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Penns Woods Bancorp, Inc. Reports Third Quarter 2020 Earnings

WILLIAMSPORT, Pa., Oct. 26, 2020 (GLOBE NEWSWIRE) -- Penns Woods Bancorp, Inc. (NASDAQ: PWOD)

Penns Woods Bancorp, Inc. achieved net income of $11.3 million for the nine months ended September 30, 2020, resulting in basic and diluted earnings per share of $1.61.

Highlights

  • Net income, as reported under GAAP, for the three and nine months ended September 30, 2020 was $4.5 million and $11.3 million, respectively compared to $4.7 million and $12.8 million for the same period of 2019. Results for the three and nine months ended September 30, 2020 compared to 2019 were impacted by an increase in after-tax securities gains of $665,000 (from a gain of $134,000 to a gain of $799,000) for the three month period and $770,000 (from a gain of $205,000 to a gain of $975,000) for the nine month period.
     
  • Gain on sale of loans increased $866,000 and $1.7 million, respectfully, for the three and nine months ended September 30, 2020, to $1.4 million and $2.9 million, respectively, compared to $583,000 and $1.2 million for the 2019 periods.  The increase is the result of a significant increase in the number of consumers who are refinancing their mortgage due to the current low interest rate environment.
     
  • The provision for loan losses increased $285,000 and $1.0 million, respectfully, for the three and nine months ended September 30, 2020, to $645,000 and $2.0 million, respectively, compared to $360,000 and $1.0 million for the 2019 periods.  The increase is the result of the economic uncertainty caused by the COVID-19 pandemic.
     
  • Basic and diluted earnings per share for the three and nine months ended September 30, 2020 were $0.63 and $1.61, respectively, compared to basic and diluted earnings per share of $0.66 and $1.82 for the three and nine months ended September 30, 2019.
     
  • Return on average assets was 0.97% for the three months ended September 30, 2020, compared to 1.10% for the corresponding period of 2019. Return on average assets was 0.85% for the nine months ended September 30, 2020, compared to 1.02% for the corresponding period of 2019.
     
  • Return on average equity was 11.05% for the three months ended September 30, 2020, compared to 12.18% for the corresponding period of 2019. Return on average equity was 9.57% for the nine months ended September 30, 2020, compared to 11.69% for the corresponding period of 2019.

COVID-19 Activity

  • Approximately one third of employees working remotely.
     
  • As of September 30, 2020, loan modification/deferral program in place to defer payments up to 180 days for principal and/or interest with $230.3 million in loan principal 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 ("PPP") by primarily utilizing third parties to service and place the loans.
     
  • Significantly reduced deposit rates during the latter half of March 2020 continuing through September 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.
     
  • Total paycheck protection program loans originated to be held on balance sheet at September 30, 2020 total $12.3 million.

Net Income

Net 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 $3.7 million for the three months ended September 30, 2020 compared to $4.5 million for the same period of 2019.  Core earnings were $10.3 million for the nine months ended September 30, 2020, compared to $12.6 million for the same period of 2019. Core earnings per share for the three months ended September 30, 2020 were $0.52 basic and diluted, compared to $0.64 basic and diluted core earnings per share for the same period of 2019. Core earnings per share for the nine months ended September 30, 2020 were $1.47 basic and diluted, compared to $1.80 basic and diluted for the same period of 2019. Core return on average assets and core return on average equity were 0.79% and 9.08% for the three months ended September 30, 2020, compared to 1.07% and 11.82% for the corresponding period of 2019. Core return on average assets and core return on average equity were 0.78% and 8.75% for the nine months ended September 30, 2020 compared to 1.01% and 11.49% 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 Margin

The net interest margin for the three and nine months ended September 30, 2020 was 2.76% and 2.97%, compared to 3.32% and 3.34% for the corresponding periods of 2019. The decrease in the net interest margin was driven by a decrease in the yield of the loan portfolio of 34 and 11 basis points ("bps"), while the the investment portfolio yield declined 56 and 60 bps, respectively, for the three and nine month periods during the current low interest rate environment. Further compressing the net interest margin was the significant increase of interest-bearing deposits. These deposits carry a current yield of a few basis points as commercial customers have received PPP funding and retail customers have received stimulus funding. Rates paid on interest-bearing liabilities decreased over the three and nine months ended September 30, 2020 and these rate decreases will partially offset the decline in earning asset yield.

