FOR IMMEDIATE RELEASE
Date: October 18, 2006
Contact: Donald F. Holt, EVP/CFO
(717) 920-5801, Fax (717) 920-1683
COMMUNITY BANKS, INC. REPORTS PROFITS UP 7%
Harrisburg, PA-, Community Banks, Inc. (“Community”) (Listed on NASDAQ Global Select Market: CMTY) today reported third quarter net income of $10.6 million, which resulted in per share earnings of $0.45. Despite interest rate trends that have constrained top line revenue growth, third quarter 2006 performance reflected a solid 7% improvement over the same period a year ago. Year-to-date earnings per share for 2006 grew to $1.32, a substantial 53% increase over the $0.86 recorded in 2005. Results in 2005 had been adversely affected by $8 million in pre-tax merger, conversion, and restructuring expenses that were recorded leading to the consummation of its mid-year merger with Blue Ball Bank.
On July 1, 2005, Community completed its acquisition of its Blue Ball affiliate, the largest merger in its history, and post-merger results have consistently reflected the successful integration of that franchise. Moreover, the addition of Blue Ball has helped to facilitate Community’s transformation into a more robust and strategic provider of financial services in its core mid-Atlantic market. During the third quarter of 2006, Community announced two additional, important banking partners when it revealed its plans to acquire East Prospect State Bank and BUCS Financial Corp. These two combinations are expected to be completed in early 2007 and will bolster Community’s position in the vibrant York County, Pennsylvania, market and provide an important market extension into the desirable, adjacent Central Maryland region.
Community’s current operating footprint, which boasts assets of $3.4 billion and 73 banking offices, extends throughout the center of Pennsylvania from the Pocono region to just over the Maryland border. Blue Ball operates as a separate division in the attractive Lancaster, Berks and Chester county markets of south-central Pennsylvania. Community Banks, Inc. is the 8th largest financial services holding company headquartered in Pennsylvania and the largest financial institution headquartered in its capital city of Harrisburg. With the addition of the two new partners announced in this most recent quarter, Community will reach $3.7 billion in pro-forma assets and a total of 78 offices after consummation.
“We are realistic about the challenging conditions that are facing the banking industry, particularly the lingering presence of a flat yield curve throughout most of 2006. At the same time, we remain optimistic about our ability to navigate through these unusual times,” commented Eddie L. Dunklebarger, President and CEO of Community. “We believe that we are building a company that has the ability to weather the influence of a flat yield curve and other short-term, external hurdles, and we remain encouraged that our new merger partners share our enthusiasm for the future of our franchise.”
Quarter-over-quarter comparisons of third quarter operating and growth performance from 2005 to 2006 have become more relevant in this most recent quarter because both current and year-ago periods were inclusive of operations of the Blue Ball affiliate. Relevant operating measures included the 7% increase in earnings per share, a 12% increase in non-interest income and an increase of less than 2% in operating expenses.
Compression in net interest margin and flat net interest income performance can be attributed to the influences of both yield curve trends and less robust asset growth. Quarter-over-quarter loan and deposit growth was strong, reaching 9% and 8%, respectively, between the third quarters of 2006 and 2005. However, earning asset and loan growth trends in more recent quarters, including linked-quarter comparisons during 2006, reflected a modest slowdown in economic activity that suggests additional challenges for the rest of 2006 and into 2007.
Throughout 2006, the pace of earnings improvement has been constrained by a series of interest rate hikes by the Federal Reserve Bank that has restricted top line revenue growth from traditional spread business. These rate hikes have contributed to a “flattening” of the yield curve and a compression in net interest margins and net interest income growth, the two key metrics for top-line revenue expansion. These interest rate increases have presented earnings challenges throughout the banking industry as rising deposit funding costs have outpaced the improvement from increasing earning asset yields.
Despite the ongoing revenue challenges, results for the first nine months of 2006 continue to reflect records for both net income and earnings per share performance, at $31.6 million and $1.32 per share, respectively. These results translated into an operating return on average tangible assets of 1.41% and an operating return on average tangible equity of 20.34%. Because the merger with Blue Ball was accounted for under the purchase accounting method (now required under authoritative accounting guidance), many of the traditional metrics used to evaluate performance in a post-merger environment have undergone change. Operating return on tangible assets and tangible equity have become relevant measures of shareholder return for companies that have experienced substantial merger activity in periods after the mandatory application of purchase accounting. Community has provided an extensive reconcilement of “GAAP” to “non-GAAP” presentations to this release to assist investors in their understanding of the effect of acquisition activity on reported results. Such information is not presented as a substitute for traditional GAAP measurements, but is provided as a supplemental enhancement to improve comparability and investor understanding.
While quarterly revenue growth rates from loan and deposit activity was modestly curtailed, most other operating metrics continued to demonstrate the success of Community’s operating philosophy. While recent loan growth trends reflected the expected impact of rising rates on loan demand, an additional component was related to competitive pricing pressures. Community has been reluctant to extend credit maturities without a rate premium that is commensurate with the incremental interest rate risk associated with maturity extension. Adherence to a strict pricing discipline has been critical in this rate environment and helped to produce a third quarter net interest margin of 3.90%, only slightly less than the 3.94% recorded in the second quarter. Throughout most of 2006, funding costs have risen as Community has reduced its reliance on more volatile wholesale funding sources in favor of increased deposit balances. Unfortunately, competitive pressures have also adversely impacted the cost of retail deposits as consumers seek higher returns in a rising rate environment. Fortunately, asset quality trends continued to reflect historically low non-performing assets, combined with stable problem credit coverage and loan loss reserve levels.
This press release contains “forward looking” information as defined by the Private Securities Litigation Reform Act of 1995, which is based on Community’s current expectations, estimates and projections about future events and financial trends affecting the financial condition of its business. These statements are not historical facts or guarantees of future performance, events, or results. Such statements involve potential risks and uncertainties and, accordingly, actual performance results may differ materially. Community undertakes no obligation to publicly update or revise forward looking information, whether as a result of new, updated information, future events, or otherwise.
