WILLIAMSPORT, Pa., April 22, 2019 (GLOBE NEWSWIRE) -- Penns Woods Bancorp, Inc. (NASDAQ: PWOD)

Penns Woods Bancorp, Inc., supported by loan and deposit growth, achieved net income of $3.9 million for the three months ended March 31, 2019, resulting in basic and diluted earnings per share of $0.84.

Highlights

  • Net income, as reported under GAAP, for the three months ended March 31, 2019 was $3.9 million, compared to $3.2 million for the same period of 2018.  Results for the three months ended March 31, 2019 compared to 2018 were impacted by an increase in after-tax securities gains of $84,000 (from a loss of $32,000 to a gain of $52,000) for the three month periods.
     
  • Basic and diluted earnings per share for the three months ended March 31, 2019 was $0.84, an increase in basic and diluted earnings per share of $0.16 as compared to the three months ended March 31, 2018.
     
  • Return on average assets was 0.95% for the three months ended March 31, 2019, compared to 0.86% for the corresponding period of 2018.
     
  • Return on average equity was 10.93% for the three months ended March 31, 2019, compared to 9.18% for the corresponding period of 2018.

Net Income

Net income from core operations (“adjusted earnings”), which is a non-generally accepted accounting principles (GAAP) measure of net income excluding net securities gains or losses, was $3.9 million for the three months ended March 31, 2019 compared to $3.2 million for the same period of 2018.  Operating earnings per share for the three months ended March 31, 2019 was $0.83 basic and diluted, an increase from $0.69 basic and diluted operating earnings per share for the same period of 2018.  Operating return on average assets and operating return on average equity were 0.94% and 10.79% for the three months ended March 31, 2019, compared to 0.87% and 9.27% for the corresponding periods of 2018.

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 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 months ended March 31, 2019 was 3.37%, compared to 3.31% for the corresponding period of 2018.  The increase in the net interest margin was driven by an increase in the yield on earning assets of 45 basis points ("bps") for the three  month period. The impact of the increase in yield on earning assets was limited by the increase in rate paid on interest-bearing liabilities of 48 bps for the three month period. 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 $122.5 million. The loan growth was primarily funded by an increase in average total deposits of $96.7 million along with growth in average total borrowings of $63.9 million for the three month period.

Assets

Total assets increased $178.0 million to $1.7 billion at March 31, 2019 compared to March 31, 2018.  Net loans increased $102.8 million to $1.4 billion at March 31, 2019 compared to March 31, 2018, primarily due to campaigns related to increasing home equity product market share and indirect auto lending. The investment portfolio increased $26.8 million from March 31, 2018 to March 31, 2019 due to increases in the taxable municipal portfolio and restricted stock.

Non-performing Loans

The ratio of non-performing loans to total loans ratio increased to 1.14% at March 31, 2019 from 0.58% at March 31, 2018 as non-performing loans have increased to $15.8 million at March 31, 2019 from $7.6 million at March 31, 2018 primarily due to a commercial loan relationship that became non-performing during the last three months 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 $405,000 for the three months ended March 31, 2019 minimally impacted the allowance for loan losses, which was 1.00% of total loans at March 31, 2019. The majority of the loans charged-off had a specific allowance within the allowance for loan losses.

Deposits

Deposits increased $116.6 million to $1.3 billion at March 31, 2019 compared to March 31, 2018.  Noninterest-bearing deposits increased $17.4 million to $321.7 million at March 31, 2019 compared to March 31, 2018.  Driving deposit growth is our commitment to easy-to-use products, community involvement, emphasis on customer service, and the opening of a new branch in Pittston, Pennsylvania.  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.  This has led to the average maturity of the time deposit portfolio being lengthened.

Shareholders’ Equity

Shareholders’ equity increased $8.9 million to $147.0 million at March 31, 2019 compared to March 31, 2018. The change in accumulated other comprehensive loss from $6.6 million at March 31, 2018 to $5.0 million at March 31, 2019 is a result of an increase in unrealized gains on available for sale securities (from an unrealized loss of $1,739,000 at March 31, 2018 to an unrealized gain of $197,000 at March 31, 2019). The amount of accumulated other comprehensive loss at March 31, 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 $353,000. The current level of shareholders’ equity equates to a book value per share of $31.33 at March 31, 2019 compared to $29.45 at March 31, 2018 and an equity to asset ratio of 8.62% at March 31, 2019, compared to 9.05% at March 31, 2018.  Excluding goodwill and intangibles, book value per share was $27.45 at March 31, 2019, compared to $25.51 at March 31, 2018.  Dividends declared for the three months ended March 31, 2019 and 2018 were $0.47 per share.

