News Column

Penns Woods Bancorp, Inc. Reports Fourth Quarter 2013 Operating Earnings

January 24, 2014

WILLIAMSPORT, Pa. , Jan. 24, 2014 (GLOBE NEWSWIRE) -- Penns Woods Bancorp, Inc. (Nasdaq:PWOD) Penns Woods Bancorp, Inc. continued its solid earnings and growth during the recently completed fourth quarter of 2013, achieving net income of $14,084,000 for the twelve months ended December 31, 2013 resulting in basic and dilutive earnings per share of $3.19 . Highlights Completion of the acquisition of Luzerne National Bank Corporation ("Luzerne") effective June 1, 2013 resulted in an increase in net loans of $254,057,000 ; investments of $21,140,000 ; deposits of $279,867,000 ; and assets of $329,209,000 at the time of acquisition. Net income from core operations ("operating earnings"), which is a non-GAAP measure of net income excluding net securities gains and bank owned life insurance gains on death benefits, increased to $3,389,000 for the three months ended December 31, 2013 compared to $3,044,000 for the same period of 2012. Net income from core operations decreased to $12,489,000 for the twelve months ended December 31, 2013 compared to $12,893,000 for the same period of 2012. Operating earnings per share for the three months ended December 31, 2013 were $0.70 basic and dilutive compared to $0.79 basic and dilutive for the same period of 2012. Operating earnings per share for the twelve months ended December 31, 2013 were $2.83 basic and dilutive compared to $3.36 basic and dilutive for the same period of 2012. Return on average assets was 1.16% for the three months ended December 31, 2013 compared to 1.46% for the corresponding period of 2012. Return on average assets was 1.32% for the twelve months ended December 31, 2013 compared to 1.70% for the corresponding period of 2012. Return on average equity was 10.99% for the three months ended December 31, 2013 compared to 12.92% for the corresponding period of 2012. Return on average equity was 12.36% for the twelve months ended December 31, 2013 compared to 15.36% for the corresponding period of 2012. The results for the twelve months ended December 31, 2013 were negatively impacted by one time expenses of $1,307,000 related to the acquisition of Luzerne National Bank Corporation . "The twelve months ended December 31, 2013 were impacted by the acquisition of Luzerne National Bank Corporation . While the acquisition was a key driver of balance sheet growth, it was a drag on earnings due to the one-time charges related to the acquisition. With these charges behind us, we will continue to focus on the continued integration of Luzerne into the Penns Woods family. We also remain focused on building future revenue streams, with the current construction of a branch in Loyalsock scheduled to be completed during the first half of 2014. In addition, the ground breaking for a branch in Lewisburg is expected to occur during the early part of 2014," 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, 2013 was $3,495,000 and $14,084,000 compared to $3,096,000 and $13,850,000 for the same period of 2012. Results for the three and twelve months ended December 31, 2013 compared to 2012 were impacted by an increase in after-tax securities gains of $54,000 (from a gain of $52,000 to a gain of $106,000 ) for the three months ended and an increase in after-tax securities gains of $747,000 (from a gain of $848,000 to a gain of $1,595,000 ) for the twelve months ended. In addition, a gain of $109,000 on death benefit related to bank owned life insurance was recorded during the first quarter of 2012. Impacting the results for the twelve months ended December 31, 2013 was the recognition of $1,307,000 in expenses related to the acquisition of Luzerne. Basic and dilutive earnings per share for the three and twelve months ended December 31, 2013 were $0.73 and $3.19 compared to $0.81 and $3.61 for the corresponding periods of 2012. Return on average