WILLIAMSPORT, Pa., July 20, 2017 (GLOBE NEWSWIRE) -- Penns Woods Bancorp, Inc. (NASDAQ:PWOD)
Penns Woods Bancorp, Inc. continued its solid earnings, supported by loan and deposit growth, achieving net income of $5,772,000 for the six months ended June 30, 2017 resulting in basic and dilutive earnings per share of $1.22.
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 $3,094,000 for the three months ended June 30, 2017 compared to $3,065,000 for the same period of 2016. Operating earnings decreased to $5,649,000 for the six months ended June 30, 2017 compared to $5,830,000 for the same period of 2016. Impacting the level of operating earnings were several factors including the continued shift of earning assets from the investment portfolio to the loan 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 increased due to the conclusion of the ten year tax credit generation period of several low income elderly housing projects in our market footprint in which the company participates.
- Operating earnings per share for the three months ended June 30, 2017 were $0.66 for both basic and dilutive, an increase from $0.65 for basic and dilutive for the same period of 2016. Operating earnings per share for the six months ended June 30, 2017 were $1.20 basic and dilutive compared to $1.23 basic and dilutive for the same period of 2016.
- Return on average assets was 0.88% for the three months ended June 30, 2017 compared to 1.00% for the corresponding period of 2016. Return on average assets was 0.83% for the six months ended June 30, 2017 compared to 0.97% for the corresponding period of 2016.
- Return on average equity was 8.79% for the three months ended June 30, 2017 compared to 9.77% for the corresponding period of 2016. Return on average equity was 8.24% for the six months ended June 30, 2017 compared to 9.36% for the corresponding period of 2016.
“We continue to position and build the company for the future. To spur quality asset growth the indirect auto lending program has been introduced throughout our entire market area, various building projects have been completed, while others are in various stages of completion. To increase income we are adding high quality assets as we build our balance sheet. In one year the indirect lending program has generated in excess of $40 million in short duration high quality loans. A more customer centric experience in our Williamsport branch is now in place following a substantial remodel. Luzerne Bank is set to open a new office in Conyngham, while Jersey Shore State Bank is expanding its footprint into Muncy/Hughesville with a branch in the construction phase. The addition of quality earning assets has led to increased revenue resulting in the second quarter of 2017 outperforming the first quarter of the year. The structures of the earning assets that have been acquired have contributed to an improving net interest margin. We continue to build for the future recognizing it may have a drag on earnings in the short-term. However, as seen by the second quarter results, investing in the future will provide long-term rewards,” said Richard A. Grafmyre, CFP®, President and CEO.
A reconciliation of the non-GAAP financial measures of operating earnings, operating return on assets, operating return on equity, and operating earnings per share, described in the highlights, to the comparable GAAP financial measures is included at the end of this press release.
Net Income
Net income, as reported under GAAP, for the three and six months ended June 30, 2017 was $3,086,000 and $5,772,000 compared to $3,390,000 and $6,468,000 for the same period of 2016. Results for the three and six months ended June 30, 2017 compared to 2016 were impacted by a decrease in after-tax securities gains of $333,000 (from a gain of $325,000 to a loss of $8,000) for the three month periods and a decrease in after-tax securities gains of $515,000 (from a gain of $638,000 to a gain of $123,000) for the six month periods. Basic and dilutive earnings per share for the three and six months ended June 30, 2017 were $0.65 and $1.22 compared to $0.72 and $1.37 for the corresponding period of 2016. Return on average assets and return on average equity were 0.88% and 8.79% for the three months ended June 30, 2017 compared to 1.00% and 9.77% for the corresponding period of 2016. Return on average assets and return on average equity were 0.83% and 8.24% for the six months ended June 30, 2017 compared to 0.97% and 9.36% for the corresponding period of 2016.
Net Interest Margin
The net interest margin for the three and six months ended June 30, 2017 was 3.44% and 3.42% compared to 3.42% and 3.49% for the corresponding period of 2016. The decline in the net interest margin for the six month period was driven by a decreasing yield on the investment portfolio due to the continued lower than historical 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 steadily rising rate environment. The impact of the declining investment portfolio yield and decreasing investment portfolio balance was offset by an 8.06% growth in gross loans from June 30, 2016 to June 30, 2017. 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 82.11% of total deposits at June 30, 2017 and 79.65% at June 30, 2016.
