##### 



EXHIBIT 13
 PORTIONS OF THE ANNUAL REPORT TO STOCKHOLDERS
FOR FISCAL YEAR ENDED DECEMBER 31, 2006
 77




---



##### 



Comm Bancorp, Inc.
CONTENTS
 Introduction79 Presidents Message to Stockholders81 Consolidated Selected Financial DataManagements Discussion and Analysis82 Forward-Looking Discussion83 Critical Accounting Policies85 Operating Environment89 Review of Financial Position130 Review of Financial PerformanceConsolidated Financial Statements143 Report of Management145 Reports of Independent Registered Public Accounting Firms147 Consolidated Statements of Income and Comprehensive Income148 Consolidated Balance Sheets149 Consolidated Statements of Changes in Stockholders Equity150 Consolidated Statements of Cash FlowsNotes to Consolidated Financial Statements151 Summary of significant accounting policies169 Cash and due from banks170 Investment securities175 Loans, nonperforming assets and allowance for loan losses177 Commitments, concentrations and contingent liabilities179 Premises and equipment, net180 Other assets181 Deposits182 Short-term borrowings183 Fair value of financial instruments183 Employee benefit plan184 Income taxes186 Parent Company financial statements187 Regulatory matters192 Summary of quarterly financial information (unaudited)Managements Discussion and Analysis 2005 versus 2004193 Operating Environment194 Review of Financial Position202 Review of Financial PerformanceDirectors and Officers206 Boards of Directors and Corporate OfficersOther Information210 Locations211 Stockholder Information
 78




---



##### 



Comm Bancorp, Inc.
PRESIDENTS MESSAGE TO STOCKHOLDERS
     79




---



##### 



Comm Bancorp, Inc.
PRESIDENTS MESSAGE TO STOCKHOLDERS (CONTINUED)
  SM
   Sincerely,/s/ William F. Farber, Sr.William F. Farber, Sr.President and Chief Executive Officer,Chairman of the Board
 80




---



##### 



Comm Bancorp, Inc.
CONSOLIDATED SELECTED FINANCIAL DATA
(Dollars in thousands, except per share data)
 Year Ended December 31
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Condensed statements of financial performance:Interest income
    
    $
    33,040
    
    
    $
    28,359
    
    
    $
    26,333
    
    
    $
    26,808
    
    
    $
    29,284Interest expense
    
    
    12,505
    
    
    
    10,103
    
    
    
    9,233
    
    
    
    9,972
    
    
    
    12,216Net interest income
    
    
    20,535
    
    
    
    18,256
    
    
    
    17,100
    
    
    
    16,836
    
    
    
    17,068Provision for loan losses
    
    
    890
    
    
    
    782
    
    
    
    600
    
    
    
    480
    
    
    
    1,100Net interest income after provision for loan losses
    
    
    19,645
    
    
    
    17,474
    
    
    
    16,500
    
    
    
    16,356
    
    
    
    15,968Noninterest income
    
    
    3,408
    
    
    
    3,884
    
    
    
    3,566
    
    
    
    4,034
    
    
    
    4,145Noninterest expense
    
    
    14,829
    
    
    
    14,897
    
    
    
    14,662
    
    
    
    14,484
    
    
    
    13,530Income before income taxes
    
    
    8,224
    
    
    
    6,461
    
    
    
    5,404
    
    
    
    5,906
    
    
    
    6,583Provision for income tax expense
    
    
    1,874
    
    
    
    1,251
    
    
    
    679
    
    
    
    1,206
    
    
    
    1,383Net income
    
    $
    6,350
    
    
    $
    5,210
    
    
    $
    4,725
    
    
    $
    4,700
    
    
    $
    5,200Condensed statements of financial position:Investment securities
    
    $
    91,213
    
    
    $
    104,965
    
    
    $
    118,756
    
    
    $
    105,248
    
    
    $
    124,203Net loans
    
    
    403,639
    
    
    
    384,475
    
    
    
    377,864
    
    
    
    354,356
    
    
    
    319,830Other assets
    
    
    45,552
    
    
    
    54,137
    
    
    
    31,702
    
    
    
    49,848
    
    
    
    42,385Total assets
    
    $
    540,404
    
    
    $
    543,577
    
    
    $
    528,322
    
    
    $
    509,452
    
    
    $
    486,418Deposits
    
    $
    483,442
    
    
    $
    491,365
    
    
    $
    478,484
    
    
    $
    459,466
    
    
    $
    437,213Other liabilities
    
    
    2,844
    
    
    
    2,523
    
    
    
    2,520
    
    
    
    3,445
    
    
    
    3,872Stockholders equity
    
    
    54,118
    
    
    
    49,689
    
    
    
    47,318
    
    
    
    46,541
    
    
    
    45,333Total liabilities and stockholders equity
    
    $
    540,404
    
    
    $
    543,577
    
    
    $
    528,322
    
    
    $
    509,452
    
    
    $
    486,418Per share data:Net income
    
    $
    3.43
    
    
    $
    2.80
    
    
    $
    2.50
    
    
    $
    2.45
    
    
    $
    2.65Cash dividends declared
    
    
    1.00
    
    
    
    0.92
    
    
    
    0.88
    
    
    
    0.88
    
    
    
    0.82Stockholders equity
    
    $
    29.27
    
    
    $
    26.86
    
    
    $
    25.38
    
    
    $
    24.41
    
    
    $
    23.31Cash dividends declared as a percentage of net income
    
    
    29.18
    %
    
    
    32.84
    %
    
    
    35.09
    %
    
    
    35.89
    %
    
    
    30.83
    %Average common shares outstanding
    
    
    1,853,089
    
    
    
    1,860,563
    
    
    
    1,890,960
    
    
    
    1,921,063
    
    
    
    1,960,140Selected ratios (based on average balances):Net income as a percentage of total assets
    
    
    1.17
    %
    
    
    0.97
    %
    
    
    0.92
    %
    
    
    0.93
    %
    
    
    1.10
    %Net income as a percentage of stockholders equity
    
    
    12.18
    
    
    
    10.68
    
    
    
    9.97
    
    
    
    10.23
    
    
    
    11.99Stockholders equity as a percentage of total assets
    
    
    9.62
    
    
    
    9.13
    
    
    
    9.19
    
    
    
    9.14
    
    
    
    9.13Tier I capital as a percentage of adjusted total assets
    
    
    9.74
    
    
    
    9.04
    
    
    
    8.75
    
    
    
    8.66
    
    
    
    8.77Net interest income as a percentage of earning assets
    
    
    4.28
    
    
    
    3.88
    
    
    
    3.76
    
    
    
    3.80
    
    
    
    4.09Loans, net, as a percentage of deposits
    
    
    87.58
    %
    
    
    82.59
    %
    
    
    80.34
    %
    
    
    76.43
    %
    
    
    74.33
    %Selected ratios and data (based on period end balances):Tier I capital as a percentage of risk-weighted assets
    
    
    12.50
    %
    
    
    11.99
    %
    
    
    11.36
    %
    
    
    11.92
    %
    
    
    12.93
    %Total capital as a percentage of risk-weighted assets
    
    
    13.55
    
    
    
    13.02
    
    
    
    12.33
    
    
    
    12.90
    
    
    
    14.10Allowance for loan losses as a percentage of loans, net
    
    
    1.09
    %
    
    
    1.06
    %
    
    
    1.01
    %
    
    
    1.00
    %
    
    
    1.16
    %Full-time equivalent employees
    
    
    186
    
    
    
    194
    
    
    
    205
    
    
    
    203
    
    
    
    196Locations
    
    
    17
    
    
    
    16
    
    
    
    17
    
    
    
    17
    
    
    
    16
  81




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share data)
  Forward-Looking Discussion:
     82




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Critical Accounting Policies:
     83




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
       84




---



##### 



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




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   December 31
    
    2006
    
    
    2005National
    
    
    4.5
    %
    
    
    4.9
    %Pennsylvania
    
    
    4.6
    
    
    
    4.7Lackawanna County
    
    
    4.8
    
    
    
    4.9Luzerne County
    
    
    5.1
    
    
    
    5.4Monroe County
    
    
    4.9
    
    
    
    5.0Susquehanna County
    
    
    4.6
    
    
    
    4.5Wayne County
    
    
    3.9
    
    
    
    4.4Wyoming County
    
    
    5.0
    %
    
    
    4.9
    %
   
    
    On November 14, 2006, Mohegan Sun at Pocono Downs, the Commonwealths first slot
machine gaming facility, opened its doors. The $70.0 million casino is owned by the
Mohegan Tribe of Connecticut and has approximately 1,100 slot machines, a food court,
bar and patio. This is just the first phase of the project. A second phase, which will
double the number of machines, add retail shops, a night club and other amenities is
scheduled for construction in the Spring of 2007. Once the second phase is complete,
annual revenues are expected to reach $167.9 million.
 86




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
 This was the first casino to open under the Race Horse Development and Gaming Act of
2004. One purpose of this Act is to generate additional revenue for Pennsylvania to fund
property tax relief for residents. There are a total of 11 licenses under this Act. On
December 20, 2006, the Gaming Control Board announced that one of the at-large licenses
would be awarded to a Dunmore, Pennsylvania, businessmans Mount Airy Resort and Casino
Project. This 196-room resort located in Monroe County will create approximately 1,000 jobs
and boost tourism in this area. The resort is scheduled to open in November 2007.
    
    In September 2006, Lackawanna County officials announced that the New
York Yankees Triple-A franchise would replace the Philadelphia
Phillies Triple-A franchise at the former Lackawanna County Stadium in
2007. The Yankees have a large fan base in Northeastern Pennsylvania.
Local merchants anticipate a rise in tourism and trade for area
hotels, restaurants and other businesses. Demand for season tickets
soared, with more than 60.0 percent of the seats available for home
games sold by the end of October.
    
    In October of 2006, Governor Edward Rendell awarded a $35.0 million
grant to build the Medical College of Northeastern Pennsylvania in
Scranton. The school received another $35.0 million in the form of a
donation from Blue Cross of Northeastern Pennsylvania. This school,
which will have an expected enrollment of 360 students and an
operating budget of $25.0 million, is scheduled to open in August of
2009.
   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)
   Review of Financial Position:
  89




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   
    
    Restructuring our trust division and financial services subsidiary;
    
    Developing our commercial lease portfolio;
    
    Increasing our market area to include Luzerne County, Pennsylvania; and
    
    Improving retail operations through implementation of a new teller platform.
    90




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   SM
   91




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    Investment Portfolio:
  92




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    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)
   Distribution of investment securities available-for-sale
 2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002December 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
    %
    
    $
    10,350
    
    
    
    8.33
    %State and municipals:Taxable
    
    
    11,912
    
    
    
    13.06
    
    
    
    15,268
    
    
    
    14.54
    
    
    
    16,898
    
    
    
    14.23
    
    
    
    17,051
    
    
    
    16.20Tax-exempt
    
    
    30,956
    
    
    
    33.94
    
    
    
    33,795
    
    
    
    32.20
    
    
    
    34,605
    
    
    
    29.14
    
    
    
    34,788
    
    
    
    33.05
    
    
    
    35,003
    
    
    
    28.18Mortgage-backed securities
    
    
    7,760
    
    
    
    8.51
    
    
    
    12,217
    
    
    
    11.64
    
    
    
    21,281
    
    
    
    17.92
    
    
    
    35,099
    
    
    
    33.35
    
    
    
    77,579
    
    
    
    62.46Equity securities:Restricted
    
    
    1,206
    
    
    
    1.32
    
    
    
    808
    
    
    
    0.77
    
    
    
    1,153
    
    
    
    0.97
    
    
    
    1,783
    
    
    
    1.70
    
    
    
    1,149
    
    
    
    0.93Other
    
    
    178
    
    
    
    0.19
    
    
    
    166
    
    
    
    0.16
    
    
    
    174
    
    
    
    0.15
    
    
    
    150
    
    
    
    0.14
    
    
    
    122
    
    
    
    0.10Total
    
    $
    91,213
    
    
    
    100.00
    %
    
    $
    104,965
    
    
    
    100.00
    %
    
    $
    118,756
    
    
    
    100.00
    %
    
    $
    105,248
    
    
    
    100.00
    %
    
    $
    124,203
    
    
    
    100.00
    %
  95




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    96




---



##### 



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, 2006
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    YieldAmortized cost:U.S. Government agencies
    
    $
    39,258
    
    
    
    5.04
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    39,258
    
    
    
    5.04
    %State and municipals:Taxable
    
    
    6,878
    
    
    
    3.15
    
    
    $
    5,261
    
    
    
    2.77
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,139
    
    
    
    2.99Tax-exempt
    
    
    190
    
    
    
    4.02
    
    
    
    5,121
    
    
    
    7.85
    
    
    $
    16,218
    
    
    
    7.64
    %
    
    $
    7,794
    
    
    
    7.35
    %
    
    
    29,323
    
    
    
    7.58Mortgage-backed securities
    
    
    5,895
    
    
    
    5.36
    
    
    
    1,820
    
    
    
    4.53
    
    
    