assets and return on average equity were 1.16% and 10.99% for the three months ended December 31, 2013 compared to 1.46% and 12.92% for the corresponding period of 2012. Return on average assets and return on average equity were 1.32% and 12.36% for the twelve months ended December 31, 2013 compared to 1.70% and 15.36% for the corresponding period of 2012. Net Interest Margin The net interest margin for the three and twelve months ended December 31, 2013 was 3.98% and 4.13% compared to 4.29% and 4.45% for the corresponding periods of 2012. While the net interest margin has decreased year over year, net interest income on a fully taxable equivalent basis has increased $2,482,000 and $6,666,000 for the three and twelve months ended December 31, 2013 compared to the corresponding period of 2012. Driving this increase is the growth in the loan and deposit portfolios for the twelve months ended December 31, 2013 compared to the corresponding period for 2012 primarily due to the acquisition of Luzerne, growth in home equity products, recognition of $528,000 in loan interest from the payoff of a nonaccrual loan in the first quarter of 2013, and the continued emphasis on core deposit growth. The primary funding for the loan growth was an increase in core deposits. These deposits represent a lower cost funding source than time deposits and comprise 75.83% of total deposits at December 31, 2013 compared to 73.62% at December 31, 2012 . The continued growth in core deposits has led to the total cost of deposits decreasing to 48 bp for the twelve months ended December 31, 2013 from 71 bp for the corresponding period of 2012. FHLB long-term borrowings have decreased $5,528,000 since December 31, 2012 . The decrease is due to the maturity of $5,528,000 in long-term borrowings during the twelve months ended December 31, 2013 carrying an average rate of 3.94%. The changes in the composition of the deposit and borrowing portfolios has led to the total cost of interest bearing funding decreasing to 69 bp for the twelve months ended December 31, 2013 from 103 bp at the corresponding period of 2012. "Mitigation of the continued compressing net interest margin remains one of our top priorities. Our focus on increasing earning assets by adding quality loans, even though these new earning assets are lower rate than legacy assets, remains steadfast. Many of the loans being added are short and intermediate in term, such as home equity products. We continue to actively manage the investment portfolio in order to reduce interest rate and market risk. This is being undertaken primarily through the sale of long-term municipal bonds that have a maturity date of 2025 or later and securities with a call date within the next five years. The efforts to sell municipal bonds have been tempered as the municipal bond market remains soft on longer maturity issues. The proceeds of the bond sales are being deployed into loans and variable rate intermediate term corporate bonds and short and intermediate term municipal bonds. The earning asset strategies do impact current earnings, but they play a key role in our long-term asset liability management strategy as the balance sheet is shortened to better prepare for a rising rate environment. On the funding side of the balance sheet there is limited opportunity to reduce costs. Our focus will continue to be on lower cost core deposits, with an eye toward the lengthening of select funding sources such as time deposits or borrowings as opportunities are presented," commented President Grafmyre. Assets Total assets increased $355,460,000 to $1,211,995,000 at December 31, 2013 compared to December 31, 2012 due primarily to the acquisition of Luzerne. Net loans increased $303,585,000 to $808,200,000 at December 31, 2013 compared to December 31, 2012 due to the acquisition of Luzerne and campaigns related to increasing home equity product market share during 2012 and 2013. The