Company Quick10K Filing
⚲
Penns Woods Bancorp
Financials
Price46.40 EPS2
Shares7 P/E25
MCap327 P/FCF21
Net Debt-57 EBIT32
TEV269 TEV/EBIT8
TTM 2019-09-30, in MM, except price, ratios
Filings
10-Q 2020-03-31 Filed 2020-05-08
10-K 2019-12-31 Filed 2020-03-11
10-Q 2019-09-30 Filed 2019-11-08
10-Q 2019-06-30 Filed 2019-08-09
10-Q 2019-03-31 Filed 2019-05-10
10-K 2018-12-31 Filed 2019-03-12
10-Q 2018-09-30 Filed 2018-11-08
10-Q 2018-08-08 Filed 2018-08-08
10-Q 2018-03-31 Filed 2018-05-10
10-K 2017-12-31 Filed 2018-03-13
10-Q 2017-09-30 Filed 2017-11-08
10-Q 2017-06-30 Filed 2017-08-08
10-Q 2017-03-31 Filed 2017-05-09
10-K 2016-12-31 Filed 2017-03-10
10-Q 2016-09-30 Filed 2016-11-09
10-Q 2016-06-30 Filed 2016-08-09
10-Q 2016-03-31 Filed 2016-05-10
10-K 2015-12-31 Filed 2016-03-10
10-Q 2015-09-30 Filed 2015-11-09
10-Q 2015-06-30 Filed 2015-08-10
10-Q 2015-03-31 Filed 2015-05-11
10-K 2014-12-31 Filed 2015-03-12
10-Q 2014-09-30 Filed 2014-11-10
10-Q 2014-06-30 Filed 2014-08-11
10-Q 2014-03-31 Filed 2014-05-12
10-K 2013-12-31 Filed 2014-03-14
10-Q 2013-09-30 Filed 2013-11-12
10-Q 2013-06-30 Filed 2013-08-09
10-Q 2013-03-31 Filed 2013-05-10
10-K 2012-12-31 Filed 2013-03-13
10-Q 2012-09-30 Filed 2012-11-09
10-Q 2012-06-30 Filed 2012-08-09
10-Q 2012-03-31 Filed 2012-05-09
10-K 2011-12-31 Filed 2012-03-14
10-Q 2011-09-30 Filed 2011-11-09
10-Q 2011-06-30 Filed 2011-08-09
10-Q 2011-03-31 Filed 2011-05-10
10-K 2010-12-31 Filed 2011-03-10
10-Q 2010-09-30 Filed 2010-11-09
10-Q 2010-06-30 Filed 2010-08-09
10-Q 2010-03-31 Filed 2010-05-10
10-K 2009-12-31 Filed 2010-03-12
Reports
8-K 2020-07-22 Earnings, Exhibits
8-K 2020-04-28
8-K 2020-04-22
8-K 2020-04-06
8-K 2020-01-28
8-K 2019-10-23
8-K 2019-09-30
8-K 2019-09-03
8-K 2019-08-13
8-K 2019-07-23
8-K 2019-05-31
8-K 2019-04-23
8-K 2019-04-22
8-K 2019-01-28
8-K 2018-12-31
8-K 2018-10-19
8-K 2018-09-27
8-K 2018-07-20
8-K 2018-04-24
8-K 2018-04-19
8-K 2018-01-30
8-K 2018-01-11

PWOD 10Q Quarterly Report

Content
Part I. Financial Information
Item 1. Financial Statements
Note 1. Basis of Presentation
Note 2. Accumulated Other Comprehensive Gain (Loss)
Note 3. Recent Accounting Pronouncements
Note 4. per Share Data
Note 5. Investment Securities
Note 6. Loans
Note 7. Net Periodic Benefit Cost - Defined Benefit Plans
Note 8. Employee Stock Purchase Plan
Note 9. Off - Balance Sheet Risk
Note 10. Fair Value Measurements
Note 11. Fair Value of Financial Instruments
Note 12. Stock Options
Note 13. Leases
Note 14. Reclassification of Comparative Amounts
Note 15. Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
Exhibits
EX-3.II ex3ii.htm
EX-31.1 ex311-1q20.htm
EX-31.2 ex312-1q20.htm
EX-32.1 ex321-1q20.htm
EX-32.2 ex322-1q20.htm

