Penns Woods Bancorp, Inc. Reports Record Second Quarter 2011 Operating Earnings

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 $2,958,000 and $5,729,000 for the three and six months ended June 30, 2011 compared to $2,735,000 and $5,185,000 for the same periods of 2010. Operating earnings per share for the three months ended June 30, 2011 were $0.77 basic and dilutive compared to $0.71 basic and dilutive for the same period of 2010 or an increase of 8.5%. Operating earnings per share for the six months ended June 30, 2011 increased 10.4% to $1.49 basic and dilutive compared to $1.35 basic and dilutive for the same period of 2010. Operating earnings for the three and six months ended June 30, 2011 have been positively impacted by continued emphasis on core deposit growth, a solid net interest margin, and expense control. 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, 2011 was $2,964,000 and $5,817,000 compared to $2,772,000 and $5,220,000 for the same periods of 2010. Results for the three and six month periods ended June 30, 2011 compared to 2010 were impacted by a decrease in after-tax securities gains of $31,000 (from a gain of $37,000 to a gain of $6,000) for the three month periods and an increase in after-tax securities gains of $53,000 (from a gain of $35,000 to a gain of $88,000) for the six month periods. Basic and dilutive earnings per share for the three and six months ended June 30, 2011 were $0.78 and $1.52 compared to $0.72 and $1.36 for the corresponding periods of 2010. Return on average assets and return on average equity were 1.64% and 16.29% for the three months ended June 30, 2011 compared to 1.58% and 15.76% for the corresponding period of 2010. Earnings for the six months ended June 30, 2011 correlate to a return on average assets and a return on average equity of 1.64% and 16.45% compared to 1.50% and 15.05% for the six month 2010 period.

The net interest margin for the three and six months ended June 30, 2011 was 4.58% and 4.73% compared to 4.56% and 4.52% for the corresponding periods of 2010. Leading the increase in net interest margin is a continued emphasis on the growth of core deposits. These deposits represent a lower cost funding source than time deposits and comprise 68.8% of total deposits at June 30, 2011 compared to 60.7% at June 30, 2010. The average rate paid on interest bearing deposits decreased 37 and 42 basis points (bp) for the three and six months ended June 30, 2011 compared to the same periods of 2010. The decrease was led by the rate paid on time deposits decreasing 49 and 54 bp for the three and six months ended June 30, 2011 compared to the same periods of 2010. The duration of the time deposit portfolio, which was shortened over the past several years, is now being lengthened due to the apparent bottoming or near bottoming of deposit rates. FHLB long-term borrowings have been reduced by $15,000,000 since June 30, 2010 with cash on hand being utilized to pay off the borrowings. An additional $10,500,000 of FHLB long-term borrowings at an average rate of 4.60% will be maturing during the latter part of 2011.

“The current, and for that matter projected, rate environment presents an asset liability management challenge. We have taken the stance to manage the balance sheet to not only generate current returns, but most importantly to prepare for a period of increasing interest rates over the long-term. Quality loans that complement the existing portfolio and possess a fair risk/return trade-off are being added to the portfolio. Shortening the investment portfolio duration has been a primary focus and is being accomplished through the purchase of primarily short-term agency and corporate bonds. This long-term strategy coupled with additional loans being placed on nonaccrual has caused the net interest margin to decrease compared to the linked quarter. On the funding side of the balance sheet we have remained focused on core deposit relationships. This focus has led to a substantial increase in core deposits as the deposit portfolio has shifted away from a time deposit weighting. The growth has also allowed for a decrease in total borrowings over the past year. We have begun to lengthen the time deposit portfolio to not only hedge against rising rates but to also better match duration against the earning assets portfolio,” commented Richard A. Grafmyre, President and Chief Executive Officer of Penns Woods Bancorp, Inc.