Assets

Total assets increased $167.7 million to $1.8 billion at September 30, 2020 compared to September 30, 2019.  Cash and cash equivalents increased significantly due to deposit growth resulting from the various economic recovery programs instituted at the state and federal levels the impacted both commercial and retail customers, coupled with customers becoming more risk adverse and seeking safety in a bank deposit. Net loans decreased $15.0 million to $1.3 billion at September 30, 2020 compared to September 30, 2019, as the COVID-19 business and travel restrictions curtailed various lending activities such as indirect auto, home equity, and commercial.  Lending activity began to rebound as business and travel restrictions were lessened during the second and third quarters of 2020.  The investment portfolio remained steady from September 30, 2019 to September 30, 2020 as cash flow was primarily invested into short-term municipal bonds.

Non-performing Loans

The ratio of non-performing loans to total loans ratio decreased to 0.77% at September 30, 2020 from 1.26% at September 30, 2019 as non-performing loans have decreased to $10.4 million at September 30, 2020 from $17.2 million at September 30, 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 $193,000 for the nine months ended September 30, 2020 impacted the allowance for loan losses, which was 1.00% of total loans at September 30, 2020 compared to 1.04% at September 30, 2019.

Deposits

Deposits increased $159.4 million to $1.5 billion at September 30, 2020 compared to September 30, 2019.  Noninterest-bearing deposits increased $106.9 million to $434.2 million at September 30, 2020 compared to September 30, 2019.  Driving deposit growth was the receipt of PPP funding by commercial customers, stimulus funding by retail customers, and customers becoming more risk adverse and seeking safety in a bank deposit. Emphasis during 2020 has been on increasing the utilization of electronic (internet and mobile) deposit banking among our customers.  Utilization of internet and mobile banking has increased since the start of 2020 due to these efforts coupled with a change in consumer behavior due to the business and travel restrictions caused by the COVID-19 pandemic.

Shareholders’ Equity

Shareholders’ equity increased $7.4 million to $162.4 million at September 30, 2020 compared to September 30, 2019. The change in accumulated other comprehensive loss from $1.9 million at September 30, 2019 to $678,000 at September 30, 2020 is a result of an increase in unrealized gains on available for sale securities (from an unrealized gain of $3.3 million at September 30, 2019 to an unrealized gain of $4.4 million at September 30, 2020). The amount of accumulated other comprehensive loss at September 30, 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 $47,000. The current level of shareholders’ equity equates to a book value per share of $23.05 at September 30, 2020 compared to $22.03 at September 30, 2019, and an equity to asset ratio of 8.82% at September 30, 2020 compared to 9.27% at September 30, 2019. Dividends declared for the nine months ended September 30, 2020 and 2019 were $0.96 per share and $0.94 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; 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.

Contact: Richard A. Grafmyre, Chief Executive Officer
  110 Reynolds Street
  Williamsport, PA 17702
  570-322-1111 e-mail: pwod@pwod.com

THIS INFORMATION IS SUBJECT TO YEAR-END AUDIT ADJUSTMENT


PENNS WOODS BANCORP, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)

    September 30,
(In Thousands, Except Share Data)   2020   2019   % Change
ASSETS:            
Noninterest-bearing balances   $ 34,987       $ 25,990       34.62   %
Interest-bearing balances in other financial institutions   191,285       31,351       510.14   %
Total cash and cash equivalents   226,272       57,341       294.61   %
             
