CITIZENS FINANCIAL CORP /KY/, DEF 14A, 1999-04-22

CITIZENS FINANCIAL CORP /KY/
DEF 14A, 1999-04-22
ACCIDENT & HEALTH INSURANCE

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<PAGE> 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 ss.240.14a-11(c) or ss.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)(1) 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

<PAGE> 2

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

NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, MAY 20, 1999

The 1999 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 Thursday, May 20, 1999 at
3:00 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");

(2) to consider and act upon a proposal to approve the Company's 1999
Stock Option Plan under which directors and key employees of the Company may be
granted options to purchase, subject to certain limitations, shares of the
Company's Class A Common Stock (the "PROPOSED STOCK OPTION PLAN"); and

(3) 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, the Proposed Stock Option
Plan and other matters.

April 16, 1999 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 22, 1999

<PAGE> 3

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 1999 Annual Meeting of
Shareholders of the Company to be held on Thursday, May 20, 1999, at 3:00 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, [ii] for approval of the Company's 1999 Stock Option
Plan, and [iii] 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 in the election of directors
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
released to shareholders on or about April 22, 1999.

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 16, 1999 (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 1,800,315 shares of the Class A Stock
outstanding and entitled to vote. Each such share is entitled to one vote on the
proposal to approve the Company's 1999 Stock Option Plan and on all other
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, including the
proposal to approve the Company's 1999 Stock Option Plan. 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.

<PAGE> 4

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table reflects certain information regarding the
beneficial ownership of the Class A 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 attributed to such person.

OWNERSHIP OF CLASS A STOCK
PERCENT OF
SHAREHOLDER SHARES CLASS

5% HOLDER

Darrell R. Wells
Suite 310, 4350 Brownsboro Road
Louisville, Kentucky 40207 955,322<F1> 53.06%

DIRECTORS AND EXECUTIVE OFFICERS
AS A GROUP

14 persons 1,044,663 58.03%

__________________
<F1> Mr. Wells shares voting and investment power with respect to 67,315 shares
of the Class A Stock. Frank T. Kiley, who beneficially owns 24,303 shares
of the Class A Stock, may be deemed to be affiliated with Mr. Wells for
certain purposes.

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 1998 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.

<PAGE> 5

<TABLE>
<CAPTION>
OWNERSHIP OF
CLASS A STOCK<F1>
PRINCIPAL OCCUPATION(S)
NAME, AGE, AND PRESENT OR EMPLOYMENT(S) DURING
POSITIONS WITH THE COMPANY DIRECTOR PAST FIVE OR MORE YEARS PERCENT
AND CITIZENS SECURITY<F2> SINCE AND CERTAIN DIRECTORSHIPS<F3> SHARES OF CLASS

John H. Harralson, Jr. 1990 Publisher, Southern Publishing d/b/a 12,468 0.69%
71 The Voice Tribune (suburban newspaper
Director of the Company publishing), Louisville, Kentucky
and Citizens Security

Lane A. Hersman 1995 Present principal positions with the Company and 5,700 0.32%
47 Citizens Security since July, 1995; formerly
Executive Vice President senior financial management positions with
and Chief Operating Officer the Company since 1991 and Citizens Security
and Director of the since 1988
Company; President and
Chief Executive Officer and
Director of Citizens
Security

Frank T. Kiley 1990 Principal, Security Management Company 24,303 1.35%
52 (investments and investment management),
Director of the Company Louisville, Kentucky

Charles A. Mays 1994 Executive Vice President and Chief Financial 2,500 0.14%
60 Officer, Commonwealth Bank and Trust
Director of the Company Company, Louisville, Kentucky
and Citizens Security

Earle V. Powell 1990 Retired; Trustee, Kentucky Teachers 16,465 0.91%
82 Retirement Board
Director of the Company
and Citizens Security

Thomas G. Ward 1990 President, Third Kentucky Cellular 24,169 1.34%
61 Corporation (telecommunications),
Director of the Company Lexington, Kentucky since 1995; President,
and Citizens Security Texas 5 Corporation (telecommunications),
Lexington, Kentucky since 1990

Darrell R. Wells<F4> 1990 General Partner, Security Management 955,322 53.06%
56 Company (investments and investment
President and Chief Executive management), Louisville, Kentucky.
Officer, Director and Director, Churchill Downs Incorporated
Chairman of the Board and Jundt Growth Fund
of the Company

Margaret A. Wells<F4> 1993 Homemaker and civic 955,322 53.06%
52 volunteer
Director of the Company
</TABLE>

_________________________
<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 1 under "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT" and Ms. Wells as to shares beneficially owned by Mr. Wells. See
Note 4.

<F2> Citizens Security Life Insurance Company ("CITIZENS SECURITY") was the
Company's corporate predecessor and is now its principal subsidiary.

<F3> 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.

<F4> 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."

3
<PAGE> 6

Five (5) meetings of the Board of Directors were held during 1998. 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 one (1) meeting
during 1998. The members of the Executive Committee for 1998 were Messrs. Wells,
Hersman, Kiley and Mays. 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
and accounting procedures and policies, the adequacy of financial, accounting
and operating 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 it may have to the Board with respect to
financial reporting and accounting practices, policies, controls and safeguards.
The Audit Committee held one (1) meeting during 1998. The members of the Audit
Committee for 1998 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.
<TABLE>
<CAPTION>

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

Darrell R. Wells President and Chief Executive General Partner, Security Management
56 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
47 Chief Operating Officer and Company and with Citizens Security since
Director of the Company; July, 1995; formerly senior financial
President and Chief Executive managent positions with the Company
Officer and Director of Citizens since 1991 and with Citizens Security
Security since 1988