Total assets increased $34,695,000 to $744,986,000 at June 30, 2011 compared to June 30, 2010. Net loans increased modestly from June 30, 2010 to June 30, 2011 as the economic environment has in general provided fewer loan opportunities. Housing, transportation, and all other facets related to the Marcellus Shale natural gas exploration are creating some loan opportunities and we are aggressively attempting to attract those loans that meet and/or exceed our credit standards. The general economic issues of the state and nation are 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 2.60% at June 30, 2011 from 1.61% at June 30, 2010. The increase in nonperforming loans is primarily the result of an increase in commercial loan delinquencies. The increase is centered on several loans that either are 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. Annualized net loan charge-offs to average loans for the six months ended June 30, 2011 of 0.70% increased from our historically low levels primarily due to a $1,500,000 partial charge-off related to a real-estate development loan. The allowance for loan losses was increased to 1.38% of total loans at June 30, 2011 from 1.23% of total loans at June 30, 2010 due to the general economic uncertainty and an increase in nonperforming loans. The investment portfolio increased $20,210,000 from June 30, 2010 to June 30, 2011 due to the purchase of short maturity bonds that have been utilized to reduce the portfolio duration and to provide current cash flow.

Deposits have grown 7.5%, or $39,852,000, to $569,833,000 at June 30, 2011 compared to June 30, 2010, with core deposits (total deposits excluding time deposits) increasing $70,445,000. “Trust, community involvement, knowledge, and customer service are just a few of the items helping to drive the deposit growth. Combine these ingredients with our marketing campaigns and easy to use products and the recipe for deposit growth success is complete. The success of the recipe can be illustrated by the double digit percentage growth in money market and NOW accounts. In addition, noninterest-bearing deposits have increased 13.8% to $100,104,000 at June 30, 2011 compared to June 30, 2010,” commented Mr. Grafmyre.

Shareholders’ equity increased $3,303,000 to $73,906,000 at June 30, 2011 compared to June 30, 2010. Accumulated other comprehensive loss increased by $1,244,000 as a result of an increase in unrealized losses on available for sale securities from an unrealized loss of $1,561,000 at June 30, 2010 to an unrealized loss of $2,312,000 at June 30, 2011. Accumulated other comprehensive loss was also impacted by the change in net excess of the projected benefit obligation over the market value of the plan assets of the defined benefit pension plan resulting in an increase in the net loss of $493,000. The current level of shareholders’ equity equates to a book value per share of $19.27 at June 30, 2011 compared to $18.42 at June 30, 2010 and an equity to asset ratio of 9.92% at June 30, 2011 compared to 9.94% at June 30, 2010. Excluding accumulated other comprehensive loss, book value per share was $20.50 at June 30, 2011 compared to $19.32 at June 30, 2010. Dividends paid to shareholders were $0.46 and $0.92 for the three and six months ended June 30, 2011 and 2010.

“Providing capital for growth remains a key part of our strategic plan. The growth in capital will occur through continued strong earnings, while maintaining a dividend policy and stock repurchase plan that follow our strategic plan. Following this formula will facilitate balance sheet growth as we continue to capitalize on our solid foundation within and around our core market area,” commented Mr. Grafmyre.

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, 2010.

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,
2011   2010   % Change
 
ASSETS
Noninterest-bearing balances $ 9,765 $ 12,378 -21.1 %
Interest-bearing deposits in other financial institutions   20,904     11,963   74.7 %
Total cash and cash equivalents 30,669 24,341 26.0 %
 
Investment securities, available for sale, at fair value 245,863 225,625 9.0 %
Investment securities held to maturity (fair value of $54 and $83) 54 82 -34.1 %
Loans held for sale 6,393 5,584 14.5 %
Loans 419,161 411,960 1.7 %
Less: Allowance for loan losses   5,764     5,047   14.2 %
Loans, net 413,397 406,913 1.6 %
Premises and equipment, net 7,520 7,966 -5.6 %
Accrued interest receivable 3,803 3,673 3.5 %
Bank-owned life insurance 15,776 15,188 3.9 %
Investment in limited partnerships 3,875 4,615 -16.0 %
Goodwill 3,032 3,032 0.0 %
Deferred tax asset 9,638 8,399 14.8 %
Other assets   4,966     4,873   1.9 %
TOTAL ASSETS $ 744,986   $ 710,291   4.9 %
 
