Community Banks (CMTY) DEFA14A Additional proxy soliciting materials

Exhibit 99.1

FOR IMMEDIATE RELEASE

Date:                July 18, 2007

Contact:            Donald F. Holt, EVP/CFO

(717) 920-5801, Fax (717) 920-1683

COMMUNITY RETURNS TO POSITIVE EARNINGS TREND

Harrisburg, PA- Community Banks, Inc. (“Community”) (Listed on NASDAQ: CMTY) today reported second quarter net income of $10.9 million, including per share earnings of $0.44, which was equal to the performance recorded in the same period one year earlier.  Net income and earnings per share for the first six months of 2007, however, were hampered by the March 31, 2007, recognition of securities losses that were attributed to Community’s portfolio restructuring initiative in the first quarter.  The first quarter investment losses reduced year-to-date net income and earnings per share by $2.9 million and $0.12, respectively.  Primarily as a result of the restructuring charge, year-to-date earnings per share performance for the first half of 2007 declined to $0.72 versus $0.88 for the first six months of 2006. The losses stemming from that initiative facilitated the reinvestment of investment sale proceeds into higher-yielding securities and contributed to the turnaround in second quarter earnings.

On May 1, 2007, Community announced the signing of a definitive merger agreement with Susquehanna Bancshares, Inc., ("Susquehanna") pursuant to which Community will be merged with Susquehanna in a stock and cash transaction that was valued at approximately $860 million. Under the terms of the merger agreement, shareholders of Community will be entitled to elect to receive for each share of Community common stock they own, either $34.00 in cash or 1.48 shares of Susquehanna common stock. Community shareholders may elect to receive cash for some shares and stock for others, but all shareholder elections will be subject to allocation procedures that will result in the exchange of 90 percent of Community's common shares outstanding for shares of Susquehanna common stock and the remaining 10 percent of Community common shares outstanding for cash.  The transaction will consolidate the companies' presence in southeastern Pennsylvania and the Mid-Atlantic region, particularly in the attractive York and Lancaster markets. The combined company will have over $12 billion in assets and approximately $2 billion in market capitalization, making it the 45th largest bank holding company in the United States.

"We remain steadfast in our efforts to favorably position the Community franchise even as we continue to prepare for our upcoming affiliation with Susquehanna,” commented Eddie L. Dunklebarger, President and Chief Executive Officer.  “Our return to more customary earnings trends in the second quarter is a tangible barometer of the efforts of our employees leading up to our expected merger later this year.  We are also seeing some signs of a return to a more normalized interest rate environment, which we believe will help with our efforts to improve earnings over the next several months.”

Community completed two mergers of its own effective April 1, 2007, and the results for the second quarter of 2007 reflect the combined results of both BUCS Financial Corp (BUCS) and East Prospect State Bank (East Prospect).  BUCS’ four branches, located primarily in central Maryland, and East Prospect's single banking office in York County, have provided an important market extension into the desirable, adjacent Maryland market and bolstered Community’s position in the vibrant York County, Pennsylvania, market.  With the completion of the two mergers, Community’s operating footprint boasts assets of $3.8 billion and 81 banking offices that extend throughout the center of Pennsylvania from the Pocono region into suburban Baltimore, Maryland.  Community Banks, Inc., is the 8^th largest financial services holding company headquartered in Pennsylvania and the largest financial institution headquartered in its capital city of Harrisburg.

Community Banks, Inc. • 777 East Park Drive, 2nd Floor • Harrisburg, PA 17111 • Phone 717-920-5800

Comparisons of operating performance in the second quarter are slightly distorted by the impact of the two mergers that occurred on April 1, 2007.  However, a number of performance metrics serve to illustrate the more favorable operating results in the second quarter.  Net interest margin, a primary driver of net interest income performance, remained stable at 3.72% despite the presence of a flat yield curve through most of the period.  At the same time, non-interest income as a percent of total income improved to 26.8% compared to 24.9% in the first quarter of 2007 as Community continues its efforts to expand other sources of revenue.  The efficiency ratio, which expresses non-interest expenses as a percent of total revenues, remained below 60%, at 58.2%, and served to illustrate Community’s ongoing efforts to keep operating expenses in line with revenue performance.  Loan, total asset and deposit growth were all in the 11% to 12% range, though approximately half of the growth was attributed to the additional loans, assets and deposits brought on in the mergers.  Nonetheless core growth in each of these categories was in the 5% to 6% range.

Community experienced increases in the level of non-accrual loans, which grew from $12.5 million at December 31, 2006 to $19.0 million at June 30, 2007.  Nearly one-half of the increase related to two seasoned credits which have been monitored over the past year.  These loans are deemed to be adequately secured by underlying real estate collateral.  A portion of the remaining increase was related to the absorption of the merged banks into Community’s stringent loan classification process.

