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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 June 30, 2003

                                       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
August 11, 2003.

The date of this Report is August 13, 2003.

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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                                                               2003                 2002
------------------------------------------------------------------------ -------------------- --------------------
Revenues:
<S>                                                                             <C>                  <C>
   Premiums and other considerations                                            $18,323,113          $18,434,777
   Premiums ceded                                                                  (532,602)            (645,273)
------------------------------------------------------------------------ -------------------- --------------------
      Net premiums earned                                                        17,790,511           17,789,504
   Net investment income                                                          2,751,839            2,896,643
   Net realized investment losses                                                  (164,728)          (1,796,551)
   Other income                                                                     112,076              108,830
------------------------------------------------------------------------ -------------------- --------------------
Total Revenues                                                                   20,489,698           18,998,426

Policy Benefits and Expenses:
   Policyholder benefits                                                         10,682,128            9,797,107
   Policyholder benefits ceded                                                     (555,852)            (849,674)
------------------------------------------------------------------------ -------------------- --------------------
      Net benefits                                                               10,126,276            8,947,433
   Increase in net benefit reserves                                               3,956,813            5,699,527
   Interest credited on policyholder deposits                                       345,572              403,041
   Commissions                                                                    3,388,237            3,537,980
   General expenses                                                               3,425,195            3,275,113
   Interest expense                                                                 189,609              159,404
   Policy acquisition costs deferred                                             (1,137,316)          (1,283,785)
   Amortization of deferred policy acquisition costs,
      value of insurance acquired, and goodwill                                     989,370              919,654
------------------------------------------------------------------------ -------------------- --------------------
Total Policy Benefits and Expenses                                               21,283,756           21,658,367
------------------------------------------------------------------------ -------------------- --------------------
Loss before income tax                                                             (794,058)          (2,659,941)
Income Tax Benefit                                                                 (141,000)            (415,000)
------------------------------------------------------------------------ -------------------- --------------------
Net Loss                                                                        $  (653,058)         $(2,244,941)
------------------------------------------------------------------------ -------------------- --------------------

Net Loss Per Common Share                                                           $ (0.39)             $ (1.31)
------------------------------------------------------------------------ -------------------- --------------------
<FN>

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

Part I; Item 1  (continued)


<TABLE>
<CAPTION>


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



Three Months Ended June 30                                                             2003                 2002
------------------------------------------------------------------------ -------------------- --------------------
Revenues:
<S>                                                                              <C>                  <C>
   Premiums and other considerations                                             $9,084,178          $ 9,838,801
   Premiums ceded                                                                  (271,307)            (306,539)
------------------------------------------------------------------------ -------------------- --------------------
      Net premiums earned                                                         8,812,871            9,532,262
   Net investment income                                                          1,377,850            1,428,820
   Net realized investment gains (losses)                                           111,435           (1,468,150)
   Other income                                                                      55,723               57,007
------------------------------------------------------------------------ -------------------- --------------------
Total Revenues                                                                   10,357,879            9,549,939

Policy Benefits and Expenses:
   Policyholder benefits                                                          5,424,917            5,021,002
   Policyholder benefits ceded                                                     (321,841)            (358,546)
------------------------------------------------------------------------ -------------------- --------------------
      Net benefits                                                                5,103,076            4,662,456
   Increase in net benefit reserves                                               2,274,626            3,413,033
   Interest credited on policyholder deposits                                       180,687              215,719
   Commissions                                                                    1,694,569            1,843,347
   General expenses                                                               1,613,123            1,774,230
   Interest expense                                                                  97,401               78,176
   Policy acquisition costs deferred                                               (557,774)            (712,890)
   Amortization of deferred policy acquisition costs,
      value of insurance acquired, and goodwill                                     339,911              468,866
------------------------------------------------------------------------ -------------------- --------------------
Total Policy Benefits and Expenses                                               10,745,619           11,742,937
------------------------------------------------------------------------ -------------------- --------------------
Loss before income tax                                                             (387,740)          (2,192,998)
Income Tax Benefit                                                                  (68,000)            (345,000)
------------------------------------------------------------------------ -------------------- --------------------
Net Loss                                                                         $ (319,740)         $(1,847,998)
------------------------------------------------------------------------ -------------------- --------------------

