Penns Woods Bancorp, Inc. (NASDAQ:PWOD)
Penns Woods Bancorp, Inc. continued its solid earnings,
supported by loan and deposit growth, achieving net income of
$9,529,000 for the nine months ended September 30, 2016 resulting
in basic and dilutive earnings per share of $2.01.
Highlights
- Net income from core operations (“operating earnings”), which
is a non-generally accepted accounting principles (GAAP) measure of
net income excluding net securities gains, was $2,887,000 for the
three months ended September 30, 2016 compared to $3,039,000
for the same period of 2015. Operating earnings decreased to
$8,719,000 for the nine months ended September 30, 2016 compared to
$9,046,000 for the same period of 2015. The 2015 nine month
period included non-recurring gains on the sale of other real
estate owned of $175,000 above the 2016 level. Nine month 2016
expenses were negatively impacted by a mass replacement of debit
cards to implement EMV card technology to better protect the
security of our customers. The 2016 period also included
expenses related to a data breach at a national restaurant chain
that impacted our customer base. In addition, the investment
portfolio has declined $61,599,000 from September 30, 2015 to
September 30, 2016 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, 2016 were $0.61 for both basic and dilutive, a
decrease from $0.64 for the same period of 2015. Operating
earnings per share for the nine months ended September 30, 2016
were $1.84 basic and dilutive compared to $1.89 basic and dilutive
for the same period of 2015.
- Return on average assets was 0.91% for the three months ended
September 30, 2016 compared to 1.04% for the corresponding period
of 2015. Return on average assets was 0.95% for the nine
months ended September 30, 2016 compared to 1.06% for the
corresponding period of 2015.
- Return on average equity was 8.69% for the three months ended
September 30, 2016 compared to 9.89% for the corresponding period
of 2015. Return on average equity was 9.14% for the nine
months ended September 30, 2016 compared to 9.90% for the
corresponding period of 2015.
“During 2016 we have maintained our focus on building balance
sheet strength by adding quality earning assets and continuing to
shift earning assets from the investment portfolio to the loan
portfolio. The quality assets being added are centered on
home equity products that are variable rate and provide protection
to a rising rate environment. The shift from investments to
loans is being undertaken to reduce interest rate and market risk
and to reduce the level of regulatory risk weighted assets which
allows for better capital utilization,” 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, 2016 was $3,059,000 and $9,529,000
compared to $3,364,000 and $10,152,000 for the same period of
2015. Results for the three and nine months ended September
30, 2016 compared to 2015 were impacted by a decrease in after-tax
securities gains of $153,000 (from a gain of $325,000 to a gain of
$172,000) for the three month periods and a decrease in after-tax
securities gains of $296,000 (from a gain of $1,106,000 to a gain
of $810,000) for the nine month periods. Basic and dilutive
earnings per share for the three and nine months ended September
30, 2016 were $0.65 and $2.01 compared to $0.71 and $2.12 for the
corresponding periods of 2015. Return on average assets and
return on average equity were 0.91% and 8.69% for the three months
ended September 30, 2016 compared to 1.04% and 9.89% for the
corresponding period of 2015. Return on average assets and return
on average equity were 0.95% and 9.14% for the nine months ended
September 30, 2016 compared to 1.06% and 9.90% for the
corresponding period of 2015.
Net Interest Margin
The net interest margin for the three and nine months ended
September 30, 2016 was 3.37% and 3.45% compared to 3.55% and 3.63%
for the corresponding periods of 2015. The decline in the net
interest margin was driven by a decreasing yield on the investment
portfolio due to the continued low rate environment that limits the
yield that we can acquire into the portfolio and our strategic
decision to continue repositioning the portfolio through active
management in anticipation of a rising rate environment. The
impact of the declining investment portfolio yield and decreasing
investment portfolio balance was partially offset by a 6.77% growth
in gross loans from September 30, 2015 to September 30,
2016. The loan growth was funded by an increase in core
deposits and a decrease in the investment portfolio. Core
deposits represent a lower cost funding source than time deposits
and comprise 79.60% of total deposits at September 30, 2016
and 78.02% at September 30, 2015.
Assets
Total assets increased $48,120,000 to $1,347,412,000 at
September 30, 2016 compared to September 30, 2015.
Net loans increased $66,598,000 to $1,056,762,000 at
September 30, 2016 compared to September 30, 2015
primarily due to campaigns related to increasing home equity
product market share during 2015 and 2016, growth in the commercial
loan portfolio, and the introduction of indirect auto lending
during the third quarter of 2016. The investment portfolio
decreased $61,599,000 from September 30, 2015 to
September 30, 2016 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 1.08%
at September 30, 2016 from 0.86% at September 30, 2015.
This change was primarily the result of a large commercial real
estate loan that was placed on non-accrual status causing
non-performing loans to increase to $11,530,000 at
September 30, 2016 from $8,608,000 at September 30, 2015.
