U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB





REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998

                                     or



  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES  EXCHANGE ACT OF 1934 For the  transition  period from  __________ to
__________



                              Commission file number 0-20148


                              CITIZENS FINANCIAL CORPORATION
             (Exact name of small business issuer as specified in its charter)


            Kentucky                                                 61-1187135
   (State of Incorporation)                 (I.R.S. Employer Identification No.)


                       12910Shelbyville  Road,   Louisville,   Kentucky,   40243
                            (Address of principal executive offices)


                                       (502) 244-2420
                                 (Issuer's telephone number)



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



                             APPLICABLE ONLY TO CORPORATE ISSURERS

     State the number of shares  outstanding of each issuer's  classes of common
equity,  as of the  latest  practicable  date:  Class  A Stock  1,802,615  as of
November 12, 1998.

Transitional Small Business Disclosure Format (Check one):Yes     No  X

     This Report  consists of 13  consecutively  numbered pages. An index to the
Exhibits to this Report  appears on page 12. The date of this Report is November
13, 1998.


Part I - FINANCIAL INFORMATION;  Item 1 - Financial Statements
--------------------------------------------------------------



                      Citizens Financial Corporation and Subsidiaries
                      Condensed Consolidated Statements of Operations
                                        (Unaudited)



Nine Months Ended September 30                       1998                  1997

----------------------------------------------- -------------------- -----------
Revenues:
   Premiums and other considerations          $14,332,477           $14,144,081
   Premiums ceded                                (740,462)             (819,487)
------------------------------------------- -------------------- ---------------
      Net premiums earned                       13,592,015           13,324,594
   Net investment income                         3,634,871            2,866,450
   Net realized investment gains, net of expenses
                                                 2,532,217            1,058,247
   Other income                                     21,397                8,240
------------------------------------------- -------------------- ---------------
Total Revenues                                  19,780,500           17,257,531

Policy Benefits and Expenses:
   Policyholder benefits                        10,113,702            8,649,689
   Policyholder benefits ceded                    (835,182)            (646,827)
------------------------------------------- -------------------- ---------------
      Net benefits                               9,278,520            8,002,862
   Increase in net benefit reserves                485,239              604,827
   Interest credited on policyholder deposits      637,091              675,204
   Commissions                                   2,829,055            2,800,671
   General expenses                              3,460,646            3,181,723
   Interest expense                                335,933              260,956
   Policy acquisition costs deferred              (725,246)            (830,096)
   Amortization of deferred policy acquisition
 costs and                                         944,779            1,038,242
      value of insurance acquired
-------------------------------------------- -------------------- --------------
Total Benefits and Expenses                      17,246,017          15,734,389
----------------------------------------- -------------------- -----------------
Income before Federal Income Tax                  2,534,483           1,523,142
Federal Income Tax Expense                          494,000             263,000
------------------------------------------ -------------------- ----------------
Net Income                                        2,040,483           1,260,142
Dividends on Redeemable Convertible
 Preferred Stock                                    279,650             305,250
------------------------------------- -------------------- ---------------------
Net Income Applicable to Common Stock            $1,760,833          $  954,892
-------------------------------------------- -------------------- --------------

Net Income Per Common Share:
   Basic                                              $1.54            $   0.89
   Diluted                                            $1.12            $   0.69









Part I; Item 1  (continued)



                 Citizens Financial Corporation and Subsidiaries
                 Condensed Consolidated Statements of Operations
                                   (Unaudited)



Three Months Ended September 30                          1998            1997


-------------------------------------------- -------------------- --------------
Revenues:
   Premiums and other considerations               $  5,020,409    $  4,597,637
   Premiums ceded                                      (287,876)       (265,749)
---------------------------------------------- -------------------- ------------
      Net premiums earned                             4,732,533       4,331,888
   Net investment income                              1,354,127         884,224
   Net realized investment gains, net of expenses       463,188         810,890
   Other income                                          13,143             945
------------------------------------------------ -------------------- ----------
Total Revenues                                        6,562,991       6,027,947

Policy Benefits and Expenses:
   Policyholder benefits                              3,697,136       2,821,895
   Policyholder benefits ceded                         (260,387)       (129,295)
----------------------------------------------- -------------------- -----------

