CCBP Comm Bancorp (MM)

CLARKS SUMMIT, Pa., July 15 /PRNewswire-FirstCall/ -- Comm Bancorp, Inc. (NASDAQ:CCBP) today reported second quarter 2009 earnings of $1,215 thousand or $0.70 per share. Year-to-date earnings totaled $2,990 thousand or $1.73 per share. Comparable earnings for 2008 were $1,660 thousand or $0.95 per share for the second quarter and $3,225 thousand or $1.84 per share year-to-date. Return on average assets was 0.79% for the second quarter and 0.97% for the first half of 2009, compared to 1.19% and 1.16% for the respective 2008 periods. Return on average stockholders' equity was 8.18% and 10.21%, respectively, for the second quarter and year-to-date 2009, compared to 11.85% and 11.62% for the same periods of 2008. "Our net income was impacted by increases in noninterest expense and the provision for loan losses, partially offset by increases in net interest income and noninterest income," stated William F. Farber, Sr., President and Chief Executive Officer. "The recessionary conditions, specifically in the housing market and construction sector, continued to adversely impact our commercial customer base. We experienced a reduction in the fair value of the underlying collateral supporting certain impaired loans, which resulted in an increase in our provision for loan losses. In addition, a higher volume of nonaccrual loans compared to the prior year is having an adverse impact on 2009 earnings. Our profitability was also negatively affected by an increase in FDIC deposit insurance, including a 5 basis point special assessment imposed on all insured depository institutions on June 30, 2009," continued Farber. "Despite these circumstances, our capital position is strong and significantly exceeds regulatory standards for well capitalized institutions. I am confident, that our strong capital base and prudent management will provide us with the foundation needed to weather the recession," concluded Farber. HIGHLIGHTS -- Net interest margin continued to improve to 4.09% in the second quarter of 2009. -- Mortgage banking income for the first half of 2009 grew 175.3% compared to 2008. -- Total assets at June 30, 2009, grew 8.7% over prior year. -- Key capital adequacy ratio improved to 9.25% at June 30, 2009, from 9.10% at previous quarter end. INCOME STATEMENT REVIEW For the six months ended June 30, tax-equivalent net interest income increased $551 thousand or 4.9% to $11,896 thousand in 2009 from $11,345 thousand in 2008. A $1,279 thousand or 19.9% decrease in interest expense was partially offset by a $728 thousand or 4.1% reduction in tax-equivalent interest revenue. With regard to interest expense, our cost of funds decreased 85 basis points to 2.19% for the first half of 2009 from 3.04% for the same period of last year. We experienced significant reductions in the rates paid for all interest-bearing liability categories. Average interest-bearing liabilities grew $49.5 million or 11.6%, which partially mitigated the positive influence of the reduction in funding costs. The decline in interest revenue resulted primarily from an 89 basis point decrease in the tax-equivalent yield on earning assets to 5.83% for the six months ended June 30, 2009, from 6.72% for the same six months of 2008. Specifically, the tax-equivalent yield on the loan portfolio, which decreased 91 basis points to 5.82% in 2009 from 6.73% in 2008, had the greatest impact on interest revenue. Partially offsetting the decline in the tax-equivalent yield on earning assets was growth in average earning assets. Average investments increased $39.2 million or 109.5% comparing the first six months of 2009 and 2008. In addition, the loan portfolio grew $19.2 million to an average of $513.9 million in 2009 from $494.7 million in 2008. Our tax-equivalent net interest margin for the six months ended June 30, contracted 22 basis points to 4.07% in 2009 compared