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Penns Woods Bancorp, Inc. Reports Second Quarter 2017 Earnings

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WILLIAMSPORT, Pa., July 20, 2017 (GLOBE NEWSWIRE) -- Penns Woods Bancorp, Inc. (NASDAQ:PWOD)

Penns Woods Bancorp, Inc. continued its solid earnings, supported by loan and deposit growth, achieving net income of $5,772,000 for the six months ended June 30, 2017 resulting in basic and dilutive earnings per share of $1.22.

Highlights

  • Net income from core operations ("operating earnings"), which is a non-generally accepted accounting principles (GAAP) measure of net income excluding net securities gains, was $3,094,000 for the three months ended June 30, 2017 compared to $3,065,000 for the same period of 2016.  Operating earnings decreased to $5,649,000 for the six months ended June 30, 2017 compared to $5,830,000 for the same period of 2016.  Impacting the level of operating earnings were several factors including the continued shift of earning assets from the investment portfolio to the loan portfolio as the balance sheet is actively managed to reduce market risk and interest rate risk in a rising rate environment.  In addition, the effective tax rate has increased due to the conclusion of the ten year tax credit generation period of several low income elderly housing projects in our market footprint in which the company participates.

  • Operating earnings per share for the three months ended June 30, 2017 were $0.66 for both basic and dilutive, an increase from $0.65 for basic and dilutive for the same period of 2016.  Operating earnings per share for the six months ended June 30, 2017 were $1.20 basic and dilutive compared to $1.23 basic and dilutive for the same period of 2016.

  • Return on average assets was 0.88% for the three months ended June 30, 2017 compared to 1.00% for the corresponding period of 2016.  Return on average assets was 0.83% for the six months ended June 30, 2017 compared to 0.97% for the corresponding period of 2016.

  • Return on average equity was 8.79% for the three months ended June 30, 2017 compared to 9.77% for the corresponding period of 2016.  Return on average equity was 8.24% for the six months ended June 30, 2017 compared to 9.36% for the corresponding period of 2016.

"We continue to position and build the company for the future.  To spur quality asset growth the indirect auto lending program has been introduced throughout our entire market area, various building projects have been completed, while others are in various stages of completion. To increase income we are adding high quality assets as we build our balance sheet.  In one year the indirect lending program has generated in excess of $40 million in short duration high quality loans.  A more customer centric experience in our Williamsport branch is now in place following a substantial remodel.  Luzerne Bank is set to open a new office in Conyngham, while Jersey Shore State Bank is expanding its footprint into Muncy/Hughesville with a branch in the construction phase.  The addition of quality earning assets has led to increased revenue resulting in the second quarter of 2017 outperforming the first quarter of the year.  The structures of the earning assets that have been acquired have contributed to an improving net interest margin.  We continue to build for the future recognizing it may have a drag on earnings in the short-term.  However, as seen by the second quarter results, investing in the future will provide long-term rewards," said Richard A. Grafmyre, CFP®, President and CEO.

A reconciliation of the non-GAAP financial measures of operating earnings, operating return on assets, operating return on equity, and operating earnings per share, described in the highlights, to the comparable GAAP financial measures is included at the end of this press release.

Net Income

Net income, as reported under GAAP, for the three and six months ended June 30, 2017 was $3,086,000  and $5,772,000 compared to $3,390,000 and $6,468,000 for the same period of 2016. Results for the three and six months ended June 30, 2017 compared to 2016 were impacted by a decrease in after-tax securities gains of $333,000 (from a gain of $325,000 to a loss of $8,000) for the three month periods and a decrease in after-tax securities gains of $515,000 (from a gain of $638,000 to a gain of $123,000) for the six month periods. Basic and dilutive earnings per share for the three and six months ended June 30, 2017 were $0.65 and $1.22 compared to $0.72 and $1.37 for the corresponding period of 2016.  Return on average assets and return on average equity were 0.88% and 8.79% for the three months ended June 30, 2017 compared to 1.00% and 9.77% for the corresponding period of 2016.  Return on average assets and return on average equity were 0.83% and 8.24% for the six months ended June 30, 2017 compared to 0.97% and 9.36% for the corresponding period of 2016.

