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Penns Woods Bancorp, Inc. Reports Second Quarter 2018 Earnings

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WILLIAMSPORT, Pa., July 20, 2018 (GLOBE NEWSWIRE) -- Penns Woods Bancorp, Inc. (NASDAQ:PWOD)

Penns Woods Bancorp, Inc., supported by loan and deposit growth, achieved net income of $6.7 million, for the six months ended June 30, 2018 resulting in basic and dilutive earnings per share of $1.43.

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 or losses, was $3.5 million for the three months ended June 30, 2018 compared to $3.1 million for the same period of 2017. Operating earnings increased to $6.7 million for the six months ended June 30, 2018 compared to $5.6 million for the same period of 2017. 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 decreased due to the "Tax Cuts and Jobs Act," which reduced the corporate tax rate to 21% effective January 1, 2018.

  • Operating earnings per share for the three months ended June 30, 2018 was $0.74 for basic and dilutive, an increase from $0.66 for basic and dilutive for the same period of 2017. Operating earnings per share for the six month ended June 30, 2018 were $1.43 basic and dilutive compared to $1.20 basic and dilutive for the same period of 2017.

  • Return on average assets was 0.91% for the three months ended June 30, 2018 compared to 0.88% for the corresponding period of 2017. Return on average assets was 0.89% for the six months ended June 30, 2018 compared to 0.83% for the corresponding period of 2017.

  • Return on average equity was 10.07% for the three months ended June 30, 2018 compared to 8.79% for the corresponding period of 2017. Return on average equity was 9.68% for the six months ended June 30, 2018 compared to 8.24% for the corresponding period of 2017.

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, 2018 was $3.5 million and $6.7 million compared to $3.1 million and $5.8 million for the same period of 2017. Results for the three and six months ended June 30, 2018 compared to 2017 were impacted by an increase in after-tax securities gains of $20,000 (from a loss of $8,000 to a gain of $12,000) for the three month periods and a decrease in after-tax securities gains of $143,000 (from a gain of $123,000 to a loss of $20,000) for the six month periods. The impact of the Tax Cuts and Jobs Act was the primary driver for the decrease in the Company's effective tax rate to 17.40% and 16.50% for the three and six month periods ended June 30, 2018 compared to 28.38% and 27.68% for the prior year periods. Earnings per share for the three and six months ended June 30, 2018 was $0.74 and $1.43 basic and diluted, an increase from the 2017 basic and diluted earnings per share of $0.65 and $1.22. Return on average assets and return on average equity were 0.91% and 10.07% for the three months ended June 30, 2018 compared to 0.88% and 8.79% for the corresponding periods of 2017. Return on average assets and return on average equity were 0.89% and 9.68% for the six months ended June 30, 2018 compared to 0.83% and 8.24% for the corresponding periods of 2017.

Net Interest Margin

The net interest margin for the three and six months ended June 30, 2018 was 3.32% and 3.31% compared to 3.44% and 3.42% for the corresponding period of 2017. The decrease in the net interest margin was driven by an increase in the cost of interest-bearing liabilities of 30 basis points ("bps") for the three month period and 25 bps for the six month period primarily from an increase in the rate paid on time deposits as the liabilities are lengthened. The impact of the increased cost of funds was limited by an increase in the yield on earning assets of 12 bps and 9 bps for the three and six month periods. The increase in the yield on earning assets was driven by an increase in the loan portfolio yield in conjunction with an increase in the average loan portfolio of $177.4 million and $169.6 million respectively. The loan growth was primarily funded by an increase in average borrowings of $93.9 million and $88.2 million for the three and six month periods along with growth in average total deposits of $45.0 million and $41.1 million respectively. Core deposits represent a lower cost funding source than time deposits and comprise 78.80% of total deposits at June 30, 2018 and 82.11% at June 30, 2017.