    84
    
    
    
    6.27
    
    
    
    
    
    
    
    
    
    
    
    7,799
    
    
    
    5.18Equity securities:Restricted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,206
    
    
    
    5.23
    
    
    
    1,206
    
    
    
    5.23Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38
    
    
    
    12.94
    
    
    
    38
    
    
    
    12.94Total
    
    $
    52,221
    
    
    
    4.82
    %
    
    $
    12,202
    
    
    
    5.16
    %
    
    $
    16,302
    
    
    
    7.63
    %
    
    $
    9,038
    
    
    
    7.09
    %
    
    $
    89,763
    
    
    
    5.61
    %Fair value:U.S. Government agencies
    
    $
    39,201
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    39,201State and municipals:Taxable
    
    
    6,814
    
    
    
    
    
    
    $
    5,098
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,912Tax-exempt
    
    
    190
    
    
    
    
    
    
    
    5,336
    
    
    
    
    
    
    $
    17,088
    
    
    
    
    
    
    $
    8,342
    
    
    
    
    
    
    
    30,956Mortgage-backed securities
    
    
    5,870
    
    
    
    
    
    
    
    1,805
    
    
    
    
    
    
    
    85
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,760Equity securities:Restricted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,206
    
    
    
    
    
    
    
    1,206Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    178
    
    
    
    
    
    
    
    178Total
    
    $
    52,075
    
    
    
    
    
    
    $
    12,239
    
    
    
    
    
    
    $
    17,173
    
    
    
    
    
    
    $
    9,726
    
    
    
    
    
    
    $
    91,213
  97




---



##### 



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




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
     Distribution of loan portfolio
 2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002December 31
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %Commercial, financial and others
    
    $
    143,792
    
    
    
    35.24
    %
    
    $
    137,302
    
    
    
    35.33
    %
    
    $
    114,341
    
    
    
    29.95
    %
    
    $
    100,723
    
    
    
    28.14%   $
    
    
    
    90,747
    
    
    
    28.05
    %Real estate:Construction
    
    
    5,513
    
    
    
    1.35
    
    
    
    2,575
    
    
    
    0.66
    
    
    
    6,704
    
    
    
    1.76
    
    
    
    2,983
    
    
    
    0.83
    
    
    
    5,398
    
    
    
    1.67Mortgage
    
    
    225,703
    
    
    
    55.31
    
    
    
    217,827
    
    
    
    56.06
    
    
    
    230,555
    
    
    
    60.40
    
    
    
    222,621
    
    
    
    62.20
    
    
    
    193,012
    
    
    
    59.65Consumer, net
    
    
    31,546
    
    
    
    7.73
    
    
    
    29,217
    
    
    
    7.52
    
    
    
    27,893
    
    
    
    7.31
    
    
    
    29,726
    
    
    
    8.30
    
    
    
    32,631
    
    
    
    10.08Lease financing, net
    
    
    1,520
    
    
    
    0.37
    
    
    
    1,682
    
    
    
    0.43
    
    
    
    2,230
    
    
    
    0.58
    
    
    
    1,887
    
    
    
    0.53
    
    
    
    1,787
    
    
    
    0.55Loans, net of unearned income
    
    
    408,074
    
    
    
    100.00
    %
    
    
    388,603
    
    
    
    100.00
    %
    
    
    381,723
    
    
    
    100.00
    %
    
    
    357,940
    
    
    
    100.00
    %
    
    
    323,575
    
    
    
    100.00
    %Less: allowance for loan losses
    
    
    4,435
    
    
    
    
    
    
    
    4,128
    
    
    
    
    
    
    
    3,859
    
    
    
    
    
    
    
    3,584
    
    
    
    
    
    
    
    3,745Net loans
    
    $
    403,639
    
    
    
    
    
    
    $
    384,475
    
    
    
    
    
    
    $
    377,864
    
    
    
    
    
    
    $
    354,356
    
    
    
    
    
    
    $
    319,830
  99




---



##### 



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




---



##### 



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, 2006
    
    one year
    
    
    five years
    
    
    five years
    
    
    TotalMaturity schedule:Commercial, financial and others
    
    $
    50,466
    
    
    $
    43,276
    
    
    $
    50,050
    
    
    $
    143,792Real estate:Construction
    
    
    5,513
    
    
    
    
    
    
    
    
    
    
    
    5,513Mortgage
    
    
    26,260
    
    
    
    85,191
    
    
    
    114,252
    
    
    
    225,703Consumer, net
    
    
    4,941
    
    
    
    20,713
    
    
    
    5,892
    
    
    
    31,546Lease financing, net
    
    
    297
    
    
    
    1,223
    
    
    
    
    
    
    
    1,520Total
    
    $
    87,477
    
    
    $
    150,403
    
    
    $
    170,194
    
    
    $
    408,074Repricing schedule:Predetermined interest rates
    
    $
    28,720
    
    
    $
    75,235
    
    
    $
    63,437
    
    
    $
    167,392Floating or adjustable interest rates
    
    
    58,757
    
    
    
    75,168
    
    
    
    106,757
    
    
    
    240,682Total
    
    $
    87,477
    
    
    $
    150,403
    
    
    $
    170,194
    
    
    $
    408,074
   101




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
       102




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    Distribution of off-balance sheet commitments
 December 31
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Commitments to extend credit
    
    $
    66,192
    
    
    $
    64,816
    
    
    $
    49,504
    
    
    $
    44,025
    
    
    $
    48,478Unused portions of home equity and credit card lines
    
    
    15,777
    
    
    
    14,576
    
    
    
    12,776
    
    
    
    9,806
    
    
    
    6,892Commercial letters of credit
    
    
    21,405
    
    
    
    18,565
    
    
    
    9,062
    
    
    
    2,255
    
    
    
    986Total
    
    $
    103,374
    
    
    $
    97,957
    
    
    $
    71,342
    
    
    $
    56,086
    
    
    $
    56,356
    103




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
 Asset Quality:
    104




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  
    
    Subprime lending;
    
    Adjustable-rate mortgages and home equity lines of credit; and
    
    Deflation in real estate values.
      105




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    106




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    Distribution of nonperforming assets
 December 31
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Nonaccrual loans:Commercial, financial and others
    
    $
    1,060
    
    
    $
    1,574
    
    
    $
    849
    
    
    $
    306
    
    
    $
    541Real estate:ConstructionMortgage
    
    
    856
    
    
    
    1,714
    
    
    
    1,123
    
    
    
    1,077
    
    
    
    1,213Consumer, net
    
    
    94
    
    
    
    98
    
    
    
    
    
    
    
    63
    
    
    
    238Lease financing, netTotal nonaccrual loans
    
    
    2,010
    
    
    
    3,386
    
    
    
    1,972
    
    
    
    1,446
    
    
    
    1,992Accruing loans past due 90 days or more:Commercial, financial and others
    
    
    13
    
    
    
    62
    
    
    
    91
    
    
    
    124
    
    
    
    97Real estate:ConstructionMortgage
    
    
    217
    
    
    
    333
    
    
    
    653
    
    
    
    352
    
    
    
    281Consumer, net
    
    
    60
    
    
    
    118
    
    
    
    169
    
    
    
    151
    
    
    
    132Lease financing, net
    
    
    2
    
    
    
    33
    
    
    
    
    
    
    
    73Total accruing loans past due 90 days or more
    
    
    292
    
    
    
    546
    
    
    
    913
    
    
    
    700
    
    
    
    510Total nonperforming loans
    
    
    2,302
    
    
    
    3,932
    
    
    
    2,885
    
    
    
    2,146
    
    
    
    2,502Foreclosed assets
    
    
    352
    
    
    
    363
    
    
    
    399
    
    
    
    261
    
    
    
    40Total nonperforming assets
    
    $
    2,654
    
    
    $
    4,295
    
    
    $
    3,284
    
    
    $
    2,407
    
    
    $
    2,542Ratios:Nonperforming loans as a percentage of loans, net
    
    
    0.56
    %
    
    
    1.01
    %
    
    
    0.76
    %
    
    
    0.60
    %
    
    
    0.77
    %Nonperforming assets as a percentage of loans, net, and foreclosed
assets
    
    
    0.65
    %
    
    
    1.10
    %
    
    
    0.86
    %
    
    
    0.67
    %
    
    
    0.79
    %
  107




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
     108




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    Distribution of impaired loans
 December 31
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Nonaccrual loans:Commercial, financial and others
    
    $
    1,060
    
    
    $
    1,574
    
    
    $
    849
    
    
    $
    306
    
    
    $
    541Real estate:ConstructionMortgage
    
    
    856
    
    
    
    1,714
    
    
    
    1,123
    
    
    
    1,077
    
    
    
    1,213Consumer, net
    
    
    94
    
    
    
    98
    
    
    
    
    
    
    
    63
    
    
    
    238Lease financing, netTotal nonaccrual loans
    
    
    2,010
    
    
    
    3,386
    
    
    
    1,972
    
    
    
    1,446
    
    
    
    1,992Accruing loans:Commercial, financial and others
    
    
    1,312
    
    
    
    638
    
    
    
    3,889
    
    
    
    
    
    
    
    889Real estate:ConstructionMortgage
    
    
    6,334
    
    
    
    1,622
    
    
    
    1,205
    
    
    
    207
    
    
    
    485Consumer, net
    
    
    44
    
    
    
    61
    
    
    
    
    
    
    
    1
    
    
    
    292Lease financing, netTotal accruing loans
    
    
    7,690
    
    
    
    2,321
    
    
    
    5,094
    
    
    
    208
    
    
    
    1,666Total impaired loans
    
    $
    9,700
    
    
    $
    5,707
    
    
    $
    7,066
    
    
    $
    1,654
    
    
    $
    3,658Ratio:Impaired loans as a percentage of loans, net
    
    
    2.38
    %
    
    
    1.47
    %
    
    
    1.85
    %
    
    
    0.46
    %
    
    
    1.13
    %
  109




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
   Reconciliation of allowance for loan losses
 December 31
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Allowance for loan losses at beginning of period
    
    $
    4,128
    
    
    $
    3,859
    
    
    $
    3,584
    
    
    $
    3,745
    
    
    $
    3,220Loans charged-off:Commercial, financial and others
    
    
    136
    
    
    
    16
    
    
    
    45
    
    
    
    94
    
    
    
    167Real estate:ConstructionMortgage
    
    
    267
    
    
    
    273
    
    
    
    125
    
    
    
    415
    
    
    
    222Consumer, net
    
    
    314
    
    
    
    297
    
    
    
    312
    
    
    
    244
    
    
    
    317Lease financing, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Total
    
    
    717
    
    
    
    586
    
    
    
    482
    
    
    
    753
    
    
    
    709Loans recovered:Commercial, financial and others
    
    
    12
    
    
    
    1
    
    
    
    27
    
    
    
    29
    
    
    
    31Real estate:ConstructionMortgage
    
    
    4
    
    
    
    13
    
    
    
    19
    
    
    
    19
    
    
    
    11Consumer, net
    
    
    118
    
    
    
    59
    
    
    
    111
    
    
    
    64
    
    
    
    92Lease financing, netTotal
    
    
    134
    
    
    
    73
    
    
    
    157
    
    
    
    112
    
    
    
    134Net loans charged-off
    
    
    583
    
    
    
    513
    
    
    
    325
    
    
    
    641
    
    
    
    575Provision for loan losses
    
    
    890
    
    
    
    782
    
    
    
    600
    
    
    
    480
    
    
    
    1,100Allowance for loan losses at end of period
    
    $
    4,435
    
    
    $
    4,128
    
    
    $
    3,859
    
    
    $
    3,584
    
    
    $
    3,745Ratios:Net loans charged-off as a percentage of average loans outstanding
    
    
    0.14
    %
    
    
    0.13
    %
    
    
    0.09
    %
    
    
    0.18
    %
    
    
    0.18
    %Allowance for loan losses as a percentage of period end loans
    
    
    1.09
    %
    
    
    1.06
    %
    
    
    1.01
    %
    
    
    1.00
    %
    
    
    1.16
    %
 110




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    Allocation of the allowance for loan losses
 2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Category
    
    
    
    
    
    
    Category
    
    
    
    
    
    
    Category
    
    
    
    
    
    
    Category
    
    
    
    
    
    
    Categoryas a
    
    
    
    
    
    
    as a
    
    
    
    
    
    
    as a
    
    
    
    
    
    
    as a
    
    
    
    
    
    
    as a% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofDecember 31
    
    Amount
    
    
    loans
    
    
    Amount
    
    
    loans
    
    
    Amount
    
    
    loans
    
    
    Amount
    
    
    loans
    
    
    Amount
    
    
    loansAllocated allowance:Specific:Commercial, financial and others
    
    $
    1,000
    
    
    
    0.58
    %
    
    $
    1,549
    
    
    
    0.57
    %
    
    $
    728
    
    
    
    1.24
    %
    
    $
    237
    
    
    
    0.09
    %
    
    $
    597
    
    
    
    0.44
    %Real estate:ConstructionMortgage
    
    
    1,296
    
    
    
    1.76
    
    
    
    532
    
    
    
