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, 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.
 (Exact name of registrant as specified in its charter)
 Pennsylvania
    
    23-2242292(State or other jurisdiction of incorporation
    
    (I.R.S. Employer Identification Number)or organization)
 125 North State Street, Clarks Summit, PA
    
    18411(Address of principal executive offices)
    
    (Zip Code)
 (570) 586-0377
 (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report.)
 þ o
  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
June 30, 2008
 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,
2008 and 2007
    
    
    3Consolidated Balance Sheets  June 30, 2008 and
December 31, 2007
    
    
    4Consolidated Statements of Changes in Stockholders Equity
for the Six Months Ended June 30, 2008 and 2007
    
    
    5Consolidated Statements of Cash Flows for the Six Months
Ended June 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
    
    
    45Item 4T. Controls and Procedures
    
    
    *PART II. OTHER INFORMATION:Item 1. Legal Proceedings
    
    
    46Item 1A. Risk Factors
    
    
    *Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds
    
    
    46Item 3. Defaults Upon Senior Securities
    
    
    46Item 4. Submission of Matters to a Vote of Security Holders
    
    
    47Item 5. Other Information
    
    
    47Item 6. Exhibits
    
    
    47Signatures
    
    
    48Exhibit Index
    
    
    49
  
 *
    
    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 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Interest income:Interest and fees on loans:Taxable
    
    $
    7,274
    
    
    $
    7,738
    
    
    $
    14,842
    
    
    $
    15,039Tax-exempt
    
    
    564
    
    
    
    445
    
    
    
    1,135
    
    
    
    845Interest and dividends on investment securities available-for-sale:Taxable
    
    
    38
    
    
    
    441
    
    
    
    81
    
    
    
    1,014Tax-exempt
    
    
    357
    
    
    
    370
    
    
    
    721
    
    
    
    741Dividends
    
    
    15
    
    
    
    21
    
    
    
    27
    
    
    
    32Interest on federal funds sold
    
    
    10
    
    
    
    4
    
    
    
    12
    
    
    
    7Total interest income
    
    
    8,258
    
    
    
    9,019
    
    
    
    16,818
    
    
    
    17,678Interest expense:Interest on deposits
    
    
    2,982
    
    
    
    3,593
    
    
    
    6,252
    
    
    
    7,027Interest on short-term borrowings
    
    
    50
    
    
    
    159
    
    
    
    178
    
    
    
    303Total interest expense
    
    
    3,032
    
    
    
    3,752
    
    
    
    6,430
    
    
    
    7,330Net interest income
    
    
    5,226
    
    
    
    5,267
    
    
    
    10,388
    
    
    
    10,348Provision for loan losses
    
    
    283
    
    
    
    
    
    
    
    613
    
    
    
    225Net interest income after provision for loan losses
    
    
    4,943
    
    
    
    5,267
    
    
    
    9,775
    
    
    
    10,123Noninterest income:Service charges, fees and commissions
    
    
    881
    
    
    
    884
    
    
    
    1,679
    
    
    
    1,589Mortgage banking income
    
    
    154
    
    
    
    98
    
    
    
    324
    
    
    
    173Total noninterest income
    
    
    1,035
    
    
    
    982
    
    
    
    2,003
    
    
    
    1,762Noninterest expense:Salaries and employee benefits expense
    
    
    2,115
    
    
    
    1,959
    
    
    
    4,245
    
    
    
    3,838Net occupancy and equipment expense
    
    
    645
    
    
    
    603
    
    
    
    1,283
    
    
    
    1,237Other expenses
    
    
    1,272
    
    
    
    1,253
    
    
    
    2,503
    
    
    
    2,493Total noninterest expense
    
    
    4,032
    
    
    
    3,815
    
    
    
    8,031
    
    
    
    7,568Income before income taxes
    
    
    1,946
    
    
    
    2,434
    
    
    
    3,747
    
    
    
    4,317Provision for income tax expense
    
    
    286
    
    
    
    554
    
    
    
    522
    
    
    
    932Net income
    
    
    1,660
    
    
    
    1,880
    
    
    
    3,225
    
    
    
    3,385Other comprehensive loss:Unrealized losses on investment securities available-for-sale
    
    
    (582
    )
    
    
    (394
    )
    
    
    (338
    )
    
    
    (398
    )Income tax benefit related to other comprehensive loss
    
    
    (198
    )
    
    
    (134
    )
    
    
    (115
    )
    
    
    (135
    )Other comprehensive loss, net of income taxes
    
    
    (384
    )
    
    
    (260
    )
    
    
    (223
    )
    
    
    (263
    )Comprehensive income
    
    $
    1,276
    
    
    $
    1,620
    
    
    $
    3,002
    
    
    $
    3,122Per share data:Net income
    
    $
    0 95
    
    
    $
    1 06
    
    
    $
    1 84
    
    
    $
    1 87Cash dividends declared
    
    $
    0 27
    
    
    $
    0 26
    
    
    $
    0 54
    
    
    $
    0 52Average common shares outstanding
    
    
    1,751,841
    
    
    
    1,776,590
    
    
    
    1,752,609
    
    
    
    1,813,847
  3




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##### 



Comm Bancorp, Inc.
 
 CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
 June 30,
    
    
    December 31,2008
    
    
    2007Assets:Cash and due from banks
    
    $
    16,944
    
    
    $
    13,125Federal funds sold
    
    
    6,700
    
    
    
    8,751Investment securities available-for-sale
    
    
    31,488
    
    
    
    39,407Loans held for sale, net
    
    
    925
    
    
    
    1,248Loans, net of unearned income
    
    
    491,084
    
    
    
    471,344Less: allowance for loan losses
    
    
    5,101
    
    
    
    4,624Net loans
    
    
    485,983
    
    
    
    466,720Premises and equipment, net
    
    
    10,710
    
    
    
    10,891Accrued interest receivable
    
    
    2,513
    
    
    
    2,634Other assets
    
    
    6,675
    
    
    
    6,211Total assets
    
    $
    561,938
    
    
    $
    548,987Liabilities:Deposits:Noninterest-bearing
    
    $
    81,280
    
    
    $
    75,232Interest-bearing
    
    
    421,252
    
    
    
    416,125Total deposits
    
    
    502,532
    
    
    
    491,357Accrued interest payable
    
    
    1,271
    
    
    
    1,308Other liabilities
    
    
    1,958
    
    
    
    1,949Total liabilities
    
    
    505,761
    
    
    
    494,614Stockholders equity:Common stock, par value $0.33, authorized 12,000,000 shares, issued and outstanding:June 30, 2008, 1,747,774 shares; December 31, 2007, 1,753,622 shares
    
    
    577
    
    
    
    579Capital surplus
    
    
    7,548
    
    
    
    7,326Retained earnings
    
    
    47,160
    
    
    
    45,353Accumulated other comprehensive income
    
    
    892
    
    
    
    1,115Total stockholders equity
    
    
    56,177
    
    
    
    54,373Total liabilities and stockholders equity
    
    $
    561,938
    
    
    $
    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
    
    
    
    
    
    
    
    
    
    
    3,225
    
    
    
    
    
    
    
    3,225Dividends declared: $0.54 per share
    
    
    
    
    
    
    
    
    
    
    (945
    )
    
    
    
    
    
    
    (945
    )Dividend reinvestment plan: 5,738 shares issued
    
    
    2
    
    
    
    257
    
    
    
    
    
    
    
    
    
    
    
    259Repurchase and retirement: 11,586 shares
    
    
    (4
    )
    
    
    (35
    )
    
    
    (473
    )
    
    
    
    
    
    
    (512
    )Other comprehensive loss, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (223
    )
    
    
    (223
    )Balance, June 30, 2008
    
    $
    577
    
    
    $
    7,548
    
    
    $
    47,160
    
    
    $
    892
    
    
    $
    56,177Balance, 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
    )Other comprehensive loss, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (263
    )
    
    
    (263
    )Balance, June 30, 2007
    
    $
    579
    
    
    $
    7,096
    
    
    $
    43,049
    
    
    $
    694
    
    
    $
    51,418
  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,
    
    2008
    
    
    2007Cash flows from operating activities:Net income
    
    $
    3,225
    
    
    $
    3,385Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    613
    
    
    
    225Depreciation and amortization of premises and equipment
    
    
    476
    
    
    
    542Net amortization (accretion) of investment securities
    
    
    47
    
    
    
    (49
    )Amortization of net loan costs
    
    
    166
    
    
    
    171Amortization of mortgage servicing rights
    
    
    110
    
    
    
    120Deferred income tax benefit
    
    
    (358
    )
    
    
    (53
    )Net gains on the sale of loans
    
    
    (259
    )
    
    
    (118
    )Gains on the sale of foreclosed assets
    
    
    (12
    )
    
    
    (37
    )Changes in:Loans held for sale, net
    
    
    582
    
    
    
    (1,763
    )Accrued interest receivable
    
    
    121
    
    
    
    (208
    )Other assets
    
    
    (341
    )
    
    
    (1,816
    )Accrued interest payable
    
    
    (37
    )
    
    
    59Other liabilities
    
    
    109
    
    
    
    271Net cash provided by operating activities
    
    
    4,442
    
    
    
    729Cash flows from investing activities:Proceeds from repayments of investment securities available-for-sale
    
    
    9,248
    
    
    
    34,206Purchases of investment securities available-for-sale
    
    
    (1,714
    )
    
    
    (10,576
    )Proceeds from sale of foreclosed assets
    
    
    137
    
    
    
    133Net increase in lending activities
    
    
    (20,042
    )
    
    
    (47,217
    )Purchases of premises and equipment
    
    
    (295
    )
    
    
    (747
    )Net cash used in investing activities
    
    
    (12,666
    )
    
    
    (24,201
    )Cash flows from financing activities:Net changes in:Money market, NOW, savings and noninterest-bearing accounts
    
    
    (258
    )
    
    
    (1,961
    )Time deposits
    
    
    11,433
    
    
    
    13,023Short-term borrowings
    
    
    
    
    
    
    5,700Proceeds from issuance of common shares
    
    
    259
    
    
    
    249Repurchase and retirement of common shares
    
    
    (512
    )
    
    
    (5,134
    )Cash dividends paid
    
    
    (930
    )
    
    
    (944
    )Net cash provided by financing activities
    
    
    9,992
    
    
    
    10,933Net increase (decrease) in cash and cash equivalents
    
    
    1,768
    
    
    
    (12,539
    )Cash and cash equivalents at beginning of year
    
    
    21,876
    
    
    
    27,634Cash and cash equivalents at end of period
    
    $
    23,644
    
    
    $
    15,095Supplemental disclosures:Cash paid during the period for:Interest
    
    $
    6,467
    
    
    $
    7,271Income taxes
    
    
    830
    
    
    
    745Noncash items:Unrealized losses on investment securities available-for-sale, net
    
    $
    223
    
    
    $
    263
  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 InputsJune 30, 2008
    
    Amount
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Assets:Investment securities available-for-sale.
    
