PWOD Penns Woods Bancorp Inc

Penns Woods Bancorp, Inc. (NASDAQ: PWOD)

Penns Woods Bancorp, Inc., supported by deposit growth, achieved net income of $12.8 million for the nine months ended September 30, 2019, resulting in basic and diluted earnings per share of $1.82.

Highlights

• Net income, as reported under GAAP, for the three and nine months ended September 30, 2019 was $4.7 million and $12.8 million, compared to $3.8 million and $10.5 million for the same periods of 2018.  Results for the three and nine months ended September 30, 2019 compared to 2018 were impacted by an increase in after-tax securities gains of $153,000 (from a loss of $19,000 to a gain of $134,000) for the three month periods and $244,000 (from a loss of $39,000 to a gain of $205,000) for the nine month periods.
• Basic and diluted earnings per share for the three and nine months ended September 30, 2019 were $0.66 and $1.82, respectively, an increase in basic and diluted earnings per share of $0.12 and $0.33 as compared to the three and nine months ended September 30, 2018. 
• Return on average assets was 1.10% for the three months ended September 30, 2019, compared to 0.96% for the corresponding period of 2018. Return on average assets was 1.02% for the nine months ended September 30, 2019, compared to 0.91% for the corresponding period of 2018.
• Return on average equity was 12.18% for the three months ended September 30, 2019, compared to 10.94% for the corresponding period of 2018. Return on average equity was 11.69% for the nine months ended September 30, 2019, compared to 10.19% for the corresponding period of 2018.

Net Income

Net income from core operations (“core earnings”), which is a non-generally accepted accounting principles (GAAP) measure of net income excluding net securities gains or losses, was $4.5 million for the three months ended September 30, 2019 compared to $3.8 million for the same period of 2018. Core earnings increased to $12.6 million for the nine months ended September 30, 2019, compared to $10.6 million for the same period of 2018. Core earnings per share for the three months ended September 30, 2019 was $0.64 basic and diluted, an increase from $0.54 basic and diluted core earnings per share for the same period of 2018. Core earnings per share for the nine months ended September 30, 2019 was $1.80 basic and diluted, compared to $1.50 basic and diluted for the same period of 2018. Core return on average assets and core return on average equity were 1.07% and 11.82% for the three months ended September 30, 2019, compared to 0.96% and 10.99% for the corresponding period of 2018.  Core return on average assets and core return on average equity were 1.01% and 11.49% for the nine months ended September 30, 2019 compared to 0.91% and 10.23% for the corresponding period of 2018. A reconciliation of the non-GAAP financial measures of core earnings, core return on assets, core return on equity, and core earnings per share described in this press release to the comparable GAAP financial measures is included at the end of this press release.

Net Interest Margin

The net interest margin for the three and nine months ended September 30, 2019 was 3.32% and 3.34%, compared to 3.30% and 3.31% for the corresponding periods of 2018. The increase in the net interest margin was driven by an increase in the yield on earning assets of 29 and 37 basis points ("bps") for the three and nine month periods. The impact of the increase in yield on earning assets was limited by the increase in rate paid on interest-bearing liabilities of 36 bps and 41 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 $31.3 million and $79.3 million, respectively. The loan growth for the three and nine month periods was primarily funded by an increase in average total interest-bearing deposits of $112.9 million and $98.2 million, respectively.

Assets

Total assets increased $2.7 million to $1.7 billion at September 30, 2019 compared to September 30, 2018.  Net loans decreased $5.0 million to $1.4 billion at September 30, 2019 compared to September 30, 2018, as the municipal loan portfolio decreased and the indirect auto lending portfolio remained constant. The investment portfolio increased $15.8 million from September 30, 2018 to September 30, 2019 due to increases in the taxable municipal portfolio.

Non-performing Loans

The ratio of non-performing loans to total loans ratio increased to 1.26% at September 30, 2019 from 0.64% at September 30, 2018 as non-performing loans have increased to $17.2 million at September 30, 2019 from $8.7 million at September 30, 2018 primarily due to a commercial loan relationship that became non-performing during the fourth quarter of 2018. 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 $112,000 and $623,000 for the three and nine months ended September 30, 2019 minimally impacted the allowance for loan losses, which was 1.04% of total loans at September 30, 2019. The majority of the loans charged-off had a specific allowance within the allowance for loan losses.

