UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

(Mark One)

For the quarterly period ended September 30, 2004

or

For the transition period from                   to                   

Commission File Number 0-32041

CITIZENS FIRST BANCORP, INC.

(810) 987-8300

Not Applicable

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

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes  x No  o

     The Issuer had 8,694,291 shares of common stock, par value $0.01 per share, outstanding as of November 5, 2004.

CITIZENS FIRST BANCORP, INC.
FORM 10-Q

INDEX

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

CITIZENS FIRST BANCORP, INC. AND SUBSIDIARIES

See accompanying notes to unaudited consolidated financial statements.

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CITIZENS FIRST BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

See accompanying notes to unaudited consolidated financial statements.

2

CITIZENS FIRST BANCORP, INC AND SUBSIDIARIES

See accompanying notes to unaudited consolidated financial statements.

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CITIZENS FIRST BANCORP, INC AND SUBSIDIARIES

See accompanying notes to unaudited consolidated financial statements.

4

CITIZENS FIRST BANCORP, INC. AND SUBSIDIARIES

See accompanying notes to unaudited consolidated financial statements.

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CITIZENS FIRST BANCORP, INC. AND SUBSIDIARIES

(1) BASIS OF FINANCIAL STATEMENT PRESENTATION

     The accompanying unaudited consolidated interim financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and with the instructions to Form 10-Q. Accordingly, certain information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements are not included herein. The interim financial statements should be read in conjunction with the financial statements of Citizens First Bancorp, Inc. (the “Company”) and the notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2003.

     All adjustments, consisting only of normal recurring adjustments, which in the opinion of management are necessary for a fair presentation of financial position, results of operations and cash flows, have been made. The results of operations for the nine months ended September 30, 2004 are not necessarily indicative of the results that may be expected for the year ended December 31, 2004.

     Certain amounts in the prior period’s financial statements have been reclassified to conform to the current period’s presentation.

(2) PRINCIPLES OF CONSOLIDATION

     The Company is a Delaware Corporation and the holding company for Citizens First Savings Bank (“Citizens”) and Metrobank (“Metrobank”, see note 5), state-chartered savings banks headquartered in Port Huron and Farmington Hills, Michigan, respectively. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries Citizens and Metrobank. Citizens also includes the accounts of its wholly owned subsidiaries, Citizens Financial Services, Inc., Citizens First Mortgage, LLC. and CFS Insurance Agency. All significant intercompany transactions and balances have been eliminated in consolidation.

(3) STOCK BASED COMPENSATION

     Under the Company’s stock based incentive plan, the Company may grant up to 476,338 stock awards and 1,429,014 stock options to its directors, officers and employees. The Company accounts for stock options under the recognition and measurement principles of APB Opinion No. 25 and related interpretations. No stock based employee compensation cost related to stock options is reflected in net income as all options granted under the plan had an exercise price equal to the market value of the underlying common stock on the date of grant. Had the Company applied the fair value recognition provisions of FASB Statement No. 123, the Company’s net income and earnings per share would have been adjusted to the pro forma amounts indicated below (000s omitted, except per share data):

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(4) EARNINGS PER SHARE

     Basic earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares that may be issued by the Company relate to outstanding stock options and restricted stock awards and are determined using the treasury stock method. Treasury and unallocated ESOP shares are not considered outstanding for purposes of calculating basic or diluted earnings per share.

     Earnings per common share have been computed based on the following (000s omitted, except per share data):

(5) ACQUISITION

     On January 9, 2004, the Company completed the acquisition of Metro Bancorp, Inc., and its subsidiary Metrobank, a Michigan savings bank headquartered in Farmington Hills, Michigan (“Metrobank”) primarily for the purposes of market expansion into the metropolitan Detroit area and an opportunity to leverage its capital base. Under the terms of this transaction, the Company acquired all of the outstanding stock of Metro Bancorp in exchange for cash of $30,000,000.

