CLARKS SUMMIT, Pa., Oct. 15 /PRNewswire-FirstCall/ -- Comm Bancorp, Inc.
(Nasdaq: CCBP) today reported third quarter 2008 earnings of $1,475 thousand
or $0.84 per share. Year-to-date earnings totaled $4,700 thousand or $2.68 per
share. For 2007, comparable earnings were $1,815 thousand or $1.03 per share
for the third quarter and $5,200 thousand or $2.90 per share year-to-date.
For the three months and nine months ended September 30, return on average
assets was 1.00% and 1.10%, respectively, in 2008, compared to 1.30% and 1.25%
for the comparable 2007 periods. Return on average stockholders' equity was
10.31% and 11.17%, respectively, for the third quarter and year-to-date 2008,
compared to 13.73% and 13.08% for the same periods of 2007.
'The downturn in the economic cycle and current financial crisis adversely
effected our commercial customer base and has had a corresponding negative
impact on our profitability during the first nine months of 2008,' stated
William F. Farber, Sr., President and Chief Executive Officer. 'We experienced
increases in net charge-off levels and a reduction in our tax-equivalent net
interest margin primarily due to an increase in loans placed on nonaccrual
status. Despite these circumstances, our capital position improved in
comparison to last year and significantly exceeds regulatory standards for
well capitalized institutions,' continued Farber. 'I am confident that our
strong capital base, favorable liquidity position and prudent management
provide the structure we need to weather the current financial storm,'
concluded Farber.
HIGHLIGHTS
-- Year-to-date noninterest revenue improved 10.6%.
-- Deposits grew 8.6% over prior year.
-- Leverage ratio improved to 9.81% at the end of the third quarter of
2008 from 9.34% one year ago.
INCOME STATEMENT REVIEW
Changes in the rates and volumes of earning assets and interest-bearing
liabilities for the nine months ended September 30, 2008, resulted in a
negligible increase of $17 thousand in tax-equivalent net interest income. A
$1,450 thousand decrease in interest expense slightly more than offset a
decline of $1,433 thousand in tax-equivalent interest revenue. The decrease in
interest expense resulted primarily from a 51 basis point reduction in our
cost of funds, as we experienced significant reductions in the rates paid for
all interest-bearing liability categories. Average interest-bearing
liabilities grew $6.6 million, the effect of which partially offset the
reduction in interest expense resulting from the decline in rates. The decline
in interest revenue resulted primarily from a 49 basis point decrease in the
tax-equivalent yield on earning assets to 6.55% for the nine months ended
September 30, 2008, from 7.04% for the same nine months of 2007. Partially
offsetting the decline in the tax-equivalent yield on earning assets was the
change in the composition of our earning assets. Average investments decreased
$38.3 million or 52.4% comparing the nine months ended September 30, 2008 and
2007. These funds were redirected into loan products bearing higher interest
rates. As a result, loans, net of unearned income, grew $39.1 million. Our
tax-equivalent net interest margin for the nine months ended September 30,
contracted 8 basis points to 4.21% in 2008 compared to 4.29% in 2007.
Comparing the second and third quarters of 2008, our net interest margin
decreased 25 basis points to 4.06% from 4.31%, respectively.
For the three months and nine months ended September 30, 2008, the
provision for loan losses totaled $400 thousand and $1,013 thousand. For the
respective periods of 2007, the provision for loan losses amounted to $75
thousand and $300 thousand. The increase in the provision from 2007 was due to
increases in both nonperforming loans and net charge-offs.
Noninterest revenue for the third quarter rose $41 thousand or 4.6% to
$930 thousand in 2008 from $889 thousand in 2007. Despite the housing market
debacle, mortgage banking income increased $22 thousand or 22.4%. Service
charges, fees and commissions increased $19 thousand. For the nine months
ended September 30, 2008, noninterest revenue totaled $2,933 thousand, an
increase of $282 thousand or 10.6% from $2,651 thousand for the same nine
months of 2007. Revenue received from our Trust and Wealth Management Division
primarily accounted for the $109 thousand or 4.6% rise in service charges,
fees and commissions. In addition, we experienced a $173 thousand or 63.8%
increase in mortgage banking income.
