-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, QBHiUMpKroiPpSOf9Ko2ACCilWUMhvnJB4FMmHJTkfAhAY3senUU1WsMWE3dmQ45 xfdEseMHHsxfBO87uHqlMQ== 0000903594-95-000029.txt : 19950814 0000903594-95-000029.hdr.sgml : 19950814 ACCESSION NUMBER: 0000903594-95-000029 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PENNS WOODS BANCORP INC CENTRAL INDEX KEY: 0000716605 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 232226454 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17077 FILM NUMBER: 95561360 BUSINESS ADDRESS: STREET 1: 115 S MAIN ST CITY: JERSEY SHORE STATE: PA ZIP: 17740 BUSINESS PHONE: 7173982213 MAIL ADDRESS: STREET 1: 300 MARKET ST CITY: WILLIAMSPORT STATE: PA ZIP: 17701 10-Q 1 FILE NAME:SEC10Q FORM 10-Q QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 10 OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended June 30, 1995 Commission file number 0-17077 PENNS WOODS BANCORP, INC. Incorporated in Pennsylvania 23-2226454 Main Office 115 South Main Street Jersey Shore, Pennsylvania 17740 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [xxx] NO [ ] On June 30, 1995 there were 844,612 shares of the Registrant's common stock outstanding.
PENNS WOODS BANCORP, INC. CONSOLIDATED BALANCE SHEET AT DATES INDICATED June 30, December 31, 1995 1994 ASSETS: Cash and due from banks $11,698,288 $12,025,441 -------------- -------------- Investment securities available-for-sale 49,439,773 60,067,442 -------------- -------------- Investment Securities held-to-maturity 3,665,875 6,757,987 -------------- -------------- Federal funds sold 8,090,000 0 -------------- -------------- Loans, net of unearned discount 154,926,272 151,491,899 -------------- -------------- Allowance for loan losses (2,329,079) (2,126,502) -------------- -------------- Loans, net 152,597,193 149,365,397 -------------- -------------- Bank premises and equipment 3,944,802 4,068,923 Foreclosed assets held for sale 213,847 414,572 Accrued interest receivable 1,569,035 1,501,658 Other assets 1,403,850 1,436,388 -------------- -------------- TOTAL ASSETS $232,622,663 $235,637,808 ============== ============== LIABILITIES: Demand Deposits $26,805,977 $22,812,653 Interest-bearing demand deposits 37,983,090 40,564,653 Savings deposits 47,321,880 49,963,037 Time deposits 87,676,006 77,461,433 -------------- -------------- Total deposits $199,786,953 $190,801,776 Federal funds purchased $0 $7,170,000 Securities sold under repurchase agreements 3,732,917 5,016,567 Accrued interest payable 786,526 610,911 Long-term Borrowings 0 7,000,000 Other liabilities 1,848,755 1,199,385 -------------- -------------- Total liabilities $206,155,151 $211,798,639 SHAREHOLDERS' EQUITY Common stock, par value $10 per share, 10,000,000 shares authorized; 844,612 shares issued and outstanding at June 30, 1995 and 1,000,000 shares authorized; 839,206 issued and outstanding at June 30, 1994 $8,446,120 $8,437,310 Additional paid-in capital 4,397,220 4,368,147 Retained earnings 12,817,328 11,659,705 Net unrealized gain (loss) on securities available for sale 806,844 (625,993) -------------- -------------- Total shareholders' equity $26,467,512 $23,839,169 -------------- -------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $232,622,663 $235,637,808 ============== ==============
PENNS WOODS BANCORP, INC. CONSOLIDATED STATEMENT OF INCOME FOR THE PERIODS INDICATED SIX MONTHS SIX MONTHS QUARTER QUARTER ENDED ENDED ENDED ENDED June 30, 1995 June 30, 1994 June 30, 1995 June 30, 1994 INTEREST INCOME: Interest and fees on loans $7,207,776 $6,121,941 $3,654,450 $3,135,652 Interest and dividends on investments: Taxable interest 1,139,152 1,049,140 $516,320 $529,060 Nontaxable interest 562,189 602,455 $277,362 $275,158 Dividends 199,457 197,869 $110,012 $92,937 Total Interest and dividends on investments 1,900,798 1,849,464 $903,694 $897,155 Interest on Federal funds sold 66,362 12,858 $66,245 $9,710 Total interest income 9,174,936 7,984,263 $4,624,389 $4,042,517 INTEREST EXPENSE: Interest on deposits 3,485,010 2,972,169 $1,813,702 $1,510,818 Interest on Federal funds purchased 65,265 81,465 $10,102 $23,949 Interest on securities sold under repurchase agreements 84,848 51,657 $41,291 $23,948 Interest on other borrowings 195,668 217,449 $85,033 $118,848 Total interest expense 3,830,791 3,322,740 $1,950,128 $1,677,563 Net interest income 5,344,145 4,661,523 $2,674,261 $2,364,954 Provision for loan losses 200,010 302,010 $100,005 $150,005 Net interest income after provision for loan losses 5,144,135 