Investment debt securities, available for sale, at fair value   149,675       149,075       0.40   %
Investment equity securities, at fair value   1,291       1,820       (29.07 ) %
Investment securities, trading   35       47       (25.53 ) %
Restricted investment in bank stock, at fair value    15,006       13,502       11.14   %
Loans held for sale   6,647       1,868       255.84   %
Loans   1,349,140       1,364,984       (1.16 ) %
Allowance for loan losses   (13,429 )     (14,249 )     (5.75 ) %
Loans, net   1,335,711       1,350,735       (1.11 ) %
Premises and equipment, net   32,886       33,366       (1.44 ) %
Accrued interest receivable   8,540       5,267       62.14   %
Bank-owned life insurance   33,474       29,107       15.00   %
Goodwill   17,104       17,104         %
Intangibles   724       960       (24.58 ) %
Operating lease right of use asset   3,184       4,217       (24.50 ) %
Deferred tax asset   3,409       3,744       (8.95 ) %
Other assets   6,821       4,942       38.02   %
TOTAL ASSETS   $ 1,840,779       $ 1,673,095       10.02   %
             
LIABILITIES:            
Interest-bearing deposits   $ 1,057,562       $ 1,005,078       5.22   %
Noninterest-bearing deposits   434,248       327,329       32.66   %
Total deposits   1,491,810       1,332,407       11.96   %
             
Short-term borrowings   15,009       5,987       150.69   %
Long-term borrowings   153,534       162,290       (5.40 ) %
Accrued interest payable   1,491       1,666       (10.50 ) %
Operating lease liability   3,219       4,228       (23.86 ) %
Other liabilities   13,287       11,456       15.98   %
TOTAL LIABILITIES   1,678,350       1,518,034       10.56   %
             
SHAREHOLDERS’ EQUITY:            
Preferred stock, no par value, 3,000,000 shares authorized; no shares issued               n/a
Common stock, par value $5.55, 22,500,000 shares authorized; 7,527,605 and 7,517,796 shares issued; 7,047,380 and 7,037,571 shares outstanding   41,820       41,758       0.15   %
Additional paid-in capital   52,268       51,290       1.91   %
Retained earnings   81,127       76,009       6.73   %
Accumulated other comprehensive loss:            
Net unrealized gain on available for sale securities   4,440       3,266       35.95   %
Defined benefit plan   (5,118 )     (5,165 )     0.91   %
Treasury stock at cost, 480,225    (12,115 )     (12,115 )       %
TOTAL PENNS WOODS BANCORP, INC. SHAREHOLDERS' EQUITY   162,422       155,043       4.76   %
Non-controlling interest   7       18       (61.11 ) %
TOTAL SHAREHOLDERS' EQUITY   162,429       155,061       4.75   %
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $ 1,840,779       $ 1,673,095       10.02   %
                             

PENNS WOODS BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)

    Three Months Ended September 30,   Nine Months Ended September 30,
(In Thousands, Except Per Share Data)   2020   2019   % Change   2020   2019   % Change
INTEREST AND DIVIDEND INCOME:                        
Loans including fees   $ 14,080       $ 15,426       (8.73 ) %   $ 43,403       $ 45,595     (4.81 ) %
Investment securities:                        
Taxable   925       998       (7.31 ) %   2,958       2,899     2.04   %
Tax-exempt   170       167       1.80   %   484       520     (6.92 ) %
Dividend and other interest income   212       493       (57.00 ) %   747       1,345     (44.46 ) %
TOTAL INTEREST AND DIVIDEND INCOME   15,387       17,084       (9.93 ) %   47,592       50,359     (5.49 ) %
                         
INTEREST EXPENSE:                        
Deposits   2,569       3,165       (18.83 ) %   8,406       8,336     0.84   %
Short-term borrowings   8       7       14.29   %   37       790     (95.32 ) %
Long-term borrowings   965       1,009       (4.36 ) %   2,893       2,739     5.62   %
TOTAL INTEREST EXPENSE   3,542       4,181       (15.28 ) %   11,336       11,865     (4.46 ) %
                         