For the third quarter, noninterest expense increased $162 thousand or 4.1%
to $4,083 thousand in 2008 from $3,921 thousand in 2007. Payroll-related
expenses rose $111 thousand or 5.4% as a result of additional staffing in the
Private Banking and Trust and Wealth Management Divisions, annual merit
increases and employee benefit costs. In addition, we experienced a $25
thousand or 4.5% increase in occupancy and equipment expense which resulted
from depreciation and maintenance costs associated with our new service
offering, CB&T Direct(SM). For the nine months ended September 30, 2008,
noninterest expense increased $625 thousand or 5.4%.
BALANCE SHEET REVIEW
Total assets increased $47.1 million to $607.4 million at September 30,
2008, from $560.3 million at September 30, 2007. The balance sheet growth was
driven by an increase in total deposits of $43.5 million or 8.6% to $547.6
million at the close of the third quarter of 2008, from $504.1 million one
year ago. Reduced tolerance for risk due to the declining stock market,
coupled with our new service offering, CB&T Direct(SM), and promotional
certificate of deposit offerings impacted our deposit gathering. Loans, net of
unearned income, rose $23.3 million to $493.9 million at September 30, 2008,
from $470.6 million at September 30, 2007. Excess deposits not used to fund
loans were directed into our investment portfolio. Available-for-sale
investment securities increased $29.6 million to $76.7 million from $47.1
million comparing September 30, 2008 and 2007.
Stockholders' equity equaled $56.6 million or $32.45 per share at
September 30, 2008, and $53.1 million or $30.24 per share at September 30,
2007. Our Leverage ratio was 9.81% at the close of the third quarter of 2008,
an improvement compared to 9.34% one year earlier. The Leverage ratio, as well
as all of our capital ratios significantly exceeded regulatory standards for
well capitalized institutions. Dividends declared were $0.27 per share for the
third quarter and $0.81 per share year-to-date in 2008. Accumulated other
comprehensive income decreased $676 thousand from year-end 2007, which
resulted directly from a decline in the market value of available-for-sale
investment securities.
Nonperforming assets equaled $18.2 million or 3.69% of loans, net of
unearned income and foreclosed assets at September 30, 2008, compared to $7.9
million or 1.67% one year earlier. The weakening in asset quality resulted
from increases in nonaccrual loans and accruing loans past due 90 days or
more, partially offset by a reduction in foreclosed assets. Loans charged-off,
net of recoveries, increased $665 thousand or 236.7% to $946 thousand for the
nine months ended September 30, 2008, from $281 thousand for the same period
last year. The provision for loan losses increased 237.7% comparing the nine
months ended September 30, 2008 and 2007, corresponding with the increase in
the volume of nonperforming assets and net charge-offs. The allowance for loan
losses equaled $4.7 million or 0.95% of loans, net of unearned income, at
September 30, 2008, compared to $4.5 million or 0.95% one year ago.
Comm Bancorp, Inc. serves six Pennsylvania counties through Community Bank
and Trust Company's 16 community-banking offices and one loan production
office. Each office, interdependent with the community, offers a comprehensive
array of financial products and services to individuals, businesses, not-for-
profit organizations and government entities. In addition, customers can take
advantage of Klick(SM) Banking, on-line banking services, by accessing the
Company's website at http://www.combk.com. The Company's business philosophy
includes offering direct access to senior management and other officers and
providing friendly, informed and courteous service, local and timely decision
making, flexible and reasonable operating procedures and consistently-applied
credit policies.
Summary Data
Comm Bancorp, Inc.