Net Loss Per Common Share                                                           $ (0.19)             $ (1.08)
------------------------------------------------------------------------ -------------------- --------------------
<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,
                                                                                         2003                2002
------------------------------------------------------------------------ -------------------- --------------------
ASSETS                                                                             (Unaudited)

Investments:
   Securities available for sale, at fair value:
<S>                                                                               <C>                   <C>
      Fixed maturities (amortized cost of $100,059,180
      and $101,161,174 in 2003 and 2002, respectively)                        $ 105,844,331         $ 103,953,815
      Equity securities (cost of $10,312,336 and
      $7,108,735 in 2003 and 2002, respectively)                                 12,413,783             7,761,892
   Investment real estate                                                         3,210,542             3,252,424
   Policy loans                                                                   4,318,561             4,239,128
   Short-term investments                                                           632,381               632,381
------------------------------------------------------------------------ -------------------- --------------------
Total Investments                                                               126,419,598           119,836,640

Cash and cash equivalents                                                         6,298,989             6,699,171
Accrued investment income                                                         1,466,807             1,330,036
Reinsurance recoverable                                                           2,697,334             2,886,256
Premiums receivable                                                                 288,170               215,759
Property and equipment                                                            2,686,731             2,767,763
Deferred policy acquisition costs                                                10,182,816             9,915,288
Value of insurance acquired                                                       3,366,665             3,617,602
Goodwill                                                                            755,782               755,782
Federal income tax receivable                                                       310,158               250,158
Other assets                                                                         49,566               164,077
------------------------------------------------------------------------ -------------------- --------------------
Total Assets                                                                  $ 154,522,616         $ 148,441,532
------------------------------------------------------------------------ -------------------- --------------------
<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,
                                                                                        2003                 2002
------------------------------------------------------------------------ -------------------- --------------------
LIABILITIES AND SHAREHOLDERS' EQUITY                                               (Unaudited)

Liabilities:
Policy Liabilities:
<S>                                                                           <C>                   <C>
   Future policy benefits                                                     $ 106,492,701         $ 102,649,565
   Policyholder deposits                                                         15,563,637            15,743,293
   Policy and contract claims                                                     1,711,743             1,797,195
   Unearned premiums                                                                239,500               247,625
   Other                                                                            218,892               277,955
------------------------------------------------------------------------ -------------------- --------------------
Total Policy Liabilities                                                        124,226,473           120,715,633

Note payable - bank                                                               4,791,668             5,779,168
Note payable - related party                                                      2,000,000             2,000,000
Accrued expenses and other liabilities                                            1,909,386             1,851,467
Deferred federal income tax                                                       1,659,191               337,632
------------------------------------------------------------------------ -------------------- --------------------
Total Liabilities                                                               134,586,718           130,683,900

Commitments and Contingencies

Shareholders' Equity:
   Common stock, 6,000,000 shares authorized;
      1,685,228 and 1,686,828 shares issued and outstanding
      in 2003 and 2002, respectively                                              1,685,228             1,686,828
   Additional paid-in capital                                                     7,170,321             7,176,480
   Accumulated other comprehensive income                                         5,062,842             2,223,759
   Retained earnings                                                              6,017,507             6,670,565
------------------------------------------------------------------------ -------------------- --------------------
Total Shareholders' Equity                                                       19,935,898            17,757,632
------------------------------------------------------------------------ -------------------- --------------------
Total Liabilities and Shareholders' Equity                                    $ 154,522,616         $ 148,441,532
------------------------------------------------------------------------ -------------------- --------------------
<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                                                               2003                 2002
------------------------------------------------------------------------ -------------------- --------------------

