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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 March 31, 2004

                                       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 ~~~~~~

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
determined in Rule 12b-2 of the Securities  Exchange Act of 1934).  Yes ~~~~~ No
~~X~~

                      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 - 1,685,228 as of
May 14, 2004.

The date of this Report is May 14, 2004.

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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)




Three Months Ended March 31                                                            2004                 2003
------------------------------------------------------------------------ -------------------- --------------------
Revenues:
<S>                                                                             <C>                  <C>
   Premiums and other considerations                                            $ 7,394,618          $ 9,238,935
   Premiums ceded                                                                  (322,050)            (261,295)
------------------------------------------------------------------------ -------------------- --------------------
      Net premiums earned                                                         7,072,568            8,977,640
   Net investment income                                                          1,623,681            1,373,989
   Net realized investment gains (losses)                                           228,186             (276,163)
   Other income                                                                      46,589               56,353
------------------------------------------------------------------------ -------------------- --------------------
Total Revenues                                                                    8,971,024           10,131,819

Policy Benefits and Expenses:
   Policyholder benefits                                                          5,551,979            5,257,211
   Policyholder benefits ceded                                                     (267,432)            (234,011)
------------------------------------------------------------------------ -------------------- --------------------
      Net benefits                                                                5,284,547            5,023,200
   Increase in net benefit reserves                                                 448,681            1,682,187
   Interest credited on policyholder deposits                                       155,028              164,885
   Commissions                                                                    1,323,574            1,693,668
   General expenses                                                               1,749,836            1,812,072
   Interest expense                                                                  90,588               92,208
   Policy acquisition costs deferred                                               (348,768)            (579,542)
   Amortization of deferred policy acquisition costs
      and value of insurance acquired                                               413,397              649,459
------------------------------------------------------------------------ -------------------- --------------------
Total Policy Benefits and Expenses                                                9,116,883           10,538,137
------------------------------------------------------------------------ -------------------- --------------------
Loss before income tax                                                             (145,859)            (406,318)
Income tax benefit                                                                  (36,248)             (73,000)
------------------------------------------------------------------------ -------------------- --------------------
Net Loss                                                                        $  (109,611)         $  (333,318)
------------------------------------------------------------------------ -------------------- --------------------

Net Loss per Common Share, basic and diluted                                    $     (0.07)         $     (0.20)
------------------------------------------------------------------------ -------------------- --------------------
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
Part I; Item 1  (continued)


<TABLE>
<CAPTION>
                                            Citizens Financial Corporation and Subsidiaries
                                       Condensed Consolidated Statements of Financial Condition




                                                                                    March 31,        December 31,
                                                                                         2004                2003
------------------------------------------------------------------------ -------------------- --------------------
ASSETS                                                                             (Unaudited)

Investments:
<S>                                                                             <C>                   <C>
   Securities available for sale, at fair value:
      Fixed maturities (amortized cost of $103,299,713
      and $104,768,393 in 2004 and 2003 respectively)                        $  108,833,578         $ 108,640,262
      Equity securities (cost of $12,863,624 and
      $8,061,783 in 2004 and 2003, respectively)                                 16,224,903            11,336,964
   Investment real estate                                                         3,094,543             3,162,223
   Policy loans                                                                   4,427,440             4,409,301
   Short-term investments                                                           642,748               642,748
------------------------------------------------------------------------ -------------------- --------------------
Total Investments                                                               133,223,212           128,191,498

Cash and cash equivalents                                                         5,301,064             8,588,896
Accrued investment income                                                         1,688,966             1,685,776
Reinsurance recoverable                                                           2,715,397             2,834,222
Premiums receivable                                                                 242,526               256,140
Property and equipment                                                            2,641,965             2,640,579
Deferred policy acquisition costs                                                10,318,570            10,325,660
Value of insurance acquired                                                       3,011,735             3,119,609
Goodwill                                                                            755,782               755,782
Federal income tax receivable                                                       448,382               421,676
Other assets                                                                        144,961                60,494
------------------------------------------------------------------------ -------------------- --------------------
Total Assets                                                                  $ 160,492,560         $ 158,880,332
------------------------------------------------------------------------ -------------------- --------------------

