Penns Woods Bancorp, Inc. (NASDAQ: PWOD)
Penns Woods Bancorp, Inc., supported by
loan and deposit growth, achieved net income of $10.5 million for
the nine months ended September 30, 2018, resulting in basic and
diluted earnings per share of $2.24.
Highlights
- Net income from core operations (“operating earnings”), which
is a non-generally accepted accounting principles (GAAP) measure of
net income excluding net securities gains or losses, was $3.8
million for the three months ended September 30, 2018 compared
to $3.1 million for the same period of 2017. Operating earnings
increased to $10.5 million for the nine months ended September 30,
2018, compared to $8.7 million for the same period of 2017.
Impacting the level of operating earnings were several factors,
including the continued shift in composition of the earning asset
portfolio as the balance sheet is actively managed to reduce market
risk and interest rate risk in a rising rate environment. In
addition, the effective tax rate has decreased due to the "Tax Cuts
and Jobs Act," which reduced the corporate tax rate to 21%
effective January 1, 2018.
- Operating earnings for the three months ended September 30,
2018 was $0.82 for basic and diluted earnings per share, an
increase from $0.66 for basic and diluted earnings per share for
the same period of 2017. Operating earnings for the nine months
ended September 30, 2018 was $2.24 basic and diluted earnings per
share compared to $1.85 basic and diluted earnings per share for
the same period of 2017.
- Return on average assets was 0.96% for the three months ended
September 30, 2018, compared to 0.93% for the corresponding period
of 2017. Return on average assets was 0.91% for the nine months
ended September 30, 2018, compared to 0.87% for the corresponding
period of 2017.
- Return on average equity was 10.94% for the three months ended
September 30, 2018, compared to 9.43% for the corresponding period
of 2017. Return on average equity was 10.19% for the nine months
ended September 30, 2018, compared to 8.69% for the corresponding
period of 2017.
A reconciliation of the non-GAAP financial
measures of operating earnings, operating return on assets,
operating return on equity, and operating earnings per share
described in the highlights to the comparable GAAP financial
measures is included at the end of this press release.
Net Income
Net income, as reported under GAAP, for the
three and nine months ended September 30, 2018 was $3.8
million and $10.5 million, compared to $3.3 million and $9.1
million for the same period of 2017. Results for the three
and nine months ended September 30, 2018 compared to 2017 were
impacted by a decrease in after-tax securities gains of $216,000
(from a gain of $197,000 to a loss of $19,000) for the three month
periods and a decrease in after-tax securities gains of $359,000
(from a gain of $320,000 to a loss of $39,000) for the nine month
periods. The impact of the Tax Cuts and Jobs Act was the primary
driver for the decrease in the Company's effective tax rate to
18.30% and 17.17% for the three and nine month periods ended
September 30, 2018 compared to 28.08% and 27.82% for the prior year
periods. Earnings per share for the three and nine months ended
September 30, 2018 was $0.82 and $2.24 basic and diluted, an
increase from the 2017 basic and diluted earnings per share of
$0.70 and $1.92. Return on average assets and return on average
equity were 0.96% and 10.94% for the three months ended September
30, 2018, compared to 0.93% and 9.43% for the corresponding periods
of 2017. Return on average assets and return on average equity were
0.91% and 10.19% for the nine months ended September 30, 2018
compared to 0.87% and 8.69% for the corresponding periods of
2017.
Net Interest Margin
The net interest margin for the three and nine
months ended September 30, 2018 was 3.30% and 3.31%, compared to
3.57% and 3.47% for the corresponding period of 2017. The
decrease in the net interest margin was driven by an increase in
the cost of interest-bearing liabilities of 41 basis points ("bps")
for the three month period and 31 bps for the nine month period
primarily from an increase in the rate paid on time deposits as the
average maturity of such liabilities lengthened. The impact of the
increased cost of funds was limited by an increase in the yield on
earning assets of 6 bps and 8 bps for the three and nine month
periods. The increase in the yield on earning assets was driven by
an increase in the loan portfolio yield in conjunction with an
increase in the average loan portfolio of $193.9 million and $177.8
million respectively. The loan growth was primarily funded by an
increase in average borrowings of $134.4 million and $103.8 million
for the three and nine month periods along with growth in average
total deposits of $45.6 million and $44.1 million respectively.
Core deposits represent a lower cost funding source than time
deposits and comprise 77.63% of total deposits at
September 30, 2018 and 81.94% at September 30, 2017.
Assets
Total assets increased $240.2 million to $1.7
billion at September 30, 2018 compared to September 30,
2017. Net loans increased $179.0 million to $1.4 billion at
September 30, 2018 compared to September 30, 2017,
primarily due to campaigns related to increasing home equity
product market share and indirect auto lending. The investment
portfolio increased $16.2 million from September 30, 2017 to
September 30, 2018 due to an increase in the taxable municipal
and restricted bank stock portfolios.
Non-performing Loans
The ratio of non-performing loans to total loans
ratio decreased to 0.64% at September 30, 2018 from 0.69%
September 30, 2017 as non-performing loans have increased to
$8.8 million at September 30, 2018 from $8.3 million at
September 30, 2017. The majority of non-performing loans
involve loans that are either in a secured position and have
sureties with a strong underlying financial position or have a
specific allocation for any impairment recorded within the
allowance for loan losses. Net loan charge-offs of $490,000
for the nine months ended September 30, 2018 minimally impacted the
allowance for loan losses, which was 0.97% of total loans at
September 30, 2018. The majority of the loans
charged-off had a specific allowance within the allowance for loan
losses.