This press release contains “forward looking” information as defined by the Private Securities Litigation Reform Act of 1995, which is based on Community’s current expectations, estimates and projections about future events and financial trends affecting the financial condition of its business.  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 undertakes no obligation to publicly update or revise forward looking information, whether as a result of new, updated information, future events, or otherwise.

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COMMUNITY BANKS, INC.
Selected Financial Information
(Dollars in thousands, except per share data) (1)
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Consolidated Summary of Operations:
Interest income	$	56,703		$	48,938		$	108,942		$	95,827
Interest expense		28,124			21,931			54,096			41,956
Net interest income		28,579			27,007			54,846			53,871
Provision for loan losses		700			650			2,000			1,150
Net interest income after provision for loan losses		27,879			26,357			52,846			52,721
Non-interest income:
Investment management and trust services		1,603			1,088			3,048			2,101
Service charges on deposit accounts		4,677			2,855			7,673			5,386
Other service charges, commissions, and fees		2,257			1,903			4,285			3,603
Investment security gains (losses)		---			6			(4,388	)		289
Trading activities losses		(34	)		---			(34	)		---
Insurance premium income and commissions		1,063			1,117			2,239			2,045
Mortgage banking activities		694			580			1,242			1,048
Earnings on investment in life insurance		756			675			1,444			1,331
Other		232			319			823			1,124
Total non-interest income		11,248			8,543			16,332			16,927
Non-interest expenses:
Salaries and employee benefits		13,069			11,251			25,078			22,669
Net occupancy and equipment expense		3,980			3,386			7,774			6,898
ATM user fees		774			556			1,387			839
Marketing expense		552			265			1,057			840
Telecommunications expense		612			566			1,137			1,117
Amortization of intangibles		811			702			1,472			1,356
Other		4,693			3,972			8,727			7,512
Total non-interest expenses		24,491			20,698			46,632			41,231
Income before income taxes		14,636			14,202			22,546			28,417
Income taxes		3,686			3,698			5,009			7,344
Net income	$	10,950		$	10,504		$	17,537		$	21,073
Net loan charge-offs	$	1,389		$	172			1,936		$	327
Net interest margin (FTE)		3.72	%		3.94	%		3.73	%		3.96	%
Efficiency ratio  (2)		58.17	%		56.18	%		58.24	%		56.07	%
Return on average assets		1.15	%		1.24	%		0.96	%		1.25	%
Return on average stockholders’ equity		8.41	%		8.95	%		7.01	%		8.95	%
Net operating (tangible) income  (3)	$	11,478		$	10,960		$	18,493		$	21,954
Operating return on average tangible assets  (3)(4)		1.31	%		1.40	%		1.09	%		1.42	%
Operating return on average tangible equity  (3)(4)		18.72	%		20.59	%		15.69	%		20.35	%
Consolidated Per Share Data:
Basic earnings per share	$	0.44		$	0.44		$	0.73		$	0.88
Diluted earnings per share	$	0.44		$	0.44		$	0.72		$	0.88
Book value at end of period	$	20.85		$	19.86		$	20.85		$	19.86
Tangible book value at end of period  (4)	$	9.66		$	8.91		$	9.66		$	8.91

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COMMUNITY BANKS, INC.

Selected Financial Information

(Dollars in thousands, except per share data) ⁽¹⁾

Consolidated Balance Sheet Data:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2007		2006		2007		2006
Average total loans	$	2,574,074	$	2,312,900		2,489,770		2,301,503
Average earning assets		3,324,514		2,944,353		3,211,794		2,941,569
Average assets		3,805,794		3,391,908		3,675,714		3,387,583
Average tangible assets  (4)		3,526,844		3,132,905		3,406,643		3,128,736
Average deposits		2,660,111		2,381,141		2,561,673		2,341,738
Average stockholders’ equity		522,409		470,695		504,767		474,580
Average tangible equity  (4)		245,927		213,528		237,705		217,518
Average diluted shares outstanding		24,962,130		23,858,269		24,349,576		24,028,229

										6/30/2007
										vs.
	June 30,			December 31,			June 30,			6/30/2006
	2007			2006			2006			% Change
Assets	$	3,750,844		$	3,496,370		$	3,385,599			11	%
Total loans		2,567,638			2,370,889			2,344,677			10	%
Deposits		2,608,164			2,513,182			2,406,551			8	%
Stockholders’ equity		517,193			486,161			465,760			11	%
Common shares outstanding		24,805,534			23,519,041			23,455,475			6	%
Non-accrual loans	$	19,032		$	12,545		$	11,492			66	%
Loans renegotiated with borrowers		665			---			108			516	%
Foreclosed real estate		2,122			37			108		NM
Total non-performing assets		21,819			12,582			11,708			86	%
Accruing loans 90 days past due		64			659			621			(90	)%
Total risk elements	$	21,883		$	13,241		$	12,329			77	%
Allowance for loan losses	$	25,010		$	23,626		$	23,788			5	%
Asset Quality Ratios:
Allowance for loan losses to total loans		0.97	%		1.00	%		1.01	%
Allowance for loan losses to non-accrual loans		131	%		188	%		207	%
Non-accrual loans to total loans		0.74	%		0.53	%		0.49	%
Non-performing assets to total assets		0.58	%		0.36	%		0.35	%
(1) Per share data reflect stock splits and stock dividends.
(2) The efficiency ratio does not include net securities transactions.
(3) Net operating (tangible) income excludes amortization of core deposit and other intangible assets, net of applicable income tax effects. A reconciliation of net income and net operating (tangible) income appears on page 5.
(4)  The difference between total assets and total tangible assets, and stockholders’ equity and tangible stockholders’ equity, represents goodwill and core deposit and other intangibles net of applicable deferred tax balances. A reconciliation of these balances appears on page 5.