Assets
Total assets increased $48,882,000 to $1,395,364,000 at June 30, 2017 compared to June 30, 2016. Net loans increased $84,374,000 to $1,125,976,000 at June 30, 2017 compared to June 30, 2016 primarily due to campaigns related to increasing home equity product market share during 2016 and 2017 and the introduction of indirect auto lending during the third quarter of 2016. The investment portfolio decreased $7,950,000 from June 30, 2016 to June 30, 2017 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 shortening 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 remained flat at 1.10% at June 30, 2017 from June 30, 2016 as non-performing loans have increased to $12,537,000 at June 30, 2017 from $11,626,000 at June 30, 2016. The majority of non-performing loans are centered on 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 $332,000 for the six months ended June 30, 2017 minimally impacted the allowance for loan losses which was 1.15% of total loans at June 30, 2017. The majority of the loans charged-off had a specific allowance within the allowance for loan losses.
Deposits
Deposits increased $66,243,000 to $1,151,110,000 at June 30, 2017 compared to June 30, 2016. Core deposits (total deposits excluding time deposits) increased $81,067,000 due to our commitment to building complete banking relationships with our customers. Noninterest-bearing deposits increased $26,052,000 to $300,054,000 at June 30, 2017 compared to June 30, 2016. 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 decreased $954,000 to $138,440,000 at June 30, 2017 compared to June 30, 2016. The change in accumulated other comprehensive loss from $2,168,000 at June 30, 2016 to $4,249,000 at June 30, 2017 is a result of an increase in unrealized losses on available for sale securities from an unrealized gain of $1,838,000 at June 30, 2016 to an unrealized loss of $16,000 at June 30, 2017. The amount of accumulated other comprehensive loss at June 30, 2017 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 $227,000 to $4,233,000 at June 30, 2017. The current level of shareholders’ equity equates to a book value per share of $29.53 at June 30, 2017 compared to $29.45 at June 30, 2016 and an equity to asset ratio of 9.92% at June 30, 2017 compared to 10.35% at June 30, 2016. Excluding goodwill and intangibles, book value per share was $25.54 at June 30, 2017 compared to $25.42 at June 30, 2016. Dividends declared for the six months ended June 30, 2017 and 2016 were $0.94 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, 2016.
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) | |||||||||||
| June 30, | |||||||||||
| (In Thousands, Except Share Data) | 2017 | 2016 | % Change | ||||||||
| ASSETS | |||||||||||
| Noninterest-bearing balances | $ | 26,223 | $ | 24,088 | 8.86 | % | |||||
| Interest-bearing balances in other financial institutions | 11,979 | 45,387 | (73.61 | )% | |||||||
| Total cash and cash equivalents | 38,202 | 69,475 | (45.01 | )% | |||||||
| Investment securities, available for sale, at fair value | 138,504 | 146,667 | (5.57 | )% | |||||||