     The Company accounted for its acquisition under SFAS No. 141, “Business Combinations”. SFAS No. 141 requires the purchase method of accounting and, accordingly, the purchase price to be allocated to the assets purchased and the liabilities assumed based upon their estimated fair values at the date of acquisition. In determining the purchase price allocation associated with the Metrobank acquisition, the Company engaged an independent professional service firm (“valuation firm”) to perform an appraisal of the acquired assets and liabilities. The tangible assets acquired included cash and securities, loans, land, buildings and improvements and equipment. The tangible liabilities assumed were deposits. The total purchase price allocated to these tangible assets, net of cash acquired and liabilities assumed was $23.2 million.

     The purchase accounting fair value adjustments are being amortized under various methods and over the lives of the corresponding assets and liabilities. Goodwill recorded for the acquisition amounted to $9.8 million and is not amortized. Intangible assets recorded for the acquisition that are subject to amortization consisted of only core deposit intangibles of $4.4 million.

     Metrobank’s total assets as of the acquisition date were $152.3 million (including investment securities of $42.7 million and net loans of $94.9 million) and total liabilities were $135.6 million (including total deposits of $134.6 million).

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     Core deposit intangibles are being amortized on an accelerated method over a period of ten years. Estimated amortization expense for the next five fiscal years is as follows (000s omitted):

     The estimated fair values of significant assets purchased and liabilities assumed were as follows as of the acquisition date (000s omitted):

     The consolidated statements of income reflect the operating results of the Company since the effective date of the acquisition. The following table presents pro forma information for the nine months ended September 30, 2003 as if the acquisition of Metrobank had occurred at the beginning of 2003. The pro forma information includes adjustments for the amortization of core deposit intangibles arising from the transaction, the elimination of acquisition related expenses and the related income tax effects. The pro forma financial information is not necessarily indicative of the results of operations as they would have been, had the transaction been effected on the assumed dates (000s omitted, except per share data).

     The unrealized gain on investments purchased from Metrobank was adjusted during the third quarter ended September 30, 2004 as we believe that there is no readily determinable market to sell the small business (SBA) and Fannie Mae (FNMA) loans to third parties. These loans were classified as investments based on recommendations from our regulators. The loans that are no longer in Metrobank’s investment portfolio at September 30, 2004 either were sold or matured at par instead of at the estimated fair market

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value. Management decreased the unrealized gain for this adjustment and increased goodwill by $396,000. The unrealized gains on securities recorded at the time of purchase of Metrobank have an adjusted value of $445,000. This unrealized gain is being amortized over four years, the weighted average estimated life of the securities. Estimated annual amortization expense related to the securities purchased is approximately $111,000, which is accelerated by any sales of securities.

(6) LOANS

Loans were as follows (000s omitted):

(7) LINE OF CREDIT

     The Company obtained a line of credit from an unrelated bank in the amount of $50 million on January 9, 2004, of which $10 million was outstanding as of September 30, 2004. The effective interest rate on the line of credit is based on the three month LIBOR rate plus 1.40 percent, effectively 3.13 percent as of September 30, 2004. At inception, a commitment fee of 1/4 percent was payable quarterly on the unused portion of the line of credit. The Agreement was modified effective September 10, 2004 to reduce the line of credit availability from $50 million to $10 million due to the Company’s review of available borrowings with other institutions, current and future expected liquidity needs and to reduce interest expense on longer-term borrowings. Under the terms of the Agreement, the Company is required to be categorized as “well capitalized” under regulatory guidelines. If the Company falls below this category, the line of credit would be terminated and become immediately due to the unrelated bank. The line is collateralized by the common stock of Citizens and expires on January 9, 2005.

(8) STANDBY AND COMMERCIAL LETTERS OF CREDIT AND FINANCIAL GUARANTEES

     The Company is a party to credit-related financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit, and commercial letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheet. The Company’s exposure to credit loss is represented by the contractual amount of these commitments. The Company follows the same credit policies in making commitments as it does for on-balance-sheet instruments.