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COMMUNITY BANKS, INC. | |||||||||||||
Selected Financial Information | |||||||||||||
(Dollars in thousands, except per share data) (1) | |||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||
Consolidated summary of operations: | |||||||||||||
| Interest income | $ | 50,443 | $ | 43,478 | $ | 146,270 | $ | 97,051 | |||||
| Interest expense | 23,505 | 17,081 | 65,461 | 41,055 | |||||||||
| Net interest income | 26,938 | 26,397 | 80,809 | 55,996 | |||||||||
| Provision for loan losses | 250 | 400 | 1,400 | 1,700 | |||||||||
| Net interest income after provision for loan losses | 26,688 | 25,997 | �� | 79,409 | 54,296 | ||||||||
| Non-interest income: | |||||||||||||
| Investment management and trust services | 968 | 796 | 3,069 | 1,741 | |||||||||
| Service charges on deposit accounts | 3,037 | 2,799 | 8,423 | 6,620 | |||||||||
| Other service charges, commissions, and fees | 1,817 | 1,819 | 5,420 | 3,763 | |||||||||
| Investment security gains | 28 | 29 | 317 | 247 | |||||||||
| Insurance premium income and commissions | 1,053 | 825 | 3,098 | 2,607 | |||||||||
| Mortgage banking activities | 533 | 660 | 1,581 | 1,723 | |||||||||
| Earnings on investment in life insurance | 679 | 659 | 2,010 | 1,413 | |||||||||
| Other | 725 | 279 | 1,849 | 560 | |||||||||
| Total non-interest income | 8,840 | 7,866 | 25,767 | 18,674 | |||||||||
| Non-interest expenses: | |||||||||||||
| Salaries and employee benefits | 11,611 | 11,808 | 34,280 | 26,537 | |||||||||
| Net occupancy | 3,452 | 3,364 | 10,350 | 7,788 | |||||||||
| Merger, conversion and restructuring expenses | --- | 248 | --- | 8,205 | |||||||||
| Marketing expense | 354 | 528 | 1,194 | 1,439 | |||||||||
| Telecommunications expense | 542 | 309 | 1,659 | 870 | |||||||||
| Amortization of intangibles | 659 | 641 | 2,015 | 728 | |||||||||
| Other | 4,554 | 4,186 | 12,905 | 9,322 | |||||||||
| Total non-interest expenses | 21,172 | 21,084 | 62,403 | 54,889 | |||||||||
| Income before income taxes | 14,356 | 12,779 | 42,773 | 18,081 | |||||||||
| Income taxes | 3,798 | 2,447 | 11,142 | 3,401 | |||||||||
| Net income | $ | 10,558 | $ | 10,332 | $ | 31,631 | $ | 14,680 | |||||
| Net loan charge-offs | $ | 4 | $ | 78 | $ | 331 | $ | 416 | |||||
| Net interest margin (FTE) | 3.90 | % | 3.89 | % | 3.94 | % | 3.67 | % | |||||
Efficiency ratio (2) | 56.25 | % | 57.86 | % | 56.12 | % | 58.31 | % | |||||
| Return on average assets | 1.24 | % | 1.24 | % | 1.25 | % | 0.80 | % | |||||
| Return on average stockholders’ equity | 8.88 | % | 8.52 | % | 8.93 | % | 7.38 | % | |||||
Net operating (tangible) income (3) | $ | 10,986 | $ | 11,012 | $ | 32,940 | $ | 20,603 | |||||
Operating return on average tangible assets (3)(4) | 1.39 | % | 1.43 | % | 1.41 | % | 1.17 | % | |||||
Operating return on average tangible equity (3)(4) | 20.31 | % | 19.14 | % | 20.34 | % | 15.53 | % | |||||
Consolidated per share data: | |||||||||||||
| Basic earnings per share | $ | 0.45 | $ | 0.42 | $ | 1.34 | $ | 0.87 | |||||
| Diluted earnings per share | $ | 0.45 | $ | 0.42 | $ | 1.32 | $ | 0.86 | |||||
| Book value at end of period | $ | 20.43 | $ | 19.83 | $ | 20.43 | $ | 19.83 | |||||
Tangible book value at end of period (4) | $ | 9.45 | $ | 9.26 | $ | 9.45 | $ | 9.26 | |||||
3
COMMUNITY BANKS, INC.
Selected Financial Information
(Dollars in thousands, except per share data) (1)
Consolidated balance sheet data:
Three Months Ended | Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||
| Average total loans | $ | 2,339,352 | $ | 2,140,930 | $ | 2,314,257 | $ | 1,550,630 | |||||
| Average earning assets | 2,935,448 | 2,873,155 | 2,939,506 | 2,227,647 | |||||||||
| Average assets | 3,385,905 | 3,316,460 | 3,387,018 | 2,451,131 | |||||||||
Average tangible assets (4) | 3,126,882 | 3,061,813 | 3,128,116 | 2,361,995 | |||||||||
| Average deposits | 2,438,057 | 2,248,304 | 2,374,197 | 1,653,722 | |||||||||
| Average stockholders’ equity | 471,911 | 481,185 | 473,680 | 265,945 | |||||||||
Average tangible equity (4) | 214,643 | 228,215 | 216,553 | 177,374 | |||||||||
| Average diluted shares outstanding | 23,662,529 | 23,571,820 | 23,925,653 | 16,338,236 | |||||||||
9/30/2006 | |||||||||||||
vs. | |||||||||||||
September 30, | December 31, | September 30, | 9/30/2005 | ||||||||||
2006 | 2005 | 2005 | % Change | ||||||||||
| Assets | $ | 3,431,208 | $ | 3,332,430 | $ | 3,291,232 | 4 | % | |||||
| Total loans | 2,348,159 | 2,237,065 | 2,168,374 | 8 | % | ||||||||
| Deposits | 2,483,519 | 2,294,367 | 2,244,791 | 11 | % | ||||||||
| Stockholders’ equity | 479,584 | 476,673 | 480,960 | --- | |||||||||
| Diluted shares outstanding | 23,682,673 | 24,359,519 | 24,575,398 | (4 | )% | ||||||||
| Non-accrual loans | $ | 11,626 | $ | 9,060 | $ | 10,736 | 8 | % | |||||
| Foreclosed real estate | 52 | 1,447 | 2,273 | (98 | )% | ||||||||
| Total non-performing assets | 11,678 | 10,507 | 13,009 | (10 | )% | ||||||||
| Accruing loans 90 days past due | 685 | 22 | 7 | n/a | |||||||||
| Total risk elements | $ | 12,363 | $ | 10,529 | $ | 13,016 | (5 | )% | |||||
| Allowance for loan losses | $ | 24,034 | $ | 22,965 | $ | 22,773 | 6 | % | |||||
Asset quality ratios: | |||||||||||||
| Allowance for loan losses to total loans | 1.02 | % | 1.03 | % | 1.05 | % | |||||||
| Allowance for loan losses to non-accrual loans | 207 | % | 253 | % | 212 | % | |||||||
| Non-accrual loans to total loans | 0.50 | % | 0.41 | % | 0.50 | % | |||||||
| Non-performing assets to total assets | 0.34 | % | 0.32 | % | 0.40 | % | |||||||
(1) Per share data reflect stock splits and stock dividends. | |||||||||||||
(2) The efficiency ratio does not include net securities transactions. | |||||||||||||
(3) Net operating (tangible) income excludes amortization of core deposit and other intangible assets, net of applicable income tax effects. A reconciliation of net income and net operating (tangible) income appears on page 5. | |||||||||||||
(4) The difference between total assets and total tangible assets, and stockholders’ equity and tangible stockholders’ equity, represents goodwill and core deposit and other intangibles net of applicable deferred tax balances. A reconciliation of these balances appears on page 5. | |||||||||||||
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COMMUNITY BANKS, INC.
