SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Quarter Ended March 31, 1998
No. 0-15786
(Commission File Number)
COMMUNITY BANKS, INC.
(Exact Name of Registrant as Specified in its Charter)
PENNSYLVANIA 23-2251762
(State of Incorporation) (IRS Employer ID Number)
150 Market Street, Millersburg, PA 17061
(Address of Principal Executive Offices) (Zip Code)
(717) 692-4781
(Registrant's Telephone Number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 12, 13, or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
Number of Shares Outstanding as of March 31, 1998.
CAPITAL STOCK-COMMON 4,365,708
(Title of Class) (Outstanding Shares)
COMMUNITY BANKS, INC. and SUBSIDIARIES
Index 10-Q
Part I
Financial Information.............................................1
Consolidated Balance Sheets.......................................2
Consolidated Statements of Income.................................3
Consolidated Statements of Changes in Stockholders' Equity........4
Consolidated Statements of Cash Flows.............................5
Notes to Consolidated Financial Statements........................6-9
Management's Discussion and Analysis of Financial
Condition and Results of Operation............................10-13
Part II
Other information and Signatures..................................14
PART I - FINANCIAL INFORMATION
COMMUNITY BANKS, INC. and SUBSIDIARIES
The following financial information sets forth the operations of
Community Banks, Inc. and Subsidiaries for the three month periods
ending March 31, 1998 and 1997.
In the opinion of management, the following Consolidated Balance
Sheets and related Consolidated Statements of Income and Cash Flows
reflect all adjustments (consisting of normal recurring accrual
adjustments) necessary to present fairly the financial position and
results of operations for such periods.
-1-
Community Banks, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(unaudited)
(dollars in thousands except per share data)
March 31, December 31,
1998 1997
ASSETS
Cash and due from banks................... $ 21,764 $ 28,015
Interest-bearing time deposits in other
banks.................................. 2,040 2,406
Investment securities, available for sale
(market value)......................... 217,094 219,284
Fed funds sold............................ 10,950 2,100
Loans..................................... 455,752 456,460
Less: Unearned income.................... (11,313) (12,429)
Allowance for loan losses.......... (6,350) (6,270)
Net loans.......................... 438,089 437,761
Premises and equipment, net............... 14,082 13,963
Goodwill.................................. 846 906
Other real estate owned................... 906 866
Loans held for sale....................... 3,497 2,641
Accrued interest receivable and other
assets................................. 11,895 11,520
Total assets........................... $721,163 $719,462
======== ========
LIABILITIES
Deposits:
Demand................................. $ 44,295 $ 44,181
Savings................................ 233,760 226,377
Time................................... 245,931 248,998
Time in denominations of $100,000 or
more.................................. 34,355 30,199
Total deposits......................... 558,341 549,755
Short-term borrowings..................... 2,641 10,540
Long-term debt............................ 77,269 77,280
Accrued interest payable and other
liabilities............................ 7,743 7,874
Total liabilities...................... 645,994 645,449
STOCKHOLDERS' EQUITY
Preferred stock, no par value; 500,000
shares authorized; no shares issued
and outstanding........................ --- ---
Common stock-$5.00 par value; 5,000,000
shares authorized; 4,409,000 and
4,405,000 shares issued in 1998 and
1997, respectively..................... 22,046 22,026
Surplus................................... 28,876 28,647
Retained earnings......................... 22,582 21,219
Other accumulated comprehensive income,
net of tax of $1,433,000 and $1,668,000,
respectively............................ 2,781 3,237
Less: Treasury stock of 44,000 shares at
cost................................... (1,116) (1,116)
Total stockholders' equity............. 75,169 74,013
Total liabilities and stockholders'
equity................................ $721,163 $719,462
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
All periods reflect the combined data of Community Banks, Inc. and the
Peoples State Bank.
