8-K

UNITED STATES

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) October 26, 2005

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)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

Randall E. Black, Chief Executive Officer, recently announced the consolidated financial results from Citizens Financial Services, Inc. and Subsidiaries for the third quarter 2005.

On October 26, 2005, Citizens Financial Services, Inc. issued a press release titled “Citizens Financial Services, Inc. Reports Third Quarter Earnings”, attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference. The information furnished under Item 2.02 of this Current Report on an 8-K shall not be deemed “filed” for any purpose.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(c) Exhibits.

Exhibit Number	Description
99.1	Press Release issued by Citizens Financial services, Inc. October 26, 2005, titled “Citizens Financial Services, Inc. Reports Third Quarter Earnings”.

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.

	COMPANY NAME CORPORATION
Date: October 26, 2005	By:	/s/ Mickey L. Jones
		Title:  Chief Financial Officer

EX-99.1

Exhibit 99.1

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

Citizens Financial Services, Inc. Reports Third Quarter Earnings

MANSFIELD, PENNSYLVANIA—October 26, 2005 - Citizens Financial Services, Incorporated (OTC BB: CZFS), parent company of First Citizens National Bank, has released its unaudited financial performance for the third quarter of 2005. Net income for the three months and nine months ended September 30, 2005 was $1,318,000 and $3,898,000, respectively. This compares to the three months and nine months ended September 30, 2004 of $1,423,000 and $4,383,000, respectively. Earnings per share were $1.36 through September 2005 compared with $1.53 in 2004, a decrease of 11.1%.

Return on equity (ROE) was 12.53% while return on assets (ROA) was 1.03% for the first nine months of 2005. Likewise, ROE and ROA was 15.04% and 1.22% for the first nine months of 2004, respectively.

CEO and President Randall E. Black stated, “Throughout 2005, we have continued to see our interest rate margin compressed due to the flattened yield curve and have implemented strategies during this period to minimize the impact to our cost of funds. Despite the less than favorable interest rate environment, we have been successful in growing our loan portfolio and increasing deposits. Lastly in July, we declared a 1% stock dividend which was distributed to shareholders along with our normal dividend, which is a continuation of past practice since 1991.”

Net interest income was $13.2 million for the nine month period ending September 30, 2005 compared to $12.9 million for the nine month period ending September 30, 2004, representing a $254,000 or 2.0% increase over the same period a year ago. Net interest margin for the nine months ended September 30 2005 of 4.02% declined from 4.15% in the same period of 2004, which is a reflection of cost of funds increasing 26 basis points over the same time frame resulting in net margin compression.

The company has grown loans organically by $22.0 million since last September, an increase of 6.2%. Total deposits have increased $21.7 million, an increase of 5.3%. We continue to focus on serving our existing customer relationships, while fostering new ones within our current and new Wellsville, NY markets.

Non-interest income was down $454,000 which has been impacted due to the lack of investment security gains in 2005. Through September 2004, $491,000 of investment gains had been recorded compared to none thus far in 2005.

Since last September, stockholders’ equity, excluding accumulated other comprehensive income, has increased $2,013,000 or 5.0%. This equates to a book value per share of $14.87, which is an increase of 4.8% over last year’s book value per share of $14.19.

The cash dividend to be paid on October 28, 2005 to record holders of October 14, 2005 will be $.21 per share. This compares to $.20 per share for the comparable period in 2004, an increase of 5.0%. The annualized dividend yield through September is 4.00%.

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.

CITIZENS FINANCIAL SERVICES, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
		September 30			December 31			September 30
(in thousands)		2005			2004			2004
ASSETS:
Cash and due from banks:
Noninterest-bearing	$	7,868		$	9,162		$	8,145
Interest-bearing		540			177			123
Total cash and cash equivalents		8,408			9,339			8,268
Available-for-sale securities		90,512			95,747			100,996
Loans (net of allowance for loan losses: 2005, $3,666;
December 31, 2004, $3,919; and September 30, 2004, $4,109)		371,852			355,774			349,381
Premises and equipment		12,316			11,833			11,863
Accrued interest receivable		2,037			1,736			1,875
Goodwill		8,605			8,605			8,605
Core deposit intangible		828			1,262			1,406
Bank owned life insurance		7,669			7,449			7,374
Other assets		7,356			7,602			7,721
TOTAL ASSETS	$	509,583		$	499,347		$	497,489
LIABILITIES:
Deposits:
Noninterest-bearing	$	52,246		$	46,866		$	42,420
Interest-bearing		378,436			372,208			366,592
Total deposits		430,682			419,074			409,012
Borrowed funds		32,814			34,975			43,753
Accrued interest payable		1,627			1,870			1,685
Commitment to purchase investment securities		300			-			-
Other liabilities		2,718			2,639			2,607
TOTAL LIABILITIES		468,141			458,558			457,057
STOCKHOLDERS' EQUITY:
Common Stock
$1.00 par value; authorized 10,000,000 shares;
issued 2,965,257 shares in 2005 and 2,937,519
shares in 2004		2,965			2,938			2,938
Additional paid-in capital		11,359			10,804			10,804
Retained earnings		30,472			28,894			28,578
TOTAL		44,796			42,636			42,320
Accumulated other comprehensive (loss) income		(880	)		164			123
Less: Treasury Stock, at cost 118,715 shares for 2005 and 97,262
shares in 2004		(2,474	)		(2,011	)		(2,011	)
TOTAL STOCKHOLDERS' EQUITY		41,442			40,789			40,432
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	509,583		$	499,347		$	497,489

