Contact: Kathleen Campbell, Marketing Director First Citizens Community Bank

570-662-0422 15 S. Main Street

570-662-8512 (fax) Mansfield, PA 16933

Citizens Financial Services, Inc. Reports unaudited First quarter 2017 Earnings

MANSFIELD, PENNSYLVANIA— April 26, 2017 – Citizens Financial Services, Inc. (OTC BB: CZFS), parent company of First Citizens Community Bank, released today its unaudited financial results for the three months ended March 31, 2017.

For the three months ended March 31, 2017, net income totaled $3,303,000 which compares to net income of $3,283,000 for the first quarter of 2016, an increase of $20,000. Basic earnings per share of $1.00 for the first quarter of 2017 compares to $.98 per share for the first quarter last year. Annualized return on equity for the three months ended March 31, 2017 and 2016 was 10.45% and 10.81%, while annualized return on assets was 1.08% and 1.11%, respectively. The slight decrease in these profitability ratios was impacted by the provision for loan loss, which was $615,000 for the quarter ended March 31, 2017 compared to $135,000 for the same quarter last year, which is directly tied to loan growth. Annualized return on equity and return on assets for the quarter ended March 31, 2017 were improved compared to the three months ended December 31, 2016, which were 10.12% and 1.05%, respectively. Similarly, net income for the first quarter of 2017 of $3,303,000, exceeded the fourth quarter of 2016's net income by $132,000, or 4.1%.

Net interest income before the provision for loan loss totaled $9,997,000 for the three months ended March 31, 2017 compared to $9,205,000 for the three months ended March 31, 2016, which is an increase of $792,000, or 8.6%. The net interest margin for the three months ended March 31, 2017 was 3.78% compared to 3.64% for the same period last year. CEO and President Randall E. Black stated, "Our strategy has been to shift interest earning assets from the investment portfolio into the loan portfolio. This strategy has and should continue to result in higher yields on interest earning assets and also help us manage the balance sheet from an interest rate risk perspective in a rising rate environment. The increase in the provision for loan loss is reflective of the strong loan growth during the first quarter of 2017, and although it impacts short-term profitability, the origination of high quality loans positions us for future revenue growth."

Non-interest expenses for the three months ended March 31, 2017 totaled $7,191,000 compared to $6,912,000 last year, an increase of $279,000. Current year expenses reflect the increased costs associated with the additional lending teams, and branch and loan production office expansion, which were added during 2016 but did impact financial results for the three months ended March 31, 2016.

At March 31, 2017, total assets were $1.225 billion which compares to $1.223 billion at December 31, 2016. Available for sale securities of $281.8 million at March 31, 2017 decreased $32.2 million from December 31, 2016 to fund growth in the loan portfolio. Net loans as of March 31, 2017 totaled $835.9 million and have increased $45.2 million from December 31, 2016. Deposits have increased $32.1 million, from December 31, 2016 to a total of $1.038 billion at March 31, 2017. Borrowed funds decreased $32.8 from December 31, 2016 to March 31, 2017, which is attributable to the increase in deposits and decrease in investment securities, offset by the first quarter 2017 loan growth.

Citizens Financial Services, Inc. has nearly 1,700 shareholders, the majority of whom reside in markets where offices are located.

Note: This press release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are not historical facts; rather, they are statements based on the Company's current expectations regarding its business strategies and their intended results and its future performance. Forward-looking statements are preceded by terms such as "expects," "believes," "anticipates," "intends" and similar expressions. Forward-looking statements are not guarantees of future performance. Numerous risks and uncertainties could cause or contribute to the Company's actual results, performance and achievements to be materially different from those expressed or implied by the forward-looking statements. Factors that may cause or contribute to these differences include, without limitation, changes in general economic conditions, including changes in market interest rates and changes in monetary and fiscal policies of the federal government; legislative and regulatory changes; and other factors disclosed periodically in the Company's filings with the Securities and Exchange Commission. Because of the risks and uncertainties inherent in forward-looking statements, readers are cautioned not to place undue reliance on them, whether included in this press release or made elsewhere periodically by the Company or on its behalf. The Company assumes no obligation to update any forward-looking statements except as may be required by applicable law or regulation.

CITIZENS FINANCIAL SERVICES, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)

	March 31			December 31			March 31
(in thousands except share data)	2017			2016			2016
ASSETS:
Cash and due from banks:
Noninterest-bearing	$	13,587		$	16,854		$	14,746
Interest-bearing		1,210			900			22,633
Total cash and cash equivalents		14,797			17,754			37,379

Interest bearing time deposits with other banks		6,708			6,955			7,697

Available-for-sale securities		281,773			314,017			371,925

Loans held for sale		1,581			1,827			1,557

Loans (net of allowance for loan losses: $9,405 at March 31, 2017;
$8,886 at December 31, 2016 and $7,275 at March 31, 2016)		835,902			790,725			692,428

Premises and equipment		16,949			17,030			17,249
Accrued interest receivable		3,618			4,089			4,096
Goodwill		21,089			21,089			21,089
Bank owned life insurance		26,389			26,223			25,705
Other intangibles		2,012			2,096			2,309
Unsettled security sales		1,297			7,759			-
Other assets		12,409			13,454			11,130