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COMMUNITY BANKS, INC.

Selected Financial Information

(Dollars in thousands, except per share data)

Reconciliation of GAAP to Non-GAAP Measures ⁽¹⁾:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Income statement data:
Net income
Net income	$	10,950		$	10,504		$	17,537		$	21,073
Amortization of core deposit and other intangible assets  (1)		528			456			956			881
Net operating (tangible) income	$	11,478		$	10,960		$	18,493		$	21,954
Balance sheet data:
Average assets
Average assets	$	3,805,794		$	3,391,908		$	3,675,714		$	3,387,583
Goodwill		(263,694	)		(245,749	)		(255,095	)		(245,265	)
Core deposit and other intangible assets		(15,256	)		(13,254	)		(13,976	)		(13,582	)
Average tangible assets	$	3,526,844		$	3,132,905		$	3,406,643		$	3,128,736
Operating return on average tangible assets		1.31	%		1.40	%		1.09	%		1.42	%
Average equity
Average equity	$	522,409		$	470,695		$	504,767		$	474,580
Goodwill		(263,694	)		(245,749	)		(255,095	)		(245,265	)
Core deposit and other intangible assets		(15,256	)		(13,254	)		(13,976	)		(13,582	)
Deferred taxes		2,468			1,836			2,009			1,785
Average tangible equity	$	245,927		$	213,528		$	237,705		$	217,518
Operating return on average tangible equity		18.72	%		20.59	%		15.69	%		20.35	%
At end of quarter:
Total assets
Total assets	$	3,750,844		$	3,385,599		$	3,750,844		$	3,385,599
Goodwill		(265,129	)		(245,056	)		(265,129	)		(245,056	)
Core deposit and other intangible assets		(14,834	)		(13,550	)		(14,834	)		(13,550	)
Total tangible assets	$	3,470,881		$	3,126,993		$	3,470,881		$	3,126,993
Total equity
Total equity	$	517,193		$	465,760		$	517,193		$	465,760
Goodwill		(265,129	)		(245,056	)		(265,129	)		(245,056	)
Core deposit and other intangible assets		(14,834	)		(13,550	)		(14,834	)		(13,550	)
Deferred taxes		2,403			1,800			2,403			1,800
Total tangible equity	$	239,633		$	208,954		$	239,633		$	208,954
Tangible book value at end of period	$	9.66		$	8.91		$	9.66		$	8.91
(1)  Net of related tax effect

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COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight – June 30, 2007
KEY RATIOS(1)
	2007						2006
	Second			First			Fourth			Third			Second
	Quarter			Quarter			Quarter			Quarter			Quarter			Annual
Diluted earnings per share	$	0.44		$	0.28		$	0.40		$	0.45		$	0.44		$	1.72
Tangible operating earnings per share (1)	$	0.46		$	0.30		$	0.41		$	0.46		$	0.46		$	1.79
Return on average assets		1.15	%		0.75	%		1.08	%		1.24	%		1.24	%		1.21	%
Return on average equity		8.41	%		5.49	%		7.74	%		8.88	%		8.95	%		8.63	%
Operating return on average tangible assets (2)		1.31	%		0.87	%		1.22	%		1.39	%		1.40	%		1.36	%
Operating return on average tangible equity(2)		18.72	%		12.40	%		17.37	%		20.31	%		20.59	%		19.57	%
Net interest margin		3.72	%		3.73	%		3.71	%		3.90	%		3.94	%		3.88	%
Non-interest income/revenues   (FTE excluding security gains)		26.80	%		24.93	%		23.83	%		23.40	%		22.76	%		22.99	%
Provision for loan losses/average loans   (annualized)		0.11	%		0.22	%		0.11	%		0.04	%		0.11	%		0.09	%
Efficiency ratio (4)		58.17	%		58.32	%		60.97	%		56.25	%		56.18	%		57.33	%
Non-performing assets to period-end loans		0.85	%		0.65	%		0.53	%		0.50	%		0.50	%
90 day past due loans to period-end loans		0.00	%		0.00	%		0.03	%		0.03	%		0.03	%
Total risk elements to period-end loans		0.85	%		0.65	%		0.56	%		0.53	%		0.53	%
Allowance for loan losses to loans		0.97	%		1.00	%		1.00	%		1.02	%		1.01	%		1.00	%
Allowance for loan losses to
non-accrual loans		131	%		155	%		188	%		207	%		207	%		188	%
Net charge-offs/average loans (annualized)		0.22	%		0.09	%		0.18	%		0.00	%		0.03	%		0.06	%
Equity to assets		13.79	%		13.52	%		13.90	%		13.98	%		13.76	%		13.90	%
Tangible equity to assets (3)		6.90	%		6.92	%		7.05	%		6.99	%		6.68	%		7.05	%
(1) Per share data reflect stock splits and stock dividends.
(2)Net tangible operating income excludes amortization of core deposit and other intangible assets, and merger, conversion and restructuring expenses, net of applicable income tax effects. A reconciliation of net income and net tangible operating income appears on page 19.
(3)  The difference between total assets and total tangible assets, and stockholders’ equity and tangible stockholders’ equity, represents goodwill and core deposit and other intangibles net of applicable deferred tax balances. A reconciliation of these balances appears on page 19.
(4)The efficiency ratio does not include net securities transactions.