investment portfolio decreased $704,000 from December 31, 2012 to December 31, 2013 due to our strategy to reduce the investment portfolio duration through the selective selling of bonds as opportunities develop, and a change in the fair market value adjustment to an unrealized loss from an unrealized gain. The decreases in value were partially offset by the acquisition of Luzerne. Non-performing Loans Our non-performing loans to total loans ratio decreased to 1.23% at December 31, 2013 from 2.29% at December 31, 2012 . The decrease in non-performing loans is primarily the result of several partial charge-offs and the payoff of a large construction loan that was on nonaccrual. 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 recoveries of $251,000 for the twelve months ended December 31, 2013 augmented the allowance for loan losses which was 1.24% of total loans at December 31, 2013 . Deposits Deposits have increased $330,976,000 to $973,002,000 at December 31, 2013 compared to December 31, 2012 , with core deposits (total deposits excluding time deposits) increasing $265,105,000 , while higher cost time deposits only increased $65,871,000 . Noninterest-bearing deposits have increased $102,424,000 to $217,377,000 at December 31, 2013 compared to December 31, 2012 . Driving this growth is our acquisition of Luzerne in addition to our commitment to easy-to-use products, community involvement, and emphasis on customer service. We have also successfully implemented a targeted marketing campaign aimed at further strengthening our customer relationships, while also expanding our market penetration. Shareholders' Equity Shareholders' equity increased $34,089,000 to $127,815,000 at December 31, 2013 compared to December 31, 2012 . The accumulated other comprehensive loss of $4,894,000 at December 31, 2013 is a result of a decrease in unrealized gains on available for sale securities from an unrealized gain of $10,164,000 at December 31, 2012 to an unrealized loss of $2,169,000 at December 31, 2013 . The amount of accumulated other comprehensive loss at December 31, 2013 was also impacted by the change in net excess of the projected benefit obligation over the market value of the plan assets of the defined benefit pension plan resulting in a decrease in the net loss of $2,082,000 to $2,725,000 at December 31, 2013 . The current level of shareholders' equity equates to a book value per share of $26.52 at December 31, 2013 compared to $24.42 at December 31, 2012 and an equity to asset ratio of 10.55% at December 31, 2013 compared to 10.94% at December 31, 2012 . Excluding goodwill and intangibles, book value per share was $22.60 at December 31, 2013 compared to $23.63 at December 31, 2012 . Dividends declared for the three and twelve months ended December 31, 2013 were $0.47 and $2.13 per share, which includes a special cash dividend of $0.25 per share declared in the first quarter 2013, compared to $0.47 and $1.88 for the three and twelve months ended December 31, 2012 . Penns Woods Bancorp, Inc. is the parent company of Jersey Shore State Bank , which operates thirteen branch offices providing financial services in Lycoming , Clinton , Centre , and Montour Counties, and Luzerne Bank, which operates eight branch offices providing financial services in Luzerne County . Investment and insurance products are offered through the 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, 2012 . 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.jssb.