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 $192,000 for the nine months
ended September 30, 2016 minimally impacted the allowance for loan
losses which was 1.19% of total loans at September 30,
2016. The majority of the loans charged-off had a specific
allowance within the allowance for loan losses.
Deposits
Deposits increased $83,496,000 to $1,088,297,000 at
September 30, 2016 compared to September 30, 2015.
Core deposits (total deposits excluding time deposits) increased
$82,335,000 due to our commitment to building complete banking
relationships with our customers. Noninterest-bearing
deposits increased $47,751,000 to $295,599,000 at
September 30, 2016 compared to September 30, 2015.
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 $4,358,000 to $139,935,000 at
September 30, 2016 compared to September 30, 2015.
Since September 30, 2015, treasury stock purchases of $727,000 for
18,308 shares were completed as part of the stock repurchase
plan. The change in accumulated other comprehensive loss from
$3,100,000 at September 30, 2015 to $2,491,000 at
September 30, 2016 is a result of an increase in unrealized
gains on available for sale securities from an unrealized gain of
$1,418,000 at September 30, 2015 to an unrealized gain of
$1,489,000 at September 30, 2016. The amount of
accumulated other comprehensive loss at September 30, 2016 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 a decrease in the net loss of
$538,000 to $3,980,000 at September 30, 2016. The
current level of shareholders’ equity equates to a book value per
share of $29.56 at September 30, 2016 compared to $28.54 at
September 30, 2015 and an equity to asset ratio of 10.39% at
September 30, 2016 compared to 10.43% at September 30,
2015. Excluding goodwill and intangibles, book value per
share was $25.55 at September 30, 2016 compared to $24.66 at
September 30, 2015. Dividends declared for each of the
three and nine months ended September 30, 2016 and 2015 were $0.47
and $1.41 per share.
Penns Woods Bancorp, Inc. is the parent company of Jersey
Shore State Bank, which operates fifteen branch offices providing
financial services in Lycoming, Clinton, Centre, Montour, and Union
Counties, and Luzerne Bank, which operates eight branch offices
providing financial services in Luzerne County. Investment
and insurance products are offered through Jersey Shore State
Bank’s subsidiary, The M Group, Inc. D/B/A The Comprehensive
Financial Group.
NOTE: This press release contains financial information
determined by methods other than in accordance with U.S. Generally
Accepted Accounting Principles (“GAAP”). Management uses the
non-GAAP measure of net income from core operations in its analysis
of the company’s performance. This measure, as used by the Company,
adjusts net income determined in accordance with GAAP to exclude
the effects of special items, including significant gains or losses
that are unusual in nature such as net securities gains and losses.
Because certain of these items and their impact on the Company’s
performance are difficult to predict, management believes
presentation of financial measures excluding the impact of such
items provides useful supplemental information in evaluating the
operating results of the Company’s core businesses. These
disclosures should not be viewed as a substitute for net income
determined in accordance with GAAP, nor are they necessarily
comparable to non-GAAP performance measures that may be presented
by other companies.
This press release may contain certain “forward-looking
statements” including statements concerning plans, objectives,
future events or performance and assumptions and other statements,
which are statements other than statements of historical
fact. The Company cautions readers that the following
important factors, among others, may have affected and could in the
future affect actual results and could cause actual results for
subsequent periods to differ materially from those expressed in any
forward-looking statement made by or on behalf of the Company
herein: (i) the effect of changes in laws and regulations,
including federal and state banking laws and regulations, and the
associated costs of compliance with such laws and regulations
either currently or in the future as applicable; (ii) the
effect of changes in accounting policies and practices, as may be
adopted by the regulatory agencies as well as by the Financial
Accounting Standards Board, or of changes in the Company’s
organization, compensation and benefit plans; (iii) the effect
on the Company’s competitive position within its market area of the
increasing consolidation within the banking and financial services
industries, including the increased competition from larger
regional and out-of-state banking organizations as well as non-bank
providers of various financial services; (iv) the effect of
changes in interest rates; and (v) the effect of changes in
the business cycle and downturns in the local, regional or national
economies. For a list of other factors which could affect the
Company’s results, see the Company’s filings with the Securities
and Exchange Commission, including “Item 1A. Risk
Factors,” set forth in the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31,
2015.
You should not place undue reliance on any forward-looking
statements. These statements speak only as of the date of
this press release, even if subsequently made available by the
Company on its website or otherwise. The Company undertakes
no obligation to update or revise these statements to reflect
events or circumstances occurring after the date of this press
release.
Previous press releases and additional information can be
obtained from the Company’s website at www.pwod.com.
