Penns Woods Bancorp, Inc. (Nasdaq:PWOD)
Penns Woods Bancorp, Inc. continued its solid earnings and
growth during the recently completed second quarter of 2014,
achieving net income of $6,932,000 for the six months ended June
30, 2014 resulting in basic and dilutive earnings per share of
$1.44.
Highlights
- Year over year comparisons are impacted by the acquisition of
Luzerne National Bank Corporation ("Luzerne") that was effective
June 1, 2013 and resulted in increases in net loans of
$254,057,000; investments of $21,140,000; deposits of $279,867,000;
and assets of $329,209,000 at the time of acquisition.
- Net income from core operations ("operating earnings"), which
is a non-GAAP measure of net income excluding net securities gains
and bank owned life insurance gains on death benefits, increased to
$3,142,000 for the three months ended June 30, 2014 compared
to $2,818,000 for the same period of 2013. Net income from
core operations increased to $6,177,000 for the six months ended
June 30, 2014 compared to $5,851,000 for the same period of 2013.
- Operating earnings per share for the three months ended June
30, 2014 were $0.65 basic and dilutive compared to $0.68 basic and
dilutive for the same period of 2013. Operating earnings per
share for the six months ended June 30, 2014 were $1.28 basic and
dilutive compared to $1.46 basic and dilutive for the same period
2013.
- Return on average assets was 1.13% for the three months ended
June 30, 2014 compared to 1.48% for the corresponding period
of 2013. Return on average assets was 1.14% for the six
months ended June 30, 2014 compared to 1.59% for the corresponding
period of 2013.
- Return on average equity was 10.29% for the three months ended
June 30, 2014 compared to 13.54% for the corresponding period
of 2013. Return on average equity was 10.43% for the six
months ended June 30, 2014 compared to 14.45% for the corresponding
period of 2013.
"The six months ended June 30, 2014 were impacted by several
events. During this time frame our flagship bank, Jersey Shore
State Bank, undertook a significant upgrade to systems. While
the upgrade at JSSB was taking place, our employees also converted
Luzerne Bank in April from their legacy system to the new systems
utilized by JSSB. The first half of 2014 has also seen the near
completion of our Loyalsock branch that will house a full service
branch and the mortgage division. While systems have been
upgraded and a new branch was being constructed, attention has also
been focused on shortening the earning asset portfolio and
lengthening the deposit portfolio per our strategy to reduce
interest rate and market price risk. We also continue to work
through impaired credits in the loan portfolio which has resulted
in $2,118,000 in charge-offs during the first six months of 2014,"
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, 2014 was $3,463,000 and $6,932,000 compared to
$3,659,000 and $7,343,000 for the same periods of 2013.
Results for the three and six months ended June 30, 2014 compared
to 2013 were impacted by a decrease in after-tax securities gains
of $520,000 (from a gain of $841,000 to a gain of $321,000) for the
three month periods and a decrease of $911,000 (from a gain of
$1,492,000 to a gain of $581,000) for the six month periods.
In addition, a gain of $174,000 on death benefits related to bank
owned life insurance was recorded during the first quarter of
2014. Basic and dilutive earnings per share for the
three and six months ended June 30, 2014 were $0.72 and $1.44
compared to $0.88 and $1.84 for the corresponding periods of
2013. Return on average assets and return on average equity
were 1.13% and 10.29% for the three months ended June 30, 2014
compared to 1.48% and 13.54% for the corresponding period of 2013.
Return on average assets and return on average equity were
1.14% and 10.43% for the six months ended June 30, 2014
compared to 1.59% and 14.45% for the corresponding period of
2013.
