Community Financial Corporation (NASDAQ: CFFC), a holding company whose sole subsidiary is Community Bank, Staunton, Virginia, today reported earnings for the quarter and nine months ended December 31 2006. For the quarter ended December 31 2006, Community Financial reported earnings of $1,042,000 or $0.24 per diluted share, compared to $1,059,000 or $0.25 per diluted share for the same period last year. Net income for the current quarter compared to the December 31, 2005 quarter was essentially unchanged with an increase in net interest income of $79,000 offset by increases in the provision for loan losses and noninterest expenses.
Total interest income increased by $1.3 million during the December 31, 2006 quarter compared to the December 31, 2005 quarter as a result of both the increase in the volume of interest earning assets and the increase in rates earned on these assets. Total interest expense increased by $1.2 million for the 2006 period compared to the same period in 2005 as a result of both the increase in the volume of interest-bearing liabilities and the increase in the interest rates paid on interest-bearing liabilities. The interest rate spread decreased by 32 basis points to 3.21% for the quarter ended December 31, 2006 compared to 3.53% for the same period in 2005.
Non-interest income increased $98,000 to $840,000 for the quarter ended December 31, 2006 from $742,000 for the December 31, 2005 quarter. The increase in non-interest income for the current quarter compared to the December 31, 2005 period was due primarily to an increase in fees from increased usage of transaction account services. Non-interest expenses increased $62,000 to $2.8 million for the December 31, 2006 quarter from $2.7 million for the December 31, 2005 quarter. The increase in non-interest expenses was due to compensation related increases.
Community's net income for the nine months ended December 31, 2006 was $3,148,000 or $0.71 diluted earnings per share, compared to $3,263,000 or $0.75 diluted earnings per share for the nine months ended December 31, 2005, a 5.3% decrease in diluted earnings per share. The decrease in net income for the nine months ended December 31 2006 compared to the same period ended December 31, 2005 can be attributed to an increase in the provision for loan losses and noninterest expenses offset by an increase in net interest income. The increase in the provision for loan losses is primarily related to the increase in loans receivable. The increase in net interest income is attributable to an increase in loans receivable offset by a decrease in the interest rate spread for the nine months ended December 31, 2006 compared to December 31 2005. The interest rate spread decreased by 25 basis points to 3.28% for the nine months December 31 2006 compared to 3.53% for the same period in 2005.
At December 31, 2006, the Company had total assets of $450.1 million, deposits of $322.5 million and stockholders' equity of $38.2 million. Non-performing assets totaled approximately $1.4 million or .31% of assets at December 31, 2006. Our allowance for loan losses to non-performing loans was 213.6% and to total loans was .77% at December 31, 2006.
After reviewing the Company's financial position and operating results the Board of Directors approved and declared a $0.065 per share dividend. The dividend is payable February 21, 2007, to stockholders of record as of February 7, 2007.
At December 31, 2006, Community Bank exceeded all regulatory capital requirements and continued to be classified as a "well capitalized" institution. Community Bank, the wholly owned subsidiary of Community Financial, is headquartered in Staunton, Virginia and has offices in Waynesboro, Stuarts Draft, Raphine, Verona, Lexington and Virginia Beach. Community Financial Corporation is traded on the Nasdaq National Market, under the symbol CFFC.
Except for the historical information in this press release, the matters discussed may be deemed to be forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties, including, but not limited to, changes in economic conditions in the Company's market areas, changes in the financial condition or business prospects of the Company's borrowers, changes in policies by regulatory agencies, the impact of competitive loan products, loan demand risks, fluctuations in interest rates and the relationship between long and short term rates, operating results and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. Actual strategies and results in future periods may differ materially from those currently expected. These forward-looking statements represent the company's judgment as of the date of this release. The Company disclaims, however, any intent or obligation to update these forward-looking statements.
