Penns Woods Bancorp, Inc. Reports Third Quarter 2013 Operating Earnings

WILLIAMSPORT, Pa., Oct. 18, 2013 (GLOBE NEWSWIRE) -- Penns Woods Bancorp, Inc. (Nasdaq:PWOD)

Penns Woods Bancorp, Inc. continued its solid earnings and growth during the recently completed third quarter of 2013. Earnings of $10,589,000 were achieved for the nine month period ending September 30, 2013 resulting in basic and dilutive earnings per share of $2.48.

Highlights
  • Completion of the acquisition of Luzerne National Bank Corporation ("Luzerne") effective June 1, 2013 resulted in an increase in net loans of $254,057,000; investments of $21,140,000; deposits of $279,867,000; and assets of $329,209,000 at the time of acquisition.
  • Net income from core operations ("operating earnings"), which is a non-GAAP measure of net income excluding net securities gains and bank owned life insurance gains on death benefits, decreased to $3,248,000 for the three months ended September 30, 2013 compared to $3,372,000 for the same period of 2012. Net income from core operations decreased to $9,099,000 for the nine months ended September 30, 2013 compared to $9,849,000 for the same period of 2012.
  • Operating earnings per share for the three months ended September 30, 2013 were $0.67 basic and dilutive compared to $0.88 basic and dilutive for the same period of 2012. Operating earnings per share for the nine months ended September 30, 2013 were $2.13 basic and dilutive compared to $2.57 basic and dilutive for the same period of 2012.
  • Return on average assets was 1.08% for the three months ended September 30, 2013 compared to 1.77% for the corresponding period of 2012. Return on average assets was 1.39% for the nine months ended September 30, 2013 compared to 1.78% for the corresponding period of 2012.
  • Return on average equity was 10.39% for the three months ended September 30, 2013 compared to 15.94% for the corresponding period of 2012. Return on average equity was 12.90% for the nine months ended September 30, 2013 compared to 16.25% for the corresponding period of 2012.
  • The results for the three and nine months ended September 30, 2013 were negatively impacted by one time expenses of $684,000 and $1,307,000 related to the acquisition of Luzerne National Bank Corporation.

"As expected the results for the three and nine months ended September 30, 2013 have been impacted by the completed acquisition of Luzerne National Bank Corporation into the Penns Woods Bancorp, Inc. family. The acquisition was the primary driver of the balance sheet growth, but was a drag on earnings for the period. We believe that most acquisition related expenses are now behind us and look forward to continuing the integration of Luzerne into the Penns Woods family. In addition to the completed acquisition, we continue to focus on the building of future revenue streams including branches in Lewisburg and Loyalsock. The Loyalsock location, which is expected to open during 2014, will also house the Mortgage department on the upper floors as the growth in this business line has expanded significantly over the past several years," 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 nine months ended September 30, 2013 was $3,246,000 and $10,589,000 compared to $3,667,000 and $10,754,000 for the same period of 2012. Results for the three and nine months ended September 30, 2013 compared to 2012 were impacted by an decrease in after-tax securities gains of $297,000 (from a gain of $295,000 to a loss of $2,000) for the three month periods and an increase in after-tax securities gains of $694,000 (from a gain of $796,000 to a gain of $1,490,000) for the nine month periods. In addition, a gain of $109,000 on death benefit related to bank owned life insurance was recorded during the first quarter of 2012. Impacting the results for the three and nine months ended September 30, 2013 was the recognition of $684,000 and $1,307,000 in expenses related to the acquisition of Luzerne National Bank Corporation. Basic and dilutive earnings per share for the three and nine months ended September 30, 2013 were $0.67 and $2.48 compared to $0.96 and $2.80 for the corresponding periods of 2012. Return on average assets and return on average equity were 1.08% and 10.39% for the three months ended September 30, 2013 compared to 1.77% and 15.94% for the corresponding period of 2012. Return on average assets and return on average equity were 1.39% and 12.90% for the nine months ended September 30, 2013 compared to 1.78% and 16.25% for the corresponding period of 2012.

