UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

January 28, 2020 
Date of Report (Date of earliest event reported)
 
PENNS WOODS BANCORP, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania
 
000-17077
 
23-2226454
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Ident. No.)
 
300 Market Street
P.O. Box 967
17703-0967
Williamsport
Pennsylvania
(Zip Code)
(Address of principal executive offices)
 
 
 
(570)
322-1111
 
 
Registrant's telephone number, including area code
 
 
N/A
(Former name or former address, if changed since last report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))

Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common stock, $5.55 par value
 
PWOD
 
The Nasdaq Global Select Market
  
Indicated by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2)
  
If an emerging growth company, indicate by check mark if registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act





Item 2.02                                           Results of Operation and Financial Condition.
 
On January 28, 2020, Penns Woods Bancorp, Inc. (the “Company”) distributed a press release announcing its earnings for the period ended December 31, 2019.  The press release is attached as Exhibit 99.1 hereto and incorporated herein by reference.

Item 9.01                                           Financial Statements and Exhibits.

(d)                                 Exhibits:

99.1        Press release, dated January 28, 2020, of Penns Woods Bancorp, Inc. announcing earnings for the period ended December 31, 2019.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
PENNS WOODS BANCORP, INC.
 
 
 
 
Dated:
January 28, 2020
 
 
 
 
 
 
 
 
By:
/s/  Brian L. Knepp
 
 
 
Brian L. Knepp
 
 
 
President and Chief Financial Officer

EXHIBIT INDEX
 
Exhibit Number
 
Description
 
Press release, dated January 28, 2020, of Penns Woods Bancorp, Inc. announcing earnings for the period ended December 31, 2019.





Exhibit 99.1
IMAGE0A14.JPG

Press Release — For Immediate Release
January 28, 2020

Penns Woods Bancorp, Inc. Reports Fourth Quarter 2019 Earnings

Williamsport, PA — January 28, 2020 - Penns Woods Bancorp, Inc. (NASDAQ: PWOD)

Penns Woods Bancorp, Inc., supported by deposit growth, achieved net income of $15.7 million for the twelve months ended December 31, 2019, resulting in basic and diluted earnings per share of $2.23 and $2.06, respectively.

Highlights

Net income, as reported under GAAP, for the three and nine months ended December 31, 2019 was $2.8 million and $15.7 million, compared to $4.2 million and $14.7 million for the same periods of 2018. Results for the three and twelve months ended December 31, 2019 compared to 2018 were impacted by an increase in after-tax securities gains of $516,000 (from a loss of $130,000 to a gain of $386,000) for the three month periods and $760,000 (from a loss of $169,000 to a gain of $591,000) for the twelve month periods. In addition, during the three and twelve months ended December 31, 2019 a loss of $682,000 was incurred related to the sale of two former branch locations as these locations were replaced with the opening of two high profile locations in their market area during 2019.

During the three and twelve months ended December 31, 2019 the Company incurred a partial charge off of a commercial relationship of $3.7 million resulting in an additional provision for loan losses of $1.4 million.

Basic and diluted earnings per share for the three months ended December 31, 2019 were $0.40 and $0.39, respectively, compared to basic and diluted earnings per share of $0.59 for the three months ended December 31, 2018.

Basic and diluted earnings per share for the twelve months ended December 31, 2019 were $2.23 and $2.06, respectively, compared to basic and diluted earnings per share of $2.09 for the twelve months ended December 31, 2018.

Return on average assets was 0.68% for the three months ended December 31, 2019, compared to 1.02% for the corresponding period of 2018. Return on average assets was 0.94% for the twelve months ended December 31, 2019, compared to 0.94% for the corresponding period of 2018.