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) 2013 2012 % Change ASSETS Noninterest-bearing balances $ 23,723 $ 12,695 86.87% Interest-bearing deposits in other financial institutions 770 2,447 (68.53)% Federal funds sold 113 — n/a Total cash and cash equivalents 24,606 15,142 62.50% Investment securities, available for sale, at fair value 288,612 289,316 (0.24)% Loans held for sale 1,626 3,774 (56.92)% Loans 818,344 512,232 59.76% Allowance for loan losses (10,144) (7,617) 33.18% Loans, net 808,200 504,615 60.16% Premises and equipment, net 20,184 8,348 141.78% Accrued interest receivable 4,696 4,099 14.56% Bank-owned life insurance 25,410 16,362 55.30% Investment in limited partnerships 2,221 2,883 (22.96)% Goodwill 17,104 3,032 464.12% Intangibles 1,801 — n/a Deferred tax asset 9,889 4,731 109.03% Other assets 7,646 4,233 80.63% TOTAL ASSETS $ 1,211,995 $ 856,535 41.50% LIABILITIES Interest-bearing deposits $ 755,625 $ 527,073 43.36% Noninterest-bearing deposits 217,377 114,953 89.10% Total deposits 973,002 642,026 51.55% Short-term borrowings 26,716 33,204 (19.54)% Long-term borrowings 71,202 76,278 (6.65)% Accrued interest payable 405 366 10.66% Other liabilities 12,855 10,935 17.56% TOTAL LIABILITIES 1,084,180 762,809 42.13% 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; 4,999,929 and 4,019,112 shares issued 41,665 33,492 24.40% Additional paid-in capital 49,800 18,157 174.27% Retained earnings 47,554 43,030 10.51% Accumulated other comprehensive (loss) income: Net unrealized (loss) gain on available for sale securities (2,169) 10,164 (121.34)% Defined benefit plan (2,725) (4,807) (43.31)% Treasury stock at cost, 180,596 shares (6,310) (6,310) —% TOTAL SHAREHOLDERS' EQUITY 127,815 93,726 36.37% TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,211,995 $ 856,535 41.50% 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) 2013 2012 % Change 2013 2012 % Change INTEREST AND DIVIDEND INCOME: Loans including fees $ 9,097 $ 6,418 41.74% $ 32,353 $ 25,372 27.51% Investment securities: Taxable 1,514 1,463 3.49% 6,034 5,940 1.58% Tax-exempt 1,049 1,302 (19.43)% 4,602 5,429 (15.23)% Dividend and other interest income 102 92 10.87% 310 366 (15.30)% TOTAL INTEREST AND DIVIDEND INCOME 11,762 9,275 26.81% 43,299 37,107 16.69% INTEREST EXPENSE: Deposits 815 848 (3.89)% 3,221 3,645 (11.63)% Short-term borrowings 18 37 (51.35)% 81 137 (40.88)% Long-term borrowings 482 552 (12.68)% 1,962 2,429 (19.23)% TOTAL INTEREST EXPENSE 1,315 1,437 (8.49)% 5,264 6,211 (15.25)% NET INTEREST INCOME 10,447 7,838 33.29% 38,035 30,896 23.11% PROVISION FOR LOAN LOSSES 600 725 (17.24)% 2,275 2,525 (9.90)% NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 9,847 7,113 38.44% 35,760 28,371 26.04% NON-INTEREST INCOME: Service charges 656 500 31.20% 2,307 1,894 21.81% Securities gains, net 160 79 102.53% 2,417 1,285 88.09% Bank-owned life insurance 196 131 49.62% 677 670 1.04% Gain on sale of loans 234 333 (29.73)% 1,438 1,386 3.75% Insurance commissions 287 304 (5.59)% 1,084 1,357 (20.12)% Brokerage commissions 221 214 3.27% 1,018 912 11.62% Other 1,178 724 62.71% 3,101 2,596 19.45% TOTAL NON-INTEREST INCOME 2,932 2,285 28.32% 12,042 10,100 19.23% NON-INTEREST EXPENSE: Salaries and employee benefits 4,390 2,956 48.51% 15,415 11,762 31.06% Occupancy 603 307 96.42% 1,905 1,270 50.00% Furniture and equipment 573 394 45.43% 1,815 1,452 25.00% Pennsylvania shares tax 247 169 46.15% 864 674 28.19% Amortization of investments in limited partnerships 165 165 —% 661 661 —% Federal Deposit Insurance Corporation deposit insurance 173 119 45.38% 594 468 26.92% Marketing 146 121 20.66% 517 516 0.19% Intangible amortization 91 — n/a 213 — n/a Other 2,088 1,527 36.74% 8,283 5,220 58.68% TOTAL NON-INTEREST EXPENSE 8,476 5,758 47.20% 30,267 22,023 37.43% INCOME BEFORE INCOME TAX PROVISION 4,303 3,640 18.21% 17,535 16,448 6.61% INCOME TAX PROVISION 808 544 48.53% 3,451 2,598 32.83% NET INCOME $ 3,495 $ 3,096 12.89% $ 14,084 $ 13,850 1.69% EARNINGS PER SHARE - BASIC AND DILUTED $ 0.73 $ 0.81 (9.88)% $ 3.19 $ 3.61 (11.63)% WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED 4,819,048 3,838,290 25.55% 4,410,626 3,837,751 14.93% DIVIDENDS DECLARED PER SHARE $ 0.47 $ 0.47 —% $ 2.13 $ 1.88 13.30% PENNS WOODS BANCORP, INC. AVERAGE BALANCES AND INTEREST RATES Three Months Ended December 31, 2013 December 31, 2012 Average Average Average Average (Dollars