THIS INFORMATION IS SUBJECT TO YEAR-END AUDIT ADJUSTMENT
|
PENNS WOODS BANCORP, INC. |
CONSOLIDATED BALANCE SHEET |
(UNAUDITED) |
|
|
|
September 30, |
(In Thousands, Except Share Data) |
|
2016 |
|
2015 |
|
% Change |
ASSETS |
|
|
|
|
|
|
Noninterest-bearing
balances |
|
$ |
23,487 |
|
|
$ |
17,304 |
|
|
35.73 |
% |
Interest-bearing
balances in other financial institutions |
|
36,694 |
|
|
951 |
|
|
3,758.46 |
% |
Total
cash and cash equivalents |
|
60,181 |
|
|
18,255 |
|
|
229.67 |
% |
|
|
|
|
|
|
|
|
Investment securities,
available for sale, at fair value |
|
141,057 |
|
|
202,593 |
|
|
(30.37 |
)% |
Investment securities,
trading |
|
— |
|
|
63 |
|
|
(100.00 |
)% |
Loans held for
sale |
|
2,160 |
|
|
1,029 |
|
|
109.91 |
% |
Loans |
|
1,069,480 |
|
|
1,001,653 |
|
|
6.77 |
% |
Allowance for loan
losses |
|
(12,718 |
) |
|
(11,489 |
) |
|
10.70 |
% |
Loans,
net |
|
1,056,762 |
|
|
990,164 |
|
|
6.73 |
% |
Premises and equipment,
net |
|
22,985 |
|
|
21,433 |
|
|
7.24 |
% |
Accrued interest
receivable |
|
3,800 |
|
|
4,093 |
|
|
(7.16 |
)% |
Bank-owned life
insurance |
|
27,176 |
|
|
26,499 |
|
|
2.55 |
% |
Investment in limited
partnerships |
|
658 |
|
|
1,064 |
|
|
(38.16 |
)% |
Goodwill |
|
17,104 |
|
|
17,104 |
|
|
— |
% |
Intangibles |
|
1,889 |
|
|
1,316 |
|
|
43.54 |
% |
Deferred tax asset |
|
7,404 |
|
|
8,618 |
|
|
(14.09 |
)% |
Other assets |
|
6,236 |
|
|
7,061 |
|
|
(11.68 |
)% |
TOTAL ASSETS |
|
$ |
1,347,412 |
|
|
$ |
1,299,292 |
|
|
3.70 |
% |
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Interest-bearing
deposits |
|
$ |
792,698 |
|
|
$ |
756,953 |
|
|
4.72 |
% |
Noninterest-bearing
deposits |
|
295,599 |
|
|
247,848 |
|
|
19.27 |
% |
Total
deposits |
|
1,088,297 |
|
|
1,004,801 |
|
|
8.31 |
% |
|
|
|
|
|
|
|
|
Short-term
borrowings |
|
11,579 |
|
|
51,690 |
|
|
(77.60 |
)% |
Long-term
borrowings |
|
91,025 |
|
|
91,051 |
|
|
(0.03 |
)% |
Accrued interest
payable |
|
481 |
|
|
460 |
|
|
4.57 |
% |
Other liabilities |
|
16,095 |
|
|
15,713 |
|
|
2.43 |
% |
TOTAL
LIABILITIES |
|
1,207,477 |
|
|
1,163,715 |
|
|
3.76 |
% |
|
|
|
|
|
|
|
|
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; 5,006,601 and 5,004,372 shares
issued |
|
41,721 |
|
|
41,702 |
|
|
0.05 |
% |
Additional paid-in
capital |
|
50,050 |
|
|
49,959 |
|
|
0.18 |
% |
Retained earnings |
|
60,889 |
|
|
56,523 |
|
|
7.72 |
% |
Accumulated other
comprehensive loss: |
|
|
|
|
|
|
|
Net
unrealized gain on available for sale securities |
|
1,489 |
|
|
1,418 |
|
|
5.01 |
% |
Defined
benefit plan |
|
(3,980 |
) |
|
(4,518 |
) |
|
11.91 |
% |
Treasury stock at cost,
272,452 and 254,144 shares |
|
(10,234 |
) |
|
(9,507 |
) |
|
7.65 |
% |
TOTAL
SHAREHOLDERS’ EQUITY |
|
139,935 |
|
|
135,577 |
|
|
3.21 |
% |
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
$ |
1,347,412 |
|
|
$ |
1,299,292 |
|
|
3.70 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
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) |
|
2016 |
|
2015 |
|
% Change |
|
2016 |
|
2015 |
|
% Change |
INTEREST AND DIVIDEND
INCOME: |
|
|
|
|
|
|
|
|
|
|
|
|
Loans including
fees |
|
$ |
10,541 |
|
|
$ |
9,862 |
|
|
6.89 |
% |
|
$ |
31,362 |
|
|
$ |
28,937 |
|
|
8.38 |
% |
Investment
securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
601 |
|
|
829 |
|
|
(27.50 |
)% |
|
1,825 |
|
|
2,728 |
|
|
(33.10 |
)% |
Tax-exempt |
|
329 |
|
|
676 |
|
|
