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, 2008
 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.
 
 Pennsylvania
    
    23-2242292(State or other jurisdiction of incorporation 
or organization)
    
    (I.R.S. Employer Identification Number)
 125 North State Street, Clarks Summit, PA
    
    18411(Address of principal executive offices)
    
    (Zip Code)
 (570) 586-0377
 
  
  þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company þ
 o þ




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##### 



COMM BANCORP, INC.
FORM 10-Q
September 30, 2008
 INDEX
 CONTENTS
    
    Page No.Part I. FINANCIAL INFORMATION:Item 1. Financial StatementsConsolidated Statements of Income and Comprehensive Income
for the Three Months and Nine Months Ended September 30,
2008 and 2007
    
    
    3Consolidated Balance Sheets  September 30, 2008 and
December 31, 2007
    
    
    4Consolidated Statements of Changes in Stockholders Equity
for the Nine Months Ended September 30, 2008 and 2007
    
    
    5Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 2008 and 2007
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    10Item 3. Quantitative and Qualitative Disclosures About Market
Risk
    
    
    *Item 4. Controls and Procedures
    
    
    46Item 4T. Controls and Procedures
    
    
    *PART II. OTHER INFORMATION:Item 1. Legal Proceedings
    
    
    47Item 1A. Risk Factors
    
    
    *Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds
    
    
    47Item 3. Defaults Upon Senior Securities
    
    
    47Item 4. Submission of Matters to a Vote of Security Holders
    
    
    47Item 5. Other Information
    
    
    47Item 6. Exhibits
    
    
    47Signatures
    
    
    48Exhibit Index
    
    
    49
 
   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 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Interest income:Interest and fees on loans:Taxable
    
    $
    7,137
    
    
    $
    7,808
    
    
    $
    21,979
    
    
    $
    22,847Tax-exempt
    
    
    559
    
    
    
    457
    
    
    
    1,694
    
    
    
    1,302Interest and dividends on investment securities available-for-sale:Taxable
    
    
    52
    
    
    
    265
    
    
    
    133
    
    
    
    1,279Tax-exempt
    
    
    351
    
    
    
    370
    
    
    
    1,072
    
    
    
    1,111Dividends
    
    
    12
    
    
    
    32
    
    
    
    39
    
    
    
    64Interest on federal funds sold
    
    
    133
    
    
    
    68
    
    
    
    145
    
    
    
    75Total interest income
    
    
    8,244
    
    
    
    9,000
    
    
    
    25,062
    
    
    
    26,678Interest expense:Interest on deposits
    
    
    3,017
    
    
    
    3,539
    
    
    
    9,269
    
    
    
    10,566Interest on short-term borrowings
    
    
    
    
    
    
    28
    
    
    
    178
    
    
    
    331Total interest expense
    
    
    3,017
    
    
    
    3,567
    
    
    
    9,447
    
    
    
    10,897Net interest income
    
    
    5,227
    
    
    
    5,433
    
    
    
    15,615
    
    
    
    15,781Provision for loan losses
    
    
    400
    
    
    
    75
    
    
    
    1,013
    
    
    
    300Net interest income after provision for loan losses
    
    
    4,827
    
    
    
    5,358
    
    
    
    14,602
    
    
    
    15,481Noninterest income:Service charges, fees and commissions
    
    
    810
    
    
    
    791
    
    
    
    2,489
    
    
    
    2,380Mortgage banking income
    
    
    120
    
    
    
    98
    
    
    
    444
    
    
    
    271Total noninterest income
    
    
    930
    
    
    
    889
    
    
    
    2,933
    
    
    
    2,651Noninterest expense:Salaries and employee benefits expense
    
    
    2,169
    
    
    
    2,058
    
    
    
    6,414
    
    
    
    5,896Net occupancy and equipment expense
    
    
    583
    
    
    
    558
    
    
    
    1,866
    
    
    
    1,795Other expenses
    
    
    1,331
    
    
    
    1,305
    
    
    
    3,834
    
    
    
    3,798Total noninterest expense
    
    
    4,083
    
    
    
    3,921
    
    
    
    12,114
    
    
    
    11,489Income before income taxes
    
    
    1,674
    
    
    
    2,326
    
    
    
    5,421
    
    
    
    6,643Provision for income tax expense
    
    
    199
    
    
    
    511
    
    
    
    721
    
    
    
    1,443Net income
    
    
    1,475
    
    
    
    1,815
    
    
    
    4,700
    
    
    
    5,200Other comprehensive income (loss):Unrealized gains (losses) on investment securities available-for-sale
    
    
    (686
    )
    
    
    412
    
    
    
    (1,024
    )
    
    
    14Income tax expense (benefit) related to other comprehensive income (loss)
    
    
    (233
    )
    
    
    140
    
    
    
    (348
    )
    
    
    5Other comprehensive income (loss), net of income taxes
    
    
    (453
    )
    
    
    272
    
    
    
    (676
    )
    
    
    9Comprehensive income
    
    $
    1,022
    
    
    $
    2,087
    
    
    $
    4,024
    
    
    $
    5,209Per share data:Net income
    
    $
    0.84
    
    
    $
    1.03
    
    
    $
    2.68
    
    
    $
    2.90Cash dividends declared
    
    $
    0.27
    
    
    $
    0.26
    
    
    $
    0.81
    
    
    $
    0.78Average common shares outstanding
    
    
    1,747,438
    
    
    
    1,756,800
    
    
    
    1,750,872
    
    
    
    1,794,623
  3




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##### 



Comm Bancorp, Inc.
 
 CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
 September 30,
    
    
    December 31,2008
    
    
    2007Assets:Cash and due from banks
    
    $
    11,174
    
    
    $
    13,125Federal funds sold
    
    
    8,000
    
    
    
    8,751Investment securities available-for-sale
    
    
    76,706
    
    
    
    39,407Loans held for sale, net
    
    
    1,243
    
    
    
    1,248Loans, net of unearned income
    
    
    493,948
    
    
    
    471,344Less: allowance for loan losses
    
    
    4,691
    
    
    
    4,624Net loans
    
    
    489,257
    
    
    
    466,720Premises and equipment, net
    
    
    11,345
    
    
    
    10,891Accrued interest receivable
    
    
    3,072
    
    
    
    2,634Other assets
    
    
    6,646
    
    
    
    6,211Total assets
    
    $
    607,443
    
    
    $
    548,987Liabilities:Deposits:Noninterest-bearing
    
    $
    86,417
    
    
    $
    75,232Interest-bearing
    
    
    461,176
    
    
    
    416,125Total deposits
    
    
    547,593
    
    
    
    491,357Accrued interest payable
    
    
    1,446
    
    
    
    1,308Other liabilities
    
    
    1,779
    
    
    
    1,949Total liabilities
    
    
    550,818
    
    
    
    494,614Stockholders equity:Common stock, par value $0.33, authorized 12,000,000
shares, issued and outstanding: September
30, 2008, 1,745,220 shares; December 31, 2007, 1,753,622 shares
    
    
    576
    
    
    
    579Capital surplus
    
    
    7,661
    
    
    
    7,326Retained earnings
    
    
    47,949
    
    
    
    45,353Accumulated other comprehensive income
    
    
    439
    
    
    
    1,115Total stockholders equity
    
    
    56,625
    
    
    
    54,373Total liabilities and stockholders equity
    
    $
    607,443
    
    
    $
    548,987
  4




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##### 



Comm Bancorp, Inc.
 
 CONSOLIDATED STATEMENTS 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, 2007
    
    $
    579
    
    
    $
    7,326
    
    
    $
    45,353
    
    
    $
    1,115
    
    
    $
    54,373Net income
    
    
    
    
    
    
    
    
    
    
    4,700
    
    
    
    
    
    
    
    4,700Dividends declared: $0.81 per share
    
    
    
    
    
    
    
    
    
    
    (1,416
    )
    
    
    
    
    
    
    (1,416
    )Dividend reinvestment plan: 8,644 shares issued
    
    
    3
    
    
    
    386
    
    
    
    
    
    
    
    
    
    
    
    389Repurchase and retirement: 17,046 shares
    
    
    (6
    )
    
    
    (51
    )
    
    
    (688
    )
    
    
    
    
    
    
    (745
    )Other comprehensive loss, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (676
    )
    
    
    (676
    )Balance, September 30, 2008
    
    $
    576
    
    
    $
    7,661
    
    
    $
    47,949
    
    
    $
    439
    
    
    $
    56,625Balance, 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
    )Other comprehensive income, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    9Balance, September 30, 2007
    
    $
    580
    
    
    $
    7,217
    
    
    $
    44,340
    
    
    $
    966
    
    
    $
    53,103
  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,
    
    2008
    
    
    2007Cash flows from operating activities:Net income
    
    $
    4,700
    
    
    $
    5,200Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    1,013
    
    
    
    300Depreciation and amortization of premises and equipment
    
    
    696
    
    
    
    799Net amortization (accretion) of investment securities
    
    
    76
    
    
    
    (34
    )Amortization of net loan costs
    
    
    270
    
    
    
    269Amortization of mortgage servicing rights
    
    
    165
    
    
    
    178Deferred income tax benefit
    
    
    (335
    )
    
    
    (30
    )Net gains on the sale of loans
    
    
    (345
    )
    
    
    (188
    )Gains on the sale of foreclosed assets
    
    
    (12
    )
    
    
    (37
    )Changes in:Loans held for sale, net
    
    
    350
    
    
    
    (1,004
    )Accrued interest receivable
    
    
    (438
    )
    
    
    (465
    )Other assets
    
    
    (390
    )
    
    
    (1,620
    )Accrued interest payable
    
    
    138
    
    
    
    123Other liabilities
    
    
    163
    
    
    
    192Net cash provided by operating activities
    
    
    6,051
    
    
    
    3,683Cash flows from investing activities:Proceeds from repayments of investment securities available-for-sale
    
    
    9,446
    
    
    
    55,095Purchases of investment securities available-for-sale
    
    
    (47,845
    )
    
    
    (10,951
    )Proceeds from sale of foreclosed assets
    
    
    137
    
    
    
    133Net increase in lending activities
    
    
    (23,820
    )
    
    
    (63,172
    )Purchases of premises and equipment
    
    
    (1,150
    )
    
    
    (833
    )Net cash used in investing activities
    
    
    (63,232
    )
    
    
    (19,728
    )Cash flows from financing activities:Net changes in:Money market, NOW, savings and noninterest-bearing accounts
    
    
    8,102
    
    
    
    16,769Time deposits
    
    
    48,134
    
    
    
    3,839Proceeds from issuance of common shares
    
    
    389
    
    
    
    376Repurchase and retirement of common shares
    
    
    (745
    )
    
    
    (5,206
    )Cash dividends paid
    
    
    (1,401
    )
    