Net Interest Margin

The net interest margin for the three and six months ended June 30, 2017 was 3.44% and 3.42% compared to 3.42% and 3.49% for the corresponding period of 2016.  The decline in the net interest margin for the six month period was driven by a decreasing yield on the investment portfolio due to the continued lower than historical rate environment that limits the yield that we can acquire into the portfolio and our strategic decision to continue repositioning the portfolio through active management in anticipation of a steadily rising rate environment.  The impact of the declining investment portfolio yield and decreasing investment portfolio balance was offset by an 8.06% growth in gross loans from June 30, 2016 to June 30, 2017.  The loan growth was funded by an increase in core deposits and a decrease in the investment portfolio.  Core deposits represent a lower cost funding source than time deposits and comprise 82.11% of total deposits at June 30, 2017 and 79.65% at June 30, 2016.

Assets

Total assets increased $48,882,000 to $1,395,364,000 at June 30, 2017 compared to June 30, 2016.  Net loans increased $84,374,000 to $1,125,976,000 at June 30, 2017 compared to June 30, 2016 primarily due to campaigns related to increasing home equity product market share during 2016 and 2017 and the introduction of indirect auto lending during the third quarter of 2016.  The investment portfolio decreased $7,950,000 from June 30, 2016 to June 30, 2017 due to our strategy to reduce the investment portfolio duration through the selective selling of bonds as opportunities develop.  The combination of loan portfolio growth and a decrease in the size of the investment portfolio has resulted in shortening the overall earning asset portfolio duration consistent with a strategy to reduce the interest rate and market risk exposure to a rising rate environment.

Non-performing Loans

The non-performing loans to total loans ratio remained flat at 1.10% at June 30, 2017 from June 30, 2016 as non-performing loans have increased to $12,537,000 at June 30, 2017 from $11,626,000 at June 30, 2016. The majority of non-performing loans are centered on loans that are either in a secured position and have sureties with a strong underlying financial position or have a specific allocation for any impairment recorded within the allowance for loan losses.  Net loan charge-offs of $332,000 for the six months ended June 30, 2017 minimally impacted the allowance for loan losses which was 1.15% of total loans at June 30, 2017.  The majority of the loans charged-off had a specific allowance within the allowance for loan losses.

Deposits

Deposits increased $66,243,000 to $1,151,110,000 at June 30, 2017 compared to June 30, 2016.  Core deposits (total deposits excluding time deposits) increased $81,067,000 due to our commitment to building complete banking relationships with our customers.  Noninterest-bearing deposits increased $26,052,000 to $300,054,000 at June 30, 2017 compared to June 30, 2016.  Driving this growth is our commitment to easy-to-use products, community involvement, and emphasis on customer service.  While deposit gathering efforts have centered on core deposits, the lengthening of the time deposit portfolio continues to move forward as part of the strategy to build balance sheet protection in a rising rate environment.

Shareholders' Equity

Shareholders' equity decreased $954,000 to $138,440,000 at June 30, 2017 compared to June 30, 2016.  The change in accumulated other comprehensive loss from $2,168,000 at June 30, 2016 to $4,249,000 at June 30, 2017 is a result of an increase in unrealized losses on available for sale securities from an unrealized gain of $1,838,000 at June 30, 2016 to an unrealized loss of $16,000 at June 30, 2017.  The amount of accumulated other comprehensive loss at June 30, 2017 was also impacted by the change in net excess of the projected benefit obligation over the fair value of the plan assets of the defined benefit pension plan resulting in an increase in the net loss of $227,000 to $4,233,000 at June 30, 2017.  The current level of shareholders' equity equates to a book value per share of $29.53 at June 30, 2017 compared to $29.45 at June 30, 2016 and an equity to asset ratio of 9.92% at June 30, 2017 compared to 10.35% at June 30, 2016.  Excluding goodwill and intangibles, book value per share was $25.54 at June 30, 2017 compared to $25.42 at June 30, 2016.  Dividends declared for the six months ended June 30, 2017 and 2016 were $0.94 per share.

