8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C., 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) July 19, 2004

CITIZENS FINANCIAL SERVICES, INC.

Pennsylvania	0-13222	23-2265045
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)
15 South Main Street, Mansfield, PA		16933
(Address of Principal Executive Office)		(Zip Code)
Registrant’s telephone number, including area code:		(570) 662-2121
N/A
(Former name or former address, if changes since last report)

ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE.

Randall E. Black, Chief Executive Officer and President, recently announced the consolidated financial results from Citizens Financial Services, Inc. and Subsidiaries for the second quarter 2004.

On July 19, 2004, Citizens Financial Services, Inc. issued a press release titled “Citizens Financial Services, Inc. Reports Second Quarter Earnings Increased By 6.2% Over One Year Ago”, a copy of which is filed as an exhibit to this Current Report on Form 8-K and is incorporated herein by reference.

ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION

AND EXHIBITS

a.Not applicable.

b.Not applicable.

c.Exhibits.

Exhibit 99: Press Release issued by Citizens Financial services, Inc. July 19, 2004, titled “Citizens Financial Services, Inc. Reports Second Quarter Earnings Increased By 6.2% Over One Year Ago”.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned, thereunto duly authorized.

	CITIZENS FINANCIAL SERVICES, INC.
Date: July 19, 2004	By:	/s/ Randall E. Black
		Title:  Chief Executive Officer and President

EX-99

Contact:	Kathleen Campbell, Marketing Director	First Citizens National Bank
	570-662-0422	15 S. Main Street
	570-662-8512 (fax)	Mansfield, PA 16933

Citizens Financial Services, Inc. Reports Second Quarter Earnings Increased by 6.2% over one year ago.

MANSFIELD, PENNSYLVANIA—Citizens Financial Services, Incorporated (OTC BB: CZFS) Chief Executive Officer and President Randall E. Black has released its financial performance through June 30, 2004. Earnings for the quarter ending June 30, 2004 were $1,468,000 as compared to $1,382,000 for the same quarter last year, representing a 6.2% increase.

Total assets for Citizens Financial Services, Inc. were $494.8 million, an increase of 10.8% over June 30, 2003. Total deposits are $414.9 million while total loans are $350.8 million – an increase of 5.9% and 15.8%, respectively.

Net earnings for the first half of 2004 were $3.0 million, a 7.8% increase over the comparable period in 2003.

Earnings per share in the current quarter were 52 cents versus 48 cents in the comparable quarter 2003. Total stockholders’ equity (excluding accumulated other comprehensive income) has grown 5% during the first six months of 2004. The recently declared cash dividend of 19.5 cents represents a 3.5% yield on the per share market price.

Chief Executive Officer and President Randall E. Black stated, "Of prime importance this past quarter has been the efforts put into the successful acquisition of two branches of The Legacy Bank in Bradford County, which became effective June 4, 2004. This acquisition increased deposits by $20,663,000 and our loan portfolio by $27,340,000. I would like to welcome The Legacy Bank customers to First Citizens National Bank. We are glad to have them as part of our family and look forward to a rewarding relationship for many years to come.”

Citizens Financial Services, Inc., has over 1,500 shareholders, the majority of whom reside in Potter, Tioga, and Bradford Counties where their 15 offices are located.

Note: This press release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results and trends could differ materially from those set forth in such statements due to various factors. These factors include operating, legal and regulatory risks; changing economic and competitive conditions and other risks and uncertainties.

Financial Highlights (In thousands, except per share and ratio data.)
(Unaudited)
	2004			2003
Six Months Ended June 30
Net income	$	2,961		$	2,746
Comprehensive income		1,069			2,072
Per common share data:
Earnings per share		1.05			0.96
Cash dividends declared		0.385			0.365
Performance ratios:
Return on average assets		1.26	%		1.27	%
Return on average equity		15.41	%		15.04	%
Three Months Ended June 30
Net Income	$	1,468		$	1,382
Per common share data:
Earnings per share		0.52			0.49
Cash dividends declared		0.195			0.185
Performance ratios:
Return on average assets		1.23	%		1.26	%
Return on average equity		15.12	%		14.96	%
At June 30
Assets	$	494,796		$	446,449
Investment securities:
Available-for-sale		98,507			96,289
Loans (net of unearned income)		350,797			302,957
Allowance for loan losses		4,129			3,769
Deposits		414,911			391,878
Stockholders' Equity		38,508			39,446
Non-performing assets		3,299			2,724
Average leverage ratio		7.81	%		6.84	%
Per common share data:
Book value	$	14.02		$	13.95
Market value (average of bid/ask price)		22.48			27.75
Market price to book value ratio		160.34	%		198.93	%

