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Susquehanna acquires Community Banks Inc.

May 06, 2007

LITITZ, Pa. - Susquehanna Bancshares Inc. and Community Banks Inc. recently announced the signing of a definitive merger agreement pursuant to which Susquehanna will acquire Community in a stock-and-cash transaction valued at about $860 million.

The transaction, unanimously approved by the boards of directors of both companies, will consolidate the companies' presence in southeastern Pennsylvania and the mid-Atlantic region, particularly in the York and Lancaster markets.

The combined company will have more than $12 billion in assets and about $2 billion in market capitalization, making it the 45th largest bank holding company in the United States.

The acquisition ranks as the largest in Susquehanna's history, and as Pennsylvania's third-largest in-state bank transaction.

Under the terms of the merger agreement, shareholders of Community will be entitled to elect to receive for each share of Community common stock they own, either $34 in cash or 1.48 shares of Susquehanna common stock. Community shareholders may elect to receive cash for some shares and stock for others, but all shareholder elections will be subject to allocation procedures that will result in the exchange of 90 percent of Community's common shares outstanding for shares of Susquehanna common stock and the remaining 10 percent of Community common shares outstanding for cash. Based upon the stated value of $34 per share, the transaction price represents 20.1 times Community's 2007 earnings per share estimate as reported by First Call.

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Susquehanna expects to achieve about 35 percent cost savings, or approximately $33 million, through the reduction of administrative and operational redundancies.

It is anticipated that the transaction will be completed during the fourth quarter of 2007, pending regulatory approvals, the approval of the shareholders of both Community and Susquehanna, and the satisfaction of other closing conditions. The transaction is expected to be accretive to earnings per share in the first full year after closing.

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