| Investment securities, trading | 213 | — | 100.00 | % | |||||||
| Loans held for sale | 1,683 | 1,349 | 24.76 | % | |||||||
| Loans | 1,139,085 | 1,054,119 | 8.06 | % | |||||||
| Allowance for loan losses | (13,109 | ) | (12,517 | ) | 4.73 | % | |||||
| Loans, net | 1,125,976 | 1,041,602 | 8.10 | % | |||||||
| Premises and equipment, net | 25,497 | 22,304 | 14.32 | % | |||||||
| Accrued interest receivable | 3,641 | 3,490 | 4.33 | % | |||||||
| Bank-owned life insurance | 27,670 | 27,016 | 2.42 | % | |||||||
| Goodwill | 17,104 | 17,104 | — | % | |||||||
| Intangibles | 1,623 | 1,979 | (17.99 | )% | |||||||
| Deferred tax asset | 8,139 | 7,400 | 9.99 | % | |||||||
| Other assets | 7,112 | 8,096 | (12.15 | )% | |||||||
| TOTAL ASSETS | $ | 1,395,364 | $ | 1,346,482 | 3.63 | % | |||||
| LIABILITIES | |||||||||||
| Interest-bearing deposits | $ | 851,056 | $ | 810,865 | 4.96 | % | |||||
| Noninterest-bearing deposits | 300,054 | 274,002 | 9.51 | % | |||||||
| Total deposits | 1,151,110 | 1,084,867 | 6.11 | % | |||||||
| Short-term borrowings | 15,737 | 17,440 | (9.76 | )% | |||||||
| Long-term borrowings | 75,998 | 91,025 | (16.51 | )% | |||||||
| Accrued interest payable | 414 | 456 | (9.21 | )% | |||||||
| Other liabilities | 13,665 | 13,300 | 2.74 | % | |||||||
| TOTAL LIABILITIES | 1,256,924 | 1,207,088 | 4.13 | % | |||||||
| 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; 5,008,192 and 5,006,036 shares issued | 41,735 | 41,717 | 0.04 | % | |||||||
| Additional paid-in capital | 50,117 | 50,025 | 0.18 | % | |||||||
| Retained earnings | 62,952 | 60,054 | 4.83 | % | |||||||
| Accumulated other comprehensive loss: | |||||||||||
| Net unrealized (loss) gain on available for sale securities | (16 | ) | 1,838 | (100.87 | )% | ||||||
| Defined benefit plan | (4,233 | ) | (4,006 | ) | (5.67 | )% | |||||
| Treasury stock at cost, 320,150 and 272,452 shares | (12,115 | ) | (10,234 | ) | 18.38 | % | |||||
| TOTAL SHAREHOLDERS’ EQUITY | 138,440 | 139,394 | (0.68 | )% | |||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,395,364 | $ | 1,346,482 | 3.63 | % | |||||
| PENNS WOODS BANCORP, INC. | ||||||||||||||||||||||
| CONSOLIDATED STATEMENT OF INCOME | ||||||||||||||||||||||
| (UNAUDITED) | ||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
| (In Thousands, Except Per Share Data) | 2017 | 2016 | % Change | 2017 | 2016 | % Change | ||||||||||||||||
| INTEREST AND DIVIDEND INCOME: | ||||||||||||||||||||||
| Loans including fees | $ | 11,109 | $ | 10,466 | 6.14 | % | $ | 21,736 | $ | 20,821 | 4.39 | % | ||||||||||
| Investment securities: | ||||||||||||||||||||||
| Taxable | 570 | 601 | (5.16 | )% | 1,112 | 1,223 | (9.08 | )% | ||||||||||||||
| Tax-exempt | 323 | 398 | (18.84 | )% | 621 | 874 | (28.95 | )% | ||||||||||||||
| Dividend and other interest income | 207 | 204 | 1.47 | % | 422 | 477 | (11.53 | )% | ||||||||||||||
| TOTAL INTEREST AND DIVIDEND INCOME | 12,209 | 11,669 | 4.63 | % | 23,891 | 23,395 | 2.12 | % | ||||||||||||||
| INTEREST EXPENSE: | ||||||||||||||||||||||