-2-
Community Banks, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(dollars in thousands except per share data)
Three Months Ended
March 31,
1998 1997
Interest income:
Interest and fees on loans................. $ 9,911 $ 9,197
Interest and dividends on investment
securities:
Taxable................................ 2,632 2,683
Exempt from federal income tax......... 761 430
Fed funds interest......................... 124 77
Other interest income...................... 28 19
Total interest income................. 13,456 12,406
Interest expense:
Interest on deposits:
Savings............................... 1,350 1,383
Time.................................. 3,277 3,268
Time in denominations of $100,000 or
more................................. 443 391
Interest on short-term borrowings and
long-term debt............................ 829 558
Fed funds purchased and repo interest...... 336 201
Total interest expense................ 6,235 5,801
Net interest income................... 7,221 6,605
Provision for loan losses.................. 193 390
Net interest income after provision
for loan losses...................... 7,028 6,215
Other income:
Trust department income............... 77 71
Service charges on deposit accounts... 331 299
Other service charges, commissions
and fees............................. 172 142
Investment security gains ............ 270 373
Income on insurance premiums.......... 131 144
Gains on mortgage sales............... 142 40
Other income.......................... 134 123
Total other income............... 1,257 1,192
Other expenses:
Salaries and employee benefits........ 2,512 2,237
Net occupancy expense................. 775 723
Operating expense of insurance
subsidiary.......................... 119 130
Other operating expense............... 1,526 1,305
Total other expense.............. 4,932 4,395
Income before income taxes....... 3,353 3,012
Provision for income taxes................. 976 909
Net income....................... $ 2,377 $ 2,103
======= =======
Earnings per share:
Basic................................... $ .36 $ .32
Diluted................................. $ .35 $ .32
Dividends paid per share................... $ .14 $ .12
Per share data has been adjusted to reflect stock dividends and splits.
The accompanying notes are an integral part of the consolidated financial
statements.
All periods reflect the combined data of Community Banks, Inc. and The
Peoples State Bank.
-3-
<TABLE>
Community Banks, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
(Dollars in thousands except per share data)
<CAPTION>
Three Month Periods Ended March 31
Accumulated
Other
Common Retained Comprehensive Treasury Total
Stock Surplus Earnings Income Stock Equity
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1997.............. $20,954 $21,624 $21,756 $ 166 $ (421) $64,079
Comprehensive income:
Net income...................... 2,103 2,103
Change in unrealized gain (loss)
on securities, net of tax of
$544,000...................... (1,056) (1,056)
Total comprehensive income..... 1,047
Cash dividends........................ (753) (753)
5% stock dividend..................... 723 3,905 (4,628)
Issuance of additional shares......... 198 1,863 (57) 2,004
Balance, March 31, 1997............... $21,875 $27,392 $18,421 $ (890) $ (421) $66,377
======= ======= ======= ======= ======= =======
Balance, January 1, 1998.............. $22,026 $28,647 $21,219 $ 3,237 $(1,116) $74,013
Comprehensive income:
Net income...................... 2,377 2,377
Change in unrealized gain (loss)
on securities, net of tax of
$235,000...................... (456) (456)
Total comprehensive income..... 1,921
Cash dividends........................ (923) (923)
Issuance of additional shares......... 20 229 (91) 158
Balance, March 31, 1998 $22,046 $28,876 $22,582 $ 2,781 $(1,116) $75,169
======= ======= ======= ======= ======= =======
Per share data for all periods has been restated to reflect stock
dividends and splits.
The accompanying notes are an integral part of the consolidated
financial statements.
All periods reflect the combined data of Community Banks, Inc. and
The Peoples State Bank.
-4-
</TABLE>
Community Banks, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(dollars in thousands)
Three Months Ended
March 31,
1998 1997
Operating Activities:
Net income...................................... $ 2,377 $ 2,103
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses.................... 193 390
Provision for depreciation and amortization.. 388 385
Amortization of goodwill..................... 60 60
Investment security gains.................... (270) (373)
Loans originated for sale.................... (8,395) (89)
Proceeds from sale of loans.................. 7,681 1,563
Gains on mortgage sales...................... (142) (40)
Increase in other assets..................... (736) (1,239)
Increase in accrued interest payable and
other liabilities........................... 105 188
Net cash provided by operating activities.. 1,261 2,948
Investing Activities:
Net decrease in interest-bearing time
deposits in other banks........................ 366 836
Proceeds from sales of investment
securities..................................... 396 8,931
Proceeds from maturities of investment
securities..................................... 31,577 6,087
Purchases of investment securities.............. (30,205) (21,463)
Net increase in total loans..................... (200) (5,498)
Purchases of premises and equipment............. (507) (948)
Net cash used by investing activities...... 1,427 (12,055)
Financing Activities:
Net increase in total deposits.................. 8,586 13,107
Net decrease in short-term borrowings........... (7,899) (12,235)
Proceeds from issuance of long-term debt........ 3,000 10,000
Repayment of long-term debt..................... (3,011) (5,005)
Cash dividends.................................. (923) (753)
Purchases of treasury stock..................... --- ---
Proceeds from issuance of common stock.......... 158 2,004
Net cash provided (used) by financing
activities................................ (89) 7,118
Increase (decrease) in cash and cash
equivalents............................... 2,599 (1,989)
Cash and cash equivalents at beginning of period... 30,115 23,699
Cash and cash equivalents at end of period......... $32,714 $21,710
======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
All periods reflect the combined data of Community Banks, Inc. and The
Peoples State Bank.
