##### 



EXHIBIT 13
 PORTIONS OF THE ANNUAL REPORT TO STOCKHOLDERS
FOR FISCAL YEAR ENDED DECEMBER 31, 2007
 39




---



##### 



Comm Bancorp, Inc.
CONTENTS
 Introduction41
    
    Presidents Message to Stockholders44
    
    Consolidated Selected Financial DataManagements Discussion and Analysis45
    
    Forward-Looking Discussion46
    
    Critical Accounting Policies48
    
    Operating Environment53
    
    Review of Financial Position91
    
    Review of Financial PerformanceConsolidated Financial Statements102
    
    Report of Management105
    
    Report of Independent Registered Public Accounting Firm106
    
    Consolidated Statements of Income and
Comprehensive Income107
    
    Consolidated Balance Sheets108
    
    Consolidated Statements of Changes in
Stockholders Equity109
    
    Consolidated Statements of Cash FlowsNotes to Consolidated Financial Statements110
    
    Summary of significant accounting policies128
    
    Cash and due from banks128
    
    Investment securities132
    
    Loans, nonperforming assets and allowance for loan losses134
    
    Commitments, concentrations and contingent
liabilities136
    
    Premises and equipment, net138
    
    Other assets139
    
    Deposits140
    
    Short-term borrowings141
    
    Fair value of financial instruments141
    
    Employee benefit plan142
    
    Income taxes144
    
    Parent Company financial statements145
    
    Regulatory mattersDirectors and Officers149
    
    Boards of Directors and Corporate OfficersOther Information153
    
    Locations154
    
    Stockholder Information
 40




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##### 



Comm Bancorp, Inc.
PRESIDENTS MESSAGE TO STOCKHOLDERS
    SM
 SM SM
 SM SM
 41




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##### 



Comm Bancorp, Inc.
PRESIDENTS MESSAGE TO STOCKHOLDERS (CONTINUED)
 SM
      42




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##### 



Comm Bancorp, Inc.
PRESIDENTS MESSAGE TO STOCKHOLDERS (CONTINUED)
    /s/ William F. Farber, Sr.

William F. Farber, Sr.President and Chief Executive Officer,Chairman of the Board
 43




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##### 



Comm Bancorp, Inc.
CONSOLIDATED SELECTED FINANCIAL DATA
(Dollars in thousands, except per share data)
 Year Ended December 31
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Condensed statements of financial performance:Interest income
    
    $
    35,654
    
    
    $
    33,040
    
    
    $
    28,359
    
    
    $
    26,333
    
    
    $
    26,808Interest expense
    
    
    14,449
    
    
    
    12,505
    
    
    
    10,103
    
    
    
    9,233
    
    
    
    9,972Net interest income
    
    
    21,205
    
    
    
    20,535
    
    
    
    18,256
    
    
    
    17,100
    
    
    
    16,836Provision for loan losses
    
    
    525
    
    
    
    890
    
    
    
    782
    
    
    
    600
    
    
    
    480Net interest income after provision for loan losses
    
    
    20,680
    
    
    
    19,645
    
    
    
    17,474
    
    
    
    16,500
    
    
    
    16,356Noninterest income
    
    
    3,543
    
    
    
    3,408
    
    
    
    3,884
    
    
    
    3,566
    
    
    
    4,034Noninterest expense
    
    
    15,420
    
    
    
    14,829
    
    
    
    14,897
    
    
    
    14,662
    
    
    
    14,484Income before income taxes
    
    
    8,803
    
    
    
    8,224
    
    
    
    6,461
    
    
    
    5,404
    
    
    
    5,906Provision for income tax expense
    
    
    1,903
    
    
    
    1,874
    
    
    
    1,251
    
    
    
    679
    
    
    
    1,206Net income
    
    $
    6,900
    
    
    $
    6,350
    
    
    $
    5,210
    
    
    $
    4,725
    
    
    $
    4,700Condensed statements of financial position:Investment securities
    
    $
    39,407
    
    
    $
    91,213
    
    
    $
    104,965
    
    
    $
    118,756
    
    
    $
    105,248Net loans
    
    
    466,720
    
    
    
    403,639
    
    
    
    384,475
    
    
    
    377,864
    
    
    
    354,356Other assets
    
    
    42,860
    
    
    
    45,552
    
    
    
    54,137
    
    
    
    31,702
    
    
    
    49,848Total assets
    
    $
    548,987
    
    
    $
    540,404
    
    
    $
    543,577
    
    
    $
    528,322
    
    
    $
    509,452Deposits
    
    $
    491,357
    
    
    $
    483,442
    
    
    $
    491,365
    
    
    $
    478,484
    
    
    $
    459,466Other liabilities
    
    
    3,257
    
    
    
    2,844
    
    
    
    2,523
    
    
    
    2,520
    
    
    
    3,445Stockholders equity
    
    
    54,373
    
    
    
    54,118
    
    
    
    49,689
    
    
    
    47,318
    
    
    
    46,541Total liabilities and stockholders equity
    
    $
    548,987
    
    
    $
    540,404
    
    
    $
    543,577
    
    
    $
    528,322
    
    
    $
    509,452Per share data:Net income
    
    $
    3.87
    
    
    $
    3.43
    
    
    $
    2.80
    
    
    $
    2.50
    
    
    $
    2.45Cash dividends declared
    
    
    1.04
    
    
    
    1.00
    
    
    
    0.92
    
    
    
    0.88
    
    
    
    0.88Stockholders equity
    
    $
    31.01
    
    
    $
    29.27
    
    
    $
    26.86
    
    
    $
    25.38
    
    
    $
    24.41Cash dividends declared as a percentage of net income
    
    
    26.81
    %
    
    
    29.18
    %
    
    
    32.84
    %
    
    
    35.09
    %
    
    
    35.89
    %Average common shares outstanding
    
    
    1,784,495
    
    
    
    1,853,089
    
    
    
    1,860,563
    
    
    
    1,890,960
    
    
    
    1,921,063Selected ratios (based on average balances):Net income as a percentage of total assets
    
    
    1.24
    %
    
    
    1.17
    %
    
    
    0.97
    %
    
    
    0.92
    %
    
    
    0.93
    %Net income as a percentage of stockholders equity
    
    
    12.94
    
    
    
    12.18
    
    
    
    10.68
    
    
    
    9.97
    
    
    
    10.23Stockholders equity as a percentage of total assets
    
    
    9.62
    
    
    
    9.62
    
    
    
    9.13
    
    
    
    9.19
    
    
    
    9.14Tier I capital as a percentage of adjusted total assets
    
    
    9.54
    
    
    
    9.74
    
    
    
    9.04
    
    
    
    8.75
    
    
    
    8.66Net interest income as a percentage of earning assets
    
    
    4.33
    
    
    
    4.28
    
    
    
    3.88
    
    
    
    3.76
    
    
    
    3.80Loans, net, as a percentage of deposits
    
    
    93.75
    %
    
    
    87.58
    %
    
    
    82.59
    %
    
    
    80.34
    %
    
    
    76.43
    %Selected ratios and data (based on period end balances):Tier I capital as a percentage of risk-weighted assets
    
    
    11.17
    %
    
    
    12.50
    %
    
    
    11.99
    %
    
    
    11.36
    %
    
    
    11.92
    %Total capital as a percentage of risk-weighted assets
    
    
    12.15
    
    
    
    13.55
    
    
    
    13.02
    
    
    
    12.33
    
    
    
    12.90Allowance for loan losses as a percentage of loans, net
    
    
    0.98
    %
    
    
    1.09
    %
    
    
    1.06
    %
    
    
    1.01
    %
    
    
    1.00
    %Full-time equivalent employees
    
    
    197
    
    
    
    186
    
    
    
    194
    
    
    
    205
    
    
    
    203Locations
    
    
    17
    
    
    
    17
    
    
    
    16
    
    
    
    17
    
    
    
    17
  44




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share data)
  Forward-Looking Discussion:
     45




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##### 



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




---



##### 



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




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Operating Environment:
   48




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    December 31
    
    2007
    
    2006National
    
    
    5.0
    %
    
    
    4.4
    %Pennsylvania
    
    
    4.7
    
    
    
    4.7Lackawanna County
    
    
    5.2
    
    
    
    4.9Luzerne County
    
    
    5.4
    
    
    
    5.2Monroe County
    
    
    5.2
    
    
    
    5.0Susquehanna County
    
    
    4.9
    
    
    
    4.5Wayne County
    
    
    4.3
    
    
    
    3.8Wyoming County
    
    
    5.7
    %
    
    
    5.0
    %
  49




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
     
    
    McLane Company, a leading national wholesale grocery distributor announced plans
to build a 400,000 square-foot facility in the Valley Business Park located in
Lackawanna County to service its customer base in the Mid-Atlantic region. In addition,
Two Chefs on a Roll, a West-coast manufacturer of custom and private-label bakery
products and savory items, is expanding to the East and is building a facility in this
park to initially manufacture dips and sauces. A third business to expand operations to
this industrial park, Northeastern Laminated Glass Corporation, a manufacturer of
laminated safety glass, plans to lease a 52,000 square-foot facility. The initial
opening of these three businesses will bring an additional 200 jobs to the area.
    
    Sears Holding Company has plans to lease a 1.2 million square-foot distribution
center in the Covington Industrial Park also located in Lackawanna County. The creation
of another 200 jobs is anticipated at this facility.
    
    C3i, Inc., a leading provider of customer relationship management services to life
sciences and pharmaceutical companies, will
relocate its domestic call center from New Jersey to a 25,000
 50




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
 square-foot office in the
CenterPoint Commerce and Trade Park located in Luzerne County. C3i, Inc. expects to bring
229 jobs to this area over the next three years. In addition, Boden, Ltd., a British
clothier with lines for men, women and children will establish its United States
headquarters in this park. A 62,000 square-foot warehouse and call center will create 160
new jobs over the next three years. Other openings in this park include, Mens Warehouse,
FedEx and Entenmanns, which in aggregate will provide approximately 400 new jobs.
    
    Johnson & Johnson Sales and Logistics, LLC, a division of the health care products
manufacturer, Johnson & Johnson, began construction on a 1.4 million square-foot logistics
facility located in the Arcadia North Business Park in Monroe County. This project is slated
to create approximately 700 jobs in this region.
    