Assets

Total assets increased $207.9 million to $1.6 billion at June 30, 2018 compared to June 30, 2017. Net loans increased $192.1 million to $1.3 billion at June 30, 2018 compared to June 30, 2017, primarily due to campaigns related to increasing home equity product market share and indirect auto lending. The investment portfolio decreased $7.9 million from June 30, 2017 to June 30, 2018 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 0.51% at June 30, 2018 from 1.10% June 30, 2017 as non-performing loans have decreased to $6.8 million at June 30, 2018 from $12.5 million at June 30, 2017. The level of non-performing loans decreased primarily as a result of a large non-performing loan being paid off during the quarter ended September 30, 2017. The majority of non-performing loans involve 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 $319,000 for the six months ended June 30, 2018 minimally impacted the allowance for loan losses which was 0.98% of total loans at June 30, 2018. The majority of the loans charged-off had a specific allowance within the allowance for loan losses.

Deposits

Deposits increased $39.9 million to $1.2 billion at June 30, 2018 compared to June 30, 2017. Noninterest-bearing deposits increased to $311.2 million at June 30, 2018 compared to June 30, 2017. 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 increased $695,000 to $139.1 million at June 30, 2018 compared to June 30, 2017. The change in accumulated other comprehensive loss from $4.2 million at June 30, 2017 to $6.9 million at June 30, 2018 is a result of an increase in unrealized losses on available for sale securities (from an unrealized loss of $16,000 at June 30, 2017 to an unrealized loss of $2,057,000 at June 30, 2018). The amount of accumulated other comprehensive loss at June 30, 2018 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 $620,000, mainly due to the change in the corporate tax rate from 2017 to 2018. The current level of shareholders' equity equates to a book value per share of $29.66 at June 30, 2018 compared to $29.53 at June 30, 2017 and an equity to asset ratio of 8.68% at June 30, 2018 compared to 9.92% at June 30, 2017. Excluding goodwill and intangibles, book value per share was $25.74 at June 30, 2018 compared to $25.54 at June 30, 2017. Dividends declared for the six months ended June 30, 2018 and 2017 were $0.94 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.

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, 2017.

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)

    June 30,
(In Thousands, Except Share Data)   2018   2017   % Change
ASSETS:            
Noninterest-bearing balances    $ 26,134     $ 26,223     (0.34 )%
Interest-bearing balances in other financial institutions    29,873     11,979     149.38 %
Total cash and cash equivalents    56,007     38,202     46.61 %
             
Investment debt securities, available for sale, at fair value    118,876     126,749     (6.21 )%
Investment equity securities, at fair value    2,438     2,474     (1.46 )%
Investment securities, trading    243     213     14.08 %
Restricted investment in bank stock, at fair value    16,716     9,281     80.11 %
Loans held for sale    2,118     1,683     25.85 %
Loans    1,331,073     1,139,085     16.85 %
Allowance for loan losses    (13,034 )   (13,109 )   (0.57 )%
Loans, net    1,318,039     1,125,976     17.06 %
Premises and equipment, net    27,385     25,497     7.40 %
Accrued interest receivable    4,618     3,641     26.83 %
Bank-owned life insurance    28,315     27,670     2.33 %
Goodwill    17,104     17,104     %
Intangibles    1,304     1,623     (19.65 )%
Deferred tax asset   4,941     8,139     (39.29 )%
Other assets    5,169     7,112     (27.32 )%
TOTAL ASSETS    $ 1,603,273     $ 1,395,364     14.90 %
             
LIABILITIES:            
Interest-bearing deposits    $ 879,825     $ 851,056     3.38 %
Noninterest-bearing deposits    311,194     300,054     3.71 %
Total deposits    1,191,019     1,151,110     3.47 %
             
Short-term borrowings    134,637     15,737     755.54 %
Long-term borrowings    123,970     75,998     63.12 %
Accrued interest payable    896     414     116.43 %
Other liabilities    13,616     13,665     (0.36 )%
TOTAL LIABILITIES    1,464,138     1,256,924     16.49 %
             
