Penns Woods Bancorp Earnings 2019-09-30

PWOD 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Comparables ($MM TTM)
Ticker	M Cap	Assets	Liab	Rev	G Profit	Net Inc	EBITDA	EV	G Margin	EV/EBITDA	ROA
SBBX	212	1,866	1,674	0	0	18	43	218		5.1	1%
INBK	210	3,959	3,663	0	0	22	99	-138		-1.4	1%
MPB	209	2,136	1,905	0	0	15	43	161		3.7	1%
NWFL	205	1,223	1,091	3	0	14	26	230	0%	9.0	1%
FBIZ	204	2,070	1,881	0	0	22	54	159		2.9	1%
PWOD	201	1,712	1,560	1	0	16	33	122	0%	3.6	1%
SHBI	200	1,489	1,297	5	0	25	38	176	0%	4.6	2%
PMBC	197	1,419	1,273	0	0	12	30	-68		-2.3	1%
BOCH	191	1,442	1,274	0	0	15	26	160		6.2	1%
DNBF	190	1,154	1,036	0	0	11	25	144		5.7	1%

Document

Table of Contents

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 September 30, 2019.



☐	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, $8.33 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 November 1, 2019 there were 7,037,823 shares of the Registrant’s common stock outstanding.

Table of Contents

PENNS WOODS BANCORP, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q



		Page
		Number

Part I	Financial Information

Item 1.	Financial Statements	3

Consolidated Balance Sheet (Unaudited) as of September 30, 2019 and December 31, 2018		3

Consolidated Statement of Income (Unaudited) for the Three and Nine Months Ended September 30, 2019 and 2018		4

Consolidated Statement of Comprehensive Income (Unaudited) for the Three and Nine Months Ended September 30, 2019 and 2018		5

Consolidated Statement of Changes in Shareholders’ Equity (Unaudited) for the Three and Nine Months Ended September 30, 2019 and 2018		6

Consolidated Statement of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2019 and 2018		8

Notes to Consolidated Financial Statements (Unaudited)		9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48

Item 4.	Controls and Procedures	48

Part II	Other Information

Item 1.	Legal Proceedings	49

Item 1A.	Risk Factors	49

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49

Item 3.	Defaults Upon Senior Securities	49

Item 4.	Mine Safety Disclosures	49

Item 5.	Other Information	49

Item 6.	Exhibits	50

Signatures		51

Exhibit Index and Exhibits		52

Table of Contents

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

PENNS WOODS BANCORP, INC.

CONSOLIDATED BALANCE SHEET

(UNAUDITED)



	September 30,			December 31,
(In Thousands, Except Share Data)	2019			2018
ASSETS:
Noninterest-bearing balances	$	25,990		$	24,325
Interest-bearing balances in other financial institutions	31,351			42,417
Total cash and cash equivalents	57,341			66,742

Investment debt securities, available for sale, at fair value	149,075			134,285
Investment equity securities, at fair value	1,820			1,776
Investment securities, trading	47			36
Restricted investment in bank stock, at fair value	13,502			18,862
Loans held for sale	1,868			2,929
Loans	1,364,984			1,384,757
Allowance for loan losses	(14,249		)	(13,837		)
Loans, net	1,350,735			1,370,920
Premises and equipment, net	33,366			27,580
Accrued interest receivable	5,267			5,334
Bank-owned life insurance	29,107			28,627
Goodwill	17,104			17,104
Intangibles	960			1,162
Operating lease right-of-use asset	4,217			—
Deferred tax asset	3,744			5,154
Other assets	4,942			4,260
TOTAL ASSETS	$	1,673,095		$	1,684,771

LIABILITIES:
Interest-bearing deposits	$	1,005,078		$	899,089
Noninterest-bearing deposits	327,329			320,814
Total deposits	1,332,407			1,219,903

Short-term borrowings	5,987			167,865
Long-term borrowings	162,290			138,942
Accrued interest payable	1,666			1,150
Operating lease liability	4,228			—
Other liabilities	11,456			13,367
TOTAL LIABILITIES	1,518,034			1,541,227