4,359,513 $2,574,256 $2,214,949 OTHER OPERATING INCOME: Service charges 357,120 329,200 $185,398 $172,448 Securities gains 565,652 954,106 $282,786 $329,091 Other income 131,491 97,832 $66,002 $52,722 Total other operating income 1,054,263 1,381,138 $534,186 $554,261 OTHER OPERATING EXPENSES: Salaries and employee benefits 2,258,365 1,641,732 $1,280,608 $841,404 Occupancy expense, net 245,437 296,297 $109,685 $138,802 Furniture and equipment expense 367,032 205,693 $220,571 $103,829 Other expenses 1,351,008 1,031,376 $603,429 $516,220 Total other operating expenses 4,221,842 3,175,098 $2,214,293 $1,600,255 INCOME BEFORE TAXES 1,976,556 2,565,553 $894,149 $1,168,955 INCOME TAX PROVISION 343,064 664,161 $53,991 $314,386 NET INCOME $1,633,492 $1,901,392 $840,158 $854,569 EARNINGS PER SHARE 1.93 2.27 0.99 1.02 TOTAL SHARES OUTSTANDING 844,612 839,026 844,612 839,026
PENNS WOODS BANCORP, INC. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 1995 UNREALIZED APPRECIATION ADDITIONAL (DEPRECIATION) ON TOTAL COMMON PAID-IN RETAINED SECURITIES SHAREHOLDERS' STOCK CAPITAL EARNINGS AVAILABLE-FOR-SALE EQUITY Balance, December 31, 1994 As previously reported $7,416,200 $4,394,542 $9,905,264 ($497,615) $21,218,391 Adjustments in connection with pooling of interest 1,021,110 (26,395) 1,754,441 (128,378) 2,620,778 Balance, December 31, 1994 As restated $8,437,310 $4,368,147 $11,659,705 ($625,993) $23,839,169 Net income for the six months ended June 30, 1995 1,633,492 1,633,492 Dividends declared and paid (475,869) (475,869) Net change in unrealized gain on marketable equity securities 1,432,837 1,432,837 Stock options exercised 8,810 29,073 37,883 Balance, June 30, 1995 $8,446,120 $4,397,220 $12,817,328 $806,844 $26,467,512
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE QUARTERS ENDED JUNE 30, 1995 AND JUNE 30, 1994 JUNE 30 JUNE 30 1995 1994 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $1,633,492 $1,901,392 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 170,811 135,656 Provision for loan losses 302,000 302,010 Amortization of investment security premiums 23,225 34,476 Accretion of investment security discounts (52,360) (32,748) Securities losses(gains) (565,652) (954,106) Salary expense recognized in relation to exercise of stock options 37,883 0 Increase in all other assets (402,068) (839,055) Increase in all other liabilities 824,985 391,009 ------------- ------------- Net cash provided by operating activities 1,972,316 938,634 ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of securities available-for-sale (19,074,901) (30,418,385) Proceeds from sale of securities available-for-sale 31,705,476 33,443,399 Purchase of securities held-to-maturity (50,000) 0 Proceeds from calls and maturities of securities held-to-maturity 3,817,458 0 Net increase in loans (3,533,796) (6,676,929) Decrease in foreclosed assets 200,725 219,028 Acquisition of bank premises and equipment (330,089) (201,193) ------------- ------------- Net cash provided by (used in) investing activities 12,734,873 (3,634,080) ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in interest-bearing deposits 4,991,853 8,130,992 Net increase (decrease) in noninterest-bearing deposits 3,993,324 2,130,304 Net decrease in sec. sold under repurch. agree. (1,283,650) (811,400) Decrease in other borrowed funds (7,170,000) (3,848,800) Increase in long-term borrowings 0 1,175,000 Repayment of long-term borrowings (7,000,000) 0 Dividends paid (475,869) (415,307) Net cash provided by (used in) financing activities (6,944,342) 6,360,789 NET INCREASE IN CASH AND CASH EQUIVALENTS 7,762,847 3,665,343 CASH AND CASH EQUIVALENTS, BEGINNING 12,025,441 12,980,957 ------------- ------------- CASH AND CASH EQUIVALENTS, ENDING $19,788,288 $16,646,300 ============= =============
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS INDICATED PENNS WOODS LOCK HAVEN CONSOLIDATED SAVINGS BANK SIX MONTHS SIX MONTHS ADJUSTMENTS SIX MONTHS ENDED ENDED ENDED June 30, 1994 June 30, 1994 N/A June 30, 1994 -------------- -------------- ----------- -------------- INTEREST INCOME: Interest and fees on loans $4,953,336 $1,168,605 $6,121,941 -------------- -------------- ----------- -------------- Interest and dividends on investments: Taxable interest 807,518 241,622 1,049,140 Nontaxable interest 602,455 0 602,455 Dividends 190,160 7,709 197,869 -------------- -------------- ----------- -------------- Total Interest and dividends on investments 1,600,133 249,331 1,849,464 Interest on Federal funds sold 12,858 