================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                               ------------------
                                    FORM 10-K
                               ------------------

            |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the Fiscal Year Ended December 31, 2005
                                       OR
          | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                               ------------------

                        Commission file number 000-23777
                     PENSECO FINANCIAL SERVICES CORPORATION
                Incorporated pursuant to the laws of Pennsylvania
                               ------------------

       Internal Revenue Service -- Employer Identification No. 23-2939222
         150 North Washington Avenue, Scranton, Pennsylvania 18503-1848
                                 (570) 346-7741
                               ------------------

Securities registered pursuant to section 12(g) of the Act:

Common Stock, Par Value $ .01 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes | | No|X|

Indicate  by  check  mark if the  registrant  is not  required  to file  reports
pursuant to Section 13 or Section 15(d) of the Act. Yes | | No|X|

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes |X| No| |

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K (ss.  229.405 of this chapter) is not contained  herein,  and
will not be  contained,  to the best of  registrant's  knowledge,  in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. | |

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
filer and large  accelerated  filer" in Rule 12b-2 of the Exchange  Act.  (Check
one):

Large accelerated filer | |   Accelerated filer |X|    Non-accelerated filer | |


Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). Yes | | No|X|

The aggregate market value of the Company's voting stock held by  non-affiliates
of the registrant on June 30, 2005,  based on the closing price of such stock on
that date, equals approximately $81,706,328.

The number of shares of common stock  outstanding as of February 10, 2006 equals
2,148,000.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  Corporation's  definitive proxy statement  relating to the 2006
Annual Meeting of Stockholders are incorporated by reference in Part III.

================================================================================


<PAGE>


         PENSECO FINANCIAL SERVICES CORPORATION



                                                                            Page

Part I -- FINANCIAL INFORMATION

     Item 1.  Business.......................................................  3

     Item 1A. Risk Factors...................................................  3

     Item 1B. Unresolved Staff Comments......................................  5

     Item 2.  Properties.....................................................  5

     Item 3.  Legal Proceedings..............................................  6

     Item 4.  Submission of Matters to a Vote of Security Holders............  6


Part II -- OTHER INFORMATION

     Item 5.  Market for Registrant's Common Equity, Related Stockholder
               Matters and Issuer Purchases of Equity Securities.............  6

     Item 6.  Selected Financial Data........................................  7

     Item 7.  Management's Discussion and Analysis of Financial Condition
               and Results of Operations.....................................  8

     Item 7A. Quantitative and Qualitative Disclosures About Market Risk.....  8

     Item 8.  Financial Statements and Supplementary Data....................  8

     Item 9.  Changes in and Disagreements with Accountants
               on Accounting and Financial Disclosure........................  8

     Item 9A. Controls and Procedures........................................  8

     Item 9B. Other Information..............................................  8


Part III -- OTHER INFORMATION

     Item 10. Directors and Executive Officers of the Registrant.............  8

     Item 11. Executive Compensation.........................................  9

     Item 12. Security Ownership of Certain Beneficial Owners
                and Management and Related Stockholder Matters...............  9

     Item 13. Certain Relationships and Related Transactions.................  9

     Item 14. Principal Accountant Fees and Services.........................  9


Part IV -- OTHER INFORMATION

     Item 15. Exhibits and Financial Statements Schedules.................... 10

     Signatures.............................................................. 11

     Index to Exhibits....................................................... 12

     Certifications.......................................................... 97


<PAGE>


                                     PART I


ITEM 1     Business


GENERAL


PENSECO FINANCIAL SERVICES CORPORATION,  (the "Company"), which is headquartered
in Scranton,  Pennsylvania, was formed under the general corporation laws of the
State of Pennsylvania in 1997 and is registered as a financial  holding company.
The  Company  became  a  holding  company  upon  the  acquisition  of all of the
outstanding  shares of Penn  Security  Bank and Trust  Company (the  "Bank"),  a
state-chartered   bank,  on  December  31,  1997.  The  Company  is  subject  to
supervision  by the  Federal  Reserve  Board.  The  Bank,  as a  state-chartered
financial institution, is subject to supervision,  regulation and examination by
the Federal Deposit  Insurance  Corporation and the  Pennsylvania  Department of
Banking.