      Net benefits                                     3,436,749      2,692,600
   Increase in net benefit reserves                      159,178        142,724
   Interest credited on policyholder deposits            194,061        222,167
   Commissions                                           922,467        917,639
   General expenses                                    1,091,746      1,032,760
   Interest expense                                      143,866         82,005
   Policy acquisition costs deferred                    (180,375)      (200,488)
   Amortization of deferred policy acquisition costs     420,702        310,132
   and value of insurance acquired
------------------------------------------------ -------------------- ----------
Total Benefits and Expenses                            6,188,394      5,199,539
----------------------------------------------- -------------------- -----------
Income before Federal Income Tax                         374,597        828,408
Federal Income Tax Expense                                16,000        143,000
------------------------------------------------ -------------------- ----------
Net Income                                               358,597        685,408
Dividends on Redeemable Convertible Preferred Stock       76,700        101,750
------------------------------------------------ -------------------- ----------
Net Income Applicable to Common Stock                  $ 281,897      $ 583,658
----------------------------------------------- -------------------- -----------

Net Income Per Common Share:
   Basic                                                   $0.22          $0.54
   Diluted                                                 $0.20          $0.38









Part I; Item 1  (continued)



                 Citizens Financial Corporation and Subsidiaries
             Condensed Consolidated Statements of Financial Condition
                                   (Unaudited)



                                              September 30,        December 31,
                                                  1998                 1997
----------------------------------------- -------------------- -----------------
ASSETS

Investments:
Securities available for sale, at fair value:
Fixed maturities (amortized cost of $75,851,430   $78,020,618    $   43,029,609
and $41,840,652 in 1998 and 1997 respectively)
Equity securities (cost of $14,090,935 and         14,898,760        14,942,792
$12,014,105 in 1998 and 1997, respectively)
Investment real estate                              3,646,033         3,890,961
Mortgage loans on real estate                         166,261           170,536
Policy loans                                        4,086,321         2,943,148
Short-term investments                                572,492           572,492
------------------------------------------- -------------------- ---------------
Total Investments                                 101,390,485        65,549,538

Cash and cash equivalents                           6,896,312         6,180,576
Accrued investment income                           1,252,066           710,673
Reinsurance recoverable
   Paid benefits and losses                           129,449            82,702
   Unpaid benefits, losses and IBNR                 2,925,532         1,537,270
Premiums receivable                                   415,130           442,846
Property and equipment                              1,490,213         1,295,917
Deferred policy acquisition costs                   4,061,708         3,819,678
Value of insurance acquired                         6,343,007         4,496,872
Goodwill                                              519,814           104,814
Other assets                                          381,786           528,956
------------------------------------------- -------------------- ---------------
Total Assets                                   $  125,805,502    $   84,749,842








Part I; Item 1  (continued)



                 Citizens Financial Corporation and Subsidiaries
              Condensed Consolidated Statements of Financial Condition
                                 (Unaudited)



                                        
                                              September 30,        December 31,
                                                  1998                 1997
---------------------------------------- -------------------- ------------------
LIABILITIES AND SHAREHOLDERS' EQUITY


Liabilities:
Policy liabilities:
   Future policy benefits                      $77,571,850          $42,229,519
   Policyholder deposits                        16,299,125           15,538,891
   Policy and contract claims                    1,167,024            1,220,023
   Unearned premiums                               205,635              160,107
   Other                                           186,452              190,243
-------------------------------------------- -------------------- --------------
Total Policy Liabilities                        95,430,086           59,338,783

Notes payable                                    6,610,000            3,510,000
Accrued expenses and other liabilities           3,294,498            2,763,849
Federal income tax payable                         750,480              263,500
Deferred federal income tax                        420,497              508,918
-------------------------------------------- -------------------- --------------
Total Liabilities                              106,505,561           66,385,050

Commitments and Contingencies

Redeemable Convertible Preferred Stock;               ---             4,043,907
   370 shares outstanding in 1997

Shareholders' Equity
Commons stock, 6,000,000 shares authorized;      1,802,615            1,075,615
      1,802,615 and 1,075,615 shares issued and
      outstanding in 1998 and 1997, respectively
   Additional paid-in capital                    8,091,825            4,836,057
   Unrealized appreciation of investments        1,893,453            2,594,998
   Retained earnings                             7,512,048            5,814,215
-------------------------------------------- -------------------- --------------
Total Shareholders' Equity                      19,299,941           14,320,885
-------------------------------------------- -------------------- --------------
Total Liabilities and Shareholders' Equity    $125,805,502          $84,749,842







Part I; Item 1  (continued)

                 Citizens Financial Corporation and Subsidiaries
                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)


Nine Months Ended September 30                      1998                  1997
------------------------------------------- -------------------- ---------------


