Exhibit 99
NEWS RELEASE
CONTACT: Patrick Scanlon, Controller
Penseco Financial Services Corporation
(570) 346-7741
FOR RELEASE: 4:00 P.M. Eastern Time: May 3, 2007
Penseco Financial Services Corporation Reports 1st Quarter 2007 Earnings
SCRANTON, PA, May 3 -- Penseco Financial Services Corporation (OTC Bulletin
Board: PFNS), the Scranton, Pennsylvania based financial holding company of Penn
Security Bank & Trust Company reported an increase in net income of $96,000 or
6.1% for the three months ended March 31, 2007 to $1,670,000 or $.78 per share
compared with $1,574,000 or $.73 per share from the year ago period. Net
interest income after provision for loan losses increased $105,000 or 2.1%, to
$5,149,000 for three months ended March 31, 2007 compared to $5,044,000 for the
same quarter of 2006. Partly, the increase resulted from higher interest on
loans due to net loan growth of $44.7 million since March 31, 2006, including
$4.6 million from December 31, 2006. Interest on investments declined due to
maturing investments being redeployed to fund future loan demand.
Other Income
Other income increased $58,000 or 2.8% to $2,096,000 for the three months ended
March 31, 2007 compared with $2,038,000 for the similar period of 2006. Merchant
transaction income decreased $61,000 or 5.5% due to lower transaction volume.
Service charges on deposit accounts increased $62,000 or 32.8% while other fee
income increased $5,000 from prior year levels. The increase was largely due to
accommodations made in 2006 to our customers during the computer conversion that
took place during the first quarter of 2006. Other operating income decreased
$17,000 or 12.9%. The Company realized a gain of $51,000 due to the sale of
equity securities.
Other Expenses
Total other expenses increased $109,000 or 2.1% to $5,232,000 for the first
quarter ended March 31, 2007 compared with $5,123,000 for the same period of
2006. Salaries and employee benefits decreased $65,000 or 2.7%, mainly due to a
reduction in wages related to a computer conversion during the first quarter of
2006. Merchant transaction expense decreased by $28,000 or 3.3% due to lower
transaction volume. Other operating expenses increased $229,000 or 19.4%, from
increases in professional fees and general operating expenses related to the
promotion of our totally free checking program.
Asset Quality
Non-accrual loans increased $1,568,000 to $3,011,000 at March 31, 2007 from
$1,443,000 at March of 2006. This increase was due to a single borrowing
relationship being placed into non-accrual during the third quarter of 2006.
Management feels the Company is well secured and projects no loss of principal
as we work toward a quick resolution to this credit. The allowance for loan
losses at March 31, 2007 was $4,200,000 or 1.12% of total loans compared to
$3,900,000 or 1.18% of total loans at March 31, 2006. Management continues to
believe the loan loss reserve is adequate.
Loans on which the accrual of interest has been discontinued or reduced amounted
to $3,011,000 and $1,443,000 at March 31, 2007 and March 31, 2006, respectively.
If interest on those loans had been accrued, such additional income would have
been $202,000 and $45,000 for the three months ended March 31, 2007 and March
31, 2006, respectively. Interest income on those loans, which is recorded only
when received, amounted to $73,000 and $1,000 for March 31, 2007 and March 31,
2006, respectively. There are no commitments to lend additional funds to
borrowers whose loans are on non-accrual status.
Income Tax Expense
Applicable income taxes decreased $42,000 or 10.9% due to higher tax free income
included in overall higher operating income.