Deposits
Deposits increased $56.5 million to $1.2 billion
at September 30, 2018 compared to September 30, 2017.
Noninterest-bearing deposits increased $2.3 million to $313.1
million at September 30, 2018 compared to September 30,
2017. Driving deposit 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 average maturity of the time deposit portfolio
continues to move forward as part of the strategy to build balance
sheet protection in a rising interest rate environment.
Shareholders’ Equity
Shareholders’ equity increased $870,000 to
$140.5 million at September 30, 2018 compared to
September 30, 2017. The change in accumulated other
comprehensive loss from $4.1 million at September 30, 2017 to
$7.5 million at September 30, 2018 is a result of an increase
in unrealized losses on available for sale securities (from an
unrealized gain of $73,000 at September 30, 2017 to an unrealized
loss of $2.7 million at September 30, 2018). The amount of
accumulated other comprehensive loss at September 30, 2018 was
also impacted by the change in net excess of the projected benefit
obligation over the fair value of the plan assets of the defined
benefit pension plan, resulting in an increase in the net loss of
$617,000, mainly due to the change in the corporate tax rate from
2017 to 2018. The current level of shareholders’ equity equates to
a book value per share of $29.96 at September 30, 2018
compared to $29.79 at September 30, 2017 and an equity to
asset ratio of 8.41% at September 30, 2018, compared to 9.77%
at September 30, 2017. Excluding goodwill and intangibles,
book value per share was $26.05 at September 30, 2018,
compared to $25.81 at September 30, 2017. Dividends declared
for the nine months ended September 30, 2018 and 2017 were $1.41
per share.
Penns Woods Bancorp, Inc. is the parent
company of Jersey Shore State Bank, which operates seventeen branch
offices providing financial services in Lycoming, Clinton, Centre,
Montour, and Union Counties, and Luzerne Bank, which operates nine
branch offices providing financial services in Luzerne
County. Investment and insurance products are offered through
Jersey Shore State Bank’s subsidiary, The M Group, Inc. D/B/A
The Comprehensive Financial Group. Insurance products are
offered through United Insurance Solutions, LLC, a joint venture
that is a subsidiary of the holding company.
NOTE: This press release contains
financial information determined by methods other than in
accordance with U.S. Generally Accepted Accounting Principles
(“GAAP”). Management uses the non-GAAP measure of net income from
core operations in its analysis of the company’s performance. This
measure, as used by the Company, adjusts net income determined in
accordance with GAAP to exclude the effects of special items,
including significant gains or losses that are unusual in nature
such as net securities gains and losses. Because these certain
items and their impact on the Company’s performance are difficult
to predict, management believes presentation of financial measures
excluding the impact of such items provides useful supplemental
information in evaluating the operating results of the Company’s
core businesses. These disclosures should not be viewed as a
substitute for net income determined in accordance with GAAP, nor
are they necessarily comparable to non-GAAP performance measures
that may be presented by other companies.
This press release may contain certain
“forward-looking statements” including statements concerning plans,
objectives, future events or performance and assumptions and other
statements, which are statements other than statements of
historical fact. The Company cautions readers that the
following important factors, among others, may have affected and
could in the future affect actual results and could cause actual
results for subsequent periods to differ materially from those
expressed in any forward-looking statement made by or on behalf of
the Company herein: (i) the effect of changes in laws and
regulations, including federal and state banking laws and
regulations, and the associated costs of compliance with such laws
and regulations either currently or in the future as applicable;
(ii) the effect of changes in accounting policies and
practices, as may be adopted by the regulatory agencies as well as
by the Financial Accounting Standards Board, or of changes in the
Company’s organization, compensation and benefit plans;
(iii) the effect on the Company’s competitive position within
its market area of the increasing consolidation within the banking
and financial services industries, including the increased
competition from larger regional and out-of-state banking
organizations as well as non-bank providers of various financial
services; (iv) the effect of changes in interest rates; and
(v) the effect of changes in the business cycle and downturns
in the local, regional or national economies. For a list of
other factors which could affect the Company’s results, see the
Company’s filings with the Securities and Exchange Commission,
including “Item 1A. Risk Factors,” set forth in the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2017.
You should not place undue reliance on any
forward-looking statements. These statements speak only as of
the date of this press release, even if subsequently made available
by the Company on its website or otherwise. The Company
undertakes no obligation to update or revise these statements to
reflect events or circumstances occurring after the date of this
press release.
Previous press releases and additional
information can be obtained from the Company’s website at
www.pwod.com.