to 4.29% in 2008. However, our net interest margin improved 4 basis points compared to 4.05% for the first quarter of 2009 and 42 basis points compared to 3.67% for the fourth quarter of 2008. For the three months and six months ended June 30, 2009, the provision for loan losses totaled $520 thousand and $1,090 thousand. In comparison, the provision for loan losses was $283 thousand and $613 thousand for the respective periods of 2008. The increases were a direct result of a higher volume of impaired loans, coupled with reductions in the fair values of the underlying collateral supporting certain impaired loans. Noninterest income for the second quarter rose $287 thousand or 27.7% to $1,322 thousand in 2009 from $1,035 thousand in 2008. A $336 thousand or 218.2% increase in mortgage banking income was the primary factor contributing to the second quarter increase. For the six months ended June 30, 2009, noninterest income totaled $2,896 thousand, an increase of $893 thousand or 44.6% from $2,003 thousand for the same six months of 2008. Included in year-to-date noninterest income in 2009 was a net gain of $294 thousand from the dispositions of the former Tunkhannock and Eaton Township, Pennsylvania branch offices. In addition, noninterest income included $114 thousand in net gains from the sale of available-for-sale investment securities. Due to the significantly lower mortgage rates, mortgage banking income increased $568 thousand or 175.3% comparing the six months ended June 30, 2009 and 2008. Service charges, fees and commissions decreased $83 thousand or 4.9% to $1,596 thousand in 2009 from $1,679 thousand in 2008. For the second quarter, noninterest expense increased $975 thousand or 24.2% to $5,007 thousand in 2009 from $4,032 thousand in 2008. The increase resulted primarily from a $988 thousand or 77.7% increase in other expenses. This increase was due largely to an increase in the cost of FDIC insurance and a special assessment imposed by the FDIC on all insured-depository institutions to help mitigate the effects of recent bank failures on the Deposit Insurance Fund. Salaries and employee benefits expense increased $49 thousand or 2.3%, while net occupancy and equipment expense decreased $62 thousand or 9.6%. For the six months ended June 30, 2009, noninterest expense increased $1,324 thousand or 16.5%. Other expenses rose $1,290 thousand or 51.5%, which was due primarily to the increase in FDIC insurance. The changes in salaries and employee benefits and net occupancy and equipment expenses were negligible. BALANCE SHEET REVIEW Total assets amounted to $610.8 million at June 30, 2009, an increase of $48.9 million compared to $561.9 million at June 30, 2008. Loans, net of unearned income, increased $19.8 million or 4.0% to $510.9 million at June 30, 2009, from $491.1 million at June 30, 2008. Excess deposits not used to fund loans were directed into our investment portfolio, which increased $41.7 million or 132.4% from one year ago. Total deposits grew $36.3 million or 7.2%. Noninterest-bearing deposits increased $722 thousand, while interest-bearing deposits rose $35.6 million. Short-term borrowings outstanding at the close of the second quarter were $8.0 million. There were no short-term borrowings outstanding at June 30, 2008. Stockholders' equity equaled $59.5 million or $34.64 per share at June 30, 2009, and $56.2 million or $32.14 per share at June 30, 2008. Common stock repurchases totaled $684 thousand for the six months ended June 30, 2009. Dividends declared were $0.28 per share and $0.56 per share, for the second quarter and first half of 2009. Accumulated other comprehensive income increased $159 thousand from year-end 2008, which resulted directly from an appreciation in the market value of available-for-sale investment securities. Nonperforming assets equaled $23.0 million or 4.49% of loans, net of unearned