Cash Flows from Operations:
Net income                                      $  2,040,483       $  1,260,142
Adjustments to reconcile net income to cash from operations:
   Increase in benefit reserves                      503,910            474,590
   Decrease in claim liabilities                    (195,683)          (187,467)
   (Increase) decrease in reinsurance recoverable    (45,293)           277,462
   Interest credited on policyholder deposits        637,091            675,204
   Provision for amortization and
   depreciation, net of deferrals                    425,798            399,996
   Amortization of premium and accretion of discount  72,600            (15,490)
      on Securities purchased, net
   Net realized investment gains                  (2,532,217)        (1,058,247)
   Decrease in accrued investment income              64,858            101,612
   Change in other assets and liabilities           (178,658)           195,929
   Increase (decrease) in deferred Federal
   income tax liability                             (287,979)            16,000
   Increase (decrease) in Federal income
   taxes payable                                     486,980           (268,000)
--------------------------------------------- -------------------- -------------
Net Cash provided by Operations                      991,890          1,871,731

Cash Flows from Investment Activities:
Cost of securities acquired                       (28,546,723)      (19,285,137)
Investments sold or matured                        30,870,497        17,280,983
Purchase price paid for United Liberty Life        (3,787,613)          ---
Insurance Company in excess of cash acquired
Investment management fees and margin interest       (396,369)         (364,504)
Short-term investments sold, net                         ---            342,219
Additions to property and equipment, net              (132,611)        (223,008)
Other investing activities, net                         37,249           47,591
-------------------------------------------- -------------------- --------------
Net Cash used in Investment Activities              (1,955,570)      (2,201,856)

Cash Flows from Financing Activities:
Policyholder deposits                                   543,575         573,347
Policyholder withdrawals                             (1,415,916)     (1,524,182)
Net brokerage account loan proceeds (repayments)       (144,454)      1,796,110
Notes payable and interest - guarantor                   ---           (220,869)
Proceeds from note payable - bank                     3,400,000           ---
Payments on notes payable - bank                       (300,000)       (290,000)
Common stock issuance                                    45,000           ---
Preferred stock redemption                             (169,139)          ---
Dividends on redeemable convertible preferred stock    (279,650)       (305,250)
--------------------------------------------- -------------------- -------------
Net Cash provided by Financing Activities              1,679,416         29,156

--------------------------------------------- -------------------- -------------
Net Increase (Decrease) in Cash and Cash Equivalents     715,736       (300,969)
Cash and Cash Equivalents at Beginning of Period       6,180,576      2,805,717
------------------------------------------------- -------------------- ---------
Cash and Cash Equivalents at End of Period          $  6,896,312   $  2,504,748








Part I; Item 1  (continued)


                 Citizens Financial Corporation and Subsidiaries
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)



1.   Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance  with the  instructions to Form 10-QSB in conformity with
generally accepted accounting  principles.  The accompanying unaudited condensed
financial  statements  reflect  all  adjustments  which are,  in the  opinion of
management,  necessary  to a fair  presentation  of the  results for the interim
periods.  All such  adjustments are of a normal  recurring  nature.  For further
information,  refer to the December 31, 1997 consolidated  financial  statements
and footnotes included in the Company's annual report on Form 10-KSB.



2.   Comprehensive Income

As  of  January  1,  1998,  the  Company   adopted  SFAS  No.  130,   "Reporting
Comprehensive  Income."  SFAS No. 130  establishes  rules for the  reporting and
display of  comprehensive  income and its components;  however,  the adoption of
this Statement had no impact on the Company's net income or total  shareholder's
equity.  SFAS 130 requires unrealized gains or losses on the Company's available
for sale securities to be included in comprehensive income.

The components of comprehensive  income, net of related tax, for the nine months
ended September 30, 1998 and 1997 are as follows:



 Nine months ended September 30                       1998                 1997

---------------------------------------------- -------------------- ------------
 Net income                                        $2,040,483        $1,260,142
 Net unrealized gains on available for sale          (701,545)        2,054,587
 securities
-------------------------------------------- -------------------- --------------
 Comprehensive income                               $1,338,938       $3,314,729


3.Reclassifications

During  1997,  the Company  adopted  the  practice  of netting  certain  direct,
incremental  investment  management  fees and margin loan interest costs against
net realized investment gains and losses presented in the Condensed Consolidated
Statements  of  Operations.  Such costs are based  directly on or, are primarily
associated with, capital gains generated in the equities  portfolio.  Previously
reported  amounts  have also been  reclassified  for  consistency.  Costs netted
against realized investment gains total $93,018 and $364,504 for the nine months
ended September 30, 1998 and 1997 respectively.