(51.33 |
)% |
|
1,203 |
|
|
2,187 |
|
|
(44.99 |
)% |
Dividend
and other interest income |
|
189 |
|
|
156 |
|
|
21.15 |
% |
|
666 |
|
|
597 |
|
|
11.56 |
% |
TOTAL INTEREST AND
DIVIDEND INCOME |
|
11,660 |
|
|
11,523 |
|
|
1.19 |
% |
|
35,056 |
|
|
34,449 |
|
|
1.76 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
909 |
|
|
800 |
|
|
13.63 |
% |
|
2,624 |
|
|
2,328 |
|
|
12.71 |
% |
Short-term
borrowings |
|
7 |
|
|
31 |
|
|
(77.42 |
)% |
|
41 |
|
|
78 |
|
|
(47.44 |
)% |
Long-term
borrowings |
|
497 |
|
|
458 |
|
|
8.52 |
% |
|
1,481 |
|
|
1,476 |
|
|
0.34 |
% |
TOTAL INTEREST
EXPENSE |
|
1,413 |
|
|
1,289 |
|
|
9.62 |
% |
|
4,146 |
|
|
3,882 |
|
|
6.80 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INTEREST
INCOME |
|
10,247 |
|
|
10,234 |
|
|
0.13 |
% |
|
30,910 |
|
|
30,567 |
|
|
1.12 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR LOAN
LOSSES |
|
258 |
|
|
520 |
|
|
(50.38 |
)% |
|
866 |
|
|
1,820 |
|
|
(52.42 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INTEREST INCOME
AFTER PROVISION FOR LOAN LOSSES |
|
9,989 |
|
|
9,714 |
|
|
2.83 |
% |
|
30,044 |
|
|
28,747 |
|
|
4.51 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-INTEREST
INCOME: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges |
|
585 |
|
|
621 |
|
|
(5.80 |
)% |
|
1,678 |
|
|
1,772 |
|
|
(5.30 |
)% |
Securities gains,
available for sale |
|
253 |
|
|
526 |
|
|
(51.90 |
)% |
|
1,174 |
|
|
1,713 |
|
|
(31.47 |
)% |
Securities gains
(losses), trading |
|
8 |
|
|
(33 |
) |
|
124.24 |
% |
|
54 |
|
|
(37 |
) |
|
245.95 |
% |
Bank-owned life
insurance |
|
172 |
|
|
182 |
|
|
(5.49 |
)% |
|
516 |
|
|
541 |
|
|
(4.62 |
)% |
Gain on sale of
loans |
|
658 |
|
|
524 |
|
|
25.57 |
% |
|
1,691 |
|
|
1,305 |
|
|
29.58 |
% |
Insurance
commissions |
|
198 |
|
|
185 |
|
|
7.03 |
% |
|
604 |
|
|
623 |
|
|
(3.05 |
)% |
Brokerage
commissions |
|
290 |
|
|
297 |
|
|
(2.36 |
)% |
|
817 |
|
|
836 |
|
|
(2.27 |
)% |
Other |
|
918 |
|
|
835 |
|
|
9.94 |
% |
|
2,723 |
|
|
2,701 |
|
|
0.81 |
% |
TOTAL NON-INTEREST
INCOME |
|
3,082 |
|
|
3,137 |
|
|
(1.75 |
)% |
|
9,257 |
|
|
9,454 |
|
|
(2.08 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-INTEREST
EXPENSE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee
benefits |
|
4,507 |
|
|
4,302 |
|
|
4.77 |
% |
|
13,433 |
|
|
13,073 |
|
|
2.75 |
% |
Occupancy |
|
544 |
|
|
529 |
|
|
2.84 |
% |
|
1,630 |
|
|
1,721 |
|
|
(5.29 |
)% |
Furniture and
equipment |
|
662 |
|
|
686 |
|
|
(3.50 |
)% |
|
2,042 |
|
|
1,924 |
|
|
6.13 |
% |
Pennsylvania shares
tax |
|
220 |
|
|
244 |
|
|
(9.84 |
)% |
|
698 |
|
|
711 |
|
|
(1.83 |
)% |
Amortization of
investments in limited partnerships |
|
46 |
|
|
165 |
|
|
(72.12 |
)% |
|
266 |
|
|
496 |
|
|
(46.37 |
)% |
Federal Deposit
Insurance Corporation deposit insurance |
|
202 |
|
|
209 |
|
|
(3.35 |
)% |
|
670 |
|
|
654 |
|
|
2.45 |
% |
Marketing |
|
173 |
|
|
160 |
|
|
8.13 |
% |
|
568 |
|
|
434 |
|
|
30.88 |
% |
Intangible
amortization |
|
90 |
|
|
73 |
|
|
23.29 |
% |
|
276 |
|
|
235 |
|
|
17.45 |
% |
Other |
|
2,295 |
|
|
2,162 |
|
|
6.15 |
% |
|
6,882 |
|
|
6,171 |
|
|
11.52 |
% |
TOTAL NON-INTEREST
EXPENSE |
|
8,739 |
|
|
8,530 |
|
|
2.45 |
% |
|
26,465 |
|
|
25,419 |
|
|
4.12 |
% |
INCOME BEFORE INCOME
TAX PROVISION |
|
4,332 |
|
|
4,321 |
|
|
0.25 |
% |
|
12,836 |
|
|
12,782 |
|
|
0.42 |
% |
INCOME TAX
PROVISION |
|
1,273 |
|
|
957 |
|
|
33.02 |