income and foreclosed assets at June 30, 2009, compared to $13.9 million or 2.83% one year earlier. Although a significant weakening from June 30, 2008, asset quality improved slightly from the previous quarter-end and from the end of 2008. Nonperforming assets equaled $23.4 million or 4.60% of loans, net of unearned income and foreclosed assets at March 31, 2009, and $24.2 million or 4.99% at December 31, 2008. The improvement from the previous quarter end resulted primarily from decreases in accruing loans past due 90 days or more and foreclosed assets, as nonaccrual loans, for the most part, were stable. The allowance for loan losses equaled $6.0 million or 1.18% of loans, net of unearned income, at June 30, 2009, compared to $5.1 million or 1.04% one year ago. Loans charged-off, net of recoveries, increased $190 thousand or 139.7% to $326 thousand for the six months ended June 30, 2009, from $136 thousand for the same period last year. 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/. 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. [TABULAR MATERIAL FOLLOWS]. Summary Data Comm Bancorp, Inc. Five Quarter Trend (In thousands, except per share data) June 30, March 31, Dec. 31, Sept. 30, June 30, 2009 2009 2008 2008 2008 Key performance data: Per share data: Net income $0.70 $1.03 $0.58 $0.84 $0.95 Cash dividends declared $0.28 $0.28 $0.27 $0.27 $0.27 Book value $34.64 $34.22 $33.41 $32.45 $32.14 Tangible book value $34.44 $34.02 $33.21 $32.25 $31.94 Market value: High $40.00 $40.99 $42.00 $44.92 $48.00 Low $35.31 $35.04 $35.00 $40.75 $41.00 Closing $40.00 $36.75 $35.01 $42.00 $44.00 Market capitalization $68,651 $63,278 $60,569 $73,299 $76,902 Common shares outstanding 1,716,263 1,721,845 1,730,062 1,745,220 1,747,774 Selected ratios: Return on average stockholders' equity 8.18% 12.30% 6.96% 10.31% 11.85% Return on average assets 0.79% 1.15% 0.65% 1.00% 1.19% Leverage ratio 9.25% 9.10% 9.62% 9.81% 9.83% Total risk-based capital ratio 11.97% 11.89% 12.17% 12.00% 12.28% Efficiency ratio 74.60% 63.26% 71.88% 66.31% 64.40% Nonperforming assets to loans, net, and foreclosed assets 4.49% 4.60% 4.99% 3.69% 2.83% Net charge-offs to average loans, net 0.03% 0.23% 0.15% 0.65% 0.09% Allowance for loan losses to loans, net 1.18% 1.09% 1.08% 0.95% 1.04% Earning assets yield (FTE) 5.79% 5.88% 5.74% 6.21% 6.60% Cost of funds 2.11% 2.27% 2.58% 2.74% 2.88% Net interest spread (FTE) 3.68% 3.61% 3.16% 3.47% 3.72% Net interest margin (FTE) 4.09% 4.05% 3.67% 4.06% 4.31% Comm Bancorp, Inc. Consolidated Statements of Income (In thousands, except per share data) Six Months Ended June 30, June 30, 2009 2008 Interest income: Interest and fees on loans: Taxable $12,884 $14,842 Tax-exempt 1,285 1,135 Interest and dividends on investment securities available-for-sale: Taxable 664 81 Tax-exempt 1,010 721 Dividends 20 27 Interest on federal funds sold 1 12 Total interest income 15,864 16,818 Interest expense: Interest on deposits 5,059 6,252 Interest on short-term borrowings 92 178 Total interest expense 5,151 6,430 Net interest income 10,713 10,388 Provision for loan losses 1,090 613 Net interest income after provision for loan losses 9,623 9,775 Noninterest income: Service charges, fees and commissions 1,596 1,679 Mortgage banking income 892 324 Net gain on sale of premises and equipment 294 Net gains on sale of investment securities available-for-sale 114 Total noninterest income 2,896 2,003 Noninterest expense: Salaries and employee benefits expense 4,304 4,245 Net occupancy and equipment expense 1,258 1,283 Other expenses 3,793 2,503 Total noninterest expense 9,355 8,031 Income before income taxes 3,164 3,747 Provision for income tax expense 174 522 Net income $2,990 $3,225 Other comprehensive income (loss): Unrealized holding gains (losses) on investment securities available-for-sale $355 $(338) Reclassification adjustment for gains included