Penns Woods Bancorp Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
1.81.41.10.70.40.02012201420172020
Assets, Equity
 0.10.10.10.00.00.02017201720182019
Rev, G Profit, Net Income
 0.10.10.0-0.0-0.1-0.12012201420172020
Ops, Inv, Fin
Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM 10-Q
 
☑
Quarterly Report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

for the Quarterly Period Ended March 31, 2020. 
☐
Transition report pursuant to Section 13 or 15 (d) of the Exchange Act

For the Transition Period from                    to                   .

No. 0-17077
(Commission File Number)

PENNS WOODS BANCORP INC.
(Exact name of Registrant as specified in its charter) 
Pennsylvania
300 Market Street, P.O. Box 967
23-2226454
(State or other jurisdiction of
Williamsport
(I.R.S. Employer Identification No.)
incorporation or organization)
Pennsylvania
17703-0967
 
(Address of principal executive offices)
(Zip Code)
 

(570) 322-1111
Registrant’s telephone number, including area code


Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common stock, $5.55 par value
 
PWOD
 
The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company. or an emerging growth company.  See the definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.  (Check one):
 
Large accelerated filer
☐
Accelerated filer
☒
  Non-accelerated filer
☐
   Smaller reporting company
☒
 
 
Emerging growth company
☐

If an emerging growth company, indicate by check mark if registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐ No ☒
On May 1, 2020 there were 7,041,580 shares of the Registrant’s common stock outstanding.



PENNS WOODS BANCORP, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

 
 
Page
 
 
Number
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2


Part I.  FINANCIAL INFORMATION
Item 1.  Financial Statements
PENNS WOODS BANCORP, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
 
 
March 31,
 
December 31,
(In Thousands, Except Share Data)
 
2020
 
2019
ASSETS:
 
 

 
 

Noninterest-bearing balances
 
$
29,572

 
$
24,725

Interest-bearing balances in other financial institutions
 
48,189

 
23,864

Total cash and cash equivalents
 
77,761

 
48,589

 
 
 
 
 
Investment debt securities, available for sale, at fair value
 
155,522

 
148,619

Investment equity securities, at fair value
 
1,281


1,261

Investment securities, trading
 
37

 
51

Restricted investment in bank stock, at fair value
 
14,611

 
13,528

Loans held for sale
 
4,294

 
4,232

Loans
 
1,349,400

 
1,355,544

Allowance for loan losses
 
(12,500
)
 
(11,894
)
Loans, net
 
1,336,900

 
1,343,650

Premises and equipment, net
 
33,170

 
32,929

Accrued interest receivable
 
5,307

 
5,246

Bank-owned life insurance
 
29,228

 
29,253

Goodwill
 
17,104

 
17,104

Intangibles
 
836

 
898

Operating lease right-of-use asset
 
3,278

 
4,154

Deferred tax asset
 
3,281

 
3,338

Other assets
 
5,898

 
12,471

TOTAL ASSETS
 
$
1,688,508

 
$
1,665,323

 
 
 
 
 
LIABILITIES:
 
 

 
 

Interest-bearing deposits
 
$
993,975

 
$
989,259

Noninterest-bearing deposits
 
332,759

 
334,746

Total deposits
 
1,326,734

 
1,324,005

 
 
 
 
 
Short-term borrowings
 
17,741

 
4,920

Long-term borrowings
 
171,903

 
161,920

Accrued interest payable
 
1,635

 
1,671

Operating lease liability
 
3,299

 
4,170

Other liabilities
 
10,608

 
13,655

TOTAL LIABILITIES
 
1,531,920

 
1,510,341

 
 
 
 
 
SHAREHOLDERS’ EQUITY:
 
 

 
 

Preferred stock, no par value, 3,000,000 shares authorized; no shares issued
 
—

 
—

Common stock, par value $5.55, 22,500,000 shares authorized; 7,521,491 and 7,520,740 shares issued; 7,041,266 and 7,040,515 outstanding
 