Net Interest Margin
The net interest margin for the three and six months ended June
30, 2014 was 3.84% and 3.88% compared to 4.09% and 4.26% for the
corresponding periods of 2013. While the net interest margin
has decreased year over year, net interest income on a fully
taxable equivalent basis has increased $1,250,000 and $2,979,000
for the three and six months ended June 30, 2014 compared to the
corresponding periods of 2013. Driving this increase is the
growth in the loan and deposit portfolios for the six months ended
June 30, 2014 compared to the corresponding period for 2013,
primarily due to growth in home equity products and the continued
emphasis on core deposit growth. The primary funding for the
loan growth was an increase in core deposits. These deposits
represent a lower cost funding source than time deposits and
comprise 77.30% of total deposits at June 30, 2014 compared to
75.03% at June 30, 2013. The continued growth in core
deposits has led to the total cost of deposits decreasing to 40
basis points ("bp") for the six months ended June 30, 2014 from 54
bp for the corresponding period of 2013. The rate paid on
borrowings decreased slightly due to the impact of maturities and
the entering into a capital lease agreement. The changes in
the composition of the deposit and borrowing portfolios has led to
the total cost of interest bearing funding decreasing to 58 bp for
the six months ended June 30, 2014 from 77 bp for the corresponding
period of 2013.
"Due to the yield on earning assets declining, the net interest
margin continues to decrease each quarter by several basis
points. The earning asset portfolio yield has decreased due to
the roll off of higher yielding legacy assets that are being
replaced by assets at lower yields due to the continued low
interest rate environment. To counter the revenue impact of
the declining asset yields, we have focused on increasing earning
assets by adding quality short and intermediate term loans such as
home equity loans, even though these new earning assets are at
lower yields than legacy assets. This action has resulted in
an increase in interest income on a fully taxable basis. In
addition, the investment portfolio continues to be actively managed
in order to reduce interest rate and market risk. This is being
undertaken primarily through the sale of long-term municipal bonds
that have a maturity date of 2025 or later and securities with a
call date within the next five years. The proceeds of the
bond sales are being deployed primarily into loans with limited
reinvestment into intermediate term corporate bonds and short and
intermediate term municipal bonds. The strategy to sell a
portion of the long-term bond portfolio does negatively impact
current earnings, but this action plays a key role in our long-term
asset liability management strategy as the balance sheet is
shortened to better prepare for a rising rate environment.
The funding side of the balance sheet has limited opportunities to
reduce cost. While we remain focused on increasing lower cost
core deposits, we have begun to lengthen our funding sources as a
campaign to attract four and five year time deposits has been
conducted," commented President Grafmyre.
Assets
Total assets increased $15,889,000 to $1,222,847,000 at
June 30, 2014 compared to June 30, 2013. Net loans
increased $69,964,000 to $847,521,000 at June 30, 2014
compared to June 30, 2013 due primarily to campaigns related
to increasing home equity product market share during 2013 and 2014
and growth in the commercial portfolio. The investment
portfolio decreased $48,263,000 from June 30, 2013 to
June 30, 2014 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 a shortening of 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 increased to 1.40%
at June 30, 2014 from 0.83% at June 30, 2013. The
increase in non-performing loans to $11,979,000 at June 30,
2014 from $6,515,000 at June 30, 2013 is primarily the result
of commercial real estate backed loans becoming
non-performing. The majority of non-performing loans are
centered on several 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 $2,118,000
for the six months ended June 30, 2014 negatively impacted the
allowance for loan losses which was 1.03% of total loans at
June 30, 2014. The majority of the loans charged-off had
a specific allowance within the allowance for loan losses.
Deposits
Deposits increased $26,465,000 to $981,826,000 at June 30,
2014 compared to June 30, 2013. Core deposits (total
deposits excluding time deposits) increased $42,157,000, while
higher cost time deposits decreased $15,692,000 due to our
commitment to building complete banking relationships with our
customers. Noninterest-bearing deposits increased $17,662,000
to $228,758,000 at June 30, 2014 compared to June 30,
2013. Driving this growth is our commitment to easy-to-use
products, community involvement, and emphasis on customer
service.