Contact: |
Richard A. Grafmyre, Chief Executive Officer |
|
110 Reynolds Street |
|
Williamsport, PA 17702 |
|
570-322-1111 |
e-mail: pwod@pwod.com |
THIS INFORMATION IS SUBJECT TO YEAR-END AUDIT
ADJUSTMENT
PENNS WOODS
BANCORP, INC.CONSOLIDATED BALANCE
SHEET(UNAUDITED)
|
|
September 30, |
(In Thousands, Except Share Data) |
|
2018 |
|
2017 |
|
% Change |
ASSETS: |
|
|
|
|
|
|
Noninterest-bearing balances |
|
$ |
33,675 |
|
|
$ |
22,042 |
|
|
52.78 |
% |
Interest-bearing balances in other financial institutions |
|
38,672 |
|
|
5,705 |
|
|
577.86 |
% |
Total cash and cash equivalents |
|
72,347 |
|
|
27,747 |
|
|
160.74 |
% |
|
|
|
|
|
|
|
Investment debt securities, available for sale, at fair value |
|
128,905 |
|
|
118,829 |
|
|
8.48 |
% |
Investment equity securities, at fair value |
|
1,902 |
|
|
2,485 |
|
|
(23.46 |
)% |
Investment securities, trading |
|
45 |
|
|
210 |
|
|
(78.57 |
)% |
Restricted investment in bank stock, at fair value |
|
17,834 |
|
|
10,999 |
|
|
62.14 |
% |
Loans held for sale |
|
3,727 |
|
|
1,734 |
|
|
114.94 |
% |
Loans |
|
1,369,105 |
|
|
1,189,714 |
|
|
15.08 |
% |
Allowance for loan losses |
|
(13,343 |
) |
|
(12,933 |
) |
|
3.17 |
% |
Loans, net |
|
1,355,762 |
|
|
1,176,781 |
|
|
15.21 |
% |
Premises and equipment, net |
|
27,361 |
|
|
25,895 |
|
|
5.66 |
% |
Accrued interest receivable |
|
5,353 |
|
|
4,289 |
|
|
24.81 |
% |
Bank-owned life insurance |
|
28,472 |
|
|
27,827 |
|
|
2.32 |
% |
Goodwill |
|
17,104 |
|
|
17,104 |
|
|
— |
% |
Intangibles |
|
1,233 |
|
|
1,543 |
|
|
(20.09 |
)% |
Deferred tax asset |
|
5,310 |
|
|
7,984 |
|
|
(33.49 |
)% |
Other assets |
|
4,993 |
|
|
6,770 |
|
|
(26.25 |
)% |
TOTAL ASSETS |
|
$ |
1,670,348 |
|
|
$ |
1,430,197 |
|
|
16.79 |
% |
|
|
|
|
|
|
|
LIABILITIES: |
|
|
|
|
|
|
Interest-bearing deposits |
|
$ |
897,366 |
|
|
$ |
843,166 |
|
|
6.43 |
% |
Noninterest-bearing deposits |
|
313,111 |
|
|
310,830 |
|
|
0.73 |
% |
Total deposits |
|
1,210,477 |
|
|
1,153,996 |
|
|
4.89 |
% |
|
|
|
|
|
|
|
Short-term borrowings |
|
164,465 |
|
|
41,596 |
|
|
295.39 |
% |
Long-term borrowings |
|
138,970 |
|
|
80,998 |
|
|
71.57 |
% |
Accrued interest payable |
|
1,051 |
|
|
483 |
|
|
117.60 |
% |
Other liabilities |
|
14,846 |
|
|
13,455 |
|
|
10.34 |
% |
TOTAL LIABILITIES |
|
1,529,809 |
|
|
1,290,528 |
|
|
18.54 |
% |
|
|
|
|
|
|
|
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;
5,011,063 and 5,008,720 shares issued; 4,690,913 and 4,688,570
outstanding |
|
41,757 |
|
|
41,739 |
|
|
0.04 |
% |
Additional paid-in capital |
|
50,577 |
|
|
50,142 |
|
|
0.87 |
% |
Retained earnings |
|
67,802 |
|
|
64,033 |
|
|
5.89 |
% |
Accumulated other comprehensive loss: |
|
|
|
|
|
|
Net unrealized (loss) gain on available for sale
securities |
|
(2,663 |
) |
|
73 |
|
|
(3,747.95 |
)% |
Defined benefit plan |
|
(4,820 |
) |
|
(4,203 |
) |
|
(14.68 |
)% |
Treasury stock at cost, 320,150 |
|
(12,115 |
) |
|
(12,115 |
) |
|
— |
% |
TOTAL PENNS WOODS BANCORP, INC. SHAREHOLDERS' EQUITY |
|
140,538 |
|
|
139,669 |
|
|
0.62 |
% |
Non-controlling interest |
|
1 |
|
|
— |
|
|
100.00 |
% |
TOTAL SHAREHOLDERS' EQUITY |
|
140,539 |
|
|
139,669 |
|
|
0.62 |
% |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
$ |
1,670,348 |
|
|
$ |
1,430,197 |
|
|
16.79 |
% |
|
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) |
|
2018 |
|
2017 |
|
% Change |
|
2018 |
|
2017 |
|
% Change |
INTEREST AND DIVIDEND INCOME: |
|
|
|
|
|
|
|
|
|
|
|
|
Loans including fees |
|
$ |
13,982 |
|
|
$ |
11,906 |
|
|
17.44 |
% |
|
$ |
39,172 |
|
|
$ |
33,642 |
|
|
16.44 |
% |
Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
713 |
|
|
553 |
|
|
28.93 |
% |
|
1,898 |
|
|
1,665 |
|
|
13.99 |
% |
Tax-exempt |
|
207 |
|
|
319 |
|
|
(35.11 |
)% |
|
678 |
|
|
940 |
|
|
(27.87 |
)% |
Dividend and other interest income |
|
296 |
|
|
170 |
|
|
74.12 |
% |
|
762 |
|
|
592 |
|
|
28.72 |
% |
TOTAL INTEREST AND DIVIDEND INCOME |
|
15,198 |
|
|
12,948 |
|
|
17.38 |
% |
|
42,510 |
|
|
36,839 |
|
|
15.39 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE: |
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
1,659 |
|
|
1,058 |
|
|
56.81 |
% |
|
4,371 |
|
|
2,968 |
|
|
47.27 |
% |
Short-term borrowings |
|
528 |
|
|
31 |
|
|
1,603.23 |
% |
|
1,004 |
|
|
39 |
|
|
2,474.36 |
% |
Long-term borrowings |
|
756 |
|
|
407 |
|
|
85.75 |
% |
|
2,024 |
|
|
1,220 |
|
|
65.90 |
% |
TOTAL INTEREST EXPENSE |
|
2,943 |
|
|
1,496 |
|
|
96.72 |
% |
|
7,399 |
|
|
4,227 |
|
|
75.04 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INTEREST INCOME |
|
12,255 |
|
|
11,452 |
|
|
7.01 |
% |
|
35,111 |
|
|
32,612 |
|
|
7.66 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR LOAN LOSSES |
|
480 |
|
|
60 |
|
|
700.00 |
% |
|
975 |
|
|
605 |
|
|
61.16 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |
|
11,775 |
|
|
11,392 |
|
|
3.36 |
% |
|
34,136 |
|
|
32,007 |
|
|
6.65 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-INTEREST INCOME: |
|
|
|
|
|
|
|
|
|
|
|
|
Service charges |
|
645 |
|
|
550 |
|
|
17.27 |
% |
|
1,788 |
|
|
1,637 |
|
|
9.22 |
% |
Debt securities (losses) gains, available for sale |
|
(22 |
) |
|
302 |
|
|
(107.28 |
)% |
|
(17 |
) |
|
487 |
|
|
(103.49 |
)% |
Equity securities losses |
|
(16 |
) |
|
— |
|
|
(100.00 |
)% |
|
(44 |
) |
|
— |
|
|
(100.00 |
)% |
Securities gains (losses), trading |
|
14 |
|
|
(4 |
) |
|
(100.00 |
)% |
|
12 |
|
|
(2 |
) |
|
(700.00 |
)% |
Bank-owned life insurance |
|
165 |
|
|
166 |
|
|
(0.60 |
)% |
|
496 |
|
|
499 |
|
|
(0.60 |
)% |
Gain on sale of loans |
|
398 |
|
|
455 |
|
|
(12.53 |
)% |
|
1,053 |
|
|
1,316 |
|
|
(19.98 |
)% |
Insurance commissions |
|
85 |
|
|
109 |
|
|
(22.02 |
)% |
|
266 |
|
|
399 |
|
|
(33.33 |
)% |
Brokerage commissions |
|
340 |
|
|
352 |
|
|
(3.41 |
)% |
|
1,013 |
|
|
1,044 |
|
|
(2.97 |
)% |
Debit card income |
|
359 |
|
|
514 |
|
|
(30.16 |
)% |
|
1,065 |
|
|
1,450 |
|
|
(26.55 |
)% |
Other |
|
621 |
|
|
296 |
|
|
109.80 |
% |
|
1,400 |
|
|
1,325 |
|
|
5.66 |
% |
TOTAL NON-INTEREST INCOME |
|
2,589 |
|
|
2,740 |
|
|
(5.51 |
)% |
|
7,032 |
|
|
8,155 |
|
|
(13.77 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-INTEREST EXPENSE: |
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
5,420 |
|
|
4,738 |
|
|
14.39 |
% |
|
15,387 |
|
|
14,116 |
|
|
9.00 |
% |
Occupancy |
|
640 |
|
|
603 |
|
|
6.14 |
% |
|
2,080 |
|
|
1,855 |
|
|
12.13 |
% |
Furniture and equipment |
|
780 |
|
|
816 |
|
|
(4.41 |
)% |
|
2,328 |
|
|
2,129 |
|
|
9.35 |
% |
Software Amortization |
|
208 |
|
|
235 |
|
|
(11.49 |
)% |
|
504 |
|
|
750 |
|
|
(32.80 |
)% |
Pennsylvania shares tax |
|
278 |
|
|
228 |
|
|
21.93 |
% |
|
833 |
|
|
696 |
|
|
19.68 |
% |
Professional Fees |
|
459 |
|
|
560 |
|
|
(18.04 |
)% |
|
1,674 |
|
|
1,816 |
|
|
(7.82 |
)% |
Federal Deposit Insurance Corporation deposit insurance |
|
237 |
|
|
194 |
|
|
22.16 |
% |
|
639 |
|
|
514 |
|
|
24.32 |
% |
Marketing |
|
245 |
|
|
315 |
|
|
(22.22 |
)% |
|
764 |
|
|
690 |
|
|
10.72 |
% |
Intangible amortization |
|
71 |
|
|
81 |
|
|
(12.35 |
)% |
|
229 |
|
|
256 |
|
|
(10.55 |
)% |
Other |
|
1,343 |
|
|
1,796 |
|
|
(25.22 |
)% |
|
4,037 |
|
|
4,792 |
|
|
(15.76 |
)% |
TOTAL NON-INTEREST EXPENSE |
|
9,681 |
|
|
9,566 |
|
|
