Comm Bancorp, Inc. Reports Net Profit for First Quarter 2010

May 18, 2010

Clarks Summit, PA, May 18/PR Newswire/-Comm Bancorp, Inc. (Nasdaq:CCBP) today reported first quarter 2010 earnings of $1,150 thousand or $0.67 per share compared to $1,775 thousand or $1.03 per share for the first quarter of 2009. For the three months ended March 31, return on average assets and return on average stockholders' equity equaled 0.72% and 9.16% in 2010, compared to 1.15% and 12.30% in 2009.

Income Statement Review

For the three months ended March 31, tax-equivalent net interest income decreased $910 thousand or 15.3% to $5,033 thousand in 2010 from $5,943 thousand in 2009. An 11.7% decrease in tax-equivalent interest income was partially offset by a 3.6% reduction in interest expense. Despite growth of $22.5 million in average earning assets, tax-equivalent interest income declined $1,006 thousand comparing the first quarters of 2010 and 2009, due largely to a $42.2 million or 8.2% decrease in average loans. Average tax-exempt loans decreased $37.1 million, while taxable loans declined $5.1 million. With regard to tax-exempt loans, several large tax anticipation notes of local municipalities, which were outstanding in the first quarter of 2009, matured at the end of 2009. As part of our tax planning strategy for 2010, we chose not to actively compete for tax-exempt loans. The maturities and repayments received from the loan portfolio were reinvested in lower-yielding assets, which resulted in an 87 basis point decrease in the tax-equivalent yield on earning assets to 5.01% in 2010 from 5.88% in 2009. With regard to interest expense, our cost of funds decreased 19 basis points to 2.08% for the first quarter of 2010 from 2.27% for the same quarter of last year. We experienced reductions in the rates paid for all interest-bearing liability categories except for money market accounts. Specifically, a decrease in the cost of time deposits had the greatest impact. For the three months ended March 31, the average cost of total time deposits decreased 64 basis points to 2.94% in 2010 from 3.58% in 2009. Partially offsetting the positive effect from the reduction in funding costs was growth in interest-bearing liabilities of $24.7 million or 5.1% to $505.7 million for the three months ended March 31, 2010 from $481.0 million for the same three months of 2009. Our tax-equivalent net interest margin for the first quarter contracted 75 basis points to 3.30% in 2010 compared to 4.05% in 2009

For the three months ended March 31, 2010, the provision for loan losses totaled $1,000 thousand, an increase of $430 thousand compared to $570 thousand for the same three months of 2009.

Noninterest revenue for the first quarter decreased $191 thousand or 12.1% to $1,383 thousand in 2010 from $1,574 thousand in 2009. Included in noninterest revenue in 2009 was a net gain of $294 thousand from the disposition of our former Tunhannock and Eaton Township, Pennsylvania branch offices. For the three months ended March 31, we recorded gains on the sale of available-for-sale investment securities of $361 thousand in 2010 and $114 thousand in 2009. Activity in our secondary mortgage banking division subsided somewhat, which caused a $121 thousand decrease in mortgage banking income comparing the first quarters of 2010 and 2009. Service charges, fees and commissions decreased $23 thousand to $741 thousand in 2010 from $764 thousand in 2009.

Noninterest expense for the first quarter amounted to $4,354 thousand in 2010 and $4,348 thousand in 2009. Increases of $47 thousand in salaries and employee benefits expense and $31 thousand in other expenses were almost entirely offset by a decrease in net occupancy and equipment expense of $72 thousand.

Balance Sheet Review

Total assets equaled $648.6 million at March 31, 2010, a decrease of $3.6 million from $652.2 million at December 31, 2009. Subdued loan demand resulted in a decrease of $10.6 million in loans, net of unearned income, to $466.3 million at the close of the first quarter of 2010 from $476.9 million at the end of 2009. Cyclical deposit trends of local school district and municipal customers caused a $4.4 million decrease in total deposits to $586.4 million at the end of the first quarter of 2010, from $590.8 million at the end of 2009. Available-for-sale investment securities increased $8.6 million, while federal funds sold rose $8.5 million from December 31, 2009.

Stockholders' equity equaled $51.1 million or $29.66 per share at March 31, 2010, an increase of $0.8 million compared to $50.3 million or $29.25 per share at December 31, 2009. At March 31, 2010, we reported a Tier I capital, Total capital and Leverage ratios of 10.1 percent, 12.9 percent and 7.8 percent. In addition, Community Bank and Trust Company reported Tier I capital, Total capital and Leverage ratios of 9.0 percent, 11.9 percent and 7.0 percent. Community Bank and Trust Company continued to exceed the requirements to be categorized as well capitalized under the regulatory framework for prompt corrective action at the close of the first quarter of 2010.

As a result of concentrated remedial efforts, nonperforming assets decreased $2.5 million or 8.9% to $25.7 million or 5.43% of loans, net of unearned income and foreclosed assets at March 31, 2010, compared to $28.2 million or 5.86% at December 31, 2009. Specifically, the improvement from year end resulted from decreases of $1.7 million in nonaccrual loans, $2.3 million in restructured loans and $1.3 million in loans past due 90 days or more and still accruing. Partially offsetting these decreases was an increase in foreclosed assets of $2.8 million. Loans charged-off, net of recoveries, for the first quarter equaled 3.05% and 0.23% of average loans outstanding for the three months ended March 31, 2010 and 2009. The allowance for loan losses equaled $14.9 million or 3.19% of loans, net of unearned income, at March 31, 2010, compared to $17.5 million or 3.65% at December 31, 2009, and compared to $5.5 million or 1.09% at March 31, 2009.

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.

SOURCE Comm Bancorp, Inc.
/Contact: MEDIA/INVESTORS, Scott A. Seasock, 570-586-0377 or fax, 570-587-3761, of Comm Bancorp, Inc.

Co: Comm Bancorp, Inc.
St: Pennsylvania
In: Fin