COBH Pennsylvania Commerce Bancorp (MM)

Pennsylvania Commerce Bancorp, Inc. (NASDAQ Global Select Market Symbol:COBH), parent company of Commerce Bank/Harrisburg, N.A., reported increased assets, loans and net income for the fourth quarter of 2007, announced Gary L. Nalbandian, Chairman. Fourth Quarter 2007 Financial Highlights � � � � % � 12/31/07 12/31/06 Change (1) Total assets $ 1.98 Billion $ 1.87 Billion 6 % � Total core deposits $ 1.55 Billion $ 1.58 Billion (2 )% � Total loans (net) $ 1.15 Billion $ 973 Million 18 % � � � � � � � � � � � Total revenues $ 23.0 Million $ 18.2 Million 26 % � Net income $ 2.5 Million $ 1.5 Million 62 % � Diluted net income per share $ 0.38 $ 0.24 58 % (1) Compared to Fourth Quarter Ended December 31, 2006 Chairman�s Statement In commenting on the Company�s financial results, Chairman Nalbandian noted the following highlights: Net income was $2.5 million, up 62% over the fourth quarter one year ago. Diluted net income per share was $0.38 for the fourth quarter, a 58% increase over the fourth quarter of 2006. Total revenues grew 26% for the fourth quarter of 2007 over the fourth quarter one year ago. Net interest income for the fourth quarter increased 29% over the same period in 2006. The Company�s net interest margin for the fourth quarter improved 24 basis points over the previous quarter and 57 basis points over the same quarter one year ago. Deposit charges and service fees grew 25% for the fourth quarter over the same period one year ago. Shareholder equity increased $11.2 million, or 11%, to $112.3 million. Return on average shareholder�s equity improved to 8.83% for the quarter vs. 6.00% for the fourth quarter of 2006. The one year annual shareholders� return on COBH was 6% as compared to minus 20% for the NASDAQ Bank Index. Total assets reached $1.98 billion. Net loans grew $173.6 million, or 18%, over the fourth quarter one year ago. Asset quality remains strong with net charge-offs for the quarter of only 0.02% and a non-performing loan coverage ratio of 366%. 2007 New Stores and Awards During 2007 the Company opened 3 new stores, increasing the total number of stores to 33 throughout its six-county footprint. New stores opened during 2007 were as follows: Location � County Shillington Road Berks Manheim Pike Lancaster Linglestown Road Dauphin On the national stage, J.D. Power & Associates ranked Commerce #1 in Customer Satisfaction in the Mid-Atlantic Region. For the fourth straight year, Commerce Bank was voted Best Bank by the Harrisburg Magazine Simply the Best Readers� Poll. Pennsylvania Commerce Bancorp is an independent member of the �Commerce Bank Network,� a network of banks established by Commerce Bancorp, Inc. (NYSE:CBH) based in Cherry Hill, N.J. Income Statement � Three months ended December 31, � Twelve months ended December 31, (dollars in thousands, except per share data) � � 2007 � � 2006 � %Change � � � 2007 � � 2006 � %Change � Total revenues $ 22,952 � $ 18,190 � 26 % $ 82,315 � $ 71,543 � 15 % Total expenses 19,171 16,010 20 % 70,807 59,294 19 % Net income 2,467 1,522 62 % 7,001 7,254 (3 )% Diluted net income per share � $ 0.38 � $ 0.24 � 58 % � $ 1.07 � $ 1.12 � (4 )% Total revenues (net interest income plus non-interest income) for the fourth quarter increased $4.8 million, to $23.0 million, up 26% over the fourth quarter of 2006. Total revenues for the year 2007 increased by $10.8 million, or 15%, over total revenues in 2006. Net income totaled $2.5 million for the fourth quarter of 2007, a 62% increase over net income of $1.5 million for the fourth quarter of 2006. For the year ended December 31, 2007, net income totaled $7.0 million, down slightly from the $7.3 million figure recorded in 2006. Net income per fully diluted share for the fourth quarter of 2007 was $0.38, a 58% increase