Five Quarter Trend
(In thousands, except per share data)
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2008 2008 2008 2007 2007
Key performance
data:
Per share data:
Net income $0.84 $0.95 $0.89 $0.97 $1.03
Cash dividends
declared $0.27 $0.27 $0.27 $0.26 $0.26
Book value $32.45 $32.14 $31.71 $31.01 $30.24
Tangible book value $32.25 $31.94 $31.52 $30.81 $30.04
Market value:
High $44.92 $48.00 $47.25 $52.60 $49.90
Low $40.75 $41.00 $41.00 $43.90 $46.00
Closing $42.00 $44.00 $41.00 $43.90 $47.68
Market capitalization $73,299 $76,902 $71,851 $76,984 $83,736
Common shares
outstanding 1,745,220 1,747,774 1,752,457 1,753,622 1,756,204
Selected ratios:
Return on average
stockholders'
equity 10.31% 11.85% 11.38% 12.53% 13.73%
Return on average
assets 1.00% 1.19% 1.13% 1.21% 1.30%
Leverage ratio 9.81% 9.83% 9.66% 9.54% 9.34%
Total risk-based
capital ratio 12.00% 12.28% 11.81% 12.15% 11.85%
Efficiency ratio 66.31% 64.40% 65.24% 62.24% 62.02%
Nonperforming assets
to loans, net, and
foreclosed assets 3.69% 2.83% 1.86% 1.64% 1.67%
Net charge-offs to
average loans, net 0.65% 0.09% 0.02% 0.05% 0.16%
Allowance for loan
losses to loans, net 0.95% 1.04% 0.99% 0.98% 0.95%
Earning assets yield
(FTE) 6.21% 6.60% 6.85% 7.10% 7.07%
Cost of funds 2.74% 2.88% 3.20% 3.34% 3.38%
Net interest spread
(FTE) 3.47% 3.72% 3.65% 3.76% 3.69%
Net interest margin (FTE) 4.06% 4.31% 4.28% 4.43% 4.40%
Comm Bancorp, Inc.
Consolidated Statements of Income
(In thousands, except per share data)
Nine Months Ended Sept. 30, Sept. 30,
2008 2007
Interest income:
Interest and fees on loans:
Taxable $21,979 $22,847
Tax-exempt 1,694 1,302
Interest and dividends on investment
securities available-for-sale:
Taxable 133 1,279
Tax-exempt 1,072 1,111
Dividends 39 64
Interest on federal funds sold 145 75
Total interest income 25,062 26,678
Interest expense:
Interest on deposits 9,269 10,566
Interest on short-term borrowings 178 331
Total interest expense 9,447 10,897
Net interest income 15,615 15,781
Provision for loan losses 1,013 300
Net interest income after provision for loan
losses 14,602 15,481
Noninterest income:
Service charges, fees and commissions 2,489 2,380
Mortgage banking income 444 271
Total noninterest income 2,933 2,651
Noninterest expense:
Salaries and employee benefits expense 6,414 5,896
Net occupancy and equipment expense 1,866 1,795
Other expenses 3,834 3,798
Total noninterest expense 12,114 11,489
Income before income taxes 5,421 6,643
Provision for income tax expense 721 1,443
Net income $4,700 $5,200
Other comprehensive income (loss):
Unrealized holding gains (losses) on
investment securities available-for-sale $(1,024) $14
Income tax expense (benefit) related to other
comprehensive income (loss) (348) 5
Other comprehensive income (loss), net of
income taxes (676) 9
Comprehensive income $4,024 $5,209
Per share data:
Net income $2.68 $2.90
Cash dividends declared $0.81 $0.78
Average common shares outstanding 1,750,872 1,794,623
Comm Bancorp, Inc.
