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                                 EXHIBIT 3 (ii)

                                                                      APPENDIX D

                BY-LAWS OF PENSECO FINANCIAL SERVICES CORPORATION

                                    ARTICLE I
                                PLACE OF BUSINESS

The principal  office for the  transaction  of business  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
business of the  corporation may be carried on at such other locations as may be
lawfully established and operated as branches).

                                   ARTICLE II
                             MEETING OF SHAREHOLDERS

SECTION 1. The annual  meeting of the  shareholders  shall be held at such place
within the  Commonwealth  of Pennsylvania as shall be designated by the Board of
Directors  on the First  Tuesday of May in each year at 2 o'clock  P.M.,  unless
that day be a duly designated  legal holiday,  in which event the annual meeting
shall be held on the first day following which is not a legal holiday.

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. 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.

SECTION 3. Special meetings of the shareholders may be called at any time by the
President,  the Board of Directors, or the holders of not less than one-fifth of
all the shares outstanding and, entitled to vote at the particular  meeting.  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 1 of this Article,  at least ten days
before the date of such meeting.

SECTION 4. 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 5. 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 of Directors 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 6. Except as provided in Section 7 of this Article,  at all meetings the
shareholders  shall be  entitled  to one vote for each share  standing  in their
respective  names on the books,  and they may vote either in person or by proxy,
duly  executed in writing,  but no proxy shall be valid unless  executed  within
eleven months previous to the meeting, at which it is to be used.

Except as  otherwise  set forth in these  By-Laws,  the acts of the holders of a
majority of the shares represented at any meeting, at which a

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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.

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 7. 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 8. 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.

SECTION 9. Any Person intending to nominate at the annual meeting a candidate or
candidates for the Board of Director's  other than those nominated by management
must notify the Corporation by certified mail, return receipt  requested,  which
notice  the  Corporation  must be in receipt  of at least  forty-five  (45) days
before said meeting,  of his intent to do so giving the name(s) and  address(es)
of the  person(s) he intends to nominate.  Any  solicitation  by or on behalf of
such candidate  subject to Federal  Securities Laws must comply  therewith.  The
judge or judges of election shall not count any votes  solicited by or on behalf
of any such  candidate in violation  of the Federal  Securities  Laws or for say
such  candidate  nominated  without prior notice thereof having been received by
the Corporation as required above.

SECTION 10. Shareholder  Proposals.  Shareholders  wishing to present a proposal
for action at a meeting of shareholders must comply with the requirements of the
Federal Securities Laws.

                                   ARTICLE III
                               BOARD OF DIRECTORS

SECTION  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 of  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 of Directors  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 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. 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  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 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 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 5. A majority  of all the  Directors  in office  shall be  necessary  to
constitute a quorum for the transaction of business, and the

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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 of Directors.

SECTION 6. 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 of Directors.

SECTION  7. The Board of  Directors  shall  meet for  organization  and  regular
business on 1st  Tuesday of May in each year  immediately  following  the annual
meeting of shareholders.  Subsequent  regular meetings of the Board of Directors
shall be held on such day and, at such hour and at such  frequency  as the Board
shall from time to time designate.

SECTION  8.  Special  meetings  of the Board of  Directors  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  9.  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  10. The order of  business of  Directors  Meeting  shall be such as the
Board shall from time to time fix.

SECTION  11.  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 12. The Board of Directors 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 1. For the proper  conduct of the  business  of the  Corporation,  there
shall be two  Standing  Committees  of the  Board  consisting  of the  Executive
Committee  and the Audit  Committee  and such other  committees  as the Board of
Directors shall create.

SECTION 2. Executive  Committee.  The Executive  Committee  shall consist of the
President  and not less than three  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.  Two members of the Committee
shall constitute a quorum.  The Committee may be called into session at any time
between the meetings of the Board of Directors, and shall have authority to pass
upon any business of the Corporation requiring immediate action.

SECTION 3. Audit  Committee.  The Audit Committee shall consist of not less than
three,  nor more than five  Directors.  Three  members  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 of Directors.  The audit  committee  shall
meet with the internal auditor at such times and places as it shall determine to
review the Auditor's reports and shall report to the Board of Directors and make
such  recommendations  in  regard to such  reports  as it deems  necessary.  The
committee shall also meet with the 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. Other Committees. Other Committees of the Board may be created by the
Board of Directors by majority  vote  consisting of such number of Directors and
having such duties and powers as the Board shall direct.

SECTION 5. The President  shall  appoint,  subject to the approval of the Board,
the members and Chairman of each  Committee to serve for such periods of time as
may be set by the Board.

                                    ARTICLE V
                                    OFFICERS

SECTION  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 of Directors, 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


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be  held by the  same  person.  The  Chairman  of the  Board,  if  any,  and the
President, shall be members of the Board.

SECTION 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  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 4. The  Vice-Presidents.  The Vice-Presidents  shall perform such duties
and do such acts as may be prescribed by the President,  the Board of Directors,
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. 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
Directors of the incorporated institution in which he is the Treasurer.

SECTION 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 7. The Secretary  shall keep the Minutes of the meetings of the Board of
Directors 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 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 9. Other  Officers.  All other officers shall have such power and duties
as may from time to time be given them by the Board of Directors,  the Executive
Committee or the President.

                                   ARTICLE VI
                         AUTHORITY OF EXECUTIVE OFFICERS

SECTION 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.

SECTION 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 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  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 of Directors 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,

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

                                   ARTICLE VII

SECTION  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 of Directors. 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 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,  furnish bond in
such amounts and with such surety as is approved by the Board of Directors.

                                   ARTICLE IX
                                    DIVIDENDS

The Board of Directors  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.

                                    ARTICLE X
                             CERTIFICATES FOR SHARES

SECTION 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 2. If a  certificate  for shares be lost or  destroyed,  another  may be
issued in its place upon the following conditions:

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.

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 of
Directors 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 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


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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 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 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.








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