    $
    31,488
    
    
    
    
    
    
    $
    31,488
   Fair Value Measurements UsingQuoted Prices inActive Markets for
    
    Significant Other
    
    SignificantIdentical Assets
    
    Observable Inputs
    
    Unobservable InputsJune 30, 2008
    
    Amount
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Assets:Impaired loans
    
    $
    14,023
    
    
    
    
    
    
    
    
    
    
    $
    14,023
  8




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##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 4. Hierarchy of GAAP:
  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:
   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
 June 30,
    
    
    December 31,2008
    
    
    2007Amount
    
    
    %
    
    
    Amount
    
    
    %State and municipals:Taxable
    
    
    
    
    
    
    
    
    
    $
    5,227
    
    
    
    13.26
    %Tax-exempt
    
    $
    29,361
    
    
    
    93.25
    %
    
    
    30,897
    
    
    
    78.41Mortgage-backed securities
    
    
    1,181
    
    
    
    3.75
    
    
    
    1,904
    
    
    
    4.83Equity securities:Restricted
    
    
    728
    
    
    
    2.31
    
    
    
    1,128
    
    
    
    2.86Other
    
    
    218
    
    
    
    0.69
    
    
    
    251
    
    
    
    0.64Total
    
    $
    31,488
    
    
    
    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
    
    
    TotalJune 30, 2008
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    YieldAmortized cost:State and municipals
    
    $
    1,008
    
    
    
    6.55
    %
    
    $
    6,090
    
    
    
    7.82
    %
    
    $
    19,546
    
    
    
    7.46
    %
    
    $
    1,460
    
    
    
    7.41
    %
    
    $
    28,104
    
    
    
    7.50
    %Mortgage-backed securities
    
    
    499
    
    
    
    4.91
    
    
    
    632
    
    
    
    5.04
    
    
    
    37
    
    
    
    6.57
    
    
    
    
    
    
    
    
    
    
    
    1,168
    
    
    
    5.03Equity securities:Restricted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    728
    
    
    
    6.64
    
    
    
    728
    
    
    
    6.64Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    136
    
    
    
    3.96
    
    
    
    136
    
    
    
    3.96Total
    
    $
    1,507
    
    
    
    6.01
    %
    
    $
    6,722
    
    
    
    7.56
    %
    
    $
    19,583
    
    
    
    7.46
    %
    
    $
    2,324
    
    
    
    6.97
    %
    
    $
    30,136
    
    
    
    7.37
    %Fair value:State and municipals
    
    $
    1,028
    
    
    
    
    
    
    $
    6,321
    
    
    
    
    
    
    $
    20,495
    
    
    
    
    
    
    $
    1,517
    
    
    
    
    
    
    $
    29,361Mortgage-backed securities
    
    
    504
    
    
    
    
    
    
    
    639
    
    
    
    
    
    
    
    38
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,181Equity securities:Restricted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    728
    
    
    
    
    
    
    
    728Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    218
    
    
    
    
    
    
    
    218Total
    
    $
    1,532
    
    
    
    
    
    
    $
    6,960
    
    
    
    
    
    
    $
    20,533
    
    
    
    
    
    
    $
    2,463
    
    
    
    
    
    
    $
    31,488
 Loan Portfolio:
   16




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##### 



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




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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 31,2008
    
    
    2007Amount
    
    
   %
    
    
    Amount
    
    
    %Commercial, financial and others
    
    $
    200,375
    
    
    
    40.80
    %
    
    $
    187,147
    
    
    
    39.70
    %Real estate:Construction
    
    
    10,280
    
    
    
    2.09
    
    
    
    12,810
    
    
    
    2.72Mortgage
    
    
    243,808
    
    
    
    49.65
    
    
    
    233,755
    
    
    
    49.59Consumer, net
    
    
    33,955
    
    
    
    6.92
    
    
    
    35,149
    
    
    
    7.46Lease financing, net
    
    
    2,666
    
    
    
    0.54
    
    
    
    2,483
    
    
    
    0.53Loans, net of unearned income
    
    
    491,084
    
    
    
    100.00
    %
    
    
    471,344
    
    
    
    100.00
    %Less: allowance for loan losses
    
    
    5,101
    
    
    
    
    
    
    
    4,624Net loans
    
    $
    485,983
    
    
    
    
    
    
    $
    466,720
   Maturity distribution and interest sensitivity of loan portfolio
 After oneWithin
    
    
    but within
    
    
    AfterJune 30, 2008
    
    one year
    
    
    five years
    
    
    five years
    
    
    TotalMaturity schedule:Commercial, financial and others
    
    $
    95,532
    
    
    $
    50,268
    
    
    $
    54,575
    
    
    $
    200,375Real estate:Construction
    
    
    10,280
    
    
    