<PAGE> 7

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

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

James L. Head Vice President, Administration, Present position with the Company since
65 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
48 of the Company; Senior Vice 1993 and with Citizens Security since
President and Chief Actuary 1992
of Citizens Security

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

Brent L. Nemec Vice President, Accounting and Present positions with the Company and
44 Chief Financial Officer, and Treasurer Citizens Security since July, 1996;
of the Company; Senior Vice formerly Second Vice President, Finan-
President, Chief Financial Officer, cial Reporting, Agency Group, Providian
and Treasurer of Citizens Security Corporation (insurance holding corpora-
tion)

Tonya G. Crawford Vice President, Pre-Need, Present position with the Company since
36 Company and Senior Vice President, February, 1999 and with Citizens Secu-
Pre-Need of Citizens Security rity since November, 1998, formerly Di-
rector and Director of Operations of United
Liberty Life Insurance Company (acquired
by Citiens Security in 1998)

</TABLE>

_________________________
<F1> Citizens Security Life Insurance Company ("CITIZENS SECURITY") was the
Company's corporate predecessor and is now its principal subsidiary.
Certain of the above-named officers hold comparable offices in United
Liberty Life Insurance Company, a subsidiary of Citizens Security.

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, 1998, 1997 and 1996. Disclosure for the
remaining executive officers is not required because none had annual salary and
bonus that exceeded $100,000.

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

OTHER
ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITIONS YEAR SALARY BONUS COMPENSATION COMPENSATION
<S> <C> <C> <C> <C> <C>

Darrell R. Wells, President and 1998 $ 0 $0 $0 $ 0
Chief Executive Officer, Director 1997 $ 0 $0 $0 $ 0
and Chairman of the Board<F1> 1996 $ 0 $0 $0 $ 0

Lane A. Hersman, Executive 1998 $109,778 $0 $0<F2> $2,933<F3>
Vice President and Chief Operating 1997 $109,100 $0 $0<F2> $2,400<F3>
Officer and Director 1996 $103,750 $0 $0<F2> $1,126<F3>

</TABLE>

<PAGE> 8

_________________________
<F1> Mr. Wells 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.

<F3> Includes contribution by the Company to Mr. Hersman's account under the
Company's 401(k) plan (beginning in 1997) and term life insurance premiums.

The following table provides information with respect to the Named
Executive Officers concerning options to purchase the Class A Stock:

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>

NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS
YEAR-END AT YEAR-END
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE
NAME ON EXERCISE VALUE REALIZED UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>

Darrell R. Wells 0 0 0/0 $0/$0
Lane A. Hersman 5,000 $18,750 0/0 $0/$0
</TABLE>

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 $7,600 per year.

PROPOSED 1999 STOCK OPTION PLAN

On March 31, 1999, the Board of Directors adopted the Citizens
Financial Corporation 1999 Stock Option Plan (the "1999 OPTION PLAN"), which
also became effective on the same date, subject to the approval of shareholders
at the Meeting. The purpose of the 1999 Option Plan is to promote the Company's
interest by affording an incentive to key employees to remain in the employ of
the Company and its subsidiaries and to use their best efforts on its behalf and
to aid the Company and its subsidiaries in attracting, maintaining and
developing capable personnel of a caliber required to ensure the continued
success of the Company and its subsidiaries.

At the Meeting, the shareholders will be asked to approve the 1999
Option Plan. Approval of the 1999 Option Plan by the Company's shareholders is
required to qualify the options for favorable tax treatment as incentive stock
options under Section 422 of the Internal Revenue Code of 1986, as amended (the
"CODE"). The 1999 Option Plan will not become effective unless approved by the
holders of record of a majority of the shares of the Company's Class A Stock
present in person or represented by proxy at the Meeting. Unless otherwise
instructed, it is the intention of the persons named in the accompanying form of
proxy to vote the shares represented thereby in favor of the 1999 Option Plan.

The following constitutes a brief discussion of the material features
of the 1999 Option Plan and is qualified in its entirety by reference to the
copy of the 1999 Option Plan which is attached as Appendix A to this Proxy
Statement. The 1999 Option Plan permits the grant of both incentive stock
options (" ISOS"), within the meaning of Code Section 422, and nonqualified
stock options ("NSOS"). All key employees, including officers and directors that
are key employees of the Company or its subsidiaries, may be granted ISOs and
NSOs. Non-employee directors of the Company or its subsidiaries are eligible
only to receive NSOs. As of April 15, 1999, the Company had about 70 employees
and directors eligible to receive stock options.

A total of 110,000 shares of Class A Stock will be reserved for
issuance under the 1999 Option Plan (representing about six percent (6%) of the
total number of shares of Class A Stock outstanding on April 15, 1999, as
adjusted to reflect the issuance of such additional shares). The shares to be
issued under the 1999 Option Plan will be currently authorized but unissued
shares of Class A Stock of the Company. The number of shares of the Company's
Class A Stock available under the 1999 Option Plan or under an option will be
automatically adjusted in the event of a stock dividend, stock split,
reorganization, merger, consolidation or a combination or exchange of shares.
Shares of the Company's Class A Stock subject to unexercised options that

<PAGE> 9

expire or are terminated before the end of the period during which options may
be granted will be restored to the number of shares available for issuance under
the 1999 Option Plan. The Class A Stock is currently eligible for quotation on
the National Association of Securities Dealers, Inc.'s Small-Cap Market
("NASDAQ") under the trading symbol CNFL. The last sale price of the Class A
Stock on or before April 15, 1999, as reported by NASDAQ, was $10.625.

The 1999 Option Plan will be administered by the Board of Directors.
The Board of Directors decides which key employees and directors will be granted
options. The Board also decides the terms and conditions of the options granted,
consistent with the terms of the 1999 Option Plan. The Board of Directors will
make any other determinations necessary or advisable for the administration of
the 1999 Option Plan.

