Comm Bancorp, Inc.
(Nasdaq: CCBP) today reported 2004 earnings of $4,725 thousand or $2.50 per
share. Comparable 2003 earnings were $4,700 thousand or $2.45 per share.
Earnings for the fourth quarter increased $155 thousand or 14.5% to $1,225
thousand or $0.66 per share in 2004, from $1,070 thousand or $0.56 per share
in 2003.
For the fourth quarter and year ended December 31, 2004, return on average
assets was 0.91% and 0.92% respectively, compared to 0.83% and 0.93% for the
respective 2003 periods. Return on average equity was 10.25% for the fourth
quarter and 9.97% for the year in 2004, compared to 9.14% and 10.23% for the
same periods of 2003.
"Despite enduring many factors which affected profitability in 2004, we
are very pleased with the Company's performance," stated William F. Farber,
Sr., President and Chief Executive Officer. "The Company was able to record
marginal growth in earnings in spite of having to counteract a slight
compression in our net interest margin, a decline in demand for mortgage-
related products and added expenses from infrastructure expansion," continued
Farber. "We experienced a substantial improvement in earnings for the fourth
quarter of 2004 and the outlook for 2005 is favorable. During the first
quarter, the Company will introduce new product and service alternatives that
will generate additional fee income, while strengthening customer
relationships. In addition, we have strategically positioned the Company's
balance sheet to be able to benefit from a rising interest rate environment,"
concluded Farber.
HIGHLIGHTS
* Fourth quarter earnings improved 14.5% over prior year.
* Revenue from service charges, fees and commissions increased 6.4% in
2004.
* Net charge-offs declined 49.4%, comparing 2004 and 2003.
* Average loan volume increased 8.0% in 2004.
* Noninterest-bearing deposits grew 14.5% in 2004.
INCOME STATEMENT REVIEW
For the year-ended December 31, 2004, tax-equivalent interest revenue
improved $292 thousand to $18,346 thousand from $18,054 thousand in 2003.
Growth in average earning assets over interest-bearing liabilities, more than
offset a 3 basis point reduction in the net interest spread. Average earning
assets grew $12.9 million to $488.3 million in 2004, from $475.4 million in
2003. Average loans increased $27.6 million in 2004, while average investments
and federal funds sold decreased $14.7 million. Total interest-bearing
liabilities averaged $401.7 million in 2004, an increase of $4.7 million from
$397.0 million in 2003. The growth was concentrated in lower-costing deposits,
as the volumes of higher-costing time deposits declined. The change in volumes
of earning assets and interest-bearing liabilities resulted in an increase in
tax-equivalent net interest income of $1,473 thousand. The majority of the
increase due to volume changes, was offset by a $1,181 thousand reduction in
tax-equivalent net interest income due to changes in interest rates. A 21
basis point reduction in the cost of funds from 2.51% in 2003 to 2.30% in
2004, was more than offset by a 24 basis point decline in the tax-equivalent
yield on earning assets from 5.89% in 2003 to 5.65% in 2004. The yield on the
loan portfolio fell 63 basis points, while the yield on investment securities
rose 47 basis points. The tax-equivalent net interest margin in 2004 was 3.76%
compared to 3.80% in 2003.
The provision for loan losses totaled $600 thousand in 2004 compared to
$480 thousand in 2003. For the fourth quarter of 2004 and 2003, the provision
for loan losses amounted to $150 thousand and $120 thousand, respectively.
The demand for mortgage loans and refinancing slowed considerably in 2004,
which resulted in a $635 thousand or 52.4% decrease in gains on the sale of
residential mortgages. Overall, noninterest revenue declined $468 thousand or
11.6% to $3,566 thousand in 2004 from $4,034 thousand in 2003. Partially
mitigating the effect of the decline in mortgage lending was a $180 thousand
or 6.4% increase in service charges, fees and commissions. Net gains on the
sale of investment securities, which were realized in the fourth quarter, were
$13 thousand in 2003. There were no such gains in 2004. For the fourth
quarter, noninterest income totaled $900 thousand in 2004 and $928 thousand in
2003. Gains on the sale of residential mortgages decreased $30 thousand, while
fee income increased $15 thousand.
