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                                          FORM 10-QSB

                                        UNITED STATES
                              SECURITIES AND EXCHANGE COMMISSION
                                    Washington, D.C.  20549
(Mark One)
|X|                      QUARTERLY  REPORT  UNDER  SECTION  13 OR  15(d)  OF THE
                         SECURITIES  EXCHANGE  ACT OF  1934  For  the  quarterly
                         period ended March 31, 1997

|_|            TRANSITION  REPORT UNDER  SECTION 13 OR 15(d) OF THE EXCHANGE ACT
               For the transition period from _______________ to_______________

                                Commission File Number 0-20148

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

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

     The Marketplace,  Suite 300, 12910 Shelbyville Road,  Louisville,  Kentucky
40243 (Address of principal executive offices)

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

     -----------------------------------------------------------------    
Former name, former address and former fiscal year, if changed since last 
report)

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 such filing requirements for the past 90 days. Yes X No




                             APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the latest  practicable date: Class A Stock - 1,075,615 as of May
14, 1997.


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


                   This Report consists of 11  consecutively  numbered pages. An
                 index to the Exhibits to this Report appears on page 10.

                       The date of this Report is May 14, 1997.
--------------------------------------------------------------------------------



                                              1

<PAGE>



Part I. - Financial Information;
 Item 1. - Financial Statements

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

<TABLE>


Three Months Ended March 31                                                1997            1996
-------------------------------------------------------------- ---------------- ---------------
Revenues:
<S>                                                                  <C>             <C>       
   Premiums and other considerations                                 $4,798,657      $4,736,460
   Premiums ceded                                                     (219,510)        (233,316)
-------------------------------------------------------------- ---------------- ---------------
     Net premiums earned                                              4,579,147       4,503,144
   Net investment income                                              1,023,819       1,024,313
   Net realized investment gains                                        146,681         591,100
   Other income                                                           1,152           4,193
-------------------------------------------------------------- ---------------- ---------------
Total Revenues                                                        5,750,799       6,122,750
Benefits and Expenses:
   Policyholder benefits                                              3,121,572       2,490,467
   Policyholder benefits ceded                                        (353,426)         (95,155)
-------------------------------------------------------------- ---------------- ---------------
     Net benefits                                                     2,768,146       2,395,312
   Increase in net benefit reserves                                     221,403         343,053
   Interest credited on policyholder deposits                           219,549         267,123
   Commissions                                                          938,977       1,025,944
   General expenses                                                   1,039,935         919,889
   Interest expense                                                     106,964         258,764
   Policy acquisition costs deferred                                  (310,876)        (169,433)
   Amortization of deferred policy acquisition costs
        and value of insurance acquired                                 431,118         387,230
-------------------------------------------------------------- ---------------- ---------------
Total Benefits and Expenses                                           5,415,216       5,427,882
Income  before Federal Income Tax                                       335,583         694,868
Federal Income Tax Expense                                               57,700         125,000
-------------------------------------------------------------- ---------------- ---------------
Net Income                                                              277,883         569,868
Dividends on Redeemable Convertible Preferred Stock                     101,750          89,393
-------------------------------------------------------------- ---------------- ---------------
Net Income Applicable to Common Stock                                $  176,133       $ 480,475
-------------------------------------------------------------- ---------------- ---------------
Net Income Per Common Share:
   Primary                                                        $        0.16    $       0.45
   Fully diluted                                                  $        0.15    $       0.37
-------------------------------------------------------------- ---------------- ---------------
</TABLE>


See Notes to Consolidated Financial Statements.