Each option granted under the 1999 Option Plan will be evidenced by a
binding agreement between the employee or director and the Company. The option
agreement will set forth the terms and conditions of the option, including the
purchase price for the shares upon exercise of the option (the "OPTION PRICE"),
the period during which the option is exercisable, the time or times when the
option vests, whether the vesting of the option will be accelerated upon death,
disability or a change in control event, whether the option is a
performance-based option and the terms thereof, and other terms considered
appropriate or desirable by the Board of Directors that are not inconsistent
with the terms of the 1999 Option Plan. The maximum term of each ISO is ten (10)
years except for an ISO granted to an employee beneficially owning more than ten
percent (10%) of the voting stock of the employer corporation and its parent and
subsidiary corporations ("TEN PERCENT SHAREHOLDER"). The maximum term for an ISO
granted to a Ten Percent Shareholder is five (5) years from the date of grant.
The Option Price for an ISO granted under the 1999 Option Plan must be at least
100% of the fair market value of such shares on the date of grant or, in the
case of an ISO granted to a Ten Percent Shareholder, 110% of the fair market
value of such shares on such date. The Option Price for an NSO will be
established by the Board of Directors and is not required to be the fair market
value of the shares as of the date of grant. There is also a $100,000 limit on
the value of stock (determined as of the date of grant) covered by ISOs that
first become exercisable by an employee in any calendar year.

No part of any option may be exercised to the extent that the exercise
would cause the employee or director to have compensation from the Company or
its affiliates for any year in excess of $1,000,000 and which is nondeductible
by the Company or its affiliates pursuant to Code Section 162(m). The Option
Price may be paid in cash by the employee or director or, in the case of a
cashless exercise, by a broker utilized by the employee or director, or in such
other consideration that the Board of Directors considers appropriate, including
Class A Stock already owned by the employee or director.

Options granted pursuant to the 1999 Option Plan are not transferable
except upon the death of an employee or director, in which event, they may be
transferred only in accordance with and to the extent provided for in the laws
of descent and distribution.

The 1999 Option Plan is scheduled to end March 30, 2009 unless sooner
terminated by the Board. At that time, no further options may be granted under
the 1999 Option Plan. The Board may amend the 1999 Option Plan at any time,
except that the following amendments require shareholder approval: [i] any
change to the classes of persons eligible to receive ISOs, [ii] an increase the
maximum number of shares available for option under the 1999 Option Plan, or
[iii] any change that would require shareholder approval under applicable
federal or state law.

ISOs granted under the 1999 Option Plan are intended to be "incentive
stock options" as defined by Code Section 422. An employee generally will not
realize taxable income upon either the grant or the exercise of an ISO. If the
employee does not sell or otherwise dispose of the shares of the Company's Class
A Stock acquired upon exercising an ISO within either (i) two (2) years after
the grant of the ISO, or (ii) one (1) year after the date shares of the
Company's Class A Stock are transferred to the employee pursuant to the exercise
of the ISO, any gain upon a subsequent disposition of the shares will be taxed
to the employee at capital gain tax rates. If the employee disposes of the
shares within either of these periods, the employee will recognize ordinary
income in the year of the early disposition in an amount equal to the difference
between the Option Price and the fair market value of the shares on the date of
exercise. Any remaining gain (the difference between the sale price and the
employee's tax basis in the shares) is taxed to the employee as long-term
capital gain or loss if the shares are held for more than one year and
short-term capital gain or loss if the shares are held for one year or less. The
employee's tax basis in the shares is equal to the Option Price plus the amount
of ordinary income recognized.

<PAGE> 10

The Company receives no tax deduction in connection with the grant or exercise
of an ISO except to the extent the employee is required to treat gain at the
time of sale as ordinary income due to early disposition of the shares. The
Company is entitled to such deduction in the same tax year as the early
disposition of the shares occurs equal to the amount of ordinary income
recognized by the employee.

The excess of the market price of the shares at the time the ISO is
exercised over the Option Price of the option is an item of tax preference for
purposes of computing any liability for the "alternative minimum tax" under Code
Section 55 in the year the option is exercised. Liability for the alternative
minimum tax is complex and depends upon an individual's overall tax situation.

Employees and directors receiving NSOs are not taxed when the option is
granted. However, unlike an ISO, the employee or director is taxed, at ordinary
income tax rates, in the year the NSO is exercised, or, with respect to
directors and key employees who are considered "insiders," the first day on
which the sale of the shares at a profit would not subject the employee or
director to liability under Section 16(b) of the Securities Exchange Act of 1934
(assuming the employee or director does not make an election to be taxed at the
time of exercise), on the difference between the market price of the shares on
such date over the Option Price. The Company generally is allowed a tax
deduction equal to the amount of ordinary income recognized by the employee or
director. The employee or director's tax basis in the shares acquired pursuant
to the exercise of an NSO is equal to the Option Price plus the amount of
ordinary income recognized. Any gain or loss on the subsequent sale or other
disposition of the shares is recognized by the employee or director as long-term
capital gain or loss if the shares are held for more than one year and
short-term capital gain or loss if the shares are held for one year or less.

The above described tax treatment for NSOs assumes there is no readily
ascertainable market value for the options when granted. NSOs granted under the
1999 Option Plan normally will not have a readily ascertainable fair market
value when granted. If there is a readily ascertainable fair market value, the
employee or director will recognize ordinary income at the time of the grant in
the amount of the fair market value of the option and the Company is entitled to
a corresponding tax deduction. The exercise of the option will not result in any
further taxable income. The employee or director's tax basis in shares is the
Option Price plus the value of the option when granted. The 1999 Option Plan
also allows the Option Price for an NSO to be less than fair market value of the
shares at the time of grant. Deeply discounted options may also cause the
employee or director to recognize ordinary income at the time the option is
granted.

