<Page>1
EXHIBIT 99.2
OLD FORGE BANK
--------------
FINANCIAL STATEMENTS
--------------------
DECEMBER 31, 2008 AND 2007
--------------------------
<Page>2
To the Board of Directors and Stockholders
Old Forge Bank
Old Forge, Pennsylvania
Independent Auditor's Report
----------------------------
We have audited the accompanying balance sheets of Old Forge Bank as of
December 31, 2008 and 2007, and the related statements of income, stockholders'
equity and cash flows for the years then ended. These financial statements are
the responsibility of the Bank's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Old Forge Bank as of
December 31, 2008 and 2007, and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.
/s/ McGrail Merkel Quinn & Associates
Scranton, Pennsylvania
February 27, 2009
F-2
<Page>3
OLD FORGE BANK
BALANCE SHEETS
DECEMBER 31, 2008 AND 2007
<Table>
<Caption>
ASSETS 2008 2007
- ------ ------------ ------------
Cash and due from banks $ 4,275,208 $ 5,529,693
Federal funds sold - 1,750,000
------------ ------------
Cash and cash equivalents 4,275,208 7,279,693
------------ ------------
Investment securities, available-for-sale 40,032,674 42,650,195
------------ ------------
Loans, net of unearned income 169,789,352 157,458,925
Allowance for loan losses (1,428,600) (1,868,708)
------------ ------------
Net loans 168,360,752 155,590,217
------------ ------------
Accrued interest receivable 1,104,030 1,125,124
Bank premises and equipment, net 1,700,597 1,755,222
Other real estate owned 210,145 102,174
Cash surrender value of life insurance 6,166,305 5,952,197
Other assets 1,411,978 1,133,810
------------ ------------
Total assets $223,261,689 $215,588,632
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Deposits
Non-interests bearing $ 27,413,367 $ 29,464,741
Interest bearing 153,044,188 150,742,648
------------ ------------
Total deposits 180,457,555 180,207,389
Short-term borrowing 7,500,000 -
Accrued interest payable 387,362 478,472
Other liabilities 1,438,229 1,421,986
------------ ------------
Total liabilities 189,783,146 182,107,847
------------ ------------
Common stock, $2.50 par value, 1,000,000
shares authorized, 558,994 shares issued
and outstanding 1,397,485 1,397,485
Additional paid-in-capital 4,602,515 4,602,515
Retained earnings 28,361,258 27,494,152
Accumulated other comprehensive income (882,715) (13,367)
------------ ------------
Total stockholders' equity 33,478,543 33,480,785
------------ ------------
Total liabilities and
stockholders' equity $223,261,689 $215,588,632
============ ============
</Table>
The accompanying Notes are an integral part of these Financial Statements.
F-3
<Page>4
OLD FORGE BANK
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2008 AND 2007
<Table>
<Caption>
2008 2007
----------- -----------
Interest income
Interest and fees on loans $10,184,452 $10,446,848
Interest and dividends on investment securities:
Taxable 559,928 499,846
Tax-exempt 1,219,003 1,320,146
Interest on Federal funds sold 32,882 71,245
----------- -----------
Total interest income 11,996,265 12,338,085
----------- -----------
Interest expense
Interest on deposits 4,361,305 4,702,793
Interest on short-term borrowings 47,333 38,691
----------- -----------
Total interest expense 4,408,638 4,741,484
----------- -----------
Net interest income 7,587,627 7,596,601
Provision for loan losses 300,000 150,000
----------- -----------
Net interest income, after provision for loan losses 7,287,627 7,446,601
----------- -----------
Other income
Service charges and other fees 485,754 593,530
Other operating income 293,675 546,448
Gain (loss) on the sale of securities, net 19,801 (12,895)
----------- -----------
Total other income 799,230 1,127,083
----------- -----------
Other expenses
Salaries and employees benefits 2,823,812 2,946,826
Occupancy expense 270,946 262,631
Furniture and equipment expense 272,639 230,901
State shares tax 355,736 334,203
Other operating expenses 1,279,105 1,082,211
----------- -----------
Total other expenses 5,002,238 4,856,772
----------- -----------
Income before income taxes 3,084,619 3,716,912
Applicable income taxes 565,000 656,000
----------- -----------
Net income $ 2,519,619 $ 3,060,912
=========== ===========
Net income per common share $ 4.51 $ 5.48
=========== ===========
</Table>
The accompanying Notes are an integral part of these Financial Statements.
F-4
<Page>5
OLD FORGE BANK
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 2008 AND 2007
<Table>
<Caption>
Additional Total
Common Paid-in Retained Accumulated Other Stockholders'
Stock Capital Earnings Comprehensive Income Equity
----------- ---------- ----------- -------------------- --------------
Balance, December 31, 2006 $1,397,485 $4,602,515 $25,998,422 $ (65,999) $31,932,423
Comprehensive income:
Net income, 2007 - - 3,060,912 - 3,060,912
Unrealized gains on securites,
net of securities, net of
reclassification adjustment - - - 52,632 52,632
--------------
Comprehensive income 3,113,544
Cash dividends declared
($2.80 per share) - - (1,565,182) - (1,565,182)
----------- ---------- ----------- -------------------- --------------
Balance, December 31, 2007 1,397,485 4,602,515 27,494,152 (13,367) 33,480,785
Cumulative effect of a
change in accounting principle - - (87,330) - (87,330)
Comprehensive income:
Net income, 2008 - - 2,519,619 - 2,519,619
Unrealized losses on
securities, net of
reclassification adjustment - - - (869,348) (869,348)
--------------
Comprehensive income 1,650,271
Cash dividends declared
($2.80 per share) - - (1,565,183) - (1,565,183)
----------- ---------- ----------- -------------------- --------------
Balance, December 31, 2008 $1,397,485 $4,602,515 $28,361,258 $ (882,715) $33,478,543
=========== ========== =========== ==================== ==============
</Table>
The accompanying Notes are an integral part of these Financial Statements.