     The Company's  principal  banking office is located at 150 North Washington
Avenue, Scranton, Pennsylvania,  containing trust, investor services, marketing,
audit,  credit card,  human  resources,  executive,  data processing and central
bookkeeping offices. There are eight additional offices.

     Through its banking subsidiary,  the Company generates interest income from
its outstanding loans receivable and its investment  portfolio.  Other income is
generated  primarily  from  merchant  transaction  fees,  trust fees and service
charges on deposit  accounts.  The Company's  primary costs are interest paid on
deposits and  borrowings  and general  operating  expenses.  The Bank provides a
variety of commercial and retail banking  services to business and  professional
customers,  as well as retail  customers,  on a personalized  basis.  The Bank's
primary lending  products are real estate,  commercial and consumer  loans.  The
Bank also offers ATM access,  credit cards,  active investment  accounts,  trust
department services and other various lending,  depository and related financial
services.  The Bank's  primary  deposit  products are savings and demand deposit
accounts and  certificates  of deposit.  The Company also offers  collateralized
repurchase  agreements,  that have a one day maturity, as an alternative deposit
option for its customers.

     The Bank has a third party  marketing  agreement  with  National  Financial
Services (formerly Fiserv Investor Services, Inc.) that allows the bank to offer
a full range of securities,  brokerage and annuity sales to its  customers.  The
Investor  Services  division  is located in the  headquarters  building  and the
services are offered throughout the entire branch system.

     The Company is not dependent  upon a single  customer,  or a few customers,
the loss of one or more of which  would  have a material  adverse  effect on its
operations.  The operations and earnings of the  Corporation  are not materially
affected by seasonal changes or by Federal, state or local environmental laws or
regulations.

FORWARD LOOKING INFORMATION

This Form 10-K contains forward-looking informational statements, in addition to
the  historical  financial  information  required by the Securities and Exchange
Commission.  There are certain  risks and  uncertainties  associated  with these
forward-looking statements which could cause actual results to differ materially
from those  stated  herein.  Such risks are  discussed  in the section  entitled
"Management  Discussion  and  Analysis  of  Financial  Condition  and Results of
Operations".  These forward-looking  statements reflect management's analysis as
of this point in time.  Readers  should  review the other  documents the Company
periodically files with the Securities and Exchange  Commission in order to keep
apprised of any material changes.


ITEM 1A  Risk Factors


                          RISKS RELATED TO OUR BUSINESS

Credit Risk

Changes in the credit quality of our loan portfolio may impact the level of our
allowance for loan losses.

We make various judgments about the  collectibility of our loans,  including the
creditworthiness  of our  borrowers  and the value of the real  estate and other
assets  serving as collateral for our loans.  In  determining  the amount of the
allowance for loan losses, we review our loans and our loan loss and delinquency
experience, and we evaluate economic conditions. If our judgments are incorrect,
our  allowance  for loan losses may not be  sufficient  to cover future  losses,
which will result in additions to our allowance through increased provisions for
loan losses. In addition,  bank regulators periodically review our allowance for
loan  losses and may  require us to increase  our  provision  for loan losses or
recognize further loan charge-offs.  Increased  provisions for loan losses would
increase our expenses and reduce our profits.


<PAGE>


     Nonetheless,  to the  best of  management's  knowledge,  there  are also no
particular  risk  elements in the local  economy that put a group or category of
loans  at  increased  risk.  Also the  Company  is not  dependent  upon a single
customer,  or a few  customers,  the loss of one or more of which  would  have a
material  adverse effect on its  operations.  The operations and earnings of the
Corporation are also not materially affected by seasonal changes.


Market Risk

Changes in interest  rates could affect our  investment  values and net interest
income.

At  December  31,  2005,  the  Company  owned  approximately  $147.9  million of
marketable  securities  available for sale. These securities are carried at fair
value on the  consolidated  balance sheet.  Unrealized  gains or losses on these
securities,  that is, the  difference  between the fair value and the  amortized
cost of these securities,  is reflected in stockholders' equity, net of deferred
taxes.  As of December 31, 2005,  the Company's  available  for sale  marketable
securities  portfolio had a net unrealized gain, net of taxes, of $363. The fair
value of the Company's  available for sale  marketable  securities is subject to
interest  rate  change,  which  would not affect  recorded  earnings,  but would
increase or decrease comprehensive income and stockholders' equity.