Selected Financial Information
(Dollars in thousands, except per share data)
Reconciliation of GAAP to Non-GAAP Measures (1):
Three Months Ended | Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||
Income statement data: | |||||||||||||
Net income | |||||||||||||
| Net income (loss) | $ | 10,558 | $ | 10,332 | $ | 31,631 | $ | 14,680 | |||||
Amortization of core deposit and other intangible assets (1) | 428 | 519 | 1,309 | 590 | |||||||||
Merger, conversion and restructuring expenses (1) | --- | 161 | --- | 5,333 | |||||||||
| Net operating (tangible) income | $ | 10,986 | $ | 11,012 | $ | 32,940 | $ | 20,603 | |||||
Balance sheet data: | |||||||||||||
Average assets | |||||||||||||
| Average assets | $ | 3,385,905 | $ | 3,316,460 | $ | 3,387,018 | $ | 2,451,131 | |||||
| Goodwill | (245,794 | ) | (239,395 | ) | (245,439 | ) | (83,043 | ) | |||||
| Core deposit and other intangible assets | (13,229 | ) | (15,252 | ) | (13,463 | ) | (6,093 | ) | |||||
| Average tangible assets | $ | 3,126,882 | $ | 3,061,813 | $ | 3,128,116 | $ | 2,361,995 | |||||
Operating return on average tangible assets | 1.39 | % | 1.43 | % | 1.41 | % | 1.17 | % | |||||
Average equity | |||||||||||||
| Average equity | $ | 471,911 | $ | 481,185 | $ | 473,680 | $ | 265,945 | |||||
| Goodwill | (245,794 | ) | (239,395 | ) | (245,439 | ) | (83,043 | ) | |||||
| Core deposit and other intangible assets | (13,229 | ) | (15,252 | ) | (13,463 | ) | (6,093 | ) | |||||
| Deferred taxes | 1,755 | 1,677 | 1,775 | 565 | |||||||||
| Average tangible equity | $ | 214,643 | $ | 228,215 | $ | 216,553 | $ | 177,374 | |||||
Operating return on average tangible equity | 20.31 | % | 19.14 | % | 20.34 | % | 15.53 | % | |||||
At end of quarter: | |||||||||||||
Total assets | |||||||||||||
| Total assets | $ | 3,431,208 | $ | 3,291,232 | $ | 3,431,208 | $ | 3,291,232 | |||||
| Goodwill | (245,864 | ) | (243,107 | ) | (245,864 | ) | (243,107 | ) | |||||
| Core deposit and other intangible assets | (13,641 | ) | (14,951 | ) | (13,641 | ) | (14,951 | ) | |||||
| Total tangible assets | $ | 3,171,703 | $ | 3,033,174 | $ | 3,171,703 | $ | 3,033,174 | |||||
Total equity | |||||||||||||
| Total equity | $ | 479,584 | $ | 480,960 | $ | 479,584 | $ | 480,960 | |||||
| Goodwill | (245,864 | ) | (243,107 | ) | (245,864 | ) | (243,107 | ) | |||||
| Core deposit and other intangible assets | (13,641 | ) | (14,951 | ) | (13,641 | ) | (14,951 | ) | |||||
| Deferred taxes | 1,698 | 1,746 | 1,698 | 1,746 | |||||||||
| Total tangible equity | $ | 221,777 | $ | 224,648 | $ | 221,777 | $ | 224,648 | |||||
Tangible book value at end of period | $ | 9.45 | $ | 9.26 | $ | 9.45 | $ | 9.26 | |||||
(1) Net of related tax effect | |||||||||||||
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COMMUNITY BANKS, INC. & SUBSIDIARIES | |||||||||||||||||||
KEY RATIOS (1) | |||||||||||||||||||
| 2006 | 2005 | ||||||||||||||||||
| Third | Second | First | Fourth | Third | |||||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | Annual | ||||||||||||||
| Diluted earnings (loss) per share | $ | 0.45 | $ | 0.44 | $ | 0.44 | $ | 0.45 | $ | 0.42 | $ | 1.35 | |||||||
Tangible operating earnings per share (2) | $ | 0.46 | $ | 0.46 | $ | 0.45 | $ | 0.47 | $ | 0.44 | $ | 1.69 | |||||||
| Return on average assets | 1.24 | % | 1.24 | % | 1.27 | % | 1.31 | % | 1.24 | % | 0.96 | % | |||||||
| Return on average equity | 8.88 | % | 8.95 | % | 8.96 | % | 9.14 | % | 8.52 | % | 8.04 | % | |||||||
Operating return on average tangible assets (3) | 1.39 | % | 1.40 | % | 1.43 | % | 1.50 | % | 1.43 | % | 1.27 | % | |||||||
Operating return on average tangible equity (3) | 20.31 | % | 20.59 | % | 20.12 | % | 20.83 | % | 19.14 | % | 17.09 | % | |||||||
| Net interest margin | 3.90 | % | 3.94 | % | 3.98 | % | 3.96 | % | 3.89 | % | 3.76 | % | |||||||
Non-interest income/revenues (FTE excluding security gains) | 23.40 | % | 22.76 | % | 21.93 | % | 21.34 | % | 21.74 | % | 22.57 | % | |||||||
Provision for loan losses/average loans (annualized) | 0.04 | % | 0.11 | % | 0.09 | % | 0.11 | % | 0.07 | % | 0.13 | % | |||||||
Efficiency ratio (4) | 56.25 | % | 56.18 | % | 55.96 | % | 55.56 | % | 57.86 | % | 57.51 | % | |||||||
| Non-performing assets to period-end loans | 0.50 | % | 0.50 | % | 0.52 | % | 0.47 | % | 0.60 | % | |||||||||
| 90 day past due loans to period-end loans | 0.03 | % | 0.03 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||||||
| Total risk elements to period-end loans | 0.53 | % | 0.53 | % | 0.52 | % | 0.47 | % | 0.60 | % | |||||||||
| Allowance for loan losses to loans | 1.02 | % | 1.01 | % | 1.02 | % | 1.03 | % | 1.05 | % | 1.03 | % | |||||||
| Allowance for loan losses to | |||||||||||||||||||
| non-accrual loans | 207 | % | 207 | % | 231 | % | 253 | % | 212 | % | 253 | % | |||||||
| Net charge-offs/average loans (annualized) | 0.00 | % | 0.03 | % | 0.03 | % | 0.07 | % | 0.01 | % | 0.05 | % | |||||||
| Equity to assets | 13.98 | % | 13.76 | % | 13.90 | % | 14.30 | % | 14.61 | % | 14.30 | % | |||||||
Tangible equity to assets (3) | 6.99 | % | 6.68 | % | 6.93 | % | 7.14 | % | 7.41 | % | 7.14 | % | |||||||
(1) Per share data reflect stock splits and stock dividends. | |||||||||||||||||||
(2) Net tangible operating income excludes amortization of core deposit and other intangible assets, and merger, conversion and restructuring expenses, net of applicable income tax effects. A reconciliation of net income and net tangible operating income appears on page 19. | |||||||||||||||||||