Penns Woods Bancorp, Inc. is the parent company of Jersey Shore State Bank, which operates fifteen branch offices providing financial services in Lycoming, Clinton, Centre, Montour, and Union Counties, and Luzerne Bank, which operates eight branch offices providing financial services in Luzerne County. Investment and insurance products are offered through Jersey Shore State Bank's subsidiary, The M Group, Inc. D/B/A The Comprehensive Financial Group.

NOTE:  This press release contains financial information determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles ("GAAP").  Management uses the non-GAAP measure of net income from core operations in its analysis of the company's performance. This measure, as used by the Company, adjusts net income determined in accordance with GAAP to exclude the effects of special items, including significant gains or losses that are unusual in nature such as net securities gains and losses. Because certain of these items and their impact on the Company's performance are difficult to predict, management believes presentation of financial measures excluding the impact of such items provides useful supplemental information in evaluating the operating results of the Company's core businesses. These disclosures should not be viewed as a substitute for net income determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

This press release may contain certain "forward-looking statements" including statements concerning plans, objectives, future events or performance and assumptions and other statements, which are statements other than statements of historical fact.  The Company cautions readers that the following important factors, among others, may have affected and could in the future affect actual results and could cause actual results for subsequent periods to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company herein: (i) the effect of changes in laws and regulations, including federal and state banking laws and regulations, and the associated costs of compliance with such laws and regulations either currently or in the future as applicable; (ii) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies as well as by the Financial Accounting Standards Board, or of changes in the Company's organization, compensation and benefit plans; (iii) the effect on the Company's competitive position within its market area of the increasing consolidation within the banking and financial services industries, including the increased competition from larger regional and out-of-state banking organizations as well as non-bank providers of various financial services; (iv) the effect of changes in interest rates; and (v) the effect of changes in the business cycle and downturns in the local, regional or national economies.  For a list of other factors which could affect the Company's results, see the Company's filings with the Securities and Exchange Commission, including "Item 1A.  Risk Factors," set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

You should not place undue reliance on any forward-looking statements.  These statements speak only as of the date of this press release, even if subsequently made available by the Company on its website or otherwise.  The Company undertakes no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this press release.

Previous press releases and additional information can be obtained from the Company's website at www.pwod.com.

THIS INFORMATION IS SUBJECT TO YEAR-END AUDIT ADJUSTMENT

 
PENNS WOODS BANCORP, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
 
    June 30,
(In Thousands, Except Share Data)   2017   2016   % Change
ASSETS            
Noninterest-bearing balances   $ 26,223     $ 24,088     8.86 %
Interest-bearing balances in other financial institutions   11,979     45,387     (73.61 )%
Total cash and cash equivalents   38,202     69,475     (45.01 )%
             
Investment securities, available for sale, at fair value   138,504     146,667     (5.57 )%
Investment securities, trading   213         100.00 %
Loans held for sale   1,683     1,349     24.76 %
Loans   1,139,085     1,054,119     8.06 %
Allowance for loan losses   (13,109 )   (12,517 )   4.73 %
Loans, net   1,125,976     1,041,602     8.10 %
Premises and equipment, net   25,497     22,304     14.32 %
Accrued interest receivable   3,641     3,490     4.33 %
Bank-owned life insurance   27,670     27,016     2.42 %
Goodwill   17,104     17,104     %
Intangibles   1,623     1,979     (17.99 )%
Deferred tax asset   8,139     7,400     9.99 %
Other assets   7,112     8,096     (12.15 )%
TOTAL ASSETS   $ 1,395,364     $ 1,346,482     3.63 %
             
LIABILITIES            
Interest-bearing deposits   $ 851,056     $ 810,865     4.96 %
Noninterest-bearing deposits   300,054     274,002     9.51 %
Total deposits   1,151,110     1,084,867     6.11 %
             
Short-term borrowings   15,737     17,440     (9.76 )%
Long-term borrowings   75,998     91,025     (16.51 )%
Accrued interest payable   414     456     (9.21 )%
Other liabilities   13,665     13,300     2.74 %
TOTAL LIABILITIES   1,256,924     1,207,088     4.13 %
             
