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Penns Woods Bancorp, Inc. Reports Third Quarter 2016 Earnings

WILLIAMSPORT, Pa., Oct. 21, 2016 (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 $9,529,000 for the nine months ended September 30, 2016 resulting in basic and dilutive earnings per share of $2.01.

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 $2,887,000 for the three months ended September 30, 2016 compared to $3,039,000 for the same period of 2015. Operating earnings decreased to $8,719,000 for the nine months ended September 30, 2016 compared to $9,046,000 for the same period of 2015. The 2015 nine month period included non-recurring gains on the sale of other real estate owned of $175,000 above the 2016 level. Nine month 2016 expenses were negatively impacted by a mass replacement of debit cards to implement EMV card technology to better protect the security of our customers. The 2016 period also included expenses related to a data breach at a national restaurant chain that impacted our customer base. In addition, the investment portfolio has declined $61,599,000 from September 30, 2015 to September 30, 2016 as part of our strategy to position the balance sheet for a rising rate environment.

  • Operating earnings per share for the three months ended September 30, 2016 were $0.61 for both basic and dilutive, a decrease from $0.64 for the same period of 2015. Operating earnings per share for the nine months ended September 30, 2016 were $1.84 basic and dilutive compared to $1.89 basic and dilutive for the same period of 2015.

  • Return on average assets was 0.91% for the three months ended September 30, 2016 compared to 1.04% for the corresponding period of 2015. Return on average assets was 0.95% for the nine months ended September 30, 2016 compared to 1.06% for the corresponding period of 2015.

  • Return on average equity was 8.69% for the three months ended September 30, 2016 compared to 9.89% for the corresponding period of 2015. Return on average equity was 9.14% for the nine months ended September 30, 2016 compared to 9.90% for the corresponding period of 2015.

“During 2016 we have maintained our focus on building balance sheet strength by adding quality earning assets and continuing to shift earning assets from the investment portfolio to the loan portfolio. The quality assets being added are centered on home equity products that are variable rate and provide protection to a rising rate environment. The shift from investments to loans is being undertaken to reduce interest rate and market risk and to reduce the level of regulatory risk weighted assets which allows for better capital utilization,” 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 nine months ended September 30, 2016 was $3,059,000 and $9,529,000 compared to $3,364,000 and $10,152,000 for the same period of 2015. Results for the three and nine months ended September 30, 2016 compared to 2015 were impacted by a decrease in after-tax securities gains of $153,000 (from a gain of $325,000 to a gain of $172,000) for the three month periods and a decrease in after-tax securities gains of $296,000 (from a gain of $1,106,000 to a gain of $810,000) for the nine month periods. Basic and dilutive earnings per share for the three and nine months ended September 30, 2016 were $0.65 and $2.01 compared to $0.71 and $2.12 for the corresponding periods of 2015. Return on average assets and return on average equity were 0.91% and 8.69% for the three months ended September 30, 2016 compared to 1.04% and 9.89% for the corresponding period of 2015. Return on average assets and return on average equity were 0.95% and 9.14% for the nine months ended September 30, 2016 compared to 1.06% and 9.90% for the corresponding period of 2015.

Net Interest Margin

The net interest margin for the three and nine months ended September 30, 2016 was 3.37% and 3.45% compared to 3.55% and 3.63% for the corresponding periods of 2015. The decline in the net interest margin was driven by a decreasing yield on the investment portfolio due to the continued low 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 rising rate environment. The impact of the declining investment portfolio yield and decreasing investment portfolio balance was partially offset by a 6.77% growth in gross loans from September 30, 2015 to September 30, 2016. 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 79.60% of total deposits at September 30, 2016 and 78.02% at September 30, 2015.

Assets

Total assets increased $48,120,000 to $1,347,412,000 at September 30, 2016 compared to September 30, 2015. Net loans increased $66,598,000 to $1,056,762,000 at September 30, 2016 compared to September 30, 2015 primarily due to campaigns related to increasing home equity product market share during 2015 and 2016, growth in the commercial loan portfolio, and the introduction of indirect auto lending during the third quarter of 2016. The investment portfolio decreased $61,599,000 from September 30, 2015 to September 30, 2016 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 a shortening of 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 increased to 1.08% at September 30, 2016 from 0.86% at September 30, 2015. This change was primarily the result of a large commercial real estate loan that was placed on non-accrual status causing non-performing loans to increase to $11,530,000 at September 30, 2016 from $8,608,000 at September 30, 2015. The majority of non-performing loans are centered on several 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 $192,000 for the nine months ended September 30, 2016 minimally impacted the allowance for loan losses which was 1.19% of total loans at September 30, 2016. The majority of the loans charged-off had a specific allowance within the allowance for loan losses.