    Early in 2008, JEC Technologies, Inc., a manufacturer and supplier of electronic circuit
boards for the defense, aerospace and medical industries, announced that it will construct a
47,000 square-foot plant in the Vision 2000 Industrial Park located in Susquehanna County and
add 260 new jobs to this area.
   51




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
     52




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    Review of Financial Position:
  53




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    
    
    Completing a modified Dutch Auction tender offer of our common stock;
    
    Implementing a remote deposit capture system;
    
    Developing a Private-Banking Division;
    
    Expanding our Trust and Wealth Management Division to include the corporate and
municipal sectors; and
    
    Purchasing land to consolidate two outdated facilities.
  SM
 54




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
      SM SM
 55




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
     56




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
 SM
    57




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Investment Portfolio:
    58




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
    59




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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
 2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003December 31
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %U.S. Government agencies
    
    
    
    
    
    
    
    
    
    $
    39,201
    
    
    
    42.98
    %
    
    $
    42,711
    
    
    
    40.69
    %
    
    $
    44,645
    
    
    
    37.59
    %
    
    $
    16,377
    
    
    
    15.56
    %State and municipals:Taxable
    
    $
    5,227
    
    
    
    13.26
    %
    
    
    11,912
    
    
    
    13.06
    
    
    
    15,268
    
    
    
    14.54
    
    
    
    16,898
    
    
    
    14.23
    
    
    
    17,051
    
    
    
    16.20Tax-exempt
    
    
    30,897
    
    
    
    78.41
    
    
    
    30,956
    
    
    
    33.94
    
    
    
    33,795
    
    
    
    32.20
    
    
    
    34,605
    
    
    
    29.14
    
    
    
    34,788
    
    
    
    33.05Mortgage-backed securities
    
    
    1,904
    
    
    
    4.83
    
    
    
    7,760
    
    
    
    8.51
    
    
    
    12,217
    
    
    
    11.64
    
    
    
    21,281
    
    
    
    17.92
    
    
    
    35,099
    
    
    
    33.35Equity securities:Restricted
    
    
    1,128
    
    
    
    2.86
    
    
    
    1,206
    
    
    
    1.32
    
    
    
    808
    
    
    
    0.77
    
    
    
    1,153
    
    
    
    0.97
    
    
    
    1,783
    
    
    
    1.70Other
    
    
    251
    
    
    
    0.64
    
    
    
    178
    
    
    
    0.19
    
    
    
    166
    
    
    
    0.16
    
    
    
    174
    
    
    
    0.15
    
    
    
    150
    
    
    
    0.14Total
    
    $
    39,407
    
    
    
    100.00
    %
    
    $
    91,213
    
    
    
    100.00
    %
    
    $
    104,965
    
    
    
    100.00
    %
    
    $
    118,756
    
    
    
    100.00
    %
    
    $
    105,248
    
    
    
    100.00
    %
    60




---



##### 



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
    
    
    TotalDecember 31, 2007
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    YieldAmortized cost:State and municipals:Taxable
    
    $
    5,254
    
    
    
    2.98
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,254
    
    
    
    2.98
    %Tax-exempt
    
    
    65
    
    
    
    5.41
    
    
    $
    6,917
    
    
    
    7.65
    %
    
    $
    19,806
    
    
    
    7.50
    %
    
    $
    2,512
    
    
    
    7.46
    %
    
    
    29,300
    
    
    
    7.53Mortgage-backed securities
    
    
    943
    
    
    
    4.60
    
    
    
    906
    
    
    
    4.97
    
    
    
    49
    
    
    
    6.68
    
    
    
    
    
    
    
    
    
    
    
    1,898
    
    
    
    4.83Equity securities:Restricted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,128
    
    
    
    6.75
    
    
    
    1,128
    
    
    
    6.75Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    138
    
    
    
    3.63
    
    
    
    138
    
    
    
    3.63Total
    
    $
    6,262
    
    
    
    3.25
    %
    
    $
    7,823
    
    
    
    7.34
    %
    
    $
    19,855
    
    
    
    7.50
    %
    
    $
    3,778
    
    
    
    7.11
    %
    
    $
    37,718
    
    
    
    6.72
    %Fair value:State and municipals:Taxable
    
    $
    5,227
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,227Tax-exempt
    
    
    65
    
    
    
    
    
    
    $
    7,178
    
    
    
    
    
    
    $
    20,959
    
    
    
    
    
    
    $
    2,695
    
    
    
    
    
    
    
    30,897Mortgage-backed securities
    
    
    945
    
    
    
    
    
    
    
    909
    
    
    
    
    
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,904Equity securities:Restricted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,128
    
    
    
    
    
    
    
    1,128Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    251
    
    
    
    
    
    
    
    251Total
    
    $
    6,237
    
    
    
    
    
    
    $
    8,087
    
    
    
    
    
    
    $
    21,009
    
    
    
    
    
    
    $
    4,074
    
    
    
    
    
    
    $
    39,407
 61




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##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Loan Portfolio:
    62




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
     63




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Distribution of loan portfolio
 2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003December 31
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %Commercial, financial and others
    
    $
    187,147
    
    
    
    39.70
    %
    
    $
    143,792
    
    
    
    35.24
    %
    
    $
    137,302
    
    
    
    35.33
    %
    
    $
    114,341
    
    
    
    29.95
    %
    
    $
    100,723
    
    
    
    28.14
    %Real estate:Construction
    
    
    12,810
    
    
    
    2.72
    
    
    
    5,513
    
    
    
    1.35
    
    
    
    2,575
    
    
    
    0.66
    
    
    
    6,704
    
    
    
    1.76
    
    
    
    2,983
    
    
    
    0.83Mortgage
    
    
    233,755
    
    
    
    49.59
    
    
    
    225,703
    
    
    
    55.31
    
    
    
    217,827
    
    
    
    56.06
    
    
    
    230,555
    
    
    
    60.40
    
    
    
    222,621
    
    
    
    62.20Consumer, net
    
    
    35,149
    
    
    
    7.46
    
    
    
    31,546
    
    
    
    7.73
    
    
    
    29,217
    
    
    
    7.52
    
    
    
    27,893
    
    
    
    7.31
    
    
    
    29,726
    
    
    
    8.30Lease financing, net
    
    
    2,483
    
    
    
    0.53
    
    
    
    1,520
    
    
    
    0.37
    
    
    
    1,682
    
    
    
    0.43
    
    
    
    2,230
    
    
    
    0.58
    
    
    
    1,887
    
    
    
    0.53Loans, net of unearned income
    
    
    471,344
    
    
    
    100.00
    %
    
    
    408,074
    
    
    
    100.00
    %
    
    
    388,603
    
    
    
    100.00
    %
    
    
    381,723
    
    
    
    100.00
    %
    
    
    357,940
    
    
    
    100.00
    %Less: allowance for loan losses
    
    
    4,624
    
    
    
    
    
    
    
    4,435
    
    
    
    
    
    
    
    4,128
    
    
    
    
    
    
    
    3,859
    
    
    
    
    
    
    
    3,584Net loans
    
    $
    466,720
    
    
    
    
    
    
    $
    403,639
    
    
    
    
    
    
    $
    384,475
    
    
    
    
    
    
    $
    377,864
    
    
    
    
    
    
    $
    354,356
    64




---



##### 



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
    
    
    AfterDecember 31, 2007
    
    one year
    
    
    five years
    
    
    five years
    
    
    TotalMaturity schedule:Commercial, financial and others
    
    $
    77,675
    
    
    $
    52,502
    
    
    $
    56,970
    
    
    $
    187,147Real estate:Construction
    
    
    12,810
    
    
    
    
    
    
    
    
    
    
    
    12,810Mortgage
    
    
    23,902
    
    
    
    88,429
    
    
    
    121,424
    
    
    
    233,755Consumer, net
    
    
    4,973
    
    
    
    23,308
    
    
    
    6,868
    
    
    
    35,149Lease financing, net
    
    
    498
    
    
    
    1,985
    
    
    
    
    
    
    
    2,483Total
    
    $
    119,858
    
    
    $
    166,224
    
    
    $
    185,262
    
    
    $
    471,344Predetermined interest rates
    
    $
    50,800
    
    
    $
    92,942
    
    
    $
    81,107
    
    
    $
    224,849Floating or adjustable interest rates
    
    
    69,058
    
    
    
    73,282
    
    
    
    104,155
    
    
    
    246,495Total
    
    $
    119,858
    
    
    $
    166,224
    
    
    $
    185,262
    
    
    $
    471,344
  65




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
      66




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
      Distribution of off-balance sheet commitments
 December 31
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Commitments to extend credit
    
    $
    80,675
    
    
    $
    60,878
    
    
    $
    59,135
    
    
    $
    49,504
    
    
    $
    44,025Unused portions of lines of credit
    
    
    17,901
    
    
    
    21,091
    
    
    
    20,257
    
    
    
    12,776
    
    
    
    9,806Commercial letters of credit
    
    
    19,634
    
    
    
    21,405
    
    
    
    18,565
    
    
    
    9,062
    
    
    
    2,255Total
    
    $
    118,210
    
    
    $
    103,374
    
    
    $
    97,957
    
    
    $
    71,342
    
    
    $
    56,086
 67




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Asset Quality:
 nd
  
    
    Subprime lending;
    
    Adjustable-rate mortgages and home equity lines of credit; and
    
    Deflation in real estate values.
  68




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
       69




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
     70




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
     Distribution of nonperforming assets
 December 31
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Nonaccrual loans:Commercial, financial and others
    
    $
    2,444
    
    
    $
    1,060
    
    
    $
    1,574
    
    
    $
    849
    
    
    $
    306Real estate:ConstructionMortgage
    
    
    2,812
    
    
    
    856
    
    
    
    1,714
    
    
    
    1,123
    
    
    
    1,077Consumer, net
    
    
    77
    
    
    
    94
    
    
    
    98
    
    
    
    
    
    
    
    63Lease financing, netTotal nonaccrual loans
    
    
    5,333
    
    
    
    2,010
    
    
    
    3,386
    
    
    
    1,972
    
    
    
    1,446Accruing loans past due 90 days or more:Commercial, financial and others
    
    
    1,837
    
    
    
    13
    
    
    
    62
    
    
    
    91
    
    
    
    124Real estate:ConstructionMortgage
    
    
    295
    
    
    
    217
    
    
    
    333
    
    
    
    653
    
    
    
    352Consumer, net
    
    
    85
    
    
    
    60
    
    
    
    118
    
    
    
    169
    
    
    
    151Lease financing, net
    
    
    17
    
    
    
    2
    
    
    
    33
    
    
    
    
    
    
    
    73Total accruing loans past due 90 days or more
    
    
    2,234
    
    
    
    292
    
    
    
    546
    
    
    
    913
    
    
    
    700Total nonperforming loans
    
    
    7,567
    
    
    
    2,302
    
    
    
    3,932
    
    
    
    2,885
    
    
    
    2,146Foreclosed assets
    
    
    125
    
    
    
    352
    
    
    
    363
    
    
    
    399
    
    
    
    261Total nonperforming assets
    
    $
    7,692
    
    
    $
    2,654
    
    
    $
    4,295
    
    
    $
    3,284
    
    
    $
    2,407Ratios:Nonperforming loans as a percentage of loans, net
    
    
    1.61
    %
    
    
    0.56
    %
    
    
    1.01
    %
    
    
    0.76
    %
    
    
    0.60
    %Nonperforming assets as a percentage of loans, net, and foreclosed
assets
    
    
    1.63
    %
    
    
    0.65
    %
    
    
    1.10
    %
    
    
    0.86
    %
    
    
    0.67
    %
 71




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
     72




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    73




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Distribution of impaired loans
 December 31
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Nonaccrual loans:Commercial, financial and others
    
    $
    2,444
    
    
    $
    1,060
    
    
    $
    1,574
    
    
    $
    849
    
    
    $
    306Real estate:ConstructionMortgage
    
    
    2,812
    
    
    
    856
    
    
    
    1,714
    
    
    
    1,123
    
    
    
    1,077Consumer, net
    
    
    77
    
    
    
    94
    
    
    
    98
    
    
    
    
    
    
    
    63Lease financing, netTotal nonaccrual loans
    
    
    5,333
    
    
    
    2,010
    
    
    
    3,386
    
    
    
