Exhibit 99.1

NEWS RELEASE

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

SCRANTON, PA, March 1, 2012 — 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 December 31, 2011 of $2,512,000, or $0.77 per weighted average share, compared with $2,681,000, or $0.82 per weighted average share, from the year ago period, a decrease of $169,000, or 6.3%. Net interest income decreased $268,000, or 3.2%. Net interest income, after provision for loan and lease losses, for the three months ended December 31, 2011 decreased $660,000, or 8.2%,compared to the corresponding period in 2010 due to a decrease in interest income of $571,000, or 5.5%, a reduction in interest expense of $303,000, or 14.9%,primarily from lower funding costs; and an increase in the provision for loan and lease losses of $392,000.

The Company reported net income for the year ended December 31, 2011 of $10,705,000, or $3.27 per weighted average share, compared with $11,722,000, or $3.58 per weighted average share, from 2010, a decrease of $1,017,000, or 8.7%. Net interest income decreased $1,070,000, or 3.2%. Net interest income, after provision for loan and lease losses, for the year ended December 31, 2011 decreased $1,452,000, or 4.6%,from 2010, due to a decrease in interest income of $2,087,000, or 5.0%;a reduction in interest expense of $1,017,000, or 12.2%, primarily from lower funding costs; and an increase in the provision for loan and lease losses of $382,000. The decrease in interest income for the three and twelve month periods ended December 31, 2011 was primarily attributable to investment and loan cash flows being reinvested at historically low yields, including excess reserve deposits held at the Federal Reserve Bank of Philadelphia.

The tax equivalent margin for 2011 was 4.13% compared to 4.42% in 2010. Non-performing loans and the allowance for loan and lease losses to total loans at December 31, 2011 were 0.50% and 1.06% compared to 0.66% and 1.06% at December 31, 2010, respectively.

Net income from core operations, which excludes the reversal of a contingent liability recorded in connection with our acquisition of Old Forge Bank in 2009, decreased $1,347,000 for the year ended December 31, 2011 to $10,375,000, compared to $11,722,000 for 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 adjusted return on average assets, adjusted return on average equity and adjusted dividend payout ratio derived from that measure are described in the Reconciliation of Non-GAAP Financial Measures included in this press release.

Non-Interest Income

Total non-interest income decreased $192,000, or 6.6%, to $2,738,000 for the three months ended December 31, 2011, compared with $2,930,000 for the corresponding period in 2010. This decrease is attributable primarily to an impairment loss on bank equity investment securities of $78,000, recognized during the three months ended December 31, 2011, and a $213,000 decrease in other operating income largely due to lower gains on residential mortgage loans sold. Net realized gains (losses) on securities increased $210,000.

Total non-interest income increased $516,000, or 4.2%, to $12,668,000 for theyear ended December 31, 2011, compared with$12,152,000 for 2010. Service charges on deposit accounts decreased $116,000 or 5.4%, primarily due to decreased overdraft activity, but this decrease was more than offset by an increase inmerchant transaction income of $149,000, or 3.3%, due to the increased volume of merchant transactions (primarily from new business). Other fee income increased $132,000, or 8.4%, mainly from increased debit card discounts related to the increased number of accounts. Other operating income increased $386,000,largely due to the reversal of a contingent liability of $500,000 recorded at the time of the Old Forge Bank acquisition, offset by reduced gains on the sale of other real estate owned property in 2011.Net realized gains (losses) on securities increased $108,000.

4

Non-Interest Expenses

Total non-interest expenses decreased $408,000, or 5.5%, to $7,002,000 for the three months ended December 31, 2011 compared with $7,410,000 for the corresponding period in 2010. This decrease was attributable primarily to a decrease in FDIC insurance assessments of $244,000, or 94.6%, as a result of a new assessment methodology which affected the three months ended December 31, 2011, and a decrease of $120,000, or 3.3%, in salary and employee benefit expenses.

Total non-interest expenses increased $324,000, or 1.1%, to $28,777,000 for the year ended December 31, 2011, compared with $28,453,000 for 2010. Salaries and employee benefits increased $606,000, or 4.6%, due primarily to increased staffing for loan production and monitoring asset quality. Other operating expenses increased $377,000, or 5.0%,primarily due to a severance payment of $90,000 and increases in other real estate owned expense of $123,000. These increases in non-interest expenses were offset by a decrease of $700,000, or 60.9%, in FDIC insurance assessmentsresulting from a new assessment methodology which affected the three months ended December 31, 2011.

Asset Quality

The Company maintains an allowance for loan and lease losses which reflects management’s estimate of probable loan losses, as determined in accordance with the Company’s allowance for loan and lease losses methodology. The ratio of the allowance for loan and lease losses to total loans was 1.06% as of December 31, 2011 and 2010.

Non-accrual loans equaled $3,166,000, or 0.50%, of loans at December 31, 2011, representing a decrease of $868,000, or 21.5%, from $4,034,000 at December 31, 2010. There were no commitments to lend additional funds to borrowers whose loans werein non-accrual status at December 31, 2011.

Net loan charge-offs amountedto $2,170,000, or 0.35%, of average outstanding loans for the year ended December 31, 2011, compared to $1,799,000, or 0.30%, of average loans outstanding for the year ended December 31, 2010.

As of December 31, 2011, the Company had total impaired loans of $3,534,000. Of the total allowance for loan and lease losses, $658,000 is specifically related to these impaired loans at December 31, 2011.

The Company continues to proactively evaluate probable loan and lease losses and address delinquent loans by, among other things, obtaining current appraisals of collateral, increasing communication with borrowers and placing loans on non-accrual status when collection is in doubt and the loan is moving toward foreclosure.

Income Tax Expense

Applicable income taxes decreased $275,000, or 31.2%, and $243,000, or 7.2%,for the three months and year ended December 31, 2011, respectively, primarily due to lower taxable income.

5

PENSECO FINANCIAL SERVICES CORPORATION

FINANCIAL HIGHLIGHTS

(unaudited)

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

6

PENSECO FINANCIAL SERVICES CORPORATION

CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands, except per share amounts)

7

PENSECO FINANCIAL SERVICES CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(in thousands, except per share amounts)

8

PENSECO FINANCIAL SERVICES CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

THREE MONTHS ENDED DECEMBER 31, 2011 AND 2010

(unaudited)

(in thousands, except per share amounts)

9

PENSECO FINANCIAL SERVICES CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

TWELVE MONTHS ENDED DECEMBER 31, 2011 AND 2010

(unaudited)

(in thousands, except per share amounts)

10

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.

Reconciliation of Non-GAAP Financial Measures

Core Earnings Calculation

Certain financial measures for 2011 reported herein exclude the effect of the reversal of a contingent liability recorded in the 2009 Merger. 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.

11

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

Return on average equity (ROE) and return on average assets (ROA) for the three months ended December 31, 2011 was 7.75% and 1.06%, respectively. ROE was 8.96% and ROA was 1.19% for the corresponding period of 2010. The dividend payout ratio was 54.55% for the three months ended December 31, 2011 and 51.22% for thecorresponding period of 2010.

Return on average equity (ROE) and return on average assets (ROA) for the year ended December 31, 2011 was 8.48% (8.22% excluding the reversal of a contingent liability) and 1.15% (1.11% excluding the reversal of a contingent liability), respectively. ROE was 9.74% and ROA was 1.32% for 2010. The dividend payout ratio was 51.38% (53.00% excluding the reversal of a contingent liability) for December 31, 2011 and 46.93% for 2010.

12

Tangible Assets and 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.

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