Deposits

Deposits increased $121.9 million to $1.3 billion at September 30, 2019 compared to September 30, 2018.  Noninterest-bearing deposits increased $14.2 million to $327.3 million at September 30, 2019 compared to September 30, 2018.  Driving deposit growth is our commitment to easy-to-use products, community involvement, and emphasis on customer service.  Deposit gathering efforts have centered on core deposits as building customer relationships remains the focus.  The time deposit portfolio has increased as time deposits have been used as a customer attraction tool.  The increase in deposits has resulted in a significant reduction in the use of short-term borrowings.

Shareholders’ Equity

Shareholders’ equity increased $14.5 million to $155.1 million at September 30, 2019 compared to September 30, 2018. The change in accumulated other comprehensive loss from $7.5 million at September 30, 2018 to $1.9 million at September 30, 2019 is a result of an increase in unrealized gains on available for sale securities (from an unrealized loss of $2.7 million at September 30, 2018 to an unrealized gain of $3.3 million at September 30, 2019). The amount of accumulated other comprehensive loss at September 30, 2019 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 $345,000. The current level of shareholders’ equity equates to a book value per share of $22.03 at September 30, 2019 compared to $19.97 at September 30, 2018, and an equity to asset ratio of 9.27% at September 30, 2019 compared to 8.41% at September 30, 2018. Dividends declared for the nine months ended September 30, 2019 and 2018 were $0.94 per share.

On September 30, 2019, the Company completed a three-for-two stock split (the “Stock Split”) of the Company’s common stock.  As a result of the Stock Split, effective at 11:59 p.m. on September 30, 2019, each share of the Company’s common stock issued at that time was changed into one and one-half shares of the Company’s common stock with a stated par value of $5.55 per share.  All share and per share amounts in this release, including in the accompanying financial statements and information, have been restated for all periods presented to give retroactive effect to the Stock Split.

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, 2018.

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)		2019				2018				% Change
ASSETS:
Noninterest-bearing balances		$	25,990			$	33,675			(22.82	)%
Interest-bearing balances in other financial institutions		31,351				38,672				(18.93	)%
Total cash and cash equivalents		57,341				72,347				(20.74	)%
Investment debt securities, available for sale, at fair value		149,075				128,905				15.65	%
Investment equity securities, at fair value		1,820				1,902				(4.31	)%
Investment securities, trading		47				45				4.44	%
Restricted investment in bank stock, at fair value		13,502				17,834				(24.29	)%
Loans held for sale		1,868				3,727				(49.88	)%
Loans		1,364,984				1,369,105				(0.30	)%
Allowance for loan losses		(14,249		)		(13,343		)		6.79	%
Loans, net		1,350,735				1,355,762				(0.37	)%
Premises and equipment, net		33,366				27,361				21.95	%
Accrued interest receivable		5,267				5,353				(1.61	)%
Bank-owned life insurance		29,107				28,472				2.23	%
Goodwill		17,104				17,104				—	%
Intangibles		960				1,233				(22.14	)%
Operating lease right of use asset		4,217				—				n/a
Deferred tax asset		3,744				5,310				(29.49	)%
Other assets		4,942				4,993				(1.02	)%
TOTAL ASSETS		$	1,673,095			$	1,670,348			0.16	%
LIABILITIES:
Interest-bearing deposits		$	1,005,078			$	897,366			12.00	%
Noninterest-bearing deposits		327,329				313,111				4.54	%
Total deposits		1,332,407				1,210,477				10.07	%
Short-term borrowings		5,987				164,465				(96.36	)%
Long-term borrowings		162,290				138,970				16.78	%
Accrued interest payable		1,666				1,051				58.52	%
Operating lease liability		4,228				—				n/a
Other liabilities		11,437				14,846				(22.96	)%
TOTAL LIABILITIES		1,518,015				1,529,809				(0.77	)%
SHAREHOLDERS’ EQUITY:
Preferred stock, no par value, 3,000,000 shares authorized; no shares issued		—				—				n/a
Common stock, par value $5.55, 22,500,000 shares authorized; 7,517,796 and 7,516,594 shares issued; 7,037,571 and 7,036,369 shares outstanding		41,777				41,757				0.05	%
Additional paid-in capital		51,290				50,577				1.41	%
Retained earnings		76,009				67,802				12.10	%
Accumulated other comprehensive loss:
Net unrealized gain (loss) on available for sale securities		3,266				(2,663		)		222.64	%
Defined benefit plan		(5,165		)		(4,820		)		(7.16	)%
Treasury stock at cost, 480,225		(12,115		)		(12,115		)		—	%
TOTAL PENNS WOODS BANCORP, INC. SHAREHOLDERS' EQUITY		155,062				140,538				10.33	%
Non-controlling interest		18				1				1,700.00	%
TOTAL SHAREHOLDERS' EQUITY		155,080				140,539				10.35	%
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	1,673,095			$	1,670,348			0.16	%

