Exhibit 99.1

NEWS RELEASE

FOR RELEASE: 12:00 P.M. Eastern Time: March 1, 2011

Penseco Financial Services Corporation Reports Earnings as of December 31, 2010

SCRANTON, PA, March 1, 2011 — Penseco Financial Services Corporation (OTC Bulletin Board: PFNS) (the “Company”), the Scranton, Pennsylvania based financial holding company of Penn Security Bank & Trust Company, reported an increase in net income of $714,000 or 36.3% for the three months ended December 31, 2010 to $2,681,000 or $0.82 per weighted average share compared with $1,967,000 or $0.60 per weighted average share from the year ago period primarily from higher non interest income due to an other-than-temporary impairment charge of $787,000 in the year ago period coupled with a lower provision for loan losses, offset by higher non interest expense and increased applicable income taxes.

The Company reported net income for 2010 increased $3,350,000 or 40.0%, to $11,722,000 or $3.58 per weighted average share compared with the year ago period of $8,372,000 or $2.80 per weighted average share. The increase in net income was primarily attributed to higher net interest income as well as the absence of merger related costs in 2010 compared to $1,550,000 incurred in 2009 due to the Company’s acquisition of Old Forge Bank. Also, the Company did not recognize any impairment losses in 2010 as compared to $787,000 of losses in 2009 related to the Bank’s equity investment portfolio. The results of operations for 2010 include twelve months of operations from the former Old Forge Bank, as opposed to only nine months of Old Forge Bank operations captured in 2009. Net interest margin remained unchanged at 4.11% for the year ended December 31, 2010 compared to the same period of 2009.

Net income from core operations (“operating earnings”), which is a non-GAAP measure of net income, increased $2,181,000 for the twelve months ended December 31, 2010 to $11,722,000 compared to $9,541,000 for the same period of 2009. Operating earnings for the twelve months ended December 31, 2010 have been positively impacted by the merger primarily through increased interest income from a greater amount of loans and securities. A reconciliation of the non-GAAP operating earnings and disclosure of the non-GAAP operating return on assets, operating return on equity and dividend payout ratio are described within the non-GAAP reconciliation schedule included within this press release.

Net Interest Income

Net interest income decreased $72,000 or 0.9% for the three months ended December 31, 2010, as compared to the corresponding period of 2009. Net interest income, after provision for loan losses, increased $339,000 or 4.4% for the fourth quarter of 2010, primarily as a result of a $411,000 decrease in the provision for loan losses, along with lower interest expense from lower funding costs, offset by lower interest income.

Net interest income increased $2,818,000 or 9.2% to $33,389,000 for the year ended December 31, 2010 compared to $30,571,000 for 2009. Net interest income after provision for loan losses increased $3,079,000 or 10.9% during 2010 primarily due to increased interest and fees on loans, which in turn were attributable to the expansion of our loan portfolio following the acquisition of Old Forge Bank in 2009. Net interest income was also positively affected in 2010 by reduced interest expense from lower borrowing costs. The provision for loan losses decreased $261,000 to $1,999,000 during 2010 compared with $2,260,000 for the same period of 2009, based on management’s evaluation of the adequacy of the allowance for loan losses through the application of its allowance for loan losses methodology. Among other things, the methodology, which was enhanced in the third quarter of 2010, takes into consideration the strength of the local economy.

Non-Interest Income

Total non-interest income increased $885,000 or 43.3% to $2,930,000 for the three months ended December 31, 2010, compared with $2,045,000 for the same period in 2009 mainly from the other-than-temporary impairment charge in 2009. Trust department income increased $38,000 or 11.2% due to an increase in the market value of trust assets and new business. Brokerage fee income increased $21,000 or 35.6% mostly due to increased volume of investor activity. Other fee income increased $53,000 or 14.1% mainly due to increased debit card discounts related to a higher number of new accounts. Bank-owned life insurance income increased $27,000 or

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21.3%. Other operating income increased $427,000 largely due to gains on the sale of low yielding long-term fixed rate real estate loans. Realized gains (losses) on securities, net, decreased $515,000 primarily as a result of a realized gain on the sale of a corporate bond from the former Old Forge Bank portfolio during the three months ended December 31, 2009.