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; 7,517,796 and 7,517,546 shares issued; 7,037,571 and 7,037,321 outstanding	41,758			41,763
Additional paid-in capital	51,290			50,737
Retained earnings	76,009			69,787
Accumulated other comprehensive gain (loss):
Net unrealized gain (loss) on available for sale securities	3,266			(1,360		)
Defined benefit plan	(5,165		)	(5,276		)
Treasury stock at cost, 480,225	(12,115		)	(12,115		)
TOTAL PENNS WOODS BANCORP, INC. SHAREHOLDERS' EQUITY	155,043			143,536
Non-controlling interest	18			8
TOTAL SHAREHOLDERS' EQUITY	155,061			143,544
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,673,095		$	1,684,771

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

PENNS WOODS BANCORP, INC.

CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)



	Three Months Ended September 30,						Nine Months Ended September 30,
(In Thousands, Except Per Share Data)	2019			2018			2019		2018
INTEREST AND DIVIDEND INCOME:
Loans, including fees	$	15,426		$	13,982		$	45,595	$	39,172
Investment securities:
Taxable	998			713			2,899		1,898
Tax-exempt	167			207			520		678
Dividend and other interest income	493			296			1,345		762
TOTAL INTEREST AND DIVIDEND INCOME	17,084			15,198			50,359		42,510
INTEREST EXPENSE:
Deposits	3,165			1,659			8,336		4,371
Short-term borrowings	7			528			790		1,004
Long-term borrowings	1,009			756			2,739		2,024
TOTAL INTEREST EXPENSE	4,181			2,943			11,865		7,399
NET INTEREST INCOME	12,903			12,255			38,494		35,111
PROVISION FOR LOAN LOSSES	360			480			1,035		975
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	12,543			11,775			37,459		34,136
NON-INTEREST INCOME:
Service charges	622			645			1,776		1,788
Net debt securities gains (losses), available for sale	189			(22		)	200		(17		)
Net equity securities (losses) gains	(21		)	(16		)	44		(44		)
Net securities gains (losses), trading	2			14			15		12
Bank-owned life insurance	143			165			434		496
Gain on sale of loans	583			398			1,246		1,053
Insurance commissions	93			85			346		266
Brokerage commissions	353			340			1,032		1,013
Debit card fees	333			359			1,032		1,065
Other	525			621			1,420		1,400
TOTAL NON-INTEREST INCOME	2,822			2,589			7,545		7,032
NON-INTEREST EXPENSE:
Salaries and employee benefits	5,488			5,420			16,512		15,387
Occupancy	638			640			2,085		2,080
Furniture and equipment	885			780			2,421		2,328
Software amortization	234			208			629		504
Pennsylvania shares tax	285			278			863		833
Professional fees	585			459			1,834		1,674
Federal Deposit Insurance Corporation deposit insurance	—			237			504		639
Marketing	98			245			233		764
Intangible amortization	62			71			202		229
Other	1,266			1,343			4,131		4,037
TOTAL NON-INTEREST EXPENSE	9,541			9,681			29,414		28,475
INCOME BEFORE INCOME TAX PROVISION	5,824			4,683			15,590		12,693
INCOME TAX PROVISION	1,170			857			2,741		2,179
CONSOLIDATED NET INCOME	$	4,654		$	3,826		$	12,849	$	10,514
Less: Net loss attributable to noncontrolling interest	4			—			10		(1		)
NET INCOME ATTRIBUTABLE TO PENNS WOODS BANCORP, INC.	$	4,650		$	3,826		$	12,839	$	10,515
EARNINGS PER SHARE - BASIC	$	0.66		$	0.54		$	1.82	$	1.49
EARNINGS PER SHARE - DILUTED	$	0.66		$	0.54		$	1.82	$	1.49
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC	7,037,055			7,035,840			7,036,181		7,034,940
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED	7,037,055			7,035,840			7,036,181		7,034,940
DIVIDENDS DECLARED PER SHARE	$	0.31		$	0.31		$	0.94	$	0.94

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

PENNS WOODS BANCORP, INC.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(UNAUDITED)