Shareholders' Equity
Shareholders' equity increased $9,874,000 to $135,802,000 at
June 30, 2014 compared to June 30, 2013. The
accumulated other comprehensive gain of $635,000 at June 30,
2014 is primarily a result of an increase in unrealized gains on
available for sale securities from an unrealized gain of $286,000
at June 30, 2013 to an unrealized gain of $3,360,000 at
June 30, 2014. The amount of accumulated other
comprehensive gain at June 30, 2014 was also impacted by the
change in net excess of the projected benefit obligation over the
market value of the plan assets of the defined benefit pension plan
resulting in a decrease in the net loss of $2,082,000 to $2,725,000
at June 30, 2014. The current level of shareholders'
equity equates to a book value per share of $28.17 at June 30,
2014 compared to $26.14 at June 30, 2013 and an equity to
asset ratio of 11.11% at June 30, 2014 compared to 10.43% at
June 30, 2013. Excluding goodwill and intangibles, book
value per share was $24.29 at June 30, 2014 compared to $22.17
at June 30, 2013. Dividends declared for the three and
six months ended June 30, 2014 were $0.47 and $0.94 per share
compared to $0.47 and $1.19 for the three and six months ended June
30, 2013.
Penns Woods Bancorp, Inc. is the parent company of Jersey
Shore State Bank, which operates thirteen branch offices providing
financial services in Lycoming, Clinton, Centre, and Montour
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,
2013.
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.jssb.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) |
2014 |
2013 |
% Change |
ASSETS |
|
|
|
Noninterest-bearing balances |
$ 22,905 |
$ 26,888 |
(14.81)% |
Interest-bearing deposits in other financial
institutions |
1,962 |
1,417 |
38.46% |
Federal funds sold |
— |
134 |
n/a |
Total cash and cash
equivalents |
24,867 |
28,439 |
(12.56)% |
|
|
|
|
Investment securities, available for sale, at
fair value |
263,026 |
311,289 |
(15.50)% |
Loans held for sale |
1,827 |
5,409 |
(66.22)% |
Loans |
856,332 |
786,961 |
8.82% |
Allowance for loan losses |
(8,811) |
(9,404) |
(6.31)% |
Loans, net |
847,521 |
777,557 |
9.00% |
Premises and equipment, net |
21,007 |
17,101 |
22.84% |
Accrued interest receivable |
4,235 |
4,999 |
(15.28)% |
Bank-owned life insurance |
25,601 |
25,022 |
2.31% |
Investment in limited partnerships |
1,891 |
2,552 |
(25.90)% |
Goodwill |
17,104 |
17,104 |
—% |
Intangibles |
1,621 |
1,984 |
(18.30)% |
Deferred tax asset |
6,807 |
9,906 |
(31.28)% |
Other assets |
7,340 |
5,596 |
31.17% |
TOTAL ASSETS |
$ 1,222,847 |
$ 1,206,958 |
1.32% |
|
|
|
|
LIABILITIES |
|
|
|
Interest-bearing deposits |
$ 753,068 |
$ 744,265 |
1.18% |
Noninterest-bearing deposits |
228,758 |
211,096 |
8.37% |
Total deposits |
981,826 |
955,361 |
2.77% |
|
|
|
|
Short-term borrowings |
21,926 |
39,000 |
(43.78)% |