Total non-interest income increased $1,783,000 or 17.2% to $12,152,000 during 2010, from $10,369,000 for the same period of 2009. Trust department income increased $101,000 or 7.3% due to an increase in the market value of trust assets and new business. Service charges on deposit accounts increased $224,000 or 11.6% primarily due to the increased number of accounts and increased service charge activity. Merchant transaction income increased $142,000 or 3.2%, mainly due to new accounts and higher transaction volume. Other fee income increased $178,000 or 12.8% mainly from increased debit card discounts related to the higher number of new accounts. Bank-owned life insurance income increased $68,000 or 14.5% from higher average balances, as Bank-owned life insurance acquired in the Old Forge Bank merger impacted twelve months of 2010, as compared to nine months of 2009. Other operating income increased $606,000 or 166.9% largely due to gains on the sale of low yielding long-term fixed rate real estate loans of $325,000 along with additional revenue of $150,000 from an over accrual from the 2006 Voluntary Early Retirement Incentive program. The Company recognized an impairment loss on bank equity investment securities of $787,000 during 2009. Realized gains on securities decreased $315,000 to $558,000 during 2010 from $873,000 for 2009.

Non-Interest Expenses

Total non-interest expenses increased $83,000 or 1.1% to $7,410,000 for the three months ended December 31, 2010 compared with $7,327,000 for the same period of 2009. Salaries and employee benefits expense increased $39,000 or 1.1%, from $3,600,000 during the fourth quarter of 2009, to $3,639,000 during the fourth quarter of 2010, in part due to increased staffing in the loan department. Expense of premises and fixed assets increased $63,000 or 7.8% largely due to branch renovation projects. Merchant transaction expenses increased $38,000 or 6.8% due to the increased number of accounts. FDIC insurance assessments decreased $139,000 or 35.0%. Other operating expenses increased $82,000 or 4.2% due to increased advertising expense.

Total non-interest expenses increased $33,000 or 0.1% to $28,453,000 during 2010 compared with $28,420,000 for 2009. Salaries and employee benefits expense increased $530,000 or 4.2% mainly due to the expenses of additional employees as a result of the Old Forge Bank merger being incurred for the full year, as compared to nine months in 2009. Expense of premises and equipment increased $301,000 or 9.3% mostly due to additional depreciation as a result of branch renovation projects. There were no merger related costs in 2010 compared to 2009, during which the Company incurred merger related costs of $1,550,000, which consisted of computer and equipment upgrades of $606,000, investment banking, valuation services, legal and accounting fees of $429,000, severance payments of $450,000 and stay bonuses of $65,000. FDIC insurance assessments increased $182,000 or 18.8% due to increases in quarterly assessments. Other operating expenses increased $516,000 or 7.4% due to an increase of $261,000 in outside services, advertising expense of $196,000, amortization of core deposit intangible expense of $65,000 and other real estate owned expense of $51,000.

Asset Quality

The Company maintains an allowance for loan losses which reflects management’s best estimate of probable loan losses, as determined in accordance with the Company’s allowance for loan losses methodology. This methodology was enhanced during the third quarter of 2010, but the enhancements did not have any immediate appreciable impact on the amount of the allowance for loan losses. The ratio of the allowance for loan losses to total loans was 1.06% and 1.04% as of December 31, 2010 and 2009, respectively.

Non-accrual loans equaled $4,034,000 or 0.66% of loans at December 31, 2010 an increase of $1,695,000 from $2,339,000 or 0.39% of loans at December 31, 2009. There were no commitments to lend additional funds to borrowers whose loans are in non-accrual status.

Net loan charge-offs amounted to $1,799,000 or 0.30% of average outstanding loans for the twelve months ended December 31, 2010 compared to $1,235,000 or 0.22% for the twelve months ended December 31, 2009.

As of December 31, 2010, the Company had total impaired loans of $4,493,000. Management performed an evaluation of expected future cash flows, including the anticipated cash flow from the sale of collateral, and compared that to the carrying amount of the impaired loans. Based on these evaluations, the Company determined that a specific reserve of $1,415,000 was required against impaired loans at December 31, 2010.

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During the second quarter of 2008, the Company was notified that The Education Resources Institute, Inc. (TERI), a guarantor of a portion of our student loan portfolio, had filed for reorganization under Chapter 11 of the United States Bankruptcy Code. At December 31, 2010, the Company had $7,395,000 of TERI loans out of a total student loan portfolio of $16,493,000. The Company does not anticipate that TERI’s bankruptcy filing will significantly impact the Company’s financial condition or results of operations. These loans are placed on non-accrual status when they become more than 90 days past due. At December 31, 2010 there was $60,000 of such loans on non-accrual status.