    0.86
    
    
    
    451
    
    
    
    0.61
    
    
    
    124
    
    
    
    0.36
    
    
    
    173
    
    
    
    0.53Consumer, net
    
    
    114
    
    
    
    0.03
    
    
    
    125
    
    
    
    0.04
    
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    0.01
    
    
    
    107
    
    
    
    0.16Lease financing, netTotal specific
    
    
    2,410
    
    
    
    2.37
    
    
    
    2,206
    
    
    
    1.47
    
    
    
    1,179
    
    
    
    1.85
    
    
    
    377
    
    
    
    0.46
    
    
    
    877
    
    
    
    1.13Formula:Commercial, financial and others
    
    
    120
    
    
    
    34.66
    
    
    
    123
    
    
    
    34.76
    
    
    
    149
    
    
    
    28.71
    
    
    
    237
    
    
    
    28.05
    
    
    
    367
    
    
    
    27.61Real estate:Construction
    
    
    
    
    
    
    1.35
    
    
    
    
    
    
    
    0.66
    
    
    
    
    
    
    
    1.76
    
    
    
    
    
    
    
    0.83
    
    
    
    
    
    
    
    1.67Mortgage
    
    
    520
    
    
    
    53.55
    
    
    
    472
    
    
    
    55.20
    
    
    
    878
    
    
    
    59.79
    
    
    
    974
    
    
    
    61.84
    
    
    
    2,071
    
    
    
    59.12Consumer, net
    
    
    374
    
    
    
    7.70
    
    
    
    360
    
    
    
    7.48
    
    
    
    288
    
    
    
    7.31
    
    
    
    316
    
    
    
    8.29
    
    
    
    419
    
    
    
    9.92Lease financing, net
    
    
    
    
    
    
    0.37
    
    
    
    
    
    
    
    0.43
    
    
    
    1
    
    
    
    0.58
    
    
    
    1
    
    
    
    0.53
    
    
    
    
    
    
    
    0.55Total formula
    
    
    1,014
    
    
    
    97.63
    
    
    
    955
    
    
    
    98.53
    
    
    
    1,316
    
    
    
    98.15
    
    
    
    1,528
    
    
    
    99.54
    
    
    
    2,857
    
    
    
    98.87Total allocated allowance
    
    
    3,424
    
    
    
    100.00
    %
    
    
    3,161
    
    
    
    100.00
    %
    
    
    2,495
    
    
    
    100.00
    %
    
    
    1,905
    
    
    
    100.00
    %
    
    
    3,734
    
    
    
    100.00
    %Unallocated allowance
    
    
    1,011
    
    
    
    
    
    
    
    967
    
    
    
    
    
    
    
    1,364
    
    
    
    
    
    
    
    1,679
    
    
    
    
    
    
    
    11Total
    
    $
    4,435
    
    
    
    
    
    
    $
    4,128
    
    
    
    
    
    
    $
    3,859
    
    
    
    
    
    
    $
    3,584
    
    
    
    
    
    
    $
    3,745
  111




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
     112




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
 Deposits:
     113




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
  Deposit distribution
 2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Average
    
    
    Average
    
    
    Average
    
    
    Average
    
    
    Average
    
    
    Average
    
    
    Average
    
    
    Average
    
    
    Average
    
    
    AverageYear Ended December 31
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    RateInterest-bearing:Money market accounts
    
    $
    30,220
    
    
    
    2.58
    %
    
    $
    24,694
    
    
    
    1.56
    %
    
    $
    20,098
    
    
    
    1.06
    %
    
    $
    16,494
    
    
    
    1.03
    %
    
    $
    19,073
    
    
    
    1.92
    %NOW accounts
    
    
    60,814
    
    
    
    2.40
    
    
    
    54,354
    
    
    
    1.66
    
    
    
    42,480
    
    
    
    1.00
    
    
    
    38,600
    
    
    
    0.90
    
    
    
    38,125
    
    
    
    1.37Savings accounts
    
    
    109,588
    
    
    
    1.32
    
    
    
    120,550
    
    
    
    0.93
    
    
    
    129,564
    
    
    
    0.76
    
    
    
    127,975
    
    
    
    1.03
    
    
    
    108,137
    
    
    
    1.88Time deposits less than $100
    
    
    187,385
    
    
    
    4.05
    
    
    
    180,457
    
    
    
    3.65
    
    
    
    180,044
    
    
    
    3.68
    
    
    
    185,873
    
    
    
    3.88
    
    
    
    185,508
    
    
    
    4.44Time deposits $100 or more
    
    
    24,599
    
    
    
    4.38
    
    
    
    28,484
    
    
    
    3.52
    
    
    
    29,488
    
    
    
    3.31
    
    
    
    27,755
    
    
    
    3.30
    
    
    
    27,861
    
    
    
    3.79Total interest-bearing
    
    
    412,606
    
    
    
    2.99
    %
    
    
    408,539
    
    
    
    2.45
    %
    
    
    401,674
    
    
    
    2.30
    %
    
    
    396,697
    
    
    
    2.51
    %
    
    
    378,704
    
    
    
    3.23
    %Noninterest-bearing
    
    
    71,853
    
    
    
    
    
    
    
    71,606
    
    
    
    
    
    
    
    63,954
    
    
    
    
    
    
    
    56,743
    
    
    
    
    
    
    
    49,441Total deposits
    
    $
    484,459
    
    
    
    
    
    
    $
    480,145
    
    
    
    
    
    
    $
    465,628
    
    
    
    
    
    
    $
    453,440
    
    
    
    
    
    
    $
    428,145
    114




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)
(Dollars in thousands, except per share data)
    115




---



##### 



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
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Within three months
    
    $
    5,307
    
    
    $
    3,964
    
    
    $
    7,353
    
    
    $
    4,414
    
    
    $
    3,020After three months but within six months
    
    
    6,923
    
    
    
    2,547
    
    
    
    4,426
    
    
    
    4,845
    
    
    
    3,333After six months but within twelve months
    
    
    13,136
    
    
    
    4,238
    
    
    
    6,198
    
    
    
    3,861
    
    
    
    8,230After twelve months
    
    
    10,554
    
    
    
    12,830
    
    
    
    16,515
    
    
    
    15,969
    
    
    
    9,961Total
    
    $
    35,920
    
    
    $
    23,579
    
    
    $
    34,492
    
    
    $
    29,089
    
    
    $
    24,544
  Market Risk Sensitivity:
  116




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
     117




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
  118




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
 Market risk disclosures
 Expected Maturity DateThere-
    
    
    
    
    
    
    Fair2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    after
    
    
    Total
    
    
    ValueFinancial assets:Cash and due from banks
    
    $
    25,584
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    25,584
    
    
    $
    25,584Average interest rateFederal funds sold
    
    
    2,050
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,050
    
    
    
    2,050Average interest rate
    
    
    5.25
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.25
    %Investment securities:U.S. Treasuries and agencies
    
    
    39,258
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,258
    
    
    
    39,201Average interest rate
    
    
    5.04
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.04
    %State and municipals:Taxable
    
    
    6,878
    
    
    $
    5,261
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,139
    
    
    
    11,912Average interest rate
    
    
    3.15
    %
    
    
    2.77
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.99
    %Tax-exempt
    
    
    190
    
    
    
    
    
    
    $
    1,449
    
    
    $
    2,042
    
    
    $
    1,630
    
    
    $
    24,012
    
    
    
    29,323
    
    
    
    30,956Average interest rate
    
    
    4.02
    %
    
    
    
    
    
    
    7.86
    %
    
    
    7.78
    %
    
    
    7.92
    %
    
    
    7.55
    %
    
    
    7.58
    %Mortgage-backed securities
    
    
    5,895
    
    
    
    906
    
    
    
    527
    
    
    
    338
    
    
    
    49
    
    
    
    84
    
    
    
    7,799
    
    
    
    7,760Average interest rate
    
    
    5.36
    %
    
    
    4.44
    %
    
    
    4.51
    %
    
    
    4.55
    %
    
    
    6.29
    %
    
    
    6.27
    %
    
    
    5.18
    %Equity securities:Restricted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,206
    
    
    
    1,206
    
    
    
    1,206Average interest rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.23
    %
    
    
    5.23
    %Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38
    
    
    
    38
    
    
    
    178Average interest rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12.94
    %
    
    
    12.94
    %Total
    
    
    52,221
    
    
    
    6,167
    
    
    
    1,976
    
    
    
    2,380
    
    
    
    1,679
    
    
    
    25,340
    
    
    
    89,763
    
    
    
    91,213Average interest rate
    
    
    4.82
    %
    
    
    3.02
    %
    
    
    6.97
    %
    
    
    7.32
    %
    
    
    7.87
    %
    
    
    7.44
    %
    
    
    5.61
    %Loans held for sale, net
    
    
    572
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    572
    
    
    
    579Average interest rate
    
    
    6.51
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.51
    %Net loans:Fixed-rate
    
    
    28,408
    
    
    
    21,072
    
    
    
    18,939
    
    
    
    17,727
    
    
    
    16,679
    
    
    
    62,748
    
    
    
    165,573
    
    
    
    161,562Average interest rate
    
    
    6.95
    %
    
    
    6.63
    %
    
    
    6.93
    %
    
    
    6.82
    %
    
    
    6.80
    %
    
    
    6.75
    %
    
    
    6.80
    %Adjustable-rate
    
    
    58,118
    
    
    
    18,939
    
    
    
    21,592
    
    
    
    16,673
    
    
    
    17,147
    
    
    
    105,597
    
    
    
    238,066
    
    
    
    233,683Average interest rate
    
    
    8.46
    %
    
    
    7.62
    %
    
    
    7.75
    %
    
    
    7.31
    %
    
    
    7.72
    %
    
    
    7.67
    %
    
    
    7.85
    %Total
    
    
    86,526
    
    
    
    40,011
    
    
    
    40,531
    
    
    
    34,400
    
    
    
    33,826
    
    
    
    168,345
    
    
    
    403,639
    
    
    
    395,245Average interest rate
    
    
    7.96
    %
    
    
    7.10
    %
    
    
    7.37
    %
    
    
    7.06
    %
    
    
    7.27
    %
    
    
    7.33
    %
    
    
    7.42
    %Mortgage servicing rights
    
    
    676
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    676
    
    
    
    676Average interest rateAccrued interest receivable
    
    
    2,863
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,863
    
    
    
    2,863Average interest rateTotal
    
    $
    170,492
    
    
    $
    46,178
    
    
    $
    42,507
    
    
    $
    36,780
    
    
    $
    35,505
    
    
    $
    193,685
    
    
    $
    525,147
    
    
    $
    518,210Financial liabilities:Noninterest-bearing deposits
    
    $
    15,342
    
    
    $
    13,881
    
    
    $
    12,419
    
    
    $
    10,958
    
    
    $
    9,497
    
    
    $
    10,958
    
    
    $
    73,055
    
    
    $
    73,055Average interest rateInterest-bearing liabilities:Money market, NOW and savings
    
    
    41,596
    
    
    
    37,635
    
    
    
    33,673
    
    
    
    29,712
    
    
    
    25,750
    
    
    
    29,712
    
    
    
    198,078
    
    
    
    198,078Average interest rate
    
    
    2.07
    %
    
    
    2.07
    %
    
    
    2.07
    %
    
    
    2.07
    %
    
    
    2.07
    %
    
    
    2.07
    %
    
    
    2.07
    %Time deposits
    
    
    121,880
    
    
    
    33,318
    
    
    
    7,962
    
    
    
    22,753
    
    
    
    9,618
    
    
    
    16,778
    
    
    
    212,309
    
    
    
    212,361Average interest rate
    
    
    4.38
    %
    
    
    4.30
    %
    
    
    3.79
    %
    
    
    4.43
    %
    
    
    4.37
    %
    
    
    4.73
    %
    
    
    4.38
    %Total
    
    
    163,476
    
    
    
    70,953
    
    
    
    41,635
    
    
    
    52,465
    
    
    
    35,368
    
    
    
    46,490
    
    
    
    410,387
    
    
    
    410,439Average interest rate
    
    
    3.79
    %
    
    
    3.12
    %
    
    
    2.40
    %
    
    
    3.09
    %
    
    
    2.70
    %
    
    
    3.03
    %
    
    
    3.26
    %Accrued interest payable
    
    
    1,106
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,106
    
    
    
    1,106Average interest rateTotal
    
    $
    179,924
    
    
    $
    84,834
    
    
    $
    54,054
    
    
    $
    63,423
    
    
    $
    44,865
    
    
    $
    57,448
    
    
    $
    484,548
    
    
    $
    484,600
 119




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
    120




---



##### 



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, 2006
    
    +100 BPS
    
    
    Level
    
    
    -100 BPSFinancial assets:Cash and due from banks
    
    $
    25,584
    
    
    $
    25,584
    
    
    $
    25,584Federal funds sold
    
    
    2,050
    
    
    
    2,050
    
    
    
    2,050Investment securities
    
    
    89,723
    
    
    
    91,213
    
    
    
    92,599Loans held for sale, net
    
    
    579
    
    
    