NET INTEREST INCOME   11,845       12,903       (8.20 ) %   36,256       38,494     (5.81 ) %
                         
PROVISION FOR LOAN LOSSES   645       360       79.17   %   2,040       1,035     97.10   %
                         
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   11,200       12,543       (10.71 ) %   34,216       37,459     (8.66 ) %
                         
NON-INTEREST INCOME:                        
Service charges   388       622       (37.62 ) %   1,249       1,776     (29.67 ) %
Debt securities gains, available for sale   1,013       189       435.98   %   1,220       200     510.00   %
Equity securities (losses) gains         (21 )     100.00   %   30       44     (31.82 ) %
Securities (losses) gains, trading   (2 )     2       (200.00 ) %   (16 )     15     (206.67 ) %
Bank-owned life insurance   156       143       9.09   %   492       434     13.36   %
Gain on sale of loans   1,449       583       148.54   %   2,921       1,246     134.43   %
Insurance commissions   101       93       8.60   %   320       346     (7.51 ) %
Brokerage commissions   224       353       (36.54 ) %   779       1,032     (24.52 ) %
Debit card income   352       333       5.71   %   936       1,032     (9.30 ) %
Other   354       525       (32.57 ) %   1,162       1,420     (18.17 ) %
TOTAL NON-INTEREST INCOME   4,035       2,822       42.98   %   9,093       7,545     20.52   %
                         
NON-INTEREST EXPENSE:                        
Salaries and employee benefits   5,465       5,488       (0.42 ) %   16,362       16,512     (0.91 ) %
Occupancy   599       638       (6.11 ) %   1,927       2,085     (7.58 ) %
Furniture and equipment   837       885       (5.42 ) %   2,525       2,421     4.30   %
Software amortization   257       234       9.83   %   743       629     18.12   %
Pennsylvania shares tax   340       285       19.30   %   948       863     9.85   %
Professional fees   608       585       3.93   %   1,888       1,834     2.94   %
Federal Deposit Insurance Corporation deposit insurance   271             n/a   650       504     28.97   %
Marketing   61       98       (37.76 ) %   170       233     (27.04 ) %
Intangible amortization   53       62       (14.52 ) %   174       202     (13.86 ) %
Other   1,216       1,266       (3.95 ) %   4,041       4,131     (2.18 ) %
TOTAL NON-INTEREST EXPENSE   9,707       9,541       1.74   %   29,428       29,414     0.05   %
INCOME BEFORE INCOME TAX PROVISION   5,528       5,824       (5.08 ) %   13,881       15,590     (10.96 ) %
INCOME TAX PROVISION   1,051       1,170       (10.17 ) %   2,563       2,741     (6.49 ) %
NET INCOME   $ 4,477       $ 4,654       (3.80 ) %   $ 11,318       $ 12,849     (11.92 ) %
Earnings attributable to noncontrolling interest   5       4       25.00   %   13       10     30.00   %
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS'   $ 4,472       $ 4,650       (3.83 ) %   $ 11,305       $ 12,839     (11.95 ) %
EARNINGS PER SHARE - BASIC   $ 0.63       $ 0.66       (4.55 ) %   $ 1.61       $ 1.82     (11.54 ) %
EARNINGS PER SHARE - DILUTED   $ 0.63       $ 0.66       (4.55 ) %   $ 1.61       $ 1.82     (11.54 ) %
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC   7,045,336       7,037,055       0.12   %   7,042,578       7,036,181     0.09   %
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED   7,045,336       7,037,055       0.12   %   7,042,578       7,036,181     0.09   %
DIVIDENDS DECLARED PER SHARE   $ 0.32       $ 0.31       3.23   %   $ 0.96       $ 0.94     2.13   %
                                                       

PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES 

    Three Months Ended
    September 30, 2020   September 30, 2019
(Dollars in Thousands)   Average 
Balance
  Interest   Average 
Rate
  Average 
Balance
  Interest   Average 
Rate
ASSETS:                        
Tax-exempt loans   $ 42,047     $ 386     3.65 %   $ 66,617     $ 505     3.04 %
All other loans   1,313,474     13,775     4.17 %   1,317,964     15,027     4.57 %
Total loans   1,355,521     14,161     4.16 %   1,384,581     15,532     4.50 %
                         
Taxable securities   140,695     1,116     3.23 %   137,394     1,284     3.79 %
Tax-exempt securities   30,587     216     2.87 %   25,769     211     3.32 %
Total securities   171,282     1,332     3.16 %   163,163     1,495     3.72 %
                         
Interest-bearing deposits   203,817     21     0.04 %   36,853     207     2.25 %
                         
Total interest-earning assets   1,730,620     15,514     3.57 %   1,584,597     17,234     4.37 %
                         
Other assets   121,901             101,318          
                         
TOTAL ASSETS   $ 1,852,521             $ 1,685,915          
                         
LIABILITIES AND SHAREHOLDERS’ EQUITY:                        
Savings   $ 199,420     51     0.10 %   $ 169,628     66     0.16 %
Super Now deposits   273,190     489     0.71 %   232,918     481     0.83 %
Money market deposits   263,926     330     0.50 %   237,362     581     0.98 %
Time deposits   329,190     1,699     2.05 %   370,229     2,037     2.21 %
Total interest-bearing deposits   1,065,726     2,569     0.96 %   1,010,137     3,165     1.26 %
                         
Short-term borrowings   17,517     8     0.18 %   7,990     7     0.35 %
Long-term borrowings   165,064     965     2.33 %   169,017     1,009     2.26 %
Total borrowings   182,581     973     2.12 %   177,007     1,016     2.18 %
                         
Total interest-bearing liabilities   1,248,307     3,542     1.13 %   1,187,144     4,181     1.39 %
                         
Demand deposits   424,753             324,940          
Other liabilities   17,644             21,151          
Shareholders’ equity   161,817             152,680          
                         
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $ 1,852,521             $ 1,685,915          
Interest rate spread           2.44 %           2.98 %
Net interest income/margin       $ 11,972     2.76 %       $ 13,053     3.32 %


     
    Three Months Ended September 30,
    2020   2019
Total interest income   $ 15,387     $ 17,084  
Total interest expense   3,542     4,181  
Net interest income   11,845     12,903  
Tax equivalent adjustment   127     150  
Net interest income (fully taxable equivalent)   $ 11,972     $ 13,053  
                 

PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES 

    Nine Months Ended
    September 30, 2020   September 30, 2019
(Dollars in Thousands)   Average 
Balance
  Interest   Average 
Rate
  Average 
Balance
  Interest   Average 
Rate
ASSETS:                        
Tax-exempt loans   $ 46,476     $ 1,138     3.27 %   $ 69,973     $ 1,592     3.04 %
All other loans   1,304,207     42,504     4.35 %   1,315,022     44,337     4.51 %
Total loans   1,350,683     43,642     4.32 %   1,384,995     45,929     4.43 %
                         
Taxable securities   143,601     3,582     3.38 %   131,451     3,934     4.05 %
Tax-exempt securities   27,558     613     3.02 %   26,813     658     3.32 %
Total securities   171,159     4,195     3.32 %   158,264     4,592     3.92 %
                         
Interest-bearing deposits   125,447     123     0.13 %   18,050     310     2.30 %
                         
Total interest-earning assets   1,647,289     47,960     3.89 %   1,561,309     50,831     4.36 %
                         
Other assets   116,868             109,278          
                         
TOTAL ASSETS   $ 1,764,157             $ 1,670,587          
                         
LIABILITIES AND SHAREHOLDERS’ EQUITY:                        
Savings   $ 189,205     209     0.15 %   $ 168,909     147     0.12 %
Super Now deposits   248,327     1,322     0.71 %   236,965     1,313     0.74 %
Money market deposits   234,772     1,225     0.70 %   242,630     1,649     0.91 %
Time deposits   356,897     5,650     2.11 %   335,456     5,227     2.08 %
Total interest-bearing deposits   1,029,201     8,406     1.09 %   983,960     8,336     1.13 %
                         
