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Penns Woods Bancorp, Inc. Reports Second Quarter 2017 Earnings

WILLIAMSPORT, Pa., July 20, 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 $5,772,000 for the six months ended June 30, 2017 resulting in basic and dilutive earnings per share of $1.22.

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 $3,094,000 for the three months ended June 30, 2017 compared to $3,065,000 for the same period of 2016. Operating earnings decreased to $5,649,000 for the six months ended June 30, 2017 compared to $5,830,000 for the same period of 2016. Impacting the level of operating earnings were several factors including the continued shift of earning assets from the investment portfolio to the loan portfolio as the balance sheet is actively managed to reduce market risk and interest rate risk in a rising rate environment. In addition, the effective tax rate has increased due to the conclusion of the ten year tax credit generation period of several low income elderly housing projects in our market footprint in which the company participates.

  • Operating earnings per share for the three months ended June 30, 2017 were $0.66 for both basic and dilutive, an increase from $0.65 for basic and dilutive for the same period of 2016. Operating earnings per share for the six months ended June 30, 2017 were $1.20 basic and dilutive compared to $1.23 basic and dilutive for the same period of 2016.

  • Return on average assets was 0.88% for the three months ended June 30, 2017 compared to 1.00% for the corresponding period of 2016. Return on average assets was 0.83% for the six months ended June 30, 2017 compared to 0.97% for the corresponding period of 2016.

  • Return on average equity was 8.79% for the three months ended June 30, 2017 compared to 9.77% for the corresponding period of 2016. Return on average equity was 8.24% for the six months ended June 30, 2017 compared to 9.36% for the corresponding period of 2016.

“We continue to position and build the company for the future. To spur quality asset growth the indirect auto lending program has been introduced throughout our entire market area, various building projects have been completed, while others are in various stages of completion. To increase income we are adding high quality assets as we build our balance sheet. In one year the indirect lending program has generated in excess of $40 million in short duration high quality loans. A more customer centric experience in our Williamsport branch is now in place following a substantial remodel. Luzerne Bank is set to open a new office in Conyngham, while Jersey Shore State Bank is expanding its footprint into Muncy/Hughesville with a branch in the construction phase. The addition of quality earning assets has led to increased revenue resulting in the second quarter of 2017 outperforming the first quarter of the year. The structures of the earning assets that have been acquired have contributed to an improving net interest margin. We continue to build for the future recognizing it may have a drag on earnings in the short-term. However, as seen by the second quarter results, investing in the future will provide long-term rewards,” 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 six months ended June 30, 2017 was $3,086,000 and $5,772,000 compared to $3,390,000 and $6,468,000 for the same period of 2016. Results for the three and six months ended June 30, 2017 compared to 2016 were impacted by a decrease in after-tax securities gains of $333,000 (from a gain of $325,000 to a loss of $8,000) for the three month periods and a decrease in after-tax securities gains of $515,000 (from a gain of $638,000 to a gain of $123,000) for the six month periods. Basic and dilutive earnings per share for the three and six months ended June 30, 2017 were $0.65 and $1.22 compared to $0.72 and $1.37 for the corresponding period of 2016. Return on average assets and return on average equity were 0.88% and 8.79% for the three months ended June 30, 2017 compared to 1.00% and 9.77% for the corresponding period of 2016. Return on average assets and return on average equity were 0.83% and 8.24% for the six months ended June 30, 2017 compared to 0.97% and 9.36% for the corresponding period of 2016.

Net Interest Margin

The net interest margin for the three and six months ended June 30, 2017 was 3.44% and 3.42% compared to 3.42% and 3.49% for the corresponding period of 2016. The decline in the net interest margin for the six month period 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 offset by an 8.06% growth in gross loans from June 30, 2016 to June 30, 2017. 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 82.11% of total deposits at June 30, 2017 and 79.65% at June 30, 2016.

Assets

Total assets increased $48,882,000 to $1,395,364,000 at June 30, 2017 compared to June 30, 2016. Net loans increased $84,374,000 to $1,125,976,000 at June 30, 2017 compared to June 30, 2016 primarily due to campaigns related to increasing home equity product market share during 2016 and 2017 and the introduction of indirect auto lending during the third quarter of 2016. The investment portfolio decreased $7,950,000 from June 30, 2016 to June 30, 2017 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 shortening 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 remained flat at 1.10% at June 30, 2017 from June 30, 2016 as non-performing loans have increased to $12,537,000 at June 30, 2017 from $11,626,000 at June 30, 2016. The majority of non-performing loans are centered on 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 $332,000 for the six months ended June 30, 2017 minimally impacted the allowance for loan losses which was 1.15% of total loans at June 30, 2017. The majority of the loans charged-off had a specific allowance within the allowance for loan losses.