F-5
<Page>6
OLD FORGE BANK
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2008 AND 2007
<Table>
<Caption>
2008 2007
----------- ------------
Operating activities
Net income $ 2,519,619 $ 3,060,912
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 300,000 150,000
Depreciation 144,479 120,171
Amortization of intangible assets 50,032 50,032
Deferred income tax provision 113,332 29,159
Increase in cash surrender value of life insurance (214,108) (307,594)
Amortization of securities (net of accretion) 244,468 290,255
Net realized (gain) loss on securities available-for-sale (19,801) 12,895
Decrease (increase) in interest receivable 21,094 (17,402)
Decrease in deferred revenue (36,811) -
Decrease in other assets 6,314 80,592
Decrease in interest payable (91,110) (32,632)
Decrease in other liabilities (71,087) (16,599)
----------- ------------
Net cash provided by operating activities 2,966,421 3,419,789
----------- ------------
Investing activities
Proceeds from sales of securities available-
for-sale 4,609,312 4,522,806
Proceeds from repayments of securities
available-for-sale 7,202,737 1,957,463
Purchases of securities available-for-sale (10,736,389) (5,532,083)
Net loans originated (13,149,377) (3,808,373)
Proceeds from other real estate 7,682 7,094
Investment in premises and equipment (89,854) (263,030)
Proceeds from life insurance policies - 563,073
----------- ------------
Net cash used in investing activities (12,155,889) (2,553,050)
----------- ------------
Financing activities
Short term borrowings 7,500,000 -
Net decrease in demand and savings deposits (7,045,585) (1,412,459)
Net increase in time deposits 7,295,751 707,600
Cash dividends paid (1,565,183) (1,565,182)
----------- ------------
Net cash provided by (used in) financing activities 6,184,983 (2,270,041)
----------- ------------
Net cash decrease in cash and cash equivalents (3,004,485) (1,403,302)
Cash and cash equivalents at January 1 7,279,693 8,682,995
----------- ------------
Cash and cash equivalents at December 31 $4,275,208 $7,279,693
=========== ============
</Table>
The accompanying Notes are an integral part of these Financial Statements.
F-6
<Page>7
NOTES TO FINANCIAL STATEMENTS
-----------------------------
Note 1 - Summary of Significant Accounting Policies
- ---------------------------------------------------
The accounting policies of Old Forge Bank (the Bank) conform with
accounting principles generally accepted in the United States of America and
with general practice within the banking industry. A description of the
significant accounting policies is presented below.
Nature of Operations
--------------------
The Bank operates under a state bank charter and provides a variety
of financial services to individual and corporate customers in
Northeastern Pennsylvania from its banking facilities located in Old
Forge, Peckville and Duryea, Pennsylvania. The Bank's primary deposit
products are interest-bearing savings and checking accounts and
certificates of deposit. Its primary lending products are individual and
corporate real estate and installment loans.
Basis of Presentation
---------------------
The accrual basis of accounting is used, except that certain minor
sources of income and expenses are recorded on the cash basis, the results
of which approximate the accrual basis.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates.
Material estimates that are particularly susceptible to significant
change relate to the determination of the allowance for losses on loans
and the valuation of real estate acquired in connection with foreclosures
or in satisfaction of loans. In connection with the determination of the
allowances for losses on loans and foreclosed real estate, management
obtains independent appraisals for significant properties.
Investment Securities
---------------------
The Bank's investments in securities are classified and accounted
for as follows:
Securities Available-for-Sale Securities available-for-sale consist of
-----------------------------
bonds, notes, debentures, and equity securities and are carried at fair
value with unrealized holding gains and losses, net of tax, reported as a
separate component of other comprehensive income until realized.
Gains and losses on the sale of securities available-for-sale are
determined using the specific identification method and are reported as a
separate component of other income in the Statements of Income.
F-7
<Page> 8
Note 1 - Summary of Significant Accounting Policies - (Continued)
- -----------------------------------------------------------------
Loans
-----
Loans are stated at the principal amount outstanding, net of any
unearned discount and the allowance for loan losses. Loan interest income
is accrued on the principal amount outstanding, except for interest income
on installment loans which is recognized on the actuarial method or the
simple interest method.
Loan commissions paid under the Bank's dealer incentive program are
amortized over the dealer commitment participation period with the
corresponding expense recorded as an offset to interest income on the
related loans.
Loans are generally placed on non-accrual or impaired status when
principal or interest is past due 90 days or more and when, in the opinion
of management, the collectability of principal or interest is in doubt. At
the time a loan is placed on non-accrual or impaired status, interest
previously accrued but not collected is charged against current income.
Loans are returned to accrual status when the collection of past due
interest and principal is probable or the loan has been modified and the
borrower has demonstrated the willingness and ability to pay currently for
a reasonable period of time.
Allowance for Loan Losses
-------------------------
The allowance for loan losses is based on management's judgment of
an amount that is adequate to absorb losses in the existing portfolio. In
evaluating the portfolio, management takes into consideration numerous
factors including current economic conditions, prior loan loss experience,
the composition of the portfolio and management's estimate of anticipated
credit losses.
Bank Premises and Equipment
---------------------------
Bank premises and equipment are stated at cost less accumulated
depreciation. Depreciation is computed on the straight-line method and is
charged to operations over the estimated useful lives of the assets (5 to
40 years). Maintenance and repairs are charged to operating expense as
incurred.
Long-Lived Assets
-----------------
The Company reviews the carrying value of long-lived assets for
impairment whenever events or changes in circumstances indicate that
carrying amounts of the assets might not be recoverable, as prescribed in
Statement Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" (SFAS 144).
Intangible Assets
-----------------
Included in "Other assets" on the accompanying Balance Sheets is
$750,480 of start-up costs, net of accumulated amortization of $600,385
and $550,353 as of December 31, 2008 and 2007, respectively. These costs
were incurred in connection with a Bank expansion program and are being
amortized using the straight-line method over a 15 year period.
