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1

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment No. )

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to <section>240.14a-11(c) or
<section>240.14a-12

CITIZENS FINANCIAL CORPORATION

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:

2) Aggregate number of securities to which transaction applies:

3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):

4) Proposed maximum aggregate value of transaction:

5) Total fee paid:

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:

2) Form, Schedule or Registration Statement No.:

3) Filing Party:

4) Date Filed

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3

CITIZENS FINANCIAL CORPORATION
THE MARKETPLACE, SUITE 300
12910 SHELBYVILLE ROAD
LOUISVILLE, KENTUCKY 40243

NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, MAY 21, 1997

The 1997 Annual Meeting of Shareholders of Citizens Financial
Corporation will be held at the offices of the Company, The Marketplace, Suite
300, 12910 Shelbyville Road, Louisville, Kentucky, on Wednesday, May 21, 1997
at 4:00 p.m., Eastern Daylight Time, for the following purposes:

(1) to elect directors of the Company to serve until the next Annual
Meeting of Shareholders and until their successors are elected and qualify (the
"Election of Directors"); and

(2) to transact such other business as may properly come before the
Meeting or any adjournments thereof, including matters incident to its conduct.

Please consult the accompanying Proxy Statement for further
information concerning the Meeting, the Election of Directors and other
matters.

April 18, 1997 is the record date for the determination of
shareholders entitled to notice of, and to vote at, the Meeting. Accordingly,
only shareholders of record at the close of business on that date are entitled
to vote at the Meeting or any adjournments thereof.

You are cordially invited to attend the Meeting in person. If you
cannot, please sign and date the accompanying form of Proxy and return it
promptly in the return envelope enclosed for your use. No postage is required
if the envelope is mailed in the United States.

By Authority of the Board of Directors

Darrell R. Wells
President and Chief Executive Officer

April 23, 1997

CITIZENS FINANCIAL CORPORATION
THE MARKETPLACE, SUITE 300
12910 SHELBYVILLE ROAD
LOUISVILLE, KENTUCKY 40243

PROXY STATEMENT

SOLICITATION AND REVOCATION OF PROXIES

The Board of Directors of Citizens Financial Corporation (the
"Company") is soliciting proxies to be voted at the 1997 Annual Meeting of
Shareholders of the Company to be held on Wednesday, May 21, 1997, at 4:00
p.m., Eastern Daylight Time, at the offices of the Company, The Marketplace,
Suite 300, 12910 Shelbyville Road, Louisville, Kentucky 40243, and at any
adjournments thereof (the "Meeting").

If the accompanying form of Proxy is properly signed and returned
prior to the Meeting, the shares it represents will be voted at the Meeting in
accordance with the directions, if any, noted thereon; or, if no contrary
directions are given, they will be voted [i] in the election of directors as
hereinafter described and [ii] on any other matters that may come before the
Meeting, including matters incident to its conduct. Any shareholder giving a
proxy may revoke it at any time before the shares it represents are voted by
giving written notice of such revocation to the Secretary of the Company at the
address shown above.

The accompanying form of Proxy may not be used [i] to authorize
shares to be voted by anyone other than the persons named therein or
substitutes appointed by the Board of Directors or [ii] to vote with respect to
nominees other than those named herein or substitutes appointed by the Board of
Directors.

This Proxy Statement and the accompanying form of Proxy are being
first mailed to shareholders on or about April 23, 1997.

VOTING AT MEETING

Only shareholders of record of the Company's Class A Stock (the
"Class A Stock"), at the close of business on April 18, 1997 (the "Record
Date"), are entitled to notice of, and to vote in person or by duly authorized
proxy at, the Meeting. On the Record Date, there were 1,075,615 shares of the
Class A Stock outstanding and entitled to vote. Each such share is entitled to
one vote on all matters that may come before the Meeting other than the
election of directors. In the election of directors, a shareholder is entitled
by Kentucky law to exercise "cumulative" voting rights; that is, the
shareholder is entitled to cast as many votes as equals the number of shares
owned by the shareholder multiplied by the number of directors to be elected
and may cast all such votes for a single director nominee or distribute them
among the nominees in any manner the shareholder may see fit. Proxies received
may be voted cumulatively. See "Discretionary Authority In Election of
Directors," below.

Under Kentucky law, abstentions and broker non-votes on any matter
are not counted in determining the number of votes required for election of a
director or passage of any matter submitted to shareholders. Abstentions and
broker non-votes are counted for purposes of determining the existence of a
quorum.