(3) The difference between total assets and total tangible assets, and stockholders’ equity and tangible stockholders’ equity, represents goodwill and core deposit and other intangibles net of applicable deferred tax balances. A reconciliation of these balances appears on page 19. | |||||||||||||||||||
(4) The efficiency ratio does not include merger, conversion and restructuring expenses or net securities transactions. | |||||||||||||||||||
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COMMUNITY BANKS, INC. & SUBSIDIARIES | ||||||||||||||||
Fiscal Insight - SEPTEMBER 30, 2006 | ||||||||||||||||
PER SHARE STATISTICS * | ||||||||||||||||
| Diluted Earnings (Loss) per Share | ||||||||||||||||
| Fourth | Third | Second | First | |||||||||||||
| Quarter | Quarter | Quarter | Quarter | Total | ||||||||||||
| 2006 | $ | 0.45 | $ | 0.44 | $ | 0.44 | $ | 1.32 | ||||||||
| 2005 | $ | 0.45 | $ | 0.42 | $ | (0.09 | ) | $ | 0.42 | $ | 1.35 | |||||
| 2004 | $ | 0.42 | $ | 0.43 | $ | 0.41 | $ | 0.39 | $ | 1.65 | ||||||
| Average Diluted Shares Outstanding | ||||||||||||||||
| (in thousands) | Fourth | Third | Second | First | Average for | |||||||||||
| Quarter | Quarter | Quarter | Quarter | Year | ||||||||||||
| 2006 | 23,663 | 23,858 | 24,212 | 23,926 | ||||||||||||
| 2005 | 24,421 | 24,750 | 13,240 | 13,192 | 18,975 | |||||||||||
| 2004 | 13,180 | 13,134 | 13,216 | 13,286 | 13,204 | |||||||||||
| Book Value per Share | ||||||||||||||||
| Fourth | Third | Second | First | |||||||||||||
| Quarter | Quarter | Quarter | Quarter | |||||||||||||
| 2006 | $ | 20.43 | $ | 19.86 | $ | 19.96 | ||||||||||
| 2005 | $ | 19.81 | $ | 19.83 | $ | 11.82 | $ | 11.74 | ||||||||
| 2004 | $ | 11.86 | $ | 11.68 | $ | 10.62 | $ | 11.68 | ||||||||
Tangible Book Value per Share | ||||||||||||||||
| Fourth | Third | Second | First | |||||||||||||
| Quarter | Quarter | Quarter | Quarter | |||||||||||||
| 2006 | $ | 9.45 | $ | 8.91 | $ | 9.19 | ||||||||||
| 2005 | $ | 9.12 | $ | 9.26 | $ | 11.43 | $ | 11.35 | ||||||||
| 2004 | $ | 11.46 | $ | 11.28 | $ | 10.23 | $ | 11.31 | ||||||||
| * Per share data reflect stock splits and stock dividends | ||||||||||||||||
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COMMUNITY BANKS, INC. & SUBSIDIARIES | ||||||||||||||||
Fiscal Insight - SEPTEMBER 30, 2006 | ||||||||||||||||
QUARTER END INFORMATION | ||||||||||||||||
| (dollars in thousands) | 2006 | 2005 | ||||||||||||||
| Third | Second | First | Fourth | Third | ||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||
| Total loans | $ | 2,348,159 | $ | 2,344,677 | $ | 2,286,820 | $ | 2,237,065 | $ | 2,168,374 | ||||||
| Allowance for loan losses | (24,034 | ) | (23,788 | ) | (23,310 | ) | (22,965 | ) | (22,773 | ) | ||||||
| Loans, net | 2,324,125 | 2,320,889 | 2,263,510 | 2,214,100 | 2,145,601 | |||||||||||
| Earning assets | 2,971,391 | 2,922,356 | 2,960,648 | 2,869,978 | 2,842,809 | |||||||||||
| Goodwill and other intangible assets | 259,505 | 258,606 | 258,359 | 259,080 | 258,057 | |||||||||||
| Total assets | 3,431,208 | 3,385,599 | 3,421,562 | 3,332,430 | 3,291,232 | |||||||||||
| Deposits | 2,483,519 | 2,406,551 | 2,373,865 | 2,294,367 | 2,244,791 | |||||||||||
| Long-term debt | 336,954 | 363,816 | 443,275 | 430,719 | 457,728 | |||||||||||
| Subordinated debt | 51,548 | 51,548 | 51,548 | 30,928 | 30,928 | |||||||||||
| Total shareholder's equity | 479,584 | 465,760 | 475,587 | 476,673 | 480,960 | |||||||||||
Accumulated other comprehensive income (loss) (net of tax) | (2,670 | ) | (10,107 | ) | (4,368 | ) | (3,779 | ) | 1,381 | |||||||
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COMMUNITY BANKS, INC. & SUBSIDIARIES | ||||||||||||||||
Fiscal Insight - SEPTEMBER 30, 2006 | ||||||||||||||||
CONDENSED CONSOLIDATED QUARTERLY AVERAGE STATEMENTS OF CONDITION | ||||||||||||||||
| (dollars in thousands) | 2006 | 2005 | ||||||||||||||
| Third | Second | First | Fourth | Third | ||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||
Assets | ||||||||||||||||
| Earning Assets: | ||||||||||||||||
| Loans | $ | 2,339,352 | $ | 2,312,900 | $ | 2,289,979 | $ | 2,202,771 | $ | 2,140,930 | ||||||
| Federal funds sold and other | 29,324 | 53,872 | 34,777 | 32,510 | 99,446 | |||||||||||
| Investment securities | 566,772 | 577,581 | 613,891 | 630,256 | 632,779 | |||||||||||
| Total earning assets | 2,935,448 | 2,944,353 | 2,938,647 | 2,865,537 | 2,873,155 | |||||||||||
| Cash and due from banks | 62,636 | 59,461 | 59,253 | 65,271 | 59,404 | |||||||||||
| Allowance for loan losses | (24,385 | ) | (23,882 | ) | (23,172 | ) | (22,976 | ) | (22,778 | ) | ||||||
| Goodwill and other intangible assets | 259,023 | 259,003 | 258,689 | 257,797 | 254,648 | |||||||||||
| Premises, equipment and other assets | 153,183 | 152,973 | 149,794 | 148,321 | 152,031 | |||||||||||
| Total assets | $ | 3,385,905 | $ | 3,391,908 | $ | 3,383,211 | $ | 3,313,950 | $ | 3,316,460 | ||||||
Liabilities and equity | ||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||
| Deposits | ||||||||||||||||
| Savings and NOW accounts | $ | 873,670 | $ | 820,265 | $ | 826,742 | $ | 848,320 | $ | 850,801 | ||||||
| Time | 984,415 | 981,371 | 900,698 | 869,096 | 865,136 | |||||||||||
| Time deposits greater than $100,000 | 235,264 | 228,931 | 200,821 | 186,514 | 175,634 | |||||||||||
| Short-term borrowings | 60,680 | 57,903 | 68,524 | 72,606 | 56,948 | |||||||||||