0 12,858 -------------- -------------- ----------- -------------- Total interest income 6,566,327 1,417,936 7,984,263 -------------- -------------- ----------- -------------- INTEREST EXPENSE: Interest on deposits 2,392,461 579,708 2,972,169 Interest on Federal funds purchased 81,465 0 81,465 Interest on securities sold under repurchase agreements 51,657 0 51,657 Interest on other borrowings 214,936 2,513 217,449 -------------- -------------- ----------- -------------- Total interest expense 2,740,519 582,221 3,322,740 -------------- -------------- ----------- -------------- Net interest expense 3,825,808 835,715 4,661,523 Provision for loan losses 300,010 2,000 302,010 -------------- -------------- ----------- -------------- Net interest income after provision for 3,525,798 833,715 4,359,513 loan losses -------------- -------------- ----------- -------------- OTHER OPERATING INCOME: Service charges 298,152 31,048 329,200 Securities gains 947,200 6,906 954,106 Other income 89,150 8,682 97,832 -------------- -------------- ----------- -------------- Total other operating income 1,334,502 46,636 1,381,138 -------------- -------------- ----------- -------------- OTHER OPERATING EXPENSES: Salaries and employee benefits 1,381,881 259,851 1,641,732 Occupancy expense, net 219,510 76,787 296,297 Furniture and equipment expense 152,163 53,530 205,693 Other expenses 851,631 179,745 1,031,376 -------------- -------------- ----------- -------------- Total other operating expenses 2,605,185 569,913 3,175,098 INCOME BEFORE TAXES 2,255,115 310,438 2,565,553 INCOME TAX PROVISION 547,751 116,410 664,161 -------------- -------------- ----------- -------------- NET INCOME $1,707,364 $194,028 1,901,392 ============== ============== =========== ============== EARNINGS PER SHARE $2.30 $1.94 $2.26 ============== ============== =========== ============== TOTAL SHARES OUTSTANDING 741,620 99,926 841,546 ============== ============== =========== ==============
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS INDICATED PENNS WOODS LOCK HAVEN CONSOLIDATED SAVINGS BANK THREE MONTHS THREE MONTHS ADJUSTMENTS THREE MONTHS ENDED ENDED ENDED June 30, 1994 June 30, 1994 N/A June 30, 1994 -------------- -------------- ----------- -------------- INTEREST INCOME: Interest and fees on loans $2,556,710 $578,942 $3,135,652 -------------- -------------- ----------- -------------- Interest and dividends on investments: Taxable interest 398,931 130,129 529,060 Nontaxable interest 275,158 0 275,158 Dividends 89,121 3,816 92,937 -------------- -------------- ----------- -------------- Total Interest and dividends on investments 763,210 133,945 897,155 Interest on Federal funds sold 9,710 0 9,710 -------------- -------------- ----------- -------------- Total interest income 3,329,630 712,887 4,042,517 -------------- -------------- ----------- -------------- INTEREST EXPENSE: Interest on deposits 1,217,534 293,284 1,510,818 Interest on Federal funds purchased 23,949 0 23,949 Interest on securities sold under repurchase agreements 23,948 0 23,948 Interest on other borrowings 116,335 2,513 118,848 -------------- -------------- ----------- -------------- Total interest expense 1,381,766 295,797 1,677,563 -------------- -------------- ----------- -------------- Net interest expense 1,947,864 417,090 2,364,954 Provision for loan losses 150,005 0 150,005 -------------- -------------- ----------- -------------- Net interest income after provision for 1,797,859 417,090 2,214,949 loan losses -------------- -------------- ----------- -------------- OTHER OPERATING INCOME: Service charges 155,907 16,541 172,448 Securities gains 322,185 6,906 329,091 Other income 51,974 748 52,722 -------------- -------------- ----------- -------------- Total other operating income 530,066 24,195 554,261 -------------- -------------- ----------- -------------- OTHER OPERATING EXPENSES: Salaries and employee benefits 707,254 134,150 841,404 Occupancy expense, net 103,766 35,036 138,802 Furniture and equipment expense 77,668 26,161 103,829 Other expenses 422,353 93,867 516,220 -------------- -------------- ----------- -------------- Total other operating expenses 1,311,041 289,214 1,600,255 INCOME BEFORE TAXES 1,016,884 152,071 1,168,955 INCOME TAX PROVISION 259,349 55,037 314,386 -------------- -------------- ----------- -------------- NET INCOME $757,535 $97,034 854,569 ============== ============== =========== ============== EARNINGS PER SHARE $1.02 $0.97 $1.02 ============== ============== =========== ============== TOTAL SHARES OUTSTANDING 741,620 99,926 841,546 ============== ============== =========== ==============