Consolidated Statements of Income
(In thousands, except per share data)
Three months ended Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2008 2008 2008 2007 2007
Interest income:
Interest and fees on
loans:
Taxable $7,137 $7,274 $7,568 $7,883 $7,808
Tax-exempt 559 564 571 543 457
Interest and dividends
on investment
securities
available-for-sale:
Taxable 52 38 43 85 265
Tax-exempt 351 357 364 364 370
Dividends 12 15 12 17 32
Interest on federal
funds sold 133 10 2 84 68
Total interest
income 8,244 8,258 8,560 8,976 9,000
Interest expense:
Interest on deposits 3,017 2,982 3,270 3,541 3,539
Interest on short-term
borrowings 50 128 11 28
Total interest
expense 3,017 3,032 3,398 3,552 3,567
Net interest income 5,227 5,226 5,162 5,424 5,433
Provision for loan
losses 400 283 330 225 75
Net interest income
after provision for
loan losses 4,827 4,943 4,832 5,199 5,358
Noninterest income:
Service charges, fees
and commissions 810 881 798 788 791
Mortgage banking income 120 154 170 104 98
Total noninterest
income 930 1,035 968 892 889
Noninterest expense:
Salaries and employee
benefits expense 2,169 2,115 2,130 2,108 2,058
Net occupancy and
equipment expense 583 645 638 601 558
Other expenses 1,331 1,272 1,231 1,222 1,305
Total noninterest
expense 4,083 4,032 3,999 3,931 3,921
Income before income
taxes 1,674 1,946 1,801 2,160 2,326
Provision for income
tax expense 199 286 236 460 511
Net income $1,475 $1,660 $1,565 $1,700 $1,815
Other comprehensive
income (loss):
Unrealized holding
gains (losses) on
investment securities
available-for-sale $(686) $(582) $244 $225 $412
Income tax expense
(benefit) related
to other comprehensive
income (loss) (233) (198) 83 76 140
Other comprehensive
income (loss), net
of income taxes (453) (384) 161 149 272
Comprehensive
income $1,022 $1,276 $1,726 $1,849 $2,087
Per share data:
Net income $0.84 $0.95 $0.89 $0.97 $1.03
Cash dividends
declared $0.27 $0.27 $0.27 $0.26 $0.26
Average common
shares
outstanding 1,747,438 1,751,841 1,753,376 1,754,443 1,756,800
Comm Bancorp, Inc.
Details of Net Interest and Net Interest Margin
(In thousands, fully taxable equivalent basis)
Three months ended Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2008 2008 2008 2007 2007
Net interest income:
Interest income
Loans, net:
Taxable $7,137 $7,274 $7,568 $7,883 $7,808
Tax-exempt 847 855 865 824 692
Total loans, net 7,984 8,129 8,433 8,707 8,500
Investments:
Taxable 64 53 55 102 297
Tax-exempt 531 542 551 552 560
Total investments 595 595 606 654 857
Federal funds sold 133 10 2 84 68
Total interest
income 8,712 8,734 9,041 9,445 9,425
Interest expense:
Deposits 3,017 2,982 3,270 3,541 3,539
Borrowed funds 50 128 11 28
Total interest
expense 3,017 3,032 3,398 3,552 3,567
Net interest income $5,695 $5,702 $5,643 $5,893 $5,858
Loans, net:
Taxable 6.42% 6.62% 6.88% 7.19% 7.30%
Tax-exempt 6.61% 6.40% 6.74% 7.37% 6.99%
Total loans, net 6.44% 6.60% 6.87% 7.20% 7.27%
Investments:
Taxable 5.60% 3.64% 2.98% 3.51% 3.93%
Tax-exempt 7.51% 7.50% 7.57% 7.45% 7.49%
Total investments 7.25% 6.85% 6.64% 6.34% 5.70%
Federal funds sold 1.64% 1.93% 3.26% 4.52% 5.11%
Total earning
assets 6.21% 6.60% 6.85% 7.10% 7.07%
Interest expense:
Deposits 2.74% 2.89% 3.20% 3.34% 3.37%
Borrowed funds 2.35% 3.20% 4.19% 5.44%
Total interest-
bearing liabilities 2.74% 2.88% 3.20% 3.34% 3.38%
Net interest spread 3.47% 3.72% 3.65% 3.76% 3.69%
Net interest margin 4.06% 4.31% 4.28% 4.43% 4.40%
Comm Bancorp, Inc.
