Exhibit 99.1

NEWS RELEASE

Penseco Financial Services Corporation Reports Earnings as of March 31, 2011

SCRANTON, PA, April 29, 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 net income for the three months ended March 31, 2011 of $2,769,000 or $0.85 per weighted average share compared with $2,981,000 or $0.91 per weighted average share from the year ago period, a decrease of $212,000 or 7.1%. Pre-provision net interest income decreased $308,000 or 3.6%. Net interest income, after provision for loan losses, decreased $349,000 or 4.3% during the 2011 period, partly due to a $41,000 increase in the provision for loan losses and a decrease in total interest income of $517,000 or 4.9%, partially offset by reduced interest expense of $209,000 or 9.9% from lower funding costs. The decrease in total interest income was primarily attributable to decreases in interest and fees on loans and interest and dividends on investments, due to weak loan demand and investment cash flows being reinvested into historically low short-term yields.

Net income from core operations, which excludes the reversal of a contingent liability recorded in connection with our acquisition of Old Forge Bank in April 2009, decreased $542,000 for the three months ended March 31, 2011 to $2,439,000 compared to $2,981,000 for the same period in 2010. Net income from core operations is a non-GAAP measure of net income. A reconciliation of the net income from core operations and disclosure of the non-GAAP return on assets, return on equity and dividend payout ratio derived from that measure are described in the non-GAAP reconciliation included in this press release.

Non-Interest Income

Total non-interest income increased $593,000, or 21.9%, to $3,304,000 for the three months ended March 31, 2011, compared with $2,711,000 for the same period in 2010. Service charges on deposit accounts decreased $60,000, or 11.3%, primarily due to decreased overdraft activity. Merchant transaction income increased $48,000, or 4.0%, due to the increased volume of merchant transactions primarily from new business. Brokerage fee income decreased $14,000, or 20.0%, mostly due to a lower volume of investor activity. Other fee income increased $28,000, or 8.0%, mainly due to increased debit card discounts of $27,000 related to the increased number of new accounts and organic growth. Other operating income increased $569,000 largely due to the reversal of a contingent liability of $500,000 recorded in connection with the Old Forge Bank acquisition and gains on the sale of low-yielding long-term fixed rate real estate loans of $48,000. Realized gains (losses) on securities, net, increased $6,000 as a result of investment securities being called.

Non-Interest Expenses

Total non-interest expenses increased $413,000, or 5.9%, to $7,450,000 for the three months ended March 31, 2011 compared with $7,037,000 for the same period in 2010. Salaries and employee benefits expense increased $352,000, or 11.1%, due primarily to merit increases in salaries of existing personnel and increased staffing for loan production and monitoring asset quality. Expense of premises and fixed assets increased $71,000 or 7.5% largely due to increased occupancy expenses and additional depreciation from branch renovations. Merchant transaction expenses increased $22,000 or 2.7% due to the increased volume of merchant transactions. FDIC insurance assessments decreased $24,000 or 9.0% in 2011.

Asset Quality

The Company maintains an allowance for loan losses which reflects management’s analysis of probable loan losses, as determined in accordance with the Company’s allowance for loan losses methodology. The ratio of the allowance for loan losses to total loans was 1.11% and 1.07% as of March 31, 2011 and 2010, respectively.

Non-accrual loans equaled $4,933,000, or 0.81%, of loans at March 31, 2011, an increase of $899,000, or 22.3%, from $4,034,000, at December 31, 2010. There were no commitments to lend additional funds to borrowers whose loans are in non-accrual status.

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Net loan charge-offs amounted to $69,000, or 0.01%, of average outstanding loans for the three months ended March 31, 2011, compared to $128,000, or 0.02%, of average loans outstanding for the three months ended March 31, 2010.

As of March 31, 2011, the Company had total impaired loans of $5,396,000. 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 reserve of $1,426,000, included in the allowance for loan losses, was required against impaired loans at March 31, 2011.

Income Tax Expense

Applicable income taxes increased $43,000 or 5.3% due to higher taxable income for the three months ended March 31, 2011.

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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 MARCH 31, 2011 AND 2010

(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 quoted on the OTC Bulletin Board, 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 Reports on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission from time to time. 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

Core Earnings Calculation

Certain financial measures reported in this press release exclude the effect of the reversal of a contingent liability recorded in the acquisition of Old Forge Bank on April 1, 2009. 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 provides a disclosure of these non-GAAP financial measures to the most closely analogous measure determined in accordance with GAAP.

The following table presents the reconciliation of non-GAAP financial measures to reported GAAP financial measures.

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Return on average equity (ROE) and return on average assets (ROA) for the three months ended March 31, 2011 was 8.96% (7.89% excluding the reversal of a contingent liability) and 1.21% (1.07% excluding the reversal of a contingent liability), respectively. ROE was 10.04% and ROA was 1.35% for the same period last year. The dividend payout ratio was 49.41% (56.76% excluding the reversal of a contingent liability) for the three months ended March 31, 2011 and 46.15% for the same period last year.

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

Management believes that tangible assets, tangible equity, and the related ratios of tangible equity to tangible assets, tangible book value per share, and market value to tangible book value, are useful to investors in evaluating the Company’s results of operations and financial condition. Our intangible assets, namely goodwill and the core deposit intangible, are the result of our accounting for the Old Forge Bank merger, and we would not be able to sell those assets separately from all other assets of the business. Tangible equity and tangible book value per share are used generally as conservative measures of net worth, approximating liquidation value.

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