Special rules apply if, as permitted by the 1999 Option Plan, the
employee or director pays all or a portion of the Option Price for an option
with stock (by delivering previously acquired shares) or by cashless exercise
(by selling shares through a broker):

USING STOCK TO PAY THE OPTION PRICE: An employee or director who
chooses to pay with stock will generally recognize no gain or loss on the shares
tendered (except for the ordinary income recognized on the early disposition of
shares if the shares tendered were acquired by the exercise of an ISO -- see the
tax discussion above for ISOs). The number of shares received on the exercise of
the option equal to the number of shares used to pay the Option Price has a tax
basis equal to the employee's or director's tax basis in the shares used to pay
the Option Price. The employee or director is treated as having acquired the
remaining shares without consideration. If the option is an NSO, the market
price of those shares is taxed to the employee or director as ordinary income
and the employee or director will have a tax basis in the shares equal to the
gain recognized plus any cash paid. If the option is an ISO, the employee or
director will recognize no taxable income with respect to the remaining shares
received but those shares will have a zero tax basis. The employee or director's
holding period in the number of shares received pursuant to exercise of the
option equal to the number of shares used to pay the Option Price includes the
employee or director's holding period in the shares used to pay the Option Price
for those shares. The employee or director's holding period in the remaining
shares received begins on the date the employee or director acquires those
shares pursuant to the exercise of the option.

USING THE CASHLESS EXERCISE METHOD: When a broker sells a portion of
the shares the employee or director is purchasing under the option to pay the
Option Price and applicable withholding taxes, the employee or director will
recognize capital gain or loss as the employee or director would for any
disposition of stock. The amount of the gain or loss will be equal to the
difference between the sale price and the employee or director's tax basis in
the shares. Since the employee or director's tax basis in the shares is equal to
the Option Price plus any ordinary income recognized on exercise of the option,
in many cases the employee or director will have no

<PAGE> 11

capital gain or loss (for example, where the exercise of the option and sale of
sufficient shares to pay the option price and withholding occurs
simultaneously). In that case, the only gain recognized is the ordinary income
recognized by the employee or director on the exercise of an NSO, or if the
employee is using the cashless exercise method with an ISO, the amount of the
ordinary income recognized on the early disposition of the ISO shares used to
pay the Option Price.

The employee or director must make arrangements to pay to the Company,
at the time of exercise in the case of an NSO, any federal, state or local taxes
required to be withheld.

The foregoing tax discussion describes the federal income tax
consequences. Different state or local tax consequences may apply.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS APPROVE THE
PROPOSAL TO ADOPT THE CITIZENS FINANCIAL CORPORATION 1999 STOCK OPTION PLAN.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

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 of the Class A Stock 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 1998.

CERTAIN TRANSACTIONS INVOLVING DIRECTORS AND EXECUTIVE OFFICERS

Darrell R. Wells, the Company's president and chief executive officer,
provides securities portfolio management under contracts with the Company and
its insurance subsidiaries through SMC Advisors, Inc. ("SMC") of which he is the
principal officer, a director, and the sole shareholder. Frank T. Kiley, a
director of the Company, is also an officer and director of SMC. The contracts
provide for annual fixed fees and incentive compensation equal to five percent
(5%) of the sum of any net gain derived from adding net realized capital gains
and losses and net unrealized capital gains and losses in the bond and stock
portfolios of the Company and its insurance subsidiaries during each year. Total
fixed fees incurred by the Company under these contracts for 1997 were $30,000
(equal to about 0.04% of average cash and invested assets during 1997).
Additionally, $306,747 in incentive fees were incurred for 1997 (equal to about
0.47% of average cash and invested assets during 1997). Total fixed fees
incurred by the Company under these contracts for 1998 were $34,500 (equal to
about 0.03 % of average cash and invested assets during 1998). Additionally,
$196,904 in incentive fees were incurred for 1998 (equal to about 0.20% of
average cash and invested assets during 1998). 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 1999. 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 its insurance subsidiaries.

In connection with its acquisition of Integrity National Life Insurance
Company in 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 remained outstanding. (The original
fee was paid by a note that the Company repaid on April 7, 1997 with interest of
$29,743.) The original agreement called 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 1996, the Company and Mr. Wells amended the agreement. In lieu of
paying Mr. Wells the fee of

<PAGE> 12

$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 any net
gain derived from adding net realized capital gains and losses and 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 (the
fee was subsequently reduced from 15% to about 12.8% to reflect a reduction in
the amount guaranteed). Pursuant to the amendment, during 1997 the Company paid
SMC a fee of $133,464 for the twelve month period ended September 30, 1997. In
September, 1997, the Company and Mr. Wells again amended the agreement to renew
for another year (through September 22, 1998) the provisions set forth in the
first amendment. However, on June 15, 1998, the bank released Mr. Wells'
guaranty. No further fee was payable for the period after September 30, 1997.

OTHER MATTERS

The Company did not receive prior to March 16, 1999 notice of any other
matters requiring a vote of shareholders to be brought before the Meeting
(except for procedural matters), and the Company does not expect any such other
matters to arise. If, however, any such other matters are presented, 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 November 11, 1998, 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, 1998. 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 1998 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 proposal that a shareholder may desire to be included in the Board
of Directors' proxy statement and form of proxy for presentation at the 2000
Annual Meeting of Shareholders must be received by the Company not later than
December 23, 1999. Any other proposal that a shareholder may desire to bring
before the 2000 Annual Meeting of Shareholders must be received by the Company
not later than March 6, 2000. All such proposals should be sent to: the
Secretary of the Company at The Marketplace, Suite 300, 12910 Shelbyville Road,
Louisville, Kentucky 40243.

