================================================================================


                                  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 June 30, 2002

                                       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 - 1,716,815 as of
August 12, 2002.

The date of this Report is August 14, 2002.

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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)

Six Months Ended June 30                                                               2002                 2001
------------------------------------------------------------------------ -------------------- --------------------
Revenues:
<S>                                                                             <C>                 <C>
   Premiums and other considerations                                            $18,434,777         $ 14,801,729
   Premiums ceded                                                                  (645,273)            (571,395)
------------------------------------------------------------------------ -------------------- --------------------
      Net premiums earned                                                        17,789,504           14,230,334
   Net investment income                                                          2,896,643            3,341,497
   Net realized investment losses                                                (1,796,551)          (3,298,100)
   Other income                                                                     108,830              119,270
------------------------------------------------------------------------ -------------------- --------------------
Total Revenues                                                                   18,998,426           14,393,001

Policy Benefits and Expenses:
   Policyholder benefits                                                          9,797,107            9,211,451
   Policyholder benefits ceded                                                     (849,674)            (551,088)
------------------------------------------------------------------------ -------------------- --------------------
      Net benefits                                                                8,947,433            8,660,363
   Increase in net benefit reserves                                               5,699,527            2,774,434
   Interest credited on policyholder deposits                                       403,041              413,409
   Commissions                                                                    3,537,980            3,413,978
   General expenses                                                               3,275,113            3,331,683
   Interest expense                                                                 159,404              314,701
   Policy acquisition costs deferred                                             (1,283,785)          (2,030,361)
   Amortization of deferred policy acquisition costs,
      value of insurance acquired, and goodwill                                     919,654              897,789
------------------------------------------------------------------------ -------------------- --------------------
Total Policy Benefits and Expenses                                               21,658,367           17,775,996
------------------------------------------------------------------------ -------------------- --------------------
Loss before income tax and cumulative effect                                     (2,659,941)          (3,382,995)
   of a change in accounting principle
Income Tax Benefit                                                                 (415,000)            (886,000)
------------------------------------------------------------------------ -------------------- --------------------
Loss before cumulative effect of a                                               (2,244,941)          (2,496,995)
   change in accounting principle
Cumulative effect from prior years (since January 1, 1999) of
   accounting for embedded options                                                                      (311,211)
------------------------------------------------------------------------ -------------------- --------------------
Net Loss                                                                      $  (2,244,941)       $  (2,808,206)
------------------------------------------------------------------------ -------------------- --------------------

Per Share Amounts:
Loss before cumulative effect of a
   change in accounting principle                                                    $ (1.31)             $ (1.43)
Cumulative effect from prior years (since January 1, 1999) of
   accounting for embedded options                                                      ---                 (0.18)
------------------------------------------------------------------------ -------------------- --------------------
Net Loss                                                                             $ (1.31)             $ (1.61)
------------------------------------------------------------------------ -------------------- --------------------
<FN>

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


<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 June 30                                                             2002                 2001
------------------------------------------------------------------------ -------------------- --------------------
Revenues:
<S>                                                                              <C>                  <C>
   Premiums and other considerations                                             $9,838,801           $7,469,404
   Premiums ceded                                                                  (306,539)            (259,863)
------------------------------------------------------------------------ -------------------- --------------------
      Net premiums earned                                                         9,532,262            7,209,541
   Net investment income                                                          1,428,820            1,656,564
   Net realized investment losses                                                (1,468,150)          (3,469,996)
   Other income                                                                      57,007               69,325
------------------------------------------------------------------------ -------------------- --------------------
Total Revenues                                                                    9,549,939            5,465,434

