Exhibit 3(ii)


                BY-LAWS OF PENSECO FINANCIAL SERVICES CORPORATION

                                   ARTICLE I
                                PLACE OF BUSINESS

     The principal  office for the transaction of business of Penseco  Financial
Services  Corporation  (the  "Corporation")  shall be in the  City of  Scranton,
Pennsylvania  (until otherwise  determined in the manner  prescribed by law, the
principal  office  shall be  located  at 150 North  Washington  Avenue,  and the
business of the  Corporation  may be carried on at such other  locations  as the
Board of  Directors,  ("the  Board") may from time to time  determine  or as the
business of the Corporation requires).

                                   ARTICLE II
                            MEETINGS OF SHAREHOLDERS

     Section 2.1. The annual meeting of the  shareholders  shall be held at such
place within the  Commonwealth of  Pennsylvania  once each calendar year on such
date and at such time as may be fixed by the Board.

     A written or printed  notice of every such meeting  shall be mailed to each
shareholder,  charges prepaid,  at least ten days before the date of the meeting
to  his,  her  or its  last  known  address  as  appears  on  the  books  of the
Corporation.

     Section  2.2.  (a) At each  annual  meeting  the  shareholders  shall elect
members to the Board of  Directors  to serve  until  their  successors  are duly
elected in accordance with Article III,  Section 1 and shall transact such other
business as may come before them.

     (b) Nominations of persons for election to the Board of the Corporation and
the  proposal of  business to be  considered  by the  shareholders  at an annual
meeting of shareholders may be made (1) pursuant to the Corporation's  notice of
meeting,  (2) by or at the direction of the Board or (3) by any  shareholder  of
the  Corporation who was a shareholder of record at the time of giving of notice
for the meeting,  who is entitled to vote at the meeting and who  complies  with
the notice procedures set forth in this Article 2.

     (c) For  nominations  or other  business to be properly  brought  before an
annual  meeting by a  shareholder  pursuant to clause (3) of section (b) of this
Section 2.2, the shareholder must have given timely notice thereof in writing to
the  Secretary  and such other  business  must  otherwise be a proper matter for
shareholder action. To be timely, a shareholder's notice must be received by the
Secretary at the principal office of the Corporation not later than the 60th day
nor earlier than the 90th day prior to the first  anniversary  of the  preceding
year's annual meeting; provided, however, that in the event that the date of the
annual  meeting  is more than 30 days  before or more  than 60 days  after  such
anniversary date, notice by the shareholder must be so received not earlier than
the 90th day prior to the  annual  meeting  and not later  than the later of the
60th day prior to the annual  meeting or the 15th day following the day on which
public announcement of the date of the meeting is first made by the Corporation.
In no event shall the public  announcement  of an adjournment or postponement of
an annual meeting  commence a new time period for the giving of a  shareholder's
notice as described above.  Notwithstanding the foregoing, if the Corporation is
required under Rule 14a-8 under the Securities  Exchange Act of 1934  ("Exchange
Act")  to  include  a  shareholder's  proposal  in  its  proxy  statement,  such
shareholder  shall be deemed to have given  timely  notice for  purposes of this
paragraph  (c) of Section 2.2 with  respect to such


<PAGE>


proposal.  A shareholder's notice shall set forth (1) as to each person whom the
shareholder  proposes to nominate for election or reelection as a director:  (A)
all  information  relating to such person  that is required to be  disclosed  in
solicitations  of proxies for election of directors in an election contest or is
otherwise  required  pursuant to  Regulation  14A under the Exchange  Act, (B) a
description of any arrangements or understandings among the shareholder and each
such person and any other  person with respect to such  nomination,  and (C) the
consent of each such person to being named in the proxy  statement  as a nominee
and to serving as a director of the  Corporation  if so  elected;  (2) as to any
other  business  that the  shareholder  proposes to bring before the meeting,  a
brief description of the business desired to be brought before the meeting,  the
reasons for conducting such business at the meeting and any material interest in
such business of such  shareholder  and the beneficial  owner,  if any, on whose
behalf the proposal is made; and (3) as to the shareholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal is made
(A)  the  name  and  address  of  such  shareholder,   as  they  appear  on  the
Corporation's  books, and of such beneficial  owner; (B) the class and number of
shares of the  Corporation  which are owned  beneficially  and of record by such
shareholder  and such  beneficial  owner;  and (C) a  representation  that  such
shareholder  and beneficial  owner intend to appear in person or by proxy at the
meeting.