    
    (1,400
    )Net cash provided by financing activities
    
    
    54,479
    
    
    
    14,378Net decrease in cash and cash equivalents
    
    
    (2,702
    )
    
    
    (1,667
    )Cash and cash equivalents at beginning of year
    
    
    21,876
    
    
    
    27,634Cash and cash equivalents at end of period
    
    $
    19,174
    
    
    $
    25,967Supplemental disclosures:Cash paid during the period for:Interest
    
    $
    9,309
    
    
    $
    10,774Income taxes
    
    
    1,320
    
    
    
    1,330Noncash items:Transfer of loans to foreclosed assets
    
    
    
    
    
    
    90Unrealized losses (gains) on investment securities available-for-sale, net
    
    $
    676
    
    
    $
    (9
    )
  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:
  3. Fair values of financial instruments:
  
 7




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##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 
    
    Level 1: Unadjusted quoted prices of identical assets or liabilities in active
markets that the entity has the ability to access as of the measurement date.
    
    Level 2: Significant other observable inputs other than Level 1 prices such as
quoted prices for similar assets or liabilities; quoted prices in markets that are not
active; or other inputs that are observable or can be corroborated by observable market
data.
    
    Level 3: Significant unobservable inputs that reflect a reporting entitys own
assumptions about the assumptions that market participants would use in pricing an asset
or liability.
  Fair Value Measurements UsingQuoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets
    
    
    Observable Inputs
    
    
    Unobservable InputsSeptember 30, 2008
    
    Amount
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Investment securities available-for-sale
    
    $
    76,706
    
    
    
    
    
    
    $
    76,706
   Fair Value Measurements UsingQuoted Prices inActive Markets for
    
    Significant Other
    
    SignificantIdentical Assets
    
    Observable Inputs
    
    Unobservable InputsSeptember 30, 2008
    
    Amount
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Assets:Impaired loans
    
    $
    13,798
    
    
    
    
    
    
    
    
    
    
    $
    13,798
  8




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##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 4. Fair value measurements:
  9




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share data)
 Forward-Looking Discussion:
      10




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Critical Accounting Policies:
      11




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##### 



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




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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:
 SM
 13




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
      Investment Portfolio:
  14




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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 31,2008
    
    
    2007Amount
    
    
    %
    
    
    Amount
    
    
    %U.S. Treasury securities
    
    $
    20,000
    
    
    
    26.07
    %State and municipals:Taxable
    
    
    
    
    
    
    
    
    
    $
    5,227
    
    
    
    13.26
    %Tax-exempt
    
    
    31,073
    
    
    
    40.51
    
    
    
    30,897
    
    
    
    78.41Mortgage-backed securities
    
    
    24,660
    
    
    
    32.15
    
    
    
    1,904
    
    
    
    4.83Equity securities:Restricted
    
    
    760
    
    
    
    0.99
    
    
    
    1,128
    
    
    
    2.86Other
    
    
    213
    
    
    
    0.28
    
    
    
    251
    
    
    
    0.64Total
    
    $
    76,706
    
    
    
    100.00
    %
    
    $
    39,407
    
    
    
    100.00
    %
     15




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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, 2008
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    YieldAmortized cost:U.S. Treasury securities
    
    $
    20,000
    
    
    
    0.01
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    20,000
    
    
    
    0.01
    %State and municipals
    
    
    1,232
    
    
    
    6.84
    
    
    $
    6,144
    
    
    
    7.81
    %
    
    $
    19,247
    
    
    
    7.46
    %
    
    $
    3,585
    
    
    
    7.07
    %
    
    
    30,208
    
    
    
    7.46Mortgage-backed securities
    
    
    2,966
    
    
    
    4.83
    
    
    
    13,082
    
    
    
    4.87
    
    
    
    8,123
    
    
    
    4.92
    
    
    
    765
    
    
    
    5.22
    
    
    
    24,936
    
    
    
    4.89Equity securities:Restricted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    760
    
    
    
    6.26
    
    
    
    760
    
    
    
    6.26Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    3.10
    
    
    
    137
    
    
    
    3.10Total
    
    $
    24,198
    
    
    
    0.95
    %
    
    $
    19,226
    
    
    
    5.81
    %
    
    $
    27,370
    
    
    
    6.71
    %
    
    $
    5,247
    
    
    
    6.58
    %
    
    $
    76,041
    
    
    
    4.64
    %Fair value:U.S. Treasury securities
    
    $
    20,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    20,000State and municipals
    
    
    1,249
    
    
    
    
    
    
    $
    6,351
    
    
    
    
    
    
    $
    19,997
    
    
    
    
    
    
    $
    3,476
    
    
    
    
    
    
    
    31,073Mortgage-backed securities
    
    
    2,939
    
    
    
    
    
    
    
    12,932
    
    
    
    
    
    
    
    8,027
    
    
    
    
    
    
    
    762
    
    
    
    
    
    
    
    24,660Equity securities:Restricted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    760
    
    
    
    
    
    
    
    760Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    213
    
    
    
    
    
    
    
    213Total
    
    $
    24,188
    
    
    
    
    
    
    $
    19,283
    
    
    
    
    
    
    $
    28,024
    
    
    
    
    
    
    $
    5,211
    
    
    
    
    
    
    $
    76,706
 Loan Portfolio:
   16




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
      17




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Distribution of loan portfolio
 September 30,
    
    
    December 31,2008
    
    
    2007Amount
    
    
    %
    
    
    Amount
    
    
    %Commercial, financial and others
    
    $
    185,705
    
    
    