    579
    
    
    
    579Net loans
    
    
    390,403
    
    
    
    395,245
    
    
    
    400,168Mortgage servicing rights
    
    
    676
    
    
    
    676
    
    
    
    676Accrued interest receivable
    
    
    2,863
    
    
    
    2,863
    
    
    
    2,863Total
    
    $
    511,878
    
    
    $
    518,210
    
    
    $
    524,519Financial liabilities:Noninterest-bearing deposits
    
    $
    73,055
    
    
    $
    73,055
    
    
    $
    73,055Money market, NOW and savings accounts
    
    
    198,078
    
    
    
    198,078
    
    
    
    198,078Time deposits
    
    
    209,239
    
    
    
    212,361
    
    
    
    215,619Accrued interest payable
    
    
    1,106
    
    
    
    1,106
    
    
    
    1,106Total
    
    $
    481,478
    
    
    $
    484,600
    
    
    $
    487,858
   121




---



##### 



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, 2006
    
    three months
    
    
    twelve months
    
    
    five years
    
    
    five years
    
    
    TotalRate-sensitive assets:Investment securities
    
    $
    17,773
    
    
    $
    34,302
    
    
    $
    12,239
    
    
    $
    26,899
    
    
    $
    91,213Loans held for sale, net
    
    
    572
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    572Loans, net of unearned income
    
    
    118,326
    
    
    
    70,354
    
    
    
    154,346
    
    
    
    65,048
    
    
    
    408,074Federal funds sold
    
    
    2,050
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,050Total
    
    $
    138,721
    
    
    $
    104,656
    
    
    $
    166,585
    
    
    $
    91,947
    
    
    $
    501,909Rate-sensitive liabilities:Money market accounts
    
    $
    23,986
    
    
    $
    7,478
    
    
    
    
    
    
    
    
    
    
    $
    31,464NOW accounts
    
    
    52,443
    
    
    
    14,830
    
    
    
    
    
    
    
    
    
    
    
    67,273Savings accounts
    
    
    6,825
    
    
    
    
    
    
    $
    92,516
    
    
    
    
    
    
    
    99,341Time deposits less than $100
    
    
    18,223
    
    
    
    78,291
    
    
    
    65,700
    
    
    $
    14,175
    
    
    
    176,389Time deposits $100 or more
    
    
    5,307
    
    
    
    20,059
    
    
    
    7,951
    
    
    
    2,603
    
    
    
    35,920Total
    
    $
    106,784
    
    
    $
    120,658
    
    
    $
    166,167
    
    
    $
    16,778
    
    
    $
    410,387Rate-sensitivity gap:Period
    
    $
    31,937
    
    
    $
    (16,002
    )
    
    $
    418
    
    
    $
    75,169Cumulative
    
    $
    31,937
    
    
    $
    15,935
    
    
    $
    16,353
    
    
    $
    91,522
    
    
    $
    91,522RSA/RSL ratio:Period
    
    
    1.30
    
    
    
    0.87
    
    
    
    1.00
    
    
    
    5.48Cumulative
    
    
    1.30
    
    
    
    1.07
    
    
    
    1.04
    
    
    
    1.22
    
    
    
    1.22
  122




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
      123




---



##### 



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.
   124




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
   Maturity distribution of contractual obligations
 After one
    
    
    After threeDue within
    
    
    but within
    
    
    but within
    
    
    AfterDecember 31, 2006
    
    one year
    
    
    three years
    
    
    five years
    
    
    five years
    
    
    TotalDeposits without a contractual maturity
    
    $
    56,938
    
    
    $
    97,608
    
    
    $
    75,917
    
    
    $
    40,670
    
    
    $
    271,133Time deposits less than $100
    
    
    96,514
    
    
    
    35,739
    
    
    
    29,961
    
    
    
    14,175
    
    
    
    176,389Time deposits $100 or more
    
    
    25,366
    
    
    
    5,541
    
    
    
    2,410
    
    
    
    2,603
    
    
    
    35,920Operating leases
    
    
    194
    
    
    
    333
    
    
    
    238
    
    
    
    469
    
    
    
    1,234Total
    
    $
    179,012
    
    
    $
    139,221
    
    
    $
    108,526
    
    
    $
    57,917
    
    
    $
    484,676
   125




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
     
 126




---



##### 



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.
   127




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
    
  128




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
  Regulatory capital
 Minimum to be WellCapitalized underMinimum for Capital
    
    Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action ProvisionsDecember 31
    
    2006
    
    2005
    
    2006
    
    2005
    
    2006
    
    2005Basis for ratios:Tier I capital to risk-weighted assets:Consolidated
    
    $
    52,745
    
    
    $
    48,308
    
    
    $
    16,881
    
    
    $
    16,113Community Bank
    
    
    50,827
    
    
    
    46,229
    
    
    
    16,851
    
    
    
    16,076
    
    
    $
    25,277
    
    
    $
    24,114Total capital to risk-weighted assets:Consolidated
    
    
    57,180
    
    
    
    52,436
    
    
    
    33,763
    
    
    
    32,227Community Bank
    
    
    55,262
    
    
    
    50,357
    
    
    
    33,703
    
    
    
    32,152
    
    
    
    42,128
    
    
    
    40,190Tier I capital to total average assets
less intangible assets:Consolidated
    
    
    52,745
    
    
    
    48,308
    
    
    
    21,670
    
    
    
    21,373Community Bank
    
    
    50,827
    
    
    
    46,229
    
    
    $
    21,631
    
    
    $
    21,343
    
    
    $
    27,039
    
    
    $
    26,679Risk-weighted assets:Consolidated
    
    
    408,540
    
    
    
    389,044Community Bank
    
    
    407,785
    
    
    
    388,108Risk-weighted off-balance sheet items:Consolidated
    
    
    13,497
    
    
    
    13,789Community Bank
    
    
    13,497
    
    
    
    13,789Average assets for Leverage ratio:Consolidated
    
    
    541,760
    
    
    
    534,314Community Bank
    
    $
    540,783
    
    
    $
    533,570Ratios:Tier I capital as a percentage of risk-
weighted assets and off-balance sheet
items:Consolidated
    
    
    12.5
    %
    
    
    12.0
    %
    
    
    4.0
    %
    
    
    4.0
    %Community Bank
    
    
    12.1
    
    
    
    11.5
    
    
    
    4.0
    
    
    
    4.0
    
    
    
    6.0
    %
    
    
    6.0
    %Total of Tier I and Tier II capital as a
percentage of risk-weighted assets and
off-balance sheet items:Consolidated
    
    
    13.5
    
    
    
    13.0
    
    
    
    8.0
    
    
    
    8.0Community Bank
    
    
    13.1
    
    
    
    12.5
    
    
    
    8.0
    
    
    
    8.0
    
    
    
    10.0
    
    
    
    10.0Tier I capital as a percentage of total
average assets less intangible assets:Consolidated
    
    
    9.7
    
    
    
    9.0
    
    
    
    4.0
    
    
    
    4.0Community Bank
    
    
    9.4
    %
    
    
    8.7
    %
    
    
    4.0
    %
    
    
    4.0
    %
    
    
    5.0
    %
    
    
    5.0
    %
  129




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
   Review of Financial Performance:
  
 130




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
   Net Interest Income:
  
    
    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.
  131




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
    132




---



##### 



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
 2006 vs. 2005
    
    
    2005 vs. 2004Increase (decrease)
    
    
    Increase (decrease)attributable to
    
    
    attributable toTotal
    
    
    
    
    
    
    
    
    
    
    TotalChange
    
    
    Rate
    
    
    Volume
    
    
    Change
    
    
    Rate
    
    
    VolumeInterest income:Loans:Taxable
    
    $
    4,472
    
    
    $
    2,599
    
    
    $
    1,873
    
    
    $
    1,388
    
    
    $
    671
    
    
    $
    717Tax-exempt
    
    
    344
    
    
    
    355
    
    
    
    (11
    )
    
    
    730
    
    
    
    155
    
    
    
    575Investments:Taxable
    
    
    75
    
    
    
    611
    
    
    
    (536
    )
    
    
    33
    
    
    
    6
    
    
    
    27Tax-exempt
    
    
    (101
    )
    
    
    4
    
    
    
    (105
    )
    
    
    (23
    )
    
    
    (3
    )
    
    
    (20
    )Federal funds sold
    
    
    (26
    )
    
    
    98
    
    
    
    (124
    )
    
    
    139
    
    
    
    200
    
    
    
    (61
    )Total interest income
    
    
    4,764
    
    
    
    3,667
    
    
    
    1,097
    
    
    
    2,267
    
    
    
    1,029
    
    
    
    1,238Interest expense:Money market accounts
    
    
    395
    
    
    
    294
    
    
    
    101
    
    
    
    172
    
    
    
    115
    
    
    
    57NOW accounts
    
    
    558
    
    
    
    441
    
    
    
    117
    
    
    
    476
    
    
    
    334
    
    
    
    142Savings accounts
    
    
    331
    
    
    
    441
    
    
    
    (110
    )
    
    
    136
    
    
    
    209
    
    
    
    (73
    )Time deposits less than $100
    
    
    1,001
    
    
    
    741
    
    
    
    260
    
    
    
    (46
    )
    
    
    (61
    )
    
    
    15Time deposits $100 or more
    
    
    74
    
    
    
    223
    
    
    
    (149
    )
    
    
    27
    
    
    
    61
    
    
    
    (34
    )Short-term borrowings
    
    
    43
    
    
    
    68
    
    
    
    (25
    )
    
    
    105
    
    
    
    2
    
    
    
    103Total interest expense
    
    
    2,402
    
    
    
    2,208
    
    
    
    194
    
    
    
    870
    
    
    
    660
    
    
    
    210Net interest income
    
    $
    2,362
    
    
    $
    1,459
    
    
    $
    903
    
    
    $
    1,397
    
    
    $
    369
    
    
    $
    1,028
   133




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
    134




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
  Summary of net interest income
 2006
    
    
    2005Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Income/
    
    
    Interest
    
    
    Average
    
    
    Income/
    
    
    InterestBalance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    RateASSETS:Earning assets:Loans:Taxable
    
    $
    386,268
    
    
    $
    27,457
    
    
    
    7.11
    %
    
    $
    358,326
    
    
    $
    22,985
    
    
    
    6.41
    %Tax-exempt
    
    
    38,036
    
    
    
    2,358
    
    
    
    6.20
    
    
    
    38,246
    
    
    
    2,014
    
    
    
    5.27Investments:Taxable
    
    
    56,578
    
    
    
    2,276
    
    
    
    4.02
    
    
    
    72,155
    
    
    
    2,201
    
    
    
    3.05Tax-exempt
    
    
    30,374
    
    
    
    2,258
    
    
    
    7.43
    
    
    
    31,792
    
    
    
    2,359
    
    
    
    7.42Federal funds sold
    
    
    5,064
    
    
    
    261
    
    
    
    5.15
    
    
    
    7,943
    
    
    
    287
    
    
    
    3.61Total earning assets
    
    
    516,320
    
    
    
    34,610
    
    
    
    6.70
    %
    
    
    508,462
    
    
    
    29,846
    
    
    
    5.87
    %Less: allowance for loan losses
    
    
    4,363
    
    
    
    
    
    
    
    
    
    
    
    4,025Other assets
    
    
    30,219
    
    
    
    
    
    
    
    
    
    
    
    30,299Total assets
    
    $
    542,176
    
    
    
    
    
    
    
    
    
    
    $
    534,736LIABILITIES AND STOCKHOLDERS EQUITY:Interest-bearing liabilities:Money market accounts
    
    $
    30,220
    
    
    
    780
    
    
    
    2.58
    %
    
    $
    24,694
    
    
    
    385
    
    
    
    1.56
    %NOW accounts
    
    
    60,814
    
    
    
    1,459
    
    
    
    2.40
    
    
    
    54,354
    
    
    
    901
    
    
    
    1.66Savings accounts
    
    
    109,588
    
    
    
    1,452
    
    
    
    1.32
    
    
    
    120,550
    
    
    
    1,121
    
    
    
    0.93Time deposits less than $100
    
    
    187,385
    
    
    
    7,587
    
    
    
    4.05
    
    
    
    180,457
    
    
    
    6,586
    
    
    
    3.65Time deposits $100 or more
    
    
    24,599
    
    
    
    1,078
    
    
    
    4.38
    
    
    
    28,484
    
    
    
    1,004
    
    
    
    3.52Short-term borrowings
    
    
    3,102
    
    
    
    149
    
    
    
    4.80
    
    
    
    3,894
    
    
    
    106
    
    
    
    2.72Total interest-bearing liabilities
    
    
    415,708
    
    
    
    12,505
    
    
    
    3.01
    %
    
    
    412,433
    
    
    
    10,103
    
    
    
    2.45
    %Noninterest-bearing deposits
    
    
    71,853
    
    
    
    
    
    
    
    
    
    
    
    71,606Other liabilities
    
    
    2,476
    
    
    
    
    
    
    
    
    
    
    
    1,897Stockholders equity
    
    
    52,139
    
    
    
