Attached files
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| 8-K - 8-K - PENNS WOODS BANCORP INC | pwod-20210721.htm |
Exhibit 99.1
Press Release — For Immediate Release
July 21, 2021
Penns Woods Bancorp, Inc. Reports Second Quarter 2021 Earnings
Williamsport, PA — July 21, 2021 - Penns Woods Bancorp, Inc. (NASDAQ: PWOD)
Penns Woods Bancorp, Inc. achieved net income of $7.0 million for the six months ended June 30, 2021, resulting in basic and diluted earnings per share of $1.00.
Highlights
•Net income, as reported under GAAP, for the three and six months ended June 30, 2021 was $3.6 million and $7.0 million, respectively, compared to $3.8 million and $6.8 million for the same period of 2020. Results for the three and six months ended June 30, 2021 compared to 2020 were impacted by a decrease in after-tax securities gains of $45,000 (from a gain of $156,000 to a gain of $111,000) for the three month period and an increase in after-tax securities gains of $27,000 (from a gain of $178,000 to a gain of $205,000) for the six month period.
•The provision for loan losses decreased $295,000 and $530,000, respectfully, for the three and six months ended June 30, 2021, to $350,000 and $865,000 compared to $645,000 and $1.4 million for the 2020 periods. The provision for loan losses was elevated in 2020 due primarily to the uncertainty caused by the COVID-19 pandemic.
•Basic and diluted earnings per share for the three and six months ended June 30, 2021 were $0.51 and $1.00. Basic and diluted earnings per share for the three and six months ended June 30, 2020 were $0.53 and $0.97.
•Return on average assets was 0.76% for three months ended June 30, 2021, compared to 0.85% for the corresponding period of 2020. Return on average assets was 0.75% for the six months ended June 30, 2021, compared to 0.79% for the corresponding period of 2020.
•Return on average equity was 8.70% for the three months ended June 30, 2021, compared to 9.59% for the corresponding period of 2020. Return on average equity was 8.69% for the six months ended June 30, 2021, compared to 8.75% for the corresponding period of 2020.
COVID-19 Activity
•Approximately one third of employees working remotely.
•As of June 30, 2021, loan modification/deferral program in place to defer payments up to 180 days for principal and/or interest with only $7.9 million in loan principal remaining in deferral.
•All COVID-19 related loan deferrals meet the requirements to not be considered a troubled debt restructuring.
•Participated in the Paycheck Protection Program ("PPP") by primarily utilizing third parties to service and place the loans.
•Significantly reduced deposit rates during the latter half of March 2020 continuing through June 2021.
•Total paycheck protection program loans originated to be held on balance sheet at June 30, 2021 total $21.6 million.
1
Net Income
Net income from core operations (“core earnings”), which is a non-generally accepted accounting principles (GAAP) measure of net income excluding net securities gains or losses, was $3.5 million for the three months ended June 30, 2021 compared to $3.6 million for the same period of 2020. Core earnings were $6.8 million for the six months ended June 30, 2021, compared to $6.7 million for the same period of 2020. Core earnings per share for the three months ended June 30, 2021 were $0.49 basic and diluted, compared to $0.51 basic and diluted core earnings per share for the same period of 2020. Core earnings per share for the six months ended June 30, 2021 were $0.97 basic and diluted, compared to $0.95 basic and diluted for the same period of 2020. Core return on average assets and core return on average equity were 0.74% and 8.43% for the three months ended June 30, 2021, compared to 0.81% and 9.19% for the corresponding period of 2020. Core return on average assets and core return on average equity were 0.73% and 8.44% for the six months ended June 30, 2021 compared to 0.77% and 8.52% for the corresponding period of 2020. A reconciliation of the non-GAAP financial measures of core earnings, core return on assets, core return on equity, and core earnings per share described in this press release to the comparable GAAP financial measures is included at the end of this press release.
Net Interest Margin
The net interest margin for the three and six months ended June 30, 2021 was 2.78% and 2.83%, compared to 3.01% and 3.09% for the corresponding period of 2020. The decrease in the net interest margin was driven by a decrease in the yield of the loan portfolio of 47 and 39 basis points ("bps"), while the investment portfolio yield declined 50 and 62 bps, respectively, during the current low interest rate environment. Further compressing the net interest margin was the significant increase of interest-bearing deposits. These deposits carry a current yield of a few basis points as commercial customers have received PPP funding and retail customers have received stimulus funding. Rates paid on interest-bearing deposit liabilities decreased 54 and 56 bps as rates paid were decreased significantly during 2020 due to the economic impact of COVID-19 prolonging the low interest rate environment. These deposit rate decreases have partially offset the decline in earning asset yield.