    37.60
    %
    
    $
    181,417
    
    
    
    38.49
    %Real estate:Construction
    
    
    25,760
    
    
    
    5.22
    
    
    
    12,810
    
    
    
    2.72Residential
    
    
    112,594
    
    
    
    22.79
    
    
    
    110,633
    
    
    
    23.47Commercial
    
    
    133,816
    
    
    
    27.09
    
    
    
    128,852
    
    
    
    27.33Consumer, net
    
    
    33,301
    
    
    
    6.74
    
    
    
    35,149
    
    
    
    7.46Lease financing, net
    
    
    2,772
    
    
    
    0.56
    
    
    
    2,483
    
    
    
    0.53Loans, net of unearned income
    
    
    493,948
    
    
    
    100.00
    %
    
    
    471,344
    
    
    
    100.00
    %Less: allowance for loan losses
    
    
    4,691
    
    
    
    
    
    
    
    4,624Net loans
    
    $
    489,257
    
    
    
    
    
    
    $
    466,720
  18




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Maturity distribution and interest sensitivity of loan portfolio
 After oneWithin
    
    
    but within
    
    
    AfterSeptember 30, 2008
    
    one year
    
    
    five years
    
    
    five years
    
    
    TotalMaturity schedule:Commercial, financial and others
    
    $
    87,646
    
    
    $
    45,295
    
    
    $
    52,764
    
    
    $
    185,705Real estate:Construction
    
    
    10,877
    
    
    
    9,790
    
    
    
    5,093
    
    
    
    25,760Residential
    
    
    17,181
    
    
    
    48,938
    
    
    
    46,475
    
    
    
    112,594Commercial
    
    
    16,704
    
    
    
    48,122
    
    
    
    68,990
    
    
    
    133,816Consumer, net
    
    
    4,601
    
    
    
    23,264
    
    
    
    5,436
    
    
    
    33,301Lease financing, net
    
    
    554
    
    
    
    2,218
    
    
    
    
    
    
    
    2,772Total
    
    $
    137,563
    
    
    $
    177,627
    
    
    $
    178,758
    
    
    $
    493,948Predetermined interest rates
    
    $
    63,931
    
    
    $
    105,504
    
    
    $
    73,529
    
    
    $
    242,964Floating or adjustable interest rates
    
    
    73,632
    
    
    
    72,123
    
    
    
    105,229
    
    
    
    250,984Total
    
    $
    137,563
    
    
    $
    177,627
    
    
    $
    178,758
    
    
    $
    493,948
    19




---



##### 



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 31,2008
    
    
    2007Commitments to extend credit
    
    $
    71,665
    
    
    $
    80,675Unused portions of lines of credit
    
    
    19,733
    
    
    
    17,901Commercial letters of credit
    
    
    15,166
    
    
    
    19,634Total
    
    $
    106,564
    
    
    $
    118,210
  20




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
 Asset Quality:
   September 30,
    
    2008
    
    2007United States
    
    
    6.1
    %
    
    
    4.7
    %Pennsylvania
    
    
    5.7
    
    
    
    4.4Lackawanna county
    
    
    6.5
    
    
    
    4.8Luzerne county
    
    
    7.0
    
    
    
    5.1Monroe county
    
    
    6.7
    
    
    
    5.0Susquehanna county
    
    
    5.3
    
    
    
    4.3Wayne county
    
    
    5.5
    
    
    
    4.3Wyoming county
    
    
    6.4
    %
    
    
    5.2
    %
   21




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Distribution of nonperforming assets
 September 30,
    
    
    December 31,2008
    
    
    2007Nonaccrual loans:Commercial, financial and others
    
    $
    5,420
    
    
    $
    2,444Real estate:Construction
    
    
    268Residential
    
    
    1,309
    
    
    
    755Commercial
    
    
    3,476
    
    
    
    2,057Consumer, net
    
    
    74
    
    
    
    77Lease financing, netTotal nonaccrual loans
    
    
    10,547
    
    
    
    5,333Accruing loans past due 90 days or more:Commercial, financial and others
    
    
    45
    
    
    
    80Real estate:Construction
    
    
    3,549Residential
    
    
    334
    
    
    
    295Commercial
    
    
    1,329
    
    
    
    1,757Consumer, net
    
    
    118
    
    
    
    85Lease financing, net
    
    
    1
    
    
    
    17Total accruing loans past due 90 days or more
    
    
    5,376
    
    
    
    2,234Total nonperforming loans
    
    
    15,923
    
    
    
    7,567Foreclosed assets
    
    
    
    
    
    
    125Total nonperforming assets
    
    $
    15,923
    
    
    $
    7,692Ratios:Nonperforming loans as a percentage of loans, net
    
    
    3.22
    %
    
    
    1.61
    %Nonperforming assets as a percentage of loans, net and
and foreclosed assets
    
    
    3.22
    %
    
    
    1.63
    %
  22




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   23




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Distribution of impaired loans
 September 30,
    
    
    December 31,2008
    
    
    2007Nonaccrual loans:Commercial, financial and others
    
    $
    5,420
    
    
    $
    2,444Real estate:Construction
    
    
    268Residential
    
    
    1,309
    
    
    
    755Commercial
    
    
    3,476
    
    
    
    2,057Consumer, net
    
    
    74
    
    
    
    77Lease financing, netTotal nonaccrual loans
    
    
    10,547
    
    
    
    5,333Accruing loans:Commercial, financial and others
    
    
    5,579
    
    
    