Short-term borrowings   13,195     37     0.37 %   45,046     790     2.34 %
Long-term borrowings   165,702     2,893     2.33 %   153,684     2,739     2.24 %
Total borrowings   178,897     2,930     2.19 %   198,730     3,529     2.26 %
                         
Total interest-bearing liabilities   1,208,098     11,336     1.25 %   1,182,690     11,865     1.32 %
                         
Demand deposits   378,889             318,602          
Other liabilities   19,682             22,705          
Shareholders’ equity   157,488             146,590          
                         
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $ 1,764,157             $ 1,670,587          
Interest rate spread           2.64 %           3.04 %
Net interest income/margin       $ 36,624     2.97 %       $ 38,966     3.34 %
                                     


    Nine Months Ended September 30,
    2020   2019
Total interest income   $ 47,592     $ 50,359  
Total interest expense   11,336     11,865  
Net interest income   36,256     38,494  
Tax equivalent adjustment   368     472  
Net interest income (fully taxable equivalent)   $ 36,624     $ 38,966  
                 


(Dollars in Thousands, Except Per Share Data)   Quarter Ended
    9/30/2020   6/30/2020   3/31/2020   12/31/2019   9/30/2019
Operating Data                    
Net income   $ 4,472     $ 3,760     $ 3,073     $ 2,833     $ 4,650  
Net interest income   11,845     12,250     12,161     12,321     12,903  
Provision for loan losses   645     645     750     1,700     360  
Net security gains   1,011     198     28     489     170  
Non-interest income, excluding net security gains   3,024     2,423     2,409     2,418     2,652  
Non-interest expense   9,707     9,611     10,110     10,294     9,541  
                     
Performance Statistics                    
Net interest margin   2.76 %   3.01 %   3.19 %   3.22 %   3.32 %
Annualized return on average assets   0.97 %   0.85 %   0.74 %   0.68 %   1.10 %
Annualized return on average equity   11.05 %   9.60 %   7.83 %   7.22 %   12.18 %
Annualized net loan charge-offs to average loans   0.06 %   0.05 %   0.04 %   1.19 %   0.03 %
Net charge-offs   193     168     144     4,055     112  
Efficiency ratio   64.89 %   65.10 %   68.96 %   69.42 %   60.98 %
                     
Per Share Data                    
Basic earnings per share   $ 0.63     $ 0.53     $ 0.44     $ 0.40     $ 0.66  
Diluted earnings per share   0.63     0.53     0.43     0.39     0.66  
Dividend declared per share   0.32     0.32     0.32     0.32     0.31  
Book value   23.05     22.66     22.23     22.01     22.03  
Common stock price:                    
High   22.83     27.75     35.36     35.58     30.93  
Low   19.61     20.01     19.05     29.68     26.87  
Close   19.85     22.71     24.30     35.58     30.83  
Weighted average common shares:                    
Basic   7,045     7,042     7,041     7,040     7,037  
Fully Diluted   7,045     7,042     7,103     7,338     7,037  
End-of-period common shares:                    
Issued   7,528     7,523     7,521     7,521     7,518  
Treasury   480     480     480     480     480  
                               