    1,972
    
    
    
    1,446Accruing loans:Commercial, financial and others
    
    
    2,338
    
    
    
    1,312
    
    
    
    638
    
    
    
    3,889Real estate:ConstructionMortgage
    
    
    7,247
    
    
    
    6,334
    
    
    
    1,622
    
    
    
    1,205
    
    
    
    207Consumer, net
    
    
    
    
    
    
    44
    
    
    
    61
    
    
    
    
    
    
    
    1Lease financing, netTotal accruing loans
    
    
    9,585
    
    
    
    7,690
    
    
    
    2,321
    
    
    
    5,094
    
    
    
    208Total impaired loans
    
    $
    14,918
    
    
    $
    9,700
    
    
    $
    5,707
    
    
    $
    7,066
    
    
    $
    1,654Ratio:Impaired loans as a percentage of loans, net
    
    
    3.16
    %
    
    
    2.38
    %
    
    
    1.47
    %
    
    
    1.85
    %
    
    
    0.46
    %
  74




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Reconciliation of allowance for loan losses
 December 31
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Allowance for loan losses at beginning of period
    
    $
    4,435
    
    
    $
    4,128
    
    
    $
    3,859
    
    
    $
    3,584
    
    
    $
    3,745Loans charged-off:Commercial, financial and others
    
    
    177
    
    
    
    136
    
    
    
    16
    
    
    
    45
    
    
    
    94Real estate:ConstructionMortgage
    
    
    39
    
    
    
    267
    
    
    
    273
    
    
    
    125
    
    
    
    415Consumer, net
    
    
    225
    
    
    
    314
    
    
    
    297
    
    
    
    312
    
    
    
    244Lease financing, netTotal
    
    
    441
    
    
    
    717
    
    
    
    586
    
    
    
    482
    
    
    
    753Loans recovered:Commercial, financial and others
    
    
    32
    
    
    
    12
    
    
    
    1
    
    
    
    27
    
    
    
    29Real estate:ConstructionMortgage
    
    
    3
    
    
    
    4
    
    
    
    13
    
    
    
    19
    
    
    
    19Consumer, net
    
    
    70
    
    
    
    118
    
    
    
    59
    
    
    
    111
    
    
    
    64Lease financing, netTotal
    
    
    105
    
    
    
    134
    
    
    
    73
    
    
    
    157
    
    
    
    112Net loans charged-off
    
    
    336
    
    
    
    583
    
    
    
    513
    
    
    
    325
    
    
    
    641Provision for loan losses
    
    
    525
    
    
    
    890
    
    
    
    782
    
    
    
    600
    
    
    
    480Allowance for loan losses at end of period
    
    $
    4,624
    
    
    $
    4,435
    
    
    $
    4,128
    
    
    $
    3,859
    
    
    $
    3,584Ratios:Net loans charged-off as a percentage of average loans outstanding
    
    
    0.07
    %
    
    
    0.14
    %
    
    
    0.13
    %
    
    
    0.09
    %
    
    
    0.18
    %Allowance for loan losses as a percentage of period end loans
    
    
    0.98
    %
    
    
    1.09
    %
    
    
    1.06
    %
    
    
    1.01
    %
    
    
    1.00
    %
   75




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Allocation of the allowance for loan losses
 2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003December 31
    
    Amount
    
    
    Categoryas a% ofloans
    
    
    Amount
    
    
    Categoryas a% ofloans
    
    
    Amount
    
    
    Categoryas a% ofloans
    
    
    Amount
    
    
    Categoryas a% ofloans
    
    
    Amount
    
    
    Categoryas a% ofloansAllocated allowance:Specific:Commercial, financial and others
    
    $
    2,216
    
    
    
    1.01
    %
    
    $
    1,000
    
    
    
    0.58
    %
    
    $
    1,549
    
    
    
    0.57
    %
    
    $
    728
    
    
    
    1.24
    %
    
    $
    237
    
    
    
    0.09
    %Real estate:ConstructionMortgage
    
    
    923
    
    
    
    2.13
    
    
    
    1,296
    
    
    
    1.76
    
    
    
    532
    
    
    
    0.86
    
    
    
    451
    
    
    
    0.61
    
    
    
    124
    
    
    
    0.36Consumer, net
    
    
    77
    
    
    
    0.02
    
    
    
    114
    
    
    
    0.03
    
    
    
    125
    
    
    
    0.04
    
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    0.01Lease financing, netTotal specific
    
    
    3,216
    
    
    
    3.16
    
    
    
    2,410
    
    
    
    2.37
    
    
    
    2,206
    
    
    
    1.47
    
    
    
    1,179
    
    
    
    1.85
    
    
    
    377
    
    
    
    0.46Formula:Commercial, financial and others
    
    
    247
    
    
    
    38.69
    
    
    
    120
    
    
    
    34.66
    
    
    
    123
    
    
    
    34.76
    
    
    
    149
    
    
    
    28.71
    
    
    
    237
    
    
    
    28.05Real estate:Construction
    
    
    
    
    
    
    2.72
    
    
    
    
    
    
    
    1.35
    
    
    
    
    
    
    
    0.66
    
    
    
    
    
    
    
    1.76
    
    
    
    
    
    
    
    0.83Mortgage
    
    
    226
    
    
    
    47.46
    
    
    
    520
    
    
    
    53.55
    
    
    
    472
    
    
    
    55.20
    
    
    
    878
    
    
    
    59.79
    
    
    
    974
    
    
    
    61.84Consumer, net
    
    
    344
    
    
    
    7.44
    
    
    
    374
    
    
    
    7.70
    
    
    
    360
    
    
    
    7.48
    
    
    
    288
    
    
    
    7.31
    
    
    
    316
    
    
    
    8.29Lease financing, net
    
    
    
    
    
    
    0.53
    
    
    
    
    
    
    
    0.37
    
    
    
    
    
    
    
    0.43
    
    
    
    1
    
    
    
    0.58
    
    
    
    1
    
    
    
    0.53Total formula
    
    
    817
    
    
    
    96.84
    
    
    
    1,014
    
    
    
    97.63
    
    
    
    955
    
    
    
    98.53
    
    
    
    1,316
    
    
    
    98.15
    
    
    
    1,528
    
    
    
    99.54Total allocated allowance
    
    
    4,033
    
    
    
    100.00
    %
    
    
    3,424
    
    
    
    100.00
    %
    
    
    3,161
    
    
    
    100.00
    %
    
    
    2,495
    
    
    
    100.00
    %
    
    
    1,905
    
    
    
    100.00
    %Unallocated allowance
    
    
    591
    
    
    
    
    
    
    
    1,011
    
    
    
    
    
    
    
    967
    
    
    
    
    
    
    
    1,364
    
    
    
    
    
    
    
    1,679Total
    
    $
    4,624
    
    
    
    
    
    
    $
    4,435
    
    
    
    
    
    
    $
    4,128
    
    
    
    
    
    
    $
    3,859
    
    
    
    
    
    
    $
    3,584
   76




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Deposits:
  77




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   _
 78




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Deposit distribution
 2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Year Ended December 31
    
    AverageBalance
    
    
    AverageRate
    
    
    AverageBalance
    
    
    AverageRate
    
    
    AverageBalance
    
    
    AverageRate
    
    
    AverageBalance
    
    
    AverageRate
    
    
    AverageBalance
    
    
    AverageRateInterest-bearing:Money market accounts
    
    $
    27,466
    
    
    
    2.84
    %
    
    $
    30,220
    
    
    
    2.58
    %
    
    $
    24,694
    
    
    
    1.56
    %
    
    $
    20,098
    
    
    
    1.06
    %
    
    $
    16,494
    
    
    
    1.03
    %NOW accounts
    
    
    67,612
    
    
    
    3.07
    
    
    
    60,814
    
    
    
    2.40
    
    
    
    54,354
    
    
    
    1.66
    
    
    
    42,480
    
    
    
    1.00
    
    
    
    38,600
    
    
    
    0.90Savings accounts
    
    
    102,767
    
    
    
    1.46
    
    
    
    109,588
    
    
    
    1.32
    
    
    
    120,550
    
    
    
    0.93
    
    
    
    129,564
    
    
    
    0.76
    
    
    
    127,975
    
    
    
    1.03Time deposits less than $100
    
    
    177,372
    
    
    
    4.40
    
    
    
    187,385
    
    
    
    4.05
    
    
    
    180,457
    
    
    
    3.65
    
    
    
    180,044
    
    
    
    3.68
    
    
    
    185,873
    
    
    
    3.88Time deposits $100 or more
    
    
    40,888
    
    
    
    4.76
    
    
    
    24,599
    
    
    
    4.38
    
    
    
    28,484
    
    
    
    3.52
    
    
    
    29,488
    
    
    
    3.31
    
    
    
    27,755
    
    
    
    3.30Total interest-bearing
    
    
    416,105
    
    
    
    3.39
    %
    
    
    412,606
    
    
    
    2.99
    %
    
    
    408,539
    
    
    
    2.45
    %
    
    
    401,674
    
    
    
    2.30
    %
    
    
    396,697
    
    
    
    2.51
    %Noninterest-bearing
    
    
    75,779
    
    
    
    
    
    
    
    71,853
    
    
    
    
    
    
    
    71,606
    
    
    
    
    
    
    
    63,954
    
    
    
    
    
    
    
    56,743Total deposits
    
    $
    491,884
    
    
    
    
    
    
    $
    484,459
    
    
    
    
    
    
    $
    480,145
    
    
    
    
    
    
    $
    465,628
    
    
    
    
    
    
    $
    453,440
    79




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    80




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Maturity distribution of time deposits $100 or more
 December 31
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Within three months
    
    $
    11,336
    
    
    $
    5,307
    
    
    $
    3,964
    
    
    $
    7,353
    
    
    $
    4,414After three months but within six months
    
    
    8,040
    
    
    
    6,923
    
    
    
    2,547
    
    
    
    4,426
    
    
    
    4,845After six months but within twelve months
    
    
    12,702
    
    
    
    13,136
    
    
    
    4,238
    
    
    
    6,198
    
    
    
    3,861After twelve months
    
    
    11,148
    
    
    
    10,554
    
    
    
    12,830
    
    
    
    16,515
    
    
    
    15,969Total
    
    $
    43,226
    
    
    $
    35,920
    
    
    $
    23,579
    
    
    $
    34,492
    
    
    $
    29,089
   Market Risk Sensitivity:
  81




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    82




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Changes in fair value of financial instruments
 Fair ValueDecember 31, 2007
    
    +100 BPS
    
    
    Level
    
    
    -100 BPSFinancial assets:Cash and due from banks
    
    $
    13,125
    
    
    $
    13,125
    
    
    $
    13,125Federal funds sold
    
    
    8,751
    
    
    
    8,751
    
    
    
    8,751Investment securities
    
    
    38,699
    
    
    
    39,407
    
    
    
    40,097Loans held for sale, net
    
    
    1,248
    
    
    
    1,248
    
    
    
    1,248Net loans
    
    
    462,917
    
    
    
    470,020
    
    
    
    477,703Mortgage servicing rights
    
    
    580
    
    
    
    580
    
    
    
    580Accrued interest receivable
    
    
    2,634
    
    
    
    2,634
    
    
    
