First National Community Bancorp, Inc. Reports Continued Positive Earnings for Second Quarter of 2013

DUNMORE, Pa., Aug. 13, 2013 /PRNewswire/ -- First National Community Bancorp, Inc. (OTCQB: FNCB), the parent company of Dunmore-based First National Community Bank, today announced improved operating results for the second quarter and six months ended June 30, 2013. The Company reported net income of $0.7 million, or $0.04 per basic and diluted share, compared to a net loss of $1.0 million, or $(0.06) per basic and diluted share, for the second quarter of 2012. Net income for the six months ended June 30, 2013, was $2.5 million, or $0.15 per basic and diluted share, compared to a net loss of $2.1 million, or $(0.13) for the comparable period of 2012. The improved performance for the quarter and six months ended June 30, 2013 resulted from an increase in non-interest income of $0.7 million and $1.7 million for the respective periods, primarily reflecting increased gains on the sale of securities, along with decreases in non-interest expense of $2.0 million and $3.6 million for the respective periods, primarily reflecting cost containment initiatives and less reliance on outside consultants.

Performance Highlights:

  • Year-to-date 2013 loan growth of 7.7%
  • A 19.9% decrease in second quarter non-interest expense, compared to second quarter 2012
  • A 13 basis point improvement, to 1.30%, in the second quarter ratio of non-performing loans to total loans, compared to 1.43% at March 31, 2013, and a 32 basis point improvement, compared with 1.62% at December 31, 2012
  • A 14.2% decrease in non-performing loans from December 31, 2012
  • Other real estate owned ("OREO") was reduced by 30.3% compared to December 31, 2012, and was down 47.6% compared to June 30, 2012 
  • The Bank's total risk-based capital of $82.2 million, or 12.27% of risk-weighted assets at June 30, 2013, was up $3.8 million from December 31, 2012

"Our community-focused Bank continued to take large strides forward during the second quarter of 2013 illustrated by significant loan growth, a sizable reduction in non-interest expense and continued improvement to our asset quality metrics," said Steven R. Tokach, President and Chief Executive Officer. "This measurable improvement reflects our competitive strengths in Northeastern Pennsylvania, which include a sizable deposit market share, a respected regional brand and a capable, energized and engaged team. Our loan growth was strong for the first half of 2013 primarily reflecting activity in our residential and commercial real estate portfolios. Importantly, our non-performing loans are at their lowest level since December 31, 2007 as a result of our focus on and effectiveness at working out classified credits. At $8.3 million, non-performing loans at June 30, 2013 were down more than 70% from their apex at December 31, 2010. We believe that our improved results reflect the application of sound policies and procedures, effective risk management, and a long-term perspective on value creation. During the second half of 2013 and beyond, we'll remain focused on maintaining an efficient operating profile, driving growth in our loan portfolio and identifying and managing institutional risk."

Summary Results for the Three and Six Months Ended June 30, 2013

Net interest income before credit for loan and lease losses was $6.3 million for the three months ended June 30, 2013 and $12.7 million for the six months ended June 30, 2013 compared to $7.1 million and $14.3 million, respectively, for the same periods in 2012, resulting mainly from decreases in volumes and yields on interest-earning assets. Net interest margin for both the three and six months ended June 30, 2013 was 3.26%. This represents a decrease of 8 basis points from the three months ended June 30, 2012 and no change from the six months ended June 30, 2012 period. Interest expense for the three and six months ended June 30, 2013 decreased $525 thousand and $1.2 million, respectively, compared to the same periods in 2012, resulting from lower average balances of interest-bearing liabilities along with a 14 and 16 basis-point decline in the Bank's average rate for interest-bearing liabilities for the three and six months ended June 30, 2013.

Non-interest income was $2.3 million and $4.7 million for the three and six months ended June 30, 2013, compared to $1.5 million and $3.0 million for the same periods in 2012. The increase in non-interest income was primarily the result of increased net gains on the sale of securities.

Non-interest expense for the three and six months ended June 30, 2013 was $7.9 million and $16.2 million, respectively, or a decrease of $2.0 million and $3.6 million compared to the same periods of 2012. Professional fees, consisting of accounting and consulting expenses, decreased $1.6 million from $2.5 million for the six months ended June 30, 2012 to $877 thousand for the same period in 2013. Salaries and employee benefits decreased by $696 thousand compared to the six months ended June 30, 2012 as a result of a reduction in force and voluntary separation program implemented in the fourth quarter of 2012. Legal fees, although reduced by $281 thousand compared with the six months ended June 30, 2012, remained elevated as a result of legal matters in process. Professional fees are expected to continue to decline to more normalized levels in coming quarters, reflecting less reliance on outside advisors and consultants. We expect that legal fees will continue to decline pending the resolution of certain existing litigation matters. Various other components of non-interest expense also contributed to the decrease in non-interest expense for the three and six months ended June 30, 2013.

Improved Asset Quality

As a result of aggressive problem credit resolutions, the Company's asset quality ratios continued to improve through June 30, 2013.

