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Penns Woods Bancorp, Inc. Reports Fourth Quarter 2016 Earnings

WILLIAMSPORT, Pa., Jan. 26, 2017 (GLOBE NEWSWIRE) -- Penns Woods Bancorp, Inc. (NASDAQ:PWOD)

Penns Woods Bancorp, Inc. continued its solid earnings, supported by loan and deposit growth, achieving net income of $12,475,000 for the twelve months ended December 31, 2016 resulting in basic and dilutive earnings per share of $2.64.

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 $2,657,000 for the three months ended December 31, 2016 compared to $3,156,000 for the same period of 2015. Operating earnings decreased to $11,373,000 for the twelve months ended December 31, 2016 compared to $12,202,000 for the same period of 2015. The 2016 twelve month period included an increase in net non-recurring losses on the sale of other real estate owned of $162,000 compared to the 2015 loss level. Twelve 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 $42,680,000 from December 31, 2015 to December 31, 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 December 31, 2016 were $0.56 for both basic and dilutive, a decrease from $0.66 for the same period of 2015. Operating earnings per share for the twelve months ended December 31, 2016 were $2.40 basic and dilutive compared to $2.56 basic and dilutive for the same period of 2015.

  • Return on average assets was 0.87% for the three months ended December 31, 2016 compared to 1.15% for the corresponding period of 2015. Return on average assets was 0.93% for the twelve months ended December 31, 2016 compared to 1.08% for the corresponding period of 2015.

  • Return on average equity was 8.43% for the three months ended December 31, 2016 compared to 10.73% for the corresponding period of 2015. Return on average equity was 8.96% for the twelve months ended December 31, 2016 compared to 10.11% for the corresponding period of 2015.

“Adding high quality earning assets and continuing to shift revenue from the investment portfolio to the loan portfolio was a top focus during 2016. The growth in home equity products coupled with a decrease in the size of the investment portfolio increased balance sheet protection to a rising rate environment as the duration of the earning asset portfolio was shortened. Another focus during 2016 was debit card fraud. During the past year we replaced all debit cards in order to implement EMV card technology to better protect the security of our customers. We view this action as important both to protect our customers' information and because debit card fraud can impact our bottom line by consuming resources intended for other activities, in addition to the actual monetary cost,” 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 twelve months ended December 31, 2016 was $2,948,000 and $12,475,000 compared to $3,746,000 and $13,898,000 for the same period of 2015. Results for the three and twelve months ended December 31, 2016 compared to 2015 were impacted by a decrease in after-tax securities gains of $299,000 (from a gain of $590,000 to a gain of $291,000) for the three month periods and a decrease in after-tax securities gains of $594,000 (from a gain of $1,696,000 to a gain of $1,102,000) for the twelve month periods. Basic and dilutive earnings per share for the three and twelve months ended December 31, 2016 were $0.62 and $2.64 compared to $0.79 and $2.91 for the corresponding periods of 2015. Return on average assets and return on average equity were 0.87% and 8.43% for the three months ended December 31, 2016 compared to 1.15% and 10.73% for the corresponding period of 2015. Return on average assets and return on average equity were 0.93% and 8.96% for the twelve months ended December 31, 2016 compared to 1.08% and 10.11% for the corresponding period of 2015.

Net Interest Margin

The net interest margin for the three and twelve months ended December 31, 2016 was 3.38% and 3.44% compared to 3.55% and 3.61% 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 lower than historical rate environment that limits the yield that we can acquire into the portfolio and our strategic decision to continue repositioning the portfolio through active management in anticipation of a steadily rising rate environment. The impact of the declining investment portfolio yield and decreasing investment portfolio balance was partially offset by a 4.64% growth in gross loans from December 31, 2015 to December 31, 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 80.06% of total deposits at December 31, 2016 and 78.55% at December 31, 2015.

Assets

Total assets increased $28,533,000 to $1,348,590,000 at December 31, 2016 compared to December 31, 2015. Net loans increased $47,622,000 to $1,080,785,000 at December 31, 2016 compared to December 31, 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 $42,680,000 from December 31, 2015 to December 31, 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 1.06% at December 31, 2016 from 0.90% at December 31, 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 $11,626,000 at December 31, 2016 from $9,446,000 at December 31, 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 $344,000 for the twelve months ended December 31, 2016 minimally impacted the allowance for loan losses which was 1.18% of total loans at December 31, 2016. The majority of the loans charged-off had a specific allowance within the allowance for loan losses.