Policy Benefits and Expenses:
   Policyholder benefits                                                          5,021,002            4,510,476
   Policyholder benefits ceded                                                     (358,546)            (267,248)
------------------------------------------------------------------------ -------------------- --------------------
      Net benefits                                                                4,662,456            4,243,228
   Increase in net benefit reserves                                               3,413,033            1,771,424
   Interest credited on policyholder deposits                                       215,719              217,863
   Commissions                                                                    1,843,347            1,655,635
   General expenses                                                               1,774,230            1,707,876
   Interest expense                                                                  78,176              143,050
   Policy acquisition costs deferred                                               (712,890)            (971,548)
   Amortization of deferred policy acquisition costs,
      value of insurance acquired, and goodwill                                     468,866              410,047
------------------------------------------------------------------------ -------------------- --------------------
Total Policy Benefits and Expenses                                               11,742,937            9,177,575
------------------------------------------------------------------------ -------------------- --------------------
Loss before income tax and cumulative effect                                     (2,192,998)          (3,712,141)
   of a change in accounting principle
Income Tax Benefit                                                                 (345,000)            (972,000)
------------------------------------------------------------------------ -------------------- --------------------
Net Loss                                                                      $  (1,847,998)      $   (2,740,141)
------------------------------------------------------------------------ -------------------- --------------------

Net Loss Per Common Share                                                           $ (1.08)             $ (1.57)
------------------------------------------------------------------------ -------------------- --------------------
<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




                                                                                     June 30,        December 31,
                                                                                         2002                2001
------------------------------------------------------------------------ -------------------- --------------------
ASSETS                                                                             (Unaudited)

Investments:
<S>                                                                            <C>                   <C>
   Securities available for sale, at fair value:
      Fixed maturities (amortized cost of $80,651,162
      and $75,872,277 in 2002 and 2001 respectively)                            $81,964,555         $  77,534,516
      Equity securities (cost of $5,817,578 and
      $7,055,402 in 2002 and 2001, respectively)                                  6,568,127             8,116,958
   Investment real estate                                                         3,386,956             3,438,345
   Mortgage loans on real estate                                                    156,000               156,000
   Policy loans                                                                   4,131,522             4,136,649
   Short-term investments                                                           652,192               652,192
------------------------------------------------------------------------ -------------------- --------------------
Total Investments                                                                96,859,352            94,034,660

Cash and cash equivalents                                                        18,940,265            18,433,626
Accrued investment income                                                         1,431,897             1,390,550
Reinsurance recoverable                                                           2,746,217             2,755,680
Premiums receivable                                                                 423,645               215,520
Property and equipment                                                            2,789,996             2,862,727
Deferred policy acquisition costs                                                 9,339,467             8,579,423
Value of insurance acquired                                                       3,901,389             4,177,907
Goodwill                                                                            755,782               755,782
Federal income tax receivable                                                     1,782,501             2,854,933
Other assets                                                                        259,669               536,275
------------------------------------------------------------------------ -------------------- --------------------
Total Assets                                                                   $139,230,180         $ 136,597,083
------------------------------------------------------------------------ -------------------- --------------------
<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




                                                                                    June 30,     December 31,
                                                                                        2002                 2001
------------------------------------------------------------------------ -------------------- --------------------
LIABILITIES AND SHAREHOLDERS' EQUITY                                               (Unaudited)

Liabilities:
Policy Liabilities:
<S>                                                                             <C>                 <C>
   Future policy benefits                                                       $95,062,043         $  89,337,560
   Policyholder deposits                                                         15,887,304            15,917,731
   Policy and contract claims                                                     1,684,577             1,442,356
   Unearned premiums                                                                252,904               252,730
   Other                                                                            212,236               289,400
------------------------------------------------------------------------ -------------------- --------------------
Total Policy Liabilities                                                        113,099,064           107,239,777

Notes payable                                                                     6,437,501             7,095,834
Accrued expenses and other liabilities                                            2,151,873             1,748,753
Deferred federal income tax                                                         193,174               510,236
------------------------------------------------------------------------ -------------------- --------------------
Total Liabilities                                                               121,881,612           116,594,600

Commitments and Contingencies

Shareholders' Equity:
   Common stock, 6,000,000 shares authorized;
      1,716,815 shares issued and outstanding
      in 2002 and 2001, respectively                                              1,716,815             1,716,815
   Additional paid-in capital                                                     7,285,938             7,285,938
   Accumulated other comprehensive income                                         1,348,131             1,757,105
   Retained earnings                                                              6,997,684             9,242,625
------------------------------------------------------------------------ -------------------- --------------------
Total Shareholders' Equity                                                       17,348,568            20,002,483
------------------------------------------------------------------------ -------------------- --------------------
Total Liabilities and Shareholders' Equity                                     $139,230,180         $ 136,597,083
------------------------------------------------------------------------ -------------------- --------------------
<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)