Long-term borrowings |
71,202 |
70,750 |
0.64% |
Accrued interest payable |
399 |
442 |
(9.73)% |
Other liabilities |
11,692 |
15,477 |
(24.46)% |
TOTAL LIABILITIES |
1,087,045 |
1,081,030 |
0.56% |
|
|
|
|
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; 5,001,222 and 4,998,881 shares issued |
41,676 |
41,657 |
0.05% |
Additional paid-in capital |
49,846 |
49,759 |
0.17% |
Retained earnings |
49,955 |
45,343 |
10.17% |
Accumulated other comprehensive income
(loss): |
|
|
|
Net unrealized gain on
available for sale securities |
3,360 |
286 |
1,074.83% |
Defined benefit plan |
(2,725) |
(4,807) |
43.31% |
Treasury stock at cost, 180,596 shares |
(6,310) |
(6,310) |
—% |
TOTAL SHAREHOLDERS' EQUITY |
135,802 |
125,928 |
7.84% |
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY |
$ 1,222,847 |
$ 1,206,958 |
1.32% |
|
|
|
|
|
|
|
|
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) |
2014 |
2013 |
% Change |
2014 |
2013 |
% Change |
INTEREST AND DIVIDEND INCOME: |
|
|
|
|
|
|
Loans including fees |
$ 8,912 |
$ 7,277 |
22.47% |
$ 17,725 |
$ 14,045 |
26.2% |
Investment securities: |
|
|
|
|
|
|
Taxable |
1,406 |
1,507 |
(6.70)% |
2,864 |
2,950 |
(2.92)% |
Tax-exempt |
892 |
1,162 |
(23.24)% |
1,823 |
2,429 |
(24.95)% |
Dividend and other interest
income |
147 |
72 |
104.17% |
274 |
134 |
104.48% |
TOTAL INTEREST AND DIVIDEND INCOME |
11,357 |
10,018 |
13.37% |
22,686 |
19,558 |
15.99% |
|
|
|
|
|
|
|
INTEREST EXPENSE: |
|
|
|
|
|
|
Deposits |
741 |
760 |
(2.50)% |
1,499 |
1,551 |
(3.35)% |
Short-term borrowings |
12 |
22 |
(45.45)% |
27 |
47 |
(42.55)% |
Long-term borrowings |
473 |
482 |
(1.87)% |
942 |
1,001 |
(5.89)% |
TOTAL INTEREST EXPENSE |
1,226 |
1,264 |
(3.01)% |
2,468 |
2,599 |
(5.04)% |
|
|
|
|
|
|
|
NET INTEREST INCOME |
10,131 |
8,754 |
15.73% |
20,218 |
16,959 |
19.22% |
|
|
|
|
|
|
|
PROVISION FOR LOAN LOSSES |
300 |
575 |
(47.83)% |
785 |
1,075 |
(26.98)% |
|
|
|
|
|
|
|
NET INTEREST INCOME AFTER PROVISION FOR LOAN
LOSSES |
9,831 |
8,179 |
20.20% |
19,433 |
15,884 |
22.34% |
|
|
|
|
|
|
|
NON-INTEREST INCOME: |
|
|
|
|
|
|
Service charges |
607 |
538 |
12.83% |
1,202 |
980 |
22.65% |
Securities gains, net |
487 |
1,274 |
(61.77)% |
880 |
2,260 |
(61.06)% |
Bank-owned life insurance |
181 |
144 |
25.69% |
551 |
282 |
95.39% |
Gain on sale of loans |
421 |
302 |
39.40% |
711 |
653 |
8.88% |
Insurance commissions |
283 |
247 |
14.57% |
703 |
511 |
37.57% |
Brokerage commissions |
251 |
299 |
(16.05)% |
522 |
547 |
(4.57)% |
Other |
699 |
731 |
(4.38)% |
1,571 |
1,035 |
51.79% |
TOTAL NON-INTEREST INCOME |
2,929 |
3,535 |
(17.14)% |
6,140 |
6,268 |
(2.04)% |
|
|
|
|
|
|
|
NON-INTEREST EXPENSE: |
|
|
|
|
|
|
Salaries and employee benefits |
4,167 |
3,442 |
21.06% |
8,670 |
6,510 |
33.18% |
Occupancy |
552 |
397 |
39.04% |
1,182 |
748 |
58.02% |
Furniture and equipment |
648 |
412 |
57.28% |
1,319 |