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; 5,010,535 and 5,008,192 shares issued    41,753     41,735     0.04 %
Additional paid-in capital   50,225     50,117     0.22 %
Retained earnings    66,181     62,952     5.13 %
Accumulated other comprehensive loss:            
Net unrealized loss on available for sale securities    (2,057 )   (16 )   12,756.25 %
Defined benefit plan    (4,853 )   (4,233 )   (14.65 )%
Treasury stock at cost, 320,150    (12,115 )   (12,115 )   %
TOTAL PENNS WOODS BANCORP, INC. SHAREHOLDERS' EQUITY   139,134     138,440     0.50 %
Non-controlling interest    1         100.00 %
TOTAL SHAREHOLDERS' EQUITY    139,135     138,440     0.50 %
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY    $ 1,603,273     $ 1,395,364     14.90 %


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)   2018   2017   % Change   2018   2017   % Change
INTEREST AND DIVIDEND INCOME:                        
Loans including fees    $ 12,997     $ 11,109     17.00 %   $ 25,190     $ 21,736     15.89 %
Investment securities:                        
Taxable    639     570     12.11 %   1,185     1,112     6.56 %
Tax-exempt    230     323     (28.79 )%   471     621     (24.15 )%
Dividend and other interest income    245     207     18.36 %   466     422     10.43 %
TOTAL INTEREST AND DIVIDEND INCOME    14,111     12,209     15.58 %   27,312     23,891     14.32 %
INTEREST EXPENSE:                        
Deposits    1,490     1,008     47.82 %   2,712     1,910     41.99 %
Short-term borrowings    252     4     6,200.00 %   476     8     5,850.00 %
Long-term borrowings    666     373     78.55 %   1,268     813     55.97 %
TOTAL INTEREST EXPENSE   2,408     1,385     73.86 %   4,456     2,731     63.16 %
NET INTEREST INCOME    11,703     10,824     8.12 %   22,856     21,160     8.02 %
PROVISION FOR LOAN LOSSES    335     215     55.81 %   495     545     (9.17 )%
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES    11,368     10,609     7.15 %   22,361     20,615     8.47 %
NON-INTEREST INCOME:                        
Service charges    592     559     5.90 %   1,143     1,087     5.15 %
Debt securities gains (losses), available for sale    14     (12 )   216.67 %   5     185     (97.30 )%
Equity securities gains (losses)   6         100.00 %   (28 )       (100.00 )%
Securities (losses) gains, trading    (5 )       (100.00 )%   (2 )   2     (200.00 )%
Bank-owned life insurance    158     161     (1.86 )%   331     333     (0.60 )%
Gain on sale of loans    400     503     (20.48 )%   655     861     (23.93 )%
Insurance commissions    64     99     (35.35 )%   181     290     (37.59 )%
Brokerage commissions    330     361     (8.59 )%   673     692     (2.75 )%
Debit card income    373     501     (25.55 )%   706     935     (24.49 )%
Other    430     591     (27.24 )%   779     1,029     (24.30 )%
TOTAL NON-INTEREST INCOME    2,362     2,763     (14.51 )%   4,443     5,414     (17.93 )%
NON-INTEREST EXPENSE:                        
Salaries and employee benefits   4,919     4,608     6.75 %   9,967     9,378     6.28 %
Occupancy    699     614     13.84 %   1,440     1,252     15.02 %
Furniture and equipment    801     664     20.63 %   1,548     1,313     17.90 %
Software Amortization    231     242     (4.55 )%   296     515     (42.52 )%
Pennsylvania shares tax    278     230     20.87 %   555     468     18.59 %
Professional Fees    649     550     18.00 %   1,215     987     23.10 %
Federal Deposit Insurance Corporation deposit insurance    200     150     33.33 %   402     320     25.63 %
Marketing    268     204     31.37 %   519     375     38.40 %
Intangible amortization    78     86     (9.30 )%   158     176     (10.23 )%
Other    1,394     1,715     (18.72 )%   2,694     3,264     (17.46 )%
TOTAL NON-INTEREST EXPENSE    9,517     9,063     5.01 %   18,794     18,048     4.13 %
INCOME BEFORE INCOME TAX PROVISION    4,213     4,309     (2.23 )%   8,010     7,981     0.36 %
INCOME TAX PROVISION    733     1,223     (40.07 )%   1,322     2,209     (40.15 )%
NET INCOME    $ 3,480     $ 3,086     12.77 %   $ 6,688     $ 5,772     15.87 %
Earnings attributable to noncontrolling interest            %   (1 )       %
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS'   $ 3,480     $ 3,086     12.77 %   $ 6,689     $ 5,772     15.89 %
EARNINGS PER SHARE - BASIC    $ 0.74     $ 0.65     13.85 %   $ 1.43     $ 1.22     17.21 %
EARNINGS PER SHARE - DILUTED    $ 0.74     $ 0.65     13.85 %   $ 1.43     $ 1.22     17.21 %
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC    4,689,932     4,711,332     (0.45 )%   4,689,656     4,723,003     (0.71 )%
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED    4,703,339     4,711,332     (0.17 )%   4,689,656     4,723,003     (0.71 )%
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, 2018   June 30, 2017
(Dollars in Thousands)   Average
Balance
  Interest   Average
Rate
  Average
Balance
  Interest   Average
Rate
ASSETS:                        
Tax-exempt loans    $ 75,859     $ 563     2.98 %   $ 41,685     $ 405     3.89 %
All other loans    1,225,343     12,552     4.11 %   1,082,165     10,842     4.02 %
Total loans    1,301,202     13,115     4.04 %   1,123,850     11,247     4.01 %
Taxable securities    93,024     871     3.75 %   83,895     680     3.24 %
Tax-exempt securities    40,300     291     2.89 %   52,850     489     3.70 %
Total securities    133,324     1,162     3.49 %   136,745     1,169     3.42 %
Interest-bearing deposits    3,034     13     1.72 %   36,662     96     1.05 %
Total interest-earning assets    1,437,560     14,290     3.99 %   1,297,257     12,512     3.87 %
Other assets    97,034             100,356          
TOTAL ASSETS    $ 1,534,594             $ 1,397,613          
                         