Return on average equity was 7.22% for the three months ended December 31, 2019, compared to 11.77% for the corresponding period of 2018. Return on average equity was 10.54% for the twelve months ended December, 2019, compared to 10.72% 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 $2.4 million for the three months ended December 31, 2019 compared to $4.3 million for the same period of 2018. Core earnings increased to $15.1 million for the twelve months ended December 31, 2019, compared to $14.9 million for the same period of 2018. Core earnings per share for the three months ended December 31, 2019 was $0.35 basic and $0.33 diluted, compared to $0.61 basic and diluted core earnings per share for the same period of 2018. Core earnings per share for the twelve months ended December 31, 2019 was $2.14 basic and $1.98 diluted, compared to $2.11 basic and diluted for the same period of 2018. Core return on average assets and core return on average equity were 0.59% and 6.23% for the three months ended December 31, 2019, compared to 1.05% and 12.12% for the corresponding period of 2018. Core return on average assets and core return on average equity were 0.90% and 10.14% for the twelve months ended December 31, 2019 compared to 0.95% and 10.84% for the corresponding period of 2018. A reconciliation of the non-GAAP financial measures of

1



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 twelve months ended December 31, 2019 was 3.22% and 3.31%, compared to 3.33% and 3.31% for the corresponding periods of 2018. The decrease in the net interest margin was driven by an increase in the rate paid on interest-bearing liabilities of 37 bps and 44 bps for the three and twelve month periods. The increase was driven by an increase in the rate paid on time deposits as time deposits were utilized as an attraction tool and to manage the duration of the interest-bearing liabilities portfolio. Partially offsetting the increase in the rate paid on interest-bearing liabilities was an increase in the yield on earning assets of 2 and 27 basis points ("bps") for the three and twelve month periods. The increase in the yield on earning assets was driven by an increase in the loan portfolio yield. Growth in the average balance of the investment portfolio of $17.7 million and $23.4 million for the three and nine month periods aided in limiting the impact of increased funding costs.

Assets

Total assets decreased $19.4 million to $1.7 billion at December 31, 2019 compared to December 31, 2018.  Net loans decreased $27.3 million to $1.3 billion at December 31, 2019 compared to December 31, 2018, as the municipal loan portfolio decreased and the indirect auto lending portfolio remained constant. The investment portfolio increased $8.5 million from December 31, 2018 to December 31, 2019 due to increases in the corporate portfolio.

Non-performing Loans

The ratio of non-performing loans to total loans ratio decreased to 0.94% at December 31, 2019 from 1.20% at December 31, 2018 as non-performing loans have decreased to $12.8 million at December 31, 2019 from $16.6 million at December 31, 2018 primarily due to a commercial loan relationship that became non-performing during the fourth quarter of 2018 and was partially charged-off during the fourth quarter of 2019 resulting in an additional provision for loan losses of $1.4 million. 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 $4.1 million and $4.7 million for the three and twelve months ended December 31, 2019 impacted the allowance for loan losses, which was 0.88% of total loans at December 31, 2019 compared to 1.00% at December 31, 2008.

Deposits

Deposits increased $104.1 million to $1.3 billion at December 31, 2019 compared to December 31, 2018. Noninterest-bearing deposits increased $13.9 million to $334.7 million at December 31, 2019 compared to December 31, 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 $11.4 million to $155.0 million at December 31, 2019 compared to December 31, 2018. The change in accumulated other comprehensive loss from $6.6 million at December 31, 2018 to $2.8 million at December 31, 2019 is a result of an increase in unrealized gains on available for sale securities (from an unrealized loss of $1.4 million at December 31, 2018 to an unrealized gain of $2.5 million at December 31, 2019). The amount of accumulated other comprehensive loss at December 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 a decrease in the net loss of $44,000. The current level of shareholders’ equity equates to a book value per share of $22.01 at December 31, 2019 compared to $20.39 at December 31, 2018, and an equity to asset ratio of 9.31% at December 31, 2019 compared to 8.52% at December 31, 2018. Dividends declared for the twelve months ended December 31, 2019 and 2018 were $1.25 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.

