SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Amendment No. [ ])
[xx] Filed by the Registrant
[ ] 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 14a6(e) (2))
[xx] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec.
240.14a-12
CITIZENS FINANCIAL SERVICES, INC.
(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):
[xx] $125 per Exchange Act Rule 0-11 (c) (1) (ii), 14a-6(I) (1),
14a-6(I) (2) or Item 22(a) (2) if Schedule 14A
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(I) (3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)
(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a) (2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
CITIZENS FINANCIAL SERVICES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 16, 1996
TO THE SHAREHOLDERS OF CITIZENS FINANCIAL SERVICES, INC.:
Notice is hereby given that the Annual Meeting of Shareholders of
CITIZENS FINANCIAL SERVICES, INC. (the "Corporation") will be held
at 12:00 p.m., prevailing time, on Tuesday, April 16, 1996 at the
Tioga County Fairgrounds Youth Building, Whitneyville,
Pennsylvania, 16901, for the following purposes:
1. To elect five (5) Class 1 Directors to serve for a three-year term and
until their successors are elected and qualified; and
2. To transact such other business as may properly come
before the Annual Meeting and any adjournment or
postponement thereof.
In accordance with the Bylaws of the Corporation and action of the
Board of Directors, only those shareholders of record at the close
of business on March 13, 1996 will be entitled to notice of and to
vote at the Annual Meeting and any adjournment or postponement
thereof.
A copy of the Corporation's Annual Report for the fiscal year ended
December 31, 1995 is being mailed with this Notice. Copies of the
Corporation's Annual Report for the 1994 fiscal year may be
obtained at no cost by contacting Richard E. Wilber, President, 15
South Main Street, Mansfield, Pennsylvania 16933, telephone: 800-326-9486.
You are urged to mark, sign, date and promptly return your Proxy in
the enclosed envelope so that your shares may be voted in
accordance with your wishes and in order that the presence of a
quorum may be assured. The prompt return of your signed Proxy,
regardless of the number of shares you hold, will aid the
Corporation in reducing the expense of additional proxy
solicitation. The giving of such Proxy does not affect your right
to vote in person if you attend the meeting and give written notice
to the Secretary of the Corporation.
By Order of the Board of Directors,
/s/ Richard E. Wilber
Richard E. Wilber, President
March 20, 1996
CITIZENS FINANCIAL SERVICES, INC.
PROXY STATEMENT FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON APRIL 16, 1996
GENERAL
Introduction, Date, Time and Place of Annual Meeting
This Proxy Statement is being furnished in connection with the
solicitation by the Board of Directors of Citizens Financial
Services, Inc. (the "Corporation"), a Pennsylvania business
corporation, of proxies to be voted at the Annual Meeting of
Shareholders of the Corporation to be held at 12:00 p.m.,
prevailing time, on Tuesday, April 16, 1996 at the Tioga County
Fairgrounds Youth Building, Whitneyville, Pennsylvania 16901.
The principal executive office of the Corporation is located at
First Citizens National Bank (the "Bank"), 15 South Main Street,
Mansfield, Pennsylvania 16933. The telephone numbers for the
Corporation are 717-662-2121 or 800-326-9486. All inquiries should
be directed to Richard E. Wilber, President and Chief Executive
Officer of the Corporation.
Solicitation and Voting of Proxies
This Proxy Statement and the enclosed form of the proxy (the
"Proxy") are first being sent to shareholders of the Corporation on
or about March 20, 1996.
Shares represented by proxies on the accompanying Proxy, if
properly signed and returned, will be voted in accordance with the
specifications made thereon by the shareholders. Any Proxy not
specifying to the contrary will be voted FOR the election of the
nominees for Class 1 Director named below to serve for a three-year
term and until their successors are elected and qualified, and FOR
the transaction of such other business as may properly come before
the Annual Meeting and any adjournment or postponement thereof.
Execution and return of the enclosed Proxy will not affect a
shareholder's right to attend the Annual Meeting and vote in
person, after giving written notice to the Secretary of the
Corporation. The cost of preparing, assembling, printing, mailing
and soliciting proxies, and any additional material which the
Corporation may furnish shareholders in connection with the Annual
Meeting, will be borne by the Corporation. In addition to the use
of the mail, certain directors, officers and employees of the
Corporation and the Bank may solicit proxies personally, by
telephone, telegraph and by telecopier. Arrangements will be made
with brokerage houses and other custodians, nominees and
fiduciaries to forward proxy solicitation material to the
beneficial owners of stock held of record by these persons, and,
upon request therefore, the Corporation will reimburse them for
their reasonable forwarding expenses.