-5-
Community Banks, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(dollars in thousands)
1. Accounting Policies
The information contained in this report is unaudited and is
subject to future adjustments. However, in the opinion of management, the
information reflects all adjustments necessary for a fair statement of
results for the three month periods ended March 31, 1998 and 1997.
The accounting policies of Community Banks, Inc. and subsidiaries,
as applied in the consolidated interim financial statements presented herein,
are substantially the same as those followed on an annual basis as presented
on page 9 of the 1997 Annual Report to shareholders.
-6-
2. Investment Securities
The amortized cost and estimated market values of investment
securities at March 31, 1998 and December 31, 1997, were as follows:
March 31,
1998
Estimated
Amortized Fair
Cost Value
U.S. Treasury securities and obligations
of U.S. government corporations and
agencies............................... $ 51,368 $ 51,544
Mortgage-backed U.S. government
agencies................................ 92,400 92,979
Obligations of states and political
subdivisions............................ 61,737 63,059
Corporate securities..................... 1,099 1,119
Equity securities........................ 6,276 8,393
Total.............................. $212,880 $217,094
======== ========
December 31,
1997
U.S. Treasury securities and obligations
of U.S. government corporations and
agencies............................... $ 66,940 $ 67,389
Mortgage-backed U.S. government
agencies................................ 84,568 85,137
Obligations of states and political
subdivisions............................ 55,248 56,633
Corporate securities..................... 1,244 1,278
Equity securities........................ 6,379 8,847
Total.............................. $214,379 $219,284
======== ========
-7-
<TABLE>
3. Allowance for loan losses
Changes in the allowance for loan losses are as follows:
<CAPTION>
Three months ended Year Ended Three Months ended
March 31, December 31, March 31,
1998 1997 1997
<S> <C> <C> <C>
Balance, January 1.................. $6,270 $5,561 $5,561
Provision for loan losses........... 193 1,317 390
Loan charge-offs.................... (279) (1,466) (266)
Recoveries.......................... 166 858 240
Balance, March 31, 1998, December
31, 1997, and March 31, 1997....... $6,350 $6,270 $5,925
====== ====== ======
NONPERFORMING LOANS (a) AND OTHER REAL ESTATE
March 31, December 31, March 31,
1998 1997 1997
Loans past due 90 days or more
and still accruing interest:
Commercial, financial and
agricultural................... $331 $ 53 ---
Mortgages....................... 413 405 $631
Personal installment............ 230 72 198
Other........................... 15 21 4
989 551 833
Loans on which accrual of interest
has been discontinued:
Commercial, financial and
agricultural.................... 637 926 782
Mortgages........................ 3,381 3,388 3,845
Other............................ 363 300 282
4,381 4,614 4,909
Other real estate................... 906 866 762
Total............................ $6,276 $6,031 $6,504
====== ====== ======
(a) The determination to discontinue the accrual of interest on
nonperforming loans is made on the individual case basis. Such
factors as the character and size of the loan, quality of the
collateral and the historical creditworthiness of the borrower and/or
guarantors are considered by management in assessing the
collectibility of such amounts.
Impaired Loans
At March 31, 1998 and December 31, 1997 the Corporation recorded no
investment in impaired loans or related valuation allowance. For the three
month periods ended March 31, 1998 and 1997 the average balance of
impaired loans was negligible. In addition, the Corporation recognized
no interest on impaired loans on the cash basis for the three month
periods ended March 31, 1998 and 1997.
