exhibit_99-1.htm

FOR IMMEDIATE RELEASE

Date: October 18, 2007

Contact: Donald F. Holt, EVP/CFO

(717) 920-5801, Fax (717) 920-1683

COMMUNITY REPORTS EARNINGS, INCLUDES MERGER EXPENSES

Harrisburg, PA- Community Banks, Inc. (“Community”) (Listed on NASDAQ: CMTY) today reported third quarter earnings per share for 2007 of $0.42, which was $0.03 less than the $0.45 recorded in the same period of 2006. Net income reached $10.5 million, almost equal to the net income recorded in the prior year’s quarter. Results for the third quarter of 2007 were inclusive of $754,000 of merger-related expenses incurred in connection with the upcoming merger with Susquehanna Bancshares, Inc. (Listed on NASDAQ: SUSQ), which reduced the current quarter’s earnings by more than $0.02 per share.

Net income and earnings per share for the first nine months of 2007 were hampered by the March 31, 2007, recognition of securities losses that were attributed to Community’s portfolio restructuring initiative in the first quarter. The first quarter investment losses reduced year-to-date net income and earnings per share by $2.9 million and $0.12, respectively. Primarily as a result of the restructuring charge, year-to-date earnings per share performance for the first nine months of 2007 declined to $1.14 versus $1.32 for the same period of 2006. The losses stemming from that initiative facilitated the reinvestment of investment sale proceeds into higher-yielding securities.

On May 1, 2007, Community announced the signing of a definitive merger agreement with Susquehanna Bancshares, Inc., ("Susquehanna") pursuant to which Community will be merged with Susquehanna in a stock and cash transaction that was valued at approximately $860 million. 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 $34.00 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. The transaction will consolidate the companies' presence in southeastern Pennsylvania and the Mid-Atlantic region, particularly in the attractive York and Lancaster markets. The combined company will have over $12 billion in assets and approximately $2 billion in market capitalization, making it the 45th largest bank holding company in the United States.

"We have remained determined in our efforts to favorably position the Community franchise even as we finalize our preparation for the upcoming affiliation with Susquehanna,” commented Eddie L. Dunklebarger, President and Chief Executive Officer. “The favorable earnings trends that have occurred since the time of our announcement, particularly in light of continuing unfavorable conditions for the banking industry, have reflected the tireless efforts of our employees. We know that this same dedication will carry over as we prepare to become a vital part of a much larger franchise.”

Community Banks, Inc. • 777 East Park Drive, 2nd Floor • Harrisburg, PA 17111 • Phone 717-920-5800

Community completed two mergers of its own effective April 1, 2007, and the results for the six months ended September 30, 2007 reflect the combined results of both BUCS Financial Corp (BUCS) and East Prospect State Bank (East Prospect). BUCS’ four branches, located primarily in central Maryland, and East Prospect's single banking office in York County, have provided an important market extension into the desirable, adjacent Maryland market and bolstered Community’s position in the vibrant York County, Pennsylvania, market. With the completion of the two mergers, Community’s operating footprint boasts assets of $3.8 billion and 81 banking offices that extend throughout the center of Pennsylvania from the Pocono region into suburban Baltimore, Maryland. Community Banks, Inc., is the 8^th largest financial services holding company headquartered in Pennsylvania and the largest financial institution headquartered in its capital city of Harrisburg.

Comparisons of operating performance in the third quarter are slightly distorted by the impact of the two mergers that occurred on April 1, 2007. A number of performance metrics serve to illustrate the continuing difficulties presented by the external operating environment. Despite these challenges, Community has continued to record results ahead of many of its competitors. Net interest margin, a primary driver of net interest income performance, declined only slightly from the second quarter, from 3.72% to 3.67%. At the same time, non-interest income as a percent of total income also declined, from 26.8% to 25.38%. The efficiency ratio, which expresses non-interest expenses as a percent of total revenues was a bright spot at 56.31% and served to illustrate Community’s ongoing efforts to keep operating expenses in line with revenue performance. Loan, total asset and deposit growth were all in the 8% to11% range, though a significant portion of the growth was attributed to the additional loans, assets and deposits brought on in the mergers.

Like many banks of its size, Community has begun to experience increases in the level of non-accrual loans, which grew from $12.5 million at December 31, 2006, to $26.4 million at September 30, 2007. Community continues to maintain an allowance for loan losses that it believes is adequate to absorb losses, if any, by deterioration in these credit relationships. During the third quarter, Community added nearly $1.1 million to the allowance via its provision to loan losses. Such provision was in excess of the $0.5 million of net-charge offs which occurred for the three months ended September 30, 2007.

This press release contains “forward looking” information as defined by the Private Securities Litigation Reform Act of 1995, which is based on Community’s current expectations, estimates and projections about future events and financial trends affecting the financial condition of its business. These statements are not historical facts or guarantees of future performance, events, or results. Such statements involve potential risks and uncertainties and, accordingly, actual performance results may differ materially. Community undertakes no obligation to publicly update or revise forward looking information, whether as a result of new, updated information, future events, or otherwise.

