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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


      X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                For the quarterly period ended September 30, 2001

                                       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 registrant as specified in its charter)


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


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


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



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by  Sections  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 ~~~~~~


                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date: Class A Stock - 1,733,715 as of
November 2, 2001.

The date of this Report is November 7, 2001.

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<PAGE>


Part I - Financial Information;  Item 1 - Financial Statements
<TABLE>
<CAPTION>

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

Nine Months Ended September 30                                                         2001                 2000
------------------------------------------------------------------------ -------------------- --------------------
Revenues:
<S>                                                                             <C>                  <C>
   Premiums and other considerations                                            $22,151,658          $18,154,881
   Premiums ceded                                                                  (868,582)            (734,408)
------------------------------------------------------------------------ -------------------- --------------------
      Net premiums earned                                                        21,283,076           17,420,473
   Net investment income                                                          4,948,968            4,561,218
   Net realized investment gains (losses), net of expenses                       (6,398,998)           4,660,783
   Other income                                                                     196,669              181,250
------------------------------------------------------------------------ -------------------- --------------------
Total Revenues                                                                   20,029,715           26,823,724

Policy Benefits and Expenses:
   Policyholder benefits                                                         13,459,724           12,331,784
   Policyholder benefits ceded                                                     (869,942)            (813,517)
------------------------------------------------------------------------ -------------------- --------------------
      Net benefits                                                               12,589,782           11,518,267
   Increase in net benefit reserves                                               4,567,024            2,024,241
   Interest credited on policyholder deposits                                       643,148              653,598
   Commissions                                                                    4,903,230            3,629,503
   General expenses                                                               4,922,102            4,750,193
   Interest expense                                                                 442,205              575,742
   Policy acquisition costs deferred                                             (2,687,885)          (1,201,812)
   Amortization of deferred policy acquisition costs,
      value of insurance acquired, and goodwill                                   1,606,003            1,048,561
------------------------------------------------------------------------ -------------------- --------------------
Total Policy Benefits and Expenses                                               26,985,609           22,998,293
------------------------------------------------------------------------ -------------------- --------------------
Income (Loss) before income tax and cumulative effect                            (6,955,894)           3,825,431
   of a change in accounting principle
Income Tax Expense (Benefit)                                                     (1,643,000)           1,272,000
------------------------------------------------------------------------ -------------------- --------------------
Income (Loss) before cumulative effect of a                                      (5,312,894)           2,553,431
   change in accounting principle
Cumulative effect from prior years (since January 1, 1999) of
   accounting for embedded options                                                 (311,211)                 ---
------------------------------------------------------------------------ -------------------- --------------------
Net Income (Loss)                                                               $(5,624,105)        $  2,553,431
------------------------------------------------------------------------ -------------------- --------------------

Per Share Amounts:
Income (Loss) before cumulative effect of a
   change in accounting principle                                                     $(3.04)               $1.45
Cumulative effect from prior years (since January 1, 1999) of
   accounting for embedded options                                                     (0.18)                ---
------------------------------------------------------------------------ -------------------- --------------------
Net Income (Loss)                                                                     $(3.22)               $1.45
------------------------------------------------------------------------ -------------------- --------------------
<FN>

See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>

Part I, Item 1  (continued)
<TABLE>
<CAPTION>



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



Three Months Ended September 30                                                        2001                 2000
------------------------------------------------------------------------ -------------------- --------------------
Revenues:
<S>                                                                              <C>                  <C>
   Premiums and other considerations                                             $7,652,167           $6,386,687
   Premiums ceded                                                                  (297,187)            (249,058)
------------------------------------------------------------------------ -------------------- --------------------
      Net premiums earned                                                         7,354,980            6,137,629
   Net investment income                                                          1,607,471            1,595,522
   Net realized investment losses, net of expenses                               (3,100,898)          (1,664,106)
   Other income                                                                      77,399               69,813
------------------------------------------------------------------------ -------------------- --------------------
Total Revenues                                                                    5,938,952            6,138,858