2





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

3



PENNS WOODS BANCORP, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
 
 
 
December 31,
(In Thousands, Except Share Data)
 
2019
 
2018
 
% Change
ASSETS:
 
 

 
 

 
 

Noninterest-bearing balances
 
$
24,725

 
$
25,020

 
(1.18
)%
Interest-bearing balances in other financial institutions
 
23,864

 
41,722

 
(42.80
)%
Total cash and cash equivalents
 
48,589

 
66,742

 
(27.20
)%
 
 
 
 
 
 
 
Investment debt securities, available for sale, at fair value
 
148,619

 
134,285

 
10.67
 %
Investment equity securities, at fair value
 
1,261

 
1,776

 
(29.00
)%
Investment securities, trading
 
51

 
36

 
41.67
 %
Restricted investment in bank stock, at fair value
 
13,528

 
18,862

 
(28.28
)%
Loans held for sale
 
4,232

 
2,929

 
44.49
 %
Loans
 
1,355,544

 
1,384,757

 
(2.11
)%
Allowance for loan losses
 
(11,894
)
 
(13,837
)
 
(14.04
)%
Loans, net
 
1,343,650

 
1,370,920

 
(1.99
)%
Premises and equipment, net
 
32,929

 
27,580

 
19.39
 %
Accrued interest receivable
 
5,246

 
5,334

 
(1.65
)%
Bank-owned life insurance
 
29,253

 
28,627

 
2.19
 %
Goodwill
 
17,104

 
17,104

 
 %
Intangibles
 
898

 
1,162

 
(22.72
)%
Operating lease right of use asset
 
4,154

 

 
n/a

Deferred tax asset
 
3,338

 
5,154

 
(35.23
)%
Other assets
 
12,471

 
4,260

 
192.75
 %
TOTAL ASSETS
 
$
1,665,323

 
$
1,684,771

 
(1.15
)%
 
 
 
 
 
 
 
LIABILITIES:
 
 

 
 

 
 

Interest-bearing deposits
 
$
989,259

 
$
899,089

 
10.03
 %
Noninterest-bearing deposits
 
334,746

 
320,814

 
4.34
 %
Total deposits
 
1,324,005

 
1,219,903

 
8.53
 %
 
 
 
 
 
 
 
Short-term borrowings
 
4,920

 
167,865

 
(97.07
)%
Long-term borrowings
 
161,920

 
138,942

 
16.54
 %
Accrued interest payable
 
1,671

 
1,150

 
45.30
 %
Operating lease liability
 
4,170

 

 
n/a

Other liabilities
 
13,655

 
13,367

 
2.15
 %
TOTAL LIABILITIES
 
1,510,341

 
1,541,227

 
(2.00
)%
 
 
 
 
 
 
 
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; 7,520,740 and 7,517,547 shares issued; 7,040,515 and 7,037,322 shares outstanding
 
41,782

 
41,763

 
0.05
 %
Additional paid-in capital
 
51,487

 
50,737

 
1.48
 %
Retained earnings
 
76,583

 
69,787

 
9.74
 %
Accumulated other comprehensive loss:
 
 

 
 
 
 

Net unrealized gain (loss) on available for sale securities
 
2,455

 
(1,360
)
 
280.51
 %
Defined benefit plan
 
(5,232
)
 
(5,276
)
 
0.83
 %
Treasury stock at cost, 480,225
 
(12,115
)
 
(12,115
)
 
 %
TOTAL PENNS WOODS BANCORP, INC. SHAREHOLDERS' EQUITY
 
154,960

 
143,536

 
7.96
 %
Non-controlling interest
 
22

 
8

 
175.00
 %
TOTAL SHAREHOLDERS' EQUITY
 
154,982

 
143,544

 
7.97
 %
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
 
$
1,665,323

 
$
1,684,771

 
(1.15
)%

4



PENNS WOODS BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
(In Thousands, Except Per Share Data)
 
2019
 
2018
 
% Change
 
2019
 
2018
 
% Change
INTEREST AND DIVIDEND INCOME:
 
 

 
 

 
 

 
 

 
 

 
 

Loans including fees
 
$
14,789

 
$
14,828

 
(0.26
)%
 
$
60,384

 
$
54,000

 
11.82
 %
Investment securities:
 
 

 
 

 
 

 
 
 
 

 
 

Taxable
 
1,098

 
886

 
23.93
 %
 
3,997

 
2,784

 
43.57
 %
Tax-exempt
 
140

 
182

 
(23.08
)%
 
660

 
860

 
(23.26
)%
Dividend and other interest income
 
388

 
340

 
14.12
 %
 
1,733

 
1,102

 
57.26
 %
TOTAL INTEREST AND DIVIDEND INCOME
 
16,415

 
16,236

 
1.10
 %
 
66,774

 
58,746

 
13.67
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
INTEREST EXPENSE:
 