Revocability of Proxy
A shareholder who returns a Proxy may revoke the Proxy at any time
before it is voted only (1) by giving written notice of revocation
to Terry B. Osborne, Secretary of Citizens Financial Services,
Inc., at 15 South Main Street, Mansfield, Pennsylvania 16933, (2)
by executing a later-dated proxy and giving written notice thereof
to the Secretary of the Corporation or (3) by voting in person
after giving written notice to the Secretary of the Corporation.
Voting Securities, Record Date and Quorum
At the close of business on March 13, 1996, the Corporation had
outstanding 1,347,323 shares of common stock, par value $1.00 per
share, the only authorized class of stock (the "Common Stock").
Page 1
Only holders of Common Stock of record at the close of business on
March 13, 1996 will be entitled to notice of and to vote at the
Annual Meeting. Cumulative voting rights do not exist with respect
to the election of directors. On all matters to come before the
Annual Meeting, each share of Common Stock is entitled to one vote
and a majority of shares must be cast at the meeting in order to
become binding upon the Corporation.
Under Pennsylvania law and the Bylaws of the Corporation, the
presence of a quorum is required for each matter to be acted upon
at the Annual Meeting. Pursuant to the Bylaws of the Corporation,
the presence, in person or by proxy, of shareholders entitled to
cast at least a majority of the votes which all shareholders are
entitled to cast shall constitute a quorum for the transaction of
business at the Annual Meeting. Votes withheld and abstentions
will be counted in determining the presence of a quorum for the
particular matter. Broker non-votes will not be counted in
determining the presence of a quorum for the particular matters as
to which the broker withheld authority.
Assuming the presence of a quorum, the five nominees for director
receiving the highest number of votes cast by shareholders entitled
to vote for the election of directors shall be elected. Votes
withheld from a nominee and broker non-votes will not be cast for
such nominee.
PRINCIPAL BENEFICIAL OWNERS OF THE CORPORATION'S STOCK
Principal Owners
As of March 13, 1996, there are no persons who own of record or who
are known by the Board of Directors to be the beneficial owners of
more than five percent (5%) of the Corporation's outstanding Common
Stock.
Beneficial Ownership by Officers, Directors and Nominees
The following table sets forth as of February 29, 1996, the amount
and percentage of the Common Stock beneficially owned by each
director, each nominee and all executive officers and directors of
the Corporation and subsidiary as a group.
Name of Beneficial Amount and Nature Percent of
Owner Beneficial Ownership (1) (2) Class
Bruce L. Adams (5) 1,501 (7) .11%
Carol J. Bond (3)(6) 33,801 2.51%
R. Lowell Coolidge (3) (6) 67,024 (8) 4.97%
Larry J. Croft (3) (6) 11,117 (9) .83%
Robert E. Dalton (4) 15,484 (10) 1.15%
Robert J. Landy (4) 9,601 (11) .71%
John E. Novak (4) 1,605 (12) .12%
John M. Thomas, M.D. (3) (6) 22,280 (13) 1.65%
William D. Van Etten (5) 2,871 (14) .21%
Rudolph J. van der Hiel (4) 8,319 (15) .62%
Richard E. Wilber (3) (6) 4,504 (16) .33%
All Nominees,
Directors and
Executive Officers
as a Group - 16
persons 179,577 13.33%
Page 2
(1) The securities "beneficially owned" by an individual are
determined in accordance with the definitions of "beneficial
ownership" set forth in the General Rules and Regulations of
the Securities and Exchange Commission and may include
securities owned by or for the individual's spouse and minor
children and any other relative who has the same home, as well
as securities to which the individual has or shares voting or
investment power or has the right to acquire beneficial
ownership within 60 days after March 13, 1996. Beneficial
ownership may be disclaimed as to certain of the securities.
(2) Information furnished by the directors and the Corporation.
(3) A Class 1 Director whose term expires in 1996.
(4) A Class 2 Director whose term expires in 1998.
(5) A Class 3 Director whose term expires in 1997.
(6) A Nominee for Class 1 Director whose term expires in 1999.
(7) Mr. Adams holds 1,357 shares individually, 144 shares jointly
with his spouse.