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)		2019				2018				% Change			2019				2018				% Change
INTEREST AND DIVIDEND INCOME:
Loans including fees		$	15,426			$	13,982			10.33	%		$	45,595			$	39,172			16.40	%
Investment securities:
Taxable		998				713				39.97	%		2,899				1,898				52.74	%
Tax-exempt		167				207				(19.32	)%		520				678				(23.30	)%
Dividend and other interest income		493				296				66.55	%		1,345				762				76.51	%
TOTAL INTEREST AND DIVIDEND INCOME		17,084				15,198				12.41	%		50,359				42,510				18.46	%
INTEREST EXPENSE:
Deposits		3,165				1,659				90.78	%		8,336				4,371				90.71	%
Short-term borrowings		7				528				(98.67	)%		790				1,004				(21.31	)%
Long-term borrowings		1,009				756				33.47	%		2,739				2,024				35.33	%
TOTAL INTEREST EXPENSE		4,181				2,943				42.07	%		11,865				7,399				60.36	%
NET INTEREST INCOME		12,903				12,255				5.29	%		38,494				35,111				9.64	%
PROVISION FOR LOAN LOSSES		360				480				(25.00	)%		1,035				975				6.15	%
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		12,543				11,775				6.52	%		37,459				34,136				9.73	%
NON-INTEREST INCOME:
Service charges		622				645				(3.57	)%		1,776				1,788				(0.67	)%
Debt securities gains (losses), available for sale		189				(22		)		959.09	%		200				(17		)		1,276.47	%
Equity securities (losses) gains		(21		)		(16		)		(31.25	)%		44				(44		)		200.00	%
Securities gains, trading		2				14				(85.71	)%		15				12				25.00	%
Bank-owned life insurance		143				165				(13.33	)%		434				496				(12.50	)%
Gain on sale of loans		583				398				46.48	%		1,246				1,053				18.33	%
Insurance commissions		93				85				9.41	%		346				266				30.08	%
Brokerage commissions		353				340				3.82	%		1,032				1,013				1.88	%
Debit card income		333				359				(7.24	)%		1,032				1,065				(3.10	)%
Other		525				621				(15.46	)%		1,420				1,400				1.43	%
TOTAL NON-INTEREST INCOME		2,822				2,589				9.00	%		7,545				7,032				7.30	%
NON-INTEREST EXPENSE:
Salaries and employee benefits		5,488				5,420				1.25	%		16,512				15,387				7.31	%
Occupancy		638				640				(0.31	)%		2,085				2,080				0.24	%
Furniture and equipment		885				780				13.46	%		2,421				2,328				3.99	%
Software amortization		234				208				12.50	%		629				504				24.80	%
Pennsylvania shares tax		285				278				2.52	%		863				833				3.60	%
Professional fees		585				459				27.45	%		1,834				1,674				9.56	%
Federal Deposit Insurance Corporation deposit insurance		—				237				(100.00	)%		504				639				(21.13	)%
Marketing		98				245				(60.00	)%		233				764				(69.50	)%
Intangible amortization		62				71				(12.68	)%		202				229				(11.79	)%
Other		1,266				1,343				(5.73	)%		4,131				4,037				2.33	%
TOTAL NON-INTEREST EXPENSE		9,541				9,681				(1.45	)%		29,414				28,475				3.30	%
INCOME BEFORE INCOME TAX PROVISION		5,824				4,683				24.36	%		15,590				12,693				22.82	%
INCOME TAX PROVISION		1,170				857				36.52	%		2,741				2,179				25.79	%
NET INCOME		$	4,654			$	3,826			21.64	%		$	12,849			$	10,514			22.21	%
Earnings attributable to noncontrolling interest		4				—				n/a			10				(1		)		(1,100.00	)%
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS'		$	4,650			$	3,826			21.54	%		$	12,839			$	10,515			22.10	%
EARNINGS PER SHARE - BASIC		$	0.66			$	0.54			22.22	%		$	1.82			$	1.49			22.15	%
EARNINGS PER SHARE - DILUTED		$	0.66			$	0.54			22.22	%		$	1.82			$	1.49			22.15	%
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC		7,037,055				7,035,840				0.02	%		7,036,181				7,034,940				0.02	%
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED		7,037,055				7,035,840				0.02	%		7,036,181				7,034,940				0.02	%
DIVIDENDS DECLARED PER SHARE		$	0.31			$	0.31			—	%		$	0.94			$	0.94			—	%