41,786

 
41,782

Additional paid-in capital
 
51,701

 
51,487

Retained earnings
 
77,403

 
76,583

Accumulated other comprehensive loss:
 
 

 
 

Net unrealized gain on available for sale securities
 
2,986

 
2,455

Defined benefit plan
 
(5,199
)
 
(5,232
)
Treasury stock at cost, 480,225
 
(12,115
)
 
(12,115
)
TOTAL PENNS WOODS BANCORP, INC. SHAREHOLDERS' EQUITY
 
156,562

 
154,960

Non-controlling interest
 
26

 
22

TOTAL SHAREHOLDERS' EQUITY
 
156,588

 
154,982

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
 
$
1,688,508

 
$
1,665,323


See accompanying notes to the unaudited consolidated financial statements.

3


PENNS WOODS BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
 
 
 
Three Months Ended March 31,
(In Thousands, Except Per Share Data)
 
2020
 
2019
INTEREST AND DIVIDEND INCOME:
 
 

 
 

Loans, including fees
 
$
14,657

 
$
14,869

Investment securities:
 
 

 
 

Taxable
 
1,010

 
934

Tax-exempt
 
145

 
174

Dividend and other interest income
 
349

 
457

TOTAL INTEREST AND DIVIDEND INCOME
 
16,161

 
16,434

INTEREST EXPENSE:
 
 

 
 

Deposits
 
3,035

 
2,300

Short-term borrowings
 
22

 
605

Long-term borrowings
 
943

 
851

TOTAL INTEREST EXPENSE
 
4,000

 
3,756

NET INTEREST INCOME
 
12,161

 
12,678

PROVISION FOR LOAN LOSSES
 
750

 
360

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
 
11,411

 
12,318

NON-INTEREST INCOME:
 
 

 
 

Service charges
 
549

 
562

Net debt securities gains, available for sale
 
21

 
13

Net equity securities gains
 
20

 
43

Net securities (losses) gains, trading
 
(14
)
 
10

Bank-owned life insurance
 
192

 
168

Gain on sale of loans
 
444

 
316

Insurance commissions
 
127

 
134

Brokerage commissions
 
369

 
323

Debit card fees
 
274

 
310

Other
 
455

 
375

TOTAL NON-INTEREST INCOME
 
2,437

 
2,254

NON-INTEREST EXPENSE:
 
 

 
 

Salaries and employee benefits
 
5,667

 
5,501

Occupancy
 
702

 
779

Furniture and equipment
 
860

 
752

Software amortization
 
250

 
207

Pennsylvania shares tax
 
285

 
293

Professional fees
 
622

 
522

Federal Deposit Insurance Corporation deposit insurance
 
194

 
268

Marketing
 
53

 
102

Intangible amortization
 
62

 
71

Other
 
1,415

 
1,319

TOTAL NON-INTEREST EXPENSE
 
10,110

 
9,814

INCOME BEFORE INCOME TAX PROVISION
 
3,738

 
4,758

INCOME TAX PROVISION
 
661

 
812

CONSOLIDATED NET INCOME
 
$
3,077

 
$
3,946

Less: Net income attributable to noncontrolling interest
 
4

 
2

NET INCOME ATTRIBUTABLE TO PENNS WOODS BANCORP, INC.
 
$
3,073

 
$
3,944

EARNINGS PER SHARE - BASIC
 
$
0.44

 
$
0.56

EARNINGS PER SHARE - DILUTED
 
$
0.43

 
$
0.56

WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC
 
7,040,740

 
7,037,628

WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED
 
7,102,990

 
7,037,628

DIVIDENDS DECLARED PER SHARE
 
$
0.32

 
$
0.31

See accompanying notes to the unaudited consolidated financial statements.

