EMPLOYMENT AGREEMENT

     THIS AGREEMENT, entered into this 30th day of December, 2002, by and between CHARLES H. UPDEGRAFF, JR., an individual residing in Potter County, Pennsylvania (Executive), and CITIZENS BANCORP, INC., a Pennsylvania corporation (the Company),

WITNESSETH THAT:

     WHEREAS, Executive has served the Company as a senior executive officer and as a member of its Board of Directors for many years; and

     WHEREAS, the Company desires to assure itself of the benefit of Executives services and experience, and to that end has authorized this Agreement; and

     WHEREAS, Executive is willing to remain in the employ of the Company upon the terms and conditions herein set forth;

     NOW, THEREFORE, in consideration of the premises and covenants herein contained, and intending to be legally bound, the parties hereto agree as follows:

     Section 1. Term of Employment.

        (a) Base Term. The term of employment of Executive under this Agreement shall be the period commencing January 1, 2003 and ending on December 31, 2005.

        (b) Automatic Renewal. At December 31, 2003 and December 31 of each succeeding calendar year to and including December 31, 2015, the term of employment of Executive under this Agreement shall be automatically extended to December 31 of the third calendar year thereafter. However, each of the parties shall have the right, exercisable by written notice to the other, to terminate the automatic renewal and thereby fix the expiration of the term of employment under this Section 1. In order to exercise its right to terminate the automatic renewal, the electing party shall deliver such notice no earlier than October 1 nor later than November 30 in any calendar year, commencing in 2003. Notice of termination of automatic renewal having been given as aforesaid, the term of employment of Executive under this Section 1 shall continue until December 31 of the third calendar year after the year in which such notice is so given, but not thereafter. The term shall not continue after December 31, 2018 whether or not such notice shall have been given.

        (c) Early Termination. Notwithstanding paragraphs (a) and (b) of this Section, the term of employment of Executive under this Agreement shall be subject to earlier termination upon:

                (i) dismissal of Executive from his position as Chief Executive Officer pursuant to resolution of a majority of the full Board of Directors; or

                (ii) determination of disability of Executive pursuant to Section 4 hereof; or

                (iii) death of Executive.

     In the event of termination pursuant to clause (i), the Company shall thereafter be obligated to pay to Executive the compensation and benefits provided for under Section 3(e) hereof. In the event of termination pursuant to clause (ii) the provisions of Section 4 hereof shall apply. In the event of termination pursuant to clause (iii), the Company shall be obligated to pay Executives estate or designated beneficiary the compensation reserved under Section 3(a) hereof until the end of the twelfth calendar month following his death, plus pro-rata portions of annual and long-term incentive bonus awards described in Section 3(b) hereof (when and if payable) under any plan or program in which Executive was then a participant.

     Section 2. Services to be Rendered.

     The Company hereby agrees to employ Executive as the Companys Chief Executive Officer at the headquarters office located in Potter County, Pennsylvania, subject to the terms, conditions and provisions of this Agreement. Executive hereby accepts such employment, and agrees (i) to perform all senior executive and managerial duties as may be required of him by the Company, (ii) to serve as a member of the Board of Directors of the Company and as the Chief Executive Officer and a member of the Board of Directors of any majority-owned subsidiary of the Company based in Potter County, Pennsylvania, and (iii) that he shall apply his efforts on a full-time basis and with substantially the same degree of skill and diligence as he has applied during his past employment with the Company. In connection therewith, Executive shall report to and be subject to the direction of the Companys Board of Directors. Notwithstanding the foregoing, Executive may devote a reasonable amount of his time to his personal investments and business affairs (including service as a director of unaffiliated companies) and to civic and charitable activities, within the limits of and subject to the Companys policies in effect from time to time.