Penns Woods Bancorp, Inc. (NASDAQ:PWOD) today reported that net income from core operations (“operating earnings”), which is a non-GAAP measure of net income excluding net securities gains and losses, increased to $2,735,000 and $5,185,000 for the three and six months ended June 30, 2010 compared to $2,208,000 and $4,611,000 for the same periods of 2009. Operating earnings per share for the three months ended June 30, 2010 were $0.71 basic and dilutive compared to $0.58 basic and dilutive for the same period of 2009 or an increase of 22.4%. Operating earnings per share for the six months ended June 30, 2010 increased 12.5% to $1.35 basic and dilutive compared to $1.20 basic and dilutive for the same period of 2009. Operating earnings for the three and six months ended June 30, 2010, have been positively impacted by continued emphasis on credit quality, core deposit growth, and an increasing net interest margin. 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 this paragraph to the comparable GAAP financial measures is included at the end of this press release.

Net income, as reported under U.S. generally accepted accounting principles, for the three and six months ended June 30, 2010 was $2,772,000 and $5,220,000 compared to $832,000 and $1,671,000 for the same periods of 2009. For the three and six month periods ended June 30, 2010 compared to 2009, results were significantly impacted by a decrease in after-tax securities losses of $1,413,000 (from a loss of $1,376,000 to a gain of $37,000) and $2,975,000 (from a loss of $2,940,000 to a gain of $35,000). Included within the change in after-tax securities losses for the three and six months ended June 30, 2009 are pre-tax other than temporary impairment charges relating to certain equity securities held in the investment portfolio of $2,251,000 and $4,584,000, while there were no such charges during the three and six months ended June 30, 2010. Basic and dilutive earnings per share for the three and six months ended June 30, 2010 were $0.72 and $1.36 compared to $0.22 and $0.44 for the corresponding periods of 2009. Return on average assets and return on average equity were 1.58% and 15.76% for the three months ended June 30, 2010 compared to 0.51% and 5.45% for the corresponding period of 2009. Earnings for the six months ended June 30, 2010 correlate to a return on average assets and return on average equity of 1.50% and 15.05% compared to 0.51% and 5.54% for the six month 2009 period.

The net interest margin for the three and six months ended June 30, 2010 was 4.56% and 4.52% compared to 4.36% and 4.42% for the corresponding periods of 2009. Contributing to the increased net interest margin is the significant growth in lower cost core deposits, which has led to the rate paid on interest bearing liabilities decreasing 63 basis points (bp) and 53 bp for the three and six months ended June 30, 2010 compared to the same periods of 2009. In addition, the rate paid on time deposits decreased 75 bp and 77 bp for the three and six months ended June 30, 2010 compared to the same periods of 2009. The liability rate decreases are the result of Federal Open Market Committee (FOMC) actions to maintain low interest rates, our strategic decision to shorten the duration of the time deposit portfolio over the past two years, and core deposit growth that provided a lower cost source of funding. The duration of the time deposit portfolio began being lengthened during the second half of 2009 and continues to be lengthened due to the apparent bottoming or near bottoming of deposit rates.

“The increased net interest margin is the result of sound balance sheet growth with core deposits providing the main source of funding. The growth in core deposits from June 30, 2009 to June 30, 2010 fully funded the growth in net loans and investment securities over the same time period, while also allowing for a reduction in total borrowings. The growth in earning assets, coupled with the deposit growth, has allowed for the net interest margin to steadily increase over the past several quarters to its current level of 4.56%, while tax equivalent net interest income increased $1,285,000 or 9.8% for the six months ended June 30, 2010 compared to the same period of 2009,” commented Ronald A. Walko, President and Chief Executive Officer of Penns Woods Bancorp, Inc. “While the emphasis has been on core deposit and earning asset growth, we have not lost our continued focus on sound credit quality and an adequate risk/return trade-off. We have not been immune from the economic issues as the continuing soft economy is impacting our loan credit quality ratios, although we continue to compare favorably to other members of the financial industry. Our nonperforming loans to total loans ratio has increased to 1.61% at June 30, 2010 from 0.68% at June 30, 2009. However, annualized net loan charge-offs to average loans of 0.15% for the six month period ended June 30, 2010 remain at a minimal level,” added Mr. Walko.