IMPORTANT

SHAREHOLDERS CAN HELP THE COMPANY AVOID THE NECESSITY AND EXPENSE OF
SENDING FOLLOW-UP LETTERS TO ENSURE A QUORUM BY PROMPTLY RETURNING
THE ENCLOSED PROXY. PLEASE MARK, DATE, SIGN AND RETURN THE ENCLOSED
PROXY IN ORDER THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE
MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table reflects certain information regarding the
beneficial ownership of the Class A Stock and the Company's 1995 Class B
Convertible Preferred Stock (the "Preferred Stock") held as of the Record
Date [i] by the only person known by the Company to own beneficially more
than five percent (5%) of the Class A Stock and [ii] by the directors and
the executive officers of the Company as a group. Unless otherwise
indicated, the Company believes that each person named or included below
has sole voting and investment power with respect to the Class A Stock and
the Preferred Stock attributed to such person.

OWNERSHIP OF CLASS A STOCK OWNERSHIP OF PREFERRED STOCK

PERCENT OF PERCENT OF
SHAREHOLDER SHARES<F1> CLASS<F2> SHARES CLASS<F2>
5% HOLDER

Darrell R. Wells 959,522<F3> 65.38% 196<F3> 52.97%
Suite 310
4350 Brownsboro Road
Louisville, Kentucky 40207

DIRECTORS AND EXECUTIVE OFFI-
CERS AS A GROUP

13 Persons 1,050,363<F4,5> 70.42% 208<F5> 56.22%

[FN]

<F1> Includes shares of the Class A Stock issuable upon conversion of the
Preferred Stock held by such persons. As of the Record Date, each
share of the Preferred Stock was immediately convertible into 2,000
shares of the Class A Stock. The Preferred Stock is not entitled to
vote except in cases of certain dividend arrearages and certain
fundamental changes in the rights of the holders of the Preferred
Stock.

<F2> Percentage calculations for the Class A Stock are based on outstanding
shares of the Class A Stock and shares of the Class A Stock issuable
upon conversion of the shares of the Preferred Stock held by such
person, plus, in the case of the group, the shares referred to in Note
4. Percentage calculations for the Preferred Stock are based on
outstanding shares of the Preferred Stock.

<F3> Mr. Wells shares voting and investment power with respect to 49,315
shares of the Class A Stock and nine (9) shares of the Preferred Stock.
Frank T. Kiley, who beneficially owns 6,303 shares of the Class A Stock
and nine (9) shares of the Preferred Stock, may be deemed to be
affiliated with Mr. Wells for certain purposes. Excluding the shares
of the Class A Stock issuable upon conversion of the Preferred Stock,
Mr. Wells beneficially owns 567,522 shares of the Class A Stock, which
represents 52.76% of the outstanding shares of the Class A Stock.

<F4> Includes 5,000 shares of the Class A Stock issuable pursuant to
purchase options that are deemed to be beneficially owned because the
options are exercisable presently or within 60 days after the Record
Date. See "Aggregate Year-End Option Values."

<F5> Includes shares beneficially owned by Mr. Wells. Excluding the shares
of the Class A Stock issuable upon conversion of the Preferred Stock
held by such group, the members of such group beneficially own 634,363
shares of the Class A Stock, which represents 58.70% of the outstanding
shares of the Class A Stock and the shares referred to in Note 4.

ELECTION OF DIRECTORS

At the Meeting, a full Board of Directors will be elected to serve
until the next Annual Meeting of Shareholders and until their respective
successors are elected and qualify. The Bylaws of the Company provide that the
Board of Directors shall consist of eight (8) persons.

Unless a proxy is marked to give a different direction, the shares
it represents will be voted to elect the eight (8) persons named in the
following table, subject to the matters described in "Discretionary Authority
In Election of Directors," below. All of the nominees were elected at the 1996
Annual Meeting of Shareholders and in previous years as shown in the table.
The terms of all present directors will expire at the conclusion of
the election of directors at the Meeting. All of the nominees have agreed
to serve if elected. If there are more nominees at the Meeting than
there are directorships, the nominees receiving the highest number of votes
will be elected to the available directorships.