LIABILITIES AND SHAREHOLDERS' EQUITY:                        
Savings    $ 165,231     16     0.04 %   $ 158,413     15     0.04 %
Super Now deposits    234,731     242     0.41 %   202,692     131     0.26 %
Money market deposits    243,771     290     0.48 %   288,035     255     0.36 %
Time deposits    253,398     942     1.49 %   205,418     607     1.19 %
Total interest-bearing deposits    897,131     1,490     0.67 %   854,558     1,008     0.47 %
Short-term borrowings    56,530     252     1.76 %   10,579     4     0.15 %
Long-term borrowings    123,970     666     2.12 %   75,998     373     1.95 %
Total borrowings   180,500     918     2.01 %   86,577     377     1.73 %
Total interest-bearing liabilities    1,077,631     2,408     0.89 %   941,135     1,385     0.59 %
Demand deposits   302,742             300,311          
Other liabilities    16,024             15,801          
Shareholders' equity    138,197             140,366          
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 1,534,594             $ 1,397,613          
Interest rate spread            3.10 %           3.28 %
Net interest income/margin        $ 11,882     3.32 %       $ 11,127     3.44 %


    Three Months Ended June 30,
    2018   2017
Total interest income    $ 14,111     $ 12,209  
Total interest expense    2,408     1,385  
Net interest income    11,703     10,824  
Tax equivalent adjustment    179     303  
Net interest income (fully taxable equivalent)    $ 11,882     $ 11,127  


PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES

    Six Months Ended
    June 30, 2018   June 30, 2017
(Dollars in Thousands)   Average
Balance
  Interest   Average
Rate
  Average
Balance
  Interest   Average
Rate
ASSETS:                        
Tax-exempt loans    $ 75,548     $ 1,130     3.02 %   $ 41,959     $ 821     3.95 %
All other loans    1,205,945     24,297     4.06 %   1,069,896     21,194     3.99 %
Total loans    1,281,493     25,427     4.00 %   1,111,855     22,015     3.99 %
Taxable securities    88,670     1,630     3.68 %   86,591     1,365     3.15 %
Tax-exempt securities    41,225     596     2.89 %   49,779     941     3.78 %
Total securities    129,895     2,226     3.43 %   136,370     2,306     3.38 %
Interest-bearing deposits    2,603     21     1.63 %   34,924     169     0.98 %
Total interest-earning assets    1,413,991     27,674     3.94 %   1,283,149     24,490     3.85 %
Other assets    97,318             99,934          
TOTAL ASSETS    $ 1,511,309             $ 1,383,083          
                         