 

 
 

 
 

 
 

 
 

 
 

Deposits
 
3,107

 
1,999

 
55.43
 %
 
11,443

 
6,370

 
79.64
 %
Short-term borrowings
 
3

 
753

 
(99.60
)%
 
793

 
1,757

 
(54.87
)%
Long-term borrowings
 
984

 
785

 
25.35
 %
 
3,723

 
2,809

 
32.54
 %
TOTAL INTEREST EXPENSE
 
4,094

 
3,537

 
15.75
 %
 
15,959

 
10,936

 
45.93
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
NET INTEREST INCOME
 
12,321

 
12,699

 
(2.98
)%
 
50,815

 
47,810

 
6.29
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
PROVISION FOR LOAN LOSSES
 
1,700

 
760

 
123.68
 %
 
2,735

 
1,735

 
57.64
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
 
10,621

 
11,939

 
(11.04
)%
 
48,080

 
46,075

 
4.35
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
NON-INTEREST INCOME:
 
 

 
 

 
 

 
 

 
 

 
 

Service charges
 
635

 
672

 
(5.51
)%
 
2,411

 
2,460

 
(1.99
)%
Debt securities gains (losses), available for sale
 
440

 
(30
)
 
1,566.67
 %
 
640

 
(47
)
 
1,461.70
 %
Equity securities gains (losses)
 
74

 
(126
)
 
158.73
 %
 
89

 
(170
)
 
152.35
 %
Securities gains (losses), trading
 
(25
)
 
(9
)
 
(177.78
)%
 
19

 
3

 
533.33
 %
Bank-owned life insurance
 
140

 
166

 
(15.66
)%
 
574

 
662

 
(13.29
)%
Gain on sale of loans
 
508

 
465

 
9.25
 %
 
1,754

 
1,518

 
15.55
 %
Insurance commissions
 
87

 
99

 
(12.12
)%
 
433

 
365

 
18.63
 %
Brokerage commissions
 
326

 
323

 
0.93
 %
 
1,358

 
1,336

 
1.65
 %
Debit card income
 
346

 
469

 
(26.23
)%
 
1,378

 
1,534

 
(10.17
)%
Other
 
376

 
400

 
(6.00
)%
 
1,796

 
1,800

 
(0.22
)%
TOTAL NON-INTEREST INCOME
 
2,907

 
2,429

 
19.68
 %
 
10,452

 
9,461

 
10.47
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
NON-INTEREST EXPENSE:
 
 

 
 

 
 

 
 

 
 

 
 

Salaries and employee benefits
 
5,317

 
5,696

 
(6.65
)%
 
21,829

 
21,083

 
3.54
 %
Occupancy
 
627

 
622

 
0.80
 %
 
2,712

 
2,702

 
0.37
 %
Furniture and equipment
 
827

 
764

 
8.25
 %
 
3,248

 
3,092

 
5.05
 %
Software amortization
 
242

 
208

 
16.35
 %
 
871

 
712

 
22.33
 %
Pennsylvania shares tax
 
285

 
275

 
3.64
 %
 
1,148

 
1,108

 
3.61
 %
Professional fees
 
640

 
432

 
48.15
 %
 
2,474

 
2,106

 
17.47
 %
Federal Deposit Insurance Corporation deposit insurance
 
97

 
251

 
(61.35
)%
 
578

 
890

 
(35.06
)%
Marketing
 
192

 
3

 
6,300.00
 %
 
425

 
767

 
(44.59
)%
Intangible amortization
 
62

 
71

 
(12.68
)%
 
264

 
300

 
(12.00
)%
Other
 
2,005

 
1,210

 
65.70
 %
 
6,159

 
5,247

 
17.38
 %
TOTAL NON-INTEREST EXPENSE
 
10,294

 
9,532

 
7.99
 %
 
39,708

 
38,007

 
4.48
 %
INCOME BEFORE INCOME TAX PROVISION
 
3,234

 
4,836

 
(33.13
)%
 
18,824

 
17,529

 
7.39
 %
INCOME TAX PROVISION
 
397

 
640

 
(37.97
)%
 
3,138

 
2,819

 
11.32
 %
NET INCOME
 
$
2,837

 
$
4,196

 
(32.39
)%
 
$
15,686

 
$
14,710

 
6.63
 %
Earnings attributable to noncontrolling interest
 
4

 

 
n/a

 
14

 
6

 
133.33
 %
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS'
 