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COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight - June 30, 2007
PER SHARE STATISTICS *
Diluted Earnings (Loss) per Share
	Fourth		Third		Second			First
	Quarter		Quarter		Quarter			Quarter		Total
2007					$	0.44		$	0.28	$	0.72
2006	$	0.40	$	0.45	$	0.44		$	0.44	$	1.72
2005	$	0.45	$	0.42	$	(0.09	)	$	0.42	$	1.35
Average Diluted Shares Outstanding
(in thousands)	Fourth		Third		Second			First		Average for
	Quarter		Quarter		Quarter			Quarter		Year
2007						24,962			23,683		24,350
2006		23,728		23,663		23,858			24,189		23,918
2005		24,421		24,750		13,240			13,192		18,975
Book Value per Share
	Fourth		Third		Second			First
	Quarter		Quarter		Quarter			Quarter
2007					$	20.85		$	20.83
2006	$	20.67	$	20.43	$	19.86		$	19.96
2005	$	19.81	$	19.83	$	11.82		$	11.74
Tangible Book Value per Share
	Fourth		Third		Second			First
	Quarter		Quarter		Quarter			Quarter
2007					$	9.66		$	9.91
2006	$	9.71	$	9.45	$	8.91		$	9.19
2005	$	9.12	$	9.26	$	11.43		$	11.35
* Per share data reflect stock splits and stock dividends

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COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight – JUNE 30, 2007
QUARTER END INFORMATION
(dollars in thousands)	2007						2006
	Second			First			Fourth			Third			Second
	Quarter			Quarter			Quarter			Quarter			Quarter
Total loans	$	2,567,638		$	2,442,318		$	2,370,889		$	2,348,159		$	2,344,677
Allowance for loan losses		(25,010	)		(24,379	)		(23,626	)		(24,034	)		(23,788	)
Loans, net		2,542,628			2,417,939			2,347,263			2,324,125			2,320,889
Earning assets		3,249,928			3,153,614			3,033,585			2,971,391			2,922,356
Goodwill and other intangible assets		279,963			258,812			259,406			259,505			258,606
Total assets		3,750,844			3,627,739			3,496,370			3,431,208			3,385,599
Deposits		2,608,164			2,529,187			2,513,182			2,483,519			2,406,551
Long-term debt		455,104			438,196			315,079			336,954			363,816
Subordinated debt		75,260			72,167			51,548			51,548			51,548
Total shareholder's equity		517,193			490,564			486,161			479,584			465,760
Accumulated other comprehensive income (loss) (net of tax)		(8,300	)		650			(1,806	)		(2,670	)		(10,107	)