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.

<PAGE> 13

APPENDIX A

CITIZENS FINANCIAL CORPORATION
1999 STOCK OPTION PLAN

1. PURPOSE. The purpose of the Citizens Financial Corporation
1999 Stock Option Plan is to promote the interests of the Company by affording
an incentive to directors and key employees to continue their service to the
Company and its Subsidiaries and to use their best efforts on its behalf and
further to aid the Company and its Subsidiaries in attracting, maintaining, and
developing capable personnel of a caliber required to ensure the continued
success of the Company and its Subsidiaries by having the means to offer to such
persons an opportunity to acquire or increase their proprietary interest in the
Company through the granting of incentive stock options and nonstatutory stock
options to purchase the Company's stock pursuant to the terms of the Plan.

2. DEFINITIONS.

A. "BOARD" means the Company's Board of Directors.

B. "CHANGE IN CONTROL" means: (a) the sale, lease, exchange or
other transfer of all or substantially all of the assets of the Company (in one
transaction or in a series of related transactions) to a person that is not
controlled by the Company, (b) the approval by the Company shareholders of any
plan or proposal for the liquidation or dissolution of the Company, or (c) a
change in control of the Company of a nature that would be required to be
reported (assuming such event has not been "previously reported") in response to
Item 1(a) of the Current Report on Form 8-K, as in effect on the effective date
of the Plan, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, whether or not the Company is then subject to such reporting requirement;
provided, however, that, without limitation, such a change in control shall be
deemed to have occurred at such time as (i) any Person becomes after the date
this Plan is approved or ratified by the Company's shareholders the "beneficial
owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934),
directly or indirectly, of 30% or more of the combined voting power of the
Company's outstanding securities ordinarily having the right to vote at
elections of directors unless the Board shall have expressly approved the
transaction or acquisition that resulted in such Person becoming the beneficial
owner of such voting power, or (ii) individuals who constitute the board of
directors of the Company on the date this Plan is approved or ratified by the
Company's shareholders cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to such date
whose election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors comprising or deemed
pursuant hereto to comprise the Board on the date this Plan is approved or
ratified by the Company's shareholders (either by a specific vote or by approval
of the proxy statement of the Company in which such person is named as a nominee
for director) shall be, for purposes of this clause (ii) considered as though
such person were a member of the Board on the date this Plan is approved or
ratified by the Company's shareholders.

C. "CLASS A STOCK" means the Company's Class A Stock, no par
value, or the common stock or securities of a Successor that have been
substituted therefor pursuant to Section 9.

D. "CODE" means the Internal Revenue Code of 1986, as amended.

E. "COMPANY" means Citizens Financial Corporation, with its
principal place of business at The Marketplace, Suite 300, 12910 Shelbyville
Road, Louisville, Kentucky 40243.

F. "DISABILITY" means, as defined by and to be construed in
accordance with Code Section 22(e)(3), any medically determinable physical or
mental impairment that is expected to result in death or that has lasted or can
be expected to last for a continuous period of not less than twelve (12) months,
and that renders Optionee unable to engage in any substantial gainful activity.
An Optionee shall not be considered to have a Disability unless Optionee
furnishes proof of the existence thereof in such form and manner, and at such
time, as the Board may require.

G. "ISO" means an option to purchase Class A Stock that at the
time the option is granted qualifies as an incentive stock option within the
meaning of Code Section 422.

A-1

<PAGE> 14

H. "NSO" means a nonstatutory stock option to purchase Class A
Stock that at the time the option is granted does not qualify as an ISO.

I. "OPTION PRICE" means the price to be paid for Class A Stock
upon the exercise of an option, in accordance with Section 7.E.

J. "OPTIONEE" means a director or key employee to whom an
option has been granted under the Plan.

K. "OPTIONEE'S REPRESENTATIVE" means the personal
representative of Optionee's estate, and after final settlement of Optionee's
estate, the successor or successors entitled thereto by law.

L. "PLAN" means the Citizens Financial Corporation 1999 Stock
Option Plan, as set forth herein, and as amended from time to time.

M. "SUBSIDIARY" means any corporation that at the time an
option is granted qualifies as a subsidiary of the Company as defined by
Code Section 424(f).

N. "SUCCESSOR" means the entity surviving a Change in Control.

O. "TEN PERCENT SHAREHOLDER" means an employee (including an
employee director) who, at the time an option is granted, owns more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or Subsidiary employing Optionee or of its parent (within the meaning of
Code Section 424(e)) or subsidiary (within the meaning of Code Section 424(f))
corporation.

3. SHARES SUBJECT TO PLAN.

A. AUTHORIZED UNISSUED OR TREASURY SHARES. Subject to Section
9, shares to be delivered upon exercise of options shall be made available, at
the discretion of the Board, from the authorized unissued shares of Class A
Stock.

B. AGGREGATE NUMBER OF SHARES. Subject to adjustments and
substitutions made pursuant to Section 9, the aggregate number of shares that
may be issued upon exercise of all options that may be granted under the Plan
shall not exceed one hundred ten thousand (110,000) of the Company's authorized
shares of Class A Stock.

C. SHARES SUBJECT TO EXPIRED OPTIONS. Shares of Class A Stock
subject to, but not delivered under, an option that expires or terminates for
any reason without having been fully exercised shall be available for any lawful
corporate purpose, including for transfer pursuant to other options granted to
the same director or key employee or other directors or key employees without
decreasing the aggregate number of shares of Class A Stock that may be granted
under the Plan.

4. ADMINISTRATION. The Plan shall be administered by the Board.
The Board shall have full power and authority to construe, interpret, and
administer the Plan and may from time to time adopt such rules and regulations
for carrying out the Plan as it may deem proper and in the Company's best
interest.