CITIZENS FINANCIAL SERVICES, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
	June 30			December 31			June 30
(in thousands, except share data)	2004			2003			2003
ASSETS:
Cash and due from banks:
Noninterest-bearing	$	8,782		$	9,624		$	13,255
Interest-bearing		3,650			327			9,955
Total cash and cash equivalents		12,432			9,951			23,210
Available-for-sale securities		98,507			106,587			96,289
Loans (net of allowance for loan losses June 30, 2004, $4,129; December 31,
2003, $3,620 and June 30, 2003 $3,769)		346,668			314,037			299,188
Premises and equipment		10,395			10,645			10,966
Accrued interest receivable		1,689			1,703			1,720
Goodwill		8,605			6,905			6,905
Core deposit intangible		1,551			978			1,195
Bank owned life insurance		7,299			7,142			2,333
Other assets		7,650			5,930			4,643
TOTAL ASSETS	$	494,796		$	463,878		$	446,449
LIABILITIES:
Deposits:
Noninterest-bearing	$	47,157		$	46,820		$	44,475
Interest-bearing		367,754			338,871			347,403
Total deposits		414,911			385,691			391,878
Borrowed funds		29,813			27,796			11,857
Notes Payable		7,500			7,500			-
Accrued interest payable		1,543			1,888			1,626
Other liabilities		2,521			2,474			1,642
TOTAL LIABILITIES		456,288			425,349			407,003
STOCKHOLDERS' EQUITY:
Common Stock
$1.00 par value; authorized 10,000,000 shares;
issued 2,909,849 shares at June 30, 2004 and December 31, 2003
and 2,882,070 shares at June 30, 2003, respectatively		2,910			2,910			2,882
Additional paid-in capital		10,213			10,213			9,474
Retained earnings		28,332			26,455			26,161
TOTAL		41,455			39,578			38,517
Accumulated other comprehensive income		(936	)		956			1,878
Less: Treasury Stock, at cost
97,262 at June 30, 2004, 96,962 at December 31, 2003,
and 55,162 shares at June 30, 2003, respectively		(2,011	)		(2,005	)		(949	)
TOTAL STOCKHOLDERS' EQUITY		38,508			38,529			39,446
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	494,796		$	463,878		$	446,449

CITIZENS FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
	Three Months Ended				Six Months Ended
(in thousands, except per share data)	June 30				June 30
	2004		2003		2004		2003
INTEREST INCOME:
Interest and fees on loans	$	5,447	$	5,315	$	10,795	$	10,719
Interest-bearing deposits with banks		3		17		8		21
Investment securities:
Taxable		852		871		1,744		1,765
Nontaxable		62		121		147		258
Dividends		67		77		129		159
TOTAL INTEREST INCOME		6,431		6,401		12,823		12,922
INTEREST EXPENSE:
Deposits		1,992		2,190		3,956		4,429
Borrowed funds		217		74		430		149
TOTAL INTEREST EXPENSE		2,209		2,264		4,386		4,578
NET INTEREST INCOME		4,222		4,137		8,437		8,344
Provision for loan losses		-		120		-		255
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES		4,222		4,017		8,437		8,089
NON-INTEREST INCOME:
Service charges		751		772		1,482		1,482
Trust		177		171		358		295
Gains on Loans Sold		12		130		21		226
Realized securities gains, net		204		140		491		400
Bank Owned Life Insurance		79		2		158		2
Other		153		196		260		359
TOTAL NON-INTEREST INCOME		1,376		1,411		2,770		2,764
NON-INTEREST EXPENSES:
Salaries and employee benefits		1,847		1,942		3,772		3,836
Occupancy		267		240		553		518
Furniture and equipment		165		176		335		354
Professional fees		158		142		312		304
Amortization		109		109		217		217
Other		1,129		1,022		2,155		2,032
TOTAL NON-INTEREST EXPENSES		3,675		3,631		7,344		7,261
Income before provision for income taxes		1,923		1,797		3,863		3,592
Provision for income taxes		455		415		902		846
NET INCOME	$	1,468	$	1,382	$	2,961	$	2,746
Earnings Per Share	$	0.52	$	0.48	$	1.05	$	0.96
Cash Dividend Declared	$	0.195	$	0.185	$	0.385	$	0.365
Weighted average number shares outstanding		2,812,834		2,854,688		2,812,861		2,854,688