Exhibit 99.2
Exhibit 99.2
ANNOUNCE A STRATEGIC MERGER
November 16, 2004
AND
Disclaimer
This presentation contains “forward looking” information, as defined by the Private Securities Litigation Reform Act of 1995, that 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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PennRock is Community’s most attractive partner for expansion
Meaningful entry into markets with favorable demographics
Strengthens market position of combined entity
Adds management depth
Community banking operating models serving similar customer bases
Product diversification and enhanced lending capabilities
Extends ability to compete against bigger players who are distracted by out-of-state acquisitions
Accretive to earnings
Enhances ability to achieve our long term goal for EPS growth of 10%
Achievable cost efficiencies
Strong financial position
Combination results in enhanced A/L management flexibility
Shared community banking philosophy and culture
Familiarity of management teams
Proven capability to integrate acquisitions
Excellent Strategic Fit
Complimentary Business Combination
Attractive Financial Implications
Low Execution Risk
Value Enhancing Transaction
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Fixed Exchange Ratio:
Structure:
Purchase Price Per PRFS Share(1):
Aggregate Purchase Price(1):
Treatment of Options:
Double Trigger Walk-away:
Termination Fee:
Due Diligence:
Board Representation:
Anticipated closing:
1.40 shares of CMTY for each share of PRFS
100% Stock
$41.85
$326 million
Rolled into equivalent options for shares of CMTY
20% absolute / 20% versus index of peers
$15 million
Completed
9 CMTY / 6 PRFS
Second Quarter 2005
Note:
(1) Based on the 10 day average closing price for CMTY of $29.89, for the period ending November 15, 2004.
Transaction Summary
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Price as a multiple to:
LTM EPS:
Relative EPS(2):
Book:
Tangible Book:
Core Deposit Premium(3):
CMTY / PRFS
High
Median
Low
PA Commercial Bank Transactions(1)
22.6x
1.3x
307%
340%
29.8%
34.9x
2.1x
366%
390%
29.4%
26.0x
1.6x
257%
283%
22.8%
20.3x
1.2x
203%
204%
10.0%
Deal Pricing
Note:
(1) Based on commercial bank transactions(15) announced in Pennsylvania since January 1, 2003.
(2) Multiple of Relative EPS is calculated by dividing the transaction multiple by CMTY’s trading price / LTM EPS multiple.
(3) Excludes $52.5 Million of time deposits with account balances greater that $100k.
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Headquartered in Blue Ball, PA
Bank founded in 1906
Blue Ball Bank will be run as a division of Community Banks, capitalizing on strong local brand
17 Branches
Lancaster, Berks and Chester counties
Average size: $49M in deposits
Total assets of $1.2 Billion
Loans: $745 Million
Deposits: $831 Million
Solid Profitability
Return on average equity of 14.35%
Return on average assets of 1.28%
Overview of PennRock
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Our Expanding Franchise
CMTY
PRFS
A $3.1 billion company with 67 offices in 11 PA counties and 1 MD county
POPULATION (PER SQUARE MILE)
0 - 99
100 - 999
1,000 - 4,999
5,000 - 9,999
10,000+
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Pivotal Transaction
Creates the 8th largest Pennsylvania commercial bank…
Note:
Data as of September 30, 2004.
CMTY/PRFS total assets does not include purchase accounting adjustments.
Total
Assets
Rank
Company
($B)
1
PNC Financial Services
$77.3
2
Mellon Financial
35.1
3
Fulton Financial
10.6
4
Susquehanna Bancshares
7.4
5
First Commonwealth Financial
6.3
6
F.N.B. Corporation
4.7
7
National Penn Bancshares
4.3
8
CMTY / PRFS
3.1
9
S&T Bancorp
3.0
10
Harleysville National Corp.
