##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 0-17455
 Comm Bancorp, Inc.
 (Exact name of registrant as specified in its charter)
 Pennsylvania
    
    23-2242292(State or other jurisdiction of incorporation
    
    (I.R.S. Employer Identification Number)or organization)125 North State Street, Clarks Summit, PA
    
    18411(Address of principal executive offices)
    
    (Zip Code)
 (570) 586-0377  (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report.)
 þ o
  o o þ
 o þ




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##### 



COMM BANCORP, INC.
FORM 10-Q
September 30, 2007
 INDEX
 CONTENTS
    
    Page No.Part I. FINANCIAL INFORMATION:Item 1. Financial Statements.Consolidated Statements of Income and Comprehensive Income
for the Three Months and Nine Months Ended September 30,
2007 and 2006
    
    
    3Consolidated Balance Sheets  September 30, 2007 and
December 31, 2006
    
    
    4Consolidated Statement of Changes in Stockholders Equity
for the Nine Months Ended September 30, 2007 and 2006
    
    
    5Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 2007 and 2006
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    8Item 3. Quantitative and Qualitative Disclosures About Market
Risk
    
    
    46Item 4. Controls and Procedures
    
    
    47Item 4T. Controls and Procedures
    
    
    *Part II. OTHER INFORMATION:Item 1. Legal Proceedings
    
    
    48Item 1A. Risk Factors
    
    
    48Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds
    
    
    48Item 3. Defaults Upon Senior Securities
    
    
    48Item 4. Submission of Matters to a Vote of Security Holders
    
    
    48Item 5. Other Information
    
    
    49Item 6. Exhibits
    
    
    49Signatures
    
    
    50Exhibit Index
    
    
    51
  
 *
    
    Not Applicable 2




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##### 



Comm Bancorp, Inc.
 
 CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 (Dollars in thousands, except per share data)
 Three Months Ended


Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Interest income:Interest and fees on loans:Taxable
    
    $
    7,808
    
    
    $
    7,133
    
    
    $
    22,847
    
    
    $
    20,190Tax-exempt
    
    
    457
    
    
    
    352
    
    
    
    1,302
    
    
    
    1,228Interest and dividends on investment securities available-for-sale:Taxable
    
    
    265
    
    
    
    490
    
    
    
    1,279
    
    
    
    1,596Tax-exempt
    
    
    370
    
    
    
    368
    
    
    
    1,111
    
    
    
    1,124Dividends
    
    
    32
    
    
    
    14
    
    
    
    64
    
    
    
    50Interest on federal funds sold
    
    
    68
    
    
    
    136
    
    
    
    75
    
    
    
    209Total interest income
    
    
    9,000
    
    
    
    8,493
    
    
    
    26,678
    
    
    
    24,397Interest expense:Interest on deposits
    
    
    3,539
    
    
    
    3,197
    
    
    
    10,566
    
    
    
    9,008Interest on short-term borrowings
    
    
    28
    
    
    
    
    
    
    
    331
    
    
    
    144Total interest
expense
    
    
    3,567
    
    
    
    3,197
    
    
    
    10,897
    
    
    
    9,152Net interest income
    
    
    5,433
    
    
    
    5,296
    
    
    
    15,781
    
    
    
    15,245Provision for loan losses
    
    
    75
    
    
    
    270
    
    
    
    300
    
    
    
    675Net interest income after provision for loan losses
    
    
    5,358
    
    
    
    5,026
    
    
    
    15,481
    
    
    
    14,570Noninterest income:Service charges, fees and commissions
    
    
    791
    
    
    
    769
    
    
    
    2,380
    
    
    
    2,297Mortgage banking income
    
    
    98
    
    
    
    89
    
    
    
    271
    
    
    
    272Total noninterest income
    
    
    889
    
    
    
    858
    
    
    
    2,651
    
    
    
    2,569Noninterest expense:Salaries and employee benefits expense
    
    
    2,058
    
    
    
    1,903
    
    
    
    5,896
    
    
    
    5,611Net occupancy and equipment expense
    
    
    558
    
    
    
    571
    
    
    
    1,795
    
    
    
    1,772Other expenses
    
    
    1,305
    
    
    
    1,273
    
    
    
    3,798
    
    
    
    3,639Total noninterest expense
    
    
    3,921
    
    
    
    3,747
    
    
    
    11,489
    
    
    
    11,022Income before income taxes
    
    
    2,326
    
    
    
    2,137
    
    
    
    6,643
    
    
    
    6,117Provision for income tax expense
    
    
    511
    
    
    
    512
    
    
    
    1,443
    
    
    
    1,367Net income
    
    
    1,815
    
    
    
    1,625
    
    
    
    5,200
    
    
    
    4,750Other comprehensive income:Unrealized gains on investment securities available-for-sale
    
    
    412
    
    
    
    868
    
    
    
    14
    
    
    
    129Income tax expense related to other comprehensive income
    
    
    140
    
    
    
    295
    
    
    
    5
    
    
    
    44Other comprehensive income, net of income taxes
    
    
    272
    
    
    
    573
    
    
    
    9
    
    
    
    85Comprehensive income
    
    $
    2,087
    
    
    $
    2,198
    
    
    $
    5,209
    
    
    $
    4,835Per share data:Net income
    
    $
    1.03
    
    
    $
    0.87
    
    
    $
    2.90
    
    
    $
    2.56Cash dividends declared
    
    $
    0.26
    
    
    $
    0.25
    
    
    $
    0.78
    
    
    $
    0.75Average common shares outstanding
    
    
    1,756,800
    
    
    
    1,854,598
    
    
    
    1,794,623
    
    
    
    1,853,227
  3




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##### 



Comm Bancorp, Inc.
 