Six Months Ended June 30                                                               2002                  2001
------------------------------------------------------------------------ -------------------- --------------------

Cash Flows from Operations:
<S>                                                                            <C>                  <C>
Net loss                                                                       $ (2,244,941)        $ (2,808,206)
Adjustments to reconcile net loss to cash from operations:
   Increase in benefit reserves                                                   5,721,141            2,814,138
   Increase (decrease) in claim liabilities                                         242,221             (168,783)
   (Increase) in reinsurance recoverable                                              9,463              175,201
   Interest credited on policyholder deposits                                       403,041              413,409
   Provision for amortization and depreciation, net of deferrals                   (210,285)            (953,450)
   Amortization of premium and accretion of discount on
      securities purchased, net                                                      47,549              (42,285)
   Net realized investment losses                                                 1,796,551            3,298,100
   (Increase) decrease in accrued investment income                                 (41,347)             (23,438)
   Change in other assets and liabilities                                           214,254             (124,023)
   Decrease in deferred federal income tax liability                               (106,379)            (236,000)
   Decrease in federal income taxes receivable                                    1,072,432              594,743
   Cumulative effect of a change in accounting principle                                ---              311,211
------------------------------------------------------------------------ -------------------- --------------------
Net Cash provided by Operations                                                   6,903,700            3,250,617

Cash Flows from Investment Activities:
Cost of securities acquired                                                     (20,820,724)          (9,002,909)
Investments sold or matured                                                      15,584,807           13,108,753
Investment management fees                                                          (44,743)            (170,395)
Additions to property and equipment, net                                            (29,727)            (157,092)
Other investing activities, net                                                       5,127               76,833
------------------------------------------------------------------------ -------------------- --------------------
Net Cash provided by (used in) Investment Activities                             (5,305,260)           3,855,190

Cash Flows from Financing Activities:
Policyholder deposits                                                               423,324              511,638
Policyholder withdrawals                                                           (856,792)            (985,671)
Payments on notes payable - bank                                                   (658,333)            (400,000)
Repurchase of common stock                                                              ---             (246,225)
------------------------------------------------------------------------ -------------------- --------------------
Net Cash used in Financing Activities                                            (1,091,801)          (1,120,258)
------------------------------------------------------------------------ -------------------- --------------------
Net Increase in Cash and Cash Equivalents                                           506,639            5,985,549
Cash and Cash Equivalents at Beginning of Period                                 18,433,626           20,093,774
------------------------------------------------------------------------ -------------------- --------------------
Cash and Cash Equivalents at End of Period                                     $ 18,940,265         $ 26,079,323
------------------------------------------------------------------------ -------------------- --------------------
<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, 2001  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 six months ended June 30, 2002 and 2001 are as follows:
<TABLE>
<CAPTION>

                                                  ------------------------------- -------------------------------
                                                   Three Months Ended June 30,      Six Months Ended June 30,
                                                  --------------- --------------- --------------- ---------------
COMPREHENSIVE INCOME:                                  2002            2001            2002            2001
------------------------------------------------- --------------- --------------- --------------- ---------------

<S>                                                  <C>             <C>             <C>             <C>
  Net Loss                                           $(1,847,998)    $(2,740,141)    $(2,244,941)    $(2,808,206)
  Net unrealized gains (losses) on securities            328,811       2,308,564        (408,974)      2,371,618
------------------------------------------------- --------------- --------------- --------------- ---------------
  Comprehensive Loss                                 $(1,519,187)   $   (431,577)    $(2,653,915)    $  (436,588)
------------------------------------------------- --------------- --------------- --------------- ---------------
</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 $1,932,000 and $2,715,000 for the six months ended June
30,  2002 and 2001,  respectively,  relating  to  declines  in value  which were
considered by management to be other than temporary.  These amounts are reported
as additions  to net  realized  investment  losses.  The Company  also  includes
certain  direct,  incremental  investment  management  fees  with  net  realized
investment losses presented in the Condensed Consolidated  Statements of Income.
Such costs are based  directly on or, are primarily  associated  with,  realized
capital gains and losses. Costs included with realized investment losses totaled
$6,000  and  $23,000  for  the  six  months   ended  June  30,  2002  and  2001,
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 June 30, 2002 and 2001, and for the
periods then ended is as follows:
<TABLE>
<CAPTION>