Policy Benefits and Expenses:
   Policyholder benefits                                                          4,248,273            4,340,600
   Policyholder benefits ceded                                                     (318,854)            (390,940)
------------------------------------------------------------------------ -------------------- --------------------
      Net benefits                                                                3,929,419            3,949,660
   Increase in net benefit reserves                                               1,793,317              975,558
   Interest credited on policyholder deposits                                       229,739              247,494
   Commissions                                                                    1,489,252            1,245,928
   General expenses                                                               1,590,419            1,569,337
   Interest expense                                                                 127,504              196,435
   Policy acquisition costs deferred                                               (657,524)            (414,141)
   Amortization of deferred policy acquisition costs,
      value of insurance acquired, and goodwill                                     692,002              421,066
------------------------------------------------------------------------ -------------------- --------------------
Total Policy Benefits and Expenses                                                9,194,128            8,191,337
------------------------------------------------------------------------ -------------------- --------------------
Loss before Income Tax                                                           (3,255,176)          (2,052,479)
Income Tax Benefit                                                                 (786,000)            (868,000)
------------------------------------------------------------------------ -------------------- --------------------
Net Loss                                                                        $(2,469,176)        $ (1,184,479)
------------------------------------------------------------------------ -------------------- --------------------


Net Loss Per Common Share                                                             $(1.42)              $(0.67)
------------------------------------------------------------------------ -------------------- --------------------
<FN>
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>

Part I; Item 1  (continued)

<TABLE>
<CAPTION>


                                            Citizens Financial Corporation and Subsidiaries
                                       Condensed Consolidated Statements of Financial Condition




                                                                                September 30,        December 31,
                                                                                         2001                2000
------------------------------------------------------------------------ -------------------- --------------------
ASSETS                                                                             (Unaudited)

Investments:
   <S>                                                                               <C>                   <C>
   Securities available for sale, at fair value:
      Fixed maturities (amortized cost of $73,878,918
      and $72,516,172 in 2001 and 2000 respectively)                           $ 74,694,965          $ 71,403,674
      Equity securities (cost of $5,808,613 and
      $13,677,303 in 2001 and 2000, respectively)                                 5,829,761            12,577,874
   Investment real estate                                                         3,527,984             3,506,386
   Mortgage loans on real estate                                                    156,000               156,000
   Policy loans                                                                   4,226,290             4,270,588
   Short-term investments                                                           610,379               610,379
------------------------------------------------------------------------ -------------------- --------------------
Total Investments                                                                89,045,379            92,524,901

Cash and cash equivalents                                                        22,672,850            20,093,774
Accrued investment income                                                         1,366,930             1,328,491
Reinsurance recoverable                                                           2,533,774             2,686,747
Premiums receivable                                                                 341,835               212,089
Property and equipment                                                            2,851,619             2,959,744
Deferred policy acquisition costs                                                 8,382,514             6,511,948
Value of insurance acquired                                                       4,360,154             4,884,680
Goodwill                                                                            778,285               851,795
Federal income tax receivable                                                     2,067,933             1,364,502
Deferred federal income tax                                                         670,839             1,711,661
Other assets                                                                        555,434               407,674
------------------------------------------------------------------------ -------------------- --------------------
Total Assets                                                                   $135,627,546          $135,538,006
------------------------------------------------------------------------ -------------------- --------------------
<FN>
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>

Part I; Item 1  (continued)


<TABLE>
<CAPTION>

                                            Citizens Financial Corporation and Subsidiaries
                                       Condensed Consolidated Statements of Financial Condition




                                                                               September 30,     December 31,
                                                                                        2001                 2000
------------------------------------------------------------------------ -------------------- --------------------
LIABILITIES AND SHAREHOLDERS' EQUITY                                               (Unaudited)

Liabilities:
Policy Liabilities:
<S>                                                                           <C>                   <C>
   Future policy benefits                                                     $  88,334,132         $  83,403,780
   Policyholder deposits                                                         16,153,350            16,381,247
   Policy and contract claims                                                     1,351,667             1,816,947
   Unearned premiums                                                                165,307               217,670
   Other                                                                            307,283               203,600
------------------------------------------------------------------------ -------------------- --------------------
Total Policy Liabilities                                                        106,311,739           102,023,244

Notes payable                                                                     7,400,000             8,000,000
Accrued expenses and other liabilities                                            2,367,840             2,240,653
------------------------------------------------------------------------ -------------------- --------------------
Total Liabilities                                                               116,079,579           112,263,897