Deposits

Deposits increased $66,243,000 to $1,151,110,000 at June 30, 2017 compared to June 30, 2016. Core deposits (total deposits excluding time deposits) increased $81,067,000 due to our commitment to building complete banking relationships with our customers. Noninterest-bearing deposits increased $26,052,000 to $300,054,000 at June 30, 2017 compared to June 30, 2016. 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 decreased $954,000 to $138,440,000 at June 30, 2017 compared to June 30, 2016. The change in accumulated other comprehensive loss from $2,168,000 at June 30, 2016 to $4,249,000 at June 30, 2017 is a result of an increase in unrealized losses on available for sale securities from an unrealized gain of $1,838,000 at June 30, 2016 to an unrealized loss of $16,000 at June 30, 2017. The amount of accumulated other comprehensive loss at June 30, 2017 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 $227,000 to $4,233,000 at June 30, 2017. The current level of shareholders’ equity equates to a book value per share of $29.53 at June 30, 2017 compared to $29.45 at June 30, 2016 and an equity to asset ratio of 9.92% at June 30, 2017 compared to 10.35% at June 30, 2016. Excluding goodwill and intangibles, book value per share was $25.54 at June 30, 2017 compared to $25.42 at June 30, 2016. Dividends declared for the six months ended June 30, 2017 and 2016 were $0.94 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, 2016.

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)
June 30,
(In Thousands, Except Share Data) 2017 2016 % Change
ASSETS
Noninterest-bearing balances $26,223 $24,088 8.86%
Interest-bearing balances in other financial institutions 11,979 45,387 (73.61)%
Total cash and cash equivalents 38,202 69,475 (45.01)%
Investment securities, available for sale, at fair value 138,504 146,667 (5.57)%
Investment securities, trading 213 100.00%
Loans held for sale 1,683 1,349 24.76%
Loans 1,139,085 1,054,119 8.06%
Allowance for loan losses (13,109) (12,517) 4.73%
Loans, net 1,125,976 1,041,602 8.10%
Premises and equipment, net 25,497 22,304 14.32%
Accrued interest receivable 3,641 3,490 4.33%
Bank-owned life insurance 27,670 27,016 2.42%
Goodwill 17,104 17,104 %
Intangibles 1,623 1,979 (17.99)%
Deferred tax asset 8,139 7,400 9.99%
Other assets 7,112 8,096 (12.15)%
TOTAL ASSETS $1,395,364 $1,346,482 3.63%
LIABILITIES
Interest-bearing deposits $851,056 $810,865 4.96%
Noninterest-bearing deposits 300,054 274,002 9.51%
Total deposits 1,151,110 1,084,867 6.11%
Short-term borrowings 15,737 17,440 (9.76)%
Long-term borrowings 75,998 91,025 (16.51)%
Accrued interest payable 414 456 (9.21)%
Other liabilities 13,665 13,300 2.74%
TOTAL LIABILITIES 1,256,924 1,207,088 4.13%
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; 5,008,192 and 5,006,036 shares issued 41,735 41,717 0.04%
Additional paid-in capital 50,117 50,025 0.18%
Retained earnings 62,952 60,054 4.83%
Accumulated other comprehensive loss:
Net unrealized (loss) gain on available for sale securities (16) 1,838 (100.87)%
Defined benefit plan (4,233) (4,006) (5.67)%
Treasury stock at cost, 320,150 and 272,452 shares (12,115) (10,234) 18.38%
TOTAL SHAREHOLDERS’ EQUITY 138,440 139,394 (0.68)%
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $1,395,364 $1,346,482 3.63%