| Deposits | 1,008 | 881 | 14.42 | % | 1,910 | 1,716 | 11.31 | % | ||||||||||||||
| Short-term borrowings | 4 | 8 | (50.00 | )% | 8 | 34 | (76.47 | )% | ||||||||||||||
| Long-term borrowings | 373 | 492 | (24.19 | )% | 813 | 983 | (17.29 | )% | ||||||||||||||
| TOTAL INTEREST EXPENSE | 1,385 | 1,381 | 0.29 | % | 2,731 | 2,733 | (0.07 | )% | ||||||||||||||
| NET INTEREST INCOME | 10,824 | 10,288 | 5.21 | % | 21,160 | 20,662 | 2.41 | % | ||||||||||||||
| PROVISION FOR LOAN LOSSES | 215 | 258 | (16.67 | )% | 545 | 608 | (10.36 | )% | ||||||||||||||
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 10,609 | 10,030 | 5.77 | % | 20,615 | 20,054 | 2.80 | % | ||||||||||||||
| NON-INTEREST INCOME: | ||||||||||||||||||||||
| Service charges | 559 | 561 | (0.36 | )% | 1,087 | 1,093 | (0.55 | )% | ||||||||||||||
| Securities (losses) gains, available for sale | (12 | ) | 486 | (102.47 | )% | 185 | 921 | (79.91 | )% | |||||||||||||
| Securities gains, trading | — | 6 | (100.00 | )% | 2 | 46 | (95.65 | )% | ||||||||||||||
| Bank-owned life insurance | 161 | 161 | — | % | 333 | 345 | (3.48 | )% | ||||||||||||||
| Gain on sale of loans | 503 | 566 | (11.13 | )% | 861 | 1,033 | (16.65 | )% | ||||||||||||||
| Insurance commissions | 99 | 200 | (50.50 | )% | 290 | 405 | (28.40 | )% | ||||||||||||||
| Brokerage commissions | 361 | 272 | 32.72 | % | 692 | 527 | 31.31 | % | ||||||||||||||
| Other | 1,092 | 926 | 17.93 | % | 1,964 | 1,805 | 8.81 | % | ||||||||||||||
| TOTAL NON-INTEREST INCOME | 2,763 | 3,178 | (13.06 | )% | 5,414 | 6,175 | (12.32 | )% | ||||||||||||||
| NON-INTEREST EXPENSE: | ||||||||||||||||||||||
| Salaries and employee benefits | 4,608 | 4,346 | 6.03 | % | 9,378 | 8,926 | 5.06 | % | ||||||||||||||
| Occupancy | 614 | 545 | 12.66 | % | 1,252 | 1,086 | 15.29 | % | ||||||||||||||
| Furniture and equipment | 664 | 679 | (2.21 | )% | 1,313 | 1,380 | (4.86 | )% | ||||||||||||||
| Pennsylvania shares tax | 230 | 220 | 4.55 | % | 468 | 478 | (2.09 | )% | ||||||||||||||
| Amortization of investments in limited partnerships | 46 | 68 | (32.35 | )% | 92 | 220 | (58.18 | )% | ||||||||||||||
| Federal Deposit Insurance Corporation deposit insurance | 150 | 236 | (36.44 | )% | 320 | 468 | (31.62 | )% | ||||||||||||||
| Marketing | 204 | 185 | 10.27 | % | 375 | 395 | (5.06 | )% | ||||||||||||||
| Intangible amortization | 86 | 100 | (14.00 | )% | 176 | 187 | (5.88 | )% | ||||||||||||||
| Other | 2,461 | 2,287 | 7.61 | % | 4,674 | 4,587 | 1.90 | % | ||||||||||||||
| TOTAL NON-INTEREST EXPENSE | 9,063 | 8,666 | 4.58 | % | 18,048 | 17,727 | 1.81 | % | ||||||||||||||
| INCOME BEFORE INCOME TAX PROVISION | 4,309 | 4,542 | (5.13 | )% | 7,981 | 8,502 | (6.13 | )% | ||||||||||||||
| INCOME TAX PROVISION | 1,223 | 1,152 | 6.16 | % | 2,209 | 2,034 | 8.60 | % | ||||||||||||||
| NET INCOME | $ | 3,086 | $ | 3,390 | (8.97 | )% | $ | 5,772 | $ | 6,468 | (10.76 | )% | ||||||||||
| EARNINGS PER SHARE - BASIC AND DILUTED | $ | 0.65 | $ | 0.72 | (9.72 | )% | $ | 1.22 | $ | 1.37 | (10.95 | )% | ||||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC | 4,711,332 | 4,733,251 | (0.46 | )% | 4,723,003 | 4,736,878 | (0.29 | )% | ||||||||||||||