     The principal  component of the Company's  earnings is net interest income,
which is the  difference  between  interest and fees earned on  interest-earning
assets and interest paid on deposits and other borrowings.  The most significant
impact on net interest income between periods is derived from the interaction of
changes in the volume of and rates earned or paid on interest-earning assets and
interest-bearing  liabilities.  The  volume  of  earning  dollars  in loans  and
investments,  compared to the volume of interest-bearing liabilities represented
by deposits and  borrowings,  combined with the spread,  produces the changes in
net interest income between periods.

     The Company  continually  monitors the  relationship  of its interest  rate
sensitive assets and liabilities through its Asset/Liability Committee.


Strong competition within our market could affect our profits and growth.

The Bank operates in a competitive environment in which it must share its market
with many local  independent banks as well as several banks which are affiliates
or  branches  of very large  regional  holding  companies.  The Bank  encounters
competition from diversified financial institutions,  ranging in size from small
banks to the nationwide banks operating in its region. The competition  includes
commercial banks,  savings and loan associations,  credit unions,  other lending
institutions and mortgage originators.

     The principal  competitive  factors among the Company's  competitors can be
grouped into two  categories:  pricing and services.  In the  Company's  primary
service area, interest rates on deposits, especially time deposits, and interest
rates  and fees  charged  to  customers  on loans are very  competitive.  From a
service perspective, the Bank competes in areas such as convenience of location,
types of services, service costs and banking hours.


Compliance

We operate in a highly regulated environment and may be affected by changes in
laws and regulations.


The Company is registered as a financial  holding company under the Bank Holding
Company Act of 1956,  as amended,  and, as such, is subject to  supervision  and
regulation by the Board of Governors of the Federal Reserve System ("FRB").  The
Company is required to file quarterly reports of its operations with the FRB.

     As a  financial  holding  company,  the Company is  permitted  to engage in
banking-related  activities as authorized by the Federal Reserve Board, directly
or through  subsidiaries or by acquiring  companies already  established in such
activities subject to the FRB regulations relating to those activities.


     Our  banking  subsidiary,  Penn  Security  Bank  and  Trust  Company,  as a
Pennsylvania  state-chartered financial institution,  is subject to supervision,
regulation and examination by the  Commonwealth  of  Pennsylvania  Department of
Banking and by the Federal Deposit  Insurance  Corporation  (the "FDIC"),  which
insures the Bank's deposits to the maximum extent permitted by law.


Operational Risk

The Company needs to continually  attract and retain qualified personnel for its
operations.


<PAGE>


High quality customer service,  as well as efficient and profitable  operations,
are  dependent  on  the  Company's  ability  to  attract  and  retain  qualified
individuals for key positions within the organization.  As of December 31, 2005,
the Company employed 189 full-time  equivalent  employees.  The employees of the
Company are not represented by any collective  bargaining  group.  Management of
the Company considers relations with its employees to be good.


Our operations could be affected if we do not have access to modern and reliable
technology.

The  Company  operates in a  highly-automated  environment,  wherein  almost all
transactions are processed by computer  software to produce  results.  To remain
competitive,  the Company  must  continually  evaluate  the adequacy of its data
processing  capabilities and make revisions as needed.  At the present time, the
Company is upgrading its computer  technology at a total cost of $1.5 million of
which $.7 million is included in fixed  assets at December  31, 2005 but not yet
placed  into  service.  The project is  expected  to be  completed  in the first
quarter of 2006.

     The Company regularly tests its ability to restore data capabilities in the
event of a natural  disaster,  sustained  power  failure or other  inability  to
utilize its primary systems.


Liquidity Risk

Increased  needs for  disbursement of funds on loans and deposits can affect our
liquidity.

The objective of liquidity  management is to maintain a balance  between sources
and uses of funds in such a way that  the cash  requirements  of  customers  for
loans and deposit withdrawals are met in the most economical manner.  Management
monitors its liquidity position  continuously in relation to trends of loans and
deposits for  short-term  as well as long-term  requirements.  Liquid assets are
monitored  on a daily  basis to  assure  maximum  utilization.  Management  also
manages its liquidity  requirements  by maintaining an adequate level of readily
marketable assets and access to short-term funding sources.  Management does not
foresee any adverse trends in liquidity.


