##### 



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 June 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.
 
  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
  o o þ
 o þ




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##### 



COMM BANCORP, INC.
 FORM 10-Q
 June 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 Six Months Ended June 30,
2007 and 2006
    
    
    3Consolidated Balance Sheets  June 30, 2007 and
December 31, 2006
    
    
    4Consolidated Statement of Changes in Stockholders Equity
for the Six Months Ended June 30, 2007 and 2006
    
    
    5Consolidated Statements of Cash Flows for the Six Months
Ended June 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
    
    
    48Item 4. Controls and Procedures
    
    
    49Item 4T. Controls and Procedures
    
    
    *PART II. OTHER INFORMATION:Item 1. Legal Proceedings
    
    
    50Item 1A. Risk Factors
    
    
    50Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds
    
    
    50Item 3. Defaults Upon Senior Securities
    
    
    50Item 4. Submission of Matters to a Vote of Security Holders
    
    
    51Item 5. Other Information
    
    
    51Item 6. Exhibits
    
    
    52Signatures
    
    
    53Exhibit Index
    
    
    54
 
 *
    
    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
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Interest income:Interest and fees on loans:Taxable
    
    $
    7,738
    
    
    $
    6,733
    
    
    $
    15,039
    
    
    $
    13,057Tax-exempt
    
    
    445
    
    
    
    446
    
    
    
    845
    
    
    
    876Interest and dividends on investment securities available-for-sale:Taxable
    
    
    441
    
    
    
    503
    
    
    
    1,014
    
    
    
    1,106Tax-exempt
    
    
    370
    
    
    
    377
    
    
    
    741
    
    
    
    756Dividends
    
    
    21
    
    
    
    25
    
    
    
    32
    
    
    
    36Interest on federal funds sold
    
    
    4
    
    
    
    67
    
    
    
    7
    
    
    
    73Total interest income
    
    
    9,019
    
    
    
    8,151
    
    
    
    17,678
    
    
    
    15,904Interest expense:Interest on deposits
    
    
    3,593
    
    
    
    2,991
    
    
    
    7,027
    
    
    
    5,811Interest on short-term borrowings
    
    
    159
    
    
    
    60
    
    
    
    303
    
    
    
    144Total interest expense
    
    
    3,752
    
    
    
    3,051
    
    
    
    7,330
    
    
    
    5,955Net interest income
    
    
    5,267
    
    
    
    5,100
    
    
    
    10,348
    
    
    
    9,949Provision for loan losses
    
    
    
    
    
    
    225
    
    
    
    225
    
    
    
    405Net interest income after provision for loan losses
    
    
    5,267
    
    
    
    4,875
    
    
    
    10,123
    
    
    
    9,544Noninterest income:Service charges, fees and commissions
    
    
    884
    
    
    
    776
    
    
    
    1,589
    
    
    
    1,528Mortgage banking income
    
    
    98
    
    
    
    75
    
    
    
    173
    
    
    
    183Total noninterest income
    
    
    982
    
    
    
    851
    
    
    
    1,762
    
    
    
    1,711Noninterest expense:Salaries and employee benefits expense
    
    
    1,959
    
    
    
    1,918
    
    
    
    3,838
    
    
    
    3,708Net occupancy and equipment expense
    
    
    603
    
    
    
    596
    
    
    
    1,237
    
    
    
    1,201Other expenses
    
    
    1,253
    
    
    
    1,205
    
    
    
    2,493
    
    
    
    2,366Total noninterest expense
    
    
    3,815
    
    
    
    3,719
    
    
    
    7,568
    
    
    
    7,275Income before income taxes
    
    
    2,434
    
    
    
    2,007
    
    
    
    4,317
    
    
    
    3,980Provision for income tax expense
    
    
    554
    
    
    
    432
    
    
    
    932
    
    
    
    855Net income
    
    
    1,880
    
    
    
    1,575
    
    
    
    3,385
    
    
    
    3,125Other comprehensive loss:Unrealized losses on investment securities available-for-sale
    
    
    (394
    )
    
    
    (289
    )
    
    
    (398
    )
    
    
    (739
    )Income tax benefit related to other comprehensive loss
    
    
    (134
    )
    
    
    (98
    )
    
    
    (135
    )
    
    
    (251
    )Other comprehensive loss, net of income taxes
    
    
    (260
    )
    
    
    (191
    )
    
    
    (263
    )
    
    
    (488
    )Comprehensive income
    
    $
    1,620
    
    
    $
    1,384
    
    
    $
    3,122
    
    
    $
    2,637Per share data:Net income
    
    $
    1.06
    
    
    $
    0.85
    
    
    $
    1.87
    
    
    $
    1.69Cash dividends declared
    
    $
    0.26
    
    
    $
    0.25
    
    
    $
    0.52
    
    
    $
    0.50Average common shares outstanding
    
    
    1,776,590
    
    
    
    1,853,235
    
    
    
    1,813,847
    
    
    
    1,852,530
  3




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##### 



Comm Bancorp, Inc.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
 June 30,
    
    
    December 31,2007
    
    
    2006Assets:Cash and due from banks
    
    $
    15,095
    
    
    $
    25,584Federal funds sold
    
    
    
    
    
    
    2,050Investment securities available-for-sale
    
    
    67,234
    
    
    
    91,213Loans held for sale, net
    
    
    2,453
    
    
    
    572Loans, net of unearned income
    
    
    455,021
    
    
    