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS INDICATED PENNS WOODS LOCK HAVEN CONSOLIDATED SAVINGS BANK THREE MONTHS THREE MONTHS ADJUSTMENTS THREE MONTHS ENDED ENDED ENDED March 31, 1995 March 31, 1995 N/A March 31, 1995 -------------- -------------- ----------- -------------- INTEREST INCOME: Interest and fees on loans $2,977,999 $575,327 $3,553,326 -------------- -------------- ----------- -------------- Interest and dividends on investments: Taxable interest 496,676 126,156 622,832 Nontaxable interest 284,827 0 284,827 Dividends 86,363 4,082 89,445 -------------- -------------- ----------- -------------- Total Interest and dividends on investments 866,866 130,238 997,104 Interest on Federal funds sold 117 0 117 -------------- -------------- ----------- -------------- Total interest income 3,844,982 705,565 4,550,547 -------------- -------------- ----------- -------------- INTEREST EXPENSE: Interest on deposits 1,382,948 288,360 1,671,308 Interest on Federal funds purchased 55,163 0 55,163 Interest on securities sold under repurchase agreements 43,557 0 43,557 Interest on other borrowings 110,635 0 110,635 -------------- -------------- ----------- -------------- Total interest expense 1,592,303 288,360 1,880,663 -------------- -------------- ----------- -------------- Net interest expense 2,252,679 417,205 2,669,884 Provision for loan losses 100,005 0 100,005 -------------- -------------- ----------- -------------- Net interest income after provision for 2,152,674 417,205 2,569,879 loan losses -------------- -------------- ----------- -------------- OTHER OPERATING INCOME: Service charges 156,913 14,809 171,722 Securities gains 282,866 0 282,866 Other income 62,517 2,972 65,489 -------------- -------------- ----------- -------------- Total other operating income 502,296 17,781 520,077 -------------- -------------- ----------- -------------- OTHER OPERATING EXPENSES: Salaries and employee benefits 793,361 184,396 977,757 Occupancy expense, net 99,330 36,422 135,752 Furniture and equipment expense 103,288 43,178 146,461 Other expenses 653,229 94,350 747,579 -------------- -------------- ----------- -------------- Total other operating expenses 1,649,203 358,346 2,007,549 INCOME BEFORE TAXES 1,005,767 76,640 1,082,407 INCOME TAX PROVISION 260,073 29,000 289,073 -------------- -------------- ----------- -------------- NET INCOME $745,694 $47,640 $793,334 ============== ============== =========== ============== EARNINGS PER SHARE $1.01 $0.45 $0.94 ============== ============== =========== ============== TOTAL SHARES OUTSTANDING 741,620 105,492 847,112 ============== ============== =========== ==============
PENNS WOODS BANCORP, INC. AND SUBSIDIARIES PART I FINANCIAL STATEMENTS: 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 financial statements and notes thereto contained in the Company's annual report for the year ended December 31, 1995. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS EARNINGS SUMMARY Merger Activity On September 15, 1994 Penns Woods Bancorp, Inc. executed an Agreement and Plan of Merger to acquire Lock Haven Savings Bank in a business combination. On April 7, 1995 (the "Effective Date") Penns Woods Bancorp, Inc. ("Penns Woods") completed the merger of Lock Haven Savings Bank, a Pennsylvania-chartered savings bank, with and into Jersey Shore State Bank, a wholly-owned subsidiary of Penns Woods. On the Effective Date, Lock Haven merged with, into and under the charter of Jersey Shore, with Jersey Shore surviving the merger, the separate existence of Lock Haven ceased, and all property, rights, powers, duties, obligations and liabilities of Lock Haven were automatically transferred to Jersey Shore. On the Effective Date each outstanding share of Lock Haven common stock was automatically converted into one share of Penns Woods common stock. A total of 102,992 shares of Penns Woods common stock were issued in the merger (2,500 share of Lock Haven common stock held by Penns Woods were cancelled in connection with the completion of the merger). The merger was treated as a pooling of interest for financial accounting purposes and constitutes a tax free reorganization for federal income tax purposes. The financial information of Penns Woods at and for the six month period ended June 30, 1995 reflect the combined business and operations of Penns Woods and Lock Haven. Interest Income For the six months