(8) Mr. Coolidge holds 53,426 shares individually, 13,598 shares
are held by his spouse.
(9) Mr. Croft holds 6,353 shares individually, 4,506 shares
jointly with his spouse, 258 shares are held by his spouse.
(10) Mr. Dalton holds 1,203 shares individually, 14,281 shares are
held by his spouse.
(11) Mr. Landy holds 7,848 shares individually, 584 shares are held
under a profit sharing plan, 1,169 shares are held jointly
with his spouse.
(12) Mr. Novak holds 1,562 shares individually, 43 shares are held
by his spouse.
(13) Dr. Thomas holds 22,030 shares individually, 250 shares are
held by his spouse.
(14) Mr. Van Etten holds 2,443 shares individually, 428 shares are
held jointly with his spouse.
(15) Mr. van der Hiel holds 7,601 shares individually, 11 shares
are held jointly with his spouse, 707 shares are held by his
spouse.
(16) Mr. Wilber holds 3,169 shares individually, 341 shares are
held jointly with his spouse, 240 shares are held by his
spouse, 754 shares are held by his wife as custodian.
ELECTION OF DIRECTORS
The Articles of Incorporation provide that the Board of Directors
shall consist of not less than five (5) nor more than twenty-five
(25) shareholders, the exact number to be fixed and determined from
time to time by resolution of a majority of the full Board of
Directors or by resolution of the shareholders at any annual or
special meeting. The number of Directors is currently set at
eleven (11). The Articles further provide that the Directors shall
be divided into three (3) classes, as nearly equal in number as
possible, known as Class 1, Class 2 and Class 3. The Class 1
Directors elected at this Annual Meeting will serve for a three (3)
year term. The Class 3 and 2 Directors at this Annual Meeting will
continue to serve for one and two years, respectively in order to
complete their three year terms.
Page 3
It is intended that the Proxies solicited hereunder will be voted
FOR (unless otherwise directed) the five (5) nominees named below.
The Corporation does not contemplate that any nominee will be
unable to serve as Director for any reason. Each nominee has
agreed to serve if elected. However, in the event one or more of
the nominees should be unable to stand for election, the vote will
be cast for the remaining nominees in accordance with the best
judgement of the Board of Directors.
There is no cumulative voting for the election of directors. Each
share of Common Stock is entitled to cast only one vote for each
nominee. For example, if a shareholder owns ten shares of Common
Stock, he or she may cast up to ten votes for the Directors on the
class to be elected.
INFORMATION AS TO NOMINEES AND DIRECTORS
The following table contains certain information with respect to
current Class 1 Directors and nominees for Class 1 Director whose
term expires in 1999 and the Class 3 Directors and Class 2
Directors whose terms expire in 1997 and 1998, respectively. The
date appearing in parenthesis opposite each Director's name in the
"Director Since" column represents the year in which each such
nominee became a Director of the Bank, or any predecessor
institution acquired by the Bank. Each nominee presently serves as
Director of the Bank, as well as Director of the Corporation. All
Directors have been engaged in the principal occupation indicated
for five years or more, with no exceptions.
Principal Occupation
for Past Five Years Director Since
and Position Held with Corporation/
Name Age the Corporation and the Subsidiary Subsidiary
CURRENT CLASS 1 DIRECTORS WHOSE TERM EXPIRES IN 1996
AND NOMINEES FOR CLASS 1 DIRECTOR WHOSE TERM EXPIRES IN 1999
Carol J. Bond 55 President of Monaghan Transportation 1986
Company; Vice President of Keystone (1984)
Parts Manufacturing, Inc.