See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
Part I; Item 1  (continued)



<TABLE>
<CAPTION>
                                            Citizens Financial Corporation and Subsidiaries
                                       Condensed Consolidated Statements of Financial Condition




                                                                                   March 31,         December 31,
                                                                                        2004                 2003
------------------------------------------------------------------------ -------------------- --------------------
LIABILITIES AND SHAREHOLDERS' EQUITY                                               (Unaudited)

Liabilities:
Policy Liabilities:
<S>                                                                          <C>                   <C>
   Future policy benefits                                                    $  109,695,071        $  109,383,695
   Policyholder deposits                                                         15,421,533            15,530,824
   Policy and contract claims                                                     1,647,900             1,663,249

   Unearned premiums                                                                261,796               249,572
   Other                                                                            271,671               310,464
------------------------------------------------------------------------ -------------------- --------------------
Total Policy Liabilities                                                        127,297,971           127,137,804

Note payable - bank                                                               3,804,169             4,133,335
Note payable - related party                                                      3,000,000             3,000,000
Accrued expenses and other liabilities                                            1,623,349             1,805,934
Deferred federal income tax                                                       2,666,847             1,969,850
------------------------------------------------------------------------ -------------------- --------------------
Total Liabilities                                                               138,392,336           138,046,923

Commitments and Contingencies

Shareholders' Equity:
   Common stock, 6,000,000 shares authorized;
      1,685,228 and 1,685,228 shares issued and outstanding
      in 2004 and 2003, respectively                                              1,685,228             1,685,228
   Additional paid-in capital                                                     7,170,321             7,170,321
   Accumulated other comprehensive income                                         5,857,366             4,595,473
   Retained earnings                                                              7,387,309             7,382,387
------------------------------------------------------------------------ -------------------- --------------------
Total Shareholders' Equity                                                       22,100,224            20,833,409
------------------------------------------------------------------------ -------------------- --------------------
Total Liabilities and Shareholders' Equity                                    $ 160,492,560         $ 158,880,332
------------------------------------------------------------------------ -------------------- --------------------

See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
Part I; Item 1  (continued)

<TABLE>
<CAPTION>
                                            Citizens Financial Corporation and Subsidiaries
                                            Condensed Consolidated Statements of Cash Flows
                                                              (Unaudited)




Three Months Ended March 31                                                            2004                  2003
------------------------------------------------------------------------ -------------------- --------------------

Cash Flows from Operations:
<S>                                                                            <C>                  <C>
Net loss                                                                       $   (109,611)        $   (333,318)
Adjustments to reconcile net loss to cash from operations:
   Increase in benefit reserves                                                     448,681            1,567,918
   Decrease in claim liabilities                                                    (15,349)            (262,102)
   Decrease in reinsurance recoverable                                              118,825              293,177
   Interest credited on policyholder deposits                                       155,887              164,885
   Provision for amortization and depreciation, net of deferrals                    136,998              141,604
   Amortization of premium and accretion of discount on
      securities purchased, net                                                       8,604                9,227
   Net realized investment (gains) losses                                          (228,186)             276,163
   Increase in accrued investment income                                             (3,190)             (56,784)
   Change in other assets and liabilities                                            22,250               (9,385)
   Decrease in deferred federal income tax liability                               (372,997)             (98,000)
   Increase in federal income taxes receivable                                      (26,706)             (35,000)
------------------------------------------------------------------------ -------------------- --------------------
Net Cash provided by Operations                                                     135,206            1,658,385

Cash Flows from Investment Activities:
Cost of securities acquired                                                     (15,022,183)         (17,128,419)
Investments sold or matured                                                      12,497,966           15,170,175
Investment management fees                                                         (355,009)              (2,298)
Additions to real estate                                                           --                    (17,669)
Additions to property and equipment, net                                           --                     (5,071)
Other investing activities, net                                                      50,532              (15,645)
------------------------------------------------------------------------ -------------------- --------------------
Net Cash used in Investment Activities                                           (2,828,694)          (1,998,927)