    
    
    
    
    
    
    
    
    10,280Mortgage
    
    
    28,652
    
    
    
    94,835
    
    
    
    120,321
    
    
    
    243,808Consumer, net
    
    
    4,813
    
    
    
    23,436
    
    
    
    5,706
    
    
    
    33,955Lease financing, net
    
    
    532
    
    
    
    2,134
    
    
    
    
    
    
    
    2,666Total
    
    $
    139,809
    
    
    $
    170,673
    
    
    $
    180,602
    
    
    $
    491,084Predetermined interest rates
    
    $
    66,878
    
    
    $
    98,760
    
    
    $
    77,943
    
    
    $
    243,581Floating- or adjustable-interest rates
    
    
    72,931
    
    
    
    71,913
    
    
    
    102,659
    
    
    
    247,503Total
    
    $
    139,809
    
    
    $
    170,673
    
    
    $
    180,602
    
    
    $
    491,084
 18




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
      19




---



##### 



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 31,2008
    
    
    2007Commitments to extend credit
    
    $
    69,058
    
    
    $
    80,675Unused portions of lines of credit
    
    
    18,933
    
    
    
    17,901Commercial letters of credit
    
    
    19,314
    
    
    
    19,634Total
    
    $
    107,305
    
    
    $
    118,210
  Asset Quality:
  June 30,
    
    2008
    
    
    2007United States
    
    
    5.5
    %
    
    
    4.6
    %Pennsylvania
    
    
    5.2
    
    
    
    4.3Lackawanna county
    
    
    5.7
    
    
    
    4.7Luzerne county
    
    
    6.2
    
    
    
    4.8Monroe county
    
    
    5.7
    
    
    
    4.8Susquehanna county
    
    
    5.1
    
    
    
    4.4Wayne county
    
    
    4.7
    
    
    
    4.1Wyoming county
    
    
    5.7
    %
    
    
    4.9
    %
   20




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    Distribution of nonperforming assets
 June 30,
    
    
    December 31,2008
    
    
    2007Nonaccrual loans:Commercial, financial and others
    
    $
    5,770
    
    
    $
    2,444Real estate:ConstructionMortgage
    
    
    5,462
    
    
    
    2,812Consumer, net
    
    
    69
    
    
    
    77Lease financing, netTotal nonaccrual loans
    
    
    11,301
    
    
    
    5,333Accruing loans past due 90 days or more:Commercial, financial and others
    
    
    686
    
    
    
    1,837Real estate:ConstructionMortgage
    
    
    1,840
    
    
    
    295Consumer, net
    
    
    59
    
    
    
    85Lease financing, net
    
    
    
    
    
    
    17Total accruing loans past due 90 days or more
    
    
    2,585
    
    
    
    2,234Total nonperforming loans
    
    
    13,886
    
    
    
    7,567Foreclosed assets
    
    
    
    
    
    
    125Total nonperforming assets
    
    $
    13,886
    
    
    $
    7,692Ratios:Nonperforming loans as a percentage of loans, net
    
    
    2.83
    %
    
    
    1.61
    %Nonperforming assets as a percentage of loans, net and
and foreclosed assets
    
    
    2.83
    %
    
    
    1.63
    %
 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 31,2008
    
    
    2007Nonaccrual loans:Commercial, financial and others
    
    $
    5,770
    
    
    $
    2,444Real estate:ConstructionMortgage
    
    
    5,462
    
    
    
    2,812Consumer, net
    
    
    69
    
    
    
    77Lease financing, netTotal nonaccrual loans
    
    
    11,301
    
    
    
    5,333Accruing loans:Commercial, financial and others
    
    
    10,148
    
    
    
    2,338Real estate:ConstructionMortgage
    
    
    9,430
    
    
    
    7,247Consumer, net
    
    
    
    
    
    
    5Lease financing, netTotal accruing loans
    
    
    19,583
    
    
    
    9,585Total impaired loans
    
    $
    30,884
    
    
    $
    14,918Ratio:Impaired loans as a percentage of loans, net
    
    
    6.29
    %
    
    
    3.16
    %
  23




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  June 30, 2008
    
    
    December 31, 2007Recorded
    
    
    Related
    
    
    Recorded
    
    
    RelatedInvestment
    
    
    Allowance
    
    
    Investment
    
    
    AllowanceImpaired loans:With a related allowance
    
    $
    17,484
    
    
    $
    3,461
    
    
    $
    7,575
    
    
    $
    3,216With no related allowance
    
    
    13,400
    
    
    
    
    
    
    
    7,343Total
    
    $
    30,884
    
    
    $
    3,461
    
    
    $
    14,918
    
    
    $
    3,216
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Gross interest due under terms
    
    $
    512
    
    
    $
    208
    
    
    $
    1,075
    
    
    $
    411Interest income recognized
    
    
    304
    
    
    
    163
    
    
    
    782
    
    
    
    375Interest income not recognized
    
    $
    208
    
    
    $
    45
    
    
    $
    293
    
    
    $
    36Interest income recognized (cash-basis)
    
    $
    304
    
    
    $
    163
    
    
    $
    782
    
    
    $
    375Average recorded investment in impaired loans.
    