% |
|
3,307 |
|
|
2,630 |
|
|
25.74 |
% |
NET INCOME |
|
$ |
3,059 |
|
|
$ |
3,364 |
|
|
(9.07 |
)% |
|
$ |
9,529 |
|
|
$ |
10,152 |
|
|
(6.14 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE -
BASIC AND DILUTED |
|
$ |
0.65 |
|
|
$ |
0.71 |
|
|
(8.45 |
)% |
|
$ |
2.01 |
|
|
$ |
2.12 |
|
|
(5.19 |
)% |
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC AND DILUTED |
|
4,733,800 |
|
|
4,761,576 |
|
|
(0.58 |
)% |
|
4,735,844 |
|
|
4,780,776 |
|
|
(0.94 |
)% |
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, 2016 |
|
September 30, 2015 |
(Dollars in Thousands) |
|
AverageBalance |
|
Interest |
|
AverageRate |
|
AverageBalance |
|
Interest |
|
AverageRate |
ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
Tax-exempt loans |
|
$ |
45,715 |
|
|
$ |
452 |
|
|
3.93 |
% |
|
$ |
43,562 |
|
|
$ |
423 |
|
|
3.85 |
% |
All other loans |
|
1,011,393 |
|
|
10,243 |
|
|
4.03 |
% |
|
947,665 |
|
|
9,583 |
|
|
4.01 |
% |
Total loans |
|
1,057,108 |
|
|
10,695 |
|
|
4.02 |
% |
|
991,227 |
|
|
10,006 |
|
|
4.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable securities |
|
93,893 |
|
|
725 |
|
|
3.09 |
% |
|
125,618 |
|
|
982 |
|
|
3.13 |
% |
Tax-exempt
securities |
|
49,231 |
|
|
498 |
|
|
4.05 |
% |
|
80,535 |
|
|
1,024 |
|
|
5.09 |
% |
Total securities |
|
143,124 |
|
|
1,223 |
|
|
3.42 |
% |
|
206,153 |
|
|
2,006 |
|
|
3.89 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
deposits |
|
48,125 |
|
|
65 |
|
|
0.54 |
% |
|
3,216 |
|
|
3 |
|
|
0.37 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-earning
assets |
|
1,248,357 |
|
|
11,983 |
|
|
3.82 |
% |
|
1,200,596 |
|
|
12,015 |
|
|
3.98 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets |
|
101,312 |
|
|
|
|
|
|
|
97,363 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
1,349,669 |
|
|
|
|
|
|
|
$ |
1,297,959 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings |
|
$ |
151,464 |
|
|
15 |
|
|
0.04 |
% |
|
$ |
143,353 |
|
|
14 |
|
|
0.04 |
% |
Super Now deposits |
|
184,440 |
|
|
107 |
|
|
0.23 |
% |
|
193,659 |
|
|
126 |
|
|
0.26 |
% |
Money market
deposits |
|
245,643 |
|
|
170 |
|
|
0.28 |
% |
|
210,029 |
|
|
145 |
|
|
0.27 |
% |
Time deposits |
|
223,082 |
|
|
617 |
|
|
1.10 |
% |
|
219,306 |
|
|
515 |
|
|
0.93 |
% |
Total interest-bearing
deposits |
|
804,629 |
|
|
909 |
|
|
0.45 |
% |
|
766,347 |
|
|
800 |
|
|
0.41 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings |
|
15,748 |
|
|
7 |
|
|
0.18 |
% |
|
40,801 |
|
|
31 |
|
|
0.30 |
% |
Long-term
borrowings |
|
91,025 |
|
|
497 |
|
|
2.14 |
% |
|
81,880 |
|
|
458 |
|
|
2.19 |
% |
Total borrowings |
|
106,773 |
|
|
504 |
|
|
1.85 |
% |
|
122,681 |
|
|
489 |
|
|
1.56 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing
liabilities |
|
911,402 |
|
|
1,413 |
|
|
0.61 |
% |
|
889,028 |
|
|
1,289 |
|
|
0.57 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
|
281,586 |
|
|
|
|
|
|
|
256,264 |
|
|
|
|
|
|
Other liabilities |
|
15,916 |
|
|
|
|
|
|
|
16,619 |
|
|
|
|
|
|
Shareholders’
equity |
|
140,765 |
|
|
|
|
|
|
|
136,048 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
$ |
1,349,669 |
|
|
|
|
|
|
|
$ |
1,297,959 |
|
|
|
|
|
|
Interest rate
spread |
|
|
|
|
|
3.21 |
% |
|
|
|
|
|
3.41 |
% |
Net interest
income/margin |
|
|
|
$ |
10,570 |
|
|
3.37 |
% |
|
|
|
$ |
10,726 |
|
|
3.55 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
2016 |
|
2015 |