Noninterest expense increased $178 thousand or 1.2% to $14,662 thousand in
2004, from $14,484 thousand in 2003. The slight increase was due mainly to a
$214 thousand or 9.5% rise in occupancy and equipment expense coupled with a
$173 thousand or 3.4% increase in other expenses. Salaries and employee
benefits expense declined $209 thousand or 2.9%. For the fourth quarter of
2004, noninterest expense totaled $3,676 thousand, a decrease of $66 thousand
or 1.8% compared to $3,742 thousand for the same quarter of 2003. Other
expenses rose $36 thousand and occupancy and equipment expense rose $31
thousand, while salaries and employee benefits expense decreased $133
thousand.
BALANCE SHEET REVIEW
Total assets rose $18.9 million or 3.7% to $528.3 million at December 31,
2004, from $509.4 million at the end of 2003. Loans, net of unearned income,
grew $23.8 million or 6.6% to $381.7 million at the close of 2004. Loan growth
was funded primarily through deposit gathering as total deposits grew $19.0
million or 4.1% from the end of 2003. Interest-bearing deposits rose $10.4
million or 2.6%, while noninterest-bearing deposits increased $8.6 million or
14.6%. Federal funds sold were $900 thousand at year-end 2004 compared to
$11.5 million one year ago. Available-for-sale investment securities increased
$13.5 million to $118.7 million at December 31, 2004, from $105.2 million at
December 31, 2003.
Stockholders' equity improved $0.8 million to $47.3 million or $25.38 per
share at December 31, 2004, compared to $46.5 million or $24.41 per share at
December 31, 2003. Net income of $4,725 thousand was the primary factor
contributing to the capital improvement. During the year ended December 31,
2004, 48,365 shares of common stock were repurchased for $1,956 thousand,
while dividends declared equaled $1,658 thousand or $0.88 per share in 2004.
Accumulated other comprehensive income, which related entirely to unrealized
gains and losses on our available-for-sale portfolio, decreased $579 thousand
from year-end 2003. The Company's stock closed at a price of $41.78 per share
and traded at 165% of book and 16.7 times trailing twelve month earnings-per-
share at December 31, 2004.
Nonperforming assets increased $877 thousand to $3.3 million at December
31 2004, from $2.4 million at year-end 2003. The deterioration in asset
quality resulted from a $526 thousand rise in nonaccrual loans, coupled with
increases of $213 thousand in accruing loans past due 90 days or more and $138
thousand in foreclosed assets. As a percentage of loans, net of unearned
income, nonperforming assets equaled 0.86% at year-end 2004 compared to 0.67%
at December 31, 2003.
The allowance for loan losses was $3.9 million or 1.01% of loans, net of
unearned income, at December 31, 2004, compared to $3.6 million or 1.00% of
loans, net of unearned income at December 31, 2003. The allowance for loan
losses covered 117.5% of nonperforming assets at year-end 2004, compared to
148.9% at the end of 2003. Net loans charged-off decreased $316 thousand or
49.3% to $325 thousand in 2004 from $641 thousand in 2003. As a percentage of
average loans outstanding, net charge-offs equaled 0.09% in 2004 and 0.18% in
2003.
Comm Bancorp, Inc. serves five Pennsylvania counties through Community
Bank and Trust Company's 17 community banking offices. 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 web
site 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.
Summary Data
Comm Bancorp, Inc.