    $
    30,935
    
    
    $
    11,257
    
    
    $
    30,570
    
    
    $
    11,040
  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 31,2008
    
    
    2007Category
    
    
    
    
    
    
    Categoryas a
    
    
    
    
    
    
    as a% of
    
    
    
    
    
    
    % ofAmount
    
    
    loans
    
    
    Amount
    
    
    loansAllocated allowance:Specific:Commercial, financial and others
    
    $
    1,510
    
    
    
    3.24
    %
    
    $
    2,216
    
    
    
    1.01
    %Real estate:ConstructionMortgage
    
    
    1,876
    
    
    
    3.03
    
    
    
    923
    
    
    
    2.13Consumer, net
    
    
    75
    
    
    
    0.02
    
    
    
    77
    
    
    
    0.02Lease financing, netTotal specific
    
    
    3,461
    
    
    
    6.29
    
    
    
    3,216
    
    
    
    3.16Formula:Commercial, financial and others
    
    
    199
    
    
    
    37.56
    
    
    
    247
    
    
    
    38.69Real estate:Construction
    
    
    
    
    
    
    
    
    
    
    2.09
    
    
    
    2.72Mortgage
    
    
    401
    
    
    
    46.62
    
    
    
    226
    
    
    
    47.46Consumer, net
    
    
    350
    
    
    
    6.90
    
    
    
    344
    
    
    
    7.44Lease financing, net
    
    
    6
    
    
    
    0.54
    
    
    
    
    
    
    
    0.53Total formula
    
    
    956
    
    
    
    93.71
    
    
    
    817
    
    
    
    96.84Total allocated allowance
    
    
    4,417
    
    
    
    100.00
    %
    
    
    4,033
    
    
    
    100.00
    %Unallocated allowance
    
    
    684
    
    
    
    
    
    
    
    591Total allowance for loan losses
    
    $
    5,101
    
    
    
    
    
    
    $
    4,624
  25




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Reconciliation of allowance for loan losses
 June 30,2008Allowance for loan losses at beginning of period
    
    $
    4,624Loans charged-off:Commercial, financial and others
    
    
    85Real estate:ConstructionMortgage
    
    
    14Consumer, net
    
    
    81Lease financing, net
    
    
    16Total
    
    
    196Loans recovered:Commercial, financial and others
    
    
    3Real estate:ConstructionMortgage
    
    
    2Consumer, net
    
    
    55Lease financing, netTotal
    
    
    60Net loans charged-off
    
    
    136Provision charged to operating expense
    
    
    613Allowance for loan losses at end of period
    
    $
    5,101Ratios:Net loans charged-off as a percentage of average loans outstanding
    
    
    0.06
    %Allowance for loan losses as a percentage of period end loans
    
    
    1.04
    %
  26




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Deposits:
    Deposit distribution
 June 30,
    
    
    June 30,2008
    
    
    2007Average
    
    
    Average
    
    
    Average
    
    
   AverageBalance
    
    
    Rate
    
    
    Balance
    
    
    RateInterest-bearing:Money market accounts
    
    $
    26,866
    
    
    
    2.06
    %
    
    $
    28,019
    
    
    
    2.96
    %NOW accounts
    
    
    70,740
    
    
    
    2.63
    
    
    
    64,098
    
    
    
    3.15Savings accounts
    
    
    100,324
    
    
    
    1.13
    
    
    
    101,081
    
    
    
    1.44Time deposits less than $100
    
    
    168,440
    
    
    
    4.15
    
    
    
    179,184
    
    
    
    4.40Time deposits $100 or more
    
    
    46,428
    
    
    
    4.39
    
    
    
    41,238
    
    
    
    4.81Total interest-bearing
    
    
    412,798
    
    
    
    3.05
    %
    
    
    413,620
    
    
    
    3.43
    %Noninterest-bearing
    
    
    74,709
    
    
    
    
    
    
    
    73,505Total deposits
    
    $
    487,507
    
    
    
    
    
    
    $
    487,125
 27




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    Maturity distribution of time deposits of $100 or more
 June 30,
    
    
    December 31,2008
    
    
    2007Within three months
    
    $
    16,257
    
    
    $
    11,336After three months but within six months
    
    
    12,242
    
    
    
    8,040After six months but within twelve months
    
    
    6,878
    
    
    
    12,702After twelve months
    
    
    13,482
    
    
    
    11,148Total
    
    $
    48,859
    
    
    $
    43,226
 28




---



##### 



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




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Interest rate sensitivity
 Due after
    
    
    Due afterthree months
    
    
    one yearDue within
    
    
    but within
    
    
    but within
    
    
    Due afterJune 30, 2008
    
    three months
    
    
    twelve months
    
    
    five years
    
    
    five years
    
    
    TotalRate-sensitive assets:Investment securities
    
    $
    125
    
    
    $
    1,407
    
    
    $
    6,960
    
    
    $
    22,996
    
    
    $
    31,488Loans held for sale, net
    
    
    925
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    925Loans, net of unearned income
    
    
    135,734
    
    
    
    85,985
    
    
    
    187,607
    
    
    
    81,758
    
    
    