in Thousands) Balance Interest Rate Balance Interest Rate ASSETS: Tax-exempt loans $ 25,849 $ 297 4.56% $ 22,171 $ 286 5.13% All other loans 786,740 8,901 4.49% 482,586 6,229 5.13% Total loans 812,589 9,198 4.49% 504,757 6,515 5.13% Federal funds sold 444 — —% — — —% Taxable securities 181,709 1,612 3.55% 161,669 1,551 3.84% Tax-exempt securities 107,494 1,589 5.91% 132,624 1,973 5.95% Total securities 289,203 3,201 4.43% 294,293 3,524 4.79% Interest-bearing deposits 4,922 4 0.32% 2,514 4 0.63% Total interest-earning assets 1,107,158 12,403 4.45% 801,564 10,043 4.99% Other assets 96,201 46,860 TOTAL ASSETS $ 1,203,359 $ 848,424 LIABILITIES AND SHAREHOLDERS' EQUITY: Savings $ 138,553 44 0.13% $ 80,341 21 0.10% Super Now deposits 165,735 166 0.40% 125,396 158 0.50% Money market deposits 208,591 140 0.27% 149,691 154 0.41% Time deposits 235,718 465 0.78% 172,334 515 1.19% Total interest-bearing deposits 748,597 815 0.43% 527,762 848 0.64% Short-term borrowings 25,385 18 0.33% 25,926 37 0.57% Long-term borrowings 70,755 482 2.67% 71,821 552 3.01% Total borrowings 96,140 500 2.05% 97,747 589 2.36% Total interest-bearing liabilities 844,737 1,315 0.62% 625,509 1,437 0.91% Demand deposits 213,368 116,314 Other liabilities 18,070 10,736 Shareholders' equity 127,184 95,865 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,203,359 $ 848,424 Interest rate spread 3.83% 4.08% Net interest income/margin $ 11,088 3.98% $ 8,606 4.29% Three Months Ended December 31 , 2013 2012 Total interest income $ 11,762 $ 9,275 Total interest expense 1,315 1,437 Net interest income 10,447 7,838 Tax equivalent adjustment 641 768 Net interest income (fully taxable equivalent) $ 11,088 $ 8,606 PENNS WOODS BANCORP, INC. AVERAGE BALANCES AND INTEREST RATES Twelve Months Ended December 31, 2013 December 31, 2012 Average Average Average Average (Dollars in Thousands) Balance Interest Rate Balance Interest Rate ASSETS: Tax-exempt loans $ 24,934 $ 1,056 4.24% $ 23,857 $ 1,195 5.01% All other loans 662,394 31,656 4.78% 446,569 24,583 5.50% Total loans 687,328 32,712 4.76% 470,426 25,778 5.48% Federal funds sold 226 — —% — — —% Taxable securities 176,674 6,326 3.58% 158,765 6,298 3.97% Tax-exempt securities 116,697 6,973 5.98% 131,637 8,226 6.25% Total securities 293,371 13,299 4.53% 290,402 14,524 5.00% Interest-bearing deposits 6,946 18 0.26% 6,621 8 0.12% Total interest-earning assets 987,871 46,029 4.66% 767,449 40,310 5.25% Other assets 76,593 49,070 TOTAL ASSETS $ 1,064,464 $ 816,519 LIABILITIES AND SHAREHOLDERS' EQUITY: Savings $ 118,125 140 0.12% $ 78,724 65 0.08% Super Now deposits 154,131 687 0.45% 118,515 610 0.51% Money market deposits 183,460 548 0.30% 145,339 734 0.51% Time deposits 209,517 1,846 0.88% 173,274 2,236 1.29% Total interest-bearing deposits 665,233 3,221 0.48% 515,852 3,645 0.71% Short-term borrowings 22,281 81 0.38% 20,961 137 0.65% Long-term borrowings 72,140 1,962 2.68% 64,994 2,429 3.68% Total borrowings 94,421 2,043 2.14% 85,955 2,566 2.94% Total interest-bearing liabilities 759,654 5,264 0.69% 601,807 6,211 1.03% Demand deposits 174,909 113,431 Other liabilities 15,962 11,126 Shareholders' equity 113,939 90,155 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,064,464 $ 816,519 Interest rate spread 3.97% 4.22% Net interest income/margin $ 40,765 4.13% $ 34,099 4.45% Twelve Months Ended December 31 , 2013 2012 Total interest income $ 43,299 $ 37,107 Total interest expense 5,264 6,211 Net interest income 38,035 30,896 Tax equivalent adjustment 2,730 3,203 Net interest income (fully taxable equivalent) $ 40,765 $ 34,099 (Dollars in Thousands, Except Per Share Data) Quarter Ended 12/31/2013 9/30/2013 6/30/2013 3/31/2013 12/31/2012 Operating Data Net income $ 3,495 $ 3,246 $ 3,659 $ 3,684 $ 3,096 Net interest income 10,447 10,629 8,754 8,205 7,838 Provision for loan losses 600 600 575 500 725 Net security gains (losses) 160 (3) 1,274 986 79 Non-interest income, ex. net security gains 