WILLIAMSPORT, Pa., April 23, 2020 (GLOBE NEWSWIRE) — Penns Woods Bancorp, Inc. (NASDAQ: PWOD)
Penns Woods Bancorp, Inc. achieved net income of $3.1 million for the three months ended March 31, 2020, resulting in basic and diluted earnings per share of $0.44 and $0.43, respectively.HighlightsNet income, as reported under GAAP, for the three months ended March 31, 2020 was $3.1 million, compared to $3.9 million for the same period of 2019.  Results for the three months ended March 31, 2020 compared to 2019 were impacted by an decrease in after-tax securities gains of $30,000 (from a gain of $52,000 to a gain of $22,000) for the three month period.The provision for loan losses increased $390,000 to $750,000 for the three months ended March 31, 2020 compared to $360,000 for the 2019 period.  The increase is the result of the economic uncertainty caused by the COVID-19 pandemic.Basic and diluted earnings per share for the three months ended March 31, 2020 were $0.44 and $0.43, respectively, compared to basic and diluted earnings per share of $0.56 for the three months ended March 31, 2019.Return on average assets was 0.74% for the three months ended March 31, 2020, compared to 0.95% for the corresponding period of 2019.Return on average equity was 7.83% for the three months ended March 31, 2020, compared to 10.93% for the corresponding period of 2019.COVID-19 ActivityApproximately one third of employees working remotely.Loan modification/deferral program in place to defer payments up to 90 days for principal and/or interest with approximately 500 loans affected by this program.All COVID-19 related loan deferrals meet the requirements to not be considered a troubled debt restructuring.Participated in the Paycheck Protection Program by primarily utilizing third parties to service and place the loans.Significantly reduced deposit rates during the latter half of March 2020.Increased the provision for loan losses due to the economic uncertainty caused by the COVID-19 pandemic.Net interest margin compression expected to continue as the rate environment remains below historical levels.Net IncomeNet income from core operations (“core earnings”), which is a non-generally accepted accounting principles (GAAP) measure of net income excluding net securities gains or losses, was $3.1 million for the three months ended March 31, 2020 compared to $3.9 million for the same period of 2019. Core earnings per share for the three months ended March 31, 2020 were $0.44 basic and $0.43 diluted, compared to $0.55 basic and diluted core earnings per share for the same period of 2019. Core return on average assets and core return on average equity were 0.73% and 7.77% for the three months ended March 31, 2020, compared to 0.94% and 10.79% for the corresponding period of 2019.  A reconciliation of the non-GAAP financial measures of core earnings, core return on assets, core return on equity, and core earnings per share described in this press release to the comparable GAAP financial measures is included at the end of this press release.Net Interest MarginThe net interest margin for the three months ended March 31, 2020 was 3.19%, compared to 3.37% for the corresponding period of 2019. The decrease in the net interest margin was driven by an increase in the rate paid on interest-bearing liabilities of 12 basis points (“bps”) for the three month periods. The increase was driven by an increase in the rate paid on time deposits as time deposits were utilized as an attraction tool and to manage the duration of the interest-bearing liabilities portfolio. Net interest margin was further compressed due to a decrease in yield of 12 bps on interest earning assets. The average balance of the investment portfolio increased by $13.8 million for the three month periods, while the yield on the portfolio decreased by 55 bps.AssetsTotal assets decreased $16.2 million to $1.7 billion at March 31, 2020 compared to March 31, 2019.  Net loans decreased $33.8 million to $1.3 billion at March 31, 2020 compared to March 31, 2019, as an increase in the indirect auto lending portfolio was offset by decreases in the municipal and commercial loan portfolios.  The investment portfolio increased $13.2 million from March 31, 2019 to March 31, 2020 due to increases in the corporate and taxable municipal portfolios.Non-performing LoansThe ratio of non-performing loans to total loans ratio decreased to 0.84% at March 31, 2020 from 1.14% at March 31, 2019 as non-performing loans have decreased to $11.3 million at March 31, 2020 from $15.8 million at March 31, 2019 primarily due to a commercial loan relationship that was partially charged-off during the fourth quarter of 2019. The majority of non-performing loans involve loans that are either in a secured position and have sureties with a strong underlying financial position or have a specific allocation for any impairment recorded within the allowance for loan losses. Net loan charge-offs of $144,000 for the three months ended March 31, 2020 impacted the allowance for loan losses, which was 0.93% of total loans at March 31, 2020 compared to 1.00% at March 31, 2019.DepositsDeposits increased $17.7 million to $1.3 billion at March 31, 2020 compared to March 31, 2019.  