2
6

OWNERSHIP OF OWNERSHIP OF
CLASS A STOCK<F1,2> PREFERRED STOCK<F1,2>

NAME, AGE, AND PRINCIPAL OCCUPATION(S)
PRESENT POSITIONS OR EMPLOYMENT(S) DURING
WITH THE COMPANY AND DIRECTOR PAST FIVE YEARS AND PERCENT PERCENT
CITIZENS SECURITY<F3> SINCE CERTAIN DIRECTORSHIPS<F4> SHARES OF CLASS SHARES OF CLASS

John H. Harralson, Jr. 1990 Publisher, Southern Publishing 12,468 1.16% -- --
69 d/b/a The Voice Tribune (sub-
Director of the Company urban newspaper publishing),
and Citizens Security Louisville, Kentucky

Lane A. Hersman 1995 Present principal positions 6,200<F5> 0.58% -- --
45 with the Company and Citizens
Executive Vice President Security since July, 1995;
and Chief Operating Officer formerly senior financial
and Director of the Compa- management positions with the
ny; President and Chief Company since 1992 and
Executive Officer and Di- Citizens Security since 1989
rector of Citizens Security

Frank T. Kiley 1990 Principal, Security Management 24,303 2.22% 9 2.43%
50 Company (investments and in-
Director of the Company vestment management), Louis-
ville, Kentucky

Charles A. Mays 1994 Executive Vice President and 2,500 0.23% 1 0.27%
58 Chief Financial Officer, Com-
Director of the Company monwealth Bank and Trust
and Citizens Security Company, Louisville, Kentucky

Earle V. Powell 1990 Retired; Trustee, Kentucky 16,465 1.53% -- --
80 Teachers Retirement System
Director of the Company
and Citizens Security

Thomas G. Ward 1990 President, Texas 5 Corporation 24,169 2.24% 2 0.54%
59 (telecommunications) since
Director of the Company 1990; President, Third Ken-
and Citizens Security tucky Cellular Corporation,
Lexington, Kentucky since 1995

Darrell R. Wells<F6> 1990 General Partner, Security Man- 959,522<F6> 65.38% 196<F6> 52.97%
54 agement Company (investments
President and Chief Execu- and investment management),
tive Officer, Director and Louisville, Kentucky.
Chairman of the Board of Director, Churchill Downs
the Company Incorporated and Jundt Growth
Fund

Margaret A. Wells<F6> 1993 Homemaker and civic volunteer 959,522<F6> 65.38% 196<F6> 52.97%
50
Director of the Company

[FN]
<F1> Amounts as of the Record Date as furnished by persons named in the table.
All nominees have sole voting and investment power with respect to their
beneficially owned shares except for Mr. Wells as to the shares described
in Note 3 under "Security Ownership of Certain Beneficial Owners and
Management" and Ms. Wells as to shares beneficially owned by Mr. Wells.
See Note 6. Percentage calculations for the Class A Stock are based on
outstanding shares of the Class A Stock and shares of the Class A Stock
issuable upon conversion of the shares of the Preferred Stock held by
each such director, and in the case of Mr. Hersman, the shares referred
to in Note 5. Percentage calculations for the Preferred Stock are based
on outstanding shares of the Preferred Stock.

<F2> Includes shares of the Class A Stock issuable upon conversion of the
Preferred Stock held by such director. As of the Record Date, each share
of the Preferred Stock was immediately convertible into 2,000 shares of
the Class A Stock. The Preferred Stock is not entitled to vote except in
cases of certain dividend arrearages and certain fundamental changes in
the rights of the holders of the Preferred Stock.

<F3> Citizens Security Life Insurance Company ("Citizens Security") was the
Company's corporate predecessor and is now its principal subsidiary.

<F4> Directorships in publicly-held companies other than the Company, in
registered investment companies and, in the case of certain directors,
other organizations deemed material by them.

<F5> Includes 5,000 shares of the Class A Stock issuable pursuant to purchase
options that are deemed to be beneficially owned because the options are
exercisable presently or within 60 days after the Record Date.

<F6> Darrell R. Wells is the husband of Margaret A. Wells. Under the federal
securities laws, a director is presumed to be the beneficial owner of
securities held by members of the director's immediate family sharing the
director's household. Accordingly, the shares reported as beneficially
owned by Mr. Wells and Ms. Wells are the same shares. See "Security
Ownership of Certain Beneficial Owners and Management."