(Dollars in Thousands, Except Per Share Data)   Quarter Ended
    9/30/2020   6/30/2020   3/31/2020   12/31/2019   9/30/2019
Financial Condition Data:                    
General                    
Total assets   $ 1,840,779     $ 1,838,364     $ 1,688,508     $ 1,665,323     $ 1,673,095  
Loans, net   1,335,711     1,336,370     1,336,900     1,343,650     1,350,735  
Goodwill   17,104     17,104     17,104     17,104     17,104  
Intangibles   724     777     836     898     960  
Total deposits   1,491,810     1,474,305     1,326,734     1,324,005     1,332,407  
Noninterest-bearing   434,248     418,324     332,759     334,746     327,329  
Savings   202,781     195,964     183,929     176,732     171,370  
NOW   268,463     268,348     229,919     218,605     219,466  
Money Market   274,480     247,753     204,832     216,038     239,926  
Time Deposits   311,838     343,915     375,295     377,884     374,316  
Total interest-bearing deposits   1,057,562     1,055,980     993,975     989,259     1,005,078  
                     
Core deposits*   1,179,972     1,130,389     951,439     946,121     958,091  
Shareholders’ equity   162,422     159,578     156,562     154,960     155,061  
                     
Asset Quality                    
Non-performing loans   $ 10,396     $ 11,097     $ 11,300     $ 12,421     $ 17,208  
Non-performing loans to total assets   0.56 %   0.60 %   0.67 %   0.75 %   1.03 %
Allowance for loan losses   13,429     12,977     12,500     11,894     14,249  
Allowance for loan losses to total loans   1.00 %   0.96 %   0.93 %   0.88 %   1.04 %
Allowance for loan losses to non-performing loans   129.17 %   116.94 %   110.62 %   95.76 %   82.80 %
Non-performing loans to total loans   0.77 %   0.82 %   0.84 %   0.92 %   1.26 %
                     
Capitalization                    
Shareholders’ equity to total assets   8.82 %   8.68 %   9.27 %   9.31 %   9.27 %
                               

* Core deposits are defined as total deposits less time deposits

Reconciliation of GAAP and Non-GAAP Financial Measures

    Three Months Ended
September 30,
  Nine Months Ended
September 30,
(Dollars in Thousands, Except Per Share Data)   2020   2019   2020   2019
GAAP net income   $ 4,472     $ 4,650     $ 11,305     $ 12,839  
Less: net securities gains, net of tax     799       134       975       205  
Non-GAAP core earnings   $ 3,673     $ 4,516     $ 10,330     $ 12,634  
                 
    Three Months Ended
September 30,
  Nine Months Ended
September 30,
    2020   2019   2020   2019
Return on average assets (ROA)   0.97 %   1.10 %   0.85 %   1.02 %
Less: net securities gains, net of tax   0.18 %   0.03 %   0.07 %   0.01 %
Non-GAAP core ROA   0.79 %   1.07 %   0.78 %   1.01 %
                 
    Three Months Ended
September 30,
  Nine Months Ended
September 30,
    2020   2019   2020   2019
Return on average equity (ROE)   11.05 %   12.18 %   9.57 %   11.69 %
Less: net securities gains, net of tax   1.97 %   0.36 %   0.82 %   0.20 %
Non-GAAP core ROE   9.08 %   11.82 %   8.75 %   11.49 %
                 
    Three Months Ended
September 30,
  Nine Months Ended
September 30,
    2020   2019   2020   2019
Basic earnings per share (EPS)   $ 0.63     $ 0.66     $ 1.61     $ 1.82  
Less: net securities gains, net of tax   0.11     0.02     0.14     0.02  
Non-GAAP basic core EPS   $ 0.52     $ 0.64     $ 1.47     $ 1.80  
         
    Three Months Ended
September 30,
  Nine Months Ended
September 30,
    2020   2019   2020   2019
Diluted EPS   $ 0.63     $ 0.66     $ 1.61     $ 1.82  
Less: net securities gains, net of tax   0.11     0.02     0.14     0.02  
Non-GAAP diluted core EPS   $ 0.52     $ 0.64     $ 1.47     $ 1.80  
                                 

Loan Deferrals

(In Thousands)   Amount
Commercial, financial, and agricultural   $ 25,933  
Real estate mortgage:    
Residential   61,712  
Commercial   128,820  
Construction   6,698  
Consumer automobile loans   6,264  
Other consumer installment loans   899  
Total loan deferrals   $ 230,326  

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