2,772 2,845 2,261 1,747 2,206 Non-interest expense 8,476 8,975 6,965 5,851 5,758 Performance Statistics Net interest margin 3.99% 4.07% 4.09% 4.46% 4.29% Annualized return on average assets 1.16% 1.08% 1.48% 1.72% 1.46% Annualized return on average equity 10.99% 10.39% 13.54% 15.51% 12.92% Annualized net loan charge-offs (recoveries) to average loans 0.04% 0.19% —% (0.55)% 0.50% Net charge-offs (recoveries) 87 374 1 (713) 629 Efficiency ratio 63.5% 66.6% 63.2% 58.8% 57.3% Per Share Data Basic earnings per share $ 0.73 $ 0.67 $ 0.88 $ 0.96 $ 0.81 Diluted earnings per share 0.73 0.67 0.88 0.96 0.81 Dividend declared per share 0.47 0.47 0.47 0.72 0.47 Book value 26.52 26.12 26.14 24.23 24.42 Common stock price: High 53.99 49.89 41.86 41.45 45.27 Low 47.03 42.76 39.44 38.50 37.16 Close 51 49.82 41.86 40.97 37.41 Weighted average common shares: Basic 4,819 4,818 4,151 3,839 3,838 Fully Diluted 4,819 4,818 4,151 3,839 3,838 End-of-period common shares: Issued 5,000 4,999 4,999 4,020 4,019 Treasury 181 181 181 181 181 Quarter Ended (Dollars in Thousands, Except Per Share Data) 12/31/2013 9/30/2013 6/30/2013 3/31/2013 12/31/2012 Financial Condition Data: General Total assets $ 1,211,995 $ 1,204,090 $ 1,206,958 $ 852,997 $ 856,535 Loans, net 808,200 796,533 777,557 503,592 504,615 Goodwill 17,104 17,104 17,104 3,032 3,032 Intangibles 1,801 1,892 1,984 — — Total deposits 973,002 975,521 955,361 659,304 642,026 Noninterest-bearing 217,377 215,374 211,096 120,471 114,953 Savings 138,621 142,193 140,667 86,556 82,546 NOW 177,996 169,974 161,972 140,626 130,454 Money Market 203,786 209,469 203,076 143,847 144,722 Time Deposits 235,222 238,511 238,550 167,804 169,351 Total interest-bearing deposits 755,625 760,147 744,265 538,833 527,073 Core deposits* 737,780 737,010 716,811 491,500 472,675 Shareholders' equity 127,815 125,852 125,928 93,013 93,726 Asset Quality Non-performing assets $ 10,029 $ 6,064 $ 6,515 $ 9,059 $ 11,706 Non-performing assets to total assets 0.83% 0.50% 0.54% 1.06% 1.37% Allowance for loan losses 10,144 9,630 9,404 8,830 7,617 Allowance for loan losses to total loans 1.24% 1.19% 1.19% 1.72% 1.49% Allowance for loan losses to non-performing loans 101.15% 158.81% 144.34% 97.47% 65.07% Non-performing loans to total loans 1.23% 0.75% 0.83% 1.77% 2.29% Capitalization Shareholders' equity to total assets 10.55% 10.45% 10.43% 10.90% 10.94% * 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) 2013 2012 2013 2012 GAAP net income $ 3,495 $ 3,096 $ 14,084 $ 13,850 Less: net securities and bank-owned life insurance (losses) gains, net of tax 106 52 1,595 957 Non-GAAP operating earnings $ 3,389 $ 3,044 $ 12,489 $ 12,893 Three Months Ended December 31 , Twelve Months Ended December 31 , 2013 2012 2013 2012 Return on average assets (ROA) 1.16% 1.46% 1.32% 1.70% Less: net securities and bank-owned life insurance (losses) gains, net of tax 0.03% 0.02% 0.15% 0.12% Non-GAAP operating ROA 1.13% 1.44% 1.17% 1.58% Three Months Ended December 31 , Twelve Months Ended December 31 , 2013 2012 2013 2012 Return on average equity (ROE) 10.99% 12.92% 12.36% 15.36% Less: net securities and bank-owned life insurance (losses) gains, net of tax 0.33% 0.22% 1.40% 1.06% Non-GAAP operating ROE 10.66% 12.70% 10.96% 14.30% Three Months Ended December 31 , Twelve Months Ended December 31 , 2013 2012 2013 2012 Basic earnings per share (EPS) $ 0.73 $ 0.81 $ 3.19 $ 3.61 Less: net securities and bank-owned life insurance (losses) gains, net of tax 0.03 0.02 0.36 0.25 Non-GAAP basic operating EPS $ 0.70 $ 0.79 $ 2.83 $ 3.36 Three Months Ended December 31 , Twelve Months Ended December 31 , 2013 2012 2013 2012 Dilutive EPS $ 0.73 $ 0.81 $ 3.19 $ 3.61 Less: net securities and bank-owned life insurance (losses) gains, net of tax 0.03 0.02 0.36 0.25 Non-GAAP dilutive operating EPS $ 0.70 $ 0.79 $ 2.83 $ 3.36 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.


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