     (d)  Notwithstanding  anything in paragraph  (c) of this Section 2.2 to the
contrary,  in the event that the number of  directors to be elected to the Board
at the annual meeting is increased  pursuant to an act of the Board and there is
no  public  announcement  by the  Corporation  naming  all of the  nominees  for
director or  specifying  the size of the  increased  Board on or before the date
which is 15 days before the latest date by which a shareholder may timely notify
the  Corporation of nominations or other business to be brought by a shareholder
in accordance  with  paragraph (c) of this Section 2.2, a  shareholder's  notice
required by this  Section  2.2 shall also be  considered  timely,  but only with
respect to nominees for any new positions created by such increase,  if it shall
be  received  by  the  Secretary  at  the  principal  executive  offices  of the
Corporation  not later than the 15th day  following the day on which such public
announcement is first made by the Corporation.

     Section 2.3. (a) Special  meetings of the shareholders may be called at any
time by the  President,  the Chairman of the Board,  or the Board.  At any time,
upon the written  request of any person  entitled  to call a special  meeting as
provided in this  Section,  the  Secretary  shall call a special  meeting of the
shareholders  to be held at such time as the notice shall specify,  but not more
than sixty days after the receipt of the request for such meeting.  A written or
printed  notice for every special  meeting,  specifying the purpose and time and
place thereof,  shall be mailed by the Secretary to the  shareholders of record,
in the manner provided in Section 2.1, at least ten days before the date of such
meeting,  and shall include a description  of the general nature of the business
to be  transacted  at the meeting.  Only such  business  shall be conducted at a
special  meeting of  shareholders  as shall have been brought before the meeting
pursuant to the Corporation's notice or meeting.

     (b)  Nominations  of  persons  for  election  to the Board may be made at a
special meeting of shareholders at which directors are to be elected pursuant to
the  Corporation's  notice of meeting (1) by or at the direction of the Board or
(2) provided that the Board has determined  that  directors  shall be elected at
such meeting,  by any  shareholder  of the  Corporation  who is a shareholder of
record at the time of giving of notice  provided  for in this  Section  2.3, who
shall be  entitled  to vote at the  meeting  and who  complies  with the  notice
procedures set forth in this Section 2.3. In the event the  Corporation  calls a
special  meeting  of  shareholders  for  the  purpose  of  electing  one or more
directors to the Board,  any such  shareholder  may nominate a person or persons
(as the case may be),  for  election to such  position(s)  as  specified  in the
Corporation's  notice  of  meeting,  if the  shareholder's  notice  required  by
paragraph  (c) of Section 2.2 of these Bylaws shall be received by the Secretary
at the principal  office of the  Corporation not earlier than the 90th day prior
to such  special  meeting  and not later than the later of the 60th day prior to
such  special  meeting  or the  15th  day  following  the  day on  which  public
announcement  is  first  made of the  date  of the  special  meeting  and of the
nominees proposed by the Board to be elected at such meeting.  In no event shall
the public  announcement  of an adjournment or postponement of a special meeting
commence a new time period for the giving of a shareholder's notice as described
above.

     Section 2.4. (a) Only such persons who are nominated in accordance with the
procedures  set forth in this  Article 2 and  Section  3.2 shall be  eligible to
serve as directors on the Board and only such  business


<PAGE>


shall be  conducted  at a meeting of  shareholders  as shall  have been  brought
before the meeting in accordance  with the  procedures set forth in this Article
2. Except as otherwise  provided by law, the  Articles of  Incorporation  or the
Bylaws of the Corporation,  the Chairman of the meeting shall have the power and
duty to determine  whether a nomination  or any business  proposed to be brought
before the meeting was made or proposed,  as the case may be, in accordance with
the  procedures  set forth in this Article 2 and, if any proposed  nomination or
business  is not in  compliance  with  this  Article  2, to  declare  that  such
defective proposal or nomination shall be disregarded.