| DIVIDENDS DECLARED PER SHARE | $ | 0.47 | $ | 0.47 | — | % | $ | 0.94 | $ | 0.94 | — | % | ||||||||||
| PENNS WOODS BANCORP, INC. | |||||||||||||||||||||||
| AVERAGE BALANCES AND INTEREST RATES | |||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||
| June 30, 2017 | June 30, 2016 | ||||||||||||||||||||||
| (Dollars in Thousands) | Average Balance | Interest | Average Rate | Average Balance | Interest | Average Rate | |||||||||||||||||
| ASSETS: | |||||||||||||||||||||||
| Tax-exempt loans | $ | 41,685 | $ | 405 | 3.89 | % | $ | 46,281 | $ | 445 | 3.87 | % | |||||||||||
| All other loans | 1,082,165 | 10,842 | 4.02 | % | 1,000,541 | 10,172 | 4.09 | % | |||||||||||||||
| Total loans | 1,123,850 | 11,247 | 4.01 | % | 1,046,822 | 10,617 | 4.08 | % | |||||||||||||||
| Taxable securities | 83,895 | 680 | 3.24 | % | 94,049 | 734 | 3.12 | % | |||||||||||||||
| Tax-exempt securities | 52,850 | 489 | 3.70 | % | 56,348 | 603 | 4.28 | % | |||||||||||||||
| Total securities | 136,745 | 1,169 | 3.42 | % | 150,397 | 1,337 | 3.56 | % | |||||||||||||||
| Interest-bearing deposits | 36,662 | 96 | 1.05 | % | 54,309 | 71 | 0.53 | % | |||||||||||||||
| Total interest-earning assets | 1,297,257 | 12,512 | 3.87 | % | 1,251,528 | 12,025 | 3.86 | % | |||||||||||||||
| Other assets | 100,356 | 100,241 | |||||||||||||||||||||
| TOTAL ASSETS | $ | 1,397,613 | $ | 1,351,769 | |||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY: | |||||||||||||||||||||||
| Savings | $ | 158,413 | 15 | 0.04 | % | $ | 153,151 | 14 | 0.04 | % | |||||||||||||
| Super Now deposits | 202,692 | 131 | 0.26 | % | 198,048 | 125 | 0.25 | % | |||||||||||||||
| Money market deposits | 288,035 | 255 | 0.36 | % | 239,754 | 161 | 0.27 | % | |||||||||||||||
| Time deposits | 205,418 | 607 | 1.19 | % | 221,376 | 581 | 1.06 | % | |||||||||||||||
| Total interest-bearing deposits | 854,558 | 1,008 | 0.47 | % | 812,329 | 881 | 0.44 | % | |||||||||||||||
| Short-term borrowings | 10,579 | 4 | 0.15 | % | 16,710 | 8 | 0.19 | % | |||||||||||||||
| Long-term borrowings | 75,998 | 373 | 1.95 | % | 91,025 | 492 | 2.14 | % | |||||||||||||||
| Total borrowings | 86,577 | 377 | 1.73 | % | 107,735 | 500 | 1.84 | % | |||||||||||||||
| Total interest-bearing liabilities | 941,135 | 1,385 | 0.59 | % | 920,064 | 1,381 | 0.60 | % | |||||||||||||||
| Demand deposits | 300,311 | 276,748 | |||||||||||||||||||||
| Other liabilities | 15,801 | 16,151 | |||||||||||||||||||||
| Shareholders’ equity | 140,366 | 138,806 | |||||||||||||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,397,613 | $ | 1,351,769 | |||||||||||||||||||
| Interest rate spread | 3.28 | % | 3.26 | % | |||||||||||||||||||
| Net interest income/margin | $ | 11,127 | 3.44 | % | $ | 10,644 | 3.42 | % | |||||||||||||||
| Three Months Ended June 30, | ||||||||
| 2017 | 2016 | |||||||
| Total interest income | $ | 12,209 | $ | 11,669 | ||||
| Total interest expense | 1,385 | 1,381 | ||||||
| Net interest income | 10,824 | 10,288 | ||||||
| Tax equivalent adjustment | 303 | 356 | ||||||