4




PENNS WOODS BANCORP, INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
 
 
 
Three Months Ended March 31,
(In Thousands)
 
2020
 
2019
Net Income
 
$
3,073

 
$
3,944

Other comprehensive income:
 
 

 
 

Change in unrealized gain on available for sale securities
 
694

 
1,984

Tax effect
 
(146
)
 
(417
)
Net realized gain on available for sale securities included in net income
 
(21
)
 
(13
)
Tax effect
 
4

 
3

   Amortization of unrecognized pension gain
 
41

 
47

        Tax effect
 
(8
)
 
(10
)
Total other comprehensive gain income
 
564

 
1,594

Comprehensive income
 
$
3,637

 
$
5,538

 
See accompanying notes to the unaudited consolidated financial statements.

5


PENNS WOODS BANCORP, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
(UNAUDITED)



 Three months ended:
 
 


 
 
COMMON STOCK
 
ADDITIONAL
PAID-IN CAPITAL
 
RETAINED EARNINGS
 
ACCUMULATED OTHER
COMPREHENSIVE LOSS
 
TREASURY STOCK
 
NON-CONTROLLING INTEREST
 
TOTAL
SHAREHOLDERS’ EQUITY
(In Thousands, Except Per Share Data)
 
SHARES
 
AMOUNT
 
 
 
 
 
 
Balance, December 31, 2019
 
7,520,740

 
$
41,782

 
$
51,487

 
$
76,583

 
$
(2,777
)
 
$
(12,115
)
 
$
22

 
$
154,982

Net income
 
 

 
 

 
 

 
3,073

 
 

 
 

 
4

 
3,077

Other comprehensive income
 
 

 
 

 
 

 
 

 
564

 
 

 
 
 
564

Stock-based compensation
 
 
 
 
 
198

 
 
 
 
 
 
 
 
 
198

Dividends declared ($0.32 per share)
 
 

 
 

 
 

 
(2,253
)
 
 

 
 

 
 
 
(2,253
)
Common shares issued for employee stock purchase plan
 
751

 
4

 
16

 
 

 
 

 
 

 
 
 
20

Balance, March 31, 2020
 
7,521,491

 
$
41,786

 
$
51,701

 
$
77,403

 
$
(2,213
)
 
$
(12,115
)
 
$
26

 
$
156,588



 
 
COMMON STOCK
 
ADDITIONAL
PAID-IN CAPITAL
 
RETAINED EARNINGS
 
ACCUMULATED OTHER
COMPREHENSIVE LOSS
 
TREASURY STOCK
 
NON-CONTROLLING INTEREST
 
TOTAL
SHAREHOLDERS’ EQUITY
(In Thousands, Except Per Share Data)
 
SHARES
 
AMOUNT
 
 
 
 
 
 
Balance, December 31, 2018
 
7,517,547

 
$
41,763

 
$
50,737

 
$
69,787

 
$
(6,636
)
 
$
(12,115
)
 
$
8

 
$
143,544

Net income
 
 

 
 

 
 

 
3,944

 
 

 
 

 
2

 
3,946

Other comprehensive income
 
 

 
 

 
 

 
 
 
1,594

 
 

 
 
 
1,594

Stock-based compensation
 
 
 
 
 
136

 
 
 
 
 
 
 
 
 
136

Dividends declared ($0.31 per share)
 
 

 
 

 
 

 
(2,205
)
 
 

 
 

 
 
 
(2,205
)
Common shares issued for employee stock purchase plan
 
863

 
4

 
17

 
 

 
 

 
 

 
 
 
21

Balance, March 31, 2019
 
7,518,410

 
$
41,767

 
$
50,890

 
$
71,526

 
$
(5,042
)
 
$
(12,115
)
 
$
10

 
$
147,036





See accompanying notes to the unaudited consolidated financial statements.

6


PENNS WOODS BANCORP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED) 
 
 
Three Months Ended March 31,
(In Thousands)
 
2020
 
2019
OPERATING ACTIVITIES:
 
 

 
 

Net Income
 
$
3,077

 
$
3,946

Adjustments to reconcile net income to net cash provided by operating activities:
 
 

 
 

Depreciation and amortization
 
760

 
691

Gain on sale of premise and equipment
 
(14
)
 
—

Amortization of intangible assets
 
62

 
71

Provision for loan losses
 
750

 
360

Stock based compensation
 
198

 
136

Accretion and amortization of investment security discounts and premiums
 
171

 
157

Net securities gains, available for sale
 
(21
)
 
