CLARKS SUMMIT, Pa., Oct. 30 /PRNewswire-FirstCall/ -- Comm Bancorp,
Inc. (NASDAQ:CCBP) today reported a net loss of $385 thousand or
$0.22 per share for the nine months ended September 30, 2009,
compared to net income of $4,700 thousand or $2.68 per share for
the same period of 2008. The net loss was $3,375 thousand or $1.95
per share in the third quarter of 2009 compared to net income of
$1,475 thousand or $0.84 per share for the same quarter of 2008.
The net losses reported for nine months and quarter ended September
30, 2009, were primarily a result of recognizing a provision for
loan losses of $8.7 million in the third quarter of 2009. Return on
average assets was (2.19)% for the third quarter and (0.08)% for
the nine months ended September 30, 2009, compared to 1.00% and
1.10% for the respective 2008 periods. Return on average
stockholders' equity was (22.63)% and (0.87)%, respectively, for
the third quarter and year-to-date 2009, compared to 10.31% and
11.17% for the same periods of 2008. "Regulatory oversight of banks
has intensified primarily as a result of the recent escalation of
bank failures reported in 2009," stated William F. Farber, Sr.,
President and Chief Executive Officer. "Regulators are being
extremely critical in their evaluations of capital adequacy, and in
particular, the reserves banks set aside for potential loan losses.
As a result of this emphasis, coupled with the recent deterioration
evidenced in the commercial and construction sectors of our loan
portfolio and the continuation of the downturn in local economic
conditions, we set aside additional reserves through recognizing a
provision for loan losses of $8.7 million in the third quarter of
2009. The rapid devaluation of collateral values used to measure
impairment on specifically identified loans, coupled with a
shortening of the loss experience period utilized to estimate
losses in the remainder of the portfolio, caused the large
provision. With this provision, we believe the allowance for loan
losses is adequate to absorb probable credit losses related to
specifically identified criticized loans as well as probable
incurred losses inherent in the remainder of the loan portfolio as
of September 30, 2009. Our institution's challenges are
specifically limited to certain sectors of the loan portfolio,
accounting for only a portion of the overall balance sheet, as we
did not experience the recent losses recognized by many banks in
their investment portfolios," continued Farber. "Despite this
significant charge, the Company's regulatory capital ratios
continued to exceed the levels required to be considered "well
capitalized" under applicable regulatory guidelines. Going forward,
we will focus our efforts on remedying the status of our
nonperforming assets, while continuing to meet the banking needs of
our customers. Our goal is to return to profitability as soon as we
are able," concluded Farber. INCOME STATEMENT REVIEW For the nine
months ended September 30, tax-equivalent net interest income
increased $352 thousand or 2.1% to $17,392 thousand in 2009 from
$17,040 thousand in 2008. A $1,858 thousand or 19.7% decrease in
interest expense was partially offset by a $1,506 thousand or 5.7%
reduction in tax-equivalent interest revenue. The reduction in
interest expense was a result of a decrease in our cost of funds of
79 basis points to 2.15% for the nine months ended September 30,
2009, from 2.94% for the same nine months of last year. We
experienced significant reductions in the rates paid for all
interest-bearing liability categories. Average interest-bearing
liabilities grew $42.9 million or 10.0%, which partially mitigated
the positive influence of the reduction in funding costs. The
decline in interest revenue resulted primarily from an 88 basis
point decrease in the tax-equivalent yield on earning assets to
5.67% for the nine months ended September 30, 2009, from 6.55% for
the same period of 2008. Specifically, the tax-equivalent yield on
the loan portfolio, which decreased 93 basis points to 5.71% in
2009 from 6.64% 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 of
$48.6 million or 9.0%. Average investments increased $35.8 million
comparing the nine months ended September 30, 2009 and 2008. In
addition, the average loan portfolio grew $19.2 million to $513.3
million in 2009 from $494.1 million in 2008. Our tax-equivalent net
interest margin for the nine months ended September 30, contracted
26 basis points to 3.95% in 2009 compared to 4.21% in 2008. The
provision for loan losses equaled $8,670 thousand for the third
quarter of 2009, compared to $400 thousand for the same quarter of
2008. The year-to-date provision for loan losses totaled $9,760
thousand in 2009, an increase of $8,747 thousand or 863.5% from
$1,013 thousand in 2008. The large change in the provision for loan
losses in 2009 reflects the effect of obtaining revised collateral
valuations on certain large commercial real estate loans from
independent appraisals which indicated significant market
devaluations brought on by the rapid deterioration in the local
economy. In addition, management revised its methodology for
estimating losses in the remainder of the loan portfolio by
shortening the number of periods considered for estimating loss
factors in order to reflect the current market conditions.