Our future pension plan costs and contributions could be unfavorably impacted by
the factors that are used in the actuarial calculations.

     Our costs of providing  non-contributory  defined benefit pension plans are
dependent upon a number of factors,  such as the rates of return on plan assets,
discount rates, the level of interest rates used to measure the required minimum
funding levels of the plans,  future  government  regulation and our required or
voluntary  contributions  made to the plans. While the Company complies with the
minimum funding  requirements under the Employee  Retirement Income Security Act
of 1974,  our  pension  plan  obligations  exceeded  the value of plan assets by
approximately  $1.0 million as of December 31, 2005. An additional  contribution
of this  amount was made to the  Pension  Plan in 2006 to resolve  the  unfunded
liability.  Without  sustained  growth in the pension  investments  over time to
increase  the value of our plan  assets  and  depending  upon the other  factors
impacting our costs as listed above, we could be required to fund our plans with
higher  amounts  of cash  than  are  anticipated  by our  actuaries.  Such  cash
increased  funding  obligations could have a material impact on our liquidity by
reducing our cash flows.


ITEM 1B  Unresolved Staff Comments

Not applicable


ITEM 2   Properties

There  are  nine  offices   positioned   throughout  the  greater   Northeastern
Pennsylvania  region.  They are located in the South  Scranton,  East  Scranton,
Green Ridge, and Central City sections of Scranton,  the Borough of Moscow,  the
Town of Gouldsboro, South Abington Township, the Borough of Mount Pocono and the
Borough of East Stroudsburg at Eagle Valley Corners.  Through these offices, the
Company  provides  a full  range of  banking  and trust  services  primarily  to
Lackawanna, Wayne, Monroe and the surrounding counties. All offices are owned by
the Bank or through a wholly owned subsidiary of the Bank, Penseco Realty, Inc.,
with the exception of the Mount Pocono Office, which is owned by the Bank but is
located on land occupied under a long-term lease. The Company also owns property
in the  Borough  of  Dalton,  Lackawanna  County,  to use for  potential  future
expansion.

     The principal office,  located at the corner of North Washington Avenue and
Spruce Street in the "Central City" of Scranton's business district,  houses the
operations,   trust,  investor  services,   marketing,  credit  card  and  audit
departments  as well as the  Company's  executive  offices.  Several  remote ATM
locations  are leased by the Bank,  which are  located  throughout  Northeastern
Pennsylvania.  All branches and ATM locations  are equipped with closed  circuit
television monitoring.


<PAGE>


ITEM 3   Legal Proceedings

There are no material  pending legal  proceedings,  other than ordinary  routine
litigation incidental to the business of the Company, as to which the Company or
subsidiary is a party or of which any of their property is subject.


ITEM 4   Submission of Matters to a Vote of Security Holders

No  matter  was  submitted  by the  Company  to  its  shareholders  through  the
solicitation  of proxies or  otherwise  during the fourth  quarter of the fiscal
year covered by this report.


                                     PART II


ITEM 5   Market for Registrant's Common Equity, Related Stockholder Matters and
           Issuer Purchases of Equity Securities

This Form 10-K is the Company's  annual  disclosure  statement as required under
Section 13 or 15(d) of the  Securities  Exchange Act of 1934.  Questions  may be
directed to any branch location of the Company or by contacting the Controller's
office at:

                           Patrick Scanlon, Controller
                     Penseco Financial Services Corporation
                           150 North Washington Avenue
                        Scranton, Pennsylvania 18503-1848
                                 1-800-327-0394

Management of the Company is aware of the following  securities dealers who make
a market in the Company stock:

Archipelago Trading Services, Inc.                    Knight Equity Markets, LP
Boenning & Scattergood, Inc.                          Monroe Securities, Inc.
Ferris, Baker, Watts, Inc.                            Ryan, Beck & Company, Inc.
Hill Thompson Magid & Company, Inc.                   UBS Capital Markets, LP
Jefferies & Company, Inc.


The Company's capital stock is traded on the  "Over-the-Counter"  BULLETIN BOARD
under the symbol "PFNS". The following table sets forth the price range together
with  dividends  paid for each of the past two years.  These  quotations  do not
necessarily reflect the value of actual transactions.