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COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight – JUNE 30, 2007
CONDENSED CONSOLIDATED QUARTERLY AVERAGE STATEMENTS OF CONDITION
(dollars in thousands)	2007						2006
	Second			First			Fourth			Third			Second
	Quarter			Quarter			Quarter			Quarter			Quarter
Assets
Earning Assets:
Loans	$	2,574,074		$	2,404,530		$	2,353,774		$	2,339,352		$	2,312,900
Federal funds sold and other		79,230			10,701			37,059			29,324			53,872
Investment securities		671,210			682,592			610,312			566,772			577,581
Total earning assets		3,324,514			3,097,823			3,001,145			2,935,448			2,944,353
Cash and due from banks		60,873			55,542			62,318			62,636			59,461
Allowance for loan losses		(25,985	)		(24,022	)		(24,102	)		(24,385	)		(23,882	)
Goodwill and other intangible assets		278,950			259,083			259,373			259,023			259,003
Premises, equipment and other assets		167,442			155,763			153,361			153,183			152,973
Total assets	$	3,805,794		$	3,544,189		$	3,452,095		$	3,385,905		$	3,391,908
Liabilities and equity
Interest-bearing liabilities:
Deposits
Savings and NOW accounts	$	942,150		$	858,469		$	876,404		$	873,670		$	820,265
Time		1,030,564			994,824			1,010,249			984,415			981,371
Time deposits greater than $100,000		324,099			268,268			267,747			235,264			228,931
Short-term borrowings		65,019			124,985			77,910			60,680			57,903
Long-term debt		456,769			391,196			318,078			340,162			405,705
Subordinated debt		75,260			56,817			51,548			51,548			51,548
Total interest-bearing liabilities		2,893,861			2,694,559			2,601,936			2,545,739			2,545,723
Non-interest bearing deposits		363,298			340,580			342,766			344,708			350,574
Other liabilities		26,226			22,122			25,659			23,547			24,916
Total liabilities		3,283,385			3,057,261			2,970,361			2,913,994			2,921,213
Stockholders' equity		522,409			486,928			481,734			471,911			470,695
Total liabilities and stockholders’ equity	$	3,805,794		$	3,544,189		$	3,452,095		$	3,385,905		$	3,391,908
CHANGE IN AVERAGE BALANCES*
	2007						2006
	Second			First			Fourth			Third			Second
	Quarter			Quarter			Quarter			Quarter			Quarter
Loans		11.3	%		5.0	%		6.9	%		9.3	%		82.8	%
Total assets		12.2	%		4.8	%		4.2	%		2.1	%		66.1	%
Deposits		11.7	%		7.0	%		10.4	%		8.4	%		72.2	%
Stockholders' equity		11.0	%		1.8	%		1.3	%		(1.9	)%		205.9	%
* Compares the current quarter to the comparable quarter of the prior year

9

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight – JUNE 30, 2007
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands)	2007					2006
	Second		First			Fourth		Third		Second
	Quarter		Quarter			Quarter		Quarter		Quarter		Annual
Interest income	$	56,703	$	52,239		$	51,364	$	50,443	$	48,938	$	197,634
Tax equivalent adjustment		2,234		2,253			1,998		1,916		1,910		7,802
		58,937		54,492			53,362		52,359		50,848		205,436
Interest expense		28,124		25,972			25,273		23,505		21,931		90,734
Net interest income		30,813		28,520			28,089		28,854		28,917		114,702
Provision for loan losses		700		1,300			650		250		650		2,050
Net interest income after provision		30,113		27,220			27,439		28,604		28,267		112,652
Non-interest income		10,554		8,924			8,194		8,279		7,957		32,063
Investment security gains (losses)		---		(4,388	)		415		28		6		732
Mortgage banking activities income		694		548			591		533		580		2,172
Non-interest expenses		24,491		22,141			22,482		21,172		20,698		84,885
Income before income taxes		16,870		10,163			14,157		16,272		16,112		62,734
Income taxes		3,686		1,323			2,759		3,798		3,698		13,901
Tax equivalent adjustment		2,234		2,253			1,998		1,916		1,910		7,802
NET INCOME	$	10,950	$	6,587		$	9,400	$	10,558	$	10,504	$	41,031
Tax effect of security transactions	$	---	$	(1,536	)	$	145	$	10	$	2	$	256

10

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight - JUNE 30, 2007
ANALYSIS OF NON-INTEREST INCOME
(dollars in thousands)	2007					2006
	Second			First		Fourth		Third		Second
	Quarter			Quarter		Quarter		Quarter		Quarter		Annual
Investment management and trust services	$	1,603		$	1,445	$	1,325	$	968	$	1,088	$	4,394
Service charges on deposit accounts		4,677			2,996		3,084		3,037		2,855		11,507
Other service charges, commissions and fees		2,257			2,028		1,852		1,817		1,903		7,272
Insurance premium income and commissions		1,063			1,176		1,022		1,053		1,117		4,120
Earnings on investment in life insurance		756			688		715		679		675		2,725
Trading activities loss		(34	)		---		---		---		---		---
Other income		232			591		196		725		319		2,045
Total non-interest income	$	10,554		$	8,924	$	8,194	$	8,279	$	7,957	$	32,063
ANALYSIS OF NON-INTEREST EXPENSES
(dollars in thousands)	2007					2006
	Second			First		Fourth		Third		Second
	Quarter			Quarter		Quarter		Quarter		Quarter		Annual
Salaries and employee benefits	$	13,069		$	12,009	$	12,154	$	11,611	$	11,251	$	46,434
Net occupancy and equipment expense		3,980			3,794		3,767		3,452		3,386		14,117
ATM user fees		774			613		530		553		556		1,922
Marketing expense		552			505		558		354		265		1,752
Telecommunications expense		612			525		584		542		566		2,243
Amortization of intangibles		811			661		624		659		702		2,639
Other operating expenses		4,693			4,034		4,265		4,001		3,972		15,778
Total non-interest expenses	$	24,491		$	22,141	$	22,482	$	21,172	$	20,698	$	84,885