Total interest
income |
|
$ |
11,660 |
|
|
$ |
11,523 |
|
Total interest
expense |
|
1,413 |
|
|
1,289 |
|
Net interest
income |
|
10,247 |
|
|
10,234 |
|
Tax equivalent
adjustment |
|
323 |
|
|
492 |
|
Net interest income
(fully taxable equivalent) |
|
$ |
10,570 |
|
|
$ |
10,726 |
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
September 30, 2016 |
|
September 30, 2015 |
(Dollars in Thousands) |
|
AverageBalance |
|
Interest |
|
AverageRate |
|
AverageBalance |
|
Interest |
|
AverageRate |
ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
Tax-exempt loans |
|
$ |
49,204 |
|
|
$ |
1,432 |
|
|
3.89 |
% |
|
$ |
39,901 |
|
|
$ |
1,194 |
|
|
4.00 |
% |
All other loans |
|
999,685 |
|
|
30,417 |
|
|
4.06 |
% |
|
920,675 |
|
|
28,149 |
|
|
4.09 |
% |
Total loans |
|
1,048,889 |
|
|
31,849 |
|
|
4.06 |
% |
|
960,576 |
|
|
29,343 |
|
|
4.08 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable securities |
|
95,652 |
|
|
2,344 |
|
|
3.27 |
% |
|
133,191 |
|
|
3,316 |
|
|
3.32 |
% |
Tax-exempt
securities |
|
56,291 |
|
|
1,823 |
|
|
4.32 |
% |
|
85,263 |
|
|
3,314 |
|
|
5.18 |
% |
Total securities |
|
151,943 |
|
|
4,167 |
|
|
3.66 |
% |
|
218,454 |
|
|
6,630 |
|
|
4.05 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
deposits |
|
38,411 |
|
|
147 |
|
|
0.51 |
% |
|
4,500 |
|
|
9 |
|
|
0.27 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-earning
assets |
|
1,239,243 |
|
|
36,163 |
|
|
3.90 |
% |
|
1,183,530 |
|
|
35,982 |
|
|
4.06 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets |
|
99,295 |
|
|
|
|
|
|
|
97,151 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
1,338,538 |
|
|
|
|
|
|
|
$ |
1,280,681 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings |
|
$ |
151,158 |
|
|
43 |
|
|
0.04 |
% |
|
$ |
142,812 |
|
|
43 |
|
|
0.04 |
% |
Super Now deposits |
|
190,190 |
|
|
356 |
|
|
0.25 |
% |
|
190,653 |
|
|
379 |
|
|
0.27 |
% |
Money market
deposits |
|
234,918 |
|
|
471 |
|
|
0.27 |
% |
|
208,317 |
|
|
424 |
|
|
0.27 |
% |
Time deposits |
|
221,676 |
|
|
1,754 |
|
|
1.06 |
% |
|
218,987 |
|
|
1,482 |
|
|
0.90 |
% |
Total interest-bearing
deposits |
|
797,942 |
|
|
2,624 |
|
|
0.44 |
% |
|
760,769 |
|
|
2,328 |
|
|
0.41 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings |
|
20,273 |
|
|
41 |
|
|
0.27 |
% |
|
36,111 |
|
|
78 |
|
|
0.29 |
% |
Long-term
borrowings |
|
91,025 |
|
|
1,481 |
|
|
2.14 |
% |
|
82,597 |
|
|
1,476 |
|
|
2.36 |
% |
Total borrowings |
|
111,298 |
|
|
1,522 |
|
|
1.80 |
% |
|
118,708 |
|
|
1,554 |
|
|
1.73 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing
liabilities |
|
909,240 |
|
|
4,146 |
|
|
0.61 |
% |
|
879,477 |
|
|
3,882 |
|
|
0.59 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
|
274,488 |
|
|
|
|
|
|
|
247,130 |
|
|
|
|
|
|
Other liabilities |
|
15,775 |
|
|
|
|
|
|
|
17,327 |
|
|
|
|
|
|
Shareholders’
equity |
|
139,035 |
|
|
|
|
|
|
|
136,747 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
$ |
1,338,538 |
|
|
|
|
|
|
|
$ |
1,280,681 |
|
|
|
|
|
|
Interest rate
spread |
|
|
|
|
|
3.29 |
% |
|
|
|
|
|
3.47 |
% |
Net interest
income/margin |
|
|
|
$ |
32,017 |
|
|
3.45 |
% |
|
|
|
$ |
32,100 |
|
|
3.63 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
2016 |
|
2015 |
Total interest
income |
|
$ |
35,056 |
|
|
$ |
34,449 |
|
Total interest
expense |
|
4,146 |
|
|
3,882 |
|
Net interest
income |
|
30,910 |
|
|
30,567 |