COMMUNITY BANKS, INC.

Selected Financial Information
(Dollars in thousands, except per share data) ⁽¹⁾

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2007			2006			2007			2006
*Consolidated Summary of Operations:*
Interest income	$	56,668		$	50,443		$	165,610		$	146,270
Interest expense		28,532			23,505			82,628			65,461
Net interest income		28,136			26,938			82,982			80,809
Provision for loan losses		1,050			250			3,050			1,400
Net interest income after provision for loan losses		27,086			26,688			79,932			79,409

Non-interest income:
Investment management and trust services		1,211			968			4,259			3,069
Service charges on deposit accounts		4,278			3,037			11,951			8,423
Other service charges, commissions, and fees		2,209			1,817			6,494			5,420
Investment security gains (losses)		---			28			(4,388	)		317
Trading activities gains		38			---			4			---
Insurance premium income and commissions		1,079			1,053			3,318			3,098
Mortgage banking activities		459			533			1,701			1,581
Earnings on investment in life insurance		755			679			2,199			2,010
Other		345			725			1,168			1,849
Total non-interest income		10,374			8,840			26,706			25,767

Non-interest expenses:
Salaries and employee benefits		12,419			11,611			37,497			34,280
Net occupancy and equipment expense		3,917			3,452			11,691			10,350
Payment card processing expense		848			553			2,235			1,391
Marketing expense		350			354			1,407			1,194
Telecommunications expense		718			542			1,855			1,659
Merger expenses		754			---			754			---
Amortization of intangibles		750			659			2,222			2,015
Other		3,930			4,001			12,657			11,514
Total non-interest expenses		23,686			21,172			70,318			62,403
Income before income taxes		13,774			14,356			36,320			42,773
Income taxes		3,281			3,798			8,290			11,142

Net income	$	10,493		$	10,558		$	28,030		$	31,631

Net loan charge-offs	$	480		$	4		$	2,416		$	331
Net interest margin (FTE)		3.67	%		3.90	%		3.71	%		3.94	%
Efficiency ratio ⁽²⁾		56.31	%		56.25	%		57.59	%		56.12	%
Return on average assets		1.10	%		1.24	%		1.01	%		1.25	%
Return on average stockholders’ equity		7.99	%		8.88	%		7.34	%		8.93	%
Net operating (tangible) income ⁽³⁾	$	11,471		$	10,986		$	29,965		$	32,940
Operating return on average tangible assets ⁽³⁾⁽⁴⁾		1.30	%		1.39	%		1.17	%		1.41	%
Operating return on average tangible equity ⁽³⁾⁽⁴⁾		18.66	%		20.31	%		16.71	%		20.34	%

*Consolidated Per Share Data:*

Basic earnings per share	$	0.42		$	0.45		$	1.15		$	1.34

Diluted earnings per share	$	0.42		$	0.45		$	1.14		$	1.32

Book value at end of period	$	21.21		$	20.43		$	21.21		$	20.43

Tangible book value at end of period ⁽⁴⁾	$	10.05		$	9.45		$	10.05		$	9.45

COMMUNITY BANKS, INC.

Selected Financial Information

(Dollars in thousands, except per share data) ⁽¹⁾

Consolidated Balance Sheet Data:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2007		2006		2007		2006

Average total loans	$	2,578,729	$	2,339,352	$	2,519,749	$	2,314,257
Average earning assets		3,288,918		2,935,448		3,237,785		2,939,506
Average assets		3,778,338		3,385,905		3,710,298		3,387,018
Average tangible assets ⁽⁴⁾		3,498,844		3,126,882		3,437,714		3,128,116
Average deposits		2,638,388		2,438,057		2,587,525		2,374,197
Average stockholders’ equity		521,089		471,911		510,268		473,680
Average tangible equity ⁽⁴⁾		243,944		214,643		239,808		216,553
Average diluted shares outstanding		24,988,695		23,662,529		24,601,460		23,925,653

										9/30/2007
										vs.
	September 30,			December 31,			September 30,			9/30/2006
	2007			2006			2006			% Change

Assets	$	3,789,634		$	3,496,370		$	3,431,208			10	%
Total loans		2,609,744			2,370,889			2,348,159			11	%
Deposits		2,626,788			2,513,182			2,483,519			6	%
Stockholders’ equity		526,475			486,161			479,584			10	%
Common shares outstanding		24,824,773			23,519,041			23,682,673			5	%


Non-accrual loans	$	26,390		$	12,545		$	11,626			127	%
Loans renegotiated with borrowers		815			---			---		NM
Foreclosed real estate		3,175			37			52		NM
Total non-performing assets		30,380			12,582			11,678			160	%
Accruing loans 90 days past due		33			659			685			(95	)%

Total risk elements	$	30,413		$	13,241		$	12,363			146	%

Allowance for loan losses	$	25,580		$	23,626		$	24,034			6	%

*Asset Quality Ratios:*

Allowance for loan losses to total loans		0.98	%		1.00	%		1.02	%
Allowance for loan losses to non-accrual loans		97	%		188	%		207	%
Non-accrual loans to total loans		1.01	%		0.53	%		0.50	%
Non-performing assets to total assets		0.80	%		0.36	%		0.34	%