11

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight – JUNE 30, 2007
RISK ELEMENTS ANALYSIS
(dollars in thousands)	2007						2006
	Second			First			Fourth			Third			Second
	Quarter			Quarter			Quarter			Quarter			Quarter
Non-performing assets:
Non-accrual loans	$	19,032		$	15,715		$	12,545		$	11,626		$	11,492
Loans renegotiated with borrowers		665			---			---			---			108
Foreclosed real estate		2,122			61			37			52			108
Total non-performing assets		21,819			15,776			12,582			11,678			11,708
Accruing loans 90 days or more past due		64			101			659			685			621
Total risk elements	$	21,883		$	15,877		$	13,241		$	12,363		$	12,329
Non-performing assets to period-end loans		0.85	%		0.65	%		0.53	%		0.50	%		0.50	%
90 day past due loans to period-end loans		0.00	%		0.00	%		0.03	%		0.03	%		0.03	%
Total risk elements to period-end loans		0.85	%		0.65	%		0.56	%		0.53	%		0.53	%

12

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight - JUNE 30, 2007
ALLOWANCE FOR LOAN LOSSES
(dollars in thousands)	2007						2006
	Second			First			Fourth			Third			Second
	Quarter			Quarter			Quarter			Quarter			Quarter
Balance at beginning of period	$	24,379		$	23,626		$	24,034		$	23,788		$	23,310
Loans charged off		(1,564	)		(660	)		(1,136	)		(499	)		(342	)
Recoveries		175			113			78			495			170
Net loans charged off		(1,389	)		(547	)		(1,058	)		(4	)		(172	)
Provision for loan losses		700			1,300			650			250			650
Allowance established for acquired credit risk		1,320			---			---			---			---
Balance at end of period	$	25,010		$	24,379		$	23,626		$	24,034		$	23,788
Net loans charged-off to average loans*		0.22	%		0.09	%		0.18	%		0.00	%		0.03	%
Provision for loan losses to average loans*		0.11	%		0.22	%		0.11	%		0.04	%		0.11	%
Allowance for loan losses to loans		0.97	%		1.00	%		1.00	%		1.02	%		1.01	%
*Annualized

13

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight - JUNE 30, 2007
OTHER RATIOS
	2007						2006
	Second			First			Fourth			Third			Second
	Quarter			Quarter			Quarter			Quarter			Quarter
Investment portfolio – fair value to amortized cost		98.6	%		100.6	%		100.0	%		99.9	%		97.9	%
Dividend payout ratio		47.6	%		75.1	%		50.0	%		44.4	%		45.1	%
Net loans to deposits ratio, average		95.8	%		96.7	%		93.3	%		95.0	%		96.1	%

MARKET PRICE AND DIVIDENDS DECLARED *
	Closing Bid Price Range				Dividends
Year / Quarter	High		Low		Declared
2007
First	$	28.11	$	22.96	$	0.2100
Second	$	34.39	$	22.82	$	0.2100
Third
Fourth
					$	0.4200
2006
First	$	27.85	$	25.67	$	0.1905
Second	$	27.39	$	24.38	$	0.2000
Third	$	27.29	$	24.58	$	0.2000
Fourth	$	28.48	$	25.74	$	0.2000
					$	0.7905
2005
First	$	27.15	$	22.57	$	0.1619
Second	$	25.24	$	21.94	$	0.1810
Third	$	27.48	$	25.39	$	0.1810
Fourth	$	28.42	$	23.90	$	0.1905
					$	0.7144
* Per share data reflect stock splits and dividends

14

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight - JUNE 30, 2007
NET INTEREST MARGIN - YEAR-TO-DATE
(dollars in thousands)	June 30, 2007							June 30, 2006
	Average Balance		FTE Interest Income/ Expense		Average Rate Earned/Paid			Average Balance		FTE Interest Income/ Expense		Average Rate Earned/Paid
Federal funds sold and interest-bearing  deposits in banks	$	45,155	$	1,177		5.26	%	$	44,431	$	1,036		4.70	%
Investment securities		676,869		20,647		6.15	%		595,635		17,523		5.93	%
Loans - commercial		933,845		36,759		7.94	%		817,901		31,161		7.68	%
- commercial real estate		805,799		28,673		7.18	%		808,350		27,931		6.97	%
- residential real estate		164,696		5,183		6.35	%		151,960		4,569		6.06	%
- consumer		585,430		20,990		7.23	%		523,292		17,495		6.74	%
Total earning assets	$	3,211,794	$	113,429		7.12	%	$	2,941,569	$	99,715		6.84	%
Deposits - savings and NOW accounts	$	900,540	$	10,486		2.35	%	$	823,485	$	7,394		1.81	%
-  time		1,309,130		29,119		4.49	%		1,156,211		21,811		3.80	%
Short-term borrowings		94,836		2,321		4.94	%		63,184		1,341		4.28	%
Long-term debt		424,164		9,801		4.66	%		436,188		9,675		4.47	%
Subordinated debt		66,090		2,369		7.23	%		48,130		1,735		7.27	%
Total interest-bearing liabilities	$	2,794,760	$	54,096		3.90	%	$	2,527,198	$	41,956		3.35	%
Interest income to earning assets						7.12	%						6.84	%
Interest expense to paying liabilities						3.90	%						3.35	%
Interest spread						3.22	%						3.49	%
Impact of non-interest funds						0.51	%						0.47	%
Net interest margin			$	59,333		3.73	%			$	57,759		3.96	%