ended June 30, 1995, total interest income increased by $1,190,673 or 14.91% compared to the same period in 1994. This increase is due to a $1,085,835 increase in interest and fees on loans, an increase in total interest and dividends on investments of $51,334 and an $53,504 increase in income in federal funds sold. The increase in interest and fees on loans of $1,085,835 was primarily due to a 1.75% increase in the prime lending rate as well as an increase in loan volume during this period of $10,440,618. The increase in interest on federal funds sold of $53,504 was due to an increase in the amount of funds sold. Interest and dividends on investments increased primarily due to an increase in taxable interest of $90,012 and a decrease in nontaxable interest on investments of $40,266. In addition, there was a slight increase in dividend income of $1,588 due to an increase of holdings in the equity portfolio. Interest Expense For the six months ended June 30, 1995, total interest expense increased $508,051 or 15.29% over the same period in 1994. This increase is primarily the result of an increase in the amount of interest paid on deposits due to increases in the rates paid on such deposits. Another contributing factor to the increase in interest paid on interest bearing deposits was the increase in volume of such deposits of $4,879,013. Provision for Loan Losses The provision for losses for the six months ended June 30, 1995 decreased $102,000 from the corresponding period in 1994. This decrease reflects a decline in anticipated losses on small business loans for the first six months of 1995 and the fiscal year. As of the second quarter of 1995 recoveries exceeded charge offs by $3,000 compared to the second quarter of 1994 when charge offs exceeded recoveries by $268,000. Provisions to date total $200,010 as compared to provisions through June 30, 1994 of $302,010. Senior Management utilizes several different methods to determine the adequacy of the loan loss allowance and to establish quarterly provisions. Among these methods is the analysis of the most recent five year average loss history, the coverage of non-performing loans provided by the allowance, an estimate of potential loss in homogeneous pools of loans and the internal credit rating assigned to watch and problem loans. In addition to the preceding senior management also reviews macro portfolio risks such as the absence of concentrations, absence of foreign credit exposure and growth objectives in further tuning the allowance and provisions. The ratio of non-accruing loans and those accruing but delinquent more than 90 days (collectively called "non- performing" loans) to the allowance for loan losses stood at .82 times at June 30, 1995 an improvement over the .73 times at December 31, 1994. Based upon this analysis as well as the others noted above, senior management has concluded that the allowance for loan losses is adequate. Other Operating Income Other operating income for the six months ended June 30, 1995 decreased $326,875 or 24% over the same time period in 1994. This decrease is due to the net effect of an increase in service charges collected of $27,920, a decrease in securities gains realized of $388,454, and an increase in other income of $33,659. The increase in service charges was a result of an increase in service charges collected on deposit accounts, and a gain taken on the sale of a foreclosed asset during the second quarter was the contributing factor to the increase in other income. The primary decrease in other operating income was due to the decline in securities gains recognized of $388,454. Realized gains were on partial sales of equity securities that have been in the portfolio long-term that had reached what management had determined to be their maximum potential. Other Operating Expense For the six months ended June 30, 1995 total operating expenses increased $1,046,744 or 32.97% over the same period in 1994. Expenses included under this heading are such items as: advertising, postage, maintenance, FDIC, SAIF and other insurance, Pennsylvania State shares tax, legal and professional fees, telephone, printing and supplies and other general and administrative expenses. Increases in other expenses totalled $319,632. This increase can be attributed to expenses related to the acquisition of Lock Haven Savings Bank and are non-recurring. In addition, employee salaries and benefits increased $616,633 because of the need to hire additional employees and to raise