Management believes that recent historical data is a better basis
for determining loss factors given the rapid economic decline in
our market area. Noninterest income for the third quarter rose
$1,590 thousand to $2,520 thousand in 2009 from $930 thousand in
2008. Included in noninterest income in the third quarter of 2009
were net gains on the sale of available-for-sale investment
securities of $1,385 thousand. Adjusting for these gains,
noninterest income increased $205 thousand or 22.0%. Mortgage
banking income increased $167 thousand, while service charges, fees
and commissions rose $38 thousand. For the nine months ended
September 30, 2009, noninterest income totaled $5,416 thousand, an
increase of $2,483 thousand or 84.7% from $2,933 thousand for the
same period last year. Included in year-to-date noninterest income
in 2009 was a net gain of $294 thousand from the disposition of the
former Tunkhannock and Eaton Township, Pennsylvania branch offices.
In addition, noninterest income in 2009 included $1,499 thousand in
net gains from the sale of available-for-sale investment
securities. Due to the significantly lower mortgage rates, mortgage
banking income increased $735 thousand comparing the nine months
ended September 30, 2009 and 2008. Service charges, fees and
commissions decreased $45 thousand or 1.8% to $2,444 thousand in
2009 from $2,489 thousand in 2008. For the third quarter,
noninterest expense increased $475 thousand or 11.6% to $4,558
thousand in 2009 from $4,083 thousand in 2008. The increase
resulted primarily from a $611 thousand or 45.9% increase in other
expenses. This increase was due largely to an increase in the cost
of deposit insurance 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 decreased $144 thousand or 6.6%, while net occupancy and
equipment expense increased $8 thousand. For the nine months ended
September 30, 2009, noninterest expense increased $1,799 thousand
or 14.9%. Other expenses rose $1,901 thousand or 49.6%, which was
due primarily to the increase in FDIC insurance. Salaries and
employee benefits and net occupancy and equipment expenses
decreased $85 thousand and $17 thousand. BALANCE SHEET REVIEW Total
assets amounted to $614.3 million at September 30, 2009, an
increase of $3.5 million compared to $610.8 million at June 30,
2009. Loans, net of unearned income, decreased $3.8 million to
$507.1 million at September 30, 2009, from $510.9 million at the
end of the previous quarter. Available-for-sale investment
securities declined $34.9 million to $38.3 million at the close of
the third quarter from $73.2 million at June 30, 2009. Total
deposits increased $16.3 million from $538.8 million at June 30,
2009, to $555.1 million at September 30, 2009. Federal funds sold
amounted to $46.1 million at September 30, 2009. At June 30, 2009,
there were $8.0 million in borrowed funds outstanding at the
Federal Home Loan Bank of Pittsburgh. Stockholders' equity equaled
$55.5 million or $32.30 per share at September 30, 2009, compared
to $59.5 million or $34.64 per share at the end of the previous
quarter. Dividends declared were $0.28 per share and $0.84 per
share, for the third quarter and nine months ended September 30,
2009. At September 30, 2009, Community Bank and Trust Company, our
wholly-owned subsidiary, reported Tier I, Total and Leverage risked
based capital ratios of 9.2%, 10.5% and 7.9%, respectively. As a
result, our bank subsidiary continued to exceed the requirements to
be categorized as well capitalized under the regulatory framework
for prompt corrective action at the end of the third quarter of
2009. Nonperforming assets equaled $23.7 million or 4.65% of loans,
net of unearned income and foreclosed assets at September 30, 2009,
compared to $18.2 million or 3.69% one year earlier. Nonperforming
assets equaled $23.0 million or 4.49% of loans, net of unearned
income and foreclosed assets at June 30, 2009, and $24.2 million or
4.99% at December 31, 2008. The allowance for loan losses equaled
$11.6 million or 2.28% of loans, net of unearned income, at
September 30, 2009, compared to $4.7 million or 0.95% one year ago.