                                                  ------------------------------- -------------------------------
                                                   Three Months Ended June 30,      Six Months Ended June 30,
                                                  --------------- --------------- --------------- ---------------
REVENUE:                                               2002            2001            2002            2001
------------------------------------------------- --------------- --------------- --------------- ---------------
<S>                                                  <C>             <C>             <C>             <C>
  Home Service Life                                  $ 2,313,622     $ 2,344,220     $ 4,629,906     $ 4,682,981
  Broker Life                                          1,492,992       1,602,379       3,046,215       3,393,677
  Preneed Life                                         4,825,708       2,530,092       8,352,974       4,667,413
  Dental                                               2,030,442       2,073,328       4,043,340       4,172,980
  Other Health                                           355,325         385,411         722,542         774,050
------------------------------------------------- --------------- --------------- --------------- ---------------
  Segment Totals                                      11,018,089       8,935,430      20,794,977      17,691,101
  Net realized investment losses                      (1,468,150)     (3,469,996)     (1,796,551)     (3,298,100)
------------------------------------------------- --------------- --------------- --------------- ---------------
  Total Revenue                                      $ 9,549,939     $ 5,465,434     $18,998,426     $14,393,001
------------------------------------------------- --------------- --------------- --------------- ---------------

</TABLE>

Below are the net investment income amounts which are included in the revenue
totals above.
<TABLE>
<CAPTION>

                                                  ------------------------------- -------------------------------
                                                   Three Months Ended June 30,      Six Months Ended June 30,
                                                  --------------- --------------- --------------- ---------------
NET INVESTMENT INCOME:                                 2002            2001            2002            2001
------------------------------------------------- --------------- --------------- --------------- ---------------
<S>                                                   <C>             <C>             <C>             <C>
  Home Service Life                                   $  456,245      $  549,316      $  933,076      $1,112,364
  Broker Life                                            554,808         685,730       1,142,345       1,398,252
  Preneed Life                                           389,733         387,505         765,293         762,276
  Dental                                                   7,286           9,822          14,308          19,787
  Other Health                                            20,748          24,191          41,621          48,818
------------------------------------------------- --------------- --------------- --------------- ---------------
  Segment Totals                                      $1,428,820      $1,656,564      $2,896,643      $3,341,497
------------------------------------------------- --------------- --------------- --------------- ---------------
</TABLE>


<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 and  interest  expense are  excluded.  A
significant  portion 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 $7,149,000 and $12,739,000 during the six months
ended June 30, 2002 and 2001, respectively.
<TABLE>
<CAPTION>

                                                  ------------------------------- -------------------------------
                                                   Three Months Ended June 30,      Six Months Ended June 30,
                                                  --------------- --------------- --------------- ---------------
SEGMENT PROFIT (LOSS):                                 2002            2001            2002            2001
------------------------------------------------- --------------- --------------- --------------- ---------------

<S>                                                  <C>            <C>             <C>              <C>
  Home Service Life                                  $  (144,248)   $      3,820    $   (147,852)    $   173,488
  Broker Life                                           (181,591)       (202,945)       (142,998)         11,502
  Preneed Life                                          (133,245)        104,739        (349,298)        (69,496)
  Dental                                                 (51,539)        (10,800)        105,218          84,698
  Other Health                                          (136,049)          6,091        (169,056)         29,614
------------------------------------------------- --------------- --------------- --------------- ---------------
  Segment Totals                                        (646,672)        (99,095)       (703,986)        229,806
  Net realized investment losses                      (1,468,150)     (3,469,996)     (1,796,551)     (3,298,100)
  Interest expense                                        78,176         143,050         159,404         314,701
------------------------------------------------- --------------- --------------- --------------- ---------------
  Loss before Federal Income Tax                     $(2,192,998)    $(3,712,141)    $(2,659,941)    $(3,382,995)
------------------------------------------------- --------------- --------------- --------------- ---------------
</TABLE>