R. Lowell Coolidge 55 Attorney-at-Law with the firm of 1984
Walrath and Coolidge (1984)
Richard E. Wilber 47 President of Citizens Financial 1984
Services, Inc. & First Citizens (1983)
National Bank
John M. Thomas, 62 Retired Executive Chairman of Guthrie 1990
M.D. Healthcare System; President of Chemung (1985)
Spring Water Company
Larry J. Croft 60 General Manager of Croft Ford, Inc.; 1990
Secretary of Croft Lumber Co. Inc. (1969)
Page 4
CURRENT CLASS 3 DIRECTORS WHOSE TERM EXPIRES IN 1997
Bruce L. Adams 59 President of Bru-Cel Distributing 1991
Co., Inc. (1991)
William D. Van 62 Dairy Farmer 1984
Etten (1978)
CURRENT CLASS 2 DIRECTORS WHOSE TERM EXPIRES IN 1998
Robert E. Dalton 63 Retired President of Keystone Parts 1984
Manufacturing, Inc.; Secretary of (1957)
Keystone North, Inc.; Real
Estate & Insurance Broker; Chairman of
the Board, First Citizens National Bank
John E. Novak 59 Retired School Administrator with 1984
Southern Tioga School District; (1976)
since 1993 has supervised Student
Teachers at Elmira College
Rudolph J. 56 Attorney-at-law with the firm of 1984
van der Hiel van der Hiel & Mansfield; Vicar at (1975)
St. James Episcopal Church,
Mansfield and Trinity Episcopal Church,
Antrim
Robert J. Landy 68 Attorney-at-Law with the firm of Landy 1990
and Landy; Retired Chairman of Board, (1960)
Guthrie Healthcare System
THE BOARD OF DIRECTORS AND ITS COMMITTEES
During 1996, there were four (4) regular meetings of the Board of
Directors of the Corporation and twenty-three (23) regular meetings
of the Board of Directors of the Bank. All Directors attended at
least seventy-five percent of the Corporation's Board of Directors
Meetings.
There is no family relationship, by blood, marriage, or adoption,
between any of the Directors and any other Director, Officer, or
full-time Employee, of the Corporation or the Bank.
None of the Directors are involved in any legal action in his/her
individual capacity which is material to an evaluation of his
ability or integrity to act as a Director.
The Corporation has no standing audit committee or nominating
committee of the Board of Directors. Matters within the
jurisdiction of these committees are considered by the Board of
Directors of the Bank.
NOMINATIONS FOR DIRECTORS
Nominations for Directors other than those made by or on behalf of
the existing Board of Directors to be elected at an annual meeting
of shareholders must be submitted to the Secretary of the
Corporation in writing not less than ninety (90) days nor more than
one-hundred twenty (120) days prior to the date of the meeting.
Such nominations must be in accordance with Section 202 of the
Corporation's Bylaws and contain information specified therein.
Page 5
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities and Exchange Act of 1934 requires
the Corporation's officers and directors, and persons who own more
than 5% of the registered class of the Corporation's equity
securities, to file reports of ownership and changes of ownership
with the Securities and Exchange Commission ("SEC"). Officers,
directors and greater than 5% shareholders are required by SEC
regulation to furnish the Corporation with copies of all Section
16(a) forms that they file. There are no 5% shareholders of the
Corporation's equity securities.
Based solely on its review of the copies of such forms received by
it, and written representations from certain reporting persons that
no Forms 5 were required for those persons, the Corporation
believes that during the period January 1, 1995 through December
31, 1995, its officers and directors were in compliance with all
applicable filing requirements except for two reports which covered
two transactions were filed late by Mr. Bruce Adams, a director of
the Corporation.
EXECUTIVE COMPENSATION
Shown below is information concerning the annual compensation for
services in all capacities to the Corporation for the fiscal years
ended December 31, 1995, 1994 and 1993 of those persons who were,
as of December 31, 1995 (I) the Chief Executive Officer, and (ii)
the four other most highly compensated executive officers of the
Corporation to the extent that such persons' total annual salary
and bonus exceeded $100,000:
Summary Compensation Table
Long-term Compensation
Annual Compensation Awards Payout
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name and Salary Bonus Compensation Award(s) Options/SARs Payouts Compensation
Principal Position Year ($) (1) ($) ($) ($) (#) ($) ($) (2)
Richard E. Wilber 1995 $119,123 $6,329 None None None None $6,329
President & CEO 1994 $109,952 $6,268 $6,268
1993 $ 95,923 $5,897 $5,897
(1) The "Salary" column includes fees paid as a director of the
Corporation and Subsidiary totaling $8,475, $8,395, $8,000 for
years 1995, 1994, and 1993 respectively.
(2) Represents the tax deferred profit sharing contribution paid
by the Bank to the Chief Executive Officer in 1995, 1994 and
1993 respectively.
Retirement Plan
The Bank has a noncontributory defined benefit pension plan (the
"Plan") for all employees meeting certain age and length of service
requirements. Benefits are based primarily on years of service and
the average annual compensation during the highest five consecutive
years within the final ten years of employment. The Bank's funding
policy is consistent with the funding requirements of Federal Law
and regulations. The First Citizens National Bank Trust Department
is trustee of the pension plan.