Commitments and Contingencies

Shareholders' Equity:
   Common stock, 6,000,000 shares authorized;
      1,733,715 and 1,758,215 shares issued and outstanding
      in 2001 and 2000, respectively                                              1,733,715             1,758,215
   Additional paid-in capital                                                     7,419,263             7,640,988
   Accumulated other comprehensive income (loss)                                    570,894            (1,573,294)
   Retained earnings                                                              9,824,095            15,448,200
------------------------------------------------------------------------ -------------------- --------------------
Total Shareholders' Equity                                                       19,547,967            23,274,109
------------------------------------------------------------------------ -------------------- --------------------
Total Liabilities and Shareholders' Equity                                     $135,627,546          $135,538,006
------------------------------------------------------------------------ -------------------- --------------------
<FN>
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>

Part I; Item 1  (continued)
<TABLE>
<CAPTION>

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




Nine Months Ended September 30                                                         2001                  2000
------------------------------------------------------------------------ -------------------- --------------------

Cash Flows from Operations:
<S>                                                                             <C>                   <C>
Net income (loss)                                                               $(5,624,105)          $2,553,431
Adjustments to reconcile net income to cash from operations:
   Increase in benefit reserves                                                   4,891,473            2,068,882
   Decrease in claim liabilities                                                   (465,280)             (30,858)
   Decrease in reinsurance recoverable                                              152,973               96,614
   Interest credited on policyholder deposits                                       643,148              653,598
   Provision for amortization and depreciation, net of deferrals                   (813,185)              74,174
   Amortization of premium and accretion of discount on
      securities purchased, net                                                    (129,103)              35,591
   Net realized investment (gains) losses                                         6,398,998           (4,660,783)
   Increase in accrued investment income                                            (38,440)             (65,420)
   Change in other assets and liabilities                                          (210,473)            (397,447)
   (Increase) decrease in deferred federal income tax asset                         353,000           (1,688,000)
   (Increase) decrease in federal income taxes receivable                          (703,431)             170,000
   Cumulative effect of a change in accounting principle                            311,211                  ---
------------------------------------------------------------------------ -------------------- --------------------
Net Cash provided by (used in) Operations                                         4,766,786           (1,190,218)

Cash Flows from Investment Activities:
Cost of securities acquired                                                     (20,797,466)         (70,458,472)
Investments sold or matured                                                      20,603,453           71,876,615
Net cash received on block of insurance business acquired                               ---            1,894,271
Investment management fees and margin interest                                     (173,389)            (679,254)
Additions to property and equipment, net                                           (182,171)            (210,058)
Other investing activities, net                                                      79,122               (9,263)
------------------------------------------------------------------------ -------------------- --------------------
Net Cash provided by (used in) Investment Activities                               (470,451)           2,413,839

Cash Flows from Financing Activities:
Policyholder deposits                                                               725,417              596,659
Policyholder withdrawals                                                         (1,596,451)          (2,020,267)
Payments on notes payable - bank                                                   (600,000)            (375,000)
Repurchase of common stock                                                         (246,225)             (66,463)
Brokerage account advances, net                                                         ---             (100,884)
------------------------------------------------------------------------ -------------------- --------------------
Net Cash used in Financing Activities                                            (1,717,259)          (1,965,955)

------------------------------------------------------------------------ -------------------- --------------------
Net Increase (Decrease) in Cash and Cash Equivalents                              2,579,076             (742,334)
Cash and Cash Equivalents at Beginning of Period                                 20,093,774           18,696,401
------------------------------------------------------------------------ -------------------- --------------------
------------------------------------------------------------------------ -------------------- --------------------
Cash and Cash Equivalents at End of Period                                      $22,672,850          $17,954,067
------------------------------------------------------------------------ -------------------- --------------------
<FN>
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>

Part I; Item 1  (continued)


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


Note 1 - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance  with the  instructions  to Form 10-Q in conformity  with
accounting  principles generally accepted in the United States. 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, 2000  consolidated  financial
statements and footnotes included in the Company's annual report on Form 10-K.