Cash Flows from Operations:
<S>                                                                            <C>                  <C>
Net loss                                                                       $   (653,058)        $ (2,244,941)
Adjustments to reconcile net loss to cash from operations:
   Increase in benefit reserves                                                   3,831,180            5,721,141
   Increase (decrease) in claim liabilities                                         (85,452)             242,221
   (Increase) decrease in reinsurance recoverable                                    (4,571)               9,463
   Interest credited on policyholder deposits                                       345,572              403,041
   Provision for amortization and depreciation, net of deferrals                    188,922             (210,285)
   Amortization of premium and accretion of discount on
      securities purchased, net                                                      60,313               47,549
   Net realized investment losses                                                   164,728            1,796,551
   Increase in accrued investment income                                           (136,771)             (41,347)
   Change in other assets and liabilities                                           (20,630)             214,254
   Decrease in deferred federal income tax liability                               (141,000)            (106,379)
   (Increase) decrease in federal income taxes receivable                           (60,000)           1,072,432
------------------------------------------------------------------------ -------------------- --------------------
Net Cash provided by Operations                                                   3,489,233            6,903,700

Cash Flows from Investment Activities:
Cost of securities acquired                                                     (33,376,076)         (20,820,724)
Investments sold or matured                                                      31,113,919           15,584,807
Investment management fees                                                           (4,597)             (44,743)
Additions to real estate                                                            (17,670)              (5,568)
Additions to property and equipment                                                  (5,071)             (24,159)
Other investing activities, net                                                     (79,433)               5,127
------------------------------------------------------------------------ -------------------- --------------------
Net Cash used in Investment Activities                                           (2,368,928)          (5,305,260)

Cash Flows from Financing Activities:
Policyholder deposits                                                               308,623              423,324
Policyholder withdrawals                                                           (833,851)            (856,792)
Payments on notes payable - bank                                                   (987,500)            (658,333)
Repurchase of common stock                                                           (7,759)                 ---
------------------------------------------------------------------------ -------------------- --------------------
Net Cash used in Financing Activities                                            (1,520,487)          (1,091,801)

------------------------------------------------------------------------ -------------------- --------------------
Net Increase (Decrease) in Cash and Cash Equivalents                               (400,182)             506,639
Cash and Cash Equivalents at Beginning of Period                                  6,699,171           18,433,626
------------------------------------------------------------------------ -------------------- --------------------
Cash and Cash Equivalents at End of Period                                     $  6,298,989         $ 18,940,265
------------------------------------------------------------------------ -------------------- --------------------
<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, 2002  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 (loss), net of related tax, for the three
and six month periods ended June 30, 2003 and 2002 are as follows:
<TABLE>
<CAPTION>

                                                  ------------------------------- -------------------------------
                                                   Three Months Ended June 30,      Six Months Ended June 30,
                                                  --------------- --------------- --------------- ---------------
COMPREHENSIVE INCOME:                                  2003            2002            2003            2002
------------------------------------------------- --------------- --------------- --------------- ---------------

<S>                                                   <C>            <C>              <C>            <C>
  Net Loss                                            $ (319,740)    $(1,847,998)     $ (653,058)    $(2,244,941)
  Net unrealized gains (losses) on securities          2,420,849         328,811       2,839,083        (408,974)
------------------------------------------------- --------------- --------------- --------------- ---------------
  Comprehensive Income (Loss)                         $2,101,109     $(1,519,187)     $2,186,025     $(2,653,915)
------------------------------------------------- --------------- --------------- --------------- ---------------
</TABLE>


Note 3 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company's  derivatives  outstanding  at June 30, 2003 include  approximately
$200,000  of  embedded  options  on  convertible  bonds and $2,000 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  $135,000 and $1,932,000 for the six months ended June
30,  2003 and 2002,  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  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 $225,000 and
$6,000 for the six months ended June 30, 2003 and 2002, 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.
<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 June 30, 2003 and 2002, and for the
periods then ended is as follows:
<TABLE>
<CAPTION>