F-8
<Page>9
Note 1 - Summary of Significant Accounting Policies - (Continued)
- -----------------------------------------------------------------
Postretirement Benefits
-----------------------
The Bank sponsors an unfunded defined benefit postretirement life
insurance plan covering substantially all of its employees and directors.
The plan provides for a reducing level of term life insurance coverage
following retirement.
The life insurance premiums are charged to salaries and employee
benefits expense when paid, inasmuch as they are insignificant in amount.
Advertising Expenses
--------------------
Advertising costs are expensed as incurred. Advertising expenses for
the years ended December 31, 2008 and 2007, amounted to $69,782 and
$67,303, respectively.
Income Taxes
------------
Provisions for income taxes are based on both the taxes payable or
refundable for the current year (after exclusion of non-taxable income,
such as interest on state and municipal securities) as well as deferred
taxes for temporary differences, between the amount of taxable income and
pretax financial income and between the tax bases of assets and
liabilities and their reported amounts in the Financial Statements.
Deferred tax assets and liabilities are included in the Financial
Statements at currently enacted income tax rates applicable to the period
in which the deferred tax assets and liabilities are expected to be
realized or settled as prescribed in Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS 109). As changes in
tax laws or rates are enacted, deferred tax assets and liabilities are
adjusted through the provision for income taxes.
Cash Flows
----------
For purposes of the Statements of Cash Flows, cash and cash
equivalents include cash on hand, due from banks and Federal funds sold
for a one-day period, when applicable.
The Bank paid interest and income taxes of $4,499,748 and $460,000
and $4,774,116 and $620,000 during the years ended December 31, 2008 and
2007, respectively.
Non-cash transactions included the unrealized (loss) gain on
investment securities, available-for-sale, net of tax, amounting to
($869,348) and $52,632 and the net acquisition of real estate in the
settlement of loans amounting to $78,842 and $0 during the years ended
December 31, 2008 and 2007.
Earnings Per Share
------------------
Basic earnings per share are calculated on the weighted average
number of common shares outstanding during each year as prescribed in
Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
(SFAS 128).
A calculation of diluted earnings per share is not applicable to the
Bank.
F-9
<Page>10
Note 1 - Summary of Significant Accounting Policies - (Continued)
- -----------------------------------------------------------------
Recent Accounting Pronouncements
--------------------------------
In July 2006, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income
Taxes - an Interpretation of FASB Statement No. 109. FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in an enterprise's
financial statements in accordance with Statement No. 109, Accounting for
Income Taxes. FIN 48 prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. FIN 48 also
provides guidance on derecognition of tax benefits, classification on the
balance sheet, interest and penalties, accounting in interim periods,
disclosure and transition.
In December 2008, the FASB provided for a deferral of the effective
date of FIN 48 for certain nonpublic enterprises to annual financial
statements for fiscal years beginning after December 15, 2008. The Company
has elected this deferral and, accordingly, will be required to adopt FIN
48 in its 2009 annual financial statements. Prior to adoption of FIN 48,
the Company will continue to evaluate its uncertain tax positions and
related tax contingencies under Statement No. 5, Accounting for
Contingencies (SFAS No. 5). SFAS No. 5 requires the Company to accrue for
losses it believes are probable and can be reasonably estimated.
Management is currently assessing the impact of FIN 48 on its
financial position and results of operations and has not yet determined if
the adoption of FIN 48 will have a material effect on its financial
statements.
In September 2006, the FASB issued Statement of Financial Accounting
Standards No. 157, Fair Value Measurements (SFAS No. 157). SFAS No. 157
defines fair value, establishes a framework for measuring fair value and
expands disclosures about fair value measurement. The Statement also
emphasizes that fair value is a market-based measurement, not an
entity-specific measurement and sets out a fair value hierarchy with the
highest priority being quoted prices in active markets. Under the
Statement, fair value measurements are disclosed by level within that
hierarchy. In February 2008, the FASB issued FASB Staff Position No.
157-2, Effective Date of FASB Statement No. 157, which permits a one-year
deferral for the implementation of SFAS No. 157 with regard to
nonfinancial assets and liabilities that are not recognized or disclosed
at fair value in the financial statements on a recurring basis. The
Company adopted SFAS No. 157 for the fiscal year beginning January 1,
2008, except for nonfinancial assets and nonfinancial liabilities that are
not recognized or disclosed at fair value in the financial statements on a
recurring basis for which delayed application is permitted until the
Company's year beginning January 1, 2009.
The adoption of the remaining provisions of SFAS No. 157 is not
expected to have a material impact on the Company's financial position,
results of operations or cash flows.
In September 2006, the FASB ratified Emerging Issues Task Force
(EITF) issue No. 06-4, Accounting for Deferred Compensation and
Postretirement Benefit Aspects of Endorsement Split-Dollar Life
F-10
<Page>11
Note 1 - Summary of Significant Accounting Policies - (Continued)
- -----------------------------------------------------------------
Recent Accounting Pronouncements - (Continued)
----------------------------------------------
Insurance Arrangements (EITF 06-4), and in March 2007, the FASB ratified
EITF Issue No. 06-10, Accounting for Collateral Assignment Split-Dollar
Life Insurance Arrangements (EITF 06-10). EITF 06-4 requires deferred
compensation or postretirement benefit aspects of an endorsement-type
split-dollar life insurance arrangement to be recognized as a liability by
the employer and states the obligation is not effectively settled by the
purchase of a life insurance policy. The liability for future benefits
should be recognized based on the substantive agreement with the employee,
which may be either to provide a future death benefit or to pay for the
future cost of the life insurance. EITF 06-10 provides recognition
guidance for postretirement benefit liabilities related to collateral
assignment split-dollar life insurance arrangements, as well as
recognition and measurement of the associated asset on the basis of the
terms of the collateral assignment split-dollar life insurance
arrangement. EITF 06-4 and EITF 06-10 were effective for fiscal years
beginning after December 15, 2007.
The adoption of this statement did not have a material impact on the
Company's financial position, results of operations or cash flows. See
Note 19 for further information.