⁽¹⁾ Per share data reflect stock splits and stock dividends.
⁽²⁾ The efficiency ratio does not include net securities transactions or merger expenses.
⁽³⁾ Net operating (tangible) income excludes amortization of core deposit and other intangible assets, net of applicable income tax effects. A reconciliation of net income and net operating (tangible) income appears on page 5.
⁽⁴⁾ The difference between total assets and total tangible assets, and stockholders’ equity and tangible stockholders’ equity, represents goodwill and core deposit and other intangibles net of applicable deferred tax balances. A reconciliation of these balances appears on page 5.

COMMUNITY BANKS, INC.

Selected Financial Information

(Dollars in thousands, except per share data)

Reconciliation of GAAP to Non-GAAP Measures ⁽¹⁾:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2007			2006			2007			2006
Income statement data:

Net income
Net income	$	10,493		$	10,558		$	28,030		$	31,631
Amortization of core deposit and other intangible assets ⁽¹⁾		488			428			1,445			1,309
Merger expenses ⁽¹⁾		490			---			490			---
Net operating (tangible) income	$	11,471		$	10,986		$	29,965		$	32,940


Balance sheet data:

Average assets
Average assets	$	3,778,338		$	3,385,905		$	3,710,298		$	3,387,018
Goodwill		(265,048	)		(245,794	)		(258,449	)		(245,439	)
Core deposit and other intangible assets		(14,446	)		(13,229	)		(14,135	)		(13,463	)
Average tangible assets	$	3,498,844		$	3,126,882		$	3,437,714		$	3,128,116

Operating return on average tangible assets		1.30	%		1.39	%		1.17	%		1.41	%

Average equity
Average equity	$	521,089		$	471,911		$	510,268		$	473,680
Goodwill		(265,048	)		(245,794	)		(258,449	)		(245,439	)
Core deposit and other intangible assets		(14,446	)		(13,229	)		(14,135	)		(13,463	)
Deferred taxes		2,349			1,755			2,124			1,775
Average tangible equity	$	243,944		$	214,643		$	239,808		$	216,553

Operating return on average tangible equity		18.66	%		20.31	%		16.71	%		20.34	%

At end of quarter:
Total assets
Total assets	$	3,789,634		$	3,431,208		$	3,789,634		$	3,431,208
Goodwill		(265,136	)		(245,864	)		(265,136	)		(245,864	)
Core deposit and other intangible assets		(14,083	)		(13,641	)		(14,083	)		(13,641	)
Total tangible assets	$	3,510,415		$	3,171,703		$	3,510,415		$	3,171,703

Total equity
Total equity	$	526,475		$	479,584		$	526,475		$	479,584
Goodwill		(265,136	)		(245,864	)		(265,136	)		(245,864	)
Core deposit and other intangible assets		(14,083	)		(13,641	)		(14,083	)		(13,641	)
Deferred taxes		2,277			1,698			2,277			1,698
Total tangible equity	$	249,533		$	221,777		$	249,533		$	221,777

Tangible book value at end of period	$	10.05		$	9.45		$	10.05		$	9.45

⁽¹⁾ Net of related tax effect

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight – SEPTEMBER 30, 2007


KEY RATIOS⁽¹⁾

	2007									2006
	Third			Second			First			Fourth			Third
	Quarter			Quarter			Quarter			Quarter			Quarter			Annual
Diluted earnings per share	$	0.42		$	0.44		$	0.28		$	0.40		$	0.45		$	1.72
Tangible operating earnings per share ⁽¹⁾	$	0.46		$	0.46		$	0.30		$	0.41		$	0.46		$	1.79
Return on average assets		1.10	%		1.15	%		0.75	%		1.08	%		1.24	%		1.21	%
Return on average equity		7.99	%		8.41	%		5.49	%		7.74	%		8.88	%		8.63	%
Operating return on average tangible assets ⁽²⁾		1.30	%		1.31	%		0.87	%		1.22	%		1.39	%		1.36	%
Operating return on average tangible equity ⁽²⁾		18.66	%		18.72	%		12.40	%		17.37	%		20.31	%		19.57	%

Net interest margin		3.67	%		3.72	%		3.73	%		3.71	%		3.90	%		3.88	%
Non-interest income/revenues (FTE excluding security gains)		25.38	%		26.80	%		24.93	%		23.83	%		23.40	%		22.99	%
Provision for loan losses/average loans (annualized)		0.16	%		0.11	%		0.22	%		0.11	%		0.04	%		0.09	%
Efficiency ratio ⁽⁴⁾		56.31	%		58.17	%		58.32	%		60.97	%		56.25	%		57.33	%