                                                  ------------------------------- -------------------------------
                                                   Three Months Ended June 30,      Six Months Ended June 30,
                                                  --------------- --------------- --------------- ---------------
REVENUE:                                               2003            2002            2003            2002
------------------------------------------------- --------------- --------------- --------------- ---------------

<S>                                                  <C>             <C>             <C>             <C>
  Home Service Life                                  $ 2,259,771     $ 2,313,622     $ 4,547,712     $ 4,629,906
  Broker Life                                          1,367,436       1,492,992       2,831,642       3,046,215
  Preneed Life                                         4,193,478       4,825,708       8,335,085       8,352,974
  Dental                                               2,090,956       2,030,442       4,238,216       4,043,340
  Other Health                                           334,803         355,325         701,771         722,542
------------------------------------------------- --------------- --------------- --------------- ---------------
  Segment Totals                                      10,246,444      11,018,089      20,654,426      20,794,977
  Net realized investment gains (losses)                 111,435      (1,468,150)       (164,728)     (1,796,551)
------------------------------------------------- --------------- --------------- --------------- ---------------
  Total Revenue                                      $10,357,879     $ 9,549,939     $20,489,698     $18,998,426
------------------------------------------------- --------------- --------------- --------------- ---------------
</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:                                 2003            2002            2003            2002
------------------------------------------------- --------------- --------------- --------------- ---------------

<S>                                                   <C>             <C>             <C>             <C>
  Home Service Life                                   $  377,689      $  456,245      $  774,031      $  933,076
  Broker Life                                            511,544         554,808       1,052,651       1,142,345
  Preneed Life                                           466,522         389,733         876,356         765,293
  Dental                                                   5,096           7,286          11,733          14,308
  Other Health                                            16,999          20,748          37,068          41,621
------------------------------------------------- --------------- --------------- --------------- ---------------
  Segment Totals                                      $1,377,850      $1,428,820      $2,751,839      $2,896,643
------------------------------------------------- --------------- --------------- --------------- ---------------
</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 are generated
from investments in equity  securities.  The equities  portfolio  averaged (on a
cost basis) approximately  $9,066,000 and $7,149,000 during the six months ended
June 30, 2003 and 2002, respectively.
<TABLE>
<CAPTION>

                                                  ------------------------------- -------------------------------
                                                   Three Months Ended June 30,      Six Months Ended June 30,
                                                  --------------- --------------- --------------- ---------------
SEGMENT PROFIT (LOSS):                                 2003            2002            2003            2002
------------------------------------------------- --------------- --------------- --------------- ---------------

<S>                                                   <C>            <C>               <C>          <C>
  Home Service Life                                   $  (35,157)    $  (144,248)      $  86,710    $   (147,852)
  Broker Life                                           (240,873)       (181,591)       (175,664)       (142,998)
  Preneed Life                                          (257,999)       (133,245)       (379,411)       (349,298)
  Dental                                                  63,984         (51,539)        205,896         105,218
  Other Health                                            68,271        (136,049)       (177,252)       (169,056)
------------------------------------------------- --------------- --------------- --------------- ---------------
  Segment Totals                                        (401,774)       (646,672)       (439,721)       (703,986)
  Net realized investment gains (losses)                 111,435      (1,468,150)       (164,728)     (1,796,551)
  Interest expense                                        97,401          78,176         189,609         159,404
------------------------------------------------- --------------- --------------- --------------- ---------------
  Loss before Federal Income Tax                     $  (387,740)    $(2,192,998)    $  (794,058)    $(2,659,941)
------------------------------------------------- --------------- --------------- --------------- ---------------
</TABLE>


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

                                                  ------------------------------- -------------------------------
                                                   Three Months Ended June 30,      Six Months Ended June 30,
                                                  --------------- --------------- --------------- ---------------
DEPRECIATION AND AMORTIZATION:                         2003            2002            2003            2002
------------------------------------------------- --------------- --------------- --------------- ---------------