 CONSOLIDATED BALANCE SHEETS
 (Dollars in thousands, except per
share data)
 September 30,
    
    
    December 31,2007
    
    
    2006Assets:Cash and due from banks
    
    $
    12,967
    
    
    $
    25,584Federal funds sold
    
    
    13,000
    
    
    
    2,050Investment securities available-for-sale
    
    
    47,117
    
    
    
    91,213Loans held for sale, net
    
    
    1,764
    
    
    
    572Loans, net of unearned income
    
    
    470,606
    
    
    
    408,074Less: allowance for loan losses
    
    
    4,454
    
    
    
    4,435Net loans
    
    
    466,152
    
    
    
    403,639Premises and equipment, net
    
    
    11,052
    
    
    
    11,018Accrued interest receivable
    
    
    3,328
    
    
    
    2,863Other assets
    
    
    4,912
    
    
    
    3,465Total assets
    
    $
    560,292
    
    
    $
    540,404Liabilities:Deposits:Noninterest-bearing
    
    $
    78,746
    
    
    $
    73,055Interest-bearing
    
    
    425,304
    
    
    
    410,387Total deposits
    
    
    504,050
    
    
    
    483,442Accrued interest payable
    
    
    1,229
    
    
    
    1,106Other liabilities
    
    
    1,910
    
    
    
    1,738Total liabilities
    
    
    507,189
    
    
    
    486,286Stockholders equity:Common
stock, par value $0.33, authorized 12,000,000 shares, issued and outstanding: September 30, 2007, 1,756,204 shares; December 31, 2006, 1,848,687 shares
    
    
    580
    
    
    
    610Capital surplus
    
    
    7,217
    
    
    
    7,146Retained earnings
    
    
    44,340
    
    
    
    45,405Accumulated other comprehensive income
    
    
    966
    
    
    
    957Total stockholders equity
    
    
    53,103
    
    
    
    54,118Total liabilities and stockholders equity
    
    $
    560,292
    
    
    $
    540,404
  4




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##### 



Comm Bancorp, Inc.
 
 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
 (Dollars in thousands, except per share data)
 AccumulatedOther
    
    
    TotalCommon
    
    
    Capital
    
    
    Retained
    
    
    Comprehensive
    
    
    StockholdersStock
    
    
    Surplus
    
    
    Earnings
    
    
    Income
    
    
    EquityBalance, December 31, 2006
    
    $
    610
    
    
    $
    7,146
    
    
    $
    45,405
    
    
    $
    957
    
    
    $
    54,118Net income
    
    
    
    
    
    
    
    
    
    
    5,200
    
    
    
    
    
    
    
    5,200Dividends
declared: $0.78 per share
    
    
    
    
    
    
    
    
    
    
    (1,394
    )
    
    
    
    
    
    
    (1,394
    )Dividend reinvestment plan: 8,062 shares issued
    
    
    3
    
    
    
    373
    
    
    
    
    
    
    
    
    
    
    
    376Repurchase and retirement: 100,545 shares
    
    
    (33
    )
    
    
    (302
    )
    
    
    (4,871
    )
    
    
    
    
    
    
    (5,206
    )Net change in other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    9Balance, September 30, 2007
    
    $
    580
    
    
    $
    7,217
    
    
    $
    44,340
    
    
    $
    966
    
    
    $
    53,103Balance, December 31, 2005
    
    $
    611
    
    
    $
    6,869
    
    
    $
    41,250
    
    
    $
    959
    
    
    $
    49,689Net income
    
    
    
    
    
    
    
    
    
    
    4,750
    
    
    
    
    
    
    
    4,750Dividends declared: $0.75 per share
    
    
    
    
    
    
    
    
    
    
    (1,390
    )
    
    
    
    
    
    
    (1,390
    )Dividend reinvestment plan: 5,383 shares issued
    
    
    2
    
    
    
    223
    
    
    
    
    
    
    
    
    
    
    
    225Repurchase and retirement: 2,400 shares
    
    
    (1
    )
    
    
    (7
    )
    
    
    (92
    )
    
    
    
    
    
    
    (100
    )Net change in other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85
    
    
    
    85Balance, September 30, 2006
    
    $
    612
    
    
    $
    7,085
    
    
    $
    44,518
    
    
    $
    1,044
    
    
    $
    53,259
  5




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##### 



Comm Bancorp, Inc.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in thousands, except per share data)
 Nine Months Ended September 30,
    
    2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    5,200
    
    
    $
    4,750Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    300
    
    
    
    675Depreciation and amortization of premises and equipment
    
    
    799
    
    
    
    759Net amortization (accretion) of investment securities
    
    
    (34
    )
    
    
    97Amortization of net loan costs
    
    
    269
    
    
    
    214Amortization of mortgage servicing rights
    
    
    178
    
    
    
    169Deferred income tax benefit
    
    
    (30
    )
    
    
    (165
    )Net gains on the sale of loans
    
    
    (188
    )
    
    
    (176
    )Net gains on the sale of foreclosed assets
    
    
    (37
    )
    
    
    (3
    )Changes in:Loans held for sale, net
    
    
    (1,004
    )
    
    
    261Accrued interest receivable
    
    
    (465
    )
    
    
    (732
    )Other assets
    
    
    (1,620
    )
    
    
    (465
    )Accrued interest payable
    
    
    123
    
    
    
    112Other liabilities
    
    
    192
    
    
    
    268Net cash provided by operating activities
    
    
    3,683
    
    
    
    5,764Cash flows from investing activities:Proceeds from repayments of investment securities available-for-sale
    
    
    55,095
    
    
    
    41,492Purchases of investment securities available-for-sale
    
    
    (10,951
    )
    
    
    (17,305
    )Proceeds from sale of foreclosed assets
    
    
    133
    
    
    
    596Net increase in lending activities
    
    
    (63,172
    )
    
    
    (39,141
    )Purchases of premises and equipment
    
    
    (833
    )
    