(13
)
Originations of loans held for sale
 
(14,977
)
 
(8,998
)
Proceeds of loans held for sale
 
15,359

 
10,456

Gain on sale of loans
 
(444
)
 
(316
)
Net equity securities gains
 
(20
)
 
(43
)
Net securities (losses) gains, trading
 
14

 
(10
)
Proceeds from the sale of trading securities
 
—

 
77

Purchases of trading securities
 
—

 
(73
)
Earnings on bank-owned life insurance
 
(192
)
 
(168
)
(Increase) decrease in deferred tax asset
 
(84
)
 
499

Proceeds on sales of investment securities receivable
 
6,627

 
—

Other, net
 
(2,658
)
 
(474
)
Net cash provided by operating activities
 
8,608

 
6,298

INVESTING ACTIVITIES:
 
 

 
 

Proceeds from sales of available for sale securities
 
2,774

 
6,986

Proceeds from calls and maturities of available for sale securities
 
2,598

 
817

Purchases of available for sale securities
 
(11,753
)
 
(12,962
)
Net decrease (increase) in loans
 
5,861

 
(169
)
Acquisition of premises and equipment
 
(1,547
)
 
(615
)
Proceeds from the sale of premises and equipment
 
336

 
—

Proceeds from the sale of foreclosed assets
 
226

 
117

Purchase of bank-owned life insurance
 
(26
)
 
(26
)
Proceeds from bank-owned life insurance death benefit
 
248

 
—

Investment in limited partnership
 
(370
)
 
—

Proceeds from redemption of regulatory stock
 
1,139

 
6,898

Purchases of regulatory stock
 
(2,222
)
 
(3,761
)
Net cash used for investing activities
 
(2,736
)
 
(2,715
)
FINANCING ACTIVITIES:
 
 

 
 

Net increase in interest-bearing deposits
 
4,716

 
88,315

Net (decrease) increase in noninterest-bearing deposits
 
(1,987
)
 
843

Proceeds from long-term borrowings
 
35,000

 
15,000

Repayment of long-term borrowings
 
(25,000
)
 
(15,317
)
Net increase (decrease) in short-term borrowings
 
12,821

 
(83,366
)
Finance lease principal payments
 
(17
)
 
(20
)
Dividends paid
 
(2,253
)
 
(2,205
)
Issuance of common stock
 
20

 
21

Net cash provided by financing activities
 
23,300

 
3,271

NET INCREASE IN CASH AND CASH EQUIVALENTS
 
29,172

 
6,854

CASH AND CASH EQUIVALENTS, BEGINNING
 
48,589

 
66,742

CASH AND CASH EQUIVALENTS, ENDING
 
$
77,761

 
$
73,596

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
 
 

 
 

Interest paid
 
$
4,036

 
$
3,628

Income taxes paid
 
—

 
—

Non-cash investing and financing activities:
 
 
 
 
Right-of-use lease assets obtained in exchange for lessee finance lease liabilities
 
—

 
6,026

Right-of-use lease assets obtained in exchange for lessee operating lease liabilities
 
—

 
4,298

Transfer of loans to foreclosed real estate
 
139

 
51

See accompanying notes to the unaudited consolidated financial statements.

7


PENNS WOODS BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 

Note 1.  Basis of Presentation
 
The consolidated financial statements include the accounts of Penns Woods Bancorp, Inc. (the “Company”) and its wholly-owned subsidiaries: Woods Investment Company, Inc., Woods Real Estate Development Company, Inc., Luzerne Bank, and Jersey Shore State Bank (Jersey Shore State Bank and Luzerne Bank are referred to together as the “Banks”) and Jersey Shore State Bank’s wholly-owned subsidiary, The M Group, Inc. D/B/A The Comprehensive Financial Group (“The M Group”).  The Company also owns a controlling interest in United Insurance Solutions, LLC. All significant inter-company balances and transactions have been eliminated in the consolidation.

The interim financial statements are unaudited, but in the opinion of management reflect all adjustments necessary for the fair presentation of results for such periods.  The results of operations for any interim period are not necessarily indicative of results for the full year.  These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

In reference to the attached financial statements, all adjustments are of a normal recurring nature pursuant to Rule 10-01(b) (8) of Regulation S-X.
 