Six (6) meetings of the Board of Directors were held during 1996.
The Board of Directors has delegated certain functions to standing committees
of the Board. The Executive Committee is authorized to perform all of the
functions of the Board of Directors except as limited by the Company's Articles
of Incorporation and Bylaws and by certain provisions contained in the
resolution creating the Executive Committee. The Executive Committee held six
(6) meetings during 1996. The members of the Executive Committee for 1996 were
Messrs. Hersman, Kiley and Wells. The Audit Committee's prescribed functions
are [i] to recommend to the Board of Directors the accounting firm to be
selected as the independent auditors for the Company and its subsidiaries and
[ii] to act on behalf of the Board in meeting with the independent auditors and
the appropriate corporate officers to review matters relating to corporate
financial reporting, accounting procedures, policies and controls, and the
scope of the respective audits of the independent auditors and any internal
auditor of the Company. In addition, the Audit Committee is responsible for
reviewing and reporting the results of each audit and making recommendations to
the Board with respect to financial reporting and accounting practices,
policies, controls and safeguards. The Audit Committee held two (2) meetings
during 1996. The members of the Audit Committee for 1996 were Ms. Wells and
Messrs. Harralson, Kiley, Mays, Powell, Ward, and Wells. The Company has not
established standing nominating or compensation committees or committees
performing similar functions. All directors attended 75% or more of the
combined total of the meetings of the Board of Directors and of all committees
on which they served.

DISCRETIONARY AUTHORITY IN ELECTION OF DIRECTORS

The Board of Directors has no reason to believe that any of the
nominees will be unavailable to serve as a director. If any nominee should
become unavailable before the Meeting, the persons named in the accompanying
form of Proxy, or their substitutes, reserve the right to vote for a substitute
nominee selected by the Board of Directors. In addition, if any shareholder or
shareholders shall vote shares cumulatively or otherwise for the election of a
director or directors other than the nominees named above, or substitute
nominees, or for less than all of them, the persons named in the accompanying
form of Proxy, or their substitutes, reserve the right to vote cumulatively
for some number less than all of the nominees named above or any
substitute nominees, and for such of the persons nominated as they may choose.

If for any reason more than eight (8) persons are to be elected
directors, the persons named in the accompanying form of Proxy, or their
substitutes, are not authorized to vote shares represented by proxies received
for more than eight (8) nominees. If for any reason less than eight (8)
persons are to be elected directors, the persons named in the accompanying form
of Proxy, or their substitutes, reserve the right to vote such shares for
nominees equal in number to the number to be elected from among those named
above or substitute nominees.

EXECUTIVE OFFICERS OF THE COMPANY

The Company's executive officers, as listed below, are elected
annually to their executive offices and serve at the pleasure of the Board of
Directors.

PRESENT POSITIONS WITH THE PRINCIPAL OCCUPATION
NAME/AGE COMPANY AND/OR CITIZENS SECURITY<F1> IN PAST FIVE OR MORE YEARS

Darrell R. Wells President and Chief Executive General Partner, Security Management
54 Officer, Director and Chairman Company (investments and investments
of the Board of the Company management), Louisville, Kentucky

Lane A. Hersman Executive Vice President and Present principal positions with the Com-
45 Chief Operating Officer and pany and with Citizens Security since
Director of the Company; July 1995; formerly senior financial man-
President and Chief Executive agement positions with the Company since
Officer and Director of Citizens 1992 and with Citizens Security since
Security 1989

Robert N. Greenwood Vice President, Operations, of the Present position with the Company since
62 Company Senior Vice President, 1992 and with Citizens Security since
Operations, of Citizens Security 1989

James L. Head Vice President, Administration, Present positions with the Company since
63 of the Company; Senior Vice 1992 and with Citizens Security since
President, Administration of 1990
Citizens Security

Stephen L. Marco Vice President and Chief Actuary Present positions with the Company since
46 of the Company; Senior Vice 1993 and with Citizens Security since
President and Chief Actuary 1992; formerly Vice President and Chief
of Citizens Security Actuary, Academy Life Insurance Com-
pany, from 1989 to 1992

Paul M. Marquess Vice President, Agency, of the Present positions with the Company and
59 Company; Senior Vice President, Citizens Security since June, 1996; for-
Agency, of Citizens Security merly Manager, Management Develop-
ment, Agency Group, Providian Corpo-
ration (insurance holding corporation)

Brent L. Nemec Vice President, Accounting, Chief Present positions with the Company and
42 Financial Officer, and Treasurer of Citizens Security since July, 1996; for-
the Company; Senior Vice President, merly Second Vice President-Financial
Accounting, Chief Financial Officer, Reporting, Agency Group, Providian Cor-
and Treasurer of Citizens Security poration (insurance holding corporation)

[FN]

<F1> Citizens Security Life Insurance Company ("Citizens Security") was the
Company's corporate predecessor and is now its principal subsidiary.