                               Dividends Paid
2005              High     Low   Per Share
---------------------------------------------
First Quarter     $ 41    $ 41   $  .33
Second Quarter      47      42      .33
Third Quarter       44      41      .33
Fourth Quarter      43      41      .45
                                 ------
                                 $ 1.44
                                 ======


                               Dividends Paid
2004              High     Low   Per Share
---------------------------------------------
First Quarter     $ 41    $ 38   $  .30
Second Quarter      41      35      .30
Third Quarter       41      34      .30
Fourth Quarter      42      40      .45
                                 ------
                                 $ 1.35
                                 ======


As of February 10, 2006 there were approximately 921 stockholders of the Company
based on the number of holders of record.

Reference should be made to the information about the Company's  dividend policy
and regulatory  guidelines in the  Consolidated  Financial  Statements and Notes
thereto filed at Exhibit 13 to this report.


TRANSFER AGENT


Penn Security Bank and Trust Company,  Trust  Department,  150 North  Washington
Avenue,  Scranton,  Pennsylvania  18503-1848.  Stockholders' questions should be
directed to the Bank's Trust Department at 570-346-7741.


<PAGE>


                     QUARTERLY FINANCIAL AMOUNTS (unaudited)
                    (in thousands, except per share amounts)


                            First    Second     Third    Fourth
2005                       Quarter   Quarter   Quarter   Quarter
----------------------------------------------------------------
Net Interest Income        $ 4,697   $ 4,888   $ 4,960   $ 5,045
Provision for Loan Losses      122         -         -       141
Other Income                 2,346     2,126     2,564     1,838
Other Expenses and Taxes     5,675     5,494     5,827     5,336
Net Income                   1,246     1,520     1,697     1,406
Earnings Per Share         $  0.58   $  0.71   $  0.79   $  0.65


                           First     Second     Third    Fourth
2004                       Quarter   Quarter   Quarter   Quarter
----------------------------------------------------------------
Net Interest Income        $ 4,216   $ 4,363   $ 4,591   $ 4,636
Provision for Loan Losses       18         3       114         9
Other Income                 2,414     2,006     2,830     2,344
Other Expenses and Taxes     5,467     5,003     5,692     5,493
Net Income                   1,145     1,363     1,615     1,478
Earnings Per Share         $  0.53   $  0.64   $  0.75   $  0.69


ITEM 6   Selected Financial Data


(in thousands, except per share amounts)

RESULTS OF OPERATIONS:

<TABLE>
<CAPTION>
                                     2005         2004         2003         2002         2001
---------------------------------------------------------------------------------------------
<S>                             <C>          <C>          <C>          <C>          <C>
Interest Income                 $  28,170    $  25,385    $  26,014    $  27,899    $  31,860
Interest Expense                    8,580        7,579        8,228        8,011       12,524
---------------------------------------------------------------------------------------------
Net Interest Income                19,590       17,806       17,786       19,888       19,336
Provision for Loan Losses             263          144          476          813          954
---------------------------------------------------------------------------------------------
Net Interest Income after
   Provision for Loan Losses       19,327       17,662       17,310       19,075       18,382
Other Income                        8,874        9,594       10,743       11,032        9,186
Other Expenses                     20,719       20,584       20,454       21,098       20,077
Income Taxes                        1,613        1,071        1,628        2,256        1,869
---------------------------------------------------------------------------------------------
Net Income                      $   5,869    $   5,601    $   5,971    $   6,753    $   5,622
=============================================================================================

BALANCE SHEET AMOUNTS:
Assets                          $ 575,688    $ 563,708    $ 584,590    $ 496,956    $ 482,551
Investment Securities           $ 229,957    $ 262,678    $ 293,125    $ 139,132    $ 128,623
Net Loans                       $ 317,562    $ 276,576    $ 236,882    $ 285,509    $ 320,208
Deposits                        $ 397,867    $ 395,301    $ 407,944    $ 414,664    $ 406,531
Long-Term Borrowings            $  75,401    $  84,620    $  93,523    $       -    $       -
Stockholders' Equity            $  63,799    $  62,376    $  60,807    $  58,975    $  54,648