Net Interest Margin

The net interest margin for the three and nine months ended September 30, 2013 was 4.07% and 4.19% compared to 4.34% and 4.51% for the corresponding periods of 2012. While the net interest margin has decreased year over year, net interest income on a fully taxable equivalent basis has increased $2,814,000 and $4,184,000 for the three and nine months ended September 30, 2013 compared to the corresponding period of 2012. Driving this increase is the growth in the loan and deposit portfolios for the nine months ended September 30, 2013 compared to the corresponding period for 2012 primarily due to the acquisition of Luzerne National Bank Corporation, growth in home equity products, recognition of $528,000 in loan interest from the payoff of a nonaccrual loan in the first quarter of 2013, and the continued emphasis on core deposit growth. The primary funding for the loan growth was an increase in core deposits. These deposits represent a lower cost funding source than time deposits and comprise 75.55% of total deposits at September 30, 2013 compared to 73.53% at September 30, 2012. The continued growth in core deposits has led to the total cost of deposits decreasing to 50 bp for the nine months ended September 30, 2013 from 73 bp for the corresponding period of 2012.  FHLB long-term borrowings have decreased $5,528,000 since September 30, 2012.  The decrease is due to the maturity of $5,528,000 in long-term borrowings during the nine months ended September 30, 2013 carrying an average rate of 3.94%. The changes in the composition of the deposit and borrowing portfolios has led to the total cost of interest bearing funding decreasing to 72 bp for the nine months ended September 30, 2013 from 107 bp at the corresponding period of 2012.

"The current rate environment has caused compression of the net margin and will continue to challenge the net interest margin as we move forward. Our strategy to mitigate the earnings impact of the compressing net interest margin remains focused on increasing earning assets by adding quality loans to the earning asset portfolio, even though these new earning assets are at a lower rate than the legacy earning assets that they are replacing. We continue to shorten the investment portfolio duration in order to reduce interest rate and market risk in the future. This is being undertaken primarily through the sale of long-term municipal bonds that have a maturity date of 2025 or later.  The proceeds of the bond sales are being deployed into loans and variable rate and intermediate term corporate bonds.  The earning asset strategies do impact current earnings, but they play a key role in our long-term asset liability management strategy as the balance sheet is adjusted to better prepare for a rising rate environment. On the funding side of the balance sheet there is limited opportunity to reduce costs. Our focus will continue to be on lower cost core deposits, with an eye toward the lengthening of select funding sources such as time deposits or borrowings as opportunities are presented," commented President Grafmyre.

Assets

Total assets increased $363,484,000 to $1,204,090,000 at September 30, 2013 compared to September 30, 2012 due primarily to the acquisition of Luzerne National Bank Corporation. Net loans increased to $796,533,000 at September 30, 2013 compared to September 30, 2012 due to the acquisition of Luzerne and campaigns related to increasing home equity product market share during 2012 and 2013. The investment portfolio decreased $10,872,000 from September 30, 2012 to September 30, 2013 due to our strategy to reduce the investment portfolio duration through the selective selling of bonds as opportunities develop partially offset by the acquisition of Luzerne National Bank Corporation.

Non-performing Loans

Our non-performing loans to total loans ratio has decreased to 0.75% at September 30, 2013 from 2.48% at September 30, 2012. The decrease in non-performing loans is primarily the result of several partial charge-offs and the payoff of a large construction loan that was on nonaccrual. 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 recoveries of $338,000 for the nine months ended September 30, 2013 augmented the allowance for loan losses which was 1.19% of total loans at September 30, 2013.

Deposits

Deposits have increased $334,411,000 to $975,521,000 at September 30, 2013 compared to September 30, 2012, with core deposits (total deposits excluding time deposits) increasing $265,620,000, while higher cost time deposits only increased $68,791,000. Noninterest-bearing deposits have increased $100,089,000 to $215,374,000 at September 30, 2013 compared to September 30, 2012. Driving this growth is our acquisition of Luzerne National Bank Corporation in addition to our commitment to easy-to-use products, community involvement, and emphasis on customer service. We have also successfully implemented a targeted marketing campaign aimed at further strengthening our customer relationships, while also expanding our market penetration.

Shareholders' Equity

Shareholders' equity increased $32,073,000 to $125,852,000 at September 30, 2013 compared to September 30, 2012.  The accumulated other comprehensive loss of $5,606,000 at September 30, 2013 is a result of a decrease in unrealized gains on available for sale securities from an unrealized gain of $10,848,000 at September 30, 2012 to an unrealized loss of $799,000 at September 30, 2013. The amount of accumulated other comprehensive loss at September 30, 2013 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 $674,000 to $4,807,000 at September 30, 2013. The current level of shareholders' equity equates to a book value per share of $26.12 at September 30, 2013 compared to $24.43 at September 30, 2012 and an equity to asset ratio of 10.45% at September 30, 2013 compared to 11.16% at September 30, 2012. Excluding goodwill and intangibles, book value per share was $22.17 at September 30, 2013 compared to $23.64 at September 30, 2012. Dividends declared for the three and nine months ended September 30, 2013 were $0.47 and $1.66 per share, which includes a special cash dividend of $0.25 per share declared in the first quarter 2013, compared to $0.47 and $1.41 for the three and nine months ended September 30, 2012.

