First National Community Bancorp, Inc. Reports First Quarter 2013 Net Income of $1.7 Million

DUNMORE, Pa., May 14, 2013 /PRNewswire/ -- First National Community Bancorp, Inc. (OTCQB: FNCB), the parent company of Dunmore-based First National Community Bank, today announced its operating results for the quarter ended March 31, 2013. The Company reported net income of $ 1.7 million, or $0.11 per basic and diluted share, compared to a net loss of $1.2 million, or $(0.07) per basic and diluted share, for the prior year first quarter. The improved performance for first quarter 2013 was a result of an increase in the credit for loan and lease losses, resulting primarily from a recovery on a commercial loan that was previously charged off, and higher non-interest income, primarily related to net gain on the sale of securities, compared to first quarter 2012.

Performance Highlights:

• A 3.7% increase in net interest income after credit for loan and lease losses, compared to prior year quarter
• Continued improvement in asset quality metrics, with a 9.0% decrease in non-performing loans from December 31, 2012
• A 19 basis point improvement in the ratio of non-performing loans to total loans to 1.43% compared to 1.62% at December 31, 2012
• Other real estate owned ("OREO") was down 1.8% compared to December 31, 2012, and down 36.2% compared to March 31, 2012 
• The Bank's total risk-based capital of $80.7 million, or 12.26% of risk-weighted assets at March 31, 2013, was up $2.3 million from December 31, 2012

"Our first quarter 2013 net income reflects the results of the operational improvements that we realized in 2012, along with our continuing focus on improved asset quality, non-interest expense management and growing our capital strength," said Steven R. Tokach, President and Chief Executive Officer.  "Led by an experienced and well-credentialed management team, we believe that today we are a stronger, more competitive organization focused on rebuilding value. Our competitive strengths, a sizable deposit market share and a very loyal customer base, along with our dedicated and loyal staff, provide the foundation on which we are building a better bank.  While improved, our first quarter results do not yet reflect the potential of our customer-focused franchise, but we believe that the changes which are now in place will translate into growth and increased value over the longer term."

Summary Results for the Three Months Ended March 31, 2013

Net interest income before credit for loan and lease losses was $6.4 million for the first three months of 2013, compared to $7.2 million for the same period in 2012, resulting mainly from decreases in yields on interest-bearing assets. Net interest margin for the three months ended March 31, 2013 was 3.27%, an increase of 7 basis points over the same period in 2012. Interest expense for the three months ended March 31, 2013 decreased $716 thousand, or 27.83%, compared to the same period in 2012, resulting from lower average balances of interest-bearing liabilities along with an 18 basis point decline in the Bank's average rate for interest-bearing liabilities.

Non-interest income was $2.5 million for the three months ended March 31, 2013, compared to $1.4 million for the same period in 2012. The increase in non-interest income was primarily the result of increased net gains on the sale of securities, which totaled $842 thousand for the three months ended March 31, 2013, compared to $8 thousand for the comparable prior year period.

Non-interest expense for the three months ended March 31, 2013 was $8.3 million, a decrease of $1.6 million from $9.9 million in the same period in 2012. Professional fees, consisting of accounting and consulting expenses, decreased from $1.5 million for the quarter ended March 31, 2012 to $551 thousand for the same period in 2013. Legal fees, although reduced by $109 thousand compared with the quarter ended March 31, 2012, remained elevated as a result of legal matters in process. Professional fees are expected to continue to decline to more normalized levels in coming quarters, reflecting less reliance on outside advisors and consultants. We expect that legal fees will continue to decline as certain existing litigation matters are resolved.

Improved Asset Quality

As a result of aggressive problem credit resolutions, the Company's asset quality ratios continued to improve through March 31, 2013.

The Company's total non-performing loans were $8.8 million at March 31, 2013, a decrease of $877 thousand or 9.03%, from December 31, 2012. The ratio of non-performing loans to total loans improved to 1.43% at March 31, 2013, compared to 1.62% at December 31, 2012, a decrease of 19 basis points. (The FDIC average for commercial banks with assets between $100 million and $1 billion at December 31, 2012, the most current FDIC statistical data, was 2.39%). The allowance for loan and lease losses as a percentage of non-performing loans was 209% at March 31, 2013 versus 191% at the end of 2012. (The above described FDIC peer group average was 76% at December 31, 2012). The Company's ratio of net charge-offs (recoveries) to average loans outstanding for the quarter ended March 31, 2013 was (0.19)%, due to a recovery of $1.5 million on one commercial loan (The average for the FDIC peer group at December 31, 2012 was 0.63%).  

Financial Condition

The Company's total assets at March 31, 2013 were $929.5 million, a decrease of $38.7 million as compared to December 31, 2012.  Total loans (before allowance for loan and lease losses) at March 31, 2013 were $616.2 million, an increase of $18.2 as compared to December 31, 2012. Total deposits at March 31, 2013 were $823.7 million, a decrease of $30.9 million from December 31, 2012. Total borrowed funds of $47.7 million at March 31, 2013 were down $6.2 million from December 31, 2012.

At March 31, 2013, First National Community Bank's capital ratios were as follows: total risk-based capital ratio of 12.26%, Tier 1 risk-based capital ratio of 10.99%, and Tier 1 leverage ratio of 7.73%. 

Downtown Wilkes-Barre Branch Relocated

During the first quarter 2013 we announced the relocation of our downtown Wilkes-Barre branch to better serve existing and new business and personal banking customers.  Our new 3,500 square foot office, located at 1 N. Main Street on Public Square, opened on April 29, 2013. Conveniently located within a one-mile radius of approximately 1,500 downtown businesses, our decision to relocate the branch was based upon a desire to improve branch visibility and customer access, and to provide a better overall banking experience for our customers.

Availability of Filings

A copy of the Company's Form 10-Q for the quarter ended March 31, 2013 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, 2013 quarterly report on Form 10-Q is also available on the Investor Relations page of the Company's website, www.fncb.com, and on the SEC website at:
http://www.sec.gov/edgar/searchedgar/companysearch.html

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, Monroe 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.

This release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results and trends could differ materially from those set forth in such statements due to various risks, uncertainties and other 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. Such risks, uncertainties and other factors that could cause actual results and experience to differ include, but are not limited to, the following: 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 impact of the Company's ability to comply with its regulatory agreements and orders; the effectiveness of the Company's revised 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 taxes, banking, securities and insurance); technological changes; 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 Securities and Exchange Commission. 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 release.

SOURCE First National Community Bancorp, Inc.