Five Quarter Trend
(In thousands, except per share data)
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2004 2004 2004 2004 2003
Key performance data:
Per share data:
Net income $0.66 $0.56 $0.66 $0.62 $0.56
Cash dividends
declared $0.22 $0.22 $0.22 $0.22 $0.22
Book value $25.38 $25.27 $24.60 $25.01 $24.41
Tangible book
value $25.05 $24.91 $24.20 $24.57 $23.95
Market value:
High $41.78 $41.00 $41.45 $40.87 $38.85
Low $39.20 $39.20 $38.78 $38.06 $35.97
Closing $41.78 $41.00 $41.45 $40.87 $37.75
Market capitalization $77,894 $76,957 $78,264 $77,954 $71,971
Common shares
outstanding 1,864,391 1,877,000 1,888,151 1,907,377 1,906,528
Selected ratios:
Return on average
stockholders' equity 10.25% 9.00% 10.61% 10.03% 9.14%
Return on average
assets 0.91% 0.82% 0.99% 0.94% 0.83%
Leverage ratio 8.75% 8.78% 8.80% 8.83% 8.66%
Efficiency ratio 70.30% 73.82% 69.05% 70.67% 72.28%
Nonperforming assets
to loans, net 0.86% 0.78% 0.56% 0.49% 0.67%
Net charge-offs
to average loans, net 0.10% 0.09% 0.06% 0.09% 0.29%
Allowance for loan
losses to loans, net 1.01% 1.02% 0.99% 1.00% 1.00%
Earning assets
yield (FTE) 5.58% 5.55% 5.75% 5.73% 5.64%
Cost of funds 2.34% 2.29% 2.27% 2.29% 2.30%
Net interest
spread (FTE) 3.24% 3.26% 3.48% 3.44% 3.34%
Net interest
margin (FTE) 3.66% 3.67% 3.88% 3.83% 3.73%
Comm Bancorp, Inc.
Consolidated Statements of Income
(In thousands, except per share data)
Year ended Dec. 31, Dec. 31,
2004 2003
Interest income:
Interest and fees on loans:
Taxable $21,597 $22,228
Tax-exempt 848 780
Interest and dividends on investment
securities available-for-sale:
Taxable 2,139 1,994
Tax-exempt 1,572 1,586
Dividends 29 40
Interest on federal funds sold 148 180
Total interest income 26,333 26,808
Interest expense:
Interest on deposits 9,232 9,969
Interest on borrowed funds 1 3
Total interest expense 9,233 9,972
Net interest income 17,100 16,836
Provision for loan losses 600 480
Net interest income after provision
for loan losses 16,500 16,356
Noninterest income:
Service charges, fees and commissions 2,989 2,809
Net gains on sale of loans 577 1,212
Net gains on sale of investment securities 13
Total noninterest income 3,566 4,034
Noninterest expense:
Salaries and employee benefits expense 6,968 7,177
Net occupancy and equipment expense 2,464 2,250
Other expenses 5,230 5,057
Total noninterest expense 14,662 14,484
Income before income taxes 5,404 5,906
Provision for income tax expense 679 1,206
Net income $4,725 $4,700
Other comprehensive loss:
Unrealized losses on investment
securities available-for-sale $(878) $(700)
Reclassification adjustment for gains
included in net income (13)
Income tax benefit related to other
comprehensive loss (299) (242)
Other comprehensive loss, net of income taxes (579) (471)
Comprehensive income $4,146 $4,229
Per share data:
Net income $2.50 $2.45
Cash dividends declared $0.88 $0.88
Average common shares outstanding 1,890,960 1,921,063
Comm Bancorp, Inc.