     (b) For  purposes  of this  Article  2,  "public  announcement"  shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange  Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.

     Section  2.5.  Any annual or special  meeting  of the  shareholders  may be
adjourned for any period of time,  but any meeting at which  Directors are to be
elected shall be adjourned  only from day to day until such  Directors have been
elected.  If there should be a failure to elect Directors at any annual meeting,
the Directors already in office shall continue to hold their offices until their
successors are duly elected and qualified.

     Section  2.6.  In advance  of any  meeting  of  shareholders,  the Board of
Directors  shall  appoint  a  judge  or  judges  of  election  who  need  not be
shareholders,  to act at such meeting or any adjournment  thereof. If a judge or
judges of  election  for any reason be not so  appointed,  the  chairman  of any
shareholders'  meeting shall make such appointment at the meeting. The number of
judges shall be one or three. If appointed at a meeting,  the majority of shares
present and entitled to vote shall determine  whether one or three judges are to
be appointed. No person who is a candidate for office shall act as judge.

     In case any person  appointed  as judge fails to appear or fails or refuses
to act, the vacancy may be filled by appointment made by the Board in advance of
the  convening  of the  meeting,  or at the  meeting  by the  person  acting  as
chairman.

     The  judge,  or judges of  election  shall  determine  the number of shares
outstanding,  the voting power of each,  the shares  represented at the meeting,
the existence of a quorum,  the authenticity,  validity,  and effect of proxies,
receive votes or ballots, hear and determine all challenges and questions in any
way arising in connection with the right to vote,  count and tabulate all votes,
determine the result,  and do such acts as may be proper to conduct the election
or vote with fairness to all shareholders. If there be three judges of election,
the  decision,  act or  certificate  of a  majority  shall be  effective  in all
respects as the decision, act, or certificate of all.

     On request of the chairman of the  meeting,  or of any  shareholder  or his
proxy,  the judge or judges shall make a report in,  writing of any challenge or
question or matter  determined by him or them,  and execute a certificate of any
fact  found by him or them.  Any  report  or  certificate  made by the  judge or
judges, shall be prima facie evidence of the facts stated therein.

     Section  2.7.  Except as provided in the Articles of  Incorporation  of the
Corporation  or  these  Bylaws,  at  all  meetings  of the  shareholders,  every
shareholder  entitled  to vote  shall be  entitled  to one  vote for each  share
standing in his or her respective name on the books,  and each such  shareholder
entitled  to vote may vote  either  in  person or by  proxy,  duly  executed  in
writing,  but no proxy shall be valid unless  executed within 11 months previous
to the meeting, at which it is to be used.

     Except as  otherwise  set forth in the  Articles  of  Incorporation  of the
corporation  or these  By-Laws,  the acts of the  holders of a  majority  of the
shares  represented at any meeting,  at which a quorum is present,  shall be the
acts of the shareholders.  The shareholders  present at a duly organized meeting
may continue to do business until adjournment, notwithstanding the withdrawal of
enough shareholders to leave less than a quorum.


<PAGE>


     The  presence,  in person or by proxy,  of the holders of a majority of the
outstanding  shares  entitled to vote shall  constitute  a quorum.  If a meeting
cannot be organized because a quorum has not attended, those present may adjourn
the meeting to such time and place as they may  determine;  but in the case of a
meeting  called for the  election of  directors,  those who attend the second of
such adjourned  meetings,  although less than a quorum as fixed in this Section,
shall nevertheless constitute a quorum for the purpose of electing Directors.