    2,634Total
    
    $
    527,954
    
    
    $
    535,765
    
    
    $
    544,138Financial liabilities:Noninterest-bearing deposits
    
    $
    75,232
    
    
    $
    75,232
    
    
    $
    75,232Money market, NOW and savings accounts
    
    
    209,643
    
    
    
    209,643
    
    
    
    209,643Time deposits
    
    
    204,340
    
    
    
    207,269
    
    
    
    210,316Accrued interest payable
    
    
    1,308
    
    
    
    1,308
    
    
    
    1,308Total
    
    $
    490,523
    
    
    $
    493,452
    
    
    $
    496,499
   83




---



##### 



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 afterDecember 31, 2007
    
    three months
    
    
    twelve months
    
    
    five years
    
    
    five years
    
    
    TotalRate-sensitive assets:Investment securities
    
    $
    2,209
    
    
    $
    4,028
    
    
    $
    8,087
    
    
    $
    25,083
    
    
    $
    39,407Loans held for sale, net
    
    
    1,248
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,248Loans, net of unearned income
    
    
    135,302
    
    
    
    62,135
    
    
    
    188,773
    
    
    
    85,134
    
    
    
    471,344Federal funds sold
    
    
    8,751
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,751Total
    
    $
    147,510
    
    
    $
    66,163
    
    
    $
    196,860
    
    
    $
    110,217
    
    
    $
    520,750Rate-sensitive liabilities:Money market accounts
    
    $
    22,294
    
    
    $
    6,363
    
    
    
    
    
    
    
    
    
    
    $
    28,657NOW accounts
    
    
    64,318
    
    
    
    13,773
    
    
    
    
    
    
    
    
    
    
    
    78,091Savings accounts
    
    
    12,505
    
    
    
    
    
    
    $
    90,390
    
    
    
    
    
    
    
    102,895Time deposits less than $100
    
    
    40,493
    
    
    
    57,380
    
    
    
    58,204
    
    
    $
    7,179
    
    
    
    163,256Time deposits $100 or more
    
    
    11,336
    
    
    
    20,742
    
    
    
    11,148
    
    
    
    
    
    
    
    43,226Total
    
    $
    150,946
    
    
    $
    98,258
    
    
    $
    159,742
    
    
    $
    7,179
    
    
    $
    416,125Rate-sensitivity gap:Period
    
    $
    (3,436
    )
    
    $
    (32,095
    )
    
    $
    37,118
    
    
    $
    103,038Cumulative
    
    $
    (3,436
    )
    
    $
    (35,531
    )
    
    $
    1,587
    
    
    $
    104,625
    
    
    $
    104,625RSA/RSL ratio:Period
    
    
    0.98
    
    
    
    0.67
    
    
    
    1.23
    
    
    
    15.35Cumulative
    
    
    0.98
    
    
    
    0.86
    
    
    
    1.00
    
    
    
    1.25
    
    
    
    1.25
  84




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
     85




---



##### 



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.
  86




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
     87




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
      88




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Capital Adequacy:
   
    
    The current and expected capital requirements, including the maintenance of
capital ratios in excess of minimum regulatory guidelines;
    
    The market value of our securities and the resulting effect on capital;
    
    Any planned asset growth;
    
    The anticipated level of net earnings and capital position, taking into account
the projected asset/liability position and exposure to changes in interest rates; and
    
    The source and timing of additional funds to fulfill future capital requirements.
   89




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
     90




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
 Review of Financial Performance:
    SM
  Net Interest Income:
  91




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  
    
    Variations in the volume, rate and composition of earning assets and
interest-bearing liabilities;
    
    Changes in general market interest rates; and
    
    The level of nonperforming assets.
    92




---



##### 



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
 2007 vs. 2006Increase (decrease)attributable toTotalChange
    
    
    Rate
    
    
    VolumeInterest income:Loans:Taxable
    
    $
    3,273
    
    
    $
    817
    
    
    $
    2,456Tax-exempt
    
    
    438
    
    
    
    240
    
    
    
    198Investments:Taxable
    
    
    (831
    )
    
    
    38
    
    
    
    (869
    )Tax-exempt
    
    
    (23
    )
    
    
    33
    
    
    
    (56
    )Federal funds sold
    
    
    (102
    )
    
    
    (21
    )
    
    
    (81
    )Total interest income
    
    
    2,755
    
    
    
    1,107
    
    
    
    1,648Interest expense:Money market accounts
    
    
    
    
    
    
    74
    
    
    
    (74
    )NOW accounts
    
    
    614
    
    
    
    438
    
    
    
    176Savings accounts
    
    
    51
    
    
    
    145
    
    
    
    (94
    )Time deposits less than $100
    
    
    219
    
    
    
    638
    
    
    
    (419
    )Time deposits $100 or more
    
    
    867
    
    
    
    99
    
    
    
    768Short-term borrowings
    
    
    193
    
    
    
    20
    
    
    
    173Total interest expense
    
    
    1,944
    
    
    
    1,414
    
    
    
    530Net interest income
    
    $
    811
    
    
    $
    (307
    )
    
    $
    1,118
   93




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   94




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Summary of net interest income
 2007
    
    
    2006Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Income/
    
    
    Interest
    
    
    Average
    
    
    Income/
    
    
    InterestBalance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    RateASSETS:Earning assets:Loans:Taxable
    
    $
    420,067
    
    
    $
    30,730
    
    
    
    7.32
    %
    
    $
    386,268
    
    
    $
    27,457
    
    
    
    7.11
    %Tax-exempt
    
    
    41,095
    
    
    
    2,796
    
    
    
    6.80
    
    
    
    38,036
    
    
    
    2,358
    
    
    
    6.20Investments:Taxable
    
    
    35,323
    
    
    
    1,445
    
    
    
    4.09
    
    
    
    56,578
    
    
    
    2,276
    
    
    
    4.02Tax-exempt
    
    
    29,636
    
    
    
    2,235
    
    
    
    7.54
    
    
    
    30,374
    
    
    
    2,258
    
    
    
    7.43Federal funds sold
    
    
    3,381
    
    
    
    159
    
    
    
    4.70
    
    
    
    5,064
    
    
    
    261
    
    
    
    5.15Total earning assets
    
    
    529,502
    
    
    
    37,365
    
    
    
    7.06
    %
    
    
    516,320
    
    
    
    34,610
    
    
    
    6.70
    %Less: allowance for loan losses
    
    
    4,595
    
    
    
    
    
    
    
    
    
    
    
    4,363Other assets
    
    
    29,498
    
    
    
    
    
    
    
    
    
    
    
    30,219Total assets
    
    $
    554,405
    
    
    
    
    
    
    
    
    
    
    $
    542,176LIABILITIES AND STOCKHOLDERS
EQUITY:Interest-bearing liabilities:Money market accounts
    
    $
    27,466
    
    
    
    780
    
    
    
    2.84
    %
    
    $
    30,220
    
    
    
    780
    
    
    
    2.58
    %NOW accounts
    
    
    67,612
    
    
    
    2,073
    
    
    
    3.07
    
    
    
    60,814
    
    
    
    1,459
    
    
    
    2.40Savings accounts
    
    
    102,767
    
    
    
    1,503
    
    
    
    1.46
    
    
    
    109,588
    
    
    
    1,452
    
    
    
    1.32Time deposits less than $100
    
    
    177,372
    
    
    
    7,806
    
    
    
    4.40
    
    
    
    187,385
    
    
    
    7,587
    
    
    
    4.05Time deposits $100 or more
    
    
    40,888
    
    
    
    1,945
    
    
    
    4.76
    
    
    
    24,599
    
    
    
    1,078
    
    
    
    4.38Short-term borrowings
    
    
    6,354
    
    
    
    342
    
    
    
    5.38
    
    
    
    3,102
    
    
    
    149
    
    
    
    4.80Total interest-bearing liabilities
    
    
    422,459
    
    
    
    14,449
    
    
    
    3.42
    %
    
    
    415,708
    
    
    
    12,505
    
    
    
    3.01
    %Noninterest-bearing deposits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,779
    
    
    
    71,853Other liabilities
    
    
    2,833
    
    
    
    
    
    
    
    
    
    
    
    2,476Stockholders equity
    
    
    53,334
    
    
    
    
    
    
    
    
    
    
    
    52,139Total liabilities and stockholders equity
    
    $
    554,405
    
    
    
    
    
    
    
    
    
    
    $
    542,176Net interest income/spread
    
    
    
    
    
    $
    22,916
    
    
    
    3.64
    %
    
    
    
    
    
    $
    22,105
    
    
    
    3.69
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    4.33
    %
    
    
    
    
    
    
    
    
    
    
    4.28
    %Tax-equivalent adjustments:Loans
    
    
    
    
    
    $
    951
    
    
    
    
    
    
    
    
    
    
    $
    802Investments
    
    
    
    
    
    
    760
    
    
    
    
    
    
    
    
    
    
    
    768Total adjustments
    
    
    
    
    
    $
    1,711
    
    
    
    
    
    
    
    
    
    
    $
    1,570
  95




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
 Summary of net interest income (continued)
 2005
    
    
    2004
    
    
    2003Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    
    
    Income/
    
    
    Interest
    
    
    Average
    
    
    Income/
    
    
    Interest
    
    
    Average
    
    
    Income/
    
    
    InterestBalance
    
    
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate$
    358,326
    
    
    
    
    $
    22,985
    
    
    
    6.41
    %
    
    $
    346,990
    
    
    $
    21,597
    
    
    
    6.22
    %
    
    $
    324,705
    
    
    $
    22,228
    
    
    
    6.85
    %38,246
    
    
    
    
    
    2,014
    
    
    
    5.27
    
    
    
    27,090
    
    
    
    1,284
    
    
    
    4.74
    
    
    
    21,853
    
    
    
    1,181
    
    
    
    5.4072,155
    
    
    
    
    
    2,201
    
    
    
    3.05
    
    
    
    71,274
    
    
    
    2,168
    
    
    
    3.04
    
    
    
    80,520
    
    
    
    2,034
    
    
    
    2.5331,792
    
    
    
    
    
    2,359
    
    
    
    7.42
    
    
    
    32,057
    
    
    
    2,382
    
    
    
    7.43
    
    
    
    32,240
    
    
    
    2,403
    
    
    
    7.457,943
    
    
    
    
    
    287
    
    
    
    3.61
    
    
    
    10,857
    
    
    
    148
    
    
    
    1.36
    
    
    
    16,116
    
    
    
    180
    
    
    
    1.12508,462
    
    
    
    
    
    29,846
    
    
    
    5.87
    %
    
    
    488,268
    
    
    
    27,579
    
    
    
    5.65
    %
    
    
    475,434
    
    
    
    28,026
    
    
    
    5.89
    %4,025
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,779
    
    
    
    
    
    
    
    
    
    
    
    3,73230,299
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,396
    
    
    
    
    
    
    
    
    
    
    
    31,160$
    534,736
    
    
    
    
    
    
    
    
    
    
    
    
    $
    515,885
    
    
    
    
    
    
    
    
    
    
    $
    502,862$
    24,694
    
    
    
    
    
    385
    
    
    
    1.56
    %
    
    $
    20,098
    
    
    
    213
    
    
    
    1.06
    %
    
    $
    16,494
    
    
    
    170
    
    
    
    1.03
    %54,354
    
    
    
    
    
    901
    
    
    
