PWOD Penns Woods Bancorp Inc

Penns Woods Bancorp, Inc. (NASDAQ:PWOD)

Penns Woods Bancorp, Inc. continued its solid earnings, supported by strong asset and deposit growth, achieving net income of $10,152,000 for the nine months ended September 30, 2015 resulting in basic and dilutive earnings per share of $2.12.

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 and bank owned life insurance gains on death benefits, decreased to $3,039,000 for the three months ended September 30, 2015 compared to $3,377,000 for the same period of 2014.  Net income from core operations decreased to $9,046,000 for the nine months ended September 30, 2015 compared to $9,554,000 for the same period of 2014.  Impacting the three and nine months ended September 30, 2015 compared to 2014 were an increase in the provision for loan losses of $60,000 and $575,000 due to the level of charge-offs and significant loan portfolio growth.  In addition, the investment portfolio has declined $30,978,000 from September 30, 2014 to September 30, 2015 as part of our strategy to position the balance sheet for a rising rate environment.
• Operating earnings per share for the three months ended September 30, 2015 and 2014 were $0.64 and $0.70 for both basic and dilutive.  Operating earnings per share for the nine months ended September 30, 2015 were $1.89 basic and dilutive compared to $1.98 basic and dilutive for the same period of 2014.
• Return on average assets was 1.04% for the three months ended September 30, 2015 compared to 1.56% for the corresponding period of 2014.  Return on average assets was 1.06% for the nine months ended September 30, 2015 compared to 1.28% for the corresponding period of 2014.
• Return on average equity was 9.89% for the three months ended September 30, 2015 compared to 13.95% for the corresponding period of 2014.  Return on average equity was 9.90% for the nine months ended September 30, 2015 compared to 11.63% for the corresponding period of 2014.

“The first nine months of 2015 have seen the Penns Woods Family continue on its proven path of success, while also preparing for the future.  Continued strong customer service and professionalism by our employees has led to double digit loan growth, deposit growth, and relationship building with our customers.  The future will entail the opening of a branch in Lewisburg during the fourth quarter of 2015 and the continued addition of technology driven products and services,” 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 nine months ended September 30, 2015 was $3,364,000 and $10,152,000 compared to $4,793,000 and $11,725,000 for the same periods of 2014.  Results for the three and nine months ended September 30, 2015 compared to 2014 were impacted by a decrease in after-tax securities gains of $1,091,000 (from a gain of $1,416,000 to a gain of $325,000) for the three month periods and a decrease in the after-tax securities gains of $891,000 (from a gain of $1,997,000 to a gain of $1,106,000) for the nine 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 nine months ended September 30, 2015 were $0.71 and $2.12 compared to $0.99 and $2.43 for the corresponding periods of 2014.  Return on average assets and return on average equity were 1.04% and 9.89% for the three months ended September 30, 2015 compared to 1.56% and 13.95% for the corresponding period of 2014.  Return on average assets and return on average equity were 1.06% and 9.90% for the nine months ended September 30, 2015 compared to 1.28% and 11.63% for the corresponding period of 2014.

Net Interest Margin

The net interest margin for the three and nine months ended September 30, 2015 was 3.55% and 3.63% compared to 3.78% and 3.84% for the corresponding periods of 2014.  The decline in the net interest margin was driven by a decreasing yield on the loan and investment portfolios due to the continued low rate environment.  The impact of the declining earning asset yield and decreasing investment portfolio balance was partially offset by a 12.45% growth in gross loans from September 30, 2014 to September 30, 2015 resulting in net interest income remaining flat compared to the comparable three and nine month periods of 2014. The loan growth was funded by an increase in core deposits, decrease in the investment portfolio, and an increase in borrowings.  Core deposits represent a lower cost funding source than time deposits and comprise 78.02% of total deposits at September 30, 2015 and 77.90% at September 30, 2014. 