PER SHARE AMOUNTS:
Earnings per Share              $    2.73    $    2.61    $    2.78    $    3.14    $    2.62
Dividends per Share             $    1.44    $    1.35    $    1.35    $    1.35    $    1.25
Book Value per Share            $   29.70    $   29.04    $   28.31    $   27.46    $   25.44
Common Shares Outstanding       2,148,000    2,148,000    2,148,000    2,148,000    2,148,000

FINANCIAL RATIOS:
Net Interest Margin                 3.57%        3.18%        3.24%        4.21%        4.30%
Return on Average Assets            1.03%         .96%        1.05%        1.37%        1.18%
Return on Average Equity            9.23%        9.11%        9.87%       11.79%       10.57%
Average Equity to Average Assets   11.19%       10.57%       10.59%       11.58%       11.19%
Dividend Payout Ratio              52.75%       51.72%       48.56%       42.99%       47.71%
</TABLE>


<PAGE>


ITEM 7   Management's Discussion and Analysis of Financial Condition and Results
           of Operations

The  information  called for by this item is filed at Exhibit 13 to this  report
and is incorporated in its entirety by reference under this Item 7.


ITEM 7A  Quantitative and Qualitative Disclosures About Market Risk

The  information  called for by this item is filed at Exhibit 13 to this  report
and is incorporated in its entirety by reference under this Item 7A.


ITEM 8   Financial Statements and Supplementary Data

The  information  called for by this item is filed at Exhibit 13 to this  report
and is incorporated in its entirety by reference under this Item 8.


ITEM 9   Changes in and Disagreements with Accountants on Accounting and
           Financial Disclosure

There  were no  changes  in or  disagreements  with  accountants  on  matters of
accounting principles or practices or financial statement disclosures in 2005.


ITEM 9A  Controls and Procedures

Under the supervision and with the  participation  of our management,  including
our Chief Executive  Officer and  Controller,  we conducted an evaluation of our
disclosure controls and procedures, as such term is defined under Rule 13a-15(e)
under the Securities Exchange Act of 1934. Based upon this evaluation, our Chief
Executive Officer and our Controller  concluded that our disclosure controls and
procedures  were  effective  as of the end of the period  covered by this annual
report.  Management's annual report on internal control over financial reporting
is  included  under the  heading  "Report on  Internal  Control  Over  Financial
Reporting" at Item 8 of this Annual Report on Form 10-K. The attestation  report
of the registered  public  accounting firm is included under the heading "Report
of the Independent  Registered  Public Accounting Firm" at Item 8 of this Annual
Report on Form 10-K.

     The Company continually  assesses the adequacy of its internal control over
financial  reporting  and enhances its controls in response to internal  control
assessments, and internal and external audit and regulatory recommendations.  No
change in internal  control over  financial  reporting  during the quarter ended
December  31, 2004 or through  the date of this Annual  Report on Form 10-K have
materially  affected,  or  are  reasonably  likely  to  materially  affect,  the
Company's internal control over financial reporting.

     Because  of its  inherent  limitations,  internal  control  over  financial
reporting  may not prevent or detect  misstatements.  Also,  projections  of any
evaluation  of  effectiveness  to future  periods  are  subject to the risk that
controls may become inadequate due to changes in conditions,  or that the degree
of compliance with the policies or procedures may deteriorate.


ITEM 9B  Other Information

There are no items required to be reported.


                                    PART III


ITEM 10  Directors and Executive Officers of the Registrant

Code of Ethics

The Company has had for many years a Code of Ethics  applicable to all employees
including  the Company's  principal  Executive  Officer and principal  Financial
Officer  (Controller).  The purpose of the Code is to promote honest and ethical
conduct,  full and fair  disclosures of financial  information,  compliance with
laws and regulations and accountability for actions.


     A copy  of  the  Code  of  Ethics  may  be  obtained,  without  charge,  by
contacting:

       Patrick Scanlon, Controller, Penseco Financial Services Corporation
              150 North Washington Avenue, Scranton, PA 18503-1848
                                 1-800-327-0394


<PAGE>


                        AUDIT COMMITTEE FINANCIAL EXPERT


The  Sarbanes-Oxley  Act of 2002 requires the Company to disclose whether or not
its Audit Committee has, as one of its members,  an "Audit  Committee  Financial
Expert", as that term is defined by the U. S. Securities and Exchange Commission
(SEC).