Depreciation  and  amortization  amounts below consist of  depreciation  expense
along with  amortization of the value of insurance  acquired and deferred policy
acquisition costs. Goodwill amortization of approximately $29,000 and $51,000 is
also included for the three months and six months, respectively,  ended June 30,
2001. As further described in Note 8, beginning in 2002,  goodwill  amortization
is no longer permitted.
<TABLE>
<CAPTION>

                                                  ------------------------------- -------------------------------
                                                   Three Months Ended June 30,      Six Months Ended June 30,
                                                  --------------- --------------- --------------- ---------------
DEPRECIATION AND AMORTIZATION:                         2002            2001            2002            2001
------------------------------------------------- --------------- --------------- --------------- ---------------

<S>                                                   <C>             <C>             <C>             <C>
  Home Service Life                                   $  121,640      $  115,131      $  280,910      $  292,766
  Broker Life                                            115,246         171,747         275,952         330,427
  Preneed Life                                           283,588         178,919         464,538         385,299
  Dental                                                  14,848          18,006          29,692          36,006
  Other Health                                            10,480          15,818          22,410          32,412
------------------------------------------------- --------------- --------------- --------------- ---------------
  Segment Totals                                      $  545,802      $  499,621      $1,073,502      $1,076,910
------------------------------------------------- --------------- --------------- --------------- ---------------
</TABLE>

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

                                              ----------------- ----------------
                                                  June 30,       December 31,
ASSETS:                                             2002             2001
--------------------------------------------- ----------------- ----------------

Home Service Life                              $  44,467,594     $  44,818,038
Broker Life                                       53,622,142        54,954,194
Preneed Life                                      38,511,045        34,138,535
Dental                                               634,439           726,728
Other Health                                       1,994,960         1,959,588
--------------------------------------------- ----------------- ----------------
Segment Totals                                 $ 139,230,180     $ 136,597,083
--------------------------------------------- ----------------- ----------------
<PAGE>
Part I; Item 1  (continued)


Note 7 - LITIGATION


United  Liberty Life Insurance  Company  ("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  whose policies
were issued in Ohio and 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 to which the plaintiffs  have not yet responded.  Although
United Liberty has requested  mediation of the action,  the plaintiffs would not
agree to the request for mediation  until United Liberty made an offer to settle
the case.  Consequently,  United  Liberty  has  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 for policies  with an increased  premium and a
set  dividend.  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. In
addition,  the  Company  is party to other  lawsuits  in the  normal  course  of
business. Management believes recorded claims liabilities are adequate to ensure
these other  suits will be resolved  without  material  financial  impact to the
Company.


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  adopted the new rules on accounting for goodwill and
other  intangible  assets  in the  first  quarter  of 2002.  Application  of the
nonamortization  provisions  of the Statement is expected to increase net income
approximately  $90,000  ($0.05 per share) per year.  During  2002,  the  Company
completed the first step in evaluating the potential impairment of its goodwill.
Based on the results of this test, there was no impairment.

Below is a proforma  illustration  of earnings  adjusted to exclude the goodwill
amortization recorded during 2001.
<TABLE>
<CAPTION>

                                                  ------------------------------- -------------------------------
                                                   Three Months Ended June 30,      Six Months Ended June 30,
                                                  --------------- --------------- --------------- ---------------
                                                       2002            2001            2002            2001
------------------------------------------------- --------------- --------------- --------------- ---------------
<S>                                                  <C>             <C>             <C>             <C>
Net Loss - excluding goodwill amortization           $(1,847,998)    $(2,717,638)    $(2,244,941)    $(2,757,200)
Goodwill amortization                                        ---          22,503             ---          51,006
------------------------------------------------- --------------- --------------- --------------- ---------------
Net Loss - as reported                               $(1,847,998)   $ (2,740,141)    $(2,244,941)    $(2,808,206)

Net Loss per Share:
  Excluding goodwill amortization                        $ (1.08)        $ (1.55)        $ (1.31)        $ (1.57)
  As reported                                            $ (1.08)        $ (1.57)        $ (1.31)        $ (1.61)
</TABLE>