Penns Woods Bancorp, Inc. is the parent company of Jersey Shore State Bank, which operates thirteen branch offices providing financial services in Lycoming, Clinton, Centre, and Montour Counties, and Luzerne Bank, which operates nine branch offices providing financial services in Luzerne and Lackawanna 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, 2012.

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) September 30,
  2013 2012 % Change
ASSETS      
Noninterest-bearing balances  $ 23,073  $ 13,243 74.23%
Interest-bearing deposits in other financial institutions  9,776  7,901 23.73%
Federal funds sold  195  --  n/a
 Total cash and cash equivalents  33,044  21,144 56.28%
       
Investment securities, available for sale, at fair value 285,383 296,255 -3.67%
Loans held for sale 1,588 2,285 -30.50%
Loans 806,163 485,051 66.20%
Allowance for loan losses (9,630) (7,521) 28.04%
 Loans, net 796,533 477,530 66.80%
Premises and equipment, net 18,352 8,247 122.53%
Accrued interest receivable 4,639 4,255 9.02%
Bank-owned life insurance 25,216 16,238 55.29%
Investment in limited partnerships 2,387 3,048 -21.69%
Goodwill 17,104 3,032 464.12%
Intangibles 1,892  --  n/a
Deferred tax asset 10,389 3,878 167.90%
Other assets 7,563 4,694 61.12%
TOTAL ASSETS  $ 1,204,090  $ 840,606 43.24%
       
LIABILITIES      
Interest-bearing deposits  $ 760,147  $ 525,825 44.56%
Noninterest-bearing deposits 215,374 115,285 86.82%
 Total deposits 975,521 641,110 52.16%
       
Short-term borrowings 15,060 17,932 -16.02%
Long-term borrowings, Federal Home Loan Bank (FHLB) 70,750 76,278 -7.25%
Accrued interest payable 435 501 -13.17%
Other liabilities 16,472 11,006 49.66%
 TOTAL LIABILITIES 1,078,238 746,827 44.38%
       
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; 4,999,483 and 4,018,777 shares issued 41,662 33,489 24.41%
Additional paid-in capital 49,782 18,148 174.31%
Retained earnings 46,324 41,737 10.99%
Accumulated other comprehensive (loss) income:      
 Net unrealized (loss) gain on available for sale securities (799) 10,848 -107.37%
 Defined benefit plan (4,807) (4,133) -16.31%
Treasury stock at cost, 180,596 shares (6,310) (6,310) 0.00%
 TOTAL SHAREHOLDERS' EQUITY 125,852 93,779 34.20%
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $ 1,204,090  $ 840,606 43.24%
 
PENNS WOODS BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME 
(UNAUDITED)
             
             
(In Thousands, Except Per Share Data) Three Months Ended Nine Months Ended
  September 30, September 30,
  2013 2012 % Change 2013 2012 % Change
INTEREST AND DIVIDEND INCOME:            
Loans including fees  $ 9,211  $ 6,346 45.15%  $ 23,256  $ 18,954 22.70%
Investment securities:            
 Taxable  1,570  1,486 5.65%  4,520  4,477 0.96%
 Tax-exempt   1,124  1,339 -16.06%  3,553  4,127 -13.91%
 Dividend and other interest income  74  96 -22.92%  208  274 -24.09%
TOTAL INTEREST AND DIVIDEND INCOME   11,979  9,267 29.27%  31,537  27,832 13.31%
             
INTEREST EXPENSE:            
Deposits   855  902 -5.21%  2,406  2,797 -13.98%
Short-term borrowings  16  38 -57.89%  63  100 -37.00%
Long-term borrowings, FHLB  479  637 -24.80%  1,480  1,877 -21.15%
TOTAL INTEREST EXPENSE  1,350  1,577 -14.39%  3,949  4,774 -17.28%
             
NET INTEREST INCOME  10,629  7,690 38.22%  27,588  23,058 19.65%
             
PROVISION FOR LOAN LOSSES  600  600 0.00%  1,675  1,800 -6.94%
             
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   10,029  7,090 41.45%  25,913  21,258 21.90%
             