EXECUTIVE COMPENSATION

The following table provides certain summary information concerning
compensation paid or accrued by the Company and its subsidiaries to or on
behalf of the Company's President and Chief Executive Officer and its Executive
Vice President and Chief Operating Officer (together, the "Named Executive
Officers") for the fiscal years ended December 31, 1996, 1995 and 1994.
Disclosure for the remaining executive officers is not required because none
had annual salary and bonus that exceeded $100,000.

SUMMARY COMPENSATION TABLE

OTHER
ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITIONS YEAR SALARY BONUS COMPENSATION COMPENSATION

Darrell R. Wells, President and Chief 1996 $ 0 $ 0 $ 0 $ 0
Executive Officer, Director and 1995 $ 0 $ 0 $ 0 $ 0
Chairman of the Board<F1>

Lane A. Hersman, Executive Vice 1996 $103,750 $ 0 $ 0 $ 0
President and Chief Operating 1995 $ 95,050 $ 0 $ 0<F2> $ 0
Officer and Director 1994 $ 87,315 $ 0 $ 0<F2> $ 0

[FN]

<F1> Mr. Wells was first elected an officer of the Company in 1995. He does
not receive any compensation for serving as an officer.

<F2> Other Annual Compensation consists of personal use of an automobile.
The aggregate cost to the Company of such personal benefits did not
exceed the lesser of $50,000 or 10% of the annual salary received by
Mr. Hersman.

The following table provides information with respect to the Named
Executive Officers concerning unexercised options to purchase the Class A Stock
held as of December 31, 1996:

AGGREGATED YEAR-END OPTION VALUES

VALUE OF UNEXERCISED IN-THE-
NUMBER OF UNEXERCISED OPTIONS AT YEAR END MONEY OPTIONS AT YEAR END <F1>
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE

Darrell R. Wells 0/0 $0/0
Lane A. Hersman 5,000/0 $0/0

[FN]

<F1> Closing high bid as of the last trading day of 1996 (December 31, 1996)
minus the exercise price.

Lane A. Hersman is employed by the Company as Executive Vice
President and Chief Operating Officer and by Citizens Security as President and
Chief Executive Officer under an agreement expiring June 30, 1998 that provides
for cash compensation (included in the Summary Compensation Table) and certain
personal benefits (including those benefits described in Note 2 to the Summary
Compensation Table and other benefits standard for executive employees). If
the Company should terminate his employment before the specified termination
date other than in the event of his death or for cause, Mr. Hersman would be
entitled to a severance payment equal to his then current salary for a period
of one year.

Each member of the Board of Directors who is not a full-time
employee of the Company or its subsidiaries or who is not otherwise compensated
as such receives a fee of $4,000 per year and meeting attendance fees of up to
$3,600 per year.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
BY DIRECTORS AND EXECUTIVE OFFICERS

The Securities Exchange Act of 1934 requires the Company's
directors and executive officers and any person beneficially owning more than
ten percent (10%) of the Class A Stock to file certain reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC").
Based solely on its review of reports filed with the SEC, the Company believes
that all filing requirements applicable to its directors, executive officers,
and ten percent (10%) beneficial owners were satisfied during 1996 except that
Paul M. Marquess was late in filing his initial statement of beneficial
ownership following his employment by the Company and Darrell R. Wells and
Margaret A. Wells were each late in filing a statement of change in their
beneficial ownership of the Preferred Stock following Mr. Wells' sale of two
shares in a private transaction.