		Three Months Ended
		September 30, 2019											September 30, 2018
(Dollars in Thousands)		AverageBalance				Interest				AverageRate			AverageBalance				Interest				AverageRate
ASSETS:
Tax-exempt loans		$	66,617			$	505			3.04	%		$	75,182			$	559			2.95	%
All other loans		1,317,964				15,027				4.57	%		1,278,149				13,541				4.20	%
Total loans		1,384,581				15,532				4.50	%		1,353,331				14,100				4.13	%
Taxable securities		137,394				1,284				3.79	%		104,321				991				3.80	%
Tax-exempt securities		25,769				211				3.32	%		34,444				262				3.04	%
Total securities		163,163				1,495				3.72	%		138,765				1,253				3.61	%
Interest-bearing deposits		36,853				207				2.25	%		3,403				18				2.10	%
Total interest-earning assets		1,584,597				17,234				4.37	%		1,495,499				15,371				4.08	%
Other assets		101,318											99,132
TOTAL ASSETS		$	1,685,915										$	1,594,631
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Savings		$	169,628			66				0.16	%		$	166,181			17				0.04	%
Super Now deposits		232,918				481				0.83	%		225,677				264				0.46	%
Money market deposits		237,362				581				0.98	%		241,977				314				0.51	%
Time deposits		370,229				2,037				2.21	%		263,399				1,064				1.60	%
Total interest-bearing deposits		1,010,137				3,165				1.26	%		897,234				1,659				0.73	%
Short-term borrowings		7,990				7				0.35	%		99,867				528				2.07	%
Long-term borrowings		169,017				1,009				2.26	%		134,731				756				2.19	%
Total borrowings		177,007				1,016				2.18	%		234,598				1,284				2.14	%
Total interest-bearing liabilities		1,187,144				4,181				1.39	%		1,131,832				2,943				1.03	%
Demand deposits		324,940											305,707
Other liabilities		21,151											17,156
Shareholders’ equity		152,680											139,936
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	1,685,915										$	1,594,631
Interest rate spread										2.98	%										3.05	%
Net interest income/margin						$	13,053			3.32	%						$	12,428			3.30	%

		Three Months Ended September 30,
		2019				2018
Total interest income		$	17,084			$	15,198
Total interest expense		4,181				2,943
Net interest income		12,903				12,255
Tax equivalent adjustment		150				173
Net interest income (fully taxable equivalent)		$	13,053			$	12,428