| Long-term debt | 340,162 | 405,705 | 467,010 | 447,532 | 476,602 | |||||||||||
| Subordinated debt | 51,548 | 51,548 | 44,674 | 30,928 | 30,928 | |||||||||||
| Total interest-bearing liabilities | 2,545,739 | 2,545,723 | 2,508,469 | 2,454,996 | 2,456,049 | |||||||||||
| Noninterest-bearing deposits | 344,708 | 350,574 | 373,637 | 358,822 | 356,733 | |||||||||||
| Other liabilities | 23,547 | 24,916 | 22,598 | 24,618 | 22,493 | |||||||||||
| Total liabilities | 2,913,994 | 2,921,213 | 2,904,704 | 2,838,436 | 2,835,275 | |||||||||||
| Stockholders' equity | 471,911 | 470,695 | 478,507 | 475,514 | 481,185 | |||||||||||
| Total liabilities and stockholders’ equity | $ | 3,385,905 | $ | 3,391,908 | $ | 3,383,211 | $ | 3,313,950 | $ | 3,316,460 | ||||||
| CHANGE IN AVERAGE BALANCES* | ||||||||||||||||
| 2006 | 2005 | |||||||||||||||
| Third | Second | First | Fourth | Third | ||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||
| Loans | 9.3 | % | 82.8 | % | 86.0 | % | 83.1 | % | 81.9 | % | ||||||
| Total assets | 2.1 | % | 66.1 | % | 70.6 | % | 69.3 | % | 69.4 | % | ||||||
| Deposits | 8.4 | % | 72.2 | % | 73.5 | % | 73.4 | % | 71.2 | % | ||||||
| Stockholders' equity | (1.9 | )% | 205.9 | % | 206.0 | % | 213.8 | % | 239.3 | % | ||||||
| * Compares the current quarter to the comparable quarter of the prior year | ||||||||||||||||
9
COMMUNITY BANKS, INC. & SUBSIDIARIES | |||||||||||||||||||
Fiscal Insight - SEPTEMBER 30, 2006 | |||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||
| (dollars in thousands) | 2006 | 2005 | |||||||||||||||||
| Third | Second | First | Fourth | Third | |||||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | Annual | ||||||||||||||
| Interest income | $ | 50,443 | $ | 48,938 | $ | 46,889 | $ | 45,242 | $ | 43,478 | $ | 142,293 | |||||||
| Tax equivalent adjustment | 1,916 | 1,910 | 1,978 | 1,922 | 1,811 | 7,163 | |||||||||||||
| 52,359 | 50,848 | 48,867 | 47,164 | 45,289 | 149,456 | ||||||||||||||
| Interest expense | 23,505 | 21,931 | 20,025 | 18,593 | 17,081 | 59,648 | |||||||||||||
| Net interest income | 28,854 | 28,917 | 28,842 | 28,571 | 28,208 | 89,808 | |||||||||||||
| Provision for loan losses | 250 | 650 | 500 | 600 | 400 | 2,300 | |||||||||||||
| Net interest income after provision | 28,604 | 28,267 | 28,342 | 27,971 | 27,808 | 87,508 | |||||||||||||
| Non-interest income | 8,279 | 7,957 | 7,633 | 7,120 | 7,177 | 23,824 | |||||||||||||
| Investment security gains income | 28 | 6 | 283 | 12 | 29 | 259 | |||||||||||||
| Mortgage banking activities income | 533 | 580 | 468 | 631 | 660 | 2,354 | |||||||||||||
| Non-interest expenses | 21,172 | 20,698 | 20,533 | 20,180 | 20,836 | 66,864 | |||||||||||||
| Merger, conversion and restructuring expenses | --- | --- | --- | --- | 248 | 8,205 | |||||||||||||
| Income before income taxes | 16,272 | 16,112 | 16,193 | 15,554 | 14,590 | 38,876 | |||||||||||||
| Income taxes | 3,798 | 3,698 | 3,646 | 2,671 | 2,447 | 6,072 | |||||||||||||
| Tax equivalent adjustment | 1,916 | 1,910 | 1,978 | 1,922 | 1,811 | 7,163 | |||||||||||||
| NET INCOME | $ | 10,558 | $ | 10,504 | $ | 10,569 | $ | 10,961 | $ | 10,332 | $ | 25,641 | |||||||
| Tax effect of security transactions | $ | 10 | $ | 2 | $ | 99 | $ | 4 | $ | 10 | $ | 91 | |||||||
10
COMMUNITY BANKS, INC. & SUBSIDIARIES | |||||||||||||||||||
Fiscal Insight - SEPTEMBER 30, 2006 | |||||||||||||||||||
ANALYSIS OF NON-INTEREST INCOME | |||||||||||||||||||
| (dollars in thousands) | 2006 | 2005 | |||||||||||||||||
| Third | Second | First | Fourth | Third | |||||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | Annual | ||||||||||||||
| Investment management and trust services | $ | 968 | $ | 1,088 | $ | 1,013 | $ | 951 | $ | 796 | $ | 2,692 | |||||||
| Service charges on deposit accounts | 3,037 | 2,855 | 2,531 | 2,793 | 2,799 | 9,413 | |||||||||||||
| Other service charges, commissions and fees | 1,817 | 1,903 | 1,700 | 1,689 | 1,819 | 5,452 | |||||||||||||
| Insurance premium income and commissions | 1,053 | 1,117 | 928 | 743 | 825 | 3,350 | |||||||||||||
| Earnings on investment in life insurance | 679 | 675 | 656 | 650 | 659 | 2,063 | |||||||||||||
| Other income | 725 | 319 | 805 | 294 | 279 | 854 | |||||||||||||
| Total non-interest income | $ | 8,279 | $ | 7,957 | $ | 7,633 | $ | 7,120 | $ | 7,177 | $ | 23,824 | |||||||
ANALYSIS OF NON-INTEREST EXPENSES | |||||||||||||||||||
| (dollars in thousands) | 2006 | 2005 | |||||||||||||||||
| Third | Second | First | Fourth | Third | |||||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | Annual | ||||||||||||||
| Salaries and employee benefits | $ | 11,611 | $ | 11,251 | $ | 11,418 | $ | 10,461 | $ | 11,808 | $ | 36,998 | |||||||
| Net occupancy expense | 3,452 | 3,386 | 3,512 | 3,567 | 3,364 | 11,355 | |||||||||||||
| Marketing expense | 354 | 265 | 575 | 597 | 528 | 2,036 | |||||||||||||
| Telecommunications expense | 542 | 566 | 551 | 489 | 309 | 1,359 | |||||||||||||
Amortization of intangibles | 659 | 702 | 654 | 696 | 641 | 1,424 | |||||||||||||
| Other operating expenses | 4,554 | 4,528 | 3,823 | 4,370 | 4,186 | 13,692 | |||||||||||||
| Total non-interest expenses | $ | 21,172 | $ | 20,698 | $ | 20,533 | $ | 20,180 | $ | 20,836 | $ | 66,864 | |||||||
11
COMMUNITY BANKS, INC. & SUBSIDIARIES | ||||||||||||||||
Fiscal Insight - SEPTEMBER 30, 2006 | ||||||||||||||||
RISK ELEMENTS ANALYSIS | ||||||||||||||||