    1.66
    
    
    
    42,480
    
    
    
    425
    
    
    
    1.00
    
    
    
    38,600
    
    
    
    348
    
    
    
    0.90120,550
    
    
    
    
    
    1,121
    
    
    
    0.93
    
    
    
    129,564
    
    
    
    985
    
    
    
    0.76
    
    
    
    127,975
    
    
    
    1,322
    
    
    
    1.03180,457
    
    
    
    
    
    6,586
    
    
    
    3.65
    
    
    
    180,044
    
    
    
    6,632
    
    
    
    3.68
    
    
    
    185,873
    
    
    
    7,212
    
    
    
    3.8828,484
    
    
    
    
    
    1,004
    
    
    
    3.52
    
    
    
    29,488
    
    
    
    977
    
    
    
    3.31
    
    
    
    27,755
    
    
    
    917
    
    
    
    3.303,894
    
    
    
    
    
    106
    
    
    
    2.72
    
    
    
    15
    
    
    
    1
    
    
    
    2.35
    
    
    
    265
    
    
    
    3
    
    
    
    1.13412,433
    
    
    
    
    
    10,103
    
    
    
    2.45
    %
    
    
    401,689
    
    
    
    9,233
    
    
    
    2.30
    %
    
    
    396,962
    
    
    
    9,972
    
    
    
    2.51
    %71,606
    
    
    
    
    
    
    
    
    
    
    
    
    
    63,954
    
    
    
    
    
    
    
    
    
    
    
    56,7431,897
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,856
    
    
    
    
    
    
    
    
    
    
    
    3,20748,800
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,386
    
    
    
    
    
    
    
    
    
    
    
    45,950$
    534,736
    
    
    
    
    
    
    
    
    
    
    
    
    $
    515,885
    
    
    
    
    
    
    
    
    
    
    $
    502,862$
    19,743
    
    
    
    3.42
    %
    
    
    
    
    
    $
    18,346
    
    
    
    3.35
    %
    
    
    
    
    
    $
    18,054
    
    
    
    3.38
    %3.88
    %
    
    
    
    
    
    
    
    
    
    
    3.76
    %
    
    
    
    
    
    
    
    
    
    
    3.80
    %$
    685
    
    
    
    
    
    
    
    
    
    
    $
    436
    
    
    
    
    
    
    
    
    
    
    $
    401802
    
    
    
    
    
    
    
    
    
    
    
    810
    
    
    
    
    
    
    
    
    
    
    
    817$
    1,487
    
    
    
    
    
    
    
    
    
    
    $
    1,246
    
    
    
    
    
    
    
    
    
    
    $
    1,218
 96




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
 Provision for Loan Losses:
   Noninterest Income:
    97




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
     Noninterest Expense:
   98




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Noninterest expense
 Year Ended December 31
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Salaries and employee benefits expense:Salaries and payroll taxes
    
    $
    6,210
    
    
    $
    6,122
    
    
    $
    5,880
    
    
    $
    5,617
    
    
    $
    5,929Employee benefits
    
    
    1,794
    
    
    
    1,526
    
    
    
    1,354
    
    
    
    1,351
    
    
    
    1,248Salaries and employee benefits expense
    
    
    8,004
    
    
    
    7,648
    
    
    
    7,234
    
    
    
    6,968
    
    
    
    7,177Net occupancy and equipment expense:Net occupancy expense
    
    
    1,140
    
    
    
    1,158
    
    
    
    1,183
    
    
    
    1,158
    
    
    
    991Equipment expense
    
    
    1,256
    
    
    
    1,195
    
    
    
    1,179
    
    
    
    1,306
    
    
    
    1,259Net occupancy and equipment expense
    
    
    2,396
    
    
    
    2,353
    
    
    
    2,362
    
    
    
    2,464
    
    
    
    2,250Other expenses:Marketing expense
    
    
    714
    
    
    
    569
    
    
    
    634
    
    
    
    586
    
    
    
    425Other taxes
    
    
    470
    
    
    
    503
    
    
    
    449
    
    
    
    394
    
    
    
    444Stationery and supplies
    
    
    401
    
    
    
    330
    
    
    
    367
    
    
    
    365
    
    
    
    385Contractual services
    
    
    1,800
    
    
    
    1,777
    
    
    
    1,982
    
    
    
    1,556
    
    
    
    1,579Insurance, including FDIC assessment
    
    
    247
    
    
    
    278
    
    
    
    277
    
    
    
    235
    
    
    
    207Other
    
    
    1,388
    
    
    
    1,371
    
    
    
    1,592
    
    
    
    2,094
    
    
    
    2,017Other expenses
    
    
    5,020
    
    
    
    4,828
    
    
    
    5,301
    
    
    
    5,230
    
    
    
    5,057Total noninterest expense
    
    $
    15,420
    
    
    $
    14,829
    
    
    $
    14,897
    
    
    $
    14,662
    
    
    $
    14,484
  SM
 99




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  SM
 SM
   100




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Income Taxes:
    101




---



##### 



Comm Bancorp, Inc.  REPORT OF MANAGEMENT
     102




---



##### 



Comm Bancorp, Inc.  REPORT OF MANAGEMENT (CONTINUED)
    
 103




---



##### 



Comm Bancorp, Inc.  REPORT OF MANAGEMENT (CONTINUED)
  /s/ William F. Farber, Sr.William F. Farber, Sr.President and Chief Executive Officer(Principal Executive Officer)/s/ Scott A. SeasockScott A. SeasockExecutive Vice President andChief Financial Officer(Principal Financial Officer)
  104




---



##### 



Comm Bancorp, Inc.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
 105




---



##### 



Comm Bancorp, Inc.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollars in thousands, except per share data)
 Year Ended December 31
    
    2007
    
    
    2006Interest income:Interest and fees on loans:Taxable
    
    $
    30,730
    
    
    $
    27,457Tax-exempt
    
    
    1,845
    
    
    
    1,556Interest and dividends on investment securities available-for-sale:Taxable
    
    
    1,364
    
    
    
    2,208Tax-exempt
    
    
    1,475
    
    
    
    1,490Dividends
    
    
    81
    
    
    
    68Interest on federal funds sold
    
    
    159
    
    
    
    261Total interest income
    
    
    35,654
    
    
    
    33,040Interest expense:Interest on deposits
    
    
    14,107
    
    
    
    12,356Interest on short-term borrowings
    
    
    342
    
    
    
    149Total interest expense
    
    
    14,449
    
    
    
    12,505Net interest income
    
    
    21,205
    
    
    
    20,535Provision for loan losses
    
    
    525
    
    
    
    890Net interest income after provision for loan losses
    
    
    20,680
    
    
    
    19,645Noninterest income:Service charges, fees and commissions
    
    
    3,168
    
    
    
    3,036Mortgage banking income
    
    
    375
    
    
    
    372Total noninterest income
    
    
    3,543
    
    
    
    3,408Noninterest expense:Salaries and employee benefits expense
    
    
    8,004
    
    
    
    7,648Net occupancy and equipment expense
    
    
    2,396
    
    
    
    2,353Other expenses
    
    
    5,020
    
    
    
    4,828Total noninterest expense
    
    
    15,420
    
    
    
    14,829Income before income taxes
    
    
    8,803
    
    
    
    8,224Provision for income tax expense
    
    
    1,903
    
    
    
    1,874Net income
    
    
    6,900
    
    
    
    6,350Other comprehensive income (loss):Unrealized holding gains (losses) on investment securities available-for-sale
    
    
    239
    
    
    
    (3
    )Income tax expense (benefit) related to other comprehensive income (loss)
    
    
    81
    
    
    
    (1
    )Other comprehensive income (loss), net of income taxes
    
    
    158
    
    
    
    (2
    )Comprehensive income
    
    $
    7,058
    
    
    $
    6,348Per share data:Net income
    
    $
    3.87
    
    
    $
    3.43Cash dividends declared
    
    $
    1.04
    
    
    $
    1.00Average common shares outstanding
    
    
    1,784,495
    
    
    
    1,853,089
  106




---



##### 



Comm Bancorp, Inc.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
 December 31
    
    2007
    
    
    2006Assets:Cash and due from banks
    
    $
    13,125
    
    
    $
    25,584Federal funds sold
    
    
    8,751
    
    
    
    2,050Investment securities available-for-sale
    
    
    39,407
    
    
    
    91,213Loans held for sale, net
    
    
    1,248
    
    
    
    572Loans, net of unearned income
    
    
    471,344
    
    
    
    408,074Less: allowance for loan losses
    
    
    4,624
    
    
    
    4,435Net loans
    
    
    466,720
    
    
    
    403,639Premises and equipment, net
    
    
    10,891
    
    
    
    11,018Accrued interest receivable
    
    
    2,634
    
    
    
    2,863Other assets
    
    
    6,211
    
    
    
    3,465Total assets
    
    $
    548,987
    
    
    $
    540,404Liabilities:Deposits:Noninterest-bearing
    
    $
    75,232
    
    
    $
    73,055Interest-bearing
    
    
    416,125
    
    
    
    410,387Total deposits
    
    
    491,357
    
    
    
    483,442Accrued interest payable
    
    
    1,308
    
    
    
    1,106Other liabilities
    
    
    1,949
    
    
    
    1,738Total liabilities
    
    
    494,614
    
    
    
    486,286Stockholders equity:Common stock, par value $0.33, authorized 12,000,000 shares, issued and
outstanding: 2007,
1,753,622 shares; 2006, 1,848,687 shares
    
    
    579
    
    
    
    610Capital surplus
    
    
    7,326
    
    
    
    7,146Retained earnings
    
    
    45,353
    
    
    
    45,405Accumulated other comprehensive income
    
    
    1,115
    
    
    
    957Total stockholders equity
    
    
    54,373
    
    
    
    54,118Total liabilities and stockholders equity
    
    $
    548,987
    
    
    $
    540,404
  107




---



##### 



Comm Bancorp, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
(Dollars in thousands, except per share data)
 AccumulatedOther
    
    
    TotalCommon
    
    
    Capital
    
    
    Retained
    
    
    Comprehensive
    
    
    StockholdersFor the Two Years Ended December 31, 2007
    
    Stock
    
    
    Surplus
    
    
    Earnings
    
    
    Income
    
    
    EquityBalance, December 31, 2005
    
    $
    611
    
    
    $
    6,869
    
    
    $
    41,250
    
    
    $
    959
    
    
    $
    49,689Net income
    
    
    
    
    
    
    
    
    
    
    6,350
    
    
    
    
    
    
    
    6,350Dividends declared: $1.00 per share
    
    
    
    
    
    
    
    
    
    
    (1,853
    )
    
    
    
    
    
    
    (1,853
    )Dividend reinvestment plan: 7,373 shares issued
    
    
    2
    
    
    
    303
    
    
    
    
    
    
    
    
    
    
    
    305Repurchase and retirement: 8,840 shares
    
    
    (3
    )
    
    
    (26
    )
    
    
    (342
    )
    
    
    
    
    
    
    (371
    )Other comprehensive loss, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )Balance, December 31, 2006
    
    
    610
    
    
    
    7,146
    
    
    
    45,405
    
    
    
    957
    
    
    
    54,118Net income
    
    
    
    
    
    
    
    
    
    
    6,900
    
    
    
    
    
    
    
