Mars National Bank Announces Earnings

December 3, 2012

MARS, PENNSYLVANIA – Mars National Bank (OTCQB:  MNBP) announced today that for the nine months ended September 30, 2012, the Bank earned $871,000 as compared to $1,265,000 for the same period in the prior year, a decrease of $394,000 or 31.1%.  This decrease primarily relates to the historically low interest rate environment, limited commercial lending opportunities, low reinvestment yields and continued growth of deposits.  Net interest income decreased $600,000 or 7.9%.  Net interest spread and net interest margin equaled 2.93% and 3.07% in 2012, respectively, as compared to 3.15% and 3.32%, respectively, in 2011.

Loans outstanding declined to $140.6 million at September 30, 2012 as compared to $148.7 at December 31, 2011 while deposits grew to $315.5 million at September 30, 2012 from $303.6 million at December 31, 2011.

The provision for loan losses totaled $15,000 for the nine months ended September 30, 2012 as compared to $90,000 for the same period in 2011.  This was reflective of the Bank’s strong credit quality position with delinquencies at 0.59% of total loans and the allowance for loan losses to loans coverage at 1.46%.

Non-interest income was higher by $31,000 for the nine months ended September 30, 2012.  Included in non-interest income were recognized gains on sale of available for sale securities of $279,000 in 2012 as compared to gains of $248,000 for the nine months ended September 30, 2011.

Non-interest expense decreased $84,000 or 1.1% for the nine months ended September 30, 2012, primarily related to the active management of salaries, benefits and occupancy costs.

The Bank recognized tax expense of $15,000 for the nine months ended September 30, 2012 as compared to a tax expense of $31,000 for the same period in the prior year.

Following are additional highlights related to the financial performance of the Bank.

FINANCIAL HIGHLIGHTS

2012 2011 Change
For the Nine Months Ended September 30,
(dollars in thousands, except per share data; unaudited)

EARNINGS
Net interest income $7,019 $7,619 -7.9%
Provision for loan losses 15 90 -83.3%
Non-interest income 1,454 1,423 2.2%
Non-interest expense 7,572 7,656 -1.1%
Income taxes 15 31 -52.1%
Net income 871 1,265 -31.1%

SHARE DATA
Earnings per share $10.89 $15.81 -31.1%

PERFORMANCE RATIOS
Return on average assets 0.34% 0.50% -16bps
Return on average equity 3.14% 4.73% -159bps
Net interest margin 3.07% 3.32% -25bps
Efficiency ratio 89.36% 84.67% 469bps
At September 30 and December 31,
(dollars in millions, except per share data; unaudited)

BALANCE SHEET
Assets $354.2 $342.2 3.5%
Loans 140.6 148.7 -5.5%
Deposits 315.5 303.6 3.9%
Stockholders’ equity 37.3 37.3 0.1%

CAPITAL
Book value per share $466.52 $465.87 0.1%
Total risk-based capital ratio 21.24% 20.25% 99bps

CREDIT QUALITY
Delinquent loans $1.0 $0.9 6.2%
Nonaccrual loans 2.3 2.6 -11.1%
Delinquent loans/loans 0.59% 0.52% 7bps
Nonaccrual loans/loans 1.65% 1.76% -11bps
Allowance for loan losses/loans 1.46% 1.38% 8bps