News Details

DUNMORE, Pa., May 8, 2015 /PRNewswire/ -- First National Community Bancorp, Inc. (OTCQX: FNCB), the parent company of Dunmore-based First National Community Bank (the "Bank"), today announced its operating results for the quarter ended March 31, 2015. The Company reported net income of $3.5 million, or $0.21 per basic and diluted share. Net income for the comparable period of 2014 was also $3.5 million, or $0.21 per basic and diluted share. Comparing the first quarter results for 2015 and 2014, earnings were impacted by decreases in net interest income, non-interest income and the credit for loan and lease losses, which were almost entirely offset by a reduction in non-interest expense. Annualized return on average assets and return on average equity were 1.45% and 26.34%, respectively, for the three months ended March 31, 2015, compared to 1.46% and 38.45%, respectively, for the same three months of 2014.

On March 25, 2015, the Office of the Comptroller of the Currency ("OCC") notified the Bank that it was fully and completely released from the Consent Order it had been under since September 2010. The release signifies that the OCC determined that the Bank had met all of the requirements that were mandated by the Order. The Company continues to be subject to a Written Agreement entered into with the Federal Reserve Bank of Philadelphia on November 24, 2010.

Performance Highlights:

• The Bank was released from the Consent Order by the OCC on March 25, 2015;
• Tangible book value per share improved 92 basis points to $3.36 at March 31, 2015 from $2.44 at March 31, 2014;
• 15.1% reduction in non-interest expense comparing the first quarters of 2015 and 2014; and
• 5 basis point improvement in the ratio of non-performing loans to total loans to 0.77% at March 31, 2015, compared to 0.82% at December 31, 2014.

"The release from the Consent Order is a testament to the determination and effort put forth by our directors, management and employees," stated Steven R. Tokach, President and Chief Executive Officer. "The strong earnings performance in the first quarter of 2015 is indicative of the steps we have taken over recent years to strengthen our balance sheet, improve our asset quality and increase our capital position. For the remainder of 2015, our goals stay focused on organic loan and core deposit growth, establishing new non-interest income sources and resolving the remaining regulatory matters. With the Consent Order behind us, we believe we are well-positioned to be able to take advantage of, and compete for, prudent market opportunities, as well as further develop our core customer relationships," concluded Mr. Tokach.

Summary Results for the Three Months Ended March 31, 2015

Net interest income before the credit for loan and lease losses was $6.3 million for the first three months of 2015, compared to $6.6 million for the same period in 2014. The $269 thousand, or 4.1%, decrease was driven by the continued repositioning of the investment portfolio from higher-yielding tax-exempt securities to taxable securities in conjunction with current tax planning strategies centered on future recognition of the valuation allowance for net deferred tax assets. This resulted in a $403 thousand, or 25.1%, decrease in interest and dividend income on securities. Partially offsetting the effects of the repositioning was a $158 thousand, or 10.0%, decrease in interest expense comparing the three months ended March 31, 2015 and 2014, resulting from a $27.5 million decrease in average interest-bearing liabilities, coupled with a 5 basis point decline in the Company's cost of funds. The tax-equivalent net interest margin for the three months ended March 31, 2015 was 2.85%, a decrease of 24 basis points from 3.09% for the same period in 2014.

Non-interest income was $3.4 million for the three months ended March 31, 2015, compared to $3.5 million for the same period in 2014. The decrease resulted primarily from non-recurring income of $607 thousand from the sale of the Company's Monroe County branches in the first quarter of 2014. In addition, the Company experienced decreases in net gains on mortgage loans and OREO of $35 thousand and $24 thousand, respectively, and a decrease in income from bank-owned life insurance of $32 thousand. Partially offsetting these decreases was an increase in net gains on the sale of available-for-sale securities of $656 thousand comparing the first quarters of 2015 and 2014.

Non-interest expense decreased $1.2 million, or 15.1%, to $6.8 million for the three months ended March 31, 2015, from $8.0 million for the same three months of 2014. The decrease reflected significant reductions in legal expense, professional fees, regulatory assessments and salaries and employee benefits expense. The Company anticipates further reductions in its non-interest expense as the release from the Consent Order should positively impact regulatory assessments, FDIC and general business insurance rates and legal expenses.

Improved Asset Quality

The Company's asset quality continued to improve through March 31, 2015, a result of the effective management of problem credits and delinquent loans. The Company's total non-performing loans decreased $338 thousand, or 6.1%, to $5.2 million at March 31, 2015 from December 31, 2014. The ratio of non-performing loans to total loans improved 5 basis points to 0.77% at March 31, 2015, compared to 0.82% at December 31, 2014. (The FDIC average for commercial banks with assets between $100 million and $1 billion at March 31, 2015 was 1.05%.) The allowance for loan and lease losses as a percentage of gross loans was 1.63% at March 31, 2015 versus 1.72% at the end of 2014. (The above described FDIC peer group average was 1.44% at March 31, 2015.) The Company's ratio of total delinquent loans to total loans at March 31, 2015 was 1.10%, an 11 basis point improvement from 1.21% at December 31, 2014. In comparison, this ratio for the FDIC peer group was 1.79% at March 31, 2015.  