Total  goodwill  outstanding  at June 30, 2002 is  approximately  $756,000  with
$304,000  allocable to Broker Life,  $270,000 to Home Service Life, and $182,000
to Preneed Life.
<PAGE>
Part I; Item 1  (continued)


Note 9 - DEBT

The Company did not meet covenants  relating to a ratio of outstanding bank debt
to adjusted  earnings and a specified  capital  amount as of June 30, 2002.  The
lender has  waived  these  covenant  violations  with  respect to that date and,
during the third  quarter of 2002,  the Company  expects to  evaluate  strategic
alternatives necessary for returning to compliance.
<PAGE>
Part I;  Item 2 - Management's Discussion and Analysis


FINANCIAL POSITION.  Shareholders' equity totaled approximately  $17,349,000 and
$20,002,000 at June 30, 2002 and December 31, 2001, respectively. These balances
reflect a 7.6% and 13.3% decrease for the three months and six months ended June
30,  2002,  respectively.  As  described  above,  comprehensive  losses  totaled
approximately  $1,519,000  and $432,000 for the three months ended June 30, 2002
and  2001,  respectively.  For the six  months  ended  June  30,  2002  and 2001
comprehensive   losses  totaled   $2,654,000  and  $437,000,   respectively.   A
significant portion of the 2002 comprehensive loss is attributable to changes in
the value of the Company's fixed maturity and equity portfolios.  As of June 30,
2002 and December 31, 2001, equity securities comprised approximately 5% and 6%,
respectively  of the Company's  total assets,  and 38% and 41%,  respectively of
shareholders'  equity.  Accordingly,  as also  described  below,  the  Company's
financial  position can be  significantly  affected by movements in the equities
markets.  Equity portfolio  positions  decreased  $1,238,000 on a cost basis and
$1,549,000 on a market value basis,  during the first six months of 2002.  Fixed
maturity portfolio positions increased $4,779,000 on an amortized cost basis and
$4,430,000  on a  market  value  basis  during  the same  period.  Cash and cash
equivalent  positions also increased by approximately  $507,000,  to $18,940,000
during the six months  ended June 30, 2002 and comprise  approximately  13.5% of
total assets at June 30, 2002 and December 31, 2001.

Equity markets continue to be highly volatile and have declined during 2002 to a
greater extent than  previously  anticipated.  In addition,  interest  yields on
fixed maturity  investments  have also declined  during 2002 to a greater extent
than previously  anticipated.  Accordingly,  although the Company had maintained
significant  cash and cash  equivalent  balances in  anticipation of potentially
rising interest  rates,  the  significant  decline in short-term  rates has and,
continues to  adversely  impact the  Company's  investment  portfolio  yield and
operating earnings. The Company's 2002 investment impairments include writedowns
of  certain  highly  publicized   companies  such  as  Cablevision   ($362,000),
MCI/Worldcom  ($348,000) and Adelphia ($145,000).  Due to continuing  accounting
investigations  at a wide range of companies and the generally  adverse economic
environment,  the Company  cannot  predict the  potential  of future  investment
impairments. The 2002 environment described above has produced a higher level of
qualitative  investment  risk.  However,  the previously  disclosed  measures of
quantitative  risk per  unit of  investment  are not  believed  to have  changed
significantly.


OPERATIONS.  Net  premiums  and  other  considerations  increased  approximately
$2,323,000  or 32% during the three months  ended June 30, 2002  compared to the
three months  ended June 30, 2001 and  increased  $3,559,000,  or 25% during the
first six months of 2002 compared to the first six months of 2001. For the first
six months of 2002,  Preneed Life and Home Service Life premium  increases  were
approximately  $3,680,000  and  $131,000,  respectively,  while  Broker Life and
Dental each  experienced  modest  decreases.  The Preneed Life segment growth is
attributable  primarily to continued  expansion into independently owned funeral
homes and a joint marketing  agreement with a casket  distributor.  Preneed Life
growth also  accounts for  approximately  eighty  percent of the Increase in Net
Benefit  Reserves  for six months  ended June 30,  2002.  Broker Life and Dental
premium  reductions are primarily  attributable to increased  competition in the
broker  market,  and the mid-2001 loss of certain  dental groups which had above
average claim rates.  The Other Health segment  represents  approximately  4% of
total premium.

