UNITED STATES
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
March 31, 1998
Date of Report (Date of earliest event reported)
Community Banks, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania 0-15786 23-2251762
(State or other jurisdiction (Commission (IRS Employer
of incorporation or organization) File Number) ID No.)
150 Market Street
Millersburg, Pennsylvania 17061
(Address of principal executive offices) (Zip Code)
(717) 692-4781
(registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Item 2. Acquisition or Disposition of Assets.
On March 31, 1998 (the "Effective Date") Registrant
acquired The Peoples State Bank of East Berlin ("Peoples")
as a wholly owned banking subsidiary of Registrant. The
merger was affected pursuant to an Agreement and Plan of
Merger dated October 28, 1997 (the "Merger Agreement")
between Registrant and Peoples.
Pursuant to the terms of the Merger Agreement, on
the Effective Date, each share of Peoples common stock, par
value of $1.00, issued and outstanding was converted into
the right to receive 0.889 shares of the Registrant's common
stock, $5.00 par value, as determined by the Merger
Agreement.
In the Merger, approximately 1,490,000 shares of
Peoples outstanding common stock were exchanged for
approximately 1,325,000 shares of common stock of
Registrant. The remaining shares of Peoples outstanding
common stock which represented fractional shares were
exchanged for cash in the amount of $40.72 per share. Funds
needed to pay the cash portion of the purchase price were
obtained internally by liquidation of short-term
investments. The total consideration associated with the
Merger approximated $53,400,000.
Within ten business days after the Effective Date,
Registrant sent to each person who on the Effective Date was
a holder of record of Peoples' common stock transmittal
materials and instructions for surrendering certificates for
Peoples' common stock in exchange for the number of whole
shares of Registrant's common stock to which such person is
entitled pursuant to the exchange ratio. No certificates for
fractional shares of Registrant's common stock will be
issued. Registrant will furnish to any holder of common
stock entitled to a fractional share a check for an amount
of cash equal to the fraction of a share of Registrant's
common stock represented by the certificates so surrendered
in accordance with the exchange ratio.
There were no relationships, material or otherwise,
between Peoples and the Registrant or any of the
Registrant's affiliates, or any director or officer of the
Registrant, or any associate of any such director or officer
prior to the Effective Date. In accordance with the Merger
Agreement, Eddie L. Dunklebarger, Harry B. Nell, Earl L.
Mummert, and Wayne H. Mummert, Directors of Peoples, will be
named to CBI's Board of Directors.
For additional information regarding the Merger,
Peoples and the Merger Agreement, reference is made to the
Joint Proxy Statement/Prospectus dated January 9, 1998
included in Registrant's Registration Statement No. 33-42941
on Form S-4 dated December 22, 1997.
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Item 7. Financial Statements and Exhibits.
(a) Financial Statements:
Pursuant to Item 7(a)(4) of Form 8-K, Registrant is
not providing the required financial statements with this
Current Report on Form 8-K because to do so would be
impracticable. The Registrant will file such financial
information as can be generated within the 60 day period
following the date by which this Current Report on Form 8-K
must be filed as provided in Item 7(a)(4).
(b) Pro Forma Financial Information
Pursuant to Item 7(a)(4) of Form 8-K, Registrant is
not providing the required financial statements with this
Current Report on Form 8-K because to do so would be
impracticable. The Registrant will file such financial
information as can be generated within the 60 day period
following the date by which this Current Report on Form 8-K
must be filed as provided in Item 7(a)(4).
(c) Exhibits:
(2) Plan of Acquisition, Reorganization,
Arrangement, Liquidation or Succession.
Incorporated by reference is the Joint Proxy
Statement/Prospectus dated January 9, 1998 included in
Registrant's Registration Statement No. 33-42941 on Form S-4
dated December 22, 1997.
(28) Additional Exhibits.
The press release of the Registrant dated October
28, 1997, regarding consummation of the Merger is included
on pages 4 and 5.
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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.
Date: April 13, 1998 By:/s/ Terry L. Burrows
Terry L. Burrows
Executive Vice President
Chief Financial Officer
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PRESS RELEASE
COMMUNITY BANKS, INC.
FOR IMMEDIATE RELEASE:
Millersburg, Pennsylvania Date: October 28, 1997
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 term 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 planed 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.
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."