PENNS WOODS BANCORP, INC.AVERAGE BALANCES AND INTEREST RATES

		Nine Months Ended
		September 30, 2019											September 30, 2018
(Dollars in Thousands)		AverageBalance				Interest				AverageRate			AverageBalance				Interest				AverageRate
ASSETS:
Tax-exempt loans		$	69,973			$	1,592			3.04	%		$	75,389			$	1,689			2.99	%
All other loans		1,315,022				44,337				4.51	%		1,230,313				37,838				4.11	%
Total loans		1,384,995				45,929				4.43	%		1,305,702				39,527				4.05	%
Taxable securities		131,451				3,934				4.05	%		93,944				2,621				3.72	%
Tax-exempt securities		26,813				658				3.32	%		38,940				858				2.94	%
Total securities		158,264				4,592				3.92	%		132,884				3,479				3.49	%
Interest-bearing deposits		18,050				310				2.30	%		2,872				39				1.82	%
Total interest-earning assets		1,561,309				50,831				4.36	%		1,441,458				43,045				3.99	%
Other assets		109,278											97,930
TOTAL ASSETS		$	1,670,587										$	1,539,388
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Savings		$	168,909			147				0.12	%		$	164,828			49				0.04	%
Super Now deposits		236,965				1,313				0.74	%		229,159				713				0.42	%
Money market deposits		242,630				1,649				0.91	%		240,751				814				0.45	%
Time deposits		335,456				5,227				2.08	%		251,071				2,795				1.49	%
Total interest-bearing deposits		983,960				8,336				1.13	%		885,809				4,371				0.66	%
Short-term borrowings		45,046				790				2.34	%		72,873				1,004				1.82	%
Long-term borrowings		153,684				2,739				2.24	%		124,483				2,024				2.14	%
Total borrowings		198,730				3,529				2.26	%		197,356				3,028				2.02	%
Total interest-bearing liabilities		1,182,690				11,865				1.32	%		1,083,165				7,399				0.91	%
Demand deposits		318,602											300,604
Other liabilities		22,705											18,070
Shareholders’ equity		146,590											137,549
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	1,670,587										$	1,539,388
Interest rate spread										3.04	%										3.08	%
Net interest income/margin						$	38,966			3.34	%						$	35,646			3.31	%

		Nine Months Ended September 30,
		2019				2018
Total interest income		$	50,359			$	42,510
Total interest expense		11,865				7,399
Net interest income		38,494				35,111
Tax equivalent adjustment		472				535
Net interest income (fully taxable equivalent)		$	38,966			$	35,646

(Dollars in Thousands, Except Per Share Data)		Quarter Ended
		9/30/2019				6/30/2019				3/31/2019				12/31/2018				9/30/2018
Operating Data
Net income		$	4,650			$	4,245			$	3,944			$	4,189			$	3,826
Net interest income		12,903				12,913				12,678				12,699				12,255
Provision for loan losses		360				315				360				760				480
Net security gains (losses)		170				23				66				(165		)		(24		)
Non-interest income, ex. net security gains (losses)		2,652				2,446				2,188				2,594				2,613
Non-interest expense		9,541				10,059				9,814				9,532				9,681
Performance Statistics
Net interest margin		3.32		%		3.39		%		3.37		%		3.33		%		3.30		%
Annualized return on average assets		1.10		%		1.02		%		0.95		%		1.02		%		0.96		%
Annualized return on average equity		12.18		%		11.42		%		10.93		%		11.77		%		10.94		%
Annualized net loan charge-offs to average loans		0.03		%		0.03		%		0.12		%		0.08		%		0.05		%
Net charge-offs		112				106				405				266				171
Efficiency ratio		61.0		%		65.0		%		65.5		%		61.9		%		64.6		%
Per Share Data
Basic earnings per share		$	0.66			$	0.61			$	0.56			$	0.59			$	0.55
Diluted earnings per share		0.66				0.61				0.56				0.59				0.55
Dividend declared per share		0.31				0.31				0.31				0.31				0.31
Book value		22.03				21.53				20.89				20.39				19.97
Common stock price:
High		30.93				30.17				29.67				29.45				30.85
Low		26.87				26.03				23.23				25.77				28.81
Close		30.83				30.17				27.40				26.83				28.97
Weighted average common shares:
Basic		7,037				7,038				7,038				7,037				7,037
Fully Diluted		7,037				7,038				7,038				7,037				7,037
End-of-period common shares:
Issued		7,518				7,518				7,518				7,518				7,517
Treasury		480				480				480				480				480

