Community Banks Inc. Reports Second-Quarter Loss

Strategic Insights -

Community Banks Inc., a Harrisburg-based bank, announced a second-quarter loss of $1.1 million, or 9 cents a share, following its acquisition of Penn-Rock Financial Services Corp. and the parent company of Blue Ball National Bank. Despite the loss, the bank's net interest income rose 5 percent to $14.9 million, driven by the consolidation of bank office functions and restructuring of its balance sheet. Eddie L. Dunklebarger, president and CEO, expressed confidence in the future efficiency gains and improvement in core results, particularly in net interest income.

Key Takeaways:

  • Community Banks Inc. reported a second-quarter loss of $1.1 million, or 9 cents a share, compared to a year-ago profit of $5.4 million, or 43 cents a share.
  • The bank's net interest income rose 5 percent to $14.9 million in the second quarter, driven by the consolidation of bank office functions and restructuring of its balance sheet.
  • The acquisition of Penn-Rock Financial Services Corp. and Blue Ball National Bank resulted in an $8 million pretax loss on merger and conversion expenses.
  • Community Banks' consolidated banks now operate almost 70 locations throughout central Pennsylvania and into Maryland.
  • Eddie L. Dunklebarger, president and CEO, expects future efficiency gains and improvement in core results, particularly in net interest income.
  • The merger provided a unique opportunity to restructure the balance sheet and reduce the cost of funding in future periods.
  • The bank's year-to-date numbers suffered, reporting income of $4.3 million for the first six months of 2005, compared to $15 million in the first half of 2004.

Statistics:

  • Second-quarter loss: $1.1 million, or 9 cents a share
  • Year-ago profit: $5.4 million, or 43 cents a share
  • Net interest income: $14.9 million (up 5% from $14.2 million in the second quarter of 2004)
  • Total bank locations: almost 70 locations throughout central Pennsylvania and into Maryland
  • Merger and conversion expenses: $8 million (pretax)
  • Consolidated bank operations: 19 Blue Ball National Bank offices operating as a division of Community Banks

Sources:

  • "Community Banks Inc. Reports Quarterly Earnings" by Lancaster New Era
  • Lancaster New Era, Pa.
  • Lancaster New Era, http://www.lancasteronline.com/newera
  • (c) 2006, Lancaster New Era
  • Distributed by Knight Ridder/Tribune Business News.