The following table sets forth the estimated annual benefits
payable on retirement at age 65 by a participating employee,
assuming final average earnings as shown. Although the pension
plan is integrated with Social Security, this table reflects the
benefit available through the pension plan exclusive of social
security. Because of funding limitations by the Internal Revenue
Service, no contributions were allowed in 1994 and 1993. Such
funding limitations no longer applied in 1995 and the Bank
therefore contributed the maximum allowed of $106,921.
Page 6
Average Annual Annual Pension Benefits Upon Retirement
Earnings with Years of Service Indicated
10 20 30 40
___ ___ ___ ___
$60,000 10,056 20,111 30,167 30,167
$80,000 14,056 28,111 42,167 42,167
$100,000 18,056 36,111 54,167 54,167
$120,000 22,056 44,111 66,167 66,167
$140,000 26,056 52,111 78,167 78,167
$160,000 28,056 56,111 84,167 84,167
Richard E. Wilber, President and Chief Executive Officer of the
Corporation, has 14 years of credited service to the Corporation
and Subsidiary. Average salary upon which benefits would be
calculated at December 31, 1995 is $103,282.
Profit Sharing Plan
The Bank has a profit-sharing plan, covering substantially all
employees, which provides tax deferred salary savings to plan
participants. Contributions to the profit-sharing plan are
allocated to participants based upon a percentage of their
compensation. The total amount of the profit-sharing contribution
is determined by the Board of Directors annually on a discretionary
basis. Total contributions for 1995, 1994, and 1993 were $86,239,
$119,630, and $112,271 respectively. As reported in the Summary
Compensation Table, the contributions paid by the Bank on behalf of
Richard E. Wilber, President and Chief Executive Officer of the
Corporation, were $6,329 in 1995, $6,268 in 1994 and $5,897 in
1993.
Compensation of Directors
Directors of the Corporation receive a fee of $115 per meeting.
Directors of the Subsidiary, except for the Chairman, receive $460
per month plus fees for attending various committee meetings at $85
per meeting. The Chairman receives a fixed annual sum of $10,400.
In addition to the above fees, each director is provided a $50,000
life insurance benefit. In the aggregate, the Board of Directors
received $86,433.36 for all Board of Directors meetings and
committee meetings attended in 1995. Total premiums paid in 1995
for life insurance on behalf of the directors was $1,855.
Compensation Committee Interlocks and Insider Participation in
Compensation Decisions
Mr. Richard E. Wilber, President and Chief Executive Officer of the
Corporation and the Bank, is a member of the Human Resource
Committee which makes recommendations on compensation policies and
practices to the Board of Directors. Mr. Wilber does not
participate in conducting his review nor does he vote on his annual
compensation package.
Board Compensation Committee Report on Executive Compensation
The Board of Directors of the Corporation is responsible for the
governance of the Corporation and its subsidiary, First Citizens
National Bank. In fulfilling its fiduciary duties, the Board of
Directors engages competent persons who undertake to accomplish
strategic goals and objectives with integrity and in a cost-effective manner.
The Human Resource Committee, comprised of the President and three
outside directors (Directors Novak, Croft and Adams), makes
recommendations on compensation policies and practices to the Board
of Directors. The fundamental philosophy of the Corporation's and
the Bank's compensation program is to offer competitive
compensation opportunities for all employees based on the
individual's contribution and personal performance. Compensation
policies are designed to attract and motivate competent and
dedicated individuals to enhance the Corporation's growth and
profitability and the ultimate financial return to shareholders.
Page 7
The compensation of the President and the Executive Vice President
is reviewed and approved in April of each year by the Board of
Directors. As a basis for determining compensation, the Board of
Directors examines information from a peer group of banks relative
to performance and compensation. The peer group for overall bank
performance analysis consists primarily of those contained within
the Uniform Bank Performance Report prepared by the Office of the
Comptroller of the Currency (banks with assets of $100 million to
$300 million throughout the United States).
The peer group for analysis of compensation paid to other bank
holding company and banking institution executives is obtained
primarily from L.R. Weber Associates, Inc. and Bank Administration
Institute (such peer data is compiled on both a regional and asset
size basis). These peer groups are different from the peer group
utilized in the performance chart appearing below.