LIABILITIES
Interest-bearing deposits $ 469,729 $ 442,002 6.3 %
Noninterest-bearing deposits   100,104     87,979   13.8 %
Total deposits 569,833 529,981 7.5 %
 
Short-term borrowings 17,007 14,209 19.7 %
Long-term borrowings, Federal Home Loan Bank (FHLB) 71,778 86,778 -17.3 %
Accrued interest payable 676 900 -24.9 %
Other liabilities   11,786     7,820   50.7 %
TOTAL LIABILITIES   671,080     639,688   4.9 %
 
SHAREHOLDERS' EQUITY

Common stock, par value $8.33, 10,000,000 shares authorized; 4,016,686 and 4,014,272 shares issued
33,472 33,452 0.1 %
Additional paid-in capital 18,090 18,032 0.3 %
Retained earnings 33,379 28,910 15.5 %
Accumulated other comprehensive loss:
Net unrealized loss on available for sale securities (2,312 ) (1,561 ) -48.1 %
Defined benefit plan (2,413 ) (1,920 ) -25.7 %
Less: Treasury stock at cost, 180,596 shares   (6,310 )   (6,310 ) 0.0 %
TOTAL SHAREHOLDERS' EQUITY   73,906     70,603   4.7 %
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 744,986   $ 710,291   4.9 %
 
 
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,
2011   2010   % Change 2011   2010   % Change
 
INTEREST AND DIVIDEND INCOME:
Loans including fees $ 6,144 $ 6,398 -4.0 % $ 12,432 $ 12,728 -2.3 %
Investment securities:
Taxable 1,411 1,405 0.4 % 2,786 2,754 1.2 %
Tax-exempt 1,272 1,270 0.2 % 2,539 2,528 0.4 %
Dividend and other interest income   57   51 11.8 %   109   103 5.8 %
TOTAL INTEREST AND DIVIDEND INCOME   8,884   9,124 -2.6 %   17,866   18,113 -1.4 %
 
INTEREST EXPENSE:
Deposits 1,182 1,551 -23.8 % 2,376 3,261 -27.1 %
Short-term borrowings 42 56 -25.0 % 99 120 -17.5 %
Long-term borrowings, FHLB   742   927 -20.0 %   1,476   1,844 -20.0 %
TOTAL INTEREST EXPENSE   1,966   2,534 -22.4 %   3,951   5,225 -24.4 %
 
NET INTEREST INCOME 6,918 6,590 5.0 % 13,915 12,888 8.0 %
 
PROVISION FOR LOAN LOSSES   600   400 50.0 %   1,200   700 71.4 %
 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   6,318   6,190 2.1 %   12,715   12,188 4.3 %
 
NON-INTEREST INCOME:
Deposit service charges 527 537 -1.9 % 1,030 1,047 -1.6 %
Securities gains, net 9 56 -83.9 % 134 53 152.8 %
Bank-owned life insurance 139 128 8.6 % 313 299 4.7 %
Gain on sale of loans 242 330 -26.7 % 491 512 -4.1 %
Insurance commissions 180 273 -34.1 % 389 537 -27.6 %
Other   776   684 13.5 %   1,461   1,256 16.3 %
TOTAL NON-INTEREST INCOME   1,873   2,008 -6.7 %   3,818   3,704 3.1 %
 
NON-INTEREST EXPENSE:
Salaries and employee benefits 2,475 2,615 -5.4 % 5,107 5,352 -4.6 %
Occupancy, net 301 313 -3.8 % 649 644 0.8 %
Furniture and equipment 349 322 8.4 % 657 626 5.0 %
Pennsylvania shares tax 172 169 1.8 % 344 338 1.8 %
Amortization of investments in limited partnerships 165 141 17.0 % 331 283 17.0 %
Other   1,394   1,430 -2.5 %   2,756   2,733 0.8 %
TOTAL NON-INTEREST EXPENSE   4,856   4,990 -2.7 %   9,844   9,976 -1.3 %
 