1.20 |
% |
|
28,475 |
|
|
27,614 |
|
|
3.12 |
% |
INCOME BEFORE INCOME TAX PROVISION |
|
4,683 |
|
|
4,566 |
|
|
2.56 |
% |
|
12,693 |
|
|
12,548 |
|
|
1.16 |
% |
INCOME TAX PROVISION |
|
857 |
|
|
1,282 |
|
|
(33.15 |
)% |
|
2,179 |
|
|
3,491 |
|
|
(37.58 |
)% |
NET INCOME |
|
$ |
3,826 |
|
|
$ |
3,284 |
|
|
16.50 |
% |
|
$ |
10,514 |
|
|
$ |
9,057 |
|
|
16.09 |
% |
Earnings attributable to noncontrolling interest |
|
— |
|
|
— |
|
|
— |
% |
|
(1 |
) |
|
— |
|
|
— |
% |
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS' |
|
$ |
3,826 |
|
|
$ |
3,284 |
|
|
16.50 |
% |
|
$ |
10,515 |
|
|
$ |
9,057 |
|
|
16.10 |
% |
EARNINGS PER SHARE - BASIC |
|
$ |
0.82 |
|
|
$ |
0.70 |
|
|
17.14 |
% |
|
$ |
2.24 |
|
|
$ |
1.92 |
|
|
16.67 |
% |
EARNINGS PER SHARE - DILUTED |
|
$ |
0.82 |
|
|
$ |
0.70 |
|
|
17.14 |
% |
|
$ |
2.24 |
|
|
$ |
1.92 |
|
|
16.67 |
% |
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC |
|
4,690,560 |
|
|
4,688,222 |
|
|
0.05 |
% |
|
4,689,960 |
|
|
4,711,282 |
|
|
(0.45 |
)% |
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED |
|
4,690,560 |
|
|
4,688,222 |
|
|
0.05 |
% |
|
4,689,960 |
|
|
4,711,282 |
|
|
(0.45 |
)% |
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,
2018 |
|
September 30,
2017 |
(Dollars in Thousands) |
|
AverageBalance |
|
Interest |
|
AverageRate |
|
AverageBalance |
|
Interest |
|
AverageRate |
ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
Tax-exempt loans |
|
$ |
75,182 |
|
|
$ |
559 |
|
|
2.95 |
% |
|
$ |
53,850 |
|
|
$ |
494 |
|
|
3.64 |
% |
All other loans |
|
1,278,149 |
|
|
13,541 |
|
|
4.20 |
% |
|
1,105,615 |
|
|
11,580 |
|
|
4.16 |
% |
Total loans |
|
1,353,331 |
|
|
14,100 |
|
|
4.13 |
% |
|
1,159,465 |
|
|
12,074 |
|
|
4.13 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable securities |
|
104,321 |
|
|
991 |
|
|
3.80 |
% |
|
83,106 |
|
|
674 |
|
|
3.24 |
% |
Tax-exempt securities |
|
34,444 |
|
|
262 |
|
|
3.04 |
% |
|
53,320 |
|
|
483 |
|
|
3.62 |
% |
Total securities |
|
138,765 |
|
|
1,253 |
|
|
3.61 |
% |
|
136,426 |
|
|
1,157 |
|
|
3.39 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits |
|
3,403 |
|
|
18 |
|
|
2.10 |
% |
|
14,085 |
|
|
49 |
|
|
1.38 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-earning assets |
|
1,495,499 |
|
|
15,371 |
|
|
4.08 |
% |
|
1,309,976 |
|
|
13,280 |
|
|
4.02 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets |
|
99,132 |
|
|
|
|
|
|
101,035 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
1,594,631 |
|
|
|
|
|
|
$ |
1,411,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY: |
|
|
|
|
|
|
|
|
|
|
|
|
Savings |
|
$ |
166,181 |
|
|
17 |
|
|
0.04 |
% |
|
$ |
157,341 |
|
|
15 |
|
|
0.04 |
% |
Super Now deposits |
|
225,677 |
|
|
264 |
|
|
0.46 |
% |
|
203,531 |
|
|
140 |
|
|
0.27 |
% |
Money market deposits |
|
241,977 |
|
|
314 |
|
|
0.51 |
% |
|
284,155 |
|
|
267 |
|
|
0.37 |
% |
Time deposits |
|
263,399 |
|
|
1,064 |
|
|
1.60 |
% |
|
206,563 |
|
|
636 |
|
|
1.22 |
% |
Total interest-bearing deposits |
|
897,234 |
|
|
1,659 |
|
|
0.73 |
% |
|
851,590 |
|
|
1,058 |
|
|
0.49 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
99,867 |
|
|
528 |
|
|
2.07 |
% |
|
19,127 |
|
|
31 |
|
|
0.64 |
% |
Long-term borrowings |
|
134,731 |
|
|
756 |
|
|
2.19 |
% |
|
81,107 |
|
|
407 |
|
|
1.96 |
% |
Total borrowings |
|
234,598 |
|
|
1,284 |
|
|
2.14 |
% |
|
100,234 |
|
|
438 |
|
|
1.71 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing liabilities |
|
1,131,832 |
|
|
2,943 |
|
|
1.03 |
% |
|
951,824 |
|
|
1,496 |
|
|
0.62 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
|
305,707 |
|
|