Cash Flows from Financing Activities:
Policyholder deposits                                                               196,907              151,298
Policyholder withdrawals                                                           (462,085)            (416,291)
Payments on notes payable - bank                                                   (329,166)            (658,333)
Repurchase of common stock                                                         --                     (7,759)
------------------------------------------------------------------------ -------------------- --------------------
Net Cash used in Financing Activities                                              (594,344)            (931,085)

------------------------------------------------------------------------ -------------------- --------------------
Net Decrease in Cash and Cash Equivalents                                        (3,287,832)          (1,271,627)
Cash and Cash Equivalents at Beginning of Period                                  8,588,896            6,699,171
------------------------------------------------------------------------ -------------------- --------------------
------------------------------------------------------------------------ -------------------- --------------------
Cash and Cash Equivalents at End of Period                                      $ 5,301,064          $ 5,427,544
------------------------------------------------------------------------ -------------------- --------------------

See Notes to Condensed Consolidated Financial Statements.
</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 that 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, 2003  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
ended March 31, 2004 and 2003 are as follows:

                                            ----------------------------------
                                              Three Months Ended March 31,
                                            ----------------- ----------------
COMPREHENSIVE INCOME:                             2004             2003
------------------------------------------- ----------------- ----------------

  Net Loss                                    $   (109,611)     $   (333,318)
  Net unrealized gain on securities              1,371,504           418,234
------------------------------------------- ----------------- ----------------
  Comprehensive Income                        $  1,261,893      $     84,916
------------------------------------------- ----------------- ----------------


Note 3 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company's  derivatives  outstanding at March 31, 2004 include  approximately
$192,000 of embedded  options on  convertible  bonds and $(15,000) of other open
option positions.  Hedge accounting is not used for these securities and changes
in market value are reported currently as realized gains or losses.


Note 4 - NET REALIZED INVESTMENT GAINS (LOSSES), NET OF EXPENSES

The Company  recorded  pretax  reductions to the carrying value of available for
sale securities  totaling  $101,061 and $68,329 for the three months ended March
31,  2004 and 2003,  respectively,  relating  to  declines  in value  which were
considered by management to be other than temporary.  These amounts are included
along with other net  realized  gains  (losses).  The Company  also nets certain
direct,  incremental  investment management fees 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.  Costs netted against realized  investment gains and losses total
$45,900  and  $21,030  for the  three  months  ended  March  31,  2004 and 2003,
respectively.


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.  Income  before  federal
income  taxes  differs  from taxable  income  principally  due to the small life
insurance company tax deduction and dividends-received tax deductions.



<PAGE>
Part I; Item 1  (continued)


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 March 31, 2004 and 2003, and for the
periods then ended is as follows:

                                             ----------------------------------
                                               Three Months Ended March 31,
                                             ----------------- ----------------
REVENUE:                                           2004             2003
-------------------------------------------- ----------------- ----------------

Home Service Life                               $ 2,241,596       $ 2,287,941
Broker Life                                       1,628,578         1,464,206
Preneed Life                                      2,357,982         4,141,607
Dental                                            2,188,638         2,147,260
Other Health                                        326,044           366,968
-------------------------------------------- ----------------- ----------------
Segment Totals                                    8,742,838        10,407,982
Realized investment gains (losses)                  228,186          (276,163)
-------------------------------------------- ----------------- ----------------
Total Revenue                                    $8,971,024       $10,131,819
-------------------------------------------- ----------------- ----------------

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

                                           ----------------------------------
                                             Three Months Ended March 31,
                                           ----------------- ----------------
INVESTMENT INCOME:                               2004             2003
------------------------------------------ ----------------- ----------------

  Home Service Life                          $    427,509      $    396,342
  Broker Life                                     563,873           541,107
  Preneed Life                                    604,179           409,834
  Dental                                            8,344             6,637
  Other Health                                     19,776            20,069
------------------------------------------ ----------------- ----------------
  Segment Totals                              $ 1,623,681       $ 1,373,989
------------------------------------------ ----------------- ----------------



<PAGE>


Part I; Item 1  (continued)


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 expense are excluded.
A significant  portion of the Company's  realized  investment gains (losses) are
generated from investments in equity securities. The equities portfolio averaged
(on a cost basis)  approximately  $10,463,000  and  $7,866,000  during the three
months ended March 31, 2004 and 2003, respectively.