     The total contractual amounts of standby letters of credit and financial guarantees were $5.9 million and $5.7 million at September 30, 2004 and December 31, 2003, respectively. There were no contractual amounts of commercial letters of credit at September 30, 2004 or December 31, 2003.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

     The following analysis discusses changes in the financial condition and results of operations of the Company for the periods presented and should be read in conjunction with the Company’s Consolidated Financial Statements and the notes thereto, appearing in Part I, Item 1. of this document.

     FORWARD-LOOKING STATEMENTS. The Company may from time to time make written or oral “forward-looking statements.” These forward-looking statements may be contained in the Company’s Annual Report to Stockholders, in the Company’s Form 10-K

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filed with the Securities and Exchange Commission (the “SEC”), in other filings with the SEC and in other communications by the Company, which are made in good faith pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements with respect to anticipated future operating and financial performance, including revenue creation, lending origination, operating efficiencies, loan sales, charge-offs, loan loss allowances and provisions, growth opportunities, interest rates, acquisition and divestiture opportunities, capital and other expenditures and synergies, efficiencies, cost savings and funding and other advantages expected to be realized from various activities. The words “may,” “could,” “should,” “would,” “will”, “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “project,” “predict,” “continue” and similar expressions are intended to identify forward-looking statements.

     Forward-looking statements include statements with respect to the Company’s beliefs, plans, strategies, objectives, goals, expectations, anticipations, estimates or intentions that are subject to significant risks or uncertainties or that are based on certain assumptions. Future results and the actual effect of plans and strategies are inherently uncertain, and actual results could differ materially from those anticipated in the forward-looking statements, depending upon various important factors, risks or uncertainties. Those factors, many of which are subject to change based on various other factors, including factors beyond the Company’s control, and other factors, including others discussed in the Company’s Annual Report to Stockholders, in the Company’s Form 10-K, other factors identified in the Company’s other filings with the SEC, as well as other factors identified by management from time to time, could have a material adverse effect on the Company and its operations or cause its financial performance to differ materially from the plans, objectives, expectations, estimates or intentions expressed in the Company’s forward-looking statements.

OPERATING STRATEGY. The Company is a community-oriented financial institution, offering a wide range of deposit and loan products to its customers. The Company’s commitment to community oriented banking is reflected in its Certificate of Incorporation, which is posted on the Company’s website (www.cfsbank.com), as well as in its corporate governance. In recent years, the Company’s strategy has been one of controlled balance sheet growth and broader diversification of its loan products and loan portfolio. Beginning in 1995, the Company determined that it would originate its fixed-rate one-to-four-family residential mortgage loans primarily for sale, while generally retaining the servicing rights as to those mortgages. Since that time, the Company has emphasized originating residential mortgage loans, commercial and multi-family real estate loans, construction loans, commercial loans, automobile loans, home equity loans and lines of credit and a variety of consumer loans. It has also emphasized increasing sources of noninterest income.

     The metropolitan Detroit area is the largest market in Michigan and continues to be a key focus of our expansion and growth opportunities. The acquisition of Metrobank (Note 5) provided the Company with a presence of four branches in central Oakland county. Although this market is highly competitive, the Company believes that the ability to provide excellent customer service and innovative banking products in addition to increased focus on commercial loans to our customers will yield increased growth in our balance sheet and earnings.

CRITICAL ACCOUNTING POLICIES. The majority of the Company’s “critical accounting policies” are described in the financial section of its 2003 Annual Report. Management believes its “critical accounting policies” relate to the allowance for loan losses, the valuation of mortgage servicing rights and goodwill.

Goodwill

     Goodwill arising from business acquisitions represents the value attributable to unidentifiable intangible elements in the business acquired. The fair value of goodwill is dependent upon many factors, including the Company’s ability to provide quality, cost effective services in the face of competition from other financial institutions. A decline in earnings as a result of business or market conditions, a lack of growth or the Companys’ inability to deliver cost effective services over sustained periods can lead to impairment of goodwill which could adversely impact earnings in future periods.

