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