In February 2007, FASB issued Statement No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities. Statement No. 159
permits companies to elect to follow fair value accounting for certain
financial assets and liabilities in an effort to mitigate volatility in
earnings without having to apply complex hedge accounting provisions. The
standard also establishes presentation and disclosure requirements
designed to facilitate comparison between entities that choose different
measurement attributes for similar types of assets and liabilities. The
Statement was effective for fiscal years beginning after November 15,
2007.
The adoption of this Statement did not have a material impact on the
Company's financial position, results of operations or cash flows.
In December 2007, the FASB issued Statement of Financial Accounting
Standards No. 141R, Business Combinations (SFAS No. 141 (R)) and Statement
of Financial Accounting Standards No. 160, Noncontrolling Interests in
Consolidated Financial Statements, and Amendment of ARB No. 51 (SFAS No.
160). These new standards significantly change the accounting for and
reporting of business combination transactions and noncontrolling
interests (previously referred to as minority interests) in consolidated
financial statements. Both standards are effective for fiscal years
beginning on or after December 15, 2008, with early adoption prohibited.
The effects of SFAS No. 141 (R) on the Company's financial
statements will depend on the nature and significance of any acquisitions
subject to SFAS No. 141 (R). The adoption of SFAS No. 160 is not expected
to have a material impact on the Company's financial position, results of
operations or cash flows.
In March 2008, the FASB issued Statement of Financial Accounting
Standards No. 161, Disclosures about derivative Instruments and Hedging
Activities - an amendment of FASB Statement No. 133 (SFAS No. 161). SFAS
No. 161 requires additional disclosures about the objectives of using
derivative instruments, the method by which the derivative instruments and
related hedged items are accounted for under Statement No. 133 and its
F-11
<Page>12
Note 1 - Summary of Significant Accounting Policies - (Continued)
- -----------------------------------------------------------------
Recent Accounting Pronouncements - (Continued)
----------------------------------------------
related interpretations, and the effect of derivative instruments and
related hedged items on financial position, financial performance and cash
flows. SFAS No. 161 also requires disclosure of the fair values of
derivative instruments and their gains and losses in a tabular format.
SFAS No. 161 is effective for fiscal years and interim periods beginning
after November 15, 2008, or the Company's quarter ended March 31, 2009. As
this pronouncement is only disclosure-related, it will not have an impact
on the Company's financial position and results of operations.
In December 2008, the FASB issued Staff Position No. 132(R)-1,
Employers' Disclosures about Postretirement Benefit Plan Assets (FSP FAS
132(R)-1). FSP FAS 132(R)-1 requires more detailed disclosures about
employers' plan assets in a defined benefit pension or other
postretirement plan, including employers' investment strategies, major
categories of plan assets, concentrations of risk within plan assets, and
inputs and valuation techniques used to measure the fair value of plan
assets. FSP FAS 132(R)-1 also requires, for fair value measurements using
significant unobservable inputs (Level 3), disclosure of the effect of the
measurement on changes in plan assets for the period. The disclosures
about plan assets required by FSP FAS 132(R)-1 must be provided for fiscal
years ending after December 15, 2009. As this pronouncement is only
disclosure-related, it will not have an impact on the Company's financial
position and results of operations.
Note 2 - Investment Securities
- ------------------------------
The amortized cost and fair values of investment securities at December
31, 2008 and 2007, are as follows:
<Table>
<Caption>
2008
--------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
------------ ------------ ----------- ------------
U.S. Government agencies
and corporations $ 7,500,067 $ 93,388 $ - $ 7,593,455
State and political subdivions 30,222,363 63,339 974,102 29,311,600
Mortgage-backed securities 711,322 1,936 4,368 708,890
Corporate securities 2,250,466 1,226 518,867 1,732,825
------------ ------------ ----------- ------------
Subtotal 40,684,218 159,889 1,497,337 39,346,770
Equity Securities 685,904 - - 685,904
------------ ------------ ----------- -------------
Total available-for-sale $41,370,122 $159,889 $1,497,337 $40,032,674
============ ============ =========== =============
</Table>
F-12
<Page>13
Note 2 - Investment Securities - (Continued)
- --------------------------------------------
<Table>
<Caption>
2007
--------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
------------ ------------ ----------- ------------
U.S. Government agencies
and corporations $ 8,001,262 $ 54,049 $ - $ 8,055,311
State and political subsdivisions 31,045,889 106,808 93,763 31,058,934
Mortgage-backed securities 863,447 474 12,697 851,224
Corporate securities 2,251,246 24,894 100,018 2,176,122
------------ ------------ ----------- ------------
Subtotal 42,161,844 186,225 206,478 42,141,591
Equity securities 508,604 - - 508,604
------------ ------------ ----------- ------------
Total available-for-sale $42,670,448 $ 186,225 $ 206,478 $42,650,195
============ ============ =========== ============
</Table>
Equity securities, at December 31, 2008 and 2007, consisted primarily of
Federal Home Loan Bank stock, which is a required investment in order to
participate in an available line of credit program. The stock is stated at par
value as there is no readily determinable fair value.
The amortized cost and fair value of debt securities at December 31, 2008
by contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
<Table>
<Caption>
Amortized Fair
Cost Value
----------- -----------
Due in one year $ 1,000,466 $ 941,140
Due after one year through five years 3,800,067 3,821,391
Due after five years through ten years 10,832,674 10,820,673
Due after ten years 24,339,689 23,054,676
----------- -----------
Subtotal 39,972,896 38,637,880
Mortgage-backed securities 711,322 708,890
----------- -----------
Total $40,684,218 $39,346,770
=========== ===========
</Table>
In 2008 and 2007, proceeds from sales of securities available-for-sale
were $4,609,312 and $4,522,806 respectively. Gross gains and losses of $24,407
and $4,606, respectively, were realized on the sales during 2008. Gross gains
and losses of $5,785 and $18,680, respectively, were realized on the sales
during 2007.