Non-performing assets to period-end loans		1.16	%		0.85	%		0.65	%		0.53	%		0.50	%
90 day past due loans to period-end loans		---	%		---	%		---	%		0.03	%		0.03	%
Total risk elements to period-end loans		1.16	%		0.85	%		0.65	%		0.56	%		0.53	%

Allowance for loan losses to loans		0.98	%		0.97	%		1.00	%		1.00	%		1.02	%		1.00	%
Allowance for loan losses to
non-accrual loans		97	%		131	%		155	%		188	%		207	%		188	%
Net charge-offs/average loans (annualized)		0.07	%		0.22	%		0.09	%		0.18	%		0.00	%		0.06	%

Equity to assets		13.89	%		13.79	%		13.52	%		13.90	%		13.98	%		13.90	%
Tangible equity to assets ⁽³⁾		7.11	%		6.90	%		6.92	%		7.05	%		6.99	%		7.05	%


⁽¹⁾ Per share data reflect stock splits and stock dividends.
⁽²⁾Net tangible operating income excludes amortization of core deposit and other intangible assets, and merger, conversion and restructuring expenses, net of applicable income tax effects. A reconciliation of net income and net tangible operating income appears on page 19.
⁽³⁾ The difference between total assets and total tangible assets, and stockholders’ equity and tangible stockholders’ equity, represents goodwill and core deposit and other intangibles net of applicable deferred tax balances. A reconciliation of these balances appears on page 19.
⁽⁴⁾The efficiency ratio does not include net securities transactions or merger expenses.

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight – SEPTEMBER 30, 2007


PER SHARE STATISTICS *

Diluted Earnings (Loss) per Share
	Fourth		Third		Second			First
	Quarter		Quarter		Quarter			Quarter		Total
2007			$	0.42	$	0.44		$	0.28	$	1.14
2006	$	0.40	$	0.45	$	0.44		$	0.44	$	1.72
2005	$	0.45	$	0.42	$	(0.09	)	$	0.42	$	1.35


Average Diluted Shares Outstanding
(in thousands)	Fourth		Third		Second			First		Average for
	Quarter		Quarter		Quarter			Quarter		Year
2007				24,989		24,962			23,683		24,601
2006		23,728		23,663		23,858			24,189		23,918
2005		24,421		24,750		13,240			13,192		18,975


Book Value per Share
	Fourth		Third		Second			First
	Quarter		Quarter		Quarter			Quarter
2007			$	21.21	$	20.85		$	20.83
2006	$	20.67	$	20.43	$	19.86		$	19.96
2005	$	19.81	$	19.83	$	11.82		$	11.74


Tangible Book Value per Share
	Fourth		Third		Second			First
	Quarter		Quarter		Quarter			Quarter
2007			$	10.05	$	9.66		$	9.91
2006	$	9.71	$	9.45	$	8.91		$	9.19
2005	$	9.12	$	9.26	$	11.43		$	11.35

* Per share data reflect stock splits and stock dividends

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight – SEPTEMBER 30, 2007



QUARTER END INFORMATION

(dollars in thousands)	2007									2006
	Third			Second			First			Fourth			Third
	Quarter			Quarter			Quarter			Quarter			Quarter
Total loans	$	2,609,744		$	2,567,638		$	2,442,318		$	2,370,889		$	2,348,159
Allowance for loan losses		(25,580	)		(25,010	)		(24,379	)		(23,626	)		(24,034	)
Loans, net		2,584,164			2,542,628			2,417,939			2,347,263			2,324,125
Earning assets		3,298,191			3,249,928			3,153,614			3,033,585			2,971,391
Goodwill and other intangible assets		279,219			279,963			258,812			259,406			259,505
Total assets		3,789,634			3,750,844			3,627,739			3,496,370			3,431,208
Deposits		2,626,788			2,608,164			2,529,187			2,513,182			2,483,519
Long-term debt		413,483			455,104			438,196			315,079			336,954
Subordinated debt		75,260			75,260			72,167			51,548			51,548
Total shareholder's equity		526,475			517,193			490,564			486,161			479,584
Accumulated other comprehensive income (loss) (net of tax)		(4,692	)		(8,300	)		650			(1,806	)		(2,670	)

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight – SEPTEMBER 30, 2007

CONDENSED CONSOLIDATED QUARTERLY AVERAGE STATEMENTS OF CONDITION

(dollars in thousands)	2007									2006
	Third			Second			First			Fourth			Third
	Quarter			Quarter			Quarter			Quarter			Quarter
Assets
Earning Assets:
Loans	$	2,578,729		$	2,574,074		$	2,404,530		$	2,353,774		$	2,339,352
Federal funds sold and other		27,494			79,230			10,701			37,059			29,324
Investment securities		682,695			671,210			682,592			610,312			566,772
Total earning assets		3,288,918			3,324,514			3,097,823			3,001,145			2,935,448

Cash and due from banks		62,333			60,873			55,542			62,318			62,636
Allowance for loan losses		(25,490	)		(25,985	)		(24,022	)		(24,102	)		(24,385	)
Goodwill and other intangible assets		279,494			278,950			259,083			259,373			259,023
Premises, equipment and other assets		173,083			167,442			155,763			153,361			153,183
Total assets	$	3,778,338		$	3,805,794		$	3,544,189		$	3,452,095		$	3,385,905