    
    
    
    
    
    
    
    
    48,800Total liabilities and stockholders equity
    
    $
    542,176
    
    
    
    
    
    
    
    
    
    
    $
    534,736Net interest/income spread
    
    
    
    
    
    $
    22,105
    
    
    
    3.69
    %
    
    
    
    
    
    $
    19,743
    
    
    
    3.42
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    4.28
    %
    
    
    
    
    
    
    
    
    
    
    3.88
    %Tax-equivalent adjustments:Loans
    
    
    
    
    
    $
    802
    
    
    
    
    
    
    
    
    
    
    $
    685Investments
    
    
    
    
    
    
    768
    
    
    
    
    
    
    
    
    
    
    
    802Total adjustments
    
    
    
    
    
    $
    1,570
    
    
    
    
    
    
    
    
    
    
    $
    1,487
 
 135




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
 Summary of net interest income (continued)
 2004
    
    
    2003
    
    
    2002Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Income/
    
    
    Interest
    
    
    Average
    
    
    Income/
    
    
    Interest
    
    
    Average
    
    
    Income/
    
    
    InterestBalance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate$
    346,990
    
    
    $
    21,597
    
    
    
    6.22
    %
    
    $
    324,705
    
    
    $
    22,228
    
    
    
    6.85
    %
    
    $
    304,849
    
    
    $
    22,811
    
    
    
    7.48
    %27,090
    
    
    
    1,284
    
    
    
    4.74
    
    
    
    21,853
    
    
    
    1,181
    
    
    
    5.40
    
    
    
    13,386
    
    
    
    1,043
    
    
    
    7.7971,274
    
    
    
    2,168
    
    
    
    3.04
    
    
    
    80,520
    
    
    
    2,034
    
    
    
    2.53
    
    
    
    72,155
    
    
    
    3,552
    
    
    
    4.9232,057
    
    
    
    2,382
    
    
    
    7.43
    
    
    
    32,240
    
    
    
    2,403
    
    
    
    7.45
    
    
    
    38,060
    
    
    
    2,856
    
    
    
    7.5010,857
    
    
    
    148
    
    
    
    1.36
    
    
    
    16,116
    
    
    
    180
    
    
    
    1.12
    
    
    
    21,241
    
    
    
    348
    
    
    
    1.64488,268
    
    
    
    27,579
    
    
    
    5.65
    %
    
    
    475,434
    
    
    
    28,026
    
    
    
    5.89
    %
    
    
    449,691
    
    
    
    30,610
    
    
    
    6.81
    %3,779
    
    
    
    
    
    
    
    
    
    
    
    3,732
    
    
    
    
    
    
    
    
    
    
    
    3,48831,396
    
    
    
    
    
    
    
    
    
    
    
    31,160
    
    
    
    
    
    
    
    
    
    
    
    28,748$
    515,885
    
    
    
    
    
    
    
    
    
    
    $
    502,862
    
    
    
    
    
    
    
    
    
    
    $
    474,951$
    20,098
    
    
    
    213
    
    
    
    1.06
    %
    
    $
    16,494
    
    
    
    170
    
    
    
    1.03
    %
    
    $
    19,073
    
    
    
    367
    
    
    
    1.92
    %42,480
    
    
    
    425
    
    
    
    1.00
    
    
    
    38,600
    
    
    
    348
    
    
    
    0.90
    
    
    
    38,125
    
    
    
    524
    
    
    
    1.37129,564
    
    
    
    985
    
    
    
    0.76
    
    
    
    127,975
    
    
    
    1,322
    
    
    
    1.03
    
    
    
    108,137
    
    
    
    2,030
    
    
    
    1.88180,044
    
    
    
    6,632
    
    
    
    3.68
    
    
    
    185,873
    
    
    
    7,212
    
    
    
    3.88
    
    
    
    185,508
    
    
    
    8,240
    
    
    
    4.4429,488
    
    
    
    977
    
    
    
    3.31
    
    
    
    27,755
    
    
    
    917
    
    
    
    3.30
    
    
    
    27,861
    
    
    
    1,055
    
    
    
    3.7915
    
    
    
    1
    
    
    
    2.35
    
    
    
    265
    
    
    
    3
    
    
    
    1.13
    
    
    
    8
    
    
    
    
    
    
    
    2.00401,689
    
    
    
    9,233
    
    
    
    2.30
    %
    
    
    396,962
    
    
    
    9,972
    
    
    
    2.51
    %
    
    
    378,712
    
    
    
    12,216
    
    
    
    3.23
    %63,954
    
    
    
    
    
    
    
    
    
    
    
    56,743
    
    
    
    
    
    
    
    
    
    
    
    49,4412,856
    
    
    
    
    
    
    
    
    
    
    
    3,207
    
    
    
    
    
    
    
    
    
    
    
    3,43547,386
    
    
    
    
    
    
    
    
    
    
    
    45,950
    
    
    
    
    
    
    
    
    
    
    
    43,363$
    515,885
    
    
    
    
    
    
    
    
    
    
    $
    502,862
    
    
    
    
    
    
    
    
    
    
    $
    474,951$
    18,346
    
    
    
    3.35
    %
    
    
    
    
    
    $
    18,054
    
    
    
    3.38
    %
    
    
    
    
    
    $
    18,394
    
    
    
    3.58
    %3.76
    %
    
    
    
    
    
    
    
    
    
    
    3.80
    %
    
    
    
    
    
    
    
    
    
    
    4.09
    %$
    436
    
    
    
    
    
    
    
    
    
    
    $
    401
    
    
    
    
    
    
    
    
    
    
    $
    355810
    
    
    
    
    
    
    
    
    
    
    
    817
    
    
    
    
    
    
    
    
    
    
    
    971$
    1,246
    
    
    
    
    
    
    
    
    
    
    $
    1,218
    
    
    
    
    
    
    
    
    
    
    $
    1,326
 136




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
 Provision for Loan Losses:
   Noninterest Income:
    137




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
      Noninterest Expense:
  138




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
    Noninterest expense
 Year Ended December 31
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Salaries and employee benefits expense:Salaries and payroll taxes
    
    $
    6,122
    
    
    $
    5,880
    
    
    $
    5,617
    
    
    $
    5,929
    
    
    $
    5,623Employee benefits
    
    
    1,526
    
    
    
    1,354
    
    
    
    1,351
    
    
    
    1,248
    
    
    
    1,144Salaries and employee benefits expense
    
    
    7,648
    
    
    
    7,234
    
    
    
    6,968
    
    
    
    7,177
    
    
    
    6,767Net occupancy and equipment expense:Net occupancy expense
    
    
    1,158
    
    
    
    1,183
    
    
    
    1,158
    
    
    
    991
    
    
    
    836Equipment expense
    
    
    1,195
    
    
    
    1,179
    
    
    
    1,306
    
    
    
    1,259
    
    
    
    1,017Net occupancy and equipment expense
    
    
    2,353
    
    
    
    2,362
    
    
    
    2,464
    
    
    
    2,250
    
    
    
    1,853Other expenses:Marketing expense
    
    
    569
    
    
    
    634
    
    
    
    586
    
    
    
    425
    
    
    
    482Other taxes
    
    
    503
    
    
    
    449
    
    
    
    394
    
    
    
    444
    
    
    
    399Stationery and supplies
    
    
    330
    
    
    
    367
    
    
    
    365
    
    
    
    385
    
    
    
    465Contractual services
    
    
    1,777
    
    
    
    1,982
    
    
    
    1,556
    
    
    
    1,579
    
    
    
    1,494Insurance, including FDIC assessment
    
    
    278
    
    
    
    277
    
    
    
    235
    
    
    
    207
    
    
    
    187Other
    
    
    1,371
    
    
    
    1,592
    
    
    
    2,094
    
    
    
    2,017
    
    
    
    1,883Other expenses
    
    
    4,828
    
    
    
    5,301
    
    
    
    5,230
    
    
    
    5,057
    
    
    
    4,910Total noninterest expense
    
    $
    14,829
    
    
    $
    14,897
    
    
    $
    14,662
    
    
    $
    14,484
    
    
    $
    13,530
  139




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
     
    
    Merging the Bank Insurance Fund and the Savings Association Insurance Fund into
a new fund, the Deposit Insurance Fund (DIF) effective March 31, 2006;
    
    Increasing the coverage limit for retirement accounts to $250,000 and indexing
the coverage limit for retirement accounts to inflation as with the general deposit
insurance coverage limit effective April 1, 2006;
    
    Establishing a range of 1.15 percent to 1.50 percent within which the FDIC
Board of Directors may set the Designated Reserve Rate (DRR);
    
    Allowing the FDIC to manage the pace at which the reserve ratio varies within
this range;
 140




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
 
    
    Eliminating the restriction on premium rates on the DRR and granting the FDIC Board
of Directors the discretion to price deposit insurance according to risk for all insured
institutions regardless of the level of the reserve ratio; and
    
    Granting a one-time credit of approximately $4.7 billion to institutions for
their past contributions to the fund.
     Income Taxes:
  141




---



##### 



Comm Bancorp, Inc.  MANAGEMENTS DISCUSSION AND ANALYSIS (CONTINUED)  (Dollars in thousands, except per share data)
     142




---



##### 



Comm Bancorp, Inc.  REPORT OF MANAGEMENT
    
 143




---



##### 



Comm Bancorp, Inc.  REPORT OF MANAGEMENT (CONTINUED)
    /s/ William F. Farber, Sr.
 /s/ Scott A. Seasock
  144




---



##### 



Comm Bancorp, Inc.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 145




---



##### 



Comm Bancorp, Inc.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 146




---



##### 



Comm Bancorp, Inc.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollars in thousands, except per share data)
 Year Ended December 31
    
    2006
    
    
    2005
    
    
    2004Interest income:Interest and fees on loans:Taxable
    
    $
    27,457
    
    
    $
    22,985
    
    
    $
    21,597Tax-exempt
    
    
    1,556
    
    
    
    1,329
    
    
    
    848Interest and dividends on investment securities available-for-sale:Taxable
    
    
    2,208
    
    
    
    2,160
    
    
    
    2,139Tax-exempt
    
    
    1,490
    
    
    
    1,557
    
    
    
    1,572Dividends
    
    
    68
    
    
    
    41
    
    
    
    29Interest on federal funds sold
    
    
    261
    
    
    
    287
    
    
    
    148Total interest income
    
    
    33,040
    
    
    
    28,359
    
    
    
    26,333Interest expense:Interest on deposits
    
    
    12,356
    
    
    
    9,997
    
    
    
    9,232Interest on short-term borrowings
    
    
    149
    
    
    
    106
    
    
    
    1Total interest expense
    
    
    12,505
    
    
    
    10,103
    
    
    
    9,233Net interest income
    
    
    20,535
    
    
    
    18,256
    
    
    
    17,100Provision for loan losses
    
    
    890
    
    
    
    782
    
    
    
    600Net interest income after provision for loan losses
    
    
    19,645
    
    
    
    17,474
    
    
    
    16,500Noninterest income:Service charges, fees and commissions
    
    
    3,036
    
    
    
    3,055
    
    
    
    2,911Mortgage banking income
    
    
    372
    
    
    
    594
    
    
    
    655Net gains on sale of merchant services
    
    
    
    
    
    
    235Total noninterest income
    
    
    3,408
    
    
    
    3,884
    
    
    
    3,566Noninterest expense:Salaries and employee benefits expense
    
    
    7,648
    
    
    
    7,234
    
    
    
    6,968Net occupancy and equipment expense
    
    
    2,353
    
    
    
    2,362
    
    
    
    2,464Other expenses
    
    
    4,828
    
    
    
    5,301
    
    
    
    5,230Total noninterest expense
    
    
    14,829
    
    
    
    14,897
    
    
    
    14,662Income before income taxes
    
    
    8,224
    
    
    
    6,461
    
    
    
    5,404Provision for income tax expense
    
    
    1,874
    
    
    
    1,251
    
    
    
    679Net income
    
    
    6,350
    
    
    
    5,210
    
    
    
    4,725Other comprehensive loss:Unrealized holding losses on investment securities available-for-sale
    
    
    (3
    )
    
    
    (871
    )
    
    
    (878
    )Income tax benefit related to other comprehensive loss
    
    
    (1
    )
    
    
    (296
    )
    
    
    (299
    )Other comprehensive loss, net of income taxes
    
    
    (2
    )
    
    
    (575
    )
    
    
    (579
    )Comprehensive income
    
    $
    6,348
    
    
    $
    4,635
    
    
    $
    4,146Per share data:Net income
    
    $
    3.43
    
    
    $
    2.80
    
    
    $
    2.50Cash dividends declared
    
    $
    1.00
    
    
    $
    0.92
    
    
    $
    0.88Average common shares outstanding
    
    
    1,853,089
    
    
    
    1,860,563
    
    
    
    1,890,960
  147




---



##### 



Comm Bancorp, Inc.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
 December 31
    
    2006
    
    
    2005Assets:Cash and due from banks
    
    $
    25,584
    
    
    $
    23,403Federal funds sold
    
    
    2,050
    
    
    
