SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 28, 1997
COMMUNITY BANKS, INC.
(Exact Name of Registrant as Specified in its Charter)
Pennsylvania 23-2251762
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
No. 0-15786
(Commission file number)
150 Market Street, Millersburg, Pennsylvania 17061
(Address of Principal Executive Offices) (Zip code)
ERNEST L. LOWE
President
COMMUNITY BANKS, INC.
150 Market Street
Millersburg, Pennsylvania 17061
(Address of executive offices)
(717) 692-4781
(Telephone number, including area code, of agent for service)
Item 5. Other Events
On October 28, 1997, the Corporation entered into an
Agreement and Plan of Reorganization (the "Agreement") with The
Peoples State Bank of East Berlin ("Peoples"), whereby Peoples
would be merged with and into a new state-chartered Pennsylvania
banking institution, "PSB Interim Bank", which will be a
wholly-owned subsidiary of the Corporation (the "merger"). PSB
Interim Bank will be formed solely for the purpose of merging
Peoples with and into PSB Interim Bank. The surviving bank will
continue under the name of The Peoples State Bank.
Under the terms of the definitive agreement, The Peoples
State Bank and Community Banks, N.A. will be run as separate
subsidiary banks of the Corporation. The Corporation will
exchange .889 shares of its common stock for each share of
Peoples common stock outstanding in a tax-free exchange. The
consummation of the merger will be conditioned upon the
transaction being accounted for as a pooling of interests, as
well as regulatory and shareholder approvals.
The press release announcing the agreement is attached
hereto as Exhibit 99.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
Community Banks, Inc.
(Registrant)
Date: November 6, 1997 /S/ Ernest L. Lowe
Ernest L. Lowe, President
EXHIBIT INDEX
Exhibit No. Description
99 Press Release of Community Banks, Inc. dated
October 28, 1997.
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EX-99
PRESS RELEASE
For Immediate Release
Date: October 28, 1997
Contact: Beth L. Miller
Phone: (717) 692-4781
Fax: (717) 692-2972
COMMUNITY BANKS, INC. AND THE PEOPLES STATE BANK
EXECUTE DEFINITIVE AGREEMENT
Millersburg, PA-Community Banks, Inc. (AMEX:CTY) and the Peoples
State Bank (NASDAQ:PSEB) jointly announced today that they have
entered into a definitive agreement providing for the affiliation
of the two institutions.
Under the terms of the definitive agreement, Peoples State Bank
and Community Banks, N.A. will be run as separate subsidiary
banks of Community and Community will exchange .889 shares of
Community common stock for each share of Peoples' common stock
outstanding in a tax-free exchange. Based on Community's closing
price yesterday, the shares of Community to be received by the
Peoples shareholders would have a value of $55.9 million, or
$37.56 per share. In relation to Community's closing price of
$42.25, the transaction consideration is approximately 2.77 times
Peoples' September 30, 1997 book value of $13.54 per share and
25.7 times its LTM earnings of $1.46 per share. The transaction
will be accounted for as a pooling of interests and, pending
regulatory and shareholder approvals, is expected to be completed
in the first half of 1998. In addition, Peoples has granted to
Community an option, exercisable under certain conditions, to
purchase up to 19.9% of Peoples' outstanding common shares.
Community is headquartered in Millersburg, PA. Its banking
subsidiary, Community Banks, N.A., currently operates 21 banking
offices in Dauphin, Schuylkill, Northumberland, and Luzerne
counties. In addition, it operates Community Banks, Investments,
Inc. and Community Banks Life Insurance Co., Inc. Community has a
twenty-second office planned to open in Pottsville later this
year.
Peoples State Bank is headquartered in East Berlin, PA and
currently operates 6 full service banking offices and 23 ATM
locations in Adams and York counties.
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Based on September 30, 1997, financial data, the combined
organization will have approximately $705 million in total
assets, $440 million in loans, $545 million in deposits, and $71
million in total equity. At consummation, it is expected the
banking subsidiaries will have 28 full service banking offices,
and 50 ATMs in service.
Thomas L. Miller, Chairman and Chief Executive Officer of
Community, commented: "Peoples State Bank is an outstanding
banking organization which shares our philosophy of community
banking. By combining under one holding company, our two banks
will be in a position to better serve our customers, and will
support Peoples' significant growth in the York and Adams county
markets."
Carlton Jacobs, Chairman of Peoples stated, "We are pleased to
become part of Community Banks, Inc. Community has a long history
of excellent performance and customer service."
Upon consummation, Eddie Dunklebarger, President and CEO of
Peoples, will assume the additional role of President and CEO of
Community Banks, Inc. Ernest L. Lowe, current President of
Community Banks, Inc., will assume the role of Chairman upon the
retirement of Mr. Miller, and will become president and CEO of
Community Banks, N.A. at that time. He will continue in these
positions after the affiliation. Four directors of Peoples will
join the Board of Directors of Community Banks, Inc. and three
directors of Peoples will join the Community Executive Committee.
There are no planned changes in the Boards or management of
Peoples State Bank and Community Banks, N.A.
Mr. Dunklebarger commented, "I am very excited about this
partnership. Community and Peoples share the philosophy of
traditional community banking and local decision making. Together
each bank will be better positioned to respond to all of our
customer's needs in our very competitive but distinctly different
markets." Mr. Lowe said, "We are elated to have Eddie
Dunklebarger and his management team join our organization. The
shareholders, customers and communities of both organizations
will definitely benefit from this combination."
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