of the Company or
the Bank as to the offering or exchange of any securities; (c) seek to
amend, or otherwise take action to change, the bylaws, articles of
incorporation, or character of the Company or the Bank; (d) exercise, or
attempt to exercise, directly or indirectly, control or controlling
influence over the management, policies or business operations of the
Company or the Bank; or (e) seek or accept any non-public information
concerning the Company or the Bank.
</FN>
</TABLE>

DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS

Any stockholder of the Company who intends to present a proposal for
action at the 1997 annual meeting to be held on or about April 19, 1997 must
file a copy thereof with the secretary of the Company not less than 30 days nor
more than 90 days prior to the date of the annual meeting, unless notice or
public disclosure of the meeting occurs less than 45 days prior to the date of
the meeting, in which event stockholders may deliver such notice not later than
the 15th day following the day on which notice of the meeting was mailed or
public disclosure thereof was made. If the proposal or proposals are intended to
be included in the Company's proxy statement and form of proxy relating to the
1997 annual meeting, they must be received by the Company no later than November
28, 1996 pursuant to the proxy soliciting rules of the SEC. Nothing in this
paragraph shall be deemed to require the Company to include in its proxy
statement and proxy relating to the 1997 annual meeting any stockholder proposal
which may be omitted from the Company's proxy materials pursuant to applicable
regulations of the SEC in effect at the time such proposal is received.

-21-

<PAGE>

OTHER BUSINESS TO BE TRANSACTED

The board of directors does not know of any other matters to be
presented for action by the stockholders at the Annual Meeting. If, however, any
other matters not now known are properly brought before the meeting, the persons
named in the accompanying proxy will vote such proxy in accordance with the
determination of a majority of the Company's board of directors.

By Order of the Board of Directors

Enos K. Fry Herbert W. Jorgensen
Vice Chairman and Chairman of the Board and
President Chief Executive Officer

Gaithersburg, Maryland
March 28, 1996

-22-

<PAGE>

PROXY STATEMENT

FIRST CITIZENS FINANCIAL
CORPORATION

TABLE OF CONTENTS
Item Page
Solicitation, Voting and
Revocability of Proxies.............1
Election of Directors................2
Executive Compensation
and Other Information................9
Independent Public Accountants.......18
Stock Owned by Management............19
Principal Holders of Voting
Securities..........................20
Date for Submission of Stockholder
Proposals...........................21
Other Business To Be Transacted......22

March 28, 1996

================================================================================

<PAGE>

REVOCABLE PROXY

FIRST CITIZENS FINANCIAL CORPORATION

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned stockholder of First Citizens Financial Corporation
(the "Company") hereby appoints the Company's board of directors as proxy to
cast all votes, as designated below, which the undersigned stockholder is
entitled to cast at the annual meeting of stockholders (the "Annual Meeting") to
be held at 9:00 a.m. on Friday, April 19, 1996, at the DoubleTree Hotel, 1750
Rockville Pike, Rockville, Maryland and any adjournments thereof, upon the
matters described in the accompanying Notice of Annual Meeting and Proxy
Statement, the receipt of which is hereby acknowledged, and upon any other
business that may properly come before the meeting. The undersigned stockholder
hereby revokes any proxy or proxies heretofore given.

This proxy will be voted in the manner directed by the undersigned
stockholder. If no direction is made, this proxy will be voted FOR the election
of the nominees listed in Proposal 1, and in accordance with the determination
of a majority of the board of directors as to other matters.

1. Election of two directors.

FOR all nominees (except as WITHHOLD AUTHORITY to
marked to the contrary) vote for all nominees
[ ] [ ]

Nominees: William J. Walsh, III and H. Deets Warfield, Jr.

(INSTRUCTION:To withhold authority to vote for any nominee, write that nominee's
name in the space provided below.)

- -------------------------------------------------

2. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting, or any adjournments
thereof.

(Continued and to be signed and dated on reverse side)

<PAGE>

(Continued from other side)

This proxy may be revoked prior to the time it is voted by delivering
to the secretary of the Company either a written revocation or a proxy bearing a
later date or by appearing at the Annual Meeting and voting in person.

Dated: -------------------------------------------------

Signature: ---------------------------------------------

(Please date and sign
here exactly as name
appears at left. When
signing as attorney,
administrator, trustee
or guardian, give full
title as such; and
when stock has been
issued in the name of
two or more persons,
all should sign.)

IF YOU RECEIVE MORE THAN ONE PROXY CARD, PLEASE
DATE, SIGN AND RETURN ALL CARDS IN THE
ACCOMPANYING ENVELOPE.

<PAGE>