                                             ----------------------------------
                                               Three Months Ended March 31,
                                             ----------------- ----------------
SEGMENT PROFIT (LOSS):                             2004             2003
-------------------------------------------- ----------------- ----------------

  Home Service Life                            $   (117,112)      $   121,867
  Broker Life                                      (145,583)           65,209
  Preneed Life                                      (77,140)         (121,412)
  Dental                                             73,956           141,912
  Other Health                                      (17,578)         (245,523)
-------------------------------------------- ----------------- ----------------
  Segment Totals                                   (283,457)          (37,947)
  Realized investment gains (losses)                228,186          (276,163)
  Interest expense                                   90,588            92,208
-------------------------------------------- ----------------- ----------------
  Income (Loss) before Federal Income Tax        $ (145,859)       $ (406,318)
-------------------------------------------- ----------------- ----------------


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

                                             -----------------------------------
                                                Three Months Ended March 31,
                                             ----------------- -----------------
DEPRECIATION AND AMORTIZATION:                     2004              2003
-------------------------------------------- ----------------- -----------------

  Home Service Life                               $ 133,960         $ 175,984
  Broker Life                                        83,205           199,537
  Preneed Life                                      229,405           318,675
  Dental                                             16,153            14,294
  Other Health                                       22,960            12,656
-------------------------------------------- ----------------- -----------------
  Segment Totals                                  $ 485,683         $ 721,146
-------------------------------------------- ----------------- -----------------


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

                                              ----------------- ----------------
                                                 March 31,       December 31,
ASSETS:                                             2004             2003
--------------------------------------------- ----------------- ----------------

Home Service Life                               $ 41,969,753       $41,312,914
Broker Life                                       55,262,113        54,585,019
Preneed Life                                      60,665,385        60,100,723
Dental                                               694,430           930,279
Other Health                                       1,900,879         1,951,397
--------------------------------------------- ----------------- ----------------
Segment Totals                                  $160,492,560      $158,880,332
--------------------------------------------- ----------------- ----------------


<PAGE>


Part I; Item 1  (continued)


Note 7 - LITIGATION

United Liberty, 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 Liberty issued over a
period of years ending  around 1971. It alleges that United  Liberty'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 Liberty 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  who were Ohio residents and whose policies were still in force in
1993. United Liberty has denied the material allegations of the Complaint and is
defending  the action  vigorously.  Pre-trial  discovery is  continuing.  United
Liberty has filed a motion for summary  judgment,  which has been fully  briefed
and argued and awaits decision by the Court.  At United  Liberty's  request,  an
initial mediation session has been completed and negotiations are continuing. As
a pre-requisite  for the mediation,  United Liberty offered to settle the matter
for payments over time, which would include  attorneys' fees, and which would be
contingent upon an exchange or reformation of the insurance  policies  currently
owned by the members of the class.  There has been no  significant  developments
during the  current  quarter  regarding  this  litigation.  At this 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.

Citizens Security is defending an action in an Alabama state court brought by an
alleged  policyholder in which a former  independent  agent is also a defendant.
The action has been pending since November, 2001. In broad summary, the original
Complaint  referred  to the  Company's  alleged  failure to pay a $30,000  death
benefit  under a life  insurance  policy  but also  alleged  that the  plaintiff
incurred  mental  anguish as a consequence  and sought damages in an unspecified
amount.  In March,  2004, the plaintiff filed an Amended Complaint that alleges,
in broad summary,  that the independent agent collected premium payments for the
policy  from the  policyholder  but failed to remit them to the Company and that
these acts,  in relation to the  Company's  failure to pay the death benefit and
other  circumstances,  amounted  to  fraudulent  conduct  for which not only the
independent  agent but also the Company  are liable.  The Company has denied the
material  allegations of the Complaint and the Amended Complaint and will defend
the action vigorously. Despite having been pending for some time, the case is in
an early stage,  with very little  pre-trial  discovery having been conducted to
date,  and none in relation to new issues  raised by the Amended  Complaint.  At
this 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.  The Company has  recently
become aware of other actions brought against the same independent agent and two
other insurance  companies in the same court by other  plaintiffs in relation to
insurance policies issued by the other companies and alleging similar misconduct
by the independent  agent. In at least one such other action,  the jury returned
very large verdict against the independent  agent and the other insurer although
the Company  understands  that the action was later  settled for an  undisclosed
amount that though substantial is much less than the verdict amount.