Liabilities and equity
Interest-bearing liabilities:
Deposits
Savings and NOW accounts	$	937,362		$	942,150		$	858,469		$	876,404		$	873,670
Time		1,017,512			1,030,564			994,824			1,010,249			984,415
Time deposits greater than $100,000		327,450			324,099			268,268			267,747			235,264
Short-term borrowings		81,387			65,019			124,985			77,910			60,680
Long-term debt		435,014			456,769			391,196			318,078			340,162
Subordinated debt		75,260			75,260			56,817			51,548			51,548
Total interest-bearing liabilities		2,873,985			2,893,861			2,694,559			2,601,936			2,545,739

Non-interest bearing deposits		356,064			363,298			340,580			342,766			344,708
Other liabilities		27,200			26,226			22,122			25,659			23,547
Total liabilities		3,257,249			3,283,385			3,057,261			2,970,361			2,913,994
Stockholders' equity		521,089			522,409			486,928			481,734			471,911
Total liabilities and stockholders’ equity	$	3,778,338		$	3,805,794		$	3,544,189		$	3,452,095		$	3,385,905


CHANGE IN AVERAGE BALANCES*

	2007									2006
	Third			Second			First			Fourth			Third
	Quarter			Quarter			Quarter			Quarter			Quarter
Loans		10.2	%		11.3	%		5.0	%		6.9	%		9.3	%
Total assets		11.6	%		12.2	%		4.8	%		4.2	%		2.1	%
Deposits		8.2	%		11.7	%		7.0	%		10.4	%		8.4	%
Stockholders' equity		10.4	%		11.0	%		1.8	%		1.3	%		(1.9	)%

* Compares the current quarter to the comparable quarter of the prior year

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight – SEPTEMBER 30, 2007



CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands)	2007							2006
	Third		Second		First			Fourth		Third
	Quarter		Quarter		Quarter			Quarter		Quarter		Annual
Interest income	$	56,668	$	56,703	$	52,239		$	51,364	$	50,443	$	197,634
Tax equivalent adjustment		2,260		2,234		2,253			1,998		1,916		7,802

		58,928		58,937		54,492			53,362		52,359		205,436
Interest expense		28,532		28,124		25,972			25,273		23,505		90,734

Net interest income		30,396		30,813		28,520			28,089		28,854		114,702
Provision for loan losses		1,050		700		1,300			650		250		2,050

Net interest income after provision		29,346		30,113		27,220			27,439		28,604		112,652
Non-interest income		9,915		10,554		8,924			8,194		8,279		32,063
Investment security gains (losses)		---		---		(4,388	)		415		28		732
Mortgage banking activities income		459		694		548			591		533		2,172
Non-interest expenses		22,932		24,491		22,141			22,482		21,172		84,885
Merger expenses		754		---		---			---		---		---

Income before income taxes		16,034		16,870		10,163			14,157		16,272		62,734
Income taxes		3,281		3,686		1,323			2,759		3,798		13,901
Tax equivalent adjustment		2,260		2,234		2,253			1,998		1,916		7,802

NET INCOME	$	10,493	$	10,950	$	6,587		$	9,400	$	10,558	$	41,031

Tax effect of security transactions	$	---	$	---	$	(1,536	)	$	145	$	10	$	256

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight - SEPTEMBER 30, 2007



ANALYSIS OF NON-INTEREST INCOME

(dollars in thousands)	2007							2006
	Third		Second			First		Fourth		Third
	Quarter		Quarter			Quarter		Quarter		Quarter		Annual

Investment management and trust services	$	1,211	$	1,603		$	1,445	$	1,325	$	968	$	4,394
Service charges on deposit accounts		4,278		4,677			2,996		3,084		3,037		11,507
Other service charges, commissions and fees		2,209		2,257			2,028		1,852		1,817		7,272
Insurance premium income and commissions		1,079		1,063			1,176		1,022		1,053		4,120
Earnings on investment in life insurance		755		756			688		715		679		2,725
Trading activities loss		38		(34	)		---		---		---		---
Other income		345		232			591		196		725		2,045

Total non-interest income	$	9,915	$	10,554		$	8,924	$	8,194	$	8,279	$	32,063





ANALYSIS OF NON-INTEREST EXPENSES

(dollars in thousands)	2007							2006
	Third		Second			First		Fourth		Third
	Quarter		Quarter			Quarter		Quarter		Quarter		Annual

Salaries and employee benefits	$	12,419	$	13,069		$	12,009	$	12,154	$	11,611	$	46,434
Net occupancy and equipment expense		3,917		3,980			3,794		3,767		3,452		14,117
Payment card processing expense		848		774			613		530		553		1,922
Marketing expense		350		552			505		558		354		1,752
Telecommunications expense		718		612			525		584		542		2,243
Amortization of intangibles		750		811			661		624		659		2,639
Other operating expenses		3,930		4,693			4,034		4,265		4,001		15,778