Deposits

Deposits increased $63,334,000 to $1,095,214,000 at December 31, 2016 compared to December 31, 2015. Core deposits (total deposits excluding time deposits) increased $66,335,000 due to our commitment to building complete banking relationships with our customers. Noninterest-bearing deposits increased $23,194,000 to $303,277,000 at December 31, 2016 compared to December 31, 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 $1,970,000 to $138,249,000 at December 31, 2016 compared to December 31, 2015. Since December 31, 2015, treasury stock purchases of $574,000 for 14,600 shares were completed as part of the stock repurchase plan. The change in accumulated other comprehensive loss from $3,799,000 at December 31, 2015 to $4,928,000 at December 31, 2016 is a result of an increase in unrealized losses on available for sale securities from an unrealized gain of $258,000 at December 31, 2015 to an unrealized loss of $639,000 at December 31, 2016. The amount of accumulated other comprehensive loss at December 31, 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 increase in the net loss of $232,000 to $4,289,000 at December 31, 2016. The current level of shareholders’ equity equates to a book value per share of $29.20 at December 31, 2016 compared to $28.71 at December 31, 2015 and an equity to asset ratio of 10.25% at December 31, 2016 compared to 10.32% at December 31, 2015. Excluding goodwill and intangibles, book value per share was $25.21 at December 31, 2016 compared to $24.84 at December 31, 2015. Dividends declared for each of the three and twelve months ended December 31, 2016 and 2015 were $0.47 and $1.88 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)
December 31,
(In Thousands, Except Share Data) 2016 2015 % Change
ASSETS
Noninterest-bearing balances $26,766 $22,044 21.42%
Interest-bearing balances in other financial institutions 16,905 752 2,148.01%
Total cash and cash equivalents 43,671 22,796 91.57%
Investment securities, available for sale, at fair value 133,492 176,157 (24.22)%
Investment securities, trading 58 73 (20.55)%
Loans held for sale 1,953 757 157.99%
Loans. 1,093,681 1,045,207 4.64%
Allowance for loan losses (12,896) (12,044) 7.07%
Loans, net 1,080,785 1,033,163 4.61%
Premises and equipment, net 24,275 21,830 11.20%
Accrued interest receivable 3,672 3,686 (0.38)%
Bank-owned life insurance 27,332 26,667 2.49%
Investment in limited partnerships 586 899 (34.82)%
Goodwill 17,104 17,104 %
Intangibles 1,799 1,240 45.08%
Deferred tax asset 8,397 8,990 (6.60)%
Other assets 5,466 6,695 (18.36)%
TOTAL ASSETS $1,348,590 $1,320,057 2.16%
LIABILITIES
Interest-bearing deposits $791,937 $751,797 5.34%
Noninterest-bearing deposits 303,277 280,083 8.28%
Total deposits 1,095,214 1,031,880 6.14%
Short-term borrowings 13,241 46,638 (71.61)%
Long-term borrowings 85,998 91,025 (5.52)%
Accrued interest payable 455 426 6.81%
Other liabilities 15,433 13,809 11.76%
TOTAL LIABILITIES 1,210,341 1,183,778 2.24%
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; 5,007,109
and 5,004,984 shares issued
41,726 41,708 0.04%
Additional paid-in capital 50,075 49,992 0.17%
Retained earnings 61,610 58,038 6.15%
Accumulated other comprehensive loss:
Net unrealized (loss) gain on available for sale securities (639) 258 (347.67)%
Defined benefit plan...... (4,289) (4,057) (5.72)%
Treasury stock at cost, 272,452 and 257,852 shares (10,234) (9,660) 5.94%
TOTAL SHAREHOLDERS’ EQUITY. 138,249 136,279 1.45%
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $1,348,590 $1,320,057 2.16%