     Section 2.8. In all elections for Directors every  shareholder  entitled to
vote shall have the right,  in person,  or by proxy,  to multiply  the number of
votes to which he may be entitled by the number of directors  to be elected,  he
may cast his whole number of such votes for one  candidate or he may  distribute
them among any two or more  candidates.  The  candidates  receiving  the highest
number of votes up to the number of Directors to be chosen shall be elected.

     Section 2.9. The shareholders may not take any action by written consent in
lieu of a  meeting,  and must  take any  actions  at a duly  called  meeting  of
shareholders,  and the power of  shareholders  to consent  in writing  without a
meeting is specifically denied.(1)

     Section 2.10.  The officer or agent having charge of the transfer books for
shares  shall make,  at least five days before each meeting of  shareholders,  a
complete list of the shareholders  entitled to vote at the meeting,  arranged in
alphabetical  order,  with the address of and the number of shares held be each,
which list shall be kept on file at the principal place of business and shall be
subject to  inspection  by any  shareholder  for any proper  purpose at any time
during usual business  hours.  Such list shall also be produced and kept open at
the time and place of the meeting, and shall be subject to the inspection of any
shareholder for any proper purpose during the whole time of the meeting.

                                  ARTICLE III
                               BOARD OF DIRECTORS

     Section 3.1. The business of the Corporation shall be managed by a Board of
Directors not less than five or more than fifteen in number. There shall be four
classes of Directors, each class shall be as nearly equal in number as possible.
At the initial meeting of  shareholders,  the exact number of Directors for each
class shall be fixed by resolution of the  shareholders.  Directors of the first
class will be elected to serve until the first annual meeting.  Directors of the
second  class  shall be  elected  to serve  until  the  second  annual  meeting.
Directors  of the third class  shall be elected to serve until the third  annual
meeting.  Directors  of the fourth  class  shall be  elected to serve  until the
fourth annual meeting.  At the first annual meeting of the  shareholders  and at
each annual meeting held thereafter,  the number of Directors of the class whose
terms are to expire  shall be elected to serve for a period of four  years.  The
Board may increase the number of Directors by not more than two in any one year.

     Changes in this provision  (providing  for classes and staggered  terms for
Directors)  shall  require  the  affirmative  vote of 3/4ths of the  outstanding
shares of the Corporation.

     Section 3.2. Every Director must be a shareholder  of the  Corporation  and
shall own on date of election in his own right at least one share.  Any Director
shall  cease to act when no longer  holding  such a share,  which  fact shall be
reported to the Board by the  Secretary,  whereupon  the Board shall declare the
seat of such Director vacated.

     Section  3.3.  Vacancies  on the Board of  Directors  caused by the  death,
resignation,  disqualification or otherwise,  of any Director who was previously
duly  elected and  qualified,  or  vacancies


--------------------------------------------------------------------------------
     (1)  The  amendment  to  Section  2.9 is  subject  to the  approval  of the
Company's   shareholders   of  an  amendment  to  the   Company's   Articles  of
Incorporation  that would restrict the right of  shareholders  to take action by
written consent.


<PAGE>


resulting  from an  increase  in the number of  Directors,  may be filled by the
remaining  members of the Board,  though less than a quorum,  and each person so
elected shall be a Director until the expiration of the term of the Director who
preceded such person,  if  applicable,  or, if such person was elected to fill a
vacancy  resulting  from an  increase  in the  number  of  Directors,  until his
successor  is  elected by the  shareholders  and has  qualified.  Failure of the
shareholders  to make such election by the next annual meeting shall result in a
reduction in the number of directors of that class.

     Section 3.4.  The meetings of the Board of Directors  shall be held at such
place within the Commonwealth of Pennsylvania as a majority of the Directors may
from time to time  designate,  or as may be designated in the notice calling the
meeting.

     Section  3.5. A majority of all the  Directors in office shall be necessary
to  constitute  a quorum  for the  transaction  of  business,  and the acts of a
majority  of the  Directors  who are  present  at a meeting at which a quorum is
present, shall be the acts of the Board.