LIABILITIES AND SHAREHOLDERS' EQUITY:                        
Savings    $ 164,140     32     0.04 %   $ 157,423     30     0.04 %
Super Now deposits    230,930     449     0.39 %   196,032     237     0.24 %
Money market deposits    240,127     500     0.42 %   275,529     446     0.33 %
Time deposits    244,805     1,731     1.43 %   207,722     1,197     1.16 %
Total interest-bearing deposits    880,002     2,712     0.62 %   836,706     1,910     0.46 %
Short-term borrowings    59,152     476     1.60 %   10,962     8     0.15 %
Long-term borrowings    119,274     1,268     2.11 %   79,258     813     2.04 %
Total borrowings   178,426     1,744     1.94 %   90,220     821     1.81 %
Total interest-bearing liabilities    1,058,428     4,456     0.84 %   926,926     2,731     0.59 %
Demand deposits   298,011             300,207          
Other liabilities    16,645             15,770          
Shareholders' equity    138,225             140,180          
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 1,511,309             $ 1,383,083          
Interest rate spread            3.10 %           3.26 %
Net interest income/margin        $ 23,218     3.31 %       $ 21,759     3.42 %


    Six Months Ended June 30,
    2018   2017
Total interest income    $ 27,312     $ 23,891  
Total interest expense    4,456     2,731  
Net interest income    22,856     21,160  
Tax equivalent adjustment    362     599  
Net interest income (fully taxable equivalent)    $ 23,218     $ 21,759  


(Dollars in Thousands, Except Per Share Data)   Quarter Ended
    6/30/2018   3/31/2018   12/31/2017   9/30/2017   6/30/2017
Operating Data                    
Net income    $ 3,480     $ 3,208     $ 716     $ 3,284     $ 3,086  
Net interest income    11,703     11,153     11,468     11,452     10,824  
Provision for loan losses    335     160     125     60     215  
Net security gains (losses)   15     (40 )   107     298     (12 )
Non-interest income, ex. net security gains (losses)    2,347     2,368     2,482     2,442     2,775  
Non-interest expense    9,517     9,524     9,248     9,566     9,063  
Performance Statistics                    
Net interest margin    3.32 %   3.31 %   3.48 %   3.57 %   3.44 %
Annualized return on average assets    0.91 %   0.86 %   0.20 %   0.93 %   0.88 %
Annualized return on average equity    10.07 %   9.18 %   2.00 %   9.43 %   8.79 %
Annualized net loan charge-offs to average loans    0.04 %   0.06 %   0.07 %   0.08 %   %
Net charge-offs    137     182     200     236     11  
Efficiency ratio    67.2 %   69.8 %   65.7 %   68.3 %   65.9 %
Per Share Data                    
Basic earnings per share    $ 0.74     $ 0.68     $ 0.16     $ 0.70     $ 0.65  
Diluted earnings per share   0.74     0.68     0.15     0.70     0.65  
Dividend declared per share    0.47     0.47     0.47     0.47     0.47  
Book value    29.66     29.45     29.47     29.79     29.53  
Common stock price:                    
High    46.92     45.56     49.79     46.47     43.60  
Low    41.29     39.61     45.65     41.08     38.17  
Close    44.78     42.31     46.58     46.47     41.18  
Weighted average common shares:                    
Basic    4,690     4,689     4,689     4,688     4,711  
Fully Diluted    4,703     4,689     4,782     4,688     4,711  
End-of-period common shares:                    
Issued    5,011     5,010     5,009     5,009     5,008  
Treasury   320     320     320     320     320  