in net income (114) Income tax expense (benefit) related to other comprehensive income (loss) 82 (115) Other comprehensive income (loss), net of income taxes 159 (223) Comprehensive income $3,149 $3,002 Per share data: Net income $1.73 $1.84 Cash dividends declared $0.56 $0.54 Average common shares outstanding 1,725,310 1,752,609 Comm Bancorp, Inc. Consolidated Statements of Income (In thousands, except per share data) Three months ended June 30, March 31, Dec. 31, Sept. 30, June 30, 2009 2009 2008 2008 2008 Interest income: Interest and fees on loans: Taxable $6,436 $6,448 $6,442 $7,137 $7,274 Tax-exempt 619 666 584 559 564 Interest and dividends on investment securities available-for-sale: Taxable 315 349 356 52 38 Tax-exempt 473 537 443 351 357 Dividends 9 11 6 12 15 Interest on federal funds sold 1 8 133 10 Total interest income 7,852 8,012 7,839 8,244 8,258 Interest expense: Interest on deposits 2,426 2,633 3,019 3,017 2,982 Interest on short-term borrowings 36 56 1 50 Total interest expense 2,462 2,689 3,020 3,017 3,032 Net interest income 5,390 5,323 4,819 5,227 5,226 Provision for loan losses 520 570 747 400 283 Net interest income after provision for loan losses 4,870 4,753 4,072 4,827 4,943 Noninterest income: Service charges, fees and commissions 832 764 868 810 881 Mortgage banking income 490 402 160 120 154 Net gain on sale of premises and equipment 294 Net gains on sale of investment securities available-for-sale 114 Total noninterest income 1,322 1,574 1,028 930 1,035 Noninterest expense: Salaries and employee benefits expense 2,164 2,140 2,117 2,169 2,115 Net occupancy and equipment expense 583 675 596 583 645 Other expenses 2,260 1,533 1,490 1,331 1,272 Total noninterest expense 5,007 4,348 4,203 4,083 4,032 Income before income taxes 1,185 1,979 897 1,674 1,946 Provision for income tax expense (benefit) (30) 204 (103) 199 286 Net income $1,215 $1,775 $1,000 $1,475 $1,660 Other comprehensive income (loss): Unrealized holding gains (losses) on investment securities available-for-sale $13 $342 $1,867 $(686) $(582) Reclassification adjustment for gains included in net income (114) Income tax expense (benefit) related to other comprehensive income (loss) 4 78 635 (233) (198) Other comprehensive income (loss), net of income taxes 9 150 1,232 (453) (384) Comprehensive income $1,224 $1,925 $2,232 $1,022 $1,276 Per share data: Net income $0.70 $1.03 $0.58 $0.84 $0.95 Cash dividends declared $0.28 $0.28 $0.27 $0.27 $0.27 Average common shares outstanding 1,722,282 1,728,371 1,741,392 1,747,438 1,751,841 Comm Bancorp, Inc. Details of Net Interest and Net Interest Margin (In thousands, fully taxable equivalent basis) Three months ended June 30, March 31, Dec. 31, Sept. 30, June 30, 2009 2009 2008 2008 2008 Net interest income: Interest income Loans, net: Taxable $6,436 $6,448 $6,442 $7,137 $7,274 Tax-exempt 938 1,009 884 847 855 Total loans, net 7,374 7,457 7,326 7,984 8,129 Investments: Taxable 324 360 362 64 53 Tax-exempt 717 814 672 531 542 Total investments 1,041 1,174 1,034 595 595 Federal funds sold 1 8 133 10 Total interest income 8,415 8,632 8,368 8,712 8,734 Interest expense: Deposits 2,426 2,633 3,019 3,017 2,982 Borrowed funds 36 56 1 50 Total interest expense 2,462 2,689 3,020 3,017 3,032 Net interest income $5,953 $5,943 $5,348 $5,695 $5,702 Loans, net: Taxable 5.80% 5.84% 5.78% 6.42% 6.62% Tax-exempt 5.66% 5.97% 6.34% 6.61% 6.40% Total loans, net 5.78% 5.86% 5.84% 6.44% 6.60% Investments: Taxable 3.92% 4.29% 3.84% 5.60% 3.64% Tax-exempt 7.43% 7.49% 7.73% 7.51% 7.50% Total investments 5.81% 6.09% 5.70% 7.25% 6.85% Federal funds sold 0.49% 0.36% 1.64% 1.93% Total earning assets 5.79% 5.88% 5.74% 6.21% 6.60% Interest expense: Deposits 2.18% 2.38% 2.58% 2.74% 2.89% Borrowed funds 0.68% 0.71% 1.01% 2.35% Total interest-bearing liabilities 2.11% 2.27% 2.58% 2.74% 2.88% Net interest spread 3.68% 3.61% 3.16% 3.47% 3.72% Net