$
2,833

 
$
4,196

 
(32.48
)%
 
$
15,672

 
$
14,704

 
6.58
 %
EARNINGS PER SHARE - BASIC
 
$
0.40

 
$
0.59

 
(32.20
)%
 
$
2.23

 
$
2.09

 
6.70
 %
EARNINGS PER SHARE - DILUTED
 
$
0.39

 
$
0.59

 
(33.90
)%
 
$
2.06

 
$
2.09

 
(1.44
)%
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC
 
7,039,968

 
7,036,688

 
0.05
 %
 
7,038,714

 
7,035,381

 
0.05
 %
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED
 
7,338,468

 
7,036,688

 
4.29
 %
 
7,620,453

 
7,035,381

 
8.32
 %
DIVIDENDS DECLARED PER SHARE
 
$
0.32

 
$
0.31

 
3.23
 %
 
$
1.26

 
$
1.25

 
0.80
 %




5



PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES 
 
 
Three Months Ended
 
 
December 31, 2019
 
December 31, 2018
(Dollars in Thousands)
 
Average 
Balance
 
Interest
 
Average 
Rate
 
Average 
Balance
 
Interest
 
Average 
Rate
ASSETS:
 
 

 
 

 
 

 
 

 
 

 
 

Tax-exempt loans
 
$
55,727

 
$
446

 
3.21
%
 
$
73,726

 
$
553

 
2.98
%
All other loans
 
1,306,203

 
14,437

 
4.43
%
 
1,310,303

 
14,391

 
4.36
%
Total loans
 
1,361,930

 
14,883

 
4.38
%
 
1,384,029

 
14,944

 
4.28
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable securities
 
145,273

 
1,372

 
3.83
%
 
121,598

 
1,207

 
3.97
%
Tax-exempt securities
 
22,406

 
177

 
3.20
%
 
28,382

 
231

 
3.26
%
Total securities
 
167,679

 
1,549

 
3.75
%
 
149,980

 
1,438

 
3.84
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits
 
30,393

 
207

 
1.50
%
 
3,399

 
19

 
2.22
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total interest-earning assets
 
1,560,002

 
16,639

 
4.26
%
 
1,537,408

 
16,401

 
4.24
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Other assets
 
108,235

 
 
 
 
 
97,798

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL ASSETS
 
$
1,668,237

 
 

 
 

 
$
1,635,206

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY:
 
 

 
 

 
 

 
 

 
 

 
 

Savings
 
$
172,573

 
69

 
0.16
%
 
$
164,891

 
26

 
0.06
%
Super Now deposits
 
216,535

 
445

 
0.82
%
 
216,170

 
320

 
0.59
%
Money market deposits
 
229,486

 
535

 
0.94
%
 
239,919

 
400

 
0.66
%
Time deposits
 
375,838

 
2,058

 
2.20
%
 
283,663

 
1,253

 
1.75
%
Total interest-bearing deposits
 
994,432

 
3,107

 
1.25
%
 
904,643

 
1,999

 
0.88
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term borrowings
 
4,781

 
3

 
0.25
%
 
121,327

 
753

 
2.43
%
Long-term borrowings
 
162,241

 
984

 
2.30
%
 
138,942

 
785

 
2.21
%
Total borrowings
 
167,022

 
987

 
2.24
%
 
260,269

 
1,538

 
2.14
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total interest-bearing liabilities
 
1,161,454

 
4,094

 
1.39
%
 
1,164,912

 
3,537

 
2.31
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Demand deposits
 
329,873

 
 
 
 
 
312,511

 
 

 
 
Other liabilities
 
19,693

 
 