     The Company’s goodwill relates to the acquisition premium recorded when purchasing banking businesses. Goodwill is reviewed periodically for impairment by comparing the fair value of the reporting unit containing the goodwill to the book value of the reporting unit, including goodwill. If the book value is in excess of the fair value, impairment is indicated and the goodwill must be written down to its fair value.

     The fair value of Metrobank is derived through use of internal valuation models. The annual test of goodwill will be performed during the fourth quarter 2004, in accordance with SFAS No. 142. For a further discussion of the Company’s goodwill, refer to Note 5 in the accompanying consolidated financial statements.

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COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2004 AND DECEMBER 31, 2003

     Summary. Total assets increased $254.8 million, or 23.3%, to $1.349 billion at September 30, 2004 from $1.094 billion at December 31, 2003, primarily due to the increase in net loans and the acquisition of Metrobank. Including the impact of the acquisition (Note 5), net loans increased $197.0 million or 21.2%, securities available for sale increased $17.9 million or 22.5% and cash and cash equivalents increased $9.8 million or 29.2%. The increase in net loans was primarily due to the acquisition of Metrobank ($94.9 million at date of acquisition) and increased originations, including an net increase of $99.3 million in commercial loans and residential mortgages and an $100.7 million increase in consumer loans. Premises and equipment increased $8.6 million due to renovations to various branches and purchase of land for a future branch location, $5.4 million of which was due to the acquisition. Accrued interest receivable and other assets increased $5.2 million, $3.0 million of which relates to the acquisition of Metrobank.

     Total liabilities increased $251.2 million, or 26.8%, from $936.1 million at December 31, 2003 to $1.187 billion at September 30, 2004. Total deposits increased $184.4 million, primarily due to the acquisition of Metrobank and a $60.0 million increase in deposits at Citizens. Federal Home Loan Bank of Indianapolis (FHLBI) advances also increased by $35.6 million to $208.1 million at September 30, 2004 from $172.5 million at December 31, 2003 primarily to fund growth.

     Portfolio Loans and Asset Quality. Nonperforming assets totaled $9.6 million at September 30, 2004 compared to $4.4 million at December 31, 2003, an increase of $5.3 million, or 120.9%. This increase was primarily due to $3.5 million in nonperforming loans and $846,000 in real estate owned at Metrobank.

     The following table sets forth information regarding nonperforming assets (000s omitted):

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     The allowance for loan losses was $13.1 million at September 30, 2004, or 1.15% of total loans, as compared to $11.7 million, or 1.24% of total loans at December 31, 2003. The following table sets forth activity in the allowance for loan losses (000s omitted):

     Deposits and Other Borrowings. Interest bearing deposits increased from $697.0 million at December 31, 2003 to $839.4 million at September 30, 2004. This $142.4 million increase consisted of increases in NOW checking accounts (which increased $52.7 million, or 71.8%, to $126.0 million), passbook and savings accounts (which increased $12.6 million, or 14.6%, to $98.8 million) and certificates of deposit (which increased $84.5 million, or 32.8%, to $342.3 million), partially offset by a decrease in money market deposit accounts of $7.4 million, or 2.6%, to $272.3 million primarily due to a reduction of accounts from municipalities and other public entities as well as reallocation of maturing certificates of deposits. Noninterest bearing deposits increased $42.0 million, or 81.6%, to $93.5 million at September 30, 2004 from $51.5 million at December 31, 2003.

     Shareholders’ Equity. Total equity was $161.8 million at September 30, 2004 compared to $158.2 million at December 31, 2003, an increase of $3.6 million primarily due to net income and an increase in unearned and deferred compensation obligations offset by the payment of dividends and a $500,000 decrease (net of tax) in unrealized gains on available for sale securities.