    6,900Dividends declared: $1.04 per share
    
    
    
    
    
    
    
    
    
    
    (1,850
    )
    
    
    
    
    
    
    (1,850
    )Dividend reinvestment plan: 10,680 shares issued
    
    
    4
    
    
    
    497
    
    
    
    
    
    
    
    
    
    
    
    501Repurchase and retirement: 105,745 shares
    
    
    (35
    )
    
    
    (317
    )
    
    
    (5,102
    )
    
    
    
    
    
    
    (5,454
    )Other comprehensive income, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    158
    
    
    
    158Balance, December 31, 2007
    
    $
    579
    
    
    $
    7,326
    
    
    $
    45,353
    
    
    $
    1,115
    
    
    $
    54,373
  108




---



##### 



Comm Bancorp, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands, except per share data)
 Year Ended December 31
    
    2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    6,900
    
    
    $
    6,350Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    525
    
    
    
    890Depreciation and amortization of premises and equipment
    
    
    1,074
    
    
    
    1,022Net amortization (accretion) of investment securities
    
    
    (6
    )
    
    
    87Amortization of net loan costs
    
    
    365
    
    
    
    298Amortization of mortgage servicing rights
    
    
    234
    
    
    
    224Deferred income tax benefit
    
    
    (108
    )
    
    
    (74
    )Net gains on sale of loans
    
    
    (258
    )
    
    
    (243
    )Losses (gains) on foreclosed assets
    
    
    (39
    )
    
    
    6Gains on disposition of equipment
    
    
    
    
    
    
    (1
    )Changes in:Loans held for sale, net
    
    
    (418
    )
    
    
    1,605Accrued interest receivable
    
    
    229
    
    
    
    (376
    )Other assets
    
    
    142
    
    
    
    (347
    )Accrued interest payable
    
    
    202
    
    
    
    82Other liabilities
    
    
    169
    
    
    
    234Net cash provided by operating activities
    
    
    9,011
    
    
    
    9,757Cash flows from investing activities:Proceeds from repayments of investment securities available-for-sale
    
    
    64,789
    
    
    
    51,547Purchases of investment securities available-for-sale
    
    
    (12,738
    )
    
    
    (37,885
    )Purchases of investment in residential housing program
    
    
    (3,272
    )Proceeds from sale of foreclosed assets
    
    
    356
    
    
    
    664Net increase in lending activities
    
    
    (64,061
    )
    
    
    (21,011
    )Proceeds from sale of premises and equipment
    
    
    
    
    
    
    6Purchases of premises and equipment
    
    
    (947
    )
    
    
    (1,042
    )Net cash used in investing activities
    
    
    (15,873
    )
    
    
    (7,721
    )Cash flows from financing activities:Net changes in:Money market, NOW, savings and noninterest-bearing accounts
    
    
    13,742
    
    
    
    (11,189
    )Time deposits
    
    
    (5,827
    )
    
    
    3,266Proceeds from the issuance of common shares
    
    
    501
    
    
    
    305Repurchase and retirement of common shares
    
    
    (5,454
    )
    
    
    (371
    )Cash dividends paid
    
    
    (1,858
    )
    
    
    (1,816
    )Net cash provided by (used in) financing activities
    
    
    1,104
    
    
    
    (9,805
    )Net decrease in cash and cash equivalents
    
    
    (5,758
    )
    
    
    (7,769
    )Cash and cash equivalents at beginning of year
    
    
    27,634
    
    
    
    35,403Cash and cash equivalents at end of year
    
    $
    21,876
    
    
    $
    27,634Supplemental disclosures:Cash paid during the period for:Interest
    
    $
    14,247
    
    
    $
    12,423Income taxes
    
    
    1,840
    
    
    
    1,820Noncash items:Transfers of loans to foreclosed assets
    
    
    90
    
    
    
    659Unrealized losses (gains) on investment securities available-for-sale, net
    
    $
    (158
    )
    
    $
    2
  109




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies:
 Nature of operations:
      110




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
  Basis of presentation:
   Accounting changes and error corrections:
   111




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
  Use of estimates:
   
 112




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
  
 113




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
  
 114




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
    115




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
     Investment securities:
   116




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
      117




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
  Loans held for sale, net:
  Loans:
 
 118




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
  Nonperforming assets:
    
 119




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
  Allowance for loan losses:
   Off-balance sheet financial instruments:
  120




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
  Premises and equipment, net:
  Premises
    
    15-45 yearsEquipment
    
    3-10 yearsLeasehold improvements
    
    15 years
 Mortgage servicing rights:
 
 121




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
   Intangible assets:
  
 122




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
 Trust and wealth management assets:
  Statements of Cash Flows:
  Fair value of financial instruments:
   123




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
  Cash and cash equivalents:
 Investment securities available for sale:
 Loans held for sale, net:
 Net loans:
 Mortgage servicing rights:
 Accrued interest receivable:
 Deposits without stated maturities:
 Deposits with stated maturities:
 Accrued interest payable:
 124




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
 Off-balance sheet financial instruments:
   
 125




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
   Comprehensive income:
  Advertising costs:
  Other expenses:
  126




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
  Income taxes:
  , 
  Earnings per common share:
  127




---



##### 



Comm Bancorp, Inc.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)  (Dollars in thousands, except per share data)
 2. Cash and due from banks:
  3. Investment securities:
  Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairDecember 31, 2007
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueState and municipals:Taxable
    
    $
    5,254
    
    
    
    
    
    
    $
    27
    
    
    $
    5,227Tax-exempt
    
    
    29,300
    
    
    $
    1,597
    
    
    
    
    
    
    
    30,897Mortgage-backed securities
    
    
    1,898
    
    
    
    10
    
    
    
    4
    
    
    
    1,904Equity securities:Restricted
    
    
    1,128
    
    
    
    
    
    
    
    
    
    
    
    1,128Other
    
    
    138
    
    
    
    113
    
    
    
    
    
    
    
    251Total
    
    $
    37,718
    
    
    $
    1,720
    
    
    $
    31
    
    
    $
    39,407
 Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairDecember 31, 2006
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueU.S. Government agencies
    
    $
    39,258
    
    
    $
    3
    
    
    $
    60
    
    
    $
    39,201State and
municipals:Taxable
    
    
    12,139
    
    
    
    
    
    
    
    227
    
    
    
    11,912Tax-exempt
    
    
    29,323
    
    
    
    1,634
    
    
    
    1
    
    
    
    30,956Mortgage-backed securities
    
    
    7,799
    
    
    
    11
    
    
    
    50
    
    
    
    7,760Equity securities:Restricted
    
    
    1,206
    
    
    
    
    
    
    
    
    
    
    
    1,206Other
    
    
    38
    
    
    
    140
    
    
    
    
    
    
    
    178Total
    
    $
    89,763
    
    
    $
    1,788
    
    
    $
    338
    
    
    $
    91,213
  128




---



##### 



Comm Bancorp, Inc.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)  (Dollars in thousands, except per share data)
 3. Investment securities (continued):
  Less than 12 months
    
    
    12 months or more
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedDecember 31, 2007
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesState and municipals:Taxable
    
    
    
    
    
    
    
    
    
    $
    3,617
    
    
    $
    27
    
    
    $
    3,617
    
    
    $
    27Tax-exempt
Mortgage-backed securities
    
    
    
    
    
    
    
    
    
    
    1,624
    
    
    
    4
    
    
    
    1,624
    
    
    
    4Equity securities:Restricted
OtherTotal
    
    
    
    
    
    
    
    
    
    $
    5,241
    
    
    $
    31
    
    
    $
    5,241
    
    
    $
    31
 Less than 12 months
    
    
    12 months or more
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedDecember 31, 2006
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesU.S. Government agencies
    
    $
    7,326
    
    
    $
    3
    
    
    $
    5,956
    
    
    $
    57     $
    
    
    
    13,282
    
    
    $
    60State and municipals:Taxable
    
    
    
    
    
    
    
    
    
    
    11,912
    
    
    
    227
    
    
    
    11,912
    
    
    
    227Tax-exempt
    
    
    
    
    
    
    
    
    
    
    129
    
    
    
    1
    
    
    
    129
    
    
    
    1Mortgage-backed securities
    
    
    2,667
    
    
    
    2
    
    
    
    4,332
    
    
    
    48
    
    
    
    6,999
    
    
    
    50Equity securities:Restricted
OtherTotal
    
    $
    9,993
    
    
    $
    5
    
    
    $
    22,329
    
    
    $
    333
    
    
    $
    32,322
    
    
    $
    338
  129




---



##### 



Comm Bancorp, Inc.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)  (Dollars in thousands, except per share data)
 3. Investment securities (continued):
    130




---



##### 



Comm Bancorp, Inc.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)  (Dollars in thousands, except per share data)
 3. Investment securities (continued):
    After one
    
    
    After fiveWithin
    
    
    but within
    
    
    but within
    
    
    AfterDecember 31, 2007
    
    one year
    
    
    five years
    
    
    ten years
    
    
    ten years
    
    
    TotalFair value:State and municipals:Taxable
    
    $
    5,227
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,227Tax-exempt
    
    
    65
    
    
    $
    7,178
    
    
    $
    20,959
    
    
    $
    2,695
    
    
    
    30,897Mortgage-backed securities
    
    
    945
    
    
    
    909
    
    
    
    50
    
    
    
    
    
    
    
    1,904Total
    
    $
    6,237
    
    
    $
    8,087
    
    
    $
    21,009
    
    
    $
    2,695
    
    
    $
    38,028
  131




---



##### 



Comm Bancorp, Inc.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)  (Dollars in thousands, except per share data)
 4. Loans, nonperforming assets and allowance for loan losses:
  December 31
    
    2007
    
    
    2006Commercial, financial and others
    
    $
    187,147
    
    
    $
    143,792Real estate:Construction
    
    
    12,810
    
    
    
    5,513Mortgage
    
    
    233,755
    
    
    
    225,703Consumer, net
    
    
    35,149
    
    
    
    31,546Lease financing, net
    
    
    2,483
    
    
    
    1,520Total
    
    $
    471,344
    
    
    $
    408,074
     2007
    
    
    2006Balance, January 1
    
    $
    4,435
    
    
    $
    4,128Provision for loan losses
    
    
    525
    
    
    
    890Loans charged-off
    
    
    (441
    )
    
    
    (717
    )Loans recovered
    
    
    105
    
    
    
    134Balance, December 31
    
    $
    4,624
    
    
    $
    4,435
 132




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 4. Loans, nonperforming assets and allowance for loan losses (continued):
  December 31
    
    2007
    
    
    2006Nonaccrual loans:Commercial, financial and others
    
    $
    2,444
    
    
    $
    1,060Real estate:ConstructionMortgage
    
    
    2,812
    
    
    
    856Consumer, net
    
    
    77
    
    
    
    94Lease financing, netTotal nonaccrual loans
    
    
    5,333
    
    
    
    2,010Accruing loans past due 90 days or more:Commercial, financial and others
    
    
    1,837
    
    
    
    13Real estate:ConstructionMortgage
    
    
    295
    
    
    
    217Consumer, net
    
    
    85
    
    
    
    60Lease financing, net
    
    
    17
    
    
    
    2Total accruing loans past due 90 days or more
    
    
    2,234
    
    
    
    292Total nonperforming loans
    
    
    7,567
    
    
    