    408,074Less: allowance for loan losses
    
    
    4,561
    
    
    
    4,435Net loans
    
    
    450,460
    
    
    
    403,639Premises and equipment, net
    
    
    11,223
    
    
    
    11,018Accrued interest receivable
    
    
    3,071
    
    
    
    2,863Other assets
    
    
    5,131
    
    
    
    3,465Total assets
    
    $
    554,667
    
    
    $
    540,404Liabilities:Deposits:Noninterest-bearing
    
    $
    77,649
    
    
    $
    73,055Interest-bearing
    
    
    416,855
    
    
    
    410,387Total deposits
    
    
    494,504
    
    
    
    483,442Short-term borrowings
    
    
    5,700Accrued interest payable
    
    
    1,165
    
    
    
    1,106Other liabilities
    
    
    1,880
    
    
    
    1,738Total liabilities
    
    
    503,249
    
    
    
    486,286Stockholders equity:Common stock, par value $0.33, authorized 12,000,000 shares,
issued and outstanding: June 30, 2007, 1,755,091 shares; December
31, 2006, 1,848,687 shares
    
    
    579
    
    
    
    610Capital surplus
    
    
    7,096
    
    
    
    7,146Retained earnings
    
    
    43,049
    
    
    
    45,405Accumulated other comprehensive income
    
    
    694
    
    
    
    957Total stockholders equity
    
    
    51,418
    
    
    
    54,118Total liabilities and stockholders equity
    
    $
    554,667
    
    
    $
    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
    
    
    
    
    
    
    
    
    
    
    3,385
    
    
    
    
    
    
    
    3,385Dividends declared: $0.52 per share
    
    
    
    
    
    
    
    
    
    
    (937
    )
    
    
    
    
    
    
    (937
    )Dividend reinvestment plan: 5,449 shares issued
    
    
    2
    
    
    
    247
    
    
    
    
    
    
    
    
    
    
    
    249Repurchase and retirement: 99,045 shares
    
    
    (33
    )
    
    
    (297
    )
    
    
    (4,804
    )
    
    
    
    
    
    
    (5,134
    )Net change in other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (263
    )
    
    
    (263
    )Balance, June 30, 2007
    
    $
    579
    
    
    $
    7,096
    
    
    $
    43,049
    
    
    $
    694
    
    
    $
    51,418Balance, December 31, 2005
    
    $
    611
    
    
    $
    6,869
    
    
    $
    41,250
    
    
    $
    959
    
    
    $
    49,689Net income
    
    
    
    
    
    
    
    
    
    
    3,125
    
    
    
    
    
    
    
    3,125Dividends declared: $0.50 per share
    
    
    
    
    
    
    
    
    
    
    (926
    )
    
    
    
    
    
    
    (926
    )Dividend reinvestment plan: 3,477 shares issued
    
    
    1
    
    
    
    144
    
    
    
    
    
    
    
    
    
    
    
    145Repurchase and retirement: 500 shares
    
    
    
    
    
    
    (1
    )
    
    
    (20
    )
    
    
    
    
    
    
    (21
    )Net change in other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (488
    )
    
    
    (488
    )Balance, June 30, 2006
    
    $
    612
    
    
    $
    7,012
    
    
    $
    43,429
    
    
    $
    471
    
    
    $
    51,524
  5




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##### 



Comm Bancorp, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands, except per share data)
 Six Months Ended June 30,
    
    2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    3,385
    
    
    $
    3,125Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    225
    
    
    
    405Depreciation and amortization of premises and equipment
    
    
    542
    
    
    
    503Net amortization (accretion) of investment securities
    
    
    (49
    )
    
    
    82Amortization of net loan costs
    
    
    171
    
    
    
    137Amortization of mortgage servicing rights
    
    
    120
    
    
    
    109Deferred income tax benefit
    
    
    (53
    )
    
    
    (138
    )Net gains on the sale of loans
    
    
    (118
    )
    
    
    (113
    )Losses (gains) on the sale of foreclosed assets
    
    
    (37
    )
    
    
    7Changes in:Loans held for sale, net
    
    
    (1,763
    )
    
    
    (304
    )Accrued interest receivable
    
    
    (208
    )
    
    
    (413
    )Other assets
    
    
    (1,816
    )
    
    
    (478
    )Accrued interest payable
    
    
    59
    
    
    
    28Other liabilities
    
    
    271
    
    
    
    792Net cash provided by operating activities
    
    
    729
    
    
    
    3,742Cash flows from investing activities:Proceeds from repayments of investment securities available-for-sale
    
    
    34,206
    
    
    
    30,616Purchases of investment securities available-for-sale
    
    
    (10,576
    )
    
    
    (10,295
    )Proceeds from sale of foreclosed assets
    
    
    133
    
    
    
    496Net increase in lending activities
    
    
    (47,217
    )
    
    
    (29,388
    )Purchases of premises and equipment
    
    
    (747
    )
    
    
    (585
    )Net cash used in investing activities
    
    
    (24,201
    )
    
    
    (9,156
    )Cash flows from financing activities:Net changes in:Money market, NOW, savings and noninterest-bearing accounts
    
    
    (1,961
    )
    
    
    (14,259
    )Time deposits
    
    
    13,023
    
    
    
    6,741Short-term borrowings
    
    
    5,700Proceeds from issuance of common shares
    
    
    249
    
    
    
    145Repurchase and retirement of common shares
    
    
    (5,134
    )
    