salary levels to keep pace with inflation. Occupancy expense decreased $50,860. Furniture and equipment expense increased $161,339 resulting from the lease of a new computer system. Provision for Income Taxes Provision for income taxes for the six months ended June 30, 1995 resulted in an effective income tax rate of 17.35% compared to 25.89% for the corresponding period in 1994. The slight decrease noted is primarily a result of a decrease in security gains for the June 30, 1995 period compared to June 30, 1994 as well as an increase in taxable interest on investments for the same periods. ASSET/LIABILITY MANAGEMENT Assets At June 30, 1995, cash, federal funds sold, and investment securities totalled $72,893,936, or a net decrease of $5,596,934 over the corresponding balance at December 31, 1994. Investment securities and cash decreased $13,719,781 and $327,153, respectively, while federal funds sold increased $8,090,000. During this period, net loans increased by $3,231,796 to $152,597,193. The investment securities decline is temporary due to the maturity of certain securities during the first quarter of 1995. In addition, subsequent to the acquisition of Lock Haven Savings Bank, management reviewed the acquired portfolio and made the decision to diversify the investments. The intention is to strengthen and improve the future long-term yield on the portfolio. Management evaluates credit risk, anticipated economic conditions and other relevant factors impacting the quality of the loan portfolio in order to establish an adequate loan-loss allowance. An internal credit review committee monitors loans in accordance with Federal supervisory standards. Furthermore, results of examination and appraisal of the coverage of the loan-loss allowance by the committee, Federal regulators and independent accountants are frequently reviewed by management. Accordingly, on a quarterly basis, management determines an appropriate provision for possible loan losses from earnings in order to maintain allowance coverage relative to potential losses. The allowance for loan losses totalled $2,329,079 at June 30, 1995, an increase of $202,577 over the balance at December 31, 1994. For the six months ended June 30, 1995, the provision for loan losses totalled $200,010. As a percent of loans, the allowance for loan losses at June 30, 1995 totalled 1.50% versus 1.59% at December 31, 1994. Loans accounted for on a non-accrual basis totalled $2,052,000 and $2,223,000 at June 30, 1995 and December 31, 1994 respectively. Accruing loans, contractually delinquent 90 days or more were $777,000 at June 30, 1995 and $672,000 at December 31, 1994. These loans are predominately secured by first lien mortgages on residential real estate where appraisal values mitigate any potential loss of interest and principal. The ratio of non- accruing loans and those accruing but delinquent more than 90 days to the allowance for loan losses stood at .82 times at June 30, 1995 and .73 times at December 31, 1994. Presently the portfolio has no loans that meet the definition of "trouble debt restructurings" under FAS 15. A watch list of potential problem loans is maintained and updated quarterly by an internal credit review committee. At this time only one credit of substance in the amount of $299,000 has the potential to become more than 90 days delinquent. The Bank has not had nor presently has any foreign outstandings. In addition, no known concentrations of credit presently exist. At June 30, 1995 the balance of other real estate was $213,847 compared to $414,572 at December 31, 1994. During the first quarter of 1995, two properties were transferred into the account and subsequently sold during the first quarter of 1995. In addition one property that was on the books at December 31, 1994 was sold during the second quarter of 1995. Deposits At June 30, 1995, total deposits amounted to $199,786,953 representing an increase of $8,985,177 or a 4.71% increase over total deposits at December 31, 1994. Other Liabilities At June 30, 1995, other liabilities totalled $1,848,755 or a $649,370 increase over the balance at December 31, 1994. This increase is primarily due to a deferred tax liability on the unrealized gain in the investment portfolio. Capital The adequacy of the Company's capital is reviewed on an ongoing basis with reference to the size, composition and quality of the Company's resources and regulatory guidelines. Management seeks to maintain a level of capital sufficient to support existing assets and anticipated asset growth, maintain favorable access to capital markets and preserve high quality credit ratings. The capital requirements of the Pennsylvania Department of Banking are 6%. The capital requirements of the Federal Deposit Insurance Corporation are: 1. Regulatory capital to total assets 6%. 