Deposits

Deposits increased $83,496,000 to $1,088,297,000 at September 30, 2016 compared to September 30, 2015. Core deposits (total deposits excluding time deposits) increased $82,335,000 due to our commitment to building complete banking relationships with our customers. Noninterest-bearing deposits increased $47,751,000 to $295,599,000 at September 30, 2016 compared to September 30, 2015. 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 increased $4,358,000 to $139,935,000 at September 30, 2016 compared to September 30, 2015. Since September 30, 2015, treasury stock purchases of $727,000 for 18,308 shares were completed as part of the stock repurchase plan. The change in accumulated other comprehensive loss from $3,100,000 at September 30, 2015 to $2,491,000 at September 30, 2016 is a result of an increase in unrealized gains on available for sale securities from an unrealized gain of $1,418,000 at September 30, 2015 to an unrealized gain of $1,489,000 at September 30, 2016. The amount of accumulated other comprehensive loss at September 30, 2016 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 $538,000 to $3,980,000 at September 30, 2016. The current level of shareholders’ equity equates to a book value per share of $29.56 at September 30, 2016 compared to $28.54 at September 30, 2015 and an equity to asset ratio of 10.39% at September 30, 2016 compared to 10.43% at September 30, 2015. Excluding goodwill and intangibles, book value per share was $25.55 at September 30, 2016 compared to $24.66 at September 30, 2015. Dividends declared for each of the three and nine months ended September 30, 2016 and 2015 were $0.47 and $1.41 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, 2015.

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)
September 30,
(In Thousands, Except Share Data) 2016 2015 % Change
ASSETS
Noninterest-bearing balances $23,487 $17,304 35.73%
Interest-bearing balances in other financial institutions 36,694 951 3,758.46%
Total cash and cash equivalents 60,181 18,255 229.67%
Investment securities, available for sale, at fair value 141,057 202,593 (30.37)%
Investment securities, trading 63 (100.00)%
Loans held for sale 2,160 1,029 109.91%
Loans 1,069,480 1,001,653 6.77%
Allowance for loan losses (12,718) (11,489) 10.70%
Loans, net 1,056,762 990,164 6.73%
Premises and equipment, net 22,985 21,433 7.24%
Accrued interest receivable 3,800 4,093 (7.16)%
Bank-owned life insurance 27,176 26,499 2.55%
Investment in limited partnerships 658 1,064 (38.16)%
Goodwill 17,104 17,104 %
Intangibles 1,889 1,316 43.54%
Deferred tax asset 7,404 8,618 (14.09)%
Other assets 6,236 7,061 (11.68)%
TOTAL ASSETS $1,347,412 $1,299,292 3.70%
LIABILITIES
Interest-bearing deposits $792,698 $756,953 4.72%
Noninterest-bearing deposits 295,599 247,848 19.27%
Total deposits 1,088,297 1,004,801 8.31%
Short-term borrowings 11,579 51,690 (77.60)%
Long-term borrowings 91,025 91,051 (0.03)%
Accrued interest payable 481 460 4.57%
Other liabilities 16,095 15,713 2.43%
TOTAL LIABILITIES 1,207,477 1,163,715 3.76%
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; 5,006,601 and 5,004,372 shares issued 41,721 41,702 0.05%
Additional paid-in capital 50,050 49,959 0.18%
Retained earnings 60,889 56,523 7.72%
Accumulated other comprehensive loss:
Net unrealized gain on available for sale securities 1,489 1,418 5.01%
Defined benefit plan (3,980) (4,518) 11.91%
Treasury stock at cost, 272,452 and 254,144 shares (10,234) (9,507) 7.65%
TOTAL SHAREHOLDERS’ EQUITY 139,935 135,577 3.21%
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $1,347,412 $1,299,292 3.70%