    2,302Foreclosed assets
    
    
    125
    
    
    
    352Total nonperforming assets
    
    $
    7,692
    
    
    $
    2,654
  2007
    
    
    2006Recorded
    
    
    Related
    
    
    Recorded
    
    
    RelatedDecember 31
    
    Investment
    
    
    Allowance
    
    
    Investment
    
    
    AllowanceImpaired loans:With a related allowance
    
    $
    7,575
    
    
    $
    3,216
    
    
    $
    8,017
    
    
    $
    2,410With no related allowance
    
    
    7,343
    
    
    
    
    
    
    
    1,683Total
    
    $
    14,918
    
    
    $
    3,216
    
    
    $
    9,700
    
    
    $
    2,410
 133




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 4. Loans, nonperforming assets and allowance for loan losses (continued):
  Year Ended December 31
    
    2007
    
    
    2006Gross interest due under terms
    
    $
    902
    
    
    $
    703Interest income recognized
    
    
    882
    
    
    
    693Interest income not recognized
    
    $
    20
    
    
    $
    10Interest income recognized (cash-basis)
    
    $
    882
    
    
    $
    693Average recorded investment in impaired loans
    
    $
    12,405
    
    
    $
    8,841
  5. Commitments, concentrations and contingent liabilities:
   December 31
    
    2007
    
    
    2006Commitments to extend credit
    
    $
    80,675
    
    
    $
    60,878Unused portions of lines of credit
    
    
    17,901
    
    
    
    21,091Commercial letters of credit
    
    
    19,634
    
    
    
    21,405Total
    
    $
    118,210
    
    
    $
    103,374
 134




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 5. Commitments, concentrations and contingent liabilities (continued):
      135




---



##### 



Comm Bancorp, Inc.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)  (Dollars in thousands, except per share data)
 5. Commitments, concentrations and contingent liabilities (continued):
    6. Premises and equipment, net:
  December 31
    
    2007
    
    
    2006Land
    
    $
    3,993
    
    
    $
    3,519Premises
    
    
    10,531
    
    
    
    10,446Leasehold improvements
    
    
    291
    
    
    
    291Furniture and equipment
    
    
    10,362
    
    
    
    10,068Total premises and equipment
    
    
    25,177
    
    
    
    24,324Less: accumulated depreciation and amortization
    
    
    14,286
    
    
    
    13,306Premises and equipment, net
    
    $
    10,891
    
    
    $
    11,018
 136




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 6. Premises and equipment, net (continued):
    2008
    
    $
    1942009
    
    
    1482010
    
    
    1192011
    
    
    1192012
    
    
    1192013 and thereafter
    
    
    350Total
    
    $
    1,049
  137




---



##### 



Comm Bancorp, Inc.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)  (Dollars in thousands, except per share data)
 7. Other assets:
  December 31
    
    2007
    
    
    2006Goodwill
    
    $
    349
    
    
    $
    349Deferred income taxes
    
    
    390
    
    
    
    363Foreclosed assets
    
    
    125
    
    
    
    352Mortgage servicing rights
    
    
    580
    
    
    
    676Investment in residential housing program
    
    
    3,455
    
    
    
    328Other
    
    
    1,312
    
    
    
    1,397Total
    
    $
    6,211
    
    
    $
    3,465
    2007
    
    
    2006Balance, January 1
    
    $
    676
    
    
    $
    735Additions
    
    
    138
    
    
    
    165Amortization
    
    
    (234
    )
    
    
    (224
    )Balance, December 31
    
    $
    580
    
    
    $
    676
  138




---



##### 



Comm Bancorp, Inc.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)  (Dollars in thousands, except per share data)
 8. Deposits:
  December 31
    
    2007
    
    
    2006Interest-bearing deposits:Money market accounts
    
    $
    28,657
    
    
    $
    31,464NOW accounts
    
    
    78,091
    
    
    
    67,273Savings accounts
    
    
    102,895
    
    
    
    99,341Time deposits less than $100
    
    
    163,256
    
    
    
    176,389Time deposits $100 or more
    
    
    43,226
    
    
    
    35,920Total interest-bearing deposits
    
    
    416,125
    
    
    
    410,387Noninterest-bearing deposits
    
    
    75,232
    
    
    
    73,055Total deposits
    
    $
    491,357
    
    
    $
    483,442
   2008
    
    $
    129,9512009
    
    
    12,5042010
    
    
    21,3852011
    
    
    10,3902012
    
    
    25,0732013 and thereafter
    
    
    7,179Total
    
    $
    206,482
   139




---



##### 



Comm Bancorp, Inc.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)  (Dollars in thousands, except per share data)
 9. Short-term borrowings:
   140




---



##### 



Comm Bancorp, Inc.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)  (Dollars in thousands, except per share data)
 10. Fair value of financial instruments:
  2007
    
    
    2006Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairDecember 31
    
    Value
    
    
    Value
    
    
    Value
    
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    21,876
    
    
    $
    21,876
    
    
    $
    27,634
    
    
    $
    27,634Investment securities available-for-sale
    
    
    39,407
    
    
    
    39,407
    
    
    
    91,213
    
    
    
    91,213Loans held for sale, net
    
    
    1,248
    
    
    
    1,248
    
    
    
    572
    
    
    
    579Net loans
    
    
    466,720
    
    
    
    470,020
    
    
    
    403,639
    
    
    
    395,245Mortgage servicing rights
    
    
    580
    
    
    
    580
    
    
    
    676
    
    
    
    676Accrued interest receivable
    
    
    2,634
    
    
    
    2,634
    
    
    
    2,863
    
    
    
    2,863Total
    
    $
    532,465
    
    
    $
    535,765
    
    
    $
    526,597
    
    
    $
    518,210Financial liabilities:Deposits without stated maturities
    
    $
    284,875
    
    
    $
    284,875
    
    
    $
    271,133
    
    
    $
    271,133Deposits with stated maturities
    
    
    206,482
    
    
    
    207,269
    
    
    
    212,309
    
    
    
    212,361Accrued interest payable
    
    
    1,308
    
    
    
    1,308
    
    
    
    1,106
    
    
    
    1,106Total
    
    $
    492,665
    
    
    $
    493,452
    
    
    $
    484,548
    
    
    $
    484,600
 11. Employee benefit plan:
   141




---



##### 



Comm Bancorp, Inc.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)  (Dollars in thousands, except per share data)
 12. Income taxes:
  Year Ended December 31
    
    2007
    
    
    2006Current
    
    $
    2,011
    
    
    $
    1,948Deferred
    
    
    (108
    )
    
    
    (74
    )Total
    
    $
    1,903
    
    
    $
    1,874
  2007
    
    
    2006Year Ended December 31
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    RateFederal income tax at statutory rate
    
    $
    2,993
    
    
    
    34.0
    %
    
    $
    2,796
    
    
    
    34.0
    %Differences resulting from:Tax-exempt interest, net
    
    
    (1,006
    )
    
    
    (11.4
    )
    
    
    (930
    )
    
    
    (11.3
    )Residential housing program tax credit
    
    
    (94
    )
    
    
    (1.1
    )Other
    
    
    10
    
    
    
    0.1
    
    
    
    8
    
    
    
    0.1Federal income tax on income before
income taxes
    
    $
    1,903
    
    
    
    21.6
    %
    
    $
    1,874
    
    
    
    22.8
    %
  December 31
    
    2007
    
    
    2006Deferred tax assets:Allowance for loan losses
    
    $
    1,369
    
    
    $
    1,290Accrued interest receivable
    
    
    58
    
    
    
    48Vacation salaries payable
    
    
    20Core deposit intangible
    
    
    243
    
    
    
    292Total
    
    
    1,690
    
    
    
    1,630Deferred tax liabilities:Investment securities available-for-sale
    
    
    574
    
    
    
    493Loans, net of unearned income
    
    
    193
    
    
    
    165Prepaid expenses
    
    
    119
    
    
    
    118Premises and equipment, net
    
    
    344
    
    
    
    421Other
    
    
    70
    
    
    
    70Total
    
    
    1,300
    
    
    
    1,267Net deferred tax assets
    
    $
    390
    
    
    $
    363
 142




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 12. Income taxes (continued):
   143




---



##### 



Comm Bancorp, Inc.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)  (Dollars in thousands, except per share data)
 13. Parent Company financial statements:
 CONDENSED STATEMENTS OF INCOME
 Year Ended December 31
    
    2007
    
    
    2006Income:Dividends from subsidiaries
    
    $
    10,070
    
    
    $
    1,866Management fees from subsidiaries
    
    
    240
    
    
    
    284Other income
    
    
    5
    
    
    
    5Total income
    
    
    10,315
    
    
    
    2,155Expense:Occupancy and equipment expenses
    
    
    87
    
    
    
    76Other expenses
    
    
    571
    
    
    
    377Total expenses
    
    
    658
    
    
    
    453Income before income taxes and undistributed income of
subsidiaries
    
    
    9,657
    
    
    
    1,702Income tax benefit
    
    
    (235
    )
    
    
    (57
    )Income before undistributed income of subsidiaries
    
    
    9,892
    
    
    
    1,759Equity in (excess of) undistributed income of subsidiaries
    
    
    (2,992
    )
    
    
    4,591Net income
    
    $
    6,900
    
    
    $
    6,350
 CONDENSED BALANCE SHEETS
 December 31
    
    2007
    
    
    2006Assets:Cash
    
    $
    75
    
    
    $
    235Investment in bank subsidiary
    
    
    49,292
    
    
    
    52,108Investment securities available-for-sale
    
    
    251
    
    
    
    178Other assets
    
    
    5,332
    
    
    
    2,192Total assets
    
    $
    54,950
    
    
    $
    54,713Liabilities:Dividends payable
    
    $
    456
    
    
    $
    463Other liabilities
    
    
    121
    
    
    
    132Total liabilities
    
    
    577
    
    
    
    595Stockholders equity
    
    
    54,373
    
    
    
    54,118Total liabilities and stockholders equity
    
    $
    54,950
    
    
    $
    54,713
 144




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 13. Parent Company financial statements (continued):
 CONDENSED STATEMENTS OF CASH FLOWS
 Year Ended December 31
    
    2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    6,900
    
    
    $
    6,350Adjustments:Excess of (equity in) undistributed income of subsidiaries
    
    
    2,992
    
    
    
    (4,591
    )Depreciation and amortization
    
    
    87
    
    
    
    76Changes in:Other assets
    
    
    45
    
    
    
    210Other liabilities
    
    
    (1
    )
    
    
    19Net cash provided by operating activities
    
    
    10,023
    
    
    
    2,064Cash flows from investing activities:Purchases of investment securities
    
    
    (100
    )Purchases of investment in residential housing program
    
    
    (3,272
    )Net cash used in investing activities
    
    
    (3,372
    )Cash flows from financing activities:Issuance of common shares
    
    
    501
    
    
    
    305Repurchase and retirement of common shares
    
    
    (5,454
    )
    
    
    (371
    )Cash dividends paid
    
    
    (1,858
    )
    
    
    (1,816
    )Net cash used in financing activities
    
    
    (6,811
    )
    
    
    (1,882
    )Net increase (decrease) in cash
    
    
    (160
    )
    
    
    182Cash at beginning of year
    
    
    235
    
    
    