    2,338Real estate:Construction
    
    
    10,019
    
    
    
    1,525Residential
    
    
    488Commercial
    
    
    7,328
    
    
    
    5,722Consumer, netLease financing, netTotal accruing loans
    
    
    23,414
    
    
    
    9,585Total impaired loans
    
    $
    33,961
    
    
    $
    14,918Ratio:Impaired loans as a percentage of loans, net
    
    
    6.88
    %
    
    
    3.16
    %
  24




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   September 30, 2008
    
    
    December 31, 2007Recorded
    
    
    Related
    
    
    Recorded
    
    
    RelatedInvestment
    
    
    Allowance
    
    
    Investment
    
    
    AllowanceImpaired loans:With a related allowance
    
    $
    16,795
    
    
    $
    2,997
    
    
    $
    7,575
    
    
    $
    3,216With no related allowance
    
    
    17,166
    
    
    
    
    
    
    
    7,343Total
    
    $
    33,961
    
    
    $
    2,997
    
    
    $
    14,918
    
    
    $
    3,216
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Gross interest due under terms
    
    $
    654
    
    
    $
    238
    
    
    $
    1,729
    
    
    $
    649Interest income recognized
    
    
    428
    
    
    
    241
    
    
    
    1,210
    
    
    
    616Interest income not recognized (recognized in
excess of due)
    
    $
    226
    
    
    $
    (3
    )
    
    $
    519
    
    
    $
    33Interest income recognized (cash-basis)
    
    $
    428
    
    
    $
    241
    
    
    $
    1,210
    
    
    $
    616Average recorded investment in impaired loans
    
    $
    33,603
    
    
    $
    12,820
    
    
    $
    31,610
    
    
    $
    11,640
  25




---



##### 



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 31,2008
    
    
    2007Category
    
    
    
    
    
    
    Categoryas a
    
    
    
    
    
    
    as a% of
    
    
    
    
    
    
    % ofAmount
    
    
    loans
    
    
    Amount
    
    
    loansAllocated allowance:Specific:Commercial, financial and others
    
    $
    2,239
    
    
    
    2.23
    %
    
    $
    2,216
    
    
    
    1.01
    %Real estate:Construction
    
    
    147
    
    
    
    2.09
    
    
    
    
    
    
    
    0.32Residential
    
    
    205
    
    
    
    0.36
    
    
    
    62
    
    
    
    0.16Commercial
    
    
    332
    
    
    
    2.19
    
    
    
    861
    
    
    
    1.65Consumer, net
    
    
    74
    
    
    
    0.01
    
    
    
    77
    
    
    
    0.02Lease financing, netTotal specific
    
    
    2,997
    
    
    
    6.88
    
    
    
    3,216
    
    
    
    3.16Formula:Commercial, financial and others
    
    
    417
    
    
    
    35.37
    
    
    
    247
    
    
    
    37.48Real estate:Construction
    
    
    38
    
    
    
    3.13
    
    
    
    11
    
    
    
    2.40Residential
    
    
    220
    
    
    
    22.43
    
    
    
    66
    
    
    
    23.31Commercial
    
    
    490
    
    
    
    24.90
    
    
    
    149
    
    
    
    25.68Consumer, net
    
    
    480
    
    
    
    6.73
    
    
    
    344
    
    
    
    7.44Lease financing, net
    
    
    7
    
    
    
    0.56
    
    
    
    
    
    
    
    0.53Total formula
    
    
    1,652
    
    
    
    93.12
    
    
    
    817
    
    
    
    96.84Total allocated allowance
    
    
    4,649
    
    
    
    100.00
    %
    
    
    4,033
    
    
    
    100.00
    %Unallocated allowance
    
    
    42
    
    
    
    
    
    
    
    591Total allowance for loan losses
    
    $
    4,691
    
    
    
    
    
    
    $
    4,624
  26




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Reconciliation of allowance for loan losses
 September 30,2008Allowance for loan losses at beginning of period
    
    $
    4,624Loans charged-off:Commercial, financial and others
    
    
    103Real estate:ConstructionResidential
    
    
    15Commercial
    
    
    749Consumer, net
    
    
    157Lease financing, net
    
    
    16Total
    
    
    1,040Loans recovered:Commercial, financial and others
    
    
    10Real estate:ConstructionResidential
    
    
    2CommercialConsumer, net
    
    
    82Lease financing, netTotal
    
    
    94Net loans charged-off
    
    
    946Provision charged to operating expense
    
    
    1,013Allowance for loan losses at end of period
    
    $
    4,691Ratios:Net loans charged-off as a percentage of average loans outstanding
    
    
    0.26
    %Allowance for loan losses as a percentage of period end loans
    
    
    0.95
    %
  27




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Deposits:
   Deposit distribution
 September 30,
    
    
    September 30,2008
    
    
    2007Average
    
    
    Average
    
    
    Average
    
    
    AverageBalance
    
    
    Rate
    
    
    Balance
    
    
    RateInterest-bearing:Money market accounts
    
    $
    24,593
    
    
    
    1.97
    %
    
    $
    26,634
    
    
    
    2.90
    %NOW accounts
    
    
    69,844
    
    
    
    2.32
    
    
    
    64,312
    
    
    
    3.06Savings accounts
    
    
    102,604
    
    
    
    1.09
    
    
    
    102,573
    
    
    
    1.46Time deposits less than $100
    
    
    170,728
    
    
    
    4.04
    
    
    
    179,431
    
    
    