    
    (804
    )Net cash used in investing activities
    
    
    (19,728
    )
    
    
    (15,162
    )Cash flows from financing activities:Net changes in:Money market, NOW, savings and noninterest-bearing accounts
    
    
    16,769
    
    
    
    (5,462
    )Time deposits
    
    
    3,839
    
    
    
    6,912Proceeds from issuance of common shares
    
    
    376
    
    
    
    225Repurchase and retirement of common shares
    
    
    (5,206
    )
    
    
    (100
    )Cash dividends paid
    
    
    (1,400
    )
    
    
    (1,352
    )Net cash provided by financing activities
    
    
    14,378
    
    
    
    223Net decrease in cash and cash equivalents
    
    
    (1,667
    )
    
    
    (9,175
    )Cash and cash equivalents at beginning of year
    
    
    27,634
    
    
    
    35,403Cash and cash equivalents at end of period
    
    $
    25,967
    
    
    $
    26,228Supplemental disclosures:Cash paid during the period for:Interest
    
    $
    10,774
    
    
    $
    9,040Income taxes
    
    
    1,330
    
    
    
    1,230Noncash items:Transfer of loans to foreclosed assets
    
    
    90
    
    
    
    313Unrealized gains on investment securities available-for-sale, net
    
    $
    (9
    )
    
    $
    (85
    )
  6




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##### 



Comm Bancorp, Inc.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands, except per share data)
 1. Basis of presentation:
   2. Earnings per common share:
  7




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##### 



Comm Bancorp, Inc.
 
 MANAGEMENTS DISCUSSION AND ANALYSIS
 (Dollars in thousands, except per share data)
 Forward-Looking Discussion:
      8




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Critical Accounting Policies:
      9




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
       10




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
 Operating Environment:
  Review of Financial Position:
   11




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Investment Portfolio:
  12




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Distribution of investment securities available-for-sale
 September 30,
    
    
    December 31,2007
    
    
    2006Amount
    
    
    %
    
    
    Amount
    
    
    %U.S. Government agencies
    
    $
    6,998
    
    
    
    14.85
    %
    
    $
    39,201
    
    
    
    42.98
    %State and municipals:Taxable
    
    
    5,195
    
    
    
    11.03
    
    
    
    11,912
    
    
    
    13.06Tax-exempt
    
    
    31,032
    
    
    
    65.86
    
    
    
    30,956
    
    
    
    33.94Mortgage-backed securities
    
    
    2,788
    
    
    
    5.92
    
    
    
    7,760
    
    
    
    8.51Equity securities:Restricted
    
    
    847
    
    
    
    1.80
    
    
    
    1,206
    
    
    
    1.32Other
    
    
    257
    
    
    
    0.54
    
    
    
    178
    
    
    
    0.19Total
    
    $
    47,117
    
    
    
    100.00
    %
    
    $
    91,213
    
    
    
    100.00
    %
    13




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Maturity distribution of available-for-sale portfolio
 After one
    
    
    After fiveWithin
    
    
    but within
    
    
    but within
    
    
    Afterone year
    
    
    five years
    
    
    ten years
    
    
    ten years
    
    
    TotalSeptember 30, 2007
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    YieldAmortized cost:U.S. Government agencies
    
    $
    7,000
    
    
    
    4.58
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    7,000
    
    
    
    4.58
    %State and municipals:Taxable
    
    
    5,255
    
    
    
    2.77
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,255
    
    
    
    2.77Tax-exempt
    
    
    65
    
    
    
    5.36
    
    
    $
    6,309
    
    
    
    7.66
    %
    
    $
    19,778
    
    
    
    7.54
    %
    
    $
    3,468
    
    
    
    7.47
    %
    
    
    29,620
    
    
    
    7.55Mortgage-backed securities
    
    
    1,684
    
    
    
    4.59
    
    
    
    1,041
    
    
    
    4.86
    
    
    
    68
    
    
    
    6.43
    
    
    
    
    
    
    
    
    
    
    
    2,793
    
    
    
    4.74Equity securities:Restricted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    847
    
    
    
    6.30
    
    
    
    847
    
    
    
    6.30Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    138
    
    
    
    3.94
    
    
    
    138
    
    
    
    3.94Total
    
    $
    14,004
    
    
    
    3.91
    %
    
    $
    7,350
    
    
    
    7.26
    %
    
    $
    19,846
    
    
    
    7.54
    %
    
    $
    4,453
    
    
    
    7.14
    %
    
    $
    45,653
    
    
    
    6.34
    %Fair value:U.S. Government agencies
    
    $
    6,998
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    6,998State and municipals:Taxable
    
    
    5,195
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,195Tax-exempt
    
    
    65
    
    
    
    
    
    
    $
    6,509
    
    
    
    
    
    
    $
    20,768
    
    
    
    
    
    
    $
    3,690
    
    
    
    
    
    
    
    31,032Mortgage-backed securities
    
    
    1,680
    
    
    
    
    
    
    
    1,039
    
    
    
    
    
    
    
    69
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,788Equity securities:Restricted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    847
    
    
    
    
    
    
    
    847Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    257
    
    
    
    
    
    
    
    257Total
    
    $
    13,938
    
    
    
    
    
    
    $
    7,548
    
    
    
    
    
    
    $
    20,837
    
    
    
    
    
    
    $
    4,794
    
    
    
    
    
    
    $
    47,117
 14




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
 Loan Portfolio:
   15




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    16




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Distribution of loan portfolio
 September 30,
    
    
    December 31,2007
    
    
    2006Amount
    
    
    %
    
    
    Amount
    
    
    %Commercial, financial and others
    
    $
    191,517
    
    
    
    40.70
    %
    
    $
    143,792
    
    
    
    35.24
    %Real estate:Construction
    
    
    8,559
    
    
    