COMPARISON OF OPERATING RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004 and 2003

     Net Income. Net income for the three months ended September 30, 2004 decreased $781,000, or 26.2%, to $2.2 million from $3.0 million for the previous period. Net income for the nine months ended September 30, 2004 decreased $3.4 million, or 36.2%, to $6.0 million from $9.5 million for the previous period. This decrease was primarily due to a decrease of $2.4 million or 27.9% in noninterest income, a $8.2 million or 39.4% increase in noninterest expense, partially offset by a $5.2 million or 19.5% increase in net interest income after provision for loan losses and a $2.0 million or 39.3% decrease in federal income tax expense due to lower pre-tax income. Included in net income for the three and nine months ended September 30, 2004 is Metrobank net losses of approximately $276,000 and $21,000, respectively, primarily due to core deposit intangible amortization and losses recognized in the sale of securities.

     Net Interest Income. Net interest income, after provision for loan losses, for the three months ended September 30, 2004 increased $1.9 million, or 21.3%, to $10.8 million from $8.9 million at September 30, 2003 primarily due to a $2.6 million, or 17.4%, increase in total interest income due to prime rate increases of 75 basis points and growth in the loan portfolio offset by a $607,000, or 10.5%, increase in interest expense due to the current interest rate environment and the cost of funds to meet loan demand. Net interest income, after provision for loan losses, for the nine months ended September 30, 2004 increased $5.2 million, or 19.5%, to $31.8 million from $26.6 million at September 30, 2003. The increase was primarily due to a $6.2 million, or 14.7%, increase in interest income on loans due to growth and increased attention to growth of the commercial loan portfolio.

     Provision for Loan Losses. The provisions for loan losses for the three and nine months ended September 30, 2004 were $470,000 and $758,000, respectively, as compared to $360,000 and $1.1 million for the same periods in the prior year. This decrease in the provision for loan losses is the result of management’s analysis of the loan loss allowance, current economic conditions, historical charge off rates and strong loan quality in the overall loan portfolio. The loan loss allowance as a percentage of total loans decreased

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from 1.24% at December 31, 2003 to 1.15% at September 30, 2004, and the allowance for loan losses as a percentage of nonperforming loans decreased from 297.93% at December 31, 2003 to 157.17% at September 30, 2004. Management considers its allowance for loan losses to be one of its critical accounting policies, meaning that in order to determine the allowance and provision for loan losses, management must make estimates and assumptions about matters that are highly uncertain and as to which different estimates and assumptions would have a material impact on the Company’s net income and on the Company’s overall financial condition and results of operations. For more information, see the caption “Critical Accounting Policies” in this section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

     Noninterest Income. Noninterest income for the three months ended September 30, 2004 decreased $1.0 million, or 36.0%, primarily due to the decrease of $1.2 million in income from mortgage banking activities offset by an increase of $451,000 in service charges and other fee income. Noninterest income for the nine months ended September 30, 2004 decreased $2.4 million or 27.9%, primarily due to the decrease of $4.6 million in income from mortgage banking activities. This decline is due primarily to a decrease in gains from the reduction of the sale of fixed-rate residential mortgage loans to third parties as a result of increased interest rates from the same period in 2003. The current interest rate environment and refinancing levels are significantly different when compared to the same period last year. The decrease in the mortgage banking activities approximates the expectation of management and is experienced throughout the financial institution industry. Management continues to implement various competitive strategies to lessen the impact from this decrease in refinanced loans. Additionally during the first quarter of 2004, approximately $400,000 was charged against noninterest income due to funds not transferred to the Freddie Mac custodial account on a timely basis. Additionally, noninterest income increased $526,000 due to a customary review and a rebalancing of our investment securities portfolio.