| (dollars in thousands) | 2006 | 2005 | ||||||||||||||
| Third | Second | First | Fourth | Third | ||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||
| Non-performing assets: | ||||||||||||||||
| Non-accrual loans | $ | 11,626 | $ | 11,492 | $ | 10,102 | $ | 9,060 | $ | 10,736 | ||||||
| Loans renegotiated with borrowers | --- | 108 | 110 | --- | --- | |||||||||||
| Foreclosed real estate | 52 | 108 | 1,728 | 1,447 | 2,273 | |||||||||||
| Total non-performing assets | 11,678 | 11,708 | 11,940 | 10,507 | 13,009 | |||||||||||
| Accruing loans 90 days or more past due | 685 | 621 | 29 | 22 | 7 | |||||||||||
| Total risk elements | $ | 12,363 | $ | 12,329 | $ | 11,969 | $ | 10,529 | $ | 13,016 | ||||||
| Non-performing assets to period-end loans | 0.50 | % | 0.50 | % | 0.52 | % | 0.47 | % | 0.60 | % | ||||||
| 90 day past due loans to period-end loans | 0.03 | % | 0.03 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||||
| Total risk elements to period-end loans | 0.53 | % | 0.53 | % | 0.52 | % | 0.47 | % | 0.60 | % | ||||||
12
COMMUNITY BANKS, INC. & SUBSIDIARIES | ||||||||||||||||
Fiscal Insight - SEPTEMBER 30, 2006 | ||||||||||||||||
ALLOWANCE FOR LOAN LOSSES | ||||||||||||||||
| (dollars in thousands) | 2006 | 2005 | ||||||||||||||
| Third | Second | First | Fourth | Third | ||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||
| Balance at beginning of period | $ | 23,788 | $ | 23,310 | $ | 22,965 | $ | 22,773 | $ | 15,383 | ||||||
| Loans charged off | (499 | ) | (342 | ) | (313 | ) | (1,153 | ) | (271 | ) | ||||||
| Recoveries | 495 | 170 | 158 | 745 | 193 | |||||||||||
| Net loans charged off | (4 | ) | (172 | ) | (155 | ) | (408 | ) | (78 | ) | ||||||
| Provision for loan losses | 250 | 650 | 500 | 600 | 400 | |||||||||||
| Allowance established for acquired credit risk | --- | --- | --- | --- | 7,068 | |||||||||||
| Balance at end of period | $ | 24,034 | $ | 23,788 | $ | 23,310 | $ | 22,965 | $ | 22,773 | ||||||
| Net loans charged-off to average loans* | 0.00 | % | 0.03 | % | 0.03 | % | 0.07 | % | 0.01 | % | ||||||
| Provision for loan losses to average loans* | 0.04 | % | 0.11 | % | 0.09 | % | 0.11 | % | 0.07 | % | ||||||
| Allowance for loan losses to loans | 1.02 | % | 1.01 | % | 1.02 | % | 1.03 | % | 1.05 | % | ||||||
| *Annualized | ||||||||||||||||
13
COMMUNITY BANKS, INC. & SUBSIDIARIES | ||||||||||||||||
Fiscal Insight - SEPTEMBER 30, 2006 | ||||||||||||||||
OTHER RATIOS | ||||||||||||||||
| 2006 | 2005 | |||||||||||||||
| Third | Second | First | Fourth | Third | ||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||
| Investment portfolio - fair value to amortized cost | 99.9 | % | 97.9 | % | 99.4 | % | 99.6 | % | 100.9 | % | ||||||
| Dividend payout ratio | 44.4 | % | 45.1 | % | 43.0 | % | 41.8 | % | 42.7 | % | ||||||
| Net loans to deposits ratio, average | 95.0 | % | 96.1 | % | 98.3 | % | 96.2 | % | 94.1 | % | ||||||
MARKET PRICE AND DIVIDENDS DECLARED * | ||||||||||
| Closing Bid Price Range | Dividends | |||||||||
| Year / Quarter | High | Low | Declared | |||||||
2006 | ||||||||||
| First | $ | 27.85 | $ | 25.67 | $ | 0.1905 | ||||
| Second | $ | 27.39 | $ | 24.38 | $ | 0.2000 | ||||
| Third | $ | 27.29 | $ | 24.58 | $ | 0.2000 | ||||
| Fourth | ||||||||||
$ | 0.5905 | |||||||||
2005 | ||||||||||
| First | $ | 27.15 | $ | 22.57 | $ | 0.1619 | ||||
| Second | $ | 25.24 | $ | 21.94 | $ | 0.1810 | ||||
| Third | $ | 27.48 | $ | 25.39 | $ | 0.1810 | ||||
| Fourth | $ | 28.42 | $ | 23.90 | $ | 0.1905 | ||||
$ | 0.7144 | |||||||||
2004 | ||||||||||
| First | $ | 32.88 | $ | 27.06 | $ | 0.1542 | ||||
| Second | $ | 30.08 | $ | 25.73 | $ | 0.1619 | ||||
| Third | $ | 28.31 | $ | 24.14 | $ | 0.1619 | ||||
| Fourth | $ | 29.97 | $ | 27.40 | $ | 0.1619 | ||||
$ | 0.6399 | |||||||||
| * Per share data reflect stock splits and dividends | ||||||||||
14
COMMUNITY BANKS, INC. & SUBSIDIARIES | |||||||||||||||||||
Fiscal Insight - SEPTEMBER 30, 2006 | |||||||||||||||||||
NET INTEREST MARGIN - YEAR-TO-DATE | |||||||||||||||||||
| (dollars in thousands) | September 30, 2006 | September 30, 2005 | |||||||||||||||||
| Average Balance | FTE Interest Income/ Expense | Average Rate Earned/Paid | Average Balance | FTE Interest Income/ Expense | Average Rate Earned/Paid | ||||||||||||||
| Federal funds sold and interest-bearing deposits in banks | $ | 39,340 | $ | 1,427 | 4.85 | % | $ | 67,706 | $ | 1,591 | 3.14 | % | |||||||
| Investment securities | 585,909 | 26,084 | 5.95 | % | 609,754 | 25,349 | 5.56 | % | |||||||||||
| Loans - commercial | 825,241 | 47,844 | 7.75 | % | 533,916 | 26,109 | 6.54 | % | |||||||||||
| - commercial real estate | 819,887 | 42,741 | 6.97 | % | 489,780 | 23,616 | 6.45 | % | |||||||||||
| - residential real estate | 151,751 | 6,933 | 6.11 | % | 119,234 | 5,702 | 6.39 | % | |||||||||||
| - consumer | 517,378 | 27,045 | 6.99 | % | 407,257 | 19,925 | 6.53 | % | |||||||||||
| Total earning assets | $ | 2,939,506 | $ | 152,074 | 6.92 | % | $ | 2,227,647 | $ | 102,292 | 6.14 | % | |||||||
| Deposits - savings and NOW accounts | $ | 840,397 | $ | 12,363 | 1.97 | % | $ | 627,710 | $ | 6,081 | 1.30 | % | |||||||
| - time | 1,177,600 | 34,700 | 3.94 | % | 784,181 | 17,873 | 3.05 | % | |||||||||||
| Short-term borrowings | 62,340 | 2,080 | 4.46 | % | 41,706 | 809 | 2.59 | % | |||||||||||
| Long-term debt | 403,828 | 13,611 | 4.51 | % | 442,153 | 14,811 | 4.48 | % | |||||||||||