Total non-interest expenses	$	22,932	$	24,491		$	22,141	$	22,482	$	21,172	$	84,885

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight – SEPTEMBER 30, 2007


RISK ELEMENTS ANALYSIS

(dollars in thousands)	2007									2006
	Third			Second			First			Fourth			Third
	Quarter			Quarter			Quarter			Quarter			Quarter

Non-performing assets:
Non-accrual loans	$	26,390		$	19,032		$	15,715		$	12,545		$	11,626
Loans renegotiated with borrowers		815			665			---			---			---
Foreclosed real estate		3,175			2,122			61			37			52

Total non-performing assets		30,380			21,819			15,776			12,582			11,678
Accruing loans 90 days or more past due		33			64			101			659			685

Total risk elements	$	30,413		$	21,883		$	15,877		$	13,241		$	12,363




Non-performing assets to period-end loans		1.16	%		0.85	%		0.65	%		0.53	%		0.50	%

90 day past due loans to period-end loans		---	%		---	%		---	%		0.03	%		0.03	%

Total risk elements to period-end loans		1.16	%		0.85	%		0.65	%		0.56	%		0.53	%

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight - SEPTEMBER 30, 2007


ALLOWANCE FOR LOAN LOSSES

(dollars in thousands)	2007									2006
	Third			Second			First			Fourth			Third
	Quarter			Quarter			Quarter			Quarter			Quarter

Balance at beginning of period	$	25,010		$	24,379		$	23,626		$	24,034		$	23,788
Loans charged off		(618	)		(1,564	)		(660	)		(1,136	)		(499	)
Recoveries		138			175			113			78			495

Net loans charged off		(480	)		(1,389	)		(547	)		(1,058	)		(4	)
Provision for loan losses		1,050			700			1,300			650			250

Allowance established for acquired credit risk		---			1,320			---			---			---

Balance at end of period	$	25,580		$	25,010		$	24,379		$	23,626		$	24,034



Net loans charged-off to average loans*		0.07	%		0.22	%		0.09	%		0.18	%		0.00	%

Provision for loan losses to average loans*		0.16	%		0.11	%		0.22	%		0.11	%		0.04	%

Allowance for loan losses to loans		0.98	%		0.97	%		1.00	%		1.00	%		1.02	%

*Annualized

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight - SEPTEMBER 30, 2007


OTHER RATIOS

	2007									2006
	Third			Second			First			Fourth			Third
	Quarter			Quarter			Quarter			Quarter			Quarter

Investment portfolio – fair value to amortized cost		99.4	%		98.6	%		100.6	%		100.0	%		99.9	%
Dividend payout ratio		49.7	%		47.6	%		75.1	%		50.0	%		44.4	%
Net loans to deposits ratio, average		96.8	%		95.8	%		96.7	%		93.3	%		95.0	%


MARKET PRICE AND DIVIDENDS DECLARED *


	Closing Bid Price Range				Dividends
Year / Quarter	High		Low		Declared

2007
First	$	28.11	$	22.96	$	0.2100
Second	$	34.39	$	22.82	$	0.2100
Third	$	33.13	$	24.89	$	0.2100
Fourth
					$	0.6300


2006
First	$	27.85	$	25.67	$	0.1905
Second	$	27.39	$	24.38	$	0.2000
Third	$	27.29	$	24.58	$	0.2000
Fourth	$	28.48	$	25.74	$	0.2000
					$	0.7905


2005
First	$	27.15	$	22.57	$	0.1619
Second	$	25.24	$	21.94	$	0.1810
Third	$	27.48	$	25.39	$	0.1810
Fourth	$	28.42	$	23.90	$	0.1905
					$	0.7144


* Per share data reflect stock splits and dividends

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight - SEPTEMBER 30, 2007


NET INTEREST MARGIN - YEAR-TO-DATE

(dollars in thousands)	September 30, 2007							September 30, 2006
	Average Balance		FTE Interest Income/ Expense		Average Rate Earned/Paid			Average Balance		FTE Interest Income/ Expense		Average Rate Earned/Paid
Federal funds sold and interest-bearing deposits in banks	$	39,203	$	1,524		5.20	%	$	39,340	$	1,427		4.85	%
Investment securities		678,833		31,311		6.17	%		585,909		26,084		5.95	%
Loans - commercial		942,456		55,779		7.91	%		825,241		47,844		7.75	%
- commercial real estate		806,338		43,304		7.18	%		819,887		42,741		6.97	%
- residential real estate		169,051		7,892		6.24	%		151,751		6,933		6.11	%
- consumer		601,904		32,547		7.23	%		517,378		27,045		6.99	%
Total earning assets	$	3,237,785	$	172,357		7.12	%	$	2,939,506	$	152,074		6.92	%

