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Penns Woods Bancorp, Inc. Reports Fourth Quarter 2017 Earnings

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WILLIAMSPORT, Pa., Jan. 30, 2018 (GLOBE NEWSWIRE) -- Penns Woods Bancorp, Inc. (NASDAQ:PWOD)

Penns Woods Bancorp, Inc., supported by loan and deposit growth, achieved net income of $9.8 million, for the twelve months ended December 31, 2017 resulting in basic and dilutive earnings per share of $2.08.

Highlights

  • On December 22, 2017, H.R.1, known as the "Tax Cuts and Jobs Act," was signed into law.  H.R.1, among other things, reduces the corporate income tax rate to 21%, effective January 1, 2018. As a result of passage of the new tax law, the revaluation of our net deferred tax assets (DTA) resulted in a write-down of $2.7 million. This is a one-time non-cash charge to the income tax provision that negatively impacted earnings per share by $0.58 per diluted share based on the weighted average share outstanding for the twelve months ended December 31, 2017.

  • Net income from core operations ("operating earnings"), which is a non-generally accepted accounting principles (GAAP) measure of net income excluding certain non-recurring items, which for the period ended December 31, 2017 include net securities gains and the impact of the deferred tax asset revaluation, was $3.4 million for the three months ended December 31, 2017 compared to $2.7 million for the same period of 2016.  Operating earnings increased to $12.1 million for the twelve months ended December 31, 2017 compared to $11.4 million 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 December 31, 2017 was $0.72 for basic and $0.71 dilutive, an increase from $0.56 for basic and dilutive for the same period of 2016.  Operating earnings per share for the twelve months ended December 31, 2017 was $2.57 basic and dilutive compared to $2.40 basic and dilutive for the same period of 2016.

  • Return on average assets was 0.20%  for the three months ended December 31, 2017 compared to 0.87% for the corresponding period of 2016.  Return on average assets was 0.69% for the twelve months ended December 31, 2017 compared to 0.93% for the corresponding period of 2016.

  • Return on average equity was 2.00% for the three months ended December 31, 2017 compared to 8.43% for the corresponding period of 2016.  Return on average equity was 6.91% for the twelve months ended December 31, 2017 compared to 8.96% for the corresponding period of 2016.

"The three and twelve month periods were negatively impacted by the Tax Cuts and Jobs Act as the passage of the act which reduces corporate tax rates beginning in 2018 required a write-down of the future benefit of our net deferred tax assets of $2.7 million or $0.58 per share.  At our current level of operating earnings, we estimate to recoup the impact of the write-down in fifteen to eighteen months due to the incremental benefit of lower tax rates," said Richard A. Grafmyre, CFP®, 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 twelve months ended December 31, 2017 was $716,000 and $9.8 million compared to $2.9 million and $12.5 million for the same period of 2016. Results for the three and twelve months ended December 31, 2017 compared to 2016 were impacted by a decrease in after-tax securities gains of $220,000 (from a gain of $291,000 to a gain of $71,000) for the three month periods and a decrease in after-tax securities gains of $711,000 (from a gain of $1.1 million to a gain of $391,000) for the twelve month periods.  The impact for the three and twelve month periods ended December 31, 2017 of the Tax Cuts and Jobs Act was a write-down in the valuation of the net deferred tax assets of $2.7 million.  Earnings per share for the three months ended December 31, 2017 was $0.16 basic and $0.15 diluted, a change from the 2016 basic and diluted earnings per share of $0.62.  Basic and diluted earnings per share for the twelve months ended December 31, 2017 was $2.08 compared to $2.64 for the corresponding period of 2016.  Return on average assets and return on average equity were 0.20% and 2.00% for the three months ended December 31, 2017 compared to 0.87% and 8.43% for the corresponding period of 2016.  Return on average assets and return on average equity were 0.69% and 6.91% for the twelve months ended December 31, 2017 compared to 0.93% and 8.96% for the corresponding period of 2016.