INCOME BEFORE INCOME TAX PROVISION 3,335 3,208 4.0 % 6,689 5,916 13.1 %
INCOME TAX PROVISION   371   436 -14.9 %   872   696 25.3 %
NET INCOME $ 2,964 $ 2,772 6.9 % $ 5,817 $ 5,220 11.4 %
 
EARNINGS PER SHARE - BASIC $ 0.78 $ 0.72 8.3 % $ 1.52 $ 1.36 11.8 %
 
EARNINGS PER SHARE - DILUTED $ 0.78 $ 0.72 8.3 % $ 1.52 $ 1.36 11.8 %
 
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC   3,835,785   3,834,164 0.0 %   3,835,542   3,834,230 0.0 %
 
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED   3,835,785   3,834,291 0.0 %   3,835,542   3,834,370 0.0 %
 
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, 2011   June 30, 2010

Average Balance
  Interest   Average Rate Average Balance   Interest   Average Rate
ASSETS:
Tax-exempt loans $ 20,369 $ 306 6.03 % $ 18,750 $ 312 6.67 %
All other loans   400,072   5,942   5.96 %   398,988   6,192 6.22 %
Total loans   420,441   6,248   5.96 %   417,738   6,504 6.24 %
 
Taxable securities 126,139 1,467 4.65 % 112,538 1,454 5.17 %
Tax-exempt securities   107,469   1,927   7.17 %   108,011   1,924 7.13 %
Total securities   233,608   3,394   5.81 %   220,549   3,378 6.13 %
 
Interest bearing deposits   17,860   1   0.02 %   8,938   2 0.09 %
 
Total interest-earning assets 671,909   9,643   5.75 % 647,225   9,884 6.12 %
 
Other assets   53,037   54,681
 
TOTAL ASSETS $ 724,946 $ 701,906
 
LIABILITIES AND SHAREHOLDERS' EQUITY:
Savings $ 70,698 34 0.19 % $ 65,483 45 0.28 %
Super Now deposits 82,483 107 0.52 % 64,931 92 0.57 %
Money market deposits 123,116 291 0.95 % 101,361 291 1.15 %
Time deposits   181,250   750   1.66 %   209,344   1,123 2.15 %
Total interest-bearing deposits   457,547   1,182   1.04 %   441,119   1,551 1.41 %
 
Short-term borrowings 14,623 42 1.15 % 12,306 56 1.82 %
Long-term borrowings, FHLB   71,778   742   4.09 %   86,778   927 4.23 %
Total borrowings   86,401   784   3.59 %   99,084   983 3.93 %
 
Total interest-bearing liabilities 543,948   1,966   1.44 % 540,203   2,534 1.87 %
 
Demand deposits 98,371 83,205
Other liabilities 9,832 8,150
Shareholders' equity   72,795   70,348
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 724,946 $ 701,906
Interest rate spread   4.31 % 4.25 %
Net interest income/margin $ 7,677   4.58 % $ 7,350 4.56 %
 
 
For the Three Months Ended
June 30,
 
2011 2010
 
Total interest income $ 8,884 $ 9,124
Total interest expense   1,966   2,534  
 
Net interest income 6,918 6,590
Tax equivalent adjustment   759   760  
 
Net interest income (fully taxable equivalent) $ 7,677 $ 7,350  
 
 
PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES
 
 
  For the Six Months Ended
(Dollars in Thousands) June 30, 2011   June 30, 2010
Average Balance   Interest   Average Rate Average Balance   Interest   Average Rate
ASSETS:
Tax-exempt loans $ 20,370 $ 614 6.08 % $ 18,018 $ 604 6.76 %
All other loans   399,839   12,027   6.07 %   397,018   12,329 6.26 %
Total loans   420,209   12,641   6.07 %   415,036   12,933 6.28 %
 