Investment securities with an amortized cost and fair value of $11,706,841
and $11,527,464 at December 31, 2008, and $12,793,208 and $12,800,069 at
December 31, 2007, were pledged to secure public deposits and for other
purposes, as required by law.
F-13
<Page>14
Note 2 - Investment Securities - (Continued)
- --------------------------------------------
The gross fair value and unrealized losses of the Bank's investments,
aggregated by investment category and length of time that individual securities
have been in a continuous unrealized loss position, are as follows:
<Table>
<Caption>
December 31, 2008
----------------------------------------------------------------------------
Less Than Twelve Months
Twelve Months Or More Totals
---------------------- ------------------------- ------------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses
---------- ----------- ----------- ----------- ----------- ------------
State and political subdivisions $4,182,787 $224,632 $14,505,416 $ 749,470 $18,688,203 $ 974,102
Mortgage backed securities - - 125,100 4,368 125,100 4,368
Corporate securities - - 1,231,685 518,867 1,231,685 518,867
---------- ----------- ----------- ----------- ----------- ------------
Total $4,182,787 $224,632 $15,862,201 $1,272,705 $20,044,988 $1,497,337
========== =========== =========== =========== =========== ============
</Table>
<Table>
<Caption>
December 31, 2008
----------------------------------------------------------------------------
Less Than Twelve Months
Twelve Months Or More Totals
---------------------- ------------------------- ------------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses
---------- ----------- ----------- ----------- ----------- ------------
State and political subdivisions $1,293,194 $ 1,762 $16,569,087 $ 92,001 $17,862,281 $ 93,763
Mortgage backed securities 9,939 2 781,189 12,695 791,128 12,697
Corporate securities - - 1,149,983 100,018 1,149,983 100,018
---------- ----------- ----------- ----------- ----------- ------------
Total $1,303,133 $ 1,764 $18,500,259 $ 204,714 $19,803,392 $ 206,478
========== =========== =========== =========== =========== ============
</Table>
The table above, at December 31, 2008, includes 11 securities that have
unrealized losses for less than twelve months and 37 securities that have been
in an unrealized loss position for twelve or more months.
F-14
<Page>15
Note 2 - Investment Securities - (Continued)
- --------------------------------------------
State and political subdivisions - The unrealized losses on the Bank's
State and political subdivision obligations were caused by interest rate
fluctuations along with unamortized premiums. The contractual terms of these
investments do not permit the issuer to settle the securities at a price less
than par value at the earliest call date. Since the Bank amortizes any premium
to the earliest call date and has the ability to hold these investments until a
recovery of fair value, which may be maturity, the Bank does not consider these
investments to be other-than-temporarily impaired at December 31, 2008.
Mortgage-backed securities - The unrealized losses on the Bank's
mortgage-backed securities were caused by interest rate fluctuations along with
the unamortized premium. The Bank amortizes the premium to expected maturity and
adjusts for unusual prepayments. Since the Bank has the ability to hold this
security to maturity and the decline in market is attributable to interest rate
changes, the Bank does not consider this investment to be other-than-temporarily
impaired at December 31, 2008.
Corporate securities - The unrealized losses on the Bank's corporate
securities consist of three securities, all at par value, and were caused by
interest rate fluctuations. The contractual terms of these investments do not
permit the issuer to settle the securities at a price less than par value. Since
the Bank has the ability to hold these investments until a recovery of fair
value, which may be maturity, the Bank does not consider these investments to be
other-than-temporarily impaired at December 31, 2008. One of the securities has
been in an unrealized loss position for in excess of sixty months and has an
unrealized loss of approximately $449,900 at December 31, 2008, however, the
security has passed its initial call date of August 2003.
Note 3 - Loans
- --------------
Major classification of loans are as follows:
<Table>
<Caption>
December 31,
------------------------------
2008 2007
------------ ------------
Real estate loans $ 78,823,847 $ 68,211,137
Commercial and industrial loans 55,693,155 58,055,156
Tax-exempt obligations 3,181,405 2,629,097
Installment loans 32,097,008 28,573,207
------------ ------------
169,795,415 157,468,597
Less: Unearned income on loans 6,063 9,672
------------ ------------
Loans, net of unearned income $169,789,352 $157,458,925
============ ============
</Table>
F-15
<Page>16
Note 3 - Loans - (Continued)
- ----------------------------
At December 31, 2008 and 2007, the Bank had total recorded investments in
impaired loans of $2,461,152 and $363,639, respectively. The average balance of
these loans amounted to approximately $1,412,396 and $327,675 for the years
ended December 31, 2008 and 2007, respectively. The allowance for loan losses
related to impaired loans amounted to approximately $555,100 and $52,200 at
December 31, 2008 and 2007, respectively. Interest income, recorded as received,
amounted to $9,980 and $20,528 during 2008 and 2007, respectively.
The Bank has no commitments to loan additional funds to the borrowers
whose loans are considered to be impaired.
Note 4 - Allowance for Loan Losses
- ----------------------------------
Changes in the allowance for loan losses are as follows:
<Table>
<Caption>
Years Ended December 31,
------------------------------
2008 2007
------------ ------------
Balance, beginning of year $1,868,708 $1,933,566
Provisions charged to operations 300,000 150,000
Loans charged-off (746,700) (223,138)
Recoveries 6,592 8,280
------------ ------------
Balance, end of year $1,428,600 $1,868,708
============ ============
</Table>
Note 5 - Bank Premises and Equipment
- ------------------------------------
A summary of the bank premises and equipment is as follows:
<Table>
<Caption>
December 31,
------------------------------
2008 2007
------------ ------------
Land $ 353,975 $ 353,975
Bank premises and improvements 2,996,065 2,932,085
Furniture and equipment 2,929,207 2,903,333
------------ ------------
6,279,247 6,189,393
Less: Accumulated depreciation 4,578,650 4,434,171
------------ ------------
Net bank premises and equipment $1,700,597 $1,755,222
============ ============
</Table>
Depreciation charged to income was $144,479 and $120,171 during the years
ended December 31, 2008 and 2007, respectively.