|
|
|
|
304,244 |
|
|
|
|
|
Other liabilities |
|
17,156 |
|
|
|
|
|
|
15,708 |
|
|
|
|
|
Shareholders’ equity |
|
139,936 |
|
|
|
|
|
|
139,235 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
$ |
1,594,631 |
|
|
|
|
|
|
$ |
1,411,011 |
|
|
|
|
|
Interest rate spread |
|
|
|
|
|
3.05 |
% |
|
|
|
|
|
3.40 |
% |
Net interest income/margin |
|
|
|
$ |
12,428 |
|
|
3.30 |
% |
|
|
|
$ |
11,784 |
|
|
3.57 |
% |
|
|
Three Months Ended September
30, |
|
|
2018 |
|
2017 |
Total interest income |
|
$ |
15,198 |
|
|
$ |
12,948 |
|
Total interest expense |
|
2,943 |
|
|
1,496 |
|
Net interest income |
|
12,255 |
|
|
11,452 |
|
Tax equivalent adjustment |
|
173 |
|
|
332 |
|
Net interest income (fully taxable equivalent) |
|
$ |
12,428 |
|
|
$ |
11,784 |
|
|
PENNS WOODS BANCORP,
INC.AVERAGE BALANCES AND INTEREST
RATES
|
|
Nine Months
Ended |
|
|
September 30,
2018 |
|
September 30,
2017 |
(Dollars in Thousands) |
|
AverageBalance |
|
Interest |
|
AverageRate |
|
AverageBalance |
|
Interest |
|
AverageRate |
ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
Tax-exempt loans |
|
$ |
75,389 |
|
|
$ |
1,689 |
|
|
2.99 |
% |
|
$ |
46,752 |
|
|
$ |
1,315 |
|
|
3.76 |
% |
All other loans |
|
1,230,313 |
|
|
37,838 |
|
|
4.11 |
% |
|
1,081,148 |
|
|
32,774 |
|
|
4.05 |
% |
Total loans |
|
1,305,702 |
|
|
39,527 |
|
|
4.05 |
% |
|
1,127,900 |
|
|
34,089 |
|
|
4.04 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable securities |
|
93,944 |
|
|
2,621 |
|
|
3.72 |
% |
|
85,417 |
|
|
2,039 |
|
|
3.18 |
% |
Tax-exempt securities |
|
38,940 |
|
|
858 |
|
|
2.94 |
% |
|
50,972 |
|
|
1,424 |
|
|
3.72 |
% |
Total securities |
|
132,884 |
|
|
3,479 |
|
|
3.49 |
% |
|
136,389 |
|
|
3,463 |
|
|
3.39 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits |
|
2,872 |
|
|
39 |
|
|
1.82 |
% |
|
27,901 |
|
|
218 |
|
|
1.04 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-earning assets |
|
1,441,458 |
|
|
43,045 |
|
|
3.99 |
% |
|
1,292,190 |
|
|
37,770 |
|
|
3.91 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets |
|
97,930 |
|
|
|
|
|
|
102,181 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
1,539,388 |
|
|
|
|
|
|
$ |
1,394,371 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY: |
|
|
|
|
|
|
|
|
|
|
|
|
Savings |
|
$ |
164,828 |
|
|
49 |
|
|
0.04 |
% |
|
$ |
157,396 |
|
|
45 |
|
|
0.04 |
% |
Super Now deposits |
|
229,159 |
|
|
713 |
|
|
0.42 |
% |
|
198,560 |
|
|
377 |
|
|
0.25 |
% |
Money market deposits |
|
240,751 |
|
|
814 |
|
|
0.45 |
% |
|
278,436 |
|
|
713 |
|
|
0.34 |
% |
Time deposits |
|
251,071 |
|
|
2,795 |
|
|
1.49 |
% |
|
207,331 |
|
|
1,833 |
|
|
1.18 |
% |
Total interest-bearing deposits |
|
885,809 |
|
|
4,371 |
|
|
0.66 |
% |
|
841,723 |
|
|
2,968 |
|
|
0.47 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
72,873 |
|
|
1,004 |
|
|
1.82 |
% |
|
13,714 |
|
|
39 |
|
|
0.26 |
% |
Long-term borrowings |
|
124,483 |
|
|
2,024 |
|
|
2.14 |
% |
|
79,881 |
|
|
1,220 |
|
|
2.01 |
% |
Total borrowings |
|
197,356 |
|
|
3,028 |
|
|
2.02 |
% |
|
93,595 |
|
|
1,259 |
|
|
1.76 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing liabilities |
|
1,083,165 |
|
|
7,399 |
|
|
0.91 |
% |
|
935,318 |
|
|
4,227 |
|
|
0.60 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
|
300,604 |
|
|
|
|
|
|
301,567 |
|
|
|
|
|
Other liabilities |
|
18,070 |
|
|
|
|
|
|
18,455 |
|
|
|
|
|
Shareholders’ equity |
|
137,549 |
|
|
|
|
|
|
139,031 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
$ |
1,539,388 |
|
|
|
|
|
|
$ |
1,394,371 |
|
|
|
|
|
Interest rate spread |
|
|
|
|
|
3.08 |
% |
|
|
|
|
|
3.31 |
% |