5. GRANT OF OPTIONS. Subject to the terms and conditions of the
Plan, the Board shall have exclusive jurisdiction and discretion to: [i] select
the directors and key employees to whom options are awarded; [ii] authorize the
award of ISOs, NSOs or a combination of ISOs and NSOs; [iii] determine the
number of shares of Class A Stock subject to each option; [iv] determine the
time(s) when options will be granted, the manner in which each option is
exercisable, and the duration of the exercise period; [v] fix other provisions
of the option agreement that it deems necessary or desirable consistent with the
terms of the Plan; and [vi] determine all other questions relating to the
administration of the Plan. The interpretation of any provision of the Plan by
the Board shall be final, conclusive, and binding upon all persons and the
officers of the Company shall place into effect and shall cause the Company to
perform its obligations under the Plan in accordance with the determinations of
the Board in administering the Plan.

6. ELIGIBILITY. Directors and key employees of the Company and
its Subsidiaries, including officers and directors, shall be eligible to receive
options under the Plan; provided that no director or other person who is not
also an employee of the Company or a Subsidiary shall be eligible to receive an
ISO. Directors and key

A-2

<PAGE> 15

employees to whom options may be granted will be those selected by the Board
from time to time who, in the Board's sole discretion, have contributed in the
past or who may be expected to contribute materially in the future to the
successful performance of the Company and its Subsidiaries.

7. TERMS AND CONDITIONS OF OPTIONS. Each option granted under
the Plan shall be evidenced by an option agreement signed by Optionee and by a
member of the Board on the Company's behalf. An option agreement shall
constitute a binding contract between the Company and Optionee, and every
Optionee, upon acceptance of such option agreement, shall be bound by the terms
and restrictions of the Plan and of the option agreement. Such agreement shall
be subject to the following express terms and conditions and to such other terms
and conditions that are not inconsistent with the Plan as the Board deems
appropriate.

A. $100,000 ISO LIMITATION. The aggregate fair market value
(determined as of the option grant date) of the stock for which ISOs will first
become exercisable by an Optionee in any calendar year under all ISO plans of
Optionee's employer corporation and its parent corporation and Subsidiaries
shall not exceed One Hundred Thousand Dollars ($100,000.00). Options granted in
excess of this limitation shall constitute NSOs.

B. OPTION PERIOD. Subject to Section 7.F, each option
agreement shall specify the period during which the option is exercisable and
shall provide for expiration of the option at the end of such period. The Board
may extend the period except that no extension shall be made without Optionee's
consent if the extension would disqualify the option as an ISO.

C. OPTION VESTING. Each option agreement shall specify the
time(s) during the option period that the option vests and becomes exercisable.
The option agreement may provide for vesting and exercise of the option in
installments.

D. ACCELERATION OF OPTION VESTING.

[1] CHANGE IN CONTROL. The Board may provide in the
option agreement for the exercise dates of outstanding
options to accelerate and be fully or partially exercisable
on or after the date of a Change in Control.

[2] DEATH OR DISABILITY. The Board may provide in
the option agreement for the exercise dates of outstanding
options to accelerate and be fully or partially exercisable
upon termination of Optionee's employment due to death
and/or Disability.

E. OPTION PRICE. The Option Price per share of Class A Stock
shall be determined by the Board at the time an option is granted, provided that
the Option Price for an ISO shall be not less than fair market value at the time
of grant (one hundred ten percent (110%) of the fair market value at the time of
grant in the case of an ISO granted to a Ten Percent Shareholder). The Option
Price shall be subject to adjustments in accordance with Section 9. The fair
market value of Class A Stock on any given measurement date shall be determined
as follows: [i] if the Class A Stock is traded on the over-the-counter market,
the closing sale price for the Class A Stock in the over-the-counter market on
the measurement date (or if there was no sale of the Class A Stock on that date,
on the immediately preceding date on which there was a sale of the Class A
Stock), as reported by the National Association of Securities Dealers Automated
Quotation System; or [ii] if the Class A Stock is listed on a national
securities exchange, the closing sale price for the Class A Stock on the
Composite Tape on the measurement date; or [iii] if the Class A Stock is neither
traded on the over-the-counter market nor listed on a national securities
exchange, such value as the Board, in good faith, shall determine.

F. OPTION EXPIRATION. An option shall cease to be exercisable
upon expiration. Each option agreement shall specify the expiration date for the
option. Notwithstanding the foregoing, the option agreement may not provide for
an ISO to expire more than ten (10) years after the date of grant (five (5)
years in the case of an ISO granted to a Ten Percent Shareholder). Upon
Optionee's death, options may be exercised, to the extent exercisable by
Optionee on the date of Optionee's death, by Optionee's Representative at any
time before expiration of the option.

G. LEAVES OF ABSENCE. The Board may, in its discretion, treat
all or any portion of any period during which an Optionee is on military or on
an approved leave of absence from the Company or a Subsidiary

A-3

<PAGE> 16

as a period of employment of the Optionee by the Company or Subsidiary for
purposes of accrual of rights under the Plan. Notwithstanding the foregoing, in
the case of an ISO, if a leave of absence exceeds ninety (90) days and
reemployment is not guaranteed by contract or statute, Optionee's employment by
the Company or a Subsidiary shall be deemed to have terminated on the 91st day
of the leave.

H. PAYMENT OF OPTION PRICE. Each option shall provide that the
Option Price shall be paid to the Company at the time of exercise either in cash
or in such other consideration as the Board deems appropriate, including, but
not limited to, Class A Stock already owned by Optionee having a total fair
market value, as determined by the Board, equal to the Option Price, or a
combination of cash and Class A Stock having a total fair market value, as
determined by the Board, equal to the Option Price.