PENNS WOODS BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
Three Months Ended June 30, Six Months Ended June 30,
(In Thousands, Except Per Share Data) 2017 2016 % Change 2017 2016 % Change
INTEREST AND DIVIDEND INCOME:
Loans including fees $11,109 $10,466 6.14% $21,736 $20,821 4.39%
Investment securities:
Taxable 570 601 (5.16)% 1,112 1,223 (9.08)%
Tax-exempt 323 398 (18.84)% 621 874 (28.95)%
Dividend and other interest income 207 204 1.47% 422 477 (11.53)%
TOTAL INTEREST AND DIVIDEND INCOME 12,209 11,669 4.63% 23,891 23,395 2.12%
INTEREST EXPENSE:
Deposits 1,008 881 14.42% 1,910 1,716 11.31%
Short-term borrowings 4 8 (50.00)% 8 34 (76.47)%
Long-term borrowings 373 492 (24.19)% 813 983 (17.29)%
TOTAL INTEREST EXPENSE 1,385 1,381 0.29% 2,731 2,733 (0.07)%
NET INTEREST INCOME 10,824 10,288 5.21% 21,160 20,662 2.41%
PROVISION FOR LOAN LOSSES 215 258 (16.67)% 545 608 (10.36)%
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 10,609 10,030 5.77% 20,615 20,054 2.80%
NON-INTEREST INCOME:
Service charges 559 561 (0.36)% 1,087 1,093 (0.55)%
Securities (losses) gains, available for sale (12) 486 (102.47)% 185 921 (79.91)%
Securities gains, trading 6 (100.00)% 2 46 (95.65)%
Bank-owned life insurance 161 161 % 333 345 (3.48)%
Gain on sale of loans 503 566 (11.13)% 861 1,033 (16.65)%
Insurance commissions 99 200 (50.50)% 290 405 (28.40)%
Brokerage commissions 361 272 32.72% 692 527 31.31%
Other 1,092 926 17.93% 1,964 1,805 8.81%
TOTAL NON-INTEREST INCOME 2,763 3,178 (13.06)% 5,414 6,175 (12.32)%
NON-INTEREST EXPENSE:
Salaries and employee benefits 4,608 4,346 6.03% 9,378 8,926 5.06%
Occupancy 614 545 12.66% 1,252 1,086 15.29%
Furniture and equipment 664 679 (2.21)% 1,313 1,380 (4.86)%
Pennsylvania shares tax 230 220 4.55% 468 478 (2.09)%
Amortization of investments in limited partnerships 46 68 (32.35)% 92 220 (58.18)%
Federal Deposit Insurance Corporation deposit insurance 150 236 (36.44)% 320 468 (31.62)%
Marketing 204 185 10.27% 375 395 (5.06)%
Intangible amortization 86 100 (14.00)% 176 187 (5.88)%
Other 2,461 2,287 7.61% 4,674 4,587 1.90%
TOTAL NON-INTEREST EXPENSE 9,063 8,666 4.58% 18,048 17,727 1.81%
INCOME BEFORE INCOME TAX PROVISION 4,309 4,542 (5.13)% 7,981 8,502 (6.13)%
INCOME TAX PROVISION 1,223 1,152 6.16% 2,209 2,034 8.60%
NET INCOME $3,086 $3,390 (8.97)% $5,772 $6,468 (10.76)%
EARNINGS PER SHARE - BASIC AND DILUTED $0.65 $0.72 (9.72)% $1.22 $1.37 (10.95)%
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC 4,711,332 4,733,251 (0.46)% 4,723,003 4,736,878 (0.29)%
DIVIDENDS DECLARED PER SHARE $0.47 $0.47 % $0.94 $0.94 %


PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES
Three Months Ended
June 30, 2017 June 30, 2016
(Dollars in Thousands) Average
Balance
Interest Average
Rate
Average
Balance
Interest Average
Rate
ASSETS:
Tax-exempt loans $41,685 $405 3.89% $46,281 $445 3.87%
All other loans 1,082,165 10,842 4.02% 1,000,541 10,172 4.09%
Total loans 1,123,850 11,247 4.01% 1,046,822 10,617 4.08%
Taxable securities 83,895 680 3.24% 94,049 734 3.12%
Tax-exempt securities 52,850 489 3.70% 56,348 603 4.28%
Total securities 136,745 1,169 3.42% 150,397 1,337 3.56%
Interest-bearing deposits 36,662 96 1.05% 54,309 71 0.53%
Total interest-earning assets 1,297,257 12,512 3.87% 1,251,528 12,025 3.86%
Other assets 100,356 100,241
TOTAL ASSETS $1,397,613 $1,351,769
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Savings $158,413 15 0.04% $153,151 14 0.04%
Super Now deposits 202,692 131 0.26% 198,048 125 0.25%
Money market deposits 288,035 255 0.36% 239,754 161 0.27%
Time deposits 205,418 607 1.19% 221,376 581 1.06%
Total interest-bearing deposits 854,558 1,008 0.47% 812,329 881 0.44%
Short-term borrowings 10,579 4 0.15% 16,710 8 0.19%
Long-term borrowings 75,998 373 1.95% 91,025 492 2.14%
Total borrowings 86,577 377 1.73% 107,735 500 1.84%
Total interest-bearing liabilities 941,135 1,385 0.59% 920,064 1,381 0.60%
Demand deposits 300,311 276,748
Other liabilities 15,801 16,151
Shareholders’ equity 140,366 138,806
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $1,397,613 $1,351,769
Interest rate spread 3.28% 3.26%
Net interest income/margin $11,127 3.44% $10,644 3.42%