                                              2

<PAGE>



Item 1. (Continued)
                        Citizens Financial Corporation and Subsidiaries
                   Condensed Consolidated Statements of Financial Condition
                                          (Unaudited)


<TABLE>
                                                                    March 31,       December 31,
                                                                         1997               1996
------------------------------------------------------------- --------------- ------------------
ASSETS
<S>                                                               <C>                <C>
Investments:
   Securities available for sale, at fair value:
      Fixed maturities (amortized cost of $47,196,643    
        and $47,238,559 in 1997 and 1996, respectively)           $46,245,142        $47,040,591
      Equity securities  (cost of $10,091,215
        and $7,085,104 in 1997 and 1996, respectively)             10,378,264          7,963,550      
   Investment real estate                                           3,942,569          3,938,806
   Mortgage loans on real estate                                      175,173            176,636
   Policy loans                                                     2,865,927          2,852,670
   Short-term investments                                             513,439            893,410
------------------------------------------------------------- --------------- ------------------
Total Investments                                                  64,120,514         62,865,663


Cash and cash equivalents                                           2,586,383          2,805,717
Accrued investment income                                             739,715            772,689
Reinsurance recoverable:
   Paid benefits and losses                                           233,112            231,648
   Unpaid benefits, losses and IBNR                                 1,403,519          1,579,926
Premiums receivable                                                   453,676            491,330
Property and equipment                                              1,249,290          1,265,948
Deferred policy acquisition costs                                   3,877,317          3,791,939
Value of insurance acquired                                         4,916,841          5,081,865
Goodwill                                                              120,535            125,766
Other assets                                                          354,881            502,204
Deferred federal income tax                                         1,219,813            748,013
------------------------------------------------------------- --------------- ------------------
Total Assets                                                      $81,275,596        $80,262,708
------------------------------------------------------------- --------------- ------------------
</TABLE>

See Notes to Consolidated Financial Statements.

                                              3

<PAGE>



Item 1. (Continued)
                       Citizens Financial Corporation and Subsidiaries
                   Condensed Consolidated Statements of Financial Condition
                                         (Unaudited)

<TABLE>
                                                                    March 31,       December 31,
                                                                         1997               1996
------------------------------------------------------------- --------------- ------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Policy liabilities:
<S>                                                               <C>                <C>        
   Future policy benefits                                         $41,541,190        $41,501,871
   Policyholder deposits                                           15,763,395         15,930,271
   Policy and contract claims                                       1,259,924          1,210,393
   Unearned premiums                                                  172,019            183,613
   Other                                                              259,715            214,305
------------------------------------------------------------- --------------- ------------------
Total Policy Liabilities                                           58,996,243         59,040,453

Notes payable                                                       4,104,344          4,095,869
Brokerage account loans                                             2,081,580                ---
Accrued expenses and other liabilities                              1,789,023          1,982,024
Federal income tax payable                                            366,000            527,000
------------------------------------------------------------- --------------- ------------------
Total Liabilities                                                  67,337,190         65,645,346

Commitments and Contingencies

Redeemable Convertible Preferred Stock;
     370 shares issued and outstanding                              4,043,907          4,043,907

Shareholders' Equity:
   Common stock, 6,000,000 shares authorized;
        1,275,724 shares issued and outstanding                     1,275,724          1,275,724
   Additional paid-in capital                                       5,198,250          5,198,250
   Unrealized appreciation of investments                            (426,309)           428,780
   Retained earnings                                                4,409,136          4,233,003
   Common stock held in treasury - at cost (200,109 shares)          (562,302)          (562,302)
------------------------------------------------------------- --------------- ------------------
Total Shareholders' Equity                                          9,894,499         10,573,455
------------------------------------------------------------- --------------- ------------------
Total Liabilities and Shareholders' Equity                        $81,275,596        $80,262,708
------------------------------------------------------------- --------------- ------------------
</TABLE>

See Notes to Consolidated Financial Statements.