    491,084Federal funds sold
    
    
    6,700
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,700Total
    
    $
    143,484
    
    
    $
    87,392
    
    
    $
    194,567
    
    
    $
    104,754
    
    
    $
    530,197Rate-sensitive liabilities:Money market accounts
    
    $
    13,135
    
    
    $
    7,039
    
    
    
    
    
    
    
    
    
    
    $
    20,174NOW accounts
    
    
    58,242
    
    
    
    15,808
    
    
    
    
    
    
    
    
    
    
    
    74,050Savings accounts
    
    
    17,500
    
    
    $
    91,613
    
    
    
    
    
    
    
    
    
    
    
    109,113Time deposits less than $100
    
    
    40,399
    
    
    
    45,691
    
    
    
    69,569
    
    
    $
    13,397
    
    
    
    169,056Time deposits $100 or more
    
    
    16,257
    
    
    
    19,120
    
    
    
    10,760
    
    
    
    2,722
    
    
    
    48,859Total
    
    $
    145,533
    
    
    $
    87,658
    
    
    $
    171,942
    
    
    $
    16,119
    
    
    $
    421,252Rate sensitivity gap:Period
    
    $
    (2,049
    )
    
    $
    (266
    )
    
    $
    22,625
    
    
    $
    88,635Cumulative
    
    $
    (2,049
    )
    
    $
    (2,315
    )
    
    $
    20,310
    
    
    $
    108,945
    
    
    $
    108,945RSA/RSL ratio:Period
    
    
    0.99
    
    
    
    1.00
    
    
    
    1.13
    
    
    
    6.50Cumulative
    
    
    0.99
    
    
    
    0.99
    
    
    
    1.05
    
    
    
    1.26
    
    
    
    1.26
  30




---



##### 



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




---



##### 



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




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
     Capital Adequacy:
  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)
  Regulatory capital
 Minimum to be Well
 Capitalized underMinimum for Capital
    
    Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action ProvisionsJune 30,
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Basis for ratios:Tier I capital to risk-weighted assets:Consolidated
    
    $
    54,879
    
    
    $
    50,315
    
    
    $
    19,532
    
    
    $
    18,570Community Bank
    
    
    49,814
    
    
    
    46,878
    
    
    
    19,391
    
    
    
    18,479
    
    
    $
    29,086
    
    
    $
    27,718Total capital to risk-weighted assets:Consolidated
    
    
    59,980
    
    
    
    54,876
    
    
    
    39,064
    
    
    
    37,139Community Bank
    
    
    54,915
    
    
    
    51,439
    
    
    
    38,781
    
    
    
    36,958
    
    
    
    48,477
    
    
    
    46,197Tier I capital to total average assets
less goodwill:Consolidated
    
    
    54,879
    
    
    
    50,315
    
    
    
    22,338
    
    
    
    22,168Community Bank
    
    
    49,814
    
    
    
    46,878
    
    
    $
    22,184
    
    
    $
    22,116
    
    
    $
    27,730
    
    
    $
    27,646Risk-weighted assets:Consolidated
    
    
    475,705
    
    
    
    451,104Community Bank
    
    
    472,172
    
    
    
    448,836Risk-weighted off-balance sheet items:Consolidated
    
    
    12,593
    
    
    
    13,137Community Bank
    
    
    12,593
    
    
    
    13,137Average assets for Leverage ratio:Consolidated
    
    
    558,457
    
    
    
    554,208Community Bank
    
    $
    554,596
    
    
    $
    552,911Ratios:Tier I capital as a percentage of risk-
weighted assets and off-balance sheet
items:Consolidated
    
    
    11.2
    %
    
    
    10.8
    %
    
    
    4.0
    %
    
    
    4.0
    %Community Bank
    
    
    10.3
    
    
    
    10.1
    
    
    
    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
    
    
    12.3
    
    
    
    11.8
    
    
    
    8.0
    
    
    
    8.0Community Bank
    
    
    11.3
    
    
    
    11.1
    
    
    
    8.0
    
    
    
    8.0
    
    
    
    10.0
    
    
    
    10.0Tier I capital as a percentage of total
average assets less intangible assets:Consolidated
    
    
    9.8
    
    
    
    9.1
    
    
    
    4.0
    
    
    
    4.0Community Bank
    
    
    9.0
    %
    
    
    8.5
    %
    
    
    4.0
    %
    
    
    4.0
    %
    
    
    5.0
    %
    
    
    5.0
    %
  35




---



##### 



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




---



##### 



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 30,2008 vs. 2007
    
    
    2008 vs. 2007Increase (decrease)
    
    
    Increase (decrease)attributable to
    
    
    attributable toTotal
    
    
    
    
    
    
    
    
    
    
    TotalChange
    
    
    Rate
    
    
    Volume
    
    
    Change
    
    
    Rate
    
    
    VolumeInterest income:Loans:Taxable
    
    $
    (464
    )
    
    $
    (877
    )
    
    $
    413
    
    
    $
    (197
    )
    
    $
    (1,318
    )
    
    $
    1,121Tax-exempt
    
    
    181
    
    
    
    (21
    )
    
    
    202
    
    
    
    440
    
    
    
    39
    
    
    
    401Investments:Taxable
    
    
    (409
    )
    
    
    (53
    )
    
    
    (356
    )
    