In  addition,  the Company is party to other  lawsuits  in the normal  course of
business.  Management  believes that recorded claims liabilities are adequate to
ensure that these other suits will be resolved without material financial impact
to the Company.


Note 8 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Effecive  January 1, 2004,  the Company  adopted  Statement  of  Position  03-1,
"Accountng  and Reporting by Insurance  Enterprises  for certain  Nontraditional
Long-Duration Contracts and for Separate Accounts (SOP 03-1)." The provisions of
SOP 03-1 did not have a material impact on the Company's financial statements.
<PAGE>


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

EXECUTIVE SUMMARY

The Company's  management  continuously  monitors the performance and outlook of
the Company by  analyzing  several  indicators  that they judge to be  critical.
Some,  but not  necessarily  all, of the  indicators of  particular  interest to
management are:

         o  The general economic environment
         o  Trend of premium volume
         o  Lapse rates
         o  Mortality and morbidity rates
         o  Trend of general expense levels
         o  Asset and Capital and Surplus growth
         o  General interest rate movements
         o  Investment yields
         o  Diversity (e.g. by industry) and mix (e.g. between fixed income
              securities and equity securities) of our portfolios
         o  Segment performance and trends

FINANCIAL POSITION.  Shareholders' equity totaled approximately  $22,100,000 and
$20,833,000  at March  31,  2004 and  December  31,  2003,  respectively.  These
balances  reflect an approximate  6.1% increase for the three months ended March
31, 2004. As described above,  the  comprehensive  income totaled  approximately
$1,262,000  and  $85,000  for the three  months  ended  March 31, 2004 and 2003,
respectively.  A significant portion of the comprehensive income is attributable
to changes in the value of the Company's  fixed maturity and equity  portfolios.
Equity securities comprised  approximately 10.1% and 7.1% of the Company's total
assets as of March 31, 2004 and December 31, 2003, respectively. Accordingly, as
also described  below,  the Company's  financial  position can be  significantly
affected by  movements  in the  equities  markets.  Equity  portfolio  positions
increased  $4,802,000  on a cost basis and  $4,888,000  on a market value basis,
during  the first  three  months of 2004.  Fixed  maturity  portfolio  positions
decreased  $1,467,000  on an amortized  cost basis and  increased  $193,000 on a
market value basis during the same period.  This difference  resulted  primarily
from some fixed  maturity  securities  being  called by the issuers and a slight
increase in bond prices during the quarter.  Cash and cash equivalent  positions
decreased approximately $3,288,000 during the quarter ended March 31, 2004.

Equity markets continue to be highly volatile and were slightly favorable in the
first quarter of 2004, along with some continuing improvements in the first half
of the second quarter. Interest yields on fixed maturity investments held in our
portfolio  are  continuing  to  slowly  increase.  The  significant  decline  in
short-term rates has and, continues to adversely impact the Company's investment
portfolio yield and operating earnings. The 2004 environment described continues
to generate a relatively  high level of qualitative  investment  risk.  However,
measures of  quantitative  risk per unit of investment  are not believed to have
changed significantly from those previously disclosed in the Company's 2003 Form
10-K.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not participate in any off-balance sheet arrangements.