CERTAIN TRANSACTIONS INVOLVING
DIRECTORS AND EXECUTIVE OFFICERS

Darrell R. Wells provides portfolio management for the Company and
Citizens Security, through SMC Advisors, Inc. ("SMC") (of which he is the
principal officer, a director, and the sole shareholder). Frank T. Kiley is
also an officer of SMC. In July 1994, the Company and Citizens Security
entered into separate contracts with SMC for portfolio management services.
The contracts provide for aggregate annual fixed fees of $30,000 and incentive
compensation equal to five percent (5%) of the sum of the net realized capital
gains and losses plus the net unrealized capital gains and losses in the bond
and stock portfolios of the Company and Citizens Security during each year.
Total fixed fees paid or accrued by the Company under these contracts for 1996
were $30,000 (equal to about .04% of average cash and invested assets during
1996), while no incentive compensation was payable for 1996. Any excess of net
realized and unrealized capital losses over net realized and unrealized capital
gains at the end of a year is not carried forward to the next year. The
contracts provide for automatic renewal for successive one-year periods unless
either party gives at least 30 days' notice of termination as of the end of the
then current period. The contracts have been renewed for 1997. The contracts
are also subject to termination in certain events of default or insolvency.
Portfolio investments are limited to investments that are eligible under the
Kentucky Insurance Code and regulations and are to be in accordance with the
overall investment policies of the Company and Citizens Security.

In connection with its acquisition of Integrity National Life
Insurance Company in September, 1995, the Company obtained $6,400,000 in
financing from a commercial bank. As part of its security for the financing,
the bank required that Mr. Wells personally guarantee $2,000,000 of the
financing. In consideration of the guaranty by Mr. Wells, the Company entered
into a guarantor's compensation agreement with Mr. Wells under which the
Company paid a fee of 10% of the $2,000,000 amount guaranteed by Mr.
Wells (that is, $200,000) on the date of the bank financing and agreed
to pay a further guaranty fee on each anniversary thereof as long as the
Mr. Wells' guaranty remains outstanding. All payments are to be in the form
of promissory notes except as hereinafter described. The guarantor's
compensation agreement calls for annual fees to be based on a percentage
of the outstanding principal balance of the amount guaranteed by Mr. Wells,
beginning with 10% on the first anniversary and thereafter decreasing in
stages to 0.5% on the last anniversary before maturity, for an average
percentage fee of 4.21% per annum over the entire term.

In September, 1996, the Company and Mr. Wells agreed to a one-year
modification of the guarantor's compensation agreement. In lieu of paying Mr.
Wells the fee of $200,000 called for by the agreement on the first anniversary
of the bank financing, the Company agreed to pay SMC an additional fee of 15%
of the sum of the net realized capital gains and losses plus the net unrealized
capital gains and losses in the bond and stock portfolios of the Company during
the period from October 1, 1996 through September 30, 1997. (By virtue of the
Company's payments to the bank described in the following paragraph, the fee
was subsequently reduced from 15% to about 12.8%.) Unless the parties
otherwise agree, this modification will not apply to any future period after
September 22, 1997. In the event the Company's investment advisory agreement
with SMC is terminated, any portion of the fee that SMC does not receive will
become payable to Mr. Wells. The amount payable to SMC and/or Mr. Wells
pursuant to the one-year modification will not be determinable until September,
1997; however, as of December 31, 1996, no fees had been earned under the
modification.

The Company has made payments of $390,000 to the bank on the
portion of the bank financing guaranteed by Mr. Wells, reducing the balance to
$1,610,000. Assuming that there are no further payments on that portion and no
future modifications of the kind described in the preceding paragraph, the
Company's total payments to Mr. Wells (exclusive of any amounts that may be
payable to SMC or him under the one-year modification described in the
preceding paragraph) will be approximately $353,000, of which $200,000 has
already been paid in the form of note described in the following paragraph.

The annual guaranty fees to Mr. Wells are payable in the form of
non-negotiable promissory notes of the Company due in 2003. The notes bear
interest at the prime rate charged by the commercial bank. The guarantor's
compensation agreement also provides that the Company and Mr. Wells may agree
to exchange the notes for securities of the Company on terms to be determined
by a majority of the members of the Company's Board of Directors who are not
affiliated with Mr. Wells. The $200,000 note issued on the date of the bank
financing in 1995, together with $29,743 in accrued interest thereon, was
prepaid by the Company on April 7, 1997.

OTHER MATTERS

No business other than the Election of Directors is expected to
come before the Meeting, except for matters incident to its conduct. Should
any other matters requiring a vote of shareholders arise, including a question
of adjourning the Meeting, the persons named in the accompanying form of Proxy
or their substitutes will vote thereon according to their judgment of the best
interests of the Company.

