AND
A STRATEGIC AFFILIATION
- 1 -
Why CommunityBanks
Excellent Strategic Fit
Complimentary Business Combination
Attractive Financial Implications
Low Execution Risk
- 2 -
Overview of Community Banks, Inc.
Parent Of CommunityBanks 47 Banking Offices Total assets of $2 Billion
Comprehensive Community Banking Services, as well as Trust & Asset Management, P&C Insurance, Retail Investment, and Title Services
- 3 -
The CommunityBanks Network
York/Adams Counties (21 Offices)
York – 2nd fastest growing urban market in PA
Adams – growth in excess of 10%
Dauphin/Cumberland Counties (12 Offices)
Harrisburg/West Shore focus
Strong in N. Dauphin
Schuylkill/Luzerne/Northumberland/Snyder (14 Offices)
Growing market share in stable markets
Northern Maryland (2 Offices)
Carroll County – Exceptional Demographics
- 4 -
Our Vision For CommunityBanks
Build shareholder value by growing our community banking franchise’s market share in existing markets and expanding (de novo or via affiliation) in new growth markets
Management team is young, energetic and motivated to perform for the long term
- 5 -
The Combined Franchise $3.1 Billion – 67 Offices – 11 PA Counties, 1 MD County
CMTY PRFS
- 6 -
The Combined Company
CMTY PRFS Combined(1)
Assets: $1,956 63% $1,147 37% $3,103
Net Loans: $1,174 61% $736 39% $1,910
Deposits: $1,320 61% $831 39% $2,151
Equity: $149 59% $104 41% $253
LTM Earnings(2): $21 60% $14 40% $35
Note:
Data as of September 30, 2004
(1) Does not include purchase accounting adjustments
(2) Does not include cost efficiencies
- 7 –
Where This Puts The Combined Company…
Creates the 8th largest Pennsylvania commercial bank…
Total Assets ($B)
Rank Company
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
Note:
Data as of September 30, 2004.
CMTY/PRFS total assets does not include purchase accounting adjustments.—8 -
Strengthened Demographic Profile
Deposits ( $) (%) of Market Population Change 2004-2009 Median HH Income Change 2004-2009
CMTY Growth Markets:
York $ 489 9.17% 4.21% 9.22%
Dauphin 302 7.09 1.41 9.07
Adams 134 12.10 7.24 12.29
Cumberland 31 0.92 4.24 11.03
Carroll (MD) 12 0.56 10.33 14.24
PRFS Markets:
Lancaster $ 508 6.89% 3.70% 10.67%
Berks 247 3.93 4.87 9.92
Chester 55 0.78 7.81 14.46
Other CMTY:
Schuylkill $ 185 10.51% (2.41)% 12.78%
Luzerne 91 1.61 (2.73) 12.55
Northumberland 52 4.53 (2.45) 11.53
Snyder 11 2.22 1.63 10.36
Note:
Data as of June 30, 2004 from SNL Securities.
- 9 -
High Quality Growth Track Record
Four year compound annual growth rate of loans is 10.8% for CommunityBanks and PennRock Four year compound annual growth of deposits 10.3% for CommunityBanks and 6.1% for PennRock
TOTAL GROSS LOANS
($ in millions)
TOTAL DEPOSITS
($ in millions) $1,2 0 0 $1,0 0 0 $8 0 0 $6 0 0 $4 0 0 $2 0 0 $0
19 99 20 00 2 00 1 20 02 2 00 3 S ep 04
CM TY PRFS
$1,4 0 0
$1,2 0 0
$1,0 0 0
$8 0 0
$6 0 0
$4 0 0
$2 0 0
$0
19 99 20 00 2 00 1 20 02 2 00 3 S ep 04
CM TY PRFS
- 10 -
Opportunities
Combination of growth markets Higher legal lending limit Leveraging of integrated businesses, e.g. retail investment sales, P&C insurance and title services Alignment of investment portfolio strategies
- 11 -
Transaction Summary
Fixed Exchange Ratio: 1.40 shares of CMTY for each share of PRFS
Structure: 100% Stock
Purchase Price Per PRFS Share(1): $ 40.45
Aggregate Purchase Price(1): $ 315 million
Termination Fee: $15 million
Board Representation: 9 CMTY / 6 PRFS
Anticipated closing Second Quarter 2005
Note:
(1) Based on CMTY’s closing price on of November 12, 2004.
- 12 -
The Integration Process
Form Integration Team
Complete CommunityBanks’ Silverlake Conversion and Consolidate Operating Systems
Integrate Loan and Deposit Operations
Deposit and IT Operations Primarily Based at Blue Ball Operations Center
- 13 -
The Integration Process
Consolidate Administrative Departments
Cultural Integration
Product Alignment
Policies and Procedures
Benefit Plans
Identify Revenue Opportunities and Initiate Programs
- 14 -