4.   Purchase of United Liberty Life Insurance Company and Proforma Information

Effective May 12, 1998 the Company's  Citizens  Security Life Insurance  Company
subsidiary  (Citizens Security) completed the acquisition of United Liberty Life
Insurance   Company  (United  Liberty)  from  Chaswil  United   Corporation,   a
privately-held  Cincinnati  insurance holding company. The acquisition price was
$6.3 million,  along with  approximately  $800  thousand of  additional  related
costs. In conjunction with the acquisition,  Chaswil retained approximately $2.1
million of United  Liberty's  real estate  related and other assets,  which were
replaced with cash by Citizens Security.
The following  proforma  consolidated  results of operations for the nine months
ended September 30, 1998 and 1997 give effect to the United Liberty  acquisition
as though it had occurred at the beginning of each period presented. The primary
proforma  effects  relate to  amortization  of the  acquired  value of insurance
inforce,  foregone  investment  income  relating  to  Company  funds used in the
purchase,  and additional  interest  expense  associated with  incremental  bank
borrowings.  Goodwill of  approximately  $440,000 was  recorded  relating to the
acquisition.  The  proforma  results  are  not  necessarily  indicative  of  the
consolidated  results that would have  occurred or which will be obtained in the
future.


   Proforma Consolidated Results of Operations
   Nine months ended September 30                     1998                 1997
   ------------------------------------------- -------------------- ------------


   Revenue                                          $21,314,035     $22,740,953
   Net Income                                      $  2,043,322    $  1,321,538
   Net Income Applicable to Common Stock           $  1,763,672    $  1,016,288

   Earnings per share:
   -------------------------------------------- -------------------- -----------
   Basic                                                   $1.55          $0.94
   Diluted                                                 $1.13          $0.73



Part I - FINANCIAL INFORMATION; Item 2 - Management's Discussion and Analysis or
Plan of Operations



                               FINANCIAL POSITION


Fixed maturities increased $34,010,778 based on amortized cost, during the first
nine months of 1998. Equity securities  increased $2,076,830 on a cost basis and
decreased  $44,032  on  market  value  basis,  during  the  same  period.  Gross
unrealized  appreciation  for  available-for-sale  fixed  maturities  and equity
securities  decreased  approximately  $1,141,000  during the nine  months  ended
September 30, 1998.



                                   OPERATIONS

An analysis of segment results (before federal income taxes) for the nine months
and three months ended September 30, 1998 and 1997 is shown below.


                                Segment Income
 ------------------------------------------------------------------------------
                    Before Realized Investment Gains           Total
              ---------------------------------------   ------------------------

Nine months ended September
30                                       1998      1997        1998       1997

--------------------------------------------------------------------------------
Life and Annuity                   $ (305,505) $  (66,146) $2,139,510 $ 952,818
Accident and Health                   307,771     531,041     394,973   570,324
--------------------------------------------------------------------------------
Total                               $   2,266    $ 464,895  $2,534,483 $1,523,14


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



Three months ended
September 30                             1998         1997      1998       1997


--------------------------------------------------------------------------------
Life and Annuity                     $ (342,002) $ (159,068)$  114,345 $ 621,965
Accident and Health                     253,411     176,586    260,252   206,443
--------------------------------------------------------------------------------
Total                                  $(88,591)    $17,518   $374,597  $828,408



The decline in Life and Annuity  segment  results  (before  realized  investment
gains) for the nine months ended September 30, 1998 is principally  attributable
to a return to historical  mortality levels for broker-sold  graded benefit life
insurance  products,  after  realizing  more  favorable  results  in  1997.  The
improvement  in the  Accident  and Health  segment  for the  current  quarter is
primarily  attributable  to  termination  of an  unprofitable  group dental case
during the year,  while the year-to-date  decrease is primarily  attributable to
this group  dental  case and  increased  individual  Accident  and Health  claim
ratios.

Total premiums and other  considerations  increased  approximately 2% during the
first nine months of 1998. This change is attributable to a 14% increase in Life
and Annuity  premium along with an 11% decrease in Accident and Health  premium.
Approximately  85% of the Life and Annuity increase resulted from acquisition of
United  Liberty,  while the  remainder  resulted  primarily  from  improved home
service sales and persistency.  The majority of the Accident and Health decrease
is attributable to termination of certain under-performing group Dental cases.



Part I; Item 2  (continued)



                             CASH FLOW AND LIQUIDITY


Cash flow from operations  totaled  $991,890 for the nine months ended September
30, 1998  compared  to  $1,871,731  for the same period in the prior year.  This
decrease  was  principally  attributable  to an increase in certain  reinsurance
receivables,  increased  life  claims,  and a reduction  of certain  outstanding
accrued expenses.

The $1,955,570 of cash used in investing  activities resulted primarily from the
acquisition  of United  Liberty  Life  Insurance  Company,  partially  offset by
liquidation of certain fixed maturity investments.