 
 
 
15,448

 
 

 
 
Shareholders’ equity
 
157,217

 
 
 
 
 
142,335

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
 
$
1,668,237

 
 

 
 
 
$
1,635,206

 
 

 
 
Interest rate spread
 
 

 
 

 
2.87
%
 
 

 
 

 
3.04
%
Net interest income/margin
 
 

 
$
12,545

 
3.22
%
 
 

 
$
12,864

 
3.33
%

 
 
Three Months Ended December 31,
 
 
2019
 
2018
Total interest income
 
$
16,415

 
$
16,236

Total interest expense
 
4,094

 
3,537

Net interest income
 
12,321

 
12,699

Tax equivalent adjustment
 
224

 
165

Net interest income (fully taxable equivalent)
 
$
12,545

 
$
12,864



6



PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES 
 
 
Twelve Months Ended
 
 
December 31, 2019
 
December 31, 2018
(Dollars in Thousands)
 
Average 
Balance
 
Interest
 
Average 
Rate
 
Average 
Balance
 
Interest
 
Average 
Rate
ASSETS:
 
 

 
 

 
 

 
 

 
 

 
 

Tax-exempt loans
 
$
66,435

 
$
2,038

 
3.07
%
 
$
74,923

 
$
2,242

 
2.99
%
All other loans
 
1,309,806

 
58,774

 
4.49
%
 
1,250,521

 
52,229

 
4.18
%
Total loans
 
1,376,241

 
60,812

 
4.42
%
 
1,325,444

 
54,471

 
4.11
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable securities
 
134,935

 
5,306

 
3.99
%
 
100,915

 
3,828

 
3.79
%
Tax-exempt securities
 
25,702

 
835

 
3.29
%
 
36,279

 
1,089

 
3.00
%
Total securities
 
160,637

 
6,141

 
3.88
%
 
137,194

 
4,917

 
3.58
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits
 
21,161

 
310

 
2.00
%
 
3,005

 
58

 
1.93
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total interest-earning assets
 
1,558,039

 
67,263

 
4.33
%
 
1,465,643

 
59,446

 
4.06
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Other assets
 
111,839

 
 

 
 
 
97,577

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL ASSETS
 
$
1,669,878

 
 

 
 
 
$
1,563,220

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY:
 
 

 
 

 
 
 
 

 
 

 
 
Savings
 
$
169,832

 
216

 
0.13
%
 
$
164,844

 
75

 
0.05
%
Super Now deposits
 
231,816

 
1,758

 
0.76
%
 
225,885

 
1,033

 
0.46
%
Money market deposits
 
239,317

 
2,184

 
0.91
%
 
240,541

 
1,214

 
0.50
%
Time deposits
 
345,635

 
7,285

 
2.11
%
 
259,286

 
4,048

 
1.56
%
Total interest-bearing deposits
 
986,600

 
11,443

 
1.16
%
 
890,556

 
6,370

 
0.72
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term borrowings
 
34,897

 
793

 
2.27
%
 
85,086

 
1,757

 
2.06
%
Long-term borrowings
 
155,841

 
3,723

 
2.25
%
 
128,127

 
2,809

 
2.19
%
Total borrowings
 
190,738

 
4,516

 
2.25
%
 
213,213

 
4,566

 
2.14
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total interest-bearing liabilities
 
1,177,338

 
15,959

 
1.34
%
 
1,103,769

 
10,936

 
0.99
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Demand deposits
 
321,443

 
 

 
 
 
303,606

 
 

 
 
Other liabilities
 
22,379

 
 

 
 
 
18,742

 
 

 
 
Shareholders’ equity
 
148,718

 
 

 
 
 
137,103

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
 
$
1,669,878

 
 

 
 
 
$
1,563,220

 
 

 
 
Interest rate spread
 
 

 
 

 
2.99
%
 
 

 
 

 
3.07
%
Net interest income/margin
 
 

 
$
51,304

 
3.31
%
 
 

 
$
48,510

 
3.31
%

 
 