The Board of Directors does not deem Section 162(m) of the Internal
Revenue Code ("IRC") to be applicable to the Corporation at this
time. The Board of Directors intends to monitor the future
application of Section 162(m) of the IRC to the compensation paid
to its executive officers and in the event that this section does
become applicable it is the intent of the Board of Directors to
amend the Corporation's and the Bank's compensation plans to
preserve the deductibility of the compensation payable under such
plans.
Compensation of the President/Executive Vice President
As mentioned previously, the Board of Directors evaluated the
compensation of the President and the Executive Vice President in
April 1995. Compensation increases were determined based on an
analysis of the contribution of these individuals in achieving the
Corporation's strategic goals and objectives. In determining
whether strategic goals had been achieved, the Board of Directors
considered among numerous factors the following: the Corporation's
performance as measured by earnings, revenues, return on assets,
return on equity, market share, total assets and non-performing
loans. Although the performance and increases in compensation were
measured in light of these factors, there was no direct correlation
between any specific criterion and compensation of these
executives, nor was there any specific weight provided to any such
criteria.
The Board of Directors believes that the President's 1995
compensation of $110,648 is appropriate in light of the of the
Corporation's 1995 accomplishments (an 8.0% increase in net income;
a 14.4% return on average equity; and a 6.3% increase in assets).
In addition to this compensation, the President and Executive Vice
President participate in the Bank's profit-sharing plan on the same
basis as all other eligible employees.
HUMAN RESOURCE COMMITTEE
Richard E. Wilber John E. Novak
Larry J. Croft Bruce L. Adams
Page 8
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly change in the
cumulative total return on the Corporation's Common Stock against
the cumulative total return of the S&P 500 Index and selected peer
groups for the period of five (5) years commencing on January 1,
1991, and ended December 31, 1995. Shareholder return shown on the
graph below is not necessarily indicative of future performance.
[PERFORMANCE GRAPH OMITTED: Following is a description of the performance
graph in tabular format.]
1990 1991 1992 1993 1994 1995
Peer Group Index 97.38 90.28 99.64 139.48 165.85 194.24
Citizens Financial
Services, Inc. 99.70 89.68 114.16 136.22 184.73 198.32
S&P 500 Index 93.44 118.02 123.29 131.99 129.96 186.52
NOTE: Peer group information appearing above includes the
following companies: CNB Financial Corporation, Citizens
& Northern Corporation, Columbia Financial Corporation,
Comm. Bancorp, Inc., Mid Penn Bancorp, Inc., Heritage
Bancorp, Inc., Penn Security Bank & Trust Co., Penns
Woods Bancorp, Inc., Pioneer American Holding Company,
and Wayne Bank. Such financial institutions and bank
holding companies were selected based on four criteria:
total assets between $150 million and $600 million,
market capitalization greater than $20 million;
headquarters located in Pennsylvania; and not listed on
NASDAQ national market.
CERTAIN TRANSACTIONS
Certain of the Corporation's Directors and Executive Officers and
their associates are and have been customers of the Bank and have
had transactions with the Bank in the ordinary course of business.
In addition, certain Directors are and have been Directors and
Officers of corporations which are customers of the Bank and have
had transactions with the Bank in the ordinary course of business.
All such transactions with these Directors and Officers of the
Corporation and their associates referred to above were made on
substantially the same terms (including interest rates and
collateral) as those prevailing at the time of such transactions.
These transactions did not involve more than a normal risk of
collectibility or present other unfavorable features.
Page 9
During 1995, business and law firms of which Directors Rudolph J.
van der Hiel, R. Lowell Coolidge and Robert J. Landy were Officers
and/or Partners rendered services or sold products to the
Corporation and/or the Bank in the normal course of business.
Directors Rudolph J. van der Hiel and R. Lowell Coolidge each
received $19,562.64 and $23,575.14, respectfully, for all legal
services rendered to the Corporation and/or Bank during 1995. Also
during 1995, Dalton Insurance Agency was paid $63 thousand in
premiums for various insurance coverages for the Corporation and
the Bank. Such agency is owned and operated by an immediate family
member of Robert E. Dalton, director to the Corporation and the
Bank.
Total loans outstanding from the Corporation and the Bank at
December 31, 1995, to the Corporation's and the Bank's officers and
directors as a group and members of their immediate families and
companies in which they had an ownership interest of ten percent
(10%) or more was $2,037,067.20, or approximately ten percent (10%)
of the total equity capital of the Bank. Loans to such persons
were made in the ordinary course of business, were made on
substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with other persons, and did not involve more than the
normal risk of collectibility or present other unfavorable
features. The aggregate amount of indebtedness outstanding as of
the latest practicable date, February 29, 1996, to the above
described group was $2,000,354.99.