Section 3.6. The Board shall meet for organization and regular business on the
1st Tuesday of May in each year immediately following the annual meeting of
shareholders. Subsequent regular meetings of the Board shall be held on such day
and at such hour and at such frequency as the Board shall from time to time
designate.

     Section 3.7.  Special  meetings of the Board may be called by the President
at any time and shall be called  whenever  three or more members of the Board so
request in writing.

     Section 3.8. Notice of every special meeting, specifying the business to be
transacted thereat,  shall be given by the Secretary to each member of the Board
at least one day  before  the date of such  meeting.  In case of any  emergency,
requiring,  in the  opinion  of the  President,  prompt  attention,  he may call
forthwith a meeting of the Board to act thereon.

     Section 3.9. The order of business of  Directors'  Meeting shall be such as
the Board shall from time to time fix.

     Section 3.10. The Board of Directors  shall keep complete  records of their
proceedings in a Minute Book kept for that purpose alone.  When a Director shall
request  it,  the vote of each  Director  upon a  particular  question  shall be
recorded in the Minutes.  The reports of Officers and committees  shall be filed
with the Secretary of the Board.

     Section 3.11.  The Board may fix, from time to time, a reasonable fee to be
paid  to each  Director  annually  for his  service  to the  corporation  and in
addition  reasonable  fees for  attending  meetings  of the  Board or any of its
committees. A Director may be a salaried officer of the corporation.

                                   ARTICLE IV
                               STANDING COMMITTEES

     Section  4.1. For the proper  conduct of the  business of the  Corporation,
there shall be four Standing Committees of the Board consisting of the Executive
Committee,   the  Nominating  and  Corporate  Governance  Committee,  the  Audit
Committee and the Compensation Committee, and such other committees as the Board
shall create.

     Section 4.2. Executive Committee.  The Executive Committee shall consist of
the President  and not less than a majority nor more than four other  Directors.
The Committee shall meet at such times as it may determine.  Special meetings of
the Committee may be called at any time by the Chairman of the Committee,  or by
the  President,  or in their  absence  any  Vice-President.  A  majority  of the
Committee shall


<PAGE>


constitute  a quorum.  The  Committee  may be called  into  session  at any time
between the  meetings of the Board,  and shall have  authority  to pass upon any
business of the Corporation requiring immediate action.

     Section 4.3. Nominating and Corporate Governance Committee.  The Nominating
and Corporate Governance Committee shall consist of not less than three nor more
than five Directors.  A majority of the Committee shall constitute a quorum. The
Committee  shall  be  responsible   for  reviewing,   from  time  to  time,  the
Corporation's  Articles  of  Incorporation  and  Bylaws and  general  governance
practices,  recommending to the Board changes thereto.  The Committee shall also
review  and rate  potential  candidates  for  filling  vacancies  on the  Board,
soliciting from all members of the Board names of potential candidates and input
from all Board members regarding such potential candidates.

     Section 4.4. Audit Committee. The Audit Committee shall consist of not less
than three nor more than five  Directors.  A  majority  of the  Committee  shall
constitute a quorum. The Audit Committee shall, at least once in each year, make
or cause to be made by Certified Public Accountants  employed for the purpose, a
complete  examination of the books,  papers,  and affairs of the Corporation and
the loans and  discounts  thereof and into such other matters as may be required
by law. Upon receipt of reports from such Accountants,  the Committee, after due
consideration  thereof,  shall,  as soon as  practicable,  make its  report  and
recommendations  thereon to the Board.  The audit  committee shall meet with the
internal  auditor at such times and places as it shall  determine  to review the
internal  auditor's  reports  and  shall  report  to the  Board  and  make  such
recommendations  in regard to such reports as it deems necessary.  The committee
shall also meet with the Independent Public Accounting firm hired to conduct the
audit on a yearly or more frequent basis and report to the Board its results and
any recommendations pursuant thereto.

