CMTY Community Bks Millersbur (MM)

HARRISBURG, Pa., Sept. 13 /PRNewswire-FirstCall/ -- The Boards of Directors of Community Banks, Inc. (listed on the Nasdaq Global Select Market under the symbol "CMTY") (NASDAQ:CMTY) and East Prospect State Bank have unanimously approved the execution of a definitive agreement pursuant to which East Prospect will merge into CommunityBanks, Community Banks, Inc. subsidiary, with CommunityBanks as the surviving bank. Completion of the merger is subject to various conditions including the approval of the shareholders of East Prospect and receipt of all required regulatory approvals. The merger is expected to be consummated by the beginning of the second quarter, 2007. Community Banks, Inc., a financial holding company with $3.3 billion in assets and 73 banking offices throughout central and eastern Pennsylvania and northern Maryland, is headquartered in Harrisburg, Pennsylvania. East Prospect State Bank has one banking office in East Prospect, Pennsylvania and over $57 million in total assets. Upon consummation of the transaction, East Prospect's banking office will become a part of CommunityBanks' York Region, and its twentieth office in York County, Pennsylvania. Roger A. Nickol, President and CEO of East Prospect will join CommunityBanks' York Region Advisory Board and will serve as a consultant to CommunityBanks. The transaction provides CommunityBanks with another banking office to serve the growing population of the eastern portion of York County, Pennsylvania. Upon consummation of the transaction, customers of East Prospect will enjoy the total array of banking and financial services CommunityBanks offers. In addition to a complete line of lending and deposit services, CommunityBanks offers trust & asset management, retail investment & brokerage, title & settlement, and general lines insurance services. In addition, East Prospect's customers will have access to CommunityBanks' state-of-the-art electronic banking and bill pay services. According to Eddie L. Dunklebarger, Chairman, President and CEO of Community Banks, Inc., "We are delighted to affiliate with East Prospect State Bank. Its York County heritage and customer service culture match well with CommunityBanks. We are especially pleased to offer our customers the convenience of another CommunityBanks location in eastern York County." Mr. Nickol commented that "the affiliation with CommunityBanks offers our customers the benefits of an expanded line of banking and financial services, as well as the convenience of twenty York County banking offices. Our employees will now have the opportunities presented by the larger organization, and our shareholders will enjoy access to trades on the NASDAQ. As such, we feel this transaction clearly provides important benefits to our customers, employees and shareholders alike." Community will acquire all of the outstanding shares of East Prospect common stock for a total purchase price of approximately $21.5 million. The purchase price is based on a fixed price of $565.80 per share in cash, or shares of Community common stock having an approximate value of $565.80 with the precise exchange ratio to be established at closing based on Community's stock price prior to completion of the merger. The number of shares of Community common stock that an East Prospect shareholder would receive may change by the date that the merger is completed, based on changes in the price of Community's common stock, up to a maximum of 27.5752 shares. Community will pay a minimum of 50% and a maximum of 75% of the purchase price in shares of Community common stock, and the remainder of the purchase price will be paid in cash. East Prospect shareholders will be able to elect whether to receive stock, cash or a combination of stock and cash for their shares of East Prospect common stock, subject to the allocation and proration procedures in the merger agreement. The amount of cash to be paid for each share of East Prospect common stock will not change. Community will decide before the proxy statement/prospectus is mailed to East Prospect shareholders the exact proportions of cash and stock to be paid to East Prospect shareholders. In any event, no less than 25% of the purchase price will be paid in cash, and no more than 75% of the purchase price will be paid in Community common stock. If elections made by East Prospect shareholders are not within the determined proportions, Community will have the authority to reallocate the elections on a proportionate basis. Mette, Evans, and Woodside of Harrisburg provided legal counsel to Community. Ryan Beck & Co, Inc. acted as financial advisor to East Prospect, and Buchanan Ingersoll & Rooney PC acted as East Prospect's legal counsel. This press release contains "forward-looking" information as defined by the Private Securities Litigation Reform Act of 1995, which is based on Community's and East Prospect's current expectations, estimates and projections about future events and financial trends affecting the financial condition of the businesses. These statements are not historical facts or guarantees of future performance, events, or results. Such statements involve potential risks and uncertainties and, accordingly, actual performance results may differ materially. Community and East Prospect undertake no obligation to publicly update or revise forward-looking information, whether as a result of new, updated information, future events, or otherwise. The following disclosure is made in accordance with Rules 165 and 14a-12 of the Securities and Exchange Commission ("SEC"). Community urges the shareholders of East Prospect State Bank, as well as other investors, to read the proxy statement/prospectus that will be included in the registration statement on Form S-4 which Community will file with the SEC in connection with the proposed merger. The proxy statement/prospectus will contain important information about Community, East Prospect, the merger, the persons soliciting proxies in the merger and their interests in the merger and related matters. After the proxy statement/prospectus is filed with the SEC, it will be available for free on the SEC's web site at http://www.sec.gov/. It will also be available for free from Community and East Prospect. You may direct such a request to either of the following persons: Patricia E. Hoch Roger A. Nickol Senior Vice President and Secretary President and Chief Executive Officer 777 East Park Drive 1 South Main Street Harrisburg, Pennsylvania 17111 East Prospect, Pennsylvania 17317 Phone: (717) 920-1698 Phone: (717) 252-1511 In addition to the proposed registration statement and proxy statement/prospectus, Community files annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information filed by Community at the SEC's public reference rooms at 100 F Street, NE, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Community's filings with the SEC are also available to the public from commercial document-retrieval services and for free on the SEC's web site at http://www.sec.gov/. Because the shares of East Prospect's common stock are not registered under the Securities Exchange Act of 1934, East Prospect does not file reports or proxy statements with the SEC. However, East prospect does file quarterly and annual financial statements with the FDIC, and publicly available information contained in such reports is available on the FDIC's website at http://www.fdic.gov/. Community and East Prospect and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies with respect to the transactions contemplated by the merger agreement. Information concerning Community's officers and directors is included in Community's proxy statement for its annual meeting of shareholders in 2006, previously filed with the SEC. The proxy statement is available for free on the SEC's website at http://www.sec.gov/ and at no charge from Community. You may direct a request for the proxy statement to the Community officer identified above. DATASOURCE: Community Banks, Inc. CONTACT: Eddie L. Dunklebarger, Chairman, President and CEO, Community Banks, +1-717-920-5800 or Roger A. Nickol, President and CEO, East Prospect State Bank, +1-717-252-1511 Web site: http://www.communitybanks.com/

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