Comm Bancorp, Inc. Reports Results Through Third Quarter 2009
- Press Release
- Source: Comm Bancorp, Inc.
- On 2:18 pm EDT, Friday October 30, 2009
CLARKS SUMMIT, Pa., Oct. 30 /PRNewswire-FirstCall/ -- Comm Bancorp, Inc. (Nasdaq: CCBP - News) 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.
Related Quotes
| Symbol | Price | Change |
|---|---|---|
| CCBP | 26.49 | -0.01 |
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.
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