General
Abington
Community Bancorp, Inc. (the “Company”) is a Pennsylvania corporation which was
organized to be a mid-tier holding company for Abington Savings Bank. Abington
Savings Bank is a Pennsylvania-chartered, FDIC-insured savings bank which
conducts business under the name “Abington Bank” (the “Bank” or “Abington
Bank”). The Bank is a wholly owned subsidiary of the Company. The Company’s
results of operations are primarily dependent on the results of the Bank and
the
Bank’s wholly owned subsidiaries, ASB Investment Co., Keswick Services II and
its wholly owned subsidiaries, and Abington Corp. As of December 31, 2006,
the
Company, on a consolidated basis, had total assets of $925.2 million, total
deposits of $587.0 million, and total stockholders’ equity of $114.1 million.
The
Company was formed when the Bank reorganized from a mutual savings bank to
a
mutual holding company structure in December 2004. Abington Mutual Holding
Company, a Pennsylvania corporation, is the mutual holding company parent of
the
Company. Abington Mutual Holding Company owns approximately 57% of the Company’s
outstanding common stock. On November 30, 2006, the Company announced that
the
Company, the Bank and Abington Mutual Holding Company had adopted a plan to
convert from the mutual holding company structure to a full stock-form holding
company structure. For further information, see Note 20 in the Notes to the
Consolidated Financial Statements in Item 8 herein.
Abington
Bank is a community-oriented savings bank, which was originally organized in
1867 and is headquartered in Jenkintown, Pennsylvania, approximately eight
miles
north of center city Philadelphia. Our banking office network currently consists
of our headquarters and main office, nine other full-service branch offices
and
five limited service branch offices. In addition, we maintain a loan processing
office in Jenkintown, Pennsylvania. Eleven of our banking offices are located
in
Montgomery County, Pennsylvania, three are in neighboring Bucks County,
Pennsylvania and one is in Delaware County, Pennsylvania. The Bank plans to
open
two additional branch offices in 2007 - one in Montgomery County and one in
Bucks County. Both branch offices are expected to open in mid-2007. Our limited
service offices have limited hours of operation and/or are limited to serving
customers who live or work in the community in which the limited service office
is located. Four of our limited service offices are located in retirement or
age
restricted communities. We maintain ATMs at all of our banking offices and
we
also have two off-site ATMs, located at a local grocery store and a local
college. We also provide on-line banking and telephone banking
services.
We
are
primarily engaged in attracting deposits from the general public and using those
funds to invest in loans and securities. Our principal sources of funds are
deposits, repayments of loans and mortgage-backed securities, maturities of
investments and interest-bearing deposits, funds provided from operations and
funds borrowed from outside sources such as the Federal Home Loan Bank of
Pittsburgh. These funds are primarily used for the origination of various loan
types including single-family residential mortgage loans, construction loans,
non-residential or commercial real estate mortgage loans, home equity loans,
commercial business loans and consumer loans. We are an active originator of
residential home mortgage loans and home construction loans in our market area.
In addition to offering loans and deposits, we also offer securities and
annuities to our customers through an affiliation with a third-party
broker-dealer.
The
Company’s website address is
www.abingtonbank.com
. The Company’s annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K and other documents filed by the Company with the Securities and Exchange
Commission (“SEC”) are available free of charge on the Company’s website under
the Investor Relations menu. Such documents are available on the Company’s
website as soon as reasonably practicable after they have been filed
electronically with the SEC.
Forward
Looking Statements
This
document contains forward-looking statements, which can be identified by
reference to a future period or periods or by the use of words such as “would
be,” “will,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,”
“seek,” “expect” and similar expressions or the negative thereof. These
forward-looking statements include:
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statements
of goals, intentions and
expectations;
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statements
regarding prospects and business strategy;
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statements
regarding asset quality and market risk;
and
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estimates
of future costs, benefits and
results.