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) 2016 2015 % Change 2016 2015 % Change
INTEREST AND DIVIDEND INCOME:
Loans including fees $10,541 $9,862 6.89% $31,362 $28,937 8.38%
Investment securities:
Taxable 601 829 (27.50)% 1,825 2,728 (33.10)%
Tax-exempt 329 676 (51.33)% 1,203 2,187 (44.99)%
Dividend and other interest income 189 156 21.15% 666 597 11.56%
TOTAL INTEREST AND DIVIDEND INCOME 11,660 11,523 1.19% 35,056 34,449 1.76%
INTEREST EXPENSE:
Deposits 909 800 13.63% 2,624 2,328 12.71%
Short-term borrowings 7 31 (77.42)% 41 78 (47.44)%
Long-term borrowings 497 458 8.52% 1,481 1,476 0.34%
TOTAL INTEREST EXPENSE 1,413 1,289 9.62% 4,146 3,882 6.80%
NET INTEREST INCOME 10,247 10,234 0.13% 30,910 30,567 1.12%
PROVISION FOR LOAN LOSSES 258 520 (50.38)% 866 1,820 (52.42)%
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 9,989 9,714 2.83% 30,044 28,747 4.51%
NON-INTEREST INCOME:
Service charges 585 621 (5.80)% 1,678 1,772 (5.30)%
Securities gains, available for sale 253 526 (51.90)% 1,174 1,713 (31.47)%
Securities gains (losses), trading 8 (33) 124.24% 54 (37) 245.95%
Bank-owned life insurance 172 182 (5.49)% 516 541 (4.62)%
Gain on sale of loans 658 524 25.57% 1,691 1,305 29.58%
Insurance commissions 198 185 7.03% 604 623 (3.05)%
Brokerage commissions 290 297 (2.36)% 817 836 (2.27)%
Other 918 835 9.94% 2,723 2,701 0.81%
TOTAL NON-INTEREST INCOME 3,082 3,137 (1.75)% 9,257 9,454 (2.08)%
NON-INTEREST EXPENSE:
Salaries and employee benefits 4,507 4,302 4.77% 13,433 13,073 2.75%
Occupancy 544 529 2.84% 1,630 1,721 (5.29)%
Furniture and equipment 662 686 (3.50)% 2,042 1,924 6.13%
Pennsylvania shares tax 220 244 (9.84)% 698 711 (1.83)%
Amortization of investments in limited partnerships 46 165 (72.12)% 266 496 (46.37)%
Federal Deposit Insurance Corporation deposit insurance 202 209 (3.35)% 670 654 2.45%
Marketing 173 160 8.13% 568 434 30.88%
Intangible amortization 90 73 23.29% 276 235 17.45%
Other 2,295 2,162 6.15% 6,882 6,171 11.52%
TOTAL NON-INTEREST EXPENSE 8,739 8,530 2.45% 26,465 25,419 4.12%
INCOME BEFORE INCOME TAX PROVISION 4,332 4,321 0.25% 12,836 12,782 0.42%
INCOME TAX PROVISION 1,273 957 33.02% 3,307 2,630 25.74%
NET INCOME $3,059 $3,364 (9.07)% $9,529 $10,152 (6.14)%
EARNINGS PER SHARE - BASIC AND DILUTED $0.65 $0.71 (8.45)% $2.01 $2.12 (5.19)%
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED 4,733,800 4,761,576 (0.58)% 4,735,844 4,780,776 (0.94)%
DIVIDENDS DECLARED PER SHARE $0.47 $0.47 % $1.41 $1.41 %


PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES
Three Months Ended
September 30, 2016 September 30, 2015
(Dollars in Thousands) Average
Balance
Interest Average
Rate
Average
Balance
Interest Average
Rate
ASSETS:
Tax-exempt loans $45,715 $452 3.93% $43,562 $423 3.85%
All other loans 1,011,393 10,243 4.03% 947,665 9,583 4.01%
Total loans 1,057,108 10,695 4.02% 991,227 10,006 4.00%
Taxable securities 93,893 725 3.09% 125,618 982 3.13%
Tax-exempt securities 49,231 498 4.05% 80,535 1,024 5.09%
Total securities 143,124 1,223 3.42% 206,153 2,006 3.89%
Interest-bearing deposits 48,125 65 0.54% 3,216 3 0.37%
Total interest-earning assets 1,248,357 11,983 3.82% 1,200,596 12,015 3.98%
Other assets 101,312 97,363
TOTAL ASSETS $1,349,669 $1,297,959
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Savings $151,464 15 0.04% $143,353 14 0.04%
Super Now deposits 184,440 107 0.23% 193,659 126 0.26%
Money market deposits 245,643 170 0.28% 210,029 145 0.27%
Time deposits 223,082 617 1.10% 219,306 515 0.93%
Total interest-bearing deposits 804,629 909 0.45% 766,347 800 0.41%
Short-term borrowings 15,748 7 0.18% 40,801 31 0.30%
Long-term borrowings 91,025 497 2.14% 81,880 458 2.19%
Total borrowings 106,773 504 1.85% 122,681 489 1.56%
Total interest-bearing liabilities 911,402 1,413 0.61% 889,028 1,289 0.57%
Demand deposits 281,586 256,264
Other liabilities 15,916 16,619
Shareholders’ equity 140,765 136,048
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $1,349,669 $1,297,959
Interest rate spread 3.21% 3.41%
Net interest income/margin $10,570 3.37% $10,726 3.55%


