WILLIAMSPORT, Pa., Oct. 24, 2019 (GLOBE NEWSWIRE) -- 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
 570-322-1111e-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) Average
Balance
 Interest Average
Rate
 Average
Balance
 Interest Average
Rate
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) Average
Balance
 Interest Average
Rate
 Average
Balance
 Interest Average
Rate
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