over the $0.24 recorded for the same period a year ago. For the year 2007, fully diluted net income per share was $1.07 vs. $1.12 for the year 2006. Net Interest Income and Net Interest Margin Net interest income for the fourth quarter of 2007 totaled $16.8 million, an increase of $3.8 million, or 29%, over the $13.0 million recorded a year ago. This increase was a result of continued strong loan growth combined with improvement in the Company�s net interest margin. For the year ended December 31, 2007, net interest income totaled $59.5 million, up $6.7 million, or 13%, over the $52.8 million recorded in the year ended December 31, 2006. The net interest margin for the fourth quarter of 2007 was 3.60%, up 57 basis points over the 3.03% figure recorded in the fourth quarter of 2006, and compared to 3.36% for the third quarter of 2007. The improvement in net interest margin is the result of a significant reduction in the Company�s deposit and total cost of funds. Net interest income, on a tax equivalent basis, totaled $17.1 million in the fourth quarter of 2007, an increase of $4.0 million, or 30%, over the fourth quarter one year ago. This figure was up $1.7 million over net interest income on a fully taxable basis recorded in the third quarter of 2007. Net Interest Income and Rate/Volume Analysis As shown below, the increase in net interest income on a tax equivalent basis was due to volume increases in the Company�s earning assets, as well as improvement in the net interest margin. (dollars in thousands) � Net Interest Income December 31 � Volume � Rate � Total � % 2007 vs. 2006 � Increase � Change � Increase � Increase Quarter $ 1,227 $ 2,730 $ 3,957 30% Twelve Months � � 3,686 � � 3,536 � � 7,222 � 14% Noninterest Income Noninterest income for the fourth quarter of 2007 totaled $6.1 million, up $932,000, or 18%, over $5.2 million a year ago. The growth in noninterest income for the fourth quarter was reflected in increased deposit charges and service fees as depicted below: � Three months ended � Twelve months ended December 31, December 31, (dollars in thousands) � � 2007 � � 2006 � %Change � � � 2007 � � 2006 � %Change � Deposit charges and service fees $ 5,711 � $ 4,574 � 25 % $ 20,688 � $ 16,816 � 23 % Other income 421 466 (10 ) 1,964 1,776 11 Subtotal 6,132 5,040 22 22,652 18,592 22 Net investment securities gains � � - � � 160 � - � � � 171 � � 160 � 7 � Total noninterest income � $ 6,132 � $ 5,200 � 18 % � $ 22,823 � $ 18,752 � 22 % Noninterest income for the year 2007 increased $4.1 million, or 22%, from $18.8 million in 2006. Like the fourth quarter, the increase was due to growth in the level of deposit charges and service fees. Noninterest Expenses Noninterest expenses for the fourth quarter of 2007 were $19.2 million, up 20%, over $16.0 million one year ago. The increases in noninterest expenses for the quarter were widespread across all categories, reflecting the Company�s continued growth. Included in noninterest expenses for the fourth quarter of 2007 are three full months of costs related to two new stores opened in November 2006, as well as costs for the three new stores all opened during the third quarter 2007. Also contributing to the increase was a higher level of regulatory expenses as well as FDIC insurance assessments that were reintroduced to the banking industry starting January 1, 2007. Excluding regulatory expenses and FDIC insurance assessments, total noninterest expenses were up 11% for the fourth quarter of 2007 over the same period in 2006 and were up 15% for the year 2007 vs. 2006. Noninterest expenses for the year 2007 totaled $70.8 million, up $11.5 million, or 19%, over the $59.3 million recorded during the same period in 2006. This increase was primarily attributable to the same costs as discussed in the previous