Three Months Ended September 30,
2016 2015
Total interest income $11,660 $11,523
Total interest expense 1,413 1,289
Net interest income 10,247 10,234
Tax equivalent adjustment 323 492
Net interest income (fully taxable equivalent) $10,570 $10,726


Nine Months Ended
September 30, 2016 September 30, 2015
(Dollars in Thousands) Average
Balance
Interest Average
Rate
Average
Balance
Interest Average
Rate
ASSETS:
Tax-exempt loans $49,204 $1,432 3.89% $39,901 $1,194 4.00%
All other loans 999,685 30,417 4.06% 920,675 28,149 4.09%
Total loans 1,048,889 31,849 4.06% 960,576 29,343 4.08%
Taxable securities 95,652 2,344 3.27% 133,191 3,316 3.32%
Tax-exempt securities 56,291 1,823 4.32% 85,263 3,314 5.18%
Total securities 151,943 4,167 3.66% 218,454 6,630 4.05%
Interest-bearing deposits 38,411 147 0.51% 4,500 9 0.27%
Total interest-earning assets 1,239,243 36,163 3.90% 1,183,530 35,982 4.06%
Other assets 99,295 97,151
TOTAL ASSETS $1,338,538 $1,280,681
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Savings $151,158 43 0.04% $142,812 43 0.04%
Super Now deposits 190,190 356 0.25% 190,653 379 0.27%
Money market deposits 234,918 471 0.27% 208,317 424 0.27%
Time deposits 221,676 1,754 1.06% 218,987 1,482 0.90%
Total interest-bearing deposits 797,942 2,624 0.44% 760,769 2,328 0.41%
Short-term borrowings 20,273 41 0.27% 36,111 78 0.29%
Long-term borrowings 91,025 1,481 2.14% 82,597 1,476 2.36%
Total borrowings 111,298 1,522 1.80% 118,708 1,554 1.73%
Total interest-bearing liabilities 909,240 4,146 0.61% 879,477 3,882 0.59%
Demand deposits 274,488 247,130
Other liabilities 15,775 17,327
Shareholders’ equity 139,035 136,747
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $1,338,538 $1,280,681
Interest rate spread 3.29% 3.47%
Net interest income/margin $32,017 3.45% $32,100 3.63%


Nine Months Ended September 30,
2016 2015
Total interest income $35,056 $34,449
Total interest expense 4,146 3,882
Net interest income 30,910 30,567
Tax equivalent adjustment 1,107 1,533
Net interest income (fully taxable equivalent) $32,017 $32,100