820 |
60.85% |
Pennsylvania shares tax |
262 |
208 |
25.96% |
506 |
392 |
29.08% |
Amortization of investments in limited
partnerships |
166 |
166 |
—% |
331 |
331 |
—% |
Federal Deposit Insurance Corporation deposit
insurance |
201 |
119 |
68.91% |
379 |
248 |
52.82% |
Marketing |
126 |
120 |
5.00% |
236 |
215 |
9.77% |
Intangible amortization |
88 |
31 |
183.87% |
180 |
31 |
480.65% |
Other |
2,212 |
2,070 |
6.86% |
4,262 |
3,521 |
21.05% |
TOTAL NON-INTEREST EXPENSE |
8,422 |
6,965 |
20.92% |
17,065 |
12,816 |
33.15% |
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAX PROVISION |
4,338 |
4,749 |
(8.65)% |
8,508 |
9,336 |
(8.87)% |
INCOME TAX PROVISION |
875 |
1,090 |
(19.72)% |
1,576 |
1,993 |
(20.92)% |
NET INCOME |
$ 3,463 |
$ 3,659 |
(5.36)% |
$ 6,932 |
$ 7,343 |
(5.60)% |
|
|
|
|
|
|
|
EARNINGS PER SHARE - BASIC AND DILUTED |
$ 0.72 |
$ 0.88 |
(18.18)% |
$ 1.44 |
$ 1.84 |
(21.74)% |
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC
AND DILUTED |
4,820,193 |
4,151,035 |
16.12% |
4,819,886 |
3,995,716 |
20.63% |
|
|
|
|
|
|
|
DIVIDENDS DECLARED PER SHARE |
$ 0.47 |
$ 0.47 |
—% |
$ 0.94 |
$ 1.19 |
(21.01)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PENNS WOODS BANCORP,
INC. |
AVERAGE BALANCES AND
INTEREST RATES |
|
|
|
|
|
|
|
|
Three
Months Ended |
|
June
30, 2014 |
June
30, 2013 |
|
Average |
|
Average |
Average |
|
Average |
(Dollars in Thousands) |
Balance |
Interest |
Rate |
Balance |
Interest |
Rate |
ASSETS: |
|
|
|
|
|
|
Tax-exempt loans |
$ 26,040 |
$ 286 |
4.41% |
$ 21,480 |
$ 249 |
4.65% |
All other loans |
805,971 |
8,723 |
4.34% |
596,206 |
7,113 |
4.79% |
Total loans |
832,011 |
9,009 |
4.34% |
617,686 |
7,362 |
4.78% |
|
|
|
|
|
|
|
Federal funds sold |
128 |
— |
—% |
98 |
— |
—% |
|
|
|
|
|
|
|
Taxable securities |
175,374 |
1,540 |
3.51% |
178,827 |
1,573 |
3.52% |
Tax-exempt securities |
95,589 |
1,352 |
5.66% |
119,655 |
1,761 |
5.89% |
Total securities |
270,963 |
2,892 |
4.27% |
298,482 |
3,334 |
4.47% |
|
|
|
|
|
|
|
Interest-bearing deposits |
14,396 |
13 |
0.36% |
8,339 |
6 |
0.29% |
|
|
|
|
|
|
|
Total interest-earning assets |
1,117,498 |
11,914 |
4.27% |
924,605 |
10,702 |
4.64% |
|
|
|
|
|
|
|
Other assets |
105,066 |
|
|
65,956 |
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
$ 1,222,564 |
|
|
$ 990,561 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY: |
|
|
|
|
|
|
Savings |
$ 141,837 |
20 |
0.06% |
$ 107,027 |
27 |
0.10% |
Super Now deposits |
189,473 |
150 |
0.32% |
149,635 |
171 |
0.46% |
Money market deposits |
211,788 |
138 |
0.26% |
172,228 |
129 |
0.30% |
Time deposits |
225,548 |
433 |
0.77% |
191,046 |
433 |
0.91% |
Total interest-bearing deposits |
768,646 |
741 |
0.39% |
619,936 |
760 |
0.49% |
|
|
|
|
|
|
|
Short-term borrowings |
15,422 |
11 |
0.29% |
21,777 |
22 |
0.40% |
Long-term borrowings |
71,202 |
474 |
2.63% |
71,237 |
482 |