I. MANNER OF EXERCISE. To exercise an option, Optionee shall
deliver to the Company, or in the case of a cashless exercise, to a
broker-dealer in the Class A Stock with the original copy to the Company, the
following: [i] seven (7) days' advance written notice specifying the number of
shares as to which the option is being exercised and, if determined by counsel
for the Company to be necessary, representing that such shares are being
acquired for investment purposes only and not for purpose of resale or
distribution; and [ii] payment by Optionee, or the broker-dealer, for such
shares in cash, or if the Board in its discretion agrees to so accept, by
delivery to the Company of other Class A Stock owned by Optionee, or in some
combination of cash and such Class A Stock acceptable to the Board. At the
expiration of the seven (7) day notice period, and provided that all conditions
precedent contained in the Plan are satisfied, the Company shall, without
transfer or issuance tax or other incidental expenses to Optionee, deliver to
Optionee, at the offices of the Company, a certificate or certificates for the
Class A Stock. If Optionee fails to accept delivery of the Class A Stock,
Optionee's right to exercise the applicable portion of the option shall
terminate. If payment of the Option Price is made in Class A Stock, the value of
the Class A Stock used for payment of the Option Price shall be the fair market
value of the Class A Stock, determined in accordance with Section 7.E, on the
business day preceding the day written notice of exercise is delivered to the
Company. Subject to the terms and conditions of any applicable option agreement,
any option granted under the Plan may be exercised in whole or in part in
installments at such time or times as the Board may prescribe in the applicable
option agreement.

J. EXERCISES CAUSING LOSS OF COMPENSATION DEDUCTION. No part
of an option may be exercised to the extent the exercise would cause Optionee to
have compensation from the Company and its affiliated companies for any year in
excess of $1 million and that is nondeductible by the Company and its affiliated
companies pursuant to Code Section 162(m). Any option not exercisable because of
this limitation shall continue to be exercisable in any subsequent year in which
the exercise would not cause the loss of the Company's or its affiliated
companies' compensation tax deduction, provided such exercise occurs before the
option expires, and otherwise complies with the terms and conditions of the Plan
and option agreement.

K. INVESTMENT REPRESENTATION. Each option agreement may
provide that, upon demand by the Board, Optionee or Optionee's Representative
shall deliver to the Board at the time of exercise of an option or portion
thereof a written representation that the shares are being acquired for
investment and not for resale or distribution. Delivery of the representation,
if required by the Board, shall be a condition precedent to the right of
Optionee or Optionee's Representative to exercise the option.

L. ISOS. Each option agreement that provides for the grant of
an ISO shall contain such terms and provisions as the Board deems necessary or
desirable to qualify the option as an ISO within the meaning of Code Section
422.

M. TRANSFERABILITY OF OPTIONS. Options granted under the Plan
may not be transferred by the Optionee except by will or the laws of descent and
distribution, and may be exercised only by the Optionee during the Optionee's
lifetime.

N. NO RIGHTS AS SHAREHOLDER. No Optionee or Optionee's
Representative shall have any rights as a shareholder with respect to Class A
Stock subject to an option before the date of transfer to the Optionee of a
certificate or certificates for such shares.

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<PAGE> 17

O. NO RIGHTS TO CONTINUED EMPLOYMENT. Neither the Plan nor any
option granted under the Plan shall confer upon any Optionee any right with
respect to continuance of employment by the Company or any Subsidiary, nor shall
it interfere in any way with the right of the Company or any Subsidiary to
terminate the Optionee's employment.

8. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The Plan, the
grant and exercise of options, and the obligation of the Company to sell and
deliver Class A Stock under such options, shall be subject to all applicable
federal and state laws, rules and regulations and to such approvals by any
government or regulatory agency as may be required. The Company shall not be
required to issue or deliver any certificates for Class A Stock before [i] the
listing of the Class A Stock on any stock exchange or over-the-counter market on
which the Class A Stock may then be listed and [ii] the completion of any
registration or qualification of any governmental body that the Company shall,
in its sole discretion, determine to be necessary or advisable. To the extent
the Company meets the then applicable requirements for the use thereof and to
the extent the Company may do so without undue cost or expense, and subject to
the determination by the Board of Directors of the Company that such action is
in the Company's best interest, the Company intends to register the issuance and
sale of such Class A Stock by the Company under federal and applicable state
securities laws using a Form S-8 registration statement under the Securities Act
of 1933, as amended, or such successor form as shall then be available.

9. CAPITAL ADJUSTMENTS AFFECTING STOCK, MERGERS AND
CONSOLIDATIONS.

A. CAPITAL ADJUSTMENTS. In the event of a capital adjustment
in the Class A Stock resulting from a stock dividend, stock split,
reorganization, merger, consolidation, or a combination or exchange of shares,
the number of shares of Class A Stock subject to the Plan and the number of
shares under option shall be automatically adjusted to take into account such
capital adjustment. The price of any share under option shall be adjusted so
that there will be no change in the aggregate purchase price payable upon
exercise of the option.

B. MERGERS AND CONSOLIDATIONS. In the event the Company merges
or consolidates with another entity, or all or a substantial portion of the
Company's assets or outstanding capital stock are acquired (whether by merger,
purchase or otherwise) by a Successor, the kind of shares that shall be subject
to the Plan and to each outstanding option shall, automatically by virtue of
such merger, consolidation or acquisition, be converted into and replaced by
shares of stock of the Successor having rights and preferences no less favorable
than the Class A Stock, and the number of shares subject to the option and the
purchase price per share upon exercise of the option shall be correspondingly
adjusted, so that, by virtue of such merger, consolidation or acquisition, each
Optionee shall have the right to purchase [i] that number of shares of stock of
the Successor that have a value equal, as of the date of such merger, conversion
or acquisition, to the value, as of the date of such merger, conversion or
acquisition, of the shares of Class A Stock of the Company theretofore subject
to Optionee's option, [ii] for a purchase price per share that, when multiplied
by the number of shares of stock of the Successor subject to the option, equal
the aggregate exercise price at which Optionee could have acquired all of the
shares of Class A Stock of the Company theretofore optioned to Optionee.