     Section 4.5.  Compensation  Committee.  The  Compensation  Committee  shall
consist of not less than three nor more than five  Directors.  A majority of the
members of the  Committee  shall  constitute a quorum.  The  Committee  shall be
responsible for reviewing and approving  compensation policies and practices for
the Corporation's  senior executive officers and employees.  The Committee shall
also recommend to the Board the appropriate structure and amount of compensation
for the Directors and recommend  material changes in the Corporation's  employee
benefit plans.

     Section 4.6. Other Committees. Other Committees of the Board may be created
by the Board by majority vote  consisting of such number of Directors and having
such duties and powers as the Board shall direct.

     Section 4.7. The President  shall recommend to the Nominating and Corporate
Governance  Committee the membership and  chairmanship  of the  committees.  The
Nominating and Corporate  Governance  Committee will then recommend to the Board
for approval.

                                   ARTICLE V
                                    OFFICERS

     Section 5.1. The Board of Directors at their Annual  Meeting  shall elect a
President,  two or more  Vice-Presidents  designating  one of them as  Executive
Vice-President,  a  Secretary  and a  Treasurer  and may elect a Chairman of the
Board, a Controller, one or more Assistant Controllers,  an Auditor, one or more
Assistant  Auditors,  one or more  Assistant  Treasurers,  one or more Assistant
Vice-Presidents, a Chief Information Officer, one or more Assistant Secretaries,
and such other  officers  as they shall deem  necessary  for the  conduct of the
Corporation's  business.  Any two or more offices,  except that of President and
Secretary  and  President  and  Treasurer  may be held by the same  person.  The
Chairman of the Board, if any, and the President, shall be members of the Board.


<PAGE>


     Section  5.2.  The  Chairman  of the Board.  If there be a Chairman  of the
Board, he shall perform such duties as are prescribed by the Board.

     Section 5.3. The President.  The President shall be responsible for general
supervision of all the  departments  and business of the  Corporation;  he shall
prescribe  the duties of the other  Officers and employees and see to the proper
performance  thereof and in general  shall  perform all the acts incident to his
office or prescribed by the Board.

     Section 5.4. The  Vice-Presidents.  The Vice-Presidents  shall perform such
duties and do such acts as may be prescribed by the President, the Board, or the
Executive Committee.  The Executive  Vice-President shall perform the duties and
have the powers of the President in the absence of the latter.

     Section 5.5. The Treasurer.  The Treasurer shall receive and take charge of
all money,  securities,  and.  evidences of indebtedness  belonging to or in the
possession of the  Corporation.  He shall see that proper  accounts are kept and
that  proper  reports are made to the  Officers,  Board of  Directors  and other
persons or authorities entitled thereto.

     He  shall  deposit  such  of  the  funds  of the  Corporation  as are to be
deposited in such other institution, or institutions as are authorized by law to
receive the same and as may be  designated  as a depository  for such funds by a
majority of all the members of the Board of Directors  excluding  any  Directors
who are Officers or Directors in such depositories.

     He shall  also  perform  such  other  duties  as may  from  time to time be
prescribed by the Board, the Executive Committee or the President. The Treasurer
shall not  engage in any  other  gainful  profession,  business,  occupation  or
calling  either,  directly or  indirectly,  but this shall not be  construed  to
affect  the  right  to be at  the  same  time  a  member  of  the  Board  of the
incorporated institution in which he is the Treasurer.

     Section 5.6. The  Assistant  Treasurers.  The  Assistant  Treasurers  shall
perform  such  duties  as shall be  prescribed  by the Board of  Directors,  the
Executive  Committee,  the  President  or the  Treasurer.  In the absence of the
Treasurer, the Assistant Treasurer shall have authority to perform the duties of
the Treasurer.

     Section 5.7. The  Secretary.  The  Secretary  shall keep the Minutes of the
meetings  of  the  Board  and of the  shareholders.  He or one of the  Assistant
Secretaries  shall see that  proper  notices  are sent of all  meetings of which
notice is required.  He shall have custody of the seal and when necessary  shall
attest to the same when  affixed to written  instruments  property  executed  on
behalf of the Corporation, and generally, shall perform such other duties as may
be prescribed  from time to time by the Board,  the  Executive  Committee or the
President.