“We, as with the financial industry, continue to experience a declining net interest margin due to the low rate environment which has resulted in a decrease in the yield of the earning asset portfolio.  We have maintained our focus on adding quality earning assets such as short and intermediate term loans which has led to growth in the home equity segment of the loan portfolio.  Despite the growth in earning assets, net interest income has remained flat as higher yielding legacy assets continue to mature or reprice to lower yields and new earning assets are added at lower yields than the existing portfolio.  Selective selling of bonds within the investment portfolio continues to occur as interest and market risk within the investment portfolio continues to be reduced.  This active management has resulted in a reduction of long-term municipal bonds within the portfolio and has provided funding for the growth of the loan portfolio.  The reduction in size of the investment portfolio does negatively impact current earnings, but the actions play a key role in our long-term asset liability management strategy,” commented President Grafmyre.

Assets

Total assets increased $72,170,000 to $1,299,292,000 at September 30, 2015 compared to September 30, 2014.  Net loans increased $108,687,000 to $990,164,000 at September 30, 2015 compared to September 30, 2014 primarily due to campaigns related to increasing home equity product market share during 2014 and 2015 and growth in the commercial loan portfolio.  The investment portfolio decreased $30,978,000 from September 30, 2014 to September 30, 2015 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 decreased to 0.86% at September 30, 2015 from 1.38% at September 30, 2014.  The ratio decreased due to a decrease in non-performing loans and an increase in total loans from September 30, 2014 to September 30, 2015.  The decrease in non-performing loans to $8,608,000 at September 30, 2015 from $12,294,000 at September 30, 2014 is primarily the result of a large commercial real estate loan that was removed from non-accrual status due to improved company performance and a solid payment history.  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 $910,000 for the nine months ended September 30, 2015 negatively impacted the allowance for loan losses which was 1.15% of total loans at September 30, 2015.  The majority of the loans charged-off had a specific allowance within the allowance for loan losses.

Deposits

Deposits increased $15,673,000 to $1,004,801,000 at September 30, 2015 compared to September 30, 2014.  Core deposits (total deposits excluding time deposits) increased $13,452,000 due to our commitment to building complete banking relationships with our customers.  Noninterest-bearing deposits increased $15,260,000 to $247,848,000 at September 30, 2015 compared to September 30, 2014.  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 is in process as part of the strategy to build balance sheet protection in a rising rate environment.

Shareholders’ Equity

Shareholders’ equity decreased $1,427,000 to $135,577,000 at September 30, 2015 compared to September 30, 2014.  Since September 30, 2014 treasury stock purchases of $2,687,000 for 61,804 shares were completed as part of the stock repurchase plan.  The change in accumulated other comprehensive loss from $211,000 at September 30, 2014 to $3,100,000 at September 30, 2015 is a result of a decrease in unrealized gains on available for sale securities from an unrealized gain of $2,514,000 at September 30, 2014 to an unrealized gain of $1,418,000 at September 30, 2015.  The amount of accumulated other comprehensive loss at September 30, 2015 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 $1,793,000 to $4,518,000 at September 30, 2015.  The current level of shareholders’ equity equates to a book value per share of $28.54 at September 30, 2015 compared to $28.49 at September 30, 2014 and an equity to asset ratio of 10.43% at September 30, 2015 compared to 11.16% at September 30, 2014.  Excluding goodwill and intangibles, book value per share was $24.66 at September 30, 2015 compared to $24.61 at September 30, 2014.  Dividends declared for each of the three and nine months ended September 30, 2015 and 2014 were $0.47 and $1.41 per share.

Penns Woods Bancorp, Inc. is the parent company of Jersey Shore State Bank, which operates fourteen 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, 2014.