    4.40Time deposits $100 or more
    
    
    53,355
    
    
    
    4.24
    
    
    
    41,617
    
    
    
    4.79Total interest-bearing
    
    
    421,124
    
    
    
    2.94
    %
    
    
    414,567
    
    
    
    3.41
    %Noninterest-bearing
    
    
    80,207
    
    
    
    
    
    
    
    75,409Total deposits
    
    $
    501,331
    
    
    
    
    
    
    $
    489,976
 28




---



##### 



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 31,2008
    
    
    2007Within three months
    
    $
    12,989
    
    
    $
    11,336After three months but within six months
    
    
    16,249
    
    
    
    8,040After six months but within twelve months
    
    
    34,442
    
    
    
    12,702After twelve months
    
    
    13,890
    
    
    
    11,148Total
    
    $
    77,570
    
    
    $
    43,226
 29




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
 Market Risk Sensitivity:
    30




---



##### 



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, 2008
    
    three months
    
    
    twelve months
    
    
    five years
    
    
    five years
    
    
    TotalRate-sensitive assets:Investment securities
    
    $
    20,665
    
    
    $
    3,523
    
    
    $
    19,283
    
    
    $
    33,235
    
    
    $
    76,706Loans held for sale, net
    
    
    1,243
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,243Loans, net of unearned income
    
    
    150,163
    
    
    
    64,735
    
    
    
    200,125
    
    
    
    78,925
    
    
    
    493,948Federal funds sold
    
    
    8,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,000Total
    
    $
    180,071
    
    
    $
    68,258
    
    
    $
    219,408
    
    
    $
    112,160
    
    
    $
    579,897Rate-sensitive liabilities:Money market accounts
    
    $
    22,092
    
    
    $
    6,949
    
    
    
    
    
    
    
    
    
    
    $
    29,041NOW accounts
    
    
    54,620
    
    
    
    16,247
    
    
    
    
    
    
    
    
    
    
    
    70,867Savings accounts
    
    
    14,329
    
    
    
    
    
    
    $
    92,323
    
    
    
    
    
    
    
    106,652Time deposits less than $100
    
    
    39,031
    
    
    
    50,438
    
    
    
    74,080
    
    
    $
    13,497
    
    
    
    177,046Time deposits $100 or more
    
    
    12,989
    
    
    
    50,691
    
    
    
    10,691
    
    
    
    3,199
    
    
    
    77,570Total
    
    $
    143,061
    
    
    $
    124,325
    
    
    $
    177,094
    
    
    $
    16,696
    
    
    $
    461,176Rate sensitivity gap:Period
    
    $
    37,010
    
    
    $
    (56,067
    )
    
    $
    42,314
    
    
    $
    95,464Cumulative
    
    $
    37,010
    
    
    $
    (19,057
    )
    
    $
    23,257
    
    
    $
    118,721
    
    
    $
    118,721RSA/RSL ratio:Period
    
    
    1.26
    
    
    
    0.55
    
    
    
    1.24
    
    
    
    6.72Cumulative
    
    
    1.26
    
    
    
    0.93
    
    
    
    1.05
    
    
    
    1.26
    
    
    
    1.26
  31




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
      32




---



##### 



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.
  33




---



##### 



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




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
 Capital Adequacy:
    35




---



##### 



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,
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007Basis for ratios:Tier I capital to risk-weighted assets:Consolidated
    
    $
    55,781
    
    
    $
    51,729
    
    
    $
    20,166
    
    
    $
    18,970Community Bank
    
    
    50,648
    
    
    
    48,314
    
    
    
    20,017
    
    
    
    18,883
    
    
    $
    30,025
    
    
    $
    28,324Total capital to risk-weighted assets:Consolidated
    
    
    60,472
    
    
    
    56,183
    
    
    
    40,333
    
    
    
    37,940Community Bank
    
    
    55,339
    
    
    
    52,768
    
    
    
    40,033
    
    
    
    37,766
    
    
    
    50,042
    
    
    
    47,207Tier I capital to total average assets
less goodwill:Consolidated
    
    
    55,781
    
    
    
    51,729
    
    
    
    22,738
    
    
    
    22,146Community Bank
    
    
    50,648
    
    
    
    48,314
    
    
    $
    22,586
    
    
    $
    22,080
    
    
    $
    28,233
    
    
    $
    27,600Risk-weighted assets:Consolidated
    
    
    490,518
    
    
    
    459,904Community Bank
    
    
    486,778
    
    
    
    457,719Risk-weighted off-balance sheet items:Consolidated
    
    
    13,639
    
    
    
    14,351Community Bank
    
    
    13,639
    
    
    
    14,351Average assets for Leverage ratio:Consolidated
    
    
    568,451
    
    
    
    553,662Community Bank
    
    $
    564,651
    
    
    $
    551,995Ratios:Tier I capital as a percentage of risk-
weighted assets and off-balance sheet
items:Consolidated
    
    
    11.1
    %
    
    
    10.9
    %
    
    
    4.0
    %
    
    
    4.0
    %Community Bank
    
    
    10.1
    
    
    
    10.2
    
    
    
    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
    
    
    12.0
    
    
    
    11.9
    
    
    
    8.0
    
    
    
    8.0Community Bank
    
    
    11.1
    
    
    
    11.2
    
    
    
    8.0
    
    
    
    8.0
    
    
    
    10.0
    
    
    
    10.0Tier I capital as a
percentage of total
average assets less intangible assets:Consolidated
    
    
    9.8
    
    
    