     Section 5.8. The Assistant  Secretaries.  The Assistant  Secretaries  shall
perform  such  duties  as shall be  prescribed  by the Board of  Directors,  the
Executive Committee,  the President or the Secretary,  and in the absence of the
Secretary, shall perform the duties of his office.

     Section 5.9. Other  Officers.  All other officers shall have such power and
duties  as may  from  time to time be given  them by the  Board,  the  Executive
Committee or the President.

                                   ARTICLE VI
                         AUTHORITY OF EXECUTIVE OFFICERS

     Section 6.1. The President and any Vice-President shall each have authority
and power to execute  and to affix the seal of the  corporation  to any power of
attorney  necessary to effect the transfer of any stocks,  bonds, loans or scrip
standing in the name of the Corporation.


<PAGE>


     Section  6.2. The  President  and the  Vice-Presidents  shall each have the
authority to assign any and all  registered,  bonds  standing at any time in the
name of the Corporation and to appoint one or more attorneys for that purpose.

     Section  6.3.   The   President,   the   Vice-Presidents,   the   Assistant
Vice-Presidents, the Treasurer, the Secretary, the Assistant Treasurers, and the
Assistant  Secretaries  shall each have the power and  authority to transfer any
policies  of fire and title  insurance  at any time  standing in the name of the
Corporation.

     Section 6.4.  The  President  or any of the  Vice-Presidents,  or Assistant
Vice-Presidents,  together  with the  Treasurer or  Secretary  or the  Assistant
Treasurers  or  Assistant  Secretaries,  are  authorized  to do and perform such
corporate and official acts as are needful in the carrying on of the business of
the Corporation, subject always to the directions of the Board and the Executive
Committee.  Subject to like  limitation,  they are fully  empowered  to make and
execute  all deeds,  leases,  releases,  agreements,  contracts,  bills of sale,
assignments,  letters of attorney or of substitution and other instruments which
may be needful to sell, assign, transfer, convey, release and assure or lease to
any party entitled thereto, whether purchaser,  lessee or transferee, any estate
or property, real or personal, stocks, bonds, loans, insurance policies, storage
receipts,  certificates  of deposit,  scrip,  or  evidences  of debt at any time
standing  in the name of the  Corporation  or of any  Officer  on  behalf of the
Corporation  or held or controlled by it and to affix its corporate  seat to any
and all such instruments, and to acknowledge or prove the same.

     Section  6.5.  Such of the  Executive  Officers as may from time to time be
designated  by the Board or by the  Executive  Committee,  shall  have power and
authority  to sign  checks,  drafts,  letters of  credit,  orders,  receipts  or
acquaintances,  and to endorse  checks,  bills of exchange,  orders,  drafts and
vouchers made payable or endorsed to the Corporation.

                                  ARTICLE VII

     Section 7.1.  Employees of the Corporation other than the Officers,  may be
appointed  or  dismissed  by the  President  or in his absence by the  Executive
Vice-President.  Officers of the  corporation may be dismissed only by action of
the Board. A list of employees, their duties and salaries, shall be submitted to
the Board or the Executive Committee should they, or either of them, at any time
so require.

     Section 7.2. No  Director,  Officer or Employee  shall  disclose any of the
business  of the  Corporation,  not of a  public  nature  or  required  by legal
authority,   except  the  necessary  information  to  patrons  concerning  their
individual business.

                                  ARTICLE VIII

     All  officers  and  Employees  of the  Corporation  and, in  addition,  any
Director,  who  is  authorized  to  receive  payments  of  moneys  or to  handle
negotiable  securities on behalf of the Corporation shall,  before entering upon
the  performance of their duties,  at the expense of the  Corporation,  shall be
bonded in such amounts and with such surety as is approved by the Board.

                                   ARTICLE IX
                                    DIVIDENDS

     The  Board may  declare,  subject  to the  limitations  prescribed  by law,
dividends  on the shares of the  Corporation  of so much of the profits as shall
appear  advisable  to the  Board,  making  the  same  payable  at a time  in its
discretion.