Note 2.  Accumulated Other Comprehensive Gain (loss)

The changes in accumulated other comprehensive gain (loss) by component shown net of tax and parenthesis indicating debits, as of March 31, 2020 and 2019 were as follows:
 
 
 
Three Months Ended March 31, 2020
 
Three Months Ended March 31, 2019
(In Thousands)
 
Net Unrealized Gain (Loss) on Available for Sale Securities
 
Defined
Benefit 
Plan
 
Total
 
Net Unrealized Gain (Loss) on Available
for Sale Securities
 
Defined
Benefit 
Plan
 
Total
Beginning balance
 
$
2,455

 
$
(5,232
)
 
$
(2,777
)
 
$
(1,360
)
 
$
(5,276
)
 
$
(6,636
)
Other comprehensive gain before reclassifications
 
548

 
—

 
548

 
1,567

 
—

 
1,567

Amounts reclassified from accumulated other comprehensive (loss) gain
 
(17
)
 
33

 
16

 
(10
)
 
37

 
27

Net current-period other comprehensive income
 
531

 
33

 
564

 
1,557

 
37

 
1,594

Ending balance
 
$
2,986

 
$
(5,199
)
 
$
(2,213
)
 
$
197

 
$
(5,239
)
 
$
(5,042
)
The reclassifications out of accumulated other comprehensive loss shown, net of tax and parenthesis indicating debits to net income, as of March 31, 2020 and 2019 were as follows:
 
Details about Accumulated Other Comprehensive Loss Components
 
Amount Reclassified from Accumulated Other Comprehensive Loss
 
Affected Line Item
 in the Consolidated 
Statement of Income
 
Three months ended March 31, 2020
 
Three months ended March 31, 2019
 
Net unrealized gain on available for sale securities
 
$
21

 
$
13

 
Net debt securities gains, available for sale
Income tax effect
 
(4
)
 
(3
)
 
Income tax provision
Total reclassifications for the period
 
$
17

 
$
10

 
 
 
 
 
 
 
 
 
Net unrecognized pension costs
 
$
(41
)
 
$
(47
)
 
Salaries and employee benefits
Income tax effect
 
8

 
10

 
Income tax provision
Total reclassifications for the period
 
$
(33
)
 
$
(37
)
 
 






8


Note 3.  Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. On October 16, 2019, the FASB voted to defer the effective date for ASC 326, Financial Instruments - Credit Losses, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years.  We expect to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, but cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the new guidance on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, the FASB eliminated Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. A public business entity that is a U.S. Securities and Exchange Commission (SEC) filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. A public business entity that is not an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2020. All other entities, including not-for-profit entities, that are adopting the amendments in this Update should do so for their annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2021. On October 16, 2019, the FASB voted to defer the effective date for ASC 350, Intangibles - Goodwill and Other, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years.  This Update is not expected to have a significant impact on the Company’s financial statements.

In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits (Topic 715-20). This Update amends ASC 715 to add, remove and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The Update eliminates the requirement to disclose the amounts in accumulated other comprehensive income expected to be recognized as part of net periodic benefit cost over the next year. The Update also removes the disclosure requirements for the effects of a one-percentage-point change on the assumed health care costs and the effect of this change in rates on service cost, interest cost and the benefit obligation for postretirement health care benefits. This Update is effective for public business entities for fiscal years ending after December 15, 2020, and must be applied on a retrospective basis. For all other entities, this Update is effective for fiscal years ending after December 15, 2021. This Update is not expected to have a significant impact on the Company’s financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). This Update addresses customers’ accounting for implementation costs incurred in a cloud computing arrangement that is a service contract and also adds certain disclosure requirements related to implementation costs incurred for internal-use software and cloud computing arrangements. The amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This Update is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. The amendments in this Update can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. On October 16, 2019, the FASB voted to defer the effective date for ASC 350, Intangibles - Goodwill and Other, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years.  This Update is not expected to have a significant impact on the Company’s financial statements.