Twelve Months Ended December 31,
 
 
2019
 
2018
Total interest income
 
$
66,774

 
$
58,746

Total interest expense
 
15,959

 
10,936

Net interest income
 
50,815

 
47,810

Tax equivalent adjustment
 
489

 
700

Net interest income (fully taxable equivalent)
 
$
51,304

 
$
48,510


7



(Dollars in Thousands, Except Per Share Data)
 
Quarter Ended
 
 
12/31/2019
 
9/30/2019
 
6/30/2019
 
3/31/2019
 
12/31/2018
Operating Data
 
 

 
 

 
 

 
 

 
 

Net income
 
$
2,833

 
$
4,650

 
$
4,245

 
$
3,944

 
$
4,196

Net interest income
 
12,321

 
12,903

 
12,913

 
12,678

 
12,699

Provision for loan losses
 
1,700

 
360

 
315

 
360

 
760

Net security gains (losses)
 
489

 
170

 
23

 
66

 
(165
)
Non-interest income, ex. net security gains (losses)
 
2,418

 
2,652

 
2,446

 
2,188

 
2,594

Non-interest expense
 
10,294

 
9,541

 
10,059

 
9,814

 
9,532

 
 
 
 
 
 
 
 
 
 
 
Performance Statistics
 
 

 
 

 
 

 
 

 
 

Net interest margin
 
3.22
%
 
3.32
%
 
3.39
%
 
3.37
%
 
3.33
%
Annualized return on average assets
 
0.68
%
 
1.10
%
 
1.02
%
 
0.95
%
 
1.02
%
Annualized return on average equity
 
7.22
%
 
12.18
%
 
11.42
%
 
10.93
%
 
11.77
%
Annualized net loan charge-offs to average loans
 
1.19
%
 
0.03
%
 
0.03
%
 
0.12
%
 
0.08
%
Net charge-offs
 
4,055

 
112

 
106

 
405

 
266

Efficiency ratio
 
69.4
%
 
61.0
%
 
65.0
%
 
65.5
%
 
61.9
%
 
 
 
 
 
 
 
 
 
 
 
Per Share Data
 
 

 
 

 
 

 
 

 
 

Basic earnings per share
 
$
0.40

 
$
0.66

 
$
0.61

 
$
0.56

 
$
0.59

Diluted earnings per share
 
0.39

 
0.66

 
0.61

 
0.56

 
0.59

Dividend declared per share
 
0.32

 
0.31

 
0.31

 
0.31

 
0.31

Book value
 
22.01

 
22.03

 
21.53

 
20.89

 
20.39

Common stock price:
 
 

 
 

 
 

 
 

 
 

High
 
35.58

 
30.93

 
30.17

 
29.67

 
29.45

Low
 
29.68

 
26.87

 
26.03

 
23.23

 
25.77

Close
 
35.58

 
30.83

 
30.17

 
27.40

 
26.83

Weighted average common shares:
 
 

 
 

 
 

 
 

 
 

Basic
 
7,040

 
7,037

 
7,038

 
7,038

 
7,037

Fully Diluted
 
7,338

 
7,037

 
7,038

 
7,038

 
7,037

End-of-period common shares:
 
 

 
 

 
 

 
 

 
 

Issued
 
7,521

 
7,518

 
7,518

 
7,518

 
7,518

Treasury
 
480

 
480

 
480

 
480

 
480


8



(Dollars in Thousands, Except Per Share Data)
 
Quarter Ended
 
 
12/31/2019
 
9/30/2019
 
6/30/2019
 
3/31/2019
 
12/31/2018
Financial Condition Data:
 
 

 
 

 
 

 
 

 
 

General
 
 

 
 

 
 

 
 

 
 