    9.3
    
    
    
    4.0
    
    
    
    4.0Community Bank
    
    
    9.0
    %
    
    
    8.8
    %
    
    
    4.0
    %
    
    
    4.0
    %
    
    
    5.0
    %
    
    
    5.0
    %
 36




---



##### 



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:
  
    
    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 30,2008 vs. 2007
    
    
    2008 vs. 2007Increase (decrease)
    
    
    Increase (decrease)attributable to
    
    
    attributable toTotal
    
    
    
    
    
    
    
    
    
    
    TotalChange
    
    
    Rate
    
    
    Volume
    
    
    Change
    
    
    Rate
    
    
    VolumeInterest income:Loans:Taxable
    
    $
    (671
    )
    
    $
    (982
    )
    
    $
    311
    
    
    $
    (868
    )
    
    $
    (2,300
    )
    
    $
    1,432Tax-exempt
    
    
    155
    
    
    
    (41
    )
    
    
    196
    
    
    
    595
    
    
    
    (2
    )
    
    
    597Investments:Taxable
    
    
    (233
    )
    
    
    107
    
    
    
    (340
    )
    
    
    (1,171
    )
    
    
    (83
    )
    
    
    (1,088
    )Tax-exempt
    
    
    (29
    )
    
    
    2
    
    
    
    (31
    )
    
    
    (59
    )
    
    
    (7
    )
    
    
    (52
    )Federal funds sold
    
    
    65
    
    
    
    (75
    )
    
    
    140
    
    
    
    70
    
    
    
    (79
    )
    
    
    149Total interest income
    
    
    (713
    )
    
    
    (989
    )
    
    
    276
    
    
    
    (1,433
    )
    
    
    (2,471
    )
    
    
    1,038Interest expense:Money market accounts
    
    
    (80
    )
    
    
    (55
    )
    
    
    (25
    )
    
    
    (216
    )
    
    
    (175
    )
    
    
    (41
    )NOW accounts
    
    
    (181
    )
    
    
    (203
    )
    
    
    22
    
    
    
    (258
    )
    
    
    (377
    )
    
    
    119Savings accounts
    
    
    
    
    
    
    (122
    )
    
    
    (127
    )
    
    
    5
    
    
    
    (279
    )
    
    
    (279
    )Time deposits less than $100
    
    
    (313
    )
    
    
    (262
    )
    
    
    (51
    )
    
    
    (747
    )
    
    
    (469
    )
    
    
    (278
    )Time deposits $100 or more
    
    
    174
    
    
    
    (96
    )
    
    
    270
    
    
    
    203
    
    
    
    (184
    )
    
    
    387Short-term borrowings
    
    
    (28
    )
    
    
    (3
    )
    
    
    (25
    )
    
    
    (153
    )
    
    
    (155
    )
    
    
    2Total interest expense
    
    
    (550
    )
    
    
    (746
    )
    
    
    196
    
    
    
    (1,450
    )
    
    
    (1,639
    )
    
    
    189Net interest income
    
    $
    (163
    )
    
    $
    (243
    )
    
    $
    80
    
    
    $
    17
    
    
    $
    (832
    )
    
    $
    849
 38




---



##### 



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




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Summary of net interest income
 September 30, 2008
    
    
    September 30, 2007Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Income/
    
    
    Interest
    
    
    Average
    
    
    Income/
    
    
    InterestBalance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    RateASSETS:Earning assets:Loans:Taxable
    
    $
    442,007
    
    
    $
    21,979
    
    
    
    6.64
    %
    
    $
    414,972
    
    
    $
    22,847
    
    
    
    7.36
    %Tax-exempt
    
    
    52,106
    
    
    
    2,567
    
    
    
    6.58
    
    
    
    39,998
    
    
    
    1,972
    
    
    
    6.59Investments:Taxable
    
    
    5,939
    
    
    
    172
    
    
    
    3.87
    
    
    
    43,344
    
    
    
    1,343
    
    
    
    4.14Tax-exempt
    
    
    28,812
    
    
    
    1,624
    
    
    
    7.53
    
    
    
    29,712
    
    
    
    1,683
    
    
    
    7.57Federal funds sold
    
    
    11,618
    
    
    
    145
    
    
    
    1.67
    
    
    
    2,037
    
    
    
    75
    
    
    
    4.92Total earning assets
    
    
    540,482
    
    
    
    26,487
    
    
    
    6.55
    %
    
    
    530,063
    
    
    
    27,920
    
    
    
    7.04
    %Less: allowance for loan losses
    
    
    5,020
    
    
    
    
    
    
    
    
    
    
    
    4,599Other assets
    
    
    33,394
    
    
    
    
    
    
    
    
    
    
    
    28,606Total assets
    
    $
    568,856
    
    
    
    
    
    
    
    
    
    
    $
    554,070LIABILITIES AND STOCKHOLDERS EQUITY:Interest-bearing liabilities:Money market accounts
    
    $
    24,593
    
    
    
    362
    
    
    
    1.97
    %
    
    $
    26,634
    
    
    
    578
    
    
    
    2.90
    %NOW accounts
    
    
    69,844
    
    
    
    1,213
    
    
    
    2.32
    
    
    
    64,312
    
    
    
    1,471
    
    
    
    3.06Savings accounts
    
    
    102,604
    
    
    
    838
    
    
    
    1.09
    
    
    
    102,573
    
    
    
    1,117
    
    
    
    1.46Time deposits less than $100
    
    
    170,728
    
    
    