     Noninterest Expense. Noninterest expense for the three months ended September 30, 2004 increased $2.2 million or 31.3% to $9.3 million, compared to $7.1 million in the three months ended September 30, 2003. The increase was primarily due to an increase of $353,000 in professional fees due to increased regulatory and compliance costs. The Company is currently documenting and testing its internal controls as required of publicly traded entities by the Sarbanes-Oxley Act. Office occupancy and equipment increased $390,000 related to an increase in depreciation expense due to renovations at various branches and the main office and as a result of lease payments for branch offices of Metrobank. Compensation and employee benefits increased $133,000 due to increases to wages and additions of staff due to the Metrobank acquisition offset by reduced health insurance premiums due to changing health insurance companies in early September. According to SFAS No. 112, Employers’ Accounting for Postemployment Benefits, the accrual related to the Companys’ future estimated obligation was reduced due to this reduction in premiums paid on behalf of former employees and directors by approximately $300,000. Also contributing to the increase in noninterest expense was a $27,000 increase in advertising and business promotion expenses associated with general advertising and costs to enter the Oakland county market through Metrobank.

     Noninterest expense for the nine months ended September 30, 2004 increased $8.2 million or 39.4%, to $29.0 million compared to $20.8 million in the nine months ended September 30, 2003. The increase was primarily due to an increase in office occupancy and equipment of $1.7 million as discussed above and compensation and employee benefits increased $1.5 million due to increases to wages, additions of staff due to the Metrobank acquisition and increased direct costs of employee benefits. Also contributing to the increase in noninterest expense was a $827,000 increase in professional fees due to reasons discussed above, a $495,000 increase related to the amortization of the core deposit intangible (Note 5), and an increase in and other noninterest expenses of $2.7 million due to general operating expenses and increased expenses as a result of the acquisition of Metrobank.

LIQUIDITY AND CAPITAL RESOURCES

     Liquidity is the ability to meet current and future financial obligations, including the ability to have funds available to respond to the needs of depositors and borrowers as well as maintaining the flexibility to take advantage of investment opportunities. The Company’s primary sources of funds consist of deposit inflows, loan repayments, maturities and sales of investment securities and borrowings from the FHLBI. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition.

     Liquidity management is both a daily and long-term responsibility of management. The Company adjusts its investments in liquid assets based upon management’s assessment of (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest-earning deposits and securities, and (4) the objectives of its asset/liability management program. Excess liquid assets are invested generally in interest-earning overnight deposits and short- and intermediate-term U.S. Government and agency obligations.

     The Company’s primary investing activities are the origination of loans and the purchase of securities. In the nine months ended September 30, 2004, the Company originated $390.9 million of loans and purchased $59.9 million of securities and in fiscal 2003, originated $761.9 million of loans and purchased $54.0 million of securities.

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     The Company’s most liquid assets are cash and short-term investments. The levels of these assets are dependent on the Company’s operating, financing, lending and investing activities during any given period. At September 30, 2004, cash and short-term investments totaled $43.0 million and securities classified as available for sale totaled $97.6 million.

     The Company originates fixed-rate mortgage loans conforming to Freddie Mac guidelines generally for sale in the secondary market. The proceeds of such sales provide funds for both additional lending and liquidity to meet current obligations. Sales of fixed-rate mortgage loans were $100.6 million and $325.0 million for the nine months ended September 30, 2004 and year ended December 31, 2003, respectively.

     Financing activities consist primarily of activity in deposit accounts, overnight borrowings from our correspondent banks and FHLBI advances. The Company experienced a net increase in total deposits of $184.4 million, of which $134.6 million was due to the acquisition of Metrobank, for the nine months ended September 30, 2004 and a net increase of $76.7 million for fiscal 2003. Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by the Company and its local competitors and other factors. The Company generally manages the pricing of its deposits to be competitive and to increase core deposit relationships, and occasionally offers promotional rates on certain deposit products in order to attract deposits.