paragraph. Balance Sheet � � December 31, � � % (dollars in thousands) � � 2007 � � 2006 � Change Total assets $ 1,979,011 $ 1,866,483 6 % � Total loans (net) 1,146,629 973,033 18 % � Core deposits 1,548,611 1,578,316 (2 )% � Total deposits � � 1,560,896 � � 1,616,777 � (3 )% Lending Total gross loans increased $174.7 million, or 18%, to $1.16 billion from $983 million one year ago, with the growth represented across all loan categories. The composition of the Company�s loan portfolio is as follows: � � % of � � % of � $ � % (dollars in thousands) � 12/31/07 � Total � 12/31/06 � Total � Increase � Increase Commercial $ 361,374 31 % $ 277,287 28 % $ 84,087 30 % Owner occupied � � 150,679 � 13 � � � 123,573 � 13 � � � 27,106 � 22 � Total commercial 512,053 44 400,860 41 111,193 28 Consumer / residential 301,667 26 281,498 29 20,169 7 Commercial real estate � � 343,651 � 30 � � � 300,360 � 30 � � � 43,291 � 14 � Gross loans � $ 1,157,371 � 100 % � $ 982,718 � 100 % � $ 174,653 � 18 % Asset Quality The Company�s asset quality ratios are highlighted below: � Quarter Ended December 31, � September 30, � December 31, � � 2007 � 2007 � 2006 Non-performing assets/total assets 0.17 % 0.19 % 0.19 % Net loan charge-offs/average total loans 0.02 % 0.02 % 0.02 % Loan loss reserve/gross loans 0.93 % 0.96 % 0.99 % Non-performing loan coverage 366 % 319 % 287 % Non-performing assets/capital and reserves � 3 % � 3 % � 3 % Non-performing assets and loans past due 90 days at December 31, 2007 totaled $3.4 million, or 0.17%, of total assets, as compared to $3.7 million, or 0.19%, of total assets, at September 30, 2007 and $3.5 million, or 0.19%, of total assets one year ago. Core Deposits Core deposit growth by type of account is as follows: � December 31, � � � 4th Qtr 2007 % Cost of (dollars in thousands) � � 2007 � � 2006 � Change Funds Demand noninterest-bearing $ 271,894 $ 275,137 (1 )% 0.00 % Demand interest-bearing 747,549 707,364 6 2.92 Savings � � 375,710 � � 396,567 � (5 ) 2.03 � Subtotal 1,395,153 1,379,068 1 2.13 Time � � 153,458 � � 199,248 � (23 ) 4.11 � Total core deposits � $ 1,548,611 � $ 1,578,316 � (2 )% 2.33 % Core deposit growth by type of customer is as follows: � December 31, � % of � December 31, � % of � % (dollars in thousands) � 2007 � Total � 2006 � Total � Change Consumer $ 586,100 38 % $ 622,313 39 % (6 )% Commercial 544,442 35 520,995 33 5 Government � � 418,069 � 27 � � � 435,008 � 28 � � (4 ) Total � $ 1,548,611 � 100 % � $ 1,578,316 � 100 % � (2 )% Investments At December 31, 2007, the Company�s investment portfolio totaled $644.6 million. Detailed below is information regarding the composition and characteristics of the Company�s investment portfolio at December 31, 2007. � Available � Held to � Product Description � for Sale � Maturity � Total (in thousands) Mortgage-backed securities: Federal agencies pass through certificates (AAA rated) $ 72,118 $ 81,846 $ 153,964 Collateralized mortgage obligations (AAA rated) 310,090 34,212 344,302 U.S. Government agencies/other � � 4,958 � � � 141,409 � � � 146,367 � Total � $ 387,166 � � $ 257,467 � � $ 644,633 � Duration (in years) 4.1 3.7 4.0 Average life (in years) 5.3 4.7 5.0 Quarterly average yield � � 5.36 % � � 5.30 % � � 5.33 % At December 31, 2007, the after tax depreciation of the Company�s available for sale portfolio was $3.9 million. Capital Stockholders� equity at December 31, 2007 totaled $112.3 million, an increase of $11.2 million, or 11%, over stockholders� equity of $101.1 million at December 31, 2006. Return on average stockholders� equity (ROE) for the three months and twelve months ended December 31, 2007 and 2006 are shown below: Return on Equity Three Months Ended � Twelve Months Ended December 31, December 31, 2007 � 2006 � 2007 � 2006 8.83 % � 6.00 % � 6.59 % � 7.58 % The Company�s