    1.82
    
    
    
    5,513
    
    
    
    1.35Mortgage
    
    
    233,752
    
    
    
    49.67
    
    
    
    225,703
    
    
    
    55.31Consumer, net
    
    
    34,681
    
    
    
    7.37
    
    
    
    31,546
    
    
    
    7.73Lease financing, net
    
    
    2,097
    
    
    
    0.44
    
    
    
    1,520
    
    
    
    0.37Loans, net of unearned income
    
    
    470,606
    
    
    
    100.00
    %
    
    
    408,074
    
    
    
    100.00
    %Less: allowance for loan losses
    
    
    4,454
    
    
    
    
    
    
    
    4,435Net loans
    
    $
    466,152
    
    
    
    
    
    
    $
    403,639
   Maturity distribution and interest sensitivity of loan portfolio
 After oneWithin
    
    
    but within
    
    
    AfterSeptember 30, 2007
    
    one year
    
    
    five years
    
    
    five years
    
    
    TotalMaturity schedule:Commercial, financial and others
    
    $
    93,688
    
    
    $
    47,928
    
    
    $
    49,901
    
    
    $
    191,517Real estate:Construction
    
    
    8,559
    
    
    
    
    
    
    
    
    
    
    
    8,559Mortgage
    
    
    26,190
    
    
    
    85,962
    
    
    
    121,600
    
    
    
    233,752Consumer, net
    
    
    4,955
    
    
    
    22,823
    
    
    
    6,903
    
    
    
    34,681Lease financing, net
    
    
    420
    
    
    
    1,677
    
    
    
    
    
    
    
    2,097Total
    
    $
    133,812
    
    
    $
    158,390
    
    
    $
    178,404
    
    
    $
    470,606Predetermined interest rates
    
    $
    65,437
    
    
    $
    86,897
    
    
    $
    77,780
    
    
    $
    230,114Floating- or adjustable-interest rates
    
    
    68,375
    
    
    
    71,493
    
    
    
    100,624
    
    
    
    240,492Total
    
    $
    133,812
    
    
    $
    158,390
    
    
    $
    178,404
    
    
    $
    470,606
 17




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
       18




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Distribution of off-balance sheet commitments
 September 30,
    
    
    December 31,2007
    
    
    2006Commitments to extend credit
    
    $
    88,830
    
    
    $
    66,192Unused portions of home equity and credit card lines
    
    
    13,171
    
    
    
    15,777Commercial letters of credit
    
    
    16,080
    
    
    
    21,405Letters of credit for municipal deposits
    
    
    47,750Total
    
    $
    165,831
    
    
    $
    103,374
  Asset Quality:
  September 30,
    
    2007
    
    2006United States
    
    
    4.7
    %
    
    
    4.6
    %Pennsylvania
    
    
    4.5
    
    
    
    4.7Lackawanna county
    
    
    5.0
    
    
    
    5.0Luzerne county
    
    
    5.2
    
    
    
    5.5Monroe county
    
    
    5.0
    
    
    
    5.3Susquehanna county
    
    
    4.5
    
    
    
    5.0Wayne county
    
    
    4.5
    
    
    
    4.4Wyoming county
    
    
    5.1
    %
    
    
    5.3
    %
  19




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
      20




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Distribution of nonperforming assets
 September 30,
    
    
    December 31,2007
    
    
    2006Nonaccrual loans:Commercial, financial and others
    
    $
    2,725
    
    
    $
    1,060Real estate:ConstructionMortgage
    
    
    2,883
    
    
    
    856Consumer, net
    
    
    76
    
    
    
    94Lease financing, netTotal nonaccrual loans
    
    
    5,684
    
    
    
    2,010Accruing loans past due 90 days or more:Commercial, financial and others
    
    
    1,248
    
    
    
    13Real estate:ConstructionMortgage
    
    
    511
    
    
    
    217Consumer, net
    
    
    46
    
    
    
    60Lease financing, net
    
    
    18
    
    
    
    2Total accruing loans past due 90 days or more
    
    
    1,823
    
    
    
    292Total nonperforming loans
    
    
    7,507
    
    
    
    2,302Foreclosed assets
    
    
    346
    
    
    
    352Total nonperforming assets
    
    $
    7,853
    
    
    $
    2,654Ratios:Nonperforming loans as a percentage of loans, net
    
    
    1.60
    %
    
    
    0.56
    %Nonperforming assets as a percentage of loans, net and
and foreclosed assets
    
    
    1.67
    %
    
    
    0.65
    %
  21




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    Distribution of impaired loans
 September 30,
    
    
    December 31,2007
    
    
    2006Nonaccrual loans:Commercial, financial and others
    
    $
    2,725
    
    
    $
    1,060Real estate:ConstructionMortgage
    
    
    2,883
    
    
    
    856Consumer, net
    
    
    76
    
    
    
    94Lease financing, netTotal nonaccrual loans
    
    
    5,684
    
    
    
    2,010Accruing loans:Commercial, financial and others
    
    
    1,714
    
    
    
    1,312Real estate:ConstructionMortgage
    
    
    7,115
    
    
    
    6,334Consumer, net
    
    
    2
    
    
    
    44Lease financing, netTotal accruing loans
    
    
    8,831
    
    
    
    7,690Total impaired loans
    
    $
    14,515
    
    
    $
    9,700Ratio:Impaired loans as a percentage of loans, net
    
    
    3.08
    %
    
    
    2.38
    %
 22




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   September 30,
    
    
    December 31,2007
    
    
    2006Impaired loans:With a related allowance
    
    $
    7,425
    
    
    $
    8,017With no related allowance
    
    
    7,090
    
    
    