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These
forward-looking statements are subject to significant risks, assumptions and
uncertainties, including, among other things, the factors discussed under the
heading “Risk Factors” in Item 1A herein that could affect the actual outcome of
future events and the following factors:
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general economic conditions, either nationally or
in our
market area, that are worse than expected;
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changes in the interest rate environment that reduce
our
interest margins or reduce the fair value of financial
instruments;
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increased competitive pressures among financial
services
companies;
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changes in consumer spending, borrowing and savings
habits;
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legislative or regulatory changes that adversely
affect
our business;
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adverse changes in the securities
markets;
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our ability to successfully manage our
growth;
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changes in accounting policies and practices, as
may be
adopted by the bank regulatory agencies, the SEC or the Financial
Accounting Standards Board; and
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our ability to successfully implement our branch
expansion strategy, enter into new markets and/or expand product offerings
successfully and take advantage of growth
opportunities.
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Any
of
the forward-looking statements that we make in the this Form 10-K and in other
public statements we make may turn out to be wrong because of inaccurate
assumptions we might make, because or the factors illustrated above or because
of other factors that we cannot foresee.
Because
of these and other uncertainties, our actual future results may be materially
different from the results indicated by these forward-looking statements and
you
should not rely on such statements.
Market
Area and Competition
Our
market area is located in Montgomery, Bucks and Delaware Counties, Pennsylvania,
which are suburbs of Philadelphia. In addition, particularly with respect to
commercial and construction lending, we also make loans in Philadelphia and
Chester Counties, Pennsylvania and contiguous counties in New Jersey and
Delaware. This area is referred to as the Delaware Valley region.
We
face
significant competition in originating loans and attracting deposits. This
competition stems primarily from commercial banks, other savings banks and
savings associations and mortgage-banking companies. Within our market area,
more than 50 other banks, savings institutions and credit unions are operating.
Many of the financial service providers operating in our market area are
significantly larger and have greater financial resources than us. We face
additional competition for deposits from short-term money market funds and
other
corporate and government securities funds, mutual funds and from other
non-depository financial institutions such as brokerage firms and insurance
companies.
Lending
Activities
General.
At
December 31, 2006, our net loan portfolio totaled $605.1 million or 65.4% of
total assets. Historically, our principal lending activity has been the
origination of loans collateralized by one- to four-family, also known as
“single-family,” residential real estate loans located in our market area. In
addition, while we have been making construction loans to homebuilders and
others for more than 30 years, we have increased our construction lending
activities in recent years. We also have increased our emphasis on originating
commercial real estate and multi-family (over four units) residential mortgage
loans. We also originate home equity lines of credit, commercial business loans
and consumer loans.
The
types
of loans that we may originate are subject to federal and state law and
regulations. Interest rates charged by us on loans are affected principally
by
the demand for such loans and the supply of money available for lending purposes
and the rates offered by our competitors. These factors are, in turn, affected
by general and economic conditions, the monetary policy of the federal
government, including the Federal Reserve Board, legislative tax policies and
governmental budgetary matters
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Loan
Portfolio Composition
.
The
following table shows the composition of our loan portfolio by type of loan
at
the dates indicated.
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December
31,
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2006
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2005
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2004
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2003
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2002
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Amount
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Amount
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Amount
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Amount
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Amount
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(Dollars
in Thousands)
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Real
estate loans:
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One-
to four-family residential
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$
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375,744
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57.55
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%
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$
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323,710
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54.88
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%
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$
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243,705
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54.69
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%
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$
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223,963
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55.95
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%
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$
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247,159
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61.70
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%
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Commercial
real estate and multi-family residential
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92,428
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14.16
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76,647
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12.99
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74,642
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16.75
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64,029
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16.00
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61,247
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15.29
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Construction
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134,976
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20.67
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132,789
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22.51
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83,253
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18.68
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66,875
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16.71
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50,401
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12.58
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Home
equity lines of credit
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33,953
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5.20
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41,063
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6.96
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32,049
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7.19
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31,185
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7.79
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25,571
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6.38
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Total
real estate loans
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637,101
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97.58
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574,209
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97.34
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433,649
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97.31
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386,052
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96.45
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384,378
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95.95
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Commercial
business loans
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11,416
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1.75
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10,975
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1.86
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8,540
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1.92
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10,403
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2.60
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11,353
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2.83
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Consumer
non-real estate loans
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4,400
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