    
    (21
    )Cash dividends paid
    
    
    (944
    )
    
    
    (889
    )Net cash provided by (used in) financing activities
    
    
    10,933
    
    
    
    (8,283
    )Net decrease in cash and cash equivalents
    
    
    (12,539
    )
    
    
    (13,697
    )Cash and cash equivalents at beginning of year
    
    
    27,634
    
    
    
    35,403Cash and cash equivalents at end of period
    
    $
    15,095
    
    
    $
    21,706Supplemental disclosures:Cash paid during the period for:Interest
    
    $
    7,271
    
    
    $
    5,927Income taxes
    
    
    745
    
    
    
    60Noncash items:Transfer of loans to foreclosed assets
    
    
    
    
    
    
    298Unrealized losses on investment securities available-for-sale, net
    
    $
    263
    
    
    $
    488
  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)
   SM
   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
 June 30,
    
    
    December 31,2007
    
    
    2006Amount
    
    
    
    %

    
    Amount
    
    
    
    %U.S. Government agencies
    
    $
    22,352
    
    
    
    33.25
    %
    
    $
    39,201
    
    
    
    42.98
    %State and municipals:Taxable
    
    
    8,258
    
    
    
    12.28
    
    
    
    11,912
    
    
    
    13.06Tax-exempt
    
    
    30,804
    
    
    
    45.82
    
    
    
    30,956
    
    
    
    33.94Mortgage-backed securities
    
    
    4,225
    
    
    
    6.28
    
    
    
    7,760
    
    
    
    8.51Equity securities:Restricted
    
    
    1,347
    
    
    
    2.00
    
    
    
    1,206
    
    
    
    1.32Other
    
    
    248
    
    
    
    0.37
    
    
    
    178
    
    
    
    0.19Total
    
    $
    67,234
    
    
    
    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)
   14




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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
    
    
    TotalJune 30, 2007
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    YieldAmortized cost:U.S. Government agencies
    
    $
    22,381
    
    
    
    4.85
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    22,381
    
    
    
    4.85
    %State and municipals:Taxable
    
    
    8,363
    
    
    
    3.19
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,363
    
    
    
    3.19Tax-exempt
    
    
    65
    
    
    
    5.38
    
    
    $
    5,821
    
    
    
    7.63
    %
    
    $
    19,161
    
    
    
    7.57
    %
    
    $
    4,657
    
    
    
    7.41
    %
    
    
    29,704
    
    
    
    7.55Mortgage-backed securities
    
    
    2,987
    
    
    
    4.89
    
    
    
    1,176
    
    
    
    4.76
    
    
    
    86
    
    
    
    6.29
    
    
    
    
    
    
    
    
    
    
    
    4,249
    
    
    
    4.88Equity securities:Restricted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,347
    
    
    
    4.39
    
    
    
    1,347
    
    
    
    4.39Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    138
    
    
    
    4.56
    
    
    
    138
    
    
    
    4.56Total
    
    $
    33,796
    
    
    
    4.44
    %
    
    $
    6,997
    
    
    
    7.15
    %
    
    $
    19,247
    
    
    
    7.56
    %
    
    $
    6,142
    
    
    
    6.68
    %
    
    $
    66,182
    
    
    
    5.84
    %Fair value:U.S. Government agencies
    
    $
    22,352
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    22,352State and municipals:Taxable
    
    
    8,258
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,258Tax-exempt
    
    
    65
    
    
    
    
    
    
    $
    5,975
    
    
    
    
    
    
    $
    19,860
    
    
    
    
    
    
    $
    4,904
    
    
    
    
    
    
    
    30,804Mortgage-backed securities
    
    
    2,973
    
    
    
    
    
    
    
    1,165
    
    
    
    
    
    
    
    87
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,225Equity securities:Restricted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,347
    
    
    
    
    
    
    
    1,347Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    248
    
    
    
    
    
    
    
    248Total
    
    $
    33,648
    
    
    
    
    
    
    $
    7,140
    
    
    
    
    
    
    $
    19,947
    
    
    
    
    
    
    $
    6,499
    
    
    
    
    
    
    $
    67,234
 Loan Portfolio:
  15




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##### 



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
 June 30,
    
    
    December 31,2007
    
    
    2006Amount
    
    
    
    %
    

    Amount
    
    
    
    %Commercial, financial and others
    
    $
    188,079
    
    
    
    41.33
    %
    
    $
    143,792
    
    
    
    35.24
    %Real estate:Construction
    
    
    7,850
    
    
    
    1.73
    
    
    
    5,513
    
    
    
    1.35Mortgage
    
    
    223,041
    
    
    
    49.02
    
    
    
    225,703
    
    
    
    55.31Consumer, net
    
    
    33,956
    
    
    
    7.46
    
    
    
    31,546
    
    
    
    7.73Lease financing, net
    
    
    2,095
    
    
    
    0.46
    
    
    
    1,520
    
    
    
    0.37Loans, net of unearned income
    
    
    455,021
    
    
    
    100.00
    %
    
    
    408,074
    
    
    
    100.00
    %Less: allowance for loan losses
    
    
    4,561
    
    
    
    
    
    
    
    4,435Net loans
    
    $
    450,460
    
    
    
    
    
    
    $
    403,639
  17




---



##### 



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
    
    
    AfterJune 30, 2007
    
    one year
    
    
    five years
    
    
    five years
    
    
    TotalMaturity schedule:Commercial, financial and others
    
    $
    87,261
    
    
    $
    49,787
    
    
    $
    51,031
    
    
    $
    188,079Real estate:Construction
    
    
    7,850
    
    
    
