Form 8 K/A
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K/A
(Amendment
No. 1)
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of the Securities Exchange Act of 1934
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Date
of Report (Date of earliest event reported) March
27,
2007
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CITIZENS
FINANCIAL CORPORATION
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(Exact
name of registrant as specified in its
charter)
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KENTUCKY
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0-20148
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61-1187135
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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12910
SHELBYVILLE ROAD
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LOUISVILLE,
KENTUCKY 40243
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(Address
of principal executive offices)
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Registrant’s
telephone number, including area code: (502)
244-2420
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Not
Applicable
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Former
name or former address, if changed since last
report
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligations of the registrant under any of the following
provisions (see General Instruction A.2. below):
[
]
Written communications pursuant to Rule 425 under the securities Act (17 CFR
230.425)
[
]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17CFR
240.14d-2(b))
[
]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17
CFR
240.13e-4(c))
Explanatory
Note
This
Amendment No. 1 on Form 8-K/A (this “Form 8-K/A”) amends the Current Report of
Citizens Financial Corporation (“Registrant”) on Form 8-K filed with the
Securities and Exchange Commission (the “Commission”) on March 30, 2007 (the
“Original Form 8-K”). This Form 8-K/A is being filed to provide expanded
disclosure in accordance with Item 4.02(a) regarding what caused the error
in
the compilation and reporting of certain reinsurance transactions which resulted
in the misstatement of net income as described in the Original Form 8-K and
to
clarify the date on which the Registrant made a final determination regarding
the error.
Item
4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit
Report or Completed Interim Review.
(a) In
its
Annual Report on Form 10-K for the fiscal year ended December 31, 2006, filed
March 30, 2007, the Registrant restated its consolidated financial statements
to
correct an error in the compilation and reporting of certain reinsurance
transactions that caused net income (loss) of the Registrant to be misstated
in
previously issued financial statements by $192,547 for the fiscal year ended
December 31, 2005 and by $91,270, $107,058 and $122,566 for the first, second
and third quarters of 2006, respectively.
While
preparing its 2006 Annual Report on Form 10-K, the Registrant concluded that
it
had incorrectly accounted for the reinsurance treaty for the Registrant’s final
expense product which was introduced in the second quarter of 2005 and,
accordingly, affected such transactions beginning in the second quarter of
2005.
The Registrant had applied reinsurance accounting to such treaty for its
financial statements based upon statutory accounting principles (“SAP”) (used
for insurance regulatory compliance), as well as for those based upon United
States generally accepted accounting principles (“GAAP”) (used for financial
statements filed with the Commission) for the fiscal year ended December 31,
2005 and for the first, second and third quarters of 2006. It has determined
that reinsurance accounting was appropriate under SAP for this reinsurance
treaty but not under GAAP. Specifically, the Registrant determined that the
treaty for the final expense product did not meet the GAAP standard for transfer
of risk. Accordingly, it should have used deposit accounting, rather than
reinsurance accounting, under GAAP. Under deposit accounting, the reinsurance
items do not flow through the Registrant’s income statement, but rather through
accounts on its balance sheet. The Registrant’s Form 10-K as filed on March 30,
2007 corrects this error by restating its financial statements as filed with
the
Commission for 2005 and the first three quarters of 2006.
On
March
26, 2007, senior management of the Registrant discussed the matters disclosed
in
this item with the Registrant’s independent registered public accounting firm,
Ernst & Young LLP (“E&Y”), and determined, in consultation with E&Y,
that the Registrant should restate its financial statements for the fiscal
year
ended December 31, 2005, as well as for the first, second and third fiscal
quarters of 2006, as described above. On March 27, 2007, the Registrant’s Audit
Committee Chairman agreed. Investors should look to the restated financial
information reflecting the correction of this error, which may be found in
Note
2 − CORRECTION OF AN ERROR and Note 10 − QUARTERLY FINANCIAL DATA in the notes
to the consolidated financial statements reported in the Registrant’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2006, filed March
30,
2007.
SIGNATURE
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 hereunto
duly authorized.
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Citizens
Financial Corporation
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Registrant
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Date:
April 17, 2007
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By
/s/ Len E.
Schweitzer
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Len
E. Schweitzer
Vice
President and
Chief
Financial Officer
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