<S>                                                   <C>             <C>             <C>             <C>
  Home Service Life                                   $  175,994      $  121,640      $  351,978      $  280,910
  Broker Life                                             86,170         115,246         285,707         275,952
  Preneed Life                                           131,698         283,588         450,373         464,538
  Dental                                                  14,231          14,848          28,525          29,692
  Other Health                                             3,506          10,480          16,162          22,410
------------------------------------------------- --------------- --------------- --------------- ---------------
  Segment Totals                                         411,599      $  545,802      $1,132,745      $1,073,502
------------------------------------------------- --------------- --------------- --------------- ---------------
</TABLE>


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

                                              ----------------- ----------------
                                                  June 30,       December 31,
ASSETS:                                             2003             2002
--------------------------------------------- ----------------- ----------------

Home Service Life                                $40,489,156       $39,587,175
Broker Life                                       54,665,495        54,232,558
Preneed Life                                      56,950,744        51,991,206
Dental                                               554,483           658,963
Other Health                                       1,862,738         1,971,630
--------------------------------------------- ----------------- ----------------
Segment Totals                                  $154,522,616      $148,441,532
--------------------------------------------- ----------------- ----------------
<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. 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 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 STANDARDS

In  January  2003,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Interpretation  No.  46,   Consolidation  of  Variable  Interest  Entities,   an
Interpretation of Accounting Research Bulletin (ARB) No. 51 which states certain
criteria for use in  consolidating  another  entity.  The Company has  evaluated
Interpretation No. 46 and does not believe it will have a material impact on the
financial statements.

In May 2003,  the  Financial  Accounting  Standards  Board  issued  Statement of
Financial  Accounting  Standards  No.  150,  Accounting  for  Certain  Financial
Instruments  with  Characteristics  of Both  Liabilities  and Equity  (FAS 150),
effective for interim reporting periods beginning after June 15, 2003. Under the
new rules, certain financial  instruments  classified as equity will be required
to be presented as  liabilities.  The Company has evaluated FAS 150 and does not
believe it will have a material impact on the financial statements.


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


FINANCIAL POSITION.  Shareholders' equity totaled approximately  $19,936,000 and
$17,758,000 at June 30, 2003 and December 31, 2002, respectively. These balances
reflect an  approximate  12% increase for the six months ended June 30, 2003. As
described above,  comprehensive income (loss) totaled  approximately  $2,186,000
and $(2,654,000) for the six months ended June 30, 2003 and 2002,  respectively.
A significant portion of comprehensive  income (loss) is attributable to changes
in the value of the  Company's  fixed  maturity  and  equity  portfolios.  Fixed
maturity portfolio positions decreased $1,102,000 on an amortized cost basis and
increased  $1,891,000  on a market  value  basis  during the first six months of
2003. This gross  appreciation of $2,993,000  resulted primarily from increasing
bond prices during the period.  However,  during July 2003, bond values declined
and a significant  portion of this appreciation was reversed.  Equity securities
comprised  approximately  8.0% and 5.2% of the Company's total assets as of June
30,  2003 and  December  31,  2002,  respectively.  Equity  portfolio  positions
increased  $3,204,000  on a cost basis and  $4,652,000  on a market value basis,
during  the  first  six  months  of 2003,  resulting  in gross  appreciation  of
$1,448,000.  Cash and cash  equivalent  positions also  decreased  approximately
$400,000 during the six months ended June 30, 2003.

Equity markets  continue to be volatile but were much more favorable during 2003
than  results  experienced  during  the prior  three  years.  Late in the second
quarter of 2003, interest yields on fixed maturity  investments finally began to
rise.  Although  this  produces an adverse  impact on the value of the Company's
bond portfolio, the opportunity to invest new money at higher yields is expected
to have a positive  impact on the Company's  operating  earnings.  Additionally,
improving economic activity and equity valuations have resulted in a lower level
of  securities  impairment  writedowns  during  2003.  The 2003  environment  as
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 2002 Form 10-K