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)
		September 30,
(In Thousands, Except Share Data)		2015				2014				% Change
ASSETS
Noninterest-bearing balances		$	17,304			$	19,556			(11.52	)%
Interest-bearing balances in other financial institutions		951				5,686				(83.27	)%
Total cash and cash equivalents		18,255				25,242				(27.68	)%
Investment securities, available for sale, at fair value		202,593				233,634				(13.29	)%
Investment securities, trading		63				—				100.00	%
Loans held for sale		1,029				1,602				(35.77	)%
Loans		1,001,653				890,727				12.45	%
Allowance for loan losses		(11,489		)		(9,250		)		24.21	%
Loans, net		990,164				881,477				12.33	%
Premises and equipment, net		21,433				21,509				(0.35	)%
Accrued interest receivable		4,093				4,298				(4.77	)%
Bank-owned life insurance		26,499				25,781				2.78	%
Investment in limited partnerships		1,064				1,725				(38.32	)%
Goodwill		17,104				17,104				—	%
Intangibles		1,316				1,538				(14.43	)%
Deferred tax asset		8,618				7,036				22.48	%
Other assets		7,061				6,176				14.33	%
TOTAL ASSETS		$	1,299,292			$	1,227,122			5.88	%
LIABILITIES
Interest-bearing deposits		$	756,953			$	756,540			0.05	%
Noninterest-bearing deposits		247,848				232,588				6.56	%
Total deposits		1,004,801				989,128				1.58	%
Short-term borrowings		51,690				17,213				200.30	%
Long-term borrowings		91,051				71,202				27.88	%
Accrued interest payable		460				411				11.92	%
Other liabilities		15,713				12,164				29.18	%
TOTAL LIABILITIES		1,163,715				1,090,118				6.75	%
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; 5,004,372 and 5,001,972 shares issued		41,702				41,682				0.05	%
Additional paid-in capital		49,959				49,871				0.18	%
Retained earnings		56,523				52,482				7.70	%
Accumulated other comprehensive loss:
Net unrealized gain on available for sale securities		1,418				2,514				(43.60	)%
Defined benefit plan		(4,518		)		(2,725		)		(65.80	)%
Treasury stock at cost, 254,144 and 192,340 shares		(9,507		)		(6,820		)		39.40	%
TOTAL SHAREHOLDERS’ EQUITY		135,577				137,004				(1.04	)%
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	1,299,292			$	1,227,122			5.88	%

 

PENNS WOODS BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
		Three Months Ended September 30,											Nine Months Ended September 30,
(In Thousands, Except Per Share Data)		2015				2014				% Change			2015				2014				% Change
INTEREST AND DIVIDEND INCOME:
Loans including fees		$	9,862			$	9,298			6.07	%		$	28,937			$	27,023			7.08	%
Investment securities:
Taxable		829				1,198				(30.80	)%		2,728				4,062				(32.84	)%
Tax-exempt		676				837				(19.24	)%		2,187				2,660				(17.78	)%
Dividend and other interest income		156				127				22.83	%		597				401				48.88	%
TOTAL INTEREST AND DIVIDEND INCOME		11,523				11,460				0.55	%		34,449				34,146				0.89	%
INTEREST EXPENSE:
Deposits		800				748				6.95	%		2,328				2,247				3.60	%
Short-term borrowings		31				5				520.00	%		78				32				143.75	%
Long-term borrowings		458				489				(6.34	)%		1,476				1,431				3.14	%
TOTAL INTEREST EXPENSE		1,289				1,242				3.78	%		3,882				3,710				4.64	%
NET INTEREST INCOME		10,234				10,218				0.16	%		30,567				30,436				0.43	%
PROVISION FOR LOAN LOSSES		520				460				13.04	%		1,820				1,245				46.18	%
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		9,714				9,758				(0.45	)%		28,747				29,191				(1.52	)%
NON-INTEREST INCOME:
Service charges		621				620				0.16	%		1,772				1,822				(2.74	)%
Securities gains, available for sale		526				2,145				(75.48	)%		1,713				3,025				(43.37	)%
Securities losses, trading		(33		)		—				(100.00	)%		(37		)		—				(100.00	)%
Bank-owned life insurance		182				185				(1.62	)%		541				736				(26.49	)%
Gain on sale of loans		524				602				(12.96	)%		1,305				1,313				(0.61	)%
Insurance commissions		185				212				(12.74	)%		623				915				(31.91	)%
Brokerage commissions		297				282				5.32	%		836				804				3.98	%
Other		835				878				(4.90	)%		2,701				2,449				10.29	%
TOTAL NON-INTEREST INCOME		3,137				4,924				(36.29	)%		9,454				11,064				(14.55	)%
NON-INTEREST EXPENSE:
Salaries and employee benefits		4,302				4,126				4.27	%		13,073				12,796				2.16	%
Occupancy		529				547				(3.29	)%		1,721				1,729				(0.46	)%
Furniture and equipment		686				591				16.07	%		1,924				1,910				0.73	%
Pennsylvania shares tax		244				232				5.17	%		711				738				(3.66	)%
Amortization of investments in limited partnerships		165				165				—	%		496				496				—	%
Federal Deposit Insurance Corporation deposit insurance		209				193				8.29	%		654				572				14.34	%
Marketing		160				144				11.11	%		434				380				14.21	%
Intangible amortization		73				82				(10.98	)%		235				263				(10.65	)%
Other		2,162				2,233				(3.18	)%		6,171				6,494				(4.97	)%
TOTAL NON-INTEREST EXPENSE		8,530				8,313				2.61	%		25,419				25,378				0.16	%
INCOME BEFORE INCOME TAX PROVISION		4,321				6,369				(32.16	)%		12,782				14,877				(14.08	)%
INCOME TAX PROVISION		957				1,576				(39.28	)%		2,630				3,152				(16.56	)%
NET INCOME		$	3,364			$	4,793			(29.81	)%		$	10,152			$	11,725			(13.42	)%
EARNINGS PER SHARE - BASIC AND DILUTED		$	0.71			$	0.99			(28.28	)%		$	2.12			$	2.43			(12.76	)%
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED		4,761,576				4,820,346				(1.22	)%		4,780,776				4,820,041				(0.81	)%
DIVIDENDS DECLARED PER SHARE		$	0.47			$	0.47			—	%		$	1.41			$	1.41			—	%

PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES
		Three Months Ended
		September 30, 2015											September 30, 2014
(Dollars in Thousands)		AverageBalance				Interest				AverageRate			AverageBalance				Interest				AverageRate
ASSETS:
Tax-exempt loans		$	43,562			$	423			3.85	%		$	30,567			$	337			4.38	%
All other loans		947,665				9,583				4.01	%		844,062				9,076				4.27	%
Total loans		991,227				10,006				4.00	%		874,629				9,413				4.27	%
Federal funds sold		—				—				—	%		—				—				—	%
Taxable securities		125,618				982				3.13	%		153,280				1,319				3.44	%
Tax-exempt securities		80,535				1,024				5.09	%		93,825				1,268				5.41	%
Total securities		206,153				2,006				3.89	%		247,105				2,587				4.19	%
Interest-bearing deposits		3,216				3				0.37	%		11,140				6				0.21	%
Total interest-earning assets		1,200,596				12,015				3.98	%		1,132,874				12,006				4.21	%
Other assets		97,363											97,596
TOTAL ASSETS		$	1,297,959										$	1,230,470
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Savings		$	143,353			14				0.04	%		$	141,558			16				0.04	%
Super Now deposits		193,659				126				0.26	%		181,011				142				0.31	%
Money market deposits		210,029				145				0.27	%		212,377				145				0.27	%
Time deposits		219,306				515				0.93	%		219,257				445				0.81	%
Total interest-bearing deposits		766,347				800				0.41	%		754,203				748				0.39	%
Short-term borrowings		40,801				31				0.30	%		21,250				12				0.22	%
Long-term borrowings		81,880				458				2.19	%		71,202				482				2.65	%
Total borrowings		122,681				489				1.56	%		92,452				494				2.09	%
Total interest-bearing liabilities		889,028				1,289				0.57	%		846,655				1,242				0.58	%
Demand deposits		256,264											233,415
Other liabilities		16,619											12,926
Shareholders’ equity		136,048											137,474
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	1,297,959										$	1,230,470
Interest rate spread										3.41	%										3.63	%
Net interest income/margin						$	10,726			3.55	%						$	10,764			3.78	%
		Three Months Ended September 30,
		2015				2014
Total interest income		$	11,523			$	11,460
Total interest expense		1,289				1,242
Net interest income		10,234				10,218
Tax equivalent adjustment		492				546
Net interest income (fully taxable equivalent)		$	10,726			$	10,764

 