Loans charged-off, net of recoveries, increased $2,503 thousand or
264.6% to $3,449 thousand for the nine months ended September 30,
2009, from $946 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) Sept. 30, June
30, March 31, Dec. 31, Sept. 30, 2009 2009 2009 2008 2008 Key
performance data: Per share data: Net income (loss) ($1.95) $0.70
$1.03 $0.58 $0.84 Cash dividends declared $0.28 $0.28 $0.28 $0.27
$0.27 Book value $32.30 $34.64 $34.22 $33.41 $32.45 Tangible book
value $32.10 $34.44 $34.02 $33.21 $32.25 Market value: High $40.00
$40.00 $40.99 $42.00 $44.92 Low $31.00 $35.31 $35.04 $35.00 $40.75
Closing $34.50 $40.00 $36.75 $35.01 $42.00 Market capitalization
$59,286 $68,651 $63,278 $60,569 $73,299 Common shares outstanding
1,718,439 1,716,263 1,721,845 1,730,062 1,745,220 Selected ratios:
Return on average stockholders' equity (22.63)% 8.18% 12.30% 6.96%
10.31% Return on average assets (2.19)% 0.79% 1.15% 0.65% 1.00%
Leverage ratio 8.68% 9.25% 9.10% 9.62% 9.81% Total risk- based
capital ratio 11.42% 11.97% 11.89% 12.17% 12.00% Efficiency ratio
60.78% 74.60% 63.26% 71.88% 66.31% Nonperforming assets to loans,
net, and foreclosed assets 4.65% 4.49% 4.60% 4.99% 3.69% Net
charge-offs to average loans, net 2.42% 0.03% 0.23% 0.15% 0.65%
Allowance for loan losses to loans, net 2.28% 1.18% 1.09% 1.08%
0.95% Earning assets yield (FTE) 5.35% 5.79% 5.88% 5.74% 6.21% Cost
of funds 2.07% 2.11% 2.27% 2.58% 2.74% Net interest spread (FTE)
3.28% 3.68% 3.61% 3.16% 3.47% Net interest margin (FTE) 3.70% 4.09%
4.05% 3.67% 4.06% Comm Bancorp, Inc. Consolidated Statements of
Income (In thousands, except per share data) Nine Months Ended
Sept. 30, Sept. 30, 2009 2008 Interest income: Interest and fees on
loans: Taxable $19,078 $21,979 Tax-exempt 1,883 1,694 Interest and
dividends on investment securities available- for-sale: Taxable 869
133 Tax-exempt 1,417 1,072 Dividends 29 39 Interest on federal
funds sold 5 145 Total interest income 23,281 25,062 Interest
expense: Interest on deposits 7,492 9,269 Interest on short-term
borrowings 97 178 Total interest expense 7,589 9,447 Net interest
income 15,692 15,615 Provision for loan losses 9,760 1,013 Net
interest income after provision for loan losses 5,932 14,602
Noninterest income: Service charges, fees and commissions 2,444
2,489 Mortgage banking income 1,179 444 Net gain on sale of
premises and equipment 294 Net gains on sale of investment
securities available-for-sale 1,499 - Total noninterest income
5,416 2,933 Noninterest expense: Salaries and employee benefits
expense 6,329 6,414 Net occupancy and equipment expense 1,849 1,866
Other expenses 5,735 3,834 Total noninterest expense 13,913 12,114
Income (loss) before income taxes (2,565) 5,421 Provision for
income tax expense (benefit) (2,180) 721 Net income (loss) $(385)
$4,700 Other comprehensive income (loss): Unrealized holding gains
(losses) on investment securities available-for-sale $1,473
$(1,024) Reclassification adjustment for gains included in net
income (1,499) - Income tax benefit related to other comprehensive
loss (9) (348) Other comprehensive loss, net of income taxes (17)
(676) Comprehensive income (loss) $(402) $4,024 Per share data: Net
income (loss) $(0.22) $2.68 Cash dividends declared $0.84 $0.81
Average common shares outstanding 1,722,994 1,750,872 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, 2009 2009 2009 2008 2008 Interest income: Interest
and fees on loans: Taxable $6,194 $6,436 $6,448 $6,442 $7,137