NON-INTEREST INCOME:            
Service charges  671  489 37.22%  1,651  1,394 18.44%
Securities (losses) gains, net  (3)  447 -100.67%  2,257  1,206 87.15%
Bank-owned life insurance  199  138 44.20%  481  539 -10.76%
Gain on sale of loans  551  527 4.55%  1,204  1,053 14.34%
Insurance commissions  286  295 -3.05%  797  1,053 -24.31%
Brokerage commissions  250  239 4.60%  797  698 14.18%
Other  888  636 39.62%  1,923  1,872 2.72%
TOTAL NON-INTEREST INCOME  2,842  2,771 2.56%  9,110  7,815 16.57%
             
NON-INTEREST EXPENSE:            
Salaries and employee benefits  4,515  2,939 53.62%  11,025  8,806 25.20%
Occupancy  554  317 74.76%  1,302  963 35.20%
Furniture and equipment  422  355 18.87%  1,242  1,058 17.39%
Pennsylvania shares tax  225  169 33.14%  617  505 22.18%
Amortization of investments in limited partnerships  165  165 0.00%  496  496 0.00%
Federal Deposit Insurance Corporation deposit insurance  173  111 55.86%  421  349 20.63%
Marketing  156  132 18.18%  371  405 -8.40%
Intangible amortization  91  --  n/a  122  --  n/a
Other  2,674  1,270 110.55%  6,195  3,683 68.21%
TOTAL NON-INTEREST EXPENSE  8,975  5,458 64.44%  21,791  16,265 33.97%
             
INCOME BEFORE INCOME TAX PROVISION   3,896  4,403 -11.51%  13,232  12,808 3.31%
INCOME TAX PROVISION   650  736 -11.68%  2,643  2,054 28.68%
NET INCOME  $ 3,246  $ 3,667 -11.48%  $ 10,589  $ 10,754 -1.53%
             
EARNINGS PER SHARE - BASIC  $ 0.67  $ 0.96 -30.21%  $ 2.48  $ 2.80 -11.43%
             
EARNINGS PER SHARE - DILUTED  $ 0.67  $ 0.96 -30.21%  $ 2.48  $ 2.80 -11.43%
             
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC  4,818,494  3,837,925 25.55%  4,272,989  3,837,570 11.35%
             
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED  4,818,494  3,837,925 25.55%  4,272,989  3,837,570 11.35%
             
DIVIDENDS DECLARED PER SHARE  $ 0.47  $ 0.47 0.00%  $ 1.66  $ 1.41 17.73%
 
PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES
             
  For the Three Months Ended
(Dollars in Thousands) September 30, 2013 September 30, 2012
  Average Balance  Interest Average Rate Average Balance  Interest Average Rate
ASSETS:            
Tax-exempt loans  $ 22,688  $ 263 4.60%  $ 22,916  $ 302 5.24%
All other loans  774,355  9,037 4.63%  452,370  6,147 5.41%
Total loans  797,043  9,300 4.63%  475,286  6,449 5.40%
             
Federal funds sold  355  --  0.00%  --   --  0.00%
             
Taxable securities  184,325  1,637 3.55%  162,822  1,580 3.88%
Tax-exempt securities  112,432  1,703 6.06%  132,996  2,029 6.10%
Total securities  296,757  3,340 4.50%  295,818  3,609 4.88%
             
Interest-bearing deposits  10,783  7 0.26%  8,966  2 0.09%
             
Total interest-earning assets  1,104,938  12,647 4.55%  780,070  10,060 5.14%
             
Other assets  94,928      48,096    
             
TOTAL ASSETS  $ 1,199,866      $ 828,166    
             
LIABILITIES AND SHAREHOLDERS' EQUITY:            
Savings  $ 141,526  44 0.12%  $ 81,413  16 0.08%
Super Now deposits  163,422  177 0.43%  120,135  158 0.52%
Money market deposits  207,684  144 0.28%  151,307  173 0.45%
Time deposits  238,551  490 0.81%  171,245  555 1.29%
Total interest-bearing deposits  751,183  855 0.45%  524,100  902 0.68%
             
Short-term borrowings  20,568  16 0.31%  18,607  38 0.81%
Long-term borrowings, FHLB  70,750  479 2.65%  65,517  637 3.80%
Total borrowings  91,318  495 2.12%  84,124  675 3.14%
             
Total interest-bearing liabilities  842,501  1,350 0.63%  608,224  1,577 1.02%
             
Demand deposits  214,897      116,582    
Other liabilities  17,513      11,355    
Shareholders' equity  124,955      92,005    
             