    53Cash at end of year
    
    $
    75
    
    
    $
    235
 14. Regulatory matters:
   145




---



##### 



Comm Bancorp, Inc.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)  (Dollars in thousands, except per share data)
 14. Regulatory matters (continued):
      146




---



##### 



Comm Bancorp, Inc.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)  (Dollars in thousands, except per share data)
 14. Regulatory matters (continued):
    Minimum to be WellCapitalized underMinimum for Capital
    
    Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action ProvisionsDecember 31, 2007
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioTier I capital to risk-weighted assets:Consolidated
    
    $
    52,852
    
    
    
    11.2
    %
    
    $
    18,921
    
    
    
    4.0
    %Community Bank
    
    
    47,845
    
    
    
    10.2
    
    
    
    18,773
    
    
    
    4.0
    
    
    $
    28,160
    
    
    
    6.0
    %Total capital to risk-weighted assets:Consolidated
    
    
    57,476
    
    
    
    12.2
    
    
    
    37,842
    
    
    
    8.0Community Bank
    
    
    52,469
    
    
    
    11.2
    
    
    
    37,546
    
    
    
    8.0
    
    
    
    46,933
    
    
    
    10.0Tier I capital to total average assets
less intangible assets:Consolidated
    
    
    52,852
    
    
    
    9.5
    
    
    
    22,160
    
    
    
    4.0Community Bank
    
    $
    47,845
    
    
    
    8.7
    %
    
    $
    22,083
    
    
    
    4.0
    %
    
    $
    27,604
    
    
    
    5.0
    %Risk-weighted assets:Consolidated
    
    $
    459,388Community Bank
    
    
    455,687Risk-weighted off-balance sheet items:Consolidated
    
    
    13,641Community Bank
    
    
    13,641Average assets for Leverage ratio:Consolidated
    
    
    553,999Community Bank
    
    $
    552,080
 147




---



##### 



Comm Bancorp, Inc.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)  (Dollars in thousands, except per share data)
 14. Regulatory matters (continued):
 Minimum to be WellCapitalized underMinimum for Capital
    
    Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action ProvisionsDecember 31, 2006
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioTier I capital to risk-weighted assets:Consolidated
    
    $
    52,745
    
    
    
    12.5
    %
    
    $
    16,881
    
    
    
    4.0
    %Community Bank
    
    
    50,827
    
    
    
    12.1
    
    
    
    16,851
    
    
    
    4.0
    
    
    $
    25,277
    
    
    
    6.0
    %Total capital to risk-weighted assets:Consolidated
    
    
    57,180
    
    
    
    13.5
    
    
    
    33,763
    
    
    
    8.0Community Bank
    
    
    55,262
    
    
    
    13.1
    
    
    
    33,703
    
    
    
    8.0
    
    
    
    42,128
    
    
    
    10.0Tier I capital to total average assets
less intangible assets:Consolidated
    
    
    52,745
    
    
    
    9.7
    
    
    
    21,670
    
    
    
    4.0Community Bank
    
    $
    50,827
    
    
    
    9.4
    %
    
    $
    21,631
    
    
    
    4.0
    %
    
    $
    27,039
    
    
    
    5.0
    %Risk-weighted assets:Consolidated
    
    $
    408,540Community Bank
    
    
    407,785Risk-weighted off-balance sheet items:Consolidated
    
    
    13,497Community Bank
    
    
    13,497Average assets for Leverage ratio:Consolidated
    
    
    541,760Community Bank
    
    $
    540,783
    148




---



##### 



Comm Bancorp, Inc.
DIRECTORS AND OFFICERS
 BOARD OF DIRECTORS  Comm Bancorp, Inc.
DAVID L. BAKER
 WILLIAM F. FARBER, SR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CHAIRMAN OF THE BOARD
 JUDD B. FITZE
 DEAN L. HESSER
 JOHN P. KAMEEN
SECRETARY  The Forest City News
 WILLIAM A. KERL
 ERWIN T. KOST
 SUSAN F. MANCUSO
 ROBERT A. MAZZONI
 J. ROBERT McDONNELL
VICE CHAIRMAN
 JOSEPH P. MOORE, III
 CORPORATE OFFICERS  Comm Bancorp, Inc.
WILLIAM R. BOYLE
 WILLIAM F. FARBER, SR.
 JOHN P. KAMEEN
 J. ROBERT McDONNELL
 SCOTT A. SEASOCK
 DIRECTORS EMERITUS
THOMAS M. CHESNICK
 MICHAEL T. GOSKOWSKI
 WILLIAM B. LOPATOFSKY
 JOSEPH P. MOORE, JR.
 149




---



##### 



Comm Bancorp, Inc.
DIRECTORS AND OFFICERS (CONTINUED)
 ADVISORY BOARDS  Community Bank and Trust Company  CARBONDALE BRANCH
JOSEPH J. BRENNAN
 JOHN J. CERRA
 HENRY E. DEECKE
 ROBERT W. FARBER
 JOSEPH R. MAZZA
 CLIFFORD BRANCH
THOMAS J. LOPATOFSKY, JR.
 SEAN P. McGRAW
 PATRICK J. OLIVERI
 EATON TOWNSHIP,
LAKE WINOLA AND  TUNKHANNOCK BRANCHES
DOUGLAS A. GAY
 THOMAS S. HENRY
 JEFFREY KINTNER
 FOREST CITY BRANCH
THOMAS BAILEYS
 RICHARD E. CURTIS
 ALLAN A. HORNBECK, JR.
 JOSEPH LUCCHESI, D.M.D.
 J. SCOTT MISKOVSKY
 LINDA M. RICHARDS
 MONTROSE BRANCH
EDGAR B. BAKER
 THOMAS R. KERR
 FRANCIS J. PINKOWSKI
 DONNA L. WILLIAMS
 NICHOLSON BRANCH
RICHARD S. LOCHEN
 MARK W. NOVITCH
 MARK D. VANKO
 SIMPSON BRANCH
FRANCIS X. LAPERA, SR.
 ROBERT M. McDONNELL
 GERALD G. SALKO, D.D.S.
 TANNERSVILLE BRANCH
TIMOTHY B. FISHER, II
 GARY HAZEN, CPA
 CHARLES R. MARZZACCO
 150




---



##### 



Comm Bancorp, Inc.
DIRECTORS AND OFFICERS (CONTINUED)
 OFFICERS  Community Bank and Trust Company
DAVID L. BAKER
 JANICE M. BEVACQUA
 WILLIAM R. BOYLE
 SHARON A. BYRNE
 ROBIN M. BULZONI
 DEBRA A. CARR
 MARK E. CATERSON
 ROBERT F. DAVIS
 WILLIAM F. FARBER, SR.
 MICHAEL J. GAGLIARDI
 DEBRA A. GAY
 GREGORY G. GULA
 DONALD J. GIBBS
 LISA A. HAHN
 DAVID A. JONES
 RICHARD J. LAPERA
 GARY S. LAVELLE
 ANNETTE M. LYNCH
 PAMELA S. MAGNOTTI
 MARY ANN MUSHO
 MICHAEL A. NARCAVAGE
 THOMAS G. NOREK
 ROBERT P. OMALLEY
 M. EVELYN PANTZAR
 JOHN PASH, III
 MARY BETH PASQUALICCHIO
 JAMES R. PIETROWSKI
 MARK D. RENZINI, CPA
 CHERYL A. RUPP
 THOMAS A. SALUS
 SCOTT A. SEASOCK
 M. JAMES SHIELDS
 RONALD K. SMITH
 TAMI L. SNYDER
 HAROLD F. STOUT
 BRIAN C. URBAS
 ANN E. VADELLA
 STEPHANIE A. WESTINGTON, CPA
 WAYNE R. WHIPPLE
 LOUIS J. ZEFRAN
 151




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Comm Bancorp, Inc.
DIRECTORS AND OFFICERS (CONTINUED)
 BOARD OF DIRECTORS  Comm Realty Corporation
WILLIAM F. FARBER, SR.
CHAIRMAN OF THE BOARD
 WILLIAM R. BOYLE
 SCOTT A. SEASOCK
 OFFICERS  Comm Realty Corporation
THOMAS A. SALUS
 STEPHANIE A. WESTINGTON, CPA
 MICHAEL J. GAGLIARDI
 BOARD OF DIRECTORS  Community Leasing Corporation
WILLIAM F. FARBER, SR.
CHAIRMAN OF THE BOARD
 JOHN P. KAMEEN
 JOSEPH J. MUSKEY
 OFFICERS  Community Leasing Corporation
JOSEPH J. MUSKEY
 STEPHANIE A. WESTINGTON, CPA
 JAMES R. PIETROWSKI
 BOARD OF DIRECTORS  Comm Financial Services Corporation
WILLIAM F. FARBER, SR.
CHAIRMAN OF THE BOARD
 JOHN P. KAMEEN
 MARK D. RENZINI, CPA
 OFFICERS  Comm Financial Services Corporation
GEORGE J. COBB
 JOHN PASH, III
 MARY ANN MUSHO
 Community Abstract Services, LLC
WILLIAM F. FARBER, SR.
 SCOTT A. SEASOCK
 STEPHANIE A. WESTINGTON, CPA
 WILLIAM R. BOYLE
 152




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##### 



Comm Bancorp, Inc.
OTHER INFORMATION
 LOCATIONS  Community Bank and Trust Company
Carbondale Branches*
 
 Clarks Summit Branch*
 Clifford Branch*
 Dickson City Branch*
 Eaton Township Branch*
 Eynon Branch*
 Forest City Branch*
 Lake Winola Branch*
 Lakewood Branch
 Montrose Branch*
 Nicholson Branch*
 Scranton Branch*
 Simpson Branch*
 Tannersville Branch*
 Tunkhannock Branch*
 Kingston**
 Trust Services
 Loan Operations Center
 Remote ATM Location
 Community Abstract Services, LLC
 Comm Financial Services Corporation
 Community Leasing Corporation
 Comm Realty Corporation
 KlickSM Banking via the Internet
 InTouchSM Telephone Banking System
 153




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##### 



Comm Bancorp, Inc.
OTHER INFORMATION (CONTINUED)
 Stockholder Information
 Corporate Headquarters:
 Legal Counsel:
 Independent Auditors:
 Transfer Agent:
 Market Makers:
 
 
 
 
 
 
 
 
 
 
 
 Community Reinvestment:
  Common Stock Market Information:
 SM
  CashDividendsHigh
    
    Low
    
    Declared2007:First Quarter
    
    $
    49.93
    
    
    $
    42.26
    
    
    $
    0.26Second Quarter
    
    
    50.22
    
    
    
    47.00
    
    
    
    0.26Third Quarter
    
    
    49.90
    
    
    
    46.00
    
    
    
    0.26Fourth Quarter
    
    $
    52.60
    
    
    $
    43.90
    
    
    $
    0.262006:First Quarter
    
    $
    44.45
    
    
    $
    41.00
    
    
    $
    0.25Second Quarter
    
    
    44.50
    
    
    
    39.94
    
    
    
    0.25Third Quarter
    
    
    43.50
    
    
    
    38.00
    
    
    
    0.25Fourth Quarter
    
    $
    43.80
    
    
    $
    40.00
    
    
    $
    0.25
 Dividend Reinvestment:
  Dividend Direct Deposit:
  Website Information:
  154