capital ratios at December 31, 2007 were as follows: � � Regulatory Guidelines Commerce � "Well Capitalized" Leverage Ratio 7.26 % 5.00 % Tier 1 10.03 % 6.00 % Total Capital � 10.78 % � 10.00 % Shareholder Returns � � As of December 31, 2007 � � Commerce � NASDAQ Bank Index � S & P Index 1 Year � 6 % � (20 )% � 5 % 3 Years (4 )% (4 )% 9 % 5 Years 10 % 6 % 13 % 10 Years � 11 % � 5 % � 6 % FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION The Company may, from time to time, make written or oral �forward-looking statements�, including statements contained in the Company�s filings with the Securities and Exchange Commission (including the annual report on Form 10-K and the exhibits thereto), in its reports to stockholders and in other communications by the Company, which are made in good faith by the Company pursuant to the �safe harbor� provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to the Company�s beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors (some of which are beyond the Company�s control). The words �may�, �could�, �should�, �would�, �believe�, �anticipate�, �estimate�, �expect�, �intend�, �plan� and similar expressions are intended to identify forward-looking statements. The following factors, among others discussed in the Company�s Form 10-K, could cause the Company�s financial performance to differ materially from that expressed or implied in such forward-looking statements: the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations; the effects of, and changes in, trade, monetary and fiscal policies, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation; interest rate, market and monetary fluctuations; the timely development of competitive new products and services by the Company and the acceptance of such products and services by customers; the willingness of customers to substitute competitors� products and services for the Company�s products and services and vice versa; the impact of changes in financial services� laws and regulations (including laws concerning taxes, banking, securities and insurance); the impact of the rapid growth of the Company; the Company�s dependence on Commerce Bancorp, Inc. (and its successor) to provide various services to the Company and the costs associated with securing alternate providers of such services; changes in the Company�s allowance for loan losses; effect of terrorists attacks and threats of actual war; unanticipated regulatory or judicial proceedings; changes in consumer spending and saving habits; and the success of the Company at managing the risks involved in the foregoing. Because such forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such statements. The Company cautions that the foregoing list of important factors is not exclusive. The Company does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by or on behalf of the Company. For information on subsequent events refer to the Company�s filings with the Securities and Exchange Commission (�SEC�). Pennsylvania Commerce Bancorp, Inc. Selected Consolidated Financial Data (Unaudited) � � At or for the At or for the Three Months Ended Twelve Months Ended December 31, December 31, (in thousands, except per share amounts) 2007 2006 %Change 2007 2006 %Change � Income Statement Data: � Net interest income $ 16,820 $ 12,990 29 % $ 59,492 $ 52,791 13 % Provision for loan losses 245 225 9 1,762 1,634 8 Noninterest income 6,132 5,200 18 22,823 18,752 22 Total revenues 22,952 18,190 26 82,315 71,543 15 Noninterest operating expenses 19,171 16,010 20 70,807 59,294 19 Net income 2,467 1,522 62 7,001 7,254 (3) � Per Common Share Data: � Net income: Basic $ 0.39 $ 0.24 63 % $ 1.11 $ 1.18 (6) % Net income: Diluted 0.38 0.24 58 1.07 1.12 (4) � Book Value $ 17.63 $ 16.27 8 % � Weighted average shares outstanding: Basic 