Total assets increased $42,430,000 to $710,291,000 at June 30, 2010 compared to June 30, 2009. Net loans increased $19,216,000 or 5.0% despite a soft economy that has in general provided fewer loan opportunities. Our high level of customer service, credit quality position, and overall balance sheet strength has allowed us to aggressively attract those loans that meet and/or exceed our credit standards. In addition, opportunities to fund economic development related to the exploration of the Marcellus Shale natural gas reserves are being created. The investment portfolio increased $17,696,000 from June 30, 2009 to June 30, 2010 due to an increase in the market value of the portfolio of $7,215,000 coupled with the purchase of short maturity bonds.

Deposits have increased 7.1% or $34,980,000 to $529,981,000 at June 30, 2010 compared to June 30, 2009, with core deposits (total deposits excluding time deposits) increasing 20.9% or $55,670,000. “Balance sheet composition is important in creating an entity that can withstand various economic cycles. We are building a strong balance sheet by focusing on core deposit growth, while reducing our overall level of borrowings and reliance on higher cost time deposits. In fact, the level of deposit growth has fully funded the growth in the loan portfolio, while allowing for short-term borrowings to consist solely of customer repurchase agreements. We continue to build current and cultivate new deposit relationships as we move forward. Doing so will require continuing community involvement, maintaining a knowledgeable workforce, enhancing electronic delivery channels, and increasing targeted marketing efforts,” commented Mr. Walko.

Shareholders’ equity increased $9,232,000 to $70,603,000 at June 30, 2010 compared to June 30, 2009 as accumulated other comprehensive loss was reduced by $6,622,000. The reduction in accumulated other comprehensive loss is primarily a result of a change in unrealized losses on available for sale securities from an unrealized loss of $9,581,000 at June 30, 2009 to an unrealized loss of $2,365,000 at June 30, 2010. The other component in the reduction of accumulated other comprehensive loss is a decrease of $1,860,000 in the net excess of the projected benefit obligation over the market value of the plan assets of the defined benefit pension plan due to an increase in the market value of the plan assets caused by relative improved performance in the stock and bond markets over the past year. The current level of shareholders’ equity equates to a book value per share of $18.42 at June 30, 2010 compared to $16.01 at June 30, 2009 and an equity to asset ratio of 9.94% at June 30, 2010 compared to 9.19% at June 30, 2009. Book value per share, excluding accumulated other comprehensive loss, was $19.32 at June 30, 2010 compared to $18.65 at June 30, 2009. Dividends paid to shareholders were $0.46 and $0.92 for the three and six months ended June 30, 2010 and 2009.

“The capital levels of all financial institutions continue to be very closely monitored by both regulators and shareholders. I am pleased to note that we continue to maintain a solid capital position that is deemed 'well capitalized' by regulatory definition. We have also been able to return capital in the form of dividends to our shareholders, while building our capital base. During the six months ended June 30, 2010, a dividend of $0.92 per share or 68% of net income was paid to shareholders, while total shareholders’ equity increased $3,687,000 from December 31, 2009. Through 2010 we will continue building value through capital growth, dividends, and prudent balance sheet management,” commented Mr. Walko.

Penns Woods Bancorp, Inc. is the parent company of Jersey Shore State Bank, which operates twelve branch offices providing financial services in Lycoming, Clinton, and Centre Counties. 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, 2009.

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)
     
(In Thousands, Except Share Data) June 30,
2010 2009 % Change
 
ASSETS
Noninterest-bearing balances $ 12,378 $ 10,832 14.3 %
Interest-bearing deposits in other financial institutions   11,963     7,815   53.1 %
Total cash and cash equivalents 24,341 18,647 30.5 %
 
Investment securities, available for sale, at fair value 225,625 207,901 8.5 %
Investment securities held to maturity (fair value of $83 and $111) 82 110 -25.5 %
Loans held for sale 5,584 4,595 21.5 %
Loans 411,960 392,074 5.1 %
Less: Allowance for loan losses   5,047     4,377   15.3 %
Loans, net 406,913 387,697 5.0 %
Premises and equipment, net 7,966 7,656 4.0 %
Accrued interest receivable 3,673 3,468 5.9 %
Bank-owned life insurance 15,188 14,862 2.2 %
Investment in limited partnerships 4,615 5,182 -10.9 %
Goodwill 3,032 3,032 0.0 %
Deferred tax asset 8,399 11,583 -27.5 %
Other assets   4,873     3,128   55.8 %
TOTAL ASSETS $ 710,291   $ 667,861   6.4 %
 