Pretax  earnings  (loss)  (before  the  cumulative  effect  of a new  accounting
principle)  improved  approximately  $723,000 to $(2,660,000) for the six months
ended June 30, 2002,  primarily  due to an  approximate  $1,502,000  decrease in
realized investment losses, partially offset by increased segment losses. Pretax
Segment Profit (Loss) (excluding realized investment gains and interest expense)
for the  first six  months of 2002 was  approximately  $(704,000),  compared  to
$230,000 for the first six months of 2001. The Pretax Segment Loss for the three
months ended June 30, 2002 and 2001 was $(647,000) and $(99,000),  respectively.
These decreases resulted primarily from declines in investment yields, increased
mortality rates, and higher disability claim levels.  Below are the approximate,
annualized  pretax  investment income and total return yields for the six months
ended June 30, 2002 and 2001.
<PAGE>
Part I;  Item 2 - Management's Discussion and Analysis  (continued)


                                             ----------------- -----------------
Six Months Ended June 30                               2002              2001
-------------------------------------------- ----------------- -----------------

  Investment Income                              $ 2,896,643        $3,341,497
  Realized and Unrealized Losses                  (2,456,404)         (325,428)
-------------------------------------------- ----------------- -----------------
  Total Return                                   $   440,239        $3,016,069
-------------------------------------------- ----------------- -----------------

  Average Cash and Investments                  $113,549,504      $113,452,219

  Investment Income Yield - Annualized                5.10%             5.89%
  Total Return - Annualized                           0.78%             5.32%

The change in the Company's  effective income tax rate is due to the lack of tax
loss carryback potential for a portion of the Company's operations.


CASH FLOW AND LIQUIDITY.  Cash flow from operations  totaled  $6,904,000 for the
six months ended June 30, 2002 compared to $3,251,000 for the same period in the
prior year.  This increase is primarily  attributable  to growth in Preneed Life
business. The $5,305,000 of cash used by investing activities for the six months
ended June 30, 2002 resulted  primarily  from  investing the proceeds of Preneed
Life  sales  in  fixed  maturity  securities.  The  $1,092,000  of cash  used in
financing activities during the first quarter of 2002 is primarily  attributable
to bank loan principal  repayments along with annuity and Universal Life account
withdrawals. Due to continued investment losses and earnings pressure from lower
yields on investments and cash  equivalents,  and in  consideration of bank loan
covenants,  the Company will be evaluating options for strengthening its overall
financial  position,  including  reassessing the strategic value of its business
segments.  Continuation  of existing  earnings  trends  could also prompt  state
insurance department regulatory action and/or rating agency reevaluations.


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 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 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.
<PAGE>
Part I; Item 3 - Quantitative and Qualitative Disclosures about Market Risk


The primary  changes in  quantitative  market  risks during the six months ended
June 30, 2002 are discussed in Part I, Item 2 above.


<PAGE>
Part II - Other Information


Item 4.  Submission of Matters to a Vote of Security Holders.

        The 2002  annual meeting  of shareholders  of the Company  was  held  on
        May  23,  2002.   At  the  meeting,   eight  incumbent  directors   were
        re- elected to serve until the 2003 annual meeting of shareholders.  The
        names of the incumbent  directors  and shares  of the  Company's Class A
        Stock voted for each were as follows:

               Candidate                                       Votes
             -------------------------------------      -----------------

             John H. Harralson, Jr.                         1,167,467
             Lane A. Hersman                                1,052,179
             Frank T. Kiley                                 1,165,967
             Earle V. Powell                                1,167,392
             Thomas G. Ward                                 1,167,467
             Darrell R. Wells                               1,088,279
             Margaret A. Wells                              1,088,279


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

         a).   Exhibits:                  See Exhibit Index enclosed.