    5,162
    
    
    
    4.04
    
    
    
    179,431
    
    
    
    5,909
    
    
    
    4.40Time deposits $100 or more
    
    
    53,355
    
    
    
    1,694
    
    
    
    4.24
    
    
    
    41,617
    
    
    
    1,491
    
    
    
    4.79Short-term borrowings
    
    
    8,190
    
    
    
    178
    
    
    
    2.90
    
    
    
    8,144
    
    
    
    331
    
    
    
    5.43Total interest-bearing liabilities
    
    
    429,314
    
    
    
    9,447
    
    
    
    2.94
    %
    
    
    422,711
    
    
    
    10,897
    
    
    
    3.45
    %Noninterest-bearing deposits
    
    
    80,207
    
    
    
    
    
    
    
    
    
    
    
    75,409Other liabilities
    
    
    3,143
    
    
    
    
    
    
    
    
    
    
    
    2,788Stockholders equity
    
    
    56,192
    
    
    
    
    
    
    
    
    
    
    
    53,162Total liabilities and stockholders equity
    
    $
    568,856
    
    
    
    
    
    
    
    
    
    
    $
    554,070Net interest income/spread
    
    
    
    
    
    $
    17,040
    
    
    
    3.61
    %
    
    
    
    
    
    $
    17,023
    
    
    
    3.59
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    4.21
    %
    
    
    
    
    
    
    
    
    
    
    4.29
    %Tax equivalent adjustments:Loans
    
    
    
    
    
    $
    873
    
    
    
    
    
    
    
    
    
    
    $
    670Investments
    
    
    
    
    
    
    552
    
    
    
    
    
    
    
    
    
    
    
    572Total adjustments
    
    
    
    
    
    $
    1,425
    
    
    
    
    
    
    
    
    
    
    $
    1,242
 
 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 $1,753 and
$1,324 for the nine months ended September 30, 2008 and 2007 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




---



##### 



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 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Salaries and employee benefits expense:Salaries and payroll taxes
    
    $
    1,700
    
    
    $
    1,606
    
    
    $
    5,048
    
    
    $
    4,617Employee benefits
    
    
    469
    
    
    
    452
    
    
    
    1,366
    
    
    
    1,279Salaries and employee benefits expense
    
    
    2,169
    
    
    
    2,058
    
    
    
    6,414
    
    
    
    5,896Net occupancy and equipment expense:Net occupancy expense
    
    
    276
    
    
    
    264
    
    
    
    918
    
    
    
    877Equipment expense
    
    
    307
    
    
    
    294
    
    
    
    948
    
    
    
    918Net occupancy and equipment expense
    
    
    583
    
    
    
    558
    
    
    
    1,866
    
    
    
    1,795Other expenses:Marketing expense
    
    
    261
    
    
    
    243
    
    
    
    597
    
    
    
    534Other taxes
    
    
    46
    
    
    
    75
    
    
    
    295
    
    
    
    351Stationery and supplies
    
    
    69
    
    
    
    82
    
    
    
    215
    
    
    
    308Contractual services
    
    
    446
    
    
    
    451
    
    
    
    1,304
    
    
    
    1,386Insurance including FDIC assessment
    
    
    84
    
    
    
    61
    
    
    
    220
    
    
    
    177Other
    
    
    425
    
    
    
    393
    
    
    
    1,203
    
    
    
    1,042Other expenses
    
    
    1,331
    
    
    
    1,305
    
    
    
    3,834
    
    
    
    3,798Total noninterest expense
    
    $
    4,083
    
    
    $
    3,921
    
    
    $
    12,114
    
    
    $
    11,489
   43




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##### 



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




---



##### 



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




---



##### 



Comm Bancorp, Inc.  CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures:
  Internal Control Over Financial Reporting:
  46




---



##### 



Comm Bancorp, Inc.  OTHER INFORMATION
 
 Part II. Other Information
 
 Item 1. Legal Proceedings
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  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 Ended
    
    Purchased
    
    
    Per Share
    
    
    or Programs
    
    
    or ProgramsJuly 31, 2008
    
    
    3,201
    
    
    $
    42.61
    
    
    
    3,201
    
    
    
    12,687August 31, 2008
    
    
    1,110
    
    
    
    42.89
    
    
    
    1,110
    
    
    
    11,577September 30, 2008
    
    
    1,149
    
    
    
    43.16
    
    
    
    1,149
    
    
    
    10,428Total
    
    
    5,460
    
    
    $
    42.78
    
    
    
    5,460
 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 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.
 47




---



##### 



COMM BANCORP, INC.
FORM 10-Q
 
 SIGNATURE PAGE
  Registrant, Comm Bancorp, Inc.Date: November 12, 2008
    
    /s/ William F. Farber, Sr.William F. Farber, Sr.President and Chief Executive OfficerChairman of the Board/Director(Principal Executive Officer)Date: November 12, 2008
    
    /s/ Scott A. SeasockScott A. SeasockExecutive Vice President andChief Financial Officer(Principal Financial Officer)Date: November 12, 2008
    
    /s/ Stephanie A. Westington, CPAStephanie A. Westington, CPAVice President of Finance(Principal Accounting Officer)
 48




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##### 



EXHIBIT INDEX
 Item Number
    
    Description
    
    Page31(i)
    
    CEO and CFO Certifications Pursuant to Rule 13a-14(a)/15d-14(a).
    
    
    5032
    
    CEO and CFO Certifications Pursuant to  Section 1350.
    
    
    54
 49