Deposits - savings and NOW accounts	$	912,949	$	16,144		2.36	%	$	840,397	$	12,363		1.97	%
- time		1,321,206		44,516		4.50	%		1,177,600		34,700		3.94	%
Short-term borrowings		90,304		3,240		4.80	%		62,340		2,080		4.46	%
Long-term debt		427,820		15,008		4.69	%		403,828		13,611		4.51	%
Subordinated debt		69,180		3,720		7.19	%		49,282		2,707		7.34	%
Total interest-bearing liabilities	$	2,821,459	$	82,628		3.92	%	$	2,533,447	$	65,461		3.45	%

Interest income to earning assets						7.12	%						6.92	%
Interest expense to paying liabilities						3.92	%						3.45	%
Interest spread						3.20	%						3.47	%
Impact of non-interest funds						0.51	%						0.47	%
Net interest margin			$	89,729		3.71	%			$	86,613		3.94	%

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight - SEPTEMBER 30, 2007


NET INTEREST MARGIN - QUARTER-TO-DATE

(dollars in thousands)	September 30, 2007							September 30, 2006
	Average Balance		FTE Interest Income/ Expense		Average Rate Earned/Paid			Average Balance		FTE Interest Income/ Expense		Average Rate Earned/Paid
Federal funds sold and interest-bearing deposits in banks	$	27,494	$	346		4.99	%	$	29,324	$	390		5.28	%
Investment securities		682,695		10,664		6.20	%		566,772		8,556		5.99	%
Loans - commercial		958,605		19,019		7.87	%		831,950		16,687		7.96	%
- commercial real estate		807,618		14,631		7.19	%		831,288		14,810		7.07	%
- residential real estate		178,487		2,709		6.02	%		150,926		2,364		6.21	%
- consumer		634,019		11,559		7.23	%		525,188		9,552		7.22	%
Total earning assets	$	3,288,918	$	58,928		7.11	%	$	2,935,448	$	52,359		7.08	%

Deposits - savings and NOW accounts	$	937,362	$	5,659		2.40	%	$	873,670	$	4,969		2.26	%
- time		1,344,962		15,397		4.54	%		1,219,679		12,889		4.19	%
Short-term borrowings		81,387		918		4.47	%		60,680		739		4.83	%
Long-term debt		435,014		5,207		4.75	%		340,162		3,936		4.59	%
Subordinated debt		75,260		1,351		7.12	%		51,548		972		7.48	%
Total interest-bearing liabilities	$	2,873,985	$	28,532		3.94	%	$	2,545,739	$	23,505		3.66	%

Interest income to earning assets						7.11	%						7.08	%
Interest expense to paying liabilities						3.94	%						3.66	%
Interest spread						3.17	%						3.42	%
Impact of non-interest funds						0.50	%						0.48	%
Net interest margin			$	30,396		3.67	%			$	28,854		3.90	%

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight – SEPTEMBER 30, 2007


NET INTEREST MARGIN - QUARTER-TO-DATE

(dollars in thousands)	September 30, 2007							June 30, 2007
	Average Balance		FTE Interest Income/ Expense		Average Rate Earned/Paid			Average Balance		FTE Interest Income/ Expense		Average Rate Earned/Paid
Federal funds sold and interest-bearing deposits in banks	$	27,494	$	346		4.99	%	$	79,230	$	1,042		5.28	%
Investment securities		682,695		10,664		6.20	%		671,210		10,438		6.24	%
Loans - commercial		958,605		19,019		7.87	%		972,907		18,967		7.82	%
- commercial real estate		807,618		14,631		7.19	%		800,711		14,499		7.26	%
- residential real estate		178,487		2,709		6.02	%		177,820		2,786		6.28	%
- consumer		634,019		11,559		7.23	%		622,636		11,205		7.22	%
Total earning assets	$	3,288,918	$	58,928		7.11	%	$	3,324,514	$	58,937		7.11	%

Deposits - savings and NOW accounts	$	937,362	$	5,659		2.40	%	$	942,150	$	5,651		2.41	%
- time		1,344,962		15,397		4.54	%		1,354,663		15,068		4.46	%
Short-term borrowings		81,387		918		4.47	%		65,019		757		4.67	%
Long-term debt		435,014		5,207		4.75	%		456,769		5,301		4.65	%
Subordinated debt		75,260		1,351		7.12	%		75,260		1,347		7.18	%
Total interest-bearing liabilities	$	2,873,985	$	28,532		3.94	%	$	2,893,861	$	28,124		3.90	%

Interest income to earning assets						7.11	%						7.11	%
Interest expense to paying liabilities						3.94	%						3.90	%
Interest spread						3.17	%						3.21	%
Impact of non-interest funds						0.50	%						0.51	%
Net interest margin			$	30,396		3.67	%			$	30,813		3.72	%

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight - SEPTEMBER 30, 2007


PERIOD-END LOAN PORTFOLIO ANALYSIS

(dollars in thousands)	2007						2006
	Third		Second		First		Fourth		Third
	Quarter		Quarter		Quarter		Quarter		Quarter

Commercial:
Commercial	$	882,338	$	860,868	$	824,301	$	763,800	$	757,714
Obligations of political subdivisions		95,143		100,338		101,090		101,555		79,028
Total commercial		977,481		961,206		925,391		865,355		836,742