Tax-exempt 598 619 666 584 559 Interest and dividends on investment
securities available-for- sale: Taxable 205 315 349 356 52
Tax-exempt 407 473 537 443 351 Dividends 9 9 11 6 12 Interest on
federal funds sold 4 1 8 133 Total interest income 7,417 7,852
8,012 7,839 8,244 Interest expense: Interest on deposits 2,433
2,426 2,633 3,019 3,017 Interest on short- term borrowings 5 36 56
1 Total interest expense 2,438 2,462 2,689 3,020 3,017 Net interest
income 4,979 5,390 5,323 4,819 5,227 Provision for loan losses
8,670 520 570 747 400 Net interest income (loss) after provision
for loan losses (3,691) 4,870 4,753 4,072 4,827 Noninterest income:
Service charges, fees and commissions 848 832 764 868 810 Mortgage
banking income 287 490 402 160 120 Net gain on sale of premises and
equipment 294 Net gains on sale of investment securities
available-for- sale 1,385 114 Total noninterest income 2,520 1,322
1,574 1,028 930 Noninterest expense: Salaries and employee benefits
expense 2,025 2,164 2,140 2,117 2,169 Net occupancy and equipment
expense 591 583 675 596 583 Other expenses 1,942 2,260 1,533 1,490
1,331 Total noninterest expense 4,558 5,007 4,348 4,203 4,083
Income (loss) before income taxes (5,729) 1,185 1,979 897 1,674
Provision for income tax expense (benefit) (2,354) (30) 204 (103)
199 Net income (loss) $(3,375) $1,215 $1,775 $1,000 $1,475 Other
comprehensive income (loss): Unrealized holding gains (losses) on
investment securities available-for- sale $1,118 $13 $342 $1,867
$(686) Reclassification adjustment for gains included in net income
(1,385) (114) Income tax expense (benefit) related to other
comprehensive income (loss) (91) 4 78 635 (233) Other comprehensive
income (loss), net of income taxes (176) 9 150 1,232 (453)
Comprehensive income (loss) $(3,551) $1,224 $1,925 $2,232 $1,022
Per share data: Net income (loss) $(1.95) $0.70 $1.03 $0.58 $0.84
Cash dividends declared $0.28 $0.28 $0.28 $0.27 $0.27 Average
common shares outstanding 1,718,439 1,722,282 1,728,371 1,741,392
1,747,438 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,
2009 2009 2009 2008 2008 Net interest income: Interest income
Loans, net: Taxable $6,194 $6,436 $6,448 $6,442 $7,137 Tax-exempt
906 938 1,009 884 847 Total loans, net 7,100 7,374 7,457 7,326
7,984 Investments: Taxable 214 324 360 362 64 Tax-exempt 616 717
814 672 531 Total investments 830 1,041 1,174 1,034 595 Federal
funds sold 4 1 8 133 Total interest income 7,934 8,415 8,632 8,368
8,712 Interest expense: Deposits 2,433 2,426 2,633 3,019 3,017
Borrowed funds 5 36 56 1 Total interest expense 2,438 2,462 2,689
3,020 3,017 Net interest income $5,496 $5,953 $5,943 $5,348 $5,695
Loans, net: Taxable 5.45% 5.80% 5.84% 5.78% 6.42% Tax-exempt 5.89%
5.66% 5.97% 6.34% 6.61% Total loans, net 5.50% 5.78% 5.86% 5.84%
6.44% Investments: Taxable 3.10% 3.92% 4.29% 3.84% 5.60% Tax-exempt
7.07% 7.43% 7.49% 7.73% 7.51% Total investments 5.32% 5.81% 6.09%
5.70% 7.25% Federal funds sold 0.11% 0.49% 0.36% 1.64% Total
earning assets 5.35% 5.79% 5.88% 5.74% 6.21% Interest expense:
Deposits 2.08% 2.18% 2.38% 2.58% 2.74% Borrowed funds 0.67% 0.68%
0.71% 1.01% Total interest- bearing liabilities 2.07% 2.11% 2.27%
2.58% 2.74% Net interest spread 3.28% 3.68% 3.61% 3.16% 3.47% Net
interest margin 3.70% 4.09% 4.05% 3.67% 4.06% 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 2009
2009 2009 2008 2008 Assets: Cash and due from banks $8,728 $8,315
$9,441 $8,017 $11,174 Federal funds sold 46,100 12,700 8,000