SHAREHOLDERS' EQUITY            
Preferred stock, no par value, 3,000,000 shares authorized; no shares issued           n/a
Common stock, par value $8.33, 15,000,000 shares authorized; 5,008,192 and 5,006,036 shares issued   41,735     41,717     0.04 %
Additional paid-in capital   50,117     50,025     0.18 %
Retained earnings   62,952     60,054     4.83 %
Accumulated other comprehensive loss:            
Net unrealized (loss) gain on available for sale securities   (16 )   1,838     (100.87 )%
Defined benefit plan   (4,233 )   (4,006 )   (5.67 )%
Treasury stock at cost, 320,150 and 272,452 shares   (12,115 )   (10,234 )   18.38 %
TOTAL SHAREHOLDERS' EQUITY   138,440     139,394     (0.68 )%
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 1,395,364     $ 1,346,482     3.63 %
                       


PENNS WOODS BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
 
    Three Months Ended June 30,   Six Months Ended June 30,
(In Thousands, Except Per Share Data)   2017   2016   % Change   2017   2016   % Change
INTEREST AND DIVIDEND INCOME:                        
Loans including fees   $ 11,109     $ 10,466     6.14 %   $ 21,736     $ 20,821     4.39 %
Investment securities:                        
Taxable   570     601     (5.16 )%   1,112     1,223     (9.08 )%
Tax-exempt   323     398     (18.84 )%   621     874     (28.95 )%
Dividend and other interest income   207     204     1.47 %   422     477     (11.53 )%
TOTAL INTEREST AND DIVIDEND INCOME   12,209     11,669     4.63 %   23,891     23,395     2.12 %
                         
INTEREST EXPENSE:                        
Deposits   1,008     881     14.42 %   1,910     1,716     11.31 %
Short-term borrowings   4     8     (50.00 )%   8     34     (76.47 )%
Long-term borrowings   373     492     (24.19 )%   813     983     (17.29 )%
TOTAL INTEREST EXPENSE   1,385     1,381     0.29 %   2,731     2,733     (0.07 )%
                         
NET INTEREST INCOME   10,824     10,288     5.21 %   21,160     20,662     2.41 %
                         
PROVISION FOR LOAN LOSSES   215     258     (16.67 )%   545     608     (10.36 )%
                         
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   10,609     10,030     5.77 %   20,615     20,054     2.80 %
                         
NON-INTEREST INCOME:                        
Service charges   559     561     (0.36 )%   1,087     1,093     (0.55 )%
Securities (losses) gains, available for sale   (12 )   486     (102.47 )%   185     921     (79.91 )%
Securities gains, trading       6     (100.00 )%   2     46     (95.65 )%
Bank-owned life insurance   161     161     %   333     345     (3.48 )%
Gain on sale of loans   503     566     (11.13 )%   861     1,033     (16.65 )%
Insurance commissions   99     200     (50.50 )%   290     405     (28.40 )%
Brokerage commissions   361     272     32.72 %   692     527     31.31 %
Other   1,092     926     17.93 %   1,964     1,805     8.81 %
TOTAL NON-INTEREST INCOME   2,763     3,178     (13.06 )%   5,414     6,175     (12.32 )%
                         
NON-INTEREST EXPENSE:                        
Salaries and employee benefits   4,608     4,346     6.03 %   9,378     8,926     5.06 %
Occupancy   614     545     12.66 %   1,252     1,086     15.29 %
Furniture and equipment   664     679     (2.21 )%   1,313     1,380     (4.86 )%
Pennsylvania shares tax   230     220     4.55 %   468     478     (2.09 )%
Amortization of investments in limited partnerships   46     68     (32.35 )%   92     220     (58.18 )%
Federal Deposit Insurance Corporation deposit insurance   150     236     (36.44 )%   320     468     (31.62 )%
Marketing   204     185     10.27 %   375     395     (5.06 )%
Intangible amortization   86     100     (14.00 )%   176     187     (5.88 )%
Other   2,461     2,287     7.61 %   4,674     4,587     1.90 %
TOTAL NON-INTEREST EXPENSE   9,063     8,666     4.58 %   18,048     17,727     1.81 %
INCOME BEFORE INCOME TAX PROVISION   4,309     4,542     (5.13 )%   7,981     8,502     (6.13 )%
INCOME TAX PROVISION   1,223     1,152     6.16 %   2,209     2,034     8.60 %
NET INCOME   $ 3,086     $ 3,390     (8.97 )%   $ 5,772     $ 6,468     (10.76 )%
                         