OPERATIONS.  Net  premiums  and  other  considerations  decreased  approximately
$719,000,  or 7% during the three  months  ended June 30,  2003  compared to the
three months ended June 30, 2002 but  increased  $1,000 for the first six months
of 2003  compared  to the first six  months of 2002.  Below is a summary  of net
premiums  earned by segment,  for the three and six month periods ended June 30,
2003, along with the change from the prior year.
<TABLE>
<CAPTION>

                                      ------------------------------ -------------------------------
                                       Three Months Ended June 30,     Six Months Ended June 30,
                                      -------------- --------------- --------------- ---------------
NET PREMIUMS EARNED                       Total          Change          Total           Change
------------------------------------- -------------- --------------- --------------- ---------------

<S>                                     <C>              <C>            <C>              <C>
  Home Service Life                     $ 1,866,814      $   27,658     $ 3,742,157      $   80,383
  Broker Life                               835,213         (80,795)      1,736,119        (124,832)
  Preneed Life                            3,708,073        (712,408)      7,423,037        (135,890)
  Dental                                  2,085,654          62,787       4,226,005         197,510
  Other Health                              317,117         (16,633)        663,193         (16,164)
------------------------------------- -------------- --------------- --------------- ---------------
  Segment Totals                        $ 8,812,871      $ (719,391)    $17,790,511        $  1,007
------------------------------------- -------------- --------------- --------------- ---------------
</TABLE>

The Home Service Life growth is attributable to a continuing  focus on providing
quality  service to existing agents and customers along with a moderate level of
new agent  recruiting.  The Broker Life declines are primarily  attributable  to
competition from other carriers in the final expense  marketplace.  Preneed life
premiums are lower, due in part to the Company's decision to emphasize the lower
annual premium "multi-pay"  policies rather than "single-pay"  policies and some
loss of volume attributable to reducing commission levels and the rate of annual
growth  credited to policies.  Dental  premium  increases  are  attributable  to
additional broker relationships and normal inflationary  premium increases.  The
Other Health segment products are not being actively marketed.

The   Company's  Pretax  Income  (Loss)   improved    approximately   $1,805,000
to   $(388,000)  for  the   three  months  ended  June 30, 2003,  and   improved
$1,866,000  to  $(794,000) for  the  six  months  ended June 30, 2003,  compared
to the  corresponding periods in 2002.  Most of this improvement is attributable
to  improving  realized  investment  gains  (losses).  Net  realized  investment
gains  (losses)  totaled  $111,000  and  $(164,728) for  the three and six month
periods   respectively,  ending  June  30,  2003.  Both  the  equity  and  fixed
income  investment   markets  improved   significantly  during   the  first  six
months of 2003. Segment Profit (Loss), which  excludes net  realized  investment
<PAGE>

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


gains  (losses)  and  interest  expense  improved   approximately   $245,000  to
$(402,000) for the three months ended June 30, 2003,  and improved  $265,000 for
the six months ended June 30,  2003,  compared to the  corresponding  periods in
2002.  Most of this  improvement is  attributable to favorable Home Service Life
mortality,  a reduction in Other Health disability claim and reserve levels, and
improvement  in Dental claim  levels.  These  favorable  impacts were  partially
offset by net declines in the Company's  investment  portfolio yield and adverse
Broker Life and Preneed Life mortality.

Below are pretax  investment  income and total  return,  along with  approximate
annualized yields for the six months ended June 30, 2003 and 2002.

                                             ----------------- -----------------
Six Months Ended June 30                               2003              2002
-------------------------------------------- ----------------- -----------------

  Investment Income                              $ 2,751,839       $ 2,896,643
  Realized and Unrealized Gains (Losses)           4,276,072        (2,456,404)
-------------------------------------------- ----------------- -----------------
  Total Return                                  $  7,027,911       $   440,239
-------------------------------------------- ----------------- -----------------

  Average Cash and Investments                  $128,685,929      $113,549,504

  Investment Income Yield - Annualized                4.28%             5.10%
  Total Return - Annualized                          10.92%             0.78%

The Company's  effective income tax rate differs from the statutory federal rate
primarily due to the effect of the small life insurance  company deduction which
allows  certain  companies  to reduce their  taxable  income by up to 60% before
computing provisions for regular and alternative minimum tax.