Principal Officers of Corporation
The following table sets forth the selected information about the
Executive Officers of the Corporation, as of March 13, 1996.
Please refer to the footnotes below under the caption entitled
"Principal Officers of First Citizens National Bank."
Held Employee Number of Shares Age as of
Name and Position Since Since Beneficially Owned March 13, 1996
Richard E. Wilber 1984 1984 4,504 47
President
Terry B. Osborne 1984 1984 396 (2) 42
Secretary
Thomas C. Lyman 1988 1988 2 50
Treasurer
Each of the above Executive Officers has served in these capacities
for the past five years.
Page 10
Principal Officers of First Citizens National Bank
The following table sets forth the selected information about the
Executive Officers of First Citizens National Bank, subsidiary of
the Corporation, as of March 13, 1996:
Held Employee Number of Shares Age as of
Name and Position Since Since Beneficially Owned March 13, 1996
Robert E. Dalton 1985 (1) 15,484 63
Chairman of the
Board
Richard E. Wilber 1983 1981 4,504 47
President
Terry B. Osborne 1991 1975 396 42
Executive Vice
President
Thomas C. Lyman 1988 1988 2 50
Finance/Control
Division Manager
William W. Wilson 1991 1979 171 (3) 46
Vice President
Operations
Division Manager
Deborah E. Scott 1991 1981 550 (4) 36
Vice President
Trust and
Investment
Services Manager
Cynthia T. 1985 1983 351 (5) 37
Pazzaglia
Administration
Services
Division Manager
(1) Is not an employee of First Citizens National Bank.
(2) Mr. Osborne holds 306 shares jointly with his spouse, 24
shares in his name alone, 66 shares held by his spouse.
(3) Mr. Wilson holds 171 shares jointly with his spouse.
(4) Mrs. Scott holds 463 shares jointly with her spouse, and 87
shares as custodian.
(5) Mrs. Pazzaglia holds 351 shares jointly with her spouse.
Page 11
ANNUAL REPORT
A copy of the Corporation's Annual Report for its fiscal year ended
December 31, 1995, is enclosed with this Proxy Statement. A
representative of S.R. Snodgrass, A.C., Certified Public
Accountants, of Wexford, Pennsylvania, the independent auditors who
prepared the Annual Report, will be present at the Annual Meeting
of Shareholders. The representative will have an opportunity to
make a statement, if he desires to do so, and will be available to
respond to any appropriate questions concerning the Annual Report
presented by shareholders at the Annual Meeting.
INDEPENDENT PUBLIC ACCOUNTANTS
S.R. Snodgrass, A.C. ("Snodgrass"), Certified Public Accountants,
of Wexford, Pennsylvania, served as the Corporation's independent
public accountants for its 1995 fiscal year. The Corporation has
been advised by Snodgrass that none of its members has any
financial interest in the Corporation. In addition to performing
customary audit services, Snodgrass assisted the Corporation and
the Bank with preparation of their federal and state tax returns,
and provided assistance in connection with regulatory matters,
charging the Bank for such services at its customary hourly billing
rates. These non-audit services were approved by the Corporation's
and the Bank's Boards of Directors after due consideration of the
effect of the performance thereof on the independence of the
auditors and after the conclusion by the Corporation's and the
Bank's Boards of Directors that there was no effect on the
independence of the auditors. Snodgrass will serve as the
Corporation's independent public accountants for its 1996 fiscal
year.
On April 19, 1994, the Board of Directors of the Corporation
approved a resolution, based upon the recommendations of the Audit
Committee of the Board of Directors of the Corporation, to engage
Snodgrass as the Corporation's independent accountants, replacing
Parente, Randolph, Orlando, Carey & Associates ("Parente"), its
prior independent accountants. Parente's report on the
Corporation's consolidated financial statements for the prior two
years contained no adverse opinion or disclaimer of opinion or
qualification as to uncertainty, audit scope or accounting
principles. In connection with the audits of the two most recent
fiscal years and subsequent interim period prior to dismissal,
there were no disagreements with Parente on any matter of
accounting principle or practice, financial statement disclosure,
or auditing scope or procedure, which disagreements, if not
resolved to the satisfaction of the former accountants, would have
caused them to reference in connection with their report to the
subject matter of the disagreement. The Corporation acknowledges
that disagreements required to be reported in response to the
proceeding sentence include both those resolved to the former
accountants' satisfaction and those not resolved to the former
accountants' satisfaction. The Corporation further acknowledges
that disagreements contemplated by this rule are those which
occurred at the decision-making level; i.e., between personnel of
the Corporation responsible for the presentation of its financial
statements and personnel of the accounting firm responsible for
rendering its report. There have been no "reportable events,"
within the meaning of Item 304 of Securities and Exchange
Commission Regulation S-K.