Net interest income/margin |
|
|
|
$ |
35,646 |
|
|
3.31 |
% |
|
|
|
$ |
33,543 |
|
|
3.47 |
% |
|
|
|
Nine Months Ended September
30, |
|
|
2018 |
|
2017 |
Total interest income |
|
$ |
42,510 |
|
|
$ |
36,839 |
|
Total interest expense |
|
7,399 |
|
|
4,227 |
|
Net interest income |
|
35,111 |
|
|
32,612 |
|
Tax equivalent adjustment |
|
535 |
|
|
931 |
|
Net interest income (fully taxable equivalent) |
|
$ |
35,646 |
|
|
$ |
33,543 |
|
|
(Dollars in Thousands, Except Per Share Data) |
|
Quarter Ended |
|
|
9/30/2018 |
|
6/30/2018 |
|
3/31/2018 |
|
12/31/2017 |
|
9/30/2017 |
Operating Data |
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
3,826 |
|
|
$ |
3,480 |
|
|
$ |
3,208 |
|
|
$ |
716 |
|
|
$ |
3,284 |
|
Net interest income |
|
12,255 |
|
|
11,703 |
|
|
11,153 |
|
|
11,468 |
|
|
11,452 |
|
Provision for loan losses |
|
480 |
|
|
335 |
|
|
160 |
|
|
125 |
|
|
60 |
|
Net security (losses) gains |
|
(24 |
) |
|
15 |
|
|
(40 |
) |
|
107 |
|
|
298 |
|
Non-interest income, ex. net security (losses)
gains |
|
2,613 |
|
|
2,347 |
|
|
2,368 |
|
|
2,482 |
|
|
2,442 |
|
Non-interest expense |
|
9,681 |
|
|
9,517 |
|
|
9,524 |
|
|
9,248 |
|
|
9,566 |
|
|
|
|
|
|
|
|
|
|
|
|
Performance Statistics |
|
|
|
|
|
|
|
|
|
|
Net interest margin |
|
3.30 |
% |
|
3.32 |
% |
|
3.31 |
% |
|
3.48 |
% |
|
3.57 |
% |
Annualized return on average assets |
|
0.96 |
% |
|
0.91 |
% |
|
0.86 |
% |
|
0.20 |
% |
|
0.93 |
% |
Annualized return on average equity |
|
10.94 |
% |
|
10.07 |
% |
|
9.18 |
% |
|
2.00 |
% |
|
9.43 |
% |
Annualized net loan charge-offs to average
loans |
|
0.05 |
% |
|
0.04 |
% |
|
0.06 |
% |
|
0.07 |
% |
|
0.08 |
% |
Net charge-offs |
|
171 |
|
|
137 |
|
|
182 |
|
|
200 |
|
|
236 |
|
Efficiency ratio |
|
64.6 |
% |
|
67.2 |
% |
|
69.8 |
% |
|
65.7 |
% |
|
68.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
Per Share Data |
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.82 |
|
|
$ |
0.74 |
|
|
$ |
0.68 |
|
|
$ |
0.16 |
|
|
$ |
0.70 |
|
Diluted earnings per share |
|
0.82 |
|
|
0.74 |
|
|
0.68 |
|
|
0.15 |
|
|
0.70 |
|
Dividend declared per share |
|
0.47 |
|
|
0.47 |
|
|
0.47 |
|
|
0.47 |
|
|
0.47 |
|
Book value |
|
29.96 |
|
|
29.66 |
|
|
29.45 |
|
|
29.47 |
|
|
29.79 |
|
Common stock price: |
|
|
|
|
|
|
|
|
|
|
High |
|
46.27 |
|
|
46.92 |
|
|
45.56 |
|
|
49.79 |
|
|
46.47 |
|
Low |
|
43.22 |
|
|
41.29 |
|
|
39.61 |
|
|
45.65 |
|
|
41.08 |
|
Close |
|
43.45 |
|
|
44.78 |
|
|
42.31 |
|
|
46.58 |
|
|
46.47 |
|
Weighted average common shares: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
4,691 |
|
|
4,690 |
|
|
4,689 |
|
|
4,689 |
|
|
4,688 |
|
Fully Diluted |
|
4,691 |
|
|
4,703 |
|
|
4,689 |
|
|
4,782 |
|
|
4,688 |
|
End-of-period common shares: |
|
|
|
|
|
|
|
|
|
|
Issued |
|
5,011 |
|
|
5,011 |
|
|
5,010 |
|
|
5,009 |
|
|
5,009 |
|
Treasury |
|
320 |
|
|
320 |
|
|
320 |
|
|
320 |
|
|
320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Thousands, Except Per Share Data) |
|
Quarter Ended |
|
|
9/30/2018 |
|
6/30/2018 |
|
3/31/2018 |
|
12/31/2017 |
|
9/30/2017 |
Financial Condition Data: |
|
|
|
|
|
|
|
|
|
|
General |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
1,670,348 |
|
|
$ |
1,603,273 |
|
|
$ |
1,526,745 |
|
|
$ |
1,474,492 |
|
|
$ |
1,430,197 |
|
Loans, net |
|
1,355,762 |
|
|
1,318,039 |
|
|
1,267,912 |
|
|
1,232,268 |
|
|
1,176,781 |
|
Goodwill |
|
17,104 |
|
|
17,104 |
|
|
17,104 |
|
|
17,104 |
|
|
17,104 |
|
Intangibles |
|
1,233 |
|
|
1,304 |
|
|
1,382 |
|
|
1,462 |
|
|
1,543 |
|
Total deposits |
|
1,210,477 |
|
|
1,191,019 |
|
|
1,192,454 |
|
|
1,146,320 |
|
|
1,153,996 |
|