-8-
</TABLE>
4. Statement of Cash Flows
Cash and cash equivalents include cash and due from banks and
federal funds sold. The company made cash payments of $575,000 and $282,000
and $6,365,000 and $5,407,000 for income taxes and interest, respectively,
for each of the three month periods ended March 31, 1998 and 1997.
Excluded from the consolidated statements of cash flows for the
periods ended March 31, 1998 and 1997 was the effect of certain non-cash
activities. The company acquired real estate through foreclosure totalling
$321,000 and $116,000, respectively. The company also recorded a decrease in
deferred tax liabilities of $235,000 in 1998. A decrease in deferred tax
liabilities of $85,000 and an increase in deferred tax assets of $458,000
were recognized in 1997. These variations related to the effects of changes
in the net unrealized gain (loss) on investment securities available for
sale.
<TABLE>
5. Earnings Per Share:
The following table sets forth the calculation of Basic and Diluted
Earnings Per Share for the periods indicated:
<CAPTION>
Three Months Ended March 31,
1998 1997
Per-Share Per-Share
Income Shares Amount Income Shares Amount
(in thousands except per share data)
<S> <C> <C> <C> <C> <C> <C>
Basic EPS:
Income available to common stockholders... $2,377 6,538 $.36 $2,103 6,521 $.32
Effect of Dilutive Securities: ==== ====
Incentive stock options outstanding....... 173 154
Diluted EPS:
Income available to common stockholders
& assumed conversion................... $2,377 6,711 $.35 $2,103 6,675 $.32
====== ===== ==== ====== ===== ====
Per share data has been adjusted to reflect a three for two stock split
payable May 8,1998.
All periods reflect the combined data of Community Banks, Inc. and The
Peoples State Bank.
</TABLE>
-9-
Community Banks, Inc. and Subsidiaries
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Results of Operations
Net interest income after provision for loan losses for the first
three months of 1998 was $813,000 or 13.1% greater than 1997. Total
interest income for the first three months increased $1,050,000 or 8.5%
while total interest expense increased $434,000 or 7.5% over the
comparable period of 1997. The amount of net interest income and total
interest income are dependent upon many factors including the volume of
earning assets and interest bearing liabilities, the level of and
changes in interest rates and levels of non-performing assets. The cost
of interest bearing liabilities changes with the amount of funds
necessary to support earning assets, the rates paid to attract and
maintain deposits, rates paid on borrowed funds and the level of
non-interest bearing demand deposits and equity capital. The increases
in net interest income and total interest income were impacted by an
increase in average earning assets of approximately $59,456,000 or 9.7%
while average interest bearing liabilities increased $43,445,000 or
8.0% for the first three months of 1998 over the comparable period of
1997. Impacting the increase in average earning assets were increases in
average loan balances of 8.4%. The average yields realized on earning
assets for the first three months approximated 8.4% in 1998 and 1997.
The average costs of interest-bearing liabilities approximated 4.3%. Net
interest margins, on a tax equivalent basis for the first three months
approximated 4.6% and 4.5% in 1998 and 1997, respectively. The provision
for loan losses charged to income decreased 50.5% in 1998. Total loans
past due 90 days and still accruing interest, non-performing loans, and
other real estate approximated $6,276,000 and $6,504,000, respectively,
as of March 31, 1998 and March 31, 1997. The balance of the allowance
for loan losses increased from $5,925,000 at March 31, 1997 to
$6,350,000 at March 31, 1998.
Total other income for the first three months of 1998 was $65,000
or 5.5% more than total other income for the first three months of 1997.
Affecting this change were security gains of $270,000 and $373,000
recognized in 1998 and 1997, respectively. Gains recognized on mortgage
sales totalled $142,000 and $40,000 in 1998 and 1997, respectively.
Loans held for sale are comprised for the most part of fixed-rate real
estate and education loans extended specifically for resale. Demand for
these products has been greater in 1998 than 1997. Loans held for sale
as of March 31, 1998 totalled $3,497,000. The market value of these
loans approximated book value at that time.
Total other expenses for the first three months of 1998 increased
$537,000 or 12.2%. Contributing factors were increases of $275,000 or
12.3% in salaries and employee benefits, $52,000 or 7.2% in net
occupancy expense, and $221,000 or 16.9% in other operating expense.