         b).   Reports on Form 8-K:       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
                           /s/ Darrell R. Wells
                 By:
                           -----------------------------------------------------
                           Darrell R. Wells
                           President and Chief Executive Officer
                           /s/ Brent L. Nemec
                 By:
                           -----------------------------------------------------
                           Brent L. Nemec
                           Treasurer and Principal Accounting Officer

Date:  August 14, 2002
<PAGE>


                                                             EXHIBIT INDEX



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

         11           Statement re: computation of per share earnings

        99.1          Certification of Chief Executive Officer

        99.2          Certification of Chief Financial Officer









<PAGE>
<TABLE>
<CAPTION>

                                                              EXHIBIT 11

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




Six Months Ended June 30                                                              2002             2001
--------------------------------------------------------------------------- ----------------- ----------------

Numerator(s):
<S>                                                                            <C>             <C>
   Loss before cumulative effect of a
      change in accounting principle                                           $(2,244,941)     $(2,496,995)
   Cumulative effect of a change in accounting principle                               ---         (311,211)
--------------------------------------------------------------------------- ----------------- ----------------
   Net Loss                                                                    $(2,244,941)    $ (2,808,206)


Denominator:
   Weighted average common shares                                                1,716,815        1,753,884


Earnings Per Share:
   Loss before cumulative effect of a
      change in accounting principle                                          $ (1.31)          $ (1.43)
   Cumulative effect of a change in accounting principle                          ---             (0.18)
--------------------------------------------------------------------------- ----------------- ----------------
   Net Loss                                                                   $ (1.31)          $ (1.61)
</TABLE>




<TABLE>
<CAPTION>



Three Months Ended June 30                                                            2002             2001
--------------------------------------------------------------------------- ----------------- ----------------

Numerator:
<S>                                                                            <C>              <C>
   Net Loss                                                                    $(1,847,998)     $(2,740,141)


Denominator:
   Weighted average common shares                                                1,716,815        1,749,600


Earnings Per Share:
   Net Loss                                                                    $  (1.08)        $  (1.57)
</TABLE>




<PAGE>

                                  EXHIBIT 99.1
                 Citizens Financial Corporation and Subsidiaries
                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER
                       PURSUANT TO 18 U.S.C. SECTION 1350


                In connection with the Quarterly Report on Form 10-Q of Citizens
Financial   Corporation  (the  "Company")  for   the  quarterly   period   ended
June 30, 2002, as filed  with the Securities and Exchange Commission on the date
hereof  (the "Report")  I,  Darrell R. Wells, Chief  Executive  Officer  of  the
Company, certify  pursuant to 18  U.S.C. ss. 1350, as adopted pursuant to ss.906
of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

1.     The Report fully complies with the requirements of section 13(a) or 15(d)
       of the Securities Exchange Act of 1934; and

2.     The information contained in the Report fairly presents,  in all material
       respects,  the financial  condition  and  results  of  operations  of the
       Company.


                 By:       /s/ Darrel R. Wells
                           -----------------------------------------------------
                           Darrell R. Wells
                             Chief Executive Officer

Date: August 14, 2002
<PAGE>
                                  EXHIBIT 99.2
                 Citizens Financial Corporation and Subsidiaries
                    CERTIFICATION OF CHIEF FINANCIAL OFFICER
                       PURSUANT TO 18 U.S.C. SECTION 1350


                In connection with the Quarterly Report on Form 10-Q of Citizens
Financial   Corporation  (the   "Company")  for   the  quarterly   period  ended
June 30, 2002, as filed  with the  Securities  and  Exchange  Commission  on the
date hereof (the "Report") I, Brent L. Nemec, Vice President and Chief Financial
Officer  of  the  Company,  certify pursuant  to 18 U.S.C. ss. 1350,  as adopted
pursuant to ss.906 of the Sarbanes-Oxley  Act of 2002,  that,  to the best of my
knowledge:

1.     The Report fully complies with the requirements of section 13(a) or 15(d)
       of the Securities Exchange Act of 1934; and

2.     The information contained in the Report fairly presents,  in all material
       respects,  the  financial  condition  and results  of  operations  of the
       Company.


                 By:       /s/ Brent L. Nemec
                           -----------------------------------------------------
                           Brent L. Nemec
                           Chief Financial Officer

Date: August 14, 2002