| Net interest income (fully taxable equivalent) | $ | 11,127 | $ | 10,644 | ||||
| Six Months Ended | ||||||||||||||||||||||
| June 30, 2017 | June 30, 2016 | |||||||||||||||||||||
| (Dollars in Thousands) | Average Balance | Interest | Average Rate | Average Balance | Interest | Average Rate | ||||||||||||||||
| ASSETS: | ||||||||||||||||||||||
| Tax-exempt loans | $ | 41,959 | $ | 821 | 3.95 | % | $ | 50,700 | $ | 980 | 3.89 | % | ||||||||||
| All other loans | 1,069,896 | 21,194 | 3.99 | % | 994,034 | 20,174 | 4.08 | % | ||||||||||||||
| Total loans | 1,111,855 | 22,015 | 4.04 | % | 1,044,734 | 21,154 | 4.07 | % | ||||||||||||||
| Taxable securities | 86,591 | 1,365 | 3.15 | % | 96,541 | 1,618 | 3.35 | % | ||||||||||||||
| Tax-exempt securities | 49,779 | 941 | 3.78 | % | 59,860 | 1,324 | 4.42 | % | ||||||||||||||
| Total securities | 136,370 | 2,306 | 3.38 | % | 156,401 | 2,942 | 3.76 | % | ||||||||||||||
| Interest-bearing deposits | 34,924 | 169 | 0.98 | % | 33,501 | 82 | 0.49 | % | ||||||||||||||
| Total interest-earning assets | 1,283,149 | 24,490 | 3.85 | % | 1,234,636 | 24,178 | 3.94 | % | ||||||||||||||
| Other assets | 99,934 | 98,276 | ||||||||||||||||||||
| TOTAL ASSETS | $ | 1,383,083 | $ | 1,332,912 | ||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY: | ||||||||||||||||||||||
| Savings | $ | 157,423 | 30 | 0.04 | % | $ | 151,004 | 29 | 0.04 | % | ||||||||||||
| Super Now deposits | 196,032 | 237 | 0.24 | % | 193,098 | 249 | 0.26 | % | ||||||||||||||
| Money market deposits | 275,529 | 446 | 0.33 | % | 229,497 | 301 | 0.26 | % | ||||||||||||||
| Time deposits | 207,722 | 1,197 | 1.16 | % | 220,965 | 1,137 | 1.03 | % | ||||||||||||||
| Total interest-bearing deposits | 836,706 | 1,910 | 0.46 | % | 794,564 | 1,716 | 0.43 | % | ||||||||||||||
| Short-term borrowings | 10,962 | 8 | 0.15 | % | 22,560 | 34 | 0.30 | % | ||||||||||||||
| Long-term borrowings | 79,258 | 813 | 2.04 | % | 91,025 | 983 | 2.14 | % | ||||||||||||||
| Total borrowings | 90,220 | 821 | 1.81 | % | 113,585 | 1,017 | 1.77 | % | ||||||||||||||
| Total interest-bearing liabilities | 926,926 | 2,731 | 0.59 | % | 908,149 | 2,733 | 0.60 | % | ||||||||||||||
| Demand deposits | 300,207 | 270,900 | ||||||||||||||||||||
| Other liabilities | 15,770 | 15,703 | ||||||||||||||||||||
| Shareholders’ equity | 140,180 | 138,160 | ||||||||||||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,383,083 | $ | 1,332,912 | ||||||||||||||||||
| Interest rate spread | 3.26 | % | 3.34 | % | ||||||||||||||||||
| Net interest income/margin | $ | 21,759 | 3.42 | % | $ | 21,445 | 3.49 | % | ||||||||||||||
| Six Months Ended June 30, | ||||||||
| 2017 | 2016 | |||||||
| Total interest income | $ | 23,891 | $ | 23,395 | ||||
| Total interest expense | 2,731 | 2,733 | ||||||
| Net interest income | 21,160 | 20,662 | ||||||
| Tax equivalent adjustment | 599 | 783 | ||||||
| Net interest income (fully taxable equivalent) | $ | 21,759 | $ | 21,445 | ||||
| (Dollars in Thousands, Except Per Share Data) | Quarter Ended | |||||||||||||||||||
| 6/30/2017 | 3/31/2017 | 12/31/2016 | 9/30/2016 | 6/30/2016 | ||||||||||||||||