| Subordinated debt | 49,282 | 2,707 | 7.34 | % | 30,928 | 1,481 | 6.40 | % | |||||||||||
| Total interest-bearing liabilities | $ | 2,533,447 | $ | 65,461 | 3.45 | % | $ | 1,926,678 | $ | 41,055 | 2.85 | % | |||||||
| Interest income to earning assets | 6.92 | % | 6.14 | % | |||||||||||||||
| Interest expense to paying liabilities | 3.45 | % | 2.85 | % | |||||||||||||||
| Interest spread | 3.47 | % | 3.29 | % | |||||||||||||||
| Impact of noninterest funds | 0.47 | % | 0.38 | % | |||||||||||||||
| Net interest margin | $ | 86,613 | 3.94 | % | $ | 61,237 | 3.67 | % | |||||||||||
15
COMMUNITY BANKS, INC. & SUBSIDIARIES | |||||||||||||||||||
Fiscal Insight - SEPTEMBER 30, 2006 | |||||||||||||||||||
NET INTEREST MARGIN - QUARTER-TO-DATE | |||||||||||||||||||
| (dollars in thousands) | September 30, 2006 | September 30, 2005 | |||||||||||||||||
| Average Balance | FTE Interest Income/ Expense | Average Rate Earned/Paid | Average Balance | FTE Interest Income/ Expense | Average Rate Earned/Paid | ||||||||||||||
| Federal funds sold and interest-bearing deposits in banks | $ | 29,324 | $ | 390 | 5.28 | % | $ | 100,263 | $ | 857 | 3.39 | % | |||||||
| Investment securities | 566,772 | 8,556 | 5.99 | % | 632,779 | 8,760 | 5.49 | % | |||||||||||
| Loans - commercial | 831,950 | 16,687 | 7.96 | % | 740,034 | 12,665 | 6.79 | % | |||||||||||
| - commercial real estate | 831,288 | 14,810 | 7.07 | % | 731,449 | 12,135 | 6.58 | % | |||||||||||
| - residential real estate | 150,926 | 2,364 | 6.21 | % | 176,263 | 2,731 | 6.15 | % | |||||||||||
| - consumer | 525,188 | 9,552 | 7.22 | % | 492,367 | 8,141 | 6.56 | % | |||||||||||
| Total earning assets | $ | 2,935,448 | $ | 52,359 | 7.08 | % | $ | 2,873,155 | $ | 45,289 | 6.25 | % | |||||||
| Deposits - savings and NOW accounts | $ | 873,670 | $ | 4,969 | 2.26 | % | $ | 850,801 | $ | 3,048 | 1.42 | % | |||||||
| - time | 1,219,679 | 12,889 | 4.19 | % | 1,040,770 | 7,945 | 3.03 | % | |||||||||||
| Short-term borrowings | 60,680 | 739 | 4.83 | % | 56,948 | 452 | 3.15 | % | |||||||||||
| Long-term debt | 340,162 | 3,936 | 4.59 | % | 476,602 | 5,109 | 4.25 | % | |||||||||||
| Subordinated debt | 51,548 | 972 | 7.48 | % | 30,928 | 527 | 6.76 | % | |||||||||||
| Total interest-bearing liabilities | $ | 2,545,739 | $ | 23,505 | 3.66 | % | $ | 2,456,049 | $ | 17,081 | 2.76 | % | |||||||
| Interest income to earning assets | 7.08 | % | 6.25 | % | |||||||||||||||
| Interest expense to paying liabilities | 3.66 | % | 2.76 | % | |||||||||||||||
| Interest spread | 3.42 | % | 3.49 | % | |||||||||||||||
| Impact of noninterest funds | 0.48 | % | 0.40 | % | |||||||||||||||
| Net interest margin | $ | 28,854 | 3.90 | % | $ | 28,208 | 3.89 | % | |||||||||||
16
COMMUNITY BANKS, INC. & SUBSIDIARIES | |||||||||||||||||||
Fiscal Insight - SEPTEMBER 30, 2006 | |||||||||||||||||||
NET INTEREST MARGIN - QUARTER-TO-DATE | |||||||||||||||||||
| (dollars in thousands) | September 30, 2006 | June 30, 2006 | |||||||||||||||||
| Average Balance | FTE Interest Income/ Expense | Average Rate Earned/Paid | Average Balance | FTE Interest Income/ Expense | Average Rate Earned/Paid | ||||||||||||||
| Federal funds sold and interest-bearing deposits in banks | $ | 29,324 | $ | 390 | 5.28 | % | $ | 53,872 | $ | 643 | 4.79 | % | |||||||
| Investment securities | 566,772 | 8,556 | 5.99 | % | 577,581 | 8,622 | 5.99 | % | |||||||||||
| Loans - commercial | 831,950 | 16,687 | 7.96 | % | 827,586 | 16,016 | 7.76 | % | |||||||||||
| - commercial real estate | 831,288 | 14,810 | 7.07 | % | 817,099 | 14,326 | 7.03 | % | |||||||||||
| - residential real estate | 150,926 | 2,364 | 6.21 | % | 150,653 | 2,272 | 6.05 | % | |||||||||||
| - consumer | 525,188 | 9,552 | 7.22 | % | 517,562 | 8,969 | 6.95 | % | |||||||||||
| Total earning assets | $ | 2,935,448 | $ | 52,359 | 7.08 | % | $ | 2,944,353 | $ | 50,848 | 6.93 | % | |||||||
| Deposits - savings and NOW accounts | $ | 873,670 | $ | 4,969 | 2.26 | % | $ | 820,265 | $ | 3,893 | 1.90 | % | |||||||
| - time | 1,219,679 | 12,889 | 4.19 | % | 1,210,302 | 11,891 | 3.94 | % | |||||||||||
| Short-term borrowings | 60,680 | 739 | 4.83 | % | 57,903 | 645 | 4.47 | % | |||||||||||
| Long-term debt | 340,162 | 3,936 | 4.59 | % | 405,705 | 4,564 | 4.51 | % | |||||||||||
| Subordinated debt | 51,548 | 972 | 7.48 | % | 51,548 | 938 | 7.30 | % | |||||||||||
| Total interest-bearing liabilities | $ | 2,545,739 | $ | 23,505 | 3.66 | % | $ | 2,545,723 | $ | 21,931 | 3.46 | % | |||||||
| Interest income to earning assets | 7.08 | % | 6.93 | % | |||||||||||||||
| Interest expense to paying liabilities | 3.66 | % | 3.46 | % | |||||||||||||||
| Interest spread | 3.42 | % | 3.47 | % | |||||||||||||||
| Impact of noninterest funds | 0.48 | % | 0.47 | % | |||||||||||||||
| Net interest margin | $ | 28,854 | 3.90 | % | $ | 28,917 | 3.94 | % | |||||||||||
17
COMMUNITY BANKS, INC. & SUBSIDIARIES | ||||||||||||||||
Fiscal Insight - SEPTEMBER 30, 2006 | ||||||||||||||||
PERIOD-END LOAN PORTFOLIO ANALYSIS | ||||||||||||||||
| (dollars in thousands) | 2006 | 2005 | ||||||||||||||
| Third | Second | First | Fourth | Third | ||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||
| Commercial: | ||||||||||||||||
| Commercial | $ | 757,714 | $ | 763,637 | $ | 747,954 | $ | 723,248 | $ | 706,475 | ||||||
| Obligations of political subdivisions | 79,028 | 76,408 | 75,449 | 59,698 | 53,881 | |||||||||||
| Total commercial | 836,742 | 840,045 | 823,403 | 782,946 | 760,356 | |||||||||||