Taxable securities 120,471 2,893 4.80 % 109,607 2,854 5.21 %
Tax-exempt securities   105,301   3,847   7.31 %   107,515   3,830 7.12 %
Total securities   225,772   6,740   5.97 %   217,122   6,684 6.16 %
 
Interest bearing deposits   9,975   2   0.04 %   8,257   3 0.07 %
 
Total interest-earning assets 655,956   19,383   5.94 % 640,415   19,620 6.16 %
 
Other assets   53,464   54,988
 
TOTAL ASSETS $ 709,420 $ 695,403
 
LIABILITIES AND SHAREHOLDERS' EQUITY:
Savings $ 68,616 70 0.21 % $ 63,891 97 0.31 %
Super Now deposits 75,867 190 0.51 % 63,994 201 0.63 %
Money market deposits 116,194 555 0.96 % 94,313 579 1.24 %
Time deposits   184,885   1,561   1.70 %   214,749   2,384 2.24 %
Total interest-bearing deposits   445,562   2,376   1.08 %   436,947   3,261 1.50 %
 
Short-term borrowings 16,902 99 1.18 % 13,518 120 1.79 %
Long-term borrowings, FHLB   71,778   1,476   4.09 %   86,778   1,844 4.23 %
Total borrowings   88,680   1,575   3.54 %   100,296   1,964 3.90 %
 
Total interest-bearing liabilities 534,242   3,951   1.48 % 537,243   5,225 1.95 %
 
Demand deposits 94,941 80,636
Other liabilities 9,502 8,142
Shareholders' equity   70,735   69,382
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 709,420 $ 695,403
Interest rate spread   4.46 % 4.21 %
Net interest income/margin $ 15,432   4.73 % $ 14,395 4.52 %
 
 
For the Six Months Ended
June 30,
 
2011 2010
 
Total interest income $ 17,866 $ 18,113
Total interest expense   3,951   5,225  
 
Net interest income 13,915 12,888
Tax equivalent adjustment   1,517   1,507  
 
Net interest income (fully taxable equivalent) $ 15,432 $ 14,395  
 
         
Quarter Ended
 
(Dollars in Thousands, Except Per Share Data)  

6/30/2011
     

3/31/2011
     

12/31/2010
     

9/30/2010
     

6/30/2010
 
                                     
Operating Data                                      
                                     
Net income $ 2,964     $ 2,853     $ 2,861     $ 2,848     $ 2,772  
Net interest income   6,918       6,997       6,848       6,758       6,590  
Provision for loan losses   600       600       750       700       400  
Net security gains   9       125       11       109       56  
Non-interest income, ex. net security gains   1,864       1,820       1,874       1,761       1,952  
Non-interest expense   4,856       4,988       4,812       4,704       4,990  
                                     
Performance Statistics                                      
                                     
Net interest margin   4.58 %     4.86 %     4.66 %     4.56 %     4.56 %
Annualized return on average assets   1.64 %     1.65 %     1.63 %     1.60 %     1.58 %
Annualized return on average equity   16.29 %     16.62 %     15.56 %     15.51 %     15.76 %
Annualized net loan charge-offs to avg loans   1.41 %     0.00 %     0.18 %     0.26 %     0.21 %
Net charge-offs (recoveries)   1,477       (5 )     193       268       217  
Efficiency ratio   55.3 %     56.6 %     55.2 %     55.2 %     58.4 %
                                     
Per Share Data                                      
                                     
Basic earnings per share $ 0.78     $ 0.74     $ 0.75     $ 0.74     $ 0.72  
Diluted earnings per share   0.78       0.74       0.75       0.74       0.72  
Dividend declared per share   0.46       0.46       0.46       0.46       0.46  
Book value   19.27       17.99       17.37       19.64       18.42  
Common stock price:                                      
High   39.30       40.08       41.26       33.15       34.50  
Low   33.33       35.46       31.97       29.41       26.76  
Close   34.36       38.93       39.80       33.05       30.42  
Weighted average common shares:                                      
Basic   3,836       3,835       3,835       3,834       3,834  
Fully Diluted   3,836       3,835       3,835       3,834       3,834  
End-of-period common shares:                                      
Issued   4,017       4,016       4,016       4,015       4,014  
Treasury   181       181       181       181       181  
 