    
    
    
    
    
    
    
    
    7,850Mortgage
    
    
    21,675
    
    
    
    85,080
    
    
    
    116,286
    
    
    
    223,041Consumer, net
    
    
    4,728
    
    
    
    22,186
    
    
    
    7,042
    
    
    
    33,956Lease financing, net
    
    
    420
    
    
    
    1,675
    
    
    
    
    
    
    
    2,095Total
    
    $
    121,934
    
    
    $
    158,728
    
    
    $
    174,359
    
    
    $
    455,021Predetermined interest rates
    
    $
    58,029
    
    
    $
    85,244
    
    
    $
    73,845
    
    
    $
    217,118Floating- or adjustable-interest rates
    
    
    63,905
    
    
    
    73,484
    
    
    
    100,514
    
    
    
    237,903Total
    
    $
    121,934
    
    
    $
    158,728
    
    
    $
    174,359
    
    
    $
    455,021
    18




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
     Distribution of off-balance sheet commitments
 June 30,
    
    
    December 31,2007
    
    
    2006Commitments to extend credit
    
    $
    75,274
    
    
    $
    66,192Unused portions of home equity and credit card lines
    
    
    11,739
    
    
    
    15,777Commercial letters of credit
    
    
    20,250
    
    
    
    21,405Total
    
    $
    107,263
    
    
    $
    103,374
  19




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
 Asset Quality:
  June 30,
    
    2007
    
    2006United States
    
    
    4.5
    %
    
    
    4.6
    %Pennsylvania
    
    
    4.1
    
    
    
    4.8Lackawanna county
    
    
    4.8
    
    
    
    5.1Luzerne county
    
    
    4.7
    
    
    
    5.6Monroe county
    
    
    4.7
    
    
    
    5.3Susquehanna county
    
    
    4.3
    
    
    
    4.8Wayne county
    
    
    3.9
    
    
    
    4.3Wyoming county
    
    
    5.2
    %
    
    
    5.6
    %
    20




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Distribution of nonperforming assets
 June 30,
    
    
    December 31,2007
    
    
    2006Nonaccrual loans:Commercial, financial and others
    
    $
    881
    
    
    $
    1,060Real estate:ConstructionMortgage
    
    
    2,602
    
    
    
    856Consumer, net
    
    
    78
    
    
    
    94Lease financing, netTotal nonaccrual loans
    
    
    3,561
    
    
    
    2,010Accruing loans past due 90 days or more:Commercial, financial and others
    
    
    260
    
    
    
    13Real estate:ConstructionMortgage
    
    
    439
    
    
    
    217Consumer, net
    
    
    44
    
    
    
    60Lease financing, net
    
    
    16
    
    
    
    2Total accruing loans past due 90 days or more
    
    
    759
    
    
    
    292Total nonperforming loans
    
    
    4,320
    
    
    
    2,302Foreclosed assets
    
    
    256
    
    
    
    352Total nonperforming assets
    
    $
    4,576
    
    
    $
    2,654Ratios:Nonperforming loans as a percentage of loans, net
    
    
    0.95
    %
    
    
    0.56
    %Nonperforming assets as a percentage of loans, net and
and foreclosed assets
    
    
    1.01
    %
    
    
    0.65
    %
  21




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   22




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Distribution of impaired loans
 June 30,
    
    
    December 31,2007
    
    
    2006Nonaccrual loans:Commercial, financial and others
    
    $
    881
    
    
    $
    1,060Real estate:ConstructionMortgage
    
    
    2,602
    
    
    
    856Consumer, net
    
    
    78
    
    
    
    94Lease financing, netTotal nonaccrual loans
    
    
    3,561
    
    
    
    2,010Accruing loans:Commercial, financial and others
    
    
    1,798
    
    
    
    1,312Real estate:ConstructionMortgage
    
    
    6,724
    
    
    
    6,334Consumer, net
    
    
    3
    
    
    
    44Lease financing, netTotal accruing loans
    
    
    8,525
    
    
    
    7,690Total impaired loans
    
    $
    12,086
    
    
    $
    9,700Ratio:Impaired loans as a percentage of loans, net
    
    
    2.66
    %
    
    
    2.38
    %
  23




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  June 30,
    
    
    December 31,2007
    
    
    2006Impaired loans:With a related allowance
    
    $
    5,129
    
    
    $
    8,017With no related allowance
    
    
    6,957
    
    
    
    1,683Total
    
    $
    12,086
    
    
    $
    9,700
  June 30,2007Balance at January 1
    
    $
    2,410Provision for loan losses
    
    
    (284
    )Loans charged-off
    
    
    46Loans recovered
    
    
    2Balance at period-end
    
    $
    2,082
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Gross interest due under terms
    
    $
    208
    
    
    $
    148
    
    
    $
    411
    
    
    $
    254Interest income recognized
    
    
    163
    
    
    
    100
    
    
    
    375
    
    
    
    242Interest income not recognized
    
    $
    45
    
    
    $
    48
    
    
    $
    36
    
    
    $
    12Interest income recognized (cash-basis)
    
    $
    163
    
    
    $
    100
    
    
    $
    375
    
    
    $
    242Average recorded investment in impaired loans
    
    $
    11,257
    
    
    $
    7,299
    
    
    $
    11,040
    
    
    $
    6,448
  24




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Allocation of the allowance for loan losses
 June 30,
    