    12,000Investment securities available-for-sale
    
    
    91,213
    
    
    
    104,965Loans held for sale, net
    
    
    572
    
    
    
    1,934Loans, net of unearned income
    
    
    408,074
    
    
    
    388,603Less: allowance for loan losses
    
    
    4,435
    
    
    
    4,128Net loans
    
    
    403,639
    
    
    
    384,475Premises and equipment, net
    
    
    11,018
    
    
    
    11,003Accrued interest receivable
    
    
    2,863
    
    
    
    2,487Other assets
    
    
    3,465
    
    
    
    3,310Total assets
    
    $
    540,404
    
    
    $
    543,577Liabilities:Deposits:Noninterest-bearing
    
    $
    73,055
    
    
    $
    75,428Interest-bearing
    
    
    410,387
    
    
    
    415,937Total deposits
    
    
    483,442
    
    
    
    491,365Accrued interest payable
    
    
    1,106
    
    
    
    1,024Other liabilities
    
    
    1,738
    
    
    
    1,499Total liabilities
    
    
    486,286
    
    
    
    493,888Stockholders equity:Common stock, par value $0.33, authorized 12,000,000 shares, issued
and outstanding:2006, 1,848,687 shares; 2005, 1,850,154 shares
    
    
    610
    
    
    
    611Capital surplus
    
    
    7,146
    
    
    
    6,869Retained earnings
    
    
    45,405
    
    
    
    41,250Accumulated other comprehensive income
    
    
    957
    
    
    
    959Total stockholders equity
    
    
    54,118
    
    
    
    49,689Total liabilities and stockholders equity
    
    $
    540,404
    
    
    $
    543,577
  148




---



##### 



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 Three Years Ended December 31, 2006
    
    Stock
    
    
    Surplus
    
    
    Earnings
    
    
    Income
    
    
    EquityBalance, December 31, 2003
    
    $
    629
    
    
    $
    6,576
    
    
    $
    37,223
    
    
    $
    2,113
    
    
    $
    46,541Net income
    
    
    
    
    
    
    
    
    
    
    4,725
    
    
    
    
    
    
    
    4,725Dividends declared: $0.88 per share
    
    
    
    
    
    
    
    
    
    
    (1,658
    )
    
    
    
    
    
    
    (1,658
    )Dividend reinvestment plan: 6,228 shares issued
    
    
    2
    
    
    
    244
    
    
    
    
    
    
    
    
    
    
    
    246Repurchase and retirement: 48,365 shares
    
    
    (16
    )
    
    
    (145
    )
    
    
    (1,796
    )
    
    
    
    
    
    
    (1,957
    )Other comprehensive loss, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (579
    )
    
    
    (579
    )Balance, December 31, 2004
    
    
    615
    
    
    
    6,675
    
    
    
    38,494
    
    
    
    1,534
    
    
    
    47,318Net income
    
    
    
    
    
    
    
    
    
    
    5,210
    
    
    
    
    
    
    
    5,210Dividends declared: $0.92 per share
    
    
    
    
    
    
    
    
    
    
    (1,711
    )
    
    
    
    
    
    
    (1,711
    )Dividend reinvestment plan: 6,357 shares issued
    
    
    2
    
    
    
    256
    
    
    
    
    
    
    
    
    
    
    
    258Repurchase and retirement: 20,594 shares
    
    
    (6
    )
    
    
    (62
    )
    
    
    (743
    )
    
    
    
    
    
    
    (811
    )Other comprehensive loss, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (575
    )
    
    
    (575
    )Balance, 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
    
    
    $
    54,118
  149




---



##### 



Comm Bancorp, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands, except per share data)
 Year Ended December 31
    
    2006
    
    
    2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    6,350
    
    
    $
    5,210
    
    
    $
    4,725Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    890
    
    
    
    782
    
    
    
    600Depreciation and amortization of premises and equipment
    
    
    1,022
    
    
    
    1,013
    
    
    
    1,191Amortization of core deposit intangible
    
    
    
    
    
    
    270
    
    
    
    270Net amortization of investment securities
    
    
    87
    
    
    
    733
    
    
    
    877Amortization of net loan costs
    
    
    298
    
    
    
    200
    
    
    
    6Amortization of mortgage servicing rights
    
    
    224
    
    
    
    218
    
    
    
    235Deferred income tax expense (benefit)
    
    
    (74
    )
    
    
    (246
    )
    
    
    113Net gains on sale of loans
    
    
    (243
    )
    
    
    (487
    )
    
    
    (577
    )Losses (gains) on foreclosed assets
    
    
    6
    
    
    
    (37
    )
    
    
    34Gains on disposition of equipment
    
    
    (1
    )Changes in:Loans held for sale, net
    
    
    1,605
    
    
    
    470
    
    
    
    1,865Accrued interest receivable
    
    
    (376
    )
    
    
    (168
    )
    
    
    (90
    )Other assets
    
    
    (347
    )
    
    
    (432
    )
    
    
    (309
    )Accrued interest payable
    
    
    82
    
    
    
    (51
    )
    
    
    (68
    )Other liabilities
    
    
    234
    
    
    
    314
    
    
    
    (525
    )Net cash provided by operating activities
    
    
    9,757
    
    
    
    7,789
    
    
    
    8,347Cash flows from investing activities:Proceeds from repayments of investment securities available-for-sale
    
    
    51,547
    
    
    
    46,225
    
    
    
    18,218Purchases of investment securities available-for-sale
    
    
    (37,885
    )
    
    
    (34,038
    )
    
    
    (33,481
    )Proceeds from sale of foreclosed assets
    
    
    664
    
    
    
    486
    
    
    
    280Net increase in lending activities
    
    
    (21,011
    )
    
    
    (8,006
    )
    
    
    (24,566
    )Proceeds from sale of premises and equipment
    
    
    6
    
    
    
    97Purchases of premises and equipment
    
    
    (1,042
    )
    
    
    (485
    )
    
    
    (335
    )Net cash provided by (used in) investing activities
    
    
    (7,721
    )
    
    
    4,279
    
    
    
    (39,884
    )Cash flows from financing activities:Net changes in:Money market, NOW, savings and noninterest-bearing accounts
    
    
    (11,189
    )
    
    
    14,757
    
    
    
    18,134Time deposits
    
    
    3,266
    
    
    
    (1,876
    )
    
    
    884Proceeds from the issuance of dividend reinvestment plan shares
    
    
    305
    
    
    
    258
    
    
    
    246Repurchase and retirement of common shares
    
    
    (371
    )
    
    
    (811
    )
    
    
    (1,957
    )Cash dividends paid
    
    
    (1,816
    )
    
    
    (1,695
    )
    
    
    (1,667
    )Net cash provided by (used in) financing activities
    
    
    (9,805
    )
    
    
    10,633
    
    
    
    15,640Net increase (decrease) in cash and cash equivalents
    
    
    (7,769
    )
    
    
    22,701
    
    
    
    (15,897
    )Cash and cash equivalents at beginning of year
    
    
    35,403
    
    
    
    12,702
    
    
    
    28,599Cash and cash equivalents at end of year
    
    $
    27,634
    
    
    $
    35,403
    
    
    $
    12,702Supplemental disclosures:Cash paid during the period for:Interest
    
    $
    12,423
    
    
    $
    10,154
    
    
    $
    9,301Income taxes
    
    
    1,820
    
    
    
    1,657
    
    
    
    578Noncash items:Transfers of loans to foreclosed assets
    
    
    659
    
    
    
    413
    
    
    
    452Unrealized losses on investment securities available-for-sale, net
    
    $
    2
    
    
    $
    575
    
    
    $
    579
  150




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies:
 Nature of operations:
      151




---



##### 



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:
   152




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
 Segment disclosure:
   Use of estimates:
  
 153




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
    154




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
    155




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
   156




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
      157




---



##### 



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:
      158




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
     159




---



##### 



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:
  160




---



##### 



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:
   161




---



##### 



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:
   162




---



##### 



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:
  Premises and equipment, net:
  Premises
    
    15-45 yearsEquipment
    
    3-10 yearsLeasehold improvements
    
    15 years
  163




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
 Mortgage servicing rights:
   Intangible assets:
  164




---



##### 



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:
  165




---



##### 



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:
 Loans held for sale, net:
 Net loans:
 Mortgage servicing rights:
 Accrued interest receivable:
 Deposits without stated maturities:
 166




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
 Deposits with stated maturities:
 Accrued interest payable:
 Off-balance sheet financial instruments:
   167




---



##### 



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:
  Website operational costs:
  Other expenses:
  Income taxes:
  168




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Dollars in thousands, except per share data)
 1. Summary of significant accounting policies (continued):
  Earnings per common share:
  2. Cash and due from banks:
  169




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
(Dollars in thousands, except per share data)
 3. Investment securities:
  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
 Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairDecember 31, 2005
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueU.S. Government agencies
    
    $
    42,938
    
    
    
    
    
    
    $
    227
    
    
    $
    42,711State and municipals:Taxable
    
    
    15,697
    
    
    $
    1
    
    
    
    430
    
    
    
    15,268Tax-exempt
    
    
    31,820
    
    
    
    1,983
    
    
    
    8
    
    
    
    33,795Mortgage-backed securities
    
    
    12,211
    
    
    
    86
    
    
    
    80
    
    
    
    12,217Equity securities:Restricted
    
    
    808
    
    
    
    
    
    
    
    
    
    
    
    808Other
    
    
    38
    
    
    
    128
    
    
    
    
    
    
    
    166Total
    
    $
    103,512
    
    
    $
    2,198
    
    
    $
    745
    
    
    $
    104,965
  170




---



##### 



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, 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:RestrictedOtherTotal
    
    $
    9,993
    
    
    $
    5
    
    
    $
    22,329
    
    
    $
    333
    
    
    $
    32,322
    
    
    $
    338
 Less than 12 months
    
    
    12 months or more
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedDecember 31, 2005
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesU.S. Government agencies
    
    $
    29,769
    
    
    $
    128
    
    
    $
    12,942
    
    
    $
    99
    
    
    $
    42,711
    
    
    $
    227State and municipals:Taxable
    
    
    1,571
    
    
    
    4
    
    
    
    13,541
    
    
    
    426
    
    
    
    15,112
    
    
    
    430Tax-exempt
    
    
    1,382
    
    
    
    5
    
    
    
    388
    
    
    
    3
    
    
    
    1,770
    
    
    
    8Mortgage-backed securities
    
    
    211
    
    
    
    1
    
    
    
    5,094
    
    
    
    79
    
    
    
    5,305
    
    
    
    80Equity securities:RestrictedOtherTotal
    
    $
    32,933
    
    
    $
    138
    
    
    $
    31,965
    
    
    $
    607
    
    
    $
    64,898
    
    
    $
    745
  171




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Dollars in thousands, except per share data)
 3. Investment securities (continued):
    172




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 
  (Dollars in thousands, except per share data)
 3. Investment securities (continued):
    173




---



##### 



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, 2006
    
    one year
    
    
    five years
    
    
    ten years
    
    
    ten years
    
    
    TotalFair value:U.S. Government agencies
    
    $
    39,201
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    39,201State and municipals:Taxable
    
    
    6,814
    
    
    $
    5,098
    
    
    
    
    
    
    
    
    
    
    
    11,912Tax-exempt
    
    
    190
    
    
    
    5,336
    
    
    $
    17,088
    
    
    $
    8,342
    
    
    
    30,956Mortgage-backed securities
    
    
    5,870
    
    
    
    1,805
    
    
    
    85
    
    
    
    
    
    
    
    7,760Total
    
    $
    52,075
    
    
    $
    12,239
    
    
    $
    17,173
    
    
    $
    8,342
    
    
    $
    89,829
  174




---



##### 



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
    
    2006
    
    
    2005Commercial, financial and others
    
    $
    143,792
    
    
    $
    137,302Real estate:Construction
    
    
    5,513
    
    
    
    2,575Mortgage
    
    
    225,703
    
    
    
    217,827Consumer, net
    
    
    31,546
    
    
    
    29,217Lease financing, net
    
    
    1,520
    
    
    
    1,682Total
    
    $
    408,074
    
    
    $
    388,603
     2006
    
    
    2005
    
    
    2004Balance, January 1
    
    $
    4,128
    
    
    $
    3,859
    
    
    $
    3,584Provision for loan losses
    
    
    890
    
    
    
    782
    
    
    
    600Loans charged-off
    
    
    (717
    )
    
    
    (586
    )
    
    
    (482
    )Loans recovered
    
    
    134
    
    
    
    73
    
    
    
    157Balance, December 31
    
    $
    4,435
    
    
    $
    4,128
    
    
    $
    3,859
 175




---



##### 



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
    
    2006
    
    
    2005Nonaccrual loans:Commercial, financial and others
    
    $
    1,060
    
    
    $
    1,574Real estate:ConstructionMortgage
    
    
    856
    
    
    
    1,714Consumer, net
    
    
    94
    
    
    
    98Lease financing, netTotal nonaccrual loans
    
    
    2,010
    
    
    