LIABILITIES
Interest-bearing deposits $ 442,002 $ 420,492 5.1 %
Noninterest-bearing deposits   87,979     74,509   18.1 %
Total deposits 529,981 495,001 7.1 %
 
Short-term borrowings 14,209 14,880 -4.5 %
Long-term borrowings, Federal Home Loan Bank (FHLB) 86,778 86,778 0.0 %
Accrued interest payable 900 1,220 -26.2 %
Other liabilities   7,820     8,611   -9.2 %
TOTAL LIABILITIES   639,688     606,490   5.5 %
 
SHAREHOLDERS' EQUITY
Common stock, par value $8.33, 10,000,000 shares authorized;

4,014,272 and 4,011,985 shares issued
33,452 33,433 0.1 %
Additional paid-in capital 18,032 17,983 0.3 %
Retained earnings 28,910 26,322 9.8 %
Accumulated other comprehensive loss:
Net unrealized loss on available for sale securities (1,561 ) (6,323 ) 75.3 %
Defined benefit plan (1,920 ) (3,780 ) 49.2 %
Less: Treasury stock at cost, 180,596 and 179,028 shares   (6,310 )   (6,264 ) 0.7 %
TOTAL SHAREHOLDERS' EQUITY   70,603     61,371   15.0 %
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 710,291   $ 667,861   6.4 %
 
 
PENNS WOODS BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
           
 
(In Thousands, Except Per Share Data) Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 % Change 2010 2009 % Change
 
INTEREST AND DIVIDEND INCOME:
Loans including fees $ 6,398 $ 6,349 0.8 % $ 12,728 $ 12,568 1.3 %
Investment securities:
Taxable 1,405 1,374 2.3 % 2,754 2,737 0.6 %
Tax-exempt 1,270 1,249 1.7 % 2,528 2,495 1.3 %
Dividend and other interest income   51   41   24.4 %   103   130   -20.8 %
TOTAL INTEREST AND DIVIDEND INCOME   9,124   9,013   1.2 %   18,113   17,930   1.0 %
 
INTEREST EXPENSE:
Deposits 1,551 2,204 -29.6 % 3,261 4,209 -22.5 %
Short-term borrowings 56 78 -28.2 % 120 236 -49.2 %
Long-term borrowings, FHLB   927   926   0.1 %   1,844   1,843   0.1 %
TOTAL INTEREST EXPENSE   2,534   3,208   -21.0 %   5,225   6,288   -16.9 %
 
NET INTEREST INCOME 6,590 5,805 13.5 % 12,888 11,642 10.7 %
 
PROVISION FOR LOAN LOSSES   400   186   115.1 %   700   312   124.4 %
 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   6,190   5,619   10.2 %   12,188   11,330   7.6 %
 
NON-INTEREST INCOME:
Deposit service charges 537 541 -0.7 % 1,047 1,066 -1.8 %
Securities gains (losses), net 56 (2,086 ) 102.7 % 53 (4,455 ) 101.2 %
Bank-owned life insurance 128 112 14.3 % 299 274 9.1 %
Gain on sale of loans 330 103 220.4 % 512 221 131.7 %
Insurance commissions 273 347 -21.3 % 537 701 -23.4 %
Other   684   591   15.7 %   1,256   1,025   22.5 %
TOTAL NON-INTEREST INCOME   2,008   (392 ) 612.2 %   3,704   (1,168 ) 417.1 %
 
NON-INTEREST EXPENSE:
Salaries and employee benefits 2,615 2,595 0.8 % 5,352 5,077 5.4 %
Occupancy, net 313 318 -1.6 % 644 657 -2.0 %
Furniture and equipment 322 306 5.2 % 626 613 2.1 %
Pennsylvania shares tax 169 172 -1.7 % 338 343 -1.5 %
Amortization of investments in limited partnerships 141 141 0.0 % 283 283 0.0 %
Other   1,430   1,353   5.7 %   2,733   2,557   6.9 %
TOTAL NON-INTEREST EXPENSE   4,990   4,885   2.1 %   9,976   9,530   4.7 %
 