<PAGE>


                                   ARTICLE X
                             CERTIFICATES FOR SHARES

     Section 10.1. Every share  certificate  shall be signed by the President or
Executive  Vice-President or one of the  Vice-Presidents and by the Treasurer or
one of the Assistant Treasurers and sealed with the corporate seal.

     Section 10.2. If a certificate for shares be lost or destroyed, another may
be issued in its place upon the following conditions:

     (a) The owner of the said  certificate  shall produce an affidavit that the
said  certificate  has been either lost or destroyed;  that he is unable to find
the same; that he has not at any time sold, pledged or otherwise disposed of any
part of his  interest  in,  or  title  to,  the  said  shares  and that the said
affidavit is made in order to obtain a new certificate.

     (b) The  owner of the said  shares  shall  furnish  a bond in form and with
surety to be approved by the President or a Vice-President in such amount as the
Board  shall  determine;  but not less than  double the par value of the shares,
conditioned to indemnify the Corporation  against loss by reason of the issuance
of a new certificate, and to deliver to the Corporation, duly assigned, the lost
certificate, if found.

     Section 10.3. The transfer book for shares of the Corporation may be closed
for such length of time as the Directors may determine  from time to time before
the  payment of any  dividends  and  before  any  annual or  special  meeting of
shareholders.

                                   ARTICLE XI
                                 CORPORATE SEAL

     The seal of the  Corporation  shall  contain the words  "PENSECO  FINANCIAL
SERVICES CORPORATION," Incorporated 1997, Scranton, Pennsylvania.

                                  ARTICLE XII
                                   FISCAL YEAR

     The fiscal year of the Corporation  shall begin on the first day of January
in each year, and end on the thirty-first day of December in each year.

                                  ARTICLE XIII
        LIABILITY AND INDEMNIFICATION OF OFFICERS, DIRECTORS, AND OTHERS

     No director shall be personally  liable for monetary damages for any action
taken or any failure to take action  unless such director has breached or failed
to  perform  the  duties of his  office  and such  breach or  failure to perform
constitutes self-dealing, willful misconduct or recklessness.

     Any person,  including but not limited to directors,  officers,  employees,
and agents, their heirs, executors and administrators,  shall be indemnified and
saved  harmless out of the assets and profits of the  Corporation to the fullest
extent  permitted  under  applicable  law from and against all  actions,  costs,
charges,  losses, damages, and expenses which they shall or may incur or sustain
by or by reason  of any act  done,  concurred  in or  committed  in or about the
execution  of their  duty,  or supposed  duty,  in their  respective  positions,
provided,  however,  that no indemnification shall be made in any case where the
act or failure to act giving rise to the claim for indemnification is determined
by  a  court  to  have  constituted   self-dealing,   willful   misconduct,   or
recklessness.

     Expenses incurred by an officer, director, employee or agent in defending a
civil or criminal  action,  suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or


<PAGE>


proceeding  upon  receipt of an  undertaking  by or on behalf of such  person to
repay such amount if it shall  ultimately be determined  that he is not entitled
to be indemnified by the Corporation.

     The  indemnification  and  advancement of expenses  provided by, or granted
pursuant to, this section shall,  unless  otherwise  provided when authorized or
ratified,  continue  as to a person  who has ceased to be a  director,  officer,
employee  or agent and shall inure to the  benefit of the heirs,  executors  and
administrators of such person.  This right of indemnification is not intended to
exclude other rights of such persons under the law.

                                  ARTICLE XIV

     These By-Laws may be amended at any regular meeting of the  shareholders or
at any special  meeting called for that purpose except as otherwise  provided in
these  By-Laws by the vote of a majority in interest  of the  shareholders;  but
notice of the proposed amendments shall be sent to the shareholders at least ten
days before the meeting.

     These  By-Laws may also be amended by the Board of Directors  (except as to
By-Laws  fixing  the  qualifications,  classification  or  terms  of  office  of
directors) subject to the power of the shareholders to change such action.