Noninterest-bearing deposits increased $11.1 million to $332.8 million at March 31, 2020 compared to March 31, 2019.  Driving deposit growth is our commitment to easy-to-use products, community involvement, and emphasis on customer service.  Deposit gathering efforts have centered on core deposits as building customer relationships remains the focus.  The time deposit portfolio has increased as time deposits have been used as a customer attraction tool.Shareholders’ EquityShareholders’ equity increased $9.5 million to $156.6 million at March 31, 2020 compared to March 31, 2019. The change in accumulated other comprehensive loss from $5.0 million at March 31, 2019 to $2.2 million at March 31, 2020 is a result of an increase in unrealized gains on available for sale securities (from an unrealized gain of $197,000 at March 31, 2019 to an unrealized gain of $3.0 million at March 31, 2020). The amount of accumulated other comprehensive loss at March 31, 2020 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 $40,000. The current level of shareholders’ equity equates to a book value per share of $22.23 at March 31, 2020 compared to $20.89 at March 31, 2019, and an equity to asset ratio of 9.27% at March 31, 2020 compared to 8.62% at March 31, 2019. Dividends declared for the three months ended March 31, 2020 and 2019 were $0.32 per share and $0.31 per share, respectively.Penns Woods Bancorp, Inc. is the parent company of Jersey Shore State Bank, which operates seventeen branch offices providing financial services in Lycoming, Clinton, Centre, Montour, and Union Counties, and Luzerne Bank, which operates nine branch offices providing financial services in Luzerne County.  Investment and insurance products are offered through Jersey Shore State Bank’s subsidiary, The M Group, Inc. D/B/A The Comprehensive Financial Group.  Insurance products are offered through United Insurance Solutions, LLC, a joint venture that is a subsidiary of the holding company.NOTE:  This press release contains financial information determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).  Management uses the non-GAAP measure of net income from core operations in its analysis of the company’s performance. This measure, as used by the Company, adjusts net income determined in accordance with GAAP to exclude the effects of special items, including significant gains or losses that are unusual in nature such as net securities gains and losses.  Because these certain items and their impact on the Company’s performance are difficult to predict, management believes presentation of financial measures excluding the impact of such items provides useful supplemental information in evaluating the operating results of the Company’s core businesses. These disclosures should not be viewed as a substitute for net income determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.This press release may contain certain “forward-looking statements” including statements concerning plans, objectives, future events or performance and assumptions and other statements, which are statements other than statements of historical fact.  The Company cautions readers that the following important factors, among others, may have affected and could in the future affect actual results and could cause actual results for subsequent periods to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company herein: (i) the effect of changes in laws and regulations, including federal and state banking laws and regulations, and the associated costs of compliance with such laws and regulations either currently or in the future as applicable; (ii) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies as well as by the Financial Accounting Standards Board, or of changes in the Company’s organization, compensation and benefit plans; (iii) the effect on the Company’s competitive position within its market area of the increasing consolidation within the banking and financial services industries, including the increased competition from larger regional and out-of-state banking organizations as well as non-bank providers of various financial services; (iv) the effect of changes in interest rates;  (v) the effects of health emergencies, including the spread of infectious diseases or pandemics; (vi) the effects of health emergencies, including the spread of infectious diseases; or (vi) 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, 2019.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.
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PENNS WOODS BANCORP, INC.
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* Core deposits are defined as total deposits less time deposits
Reconciliation of GAAP and Non-GAAP Financial Measures 

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