                                              4

<PAGE>



Item 1. (Continued)
                        Citizens Financial Corporation and Subsidiaries
                        Condensed Consolidated Statement of Cash Flows
                                          (Unaudited)
<TABLE>

Three Months Ended March 31                                                 1997          1996
<S>                                                                  <C>          <C>    
Cash Flows from Operations:
Net income                                                           $   277,883  $    569,868
Adjustments to reconcile net income to net cash flows from operations:
  Increase in benefit reserves                                            27,725       387,437
  Increase (decrease) in claims liabilities                               49,531      (254,913)
  (Increase) decrease in reinsurance recoverable:
    Paid benefits                                                        (1,464)       (19,949)
    Unpaid benefits                                                      176,407       (53,340)
  Interest credited on policyholder deposits                             221,710       267,123
  Provision for amortization and depreciation, net of deferrals          181,830       216,805
  Amortization of premium and accretion of discount
      on securities purchased, net                                       (6,399)        (2,504)
  Net realized investment (gains)                                      (146,681)      (604,754)
  Decrease (increase) in accrued investment income                        32,974       (72,064)
  Change in other assets and other liabilities                             3,791      (710,256)
  Deferred federal income taxes                                         (31,300)        90,000
  Federal income taxes payable                                         (161,000)         5,000
Net Cash Flows provided by (Used In) Operations                          625,007     (181,547)

Cash Flows from Investment Activities:
Cost of securities and mortgage loans acquired                       (7,114,394)   (17,126,566)
Investments sold or matured                                            4,268,487    12,527,285
Short-term investments sold (acquired), net                              379,971      (352,111)
Additions to property and equipment, net                                (43,452)       (19,245)
Other investing activities, net                                           65,328       (88,435)
Net Cash (Used In) Investment Activities                             (2,444,060)   (5,059,072)

Cash Flows from Financing Activities:
Issuance of redeemable convertible preferred stock                           ---     2,343,000
Policyholder deposits                                                    166,589       200,097
Policyholder withdrawals                                               (555,175)      (475,312)
Net proceeds from brokerage account loans                              2,081,580           ---
Notes payable and accrued interest - Guarantor                             8,475           ---
Payments on notes payable                                                    ---      (120,101)
Dividends on nonredeemable convertible preferred stock                 (101,750)           ---
Other                                                                        ---        61,796
Net Cash Flows provided by Financing Activities                        1,599,719     2,009,480
Net (Decrease) in Cash and Cash Equivalents                            (219,334)   (3,231,139)
Cash and Cash Equivalents at Beginning of  Period                      2,805,717     9,776,964
Cash and Cash Equivalents at End of Period                           $ 2,586,383   $ 6,545,825
----------------------------------------------------------------------------------------------
</TABLE>

  See Notes to Consolidated Financial Statements.

                                              5

<PAGE>



Item 1.  (Continued)


                        CITIZENS FINANCIAL CORPORATION AND SUBSIDIARIES
                     NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



1.  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, 1996
    consolidated  financial  statements and footnotes  included in the Company's
    annual report on Form 10-K.

2.  In February 1997, the Financial  Accounting Standards Board issued Statement
    No. 128, Earnings per Share, which is required to be adopted on December 31,
    1997.  At that  time,  the  Company  will be  required  to change the method
    currently  used to  compute  earnings  per  share and to  restate  all prior
    periods.  Under the new  requirements  for calculating  primary earnings per
    share,  the  dilutive  effect of stock  options  is  excluded.  The  Company
    believes  that  Statement  128 will have no impact on its  primary and fully
    diluted earnings per share calculations.























                                              6

<PAGE>



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


                                      FINANCIAL POSITION

Fixed maturities  decreased  $41,916,  based on amortized cost, during the first
three months of 1997. Equity securities increased $3,006,111 and $2,414,714 on a
cost and  market  value  basis,  respectively,  during  the same  period.  Gross
unrealized  appreciation  for  available-for-sale  fixed  maturities  and equity
securities decreased $1,344,930 during the three months ended March 31, 1997.



                                          OPERATIONS

An analysis  of segment  results  (before  federal  income  taxes) for the three
months ended March 31, 1997 and 1996, is shown below.