     The Board of Directors has  determined  that the Audit  Committee  does not
have an  "audit  committee  financial  expert"  as that term is  defined  in the
Securities and Exchange  Commission's rules and regulations.  However, the Board
believes that each of the members of the Audit Committee has  demonstrated  that
he is capable of analyzing and evaluating the Company's financial statements and
understanding internal controls and procedures for financial reporting.  Because
the Board believes that the current members of the Audit Committee are qualified
to carry out all of the  duties  and  responsibilities  of the  Company's  Audit
Committee,  the Board  does not  believe  that it is  necessary  at this time to
actively search for an outside person to serve on the Board who would qualify as
an audit committee financial expert.

     Other  information  required  by this Item as to  Directors  of the Company
contained under the headings "Voting  Securities & Principal  Holders  Thereof",
"Election  of   Directors",   "Board  and   Committee   Meetings"  and  "Certain
Relationships  and Related  Transactions"  within the definitive proxy statement
relating to the  Company's  Annual  Meeting of  Shareholders,  to be held May 2,
2006, is incorporated herein by reference thereto.


ITEM 11  Executive Compensation

The  information   contained  under  the  headings   "Executive   Compensation",
"Directors   Compensation",   "Compensation   Committee   Report  on   Executive
Compensation" and "Compensation  Committee Interlocks and Insider Participation"
in the definitive  proxy statement  relating to the Company's  Annual Meeting of
stockholders,  to be held May 2,  2006,  is  incorporated  herein  by  reference
thereto.


ITEM 12  Security Ownership of Certain Beneficial Owners and Management and
           Related Stockholder Matters


The  information  contained  under the heading  "Voting  Securities  & Principal
Holders  Thereof" in the definitive  proxy  statement  relating to the Company's
Annual Meeting of stockholders,  to be held May 2, 2006, is incorporated  herein
by reference thereto.


ITEM 13  Certain Relationships and Related Transactions

The information  contained under the heading "Certain  Relationships and Related
Transactions"  and "Transactions  with Directors and Principal  Officers" in the
definitive  proxy  statement   relating  to  the  Company's  annual  meeting  of
stockholders,  to be  held  May 2,  2006 is  incorporated  herein  by  reference
thereto.


ITEM 14  Principal Accountant Fees and Services

The information contained under the heading "Our Relationship with Our Auditors"
in the definitive  proxy statement  relating to the Company's  Annual Meeting of
Stockholders,  to be  held  May 2,  2006 is  incorporated  herein  by  reference
thereto.


<PAGE>


                                     PART IV


ITEM 15  Exhibits and Financial Statements Schedules

(a) (1)  Financial Statements - The following financial statements are
           incorporated by reference in Part II, Item 8 hereof:

         Balance Sheets
         Consolidated Statements of Income
         Consolidated Statements of Stockholders' Equity
         Consolidated Statements of Cash Flows
         General Notes to Financial Statements
         Report of Independent Registered Public Accounting Firm

    (2)  Financial Statement Schedules - The Financial Statement Schedules are
           incorporated by reference in Part II, Item 8 hereof.

    (3)  Exhibits
         The following exhibits are filed herewith or incorporated by reference
           as part of this Annual Report.

         3(i)  Registrant's Articles of  Incorporation (Incorporated herein by
               reference to Exhibit 3(i) of Registrant's report on Form 10-K
               filed with the SEC on March 30, 1998.)

         3(ii) Registrant's By-Laws

         10    Material contracts

         13    Annual report to security holders

         14    Code of Ethics

         21    Subsidiaries of the registrant (Incorporated herein by reference
               to Exhibit 21 of Registrant's report on Form 10-K filed with
               the SEC on March 30, 1998.)

         31    Certifications required under Section 302 of the Sarbanes-Oxley
               Act of 2002

         32    Certifications required under Section 906 of the Sarbanes-Oxley
               Act of 2002

(b)      A Form 8-K was filed during the fourth quarter of the fiscal year ended
           December 31, 2005.

(c)      The exhibits required to be filed by this Item are listed under Item 15
           (a)(3), above.