    
    (938
    )
    
    
    (190
    )
    
    
    (748
    )Tax-exempt
    
    
    (19
    )
    
    
    (6
    )
    
    
    (13
    )
    
    
    (30
    )
    
    
    (9
    )
    
    
    (21
    )Federal funds sold
    
    
    6
    
    
    
    (4
    )
    
    
    10
    
    
    
    5
    
    
    
    (4
    )
    
    
    9Total interest income
    
    
    (705
    )
    
    
    (961
    )
    
    
    256
    
    
    
    (720
    )
    
    
    (1,482
    )
    
    
    762Interest expense:Money market accounts
    
    
    (78
    )
    
    
    (67
    )
    
    
    (11
    )
    
    
    (136
    )
    
    
    (120
    )
    
    
    (16
    )NOW accounts
    
    
    (92
    )
    
    
    (135
    )
    
    
    43
    
    
    
    (77
    )
    
    
    (174
    )
    
    
    97Savings accounts
    
    
    (117
    )
    
    
    (115
    )
    
    
    (2
    )
    
    
    (157
    )
    
    
    (152
    )
    
    
    (5
    )Time deposits less than $100
    
    
    (296
    )
    
    
    (189
    )
    
    
    (107
    )
    
    
    (434
    )
    
    
    (207
    )
    
    
    (227
    )Time deposits $100 or more
    
    
    (28
    )
    
    
    (71
    )
    
    
    43
    
    
    
    29
    
    
    
    (88
    )
    
    
    117Short-term borrowings
    
    
    (109
    )
    
    
    (80
    )
    
    
    (29
    )
    
    
    (125
    )
    
    
    (152
    )
    
    
    27Total interest expense
    
    
    (720
    )
    
    
    (657
    )
    
    
    (63
    )
    
    
    (900
    )
    
    
    (893
    )
    
    
    (7
    )Net interest income
    
    $
    15
    
    
    $
    (304
    )
    
    $
    319
    
    
    $
    180
    
    
    $
    (589
    )
    
    $
    769
  37




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
     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)
  Summary of net interest income
 June 30, 2008
    
    
    June 30, 2007Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Income/
    
    
    Interest
    
    
    Average
    
    
    Income/
    
    
    InterestBalance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    RateASSETS:Earning assets:Loans:Taxable
    
    $
    441,991
    
    
    $
    14,842
    
    
    
    6.75
    %
    
    $
    410,136
    
    
    $
    15,039
    
    
    
    7.39
    %Tax-exempt
    
    
    52,683
    
    
    
    1,720
    
    
    
    6.57
    
    
    
    40,362
    
    
    
    1,280
    
    
    
    6.40Investments:Taxable
    
    
    6,643
    
    
    
    108
    
    
    
    3.27
    
    
    
    50,136
    
    
    
    1,046
    
    
    
    4.21Tax-exempt
    
    
    29,161
    
    
    
    1,093
    
    
    
    7.54
    
    
    
    29,730
    
    
    
    1,123
    
    
    
    7.62Federal funds sold
    
    
    1,165
    
    
    
    12
    
    
    
    2.07
    
    
    
    391
    
    
    
    7
    
    
    
    3.61Total earning assets
    
    
    531,643
    
    
    
    17,775
    
    
    
    6.72
    %
    
    
    530,755
    
    
    
    18,495
    
    
    
    7.03
    %Less: allowance for loan losses
    
    
    4,930
    
    
    
    
    
    
    
    
    
    
    
    4,609Other assets
    
    
    32,150
    
    
    
    
    
    
    
    
    
    
    
    28,471Total assets
    
    $
    558,863
    
    
    
    
    
    
    
    
    
    
    $
    554,617LIABILITIES AND STOCKHOLDERS EQUITY:Interest-bearing liabilities:Money market accounts
    
    $
    26,866
    
    
    
    275
    
    
    
    2.06
    %
    
    $
    28,019
    
    
    
    411
    
    
    
    2.96
    %NOW accounts
    
    
    70,740
    
    
    
    924
    
    
    
    2.63
    
    
    
    64,098
    
    
    
    1,001
    
    
    
    3.15Savings accounts
    
    
    100,324
    
    
    
    564
    
    
    
    1.13
    
    
    
    101,081
    
    
    
    721
    
    
    
    1.44Time deposits less than $100
    
    
    168,440
    
    
    
    3,476
    
    
    
    4.15
    
    
    
    179,184
    
    
    
    3,910
    
    
    
    4.40Time deposits $100 or more
    
    
    46,428
    
    
    
    1,013
    
    
    
    4.39
    
    
    
    41,238
    
    
    
    984
    
    
    
    4.81Short-term borrowings
    
    
    12,330
    
    
    
    178
    
    
    
    2.90
    
    
    
    11,245
    
    
    
    303
    
    
    
    5.43Total interest-bearing liabilities
    
    
    425,128
    
    
    
    6,430
    
    
    
    3.04
    %
    
    
    424,865
    
    
    
    7,330
    
    
    
    3.48
    %Noninterest-bearing deposits
    
    
    74,709
    
    
    
    
    
    
    
    
    
    
    
    73,505Other liabilities
    
    
    3,209
    
    
    
    
    
    
    
    
    
    
    