Consolidated Balance Sheets
(In thousands, except per share data)
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
At period end 2008 2008 2008 2007 2007
Assets:
Cash and due
from banks $11,174 $16,944 $12,870 $13,125 $12,967
Federal funds sold 8,000 6,700 8,751 13,000
Investment securities
available-for-sale 76,706 31,488 37,915 39,407 47,117
Loans held for sale,
net 1,243 925 2,034 1,248 1,764
Loans, net of unearned
income 493,948 491,084 497,668 471,344 470,606
Less: allowance for
loan losses 4,691 5,101 4,934 4,624 4,454
Net loans 489,257 485,983 492,734 466,720 466,152
Premises and
equipment, net 11,345 10,710 10,784 10,891 11,052
Accrued interest
receivable 3,072 2,513 2,710 2,634 3,328
Other assets 6,646 6,675 6,561 6,211 4,912
Total assets $607,443 $561,938 $565,608 $548,987 $560,292
Liabilities:
Deposits:
Noninterest-bearing $86,417 $81,280 $74,499 $75,232 $78,746
Interest-bearing 461,176 421,252 413,540 416,125 425,304
Total deposits 547,593 502,532 488,039 491,357 504,050
Borrowed funds 18,100
Accrued interest
payable 1,446 1,271 1,423 1,308 1,229
Other liabilities 1,779 1,958 2,468 1,949 1,910
Total liabilities 550,818 505,761 510,030 494,614 507,189
Stockholders' equity:
Common stock, par value
$0.33 authorized
12,000,000, shares
issued and outstanding
1,745,220; 1,747,774;
1,752,457; 1,753,622;
1,756,204 576 577 578 579 580
Capital surplus 7,661 7,548 7,440 7,326 7,217
Retained earnings 47,949 47,160 46,284 45,353 44,340
Accumulated other
comprehensive income 439 892 1,276 1,115 966
Total stockholders'
equity 56,625 56,177 55,578 54,373 53,103
Total liabilities
and stockholders'
equity $607,443 $561,938 $565,608 $548,98 $560,292
Comm Bancorp, Inc.
Consolidated Balance Sheets
(In thousands, except per share data)
Average quarterly Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
balances 2008 2008 2008 2007 2007
Assets:
Loans, net:
Taxable $442,039 $441,648 $442,334 $435,186 $424,486
Tax-exempt 50,964 53,765 51,601 44,350 39,282
Total loans, net 493,003 495,413 493,935 479,536 463,768
Investments:
Taxable 4,546 5,863 7,423 11,521 29,982
Tax-exempt 28,122 29,052 29,270 29,410 29,677
Total investments 32,668 34,915 36,693 40,931 59,659
Federal funds sold 32,297 2,083 247 7,370 5,275
Total earning assets 557,968 532,411 530,875 527,837 528,702
Other assets 30,657 26,983 27,457 27,562 24,292
Total assets $588,625 $559,394 $558,332 $555,399 $552,994
Liabilities and
stockholders' equity:
Deposits:
Interest-bearing $437,595 $414,669 $410,927 $420,669 $416,430
Noninterest-bearing 91,084 76,752 72,666 76,877 79,155
Total deposits 528,679 491,421 483,593 497,546 495,585
Borrowed funds 8,575 16,085 1,042 2,043
Other liabilities 3,012 3,065 3,353 2,967 2,908
Total liabilities 531,691 503,061 503,031 501,555 500,536
Stockholders' equity 56,934 56,333 55,301 53,844 52,458
Total liabilities
and stockholders'
equity $588,625 $559,394 $558,332 $555,399 $552,994
Comm Bancorp, Inc.
Asset Quality Data
(In thousands)
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
At quarter end 2008 2008 2008 2007 2007
Nonperforming assets:
Nonaccrual/
restructured loans $11,155 $11,301 $8,373 $5,352 $5,684
Accruing loans past
due 90 days or more 7,085 2,585 840 2,234 1,823
Foreclosed assets 45 125 346
Total nonperforming
assets $18,240 $13,886 $9,258 $7,711 $7,853
Three months ended
Allowance for loan losses:
Beginning balance $5,101 $4,934 $4,624 $4,454 $4,561
Charge-offs 844 150 46 80 221
Recoveries 34 34 26 25 39
Provision for loan losses 400 283 330 225 75
Ending balance $4,691 $5,101 $4,934 $4,624 $4,454
Except for the historical information contained, herein, the matters
discussed in this press release are forward-looking statements that involve
risks and uncertainties in the banking industry and overall economy. Such
risks and uncertainties are detailed in the Company's Securities and Exchange
Commission reports, including the Annual Report on Form 10-K and quarterly
reports on Form 10-Q.
SOURCE Comm Bancorp, Inc.