     The Company had the ability to borrow a total of approximately $394.1 million from its correspondent banks and the FHLBI, of which $244.5 million was outstanding at September 30, 2004. Advances outstanding with the FHLBI on that date were $208.1 million. During the nine months ended September 30, 2004, the net increase in FHLBI advances was $35.6 million, primarily to provide liquidity for loan growth and manage interest rate risk. Included in the total amount of available borrowings was a bank line-of-credit in the amount of $10.0 million, of which $10.0 million was outstanding at September 30, 2004.

     At September 30, 2004, the Company had outstanding commitments to originate loans of $86.9 million, of which $40.0 million had fixed interest rates. The Company believes that it will have sufficient funds available to meet its current loan commitments. Loan commitments have, in recent periods, been funded through liquidity or through FHLBI borrowings. Certificates of deposit that are scheduled to mature in one year or less as of September 30, 2004 totaled $179.8 million. Management believes, based on past experience, that a significant portion of those deposits will remain with the Company. Based on the foregoing, the Company considers its liquidity and capital resources sufficient to meet its outstanding short-term and long-term needs.

     The Company is subject to various regulatory capital requirements administered by the Federal Deposit Insurance Corporation including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. At September 30, 2004, the Company exceeded all of its regulatory capital requirements and it is considered “well capitalized” under regulatory guidelines.

     The primary sources of funding for the holding company are maturities of investment securities and, to a lesser extent, earnings on investments and deposits held by the Company. These funds have been used to pay dividends, repurchase the Company’s common stock and pay general corporate expenses. The Company may utilize future dividend payments from its subsidiary banks as an additional funding source. The banks’ ability to pay dividends and other capital distributions to the Company is generally limited by the Michigan Banking Commissioner and Federal Deposit Insurance Corporation. Additionally, the Michigan Banking Commissioner and Federal Deposit Insurance Corporation may prohibit the payment of dividends by the banks to the Company, which are otherwise permissible by regulation for safety and soundness reasons.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

     As of September 30, 2004, there have been no material changes in the quantitative and qualitative disclosures about market risks as disclosed in the Company’s Form 10-K for the year ended December 31, 2003.

Item 4. Controls and Procedures

     The Company maintains disclosure controls and procedures designed to ensure that the information the Company must disclose in its filings with the Securities and Exchange Commission is recorded, processed, summarized and reported on a timely basis. The Company’s Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, the officers have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective in bringing to their attention on a timely basis, material information required to be included in the Company’s periodic filings under the Exchange Act.

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     No significant change in the Company’s internal controls over financial reporting occurred during the Company’s most recent fiscal quarter that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

     Periodically, there have been various claims and lawsuits involving the Company, such as claims to enforce liens, condemnation proceedings on properties in which the Company holds security interests, claims involving the making and servicing of real property loans and other issues incident to the Company’s business. Neither the Company or its subsidiaries are a party to any pending legal proceedings that management believes would have a material adverse effect on the financial condition or operations the Company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

     On October 1, 2002, the Company announced a share repurchase program authorizing the repurchase of up to 428,701 shares of the Company’s outstanding common stock. All share repurchases under the Company’s share repurchase program are transacted in the open market and are within the scope of Rule 10b-18, which provides a safe harbor for purchases in a given day if an issuer of equity securities satisfies the manner, timing, price and volume conditions of the rule when purchasing its own common shares in the open market. The following table summarizes the Company’s share repurchase activity for the three months ended September 30, 2004.

Item 3. Defaults Upon Senior Securities.

     None.

Item 4. Submission of Matters to a Vote of Security Holders.

     None.

Item 5. Other Information.

       None.

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Item 6. Exhibits

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CONFORMED

SIGNATURES

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

	CITIZENS FIRST BANCORP, INC.
Dated: November 9, 2004	By:	/s/ Marshall J. Campbell
		Marshall J. Campbell
		President and Chief Executive Officer (Principal Executive Officer)

Dated: November 9, 2004	By:	/s/ Timothy D. Regan
		Timothy D. Regan
		Secretary, Treasurer and Director (Principal Financial and Accounting Officer)

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Exhibit Index

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