The cash provided by financing  activities  during the first nine months of 1998
is primarily  attributable to an additional $3,400,000 bank loan used to finance
a portion of the United Liberty Life Insurance Company acquisition.


Part II - OTHER INFORMATION



Item 2.  Changes in Securities

     c. As disclosed in the Company's Forms 8-K filed August 14 and September 4,
1998, in late August and early September 1998, the Company issued 718,000 shares
of its Class A Stock  (the  "Common  Stock") to 20 holders of record of its 1995
Convertible  Class B Preferred  Stock (the  "Preferred  Stock") in exchange  for
their shares of Preferred Stock. The exchange was not underwritten.  Pursuant to
the instruments  governing the Preferred Stock, it was called by the Company for
redemption for cash or conversion into Common Stock on the ratio of 2,000 shares
of Common  Stock for each share of Preferred  Stock.  The shares of Common Stock
were exempt from registration  pursuant to Section 3(a)(9) of the Securities Act
by reason of their being  securities  exchanged  by the issuer with its existing
security  holders where no commission  or other  remuneration  was paid or given
directly or indirectly for soliciting such exchange.



Item 6.  Exhibits and Reports on Form 8-K.

         a.       Exhibit 11.  Statement re computation of per share earnings.
                  Exhibit 27.  Financial Data Schedule.


         b.       Form 8-KA's dated July 28 and 29, 1998 were filed  relating to
                  Item 7 Financial  Statements.  These forms disclosed  audited,
                  interim, and proforma financial information for United Liberty
                  Life Insurance Company, which was acquired during May 1998.

                  Form 8-K's dated  August 14 and  September  4, 1998 were filed
                  relating to Item 5 Other  Events.  These forms  disclosed  the
                  Company's  program for redeeming  the Preferred  Stock and the
                  conversion or repurchase of all such stock by the  established
                  deadline of September 3, 1998. The conversion program resulted
                  in issuance of 718,000 additional shares of Common Stock.



                                   SIGNATURES


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

                      CITIZENS FINANCIAL CORPORATION

                   BY: /s/ Darrell R. Wells
                      -----------------------------------------------------
                      Darrell R. Wells
                      President and Chief Executive Officer

                   BY: /s/ Brent L. Nemec
                      ------------------------------------------ ----------
                      Brent L. Nemec
                      Treasurer and Principal Accounting Officer


Date:  November 13, 1998









                                  EXHIBIT INDEX



-------------------- ---------------------------------- -----------------------
    Exhibit No.             Description                              Page No.
-------------------- ---------------------------------- -----------------------

     11        Statement re computation of per share earnings          13

     27        Financial Data Schedule                   electronic filing only





















                                   EXHIBIT 11

                 Citizens Financial Corporation and Subsidiaries
                        Computation of Per Share Earnings
                                   (Unaudited)




Nine Months Ended September 30                       1998                  1997
---------------------------------------------- -------------------- ------------

Numerator:
   Diluted:  Net income                            $2,040,483       $ 1,260,142
             Less: Preferred stock dividends         (279,650)        (305,250)
--------------------------------------------- -------------------- -------------
   Basic:    Net income applicable to common stock $1,760,833      $    954,892
--------------------------------------------- -------------------- -------------

Denominator:
   Basic:    Weighted average common shares         1,139,838         1,075,615
   Plus: Assumed conversion of preferred stock        675,495           740,000
---------------------------------------------- -------------------- ------------
  Diluted:  Weighted average shares assumin
  preferred conversion                              1,815,333         1,815,615
---------------------------------------------- -------------------- ------------

Basic Earnings Per Share                                $1.54             $0.89

Diluted Earnings Per Share                              $1.12             $0.69








Three Months Ended September 30                      1998                  1997
------------------------------------------- -------------------- ---------------

Numerator:
   Diluted:  Net income                          $358,597              $685,408
             Less: Preferred stock dividends      (76,700)             (101,750)
------------------------------------------- -------------------- ---------------
   Basic:  Net income applicable to common stock $281,897              $583,658
------------------------------------------- -------------------- ---------------

Denominator:
   Basic:    Weighted average common shares       1,264,115           1,075,615
   Plus: Assumed conversion of preferred stock      549,848             740,000
-------------------------------------------- -------------------- --------------
   Diluted:  Weighted average shares assuming preferred conversion
                                                   1,813,963          1,815,615
-------------------------------------------- -------------------- --------------

Basic Earnings Per Share                               $0.22              $0.54

Diluted Earnings Per Share                             $0.20              $0.38