6,299 6,138 6,237 6,099 Diluted 6,517 6,360 6,480 6,381 � Balance Sheet Data: � Total assets $ 1,979,011 $ 1,866,483 6 % Loans (net) 1,146,629 973,033 18 Allowance for loan losses 10,742 9,685 11 Investment securities 644,633 711,686 (9) Total deposits 1,560,896 1,616,777 (3) Core deposits 1,548,611 1,578,316 (2) Stockholders' equity 112,335 101,108 11 � Capital: � Stockholders' equity to total assets 5.68 % 5.42 % Leverage ratio 7.26 7.31 Risk based capital ratios: Tier 1 10.03 10.00 Total Capital 10.78 10.72 � Performance Ratios: � Cost of funds 2.80 % 3.36 % 3.16 % 3.14 % Deposit cost of funds 2.02 2.85 2.37 2.42 Net interest margin 3.60 3.03 3.30 3.18 Return on average assets 0.49 0.33 0.36 0.41 Return on average total stockholders' equity 8.83 6.00 6.59 7.58 � Asset Quality: � Net charge-offs to average loans outstanding 0.07 % 0.13 % Nonperforming assets to total period-end assets 0.17 0.19 Allowance for loan losses to total period-end loans 0.93 0.99 Allowance for loan losses to nonperforming loans 366 287 Nonperforming assets to capital and reserves 3 % 3 % Pennsylvania Commerce Bancorp, Inc. and Subsidiaries Average Balances and Net Interest Income(unaudited) � � � � Quarter ending, � Year-to-date, � � � � � � � � � � � � � � � December 2007 � September 2007 � December 2006 � December 2007 � December 2006 AverageBalance � Interest � AverageRate AverageBalance � Interest � Average Rate AverageBalance � Interest � Average Rate AverageBalance � Interest � AverageRate AverageBalance � Interest � Average Rate (dollars in thousands) Earning Assets Investment securities Taxable $ 704,586 9,419 5.35 % $ 682,415 $ 9,154 5.37 % $ 724,879 $ 9,651 5.33 % $ 694,575 $ 37,060 5.34 % $ 733,990 $ 38,845 5.29 % Tax-exempt � � 1,621 � � 25 � 6.17 � � � 1,620 � � 25 � 6.17 � � � 1,619 � � 25 � 6.18 � � � 1,620 � � 99 � 6.11 � � � 1,985 � � 130 � 6.55 � Total securities 706,207 9,444 5.35 684,035 9,179 5.37 726,498 9,676 5.33 696,195 37,159 5.34 735,975 38,975 5.30 Federal funds sold 0 0 0.00 0 0 0.00 0 0 0.00 0 0 0.00 0 0 0.00 Loans receivable Mortgage and construction 551,255 10,088 7.19 539,964 10,030 7.29 467,844 8,465 7.11 525,063 38,287 7.21 452,781 32,267 7.05 Commercial loans and lines of credit 314,229 6,006 7.48 301,787 6,083 7.89 281,668 5,709 7.93 307,540 24,425 7.83 259,280 20,914 7.96 Consumer 219,970 3,764 6.79 210,156 3,620 6.83 184,760 3,150 6.76 206,459 14,040 6.80 170,535 11,412 6.69 Tax-exempt � � 52,612 � � 897 � 6.82 � � � 48,025 � � 828 � 6.90 � � � 29,952 � � 507 � 6.77 � � � 46,840 � � 3,196 � 6.82 � � � 23,788 � � 1,582 � 6.65 � Total loans receivable � � 1,138,066 � � 20,755 � 7.17 � � � 1,099,932 � � 20,561 � 7.35 � � � 964,224 � � 17,831 � 7.27 � � � 1,085,902 � � 79,948 � 7.29 � � � 906,384 � � 66,175 � 7.23 � Total earning assets � $ 1,844,273 � $ 30,199 � 6.47 % � $ 1,783,967 � $ 29,740 � 6.59 % � $ 1,690,722 � $ 27,507 � 6.44 % � $ 1,782,097 � $ 117,107 � 6.53 % � $ 1,642,359 � $ 105,150 � 6.36 % � Sources of Funds Interest-bearing deposits Regular savings $ 366,190 $ 1,876 2.03 % $ 373,663 $ 2,266 2.41 % $ 383,600 $ 2,571 2.66 % $ 373,209 $ 8,997 2.41 % $ 363,515 $ 8,533 2.35 % Interest checking and money market 769,826 5,657 2.92 704,352 6,091 3.43 712,341 7,162 3.99 712,418 24,738 3.47 605,043 22,282 3.68 Time deposits 160,271 1,662 4.11 173,084 1,817 4.16 196,628 2,064 4.16 181,080 7,604 4.20 194,611 7,541 3.87 Public funds time � � 14,167 � � 173 � 4.84 � � � 18,290 � � 230 � 4.99 � � � 28,256 � � 328 � 4.61 � � � 17,464 � � 858 � 4.91 � � � 32,873 � � 1,406 � 4.28 � Total interest-bearing deposits 1,310,454 9,368 2.84 1,269,389 10,404 3.25 1,320,825 12,125 3.64 1,284,171 42,197 3.29 1,196,042 39,762 3.32 Short-term borrowings 210,947 2,475 4.59 217,130 2,906 5.24 112,868 1,544 5.35 208,112 10,804 5.12 199,742 10,267 5.07 Other borrowed