EARNINGS PER SHARE - BASIC AND DILUTED   $ 0.65     $ 0.72     (9.72 )%   $ 1.22     $ 1.37     (10.95 )%
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC   4,711,332     4,733,251     (0.46 )%   4,723,003     4,736,878     (0.29 )%
DIVIDENDS DECLARED PER SHARE   $ 0.47     $ 0.47     %   $ 0.94     $ 0.94     %
 


PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES
 
    Three Months Ended
    June 30, 2017     June 30, 2016
(Dollars in Thousands)   Average
Balance
  Interest   Average
Rate
    Average
Balance
  Interest   Average
Rate
ASSETS:                          
Tax-exempt loans   $ 41,685     $ 405     3.89 %     $ 46,281     $ 445     3.87 %
All other loans   1,082,165     10,842     4.02 %     1,000,541     10,172     4.09 %
Total loans   1,123,850     11,247     4.01 %     1,046,822     10,617     4.08 %
                           
Taxable securities   83,895     680     3.24 %     94,049     734     3.12 %
Tax-exempt securities   52,850     489     3.70 %     56,348     603     4.28 %
Total securities   136,745     1,169     3.42 %     150,397     1,337     3.56 %
                           
Interest-bearing deposits   36,662     96     1.05 %     54,309     71     0.53 %
                           
Total interest-earning assets   1,297,257     12,512     3.87 %     1,251,528     12,025     3.86 %
                           
Other assets   100,356               100,241          
                           
TOTAL ASSETS   $ 1,397,613               $ 1,351,769          
                           
LIABILITIES AND SHAREHOLDERS' EQUITY:                          
Savings   $ 158,413     15     0.04 %     $ 153,151     14     0.04 %
Super Now deposits   202,692     131     0.26 %     198,048     125     0.25 %
Money market deposits   288,035     255     0.36 %     239,754     161     0.27 %
Time deposits   205,418     607     1.19 %     221,376     581     1.06 %
Total interest-bearing deposits   854,558     1,008     0.47 %     812,329     881     0.44 %
                           
Short-term borrowings   10,579     4     0.15 %     16,710     8     0.19 %
Long-term borrowings   75,998     373     1.95 %     91,025     492     2.14 %
Total borrowings   86,577     377     1.73 %     107,735     500     1.84 %
                           
Total interest-bearing liabilities   941,135     1,385     0.59 %     920,064     1,381     0.60 %
                           
Demand deposits   300,311               276,748          
Other liabilities   15,801               16,151          
Shareholders' equity   140,366               138,806          
                           
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 1,397,613               $ 1,351,769          
Interest rate spread           3.28 %             3.26 %
Net interest income/margin       $ 11,127     3.44 %         $ 10,644     3.42 %


    Three Months Ended June 30,
    2017   2016
Total interest income   $ 12,209     $ 11,669  
Total interest expense   1,385     1,381  
Net interest income   10,824     10,288  
Tax equivalent adjustment   303     356  
Net interest income (fully taxable equivalent)   $ 11,127     $ 10,644  


 
    Six Months Ended
    June 30, 2017   June 30, 2016
(Dollars in Thousands)   Average
Balance
  Interest   Average
Rate
  Average
Balance
  Interest   Average
Rate
ASSETS:                        
Tax-exempt loans   $ 41,959     $ 821     3.95 %   $ 50,700     $ 980     3.89 %
All other loans   1,069,896     21,194     3.99 %   994,034     20,174     4.08 %
Total loans   1,111,855     22,015     4.04 %   1,044,734     21,154     4.07 %
                         
Taxable securities   86,591     1,365     3.15 %   96,541     1,618     3.35 %
Tax-exempt securities   49,779     941     3.78 %   59,860     1,324     4.42 %
Total securities   136,370     2,306     3.38 %   156,401     2,942     3.76 %
                         