15

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight - JUNE 30, 2007
NET INTEREST MARGIN - QUARTER-TO-DATE
(dollars in thousands)	June 30, 2007							June 30, 2006
	Average Balance		FTE Interest Income/ Expense		Average Rate Earned/Paid			Average Balance		FTE Interest Income/ Expense		Average Rate Earned/Paid
Federal funds sold and interest-bearing  deposits in banks	$	79,230	$	1,042		5.28	%	$	53,872	$	643		4.79	%
Investment securities		671,210		10,438		6.24	%		577,581		8,622		5.99	%
Loans - commercial		972,907		18,967		7.82	%		827,586		16,016		7.76	%
- commercial real estate		800,711		14,499		7.26	%		817,099		14,326		7.03	%
- residential real estate		177,820		2,786		6.28	%		150,653		2,272		6.05	%
- consumer		622,636		11,205		7.22	%		517,562		8,969		6.95	%
Total earning assets	$	3,324,514	$	58,937		7.11	%	$	2,944,353	$	50,848		6.93	%
Deposits - savings and NOW accounts	$	942,150	$	5,651		2.41	%	$	820,265	$	3,893		1.90	%
-  time		1,354,663		15,068		4.46	%		1,210,302		11,891		3.94	%
Short-term borrowings		65,019		757		4.67	%		57,903		645		4.47	%
Long-term debt		456,769		5,301		4.65	%		405,705		4,564		4.51	%
Subordinated debt		75,260		1,347		7.18	%		51,548		938		7.30	%
Total interest-bearing liabilities	$	2,893,861	$	28,124		3.90	%	$	2,545,723	$	21,931		3.46	%
Interest income to earning assets						7.11	%						6.93	%
Interest expense to paying liabilities						3.90	%						3.46	%
Interest spread						3.21	%						3.47	%
Impact of non-interest funds						0.51	%						0.47	%
Net interest margin			$	30,813		3.72	%			$	28,917		3.94	%

16

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight – JUNE 30, 2007
NET INTEREST MARGIN - QUARTER-TO-DATE
(dollars in thousands)	June 30, 2007							March 31, 2007
	Average Balance		FTE Interest Income/ Expense		Average Rate Earned/Paid			Average Balance		FTE Interest Income/ Expense		Average Rate Earned/Paid
Federal funds sold and interest-bearing deposits in banks	$	79,230	$	1,042		5.28	%	$	10,701	$	135		5.12	%
Investment securities		671,210		10,438		6.24	%		682,592		10,209		6.07	%
Loans - commercial		972,907		18,967		7.82	%		895,114		17,792		8.06	%
- commercial real estate		800,711		14,499		7.26	%		810,424		14,174		7.09	%
- residential real estate		177,820		2,786		6.28	%		151,141		2,397		6.43	%
- consumer		622,636		11,205		7.22	%		547,851		9,785		7.24	%
Total earning assets	$	3,324,514	$	58,937		7.11	%	$	3,097,823	$	54,492		7.13	%
Deposits - savings and NOW accounts	$	942,150	$	5,651		2.41	%	$	858,469	$	4,835		2.28	%
-  time		1,354,663		15,068		4.46	%		1,263,092		14,051		4.51	%
Short-term borrowings		65,019		757		4.67	%		124,985		1,564		5.07	%
Long-term debt		456,769		5,301		4.65	%		391,196		4,500		4.67	%
Subordinated debt		75,260		1,347		7.18	%		56,817		1,022		7.29	%
Total interest-bearing liabilities	$	2,893,861	$	28,124		3.90	%	$	2,694,559	$	25,972		3.91	%
Interest income to earning assets						7.11	%						7.13	%
Interest expense to paying liabilities						3.90	%						3.91	%
Interest spread						3.21	%						3.22	%
Impact of non-interest funds						0.51	%						0.51	%
Net interest margin			$	30,813		3.72	%			$	28,520		3.73	%