INCOME BEFORE INCOME TAX PROVISION (BENEFIT) 3,208 342 838.0 % 5,916 632 836.1 %
INCOME TAX PROVISION (BENEFIT)   436   (490 ) 189.0 %   696   (1,039 ) 167.0 %
NET INCOME $ 2,772 $ 832   233.2 % $ 5,220 $ 1,671   212.4 %
 
EARNINGS PER SHARE - BASIC $ 0.72 $ 0.22   227.3 % $ 1.36 $ 0.44   209.1 %
 
EARNINGS PER SHARE - DILUTED $ 0.72 $ 0.22   227.3 % $ 1.36 $ 0.44   209.1 %
 
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC   3,834,164   3,832,520   0.0 %   3,834,230   3,832,135   0.1 %
 
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED   3,834,291   3,832,596   0.0 %   3,834,370   3,832,173   0.1 %
 
DIVIDENDS PER SHARE $ 0.46 $ 0.46   0.0 % $ 0.92 $ 0.92   0.0 %
 
           
PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES
 
For the Three Months Ended
(Dollars in Thousands) June 30, 2010 June 30, 2009
Average Balance Interest Average Rate Average Balance Interest Average Rate
ASSETS:
Tax-exempt loans $ 18,750 $ 312 6.67 % $ 16,934 $ 271 6.42 %
All other loans   398,988   6,192   6.22 %   377,324   6,170 6.56 %
Total loans   417,738   6,504   6.24 %   394,258   6,441 6.55 %
 
Taxable securities 112,538 1,454 5.17 % 101,984 1,415 5.55 %
Tax-exempt securities   108,011   1,924   7.13 %   103,848   1,892 7.29 %
Total securities   220,549   3,378   6.13 %   205,832   3,307 6.43 %
 
Interest bearing deposits   8,938   2   0.09 %   1,371   - 0.00 %
 
Total interest-earning assets 647,225   9,884   6.12 % 601,461   9,748 6.52 %
 
Other assets   54,681   55,793
 
TOTAL ASSETS $ 701,906 $ 657,254
 
LIABILITIES AND SHAREHOLDERS' EQUITY:
Savings $ 65,483 45 0.28 % $ 61,383 81 0.53 %
Super Now deposits 64,931 92 0.57 % 56,645 131 0.93 %
Money market deposits 101,361 291 1.15 % 64,374 367 2.29 %
Time deposits   209,344   1,123   2.15 %   224,918   1,625 2.90 %
Total deposits   441,119   1,551   1.41 %   407,320   2,204 2.17 %
 
Short-term borrowings 12,306 56 1.82 % 18,035 78 1.73 %
Long-term borrowings   86,778   927   4.23 %   86,778   926 4.22 %
Total borrowings   99,084   983   3.93 %   104,813   1,004 3.79 %
 
Total interest-bearing liabilities 540,203   2,534   1.87 % 512,133   3,208 2.50 %
 
Demand deposits 83,205 73,930
Other liabilities 8,150 10,113
Shareholders' equity   70,348   61,078
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 701,906 $ 657,254
Interest rate spread   4.25 % 4.02 %
Net interest income/margin $ 7,350   4.56 % $ 6,540 4.36 %
 
 
For the Three Months Ended
June 30,
 
2010 2009
 
Total interest income $ 9,124 $ 9,013
Total interest expense   2,534   3,208  
 
Net interest income 6,590 5,805
Tax equivalent adjustment   760   735  
 
Net interest income (fully taxable equivalent) $ 7,350 $ 6,540  
 
 
PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES
           
For the Six Months Ended
(Dollars in Thousands) June 30, 2010 June 30, 2009
Average Balance Interest Average Rate Average Balance Interest Average Rate
ASSETS:
Tax-exempt loans $ 18,018 $ 604 6.76 % $ 16,420 $ 538 6.61 %
All other loans   397,018   12,329   6.26 %   375,687   12,213 6.56 %
Total loans   415,036   12,933   6.28 %   392,107   12,751 6.56 %
 