F-16
<Page>17
Note 6 - Other Real Estate Owned
- --------------------------------
Real estate acquired through foreclosure is recorded at the lower of cost
or market at the time of acquisition, based on appraisals of the real estate
involved. Other real estate owned, which includes real estate sales contracts,
at December 31, 2008 and 2007 was $210,145 and $102,174, respectively.
Additional costs associated with holding the properties are expensed as
incurred.
Note 7 - Cash Surrender Value of Life Insurance
- -----------------------------------------------
The Bank has purchased Bank Owned Life Insurance (BOLI) policies on
certain directors and officers.
The policies are split-dollar life insurance policies which provide for
the Bank to receive the cash value of the policy and to split the residual
proceeds with the director/officer's designated beneficiary upon the death of
the insured.
Note 8 - Deposits
- -----------------
Deposits are summarized as follows:
<Table>
<Caption>
December 31,
------------------------------
2008 2007
------------ ------------
Demand deposits - non interest bearing $ 27,413,367 $29,464,741
NOW accounts 17,593,593 18,143,685
Money market accounts 6,414,747 10,083,170
Savings deposits 33,529,592 34,305,299
Time certificates 95,506,256 88,210,494
------------ ------------
Total deposits $180,457,555 $180,207,389
============ ============
</Table>
The aggregate amounts of certificates of deposit of $100,000 or more were
$31,609,697 and $29,557,625 at December 31, 2008 and 2007, respectively.
Interest expense related to these certificates of deposit was $1,111,213
and $1,297,427 in 2008 and 2007, respectively.
The scheduled maturities of time deposits at December 31, 2008, are as
follows:
<Table>
<Caption>
2009 $ 67,184,633
2010 16,370,639
2011 6,458,179
2012 2,614,689
2013 2,878,116
-------------
Total $ 95,506,256
=============
</Table>
F-17
<Page> 18
Note 9 - Short-Term Borrowings
- ------------------------------
A summary of aggregate short-term borrowings for the years ended December
31, 2008 and 2007, respectively, is as follows:
<Table>
<Caption>
2008 2007
------------ ------------
Amount outstanding at year-end $7,500,000 $ -
Average interest rate at year-end 0.72% -
Maximum amount outstanding at any month-end $8,620,000 $4,375,000
Average amount outstanding $2,105,545 $ 734,270
Average interest rate:
Federal funds purchased 2.37% 5.26%
Federal Home Loan Bank advance 2.16% 5.32%
</Table>
Federal funds purchased and Federal Home Loan Bank advances generally
mature within six months from the transaction date.
The Bank has an approved Maximum Borrowing Capacity of $81,650,000 with
the Federal Home Loan Bank (FHLB) and an approved Borrowing Facility of
$6,000,000 with the Atlantic Central Bankers Bank (ACBB). The Bank is required
to purchase and maintain stock in the FHLB and pledge a general assignment of
its assets as guarantee for the maximum borrowing capacity. The Bank is also
required to purchase and maintain stock in and maintain a corresponding banking
relationship with the ACBB as a guarantee for the borrowing facility.
Note 10 - Accumulated Other Comprehensive Income
- ------------------------------------------------
Accumulated other comprehensive income of ($882,715) and ($13,367) at
December 31, 2008 and 2007, respectively, consisted entirely of unrealized gains
or losses on available-for-sale securities, net of tax.
A reconciliation of other comprehensive income for the years ended
December 31, 2008 and 2007 is as follows:
<Table>
<Caption>
2008
--------------------------------------
Tax
Before-Tax (Expense) Net-of-Tax
Amount Benefit Amount
------------ ---------- ----------
Unrealized losses on available-for-sale
securities:
Unrealized holding losses arising during
the year ($1,336,996) $ 454,579 ($882,417)
Less: Reclassification adjustment for
losses realized in net income 19,801 (6,732) 13,069
------------ ----------- ----------
Net unrealized gains ($1,317,195) 447,847 (869,348)
------------ ----------- ----------
Other comprehensive income ($1,317,195) $ 447,847 ($869,348)
============ =========== ==========
</Table>
F-18
<Page>19
Note 10 - Accumulated Other Comprehensive Income - (Continued)
- --------------------------------------------------------------
<Table>
<Caption>
2008
---------------------------------------
Tax
Before-Tax (Expense) Net-of-Tax
Amount Benefit Amount
------------ ------------ ------------
Unrealized gains on available-for-sale
securities:
Unrealized holding gains arising during
the year $ 66,850 ($22,729) $ 44,121
Less: Reclassification adjustment for
losses realized in net income (12,895) 4,384 (8,511)
------------ ------------ ------------
Net unrealized gains 79,745 (27,113) 52,632
------------ ------------ ------------
Other comprehensive income $ 79,745 ($27,113) $ 52,632
============ ============ ============
</Table>
Note 11 - Profit Sharing Plan
- -----------------------------
The Bank sponsors a 401(k) deferred compensation and profit sharing plan
for eligible employees. Eligible employees may elect deferrals of up to the
maximum amounts permitted by law. The Bank's contributions to the plan are made
at the discretion of the Board of Directors based on includable compensation.
The Bank's expenses for the plan were $208,000 and $250,000 for the years
ended December 31, 2008 and 2007, respectively.