2. Primary capital to total assets 5-1/2%. At June 30, 1995, regulatory capital to total assets was 11.38% compared to 10.11% at December 31, 1994. Primary capital to total assets at June 30, 1995 was 12.38% compared to 11.01% at December 31, 1994. The Federal Reserve Board, the FDIC and the OCC have issued certain risk-based capital guidelines, which supplement existing capital requirements. The guidelines require all United States banks and bank holding companies to maintain a minimum risk-based capital ratio of 8.00% (of which at least 4.00% must be in the form of common stockholders' equity). Assets are assigned to five risk categories, with higher levels of capital being required for the categories perceived as representing greater risk. The required capital will represent equity and (to the extent permitted) nonequity capital as a percentage of total risk-weighted assets. The risk-based capital rules are designed to make regulatory capital requirements more sensitive to differences in risk profiles among banks and bank holding companies and to minimize disincentives for holding liquid assets. Capital is being maintained in compliance with the new risk-based capital guidelines. The Company's Tier 1 Capital to total risk weighted assets ratio is 15.62% and the total capital ratio to total risk weighted assets ratio is 17.04%. Liquidity and Interest Rate Sensitivity The asset/liability committee addresses the liquidity needs of the Bank to see that sufficient funds are available to meet credit demands and deposit withdrawals as well as to the placement of available funds in the investment portfolio. In assessing liquidity requirements, equal consideration is given to the current position as well as the future outlook. The following liquidity measures are monitored and kept within the limits cited. 1. Net Loans to Total Assets, less than 70% 2. Net Loans to Total Deposits, less than 80% 3. Net Loans to Core Deposits, less than 85% 4. Investments to Total Assets, less than 40% 5. Investments to Total Deposits, less than 50% 6. Net Primary Liquid Assets to Total Assets, greater than 10% 7. Net Primary Liquid Assets to Total Liabilities, greater than 10% 8. Total Liquid Assets to Total Assets, greater than 25% 9. Total Liquid Assets to Total Liabilities, greater than 25% The Bank has maintained a liquidity level at or above the guidelines of the F.D.I.C. and the Pennsylvania Department of Banking. The Bank has available to it Federal Funds lines of credit totalling $25,630,000 from correspondent banks should the need for short-term funds arise. The following table sets forth the Bank's interest rate sensitivity as of June 30, 1995:
AFTER ONE AFTER FIVE AFTER WITHIN BUT WITHIN BUT WITHIN TEN ONE YEARFIVE YEARS TEN YEARS YEARS Earning Assets(1)(2) $85,594 $ 31,412 $44,012 $45,646 Interest-bearing liabilities(3) 79,313 61,204 666 85 _______ ________ _______ _______ Gap: By period 6,281 (29,792) 43,346 45,561 By cumulative $ 6,281 $(23,511) $19,835 $65,396 _______ ________ _______ _______ Earning assets: Investments(1) $25,661 $ 5,405 $18,935 $ 1,737 Loans(2) 59,933 26,007 25,077 43,909 Interest-bearing liabilities(3) Interest-bearing deposits $79,313 $ 61,204 $ 666 $ 85 Long-term borrowings 0 0 0 0 (1) Investment balances include annual repayment assumptions of 6%. Mortgage backed securities and certain other securities include repayment assumptions based on the terms of the securities. (2) Loan balances include annual repayment assumptions based on the projected cash flow from the loan portfolio. The cash flow projections are based on the terms of the credit facilities. No assumptions are made regarding prepayment of loans. Loans are presented net of deferred loan fees and include loans held for resale and allowance for loan losses. (3) The Corporation considers one-half of its regular saving deposits to be stable core deposits, and accordingly has classified 50% of such deposits in the "Within One Year category" and 50% in the "After One but Within Five years" category. All other interest- bearing demand deposits are classified in the "Within One Year" category and time deposits are categorized according to scheduled maturity.
