(Source: PRNewswire-FirstCall)
CLARKS SUMMIT, Pa., April 15 /PRNewswire-FirstCall/ -- Comm Bancorp, Inc. today reported first quarter 2009 earnings of $1,775 thousand or $1.03 per share, an increase of $210 thousand or 13.4% compared to $1,565 thousand or $0.89 per share for the first quarter of 2008. Comprehensive income equaled $1,925 thousand for the first quarter of 2009 compared to $1,726 thousand for the same quarter of 2008. For the three months ended March 31, return on average assets and return on average stockholders' equity equaled 1.15% and 12.30% in 2009, compared to 1.13% and 11.38% in 2008.
"I am very pleased with the Company's first quarter performance. Higher net interest income and noninterest income were the primary factors contributing to the increase in comparable first quarter earnings," stated William F. Farber, Sr., President and Chief Executive Officer. "As a result of very low mortgage rates, we experienced strong growth in revenue generated by our secondary mortgage banking services. Looking forward, earnings for the second quarter of 2009 will be directly affected by the burden posed from recent legislation, which imposes a 20 basis point one-time assessment for FDIC deposit insurance. This special assessment is being imposed on all financial institutions regardless of whether or not they were involved in the high-risk activities that caused the recent financial turmoil. Our financial institution is not involved in, nor was it ever involved in, such activities and remains financially sound and well capitalized. For the remainder of 2009, we will continue to look for ways to strengthen our noninterest revenue sources, as well as control our noninterest expense," concluded Farber.
HIGHLIGHTS -- Earnings per share increased $0.14 comparing 2009 and 2008. -- Mortgage banking income grew approximately 137% over the prior year. -- Efficiency ratio improved to 63% compared to 65% for the same period of 2008. -- Total assets grew 8% over the prior year. INCOME STATEMENT REVIEW
For the three months ended March 31, tax-equivalent net interest income increased $300 thousand or 5.3% to $5,943 thousand in 2009 from $5,643 thousand in 2008. Due to declining market rates, interest expense decreased $709 thousand or 20.9%. Partially offsetting this decrease was a $409 thousand or 4.5% reduction in tax-equivalent interest revenue. With regard to interest expense, our cost of funds decreased 93 basis points to 2.27% for the first quarter of 2009 from 3.20% for the same quarter of last year. We experienced significant reductions in the rates paid for all interest-bearing liability categories. For the three months ended March 31, the average cost of interest-bearing transaction accounts, including money market, NOW and savings accounts, decreased 102 basis points to 0.96% in 2009 from 1.98% in 2008. In addition, the rate paid for total time deposits declined 77 basis points to 3.58% for the first quarter of 2009 from 4.35% for the same quarter of 2008. Furthermore, the rate paid for short-term borrowings fell 249 basis points. Partially offsetting the positive effect from the reduction in funding costs was growth in average interest-bearing liabilities of $54.0 million. The decline in interest revenue resulted from a 97 basis point decrease in the tax-equivalent yield on earning assets. The yield on the loan portfolio decreased 101 basis points caused by a decline in the prime rate of interest and a higher level of nonaccrual loans. Partially offsetting the effects of yield decline was growth in average earning assets of $64.6 million. Our tax-equivalent net interest margin for the first quarter contracted 23 basis points to 4.05% in 2009 compared to 4.28% in 2008. However, in comparison to the fourth quarter of 2008, our net interest margin improved 38 basis points from 3.67% to 4.05%.
For the three months ended March 31, 2009, the provision for loan losses totaled $570 thousand, an increase of $240 thousand compared to $330 thousand for the same three months of 2008.
Noninterest income for the first quarter rose $606 thousand or 62.6% to $1,574 thousand in 2009 from $968 thousand in 2008. Included in noninterest income in 2009 was a net gain of $294 thousand from the disposition of the former Tunkhannock and Eaton, Pennsylvania branch offices. These branches were relocated to a new site, which opened for business during the fourth quarter of 2008. Noninterest income in the first quarter of 2009 also included $114 thousand in net gains on the sale of available-for-sale investment securities. The unprecedented high demand from municipal customers for financing in 2009 caused us to liquidate certain tax exempt securities to avoid being placed into an alternative minimum tax position. Due to significantly low mortgage rates, mortgage banking income increased $232 thousand or 136.5% comparing the first quarters of 2009 and 2008. Service charges, fees and commissions decreased $34 thousand to $764 thousand in 2009 from $798 thousand in 2008.
For the three months ended March 31, noninterest expense increased $349 thousand or 8.7% to $4,348 thousand in 2009 from $3,999 thousand in 2008. The increase resulted primarily from a $302 thousand or 24.5% increase in other expenses. The increase in other expenses was due largely to an increase in the cost of Federal Deposit Insurance Corporation insurance and higher loan collection expense. Salaries and employee benefits expense increased $10 thousand, while net occupancy and equipment expense rose $37 thousand.
BALANCE SHEET REVIEW
Total assets equaled $611.8 million at March 31, 2009, an increase of $46.2 million or 8.2% compared to $565.6 million at March 31, 2008. Loans, net of unearned income increased $9.5 million to $507.2 million at March 31, 2009, from $497.7 million at March 31, 2008. Excess deposits not used to fund loans were directed into our investment portfolio. Available-for-sale investment securities increased $37.3 million comparing March 31, 2009 and 2008. Total deposits increased $32.9 million, as noninterest-bearing deposits increased $3.3 million and interest-bearing deposits increased $29.6 million. Short-term borrowings outstanding at the end of the first quarter were $27.5 million in 2009 and $18.1 million in 2008.
Stockholders' equity equaled $58.9 million or $34.22 per share at March 31, 2009, and $55.6 million or $31.71 per share at March 31, 2008. Included in stockholders' equity was accumulated other comprehensive income related entirely to net unrealized holding gains on available-for-sale investment securities of $1,821 thousand at the end of the first quarter of 2009, compared to $1,276 thousand at the end of the same period of 2008. Dividends declared for the first quarter were $0.28 per share in 2009 and $0.27 per share in 2008.
Nonperforming assets equaled $23.4 million or 4.60% of loans, net of unearned income and foreclosed assets at March 31, 2009, compared to $9.3 million or 1.86% one year earlier. Although a significant weakening from March 31, 2008, asset quality improved slightly from December 31, 2008. Nonperforming assets equaled $24.2 million or 4.99% of loans, net of unearned income and foreclosed assets at December 31, 2008. The improvement from year end resulted from a decrease in nonaccrual loans, partially offset by increases in accruing loans past due 90 days or more and foreclosed assets. Loans charged off, net of recoveries, for the first quarter equaled 0.23% and 0.02% of average loans outstanding for the three months ended March 31, 2009 and 2008. Corresponding with the increase in net charge-offs, the provision for loan losses increased 72.7%. The allowance for loan losses equaled $5.5 million or 1.09% of loans, net of unearned income, at March 31, 2009, compared to $4.9 million or 0.99% at March 31, 2008.
Comm Bancorp, Inc. serves six Pennsylvania counties through Community Bank and Trust Company's 15 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/.