interest margin 4.09% 4.05% 3.67% 4.06% 4.31% Comm Bancorp, Inc. Consolidated Balance Sheets (In thousands, except per share data) June 30, March 31, Dec. 31, Sept. 30, June 30, At period end 2009 2009 2008 2008 2008 Assets: Cash and due from banks $8,315 $9,441 $8,017 $11,174 $16,944 Federal funds sold 12,700 8,000 6,700 Investment securities available-for-sale 73,169 75,249 80,574 76,706 31,488 Loans held for sale, net 787 2,243 1,390 1,243 925 Loans, net of unearned income 510,870 507,166 485,882 493,948 491,084 Less: allowance for loan losses 6,019 5,531 5,255 4,691 5,101 Net loans 504,851 501,635 480,627 489,257 485,983 Premises and equipment, net 11,709 11,785 11,753 11,345 10,710 Accrued interest receivable 2,526 2,456 2,143 3,072 2,513 Other assets 9,456 8,951 6,837 6,646 6,675 Total assets $610,813 $611,760 $604,041 $607,443 $561,938 Liabilities: Deposits: Noninterest-bearing $82,002 $77,752 $79,674 $86,417 $81,280 Interest-bearing 456,795 443,114 462,617 461,176 421,252 Total deposits 538,797 520,866 542,291 547,593 502,532 Borrowed funds 7,950 27,450 Accrued interest payable 1,696 2,124 1,815 1,446 1,271 Other liabilities 2,912 2,397 2,137 1,779 1,958 Total liabilities 551,355 552,837 546,243 550,818 505,761 Stockholders' equity: Common stock, par value $0.33 authorized 12,000,000, shares issued and outstanding 1,716,263; 1,721,845; 1,730,062; 1,745,220; 1,747,774 566 568 571 576 577 Capital surplus 7,799 7,741 7,694 7,661 7,548 Retained earnings 49,263 48,793 47,862 47,949 47,160 Accumulated other comprehensive income 1,830 1,821 1,671 439 892 Total stockholders' equity 59,458 58,923 57,798 56,625 56,177 Total liabilities and stockholders' equity $610,813 $611,760 $604,041 $607,443 $561,938 Comm Bancorp, Inc. Consolidated Balance Sheets (In thousands, except per share data) Average quarterly June 30, March 31, Dec. 31, Sept. 30, June 30, balances 2009 2009 2008 2008 2008 Assets: Loans, net: Taxable $444,905 $447,922 $443,690 $442,039 $441,648 Tax-exempt 66,500 68,567 55,436 50,964 53,765 Total loans, net 511,405 516,489 499,126 493,003 495,413 Investments: Taxable 33,115 34,068 37,514 4,546 5,863 Tax-exempt 38,729 44,051 34,600 28,122 29,052 Total investments 71,844 78,119 72,114 32,668 34,915 Federal funds sold 37 833 8,897 32,297 2,083 Total earning assets 583,286 595,441 580,137 557,968 532,411 Other assets 30,625 27,910 31,815 30,657 26,983 Total assets $613,911 $623,351 $611,952 $588,625 $559,394 Liabilities and stockholders' equity: Deposits: Interest-bearing $446,992 $449,242 $466,086 $437,595 $414,669 Noninterest-bearing 82,221 79,997 85,434 91,084 76,752 Total deposits 529,213 529,239 551,520 528,679 491,421 Borrowed funds 21,359 31,773 393 8,575 Other liabilities 3,743 3,821 2,892 3,012 3,065 Total liabilities 554,315 564,833 554,805 531,691 503,061 Stockholders' equity 59,596 58,518 57,147 56,934 56,333 Total liabilities and stockholders' equity $613,911 $623,351 $611,952 $588,625 $559,394 Comm Bancorp, Inc. Asset Quality Data (In thousands) June 30, March 31, Dec. 31, Sept. 30, June 30, At quarter end 2009 2009 2008 2008 2008 Nonperforming assets: Nonaccrual/ restructured loans $20,166 $20,154 $23,068 $11,155 $11,301 Accruing loans past due 90 days or more 1,139 1,402 835 7,085 2,585 Foreclosed assets 1,726 1,854 336 Total nonperforming assets $23,031 $23,410 $24,239 $18,240 $13,886 Three months ended Allowance for loan losses: Beginning balance $5,531 $5,255 $4,691 $5,101 $4,934 Charge-offs 147 324 196 844 150 Recoveries 115 30 13 34 34 Provision for loan losses 520 570 747 400 283 Ending balance $6,019 $5,531 $5,255 $4,691 $5,101 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. DATASOURCE: Comm Bancorp, Inc. CONTACT: MEDIA/INVESTORS, Scott A. Seasock, +1-570-586-0377 or fax, +1-570-587-3761, of Comm Bancorp, Inc. Web Site: http://www.combk.com/

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