| Operating Data | ||||||||||||||||||||
| Net income | $ | 3,086 | $ | 2,686 | $ | 2,948 | $ | 3,059 | $ | 3,390 | ||||||||||
| Net interest income | 10,824 | 10,336 | 10,337 | 10,247 | 10,288 | |||||||||||||||
| Provision for loan losses | 215 | 330 | 330 | 258 | 258 | |||||||||||||||
| Net security (losses) gains | (12 | ) | 199 | 441 | 261 | 492 | ||||||||||||||
| Non-interest income, excluding net security gains | 2,775 | 2,452 | 2,415 | 2,821 | 2,686 | |||||||||||||||
| Non-interest expense | 9,063 | 8,985 | 8,625 | 8,739 | 8,666 | |||||||||||||||
| Performance Statistics | ||||||||||||||||||||
| Net interest margin | 3.44 | % | 3.40 | % | 3.38 | % | 3.37 | % | 3.42 | % | ||||||||||
| Annualized return on average assets | 0.88 | % | 0.79 | % | 0.87 | % | 0.91 | % | 1.00 | % | ||||||||||
| Annualized return on average equity | 8.79 | % | 7.69 | % | 8.43 | % | 8.69 | % | 9.77 | % | ||||||||||
| Annualized net loan charge-offs (recoveries) to average loans | — | % | 0.12 | % | 0.06 | % | 0.02 | % | 0.05 | % | ||||||||||
| Net charge-offs (recoveries) | 11 | 321 | 152 | 57 | 123 | |||||||||||||||
| Efficiency ratio | 65.9 | % | 69.6 | % | 66.9 | % | 66.2 | % | 66.0 | % | ||||||||||
| Per Share Data | ||||||||||||||||||||
| Basic earnings per share | $ | 0.65 | $ | 0.57 | $ | 0.62 | $ | 0.65 | $ | 0.72 | ||||||||||
| Diluted earnings per share | 0.65 | 0.56 | 0.62 | 0.65 | 0.72 | |||||||||||||||
| Dividend declared per share | 0.47 | 0.47 | 0.47 | 0.47 | 0.47 | |||||||||||||||
| Book value | 29.53 | 29.38 | 29.20 | 29.56 | 29.45 | |||||||||||||||
| Common stock price: | ||||||||||||||||||||
| High | 43.60 | 49.45 | 52.03 | 44.75 | 44.70 | |||||||||||||||
| Low | 38.17 | 43.28 | 41.00 | 40.34 | 37.82 | |||||||||||||||
| Close | 41.18 | 43.45 | 50.50 | 44.46 | 41.99 | |||||||||||||||
| Weighted average common shares: | ||||||||||||||||||||
| Basic | 4,711 | 4,735 | 4,734 | 4,734 | 4,733 | |||||||||||||||
| Fully Diluted | 4,711 | 4,761 | 4,734 | 4,734 | 4,733 | |||||||||||||||
| End-of-period common shares: | ||||||||||||||||||||
| Issued | 5,008 | 5,008 | 5,007 | 5,007 | 5,006 | |||||||||||||||
| Treasury | 320 | 272 | 272 | 272 | 272 | |||||||||||||||
| (Dollars in Thousands, Except Per Share Data) | Quarter Ended | |||||||||||||||||||
| 6/30/2017 | 3/31/2017 | 12/31/2016 | 9/30/2016 | 6/30/2016 | ||||||||||||||||
| Financial Condition Data: | ||||||||||||||||||||
| General | ||||||||||||||||||||
| Total assets | $ | 1,395,364 | $ | 1,400,708 | $ | 1,348,590 | $ | 1,347,412 | $ | 1,346,482 | ||||||||||
| Loans, net | 1,125,976 | 1,098,195 | 1,080,785 | 1,056,762 | 1,041,602 | |||||||||||||||
| Goodwill | 17,104 | 17,104 | 17,104 | 17,104 | 17,104 | |||||||||||||||
| Intangibles | 1,623 | 1,709 | 1,799 | 1,889 | 1,979 | |||||||||||||||
| Total deposits | 1,151,110 | 1,160,664 | 1,095,214 | 1,088,297 | 1,084,867 | |||||||||||||||
| Noninterest-bearing | 300,054 | 312,392 | 303,277 | 295,599 | 274,002 | |||||||||||||||
| Savings | 158,101 | 159,652 | 153,788 | 150,822 | 152,540 | |||||||||||||||