|
Tax equivalent
adjustment |
|
1,107 |
|
|
1,533 |
|
Net interest income
(fully taxable equivalent) |
|
$ |
32,017 |
|
|
$ |
32,100 |
|
|
|
|
|
|
|
|
|
|
(Dollars in Thousands, Except Per Share Data) |
|
Quarter Ended |
|
|
9/30/2016 |
|
6/30/2016 |
|
3/31/2016 |
|
12/31/2015 |
|
9/302015 |
Operating
Data |
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
3,059 |
|
|
$ |
3,390 |
|
|
$ |
3,078 |
|
|
$ |
3,746 |
|
|
$ |
3,364 |
|
Net
interest income |
|
10,247 |
|
|
10,288 |
|
|
10,374 |
|
|
10,338 |
|
|
10,234 |
|
Provision
for loan losses |
|
258 |
|
|
258 |
|
|
350 |
|
|
480 |
|
|
520 |
|
Net
security gains |
|
261 |
|
|
492 |
|
|
475 |
|
|
894 |
|
|
493 |
|
Non-interest income, excluding net security gains |
|
2,821 |
|
|
2,686 |
|
|
2,522 |
|
|
2,417 |
|
|
2,644 |
|
Non-interest expense |
|
8,739 |
|
|
8,666 |
|
|
9,061 |
|
|
8,317 |
|
|
8,530 |
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Statistics |
|
|
|
|
|
|
|
|
|
|
Net
interest margin |
|
3.37 |
% |
|
3.42 |
% |
|
3.57 |
% |
|
3.55 |
% |
|
3.55 |
% |
Annualized return on average assets |
|
0.91 |
% |
|
1.00 |
% |
|
0.94 |
% |
|
1.15 |
% |
|
1.04 |
% |
Annualized return on average equity |
|
8.69 |
% |
|
9.77 |
% |
|
8.95 |
% |
|
10.73 |
% |
|
9.89 |
% |
Annualized net loan charge-offs (recoveries) to average loans |
|
0.02 |
% |
|
0.05 |
% |
|
— |
% |
|
(0.03 |
)% |
|
0.12 |
% |
Net
charge-offs (recoveries) |
|
57 |
|
|
123 |
|
|
12 |
|
|
(75 |
) |
|
296 |
|
Efficiency ratio |
|
66.2 |
% |
|
66.0 |
% |
|
69.6 |
% |
|
64.6 |
% |
|
65.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
Per Share
Data |
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share |
|
$ |
0.65 |
|
|
$ |
0.72 |
|
|
$ |
0.65 |
|
|
$ |
0.79 |
|
|
$ |
0.71 |
|
Diluted
earnings per share |
|
0.65 |
|
|
0.72 |
|
|
0.65 |
|
|
0.79 |
|
|
0.71 |
|
Dividend
declared per share |
|
0.47 |
|
|
0.47 |
|
|
0.47 |
|
|
0.47 |
|
|
0.47 |
|
Book
value |
|
29.56 |
|
|
29.45 |
|
|
29.09 |
|
|
28.71 |
|
|
28.54 |
|
Common
stock price: |
|
|
|
|
|
|
|
|
|
|
High |
|
44.75 |
|
|
44.70 |
|
|
41.32 |
|
|
45.28 |
|
|
44.56 |
|
Low |
|
40.34 |
|
|
37.82 |
|
|
36.73 |
|
|
40.47 |
|
|
40.41 |
|
Close |
|
44.46 |
|
|
41.99 |
|
|
38.54 |
|
|
42.46 |
|
|
40.92 |
|
Weighted
average common shares: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
4,734 |
|
|
4,733 |
|
|
4,741 |
|
|
4,747 |
|
|
4,762 |
|
Fully
Diluted |
|
4,734 |
|
|
4,733 |
|
|
4,741 |
|
|
4,747 |
|
|
4,762 |
|
End-of-period common shares: |
|
|
|
|
|
|
|
|
|
|
Issued |
|
5,007 |
|
|
5,006 |
|
|
5,006 |
|
|
5,005 |
|
|
5,004 |
|
Treasury |
|
272 |
|
|
272 |
|
|
272 |
|
|
258 |
|
|
254 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Thousands, Except Per Share Data) |
|
Quarter Ended |
|
|
9/30/2016 |
|
6/30/2016 |
|
3/31/2016 |
|
12/31/2015 |
|
9/30/2015 |
Financial
Condition Data: |
|
|
|
|
|
|
|
|
|
|
General |
|
|
|
|
|
|
|
|
|
|
Total
assets |
|
$ |
1,347,412 |
|
|
$ |
1,346,482 |
|
|
$ |
1,318,137 |
|
|
$ |
1,320,057 |
|
|
$ |
1,299,292 |
|
Loans,
net |
|
1,056,762 |
|
|
1,041,602 |
|
|
1,028,870 |
|
|
1,033,163 |
|
|
990,164 |
|
Goodwill |
|
17,104 |
|
|
17,104 |
|
|
17,104 |
|
|
17,104 |
|
|
17,104 |
|
Intangibles |
|
1,889 |
|
|
1,979 |
|
|
2,078 |
|
|
1,240 |
|
|
1,316 |
|
Total
deposits |
|
1,088,297 |
|
|
1,084,867 |
|
|
1,059,581 |
|
|
1,031,880 |
|
|
1,004,801 |
|
Noninterest-bearing |
|
295,599 |