Three Months Ended June 30,
2017 2016
Total interest income $12,209 $11,669
Total interest expense 1,385 1,381
Net interest income 10,824 10,288
Tax equivalent adjustment 303 356
Net interest income (fully taxable equivalent) $11,127 $10,644


Six Months Ended
June 30, 2017 June 30, 2016
(Dollars in Thousands) Average
Balance
Interest Average
Rate
Average
Balance
Interest Average
Rate
ASSETS:
Tax-exempt loans $41,959 $821 3.95% $50,700 $980 3.89%
All other loans 1,069,896 21,194 3.99% 994,034 20,174 4.08%
Total loans 1,111,855 22,015 4.04% 1,044,734 21,154 4.07%
Taxable securities 86,591 1,365 3.15% 96,541 1,618 3.35%
Tax-exempt securities 49,779 941 3.78% 59,860 1,324 4.42%
Total securities 136,370 2,306 3.38% 156,401 2,942 3.76%
Interest-bearing deposits 34,924 169 0.98% 33,501 82 0.49%
Total interest-earning assets 1,283,149 24,490 3.85% 1,234,636 24,178 3.94%
Other assets 99,934 98,276
TOTAL ASSETS $1,383,083 $1,332,912
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Savings $157,423 30 0.04% $151,004 29 0.04%
Super Now deposits 196,032 237 0.24% 193,098 249 0.26%
Money market deposits 275,529 446 0.33% 229,497 301 0.26%
Time deposits 207,722 1,197 1.16% 220,965 1,137 1.03%
Total interest-bearing deposits 836,706 1,910 0.46% 794,564 1,716 0.43%
Short-term borrowings 10,962 8 0.15% 22,560 34 0.30%
Long-term borrowings 79,258 813 2.04% 91,025 983 2.14%
Total borrowings 90,220 821 1.81% 113,585 1,017 1.77%
Total interest-bearing liabilities 926,926 2,731 0.59% 908,149 2,733 0.60%
Demand deposits 300,207 270,900
Other liabilities 15,770 15,703
Shareholders’ equity 140,180 138,160
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $1,383,083 $1,332,912
Interest rate spread 3.26% 3.34%
Net interest income/margin $21,759 3.42% $21,445 3.49%


Six Months Ended June 30,
2017 2016
Total interest income $23,891 $23,395
Total interest expense 2,731 2,733
Net interest income 21,160 20,662
Tax equivalent adjustment 599 783
Net interest income (fully taxable equivalent) $21,759 $21,445


(Dollars in Thousands, Except Per Share Data) Quarter Ended
6/30/2017 3/31/2017 12/31/2016 9/30/2016 6/30/2016
Operating Data
Net income $3,086 $2,686 $2,948 $3,059 $3,390
Net interest income 10,824 10,336 10,337 10,247 10,288
Provision for loan losses 215 330 330 258 258
Net security (losses) gains (12) 199 441 261 492
Non-interest income, excluding net security gains 2,775 2,452 2,415 2,821 2,686
Non-interest expense 9,063 8,985 8,625 8,739 8,666
Performance Statistics
Net interest margin 3.44% 3.40% 3.38% 3.37% 3.42%
Annualized return on average assets 0.88% 0.79% 0.87% 0.91% 1.00%
Annualized return on average equity 8.79% 7.69% 8.43% 8.69% 9.77%
Annualized net loan charge-offs (recoveries) to average loans % 0.12% 0.06% 0.02% 0.05%
Net charge-offs (recoveries) 11 321 152 57 123
Efficiency ratio 65.9% 69.6% 66.9% 66.2% 66.0%
Per Share Data
Basic earnings per share $0.65 $0.57 $0.62 $0.65 $0.72
Diluted earnings per share 0.65 0.56 0.62 0.65 0.72
Dividend declared per share 0.47 0.47 0.47 0.47 0.47
Book value 29.53 29.38 29.20 29.56 29.45
Common stock price:
High 43.60 49.45 52.03 44.75 44.70
Low 38.17 43.28 41.00 40.34 37.82
Close 41.18 43.45 50.50 44.46 41.99
Weighted average common shares:
Basic 4,711 4,735 4,734 4,734 4,733
Fully Diluted 4,711 4,761 4,734 4,734 4,733
End-of-period common shares:
Issued 5,008 5,008 5,007 5,007 5,006
Treasury 320 272 272 272 272