Note 12 - Income Taxes
- ----------------------
The total income taxes in the Statements of Income are as follows:
<Table>
<Caption>
Years Ended December 31,
------------------------------
2008 2007
------------ ------------
Current provision $ 451,668 $ 626,841
Deferred tax provision 113,332 29,159
------------ ------------
Total $ 565,000 $ 656,000
============ ============
</Table>
F-19
<Page>20
Note 12 - Income Taxes - (Continued)
- ------------------------------------
A reconciliation of income taxes at statutory rates to applicable income
taxes reported in the Statements of Income is as follows:
<Table>
<Caption>
Years Ended December 31,
------------------------------
2008 2007
------------ ------------
Provisions at statutory rates on pretax income $ 1,048,770 $ 1,263,750
Add (deduct) tax effect of:
Non-taxable interest income (538,953) (569,275)
Non-taxable life insurance proceeds - (100,327)
Non-deductible interest expense 47,953 57,665
Other items, net 7,230 4,187
------------ ------------
Applicable income taxes $ 565,000 $ 656,000
============ ============
</Table>
The components of the net deferred tax provision are as follows:
<Table>
<Caption>
Years Ended December 31,
------------------------------
2008 2007
------------ ------------
Provisions for loan losses $ 149,637 $ 22,052
Depreciation 17,452 33,149
Alternative minimum tax (53,235) (25,764)
Other (522) (278)
------------ ------------
Total $ 113,332 $ 29,159
============ ============
</Table>
The significant components of deferred tax assets and liabilities are as
follows:
<Table>
<Caption>
Years Ended December 31,
------------------------------
2008 2007
------------ ------------
Deferred tax assets:
Allowance for loan losses $ 291,471 $ 441,108
Unrealized securities losses 454,732 6,886
Alternative minimum tax 78,999 25,764
------------ ------------
Total deferred tax assets 825,202 473,758
------------ ------------
Deferred tax liabilities
Depreciation 107,073 89,621
Other 2,904 3,426
------------ ------------
Total deferred tax liabilities 109,977 93,047
------------ ------------
Net deferred tax asset $ 715,225 $ 380,711
============ ============
</Table>
In management's opinion, the deferred tax assets are realizable as the
Bank has a history of taxable income and a carryback potential greater than the
deferred tax assets. Management is not aware of any evidence that would preclude
the Bank from realizing the benefit in the future and, accordingly, has not
established a valuation allowance against the deferred tax assets.
F-20
<Page>21
Note 13 - Fair Value of Financial Instruments
- ---------------------------------------------
General
-------
Statement of Financial Accounting Standards No. 107, "Disclosures
about Fair Value of Financial Instruments" (SFAS 107), requires the
disclosure of the estimated fair value of on and off-balance sheet
financial instruments. For Old Forge Bank, as for most financial
institutions, in excess of 90% of its assets and liabilities are
considered financial instruments as defined in SFAS 107. Many of the
Bank's financial instruments however, lack an available trading market as
characterized by a willing buyer and willing seller engaging in an
exchange transaction. It is also the Bank's general practice to hold its
financial instruments to maturity and to not engage in trading or sales
activities. Therefore, significant estimations and present value
calculations were used by the Bank for the purposes of this disclosure.
Valuation Methods and Assumptions
---------------------------------
Estimated fair values have been determined by the Bank using the
best available data, an estimation methodology suitable for each category
of financial instruments.
Financial instruments actively traded in a secondary market have
been valued using quoted available market prices. Those with stated
maturities have been valued using future cash flow with an applicable rate
approximating current market for similar assets and liabilities. Those
liabilities with no stated maturities have an estimated fair value equal
to both the amount payable on demand and the carrying amount balance. The
rate used in these calculations is the current loan rate adjusted for
non-interest operating costs, credit loss and assumed prepayment risk.
Changes in assumptions or estimation methodologies may have a
material effect on these estimated fair values.
The Bank's remaining assets and liabilities are not considered
financial instruments and have not been valued within the following table.
Accordingly, the aggregate of fair value amounts presented does not
attempt to represent the aggregate assets and liabilities of the Bank.
The carrying amount and estimated fair value of financial
instruments at December 31, 2008 and 2007 are as follows:
<Table>
<Caption>
December 31, 2008 December 31, 2007
-------------------------- --------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------------ ------------ ----------- ------------
Assets
- ------
Cash and cash equivalents $ 4,275,208 $ 4,275,208 $ 7,279,693 $ 7,279,693
Investment securities 40,032,674 40,032,674 42,650,195 42,650,195
Net loans 168,360,752 175,197,680 155,590,217 156,388,301
Liabilities
- -----------
Demand deposits 84,952,045 84,952,045 91,996,895 91,996,895
Time deposits 95,506,256 97,290,599 88,210,494 88,622,381
</Table>
F-21
<Page>22
Note 14 - Commitments and Contingent Liabilities
- ------------------------------------------------
In the normal course of business, there are outstanding commitments and
contingent liabilities, created under prevailing terms and collateral
requirements, such as commitments to extend credit and letters of credit which
are not reflected in the accompanying Financial Statements. The Bank does not
anticipate any losses as a result of these transactions. These instruments
involve, to varying degrees, elements of credit and interest rate risk in excess
of the amount recognized in the Balance Sheets. The contract or notional amounts
of these instruments reflect the extent of involvement the Bank has in
particular classes of financial instruments.
Financial instruments, whose contract amounts represent credit risk at
December 31, 2008 and 2007, are as follows:
<Table>
<Caption>
2008 2007
------------ ------------
Commitments to extend credit
Fixed rate $ 205,915 $ 2,120,110
Variable rate 9,113,846 6,690,124
Standby letters of credit 4,465,383 3,439,179
</Table>
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract. These
commitments include loans-in-process, available borrowing under commercial line
of credit agreements and available borrowing under home equity agreements.
Commitments generally have fixed expiration dates or other termination clauses
and may require a payment of a fee. Since some of the commitments are expected
to expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements.
Standby letters of credit are conditional commitments issued by the Bank
to guarantee the performance of a customer to a third party. The credit risk
involved in issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers.
Note 15 - Concentration of Credit Risk
- --------------------------------------
Most of the Bank's lending activity is with customers located in the
Bank's geographic market area and repayment is affected by economic conditions
in this market area.
The Bank may, from time to time, maintain correspondent bank balances in
excess of $100,000 each. Management is not aware of any evidence that would
indicate that such deposits are at risk.
Note 16 - Related Party Transactions
- ------------------------------------
The following table represents the indebtedness of directors, officers,
employees and companies in which they have 10 percent or more beneficial
ownership. Related party loans are granted on the same terms, including interest
rates and collateral, as those prevailing at the time of the loan for comparable
transactions with unrelated persons.