Net Interest Margin

The net interest margin for the three and twelve months ended December 31, 2017 was 3.48% and 3.47% compared to 3.38% and 3.44% for the corresponding period of 2016.  The increase in the net interest margin for the twelve month period was limited by a decreasing yield on the investment portfolio as higher yielding bonds continue to be redeemed at their call date and our strategic decision to continue repositioning the portfolio through active management.  The impact of the declining investment portfolio yield and decreasing investment portfolio balance was offset by a 13.85% growth in gross loans from December 31, 2016 to December 31, 2017.  The loan growth was primarily funded by an increase in short term borrowings and growth in core deposits of $40.0 million.  Core deposits represent a lower cost funding source than time deposits and comprise 79.98% of total deposits at December 31, 2017 and 80.06% at December 31, 2016. 

Assets

Total assets increased $125.9 million to $1.5 billion at December 31, 2017 compared to December 31, 2016.  Net loans increased $151.5 million to $1.2 billion at December 31, 2017 compared to December 31, 2016 primarily due to campaigns related to increasing home equity product market share during 2017 and indirect auto lending.  The investment portfolio decreased $8.9 million from December 31, 2016 to December 31, 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 ratio of non-performing loans to total loans ratio decreased to 0.58% at December 31, 2017 from 1.06% December 31, 2016 as non-performing loans have decreased to $7.3 million at December 31, 2017 from $11.6 million at December 31, 2016. The level of non-performing loans decreased as a large non-performing loan was paid-off during the quarter ended September 30, 2017.  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 $768,000 for the twelve months ended December 31, 2017 minimally impacted the allowance for loan losses which was 1.03% of total loans at December 31, 2017.  The majority of the loans charged-off had a specific allowance within the allowance for loan losses.

Deposits

Deposits increased $51.1 million to $1.1 billion at December 31, 2017 compared to December 31, 2016.  Core deposits (total deposits excluding time deposits) increased $40.0 million due to our commitment to building complete banking relationships with our customers.  Noninterest-bearing deposits remained stable at $303.3 million at December 31, 2017 compared to December 31, 2016.  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 $55,000 to $138.2 million at December 31, 2017 compared to December 31, 2016.  Accumulated other comprehensive loss remained constant at $4.9 million at December 31, 2016 and December 31, 2017.  The component of other accumulated comprehensive loss associated with unrealized losses on available for sale securities decreased from an unrealized loss of  $639,000 at December 31, 2016 to an unrealized loss of $54,000 at December 31, 2017.  The amount of accumulated other comprehensive loss at December 31, 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 $179,000.  In addition, the Tax Cuts and Jobs Act resulted in an additional loss of $810,000 related to the defined benefit pension plan component of accumulated other comprehensive loss.  The current level of shareholders' equity equates to a book value per share of $29.47 at December 31, 2017 compared to $29.20 at December 31, 2016 and an equity to asset ratio of 9.37% at December 31, 2017 compared to 10.25% at December 31, 2016.  Excluding goodwill and intangibles, book value per share was $25.51 at December 31, 2017 compared to $25.21 at December 31, 2016.  Dividends declared for the twelve months ended December 31, 2017 and 2016 were $1.88 per share.

Penns Woods Bancorp, Inc. is the parent company of Jersey Shore State Bank, which operates seventeen branch offices providing financial services in Lycoming, Clinton, Centre, Montour, and Union Counties, and Luzerne Bank, which operates nine 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.  Insurance products are offered through United Insurance Solutions, LLC a joint venture that is a subsidiary of the holding company.

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. These certain 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.

The Company's revaluation of its net deferred tax assets is management's reasonable estimate based on current guidance from authoritative sources.  The final impact of the tax reform may differ from these estimates, due to, among other things, changes in interpretations and assumptions made by management and is subject to further clarifications and guidance. The reduction of the Company's net deferred tax assets may vary materially from the amount reported. The Company does not anticipate future cash expenditures as a result of the reduction to the net deferred tax assets.