                                                    Three months ended March 31,
                              Segment Income (Loss) before
                                 Realized Investment Gains       Segment Income

                                 1997           1996         1997          1996
                             -------------- -------------- -----------  --------
    Life and Annuity         $ (56,052)     $(125,692)    $  84,995     $447,675
    Accident and Health        244,954        229,460       250,588      247,193
                             ----------     ------------  ----------    --------
                             $188,902       $ 103,768     $335,583      $694,868
                             =========      ===========   =========     ========


The improvement in Life and Annuity segment results (before realized  investment
gains) is principally  attributable to additional margins generated by improving
persistency  of the Integrity  National  Life  Insurance  Company  ("Integrity")
business  which was acquired in late 1995.  The  improvement in the Accident and
Health  segment is  attributable  to several Dental  profitability  initiatives,
including  product redesign,  renewal  underwriting  enhancements,  and improved
claims administration  procedures.  These additional Accident and Health margins
have been  partially  offset  by  moderate  increases  in  administrative  costs
associated with a 10.5% increase in premium volume.

Total  premiums and other  considerations  increased 1.7% during the first three
months of 1997  compared to the same period in 1996.  The  increase is primarily
attributable  to a 10.5% increase in the Company's  Accident and Health premiums
offset by a 5.2% decrease in Life and Annuity premiums.  The Accident and Health
increase is due primarily to growth in sales of the Company's  Dental  products.
The Life and  Annuity  premium  decline  resulted  primarily  from two key state
insurance  licenses  not being  retained  after the  Integrity  merger  and some
disruption of sales momentum during the first year of the Integrity merger.






                                              7

<PAGE>



     Item 2.  Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations (Continued)



                                    CASH FLOW AND LIQUIDITY


Cash flow from  operations  increased  $806,554 for the three months ended March
31,  1997  compared  to the same period in the prior  year.  This  increase  was
principally  attributable to  nonrecurring  payments during the first quarter of
1996 for integration costs, bonuses,  agent awards and other expenses associated
with the Integrity acquisition, which were accrued as of December 31, 1995.

The $2,444,060 of cash used in investing  activities resulted primarily from the
Company's  investment of brokerage  account  advances into fixed  maturities and
stocks.

The cash provided by financing  activities during the first three months of 1997
is primarily  attributable to advances received from a brokerage account,  while
cash provided by financing  activities  during the first three months of 1996 is
primarily attributable to the sale of Redeemable Convertible Preferred Stock.






































                                              8

<PAGE>



PART II.  OTHER INFORMATION


    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.     None






                                          SIGNATURES


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





                                     CITIZENS FINANCIAL CORPORATION



                               BY:   ___________________________________________
                                     Darrell R. Wells
                                     President and Chief Executive Officer


                               BY:   ___________________________________________
                                     Brent L. Nemec
                                     Treasurer and Principal Accounting Officer
Date:  May 14, 1997

                                              9

<PAGE>




                                        EXHIBIT INDEX


      Exhibit No.                Description                            Page No.


         11       Statement re computation of per share earnings           11

         27       Financial Data Schedule                       (electronic 
                                                                 filing only)


                                              10

<PAGE>



                                          EXHIBIT 11
                              COMPUTATION OF PER SHARE EARNINGS


                                                         Three Months Ended
                                                               March 30,
                                                           1997         1996
                                                     (In thousands, except share
                                                         And per share data)

Primary earnings per common share:
       Net income                                     $    277,883   $ 569,868
       Convertible preferred stock dividends               101,750      89,393
                                                      ------------   ---------
       Income applicable to common stock              $    176,133   $ 480,475
       Average common shares outstanding                 1,075,615   1,075,615
                                                      ============   =========
       Primary earnings per common share              $       0.16   $     .45
                                                      =========================

Fully diluted earnings per common share:
       Net income                                     $    277,883   $ 525,172
                                                      ============   =========
       Average number of shares for computation
         of fully diluted earnings per common share      1,815,615   1,401,142
                                                      ============   =========
       Fully diluted earnings per common share        $       0.15   $     .37
                                                      ========================








                                              11

<PAGE>