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) 2016 2015 % Change 2016 2015 % Change
INTEREST AND DIVIDEND INCOME:
Loans including fees $10,694 $10,197 4.87% $42,056 $39,134 7.47%
Investment securities:
Taxable 600 698 (14.04)% 2,424 3,426 (29.25)%
Tax-exempt 296 608 (51.32)% 1,498 2,795 (46.40)%
Dividend and other interest income 168 172 (2.33)% 835 769 8.58%
TOTAL INTEREST AND DIVIDEND INCOME 11,758 11,675 0.71% 46,813 46,124 1.49%
INTEREST EXPENSE:
Deposits 923 801 15.23% 3,547 3,129 13.36%
Short-term borrowings 5 38 (86.84)% 46 116 (60.34)%
Long-term borrowings 493 498 (1.00)% 1,974 1,974 %
TOTAL INTEREST EXPENSE 1,421 1,337 6.28% 5,567 5,219 6.67%
NET INTEREST INCOME 10,337 10,338 (0.01)% 41,246 40,905 0.83%
PROVISION FOR LOAN LOSSES 330 480 (31.25)% 1,196 2,300 (48.00)%
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 10,007 9,858 1.51% 40,050 38,605 3.74%
NON-INTEREST INCOME:
Service charges 571 611 (6.55)% 2,249 2,383 (5.62)%
Securities gains, available for sale 437 879 (50.28)% 1,611 2,592 (37.85)%
Securities gains (losses), trading 4 15 (73.33)% 58 (22) 363.64%
Bank-owned life insurance 167 179 (6.70)% 684 720 (5.00)%
Gain on sale of loans 411 438 (6.16)% 2,102 1,743 20.60%
Insurance commissions 191 158 20.89% 795 781 1.79%
Brokerage commissions 281 228 23.25% 1,098 1,064 3.20%
Other 794 803 (1.12)% 3,516 3,504 0.34%
TOTAL NON-INTEREST INCOME 2,856 3,311 (13.74)% 12,113 12,765 (5.11)%
NON-INTEREST EXPENSE:
Salaries and employee benefits 4,380 3,950 10.89% 17,813 17,023 4.64%
Occupancy 593 527 12.52% 2,223 2,248 (1.11)%
Furniture and equipment 751 698 7.59% 2,793 2,622 6.52%
Pennsylvania shares tax 175 243 (27.98)% 873 954 (8.49)%
Amortization of investments in limited partnerships 46 165 (72.12)% 312 661 (52.80)%
Federal Deposit Insurance Corporation deposit insurance 97 213 (54.46)% 767 867 (11.53)%
Marketing 172 178 (3.37)% 740 612 20.92%
Intangible amortization 89 76 17.11% 366 311 17.68%
Other 2,322 2,267 2.43% 9,204 8,438 9.08%
TOTAL NON-INTEREST EXPENSE 8,625 8,317 3.70% 35,091 33,736 4.02%
INCOME BEFORE INCOME TAX PROVISION. 4,238 4,852 (12.65)% 17,072 17,634 (3.19)%
INCOME TAX PROVISION 1,290 1,106 16.64% 4,597 3,736 23.05%
NET INCOME $2,948 $3,746 (21.30)% $12,475 $13,898 (10.24)%
EARNINGS PER SHARE - BASIC AND DILUTED $0.62 $0.79 (21.52)% $2.64 $2.91 (9.28)%
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED 4,734,304 4,746,910 (0.27)% 4,735,457 4,772,239 (0.77)%
DIVIDENDS DECLARED PER SHARE $0.47 $0.47 % $1.88 $1.88 %

PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES
Three Months Ended
December 31, 2016 December 31, 2015
(Dollars in Thousands) Average
Balance
Interest Average
Rate
Average
Balance
Interest Average
Rate
ASSETS:
Tax-exempt loans $43,039 $420 3.88% $52,329 $485 3.68%
All other loans 1,038,973 10,417 3.99% 967,751 9,877 4.05%
Total loans 1,082,012 10,837 3.98% 1,020,080 10,362 4.03%
Taxable securities 92,611 728 3.14% 108,835 867 3.19%
Tax-exempt securities 45,735 449 3.93% 77,447 921 4.76%
Total securities 138,346 1,177 3.40% 186,282 1,788 3.84%
Interest-bearing deposits 31,176 40 0.51% 3,463 3 0.34%
Total interest-earning assets 1,251,534 12,054 3.83% 1,209,825 12,153 3.99%
Other assets 99,837 97,197
TOTAL ASSETS $1,351,371 $1,307,022
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Savings $152,109 15 0.04% $143,774 14 0.04%
Super Now deposits 177,918 101 0.23% 177,733 112 0.25%
Money market deposits 247,876 178 0.29% 204,092 129 0.25%
Time deposits 220,967 629 1.13% 224,435 546 0.97%
Total interest-bearing deposits 798,870 923 0.46% 750,034 801 0.42%
Short-term borrowings 13,291 5 0.15% 47,212 38 0.32%
Long-term borrowings 89,151 493 2.17% 91,025 498 2.14%
Total borrowings 102,442 498 1.91% 138,237 536 1.52%
Total interest-bearing liabilities 901,312 1,421 0.62% 888,271 1,337 0.59%
Demand deposits 292,955 262,599
Other liabilities 17,232 16,455
Shareholders’ equity 139,872 139,697
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $1,351,371 $1,307,022
Interest rate spread 3.21% 3.40%
Net interest income/margin $10,633 3.38% $10,816 3.55%