(Dollars in Thousands, Except Per Share Data) Quarter Ended
6/30/2017 3/31/2017 12/31/2016 9/30/2016 6/30/2016
Financial Condition Data:
General
Total assets $1,395,364 $1,400,708 $1,348,590 $1,347,412 $1,346,482
Loans, net 1,125,976 1,098,195 1,080,785 1,056,762 1,041,602
Goodwill 17,104 17,104 17,104 17,104 17,104
Intangibles 1,623 1,709 1,799 1,889 1,979
Total deposits 1,151,110 1,160,664 1,095,214 1,088,297 1,084,867
Noninterest-bearing 300,054 312,392 303,277 295,599 274,002
Savings 158,101 159,652 153,788 150,822 152,540
NOW 199,917 205,011 174,653 175,767 190,890
Money Market 287,140 278,443 245,121 244,138 246,712
Time Deposits 205,898 205,166 218,375 221,971 220,723
Total interest-bearing deposits 851,056 848,272 791,937 792,698 810,865
Core deposits* 945,212 955,498 876,839 866,326 864,144
Shareholders’ equity 138,440 139,113 138,249 139,935 139,394
Asset Quality
Non-performing loans $12,537 $10,870 $11,626 $11,530 $11,626
Non-performing loans to total assets 0.90% 0.78% 0.86% 0.86% 0.86%
Allowance for loan losses 13,109 12,905 12,896 12,718 12,517
Allowance for loan losses to total loans 1.15% 1.16% 1.18% 1.19% 1.19%
Allowance for loan losses to non-performing loans 104.56% 118.72% 110.92% 110.30% 107.66%
Non-performing loans to total loans 1.10% 0.98% 1.06% 1.08% 1.10%
Capitalization
Shareholders’ equity to total assets 9.92% 9.93% 10.25% 10.39% 10.35%

* Core deposits are defined as total deposits less time deposits

Reconciliation of GAAP and Non-GAAP Financial Measures
Three Months Ended
June 30,
Six Months Ended
June 30,
(Dollars in Thousands, Except Per Share Data) 2017 2016 2017 2016
GAAP net income $3,086 $3,390 $5,772 $6,468
Less: net securities (losses) gains, net of tax (8) 325 123 638
Non-GAAP operating earnings $3,094 $3,065 $5,649 $5,830
Three Months Ended
June 30,
Six Months Ended
June 30,
2017 2016 2017 2016
Return on average assets (ROA) 0.88% 1.00% 0.83% 0.97%
Less: net securities gains, net of tax % 0.09% 0.01% 0.10%
Non-GAAP operating ROA 0.88% 0.91% 0.82% 0.87%
Three Months Ended
June 30,
Six Months Ended
June 30,
2017 2016 2017 2016
Return on average equity (ROE) 8.79% 9.77% 8.24% 9.36%
Less: net securities (losses) gains, net of tax (0.03)% 0.94% 0.18% 0.92%
Non-GAAP operating ROE 8.82% 8.83% 8.06% 8.44%
Three Months Ended
June 30,
Six Months Ended
June 30,
2017 2016 2017 2016
Basic earnings per share (EPS) $0.65 $0.72 $1.22 $1.37
Less: net securities (losses) gains, net of tax (0.01) 0.07 0.02 0.14
Non-GAAP basic operating EPS $0.66 $0.65 $1.20 $1.23
Three Months Ended
June 30,
Six Months Ended
June 30,
2017 2016 2017 2016
Dilutive EPS $0.65 $0.72 $1.22 $1.37
Less: net securities (losses) gains, net of tax (0.01) 0.07 0.02 0.14
Non-GAAP dilutive operating EPS $0.66 $0.65 $1.20 $1.23

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.