OPERATIONS.  Net  premiums  and  other  considerations  decreased  approximately
$1,905,000,  or 21.2%  during the first  quarter of 2004  compared  to the first
quarter of 2003. Preneed Life premiums declined  $1,914,000 or 51% as the result
of the Company lowering crediting rates related to face amount growth,  lowering
commission  rates and changing the focus of our marketing  efforts in the second
half of 2003. All other segments experienced only modest changes in premium from
the first  quarter of 2003.  The  Company is in the process of  redirecting  the
focus of our marketing  efforts to the Home Service,  Broker and Dental segments
in an effort to improve profitability in those segments.

Pretax loss decreased  approximately $260,000 to $(146,000) for the three months
ended March 31, 2004,  primarily due to an increase in realized investment gains
of $504,000  and an increase in net  investment  income of  $250,000,  offset by
unfavorable  Home  Service  Life and Broker  Life  mortality.  General  expenses

<PAGE>

decreased  $62,000  for the quarter due to the  implementation  of various  cost
saving  measures,  although the Company is continuing to incur costs  associated
with  outside  consultants  who were  employed  to review  profitability  of the
Company's  life products in the current  interest rate  environment  and perform
other  actuarial  calculations  and  analysis.  Pretax  Segment loss  (excluding
realized  investment  gains  (losses) and interest  expense) for the first three
months of 2004 was  approximately  $283,000  compared  to $38,000  for the first
three months of 2003. This is primarily  attributable  to the factors  described
above relative to revenue changes. Below are the approximate,  annualized pretax
investment  income and total return  yields for the three months ended March 31,
2004 and 2003.

                                             ----------------- -----------------
Three Months Ended March 31                            2004              2003
-------------------------------------------- ----------------- -----------------

  Investment Income                              $ 1,623,681       $ 1,373,989
  Realized and Unrealized Gains (Losses)           1,599,688           380,874
-------------------------------------------- ----------------- -----------------
  Total Return                                   $ 3,223,369       $ 1,754,863
-------------------------------------------- ----------------- -----------------

  Average Cash and Investments                  $137,652,385      $127,140,985

  Investment Income Yield - Annualized                  4.72%             4.32%
  Total Return - Annualized                             9.37%             5.52%




CASH FLOW AND  LIQUIDITY.  Cash flow from  operations  totaled  $135,000 for the
quarter ended March 31, 2004  compared to $1,658,000  for the same period in the
prior year. The decrease in the positive cash flow is primarily  attributable to
the decline in Preneed Life business  which was growing during the first quarter
of 2003. The  $2,829,000  of cash used by investing  activities for the quarter
ended March 31, 2004 resulted  primarily  from investing a large portion of cash
held at the  beginning  of the  quarter.  The $594,000 of cash used in financing
activities  during the first quarter of 2004 is primarily  attributable  to bank
loan  principal  repayments  along  with  annuity  and  Universal  Life  account
withdrawals.  Due to continued  earnings pressure from low yields on investments
and  cash  equivalents  and the  declining  Preneed  premiums,  the  Company  is
completing a strategic  review of its products and operations.  A key element of
this initiative is improving  profitability  of the Preneed,  Home Service,  and
Broker Life  segments  by  increasing  premiums  in the Home  Service and Broker
segments, strengthening underwriting practices, modifying commissions, and where
possible,  lowering  interest  crediting or policy growth  rates.  Regarding the
currently  scheduled debt  repayments,  the Company believes its available funds
will be adequate to service  2004 debt  obligations  and,  with other  available
assets,  management  believes it will be adequate  to service  debt  obligations
through 2005. The Company sold its interest in an aircraft to SMC Advisors Inc.,
a related  entity,  in April 2004,  generating  $971,000 in additional  cash. In
addition, the Company's Chairman has expressed potential willingness to loan the
Company  an  additional  $2,000,000  if  necessary,  which  could  service  debt
obligations through the majority of 2007.


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

<PAGE>

         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  that 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


Quantitative  and Qualitative  Risk. The primary changes in quantitative  market
risks during the three months ended March 31, 2004 are discussed in Part I, Item
2 above.