Noninterest-bearing |
|
313,111 |
|
|
311,194 |
|
|
304,261 |
|
|
303,316 |
|
|
310,830 |
|
Savings |
|
164,449 |
|
|
166,183 |
|
|
166,243 |
|
|
160,698 |
|
|
156,437 |
|
NOW |
|
223,963 |
|
|
216,109 |
|
|
240,259 |
|
|
215,021 |
|
|
203,744 |
|
Money Market |
|
238,131 |
|
|
245,081 |
|
|
235,381 |
|
|
237,818 |
|
|
274,528 |
|
Time Deposits |
|
270,823 |
|
|
252,452 |
|
|
246,310 |
|
|
229,467 |
|
|
208,457 |
|
Total interest-bearing deposits |
|
897,366 |
|
|
879,825 |
|
|
888,193 |
|
|
843,004 |
|
|
843,166 |
|
|
|
|
|
|
|
|
|
|
|
|
Core deposits* |
|
939,654 |
|
|
938,567 |
|
|
946,144 |
|
|
916,853 |
|
|
945,539 |
|
Shareholders’ equity |
|
140,538 |
|
|
139,134 |
|
|
138,192 |
|
|
138,192 |
|
|
139,669 |
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality |
|
|
|
|
|
|
|
|
|
|
Non-performing loans |
|
$ |
8,820 |
|
|
$ |
7,132 |
|
|
$ |
7,641 |
|
|
$ |
7,268 |
|
|
$ |
8,317 |
|
Non-performing loans to total assets |
|
0.53 |
% |
|
0.44 |
% |
|
0.50 |
% |
|
0.49 |
% |
|
0.58 |
% |
Allowance for loan losses |
|
13,343 |
|
|
13,034 |
|
|
12,836 |
|
|
12,858 |
|
|
12,933 |
|
Allowance for loan losses to total loans |
|
0.97 |
% |
|
0.98 |
% |
|
1.00 |
% |
|
1.03 |
% |
|
1.09 |
% |
Allowance for loan losses to non-performing
loans |
|
151.28 |
% |
|
182.75 |
% |
|
167.99 |
% |
|
176.91 |
% |
|
155.50 |
% |
Non-performing loans to total loans |
|
0.64 |
% |
|
0.54 |
% |
|
0.60 |
% |
|
0.58 |
% |
|
0.69 |
% |
|
|
|
|
|
|
|
|
|
|
|
Capitalization |
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity to total assets |
|
8.41 |
% |
|
8.68 |
% |
|
9.05 |
% |
|
9.37 |
% |
|
9.77 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Core deposits are defined as total deposits less time
deposits
Reconciliation of GAAP and Non-GAAP
Financial Measures
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
(Dollars in Thousands, Except Per Share Data) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
GAAP net income |
|
$ |
3,826 |
|
|
$ |
3,284 |
|
|
$ |
10,514 |
|
|
$ |
9,057 |
|
Less: net securities
(losses) gains, net of tax |
|
|
(19 |
) |
|
|
197 |
|
|
|
(39 |
) |
|
320 |
|
Non-GAAP operating
earnings |
|
$ |
3,845 |
|
|
$ |
3,087 |
|
|
$ |
10,553 |
|
|
$ |
8,737 |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Return on average
assets (ROA) |
|
|
0.96 |
% |
|
|
0.93 |
% |
|
|
0.91 |
% |
|
0.87 |
% |
Less: net securities
(losses) gains, net of tax |
|
|
— |
% |
|
|
0.05 |
% |
|
|
— |
% |
|
0.03 |
% |
Non-GAAP operating
ROA |
|
|
0.96 |
% |
|
|
0.88 |
% |
|
|
0.91 |
% |
|
0.84 |
% |
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Return on average
equity (ROE) |
|
|
10.94 |
% |
|
|
9.43 |
% |
|
|
10.19 |
% |
|
8.69 |
% |
Less: net securities
(losses) gains, net of tax |
|
|
(0.05 |
)% |
|
|
0.56 |
% |
|
|
(0.04 |
)% |
|
0.31 |
% |
Non-GAAP operating
ROE |
|
|
10.99 |
% |
|
|
8.87 |
% |
|
|
10.23 |
% |
|
8.38 |
% |
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Basic earnings per
share (EPS) |
|
$ |
0.82 |
|
|
$ |
0.70 |
|
|
$ |
2.24 |
|
|
$ |
1.92 |
|
Less: net securities
(losses) gains, net of tax |
|
|
— |
|
|
|
0.04 |
|
|
|
— |
|
|
0.07 |
|
Non-GAAP basic
operating EPS |
|
$ |
0.82 |
|
|
$ |
0.66 |
|
|
$ |
2.24 |
|
|
$ |
1.85 |
|
|
|
|
|
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Diluted EPS |
|
$ |
0.82 |
|
|
$ |
0.70 |
|
|
$ |
2.24 |
|
|
$ |
1.92 |
|
Less: net securities
(losses) gains, net of tax |
|
|
— |
|
|
|
0.04 |
|
|
|
— |
|
|
0.07 |
|
Non-GAAP diluted
operating EPS |
|
$ |
0.82 |
|
|
$ |
0.66 |
|
|
$ |
2.24 |
|
|
$ |
1.85 |
|
|
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