Three Months Ended December 31,
2016 2015
Total interest income $11,758 $11,675
Total interest expense 1,421 1,337
Net interest income 10,337 10,338
Tax equivalent adjustment 296 478
Net interest income (fully taxable equivalent) $10,633 $10,816


Twelve Months Ended
December 31, 2016 December 31, 2015
(Dollars in Thousands) Average
Balance
Interest Average
Rate
Average
Balance
Interest Average
Rate
ASSETS:
Tax-exempt loans $47,782 $1,852 3.87% $43,395 $1,679 3.87%
All other loans 1,009,384 40,834 4.05% 932,179 38,026 4.08%
Total loans 1,057,166 42,686 4.04% 975,574 39,705 4.07%
Taxable securities 94,887 3,072 3.24% 127,052 4,183 3.29%
Tax-exempt securities 53,638 2,270 4.23% 83,293 4,235 5.08%
Total securities 148,525 5,342 3.60% 210,345 8,418 4.00%
Interest-bearing deposits 36,592 187 0.51% 4,238 12 0.28%
Total interest-earning assets 1,242,283 48,215 3.88% 1,190,157 48,135 4.04%
Other assets 99,500 97,103
TOTAL ASSETS $1,341,783 $1,287,260
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Savings $151,397 58 0.04% $143,055 56 0.04%
Super Now deposits 187,106 458 0.24% 187,396 491 0.26%
Money market deposits 238,175 648 0.27% 207,252 554 0.27%
Time deposits 221,498 2,383 1.08% 220,360 2,028 0.92%
Total interest-bearing deposits 798,176 3,547 0.44% 758,063 3,129 0.41%
Short-term borrowings 18,518 46 0.25% 38,909 116 0.30%
Long-term borrowings 90,554 1,974 2.14% 84,721 1,974 2.30%
Total borrowings 109,072 2,020 1.82% 123,630 2,090 1.67%
Total interest-bearing liabilities 907,248 5,567 0.61% 881,693 5,219 0.59%
Demand deposits 279,130 251,029
Other liabilities 16,152 17,047
Shareholders’ equity 139,253 137,491
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $1,341,783 $1,287,260
Interest rate spread 3.27% 3.45%
Net interest income/margin $42,648 3.44% $42,916 3.61%


Twelve Months Ended December 31,
2016 2015
Total interest income $46,813 $46,124
Total interest expense 5,567 5,219
Net interest income 41,246 40,905
Tax equivalent adjustment 1,402 2,011
Net interest income (fully taxable equivalent) $42,648 $42,916