Total assets
 
$
1,665,323

 
$
1,673,095

 
$
1,711,500

 
$
1,704,708

 
$
1,684,771

Loans, net
 
1,343,650

 
1,350,735

 
1,365,284

 
1,370,678

 
1,370,920

Goodwill
 
17,104

 
17,104

 
17,104

 
17,104

 
17,104

Intangibles
 
898

 
960

 
1,022

 
1,091

 
1,162

Total deposits
 
1,324,005

 
1,332,407

 
1,327,086

 
1,309,061

 
1,219,903

Noninterest-bearing
 
334,746

 
327,329

 
322,755

 
321,657

 
320,814

Savings
 
176,732

 
171,370

 
171,992

 
170,005

 
166,063

NOW
 
218,605

 
219,466

 
238,410

 
253,475

 
207,819

Money Market
 
216,038

 
239,926

 
238,352

 
244,753

 
238,596

Time Deposits
 
377,884

 
374,316

 
355,577

 
319,171

 
286,611

Total interest-bearing deposits
 
989,259

 
1,005,078

 
1,004,331

 
987,404

 
899,089

 
 
 
 
 
 
 
 
 
 
 
Core deposits*
 
946,121

 
958,091

 
971,509

 
989,890

 
933,292

Shareholders’ equity
 
154,960

 
155,061

 
151,527

 
147,026

 
143,536

 
 
 
 
 
 
 
 
 
 
 
Asset Quality
 
 

 
 

 
 

 
 

 
 

Non-performing loans
 
$
12,758

 
$
17,208

 
$
15,383

 
$
15,794

 
$
16,572

Non-performing loans to total assets
 
0.77
%
 
1.03
%
 
0.90
%
 
0.93
%
 
0.98
%
Allowance for loan losses
 
11,894

 
14,249

 
14,001

 
13,792

 
13,837

Allowance for loan losses to total loans
 
0.88
%
 
1.04
%
 
1.02
%
 
1.00
%
 
1.00
%
Allowance for loan losses to non-performing loans
 
93.23
%
 
82.80
%
 
91.02
%
 
87.32
%
 
83.50
%
Non-performing loans to total loans
 
0.94
%
 
1.26
%
 
1.12
%
 
1.14
%
 
1.20
%
 
 
 
 
 
 
 
 
 
 
 
Capitalization
 
 

 
 

 
 

 
 

 
 

Shareholders’ equity to total assets
 
9.31
%
 
9.27
%
 
8.85
%
 
8.62
%
 
8.52
%

* Core deposits are defined as total deposits less time deposits

9



Reconciliation of GAAP and Non-GAAP Financial Measures
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
(Dollars in Thousands, Except Per Share Data)
 
2019
 
2018
 
2019
 
2018
GAAP net income
 
$
2,833

 
$
4,189

 
$
15,672

 
$
14,704

Less: net securities gains (losses), net of tax
 
386

 
(130
)
 
591

 
(169
)
Non-GAAP core earnings
 
$
2,447

 
$
4,319

 
$
15,081

 
$
14,873

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2019
 
2018
 
2019
 
2018
Return on average assets (ROA)
 
0.68
%
 
1.02
 %
 
0.94
%
 
0.94
 %
Less: net securities gains (losses), net of tax
 
0.09
%
 
(0.03
)%
 
0.04
%
 
(0.01
)%
Non-GAAP core ROA
 
0.59
%
 
1.05
 %
 
0.90
%
 
0.95
 %
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2019
 
2018
 
2019
 
2018
Return on average equity (ROE)
 
7.22
%
 
11.77
 %
 
10.54
%
 
10.72
 %
Less: net securities gains (losses), net of tax
 
0.99
%
 
(0.35
)%
 
0.40
%
 
(0.12
)%
Non-GAAP core ROE
 
6.23
%
 
12.12
 %
 
10.14
%
 
10.84
 %
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2019
 
2018
 
2019
 
2018
Basic earnings per share (EPS)
 
$
0.40

 
$
0.59

 
$
2.23

 
$
2.09

Less: net securities gains (losses), net of tax
 
0.05

 
(0.02
)
 
0.09

 
(0.02
)
Non-GAAP basic core EPS
 
$
0.35

 
$
0.61

 
$
2.14

 
$
2.11

 
 
 
 
 
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2019
 
2018
 
2019
 
2018
Diluted EPS
 
$
0.39

 
$
0.59

 
$
2.06

 
$
2.09

Less: net securities gains (losses), net of tax
 
0.06

 
(0.02
)
 
0.08

 
(0.02
)
Non-GAAP diluted core EPS
 
$
0.33

 
$
0.61

 
$
1.98

 
$
2.11



10