Investment securities available-for-sale 38,302 73,169 75,249
80,574 76,706 Loans held for sale, net 787 2,243 1,390 1,243 Loans,
net of unearned income 507,094 510,870 507,166 485,882 493,948
Less: allowance for loan losses 11,566 6,019 5,531 5,255 4,691 Net
loans 495,528 504,851 501,635 480,627 489,257 Premises and
equipment, net 11,631 11,709 11,785 11,753 11,345 Accrued interest
receivable 2,597 2,526 2,456 2,143 3,072 Other assets 11,386 9,456
8,951 6,837 6,646 Total assets $614,272 $610,813 $611,760 $604,041
$607,443 Liabilities: Deposits: Noninterest-bearing $79,591 $82,002
$77,752 $79,674 $86,417 Interest-bearing 475,509 456,795 443,114
462,617 461,176 Total deposits 555,100 538,797 520,866 542,291
547,593 Borrowed funds 7,950 27,450 Accrued interest payable 1,185
1,696 2,124 1,815 1,446 Other liabilities 2,478 2,912 2,397 2,137
1,779 Total liabilities 558,763 551,355 552,837 546,243 550,818
Stockholders' equity: Common stock, par value $0.33 authorized
12,000,000, shares issued and outstanding 1,718,439; 1,716,263;
1,721,845; 1,730,062; 1,745,220 567 566 568 571 576 Capital surplus
7,881 7,799 7,741 7,694 7,661 Retained earnings 45,407 49,263
48,793 47,862 47,949 Accumulated other comprehensive income 1,654
1,830 1,821 1,671 439 Total stockholders' equity 55,509 59,458
58,923 57,798 56,625 Total liabilities and stockholders' equity
$614,272 $610,813 $611,760 $604,041 $607,443 Comm Bancorp, Inc.
Consolidated Balance Sheets (In thousands, except per share data)
Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Average quarterly
balances 2009 2009 2009 2008 2008 Assets: Loans, net: Taxable
$451,025 $444,905 $447,922 $443,690 $442,039 Tax-exempt 61,000
66,500 68,567 55,436 50,964 Total loans, net 512,025 511,405
516,489 499,126 493,003 Investments: Taxable 27,354 33,115 34,068
37,514 4,546 Tax-exempt 34,562 38,729 44,051 34,600 28,122 Total
investments 61,916 71,844 78,119 72,114 32,668 Federal funds sold
14,709 37 833 8,897 32,297 Total earning assets 588,650 583,286
595,441 580,137 557,968 Other assets 22,649 30,625 27,910 31,815
30,657 Total assets $611,299 $613,911 $623,351 $611,952 $588,625
Liabilities and stockholders' equity: Deposits: Interest-bearing
$464,411 $446,992 $449,242 $466,086 $437,595 Noninterest-bearing
81,047 82,221 79,997 85,434 91,084 Total deposits 545,458 529,213
529,239 551,520 528,679 Borrowed funds 2,970 21,359 31,773 393
Other liabilities 3,710 3,743 3,821 2,892 3,012 Total liabilities
552,138 554,315 564,833 554,805 531,691 Stockholders' equity 59,161
59,596 58,518 57,147 56,934 Total liabilities and stockholders'
equity $611,299 $613,911 $623,351 $611,952 $588,625 Comm Bancorp,
Inc. Asset Quality Data (In thousands) Sept. 30, June 30, March 31,
Dec. 31, Sept. 30, At quarter end 2009 2009 2009 2008 2008
Nonperforming assets: Nonaccrual/restructured loans $20,567 $20,166
$20,154 $23,068 $11,155 Accruing loans past due 90 days or more
1,177 1,139 1,402 835 7,085 Foreclosed assets 1,932 1,726 1,854 336
Total nonperforming assets $23,676 $23,031 $23,410 $24,239 $18,240
Three months ended Allowance for loan losses: Beginning balance
$6,019 $5,531 $5,255 $4,691 $5,101 Charge-offs 3,133 147 324 196
844 Recoveries 10 115 30 13 34 Provision for loan losses 8,670 520
570 747 400 Ending balance $11,566 $6,019 $5,531 $5,255 $4,691
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: Scott
A. Seasock of Comm Bancorp, Inc., +1-570-587-3421, ext. 323 Web
Site: http://www.combk.com/
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