Interest-bearing deposits   34,924     169     0.98 %   33,501     82     0.49 %
                         
Total interest-earning assets   1,283,149     24,490     3.85 %   1,234,636     24,178     3.94 %
                         
Other assets   99,934             98,276          
                         
TOTAL ASSETS   $ 1,383,083             $ 1,332,912          
                         
LIABILITIES AND SHAREHOLDERS' EQUITY:                        
Savings   $ 157,423     30     0.04 %   $ 151,004     29     0.04 %
Super Now deposits   196,032     237     0.24 %   193,098     249     0.26 %
Money market deposits   275,529     446     0.33 %   229,497     301     0.26 %
Time deposits   207,722     1,197     1.16 %   220,965     1,137     1.03 %
Total interest-bearing deposits   836,706     1,910     0.46 %   794,564     1,716     0.43 %
                         
Short-term borrowings   10,962     8     0.15 %   22,560     34     0.30 %
Long-term borrowings   79,258     813     2.04 %   91,025     983     2.14 %
Total borrowings   90,220     821     1.81 %   113,585     1,017     1.77 %
                         
Total interest-bearing liabilities   926,926     2,731     0.59 %   908,149     2,733     0.60 %
                         
Demand deposits   300,207             270,900          
Other liabilities   15,770             15,703          
Shareholders' equity   140,180             138,160          
                         
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 1,383,083             $ 1,332,912          
Interest rate spread           3.26 %           3.34 %
Net interest income/margin       $ 21,759     3.42 %       $ 21,445     3.49 %


    Six Months Ended June 30,
    2017   2016
Total interest income   $ 23,891     $ 23,395  
Total interest expense   2,731     2,733  
Net interest income   21,160     20,662  
Tax equivalent adjustment   599     783  
Net interest income (fully taxable equivalent)   $ 21,759     $ 21,445  
 


(Dollars in Thousands, Except Per Share Data)   Quarter Ended
    6/30/2017   3/31/2017   12/31/2016   9/30/2016   6/30/2016
Operating Data                    
Net income   $ 3,086     $ 2,686     $ 2,948     $ 3,059     $ 3,390  
Net interest income     10,824       10,336       10,337       10,247     10,288  
Provision for loan losses     215       330     330     258     258  
Net security (losses) gains     (12 )     199     441     261     492  
Non-interest income, excluding net security gains     2,775       2,452     2,415     2,821     2,686  
Non-interest expense     9,063       8,985     8,625     8,739     8,666  
                     
Performance Statistics                    
Net interest margin   3.44 %   3.40 %   3.38 %   3.37 %   3.42 %
Annualized return on average assets   0.88 %   0.79 %   0.87 %   0.91 %   1.00 %
Annualized return on average equity   8.79 %   7.69 %   8.43 %   8.69 %   9.77 %
Annualized net loan charge-offs (recoveries) to average loans   %   0.12 %   0.06 %   0.02 %   0.05 %
Net charge-offs (recoveries)   11     321     152     57     123  
Efficiency ratio   65.9 %   69.6 %   66.9 %   66.2 %   66.0 %
                     
Per Share Data                    
Basic earnings per share   $ 0.65     $ 0.57     $ 0.62     $ 0.65     $ 0.72  
Diluted earnings per share   0.65     0.56     0.62     0.65     0.72  
Dividend declared per share   0.47     0.47     0.47     0.47     0.47  
Book value   29.53     29.38     29.20     29.56     29.45  
Common stock price:                    
High   43.60     49.45     52.03     44.75     44.70  
Low   38.17     43.28     41.00     40.34     37.82  
Close   41.18     43.45     50.50     44.46     41.99  
Weighted average common shares:                    
Basic   4,711     4,735     4,734     4,734     4,733  
Fully Diluted   4,711     4,761     4,734     4,734     4,733  
End-of-period common shares:                    
Issued   5,008     5,008     5,007     5,007     5,006  
Treasury   320     272     272     272     272  
                               