    1,683Total
    
    $
    14,515
    
    
    $
    9,700
  September 30,2007Balance at January 1
    
    $
    2,410Provision for loan losses
    
    
    1,142Loans charged-off
    
    
    206Loans recovered
    
    
    21Balance at period-end
    
    $
    3,367
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Gross interest due under terms
    
    $
    238
    
    
    $
    187
    
    
    $
    649
    
    
    $
    441Interest income recognized
    
    
    241
    
    
    
    218
    
    
    
    616
    
    
    
    460Interest income not recognized (recognized in excess of due)
    
    $
    (3
    )
    
    $
    (31
    )
    
    $
    33
    
    
    $
    (19
    )Interest income recognized (cash-basis)
    
    $
    241
    
    
    $
    218
    
    
    $
    616
    
    
    $
    460Average recorded investment in impaired loans
    
    $
    12,820
    
    
    $
    9,501
    
    
    $
    11,640
    
    
    $
    7,552
 23




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Allocation of the allowance for loan losses
 September 30,
    
    
    December 31,2007
    
    
    2006Category
    
    
    
    
    
    
    Categoryas a
    
    
    
    
    
    
    as a% of
    
    
    
    
    
    
    % ofAmount
    
    
    loans
    
    
    Amount
    
    
    loansAllocated allowance:Specific:Commercial, financial and others
    
    $
    2,243
    
    
    
    0.94
    %
    
    $
    1,000
    
    
    
    0.58
    %Real estate:ConstructionMortgage
    
    
    1,045
    
    
    
    2.12
    
    
    
    1,296
    
    
    
    1.76Consumer, net
    
    
    79
    
    
    
    0.02
    
    
    
    114
    
    
    
    0.03Lease financing, netTotal specific
    
    
    3,367
    
    
    
    3.08
    
    
    
    2,410
    
    
    
    2.37Formula:Commercial, financial and others
    
    
    195
    
    
    
    39.76
    
    
    
    120
    
    
    
    34.66Real estate:Construction
    
    
    
    
    
    
    1.82
    
    
    
    
    
    
    
    1.35Mortgage
    
    
    277
    
    
    
    47.55
    
    
    
    520
    
    
    
    53.55Consumer, net
    
    
    353
    
    
    
    7.35
    
    
    
    374
    
    
    
    7.70Lease financing, net
    
    
    
    
    
    
    0.44
    
    
    
    
    
    
    
    0.37Total formula
    
    
    825
    
    
    
    96.92
    
    
    
    1,014
    
    
    
    97.63Total allocated allowance
    
    
    4,192
    
    
    
    100.00
    %
    
    
    3,424
    
    
    
    100.00
    %Unallocated allowance
    
    
    262
    
    
    
    
    
    
    
    1,011Total allowance for loan losses
    
    $
    4,454
    
    
    
    
    
    
    $
    4,435
  24




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    Reconciliation of allowance for loan losses
 September 30,2007Allowance for loan losses at beginning of period
    
    $
    4,435Loans charged-off:Commercial, financial and others
    
    
    171Real estate:ConstructionMortgage
    
    
    37Consumer, net
    
    
    153Lease financing, netTotal
    
    
    361Loans recovered:Commercial, financial and others
    
    
    26Real estate:ConstructionMortgage
    
    
    2Consumer, net
    
    
    52Lease financing, netTotal
    
    
    80Net loans charged-off
    
    
    281Provision charged to operating expense
    
    
    300Allowance for loan losses at end of period
    
    $
    4,454Ratios:Net loans charged-off as a percentage of average loans outstanding
    
    
    0.08
    %Allowance for loan losses as a percentage of period end loans
    
    
    0.95
    %
 25




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Deposits:
  K
 26




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Deposit distribution
 September 30,
    
    
    September 30,2007
    
    
    2006Average
    
    
    Average
    
    
    Average
    
    
    AverageBalance
    
    
    Rate
    
    
    Balance
    
    
    RateInterest-bearing:Money market accounts
    
    $
    26,634
    
    
    
    2.90
    %
    
    $
    30,091
    
    
    
    2.44
    %NOW accounts
    
    
    64,312
    
    
    
    3.06
    
    
    
    59,172
    
    
    
    2.28Savings accounts
    
    
    102,573
    
    
    
    1.46
    
    
    
    111,997
    
    
    
    1.32Time deposits less than $100
    
    
    179,431
    
    
    
    4.40
    
    
    
    187,658
    
    
    
    3.98Time deposits $100 or more
    
    
    41,617
    
    
    
    4.79
    
    
    
    23,823
    
    
    
    4.29Total interest-bearing
    
    
    414,567
    
    
    
    3.41
    %
    
    
    412,741
    
    
    
    2.92
    %Noninterest-bearing
    
    
    75,409
    
    
    
    
    
    
    
    70,981Total deposits
    
    $
    489,976
    
    
    
    
    
    
    $
    483,722
   27




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Maturity distribution of time deposits of $100 or more
 September 30,
    
    
    December 31,2007
    
    
    2006Within three months
    
    $
    16,481
    
    
    $
    5,307After three months but within six months
    
    
    7,880
    
    
    
    6,923After six months but within twelve months
    
    
    6,434
    
    
    
    13,136After twelve months
    
    
    11,263
    
    
    
    10,554Total
    
    $
    42,058
    
    
    $
    35,920
 Market Risk Sensitivity:
  28




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    29




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Interest rate sensitivity
 Due after
    
    
    Due afterthree months
    
    
    one yearDue within
    
    
    but within
    
    
    but within
    
    
    Due afterSeptember 30, 2007
    
    three months
    
    
    twelve months
    
    
    five years
    
    
    five years
    
    
    TotalRate-sensitive assets:Investment securities
    
    $
    7,775
    
    
    $
    6,163
    
    
    $
    7,548
    
    
    $
    25,631
    
    
    $
    47,117Loans held for sale, net
    
    
    1,764
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,764Loans, net of unearned income
    