Note 2 - COMPREHENSIVE INCOME

The components of comprehensive income, net of related tax, for the three months
and nine months ended September 30, 2001 and 2000 are as follows:
<TABLE>
<CAPTION>

                                            ---------------------------------- ----------------------------------
                                            Three Months Ended September 30,    Nine Months Ended September 30,
------------------------------------------- ----------------- ---------------- ----------------- ----------------
COMPREHENSIVE INCOME:                             2001             2000              2001             2000
------------------------------------------- ----------------- ---------------- ----------------- ----------------

<S>                                            <C>              <C>               <C>               <C>
  Net Income (Loss)                            $(2,469,176)     $ (1,184,479)     $(5,624,104)      $ 2,553,431
  Net   unrealized   gains   (losses)   on
securities                                        (227,430)       (2,000,020)       2,144,188        (2,865,000)
------------------------------------------- ----------------- ---------------- ----------------- ----------------
  Comprehensive Loss                           $(2,696,606)     $ (3,184,499)     $(3,479,916)      $  (311,569)
------------------------------------------- ----------------- ---------------- ----------------- ----------------
</TABLE>


Note 3 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Effective  January 1, 2001, the Company adopted Financial  Accounting  Standards
Board  Statement  (SFAS) No. 133,  "Accounting  for Derivative  Instruments  and
Hedging  Activities",  as  amended  by SFAS  Nos.  137 and 138.  This  statement
requires that all  derivatives  be recognized as either assets or liabilities in
the balance sheet at their fair value,  and sets forth the manner in which gains
or losses thereon are to be recorded.  The treatment of such gains and losses is
dependent  upon the type of  exposure,  if any,  for  which  the  derivative  is
designed as a hedge.  Currently,  the Company has not designated any derivatives
as hedges.  In  accordance  with SFAS 133,  as of January 1, 2001,  the  Company
recorded a $311,211 transition  adjustment loss. This adjustment  represents the
cumulative  market  value  change  (since  January 1, 1999) of options  embedded
within  convertible  bonds, along with a recalculation of discount accretion for
the related host bonds and corresponding  income tax impacts. The net transition
adjustment  includes a $539,090 gross market value decline,  $67,558 of discount
accretion, and a $160,321 income tax benefit.



Note  4 - NET REALIZED INVESTMENT GAINS, NET OF EXPENSES

The Company  recorded  pretax  reductions to the carrying value of available for
sale  securities  totaling  $2,634,000  and $5,063,000 for the nine months ended
September 30, 2001 and 2000,  respectively,  relating to declines in value which
were  considered  by management  to be other than  temporary.  These amounts are
reported as additional realized investment losses.  Changes in the fair value of
derivative instruments are also reported as realized gains (losses). The Company
also nets certain  direct,  incremental  investment  management fees against net
realized  investment  gains  (losses)  presented in the  Condensed  Consolidated
Statements  of  Operations.  Such costs are based  directly on or, are primarily
associated with, realized capital gains (losses).  Costs netted against realized
investment  gains  (losses) total $54,000 and $211,000 for the nine months ended
September 30, 2001 and 2000, respectively.
<PAGE>

Part I; Item 1  (continued)


Note 5 - INCOME TAXES

Current taxes are provided based on estimates of the projected  effective annual
tax rate.  Deferred  taxes  reflect  the net  effects of  temporary  differences
between the carrying amount of assets and  liabilities  for financial  reporting
purposes and the amounts used for income tax purposes.


Note 6 - SEGMENT INFORMATION

The Company's  operations  are managed along five  principal  insurance  product
lines: Home Service Life, Broker Life,  Preneed Life,  Dental, and Other Health.
Products in all five lines are sold through independent agency operations.  Home
Service Life consists  primarily of traditional life insurance  coverage sold in
amounts  of  $10,000  and under to middle  and lower  income  individuals.  This
distribution  channel is characterized by a significant  amount of agent contact
with customers  throughout the year. Broker Life product sales consist primarily
of simplified issue and graded-benefit policies in amounts of $10,000 and under.
Other  products in this segment  which are not  aggressively  marketed  include:
group life, universal life, annuities and participating life coverages.  Preneed
Life products are sold to individuals in connection with prearrangement of their
funeral and  include  single  premium  and  multi-pay  policies  with  coverages
generally in amounts of $10,000 and less.  These  policies are generally sold to
older individuals at increased premium rates. Dental products are term coverages
generally  sold to small and  intermediate  size employer  groups.  Other Health
products  include various  accident and health coverages sold to individuals and
employer groups.  Segment information as of September 30, 2001 and 2000, and for
the periods then ended is as follows:
<TABLE>
<CAPTION>

                                             ---------------------------------- -----------------------------------
                                             Three Months Ended September 30,    Nine Months Ended September 30,
-------------------------------------------- ----------------- ---------------- ----------------- -----------------
REVENUE:                                           2001             2000              2001              2000
-------------------------------------------- ----------------- ---------------- ----------------- -----------------