    
    December 31,2007
    
    
    2006Category
    
    
    
    
    
    
    Categoryas a
    
    
    
    
    
    
    as a% of
    
    
    
    
    
    
    % ofAmount
    
    
    loans
    
    
    Amount
    
    
    loansAllocated allowance:Specific:Commercial, financial and others
    
    $
    1,083
    
    
    
    0.59
    %
    
    $
    1,000
    
    
    
    0.58
    %Real estate:ConstructionMortgage
    
    
    919
    
    
    
    2.05
    
    
    
    1,296
    
    
    
    1.76Consumer, net
    
    
    80
    
    
    
    0.02
    
    
    
    114
    
    
    
    0.03Lease financing, netTotal specific
    
    
    2,082
    
    
    
    2.66
    
    
    
    2,410
    
    
    
    2.37Formula:Commercial, financial and others
    
    
    140
    
    
    
    40.75
    
    
    
    120
    
    
    
    34.66Real estate:Construction
    
    
    
    
    
    
    1.72
    
    
    
    
    
    
    
    1.35Mortgage
    
    
    310
    
    
    
    46.97
    
    
    
    520
    
    
    
    53.55Consumer, net
    
    
    374
    
    
    
    7.44
    
    
    
    374
    
    
    
    7.70Lease financing, net
    
    
    
    
    
    
    0.46
    
    
    
    
    
    
    
    0.37Total formula
    
    
    824
    
    
    
    97.34
    
    
    
    1,014
    
    
    
    97.63Total allocated allowance
    
    
    2,906
    
    
    
    100.00
    %
    
    
    3,424
    
    
    
    100.00
    %Unallocated allowance
    
    
    1,655
    
    
    
    
    
    
    
    1,011Total allowance for loan losses
    
    $
    4,561
    
    
    
    
    
    
    $
    4,435
  25




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    Reconciliation of allowance for loan losses
 June 30,2007Allowance for loan losses at beginning of period
    
    $
    4,435Loans charged-off:Commercial, financial and others
    
    
    33Real estate:ConstructionMortgage
    
    
    14Consumer, net
    
    
    93Lease financing, netTotal
    
    
    140Loans recovered:Commercial, financial and others
    
    
    7Real estate:ConstructionMortgage
    
    
    1Consumer, net
    
    
    33Lease financing, netTotal
    
    
    41Net loans charged-off
    
    
    99Provision charged to operating expense
    
    
    225Allowance for loan losses at end of period
    
    $
    4,561Ratios:Net loans charged-off as a percentage of average loans outstanding
    
    
    0.04
    %Allowance for loan losses as a percentage of period end loans
    
    
    1.00
    %
  26




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Deposits:
   27




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Deposit distribution
 June 30,
    
    
    June 30,2007
    
    
    2006Average
    
    
    Average
    
    
    Average
    
    
    AverageBalance
    
    
    Rate
    
    
    Balance
    
    
    RateInterest-bearing:Money market accounts
    
    $
    28,019
    
    
    
    2.96
    %
    
    $
    31,741
    
    
    
    2.41
    %NOW accounts
    
    
    64,098
    
    
    
    3.15
    
    
    
    58,973
    
    
    
    2.14Savings accounts
    
    
    101,081
    
    
    
    1.44
    
    
    
    114,096
    
    
    
    1.28Time deposits less than $100
    
    
    179,184
    
    
    
    4.40
    
    
    
    187,398
    
    
    
    3.90Time deposits $100 or more
    
    
    41,238
    
    
    
    4.81
    
    
    
    22,142
    
    
    
    4.13Total interest-bearing
    
    
    413,620
    
    
    
    3.43
    %
    
    
    414,350
    
    
    
    2.83
    %Noninterest-bearing
    
    
    73,505
    
    
    
    
    
    
    
    69,171Total deposits
    
    $
    487,125
    
    
    
    
    
    
    $
    483,521
   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
 June 30,
    
    
    December 31,2007
    
    
    2006Within three months
    
    $
    20,929
    
    
    $
    5,307After three months but within six months
    
    
    7,553
    
    
    
    6,923After six months but within twelve months
    
    
    6,941
    
    
    
    13,136After twelve months
    
    
    9,516
    
    
    
    10,554Total
    
    $
    44,939
    
    
    $
    35,920
 Market Risk Sensitivity:
   29




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   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 afterJune 30, 2007
    
    three months
    
    
    twelve months
    
    
    five years
    
    
    five years
    
    
    TotalRate-sensitive assets:Investment securities
    
    $
    19,779
    
    
    $
    13,869
    
    
    $
    7,140
    
    
    $
    26,446
    
    
    $
    67,234Loans held for sale, net
    
    
    2,453
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,453Loans, net of unearned income
    
    
    126,550
    
    
    
    90,757
    
    
    
    161,281
    
    
    
    76,433
    
    
    
    455,021Total
    
    $
    148,782
    
    
    $
    104,626
    
    
    $
    168,421
    
    
    $
    102,879
    
    
    $
    524,708Rate-sensitive liabilities:Money market accounts
    
    $
    15,602
    
    
    $
    6,327
    
    
    
    
    
    
    
    
    
    
    $
    21,929NOW accounts
    
    
    51,517
    
    
    
    13,698
    
    
    
    
    
    
    
    
    
    
    
    65,215Savings accounts
    
    
    13,211
    
    
    