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.

Contact: Richard A. Grafmyre, Chief Executive Officer
  110 Reynolds Street
  Williamsport, PA 17702
  570-322-1111 e-mail: pwod@pwod.com 

THIS INFORMATION IS SUBJECT TO YEAR-END AUDIT ADJUSTMENT


PENNS WOODS BANCORP, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
 
    December 31,
(In Thousands, Except Share Data)   2017   2016   % Change
ASSETS:            
Noninterest-bearing balances   $ 25,692     $ 26,766     (4.01 )%
Interest-bearing balances in other financial institutions   1,551     16,905     (90.83 )%
Total cash and cash equivalents   27,243     43,671     (37.62 )%
               
Investment securities, available for sale, at fair value   124,475     133,492     (6.75 )%
Investment securities, trading   190     58     227.59 %
Loans held for sale   1,196     1,953     (38.76 )%
Loans   1,245,126     1,093,681     13.85 %
Allowance for loan losses   (12,858 )   (12,896 )   (0.29 )%
Loans, net   1,232,268     1,080,785     14.02 %
Premises and equipment, net   27,386     24,275     12.82 %
Accrued interest receivable   4,321     3,672     17.67 %
Bank-owned life insurance   27,982     27,332     2.38 %
Goodwill   17,104     17,104     %
Intangibles   1,462     1,799     (18.73 )%
Deferred tax asset   4,388     8,397     (47.74 )%
Other assets   6,477     6,052     7.02 %
TOTAL ASSETS   $ 1,474,492     $ 1,348,590     9.34 %
               
LIABILITIES:              
Interest-bearing deposits   $ 843,004     $ 791,937     6.45 %
Noninterest-bearing deposits   303,316     303,277     0.01 %
Total deposits   1,146,320     1,095,214     4.67 %
               
Short-term borrowings   100,748     13,241     660.88 %
Long-term borrowings   70,970     85,998     (17.47 )%
Accrued interest payable   502     455     10.33 %
Other liabilities   17,758     15,433     15.07 %
TOTAL LIABILITIES   1,336,298     1,210,341     10.41 %
               
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; 5,009,339 and 5,007,109 shares issued   41,744     41,726     0.04 %
Additional paid-in capital   50,173     50,075     0.20 %
Retained earnings   63,364     61,610     2.85 %
Accumulated other comprehensive loss:              
Net unrealized loss on available for sale securities   (54 )   (639 )   (91.55 )%
Defined benefit plan   (4,920 )   (4,289 )   (14.71 )%
Treasury stock at cost, 320,150 and 272,452 shares   (12,115 )   (10,234 )   18.38 %
TOTAL PENNS WOODS BANCORP, INC. SHAREHOLDERS' EQUITY   138,192     138,249     (0.04 )%
Non controlling interest   2         100.00 %
TOTAL SHAREHOLDERS' EQUITY   138,194     138,249     (0.04 )%
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 1,474,492     $ 1,348,590     9.34 %
                       


PENNS WOODS BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
 
    Three Months Ended December 31,   Twelve Months Ended December 31,
(In Thousands, Except Per Share Data)   2017   2016   % Change   2017   2016   % Change
INTEREST AND DIVIDEND INCOME:                        
Loans including fees   $ 12,191     $ 10,694     14.00 %   $ 45,833     $ 42,056     8.98 %
Investment securities:                                    
Taxable   517     600     (13.83 )%   2,182     2,424     (9.98 )%
Tax-exempt   278     296     (6.08 )%   1,218     1,498     (18.69 )%
Dividend and other interest income   152     168     (9.52 )%   744     835     (10.90 )%
TOTAL INTEREST AND DIVIDEND INCOME   13,138     11,758     11.74 %   49,977     46,813     6.76 %
                                     