| Commercial real estate: | ||||||||||||||||
| Commercial mortgages | $ | 820,619 | $ | 834,345 | $ | 805,120 | $ | 793,969 | $ | 737,432 | ||||||
| Residential real estate: | ||||||||||||||||
| Residential mortgages | $ | 144,047 | $ | 144,590 | $ | 146,360 | $ | 149,525 | $ | 150,596 | ||||||
| Construction | 6,918 | 5,770 | 5,136 | 4,532 | 26,437 | |||||||||||
| Total residential real estate | 150,965 | 150,360 | 151,496 | 154,057 | 177,033 | |||||||||||
| Consumer: | ||||||||||||||||
| Home equity loans | $ | 308,173 | $ | 282,777 | $ | 262,835 | $ | 252,080 | $ | 236,363 | ||||||
| Home equity lines of credit | 96,608 | 103,216 | 105,933 | 113,133 | 120,080 | |||||||||||
| Indirect consumer loans | 66,126 | 67,786 | 66,344 | 63,644 | 62,471 | |||||||||||
| Other consumer loans | 68,926 | 66,148 | 71,689 | 77,236 | 74,639 | |||||||||||
| Total consumer | 539,833 | 519,927 | 506,801 | 506,093 | 493,553 | |||||||||||
| Total loans | $ | 2,348,159 | $ | 2,344,677 | $ | 2,286,820 | $ | 2,237,065 | $ | 2,168,374 | ||||||
18
COMMUNITY BANKS, INC. & SUBSIDIARIES | |||||||||||||||||||
Fiscal Insight - SEPTEMBER 30, 2006 | |||||||||||||||||||
Reconciliation of GAAP to Non-GAAP Measures (1): | |||||||||||||||||||
| (in thousands, except per share data) | 2006 | 2005 | |||||||||||||||||
| Third | Second | First | Fourth | Third | |||||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | Annual | ||||||||||||||
Income statement data: | |||||||||||||||||||
Net income (loss) | |||||||||||||||||||
| Net income (loss) | $ | 10,558 | $ | 10,504 | $ | 10,569 | $ | 10,961 | $ | 10,332 | $ | 25,641 | |||||||
Amortization of core deposit and other intangible assets (2) | 428 | 456 | 425 | 564 | 519 | 1,153 | |||||||||||||
Merger, conversion and restructuring expenses (2) | --- | --- | --- | --- | 161 | 5,333 | |||||||||||||
| Net operating (tangible) income | $ | 10,986 | $ | 10,960 | $ | 10,994 | $ | 11,525 | $ | 11,012 | $ | 32,127 | |||||||
Earnings (loss) per share | |||||||||||||||||||
| Diluted earnings (loss) per common share | $ | 0.45 | $ | 0.44 | $ | 0.44 | $ | 0.45 | $ | 0.42 | $ | 1.35 | |||||||
Amortization of core deposit and other intangible assets (2) | 0.01 | 0.02 | 0.01 | 0.02 | 0.02 | 0.06 | |||||||||||||
Merger, conversion and restructuring expenses (2) | --- | --- | --- | --- | --- | 0.28 | |||||||||||||
| Diluted operating (tangible) earnings per share | $ | 0.46 | $ | 0.46 | $ | 0.45 | $ | 0.47 | $ | 0.44 | $ | 1.69 | |||||||
Balance sheet data: | |||||||||||||||||||
Average assets | |||||||||||||||||||
| Average assets | $ | 3,385,905 | $ | 3,391,908 | $ | 3,383,211 | $ | 3,313,950 | $ | 3,316,460 | $ | 2,668,605 | |||||||
| Goodwill | (245,794 | ) | (245,749 | ) | (244,775 | ) | (243,203 | ) | (239,395 | ) | (123,412 | ) | |||||||
| Core deposit and other intangible assets | (13,229 | ) | (13,254 | ) | (13,914 | ) | (14,594 | ) | (15,252 | ) | (8,236 | ) | |||||||
| Average tangible assets | $ | 3,126,882 | $ | 3,132,905 | $ | 3,124,522 | $ | 3,056,153 | $ | 3,061,813 | $ | 2,536,957 | |||||||
Operating return on average tangible assets | 1.39 | % | 1.40 | % | 1.43 | % | 1.50 | % | 1.43 | % | 1.27 | % | |||||||
Average equity | |||||||||||||||||||
| Average equity | $ | 471,911 | $ | 470,695 | $ | 478,507 | $ | 475,514 | $ | 481,185 | $ | 318,768 | |||||||
| Goodwill | (245,794 | ) | (245,749 | ) | (244,775 | ) | (243,203 | ) | (239,395 | ) | (123,412 | ) | |||||||
| Core deposit and other intangible assets | (13,229 | ) | (13,254 | ) | (13,914 | ) | (14,594 | ) | (15,252 | ) | (8,236 | ) | |||||||
| Deferred taxes | 1,755 | 1,836 | 1,734 | 1,742 | 1,677 | 862 | |||||||||||||
| Average tangible equity | $ | 214,643 | $ | 213,528 | $ | 221,552 | $ | 219,459 | $ | 228,215 | $ | 187,982 | |||||||
Operating return on average tangible equity | 20.31 | % | 20.59 | % | 20.12 | % | 20.83 | % | 19.14 | % | 17.09 | % | |||||||
At end of quarter: | |||||||||||||||||||
Total assets | |||||||||||||||||||
| Total assets | $ | 3,431,208 | $ | 3,385,599 | $ | 3,421,562 | $ | 3,332,430 | $ | 3,291,232 | $ | 3,332,430 | |||||||
| Goodwill | (245,864 | ) | (245,056 | ) | (244,760 | ) | (244,827 | ) | (243,107 | ) | (244,827 | ) | |||||||
| Core deposit and other intangible assets | (13,641 | ) | (13,550 | ) | (13,599 | ) | (14,253 | ) | (14,951 | ) | (14,253 | ) | |||||||
| Total tangible assets | $ | 3,171,703 | $ | 3,126,993 | $ | 3,163,203 | $ | 3,073,350 | $ | 3,033,174 | $ | 3,073,350 | |||||||
Total equity | |||||||||||||||||||
| Total equity | $ | 479,584 | $ | 465,760 | $ | 475,587 | $ | 476,673 | $ | 480,960 | $ | 476,673 | |||||||
| Goodwill | (245,864 | ) | (245,056 | ) | (244,760 | ) | (244,827 | ) | (243,107 | ) | (244,827 | ) | |||||||
| Core deposit and other intangible assets | (13,641 | ) | (13,550 | ) | (13,599 | ) | (14,253 | ) | (14,951 | ) | (14,253 | ) | |||||||
| Deferred taxes | 1,698 | 1,800 | 1,854 | 1,734 | 1,746 | 1,734 | |||||||||||||
| Total tangible equity | $ | 221,777 | $ | 208,954 | $ | 219,082 | $ | 219,327 | $ | 224,648 | $ | 219,327 | |||||||
Tangible book value at end of period | $ | 9.45 | $ | 8.91 | $ | 9.19 | $ | 9.12 | $ | 9.26 | $ | 9.12 | |||||||
Tangible equity to assets | 6.99 | % | 6.68 | % | 6.93 | % | 7.14 | % | 7.41 | % | 7.14 | % | |||||||
(1) Per share data reflect stock splits and stock dividends | |||||||||||||||||||
(2) Net of related tax effect | |||||||||||||||||||
19