money 50,000 561 4.39 25,815 289 4.38 0 0 0.00 19,110 849 4.38 0 0 0.00 Junior subordinated debt � � 29,400 � � 661 � 8.99 � � � 29,400 � � 661 � 8.99 � � � 29,400 � � 661 � 8.99 � � � 29,400 � � 2,645 � 9.00 � � � 17,669 � � 1,731 � 9.80 � Total interest-bearing liabilities 1,600,801 13,065 3.23 1,541,734 14,260 3.66 1,463,093 14,330 3.88 1,540,793 56,495 3.66 1,413,453 51,760 3.65 Noninterest-bearing funds (net) � � 243,472 � � � � � � � 242,233 � � � � � � � 227,629 � � � � � � � 241,304 � � � � � � � 228,906 � � � � � Total sources to fund earning assets � $ 1,844,273 � $ 13,065 � 2.80 � � $ 1,783,967 � $ 14,260 � 3.16 � � $ 1,690,722 � $ 14,330 � 3.36 � � $ 1,782,097 � $ 56,495 � 3.16 � � $ 1,642,359 � $ 51,760 � 3.14 � Net interest income and margin on a tax-equivalent basis $ 17,134 3.67 % $ 15,480 3.43 % $ 13,177 3.08 % $ 60,612 3.37 % $ 53,390 3.22 % Tax-exempt adjustment � 314 � 290 � 186 � 1,120 � 599 Net interest income and margin � � � $ 16,820 � 3.60 % � � � $ 15,190 � 3.36 % � � � $ 12,991 � 3.03 % � � � $ 59,492 � 3.30 % � � � $ 52,791 � 3.18 % � � � Other Balances: Cash and due from banks $ 52,086 $ 55,115 $ 49,778 $ 51,874 $ 49,210 Other assets 90,652 90,536 86,285 90,437 79,815 Total assets 1,987,011 1,929,618 1,826,785 1,924,408 1,771,384 Demand deposits (noninterest-bearing) 266,407 274,089 255,903 269,353 253,671 Other liabilities 8,918 7,591 7,162 8,035 8,558 Stockholders' equity 110,885 106,204 100,627 106,227 95,702 Pennsylvania Commerce Bancorp, Inc. and Subsidiaries Summary of Non-Performing Loans and Assets (unaudited) � � � � � � � December 31, September 30, June 30, March 31, December 31, 2007 � 2007 � 2007 � 2007 � 2006 Nonaccrual loans: Commercial $ 534 $ 997 $ 1,362 $ 945 $ 984 Consumer 57 57 54 19 19 Mortgage: Construction 385 529 520 394 247 Mortgage � 1,959 � � � 1,767 � � � 1,784 � � � 2,207 � � � 2,129 � Total nonaccrual loans 2,935 3,350 3,720 3,565 3,379 Loans past due 90 days or more and still accruing 0 0 0 0 2 Renegotiated loans: � 0 � � � 0 � � � 0 � � � 0 � � � 0 � Total non-performing loans 2,935 3,350 3,720 3,565 3,381 � Foreclosed real estate � 489 � � � 390 � � � 300 � � � 300 � � � 159 � � Total non-performing assets $ 3,424 � � $ 3,740 � � $ 4,020 � � $ 3,865 � � $ 3,540 � � � Non-performing loans to total loans 0.25 % 0.30 % 0.34 % 0.34 % 0.34 % � Non-performing assets to total assets 0.17 % 0.19 % 0.21 % 0.20 % 0.19 % � Non-performing loan coverage 366 % 319 % 278 % 280 % 287 % � Allowance for loan losses as a percentage of total period-end loans 0.93 % 0.96 % 0.96 % 0.95 % 0.99 % � Non-performing assets / capital reserves 3 % 3 % 3 % 3 % 3 % Pennsylvania Commerce Bancorp, Inc. and Subsidiaries Summary of Allowance for Loan Losses and Other Related Data (unaudited) � � � 12/31/2007 � 12/31/2006 Year-ended12/31/2006 12/31/2007 � 12/31/2006 (dollar amounts in thousands) Three Months Ended � � Twelve Months Ended � Balance at beginning of period $ 10,673 $ 9,635 $ 9,231 $ 9,685 $ 9,231 Provisions charged to operating expense � 245 � � 225 � � 1,634 � � 1,762 � � 1,634 10,918 9,860 10,865 11,447 10,865 � Recoveries on loans charged-off: Commercial 7 (28) 34 11 34 Consumer 30 31 71 53 71 Real estate � 0 � � 0 � � 0 � � 8 � � 0 Total recoveries 37 3 105 72 105 � Loans charged-off: Commercial (165) (145) (895) (634) (895) Consumer 0 (33) (390) (69) (390) Real estate � (48) � � 0 � � 0 � � (74) � � 0 � Total charged-off � (213) � � (178) � � (1,285) � � (777) � � (1,285) � Net charge-offs � (176) � � (175) � � (1,180) � � (705) � � (1,180) � Balance at end of period $ 10,742 � $ 9,685 � $ 9,685 � $ 10,742 � $ 9,685 � Net charge-offs as a percentage of average loans outstanding 0.02 % 0.02 % 0.13 % 0.07 % 0.13 % � Allowance for loan losses as a percentage of period-end loans 0.93 % 0.99 % 0.99 % 0.93 % 0.99 %