Consolidated Statements of Income
(In thousands, except per share data)
Three months ended Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2004 2004 2004 2004 2003
Interest income:
Interest and fees
on loans:
Taxable $5,472 $5,405 $ 5,431 $5,289 $5,447
Tax-exempt 244 191 208 205 203
Interest and dividends
on investment
securities available-
for-sale:
Taxable 610 495 499 535 509
Tax-exempt 392 392 395 393 393
Dividends 1 7 11 10 6
Interest on federal
funds sold 42 68 22 16 17
Total interest
income 6,761 6,558 6,566 6,448 6,575
Interest expense:
Interest on deposits 2,431 2,323 2,240 2,238 2,323
Interest on borrowed
funds 1 3
Total interest
expense 2,432 2,323 2,240 2,238 2,326
Net interest income 4,329 4,235 4,326 4,210 4,249
Provision for loan
losses 150 150 150 150 120
Net interest income
after provision for
loan losses 4,179 4,085 4,176 4,060 4,129
Noninterest income:
Service charges,
fees and commissions 731 780 752 726 716
Net gains on sale of
loans 169 84 128 196 199
Net gains on sale of
investment securities 13
Total noninterest
income 900 864 880 922 928
Noninterest expense:
Salaries and employee
benefits expense 1,716 1,772 1,754 1,726 1,849
Net occupancy and
equipment expense 635 566 599 664 604
Other expenses 1,325 1,426 1,242 1,237 1,289
Total noninterest
expense 3,676 3,764 3,595 3,627 3,742
Income before income
taxes 1,403 1,185 1,461 1,355 1,315
Provision for income
tax expense 178 120 206 175 245
Net income $1,225 $1,065 $1,255 $1,180 $1,070
Other comprehensive
income (loss):
Unrealized gains
(losses) on
investment securities
available-for-sale $ (640) $1,203 $(1,991) $550 $(268)
Reclassification
adjustment for gains
included in net
income (13)
Income tax expense
(benefit) related to
other comprehensive
income (loss) (218) 409 (677) 187 (95)
Other comprehensive
income (loss), net
of income taxes (422) 794 (1,314) 363 (186)
Comprehensive
income (loss) $803 $1,859 $(59) $1,543 $884
Per share data:
Net income $0.66 $0.56 $0.66 $0.62 $0.56
Cash dividends
declared $0.22 $0.22 $0.22 $0.22 $0.22
Average common
shares
outstanding 1,869,693 1,886,534 1,900,321 1,907,573 1,906,528
Comm Bancorp, Inc.
Details of Net Interest and Net Interest Margin
(In thousands, fully taxable equivalent basis)
Three months ended Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
2004 2004 2004 2004 2003
Net interest income:
Interest income
Loans, net:
Taxable $5,472 $5,405 $5,431 $5,289 $5,447
Tax-exempt 368 290 315 311 306
Total loans, net 5,840 5,695 5,746 5,600 5,753
Investments:
Taxable 611 502 510 545 515
Tax-exempt 594 595 597 596 596
Total investments 1,205 1,097 1,107 1,141 1,111
Federal funds sold 42 68 22 16 17
Total interest
income 7,087 6,860 6,875 6,757 6,881
Interest expense
Deposits 2,431 2,323 2,240 2,238 2,323
Borrowed funds 1 3
Total interest
expense 2,432 2,323 2,240 2,238 2,326
Net interest
income $4,655 $4,537 $4,635 $4,519 $4,555
Loans, net:
Taxable 6.14% 6.13% 6.36% 6.27% 6.48%
Tax-exempt 6.04% 4.83% 4.05% 4.31% 4.87%
Total loans, net 6.13% 6.05% 6.17% 6.12% 6.37%
Investments:
Taxable 2.83% 3.02% 3.15% 3.23% 2.35%
Tax-exempt 7.39% 7.40% 7.45% 7.48% 7.41%
Total investments 4.07% 4.45% 4.57% 4.59% 3.71%
Federal funds sold 1.90% 1.42% 0.98% 1.00% 0.94%
Total earning assets 5.58% 5.55% 5.75% 5.73% 5.64%
Interest expense
Deposits 2.34% 2.29% 2.27% 2.29% 2.30%
Borrowed funds 2.35% 1.13%
Total interest-
bearing
liabilities 2.34% 2.29% 2.27% 2.29% 2.30%
Net interest spread 3.24% 3.26% 3.48% 3.44% 3.34%
Net interest margin 3.66% 3.67% 3.88% 3.83% 3.73%
Comm Bancorp, Inc.