17

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight - JUNE 30, 2007
PERIOD-END LOAN PORTFOLIO ANALYSIS
(dollars in thousands)	2007				2006
	Second		First		Fourth		Third		Second
	Quarter		Quarter		Quarter		Quarter		Quarter
Commercial:
Commercial	$	860,868	$	824,301	$	763,800	$	757,714	$	763,637
Obligations of political subdivisions		100,338		101,090		101,555		79,028		76,408
Total commercial		961,206		925,391		865,355		836,742		840,045
Commercial real estate:
Commercial mortgages	$	802,922	$	804,652	$	815,028	$	820,619	$	834,345
Residential real estate:
Residential mortgages	$	169,890	$	145,719	$	141,826	$	144,047	$	144,590
Construction		7,648		6,730		7,290		6,918		5,770
Total residential real estate		177,538		152,449		149,116		150,965		150,360
Consumer:
Home equity loans	$	358,949	$	331,418	$	322,712	$	308,173	$	282,777
Home equity lines of credit		104,586		90,675		92,163		96,608		103,216
Indirect  consumer loans		74,687		69,097		65,699		66,126		67,786
Other consumer loans		87,750		68,636		60,816		68,926		66,148
Total consumer		625,972		559,826		541,390		539,833		519,927
Total loans	$	2,567,638	$	2,442,318	$	2,370,889	$	2,348,159	$	2,344,677

18

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight - JUNE 30, 2007
Reconciliation of GAAP to Non-GAAP Measures:
(in thousands, except per share data)	2007						2006
	Second			First			Fourth			Third			Second
	Quarter			Quarter			Quarter			Quarter			Quarter			Annual
Income statement data:
Net income
Net income	$	10,950		$	6,587		$	9,400		$	10,558		$	10,504		$	41,031
Amortization of core deposit and other intangible assets  (1)		528			429			406			428			456			1,715
Net operating (tangible) income	$	11,478		$	7,016		$	9,806		$	10,986		$	10,960		$	42,746
Earnings per share
Diluted earnings per common share	$	0.44		$	0.28		$	0.40		$	0.45		$	0.44		$	1.72
Amortization of core deposit and other intangible assets  (1)		0.02			0.02			0.01			0.01			0.02			0.07
Diluted operating (tangible) earnings per share	$	0.46		$	0.30		$	0.41		$	0.46		$	0.46		$	1.79
Balance sheet data:
Average assets
Average assets	$	3,805,794		$	3,544,189		$	3,452,095		$	3,385,905		$	3,391,908		$	3,403,421
Goodwill		(263,694	)		(246,400	)		(246,287	)		(245,794	)		(245,749	)		(245,652	)
Core deposit and other intangible assets		(15,256	)		(12,683	)		(13,086	)		(13,229	)		(13,254	)		(13,369	)
Average tangible assets	$	3,526,844		$	3,285,106		$	3,192,722		$	3,126,882		$	3,132,905		$	3,144,400
Operating return on average tangible assets		1.31	%		0.87	%		1.22	%		1.39	%		1.40	%		1.36	%
Average equity
Average equity	$	522,409		$	486,928		$	481,734		$	471,911		$	470,695		$	475,710
Goodwill		(263,694	)		(246,400	)		(246,287	)		(245,794	)		(245,749	)		(245,652	)
Core deposit and other intangible assets		(15,256	)		(12,683	)		(13,086	)		(13,229	)		(13,254	)		(13,368	)
Deferred taxes		2,468			1,547			1,652			1,755			1,836			1,744
Average tangible equity	$	245,927		$	229,392		$	224,013		$	214,643		$	213,528		$	218,434
Operating return on average tangible equity		18.72	%		12.40	%		17.37	%		20.31	%		20.59	%		19.57	%
At end of quarter:
Total assets
Total assets	$	3,750,844		$	3,627,739		$	3,496,370		$	3,431,208		$	3,385,599		$	3,496,370
Goodwill		(265,129	)		(246,449	)		(246,383	)		(245,864	)		(245,056	)		(246,383	)
Core deposit and other intangible assets		(14,834	)		(12,363	)		(13,023	)		(13,641	)		(13,550	)		(13,023	)
Total tangible assets	$	3,470,881		$	3,368,927		$	3,236,964		$	3,171,703		$	3,126,993		$	3,236,964
Total equity
Total equity	$	517,193		$	490,564		$	486,161		$	479,584		$	465,760		$	486,161
Goodwill		(265,129	)		(246,449	)		(246,383	)		(245,864	)		(245,056	)		(246,383	)
Core deposit and other intangible assets		(14,834	)		(12,363	)		(13,023	)		(13,641	)		(13,550	)		(13,023	)
Deferred taxes		2,403			1,482			1,591			1,698			1,800			1,591
Total tangible equity	$	239,633		$	233,234		$	228,346		$	221,777		$	208,954		$	228,346
Tangible book value at end of period	$	9.68		$	9.91		$	9.71		$	9.45		$	8.91		$	9.71
Tangible equity to assets		6.90	%		6.92	%		7.05	%		6.99	%		6.68	%		7.05	%
(1)Net of related tax effect

19