(Dollars in Thousands, Except Per Share Data) Quarter Ended
12/31/2016 9/30/2016 6/30/2016 3/31/2016 12/31/2015
Operating Data
Net income $2,948 $3,059 $3,390 $3,078 $3,746
Net interest income 10,337 10,247 10,288 10,374 10,338
Provision for loan losses 330 258 258 350 480
Net security gains 441 261 492 475 894
Non-interest income, excluding net security gains 2,415 2,821 2,686 2,522 2,417
Non-interest expense 8,625 8,739 8,666 9,061 8,317
Performance Statistics
Net interest margin 3.38% 3.37% 3.42% 3.57% 3.55%
Annualized return on average assets 0.87% 0.91% 1.00% 0.94% 1.15%
Annualized return on average equity 8.43% 8.69% 9.77% 8.95% 10.73%
Annualized net loan charge-offs (recoveries) to average loans 0.06% 0.02% 0.05% % (0.03)%
Net charge-offs (recoveries) 152 57 123 12 (75)
Efficiency ratio 66.9% 66.2% 66.0% 69.6% 64.6%
Per Share Data
Basic earnings per share $0.62 $0.65 $0.72 $0.65 $0.79
Diluted earnings per share 0.62 0.65 0.72 0.65 0.79
Dividend declared per share 0.47 0.47 0.47 0.47 0.47
Book value 29.20 29.56 29.45 29.09 28.71
Common stock price:
High 52.03 44.75 44.70 41.32 45.28
Low 41.00 40.34 37.82 36.73 40.47
Close 50.50 44.46 41.99 38.54 42.46
Weighted average common shares:
Basic 4,734 4,734 4,733 4,741 4,747
Fully Diluted 4,734 4,734 4,733 4,741 4,747
End-of-period common shares:
Issued 5,007 5,007 5,006 5,006 5,005
Treasury 272 272 272 272 258


(Dollars in Thousands, Except Per Share Data) Quarter Ended
12/31/2016 9/30/2016 6/30/2016 3/31/2016 12/31/2015
Financial Condition Data:
General
Total assets $1,348,590 $1,347,412 $1,346,482 $1,318,137 $1,320,057
Loans, net 1,080,785 1,056,762 1,041,602 1,028,870 1,033,163
Goodwill 17,104 17,104 17,104 17,104 17,104
Intangibles 1,799 1,889 1,979 2,078 1,240
Total deposits. 1,095,214 1,088,297 1,084,867 1,059,581 1,031,880
Noninterest-bearing 303,277 295,599 274,002 269,362 280,083
Savings 153,788 150,822 152,540 153,217 144,561
NOW 174,653 175,767 190,890 190,168 176,078
Money Market 245,121 244,138 246,712 226,659 209,782
Time Deposits 218,375 221,971 220,723 220,175 221,376
Total interest-bearing deposits 791,937 792,698 810,865 790,219 751,797
Core deposits* 876,839 866,326 864,145 839,406 810,504
Shareholders’ equity 138,249 139,935 139,394 137,663 136,279
Asset Quality
Non-performing loans $11,626 $11,530 $11,626 $11,648 $9,446
Non-performing loans to total assets 0.86% 0.86% 0.86% 0.88% 0.72%
Allowance for loan losses 12,896 12,718 12,517 12,382 12,044
Allowance for loan losses to total loans 1.18% 1.19% 1.19% 1.19% 1.15%
Allowance for loan losses to non-performing loans 110.92% 110.30% 107.66% 106.30% 127.50%
Non-performing loans to total loans 1.06% 1.08% 1.10% 1.12% 0.90%
Capitalization
Shareholders’ equity to total assets 10.25% 10.39% 10.35% 10.44% 10.32%
* Core deposits are defined as total deposits less time deposits



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) 2016 2015 2016 2015
GAAP net income $2,948 $3,746 $12,475 $13,898
Less: net securities gains, net of tax 291 590 1,102 1,696
Non-GAAP operating earnings $2,657 $3,156 $11,373 $12,202
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2016 2015 2016 2015
Return on average assets (ROA) 0.87% 1.15% 0.93% 1.08%
Less: net securities gains, net of tax 0.08% 0.18% 0.08% 0.13%
Non-GAAP operating ROA 0.79% 0.97% 0.85% 0.95%
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2016 2015 2016 2015
Return on average equity (ROE) 8.43% 10.73% 8.96% 10.11%
Less: net securities gains, net of tax 0.83% 1.69% 0.79% 1.24%
Non-GAAP operating ROE 7.60% 9.04% 8.17% 8.87%
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2016 2015 2016 2015
Basic earnings per share (EPS) $0.62 $0.79 $2.64 $2.91
Less: net securities gains, net of tax 0.06 0.13 0.24 0.35
Non-GAAP basic operating EPS $0.56 $0.66 $2.40 $2.56
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2016 2015 2016 2015
Dilutive EPS $0.62 $0.79 $2.64 $2.91
Less: net securities gains, net of tax 0.06 0.13 0.24 0.35
Non-GAAP dilutive operating EPS $0.56 $0.66 $2.40 $2.56


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.