    3,386Accruing loans past due 90 days or more:Commercial, financial and others
    
    
    13
    
    
    
    62Real estate:ConstructionMortgage
    
    
    217
    
    
    
    333Consumer, net
    
    
    60
    
    
    
    118Lease financing, net
    
    
    2
    
    
    
    33Total accruing loans past due 90 days or more
    
    
    292
    
    
    
    546Total nonperforming loans
    
    
    2,302
    
    
    
    3,932Foreclosed assets
    
    
    352
    
    
    
    363Total nonperforming assets
    
    $
    2,654
    
    
    $
    4,295
  December 31
    
    2006
    
    
    2005Impaired loans:With a related allowance
    
    $
    8,017
    
    
    $
    3,844With no related allowance
    
    
    1,683
    
    
    
    1,863Total
    
    $
    9,700
    
    
    $
    5,707
  2006
    
    
    2005
    
    
    2004Balance, January 1
    
    $
    2,206
    
    
    $
    1,179
    
    
    $
    377Provision for loan losses
    
    
    662
    
    
    
    1,337
    
    
    
    1,002Loans charged-off
    
    
    (458
    )
    
    
    (318
    )
    
    
    (212
    )Loans recovered
    
    
    
    
    
    
    8
    
    
    
    12Balance, December 31
    
    $
    2,410
    
    
    $
    2,206
    
    
    $
    1,179
 176




---



##### 



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
    
    2006
    
    
    2005
    
    
    2004Gross interest due under terms
    
    $
    703
    
    
    $
    434
    
    
    $
    279Interest income recognized
    
    
    693
    
    
    
    337
    
    
    
    246Interest income not recognized
    
    $
    10
    
    
    $
    97
    
    
    $
    33Interest income recognized (cash-basis)
    
    $
    693
    
    
    $
    337
    
    
    $
    246Average recorded investment in impaired loans
    
    $
    8,841
    
    
    $
    6,285
    
    
    $
    4,564
  5. Commitments, concentrations and contingent liabilities:
   December 31
    
    2006
    
    
    2005Commitments to extend credit
    
    $
    66,192
    
    
 $
    64,816Unused portions of home equity and credit card lines
    
    
    15,777
    
    
    
    14,576Commercial letters of credit
    
    
    21,405
    
    
    
    18,565Total
    
    $
    103,374
    
    
    $
    97,957
 177




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 5. Commitments, concentrations and contingent liabilities (continued):
      178




---



##### 



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
    
    2006
    
    
    2005Land
    
    $
    3,519
    
    
    $
    3,519Premises
    
    
    10,446
    
    
    
    10,406Leasehold improvements
    
    
    291
    
    
    
    291Furniture and equipment
    
    
    10,068
    
    
    
    9,140Total premises and equipment
    
    
    24,324
    
    
    
    23,356Less: accumulated depreciation and amortization
    
    
    13,306
    
    
    
    12,353Premises and equipment, net
    
    $
    11,018
    
    
    $
    11,003
 179




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 6. Premises and equipment, net (continued):
    2007
    
    $
    1942008
    
    
    1862009
    
    
    1472010
    
    
    1192011
    
    
    1192012 and thereafter
    
    
    469Total
    
    $
    1,234
 7. Other assets:
  December 31
    
    2006
    
    
    2005Goodwill
    
    $
    349
    
    
    $
    349Deferred income taxes
    
    
    363
    
    
    
    288Foreclosed assets
    
    
    352
    
    
    
    363Mortgage servicing rights
    
    
    676
    
    
    
    735Other
    
    
    1,725
    
    
    
    1,575Total
    
    $
    3,465
    
    
    $
    3,310
   180




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 7. Other assets (continued):
   2006
    
    
    2005
    
    
    2004Balance, January 1
    
    $
    735
    
    
    $
    719
    
    
    $
    740Additions
    
    
    165
    
    
    
    234
    
    
    
    214Amortization
    
    
    (224
    )
    
    
    (218
    )
    
    
    (235
    )Balance, December 31
    
    $
    676
    
    
    $
    735
    
    
    $
    719
  8. Deposits:
  December 31
    
    2006
    
    
    2005Interest-bearing deposits:Money market accounts
    
    $
    31,464
    
    
    $
    30,839NOW accounts
    
    
    67,273
    
    
    
    60,191Savings accounts
    
    
    99,341
    
    
    
    115,864Time deposits less than $100
    
    
    176,389
    
    
    
    185,464Time deposits $100 or more
    
    
    35,920
    
    
    
    23,579Total interest-bearing deposits
    
    
    410,387
    
    
    
    415,937Noninterest-bearing deposits
    
    
    73,055
    
    
    
    75,428Total deposits
    
    $
    483,442
    
    
    $
    491,365
  181




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 8. Deposits (continued):
  2007
    
    $
    121,8802008
    
    
    33,3182009
    
    
    7,9622010
    
    
    22,7532011
    
    
    9,6182012 and thereafter
    
    
    16,778Total
    
    $
    212,309
  9. Short-term borrowings:
   182




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 10. Fair value of financial instruments:
  2006
    
    
    2005Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairDecember 31
    
    Value
    
    
    Value
    
    
    Value
    
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    27,634
    
    
    $
    27,634
    
    
    $
    35,403
    
    
    $
    35,403Investment securities available-for-sale
    
    
    91,213
    
    
    
    91,213
    
    
    
    104,965
    
    
    
    104,965Loans held for sale, net
    
    
    572
    
    
    
    579
    
    
    
    1,934
    
    
    
    1,951Net loans
    
    
    403,639
    
    
    
    395,245
    
    
    
    384,475
    
    
    
    381,730Mortgage servicing rights
    
    
    676
    
    
    
    676
    
    
    
    735
    
    
    
    735Accrued interest receivable
    
    
    2,863
    
    
    
    2,863
    
    
    
    2,487
    
    
    
    2,487Total
    
    $
    526,597
    
    
    $
    518,210
    
    
    $
    529,999
    
    
    $
    527,271Financial liabilities:Deposits without stated maturities
    
    $
    271,133
    
    
    $
    271,133
    
    
    $
    282,322
    
    
    $
    282,322Deposits with stated maturities
    
    
    212,309
    
    
    
    212,361
    
    
    
    209,043
    
    
    
    210,271Accrued interest payable
    
    
    1,106
    
    
    
    1,106
    
    
    
    1,024
    
    
    
    1,024Total
    
    $
    484,548
    
    
    $
    484,600
    
    
    $
    492,389
    
    
    $
    493,617
 11. Employee benefit plan:
  183




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 11. Employee benefit plan (continued):
  12. Income taxes:
  Year Ended December 31
    
    2006
    
    
    2005
    
    
    2004Current
    
    $
    1,948
    
    
    $
    1,497
    
    
    $
    566Deferred
    
    
    (74
    )
    
    
    (246
    )
    
    
    113Total
    
    $
    1,874
    
    
    $
    1,251
    
    
    $
    679
  Year Ended December 31
    
    2006
    
    
    2005
    
    
    2004Federal income tax at statutory rate
    
    $
    2,796
    
    
    $
    2,197
    
    
    $
    1,837Differences resulting from:Tax-exempt interest, net
    
    
    (930
    )
    
    
    (891
    )
    
    
    (748
    )Residential housing program tax credit
    
    
    
    
    
    
    (9
    )
    
    
    (419
    )Other
    
    
    8
    
    
    
    (46
    )
    
    
    9Federal income tax on income before income taxes
    
    $
    1,874
    
    
    $
    1,251
    
    
    $
    679
  Year Ended December 31
    
    2006
    
    
    2005
    
    2004Allowance for loan losses
    
    $
    (128
    )
    
    $
    (119
 )
    
    $
    (116
    )Loans, net of unearned income
    
    
    78
    
    
    
    49
    
    
    
    198Accrued interest receivable
    
    
    25
    
    
    
    (32
    )
    
    
    8Prepaid expenses
    
    
    28
    
    
    
    (57
    )
    
    
    147Premises and equipment, net
    
    
    (122
    )
    
    
    (91
    )
    
    
    (70
    )Core deposit intangible
    
    
    49
    
    
    
    (42
    )
    
    
    (42
    )Other
    
    
    (4
    )
    
    
    46
    
    
    
    (12
    )Change in deferred income taxes affecting the statements of
income
    
    
    (74
    )
    
    
    (246
    )
    
    
    113Deferred income taxes on investment securities recognized in
stockholders equity
    
    
    (1
    )
    
    
    (296
    )
    
    
    (299
    )Total change in deferred income taxes
    
    $
    (75
    )
    
    $
    (542
 )
    
    $
    (186
    )
 184




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 12. Income taxes (continued):
  December 31
    
    2006
    
    
    2005Deferred tax assets:Allowance for loan losses
    
    $
    1,290
    
    
    $
    1,162Accrued interest receivable
    
    
    48
    
    
    
    73Core deposit intangible
    
    
    292
    
    
    
    341Total
    
    
    1,630
    
    
    
    1,576Deferred tax liabilities:Investment securities available-for-sale
    
    
    493
    
    
    
    494Loans, net of unearned income
    
    
    165
    
    
    
    87Prepaid expenses
    
    
    118
    
    
    
    90Premises and equipment, net
    
    
    421
    
    
    
    543Other
    
    
    70
    
    
    
    74Total
    
    
    1,267
    
    
    
    1,288Net deferred tax assets
    
    $
    363
    
    
    $
    288
  185




---



##### 



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
    
    2006
    
    
    2005
    
    
    2004Income:Dividends from subsidiaries
    
    $
    1,866
    
    
    $
    2,255
    
    
    $
    3,848Management fees from subsidiaries
    
    
    284
    
    
    
    281
    
    
    
    262Other income
    
    
    5
    
    
    
    119
    
    
    
    3Total income
    
    
    2,155
    
    
    
    2,655
    
    
    
    4,113Expense:Occupancy and equipment expenses
    
    
    76
    
    
    
    76
    
    
    
    76Other expenses
    
    
    377
    
    
    
    281
    
    
    
    367Total expenses
    
    
    453
    
    
    
    357
    
    
    
    443Income before income taxes and undistributed income of
subsidiaries
    
    
    1,702
    
    
    
    2,298
    
    
    
    3,670Income tax expense (benefit)
    
    
    (57
    )
    
    
    4
    
    
    
    (480
    )Income before undistributed income of subsidiaries
    
    
    1,759
    
    
    
    2,294
    
    
    
    4,150Equity in undistributed income of subsidiaries
    
    
    4,591
    
    
    
    2,916
    
    
    
    575Net income
    
    $
    6,350
    
    
    $
    5,210
    
    
    $
    4,725
 CONDENSED BALANCE SHEETS
 December 31
    
    2006
    
    
    2005Assets:Cash
    
    $
    235
    
    
    $
    53Investment in bank subsidiary
    
    
    52,108
    
    
    
    47,526Investment securities available-for-sale
    
    
    178
    
    
    
    166Other assets
    
    
    2,192
    
    
    
    2,478Total assets
    
    $
    54,713
    
    
    $
    50,223Liabilities:Dividends payable
    
    $
    463
    
    
    $
    426Other liabilities
    
    
    132
    
    
    
    108Total liabilities
    
    
    595
    
    
    
    534Stockholders equity
    
    
    54,118
    
    
    
    49,689Total liabilities and stockholders equity
    
    $
    54,713
    
    
    $
    50,223
 186




---



##### 



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
    
    2006
    
    
    2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    6,350
    
    
    $
    5,210
    
    
    $
    4,725Adjustments:Equity in undistributed income of subsidiaries
    
    
    (4,591
    )
    
    
    (2,916
    )
    
    
    (575
    )Depreciation and amortization
    
    
    76
    
    
    
    76
    
    
    
    76Changes in:Other assets
    
    
    210
    
    
    
    (5
    )
    
    
    (811
    )Other liabilities
    
    
    19
    
    
    
    (203
    )
    
    
    82Net cash provided by operating activities
    
    
    2,064
    
    
    
    2,162
    
    
    
    3,497Cash flows from financing activities:Issuance of dividend reinvestment plan shares
    
    
    305
    
    
    
    258
    
    
    
    246Repurchase and retirement of common shares
    
    
    (371
    )
    
    
    (811
    )
    
    
    (1,957
    )Cash dividends paid
    
    
    (1,816
    )
    
    
    (1,695
    )
    
    
    (1,667
    )Net cash used in financing activities
    
    
    (1,882
    )
    
    
    (2,248
    )
    
    
    (3,378
    )Net increase (decrease) in cash
    
    
    182
    
    
    
    (86
    )
    
    
    119Cash at beginning of year
    
    
    53
    
    
    
    139
    
    
    
    20Cash at end of year
    
    $
    235
    
    
    $
    53
    
    
    $
    139
 14. Regulatory matters:
   187




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 14. Regulatory matters (continued):
     188




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 14. Regulatory matters (continued):
   189




---



##### 



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 assetsless 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
 Minimum to be WellCapitalized underMinimum for Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action ProvisionsDecember 31, 2005
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioTier I capital to risk-weighted assets:Consolidated
    
    $
    48,308
    
    
    