3.0
12
Community Banks
2.0
16
PennRock
1.1
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Strengthened Demographic Profile
CMTY Growth Markets:
York
Dauphin
Adams
Cumberland
Carroll (MD)
PRFS Markets:
Lancaster
Berks
Chester
Other CMTY:
Schuylkill
Luzerne
Northumberland
Snyder
Population
Change
2004-2009
Median
HH Income
Change
2004-2009
Note:
Data as of June 30, 2004 from SNL Securities.
4.21%
1.41
7.24
4.24
10.33
3.70%
4.87
7.81
(2.41)%
(2.73)
(2.45)
1.63
9.22%
9.07
12.29
11.03
14.24
10.67%
9.92
14.46
12.78%
12.55
11.53
10.36
Lancaster, Berks and Chester provide significant opportunity for growth.
85% of the combined franchise is in markets with strong demographics.
$489
302
134
31
12
$508
247
55
$185
91
52
11
9.17%
7.09
12.10
0.92
0.56
6.89%
3.93
0.78
10.51%
1.61
4.53
2.22
(%)
of Market
Deposits
($)
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Strengthened Demographic Profile
Existing Growth Markets (35 Offices; 3 in process)
York/Adams is one of the fastest-growing urban Pennsylvania markets
Exceptional loan growth in Capital Region (Harrisburg/West Shore)
Strong foundation in Northern Dauphin
Carroll County demographics provide potential for future expansion
New Growth Markets from PRFS (17 offices; 3 in process)
Lancaster/Berks/Chester are large population centers with exceptional growth prospects
Other Markets (16 Offices)
Stable funding
Pockets of growth
Historical market share gain
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High Quality Growth Track Record
Four year compound annual growth rate of loans is 10.8% for CMTY and PRFS.
Four year compound annual growth of deposits 10.3% for CMTY and 6.1% for PRFS.
($ in millions)
TOTAL GROSS LOANS
$0
$200
$400
$600
$800
$1,000
$1,200
1999
2000
2001
2002
2003
Sep 04
CMTY
PRFS
TOTAL DEPOSITS
($ in millions)
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
1999
2000
2001
2002
2003
2004
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Financial Impact
Accretive to earnings in the first full year of combined operations
Balance sheet will remain flexible and at well capitalized levels
No incremental share repurchases or leverage of capital is assumed
For the Year Ending December 31, 2005
($) After
%
($) Per
Avg.
Tax
Contribution
Share
FD Shares
CMTY earnings
23,332
60%
1.85
12,600
PRFS earnings
15,482
40%
2.00
7,741
Cost Savings
5,093
0.22
Other Adjustments
(1)
293
0.01
Pro forma
44,200
1.88
23,507
Accretion / (dilution)
Per share
0.03
Percent
1.5%
Note:
Includes the impact of:
3.0% core deposit premium on non-time deposits amortized over a period of 8 years straight line.
After-tax interest rate mark to market of ($7) million.
Opportunity cost of $14.5 million in after-tax restructuring charges
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Identified Cost Efficiencies
$7.7 million pre-tax annual cost savings or approximately 25% of PRFS’ historical operating expense and 9.5% of combined operating expense
Annual
%
Cost
of Combined
Efficiencies
Operating Expense
Internal Personnel Cost
Duplicate administrative
490
0.6%
Capacity absorption
419
0.5%
Back office consolidation
2,006
2.5%
Front line administrative
755
0.9%
Bonus / Incentive / Retirement
761
0.9%
External Costs
1,865
2.3%
Office Staffing Model
525
0.6%
Other
895
1.1%
Total savings
7,716
9.5%
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Opportunities
Although no revenue enhancements are assumed, we have identified the following opportunities:
Overlay of CMTY’s growth trend on PRFS’ markets
Higher legal lending limit
Leveraging of integrated businesses, e.g. retail investment sales, property and casualty insurance, title insurance
Alignment of investment portfolio strategies
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Summary
Transformational merger
Enhances ability to achieve or exceed our targeted EPS growth of 10%
Immediately accretive to earnings
Strong foundation for growth in attractive markets
Added management
Creates the 8th largest commercial bank in Pennsylvania
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