(d)      There are no financial statement schedules required to be filed under
           this item.


<PAGE>


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the Bank has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized on March 7, 2006.


By:  /s/ CRAIG W. BEST
     ------------------------------
     Craig W. Best
     President and CEO


By: /s/ RICHARD E. GRIMM
     ------------------------------
     Richard E. Grimm
     Executive Vice-President


By:  /s/ PATRICK SCANLON
     ------------------------------
     Patrick Scanlon
     Controller


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities indicated on March 7, 2006.


By:  /s/ CRAIG W. BEST                       By:  /s/ ROBERT W. NAISMITH, PH.D.
     ------------------------------               ------------------------------
     Craig W. Best                                Robert W. Naismith, Ph.D.
     President and CEO                            Director


By: /s/ EDWIN J. BUTLER                       By: /s/ JAMES B. NICHOLAS
     ------------------------------               ------------------------------
     Edwin J. Butler                              James B. Nicholas
     Director                                     Director


By: /s/ RICHARD E. GRIMM                     By:  /s/ EMILY S. PERRY
     ------------------------------               ------------------------------
     Richard E. Grimm                             Emily S. Perry
     Director                                     Director


By: /s/ RUSSELL C. HAZELTON                  By:  /s/ SANDRA C.PHILLIPS
     ------------------------------               ------------------------------
     Russell C. Hazelton                          Sandra C. Phillips
     Director                                     Director


By: /s/ D. WILLIAM HUME                      By:  /s/ OTTO P. ROBINSON,JR.
     ------------------------------               ------------------------------
     D. William Hume                              Otto P. Robinson, Jr.
     Chairman of the Board                        Director


By: /s/ JAMES G. KEISLING                    By:  /s/ STEVEN L.WEINBERGER
     ------------------------------               ------------------------------
     James G. Keisling                            Steven L. Weinberger
     Director                                     Director


By: /s/ P. FRANK KOZIK
     ------------------------------
     P. Frank Kozik
     Director


<PAGE>


                              INDEX TO EXHIBITS
<TABLE>
<CAPTION>

Exhibit Number
Referred to
Item 601 of                                                              Prior Filing or Exhibit
Regulation S-K    DESCRIPTION OF EXHIBIT                                 Page Number Herein
----------------------------------------------------------------------------------------------------------------------------
  <S>             <C>                                                    <C>
   2              Plan of acquisition, reorganization, arrangement,       None
                  liquidation or succession

   3              (i)  Articles of Incorporation                          Incorporated herein by reference to Exhibit 3 (i) of
                                                                          Registrant's report on Form 10-K filed with the
                                                                          SEC on March 30, 1998.

                  (ii)  By-Laws                                           Filed at Exhibit 3(ii) to this report.

   4              Instruments defining the rights of security holders,    None
                  including indentures

   9              Voting trust agreement                                  None

  10              Material contracts                                      Filed at Exhibit 10 to this report.

  11              Statement re:  Computation of per share earnings        None

  12              Statements re:  Computation of ratios                   None

  13              Annual report to security holders, Form 10-Q or         Filed at Exhibit 13 to this report.
                    quarterly report to security holders

  14              Code of Ethics                                          Filed at Exhibit 14 to this report.

  16              Letter re:  Change in certifying accountant             None

  18              Letter re:  Change in accounting principles             None

  21              Subsidiaries of the registrant                          Incorporated herein by reference to Exhibit 21
                                                                          of Registrant's report on Form 10-K filed with
                                                                          the SEC on March 30, 1998.

  22              Published report regarding matters submitted to         None
                  vote of security holders

  23              Consents of experts and counsel                         None

  24              Power of attorney                                       None

  31              (i)   Rule 13a-14(a)/15d-14(a) Certifications           Filed at Exhibit 31 to this report.

                  (ii)  Rule 13a-14(d)/15d-14(d) Certifications           Filed at Exhibit 31 to this report.

  32              Section 1350 Certifications                             Filed at Exhibit 32 to this report.

  33              Report on assessment of compliance with                 None
                    servicing criteria for asset-backed securities

  34              Attestation report on assessment of compliance          None
                    with servicing criteria for asset-backed securities

  35              Servicer compliance statement                           None

  99              Additional Exhibits                                     None
</TABLE>