(Dollars in Thousands, Except Per Share Data)		Quarter Ended
		9/30/2019				6/30/2019				3/31/2019				12/31/2018				9/30/2018
Financial Condition Data:
General
Total assets		$	1,673,095			$	1,711,500			$	1,704,708			$	1,684,771			$	1,670,348
Loans, net		1,350,735				1,365,284				1,370,678				1,370,920				1,355,762
Goodwill		17,104				17,104				17,104				17,104				17,104
Intangibles		960				1,022				1,091				1,162				1,233
Total deposits		1,332,407				1,327,086				1,309,061				1,219,903				1,210,477
Noninterest-bearing		327,329				322,755				321,657				320,814				313,111
Savings		171,370				171,992				170,005				166,063				164,449
NOW		219,466				238,410				253,475				207,819				223,963
Money Market		239,926				238,352				244,753				238,596				238,131
Time Deposits		374,316				355,577				319,171				286,611				270,823
Total interest-bearing deposits		1,005,078				1,004,331				987,404				899,089				897,366
Core deposits*		958,091				971,509				989,890				933,292				939,654
Shareholders’ equity		155,062				151,527				147,026				143,536				140,538
Asset Quality
Non-performing loans		$	17,208			$	15,383			$	15,794			$	16,572			$	8,739
Non-performing loans to total assets		1.03		%		0.90		%		0.93		%		0.98		%		0.52		%
Allowance for loan losses		14,249				14,001				13,792				13,837				13,343
Allowance for loan losses to total loans		1.04		%		1.02		%		1.00		%		1.00		%		0.97		%
Allowance for loan losses to non-performing loans		82.80		%		91.02		%		87.32		%		83.50		%		152.68		%
Non-performing loans to total loans		1.26		%		1.12		%		1.14		%		1.20		%		0.64		%
Capitalization
Shareholders’ equity to total assets		9.27		%		8.85		%		8.62		%		8.52		%		8.41		%

* 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)		2019				2018				2019				2018
GAAP net income		$	4,650			$	3,826			$	12,839			$	10,515
Less: net securities gains (losses), net of tax		134				(19		)		205				(39		)
Non-GAAP core earnings		$	4,516			$	3,845			$	12,634			$	10,554
		Three Months Ended September 30,								Nine Months Ended September 30,
		2019				2018				2019				2018
Return on average assets (ROA)		1.10		%		0.96		%		1.02		%		0.91		%
Less: net securities gains (losses), net of tax		0.03		%		—		%		0.01		%		—		%
Non-GAAP core ROA		1.07		%		0.96		%		1.01		%		0.91		%
		Three Months Ended September 30,								Nine Months Ended September 30,
		2019				2018				2019				2018
Return on average equity (ROE)		12.18		%		10.94		%		11.69		%		10.19		%
Less: net securities gains (losses), net of tax		0.36		%		(0.05		)%		0.20		%		(0.04		)%
Non-GAAP core ROE		11.82		%		10.99		%		11.49		%		10.23		%
		Three Months Ended September 30,								Nine Months Ended September 30,
		2019				2018				2019				2018
Basic earnings per share (EPS)		$	0.66			$	0.54			$	1.82			$	1.49
Less: net securities gains (losses), net of tax		0.02				—				0.02				(0.01		)
Non-GAAP basic core EPS		$	0.64			$	0.54			$	1.80			$	1.50
		Three Months Ended September 30,								Nine Months Ended September 30,
		2019				2018				2019				2018
Diluted EPS		$	0.66			$	0.54			$	1.82			$	1.49
Less: net securities gains (losses), net of tax		0.02				—				0.02				(0.01		)
Non-GAAP diluted core EPS		$	0.64			$	0.54			$	1.80			$	1.50