During the second quarter of 2019, the Company expects to offer approximately $10.0 million of a new series of non-cumulative, preferred stock to a limited number of accredited investors in a private placement transaction.  The preferred stock would be structured to qualify as Tier 1 capital for bank regulatory purposes.  The proceeds of the offering would be used for general corporate purposes, including funding organic growth.  There can be no assurance that the offering will be completed during the second quarter of 2019 or otherwise.  Any shares of preferred stock offered and sold will not be registered under the Securities Act of 1933 and may not be offered or sold absent registration or an applicable exemption from registration requirements.

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
 570-322-1111e-mail: pwod@pwod.com 

THIS INFORMATION IS SUBJECT TO YEAR-END AUDIT ADJUSTMENT

PENNS WOODS BANCORP, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)

  March 31,
(In Thousands, Except Share Data) 2019 2018 % Change
ASSETS:      
Noninterest-bearing balances $31,211  $18,940  64.79%
Interest-bearing balances in other financial institutions 42,385  18,452  129.70%
Total cash and cash equivalents 73,596  37,392  96.82%
        
Investment debt securities, available for sale, at fair value 141,762  116,444  21.74%
Investment equity securities, at fair value 1,819  2,482  (26.71)%
Investment securities, trading 42  159  (73.58)%
Restricted investment in bank stock, at fair value 15,725  13,483  16.63%
Loans held for sale 1,787  748  138.90%
Loans 1,384,470  1,280,748  8.10%
Allowance for loan losses (13,792) (12,836) 7.45%
Loans, net 1,370,678  1,267,912  8.11%
Premises and equipment, net 33,270  27,587  20.60%
Accrued interest receivable 5,542  4,456  24.37%
Bank-owned life insurance 28,812  28,169  2.28%
Goodwill 17,104  17,104  %
Intangibles 1,091  1,382  (21.06)%
Operating lease right of use asset 4,239    n/a 
Deferred tax asset 4,241  4,721  (10.17)%
Other assets 5,000  4,706  6.25%
TOTAL ASSETS $1,704,708  $1,526,745  11.66%
       
LIABILITIES:      
Interest-bearing deposits $987,404  $888,193  11.17%
Noninterest-bearing deposits 321,657  304,261  5.72%
Total deposits 1,309,061  1,192,454  9.78%
        
Short-term borrowings 84,499  59,305  42.48%
Long-term borrowings 144,631  123,970  16.67%
Accrued interest payable 1,278  793  61.16%
Operating lease liability 4,241    n/a 
Other liabilities 13,962  12,110  15.29%
TOTAL LIABILITIES 1,557,672  1,388,632  12.17%
        
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; 5,012,273 and 5,009,898 shares issued; 4,691,752 and 4,689,748 outstanding 41,767  41,748  0.05%
Additional paid-in capital 50,890  50,199  1.38%
Retained earnings 71,526  64,905  10.20%
Accumulated other comprehensive loss:       
Net unrealized gain (loss) on available for sale securities 197  (1,739) 111.33%
Defined benefit plan (5,239) (4,886) (7.22)%
Treasury stock at cost, 320,150 (12,115) (12,115) %
TOTAL PENNS WOODS BANCORP, INC. SHAREHOLDERS' EQUITY 147,026  138,112  6.45%
Non-controlling interest 10  1  900.00%
TOTAL SHAREHOLDERS' EQUITY 147,036  138,113  6.46%
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $1,704,708  $1,526,745  11.66%
            

PENNS WOODS BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)

  Three Months Ended March 31,
(In Thousands, Except Per Share Data) 2019 2018 % Change
INTEREST AND DIVIDEND INCOME:      
Loans including fees  $14,869  $12,193  21.95%
Investment securities:       
Taxable  934  546  71.06%
Tax-exempt  174  241  (27.80)%
Dividend and other interest income  457  221  106.79%
TOTAL INTEREST AND DIVIDEND INCOME  16,434  13,201  24.49%
        
INTEREST EXPENSE:       
Deposits  2,300  1,222  88.22%
Short-term borrowings  605  224  170.09%
Long-term borrowings  851  602  41.36%
TOTAL INTEREST EXPENSE 3,756  2,048  83.40%
        
NET INTEREST INCOME  12,678  11,153  13.67%
        
PROVISION FOR LOAN LOSSES  360  160  125.00%
        
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES  12,318  10,993  12.05%
        
NON-INTEREST INCOME:       
Service charges  562  551  2.00%
Debt securities gains, available for sale  13  (9) (244.44)%
Equity securities gains (losses) 43  (34) 226.47%
Securities gains (losses), trading  10  3  (233.33)%
Bank-owned life insurance  168  173  (2.89)%
Gain on sale of loans  316  255  23.92%
Insurance commissions  134  117  14.53%
Brokerage commissions  323  343  (5.83)%
Debit card income  310  333  (6.91)%
Other  375  349  7.45%
TOTAL NON-INTEREST INCOME  2,254  2,081  8.31%
        