9



In October 2018, the FASB issued ASU 2018-16, Derivatives and Hedging (Topic 815). The amendments in this Update permit use of the Overnight Index Swap (OIS) rate based on the Secured Overnight Financing Rate (SOFR) as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815, in addition to the interest rates on direct Treasury obligations of the U.S. government, the London Interbank Offered Rate (LIBOR) swap rate, the OIS rate based on the Fed Funds Effective Rate, and the Securities Industry and Financial Markets Association (SIFMA) Municipal Swap Rate. For entities that have not already adopted Update 2017-12, the amendments in this Update are required to be adopted concurrently with the amendments in Update 2017-12. For public business entities that already have adopted the amendments in Update 2017-12, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities that already have adopted the amendments in Update 2017-12, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted in any interim period upon issuance of this Update if an entity already has adopted Update 2017-12. This Update is not expected to have a significant impact on the Company’s financial statements.

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which affects a variety of topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance. Topic 326, Financial Instruments - Credit Losses amendments are effective for SEC registrants for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other public business entities, the effective date is for fiscal years beginning after December 15, 2020, and for all other entities, the effective date is for fiscal years beginning after December 15, 2021.On October 16, 2019, the FASB voted to defer the effective date for ASC 326, Financial Instruments - Credit Losses, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years.  The final ASU is expected to be issued in mid-November. Topic 815, Derivatives and Hedging amendments are effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020. For entities that have adopted the amendments in Update 2017- 12, the effective date is as of the beginning of the first annual period beginning after the issuance of this Update. Topic 825, Financial Instruments amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years. This Update is not expected to have a significant impact on the Company’s financial statements.

In May 2019, the FASB issued ASU 2019-05, Financial Instruments - Credit Losses, Topic 326, which allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of the new credit losses standard. To be eligible for the transition election, the existing financial asset must otherwise be both within the scope of the new credit losses standard and eligible for the applying the fair value option in ASC 825-10.3. The election must be applied on an instrument-by-instrument basis and is not available for either available-for-sale or held-to-maturity debt securities. For entities that elect the fair value option, the difference between the carrying amount and the fair value of the financial asset would be recognized through a cumulative-effect adjustment to opening retained earnings as of the date an entity adopted ASU 2016-13. Changes in fair value of that financial asset would subsequently be reported in current earnings. For entities that have not yet adopted ASU 2016-13, the effective dates and transition requirements are the same as those in ASU 2016-13. For entities that have adopted ASU 2016-13, ASU 2019-05 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted once ASU 2016-13 has been adopted. On October 16, 2019, the FASB voted to defer the effective date for ASC 326, Financial Instruments - Credit Losses, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years.  This Update is not expected to have a significant impact on the Company’s financial statements.

In November 2019, the FASB issued ASU 2019-09, Financial Services - Insurance (Topic 944), which defers the effective date of the amendments in Update 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For public business entities that meet the definition of an SEC filer, excluding entities eligible to be smaller reporting companies, as defined by the SEC, the amendments in Update 2018-12 are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. Early application of the amendments in Update 2018-12 is permitted. For all other entities, the amendments in Update 2018-12 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early application of the amendments in Update 2018-12 is permitted. This Update is not expected to have a significant impact on the Company’s financial statements.

In November 2019, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). The Update defers the effective dates of ASU 2016-13 for SEC filers that are eligible to be smaller reporting companies, non-SEC filers, and all other companies to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. This Update also amends the mandatory effective date for the elimination of Step 2 from

10


the goodwill impairment test under ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (Goodwill), to align with those used for credit losses. Furthermore, the ASU provides a one-year deferral of the effective dates of the ASUs on derivatives and hedging and leases for companies that are not public business entities. The Company qualifies as a smaller reporting company and does not expect to early adopt these ASUs.