    
    
    
    $
    91,168
    
    
    
    
    
    
    
    104,379Time deposits less than $100
    
    
    44,695
    
    
    
    68,676
    
    
    
    55,695
    
    
    $
    11,327
    
    
    
    180,393Time deposits $100 or more
    
    
    20,929
    
    
    
    14,494
    
    
    
    9,516
    
    
    
    
    
    
    
    44,939Short-term borrowings
    
    
    5,700
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,700Total
    
    $
    151,654
    
    
    $
    103,195
    
    
    $
    156,379
    
    
    $
    11,327
    
    
    $
    422,555Rate sensitivity gap:Period
    
    $
    (2,872
    )
    
    $
    1,431
    
    
    $
    12,042
    
    
    $
    91,552Cumulative
    
    $
    (2,872
    )
    
    $
    (1,441
    )
    
    $
    10,601
    
    
    $
    102,153
    
    
    $
    102,153RSA/RSL ratio:Period
    
    
    0.98
    
    
    
    1.01
    
    
    
    1.08
    
    
    
    9.08Cumulative
    
    
    0.98
    
    
    
    0.99
    
    
    
    1.03
    
    
    
    1.24
    
    
    
    1.24
  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)
  36




---



##### 



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 ProvisionsJune 30,
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Basis for ratios:Tier I capital to risk-weighted assets:Consolidated
    
    $
    50,315
    
    
    $
    50,633
    
    
    $
    18,570
    
    
    $
    17,101Community Bank
    
    
    46,878
    
    
    
    48,661
    
    
    
    18,479
    
    
    
    17,069
    
    
    $
    27,718
    
    
    $
    25,604Total capital to risk-weighted assets:Consolidated
    
    
    54,876
    
    
    
    54,927
    
    
    
    37,139
    
    
    
    34,203Community Bank
    
    
    51,439
    
    
    
    52,955
    
    
    
    36,958
    
    
    
    34,139
    
    
    
    46,197
    
    
    
    42,673Tier I capital to total average assets
less goodwill:Consolidated
    
    
    50,315
    
    
    
    50,633
    
    
    
    22,168
    
    
    
    21,694Community Bank
    
    
    46,878
    
    
    
    48,661
    
    
    $
    22,116
    
    
    $
    21,655
    
    
    $
    27,646
    
    
    $
    27,069Risk-weighted assets:Consolidated
    
    
    451,104
    
    
    
    414,960Community Bank
    
    
    448,836
    
    
    
    414,160Risk-weighted off-balance sheet items:Consolidated
    
    
    13,137
    
    
    
    12,572Community Bank
    
    
    13,137
    
    
    
    12,572Average assets for Leverage ratio:Consolidated
    
    
    554,208
    
    
    
    542,338Community Bank
    
    $
    552,911
    
    
    $
    541,386Ratios:Tier I capital as a percentage of risk-
weighted assets and off-balance sheet
items:Consolidated
    
    
    10.8
    %
    
    
    11.8
    %
    
    
    4.0
    %
    
    
    4.0
    %Community Bank
    
    
    10.1
    
    
    
    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
    
    
    11.8
    
    
    
    12.9
    
    
    
    8.0
    
    
    
    8.0Community Bank
    
    
    11.1
    
    
    
    12.4
    
    
    
    8.0
    
    
    
    8.0
    
    
    
    10.0
    
    
    
    10.0Tier I capital as a percentage of total
average assets less intangible assets:Consolidated
    
    
    9.1
    
    
    
    9.3
    
    
    
    4.0
    
    
    
    4.0Community Bank
    
    
    8.5
    %
    
    
    9.0
    %
    
    
    4.0
    %
    
    
    4.0
    %
    
    
    5.0
    %
    
    
    5.0
    %
  37




---



##### 



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.
 38




---



##### 



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
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007 vs. 2006
    
    
    2007 vs. 2006Increase (decrease)
    
    
    Increase (decrease)attributable to
    
    
    attributable toTotal
    
    
    
    
    
    
    
    
    
    
    TotalChange
    
    
    Rate
    
    
    Volume
    
    
    Change
    
    
    Rate
    
    
    VolumeInterest income:Loans:Taxable
    
    $
    1,005
    
    
    $
    360
    
    
    $
    645
    
    
    $
    1,982
    
    
    $
    857
    
    
    $
    1,125Tax-exempt
    
    
    (2
    )
    
    
    48
    
    
    
    (50
    )
    
    
    (47
    )
    
    
    64
    
    
    
    (111
    )Investments:Taxable
    
    
    (66
    )
    
    
    24
    
    
    
    (90
    )
    
    
    (96
    )
    
    
    128
    
    
    
    (224
    )Tax-exempt
    
    
    (10
    )
    
    
    13
    
    
    
    (23
    )
    
    
    (22
    )
    
    
    33
    
    
    
    (55
    )Federal funds sold
    
    
    (63
    )
    
    
    (17
    )
    
    
    (46
    )
    
    
    (66
    )
    
    
    (16
    )
    
    
    (50
    )Total interest income
    
    
    864
    
    
    
    428
    
    
    
    436
    
    
    
    1,751
    
    
    
    1,066
    
    
    
    685Interest expense:Money market accounts
    
    
    6
    
    
    
    33
    
    
    
    (27
    )
    
    
    32
    
    
    
    80
    
    
    
    (48
    )NOW accounts
    
    
    174
    
    
    
    144
    
    
    
