Citizens Financial Services (CZFS) 8-K Citizens Financial Services, Inc. Reports First Quarter 2006 Earnings

Exhbit 99.1

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 First Quarter 2006 Earnings

MANSFIELD, PENNSYLVANIA— April 20, 2006 - Citizens Financial Services, Incorporated (OTC BB: CZFS), parent company of First Citizens National Bank, has released its unaudited financial performance for the first quarter of 2006.

Net income for the three months ended March 31, 2006 was $1,276,000, which compares to $1,267,000 for the comparable period last year. Our tax adjusted net interest margin for 2006 was 3.87% compared with 4.01% for 2005. Earnings per share were $.45 through March 31, 2006 compared with $.44 in 2005, an increase of 2.3%. Return on equity (ROE) was 11.84% while return on assets (ROA) was .96% for 2006, compared to 12.41% and 1.01% for 2005, respectively.

CEO and President Randall E. Black stated, “the effects of a continued flattened yield curve has resulted in further margin compression through the first quarter of 2006. Despite this less than favorable interest rate environment, we have been able to exceed our operating results from a year ago. Through more tax-exempt assets and cost control, net income was $9,000 higher than last year. Additionally, we continue to make progress on our new branch in Wellsville, New York. We anticipate breaking ground in April with a late fall completion date. As expected, the Wellsville office will incur operating losses until the branch achieves certain growth levels. Pre-tax net income would have been approximately $80,000 higher in the first quarter, when excluding the Wellsville operations.”

Since March of last year, total assets have increased $33.8 million, or 6.7%. At the end of March, total assets were $540.2 million compared with $506.4 million last year. The investment portfolio as of the end of March totaled $105.2 million, which is an increase of $10.6 million from a year ago. Total loans have increased $20.2 million, an increase of 5.5%. Total deposits have increased $14.2 million, or 3.4%. Borrowed funds have increased $18.7 million, which has been used to help fund the asset growth.

Stockholders’ Equity, excluding accumulated other comprehensive income, has increased $1.9 million, or 4.6% since last March. In March, a cash dividend of $.215 per share was declared and will be paid to shareholders on April 28, 2006 to record holders as of April 14, 2006. This represents an increase of 4.9%. Book value per share at March 31, 2006 was $15.32 compared with $14.55 last year, an increase of 5.3%. On January 17, 2006, the Board of Directors approved a stock repurchase plan authorizing the repurchase of up to 140,000 shares of our common stock either in the open market or through privately negotiated sales. Through March, 25,373 shares have been repurchased.

Citizens Financial Services, Inc., has over 1,500 shareholders, the majority of whom reside in Potter, Tioga, and Bradford Counties, Pennsylvania and Allegany County, New York, where their 16 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)
	March 31			December 31			March 31
(in thousands except share data)	2006			2005			2005
ASSETS:
Cash and cash equivalents:
Noninterest-bearing	$	9,781		$	8,498		$	7,910
Interest-bearing		21			111			100
Total cash and cash equivalents		9,802			8,609			8,010
Available-for-sale securities		105,220			102,602			94,611
Loans (net of allowance for loan losses:
2006, $3,709; December 31, 2005, $3,664; and March 31, 2005, $3,856 )		385,116			379,139			364,786
Premises and equipment		12,195			12,305			11,700
Accrued interest receivable		2,316			2,164			2,036
Goodwill		8,605			8,605			8,605
Core deposit intangible		539			684			1,117
Bank owned life insurance		7,815			7,743			7,523
Other assets		8,595			7,390			8,034
TOTAL ASSETS	$	540,203		$	529,241		$	506,422
LIABILITIES:
Deposits:
Noninterest-bearing	$	52,360		$	50,600		$	45,642
Interest-bearing		375,087			379,199			367,582
Total deposits		427,447			429,799			413,224
Borrowed funds		67,042			52,674			48,367
Accrued interest payable		1,657			1,862			1,632
Commitment to purchase investment securities		-			752			-
Other liabilities		2,786			2,593			2,809
TOTAL LIABILITIES		498,932			487,680			466,032
STOCKHOLDERS' EQUITY:
Common Stock $1.00 par value; authorized
10,000,000 shares; issued 2,965,257 shares
in 2006 and at December 31, 2005 and
2,937,519 shares at March 31, 2005		2,965			2,965			2,938
Additional paid-in capital		11,359			11,359			10,804
Retained earnings		31,930			31,251			29,593
TOTAL		46,254			45,575			43,335
Accumulated other comprehensive loss		(1,942	)		(1,540	)		(934	)
Less: Treasury Stock, at cost, 144,088 shares for
2006, 118,715 shares at December 31, 2005
and 97,262 shares at March 31, 2005		(3,041	)		(2,474	)		(2,011	)
TOTAL STOCKHOLDERS' EQUITY		41,271			41,561			40,390
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	540,203		$	529,241		$	506,422

CITIZENS FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
	Three Months Ended
(in thousands, except per share data)	March 31
	2006			2005
INTEREST INCOME:
Interest and fees on loans	$	6,519		$	5,919
Investment securities:
Taxable		819			792
Nontaxable		226			117
Dividends		67			51
TOTAL INTEREST INCOME		7,631			6,879
INTEREST EXPENSE:
Deposits		2,601			2,168
Borrowed funds		663			378
TOTAL INTEREST EXPENSE		3,264			2,546
NET INTEREST INCOME		4,367			4,333
Provision for loan losses		60			-
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES		4,307			4,333
NON-INTEREST INCOME:
Service charges		706			673
Trust		129			121
Brokerage		58			38
Insurance		36			83
Investment securities losses, net		(6	)		-
Earnings on bank owned life insurance		72			74
Other		137			121
TOTAL NON-INTEREST INCOME		1,132			1,110
NON-INTEREST EXPENSES:
Salaries and employee benefits		2,036			1,921
Occupancy		308			303
Furniture and equipment		152			175
Professional fees		140			145
Amortization of intangibles		144			144
Other		1,111			1,143
TOTAL NON-INTEREST EXPENSES		3,891			3,831
Income before provision for income taxes		1,548			1,612
Provision for income taxes		272			345
NET INCOME	$	1,276		$	1,267
Earnings Per Share	$	0.45		$	0.44
Cash Dividends Per Share	$	0.21		$	0.20

FINANCIAL HIGHLIGHTS
(UNAUDITED)
(in thousands, except per share and ratio data)	2006			2005
Three Months Ended March 31
Net Income	$	1,276		$	1,267
Comprehensive Income		875			169
Per common share data:
Earnings per share	$	0.45		$	0.44
Cash dividends per share	$	0.21		$	0.20
Performance Ratios:
Return on average assets (annualized)		0.96	%		1.01	%
Return on average equity (annualized)		11.84	%		12.41	%
At March 31
Assets	$	540,203		$	506,422
Investment securities:
Available for sale		105,220			94,611
Loans (net of unearned income)		388,825			368,642
Allowance for loan losses		3,709			3,856
Deposits		427,447			413,224
Stockholders' Equity		41,271			40,390
Non-performing assets		3,007			2,667
Average Leverage Ratio		7.91	%		7.90	%
Per common share data:
Book value	$	15.32		$	14.55
Market value (average of bid/ask price)	$	22.30		$	23.88
Market price to book value ratio		145.59	%		164.10	%

					Cash Dividends
Common Stock Information:	Bid		Ask		Paid
Quarter Ended:
March 31, 2006	$	21.35	$	23.25	$	0.210
December 31, 2005	$	20.80	$	21.00	$	0.210
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