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $ 1,199,866      $ 828,166    
Interest rate spread     3.92%     4.12%
Net interest income/margin    $ 11,297 4.07%    $ 8,483 4.34%
             
             
    For the Three Months Ended      
    September 30,      
    2013 2012      
Total interest income    $ 11,979  $ 9,267      
Total interest expense    1,350  1,577      
Net interest income    10,629  7,690      
Tax equivalent adjustment    668  793      
Net interest income (fully taxable equivalent)    $ 11,297  $ 8,483      
 
PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES
             
  For the Nine Months Ended
(Dollars in Thousands) September 30, 2013 September 30, 2012
  Average Balance  Interest Average Rate Average Balance  Interest Average Rate
ASSETS:            
Tax-exempt loans  $ 22,069  $ 761 4.61%  $ 21,977  $ 909 5.52%
All other loans  623,047  22,754 4.88%  436,921  18,354 5.61%
Total loans  645,116  23,515 4.87%  458,898  19,263 5.61%
             
Federal funds sold  152  --  0.00%  --   --  0.00%
             
Taxable securities  174,977  4,714 3.59%  157,791  4,747 4.01%
Tax-exempt securities  119,799  5,383 5.99%  131,306  6,253 6.35%
Total securities  294,776  10,097 4.57%  289,097  11,000 5.07%
             
Interest-bearing deposits  7,628  14 0.25%  8,098  4 0.07%
             
Total interest-earning assets  947,672  33,626 4.74%  756,093  30,267 5.34%
             
Other assets  69,942      49,702    
             
TOTAL ASSETS  $ 1,017,614      $ 805,795    
             
LIABILITIES AND SHAREHOLDERS' EQUITY:            
Savings  $ 111,242  96 0.12%  $ 78,180  44 0.08%
Super Now deposits  150,220  521 0.46%  116,205  452 0.52%
Money market deposits  174,991  408 0.31%  143,878  580 0.54%
Time deposits  200,688  1,381 0.92%  173,578  1,721 1.32%
Total interest-bearing deposits  637,141  2,406 0.50%  511,841  2,797 0.73%
             
Short-term borrowings  21,235  63 0.40%  19,293  100 0.69%
Long-term borrowings, FHLB  72,607  1,480 2.69%  62,701  1,877 3.93%
Total borrowings  93,842  1,543 2.17%  81,994  1,977 3.17%
             
Total interest-bearing liabilities  730,983  3,949 0.72%  593,835  4,774 1.07%
             
Demand deposits  161,948      112,464    
Other liabilities  15,208      11,258    
Shareholders' equity  109,475      88,238    
             
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $ 1,017,614      $ 805,795    
Interest rate spread     4.02%     4.27%
Net interest income/margin    $ 29,677 4.19%    $ 25,493 4.51%
             
             
    For the Nine Months Ended      
    September 30,      
    2013 2012      
Total interest income    $ 31,537  $ 27,832      
Total interest expense    3,949  4,774      
Net interest income    27,588  23,058      
Tax equivalent adjustment    2,089  2,435      
Net interest income (fully taxable equivalent)    $ 29,677  $ 25,493      
   
  Quarter Ended
           
(Dollars in Thousands, Except Per Share Data) 9/30/2013 6/30/2013 3/31/2013 12/31/2012 9/30/2012
           
Operating Data          
Net income  $ 3,246  $ 3,659  $ 3,684  $ 3,096  $ 3,667
Net interest income  10,629  8,754  8,205  7,838  7,690
Provision for loan losses  600  575  500  725  600
Net security (losses) gains  (3)  1,274  986  79  447
Non-interest income, ex. net security gains  2,845  2,261  1,747  2,206  2,324
Non-interest expense  8,975  6,965  5,851  5,758  5,458
           
Performance Statistics          
Net interest margin 4.07% 4.09% 4.46% 4.29% 4.34%
Annualized return on average assets 1.08% 1.48% 1.72% 1.46% 1.77%
Annualized return on average equity 10.39% 13.54% 15.51% 12.92% 15.94%
Annualized net loan charge-offs (recoveries) to average loans 0.19% 0.00% -0.55% 0.50% 0.44%
Net charge-offs (recoveries)  374  1  (713)  629  517
Efficiency ratio 66.6% 63.2% 58.8% 57.3% 54.5%
           