PENSECO FINANCIAL SERVICES CORPORATION
FINANCIAL HIGHLIGHTS
(unaudited)
(in thousands, except per share amounts)
FINANCIAL HIGHLIGHTS
March 31, 2007 2007 2006 Increase $ % Change
- ------------------------------------------------------------------------------------------
Net Income $ 1,670 $ 1,574 $ 96 6.10%
Earnings per share $ 0.78 $ 0.73 $ 0.05 6.85%
Net Income - Core $ 1,661 $ 1,574 $ 87 5.53%
Earnings per share - Core $ 0.77 $ 0.73 $ 0.04 5.48%
ROA 1.16% 1.11% 4.50%
ROA- Core 1.16% 1.11% 4.50%
ROE 9.94% 9.74% 2.05%
ROE - Core 9.89% 9.74% 1.54%
Efficiency Ratio 71.27% 71.07% -0.28%
Efficiency Ratio - Core 71.19% 71.07% -0.17%
PENSECO FINANCIAL SERVICES CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except per share amounts)
March 31, March 31,
2007 2006
---------------- -----------------
ASSETS
Cash and due from banks $ 11,866 $ 10,799
Interest bearing balances with banks 8,797 433
Federal funds sold 8,050 -
---------------- -----------------
Cash and Cash Equivalents 28,713 11,232
Investment securities:
Available-for-sale, at fair value 87,168 129,961
Held-to-maturity (fair value of $73,592
and $80,003, respectively) 72,765 79,900
---------------- -----------------
Total Investment Securities
159,933 209,861
Loans, net of unearned income 374,472 329,495
Less: Allowance for loan losses 4,200 3,900
---------------- -----------------
Loans, Net 370,272 325,595
Bank premises and equipment 9,835 9,420
Other real estate owned 73 2
Accrued interest receivable 3,314 3,257
Cash surrender value of life insurance 7,132 -
Other assets 3,450 4,809
---------------- -----------------
Total Assets $ 582,722 $ 564,176
================ =================
LIABILITIES
Deposits:
Non-interest bearing $ 72,870 $ 89,481
Interest bearing 351,718 307,781
---------------- -----------------
Total Deposits 424,588 397,262
Other borrowed funds:
Repurchase agreements 21,423 16,905
Short-term borrowings 482 8,475
Long-term borrowings 63,414 73,045
Accrued interest payable 1,656 1,322
Other liabilities 3,691 2,645
---------------- -----------------
Total Liabilities 515,254 499,654
---------------- -----------------
STOCKHOLDERS' EQUITY
Common stock ($ .01 par value, 15,000,000 shares
authorized, 2,148,000 shares issued and outstanding) 21 21
Surplus 10,819 10,819
Retained earnings 57,268 54,429
Accumulated other comprehensive income (640) (747)
---------------- -----------------
Total Stockholders' Equity 67,468 64,522
---------------- -----------------
Total Liabilities and Stockholders' Equity $ 582,722 $ 564,176
================ =================
PENSECO FINANCIAL SERVICES CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share amounts)
Three Months Ended Three Months Ended
March 31, 2007 March 31, 2006
-------------------- --------------------
INTEREST INCOME
Interest and fees on loans $ 6,293 $ 5,515
Interest and dividends on investments:
U.S. Treasury securities and U.S. Agency obligations 1,011 1,512
States & political subdivisions 721 625
Other securities 141 58
Interest on Federal funds sold 85 -
Interest on balances with banks 91 9
---------------- ----------------
Total Interest Income 8,342 7,719
---------------- ----------------
INTEREST EXPENSE
Interest on time deposits of $100,000 or more 509 219
Interest on other deposits 1,812 1,426
Interest on other borrowed funds 776 903
---------------- ----------------
Total Interest Expense 3,097 2,548
---------------- ----------------
Net Interest Income 5,245 5,171
Provision for loan losses 96 127
---------------- ----------------
Net Interest Income After Provision for Loan Losses 5,149 5,044
---------------- ----------------
OTHER INCOME
Trust department income 372 354
Service charges on deposit accounts 251 189
Merchant transaction income 1,047 1,108
Other fee income 260 255
Other operating income 115 132
Realized gains (losses) on securities, net 51 -
---------------- ----------------
Total Other Income 2,096 2,038
---------------- ----------------
OTHER EXPENSES
Salaries and employee benefits 2,375 2,440
Expense of premises and fixed assets 625 652
Merchant transaction expenses 824 852
Other operating expenses 1,408 1,179
---------------- ----------------
Total Other Expenses 5,232 5,123
---------------- ----------------
Income before income taxes 2,013 1,959
Applicable income taxes 343 385
---------------- ----------------
Net Income 1,670 1,574
Other comprehensive income, net of taxes:
Unrealized securities gains (losses) 22 (99)
---------------- ----------------
Comprehensive Income $ 1,692 $ 1,475
================ ================
Earnings per Common Share
(Based on 2,148,000 shares outstanding) $ 0.78 $ 0.73
Cash Dividends Declared Per Common Share $ 0.37 $ 0.35