Commercial real estate:
Commercial mortgages	$	813,877	$	802,922	$	804,652	$	815,028	$	820,619


Residential real estate:
Residential mortgages	$	168,534	$	169,890	$	145,719	$	141,826	$	144,047
Construction		9,855		7,648		6,730		7,290		6,918
Total residential real estate		178,389		177,538		152,449		149,116		150,965


Consumer:
Home equity loans	$	369,264	$	358,949	$	331,418	$	322,712	$	308,173
Home equity lines of credit		103,625		104,586		90,675		92,163		96,608
Indirect consumer loans		76,472		74,687		69,097		65,699		66,126
Other consumer loans		90,636		87,750		68,636		60,816		68,926
Total consumer		639,997		625,972		559,826		541,390		539,833



Total loans	$	2,609,744	$	2,567,638	$	2,442,318	$	2,370,889	$	2,348,159

COMMUNITY BANKS, INC. & SUBSIDIARIES
Fiscal Insight - SEPTEMBER 30, 2007

*Reconciliation of GAAP to Non-GAAP Measures:*
(in thousands, except per share data)	2007									2006
	Third			Second			First			Fourth			Third
	Quarter			Quarter			Quarter			Quarter			Quarter			Annual

Income statement data:
Net income
Net income	$	10,493		$	10,950		$	6,587		$	9,400		$	10,558		$	41,031
Amortization of core deposit and other intangible assets ⁽¹⁾		488			528			429			406			428			1,715
Merger expenses ⁽¹⁾		490			---			---			---			---			---
Net operating (tangible) income	$	11,471		$	11,478		$	7,016		$	9,806		$	10,986		$	42,746

Earnings per share
Diluted earnings per common share	$	0.42		$	0.44		$	0.28		$	0.40		$	0.45		$	1.72
Amortization of core deposit and other intangible assets ⁽¹⁾		0.02			0.02			0.02			0.01			0.01			0.07
Merger expenses ⁽¹⁾		0.02			---			---			---			---			---
Diluted operating (tangible) earnings per share	$	0.46		$	0.46		$	0.30		$	0.41		$	0.46		$	1.79

Balance sheet data:
Average assets
Average assets	$	3,778,338		$	3,805,794		$	3,544,189		$	3,452,095		$	3,385,905		$	3,403,421
Goodwill		(265,048	)		(263,694	)		(246,400	)		(246,287	)		(245,794	)		(245,652	)
Core deposit and other intangible assets		(14,446	)		(15,256	)		(12,683	)		(13,086	)		(13,229	)		(13,369	)
Average tangible assets	$	3,498,844		$	3,526,844		$	3,285,106		$	3,192,722		$	3,126,882		$	3,144,400

Operating return on average tangible assets		1.30	%		1.31	%		0.87	%		1.22	%		1.39	%		1.36	%

Average equity
Average equity	$	521,089		$	522,409		$	486,928		$	481,734		$	471,911		$	475,710
Goodwill		(265,048	)		(263,694	)		(246,400	)		(246,287	)		(245,794	)		(245,652	)
Core deposit and other intangible assets		(14,446	)		(15,256	)		(12,683	)		(13,086	)		(13,229	)		(13,368	)
Deferred taxes		2,349			2,468			1,547			1,652			1,755			1,744
Average tangible equity	$	243,944		$	245,927		$	229,392		$	224,013		$	214,643		$	218,434

Operating return on average tangible equity		18.66	%		18.72	%		12.40	%		17.37	%		20.31	%		19.57	%

At end of quarter:
Total assets
Total assets	$	3,789,634		$	3,750,844		$	3,627,739		$	3,496,370		$	3,431,208		$	3,496,370
Goodwill		(265,136	)		(265,129	)		(246,449	)		(246,383	)		(245,864	)		(246,383	)
Core deposit and other intangible assets		(14,083	)		(14,834	)		(12,363	)		(13,023	)		(13,641	)		(13,023	)
Total tangible assets	$	3,510,415		$	3,470,881		$	3,368,927		$	3,236,964		$	3,171,703		$	3,236,964

Total equity
Total equity	$	526,475		$	517,193		$	490,564		$	486,161		$	479,584		$	486,161
Goodwill		(265,136	)		(265,129	)		(246,449	)		(246,383	)		(245,864	)		(246,383	)
Core deposit and other intangible assets		(14,083	)		(14,834	)		(12,363	)		(13,023	)		(13,641	)		(13,023	)
Deferred taxes		2,277			2,403			1,482			1,591			1,698			1,591
Total tangible equity	$	249,533		$	239,633		$	233,234		$	228,346		$	221,777		$	228,346

Tangible book value at end of period	$	10.05		$	9.68		$	9.91		$	9.71		$	9.45		$	9.71
Tangible equity to assets		7.11	%		6.90	%		6.92	%		7.05	%		6.99	%		7.05	%

⁽¹⁾Net of related tax effect