|
|
274,002 |
|
|
269,362 |
|
|
280,083 |
|
|
247,848 |
|
|
|
|
|
|
|
|
|
|
|
|
Savings |
|
150,822 |
|
|
152,540 |
|
|
153,217 |
|
|
144,561 |
|
|
143,224 |
|
NOW |
|
175,767 |
|
|
190,890 |
|
|
190,168 |
|
|
176,078 |
|
|
188,444 |
|
Money
Market |
|
244,138 |
|
|
246,712 |
|
|
226,659 |
|
|
209,782 |
|
|
204,475 |
|
Time
Deposits |
|
221,971 |
|
|
220,723 |
|
|
220,175 |
|
|
221,376 |
|
|
220,810 |
|
Total
interest-bearing deposits |
|
792,698 |
|
|
810,865 |
|
|
790,219 |
|
|
751,797 |
|
|
756,953 |
|
|
|
|
|
|
|
|
|
|
|
|
Core deposits* |
|
866,326 |
|
|
864,145 |
|
|
839,406 |
|
|
810,504 |
|
|
783,991 |
|
Shareholders’ equity |
|
139,935 |
|
|
139,394 |
|
|
137,663 |
|
|
136,279 |
|
|
135,577 |
|
|
|
|
|
|
|
|
|
|
|
|
Asset
Quality |
|
|
|
|
|
|
|
|
|
|
Non-performing loans |
|
$ |
11,530 |
|
|
$ |
11,626 |
|
|
$ |
11,648 |
|
|
$ |
9,446 |
|
|
$ |
8,608 |
|
Non-performing loans to total assets |
|
0.86 |
% |
|
0.86 |
% |
|
0.88 |
% |
|
0.72 |
% |
|
0.66 |
% |
Allowance
for loan losses |
|
12,718 |
|
|
12,517 |
|
|
12,382 |
|
|
12,044 |
|
|
11,489 |
|
Allowance
for loan losses to total loans |
|
1.19 |
% |
|
1.19 |
% |
|
1.19 |
% |
|
1.15 |
% |
|
1.15 |
% |
Allowance
for loan losses to non-performing loans |
|
110.30 |
% |
|
107.66 |
% |
|
106.30 |
% |
|
127.50 |
% |
|
133.47 |
% |
Non-performing loans to total loans |
|
1.08 |
% |
|
1.10 |
% |
|
1.12 |
% |
|
0.90 |
% |
|
0.86 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity to total assets |
|
10.39 |
% |
|
10.35 |
% |
|
10.44 |
% |
|
10.32 |
% |
|
10.43 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* 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) |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
GAAP net income |
|
$ |
3,059 |
|
|
$ |
3,364 |
|
|
$ |
9,529 |
|
|
$ |
10,152 |
|
Less: net securities
gains, net of tax |
|
172 |
|
|
325 |
|
|
810 |
|
|
1,106 |
|
Non-GAAP operating
earnings |
|
$ |
2,887 |
|
|
$ |
3,039 |
|
|
$ |
8,719 |
|
|
$ |
9,046 |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Return on average
assets (ROA) |
|
0.91 |
% |
|
1.04 |
% |
|
0.95 |
% |
|
1.06 |
% |
Less: net securities
gains, net of tax |
|
0.05 |
% |
|
0.10 |
% |
|
0.08 |
% |
|
0.12 |
% |
Non-GAAP operating
ROA |
|
0.86 |
% |
|
0.94 |
% |
|
0.87 |
% |
|
0.94 |
% |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Return on average
equity (ROE) |
|
8.69 |
% |
|
9.89 |
% |
|
9.14 |
% |
|
9.90 |
% |
Less: net securities
gains, net of tax |
|
0.49 |
% |
|
0.95 |
% |
|
0.78 |
% |
|
1.08 |
% |
Non-GAAP operating
ROE |
|
8.20 |
% |
|
8.94 |
% |
|
8.36 |
% |
|
8.82 |
% |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Basic earnings per
share (EPS) |
|
$ |
0.65 |
|
|
$ |
0.71 |
|
|
$ |
2.01 |
|
|
$ |
2.12 |
|
Less: net securities
gains, net of tax |
|
0.04 |
|
|
0.07 |
|
|
0.17 |
|
|
0.23 |
|
Non-GAAP basic
operating EPS |
|
$ |
0.61 |
|
|
$ |
0.64 |
|
|
$ |
1.84 |
|
|
$ |
1.89 |
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Dilutive EPS |
|
$ |
0.65 |
|
|
$ |
0.71 |
|
|
$ |
2.01 |
|
|
$ |
2.12 |
|
Less: net securities
gains, net of tax |
|
0.04 |
|
|
0.07 |
|
|
0.17 |
|
|
0.23 |
|
Non-GAAP dilutive
operating EPS |
|
$ |
0.61 |
|
|
$ |
0.64 |
|
|
$ |
1.84 |
|
|
$ |
1.89 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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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