MARIETTA, Penn., Aug. 22, 2008 (GLOBE NEWSWIRE) -- Conestoga Financial Corporation and Donegal Mutual Insurance Company announced today that they have signed an agreement whereby a subsidiary of Donegal Mutual will acquire all of the outstanding capital stock of Conestoga Title Insurance Company and its affiliated companies that provide various title insurance services from Conestoga Financial Corporation. The acquisition has been approved by the Commissioner of Insurance of the Commonwealth of Pennsylvania and the shareholders of Conestoga Financial. Closing of the transaction is scheduled to occur on August 27, 2008.

For Donegal Mutual, the acquisition provides an opportunity to expand its lines of business. Donald H. Nikolaus, President of Donegal Mutual, remarked ``We are pleased to affiliate with a company with a long-standing reputation such as Conestoga Title, which has excellent relationships with its independent agents throughout its market area. We look forward to making our strategic resources available to Conestoga Title, so that it can grow its business and deliver enhanced products and services to its policyholders and agents.''

Donegal Mutual, which was incorporated in 1889, is a mutual fire and casualty insurance company located in Marietta, Pennsylvania. Donegal Mutual underwrites a broad line of personal and commercial insurance coverages. Donegal Mutual has an A.M. Best financial strength rating of A (Excellent) and its combined ratio regularly outperforms the combined ratio of the United States property and casualty insurance industry as a whole.

Donegal Mutual owns approximately 66% of the voting control of Donegal Group Inc., an insurance holding company that, through its insurance subsidiaries, conducts a property and casualty insurance business in 18 states in the Mid-Atlantic, Southeastern and Midwestern regions of the United States. The Class A common stock and Class B common stock of Donegal Group is traded on the Nasdaq Global Select Market under the symbols DGICA and DGICB. Donegal Group is not a party to the transaction with Conestoga Financial Corporation.

         Donegal Mutual Insurance Company
         Jeffrey D. Miller, Senior Vice President
          & Chief Financial Officer
         (717) 426-3529 ext. 7357
         Fax: (717) 426-7009
         jeffmiller@donegalgroup.com
         
         Conestoga Financial Corporation
         John K. Schwertfuehrer, Vice President Finance
         (717) 299-4805
         Fax: (717) 399-9833
         jschwertfuehrer@contitle.com