		Nine Months Ended
		September 30, 2015											September 30, 2014
(Dollars in Thousands)		AverageBalance				Interest				AverageRate			AverageBalance				Interest				AverageRate
ASSETS:
Tax-exempt loans		$	39,901			$	1,194			4.00	%		$	28,042			$	929			4.43	%
All other loans		920,675				28,149				4.09	%		813,859				26,410				4.34	%
Total loans		960,576				29,343				4.08	%		841,901				27,339				4.34	%
Federal funds sold		—				—				—	%		228				—				—	%
Taxable securities		133,191				3,316				3.32	%		168,376				4,435				3.51	%
Tax-exempt securities		85,263				3,314				5.18	%		96,503				4,030				5.57	%
Total securities		218,454				6,630				4.05	%		264,879				8,465				4.26	%
Interest-bearing deposits		4,500				9				0.27	%		11,364				28				0.33	%
Total interest-earning assets		1,183,530				35,982				4.06	%		1,118,372				35,832				4.28	%
Other assets		97,151											102,001
TOTAL ASSETS		$	1,280,681										$	1,220,373
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Savings		$	142,812			43				0.04	%		$	141,057			67				0.06	%
Super Now deposits		190,653				379				0.27	%		182,445				449				0.33	%
Money market deposits		208,317				424				0.27	%		210,346				417				0.27	%
Time deposits		218,987				1,482				0.90	%		225,615				1,314				0.78	%
Total interest-bearing deposits		760,769				2,328				0.41	%		759,463				2,247				0.40	%
Short-term borrowings		36,111				78				0.29	%		18,929				32				0.23	%
Long-term borrowings		82,597				1,476				2.36	%		71,202				1,431				2.65	%
Total borrowings		118,708				1,554				1.73	%		90,131				1,463				2.14	%
Total interest-bearing liabilities		879,477				3,882				0.59	%		849,594				3,710				0.58	%
Demand deposits		247,130											222,259
Other liabilities		17,327											14,065
Shareholders’ equity		136,747											134,455
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	1,280,681										$	1,220,373
Interest rate spread										3.47	%										3.70	%
Net interest income/margin						$	32,100			3.63	%						$	32,122			3.84	%
		Nine Months Ended September 30,
		2015				2014
Total interest income		$	34,449			$	34,146
Total interest expense		3,882				3,710
Net interest income		30,567				30,436
Tax equivalent adjustment		1,533				1,686
Net interest income (fully taxable equivalent)		$	32,100			$	32,122

 