These increases were affected by the opening of new banking offices and
the recognition of certain retirement plan obligations.
The provision for income taxes increased $67,000 or 7.4% for the
first three months of 1998 in comparison to the first three months of
1997. Affecting this change was an increase in the relative amount of
tax-free income in 1998. The effective tax rates approximated 29.1% and
30.2% for the respective periods.
The previously described factors contributed to a net increase of
$274,000 or 13.0% in net income for the three month period ended March
31, 1998.
-10-
Management's Discussion, Continued
Financial Condition
The Corporation's financial condition can be examined in terms of
developing trends in its sources and uses of funds. These trends are the
result of both external environmental factors, such as changing economic
conditions, regulatory changes and competition, and internal
environmental factors such as Management's evaluation as to the best use
of funds under these changing conditions.
Increase (Decrease)
Balance since
March 31, 1998 December 31, 1997
(dollars in thousands)
Amount %
Funding Sources:
Deposits and borrowed funds:
Non-interest bearing............ $ 44,295 $ 113 .3%
Interest bearing................ 514,046 8,472 1.7
Total deposits............... 558,341 8,586 1.6
Borrowed funds.................. 79,910 (7,910) (9.0)
Other liabilities................ 7,743 (131) (1.7)
Shareholders' equity............. 75,169 1,156 1.6
Total sources................. $721,163 $ 1,701 .2%
======== ======= ====
Funding uses:
Interest earning assets:
Short-term investments.......... $ 12,990 $ 8,484 188.3%
Investment securities........... 217,094 (2,190) (1.0)
Loans, net of unearned income... 444,439 408 .1
Total interest earning assets. 674,523 6,702 1.0
Cash and due from banks.......... 21,764 (6,251) (22.3)
Other assets..................... 24,876 1,250 5.3
Total uses.................... $721,163 $ 1,701 .2%
======== ======= =====
-11-
Management's Discussion, Continued
As of March 31, 1998 cash and due from banks was $6,251,000 or
22.3% less than it was at December 31, 1997. Interest-bearing time
deposits in other banks and investment securities decreased $2,556,000
or 1.2% while fed funds sold increased $8,850,000. The approximate
market value of debt securities was $2,097,000 greater than amortized
cost at March 31, 1998. The approximate market value of debt securities
was $2,437,000 greater than amortized cost at December 31, 1997.
Securities to be held for indefinite periods of time and not intended to
be held to maturity or on a long-term basis are classified as available
for sale and carried at market value. Securities held for indefinite
periods of time include securities that management intends to use as
part of its asset/liability management strategy and that may be sold in
response to changes in interest rates, resultant prepayment risk and
other factors related to interest rate and resultant prepayment risk
changes. At March 31, 1998 and December 31, 1997, management classified
investment securities with amortized costs and market values of
$212,880,000 and $217,094,000, and $214,379,000 and $219,284,000,
respectively, as available for sale. Net loans increased $328,000 or
0.1% from December 31, 1997 to March 31, 1998. Affecting this change
were decreases in real estate loans of $477,000 and consumer loans of
$1,731,000. Commercial loans increased $3,106,000 during the period. The
allowance for loan losses approximated 1.43% and 1.41% of net loans at
March 31, 1998 and December 31, 1997. Much of the increase in net
premises and equipment of $119,000 related to new banking offices.
Goodwill continues to be amortized at an annualized rate of $240,000. As
previously noted, Community Banks, Inc. sells only fixed-rate real
estate and education loans specifically designated for resale on the
secondary market and at March 31, 1998 and December 31, 1997 these loans
totalled $3,497,000 and $2,641,000, respectively. Affecting the increase
of $375,000 in accrued interest receivable and other assets was an
increase in prepaid expenses. These factors contributed to an increase
of $1,701,000 or 0.2% in total assets from December 31, 1997 to March
31, 1998.
Total deposits increased $8,586,000 or 1.6% from December 31, 1997
to March 31, 1998. Most of the increase can be attributed to increases
in savings deposits and time deposits greater than $100,000. It is
management's philosophy to generally maintain competitive but not
overly-aggressive interest rates relative to interest-bearing
liabilities.