C. NO EFFECT ON COMPANY'S RIGHTS. The granting of an option
pursuant to the Plan shall not affect in any way the right and power of the
Company to make adjustments, reorganizations, reclassifications, or changes of
its capital or business structure or to merge, consolidate, dissolve, liquidate,
sell or transfer all or any part of its business or assets.

10. AMENDMENT, SUSPENSION, OR TERMINATION. The Board shall have
the right, at any time, to amend, suspend or terminate the Plan in any respect
that it may deem to be in the best interests of the Company, except that no
amendment shall be made without approval by shareholders of the Company holding
not less than a majority of the votes represented and entitled to be voted at a
duly held meeting of the Company's shareholders that would: [i] change the
aggregate number of shares of Class A Stock which may be delivered under the
Plan, except as provided in Section 9; or [ii] change the employees or class of
employees eligible to receive ISOs; or [iii] require shareholder approval under
applicable federal or state laws.

11. EFFECTIVE DATE, TERM AND APPROVAL. The effective date of the
Plan shall be March 31, 1999 (the date of Board adoption of the Plan), subject
to approval by shareholders of the Company holding not less than a

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<PAGE> 18

majority of the shares present and voting at its 1999 annual meeting on May 20,
1999. The Plan shall terminate ten (10) years after the effective date of the
Plan and no options may be granted under the Plan after such time, but any
option granted prior thereto may be exercised in accordance with its terms.

12. SEVERABILITY. The invalidity or unenforceability of any
provision of the Plan or option agreement under the Plan shall not affect the
validity and enforceability of the remaining provisions of the Plan and the
option agreement, and the invalid or unenforceable provision shall be stricken
to the extent necessary to preserve the validity and enforceability of the Plan
and the options granted hereunder.

13. GOVERNING LAW. The Plan shall be governed by the laws of
the Commonwealth of Kentucky.

Dated this 31st day of March, 1999.

CITIZENS FINANCIAL CORPORATION

By:
Chief Executive Officer

<PAGE> 19
APPENDIX TO PROXY STATEMENT
FORM OF PROXY CARD

(Front)

PROXY

CITIZENS FINANCIAL CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR SHAREHOLDERS MEETING ON MAY 20, 1999

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 1999 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 Thursday, May 20,
1999 at 3:00 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. APPROVAL OF THE PROPOSED CITIZENS FINANCIAL CORPORATION 1999 STOCK
OPTION PLAN as described in the Board of Directors' Proxy Statement
for the Meeting

[ ] VOTE FOR

----------------------------------------------------------------------
OR

[ ] VOTE AGAINST

----------------------------------------------------------------------
OR

[ ] VOTE WITHHELD

3. 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 AND FOR
APPROVAL OF THE PROPOSED CITIZENS FINANCIAL CORPORATION 1999 STOCK OPTION PLAN.

PLEASE DATE AND SIGN ON THE REVERSE SIDE

<PAGE> 20 (Back)

Dated:_______________, 1999
PLEASE SIGN EXACTLY AS
NAME APPEARS BELOW ______________________Signature

______________________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.

<PAGE> 21

APPENDIX TO PROXY STATEMENT
COMPENSATION PLAN

CITIZENS FINANCIAL CORPORATION
1999 STOCK OPTION PLAN

2. DEFINITIONS.

A. "BOARD" means the Company's Board of Directors.

C. "CLASS A STOCK" means the Company's Class A Stock, no par
value, or the common stock or securities of a Successor that have been
substituted therefor pursuant to Section 9.

D. "CODE" means the Internal Revenue Code of 1986, as amended.

E. "COMPANY" means Citizens Financial Corporation, with its
principal place of business at The Marketplace, Suite 300, 12910 Shelbyville
Road, Louisville, Kentucky 40243.

G. "ISO" means an option to purchase Class A Stock that at the
time the option is granted qualifies as an incentive stock option within the
meaning of Code Section 422.

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<PAGE> 22

H. "NSO" means a nonstatutory stock option to purchase Class A
Stock that at the time the option is granted does not qualify as an ISO.

I. "OPTION PRICE" means the price to be paid for Class A Stock
upon the exercise of an option, in accordance with Section 7.E.

J. "OPTIONEE" means a director or key employee to whom an
option has been granted under the Plan.

K. "OPTIONEE'S REPRESENTATIVE" means the personal
representative of Optionee's estate, and after final settlement of Optionee's
estate, the successor or successors entitled thereto by law.

L. "PLAN" means the Citizens Financial Corporation 1999 Stock
Option Plan, as set forth herein, and as amended from time to time.

M. "SUBSIDIARY" means any corporation that at the time an
option is granted qualifies as a subsidiary of the Company as defined by
Code Section 424(f).

N. "SUCCESSOR" means the entity surviving a Change in Control.

3. SHARES SUBJECT TO PLAN.

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<PAGE> 23

D. ACCELERATION OF OPTION VESTING.

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<PAGE> 24

A-4

<PAGE> 25

9. CAPITAL ADJUSTMENTS AFFECTING STOCK, MERGERS AND
CONSOLIDATIONS.

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<PAGE> 26

13. GOVERNING LAW. The Plan shall be governed by the laws of
the Commonwealth of Kentucky.

Dated this 31st day of March, 1999.

CITIZENS FINANCIAL CORPORATION

By:
Chief Executive Officer