INTEREST EXPENSE:                                    
Deposits   1,115     923     20.80 %   4,083     3,547     15.11 %
Short-term borrowings   195     5     3,800.00 %   234     46     408.70 %
Long-term borrowings   360     493     (26.98 )%   1,580     1,974     (19.96 )%
TOTAL INTEREST EXPENSE   1,670     1,421     17.52 %   5,897     5,567     5.93 %
                                     
NET INTEREST INCOME   11,468     10,337     10.94 %   44,080     41,246     6.87 %
                                     
PROVISION FOR LOAN LOSSES   125     330     (62.12 )%   730     1,196     (38.96 )%
                                     
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   11,343     10,007     13.35 %   43,350     40,050     8.24 %
                                     
NON-INTEREST INCOME:                                    
Service charges   585     571     2.45 %   2,222     2,249     (1.20 )%
Securities gains, available for sale   113     437     (74.14 )%   600     1,611     (62.76 )%
Securities (losses) gains, trading   (6 )   4     (250.00 )%   (8 )   58     (113.79 )%
Bank-owned life insurance   167     167     %   666     684     (2.63 )%
Gain on sale of loans   358     411     (12.90 )%   1,674     2,102     (20.36 )%
Insurance commissions   97     191     (49.21 )%   496     795     (37.61 )%
Brokerage commissions   334     281     18.86 %   1,378     1,098     25.50 %
Debit card income   510     483     5.59 %   1,960     1,896     3.38 %
Other   431     311     38.59 %   1,756     1,620     8.40 %
TOTAL NON-INTEREST INCOME   2,589     2,856     (9.35 )%   10,744     12,113     (11.30 )%
                                     
NON-INTEREST EXPENSE:                                    
Salaries and employee benefits   4,883     4,380     11.48 %   18,999     17,813     6.66 %
Occupancy   592     593     (0.17 )%   2,447     2,223     10.08 %
Furniture and equipment   786     751     4.66 %   2,915     2,793     4.37 %
Software Amortization   224     306     (26.80 )%   974     1,256     (22.45 )%
Pennsylvania shares tax   229     175     30.86 %   925     873     5.96 %
Professional Fees   537     584     (8.05 )%   2,353     2,096     12.26 %
Federal Deposit Insurance Corporation deposit insurance   155     97     59.79 %   669     767     (12.78 )%
Debit Card Expense   124     148     (16.22 )%   602     604     (0.33 )%
Marketing   268     172     55.81 %   958     740     29.46 %
Intangible amortization   81     89     (8.99 )%   337     366     (7.92 )%
Other   1,369     1,330     2.93 %   5,683     5,560     2.21 %
TOTAL NON-INTEREST EXPENSE   9,248     8,625     7.22 %   36,862     35,091     5.05 %
INCOME BEFORE INCOME TAX PROVISION   4,684     4,238     10.52 %   17,232     17,072     0.94 %
INCOME TAX PROVISION   3,968     1,290     207.60 %   7,459     4,597     62.26 %
NET INCOME   $ 716     $ 2,948     (75.71 )%   $ 9,773     $ 12,475     (21.66 )%
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS'   $ 716     $ 2,948     (75.71 )%   $ 9,773     $ 12,475     (21.66 )%
                                     
EARNINGS PER SHARE - BASIC   $ 0.16     $ 0.62     (74.19 )%   $ 2.08     $ 2.64     (21.21 )%
EARNINGS PER SHARE - DILUTED   $ 0.15     $ 0.62     (75.81 )%   $ 2.08     $ 2.64     (21.21 )%
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC   4,688,744     4,734,304     (0.96 )%   4,705,602     4,735,457     (0.63 )%
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED   4,782,244     4,734,304     1.01 %   4,705,602     4,735,457     (0.63 )%
DIVIDENDS DECLARED PER SHARE   $ 0.47     $ 0.47     %   $ 1.88     $ 1.88     %
                                             


PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES
 
    Three Months Ended
    December 31, 2017   December 31, 2016
(Dollars in Thousands)   Average
Balance
  Interest   Average
Rate
  Average
Balance
  Interest   Average
Rate
ASSETS:                        
Tax-exempt loans   $ 62,012     $ 609     3.90 %   $ 43,039     $ 420     3.88 %
All other loans   1,151,374     11,789     4.06 %   1,038,973     10,417     3.99 %
Total loans   1,213,386     12,398     4.05 %   1,082,012     10,837     3.98 %
                                     
Taxable securities   80,109     650     3.25 %   92,611     728     3.14 %
Tax-exempt securities   47,788     421     3.52 %   45,735     449     3.93 %
Total securities   127,897     1,071     3.35 %   138,346     1,177     3.40 %
                                     
Interest-bearing deposits   6,318     19     1.19 %   31,176     40     0.51 %
                                     
Total interest-earning assets   1,347,601     13,488     3.97 %   1,251,534     12,054     3.83 %
                         
Other assets   101,907             99,837          
                         
TOTAL ASSETS   $ 1,449,508             $ 1,351,371          
                         
LIABILITIES AND SHAREHOLDERS' EQUITY:                        
Savings   $ 159,204     17     0.04 %   $ 152,109     15     0.04 %
Super Now deposits   206,005     151     0.29 %   177,918     101     0.23 %
Money market deposits   263,003     236     0.36 %   247,876     178     0.29 %
Time deposits   220,331     711     1.28 %   220,967     629     1.13 %
Total interest-bearing deposits   848,543     1,115     0.52 %   798,870     923     0.46 %
                                     
Short-term borrowings   62,394     195     1.23 %   13,291     5     0.15 %
Long-term borrowings   75,373     360     1.87 %   89,151     493     2.17 %
Total borrowings   137,767     555     1.58 %   102,442     498     1.91 %
                                     
Total interest-bearing liabilities   986,310     1,670     0.67 %   901,312     1,421     0.62 %
                             
Demand deposits   305,867               292,955            
Other liabilities   14,258               17,232            
Shareholders' equity   143,073               139,872            
                             
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 1,449,508               $ 1,351,371            
Interest rate spread           3.30 %           3.21 %
Net interest income/margin       $ 11,818     3.48 %       $ 10,633     3.38 %
                                     


    Three Months Ended December 31,
    2017   2016
Total interest income   $ 13,138     $ 11,758  
Total interest expense   1,670     1,421  
Net interest income   11,468     10,337  
Tax equivalent adjustment   350     296  
Net interest income (fully taxable equivalent)   $ 11,818     $ 10,633  
                 


    Twelve Months Ended
    December 31, 2017   December 31, 2016
(Dollars in Thousands)   Average
Balance
  Interest   Average
Rate
  Average
Balance
  Interest   Average
Rate
ASSETS:                        
Tax-exempt loans   $ 49,982     $ 1,924     3.85 %   $ 47,782     $ 1,852     3.87 %
All other loans   1,099,465     44,563     4.05 %   1,009,384     40,834     4.05 %
Total loans   1,149,447     46,487     4.04 %   1,057,166     42,686     4.04 %
                                     
Taxable securities   84,079     2,689     3.20 %   94,887     3,072     3.24 %
Tax-exempt securities   50,169     1,845     3.68 %   53,638     2,270     4.23 %
Total securities   134,248     4,534     3.38 %   148,525     5,342     3.60 %
                                     
Interest-bearing deposits   22,461     237     1.06 %   36,592     187     0.51 %
                                     
Total interest-earning assets   1,306,156     51,258     3.92 %   1,242,283     48,215     3.88 %
                         
Other assets   100,481             99,500          
                         
TOTAL ASSETS   $ 1,406,637             $ 1,341,783          
                         
LIABILITIES AND SHAREHOLDERS' EQUITY:                        
Savings   $ 157,851     62     0.04 %   $ 151,397     58     0.04 %
Super Now deposits   200,436     528     0.26 %   187,106     458     0.24 %
Money market deposits   274,546     949     0.35 %   238,175     648     0.27 %
Time deposits   210,608     2,544     1.21 %   221,498     2,383     1.08 %
Total interest-bearing deposits   843,441     4,083     0.48 %   798,176     3,547     0.44 %
                                     