    
    153,488
    
    
    
    60,470
    
    
    
    175,475
    
    
    
    81,173
    
    
    
    470,606Federal funds sold
    
    
    13,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,000Total
    
    $
    176,027
    
    
    $
    66,633
    
    
    $
    183,023
    
    
    $
    106,804
    
    
    $
    532,487Rate-sensitive liabilities:Money market accounts
    
    $
    22,018
    
    
    $
    7,021
    
    
    
    
    
    
    
    
    
    
    $
    29,039NOW accounts
    
    
    63,821
    
    
    
    13,533
    
    
    
    
    
    
    
    
    
    
    
    77,354Savings accounts
    
    
    17,869
    
    

    
    


    
$
    84,894
    
    
    
    
    
    
    
    102,763Time deposits less than $100
    
    
    48,351
    
    
    
    59,986
    
    
    
    57,046
    
    
    $
    8,707
    
    
    
    174,090Time deposits $100 or more
    
    
    16,481
    
    
    
    14,314
    
    
    
    11,263
    
    
    
    
    
    
    
    42,058Total
    
    $
    168,540
    
    
    $
    94,854
    
    
    $
    153,203
    
    
    $
    8,707
    
    
    $
    425,304Rate sensitivity gap:Period
    
    $
    7,487
    
    
    $
    (28,221
    )
    
    $
    29,820
    
    
    $
    98,097Cumulative
    
    $
    7,487
    
    
    $
    (20,734
    )
    
    $
    9,086
    
    
    $
    107,183
    
    
    $
    107,183RSA/RSL ratio:Period
    
    
    1.04
    
    
    
    0.70
    
    
    
    1.19
    
    
    
    12.27Cumulative
    
    
    1.04
    
    
    
    0.92
    
    
    
    1.02
    
    
    
    1.25
    
    
    
    1.25
  30




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
     31




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Liquidity:
  
    
    Funding new and existing loan commitments;
    
    Payment of deposits on demand or at their contractual maturity;
    
    Repayment of borrowings as they mature;
    
    Payment of lease obligations; and
    
    Payment of operating expenses.
   32




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
      33




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Capital Adequacy:
     34




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Regulatory capital
 Minimum to be WellCapitalized underMinimum for Capital
    
    Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action ProvisionsSeptember 30,
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006Basis for ratios:Tier I capital to risk-weighted assets: Consolidated
    
    $
    51,729
    
    
    $
    51,797
    
    
    $
    18,970
    
    
    $
    17,584Community Bank
    
    
    48,314
    
    
    
    49,865
    
    
    
    18,883
    
    
    
    17,556
    
    
    $
    28,324
    
    
    $
    26,335Total capital to risk-weighted assets:Consolidated
    
    
    56,183
    
    
    
    56,250
    
    
    
    37,940
    
    
    
    35,169Community Bank
    
    
    52,768
    
    
    
    54,318
    
    
    
    37,766
    
    
    
    35,113
    
    
    
    47,207
    
    
    
    43,891Tier I
capital to total average assets less goodwill:Consolidated
    
    
    51,729
    
    
    
    51,797
    
    
    
    22,146
    
    
    
    21,648Community Bank
    
    
    48,314
    
    
    
    49,865
    
    
    $
    22,080
    
    
    $
    21,611
    
    
    $
    27,600
    
    
    $
    27,014Risk-weighted assets:Consolidated
    
    
    459,904
    
    
    
    423,738Community Bank
    
    
    457,719
    
    
    
    423,040Risk-weighted off-balance sheet items:Consolidated
    
    
    14,351
    
    
    
    15,869Community Bank
    
    
    14,351
    
    
    
    15,869Average assets for Leverage ratio:Consolidated
    
    
    553,662
    
    
    
    541,211Community Bank
    
    $
    551,995
    
    
    $
    540,272Ratios:Tier I capital as a percentage of risk-
weighted assets and off-balance sheet
items:Consolidated
    
    
    10.9
    %
    
    
    11.8
    %
    
    
    4.0
    %
    
    
    4.0
    %Community Bank
    
    
    10.2
    
    
    
    11.4
    
    
    
    4.0
    
    
    
    4.0
    
    
    
    6.0
    %
    
    
    6.0
    %Total of Tier I and Tier II capital as a
percentage of risk-weighted assets and
off-balance sheet items:Consolidated
    
    
    11.9
    
    
    
    12.8
    
    
    
    8.0
    
    
    
    8.0Community Bank
    
    
    11.2
    
    
    
    12.4
    
    
    
    8.0
    
    
    
    8.0
    
    
    
    10.0
    
    
    
    10.0Tier I
capital as a percentage of total average assets less intangible assets:Consolidated
    
    
    9.3
    
    
    
    9.6
    
    
    
    4.0
    
    
    
    4.0Community Bank
    
    
    8.8
    %
    
    
    9.2
    %
    
    
    4.0
    %
    
    
    4.0
    %
    
    
    5.0
    %
    
    
    5.0
    %
 35




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  
    
    A Tier I risk-based ratio of at least 6.0 percent;
    
    A total risk-based ratio of at least 10.0 percent; and
    
    A Leverage ratio of at least 5.0 percent.
  Review of Financial Performance:
   Net Interest Income:
  36




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
 
    
    Variations in the volume, rate and composition of earning assets and
interest-bearing liabilities;
    
    Changes in general market rates; and
    
    The level of nonperforming assets.
  37




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Net interest income changes due to rate and volume
 Three Months Ended

    
    
    Nine Months EndedSeptember 30,
       
    
    September 30,2007 vs. 2006
    
    
    2007 vs. 2006Increase (decrease)
    
    
    Increase (decrease)attributable to
    
    
    attributable toTotal
    
    
    
    
    
    
    
    
    