In reference to the attached financial statements, all adjustments are of a normal recurring nature pursuant to Rule 10- 01 (b) (8) of Regulation SX. Part II. OTHER INFORMATION Item 4. Submission of matters to vote of security holders. The 1995 Annual Meeting of Shareholders (the "Meeting") of the Company was held on June 27, 1995. Notice of the Meeting was mailed to shareholders on or about May 5, 1995, together with proxy solicitation materials prepared in accordance with Section 14(a) of the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder. The Meeting was held for the following purposes: 1. to elect four (4) Class 1 Directors, to serve for a three-year term that will expire in 1998, and until their successors are elected and qualified (Matter No. 1); 2. to vote on a proposed amendment to the Articles of Incorporation, of the Corporation, to increase the number of authorized shares from one million (1,000,000) to ten million (10,000,000) shares (Matter No. 2); 3. to ratify the appointment by the Corporation's Board of Directors of Parente, Randolph, Orlando, Carey & Associates of Williamsport, Pennsylvania, Certified Public Accountants, as the independent auditors for the Corporation for the year ending December 31, 1995; (Matter No. 3); and 4. to transact such other business as may properly come before the Annual Meeting, and any adjournment or postponement thereof (Matter No. 4). There was no solicitation in opposition to the nominees of the Board of Directors for election to the Board of Directors. All nominees of the Board of Directors were elected. The number of votes cast for or withheld, as well as the number of abstentions and broker nonvotes for each of the nominees for election to the Board of Directors were as follows: Abstentions and Broker Nominee For Withheld Nonvotes - ------- ------- -------- ----------- Allan W. Lugg 638,633 - - R. Edward Nestlerode 631,055 - - Howard M. Thompson 636,839 - - William F. Williams, Jr. 636,769 - - Matter Nos. 2 and 3 were approved by shareholders at the Meeting. The votes cast on each of these Matters were as follows: For Against Abstain ------- ------- ------- Matter No. 2 609,154 19,225 10,496 Matter No. 3 634,468 2,700 1,707 No other matters were brought before the Meeting. Item 6. Exhibits and reports on Form 8-K. a. Exhibits: (2) Plan of acquisition (incorporated herein by reference to Form S-4, Registration Statement, filed on December 9, 1994). SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PENNS WOODS BANCORP, INC. (Registrant) Date: August 8, 1995 /s/ Theodore H. Reich Theodore H. Reich, President Date: August 8, 1995 /s/ Sonya E. Hartranft Sonya E. Hartranft, Controller EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
9 1,000 6-MOS DEC-31-1995 JUN-30-1995 9,851 1,847 8,090 0 49,440 3,666 0 154,926 2,329 232,623 199,787 4,519 0 1,849 8,446 0 0 18,022 232,623 7,208 1,901 66 9,175 3,485 346 5,344 200 566 4,222 1,976 1,976 0 0 1,633 1.93 0 0 2,052 777 0 0 1,995 128 131 2,329 2,329 0 0
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