    2,727Stockholders equity
    
    
    55,817
    
    
    
    
    
    
    
    
    
    
    
    53,520Total liabilities and stockholders equity
    
    $
    558,863
    
    
    
    
    
    
    
    
    
    
    $
    554,617Net interest income/spread
    
    
    
    
    
    $
    11,345
    
    
    
    3.68
    %
    
    
    
    
    
    $
    11,165
    
    
    
    3.55
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    4.29
    %
    
    
    
    
    
    
    
    
    
    
    4.24
    %Tax equivalent adjustments:Loans
    
    
    
    
    
    $
    585
    
    
    
    
    
    
    
    
    
    
    $
    435Investments
    
    
    
    
    
    
    372
    
    
    
    
    
    
    
    
    
    
    
    382Total adjustments
    
    
    
    
    
    $
    957
    
    
    
    
    
    
    
    
    
    
    $
    817
 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 $1,960 and
$1,396 for the six months ended June 30, 2008 and 2007 included in other assets.
Tax-equivalent adjustments were calculated using the prevailing statutory tax rate of 34.0
percent.
 40




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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:
  41




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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 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Salaries and employee benefits expense:Salaries and payroll taxes
    
    $
    1,677
    
    
    $
    1,527
    
    
    $
    3,348
    
    
    $
    3,011Employee benefits
    
    
    438
    
    
    
    432
    
    
    
    897
    
    
    
    827Salaries and employee benefits expense
    
    
    2,115
    
    
    
    1,959
    
    
    
    4,245
    
    
    
    3,838Net occupancy and equipment expense:Net occupancy expense
    
    
    312
    
    
    
    292
    
    
    
    642
    
    
    
    613Equipment expense
    
    
    333
    
    
    
    311
    
    
    
    641
    
    
    
    624Net occupancy and equipment expense
    
    
    645
    
    
    
    603
    
    
    
    1,283
    
    
    
    1,237Other expenses:Marketing expense
    
    
    162
    
    
    
    132
    
    
    
    336
    
    
    
    291Other taxes
    
    
    125
    
    
    
    142
    
    
    
    249
    
    
    
    276Stationery and supplies
    
    
    74
    
    
    
    115
    
    
    
    146
    
    
    
    226Contractual services
    
    
    427
    
    
    
    482
    
    
    
    858
    
    
    
    935Insurance including FDIC assessment
    
    
    56
    
    
    
    65
    
    
    
    136
    
    
    
    116Other
    
    
    428
    
    
    
    317
    
    
    
    778
    
    
    
    649Other expenses
    
    
    1,272
    
    
    
    1,253
    
    
    
    2,503
    
    
    
    2,493Total noninterest expense
    
    $
    4,032
    
    
    $
    3,815
    
    
    $
    8,031
    
    
    $
    7,568
   42




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  SM
    43




---



##### 



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




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##### 



Comm Bancorp, Inc.  CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures:
  Internal Control Over Financial Reporting:
  45




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##### 



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 Ending
    
    Purchased
    
    
    Per Share
    
    
    or Programs
    
    
    or ProgramsApril 30, 2008
    
    
    1,200
    
    
    $
    43.42
    
    
    
    1,200
    
    
    
    22,488May 31, 2008
    
    
    6,200
    
    
    
    43.21
    
    
    
    6,200
    
    
    
    16,288June 30, 2008
    
    
    400
    
    
    
    44.27
    
    
    
    400
    
    
    
    15,888Total
    
    
    7,800
    
    
    $
    43.30
    
    
    
    7,800
 
 Item 3. Defaults Upon Senior Securities
  46




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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 6, 2008, 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 fix the number of directors at 10.
 For
    
    Against1,473,314.556
    
    16,328.675
 2.
    
    To elect 10 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
    
    
    1,486,656.175
    
    
    
    2,989.056William F. Farber, Sr.
    
    
    1,478,929.231
    
    
    
    10,716.000Judd B. Fitze
    
    
    1,487,745.231
    
    
    
    1,900.000Dean L. Hesser
    
    
    1,479,595.231
    
    
    
    10,050.000John P. Kameen
    
    
    1,487,265.231
    
    
    
    2,380.000William A. Kerl
    
    
    1,479,115.231
    
    
    
    10,530.000Erwin T. Kost
    
    
    1,487,745.231
    
    
    
    1,900.000Susan F. Mancuso
    
    
    1,487,745.231
    
    
    
    1,900.000Robert A. Mazzoni
    
    
    1,476,615.231
    
    
    
    13,030.000Joseph P. Moore, III
    
    
    1,484,765.231
    
    
    
    4,880.000
 3.
    
    To ratify the selection of Beard Miller Company LLP, of Allentown, Pennsylvania,
Certified Public Accountants, as the independent auditor for the year ending December
31, 2008. The votes cast on this matter were as follows:
 For
    
    Against1,487,450.231
    
    2,194.000
 
 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: August 12, 2008
    /s/ William F. Farber, Sr.William F. Farber, Sr.President and Chief Executive Officer
Chairman of the Board/Director
(Principal Executive Officer) Date: August 12, 2008
    /s/ Scott A. SeasockScott A. SeasockExecutive Vice President and 
Chief Financial Officer
(Principal Financial Officer) Date: August 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