    30
    
    
    
    375
    
    
    
    317
    
    
    
    58Savings accounts
    
    
    (11
    )
    
    
    30
    
    
    
    (41
    )
    
    
    (6
    )
    
    
    82
    
    
    
    (88
    )Time deposits less than $100
    
    
    131
    
    
    
    212
    
    
    
    (81
    )
    
    
    285
    
    
    
    450
    
    
    
    (165
    )Time deposits $100 or more
    
    
    302
    
    
    
    86
    
    
    
    216
    
    
    
    530
    
    
    
    134
    
    
    
    396Short-term borrowings
    
    
    99
    
    
    
    4
    
    
    
    95
    
    
    
    159
    
    
    
    21
    
    
    
    138Total interest expense
    
    
    701
    
    
    
    509
    
    
    
    192
    
    
    
    1,375
    
    
    
    1,084
    
    
    
    291Net interest income
    
    $
    163
    
    
    $
    (81
    )
    
    $
    244
    
    
    $
    376
    
    
    $
    (18
    )
    
    $
    394
 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)
    41




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  42




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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
 June 30, 2007
    
    
    June 30, 2006Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Income/
    
    
    Interest
    
    
    Average
    
    
    Income/
    
    
    InterestBalance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    RateASSETS:Earning assets:Loans:Taxable
    
    $
    410,136
    
    
    $
    15,039
    
    
    
    7.39
    %
    
    $
    378,656
    
    
    $
    13,057
    
    
    
    6.95
    %Tax-exempt
    
    
    40,362
    
    
    
    1,280
    
    
    
    6.40
    
    
    
    43,939
    
    
    
    1,327
    
    
    
    6.09Investments:Taxable
    
    
    50,136
    
    
    
    1,046
    
    
    
    4.21
    
    
    
    61,341
    
    
    
    1,142
    
    
    
    3.75Tax-exempt
    
    
    29,730
    
    
    
    1,123
    
    
    
    7.62
    
    
    
    31,213
    
    
    
    1,145
    
    
    
    7.40Federal funds sold
    
    
    391
    
    
    
    7
    
    
    
    3.61
    
    
    
    2,996
    
    
    
    73
    
    
    
    4.91Total earning assets
    
    
    530,755
    
    
    
    18,495
    
    
    
    7.03
    %
    
    
    518,145
    
    
    
    16,744
    
    
    
    6.52
    %Less: allowance for loan losses
    
    
    4,609
    
    
    
    
    
    
    
    
    
    
    
    4,227Other assets
    
    
    28,471
    
    
    
    
    
    
    
    
    
    
    
    28,840Total assets
    
    $
    554,617
    
    
    
    
    
    
    
    
    
    
    $
    542,758LIABILITIES AND STOCKHOLDERS EQUITY:Interest-bearing liabilities:Money market accounts
    
    $
    28,019
    
    
    
    411
    
    
    
    2.96
    %
    
    $
    31,741
    
    
    
    379
    
    
    
    2.41
    %NOW accounts
    
    
    64,098
    
    
    
    1,001
    
    
    
    3.15
    
    
    
    58,973
    
    
    
    626
    
    
    
    2.14Savings accounts
    
    
    101,081
    
    
    
    721
    
    
    
    1.44
    
    
    
    114,096
    
    
    
    727
    
    
    
    1.28Time deposits less than $100
    
    
    179,184
    
    
    
    3,910
    
    
    
    4.40
    
    
    
    187,398
    
    
    
    3,625
    
    
    
    3.90Time deposits $100 or more
    
    
    41,238
    
    
    
    984
    
    
    
    4.81
    
    
    
    22,142
    
    
    
    454
    
    
    
    4.13Short-term borrowings
    
    
    11,245
    
    
    
    303
    
    
    
    5.43
    
    
    
    6,059
    
    
    
    144
    
    
    
    4.79Total interest-bearing liabilities
    
    
    424,865
    
    
    
    7,330
    
    
    
    3.48
    %
    
    
    420,409
    
    
    
    5,955
    
    
    
    2.86
    %Noninterest-bearing deposits
    
    
    73,505
    
    
    
    
    
    
    
    
    
    
    
    69,171Other liabilities
    
    
    2,727
    
    
    
    
    
    
    
    
    
    
    
    2,303Stockholders equity
    
    
    53,520
    
    
    
    
    
    
    
    
    
    
    
    50,875Total liabilities and stockholders
equity
    
    $
    554,617
    
    
    
    
    
    
    
    
    
    
    $
    542,758Net interest/income spread
    
    
    
    
    
    $
    11,165
    
    
    
    3.55
    %
    
    
    
    
    
    $
    10,789
    
    
    
    3.66
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    4.24
    %
    
    
    
    
    
    
    
    
    
    
    4.20
    %Tax equivalent adjustments:Loans
    
    
    
    
    
    $
    435
    
    
    
    
    
    
    
    
    
    
    $
    451Investments
    
    
    
    
    
    
    382
    
    
    
    
    
    
    
    
    
    
    
    389Total adjustments
    
    
    
    
    
    $
    817
    
    
    
    
    
    
    
    
    
    
    $
    840
 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 $1,396 and
$1,177 for the six months ended June 30, 2007 and 2006 included in other assets.
Tax-equivalent adjustments were calculated using the prevailing statutory tax rate of 34.0
percent.
 43




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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:
  44




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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
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Salaries and employee benefits expense:Salaries and payroll taxes
    