<S>                                             <C>               <C>              <C>               <C>
  Home Service Life                             $ 2,346,090       $ 2,252,559      $ 7,029,071       $ 6,797,357
  Broker Life                                     1,684,895         1,609,712        4,776,334         4,575,552
  Preneed Life                                    2,763,516         1,595,490        7,430,929         3,875,964
  Dental                                          1,884,305         1,993,461        6,057,285         5,828,971
  Other Health                                      361,044           351,742        1,135,094         1,085,097
-------------------------------------------- ----------------- ---------------- ----------------- -----------------
  Segment Totals                                  9,039,850         7,802,964       26,428,713        22,162,941
--------------------------------------------
  Realized investment gain (loss), net           (3,100,898)       (1,664,106)      (6,398,998)        4,660,783
-------------------------------------------- ----------------- ---------------- ----------------- -----------------
  Total Revenue                                 $ 5,938,952       $ 6,138,858      $20,029,715       $26,823,724
-------------------------------------------- ----------------- ---------------- ----------------- -----------------
</TABLE>
<TABLE>
<CAPTION>

Below are the net investment income amounts which are included in the revenue totals above.

                                           ---------------------------------- ----------------------------------
                                           Three Months Ended September 30,    Nine Months Ended September 30,
------------------------------------------ ----------------- ---------------- ----------------- ----------------
INVESTMENT INCOME:                               2001             2000              2001             2000
------------------------------------------ ----------------- ---------------- ----------------- ----------------

<S>                                            <C>               <C>              <C>               <C>
  Home Service Life                            $  526,394        $  524,942       $1,638,758        $1,553,985
  Broker Life                                     661,800           702,021        2,060,052         1,938,719
  Preneed Life                                    388,358           336,452        1,150,634           974,073
  Dental                                            7,907             8,996           27,694            27,697
  Other Health                                     23,012            23,111           71,830            66,744
------------------------------------------ ----------------- ---------------- ----------------- ----------------
  Segment Totals                               $1,607,471        $1,595,522       $4,948,968        $4,561,218
------------------------------------------ ----------------- ---------------- ----------------- ----------------
</TABLE>


The Company evaluates performance based on several factors, of which the primary
financial measure is segment profit.  Segment profit represents pretax earnings,
except net realized investment gains (losses) and interest

<PAGE>

Part I; Item 1  (continued)


expense are excluded.  The majority of the Company's  realized  investment gains
and losses are generated  from  investments in equity  securities.  The equities
portfolio averaged (on a cost basis)  approximately  $10,887,000 and $20,508,000
during the nine months ended September 30, 2001 and 2000, respectively. If these
funds had been invested in  fixed-maturities  yielding 7%,  realized  investment
gains (losses) would have changed and the nine month segment profit totals below
would have  increased by  approximately  $365,000 and $763,000 in 2001 and 2000,
respectively.
<TABLE>
<CAPTION>
                                             ---------------------------------- -----------------------------------
                                             Three Months Ended September 30,    Nine Months Ended September 30,
-------------------------------------------- ----------------- ---------------- ----------------- -----------------
SEGMENT PROFIT (LOSS):                             2001             2000              2001              2000
-------------------------------------------- ----------------- ---------------- ----------------- -----------------

<S>                                             <C>              <C>               <C>                <C>
  Home Service Life                             $    42,374      $    (17,494)     $   215,862        $   77,454
  Broker Life                                       181,013            63,395          192,515           259,408
  Preneed Life                                     (260,289)         (274,706)        (647,508)         (829,929)
  Dental                                             81,070            47,080          165,768           269,575
  Other Health                                      (70,942)          (10,213)         (41,328)          (36,118)
-------------------------------------------- ----------------- ---------------- ----------------- -----------------
  Segment Totals                                    (26,774)         (191,938)        (114,691)         (259,610)
  Realized investment gain (loss), net           (3,100,898)       (1,664,106)      (6,398,998)        4,660,783
  Interest expense                                  127,504           196,435          442,205           575,742
-------------------------------------------- ----------------- ---------------- ----------------- -----------------
  Income (Loss) before income tax and
     cumulative effect of a change in
     accounting principle                       $(3,255,176)     $ (2,052,479)     $(6,955,894)       $3,825,431
-------------------------------------------- ----------------- ---------------- ----------------- -----------------
</TABLE>
<TABLE>
<CAPTION>


Depreciation and amortization  amounts below consist of amortization of the value of insurance acquired, deferred policy acquisition
costs and goodwill, along with depreciation expense.