In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, to clarify its new credit impairment guidance in ASC 326, based on implementation issues raised by stakeholders. This Update clarified, among other things, that expected recoveries are to be included in the allowance for credit losses for these financial assets; an accounting policy election can be made to adjust the effective interest rate for existing troubled debt restructurings based on the prepayment assumptions instead of the prepayment assumptions applicable immediately prior to the restructuring event; and extends the practical expedient to exclude accrued interest receivable from all additional relevant disclosures involving amortized cost basis. The effective dates in this Update are the same as those applicable for ASU 2019-10. This Update is not expected to have a significant impact on the Company’s financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), to simplify the accounting for income taxes, change the accounting for certain tax transactions, and make minor improvements to the codification. This Update provides a policy election to not allocate consolidated income taxes when a member of a consolidated tax return is not subject to income tax and provides guidance to evaluate whether a step-up in tax basis of goodwill relates to a business combination in which book goodwill was recognized or a separate transaction. The Update also changes current guidance for making an intraperiod allocation, if there is a loss in continuing operations and gains outside of continuing operations; determining when a deferred tax liability is recognized after an investor in a foreign entity transitions to or from the equity method of accounting; accounting for tax law changes and year-to-date losses in interim periods; and determining how to apply the income tax guidance to franchise taxes that are partially based on income. For public business entities, the amendments in this Update are effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. This Update is not expected to have a significant impact on the Company’s financial statements.

In January 2020, the FASB issued ASU 2020-1, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), to clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The amendments also clarify that, for the purpose of applying paragraph 815-10-15-141(a) an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method in Topic 323 or the fair value option, in accordance with the financial instruments guidance in Topic 825. An entity also would evaluate the remaining characteristics in paragraph 815-10-15-141 to determine the accounting for those forward contracts and purchased options. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. This Update is not expected to have a significant impact on the Company’s financial statements.

In January 2020, the FASB issued ASU 2020-2, Financial Instruments - Credit Losses (Topic 326) and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842), to add and amend SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Staff Accounting Bulletin No. 119, related to the new credit losses standard, and comments by the SEC staff related to the revised effective date of the new leases standard. This ASU is effective upon issuance. This did not have a significant impact on the Company’s financial statements.

In March 2020, the FASB issued ASU 2020-3, Codification Improvements to Financial Instruments. This ASU was issued to improve and clarify various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016. The ASU includes seven issues that describe the areas of improvement and the related amendments to GAAP; they are intended to make the standards easier to understand and apply and to eliminate inconsistencies, and they are narrow in scope and are not expected to significantly change practice for most entities. Among its provisions, the ASU clarifies that all entities, other than public business entities that elected the fair value option, are required to provide certain fair value disclosures under ASC 825, Financial Instruments, in both interim and annual financial statements. It also clarifies that the contractual term of a net investment in a lease under Topic 842 should be the contractual term used to measure expected credit losses under Topic 326. Amendments related to ASU 2019-04 are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is not permitted before an entity’s adoption of ASU 2016-01. Amendments related to ASU 2016-13 for entities that have not yet adopted that guidance are effective upon adoption of the amendments in ASU 2016-13.

11


Early adoption is not permitted before an entity’s adoption of ASU 2016-13. Amendments related to ASU 2016-13 for entities that have adopted that guidance are effective for fiscal years beginning after December 15, 2019, including interim periods within those years. Other amendments are effective upon issuance of this ASU. This Update is not expected to have a significant impact on the Company’s financial statements.

In January 2020, the FASB issued ASU 2020-4, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as Secured Overnight Financing Rate. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Also, entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met, and can make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform. The amendments in this ASU are effective for all entities upon issuance through December 31, 2022. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.


Note 4. Per Share Data

There are no convertible securities which would affect the denominator in calculating basic and dilutive earnings per share. There were a total of 864,300 stock options, with an average exercise price of $28.20, outstanding on March 31, 2020. A portion of these options were included, on a weighted average basis, in the computation of diluted earnings per share for the period due to the average market price of common shares of $29.57 exceeding the exercise price of the options issued for all years except for 2017. There were a total of 635,550 stock options outstanding for the same period end in 2019 that had an average exercise price of $29.29 and were excluded, on a weighted average basis, in the computation of diluted earnings per share because the quarterly average closing market price of common shares was $26.91 for the period.
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Weighted average common shares issued
 
7,520,965

 
7,517,853

Weighted average treasury stock shares
 
(<