INDEPENDENT PUBLIC ACCOUNTANTS

On August 7, 1996, the Board of Directors approved the appointment
of Ernst & Young, LLP as the Company's independent public accountants and
auditors with respect to the Company's financial statements for the year ending
December 31, 1996. Ernst & Young, LLP has conducted the audits of the Company
since its organization in 1990 and has conducted the audits of Citizens
Security since the year ended December 31, 1989. The Board of Directors
ordinarily selects an independent certified public accountant and
auditor for a year in the last half of the year. It has not yet made a
selection for the current year.

It is expected that a representative of Ernst & Young, LLP will be
present at the Meeting, will have the opportunity to make a statement if the
representative desires to do so, and will be available to respond to
appropriate questions.

FINANCIAL STATEMENTS

Financial statements of the Company for its most recent year are
contained in the 1996 Annual Report to Shareholders, a copy of which is
included with the copies of this Proxy Statement mailed to shareholders.
Additional copies are available to shareholders on request addressed to the
President, The Marketplace, Suite 300, 12910 Shelbyville Road, Louisville,
Kentucky 40243. The Annual Report and such financial statements are not to be
considered as part of this Proxy Statement because they are not deemed material
for the exercise of prudent judgment in regard to the matters to be acted upon
at the Meeting.

PROPOSALS BY SHAREHOLDERS

Any shareholder proposals that may be included in the Board of
Directors' proxy statement and form of proxy for presentation at the 1998
Annual Meeting of Shareholders must be received by the Company at The
Marketplace, Suite 300, 12910 Shelbyville Road, Louisville, Kentucky 40243 not
later than December 23, 1997.

GENERAL INFORMATION

This solicitation of proxies by the Board of Directors is being
conducted primarily by mail. The Company will bear the costs of the
solicitation, which may include reimbursement paid to brokerage firms and
others for their reasonable expenses in forwarding solicitation material for
the Meeting to beneficial owners. Certain officers, directors, and regular
employees of the Company may also solicit proxies on behalf of the Board of
Directors by means of telephone calls, personal interviews, and mail at no
additional expense to the Company, except any actual out-of-pocket
communications charges that, if incurred, are not expected to exceed $500.

All shareholders who do not expect to attend the Meeting are urged
to complete, date, sign, and return the accompanying form of Proxy in the
return envelope enclosed for that purpose.

APPENDIX A
(Front)
PROXY

CITIZENS FINANCIAL CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR SHAREHOLDERS MEETING ON MAY 21, 1997

The undersigned hereby appoints James L. Head and Len E. Schweitzer
and each or either of them, as true and lawful agents and proxies, with full
power of substitution in each, to represent the undersigned in all matters
coming before the 1997 Annual Meeting of Shareholders of Citizens Financial
Corporation to be held at the office of the Company, The Marketplace, Suite
300, 12910 Shelbyville Road, Louisville, Kentucky on Wednesday, May 21, 1997 at
4:00 p.m. Eastern Daylight Time, and any adjournments thereof, and to vote all
shares owned of record by the undersigned as follows:

1. ELECTION OF DIRECTORS
Nominees: John H. Harralson, Jr., Lane A. Hersman, Frank T.
Kiley, Charles A. Mays, Earle V. Powell, Thomas G.
Ward, Darrell R. Wells and Margaret A. Wells.

[ ] VOTE FOR all nominees listed above, except vote withheld from
following nominees (if any):
____________________________________________________________________

[ ] VOTE WITHHELD from all nominees listed above.

2. OTHER MATTERS
In their discretion, to vote with respect to any other matters that
may come before the Meeting or any adjournments thereof, including
matters incident to its conduct.

WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER
SPECIFIED ABOVE BY THE SHAREHOLDER. TO THE EXTENT CONTRARY SPECIFICATIONS ARE
NOT GIVEN, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN ITEM 1 WITH THE
DISCRETIONARY AUTHORITY SET FORTH IN THE ACCOMPANYING PROXY STATEMENT.

PLEASE DATE AND SIGN ON THE REVERSE SIDE

________________________________________________________________________________
13 (Back)

PLEASE SIGN EXACTLY AS Dated: _______________, 1997
NAME APPEARS BELOW

______________________Signature

(JOINT OWNERS SHOULD EACH SIGN.
ATTORNEYS-IN-FACT, EXECUTORS,
ADMINISTRATORS, CUSTODIANS,
PARTNERS, OR CORPORATION OFFICERS
SHOULD GIVE FULL TITLE).

PLEASE DATE, SIGN, AND RETURN THIS PROXY
IN THE ENCLOSED ENVELOPE PROMPTLY.
NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.