                                               ----------------------------------- ----------------------------------
                                                Three Months Ended September 30,    Nine Months Ended September 30,
----------------------------------------------  ----------------- ----------------- ---------------- -----------------
DEPRECIATION AND AMORTIZATION:                       2001              2000             2001              2000
---------------------------------------------- ----------------- ----------------- ---------------- -----------------

<S>                                                 <C>               <C>              <C>              <C>
  Home Service Life                                 $ 352,726         $ 233,834        $  645,492       $  538,399
  Broker Life                                         158,360           160,873           488,787          436,980
  Preneed Life                                        241,809            77,434           643,320          230,241
  Dental                                               18,005            13,818            54,011           40,080
  Other Health                                         10,677            13,257            43,089           30,287
---------------------------------------------- ----------------- ----------------- ---------------- -----------------
  Segment Totals                                    $ 781,577         $ 499,216        $1,874,699       $1,275,987
---------------------------------------------- ----------------- ----------------- ---------------- -----------------
</TABLE>
<TABLE>
<CAPTION>


Segment asset totals are determined based on policy liabilities outstanding in each segment.

                                                ----------------- ----------------
-----------------------------------------------   September 30,     December 31,
ASSETS:                                               2001             2000
----------------------------------------------- ----------------- ----------------

<S>                                               <C>               <C>
Home Service Life                                 $ 44,498,472      $ 45,577,255
Broker Life                                         55,107,256        57,721,008
Preneed Life                                        33,462,095        29,421,677
Dental                                                 643,914           799,496
Other Health                                         1,915,809         2,018,570
----------------------------------------------- ----------------- ----------------
Segment Totals                                    $135,627,546      $135,538,006
----------------------------------------------- ----------------- ----------------
</TABLE>
<PAGE>

Part I; Item 1  (continued)


Note 7 - LITIGATION


United Liberty Life Insurance Company ("United"),  which the Company acquired in
1998,   is  defending  an  action  in  an  Ohio  state  court   brought  by  two
policyholders.  The  Complaint  refers to a particular  class of life  insurance
policies  that  United  issued over a period of years  ending  around  1971.  It
alleges that United's dividend payments on these policies from 1993 through 1999
were  less than the  required  amount.  It does not  specify  the  amount of the
alleged  underpayment  but implies a maximum of about  $850,000.  The plaintiffs
also  allege  that  United  is  liable  to  pay  punitive  damages,  also  in an
unspecified  amount,  for breach of an implied  covenant  of good faith and fair
dealing to the  plaintiffs  in  relation to the  dividends.  The action has been
certified  as a class  action on behalf of all  policyholders  residing  in Ohio
whose  policies  were still in force in 1993.  United  has  denied the  material
allegations of the Complaint and is defending the action  vigorously.  Pre-trial
discovery is continuing and will be followed by motions to dismiss or narrow the
plaintiffs' claims. At this early stage of the litigation, the Company is unable
to determine whether an unfavorable outcome of the action is likely to occur or,
alternatively,  whether the chance of such an outcome is remote.  Therefore,  at
this time, management has no basis for estimating potential losses, if any.


Note 8 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2001,  the Financial  Accounting  Standards  Board issued  Statements of
Financial  Accounting  Standards No. 141,  Business  Combinations,  and No. 142,
Goodwill and Other Intangible Assets, effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill will no longer be amortized but
will be subject to annual  impairment  tests in accordance  with the Statements.
Other intangible assets will continue to be amortized over their useful lives.