Short-term borrowings   25,984     234     0.89 %   18,518     46     0.25 %
Long-term borrowings   78,745     1,580     1.98 %   90,554     1,974     2.14 %
Total borrowings   104,729     1,814     1.71 %   109,072     2,020     1.82 %
                                     
Total interest-bearing liabilities   948,170     5,897     0.62 %   907,248     5,567     0.61 %
                             
Demand deposits   302,651               279,130            
Other liabilities   14,398               16,152            
Shareholders' equity   141,418               139,253            
                             
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 1,406,637               $ 1,341,783            
Interest rate spread           3.30 %           3.27 %
Net interest income/margin       $ 45,361     3.47 %       $ 42,648     3.44 %
                                     


    Twelve Months Ended December 31,
    2017   2016
Total interest income   $ 49,977     $ 46,813  
Total interest expense   5,897     5,567  
Net interest income   44,080     41,246  
Tax equivalent adjustment   1,281     1,402  
Net interest income (fully taxable equivalent)   $ 45,361     $ 42,648  
                 


(Dollars in Thousands, Except Per Share Data)   Quarter Ended
    12/31/2017   9/30/2017   6/30/2017   3/31/2017   12/31/2016
Operating Data                    
Net income   $ 716     $ 3,284     $ 3,086     $ 2,686     $ 2,948  
Net interest income   11,468     11,452     10,824     10,336     10,337  
Provision for loan losses   125     60     215     330     330  
Net security gains (losses)   107     298     (12 )   199     441  
Non-interest income, excluding net security gains   2,482     2,442     2,775     2,452     2,415  
Non-interest expense   9,248     9,566     9,063     8,985     8,625  
                     
Performance Statistics                    
Net interest margin   3.48 %   3.57 %   3.44 %   3.40 %   3.38 %
Annualized return on average assets   0.20 %   0.93 %   0.88 %   0.79 %   0.87 %
Annualized return on average equity   2.00 %   9.43 %   8.79 %   7.69 %   8.43 %
Annualized net loan charge-offs to average loans   0.07 %   0.08 %   %   0.12 %   0.06 %
Net charge-offs   200     236     11     321     152  
Efficiency ratio   65.7 %   68.3 %   65.9 %   69.6 %   66.9 %
                     
Per Share Data                    
Basic earnings per share   $ 0.16     $ 0.70     $ 0.65     $ 0.57     $ 0.62  
Diluted earnings per share   0.15     0.70     0.65     0.56     0.62  
Dividend declared per share   0.47     0.47     0.47     0.47     0.47  
Book value   29.47     29.79     29.53     29.38     29.20  
Common stock price:                    
High   49.79     46.47     43.60     49.45     52.03  
Low   45.65     41.08     38.17     43.28     41.00  
Close   46.58     46.47     41.18     43.45     50.50  
Weighted average common shares:                    
Basic   4,689     4,688     4,711     4,735     4,734  
Fully Diluted   4,782     4,688     4,711     4,761     4,734  
End-of-period common shares:                    
Issued   5,009     5,009     5,008     5,008     5,007  
Treasury   320     320     320     272     272  


(Dollars in Thousands, Except Per Share Data)   Quarter Ended
    12/31/2017   9/30/2017   6/30/2017   3/31/2017   12/31/2016
Financial Condition Data:                    
General                    
Total assets   $ 1,474,492     $ 1,430,197     $ 1,395,364     $ 1,400,708     $ 1,348,590  
Loans, net   1,232,268     1,176,781     1,125,976     1,098,195     1,080,785  
Goodwill   17,104     17,104     17,104     17,104     17,104  
Intangibles   1,462     1,543     1,623     1,709     1,799  
Total deposits   1,146,320     1,153,996     1,151,110     1,160,664     1,095,214  
Noninterest-bearing   303,316     310,830     300,054     312,392     303,277  
Savings   160,698     156,437     158,101     159,652     153,788  
NOW   215,021     203,744     199,917     205,011     174,653  
Money Market   237,818     274,528     287,140     278,443     245,121  
Time Deposits   229,467     208,457     205,898     205,166     218,375  
Total interest-bearing deposits   843,004     843,166     851,056     848,272     791,937  
                     