Taxable securities 109,607 2,854 5.21 % 101,937 2,867 5.63 %
Tax-exempt securities   107,515   3,830   7.12 %   102,757   3,780 7.36 %
Total securities   217,122   6,684   6.16 %   204,694   6,647 6.49 %
 
Interest bearing deposits   8,257   3   0.07 %   700   - 0.00 %
 
Total interest-earning assets 640,415   19,620   6.16 % 597,501   19,398 6.53 %
 
Other assets   54,988   55,459
 
TOTAL ASSETS $ 695,403 $ 652,960
 
LIABILITIES AND SHAREHOLDERS' EQUITY:
Savings $ 63,891 97 0.31 % $ 60,517 159 0.53 %
Super Now deposits 63,994 201 0.63 % 55,276 260 0.95 %
Money market deposits 94,313 579 1.24 % 52,888 580 2.21 %
Time deposits   214,749   2,384   2.24 %   215,069   3,210 3.01 %
Total Deposits   436,947   3,261   1.50 %   383,750   4,209 2.21 %
 
Short-term borrowings 13,518 120 1.79 % 39,641 236 1.19 %
Long-term borrowings   86,778   1,844   4.23 %   86,778   1,843 4.22 %
Total borrowings   100,296   1,964   3.90 %   126,419   2,079 3.27 %
 
Total interest-bearing liabilities 537,243   5,225   1.95 % 510,169   6,288 2.48 %
 
Demand deposits 80,636 72,633
Other liabilities 8,142 9,870
Shareholders' equity   69,382   60,288
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 695,403 $ 652,960
Interest rate spread   4.21 % 4.05 %
Net interest income/margin $ 14,395   4.52 % $ 13,110 4.42 %
 
 
For the Six Months Ended
June 30,
 
2010 2009
 
Total interest income $ 18,113 $ 17,930
Total interest expense   5,225   6,288  
 
Net interest income 12,888 11,642
Tax equivalent adjustment   1,507   1,468  
 
Net interest income (fully taxable equivalent) $ 14,395 $ 13,110  
 
   
Quarter Ended
 
(Dollars in Thousands, Except Per Share Data)  

6/30/2010
   

3/31/2010
   

12/31/2009
   

9/30/2009
   

6/30/2009
 
                   
Operating Data                    
                   
Net income $ 2,772   $ 2,448   $ 2,500   $ 1,922   $ 832  
Net interest income   6,590     6,298     6,206     5,945     5,805  
Provision for loan losses   400     300     335     270     186  
Net security gains (losses)   56     (3 )   116     (507 )   (2,086 )
Non-interest income, ex. net security gains (losses)   1,952     1,699     1,958     1,888     1,694  
Non-interest expense   4,990     4,986     5,185     5,097     4,885  
                   
Performance Statistics                    
                   
Net interest margin   4.56 %   4.49 %   4.42 %   4.35 %   4.36 %
Annualized return on average assets   1.58 %   1.42 %   1.47 %   1.15 %   0.51 %
Annualized return on average equity   15.76 %   14.31 %   14.72 %   12.08 %   5.45 %
Annualized net loan charge-offs to avg loans   0.21 %   0.09 %   0.15 %   0.17 %   0.25 %
Net charge-offs   217     93     157     168     250  
Efficiency ratio   58.4 %   62.4 %   63.5 %   65.1 %   65.1 %
                   
Per Share Data                    
                   
Basic earnings per share $ 0.72   $ 0.64   $ 0.65   $ 0.50   $ 0.22  
Diluted earnings per share   0.72     0.64     0.65     0.50     0.22  
Dividend declared per share   0.46     0.46     0.46     0.46     0.46  
Book value   18.42     17.73     17.45     18.40     16.01  
Common stock price:                    
High   34.50     34.03     33.24     34.25     31.81  
Low   26.76     30.04     30.37     29.89     24.89  
Close   30.42     33.55     32.44     32.01     29.14  
Weighted average common shares:                    
Basic   3,834     3,834     3,834     3,833     3,833  
Fully Diluted   3,834     3,834     3,834     3,833     3,833  
End-of-period common shares:                    
Issued   4,014     4,014     4,013     4,013     4,012  
Treasury   181     179     179     179     179  
 