NON-INTEREST EXPENSE:       
Salaries and employee benefits 5,501  5,048  8.97%
Occupancy  779  741  5.13%
Furniture and equipment  752  747  0.67%
Software Amortization  207  65  218.46%
Pennsylvania shares tax  293  277  5.78%
Professional Fees  522  566  (7.77)%
Federal Deposit Insurance Corporation deposit insurance  268  202  32.67%
Marketing  102  251  (59.36)%
Intangible amortization  71  80  (11.25)%
Other  1,319  1,300  1.46%
TOTAL NON-INTEREST EXPENSE  9,814  9,277  5.79%
INCOME BEFORE INCOME TAX PROVISION  4,758  3,797  25.31%
INCOME TAX PROVISION  812  589  37.86%
NET INCOME  $3,946  $3,208  23.00%
Earnings attributable to noncontrolling interest  2  (1) 300.00%
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS' $3,944  $3,209  22.90%
EARNINGS PER SHARE - BASIC  $0.84  $0.68  23.53%
EARNINGS PER SHARE - DILUTED  $0.84  $0.68  23.53%
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC  4,691,752  4,689,376  0.05%
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED  4,691,752  4,689,376  0.05%
DIVIDENDS DECLARED PER SHARE  $0.47  $0.47  %
            


PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES

  Three Months Ended
  March 31, 2019 March 31, 2018
(Dollars in Thousands) Average
Balance
 Interest Average
Rate
 Average
Balance
 Interest Average
Rate
ASSETS:            
Tax-exempt loans $72,714  $539  3.01% $75,448  $567  3.05%
All other loans 1,311,315  14,443  4.47% 1,186,117  11,745  4.02%
Total loans 1,384,029  14,982  4.39% 1,261,565  12,312  3.96%
                   
Taxable securities 126,033  1,350  4.28% 84,267  759  3.60%
Tax-exempt securities 26,711  220  3.29% 42,160  305  2.89%
Total securities 152,744  1,570  4.11% 126,427  1,064  3.37%
                   
Interest-bearing deposits 6,534  41  2.54% 2,167  8  1.50%
                   
Total interest-earning assets 1,543,307  16,593  4.35% 1,390,159  13,384  3.90%
             
Other assets 111,600      97,606     
             
TOTAL ASSETS $1,654,907      $1,487,765     
             
LIABILITIES AND SHAREHOLDERS’ EQUITY:            
Savings $166,927  30  0.07% $163,037  16  0.04%
Super Now deposits 231,508  379  0.66% 227,086  207  0.37%
Money market deposits 241,402  472  0.79% 236,443  210  0.36%
Time deposits 299,644  1,419  1.92% 236,116  789  1.36%
Total interest-bearing deposits 939,481  2,300  0.99% 862,682  1,222  0.57%
                   
Short-term borrowings 96,029  605  2.56% 61,803  224  1.45%
Long-term borrowings 144,191  851  2.23% 114,526  602  2.10%
Total borrowings 240,220  1,456  2.36% 176,329  826  1.87%
                   
Total interest-bearing liabilities 1,179,701  3,756  1.27% 1,039,011  2,048  0.79%
             
Demand deposits 313,112      293,227     
Other liabilities 17,776      15,786     
Shareholders’ equity 144,318      139,741     
             
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $1,654,907      $1,487,765     
Interest rate spread     3.08%     3.11%
Net interest income/margin   $12,837  3.37%   $11,336  3.31%
                   


  Three Months Ended March 31,
  2019 2018
Total interest income $16,434  $13,201 
Total interest expense 3,756  2,048 
Net interest income 12,678  11,153 
Tax equivalent adjustment 159  183 
Net interest income (fully taxable equivalent) $12,837  $11,336 
         


(Dollars in Thousands, Except Per Share Data) Quarter Ended
  3/31/2019 12/31/2018 9/30/2018 6/30/2018 3/31/2018
Operating Data          
Net income $3,944  $4,189  $3,826  $3,480  $3,209 
Net interest income 12,678  12,699  12,255  11,703  11,153 
Provision for loan losses 360  760  480  335  160 
Net security gains (losses) 66  (165) (24) 15  (40)
Non-interest income, ex. net security gains (losses) 2,188  2,594  2,613  2,347  2,368 
Non-interest expense 9,814  9,532  9,681  9,517  9,524 
           