    
    TotalChange
    
    
    Rate
    
    
    Volume
    
    
    Change
    
    
    Rate
    
    
    VolumeInterest income:Loans:Taxable
    
    $
    675
    
    
    $
    60
    
    
    $
    615
    
    
    $
    2,657
    
    
    $
    917
    
    
    $
    1,740Tax-exempt
    
    
    158
    
    
    
    61
    
    
    
    97
    
    
    
    111
    
    
    
    125
    
    
    
    (14
    )Investments:Taxable
    
    
    (207
    )
    
    
    (9
    )
    
    
    (198
    )
    
    
    (303
    )
    
    
    119
    
    
    
    (422
    )Tax-exempt
    
    
    2
    
    
    
    4
    
    
    
    (2
    )
    
    
    (20
    )
    
    
    37
    
    
    
    (57
    )Federal funds sold
    
    
    (68
    )
    
    
    6
    
    
    
    (74
    )
    
    
    (134
    )
    
    
    (10
    )
    
    
    (124
    )Total interest income
    
    
    560
    
    
    
    122
    
    
    
    438
    
    
    
    2,311
    
    
    
    1,188
    
    
    
    1,123Interest expense:Money market accounts
    
    
    (3
    )
    
    
    17
    
    
    
    (20
    )
    
    
    29
    
    
    
    97
    
    
    
    (68
    )NOW accounts
    
    
    88
    
    
    
    52
    
    
    
    36
    
    
    
    463
    
    
    
    369
    
    
    
    94Savings accounts
    
    
    17
    
    
    
    26
    
    
    
    (9
    )
    
    
    11
    
    
    
    108
    
    
    
    (97
    )Time deposits less than $100
    
    
    44
    
    
    
    132
    
    
    
    (88
    )
    
    
    329
    
    
    
    582
    
    
    
    (253
    )Time deposits $100 or more
    
    
    196
    
    
    
    13
    
    
    
    183
    
    
    
    726
    
    
    
    147
    
    
    
    579Short-term borrowings
    
    
    28
    
    
    
    
    
    
    
    28
    
    
    
    187
    
    
    
    21
    
    
    
    166Total interest expense
    
    
    370
    
    
    
    240
    
    
    
    130
    
    
    
    1,745
    
    
    
    1,324
    
    
    
    421Net interest income
    
    $
    190
    
    
    $
    (118
    )
    
    $
    308
    
    
    $
    566
    
    
    $
    (136
    )
    
    $
    702
   38




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
     39




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    40




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Summary of net interest income
 September 30, 2007
    
    
    September 30, 2006Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Income/
    
    
    Interest
    
    
    Average
    
    
    Income/
    
    
    InterestBalance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    RateASSETS:Earning assets:Loans:Taxable
    
    $
    414,972
    
    
    $
    22,847
    
    
    
    7.36
    %
    
    $
    382,895
    
    
    $
    20,190
    
    
    
    7.05
    %Tax-exempt
    
    
    39,998
    
    
    
    1,972
    
    
    
    6.59
    
    
    
    40,296
    
    
    
    1,861
    
    
    
    6.17Investments:Taxable
    
    
    43,344
    
    
    
    1,343
    
    
    
    4.14
    
    
    
    57,186
    
    
    
    1,646
    
    
    
    3.85Tax-exempt
    
    
    29,712
    
    
    
    1,683
    
    
    
    7.57
    
    
    
    30,724
    
    
    
    1,703
    
    
    
    7.41Federal funds sold
    
    
    2,037
    
    
    
    75
    
    
    
    4.92
    
    
    
    5,404
    
    
    
    209
    
    
    
    5.15Total earning assets
    
    
    530,063
    
    
    
    27,920
    
    
    
    7.04
    %
    
    
    516,505
    
    
    
    25,609
    
    
    
    6.63
    %Less: allowance for loan losses
    
    
    4,599
    
    
    
    
    
    
    
    
    
    
    
    4,300Other assets
    
    
    28,606
    
    
    
    
    
    
    
    
    
    
    
    29,424Total assets
    
    $
    554,070
    
    
    
    
    
    
    
    
    
    
    $
    541,629LIABILITIES AND STOCKHOLDERS EQUITY:Interest-bearing liabilities:Money market accounts
    
    $
    26,634
    
    
    
    578
    
    
    
    2.90
    %
    
    $
    30,091
    
    
    
    549
    
    
    
    2.44
    %NOW accounts
    
    
    64,312
    
    
    
    1,471
    
    
    
    3.06
    
    
    
    59,172
    
    
    
    1,008
    
    
    
    2.28Savings accounts
    
    
    102,573
    
    
    
    1,117
    
    
    
    1.46
    
    
    
    111,997
    
    
    
    1,106
    
    
    
    1.32Time deposits less than $100
    
    
    179,431
    
    
    
    5,909
    
    
    
    4.40
    
    
    
    187,658
    
    
    
    5,580
    
    
    
    3.98Time deposits $100 or more
    
    
    41,617
    
    
    
    1,491
    
    
    
    4.79
    
    
    
    23,823
    
    
    
    765
    
    
    
    4.29Short-term borrowings
    
    
    8,144
    
    
    
    331
    
    
    
    5.43
    
    
    
    4,017
    
    
    
    144
    
    
    
    4.79Total interest-bearing liabilities
    
    
    422,711
    
    
    
    10,897
    
    
    
    3.45
    %
    
    
    416,758
    
    
    
    9,152
    
    
    
    2.94
    %Noninterest-bearing deposits
    
    
    75,409
    
    
    
    
    
    
    
    
    
    
    
    70,981Other liabilities
    
    
    2,788
    
    
    
    
    
    
    
    
    
    
    
    2,403Stockholders equity
    
    
    53,162
    
    
    
    
    
    
    
    
    
    
    
    51,487Total liabilities and stockholders equity
    
    $
    554,070
    
    
    