The  Company  will  apply the new rules on  accounting  for  goodwill  and other
intangible  assets  beginning in the first quarter of 2002.  Application  of the
nonamortization provisions of the Statement is expected to result in an increase
in net income of $90,000  ($0.05 per share) per year.  During 2002,  the Company
will  perform  the first of the  required  impairment  tests of  goodwill  as of
January 1, 2002 and has not yet  determined  what the effect of these tests will
be on the earnings and financial position of the Company.
<PAGE>

Part I;  Item 2 - Management's Discussion and Analysis



FINANCIAL POSITION.  Shareholders' equity totaled approximately  $19,548,000 and
$23,274,000  at September  30, 2001 and December 31, 2000,  respectively.  These
balances  reflect a decrease  of  approximately  16% for the nine  months  ended
September  30,  2001.  As  described  above,  the  comprehensive   loss  totaled
approximately  $3,480,000  for the nine  months  ended  September  30,  2001.  A
significant  portion of the  comprehensive  loss is  attributable  to securities
trading  and changes in the value of the  Company's  equity  portfolios.  Equity
portfolio  positions  decreased  $7,869,000 (57%) on a cost basis and $6,748,000
(54%)  on  a  market  value  basis,  during  the  first  nine  months  of  2001.
Accordingly,  equity  securities  comprised  approximately  4%  and  9%  of  the
Company's  total  assets  as of  September  30,  2001  and  December  31,  2000,
respectively.  Fixed maturity  portfolio  positions  increased  $1,363,000 on an
amortized  cost basis and  $3,291,000  on a market  value basis  during the same
period.  However,  as described in Note 3 above,  $497,000 of the change between
cost and market values during 2001 is  attributable  to the SFAS 133  transition
adjustment recorded at January 1, 2001. Cash and cash equivalent  positions also
increased  approximately  $2,579,000  during the nine months ended September 30,
2001.

The reduced equity positions  described above have  significantly  decreased the
Company's gross quantitative equity market risk. However,  with the accompanying
reductions  in  shareholders'  equity,  there is a  somewhat  lesser  decline in
relative  equity market risk. As a result of this  activity,  A. M. Best Company
recently revised the rating for the Company's  principal  insurance  subsidiary,
Citizens  Security Life Insurance Company  ("CSLIC"),  from B to B-. In addition
CSLIC reached agreement with its principal state insurance regulator  concerning
the carrying value of its subsidiaries.  For statutory reporting purposes, CSLIC
is  now  permitted  to  carry  its  inactive  property  and  casualty  insurance
subsidiary at its full statutory value,  provided CSLIC complies with additional
planning and reporting requests.


OPERATIONS.  Net  premiums  and  other  considerations  increased  approximately
$3,863,000,  or 22% during the first nine  months of 2001  compared to the first
nine months of 2000.  Preneed  Life,  Dental,  Home Service Life and Broker Life
premium increases were approximately $3,876,000, $228,000, $144,000 and $75,000,
respectively.  The Preneed  Life  segment  growth is  attributable  primarily to
competitive  marketing  agreements signed with certain independent agency groups
during late 2000 and continued expansion into independently owned funeral homes.
Dental  premium  growth  is  also  primarily  attributable  to a key  additional
independent  marketing  arrangement signed during 2000 and inflationary  growth,
net of cancellations.  The Other Health segment represents less that 6% of total
premium.  Net  premiums  and other  considerations  for the three  months  ended
September  30, 2001  increased  approximately  $1,217,000 or 20% compared to the
three months ended September 30, 2000. Preneed Life,  Dental,  Home Service Life
and Broker Life premium  increases  (decreases) were  approximately  $1,112,000,
$(108,000), $90,000 and $114,000 respectively

Pretax  earnings  (loss)  [before  the  cumulative  effect  of a new  accounting
principle]  totaled  approximately   $(6,956,000)  for  the  nine  months  ended
September 30, 2001,  compared to $3,825,000 for the nine months ended  September
30, 2000.  Pretax (loss) for the three months ending  September 30, 2001 totaled
approximately  $(3,255,000)  compared to  $(2,052,000)  for three  months  ended
September  30,  2000.  The  majority of these  changes  resulted  from  realized
investment losses.  Pretax Segment (Loss) (excluding  realized  investment gains
and  losses  and  interest  expense)  for the  first  nine  months  of 2001  was
approximately  $(115,000),  compared to $(260,000)  for the first nine months of
2000. This change  resulted  primarily from improving sales volume and mortality
for Preneed Life and Home Service Life,  partially  offset by higher Broker Life
and  Dental  claims.  The  Pretax  Segment  (Loss)  for the three  months  ended
September  30, 2001 was $(27,000)  compared to  $(192,000)  for the three months
ended September 30, 2000.