CASH FLOW AND LIQUIDITY.  Cash flow from operations  totaled  $3,489,000 for the
six months ended June 30, 2003 compared to $6,904,000 for the same period in the
prior year.  This positive cash flow for both periods is primarily  attributable
to growth in Preneed Life  business,  although  the 2002 total also  includes an
approximate  $1,072,000  net recovery of federal  income tax. The  $2,369,000 of
cash  used by  investing  activities  for the six  months  ended  June 30,  2003
resulted  primarily  from  investing  the  proceeds of Preneed  Life sales.  The
$1,520,000 of cash used in financing  activities  during the first six months of
2003 is primarily  attributable  to bank loan  principal  repayments  along with
annuity and Universal Life account withdrawals.  The quarterly bank loan payment
due on July 1, 2003 was paid by June 30, 2003, accordingly, the outstanding bank
loan  balance  decreased  by  three  quarterly  installments.  Due to  continued
investment  losses and earnings  pressure from lower yields on  investments  and
cash  equivalents,  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,
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 2003 debt obligations and, with other available assets, will
probably be adequate to service debt obligations through 2004. In addition,  the
Company's  Chairman has expressed  potential  willingness to loan the Company an
additional $3,000,000 if necessary, which could service debt obligations through
the majority of 2006.


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:

<PAGE>


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


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


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


Quantitative  and Qualitative  Risk. The primary changes in quantitative  market
risks during the six months ended June 30, 2003 are  discussed in Part I, Item 2
above.




Part I;  Item 4 - Controls and Procedures


EVALUATION  OF  DISCLOSURE  CONTROLS AND  PROCEDURES.  Management of the Company
conducted an  evaluation of its  disclosure  controls and  procedures,  with the
supervision and participation of its Chief Executive Officer and Chief Financial
Officer,  as of the end of the period  covered  by this  quarterly  report.  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
Chief 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 has been no change in the Company's internal
control over financial  reporting  identified in connection with the evaluation,
that  occurred  during the fiscal  quarter  ended June 30, 2003 that  materially
affected,  or is reasonably likely to materially  affect, the Company's internal
control over financial reporting.
<PAGE>

Part II - Other Information



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

         The  2003  annual  meeting  of shareholders of the  Company was held on
         May 22, 2003. 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.                         1,364,917
Lane A. Hersman                                1,292,093
Frank T. Kiley                                 1,312,293
Earle V. Powell                                1,364,817
Thomas G. Ward                                 1,364,917
Darrell R. Wells                               1,312,293
Margaret A. Wells                              1,312,293


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

      a).   Exhibit 11:         Statement re: computation of per share earnings
            Exhibit 31.1:       Certification of Chief Executive Officer
            Exhibit 31.2:       Certification of Chief Financial Officer
            Exhibit 32.1:       Certification of Chief Executive Officer
            Exhibit 32.2:       Certification of Chief Financial Officer


      b).   Reports on Form 8-K:        On May 22, 2003 the Company filed a Form
                                        8-K to  furnish,  pursuant to Item 12, a
                                        press  release  disclosing the Company's
                                        earnings for the first quarter of 2003.

                                        On May 23, 2003 the Company filed a Form
                                        8-K  to  furnish,  pursuant  to Item 12,
                                        remarks by  the Company's Executive Vice
                                        President and Chief Operating Officer at
                                        the Company's 2003 Annual Meeting.



                                                    SIGNATURES

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

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

                             BY:  /s/ Brent L. Nemec
                                  ----------------------------------------------
                                      Brent L. Nemec
                                      Treasurer and Principal Accounting Officer
Date:  August 12, 2003
<PAGE>


                                  EXHIBIT INDEX



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

         11           Statement re: computation of per share earnings

        31.1          Certification of Chief Executive Officer

        31.2          Certification of Chief Financial Officer

        32.1          Certification of Chief Executive Officer

        32.2          Certification of Chief Financial Officer