(Dollars in Thousands, Except Per Share Data)   Quarter Ended
    6/30/2017   3/31/2017   12/31/2016   9/30/2016   6/30/2016
Financial Condition Data:                    
General                    
Total assets   $ 1,395,364     $ 1,400,708     $ 1,348,590     $ 1,347,412     $ 1,346,482  
Loans, net   1,125,976     1,098,195     1,080,785     1,056,762     1,041,602  
Goodwill   17,104     17,104     17,104     17,104     17,104  
Intangibles   1,623     1,709     1,799     1,889     1,979  
Total deposits   1,151,110     1,160,664     1,095,214     1,088,297     1,084,867  
Noninterest-bearing   300,054     312,392     303,277     295,599     274,002  
Savings   158,101     159,652     153,788     150,822     152,540  
NOW   199,917     205,011     174,653     175,767     190,890  
Money Market   287,140     278,443     245,121     244,138     246,712  
Time Deposits   205,898     205,166     218,375     221,971     220,723  
Total interest-bearing deposits   851,056     848,272     791,937     792,698     810,865  
                     
Core deposits*   945,212     955,498     876,839     866,326     864,144  
Shareholders' equity   138,440     139,113     138,249     139,935     139,394  
                     
Asset Quality                    
Non-performing loans   $ 12,537     $ 10,870     $ 11,626     $ 11,530     $ 11,626  
Non-performing loans to total assets   0.90 %   0.78 %   0.86 %   0.86 %   0.86 %
Allowance for loan losses   13,109     12,905     12,896     12,718     12,517  
Allowance for loan losses to total loans   1.15 %   1.16 %   1.18 %   1.19 %   1.19 %
Allowance for loan losses to non-performing loans   104.56 %   118.72 %   110.92 %   110.30 %   107.66 %
Non-performing loans to total loans   1.10 %   0.98 %   1.06 %   1.08 %   1.10 %
                     
Capitalization                    
Shareholders' equity to total assets   9.92 %   9.93 %   10.25 %   10.39 %   10.35 %

* Core deposits are defined as total deposits less time deposits

 
Reconciliation of GAAP and Non-GAAP Financial Measures
 
    Three Months Ended
June 30,
  Six Months Ended
June 30,
(Dollars in Thousands, Except Per Share Data)   2017   2016   2017   2016
GAAP net income   $ 3,086     $ 3,390     $ 5,772     $ 6,468  
Less: net securities (losses) gains, net of tax   (8 )   325     123     638  
Non-GAAP operating earnings   $ 3,094     $ 3,065     $ 5,649     $ 5,830  
                 
    Three Months Ended
June 30,
  Six Months Ended
June 30,
    2017   2016   2017   2016
Return on average assets (ROA)   0.88 %   1.00 %   0.83 %   0.97 %
Less: net securities gains, net of tax   %   0.09 %   0.01 %   0.10 %
Non-GAAP operating ROA   0.88 %   0.91 %   0.82 %   0.87 %
                 
    Three Months Ended
June 30,
  Six Months Ended
June 30,
    2017   2016   2017   2016
Return on average equity (ROE)   8.79 %   9.77 %   8.24 %   9.36 %
Less: net securities (losses) gains, net of tax   (0.03 )%   0.94 %   0.18 %   0.92 %
Non-GAAP operating ROE   8.82 %   8.83 %   8.06 %   8.44 %
                 
    Three Months Ended
June 30,
  Six Months Ended
June 30,
    2017   2016   2017   2016
Basic earnings per share (EPS)   $ 0.65     $ 0.72     $ 1.22     $ 1.37  
Less: net securities (losses) gains, net of tax   (0.01 )   0.07     0.02     0.14  
Non-GAAP basic operating EPS   $ 0.66     $ 0.65     $ 1.20     $ 1.23  
         
    Three Months Ended
June 30,
  Six Months Ended
June 30,
    2017   2016   2017   2016
Dilutive EPS   $ 0.65     $ 0.72     $ 1.22     $ 1.37  
Less: net securities (losses) gains, net of tax   (0.01 )   0.07     0.02     0.14  
Non-GAAP dilutive operating EPS   $ 0.66     $ 0.65     $ 1.20     $ 1.23  
 

Contact:
Richard A. Grafmyre, President and Chief Executive Officer
300 Market Street
Williamsport, PA 17701
570-322-1111 e-mail: pwod@pwod.com

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