Company Also Files Amended Interim Financial Statements for the
Quarters Ended March 31, 2010 and June 30, 2010
Dunmore, Pa., December 2, 2011 - First National Community Bancorp, Inc., (OTC Markets Group, Inc.: FNCB), the parent company of Dunmore-based First National Community Bank, today announced that it has filed with the Securities and Exchange Commission an amendment to its Annual Report on Form 10-K for the year ended December 31, 2009. Concurrently, the Company filed amendments to its Forms 10-Q for the quarters ended March 31, 2010 and June 30, 2010. The Company’s current management advised in October 2010 that the financial statements previously filed for these periods would be restated.
The most significant amendments included:
- restating in their entirety the consolidated financial statements and the notes thereto;
- appropriately accounting for and the timing of accounting charges related to other than temporary impairment of the collateralized debt obligations in the Company’s securities investment portfolio;
- determining the appropriate provision and allowance for loan and lease losses;
- determining the appropriate provision for off-balance sheet commitments and the accounting for goodwill;
- additional disclosure regarding non-performing assets, including loans extended to insiders and affiliates;
- revised disclosure reflecting current management’s determination that material weaknesses existed in the Company’s disclosure controls and procedures and internal control over the timing and financial reporting of accounting charges and allowances at December 31, 2009;
- information relating to the Company’s and Bank’s regulatory orders entered into after the date of the original report;
- enhanced disclosure of business and operations risks; and
- revised and corrected disclosure in response to comments from the SEC.
As stated in the amended SEC filings, the Company determined that its subsequent events analysis performed in the restatement process reflected that significant accounting charges and allowances that were previously recorded in 2010 were more properly recorded in 2009. The net result of these amendments to the Company’s 2009 financial statements was a net loss of $44.3 million, compared to the reported net loss of $11.3 million in the original Form 10-K filing. The net $33.0 million adjustment included a $10.1 million addition to the provision for loan and lease losses; $14.5 million additional charges related to other-than-temporary impairment in the securities investment portfolio; $8.1 million to record goodwill impairment; and, $0.3 million in other adjustments. For the quarter ended March 31, 2010, the net result of the amendments was a net loss of $825,000, compared to the reported net income of $2.0 million, and for the quarter ended June 30, 2010, the net result of the amendments was a net loss of $5.2 million, compared to the reported net loss of $1.7 million. The net adjustments for the first and second quarters of 2010 resulted primarily from additions to the provision for loan and lease losses, additional charges related to other-than-temporary impairment in the securities investment portfolio, and a reduction in the credit for income taxes. As a result of these adjustments, the Bank’s restated total risk-based capital was $118.0 million, or 10.2% of risk-weighted assets, on December 31, 2009.
The Bank’s unaudited Call Reports, which have been filed with the FDIC for the reporting periods subsequent to the Company’s October 2010 disclosure that the financial statements in the original SEC filings should no longer be relied upon, substantially reflected the adjustments reported in the restated SEC filings. The Bank will amend its Call Reports to fully reflect the adjustments finalized in the amended SEC filings for the proper periods, and does not believe that further amendments will be required.
"This has been a long and arduous but necessary process", said Dominick L. DeNaples, Chairman of the Board. “With this process nearing completion, our Board, management team and employees can begin to once again focus on rebuilding the Company’s financial position.”
"Our work is not complete with the filing of these reports. We continue to work closely with our financial and regulatory advisors, and are moving quickly to file our annual report on Form 10-K for the year ended December 31, 2010, as well as our quarterly reports on Form 10-Q for the periods ended September 30, 2010, March 31, 2011, June 30, 2011 and September 30, 2011," Mr. DeNaples said. We continue to also work with our advisors to explore and evaluate options to raise additional capital as we work towards fulfilling the Consent Order requirements. Our goal is to remain an independent bank and a strong competitor within our Northeastern Pennsylvania market, and we believe that we have the pieces in place to accomplish this.”
About First National Community Bank:
First National Community Bancorp, Inc. is the financial 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