(Dollars in Thousands, Except Per Share Data)   Quarter Ended
    6/30/2018   3/31/2018   12/31/2017   9/30/2017   6/30/2017
Financial Condition Data:                    
General                    
Total assets    $ 1,603,273     $ 1,526,745     $ 1,474,492     $ 1,430,197     $ 1,395,364  
Loans, net    1,318,039     1,267,912     1,232,268     1,176,781     1,125,976  
Goodwill    17,104     17,104     17,104     17,104     17,104  
Intangibles    1,304     1,382     1,462     1,543     1,623  
Total deposits    1,191,019     1,192,454     1,146,320     1,153,996     1,151,110  
Noninterest-bearing    311,194     304,261     303,316     310,830     300,054  
Savings    166,183     166,243     160,698     156,437     158,101  
NOW    216,109     240,259     215,021     203,744     199,917  
Money Market    245,081     235,381     237,818     274,528     287,140  
Time Deposits    252,452     246,310     229,467     208,457     205,898  
Total interest-bearing deposits    879,825     888,193     843,004     843,166     851,056  
Core deposits*    938,567     946,144     916,853     945,539     945,212  
Shareholders' equity    139,134     138,192     138,192     139,669     138,440  
                     
Asset Quality                    
Non-performing loans    $ 6,818     $ 7,641     $ 7,268     $ 8,317     $ 12,498  
Non-performing loans to total assets    0.43 %   0.50 %   0.49 %   0.58 %   0.90 %
Allowance for loan losses    13,034     12,836     12,858     12,933     13,109  
Allowance for loan losses to total loans    0.98 %   1.00 %   1.03 %   1.09 %   1.15 %
Allowance for loan losses to non-performing loans    191.17 %   167.99 %   176.91 %   157.05 %   104.56 %
Non-performing loans to total loans    0.51 %   0.60 %   0.58 %   0.69 %   1.10 %
                     
Capitalization                    
Shareholders' equity to total assets    8.68 %   9.05 %   9.37 %   9.77 %   9.92 %

* 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)   2018    2017
   2018
  2017
GAAP net income    $ 3,480     $ 3,086     $ 6,689     $ 5,772  
Less: net securities gains (losses), net of tax    12       (8 )     (20 )   123  
Non-GAAP operating earnings    $ 3,468     $ 3,094     $ 6,709     $ 5,649  
                 
    Three Months Ended
June 30,
  Six Months Ended
June 30,
    2018    2017
   2018
  2017
Return on average assets (ROA)    0.91 %     0.88 %     0.89 %   0.83 %
Less: net securities gains (losses), net of tax    0.01 %     %     %   0.01 %
Non-GAAP operating ROA    0.90 %     0.88 %     0.89 %   0.82 %
                 
    Three Months Ended
June 30,
  Six Months Ended
June 30,
    2018    2017
   2018
  2017
Return on average equity (ROE)    10.07 %     8.79 %     9.68 %   8.24 %
Less: net securities gains (losses), net of tax    0.03 %     (0.03 )%     (0.03 )%   0.18 %
Non-GAAP operating ROE    10.04 %     8.82 %     9.71 %   8.06 %
                 
    Three Months Ended
June 30,
  Six Months Ended
June 30,
    2018    2017
   2018
  2017
Basic earnings per share (EPS)    $ 0.74     $ 0.65     $ 1.43     $ 1.22  
Less: net securities gains (losses), net of tax          (0.01 )         0.02  
Non-GAAP basic operating EPS    $ 0.74     $ 0.66     $ 1.43     $ 1.20  
         
    Three Months Ended
June 30,
  Six Months Ended
June 30,
    2018    2017
   2018
  2017
Dilutive EPS    $ 0.74     $ 0.65     $ 1.43     $ 1.22  
Less: net securities gains (losses), net of tax          (0.01 )         0.02  
Non-GAAP dilutive operating EPS    $ 0.74     $ 0.66     $ 1.43     $ 1.20  

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