| NOW | 199,917 | 205,011 | 174,653 | 175,767 | 190,890 | |||||||||||||||
| Money Market | 287,140 | 278,443 | 245,121 | 244,138 | 246,712 | |||||||||||||||
| Time Deposits | 205,898 | 205,166 | 218,375 | 221,971 | 220,723 | |||||||||||||||
| Total interest-bearing deposits | 851,056 | 848,272 | 791,937 | 792,698 | 810,865 | |||||||||||||||
| Core deposits* | 945,212 | 955,498 | 876,839 | 866,326 | 864,144 | |||||||||||||||
| Shareholders’ equity | 138,440 | 139,113 | 138,249 | 139,935 | 139,394 | |||||||||||||||
| Asset Quality | ||||||||||||||||||||
| Non-performing loans | $ | 12,537 | $ | 10,870 | $ | 11,626 | $ | 11,530 | $ | 11,626 | ||||||||||
| Non-performing loans to total assets | 0.90 | % | 0.78 | % | 0.86 | % | 0.86 | % | 0.86 | % | ||||||||||
| Allowance for loan losses | 13,109 | 12,905 | 12,896 | 12,718 | 12,517 | |||||||||||||||
| Allowance for loan losses to total loans | 1.15 | % | 1.16 | % | 1.18 | % | 1.19 | % | 1.19 | % | ||||||||||
| Allowance for loan losses to non-performing loans | 104.56 | % | 118.72 | % | 110.92 | % | 110.30 | % | 107.66 | % | ||||||||||
| Non-performing loans to total loans | 1.10 | % | 0.98 | % | 1.06 | % | 1.08 | % | 1.10 | % | ||||||||||
| Capitalization | ||||||||||||||||||||
| Shareholders’ equity to total assets | 9.92 | % | 9.93 | % | 10.25 | % | 10.39 | % | 10.35 | % | ||||||||||
* Core deposits are defined as total deposits less time deposits
| Reconciliation of GAAP and Non-GAAP Financial Measures | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (Dollars in Thousands, Except Per Share Data) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
| GAAP net income | $ | 3,086 | $ | 3,390 | $ | 5,772 | $ | 6,468 | ||||||||
| Less: net securities (losses) gains, net of tax | (8 | ) | 325 | 123 | 638 | |||||||||||
| Non-GAAP operating earnings | $ | 3,094 | $ | 3,065 | $ | 5,649 | $ | 5,830 | ||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Return on average assets (ROA) | 0.88 | % | 1.00 | % | 0.83 | % | 0.97 | % | ||||||||
| Less: net securities gains, net of tax | — | % | 0.09 | % | 0.01 | % | 0.10 | % | ||||||||
| Non-GAAP operating ROA | 0.88 | % | 0.91 | % | 0.82 | % | 0.87 | % | ||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Return on average equity (ROE) | 8.79 | % | 9.77 | % | 8.24 | % | 9.36 | % | ||||||||
| Less: net securities (losses) gains, net of tax | (0.03 | )% | 0.94 | % | 0.18 | % | 0.92 | % | ||||||||
| Non-GAAP operating ROE | 8.82 | % | 8.83 | % | 8.06 | % | 8.44 | % | ||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Basic earnings per share (EPS) | $ | 0.65 | $ | 0.72 | $ | 1.22 | $ | 1.37 | ||||||||
| Less: net securities (losses) gains, net of tax | (0.01 | ) | 0.07 | 0.02 | 0.14 | |||||||||||
| Non-GAAP basic operating EPS | $ | 0.66 | $ | 0.65 | $ | 1.20 | $ | 1.23 | ||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Dilutive EPS | $ | 0.65 | $ | 0.72 | $ | 1.22 | $ | 1.37 | ||||||||
| Less: net securities (losses) gains, net of tax | (0.01 | ) | 0.07 | 0.02 | 0.14 | |||||||||||
| Non-GAAP dilutive operating EPS | $ | 0.66 | $ | 0.65 | $ | 1.20 | $ | 1.23 | ||||||||