Per Share Data          
Basic earnings per share  $ 0.67  $ 0.88  $ 0.96  $ 0.81  $ 0.96
Diluted earnings per share  0.67  0.88  0.96  0.81  0.96
Dividend declared per share  0.47  0.47  0.72  0.47  0.47
Book value  26.12  26.14  24.23  24.42  24.43
Common stock price:          
 High  49.89  41.86  41.45  45.27  44.60
 Low  42.76  39.44  38.50  37.16  37.78
 Close  49.82  41.86  40.97  37.41  44.33
Weighted average common shares:          
 Basic  4,818  4,151  3,839  3,838  3,838
 Fully Diluted  4,818  4,151  3,839  3,838  3,838
End-of-period common shares:          
 Issued  4,999  4,999  4,020  4,019  4,019
 Treasury  181  181  181  181  181
   
  Quarter Ended
           
(Dollars in Thousands, Except Per Share Data) 9/30/2013 6/30/2013 3/31/2013 12/31/2012 9/30/2012
           
Financial Condition Data:          
General          
Total assets  $ 1,204,090  $ 1,206,958  $ 852,997  $ 856,535  $ 840,606
Loans, net  796,533  777,557  503,592  504,615  477,530
Goodwill  17,104  17,104  3,032  3,032  3,032
Intangibles  1,892  1,984  --   --   -- 
Total deposits  975,521  955,361  659,304  642,026  641,110
 Noninterest-bearing  215,374  211,096  120,471  114,953  115,285
           
 Savings  142,193  140,667  86,556  82,546  81,479
 NOW  169,974  161,972  140,626  130,454  125,572
 Money Market  209,469  203,076  143,847  144,722  149,054
 Time Deposits  238,511  238,550  167,804  169,351  169,720
 Total interest-bearing deposits  760,147  744,265  538,833  527,073  525,825
           
Core deposits*  737,010  716,811  491,500  472,675  471,390
Shareholders' equity  125,852  125,928  93,013  93,726  93,779
           
Asset Quality          
           
Non-performing assets  $ 6,064  $ 6,515  $ 9,059  $ 11,706  $ 12,041
Non-performing assets to total assets 0.50% 0.54% 1.06% 1.37% 1.43%
Allowance for loan losses  9,630  9,404  8,830  7,617  7,521
Allowance for loan losses to total loans 1.19% 1.19% 1.72% 1.49% 1.55%
Allowance for loan losses to non-performing loans 158.81% 144.34% 97.47% 65.07% 62.46%
Non-performing loans to total loans 0.75% 0.83% 1.77% 2.29% 2.48%
           
Capitalization          
           
Shareholders' equity to total assets 10.45% 10.43% 10.90% 10.94% 11.16%
           
* 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 Nine Months Ended
  September 30, September 30,
  2013 2012 2013 2012
GAAP net income  $ 3,246  $ 3,667  $ 10,589  $ 10,754
Less: net securities and bank-owned life insurance (losses) gains, net of tax  (2)  295  1,490  905
Non-GAAP operating earnings  $ 3,248  $ 3,372  $ 9,099  $ 9,849
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2013 2012 2013 2012
Return on average assets (ROA) 1.08% 1.77% 1.39% 1.78%
Less: net securities and bank-owned life insurance (losses) gains, net of tax 0.00% 0.14% 0.20% 0.15%
Non-GAAP operating ROA 1.08% 1.63% 1.19% 1.63%
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2013 2012 2013 2012
Return on average equity (ROE) 10.39% 15.94% 12.90% 16.25%
Less: net securities and bank-owned life insurance (losses) gains, net of tax -0.01% 1.28% 1.82% 1.37%
Non-GAAP operating ROE 10.40% 14.66% 11.08% 14.88%
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2013 2012 2013 2012
Basic earnings per share (EPS)  $ 0.67  $ 0.96  $ 2.48  $ 2.80
Less: net securities and bank-owned life insurance (losses) gains, net of tax  --  0.08  0.35  0.23
Non-GAAP basic operating EPS  $ 0.67  $ 0.88  $ 2.13  $ 2.57
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2013 2012 2013 2012
Dilutive EPS  $ 0.67  $ 0.96  $ 2.48  $ 2.80
Less: net securities and bank-owned life insurance (losses) gains, net of tax  --  0.08  0.35  0.23
Non-GAAP dilutive operating EPS  $ 0.67  $ 0.88  $ 2.13  $ 2.57
CONTACT: Richard A. Grafmyre         President and Chief Executive Officer         300 Market Street         Williamsport, PA  17701         570-322-1111 e-mail: jssb@jssb.com