Performance Statistics          
Net interest margin 3.37% 3.33% 3.30% 3.32% 3.31%
Annualized return on average assets 0.95% 1.02% 0.96% 0.91% 0.86%
Annualized return on average equity 10.93% 11.77% 10.94% 10.07% 9.18%
Annualized net loan charge-offs to average loans 0.12% 0.08% 0.05% 0.04% 0.06%
Net charge-offs 405  266  171  137  182 
Efficiency ratio 65.5% 61.9% 64.6% 67.2% 69.8%
           
Per Share Data          
Basic earnings per share $0.84  $0.89  $0.82  $0.74  $0.68 
Diluted earnings per share 0.84  0.89  0.82  0.74  0.68 
Dividend declared per share 0.47  0.47  0.47  0.47  0.47 
Book value 31.33  30.59  29.96  29.66  29.45 
Common stock price:          
High 44.50  44.18  46.27  46.92  45.56 
Low 34.84  38.66  43.22  41.29  39.61 
Close 41.10  40.24  43.45  44.78  42.31 
Weighted average common shares:          
Basic 4,692  4,691  4,691  4,690  4,689 
Fully Diluted 4,692  4,691  4,691  4,703  4,689 
End-of-period common shares:          
Issued 5,012  5,012  5,011  5,011  5,010 
Treasury 320  320  320  320  320 


(Dollars in Thousands, Except Per Share Data) Quarter Ended
  3/31/2019 12/31/2018 9/30/2018 6/30/2018 3/31/2018
Financial Condition Data:          
General          
Total assets $1,704,708  $1,684,771  $1,670,348  $1,603,273  $1,526,745 
Loans, net 1,370,678  1,370,920  1,355,762  1,318,039  1,267,912 
Goodwill 17,104  17,104  17,104  17,104  17,104 
Intangibles 1,091  1,162  1,233  1,304  1,382 
Total deposits 1,309,061  1,219,903  1,210,477  1,191,019  1,192,454 
Noninterest-bearing 321,657  320,814  313,111  311,194  304,261 
Savings 170,005  166,063  164,449  166,183  166,243 
NOW 253,475  207,819  223,963  216,109  240,259 
Money Market 244,753  238,596  238,131  245,081  235,381 
Time Deposits 319,171  286,611  270,823  252,452  246,310 
Total interest-bearing deposits 987,404  899,089  897,366  879,825  888,193 
           
Core deposits* 989,890  933,292  939,654  938,567  946,144 
Shareholders’ equity 147,026  143,536  140,538  139,134  138,112 
           
Asset Quality          
Non-performing loans $15,794  $16,572  $8,739  $7,132  $7,641 
Non-performing loans to total assets 0.93% 0.98% 0.52% 0.44% 0.50%
Allowance for loan losses 13,792  13,837  13,343  13,034  12,836 
Allowance for loan losses to total loans 1.00% 1.00% 0.97% 0.98% 1.00%
Allowance for loan losses to non-performing loans 87.32% 83.50% 152.68% 182.75% 167.99%
Non-performing loans to total loans 1.14% 1.20% 0.64% 0.54% 0.58%
                     
Capitalization                    
Shareholders’ equity to total assets 8.62% 8.52% 8.41% 8.68% 9.05%

* Core deposits are defined as total deposits less time deposits

Reconciliation of GAAP and Non-GAAP Financial Measures

  Three Months Ended March 31,
(Dollars in Thousands, Except Per Share Data) 2019 2018
GAAP net income $3,944  $3,209 
Less: net securities gains (losses), net of tax 52  (32)
Non-GAAP operating earnings $3,892  $3,241 
     
  Three Months Ended March 31,
  2019 2018
Return on average assets (ROA) 0.95% 0.86%
Less: net securities gains (losses), net of tax 0.01% (0.01)%
Non-GAAP operating ROA 0.94% 0.87%
     
  Three Months Ended March 31,
  2019 2018
Return on average equity (ROE) 10.93% 9.18%
Less: net securities gains (losses), net of tax 0.14% (0.09)%
Non-GAAP operating ROE 10.79% 9.27%
     
  Three Months Ended March 31,
  2019 2018
Basic earnings per share (EPS) $0.84  $0.68 
Less: net securities gains (losses), net of tax 0.01  (0.01)
Non-GAAP basic operating EPS $0.83  $0.69 
         
  Three Months Ended March 31,
  2019 2018
Diluted EPS $0.84  $0.68 
Less: net securities gains (losses), net of tax 0.01  (0.01)
Non-GAAP diluted operating EPS $0.83  $0.69