2.68% |
Total borrowings |
86,624 |
485 |
2.22% |
93,014 |
504 |
2.14% |
|
|
|
|
|
|
|
Total interest-bearing liabilities |
855,270 |
1,226 |
0.57% |
712,950 |
1,264 |
0.71% |
|
|
|
|
|
|
|
Demand deposits |
220,975 |
|
|
153,840 |
|
|
Other liabilities |
14,651 |
|
|
15,652 |
|
|
Shareholders' equity |
134,668 |
|
|
108,120 |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY |
$ 1,225,564 |
|
|
$ 990,562 |
|
|
Interest rate spread |
|
|
3.70% |
|
|
3.93% |
Net interest income/margin |
|
$ 10,688 |
3.84% |
|
$ 9,438 |
4.09% |
|
|
|
|
|
|
|
|
Three
Months Ended June 30, |
|
2014 |
2013 |
Total interest income |
$ 11,357 |
$ 10,018 |
Total interest expense |
1,226 |
1,264 |
Net interest income |
10,131 |
8,754 |
Tax equivalent adjustment |
557 |
684 |
Net interest income (fully taxable
equivalent) |
$ 10,688 |
$ 9,438 |
|
|
|
|
|
|
|
Six
Months Ended |
|
June
30, 2014 |
June
30, 2013 |
|
Average |
|
Average |
Average |
|
Average |
(Dollars in Thousands) |
Balance |
Interest |
Rate |
Balance |
Interest |
Rate |
ASSETS: |
|
|
|
|
|
|
Tax-exempt loans |
$ 26,714 |
$ 592 |
4.47% |
$ 21,860 |
$ 498 |
4.59% |
All other loans |
798,552 |
17,334 |
4.38% |
546,033 |
13,716 |
5.07% |
Total loans |
825,266 |
17,926 |
4.38% |
567,893 |
14,214 |
5.05% |
|
|
|
|
|
|
|
Federal funds sold |
344 |
— |
—% |
49 |
— |
—% |
|
|
|
|
|
|
|
Taxable securities |
176,046 |
3,116 |
3.54% |
170,226 |
3,076 |
3.61% |
Tax-exempt securities |
97,864 |
2,762 |
5.64% |
123,543 |
3,680 |
5.96% |
Total securities |
273,910 |
5,878 |
4.29% |
293,769 |
6,756 |
4.60% |
|
|
|
|
|
|
|
Interest-bearing deposits |
10,000 |
22 |
0.44% |
6,024 |
8 |
0.27% |
|
|
|
|
|
|
|
Total interest-earning assets |
1,109,520 |
23,826 |
4.32% |
867,735 |
20,978 |
4.86% |
|
|
|
|
|
|
|
Other assets |
105,718 |
|
|
57,369 |
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
$ 1,215,238 |
|
|
$ 925,104 |
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY: |
|
|
|
|
|
|
Savings |
$ 140,803 |
51 |
0.07% |
$ 95,848 |
52 |
0.11% |
Super Now deposits |
183,174 |
307 |
0.34% |
143,509 |
344 |
0.48% |
Money market deposits |
209,314 |
272 |
0.26% |
158,374 |
264 |
0.34% |
Time deposits |
228,846 |
869 |
0.77% |
181,443 |
891 |
0.99% |
Total interest-bearing deposits |
762,137 |
1,499 |
0.40% |
579,174 |
1,551 |
0.54% |
|
|
|
|
|
|
|
Short-term borrowings |
17,749 |
27 |
0.31% |
21,574 |
47 |
0.44% |
Long-term borrowings |
71,202 |
942 |
2.63% |
73,550 |
1,001 |
2.71% |
Total borrowings |
88,951 |
969 |
2.17% |
95,124 |
1,048 |
2.19% |
|
|
|
|
|
|
|
Total interest-bearing liabilities |
851,088 |
2,468 |
0.58% |
674,298 |
2,599 |
0.77% |
|
|
|
|
|
|
|
Demand deposits |
216,588 |
|
|
135,035 |
|
|
Other liabilities |
14,642 |
|
|
14,164 |
|
|
Shareholders' equity |
132,920 |
|
|
101,607 |
|
|
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY |
$ 1,215,238 |
|
|
$ 925,104 |
|