	Three Months Ended September 30,						Nine Months Ended September 30,
(In Thousands)	2019			2018			2019			2018
Net Income	$	4,650		$	3,826		$	12,839		$	10,515
Other comprehensive income (loss) income:
Change in unrealized gain (loss) on available for sale securities	1,261			(789		)	6,056			(2,641		)
Tax effect	(265		)	166			(1,272		)	556
Net realized (gain) loss on available for sale securities included in net income	(189		)	22			(200		)	17
Tax effect	40			(5		)	42			(4		)
Amortization of unrecognized pension gain	46			41			140			125
Tax effect	(9		)	(8		)	(29		)	(25		)
Total other comprehensive gain (loss) income	884			(573		)	4,737			(1,972		)
Comprehensive income	$	5,534		$	3,253		$	17,576		$	8,543

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

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			ADDITIONAL PAID-IN CAPITAL		RETAINED EARNINGS			ACCUMULATED OTHER COMPREHENSIVE LOSS			TREASURY STOCK			NON-CONTROLLING INTEREST		TOTAL SHAREHOLDERS’ EQUITY
Balance, June 30, 2019	7,519,344		$	41,773		$	51,067	$	73,565		$	(2,783	)	$	(12,115	)	$	14	$	151,521
Net income								4,650									4		4,654
Other comprehensive income											884								884
Stock-based compensation						185													185
Dividends declared ($0.31 per share)								(2,206		)									(2,206		)
Common shares issued for employee stock purchase plan	782		4			38													42
Stock split fractional shares	(2,330	)	(19		)														(19		)
Balance, September 30, 2019	7,517,796		$	41,758		$	51,290	$	76,009		$	(1,899	)	$	(12,115	)	$	18	$	155,061



	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		ADDITIONAL PAID-IN CAPITAL		RETAINED EARNINGS			ACCUMULATED OTHER COMPREHENSIVE LOSS			TREASURY STOCK			NON-CONTROLLING INTEREST		TOTAL SHAREHOLDERS’ EQUITY
Balance, June 30, 2018	7,515,803	$	41,753	$	50,225	$	66,181		$	(6,910	)	$	(12,115	)	$	1	$	139,135
Net income						3,826									—		3,826
Other comprehensive loss									(573		)						(573		)
Stock-based compensation				333													333
Dividends declared ($0.31 per share)						(2,205		)									(2,205		)
Common shares issued for employee stock purchase plan	1,743	4		19													23
Balance, September 30, 2018	7,517,546	$	41,757	$	50,577	$	67,802		$	(7,483	)	$	(12,115	)	$	1	$	140,539

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

Nine 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			ADDITIONAL PAID-IN CAPITAL		RETAINED EARNINGS			ACCUMULATED OTHER COMPREHENSIVE LOSS			TREASURY STOCK			NON-CONTROLLING INTEREST		TOTAL SHAREHOLDERS’ EQUITY
Balance, December 31, 2018	7,517,546		$	41,763		$	50,737	$	69,787		$	(6,636	)	$	(12,115	)	$	8	$	143,544
Net income								12,839									10		12,849
Other comprehensive income											4,737								4,737
Stock-based compensation						498													498
Dividends declared ($0.94 per share)								(6,617		)									(6,617		)
Common shares issued for employee stock purchase plan	2,580		14			55													69
Stock split fractional shares	(2,330	)	(19		)														(19		)
Balance, September 30, 2019	7,517,796		$	41,758		$	51,290	$	76,009		$	(1,899	)	$	(12,115	)	$	18	$	155,061



	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		ADDITIONAL PAID-IN CAPITAL		RETAINED EARNINGS			ACCUMULATED OTHER COMPREHENSIVE LOSS			TREASURY STOCK			NON-CONTROLLING INTEREST			TOTAL SHAREHOLDERS’ EQUITY
Balance, December 31, 2017	7,514,009	$	41,744	$	50,173	$	63,364		$	(4,974	)	$	(12,115	)	$	2		$	138,194
Net income						10,515									(1		)	10,514
Adoption of ASU 2016-01						537			(537		)							—
Other comprehensive (loss)									(1,972		)							(1,972		)
Stock-based compensation				345														345
Dividends declared ($0.94 per share)						(6,614		)										(6,614		)
Common shares issued for employee stock purchase plan	3,537	13		59														72
Balance, September 30, 2018	7,517,546	$	41,757	$	50,577	$	67,802		$	(7,483	)	$	(12,115	)	$	1		$	140,539