(Dollars in Thousands, Except Per Share Data) Quarter Ended
9/30/2016 6/30/2016 3/31/2016 12/31/2015 9/302015
Operating Data
Net income $3,059 $3,390 $3,078 $3,746 $3,364
Net interest income 10,247 10,288 10,374 10,338 10,234
Provision for loan losses 258 258 350 480 520
Net security gains 261 492 475 894 493
Non-interest income, excluding net security gains 2,821 2,686 2,522 2,417 2,644
Non-interest expense 8,739 8,666 9,061 8,317 8,530
Performance Statistics
Net interest margin 3.37% 3.42% 3.57% 3.55% 3.55%
Annualized return on average assets 0.91% 1.00% 0.94% 1.15% 1.04%
Annualized return on average equity 8.69% 9.77% 8.95% 10.73% 9.89%
Annualized net loan charge-offs (recoveries) to average loans 0.02% 0.05% % (0.03)% 0.12%
Net charge-offs (recoveries) 57 123 12 (75) 296
Efficiency ratio 66.2% 66.0% 69.6% 64.6% 65.7%
Per Share Data
Basic earnings per share $0.65 $0.72 $0.65 $0.79 $0.71
Diluted earnings per share 0.65 0.72 0.65 0.79 0.71
Dividend declared per share 0.47 0.47 0.47 0.47 0.47
Book value 29.56 29.45 29.09 28.71 28.54
Common stock price:
High 44.75 44.70 41.32 45.28 44.56
Low 40.34 37.82 36.73 40.47 40.41
Close 44.46 41.99 38.54 42.46 40.92
Weighted average common shares:
Basic 4,734 4,733 4,741 4,747 4,762
Fully Diluted 4,734 4,733 4,741 4,747 4,762
End-of-period common shares:
Issued 5,007 5,006 5,006 5,005 5,004
Treasury 272 272 272 258 254


(Dollars in Thousands, Except Per Share Data) Quarter Ended
9/30/2016 6/30/2016 3/31/2016 12/31/2015 9/30/2015
Financial Condition Data:
General
Total assets $1,347,412 $1,346,482 $1,318,137 $1,320,057 $1,299,292
Loans, net 1,056,762 1,041,602 1,028,870 1,033,163 990,164
Goodwill 17,104 17,104 17,104 17,104 17,104
Intangibles 1,889 1,979 2,078 1,240 1,316
Total deposits 1,088,297 1,084,867 1,059,581 1,031,880 1,004,801
Noninterest-bearing 295,599 274,002 269,362 280,083 247,848
Savings 150,822 152,540 153,217 144,561 143,224
NOW 175,767 190,890 190,168 176,078 188,444
Money Market 244,138 246,712 226,659 209,782 204,475
Time Deposits 221,971 220,723 220,175 221,376 220,810
Total interest-bearing deposits 792,698 810,865 790,219 751,797 756,953
Core deposits* 866,326 864,145 839,406 810,504 783,991
Shareholders’ equity 139,935 139,394 137,663 136,279 135,577
Asset Quality
Non-performing loans $11,530 $11,626 $11,648 $9,446 $8,608
Non-performing loans to total assets 0.86% 0.86% 0.88% 0.72% 0.66%
Allowance for loan losses 12,718 12,517 12,382 12,044 11,489
Allowance for loan losses to total loans 1.19% 1.19% 1.19% 1.15% 1.15%
Allowance for loan losses to non-performing loans 110.30% 107.66% 106.30% 127.50% 133.47%
Non-performing loans to total loans 1.08% 1.10% 1.12% 0.90% 0.86%
Capitalization
Shareholders’ equity to total assets 10.39% 10.35% 10.44% 10.32% 10.43%

* 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) 2016 2015 2016 2015
GAAP net income $3,059 $3,364 $9,529 $10,152
Less: net securities gains, net of tax 172 325 810 1,106
Non-GAAP operating earnings $2,887 $3,039 $8,719 $9,046
Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2015 2016 2015
Return on average assets (ROA) 0.91% 1.04% 0.95% 1.06%
Less: net securities gains, net of tax 0.05% 0.10% 0.08% 0.12%
Non-GAAP operating ROA 0.86% 0.94% 0.87% 0.94%
Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2015 2016 2015
Return on average equity (ROE) 8.69% 9.89% 9.14% 9.90%
Less: net securities gains, net of tax 0.49% 0.95% 0.78% 1.08%
Non-GAAP operating ROE 8.20% 8.94% 8.36% 8.82%
Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2015 2016 2015
Basic earnings per share (EPS) $0.65 $0.71 $2.01 $2.12
Less: net securities gains, net of tax 0.04 0.07 0.17 0.23
Non-GAAP basic operating EPS $0.61 $0.64 $1.84 $1.89
Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2015 2016 2015
Dilutive EPS $0.65 $0.71 $2.01 $2.12
Less: net securities gains, net of tax 0.04 0.07 0.17 0.23
Non-GAAP dilutive operating EPS $0.61 $0.64 $1.84 $1.89


Contact: Richard A. Grafmyre, President and Chief Executive Officer 300 Market Street Williamsport, PA 17701 570-322-1111 e-mail: pwod@pwod.com

Source:Penns Woods Bancorp, Inc.