|
Interest rate spread |
|
|
3.74% |
|
|
4.09% |
Net interest income/margin |
|
$ 21,358 |
3.88% |
|
$ 18,379 |
4.26% |
|
|
|
|
|
|
|
|
Six
Months Ended June 30, |
|
2014 |
2013 |
Total interest income |
$ 22,686 |
$ 19,558 |
Total interest expense |
2,468 |
2,599 |
Net interest income |
20,218 |
16,959 |
Tax equivalent adjustment |
1,140 |
1,420 |
Net interest income (fully taxable
equivalent) |
$ 21,358 |
$ 18,379 |
|
|
|
|
|
|
(Dollars in Thousands, Except Per Share Data) |
Quarter Ended |
|
6/30/2014 |
3/31/2014 |
12/31/2013 |
9/30/2013 |
6/30/2013 |
Operating Data |
|
|
|
|
|
Net income |
$ 3,463 |
$ 3,469 |
$ 3,495 |
$ 3,246 |
$ 3,659 |
Net interest income |
10,131 |
10,087 |
10,447 |
10,629 |
8,754 |
Provision for loan losses |
300 |
485 |
600 |
600 |
575 |
Net security gains
(losses) |
487 |
393 |
160 |
(3) |
1,274 |
Non-interest income, ex. net
security gains |
2,442 |
2,818 |
2,772 |
2,845 |
2,261 |
Non-interest expense |
8,422 |
8,643 |
8,476 |
8,975 |
6,965 |
|
|
|
|
|
|
Performance Statistics |
|
|
|
|
|
Net interest margin |
3.84% |
3.96% |
3.98% |
4.07% |
4.09% |
Annualized return on average
assets |
1.13% |
1.15% |
1.16% |
1.08% |
1.48% |
Annualized return on average
equity |
10.29% |
10.58% |
10.99% |
10.39% |
13.54% |
Annualized net loan charge-offs
to average loans |
—% |
1.06% |
0.04% |
0.19% |
—% |
Net charge-offs |
9 |
2,109 |
87 |
374 |
1 |
Efficiency ratio |
66.3% |
66.3% |
63.5% |
66.6% |
63.2% |
|
|
|
|
|
|
Per Share Data |
|
|
|
|
|
Basic earnings per share |
$ 0.72 |
$ 0.72 |
$ 0.73 |
$ 0.67 |
$ 0.88 |
Diluted earnings per share |
0.72 |
0.72 |
0.73 |
0.67 |
0.88 |
Dividend declared per
share |
0.47 |
0.47 |
0.47 |
0.47 |
0.47 |
Book value |
28.17 |
27.45 |
26.52 |
26.12 |
26.14 |
Common stock price: |
|
|
|
|
|
High |
48.37 |
50.95 |
53.99 |
49.89 |
41.86 |
Low |
43.21 |
43.19 |
47.03 |
42.76 |
39.44 |
Close |
47.10 |
48.78 |
51.00 |
49.82 |
41.86 |
Weighted average common
shares: |
|
|
|
|
|
Basic |
4,820 |
4,820 |
4,819 |
4,818 |
4,151 |
Fully
Diluted |
4,820 |
4,820 |
4,819 |
4,818 |
4,151 |
End-of-period common
shares: |
|
|
|
|
|
Issued |
5,001 |
5,001 |
5,000 |
4,999 |
4,999 |
Treasury |
181 |
181 |
181 |
181 |
181 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
(Dollars in Thousands, Except Per Share Data) |
6/30/2014 |
3/31/2014 |
12/31/2013 |
9/30/2013 |
6/30/2013 |
Financial Condition
Data: |
|
|
|
|
|
General |
|
|
|
|
|
Total assets |
$ 1,222,847 |
$ 1,217,137 |
$ 1,211,995 |
$ 1,204,090 |
$ 1,206,958 |
Loans, net |
847,521 |
812,091 |
808,200 |
796,533 |
777,557 |
Goodwill |
17,104 |
17,104 |
17,104 |
17,104 |
17,104 |
Intangibles |
1,621 |
1,709 |
1,801 |
1,892 |
1,984 |
Total deposits |
981,826 |
983,026 |
973,002 |
975,521 |
955,361 |
Noninterest-bearing |
228,758 |
218,740 |
217,377 |
215,374 |
211,096 |
|
|
|
|
|
|
Savings |
141,362 |
142,030 |
138,621 |
142,193 |