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

PENNS WOODS BANCORP, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)



	Nine Months Ended September 30,
(In Thousands)	2019			2018
OPERATING ACTIVITIES:
Net Income	$	12,849		$	10,514
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,904			1,907
Amortization of intangible assets	202			229
Provision for loan losses	1,035			975
Accretion and amortization of investment security discounts and premiums	499			591
Net securities (gains) losses, available for sale	(200		)	17
Originations of loans held for sale	(41,601		)	(39,979		)
Proceeds of loans held for sale

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	5	$201

10-Q	2019-11-08	Quarter: 2019-09-30
10-Q	2019-08-09	Quarter: 2019-06-30
10-Q	2019-05-10	Quarter: 2019-03-31
10-K	2019-03-12	Annual: 2018-12-31
10-Q	2018-11-08	Quarter: 2018-09-30
10-Q	2018-08-08	Quarter: 2018-08-08
10-Q	2018-05-10	Quarter: 2018-03-31
10-K	2018-03-13	Annual: 2017-12-31
10-Q	2017-11-08	Quarter: 2017-09-30
10-Q	2017-08-08	Quarter: 2017-06-30
10-Q	2017-05-09	Quarter: 2017-03-31
10-K	2017-03-10	Annual: 2016-12-31
10-Q	2016-11-09	Quarter: 2016-09-30
10-Q	2016-08-09	Quarter: 2016-06-30
10-Q	2016-05-10	Quarter: 2016-03-31
10-K	2016-03-10	Annual: 2015-12-31
10-Q	2015-11-09	Quarter: 2015-09-30
10-Q	2015-08-10	Quarter: 2015-06-30
10-Q	2015-05-11	Quarter: 2015-03-31
10-K	2015-03-12	Annual: 2014-12-31
10-Q	2014-11-10	Quarter: 2014-09-30
10-Q	2014-08-11	Quarter: 2014-06-30
10-Q	2014-05-12	Quarter: 2014-03-31
10-K	2014-03-14	Annual: 2013-12-31
10-Q	2013-11-12	Quarter: 2013-09-30
10-Q	2013-08-09	Quarter: 2013-06-30
10-Q	2013-05-10	Quarter: 2013-03-31
10-K	2013-03-13	Annual: 2012-12-31
10-Q	2012-11-09	Quarter: 2012-09-30
10-Q	2012-08-09	Quarter: 2012-06-30
10-Q	2012-05-09	Quarter: 2012-03-31
10-K	2012-03-14	Annual: 2011-12-31
10-Q	2011-11-09	Quarter: 2011-09-30
10-Q	2011-08-09	Quarter: 2011-06-30
10-Q	2011-05-10	Quarter: 2011-03-31
10-K	2011-03-10	Annual: 2010-12-31
10-Q	2010-11-09	Quarter: 2010-09-30
10-Q	2010-08-09	Quarter: 2010-06-30
10-Q	2010-05-10	Quarter: 2010-03-31
10-K	2010-03-12	Annual: 2009-12-31

8-K	2019-10-23	Earnings, Exhibits
8-K	2019-09-30	Shareholder Rights, Amend Bylaw, Exhibits
8-K	2019-09-03	Other Events, Exhibits
8-K	2019-08-13	Officers
8-K	2019-07-23	Earnings, Exhibits
8-K	2019-05-31	Officers, Exhibits
8-K	2019-04-23	Shareholder Vote
8-K	2019-04-22	Earnings, Exhibits
8-K	2019-01-28	Earnings, Exhibits
8-K	2018-12-31	Officers, Exhibits
8-K	2018-10-19	Earnings, Exhibits
8-K	2018-09-27	Officers, Exhibits
8-K	2018-07-20	Earnings, Exhibits
8-K	2018-04-24	Shareholder Vote
8-K	2018-04-19	Earnings, Exhibits
8-K	2018-01-30	Earnings, Exhibits
8-K	2018-01-11	Other Events

EX-3.1	ex31-3q19.htm
EX-31.1	ex311-3q19.htm
EX-31.2	ex312-3q19.htm
EX-32.1	ex321-3q19.htm
EX-32.2	ex322-3q19.htm