On April 26, 1994, the Corporation filed a Current Report on Form
8-K with the Securities and Exchange Commission (the "SEC") to
notify the SEC of the Corporation's change in accountants. The
Corporation provided Parente with a copy of the Form 8-K and
requested that they furnish the Corporation with a letter addressed
to the SEC stating whether such firm agreed with the statements
made by the Corporation contained in the Form 8-K and, if not,
stating the respects in which the firm disagreed. Parente's letter
of response indicated no disagreements with the statements made, as
described above. The letter was attached as an exhibit to the
above-referenced Current Report on Form 8-K. Parente is not
expected to be represented at the Annual Meeting.
Page 12
SHAREHOLDER PROPOSALS
Securities and Exchange Commission Regulations permit shareholders
to submit proposals for consideration at Annual Meetings of
Shareholders. Any such proposals for the Corporation's Annual
Meeting of Shareholders to be held in 1997, must be submitted to
the President of Citizens Financial Services, Inc., at its
principal office of 15 South Main Street, Mansfield, Pennsylvania
16933 on or before Thursday, November 21, 1996, in order to be
included in proxy materials relating to that Annual Meeting.
OTHER MATTERS
The Board of Directors of the Corporation is not aware of any other
matters to be presented for action other than described in the
accompanying Notice of Annual Meeting of Shareholders, but if any
other matters properly come before the Meeting, and any
adjournments or postponements thereof, the holder(s) of any Proxy
is (are) authorized to vote thereon in accordance with their best
judgment.
ADDITIONAL INFORMATION
Upon written request of any shareholder, a copy of the
Corporation's Annual Report or SEC Form 10-K for its fiscal year
ended December 31, 1995, including the financial statements and the
schedules thereto, required to be filed with the Securities and
Exchange Commission pursuant to Rule 13a-1 under the Securities
Exchange Act of 1934, as amended, may be obtained without charge,
from Thomas C. Lyman, Treasurer, Citizens Financial Services, Inc.,
15 South Main Street, Mansfield, Pennsylvania 16933.
Next year's Annual Meeting is scheduled to be held on Tuesday,
April 15, 1997.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Richard E. Wilber
Richard E. Wilber
President
Page 13
CITIZENS FINANCIAL SERVICES, INC.
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 16, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Terry B. Osborne
and Jerald J. Rumsey and each or any of them, proxies of the
undersigned, with full power of substitution, to vote all of the
shares of Citizens Financial Services, Inc. (the "Corporation")
that the undersigned may be entitled to vote at the Annual Meeting
of Shareholders of the Corporation to be held at the Tioga County
Fairgrounds Youth Building, Whitneyville, Pennsylvania 16901, on
Tuesday, April 16, 1996 at 12:00 p.m., prevailing time, and at any
adjournment or postponement thereof as follows:
1. ELECTION OF CLASS 1 DIRECTORS TO SERVE FOR A THREE-YEAR TERM
Carol J. Bond, R. Lowell Coolidge, Richard E. Wilber, John M.
Thomas, M.D., Larry J. Croft
For all nominees WITHHOLD AUTHORITY
listed above (except to vote for all
as marked to the nominees listed
contrary below) above
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME ON THE SPACE
PROVIDED BELOW.)
__________________________________________________________________
2. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the meeting
and any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED ABOVE.
Dated:________________, 1996
_______________________________
Number of Shares Held of Record
on March 13, 1996 Indicated Above _______________________________
Signature(s)
(Seal)
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER AND RETURNED
PROMPTLY TO THE CORPORATION IN THE ENCLOSED ENVELOPE. WHEN SIGNING
AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE
GIVE FULL TITLE. IF MORE THAN ONE TRUSTEE, ALL SHOULD SIGN. IF
STOCK IT IS HELD JOINTLY, EACH OWNER SHOULD SIGN.