Financial Condition

The Company's total assets decreased $9.8 million, or 1.0%, to $960.2 million at March 31, 2015 from $970.0 million at December 31, 2014. The balance sheet reduction was due largely to a $14.4 million, or 6.6%, decrease in available-for-sale securities, as management continued to reposition the investment portfolio. The Company experienced moderate loan demand, which resulted in a $1.9 million, or 0.3%, increase in total loans (before allowance for loan and lease losses) to $672.2 million at March 31, 2015 from $670.3 million at December 31, 2014. Total deposits decreased $20.2 million, or 2.5%, to $775.1 million at the close of the first quarter of 2015 from $795.3 million at year-end 2014, which resulted primarily from the expected maturities of $11.8 million in certificates of deposits originated through a national listing service and $4.5 million in brokered deposits, coupled with cyclical deposit outflows from several large commercial and municipal customers. Cash and cash equivalents increased $1.7 million, while total borrowed funds, specifically with the FHLB of Pittsburgh, increased $6.4 million when comparing March 31, 2015 to December 31, 2014.

Total shareholders' equity increased $4.3 million, or 8.4%, to $55.7 million at March 31, 2015 from $51.4 million at December 31, 2014. The capital improvement resulted primarily from net income of $3.5 million, coupled with a $0.8 million increase in accumulated other comprehensive income related to appreciation, net of tax effects, in the fair value of available-for-sale securities.

Availability of Filings

A copy of the Company's Form 10-Q for the quarter ended March 31, 2015 will be provided upon request from: Shareholder Relations, First National Community Bancorp, Inc., 102 East Drinker Street, Dunmore, PA 18512 or by calling (570) 348-6419. The Company's March 31, 2015 quarterly report on Form 10-Q is also available on the Investor Relations page of the Company's website, www.fncb.com/investorrelations.

About First National Community Bank:
First National Community Bancorp, Inc. is the bank holding company of First National Community Bank, which provides personal, small business and commercial banking services to individuals and businesses throughout Lackawanna, Luzerne, and Wayne Counties in Northeastern Pennsylvania.  The institution was established as a National Banking Association in 1910 as The First National Bank of Dunmore, and has been operating under its current name since 1988. For more information about FNCB, visit www.fncb.com.

INVESTOR CONTACT:                                                           
James M. Bone, Jr., CPA                      
Executive Vice President and                                      
Chief Financial Officer                          
First National Community Bank                                    
(570) 348-6419                                 
james.bone@fncb.com                                    

The Company may from time to time make written or oral "forward-looking statements," including statements contained in the Company's filings with the Securities and Exchange Commission ("SEC"), in its reports to shareholders, and in other communications by the Company, which are made in good faith by the Company pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements include statements with respect to the Company's beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, that are subject to significant risks and uncertainties, and are subject to change based on various factors (some of which are beyond the Company's control).  The words "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan" and similar expressions are intended to identify forward-looking statements.  The following factors, among others, could cause the Company's financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: the strength of the United States economy in general and the strength of the local economies in the Company's markets; the effects of, and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, market and monetary fluctuations; the timely development of and acceptance of new products and services; the ability of the Company to compete with other institutions for business; the composition and concentrations of the Company's lending risk and the adequacy of the Company's reserves to manage those risks; the valuation of the Company's investment securities; the ability of the Company to pay dividends or repurchase common shares; the ability of the Company to retain key personnel; the impact of any pending or threatened litigation against the Company; the marketability of shares of the Company and fluctuations in the value of the Company's share price;  the impact of the Company's ability to comply with its regulatory agreements and orders; the effectiveness of the Company's system of internal controls; the ability of the Company to attract additional capital investment; the impact of changes in financial services' laws and regulations (including laws concerning capital adequacy, taxes, banking, securities and insurance); the impact of technological changes and security risks upon the Company's information technology systems; changes in consumer spending and saving habits; the nature, extent, and timing of governmental actions and reforms, and the success of the Company at managing the risks involved in the foregoing and other risks and uncertainties, including those detailed in the Company's filings with the SEC.

The Company cautions that the foregoing list of important factors is not all inclusive.  Readers are also cautioned not to place undue reliance on any forward-looking statements, which reflect management's analysis only as of the date of this report, even if subsequently made available by the Company on its website or otherwise.  The Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company to reflect events or circumstances occurring after the date of this report.

Readers should carefully review the risk factors described in the Annual Report and other documents that the Company periodically files with the Securities and Exchange Commission, including its Form 10-K for the year ended December 31, 2014.

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