Management decreased short-term borrowings in 1998 in an attempt to
better balance rate sensitive assets and liabilities. At March 31, 1998
long-term debt totalling $77,269,000 included borrowings from the
Federal Home Loan Bank of Pittsburgh of $56,000,000 and repurchase
agreements totalling $20,000,000 at a weighted average interest rate of
5.77%.
Based on a one year interval, rate sensitive assets to rate
sensitive liabilities approximated 105% as of March 31, 1998.
-12-
Management's Discussion, Continued
As of March 31, 1998 the Corporation had risk-based capital in
excess of the fully implemented regulatory requirements, and tier 1 plus
tier 2 capital approximated 16% of risk-weighted assets.
Liquidity
Liquidity is the ratio of net liquid assets to net liabilities. The
primary functions of asset/liability management are the assurance of
adequate liquidity and maintenance of an appropriate balance between
interest-sensitive earning assets and interest-bearing liabilities.
Liquidity management refers to the ability to meet the cash flow
requirements of depositors and borrowers.
A continuous review of net liquid assets is conducted to assure
appropriate cash flow to meet needs and obligations in a timely manner.
There was an adequate relationship of liquid assets to short-term
liabilities at March 31, 1998
Forward Outlook
Management is unaware of any regulatory recommendations which, if
implemented, would have a material effect on the liquidity, capital
resources, or operations of CBI. Adequate loan demand is anticipated for
the remainder of 1998 and management will continue to carefully evaluate
this demand based on the creditworthiness of the borrower and the
relative strength of the economy in the Corporation's market.
The Corporation is anticipating the maintenance of a favorable net
interest margin throughout the remainder of 1998.
Other Events
On March 31, 1998, Community Banks, Inc. (Community) completed its
merger of The Peoples State Bank (Peoples). Peoples has six banking
offices which are located in York and Adams Counties, Pennsylvania.
Community issued 1,325,330 shares of common stock for all of the
outstanding common stock of Peoples. This transaction was accounted for
as a pooling of interests and combined unaudited financial information
is as follows:
Quarter Ended March 31, 1997
(dollars in thousands except per share data)
Community Peoples Combined
Interest income............ $8,127 $4,279 $12,406
Interest expense........... 3,435 2,366 5,801
Net interest income........ 4,692 1,913 6,605
Loan loss provision........ 240 150 390
Other income............... 957 235 1,192
Other expense.............. 3,134 1,261 4,395
Income before taxes........ 2,275 737 3,012
Taxes...................... 651 258 909
Net income................. $1,624 $ 479 $ 2,103
=========================================
Earnings per common share:
Basic $ .36 $ .23 $ .32
Diluted $ .35 $ .23 $ .32
Per share data has been adjusted to reflect a three for two stock split
payable May 8, 1998.
-13-
COMMUNITY BANKS, INC. and SUBSIDIARIES
PART II - OTHER INFORMATION AND SIGNATURES
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - none
(b) Registrant was not required to file any reports
on Form 8-K during the quarter ending March 31, 1998.
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 thereunto duly authorized.
COMMUNITY BANKS, INC.
(Registrant)
Date May 11, 1998 /S/ Eddie L. Dunklebarger
Eddie L. Dunklebarger
President
(Chief Executive Officer)
Date May 11, 1998 /S/ Terry L. Burrows
Terry L. Burrows
Executive Vice-President
(Chief Financial Officer)
-14-
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1998
<CASH> 21,764
<INT-BEARING-DEPOSITS> 2,040
<FED-FUNDS-SOLD> 10,950
<TRADING-ASSETS> 3,497
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 217,094
<INVESTMENTS-MARKET> 212,880
<LOANS> 426,776
<ALLOWANCE> 6,350
<TOTAL-ASSETS> 721,163
<DEPOSITS> 558,341
<SHORT-TERM> 2,641
<LIABILITIES-OTHER> 7,743
<LONG-TERM> 77,269
<COMMON> 22,046
0
0
<OTHER-SE> 53,123
<TOTAL-LIABILITIES-AND-EQUITY> 721,163
<INTEREST-LOAN> 9,911
<INTEREST-INVEST> 3,393
<INTEREST-OTHER> 152
<INTEREST-TOTAL> 13,456
<INTEREST-DEPOSIT> 5,070
<INTEREST-EXPENSE> 6,235
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</TABLE>