    12.0
    %
    
    $
    16,113
    
    
    
    4.0
    %Community Bank
    
    
    46,229
    
    
    
    11.5
    
    
    
    16,076
    
    
    
    4.0
    
    
    $
    24,114
    
    
    
    6.0
    %Total capital to risk-weighted assets:Consolidated
    
    
    52,436
    
    
    
    13.0
    
    
    
    32,227
    
    
    
    8.0Community Bank
    
    
    50,357
    
    
    
    12.5
    
    
    
    32,152
    
    
    
    8.0
    
    
    
    40,190
    
    
    
    10.0Tier I capital to total average assets
less intangible assets:Consolidated
    
    
    48,308
    
    
    
    9.0
    
    
    
    21,373
    
    
    
    4.0Community Bank
    
    $
    46,229
    
    
    
    8.7
    %
    
    $
    21,343
    
    
    
    4.0
    %
    
    $
    26,679
    
    
    
    5.0
    %Risk-weighted assets:Consolidated
    
    $
    389,044Community Bank
    
    
    388,108Risk-weighted off-balance sheet items:Consolidated
    
    
    13,789Community Bank
    
    
    13,789Average assets for Leverage ratio:Consolidated
    
    
    534,314Community Bank
    
    $
    533,570
 190




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 14. Regulatory matters (continued):
   191




---



##### 



Comm Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands, except per share data)
 15. Summary of quarterly financial information (unaudited):
 2006
    
    
    
    2005Quarter Ended
    
    March 31
    
    
    June 30
    
    
    Sept. 30
    
    
    Dec. 31
    
    
    March 31
    
    
    June 30
    
    
    Sept. 30
    
    
    Dec. 31Interest income:Interest and fees on loans:Taxable
    
    $
    6,324
    
    
    $
    6,733
    
    
    $
    7,133
    
    
    $
    7,267
    
    
    $
    5,489
    
    
    $
    5,566
    
    
    $
    5,809
    
    
    $
    6,121Tax-exempt
    
    
    430
    
    
    
    446
    
    
    
    352
    
    
    
    328
    
    
    
    330
    
    
    
    347
    
    
    
    337
    
    
    
    315Interest and dividends on investment
securities available-for-sale:Taxable
    
    
    603
    
    
    
    503
    
    
    
    490
    
    
    
    612
    
    
    
    555
    
    
    
    475
    
    
    
    493
    
    
    
    637Tax-exempt
    
    
    379
    
    
    
    377
    
    
    
    368
    
    
    
    366
    
    
    
    391
    
    
    
    381
    
    
    
    396
    
    
    
    389Dividends
    
    
    11
    
    
    
    25
    
    
    
    14
    
    
    
    18
    
    
    
    8
    
    
    
    14
    
    
    
    10
    
    
    
    9Interest on federal funds sold
    
    
    6
    
    
    
    67
    
    
    
    136
    
    
    
    52
    
    
    
    
    
    
    
    14
    
    
    
    144
    
    
    
    129Total interest income
    
    
    7,753
    
    
    
    8,151
    
    
    
    8,493
    
    
    
    8,643
    
    
    
    6,773
    
    
    
    6,797
    
    
    
    7,189
    
    
    
    7,600Interest expense:Interest on deposits
    
    
    2,820
    
    
    
    2,991
    
    
    
    3,197
    
    
    
    3,348
    
    
    
    2,380
    
    
    
    2,363
    
    
    
    2,522
    
    
    
    2,732Interest on short-term borrowings
    
    
    84
    
    
    
    60
    
    
    
    
    
    
    
    5
    
    
    
    79
    
    
    
    27Total interest expense
    
    
    2,904
    
    
    
    3,051
    
    
    
    3,197
    
    
    
    3,353
    
    
    
    2,459
    
    
    
    2,390
    
    
    
    2,522
    
    
    
    2,732Net interest income
    
    
    4,849
    
    
    
    5,100
    
    
    
    5,296
    
    
    
    5,290
    
    
    
    4,314
    
    
    
    4,407
    
    
    
    4,667
    
    
    
    4,868Provision for loan losses
    
    
    180
    
    
    
    225
    
    
    
    270
    
    
    
    215
    
    
    
    300
    
    
    
    158
    
    
    
    161
    
    
    
    163Net interest income after
provision for loan losses
    
    
    4,669
    
    
    
    4,875
    
    
    
    5,026
    
    
    
    5,075
    
    
    
    4,014
    
    
    
    4,249
    
    
    
    4,506
    
    
    
    4,705Noninterest income:Service charges, fees and commissions
    
    
    752
    
    
    
    776
    
    
    
    769
    
    
    
    739
    
    
    
    811
    
    
    
    802
    
    
    
    720
    
    
    
    722Mortgage banking income
    
    
    108
    
    
    
    75
    
    
    
    89
    
    
    
    100
    
    
    
    182
    
    
    
    148
    
    
    
    145
    
    
    
    119Net gains on sale of merchant services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125
    
    
    
    110Total noninterest income
    
    
    860
    
    
    
    851
    
    
    
    858
    
    
    
    839
    
    
    
    1,118
    
    
    
    1,060
    
    
    
    865
    
    
    
    841Noninterest expense:Salaries and employee benefits
    
    
    1,790
    
    
    
    1,918
    
    
    
    1,903
    
    
    
    2,037
    
    
    
    1,795
    
    
    
    1,843
    
    
    
    1,778
    
    
    
    1,818Net occupancy and equipment
    
    
    605
    
    
    
    596
    
    
    
    571
    
    
    
    581
    
    
    
    638
    
    
    
    584
    
    
    
    588
    
    
    
    552Other
    
    
    1,161
    
    
    
    1,205
    
    
    
    1,273
    
    
    
    1,189
    
    
    
    1,187
    
    
    
    1,373
    
    
    
    1,254
    
    
    
    1,487Total noninterest expense
    
    
    3,556
    
    
    
    3,719
    
    
    
    3,747
    
    
    
    3,807
    
    
    
    3,620
    
    
    
    3,800
    
    
    
    3,620
    
    
    
    3,857Income before income taxes
    
    
    1,973
    
    
    
    2,007
    
    
    
    2,137
    
    
    
    2,107
    
    
    
    1,512
    
    
    
    1,509
    
    
    
    1,751
    
    
    
    1,689Provision for income tax expense
    
    
    423
    
    
    
    432
    
    
    
    512
    
    
    
    507
    
    
    
    232
    
    
    
    289
    
    
    
    371
    
    
    
    359Net income
    
    
    1,550
    
    
    
    1,575
    
    
    
    1,625
    
    
    
    1,600
    
    
    
    1,280
    
    
    
    1,220
    
    
    
    1,380
    
    
    
    1,330Other comprehensive income (loss):Unrealized holding gains (losses) on
investment securities available-
for-sale
    
    
    (450
    )
    
    
    (289
    )
    
    
    868
    
    
    
    (132
    )
    
    
    (813
    )
    
    
    889
    
    
    
    (721
    )
    
    
    (226
    )Income tax expense (benefit) related
to other comprehensive income (loss)
    
    
    (153
    )
    
    
    (98
    )
    
    
    295
    
    
    
    (45
    )
    
    
    (276
    )
    
    
    302
    
    
    
    (245
    )
    
    
    (77
    )Other comprehensive income
(loss), net of income taxes
    
    
    (297
    )
    
    
    (191
    )
    
    
    573
    
    
    
    (87
    )
    
    
    (537
    )
    
    
    587
    
    
    
    (476
    )
    
    
    (149
    )Comprehensive income
    
    $
    1,253
    
    
    $
    1,384
    
    
    $
    2,198
    
    
    $
    1,513
    
    
    $
    743
    
    
    $
    1,807
    
    
    $
    904
    
    
    $
    1,181Per share data:Net income
    
    $
    0.84
    
    
    $
    0.85
    
    
    $
    0.87
    
    
    $
    0.87
    
    
    $
    0.69
    
    
    $
    0.65
    
    
    $
    0.74
    
    
    $
    0.72Cash dividends declared
    
    $
    0.25
    
    
    $
    0.25
    
    
    $
    0.25
    
    
    $
    0.25
    
    
    $
    0.23
    
    
    $
    0.23
    
    
    $
    0.23
    
    
    $
    0.23
 192




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS 2005 VERSUS 2004  (Dollars in thousands, except per share data)
 Operating Environment:
      193




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS 2005 VERSUS 2004 (CONTINUED)  (Dollars in thousands, except per share data)
   Review of Financial Position:
   194




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS 2005 VERSUS 2004 (CONTINUED)  (Dollars in thousands, except per share data)
  Investment Portfolio:
     195




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS 2005 VERSUS 2004 (CONTINUED)  (Dollars in thousands, except per share data)
   Loan Portfolio:
   196




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS 2005 VERSUS 2004 (CONTINUED)  (Dollars in thousands, except per share data)
   Asset Quality:
   197




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS 2005 VERSUS 2004 (CONTINUED)  (Dollars in thousands, except per share data)
     198




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS 2005 VERSUS 2004 (CONTINUED)  (Dollars in thousands, except per share data)
 Deposits:
    Market Risk Sensitivity:
  199




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS 2005 VERSUS 2004 (CONTINUED)
(Dollars in thousands, except per share data)
     200




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS 2005 VERSUS 2004 (CONTINUED)  (Dollars in thousands, except per share data)
 Liquidity:
      201




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS 2005 VERSUS 2004 (CONTINUED)  (Dollars in thousands, except per share data)
 Capital Adequacy:
    Review of Financial Performance:
  Net Interest Income:
  202




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS 2005 VERSUS 2004 (CONTINUED)  (Dollars in thousands, except per share data)
   203




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS 2005 VERSUS 2004 (CONTINUED)  (Dollars in thousands, except per share data)
  Provision for Loan Losses:
  Noninterest Income:
  Noninterest Expense:
     204




---



##### 



Comm Bancorp, Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS 2005 VERSUS 2004 (CONTINUED)  (Dollars in thousands, except per share data)
 Income Taxes:
  205




---



##### 



Comm Bancorp, Inc.
DIRECTORS AND OFFICERS
 BOARD OF DIRECTORS
Comm Bancorp, Inc. and  Community Bank and Trust Company
 DAVID L. BAKER
 THOMAS M. CHESNICK
 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
 ERIC G. STEPHENS
 CORPORATE OFFICERS
 Comm Bancorp, Inc.
 WILLIAM R. BOYLE
 WILLIAM F. FARBER, SR.
 JOHN P. KAMEEN
 J. ROBERT McDONNELL
 SCOTT A. SEASOCK
 DIRECTORS EMERITUS
 MICHAEL T. GOSKOWSKI
 WILLIAM B. LOPATOFSKY
 JOSEPH P. MOORE, JR.
 206




---



##### 



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
 MATILDA B. SHEPTAK
 207




---



##### 



Comm Bancorp, Inc.
DIRECTORS AND OFFICERS (CONTINUED)
 OFFICERS
 Community Bank and Trust Company
 DAVID L. BAKER
 J. KEVIN BOYLAN
 WILLIAM R. BOYLE
 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
 SHARON A. KOHANSKI
 RICHARD J. LAPERA
 GARY S. LAVELLE
 ANNETTE M. LYNCH
 PAMELA S. MAGNOTTI
 MARY ANN MUSHO
 MICHAEL A. NARCAVAGE
 TIMOTHY P. OBRIEN
 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
 RONALD K. SMITH
 TAMI L. SNYDER
 HAROLD F. STOUT
 BRIAN C. URBAS
 ANN E. VADELLA
 STEPHANIE A. WESTINGTON, CPA
 LOUIS J. ZEFRAN
 208




---



##### 



Comm Bancorp, Inc.
DIRECTORS AND OFFICERS (CONTINUED)
 BOARD OF DIRECTORS
 Comm Realty Corporation
 WILLIAM F. FARBER, SR.
CHAIRMAN OF THE BOARD
 SCOTT A. SEASOCK
 ERIC G. STEPHENS
 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
 JOSEPH J. MUSKEY
 ERIC G. STEPHENS
 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
 MEMBERSHIP
 Community Abstract Services, LLC
 WILLIAM F. FARBER, SR.
 MICHAEL C. COWLEY
 OFFICERS
 Community Abstract Services, LLC
 MICHAEL C. COWLEY
 SCOTT A. SEASOCK
 STEPHANIE A. WESTINGTON, CPA
 WILLIAM R. BOYLE
 209




---



##### 



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
 Klick
SM Banking via the Internet  www.combk.com
 InTouch
SM Telephone Banking System
 
 210




---



##### 



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
    
    
    Declared2006: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
    
    
    $
    0.252005:First Quarter
    
    $
    43.00
    
    
    $
    40.50
    
    
    $
    0.23Second Quarter
    
    
    42.72
    
    
    
    39.76
    
    
    
    0.23Third Quarter
    
    
    43.16
    
    
    
    39.25
    
    
    
    0.23Fourth Quarter
    
    $
    41.99
    
    
    $
    36.45
    
    
    $
    0.23
 Dividend Reinvestment:
  Dividend Direct Deposit:
  Website Information:
  211