Income Tax Expense

Applicable income taxes increased $427,000 or 94.1% for the three months ended December 31, 2010 mostly due to the tax effect of the recognition of an impairment loss on bank equity investment securities during 2009. Also, applicable income taxes increased $1,479,000 or 78.3% during the twelve months ended December 31, 2010 primarily due to higher income.

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PENSECO FINANCIAL SERVICES CORPORATION

FINANCIAL HIGHLIGHTS

(unaudited)

(in thousands, except per share amounts based on weighted average shares outstanding in each period)

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PENSECO FINANCIAL SERVICES CORPORATION

CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands, except per share amounts)

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PENSECO FINANCIAL SERVICES CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(in thousands, except per share amounts)

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PENSECO FINANCIAL SERVICES CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

THREE MONTHS ENDED DECEMBER 31, 2010 AND 2009

(unaudited)

(in thousands, except per share amounts)

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PENSECO FINANCIAL SERVICES CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

TWELVE MONTHS ENDED DECEMBER 31, 2010 AND 2009

(unaudited)

(in thousands, except per share amounts)

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About Penseco Financial Services Corporation

Penseco Financial Services Corporation, through its subsidiary Penn Security Bank & Trust Company, operates twelve offices in Lackawanna, Luzerne, Wayne and Monroe counties. The Company’s stock is traded on the OTC Bulletin Board Market, under the symbol, “PFNS”.

Safe Harbor Forward-Looking Statements

This press release, as well as other written communications made from time to time by the Company and its subsidiaries and oral communications made from time to time by management of the Company, may contain statements relating to the future results of the Company (including certain projections and business trends) that are considered “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). Such forward-looking statements may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “intend” and “potential”. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the PSLRA.

The Company cautions you that a number of important factors could cause actual results to differ materially from those currently anticipated in any forward-looking statement. Such factors include, but are not limited to: prevailing economic and political conditions, particularly in our market area; credit risk associated with our lending activities; changes in interest rates, loan demand, real estate values and competition; changes in accounting principles, policies, and guidelines; changes in any applicable law, rule, regulation or practice with respect to tax or legal issues; and other economic, competitive, governmental, regulatory and technological factors affecting the Company’s operations, pricing, products and services and other factors that may be described in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission. The forward-looking statements are made as of the date of this release, and, except as may be required by applicable law or regulation, the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

Non-GAAP Financial Measures

Certain financial measures contained in this press release exclude costs related to the Company’s acquisition of Old Forge Bank on April 1, 2009. Financial measures which exclude the above referenced items have not been determined in accordance with generally accepted accounting principles (“GAAP”) and are therefore non-GAAP financial measures. Management of the Company believes that investors’ understanding of the Company’s performance is enhanced by disclosing these non-GAAP financial measures as a reasonable basis for comparison of the Company’s ongoing results of operations. These non-GAAP measures should not be considered a substitute for GAAP-basis measures and results. Our non-GAAP measures may not be comparable to non-GAAP measures of other companies. The Non-GAAP Reconciliation Schedule provides a disclosure of these non-GAAP financial measures to the most closely analogous measure determined in accordance with GAAP.

Merger costs of $1,550,000 in the twelve months ended December 31, 2009, related to the acquisition of Old Forge Bank consist primarily of investment banking costs, system conversion costs, valuation services, legal and accounting fees and severance payments.

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NON-GAAP RECONCILIATION SCHEDULE

(unaudited)

(in thousands)

The following tables present the reconciliation of non-GAAP financial measures to reported GAAP financial measures.

Core Earnings Calculation

Return on average equity (ROE) and return on average assets (ROA) for the year ended December 31, 2010 was 9.74% and 1.32%, respectively. ROE was 7.93% (9.03% excluding the Merger costs) and ROA was 1.04% (1.18% excluding the Merger costs) for the same period last year. The dividend payout ratio for December 31, 2010 was 46.93% and

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60.00% (52.66% excluding the Merger costs) for the same period last year.

The following table presents a reconciliation of tangible assets / tangible equity.