 
Quarter Ended
       
(Dollars in Thousands, Except Per Share Data)  

6/30/2011
     

3/31/2011
     

12/31/2010
     

9/30/2010
     

6/30/2010
                                     
Financial Condition Data:                                      
General                                      
Total assets $ 744,986     $ 693,337     $ 691,688     $ 713,496     $ 710,291  
Loans, net   413,397       405,453       409,522       407,394       406,913  
Intangibles   3,032       3,032       3,032       3,032       3,032  
Total deposits   569,833       528,717       517,508       534,170       529,981  
Noninterest-bearing   100,104       95,278       89,347       92,128       87,979  
                                     
Savings   71,923       69,095       64,258       66,763       66,789  
NOW   91,285       70,763       67,505       66,957       65,802  
Money Market   129,004       108,104       107,123       105,147       101,301  
Time Deposits   177,517       185,477       189,275       203,175       208,110  
Total interest-bearing deposits   469,729       433,439       428,161       442,042       442,002  
                                     
Core deposits*   392,316       343,240       328,233       330,995       321,871  
Shareholders' equity   73,906       68,998       66,620       75,323       70,603  
                                     
Asset Quality                                      
                                     
Non-performing assets $ 10,911     $ 12,900     $ 6,215     $ 6,918     $ 6,646  
Non-performing assets to total assets   1.46 %     1.86 %     0.90 %     0.97 %     0.94 %
Allowance for loan losses   5,764       6,640       6,035       5,479       5,047  
Allowance for loan losses to total loans   1.38 %     1.61 %     1.45 %     1.33 %     1.23 %

Allowance for loan losses to non-performing loans
  52.83 %     51.47 %     97.10 %     79.20 %     75.94 %
Non-performing loans to total loans   2.60 %     3.13 %     1.50 %     1.68 %     1.61 %
                                     
Capitalization                                      
                                     
Shareholders' equity to total assets   9.92 %     9.95 %     9.63 %     10.56 %     9.94 %
 
* 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,
2011   2010 2011   2010
GAAP net income $ 2,964 $ 2,772 $ 5,817 $ 5,220
Less: net securities gains, net of tax   6     37     88     35  
Non-GAAP operating earnings $ 2,958   $ 2,735   $ 5,729   $ 5,185  
 
 
Three Months Ended Six Months Ended
June 30, June 30,
2011 2010 2011 2010
Return on average assets (ROA) 1.64 % 1.58 % 1.64 % 1.50 %
Less: net securities gains, net of tax   0.01 %   0.02 %   0.02 %   0.01 %
Non-GAAP operating ROA   1.63 %   1.56 %   1.62 %   1.49 %
 
 
Three Months Ended Six Months Ended
June 30, June 30,
2011 2010 2011 2010
Return on average equity (ROE) 16.29 % 15.76 % 16.45 % 15.05 %
Less: net securities gains, net of tax   0.04 %   0.21 %   0.25 %   0.10 %
Non-GAAP operating ROE   16.25 %   15.55 %   16.20 %   14.95 %
 
 
Three Months Ended Six Months Ended
June 30, June 30,
2011 2010 2011 2010
Basic earnings per share (EPS) $ 0.78 $ 0.72 $ 1.52 $ 1.36
Less: net securities gains, net of tax   0.01     0.01     0.03     0.01  
Non-GAAP basic operating EPS $ 0.77   $ 0.71   $ 1.49   $ 1.35  
 
 
Three Months Ended Six Months Ended
June 30, June 30,
2011 2010 2011 2010
Dilutive EPS $ 0.78 $ 0.72 $ 1.52 $ 1.36
Less: net securities gains, net of tax   0.01     0.01     0.03     0.01  
Non-GAAP dilutive operating EPS $ 0.77   $ 0.71   $ 1.49   $ 1.35  
 

Copyright Business Wire 2010

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