Core deposits*   916,853     945,539     945,212     955,498     876,839  
Shareholders' equity   138,192     139,669     138,440     139,113     138,249  
                     
Asset Quality                    
Non-performing loans   $ 7,268     $ 8,317     $ 12,498     $ 10,871     $ 11,626  
Non-performing loans to total assets   0.49 %   0.58 %   0.90 %   0.78 %   0.86 %
Allowance for loan losses   12,858     12,933     13,109     12,905     12,896  
Allowance for loan losses to total loans   1.03 %   1.09 %   1.15 %   1.16 %   1.18 %
Allowance for loan losses to non-performing loans   176.91 %   157.05 %   104.56 %   118.72 %   110.92 %
Non-performing loans to total loans   0.58 %   0.69 %   1.10 %   0.98 %   1.06 %
                                         
Capitalization                                        
Shareholders' equity to total assets   9.37 %   9.77 %   9.92 %   9.93 %   10.25 %

* Core deposits are defined as total deposits less time deposits


Reconciliation of GAAP and Non-GAAP Financial Measures
 
    Three Months Ended December 31,   Twelve Months Ended December 31,
(Dollars in Thousands, Except Per Share Data)     2017     2016     2017     2016
GAAP net income    $ 716     $ 2,948     $ 9,773     $ 12,475  
Less: net securities gains, net of tax     71       291       391       1,102  
Add: Effect of deferred tax asset revaluation      2,734             2,734        
Non-GAAP operating earnings    $ 3,379
    $ 2,657
    $ 12,116
    $ 11,373
 
                 
    Three Months Ended December 31,   Twelve Months Ended December 31,
      2017     2016     2017     2016
Return on average assets (ROA)      0.20 %     0.87 %     0.69 %     0.93 %
Less: net securities gains, net of tax     0.02 %     0.08 %     0.02 %     0.08 %
Add: Effect of deferred tax asset revaluation      0.75 %     %     0.19 %     %
Non-GAAP operating ROA      0.93 %     0.79 %     0.86 %     0.85 %
                 
    Three Months Ended December 31,   Twelve Months Ended December 31,
      2017     2016     2017     2016
Return on average equity (ROE)      2.00 %     8.43 %     6.91 %     8.96 %
Less: net securities gains, net of tax     0.20 %     0.83 %     0.27 %     0.79 %
Add: Effect of deferred tax asset revaluation      7.65 %     %     1.93 %     %
Non-GAAP operating ROE      9.45 %     7.60 %     8.57 %     8.17 %
                 
    Three Months Ended December 31,   Twelve Months Ended December 31,
      2017     2016     2017     2016
Basic earnings per share (EPS)    $ 0.16     $ 0.62     $ 2.08     $ 2.64  
Less: net securities gains, net of tax     0.02       0.06       0.09       0.24  
Add: Effect of deferred tax asset revaluation      0.58             0.58        
Non-GAAP basic operating EPS    $ 0.72     $ 0.56     $ 2.57     $ 2.40  
         
    Three Months Ended December 31,   Twelve Months Ended December 31,
      2017     2016     2017     2016
Dilutive EPS    $ 0.15     $ 0.62     $ 2.08     $ 2.64  
Less: net securities gains, net of tax     0.02       0.06       0.09       0.24  
Add: Effect of deferred tax asset revaluation      0.58             0.58        
Non-GAAP dilutive operating EPS    $ 0.71     $ 0.56     $ 2.57     $ 2.40  
                                 

 

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