140,667 |
NOW |
176,066 |
191,191 |
177,996 |
169,974 |
161,972 |
Money Market |
212,782 |
202,893 |
203,786 |
209,469 |
203,076 |
Time
Deposits |
222,858 |
228,172 |
235,222 |
238,511 |
238,550 |
Total
interest-bearing deposits |
753,068 |
764,286 |
755,625 |
760,147 |
744,265 |
|
|
|
|
|
|
Core deposits* |
758,968 |
754,854 |
737,780 |
737,010 |
716,811 |
Shareholders' equity |
135,802 |
132,305 |
127,815 |
125,852 |
125,928 |
|
|
|
|
|
|
Asset Quality |
|
|
|
|
|
Non-performing assets |
$ 11,979 |
$ 10,614 |
$ 9,678 |
$ 6,064 |
$ 6,515 |
Non-performing assets to total
assets |
0.98% |
0.87% |
0.80% |
0.50% |
0.54% |
Allowance for loan losses |
8,811 |
8,520 |
10,144 |
9,630 |
9,404 |
Allowance for loan losses to
total loans |
1.03% |
1.04% |
1.24% |
1.19% |
1.19% |
Allowance for loan losses to
non-performing loans |
73.55% |
80.27% |
104.82% |
158.81% |
144.34% |
Non-performing loans to total
loans |
1.40% |
1.29% |
1.18% |
0.75% |
0.83% |
|
|
|
|
|
|
Capitalization |
|
|
|
|
|
Shareholders' equity to total
assets |
11.11% |
10.87% |
10.55% |
10.45% |
10.43% |
|
|
|
|
|
|
* 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) |
2014 |
2013 |
2014 |
2013 |
GAAP net income |
$ 3,463 |
$ 3,659 |
$ 6,932 |
$ 7,343 |
Less: net securities and bank-owned life
insurance gains, net of tax |
321 |
841 |
755 |
1,492 |
Non-GAAP operating earnings |
$ 3,142 |
$ 2,818 |
$ 6,177 |
$ 5,851 |
|
|
|
|
|
|
Three
Months Ended June 30, |
Six
Months Ended June 30, |
|
2014 |
2013 |
2014 |
2013 |
Return on average assets (ROA) |
1.13% |
1.48% |
1.14% |
1.59% |
Less: net securities and bank-owned life
insurance (losses) gains, net of tax |
0.10% |
0.34% |
0.12% |
0.33% |
Non-GAAP operating ROA |
1.03% |
1.14% |
1.02% |
1.26% |
|
|
|
|
|
|
Three
Months Ended June 30, |
Six
Months Ended June 30, |
|
2014 |
2013 |
2014 |
2013 |
Return on average equity (ROE) |
10.29% |
13.54% |
10.43% |
14.45% |
Less: net securities and bank-owned life
insurance (losses) gains, net of tax |
0.96% |
3.11% |
1.14% |
2.93% |
Non-GAAP operating ROE |
9.33% |
10.43% |
9.29% |
11.52% |
|
|
|
|
|
|
Three
Months Ended June 30, |
Six
Months Ended June 30, |
|
2014 |
2013 |
2014 |
2013 |
Basic earnings per share (EPS) |
$ 0.72 |
$ 0.88 |
$ 1.44 |
$ 1.84 |
Less: net securities and bank-owned life
insurance (losses) gains, net of tax |
0.07 |
0.20 |
0.16 |
0.38 |
Non-GAAP basic operating EPS |
$ 0.65 |
$ 0.68 |
$ 1.28 |
$ 1.46 |
|
|
|
|
|
|
Three
Months Ended June 30, |
Six
Months Ended June 30, |
|
2014 |
2013 |
2014 |
2013 |
Dilutive EPS |
$ 0.72 |
$ 0.88 |
$ 1.44 |
$ 1.84 |
Less: net securities and bank-owned life
insurance (losses) gains, net of tax |
0.07 |
0.20 |
0.16 |
0.38 |
Non-GAAP dilutive operating EPS |
$ 0.65 |
$ 0.68 |
$ 1.28 |
$ 1.46 |
|
|
|
|
|
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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