Consolidated Balance Sheets
(In thousands, except per share data)
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
At period end 2004 2004 2004 2004 2003
Assets:
Cash and due
from banks $11,802 $10,960 $6,923 $9,121 $17,099
Federal funds sold 900 15,900 17,100 9,750 11,500
Investment securities
available-for-sale 118,756 111,522 99,639 101,982 105,248
Loans held for sale,
net 1,917 3,302 2,432 4,062 3,205
Loans, net of
unearned income 381,723 374,986 377,268 365,280 357,940
Less: Allowance for
loan losses 3,859 3,809 3,743 3,652 3,584
Net loans 377,864 371,177 373,525 361,628 354,356
Premises and
equipment, net 11,628 11,843 12,078 12,361 12,484
Other assets 5,455 5,242 5,554 5,726 5,560
Total Assets $528,322 $529,946 $517,251 $504,630 $509,452
Liabilities:
Deposits:
Noninterest-bearing $67,714 $65,199 $63,405 $58,296 $59,119
Interest-bearing 410,770 414,104 404,290 395,071 400,347
Total deposits 478,484 479,303 467,695 453,367 459,466
Other liabilities 2,520 3,204 3,112 3,569 3,445
Total liabilities 481,004 482,507 470,807 456,936 462,911
Stockholders' equity:
Common stock, par value
$0.33 authorized
12,000,000, issued
1,864,391; 1,877,000;
1,888,151; 1,907,377;
1,906,528 615 619 623 629 629
Capital surplus 6,675 6,658 6,637 6,637 6,576
Retained earnings 38,494 38,206 38,022 37,952 37,223
Accumulated other
comprehensive income 1,534 1,956 1,162 2,476 2,113
Total stockholders'
equity 47,318 47,439 46,444 47,694 46,541
Total liabilities
and stockholders'
equity $528,322 $529,946 $517,251 $504,630 $509,452
Comm Bancorp, Inc.
Consolidated Balance Sheets
(In thousands, except per share data)
Average quarterly Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
balances 2004 2004 2004 2004 2003
Assets:
Loans, net:
Taxable $354,820 $350,602 $343,312 $339,100 $333,352
Tax-exempt 24,231 23,910 31,278 29,008 24,948
Total loans, net 379,051 374,512 374,590 368,108 358,300
Investments:
Taxable 85,853 66,088 65,145 67,907 86,989
Tax-exempt 31,961 32,004 32,234 32,030 31,917
Total investments 117,814 98,092 97,379 99,937 118,906
Federal funds sold 8,793 19,109 8,995 6,463 7,202
Total earning
assets 505,658 491,713 480,964 474,508 484,408
Other assets 27,176 27,298 27,698 28,304 28,030
Total assets $532,834 $519,011 $508,662 $502,812 $512,438
Liabilities and
stockholders' equity:
Deposits:
Interest-bearing $413,706 $402,952 $396,265 $393,627 $399,985
Noninterest-bearing 68,832 66,268 61,824 58,812 61,791
Total deposits 482,538 469,220 458,089 452,439 461,776
Borrowed funds 60 1 1,051
Other liabilities 2,704 2,697 2,987 3,038 3,142
Total liabilities 485,302 471,917 461,076 455,478 465,969
Stockholders' equity 47,532 47,094 47,586 47,334 46,469
Total liabilities and
stockholders' equity $532,834 $519,011 $508,662 $502,812 $512,438
Comm Bancorp, Inc.
Asset Quality Data
(In thousands)
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
At quarter end 2004 2004 2004 2004 2003
Nonperforming assets:
Nonaccrual/
restructured
loans $1,972 $2,105 $1,490 $1,368 $1,446
Accruing loans
past due 90
days or more 913 574 400 251 700
Foreclosed assets 399 257 210 182 261
Total nonperforming
assets $3,284 $2,936 $2,100 $1,801 $2,407
Three months ended
Allowance for loan losses:
Beginning balance $3,809 $3,743 $3,652 $3,584 $3,723
Charge-offs 117 119 118 128 303
Recoveries 17 35 59 46 44
Provision for loan
losses 150 150 150 150 120
Ending balance $3,859 $3,809 $3,743 $3,652 $3,584
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.
SOURCE Comm Bancorp, Inc.
MEDIA
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