(Dollars in Thousands, Except Per Share Data)		Quarter Ended
		9/30/2015				6/30/2015				3/31/2015				12/31/2014				9/30/2014
Operating Data
Net income		$	3,364			$	3,433			$	3,355			$	2,883			$	4,793
Net interest income		10,234				10,222				10,111				10,208				10,218
Provision for loan losses		520				600				700				1,605				460
Net security gains		493				522				661				490				2,145
Non-interest income, excluding net security gains		2,644				2,535				2,599				2,954				2,779
Non-interest expense		8,530				8,421				8,468				8,512				8,313
Performance Statistics
Net interest margin		3.55		%		3.64		%		3.69		%		3.73		%		3.78		%
Annualized return on average assets		1.04		%		1.07		%		1.06		%		0.93		%		1.56		%
Annualized return on average equity		9.89		%		10.05		%		9.76		%		8.33		%		13.95		%
Annualized net loan charge-offs to average loans		0.12		%		0.07		%		0.20		%		0.12		%		0.01		%
Net charge-offs		296				161				453				276				21
Efficiency ratio		65.7		%		65.3		%		66.0		%		64.0		%		63.3		%
Per Share Data
Basic earnings per share		$	0.71			$	0.72			$	0.70			$	0.60			$	0.99
Diluted earnings per share		0.71				0.72				0.70				0.60				0.99
Dividend declared per share		0.47				0.47				0.47				0.47				0.47
Book value		28.54				28.33				28.57				28.30				28.49
Common stock price:
High		44.56				48.28				48.91				49.26				48.79
Low		40.41				41.84				44.41				42.18				42.25
Close		40.92				44.09				48.91				49.26				42.25
Weighted average common shares:
Basic		4,762				4,780				4,802				4,805				4,820
Fully Diluted		4,762				4,780				4,802				4,805				4,820
End-of-period common shares:
Issued		5,004				5,004				5,003				5,003				5,002
Treasury		254				238				207				198				192
(Dollars in Thousands, Except Per Share Data)		Quarter Ended
		9/30/2015				6/30/2015				3/31/2015				12/31/2014				9/30/2014
Financial Condition Data:
General
Total assets		$	1,299,292			$	1,291,812			$	1,268,833			$	1,245,011			$	1,227,122
Loans, net		990,164				966,613				933,044				905,000				881,477
Goodwill		17,104				17,104				17,104				17,104				17,104
Intangibles		1,316				1,294				1,373				1,456				1,538
Total deposits		1,004,801				1,007,468				996,489				981,419				989,128
Noninterest-bearing		247,848				244,502				246,231				243,378				232,588
Savings		143,224				143,415				143,222				139,278				141,170
NOW		188,444				188,092				186,788				177,970				183,056
Money Market		204,475				211,412				204,352				204,535				213,725
Time Deposits		220,810				220,047				215,896				216,258				218,589
Total interest-bearing deposits		756,953				762,966				750,258				738,041				756,540
Core deposits*		783,991				787,421				780,593				765,161				770,539
Shareholders’ equity		135,577				134,998				137,004				135,967				137,004
Asset Quality
Non-performing assets		$	8,608			$	9,689			$	11,157			$	12,248			$	12,294
Non-performing loans to total assets		0.66		%		0.75		%		0.88		%		0.98		%		1.00		%
Allowance for loan losses		11,489				11,265				10,826				10,579				9,250
Allowance for loan losses to total loans		1.15		%		1.15		%		1.15		%		1.16		%		1.04		%
Allowance for loan losses to non-performing loans		133.47		%		116.27		%		97.03		%		86.37		%		75.24		%
Non-performing loans to total loans		0.86		%		0.99		%		1.18		%		1.34		%		1.38		%
Capitalization
Shareholders’ equity to total assets		10.43		%		10.45		%		10.80		%		10.92		%		11.16		%
* Core deposits are defined as total deposits less time deposits

Reconciliation of GAAP and Non-GAAP Financial Measures
		Three Months Ended September 30,								Nine Months Ended September 30,
(Dollars in Thousands, Except Per Share Data)		2015				2014				2015				2014
GAAP net income		$	3,364			$	4,793			$	10,152			$	11,725
Less: net securities and bank-owned life insurance gains, net of tax		325				1,416				1,106				2,171
Non-GAAP operating earnings		$	3,039			$	3,377			$	9,046			$	9,554
		Three Months Ended September 30,								Nine Months Ended September 30,
		2015				2014				2015				2014
Return on average assets (ROA)		1.04		%		1.56		%		1.06		%		1.28		%
Less: net securities and bank-owned life insurance gains, net of tax		0.10		%		0.46		%		0.12		%		0.24		%
Non-GAAP operating ROA		0.94		%		1.10		%		0.94		%		1.04		%
		Three Months Ended September 30,								Nine Months Ended September 30,
		2015				2014				2015				2014
Return on average equity (ROE)		9.89		%		13.95		%		9.90		%		11.63		%
Less: net securities and bank-owned life insurance gains, net of tax		0.95		%		4.12		%		1.08	%		2.16		%
Non-GAAP operating ROE		8.94		%		9.83		%		8.82		%		9.47		%
		Three Months Ended September 30,								Nine Months Ended September 30,
		2015				2014				2015				2014
Basic earnings per share (EPS)		$	0.71			$	0.99			$	2.12			$	2.43
Less: net securities and bank-owned life insurance gains, net of tax		0.07				0.29				0.23				0.45
Non-GAAP basic operating EPS		$	0.64			$	0.70			$	1.89			$	1.98
		Three Months Ended September 30,								Nine Months Ended September 30,
		2015				2014				2015				2014
Dilutive EPS		$	0.71			$	0.99			$	2.12			$	2.43
Less: net securities and bank-owned life insurance gains, net of tax		0.07				0.29				0.23				0.45
Non-GAAP dilutive operating EPS		$	0.64			$	0.70			$	1.89			$	1.98

 

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