F-22
<Page>23
Note 16 - Related Party Transactions - (Continued)
- --------------------------------------------------
<Table>
<Caption>
Years Ended December 31,
------------------------------
2008 2007
------------ ------------
Balance, beginning of year $ 4,478,982 $ 4,748,140
Additions 457,885 255,827
Reductions (1,313,374) (524,985)
------------ ------------
Balance, end of year $ 3,623,493 $ 4,478,982
============ ============
</Table>
Note 17 - Restrictions that Limit the Availability of Surplus and/or Retained
- ------------------------------------------------------------------------------
Earnings for Dividend Purposes
- ------------------------------
The Pennsylvania Banking Code restricts, in all state-chartered banks, the
availability of capital funds for the payment of dividends to the Retained
Earnings of the bank. Accordingly, at December 31, 2008, the balances in the
Capital Stock and Additional Paid-in Capital accounts, totaling $6,000,000, were
unavailable for dividend payments.
Note 18 - Regulatory Matters
- ----------------------------
The Bank is subject to various regulatory capital requirements
administered by the Federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory--and possibly additional
discretionary--actions by regulators that, if undertaken, could have a direct
material effect on the Bank's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the Bank
must meet specific capital guidelines that involve quantitative measures of the
Bank's assets, liabilities, and certain off-balance sheet items as calculated
under regulatory accounting practices. The Bank's capital amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of Total Capital and Tier I Capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I Capital (as defined) to average
assets (as defined). Management believes, as of December 31, 2008, that the Bank
meets all capital adequacy requirements to which it is subject.
As of December 31, 2008, the most recent notification from the Federal
Deposit Insurance Corporation categorized the Bank as "well capitalized" under
the regulatory framework for prompt corrective action. To be categorized as
"well capitalized" the Bank must maintain minimum Total risk-based, Tier I
risk-based, and Tier I leverage ratios as set forth in the table below. There
are no conditions or events since that notification that management believes
have changed the institution's category.
F-23
<Page>24
Note 18 - Regulatory Matters - (Continued)
- ------------------------------------------
The Bank's actual capital amounts and ratios are also presented in the
table.
<Table>
<Caption>
For Capital Adequacy To Be "Well
Actual Purposes Capitalized"
---------------------- ------------------------ -----------------------
Amount Ratio Amount Ratio Amount Ratio
------------ ------- ------------- --------- ------------ ---------
December 31, 2008
Total Capital (to Risk-Weighted Assets) $35,640,000 21.2% >$13,470,720 >8.0% $16,838,400 >10.0%
- - -
Tier 1 Capital (to Risk-Weighted Assets $34,212,000 20.3% >$ 6,735,360 >4.0% $10,103,040 > 6.0%
- - -
Tier 1 Capital (to Average Assets) $34,212,000 15.4% > $8,871,160 >4.0% $11,088,950 > 5.0%
- - -
</Table>
<Table>
<Caption>
For Capital Adequacy To Be "Well
Actual Purposes Capitalized"
---------------------- ------------------------ -----------------------
Amount Ratio Amount Ratio Amount Ratio
------------ ------- ------------- --------- ------------ ---------
December 31, 2007
Total Capital (to Risk-Weighted Assets) $35,163,000 22.1% >$12,749,440 >4.0% $15,936,800 >10.0%
- - -
Tier 1 Capital (to Risk-Weighted Assets $33,294,000 20.9% >$ 6,374,720 >4.0% $ 9,562,080 > 6.0%
- - -
Tier 1 Capital (to Average Assets) $33,294,000 15.5% >$ 8,591,160 >4.0% $10,738,950 > 5.0%
- - -
</Table>
F-24
<Page>25
Note 19 - Change in Accounting Principle
- ----------------------------------------
During the year ended December 31, 2008, the Bank implemented the guidance
in Emerging Issues Task Force (EITF) Issue No. 06-4, Accounting for Deferred
Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life
Insurance Arrangements. The EITF required postretirement benefit aspects of an
endorsement-type split-dollar life insurance arrangement to be recognized as a
liability by the Bank. As allowed by the EITF, the Company recorded a charge to
Retained Earnings, as of January 1, 2008, in the amount of $87,330 to record the
accumulated liability through December 31, 2007. The Company recorded an expense
of $17,604 for the year ended December 31, 2008.
Note 20 - Agreement and Plan of Merger
- --------------------------------------
An Agreement and Plan of Merger (The Agreement) by and between Penseco
Financial Services Corporation, Penn Security Bank and Trust Company and Old
Forge Bank, dated December 5, 2008, provides for, among other things, Penseco to
acquire Old Forge Bank through a two-step merger transaction. Old Forge Bank
will be merged with and into Penn Security Bank and Trust Company. Following the
merger, Penn Security Bank and Trust Company will continue to operate as a
banking subsidiary of Penseco Financial Services Corporation.
Shareholders of Old Forge Bank will be entitled to receive the merger
consideration in either cash or shares of Penseco common stock, or any
combination thereof, subject to certain limitations and allocation procedures
set forth in the agreement. The per share amount will be calculated from the
cash consideration and the value of the stock consideration based on the Penseco
closing price, as such term is defined in the Agreement. The per share amount
will be approximately $103.76, provided that the Penseco closing price is
between $35.99 and $39.77 per share.
Penseco and Old Forge Bank have agreed to use reasonable best efforts to
obtain all regulatory approvals required to complete the transactions
contemplated by the merger agreement. These approvals include approval from the
Federal Deposit Insurance Corporation, under the Federal Bank Merger Act, and
the Pennsylvania Department of Banking under the Pennsylvania Banking Code of
1965, as well as various other regulatory authorities. The transaction is also
subject to the non-objection of the Federal Reserve Bank of Philadelphia,
because the merger involves an acquisition by a bank holding company. Old Forge
Bank and Penseco have completed the filing of applications and notifications to
obtain the required regulatory approvals.
F-25