Part I;  Item 4 - Controls and Procedures


EVALUATION OF DISCLOSURE  CONTROLS AND PROCEDURES.  Within the past 90 days, the
Company conducted an evaluation of its disclosure controls and procedures,  with
the supervision and  participation of its Chief Executive  Officer and Principal
Financial Officer.  The Company does not expect that its disclosure controls and
procedures will prevent all error and fraud.  Such a control  system,  no matter
how well  conceived and  operated,  can provide only  reasonable,  not absolute,
assurance that the objectives of the control system are met. Further, the design
of a control system must balance the constraint of prudent resource  expenditure
with a judgmental evaluation of risks and benefits.  Based on this evaluation of
disclosure  controls and procedures,  the Company's Chief Executive  Officer and
Principal  Financial  Officer have  concluded  that such controls and procedures
provide reasonable  assurance that material  information required to be included
in the  Company's  periodic  SEC reports is made known on a timely  basis to the
Company's principal executive and financial officers.

CHANGES IN  INTERNAL  CONTROLS.  There have been no  significant  changes in the
Company's internal controls or changes in other factors that could significantly
affect  these  controls  subsequent  to their  evaluation,  nor has the  Company
implemented  any  corrective  actions  regarding  significant   deficiencies  or
material weaknesses in internal controls.

<PAGE>


Part II - Other Information



Item 1.  Litigation

The Company's subsidiary, Citizens Security Life Insurance Company, is defending
an action in the Circuit  Court of Macon County,  Alabama  brought by an alleged
policyholder in which a former independent agent is also a defendant. The action
has been pending since November,  2001. In broad summary, the original Complaint
referred to the Company's alleged failure to pay a $30,000 death benefit under a
life  insurance  policy but also  alleged  that the  plaintiff  incurred  mental
anguish as a consequence and sought damages in an unspecified  amount. In March,
2004, the plaintiff filed an Amended  Complaint that alleges,  in broad summary,
that the independent  agent collected  premium  payments for the policy from the
policyholder  but failed to remit them to the Company  and that these  acts,  in
relation  to  the  Company's   failure  to  pay  the  death  benefit  and  other
circumstances, amounted to fraudulent conduct for which not only the independent
agent but also the  Company are  liable.  The  Company  has denied the  material
allegations  of the  Complaint  and the  Amended  Complaint  and will defend the
action vigorously.  Despite having been pending for some time, the case is in an
early stage, with very little pre-trial discovery having been conducted to date,
and none in relation  to new issues  raised by the  Amended  Complaint.  At this
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.  The Company has  recently
become aware of other actions brought against the same independent agent and two
other insurance  companies in the same court by other  plaintiffs in relation to
insurance policies issued by the other companies and alleging similar misconduct
by the independent  agent. In at least one such other action,  the jury returned
very large verdict against the independent  agent and the other insurer although
the Company  understands  that the action was later  settled for an  undisclosed
amount that though substantial is much less than the verdict amount.



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


a).  Exhibit 10.15:         Severance  Agreement and release  dated as of  April
                            15, 2004 between the Company and Lane A. Hersman
     Exhibit 11:            Statement re:  computation of per share earnings.
     Exhibit 31.1           Rule 13a-14(a)/15d-14(a)  Certification  --Principal
                            Executive Officer
     Exhibit 31.2           Rule  13a-14(a)/15d-14(a) Certification  --Principal
                            Financial Officer
     Exhibit 32.1           Section  1350  Certification  --Principal  Executive
                            Officer
     Exhibit 32.2           Section  1350  Certification  --Principal  Financial
                            Officer





b).  Reports on Form 8-K:   On  January 9,  2004 the  Company  filed  a Form 8-K
                            which noted that the Company completed the borrowing
                            of  $1,000,000  from the  Company's Chairman  at the
                            greater  of 6% annual  interest or  prime  plus  one
                            percent.

                            On  March 29,  2004 the Company  filed a Form 8-K to
                            furnish,  pursuant  to  Item  12,  a  press  release
                            disclosing the Company's earnings for the year ended
                            December 31, 2003.



                                                              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/ Len E. Schweitzer
                                ------------------------------------------------
                                Len E. Schweitzer
                                Treasurer and Principal Financial Officer

Date:  May 14, 2004