 
  Quarter Ended
       
(Dollars in Thousands, Except Per Share Data)   6/30/2010     3/31/2010     12/31/2009     9/30/2009     6/30/2009
                           
Financial Condition Data:                            
General                            
Total assets $ 710,291   $ 695,755   $ 676,204   $ 678,685   $ 667,861
Loans, net   406,913     405,055     400,872     396,347     387,697
Intangibles   3,032     3,032     3,032     3,032     3,032
Total deposits   529,981     521,040     497,287     490,062     495,001
Noninterest-bearing   87,979     80,913     79,899     75,569     74,509
                           
Savings   66,789     64,255     60,827     62,717     61,924
NOW   65,802     64,362     64,361     61,855     58,020
Money Market   101,301     94,725     74,634     71,820     71,748
Time Deposits   208,110     216,785     217,566     218,101     228,800
Total interest-bearing deposits   442,002     440,127     417,388     414,493     420,492
                           
Core deposits*   321,871     304,255     279,721     271,961     266,201
Shareholders' equity   70,603     67,972     66,916     70,539     61,371
                           
Asset Quality                            
                           
Non-performing assets $ 6,646   $ 3,863   $ 4,456   $ 5,844   $ 2,667
Non-performing assets to total assets   0.94%     0.56%     0.66%     0.86%     0.40%
Allowance for loan losses   5,047     4,864     4,657     4,478     4,377
Allowance for loan losses to total loans   1.23%     1.19%     1.15%     1.12%     1.12%

Allowance for loan losses to non-performing loans
  75.94%     125.91%     104.51%     76.63%     164.12%
Non-performing loans to total loans   1.61%     0.94%     1.10%     1.46%     0.68%
                           
Capitalization                            
                           
Shareholders' equity to total assets   9.94%     9.77%     9.90%     10.39%     9.19%
 
* Core deposits are defined as total deposits less time deposits
 
 
Reconciliation of GAAP and non-GAAP Financial Measures
       
(Dollars in Thousands, Except Per Share Data) Three Months Ended Six Months Ended
June 30, June 30,
  2010     2009     2010     2009  
GAAP net income $ 2,772 $ 832 $ 5,220 $ 1,671
Less: securities gains (losses), net of tax   37     (1,376 )   35     (2,940 )
Non-GAAP operating earnings $ 2,735   $ 2,208   $ 5,185   $ 4,611  
 
Three Months Ended Six Months Ended
June 30, June 30,
  2010     2009     2010     2009  
Return on average assets (ROA) 1.58 % 0.51 % 1.50 % 0.51 %
Less: securities gains (losses), net of tax   0.02 %   -0.83 %   0.01 %   -0.90 %
Non-GAAP operating ROA   1.56 %   1.34 %   1.49 %   1.41 %
 
Three Months Ended Six Months Ended
June 30, June 30,
  2010     2009     2010     2009  
Return on average equity (ROE) 15.76 % 5.45 % 15.05 % 5.54 %
Less: securities gains (losses), net of tax   0.21 %   -9.01 %   0.10 %   -9.76 %
Non-GAAP operating ROE   15.55 %   14.46 %   14.95 %   15.30 %
 
Three Months Ended Six Months Ended
June 30, June 30,
  2010     2009     2010     2009  
Basic earnings per share (EPS) $ 0.72 $ 0.22 $ 1.36 $ 0.44
Less: securities gains (losses), net of tax   0.01  

 
  (0.36 )   0.01  

 
  (0.76 )
Non-GAAP basic operating EPS $ 0.71   $ 0.58   $ 1.35   $ 1.20  
 
Three Months Ended Six Months Ended
June 30, June 30,
  2010     2009     2010     2009  
Dilutive EPS $ 0.72 $ 0.22 $ 1.36 $ 0.44
Less: securities gains (losses), net of tax   0.01  

 
  (0.36 )   0.01  

 
  (0.76 )
Non-GAAP dilutive operating EPS $ 0.71   $ 0.58   $ 1.35   $ 1.20  
 

Copyright Business Wire 2010