    
    
    
    
    
    
    
    $
    541,629Net interest/income spread
    
    
    
    
    
    $
    17,023
    
    
    
    3.59
    %
    
    
    
    
    
    $
    16,457
    
    
    
    3.69
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    4.29
    %
    
    
    
    
    
    
    
    
    
    
    4.26
    %Tax equivalent adjustments:Loans
    
    
    
    
    
    $
    670
    
    
    
    
    
    
    
    


$
    633Investments
    
    
    
    
    
    
    572
    
    
    
    
    
    
    

    
    
    
    

579Total adjustments
    
    
    
    
    
    $
    1,242
    
    
    
    
    
    
    
    
    

$
    1,212
 
 Note:
    
    Average balances were calculated using average daily balances. Average balances for loans
include nonaccrual loans. Available-for-sale securities, included in investment securities,
are stated at amortized cost with the related average unrealized holding gains of $1,324 and
$1,153 for the nine months ended September 30, 2007 and 2006 included in other assets.
Tax-equivalent adjustments were calculated using the prevailing statutory tax rate of 34.0
percent. 41




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
 Provision for Loan Losses:
  Noninterest Income:
  Noninterest Expense:
  42




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Noninterest expenses
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    

2006
    
    

2007
    
    

2006Salaries and employee benefits expense:Salaries and payroll taxes
    
    $
    1,606
    
    
    $
    1,524
    
    
    $
    4,617
    
    
    $
    4,497Employee benefits
    
    
    452
    
    
    
    379
    
    
    
    1,279
    
    
    
    1,114Salaries and employee benefits expense
    
    
    2,058
    
    
    
    1,903
    
    
    
    5,896
    
    
    
    5,611Net occupancy and equipment expense:Net occupancy expense
    
    
    264
    
    
    
    267
    
    
    
    877
    
    
    
    881Equipment expense
    
    
    294
    
    
    
    304
    
    
    
    918
    
    
    
    891Net occupancy and equipment expense
    
    
    558
    
    
    
    571
    
    
    
    1,795
    
    
    
    1,772Other expenses:Marketing expense
    
    
    243
    
    
    
    180
    
    
    
    534
    
    
    
    445Other taxes
    
    
    75
    
    
    
    92
    
    
    
    351
    
    
    
    346Stationery and supplies
    
    
    82
    
    
    
    81
    
    
    
    308
    
    
    
    246Contractual services
    
    
    451
    
    
    
    472
    
    
    
    1,386
    
    
    
    1,312Insurance including FDIC assessment
    
    
    61
    
    
    
    78
    
    
    
    177
    
    
    
    214Other
    
    
    393
    
    
    
    370
    
    
    
    1,042
    
    
    
    1,076Other expenses
    
    
    1,305
    
    
    
    1,273
    
    
    
    3,798
    
    
    
    3,639Total noninterest expense
    
    $
    3,921
    
    
    $
    3,747
    
    
    $
    11,489
    
    
    $
    11,022
   43




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  K
    Income Taxes:
  44




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   45




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##### 



Comm Bancorp, Inc.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
 
 Disclosure of Quantitative and Qualitative Disclosure about Market Risk:
  46




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##### 



Comm
Bancorp, Inc.
 
 CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures:
  Internal Control Over Financial Reporting:
  47




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##### 



Comm Bancorp, Inc.
OTHER INFORMATION
 
 Part II. Other Information
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2.
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
  Total Number of
    
    Maximum NumberShares Purchased
    
    of Shares that mayTotal Number
    
    Average
    
    as Part of Publicly
    
    yet be Purchasedof Shares
    
    Price Paid
    
    Announced Plans
    
    Under the PlansMonth Ending
    
    Purchased(1)
    
    Per Share
    
    or Programs
    
    or ProgramsJuly 31, 2007
    
    
    600
    
    
    
    48.17
    
    
    
    600
    

    
    33,574August 31, 2007
    
    
    900
    
    
    
    47.80
    
    
    
    900
    

    
    32,674September 30, 2007
    
    
    
    
    
    
    
    
    
    
    
    

    
    32,674Total
    
    
    5,700
    
    
    $
    47.98
    
    
    
    5,700
 
 (1)
    
    All purchases were made pursuant to resolutions given by our Board of Directors, which
authorize Management to repurchase shares of our common stock from time to time in unsolicited
open market purchases through a licensed broker-dealer and in accordance with terms, conditions and
restrictions contained in Rule 10b-18 under the Exchange Act. 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  48




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##### 



Comm Bancorp, Inc.
OTHER INFORMATION (CONTINUED)
 
 Item 5. Other Information
  
 Item 6. Exhibits
 31(i)
    
    CEO and CFO certifications pursuant to Rule 13a-14(a)/15d-14(a).32
    
    CEO and CFO certifications pursuant to Section 1350.
 49




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##### 



COMM BANCORP, INC.
FORM 10-Q
 
 SIGNATURE PAGE
  Registrant, Comm Bancorp, Inc.Date: November 8, 2007
    
    /s/ William F. Farber, Sr.William F. Farber, Sr.President and Chief Executive OfficerChairman of the Board/Director(Principal Executive Officer)Date: November 8, 2007
    
    /s/ Scott A. SeasockScott A. SeasockExecutive Vice President andChief Financial Officer(Principal Financial Officer)Date: November 8, 2007
    
    /s/ Stephanie A. Westington, CPAStephanie A. Westington, CPAVice President of Finance(Principal Accounting Officer)
 50




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##### 



EXHIBIT INDEX
 Item Number
    
    Description
    
    Page31(i)
    
    CEO and CFO Certifications Pursuant
to Rule 13a-14(a)/15d-14(a).
    
    
    5232
    
    CEO and CFO Certifications Pursuant
to Section 1350.
    
    
    56
 51