The Company's total non-performing loans were $8.3 million at June 30, 2013, a decrease of $1.4 million, or 14.2%, from December 31, 2012. The ratio of non-performing loans to total loans improved to 1.30% at June 30, 2013, compared to 1.62% at December 31, 2012, a decrease of 32 basis points. (The FDIC average for commercial banks with assets between $300 million and $1 billion at June 30, 2013, the most current FDIC statistical data, was 1.69%). The allowance for loan and lease losses as a percentage of non-accrual loans was 227% at June 30, 2013 versus 192% at December 31, 2012. (The above described FDIC peer group average was 197% at June 30, 2013). The Company had an annual ratio of net recoveries to average loans outstanding for the six months ended June 30, 2013 of 0.42%, due to a recovery of $1.5 million on one commercial loan (The average net charge-offs for the FDIC peer group at June 30, 2013 was 0.26%).  

Financial Condition

The Company's total assets at June 30, 2013 were $938.3 million, an increase of $8.7 million compared to March 31, 2013.  Total loans (before allowance for loan and lease losses) at June 30, 2013 were $642.3 million, an increase of $44.4 million compared to December 31, 2012 and up $26.2 million compared to March 31, 2013. Total deposits at June 30, 2013 were $829.7 million, a decrease of $24.9 million from December 31, 2012, but increased by $6.0 million from March 31, 2013. Total borrowed funds were $57.6 million at June 30, 2013 compared to $53.9 million at December 31, 2012.

At June 30, 2013, First National Community Bank's capital ratios were as follows: total risk-based capital ratio of 12.27%, Tier 1 risk-based capital ratio of 11.00%, and Tier 1 leverage ratio of 8.01%. 

Downtown Wilkes-Barre Branch Relocated

We successfully completed the relocation of our downtown Wilkes-Barre branch during the second quarter. This new location allows us to better serve existing and new business and personal banking customers.  Our new 3,500 square foot office, located at 1 N. Main Street on Public Square, opened on April 29, 2013. Conveniently located within a one-mile radius of approximately 1,500 downtown businesses, our decision to relocate the branch was based upon a desire to improve branch visibility and customer access, and to provide a better overall banking experience for our customers.

Availability of Filings

A copy of the Company's Form 10-Q for the quarter ended June 30, 2013 will be provided upon request from: Shareholder Relations, First National Community Bancorp, Inc., 102 East Drinker Street, Dunmore, PA 18512 or by calling (570) 348-6419. The Company's June 30, 2013 quarterly report on Form 10-Q is also available on the Investor Relations page of the Company's website, www.fncb.com, and on the SEC website at:
http://www.sec.gov/edgar/searchedgar/companysearch.html

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 CONTACT:

INVESTOR CONTACT:



Joseph J. Earyes, CPA

James M. Bone, Jr., CPA

First Senior Vice President and

Executive Vice President and

Chief Retail Banking and Operations Officer

Chief Financial Officer

First National Community Bank

First National Community Bank

(570) 558-6701

(570) 348-6419

joseph.earyes@fncb.com

james.bone@fncb.com



This release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results and trends could differ materially from those set forth in such statements due to various risks, uncertainties and other factors (some of which are beyond the Company's control). The words "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan" and similar expressions are intended to identify forward-looking statements. Such risks, uncertainties and other factors that could cause actual results and experience to differ include, but are not limited to, the following: the strength of the United States economy in general and the strength of the local economies in the Company's markets; the effects of, and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, market and monetary fluctuations; the timely development of and acceptance of new products and services; the ability of the Company to compete with other institutions for business; the composition and concentrations of the Company's lending risk and the adequacy of the Company's reserves to manage those risks; the valuation of the Company's investment securities; the ability of the Company to pay dividends or repurchase common shares; the ability of the Company to retain key personnel; the impact of any pending or threatened litigation against the Company; the marketability of shares of the Company and fluctuations in the value of the Company's share price; the impact of the Company's ability to comply with its regulatory agreements and orders; the effectiveness of the Company's system of internal controls; the ability of the Company to attract additional capital investment; the timing of the Company's annual shareholder meeting; the impact of changes in financial services' laws and regulations (including laws concerning taxes, banking, securities, capital adequacy and insurance); the impact of technological changes and security risks upon the Company's information technology systems; changes in consumer spending and saving habits; the nature, extent, and timing of governmental actions and reforms, and the success of the Company at managing the risks involved in the foregoing and other risks and uncertainties, including those detailed in the Company's filings with the Securities and Exchange Commission.

The Company cautions that the foregoing list of important factors is not all inclusive.  Readers are also cautioned not to place undue reliance on any forward-looking statements, which reflect management's analysis only as of the date of this release, even if subsequently made available by the Company on its website or otherwise.  The Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company to reflect events or circumstances occurring after the date of this release.  Readers should carefully review the risk factors described in the Annual Report and other documents that the Company periodically files with the Securities and Exchange Commission, including its Form 10-K for the year ended December 31, 2012.

SOURCE First National Community Bancorp, Inc.



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