CITIZENS FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
	Three Months Ended				Nine Months Ended
(in thousands, except per share data)	September 30				September 30
	2005		2004		2005		2004
INTEREST INCOME:
Interest and fees on loans	$	6,362	$	5,851	$	18,386	$	16,647
Interest-bearing deposits with banks		3		1		2		9
Investment securities:
Taxable		698		846		2,240		2,590
Nontaxable		153		76		394		223
Dividends		50		81		156		210
TOTAL INTEREST INCOME		7,266		6,855		21,178		19,679
INTEREST EXPENSE:
Deposits		2,416		2,126		6,840		6,081
Borrowed funds		383		253		1,140		684
TOTAL INTEREST EXPENSE		2,799		2,379		7,980		6,765
NET INTEREST INCOME		4,467		4,476		13,198		12,914
Provision for loan losses		30		-		30		-
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES		4,437		4,476		13,168		12,914
NON-INTEREST INCOME:
Service charges		784		783		2,203		2,265
Trust		161		86		368		332
Brokerage		45		40		138		152
Insurance		61		61		205		150
Gains on loans sold		24		17		45		37
Investment securities gains, net		-		-		-		491
Earnings on bank owned life insurance		71		75		220		233
Other		85		91		289		262
TOTAL NON-INTEREST INCOME		1,231		1,153		3,468		3,922
NON-INTEREST EXPENSES:
Salaries and employee benefits		1,993		1,905		5,888		5,677
Occupancy		262		259		846		812
Furniture and equipment		156		181		491		517
Professional fees		132		131		408		443
Amortization of intangibles		145		145		434		362
Other		1,133		1,159		3,439		3,314
TOTAL NON-INTEREST EXPENSES		3,821		3,780		11,506		11,125
Income before provision for income taxes		1,847		1,849		5,130		5,711
Provision for income taxes		529		426		1,232		1,328
NET INCOME	$	1,318	$	1,423	$	3,898	$	4,383
Earnings Per Share	$	0.46	$	0.50	$	1.36	$	1.53
Cash Dividends Per Share	$	0.205	$	0.195	$	0.610	$	0.580
Weighted average number of shares outstanding		2,846,542		2,867,995		2,859,980		2,868,177

Financial Highlights
	2005			2004
Nine Months Ended September 30
Net Income	$	3,898		$	4,383
Comprehensive Income		2,855			3,550
Per common share data:
Earnings per share	$	1.36		$	1.53
Cash dividends per share	$	0.610		$	0.580
Performance Ratios:
Return on average assets (annualized)		1.03	%		1.22	%
Return on average equity (annualized)		12.53	%		15.04	%
Three Months Ended September 30
Net Income	$	1,318		$	1,423
Per common share data:
Earnings per share	$	0.46		$	0.50
Cash dividends per share	$	0.205		$	0.195
Performance Ratios:
Return on average assets (annualized)		1.03	%		1.15	%
Return on average equity (annualized)		12.55	%		14.31	%
At September 30
Assets	$	509,583		$	497,489
Investment securities:
Available for sale		90,512			100,996
Loans (net of unearned income)		375,518			353,490
Allowance for loan losses		3,666			4,109
Deposits		430,682			409,012
Stockholders' Equity		41,442			40,432
Non-performing assets		2,857			2,588
Average Leverage Ratio		8.03	%		7.74	%
Per common share data:
Book value	$	14.87		$	14.19
Market value (average of bid/ask price)	$	20.30		$	21.83
Market price to book value ratio		136.5	%		153.8	%

					Cash Dividends
Common Stock Information:	Bid		Ask		Per Share
Quarter Ended:
September 30, 2005	$	20.10	$	20.50	$	0.205
June 30, 2005	$	21.00	$	21.70	$	0.205
March 31, 2005	$	23.50	$	24.25	$	0.200
December 31, 2004	$	23.65	$	24.00	$	0.200
September 30, 2004	$	21.50	$	22.15	$	0.195
June 30, 2004	$	22.20	$	22.75	$	0.195
March 31, 2004	$	25.00	$	25.25	$	0.190
December 31, 2003	$	23.85	$	24.15	$	0.190