First National Community Bancorp, Inc. Files Form 10-K and Forms 10-Q for All 2011 Reporting Periods
Filings Represent Important Step Toward Return to SEC Reporting Compliance
DUNMORE, Pa., Aug. 10, 2012 /PRNewswire/ -- First National Community Bancorp, Inc., (OTC Markets Group, Inc.: FNCB), the parent company of Dunmore-based First National Community Bank, today announced that it has filed with the Securities and Exchange Commission its Annual Report on Form 10-K for the year ended December 31, 2011, and its Quarterly Reports on Form 10-Q for the periods ended March 31, 2011, June 30, 2011 and September 30, 2011.
Today's filings fulfill the Company's SEC reporting requirements for all historical periods except for the completed quarters of 2012. The Company anticipates filing quarterly reports on Form 10-Q for the periods ended March 31, 2012 and June 30, 2012 in the near future, bringing the Company up-to-date with its SEC reporting obligations.
"Filing our annual and quarterly results for 2011 is an important step toward achieving full regulatory reporting compliance, enabling our leadership team to fully focus on building additional capital strength and refining our strategy for growing our institution," said Steven R. Tokach, President and Chief Executive Officer. "Our progress reflects the strong and appropriate actions we've taken to improve the financial health of First National Community Bank, and we look forward to reporting the results of these improvements in the coming quarters."
Summary Results for 2011
The Company reported a net loss of $335,000, or ($0.02) per basic and diluted share, for 2011, compared to a net loss of $31.7 million, or $(1.94) per basic and diluted share, in 2010. The Bank's Call Reports for 2011, which have been filed with the FDIC prior to today's SEC filings, will be amended to fully reflect the audit adjustments finalized in the SEC filings.
The Company's significant improvement in results of operations was principally attributable to continued efforts to aggressively reduce the bank's exposure to problem credits and liquidate its impaired assets. As such, in 2011 the provision for loan and lease losses fell $24.5 million, or 97.9%, to $0.5 million, compared to $25.0 million in 2010. Likewise, expenses attributable to valuation impairments on other real estate owned (OREO), as well as expenses incurred to manage such properties, fell $3.8 million or 50.5% to $3.7 million in 2011. During 2011 the Company also liquidated a number of OREO properties, reporting gains of $2.5 million on the sales, compared to gains of $403,000 in the prior year.
Additionally, improved results from securities sales and valuation impairments benefited the Company's non-interest income by $10.3 million in 2011 compared to 2010. In 2011, the Company recorded gains of $5.1 million on the sale of certain securities, compared to a net loss of $1.7 million on securities sales in 2010. Additionally, during 2011 the Company recognized valuation impairments on investment securities of $798,000, $3.5 million lower than the $4.3 million in impairments charged in 2010.
Offsetting these improvements were increased financial, consulting and legal expenses in 2011, which resulted from the Company's increased reliance on external expertise to fulfill its financial statement and regulatory filing obligations, as well as increased audit and regulatory compliance costs. With today's announcement of the Company's completion of its 2011 regulatory filings, and the imminent filing of all 2012 required reports, the Company expects these professional expenses to decline in the coming quarters.
Also, partially offsetting 2011 results of operations was a $4.5 million or 13.5% decline in net interest income before the provision for loan and lease losses, to $29.1 million in 2011, from $33.6 million in 2010. The largest component of the Company's operating income, net interest income declined due to lower interest-earning asset and interest-bearing liability balances, combined with the persistent low-interest rate environment which lowered overall asset yields. However, while net interest income declined, the net interest margin increased by three basis points, to 3.10% in 2011. Average balances of interest-bearing liabilities declined by a moderately higher amount than interest-earning assets, while the interest rate spread between the two expanded.
Asset Quality Improved in 2011
Improved asset quality in 2011 reflected the Company's commitment to aggressively reduce its exposure to problem credits and liquidate its holdings of foreclosed properties. Non-performing loans and OREO fell by $11.1 million or 29.3% to $26.9 million at December 31, 2011, compared to the prior year end. The decline in non-performing loans outpaced the decline in total loans. Consequently, the ratio of non-performing loans to total loans improved to 2.9% at December 31, 2011, 80 basis points lower than the ratio of 3.7% at December 31, 2010.
The allowance for loan and lease losses declined by $1.7 million or 7.7%, to $20.8 million at December 31, 2011, compared to $22.6 million at the prior year end. The reduction reflected both the decreased level of total loans in 2011 and the decline in both the provision for loan and lease losses (described previously) and net charge-offs, which fell $22.7 million or 90.9% to $2.3 million for 2011. The Company's ratio of net charge-offs to average loans improved by 253 basis points to 0.31% for 2011, compared to 2.84% for 2010.
Financial Condition at December 31, 2011
Total assets decreased $64.7 million or 5.5% during 2011 largely due to reductions in both loan balances and investment securities as the Company sought to manage its credit and interest rate risk positioning. Net loans fell $76.8 million, or 10.4%, primarily as a result of payoffs in its construction loan portfolio and the competitive rate environment for commercial and industrial and residential mortgage loans, which slowed production. Available-for-sale investment securities declined by $65.5 million, or 25.9%, as the company sold certain real-estate backed securities and municipal securities to improve its interest rate risk positioning. Increases in cash and cash equivalents partially offset the decline in interest-earning assets.
The lower level of assets in 2011 allowed the Company to reduce higher-cost sources of funding during the year. Total deposits were $957.1 million at December 31, 2011, $25.3 million or 2.6% lower than the previous year end. The Company elected to allow higher-cost time deposits to mature and chose to be conservative in setting rates on new deposits and renewals. As such, average interest-bearing deposits decreased $97.9 million or 10.2% during 2011, while average non-interest bearing transaction deposits increased by $25.4 million or 30.8%. In addition, average borrowed funds decreased by $84.9 million or 43.2% to $111.7 million for 2011.
The Company's capital ratios improved meaningfully in 2011. At December 31, 2011, First National Community Bancorp posted a total risk-based capital ratio of 11.35%, a Tier 1 risk-based capital ratio of 6.85%, and a Tier 1 leverage ratio of 4.72%. Its First National Community Bank subsidiary at December 31, 2011 recorded a total risk-based capital ratio of 11.73%, a Tier 1 risk-based capital ratio of 10.46%, and a Tier 1 leverage ratio of 7.20%.
Availability of Filings
FNCB shareholders can obtain a copy of the filing documents by request from: Shareholder Relations, First National Community Bancorp, Inc., 102 East Drinker Street, Dunmore, PA 18512 or by calling (570) 348-6438. The 2011 Form 10-K and Forms 10-Q for the periods ended March 31, 2011, June 30, 2011 and September 30, 2011 are also available on the SEC website at:
About First National Community Bank:
First National Community Bancorp, Inc. is the bank holding company of First National Community Bank, which provides personal, small business and commercial banking services to individuals and businesses throughout Lackawanna, Luzerne, Monroe and Wayne Counties in Northeastern Pennsylvania. The institution was established as a National Banking Association in 1910 as The First National Bank of Dunmore, and has been operating under its current name since 1988.
For more information about FNCB, visit www.fncb.com.
MEDIA and INVESTOR CONTACT:
Joseph J. Earyes, CPA
First Senior Vice President and
Retail Banking Officer
First National Community Bank
SOURCE First National Community Bancorp, Inc.
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