TOTAL ASSETS	$	1,224,524		$	1,223,018		$	1,192,564

LIABILITIES:
Deposits:
Noninterest-bearing	$	157,426		$	147,425		$	147,897
Interest-bearing		880,183			858,078			869,914
Total deposits		1,037,609			1,005,503			1,017,811
Borrowed funds		46,836			79,662			39,996
Accrued interest payable		612			720			660
Other liabilities		14,511			13,865			12,126
TOTAL LIABILITIES		1,099,568			1,099,750			1,070,593
STOCKHOLDERS' EQUITY:
Preferred Stock $1.00 par value; authorized
3,000,000 shares; none issued in 2017 or 2016		-			-			-
Common stock
$1.00 par value; authorized 15,000,000 shares at March 31, 2017, December 31, 2016
and March 31, 2016; issued 3,704,375 at March 31, 2017 and December 31, 2016
and 3,671,751 shares at March 31, 2016		3,704			3,704			3,672
Additional paid-in capital		42,256			42,250			40,722
Retained earnings		93,172			91,278			87,696
Accumulated other comprehensive loss		(1,421	)		(1,392	)		903
Treasury stock, at cost: 388,190 shares at March 31, 2017; 384,671 shares at
December 31, 2016 and 353,400 shares at March 31, 2016		(12,755	)		(12,572	)		(11,022	)
TOTAL STOCKHOLDERS' EQUITY		124,956			123,268			121,971
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	1,224,524		$	1,223,018		$	1,192,564

CITIZENS FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
	Three Months Ended
	March 31
(in thousands, except per share data)	2017		2016
INTEREST INCOME:
Interest and fees on loans	$	9,717	$	8,596
Interest-bearing deposits with banks		35		71
Investment securities:
Taxable		804		944
Nontaxable		668		771
Dividends		76		80
TOTAL INTEREST INCOME		11,300		10,462
INTEREST EXPENSE:
Deposits		1,045		1,074
Borrowed funds		258		183
TOTAL INTEREST EXPENSE		1,303		1,257
NET INTEREST INCOME		9,997		9,205
Provision for loan losses		615		135
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES		9,382		9,070
NON-INTEREST INCOME:
Service charges		1,058		1,102
Trust		221		196
Brokerage and insurance		191		209
Gains on loans sold		101		46
Investment securities gains, net		172		27
Earnings on bank owned life insurance		166		170
Other		126		166
TOTAL NON-INTEREST INCOME		2,035		1,916
NON-INTEREST EXPENSES:
Salaries and employee benefits		4,319		3,882
Occupancy		527		445
Furniture and equipment		139		157
Professional fees		310		287
FDIC insurance		105		157
Pennsylvania shares tax		281		150
Amortization of intangibles		74		82
ORE expenses		90		92
Other		1,346		1,660
TOTAL NON-INTEREST EXPENSES		7,191		6,912
Income before provision for income taxes		4,226		4,074
Provision for income taxes		923		791
NET INCOME	$	3,303	$	3,283

PER COMMON SHARE DATA:
Net Income - Basic	$	1.00	$	0.98
Net Income - Diluted	$	1.00	$	0.98
Cash Dividends Paid	$	0.425	$	0.411

Number of shares used in computation - basic		3,313,616		3,356,573
Number of shares used in computation - diluted		3,313,636		3,356,573

Financial Highlights (Unaudited)

	Three Months Ended
	March 31,
	2017			2016
Performance Ratios and Share Data:
Return on average assets (annualized for the three month period)		1.08	%		1.11	%
Return on average equity (annualized for the three month period)		10.45	%		10.81	%
Net interest margin (tax equivalent)		3.78	%		3.64	%
Cash dividends paid per share	$	0.425		$	0.411
Earnings per share - basic	$	1.00		$	0.98
Earnings per share - diluted	$	1.00		$	0.98
Number of shares used in computation - basic		3,313,616			3,356,573
Number of shares used in computation - diluted		3,313,636			3,356,573

Balance Sheet Highlights (dollars in thousands, except per share Data):	March 31, 2017			December 31, 2016			March 31, 2016

Assets	$	1,224,524		$	1,223,018		$	1,192,564
Investment securities - Available for sale:		281,773			314,017			371,925
Loans (net of unearned income)		845,307			799,611			699,703
Allowance for loan losses		(9,405	)		(8,886	)		(7,275	)
Deposits		1,037,609			1,005,503			1,017,811
Stockholders' Equity		124,956			123,268			121,971
Non-performing assets		12,745			12,895			8,773
Non-performing assets to total loans		1.51	%		1.61	%		1.25	%
Annualized net charge-offs (recoveries) to total loans		0.05	%		-0.04	%		-0.02	%
Average Leverage Ratio		9.51	%		9.46	%		9.42	%
Common shares outstanding		3,316,185			3,319,704			3,318,351
Book value per share	$	38.11		$	37.55		$	36.13