    $
    1,527
    
    
    $
    1,525
    
    
    $
    3,011
    
    
    $
    2,973Employee benefits
    
    
    432
    
    
    
    393
    
    
    
    827
    
    
    
    735Salaries and employee benefits expense
    
    
    1,959
    
    
    
    1,918
    
    
    
    3,838
    
    
    
    3,708Net occupancy and equipment expense:Net occupancy expense
    
    
    292
    
    
    
    297
    
    
    
    613
    
    
    
    614Equipment expense
    
    
    311
    
    
    
    299
    
    
    
    624
    
    
    
    587Net occupancy and equipment expense
    
    
    603
    
    
    
    596
    
    
    
    1,237
    
    
    
    1,201Other expenses:Marketing expense
    
    
    132
    
    
    
    152
    
    
    
    291
    
    
    
    265Other taxes
    
    
    142
    
    
    
    123
    
    
    
    276
    
    
    
    254Stationery and supplies
    
    
    115
    
    
    
    83
    
    
    
    226
    
    
    
    165Contractual services
    
    
    482
    
    
    
    414
    
    
    
    935
    
    
    
    840Insurance including FDIC assessment
    
    
    65
    
    
    
    74
    
    
    
    116
    
    
    
    136Other
    
    
    317
    
    
    
    359
    
    
    
    649
    
    
    
    706Other expenses
    
    
    1,253
    
    
    
    1,205
    
    
    
    2,493
    
    
    
    2,366Total noninterest expense
    
    $
    3,815
    
    
    $
    3,719
    
    
    $
    7,568
    
    
    $
    7,275
  45




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  SM
    46




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
 Income Taxes:
   47




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##### 



Comm Bancorp, Inc.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
 Disclosure of Quantitative and Qualitative Disclosure about Market Risk:
  48




---



##### 



Comm Bancorp, Inc.
CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures:
  Internal Control Over Financial Reporting:
  49




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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 ProgramsJanuary 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,374February 28, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,374March 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,374April 30, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,374May 31, 2007
    
    
    4,200
    
    
    $
    47.99
    
    
    
    4,200
    
    
    
    34,174June 30, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,174Total
    
    
    4,200
    
    
    $
    47.99
    
    
    
    4,200
 
 (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
  50




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##### 



Comm Bancorp, Inc.
OTHER INFORMATION (CONTINUED)
 Item 4.
    
    Results of Votes of Security Holders at the Companys annual meeting of stockholders held
on June 1, 2007, for which proxies were solicited pursuant to Section 14 under the Securities
Exchange Act of 1934, the following matters were voted upon by the stockholders.
 1.
    
    To elect 13 directors to serve for a one-year term and until their successors are
duly elected and qualified.All nominees of the Board of Directors were elected. The number of votes cast for or
opposed to each of the nominees for election to the Board of Directors were as follows:
 Nominee
    
    For
    
    
    AgainstDavid L. Baker
    
    
    1,512,390.849
    
    
    
    51,952.623Thomas M. Chesnick
    
    
    1,504,841.268
    
    
    
    59,502.204William F. Farber, Sr.
    
    
    1,501,685.301
    
    
    
    62,658.171Judd B. Fitze
    
    
    1,460,761.268
    
    
    
    103,582.204Dean L. Hesser
    
    
    1,513,571.268
    
    
    
    50,772.204John P. Kameen
    
    
    1,512,931.268
    
    
    
    50,412.204William A. Kerl
    
    
    1,504,841.268
    
    
    
    59,502.204Erwin T. Kost
    
    
    1,512,931.268
    
    
    
    51,412.204Susan F. Mancuso
    
    
    1,514,674.472
    
    
    
    49,669.000Robert A. Mazzoni
    
    
    1,513,571.268
    
    
    
    50,772.204J. Robert McDonnell
    
    
    1,479,763.268
    
    
    
    84,580.204Joseph P. Moore, III
    
    
    1,512,931.268
    
    
    
    51,412.204Eric G. Stephens
    
    
    1,460,761.268
    
    
    
    103,582.204
 2.
    
    To ratify the selection of Beard Miller Company LLP, of Allentown, Pennsylvania,
Certified Public Accountants, as the independent auditors for the year ending December
31, 2007. The votes cast on this matter were as follows:
 For
    
    Against1,548,794.472
    
    15,549.000
 Item 5. Other Information
  51




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##### 



Comm Bancorp, Inc.
OTHER INFORMATION (CONTINUED)
 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.
 52




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##### 



COMM BANCORP, INC.
 FORM 10-Q
 SIGNATURE PAGE
  Registrant, Comm Bancorp, Inc.Date: August 9, 2007
    /s/ William F. Farber, Sr.William F. Farber, Sr.President and Chief Executive Officer
Chairman of the Board/Director
(Principal Executive Officer)Date: August 9, 2007
    /s/ Scott A. SeasockScott A. SeasockExecutive Vice President and
Chief Financial Officer
(Principal Financial Officer)Date: August 9, 2007
    /s/ Stephanie A. Westington, CPAStephanie A. Westington, CPAVice President of Finance
(Principal Accounting Officer) 53




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##### 



EXHIBIT INDEX
 Item Number
    
    Description
    
    Page31(i)
    
    CEO and CFO Certifications Pursuant to
Rule 13a-14(a)/15d-14(a).
    
    
    5532
    
    CEO and CFO Certifications Pursuant to
Section 1350.
    
    
    59
 54