The Company's  lower  effective  income tax  (benefit)  rate for the nine months
ended  September  30,  2001 is due to the  effect  of the small  life  insurance
company  deduction on taxes paid in prior years,  for which loss  carrybacks are
available.
<PAGE>

Part I;  Item 2 - Management's Discussion and Analysis  (continued)



CASH FLOW AND LIQUIDITY.  Cash flow from operations  totaled  $4,767,000 for the
nine months  ended  September  30, 2001  compared to  $(1,190,000)  for the same
period in the prior year.  This increase is primarily  attributable to growth in
the Preneed Life business.  The $1,717,000 of cash used in financing  activities
during the first nine months of 2001 is  primarily  attributable  to annuity and
Universal Life account withdrawals and bank loan principal repayments.


FORWARD-LOOKING INFORMATION.

All statements,  trend analyses and other  information  contained in this report
relative  to markets  for the  Company's  products  and trends in the  Company's
operations or financial  results,  as well as other  statements  including words
such as "anticipate",  "believe",  "plan", "estimate",  "expect",  "intend", and
other  similar  expressions,  constitute  forward-looking  statements  under the
Private  Securities   Litigation  Reform  Act  of  1995.  These  forward-looking
statements  are  subject to known and  unknown  risks,  uncertainties  and other
factors  which may cause actual  results to be materially  different  from those
contemplated by the  forward-looking  statements.  Such factors  include,  among
other things:

|X|      the market value of  the Company's investments, including  stock market
         performance and prevailing interest rate levels;
|X|      customer  and agent  response  to new  products, distribution  channels
         and marketing initiatives, including exposure to unrecoverable advanced
         commissions;
|X|      mortality, morbidity,  lapse rates, and other factors  which may affect
         the profitability of the Company's insurance products;
|X|      regulatory changes or actions,  including  those relating to regulation
         of insurance products and insurance companies;
|X|      ratings  assigned to  the Company and its  subsidiaries  by independent
         rating  organizations  which the Company  believes are important to the
         sale of its products;
|X|      general economic conditions and increasing competition which may affect
         the Company's ability to sell its products;
|X|      the  Company's  ability  to  achieve  anticipated  levels of  operating
         efficiencies and meet cash requirements  based upon projected liquidity
         sources;
|X|      unanticipated adverse litigation outcomes; and
|X|      changes in the Federal income tax laws and regulations which may affect
         the relative tax advantages of some of the Company's products.

There can be no  assurance  that other  factors  not  currently  anticipated  by
management will not also materially and adversely  affect the Company's  results
of operations.



Part I; Item 3 - Quantitative and Qualitative Disclosures about Market Risk

The primary  changes in  quantitative  market risks during the nine months ended
September 30, 2001 are discussed in Part I, Item 2 above.




<PAGE>


Part II - Other Information



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

         a).   Exhibit 11.    Statement re: computation of per share earnings.


         b).   none



                                                              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 7, 2001
<PAGE>



                                  EXHIBIT INDEX

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

         11           Statement re: computation of per share earnings















<PAGE>

<TABLE>
<CAPTION>

                                                              EXHIBIT 11

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





Nine Months Ended September 30                                                        2001             2000
--------------------------------------------------------------------------- ----------------- ----------------

Numerator(s):
   <S>                                                                           <C>                <C>
   Income (Loss) before cumulative effect of a
      change in accounting principle                                           $(5,312,894)      $2,553,431
   Cumulative effect of a change in accounting principle                          (311,211)             ---
--------------------------------------------------------------------------- ----------------- ----------------
   Net Income (Loss)                                                          $ (5,624,105)      $2,553,431


Denominator:
   Weighted average common shares                                                1,747,087        1,762,430


Earnings Per Share:
   Income (Loss) before cumulative effect of a
      change in accounting principle                                               $ (3.04)          $ 1.45
   Cumulative effect of a change in accounting principle                             (0.18)            ---
--------------------------------------------------------------------------- ----------------- ----------------
   Net Income (Loss)                                                               $ (3.22)          $ 1.45
</TABLE>





<TABLE>
<CAPTION>



Three Months Ended September 30                                                       2001             2000
--------------------------------------------------------------------------- ----------------- ----------------

Numerator:
<S>                                                                            <C>              <C>
   Net Income (Loss)                                                           $(2,469,176)     $(1,184,479)


Denominator:
   Weighted average common shares                                                1,733,715        1,761,415


Earnings Per Share:
   Net Income (Loss)                                                              $  (1.42)        $  (0.67)



</TABLE>