Assets
Total assets increased $56.5 million to $1.9 billion at June 30, 2021 compared to June 30, 2020. Cash and cash equivalents increased significantly due to deposit growth resulting from the various economic recovery programs instituted at the state and federal levels that impacted both commercial and retail customers, coupled with customers becoming more risk averse and seeking safety in a bank deposit. Net loans decreased $12.9 million to $1.3 billion at June 30, 2021 compared to June 30, 2020, as the COVID-19 business and travel restrictions curtailed various lending activities such as indirect auto, home equity, and commercial. Lending activity began to rebound as business and travel restrictions were lessened during the second half of 2020 and continues to rebound in 2021. The investment portfolio increased $7.7 million from June 30, 2020 to June 30, 2021 as a portion of the excess cash liquidity was invested into short-term municipal bonds.
Non-performing Loans
The ratio of non-performing loans to total loans ratio decreased to 0.59% at June 30, 2021 from 0.82% at June 30, 2020 as non-performing loans have decreased to $7.9 million at June 30, 2021 from $11.1 million at June 30, 2020 primarily due to a commercial loan relationship that was paid-off during the fourth quarter of 2020. The majority of non-performing loans involve loans that are either in a secured position and have sureties with a strong underlying financial position or have a specific allocation for any impairment recorded within the allowance for loan losses. Net loan charge-offs of $230,000 for the six months ended June 30, 2021 impacted the allowance for loan losses, which was 1.08% of total loans at June 30, 2021 compared to 0.96% at June 30, 2020.
Deposits
Deposits increased $89.4 million to $1.6 billion at June 30, 2021 compared to June 30, 2020. Noninterest-bearing deposits increased $59.0 million to $477.3 million at June 30, 2021 compared to June 30, 2020. Driving deposit growth was the receipt of PPP funding by commercial customers, stimulus funding by retail customers, and customers becoming more risk averse and seeking safety in a bank deposit. Emphasis remains on increasing the utilization of electronic (internet and mobile) deposit banking among our customers. Utilization of internet and mobile banking has increased since the start of 2020 due to these efforts coupled with a change in consumer behavior due to the business and travel restrictions caused by the COVID-19 pandemic. The increased level of deposits have allowed for a decrease in short and long-term borrowings.
2
Shareholders’ Equity
Shareholders’ equity increased $7.3 million to $166.8 million at June 30, 2021 compared to June 30, 2020. Accumulated other comprehensive loss of $1.4 million at June 30, 2021 increased from a loss of $1.0 million at June 30, 2020 primarily as a result of a change in the net excess of the projected benefit obligations under the defined benefit plan over the fair value of the plan’s assets, resulting in an increase in the net loss of $364,000. The current level of shareholders’ equity equates to a book value per share of $23.63 at June 30, 2021 compared to $22.66 at June 30, 2020, and an equity to asset ratio of 8.80% at June 30, 2021 compared to 8.68% at June 30, 2020. Dividends declared for the six months ended June 30, 2021 and 2020 were $0.64 per share, respectively.
Penns Woods Bancorp, Inc. is the parent company of Jersey Shore State Bank, which operates eighteen branch offices providing financial services in Lycoming, Clinton, Centre, Montour, Union, and Blair Counties, and Luzerne Bank, which operates eight branch offices providing financial services in Luzerne County. Investment and insurance products are offered through Jersey Shore State Bank’s subsidiary, The M Group, Inc. D/B/A The Comprehensive Financial Group. Insurance products are offered through United Insurance Solutions, LLC, a joint venture that is a subsidiary of the holding company.
NOTE: This press release contains financial information determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). Management uses the non-GAAP measure of net income from core operations in its analysis of the company’s performance. This measure, as used by the Company, adjusts net income determined in accordance with GAAP to exclude the effects of special items, including significant gains or losses that are unusual in nature such as net securities gains and losses. Because these certain items and their impact on the Company’s performance are difficult to predict, management believes presentation of financial measures excluding the impact of such items provides useful supplemental information in evaluating the operating results of the Company’s core businesses. These disclosures should not be viewed as a substitute for net income determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
This press release may contain certain “forward-looking statements” including statements concerning plans, objectives, future events or performance and assumptions and other statements, which are statements other than statements of historical fact. The Company cautions readers that the following important factors, among others, may have affected and could in the future affect actual results and could cause actual results for subsequent periods to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company herein: (i) the effect of changes in laws and regulations, including federal and state banking laws and regulations, and the associated costs of compliance with such laws and regulations either currently or in the future as applicable; (ii) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies as well as by the Financial Accounting Standards Board, or of changes in the Company’s organization, compensation and benefit plans; (iii) the effect on the Company’s competitive position within its market area of the increasing consolidation within the banking and financial services industries, including the increased competition from larger regional and out-of-state banking organizations as well as non-bank providers of various financial services; (iv) the effect of changes in interest rates; (v) the effects of health emergencies, including the spread of infectious diseases or pandemics; or (vi) the effect of changes in the business cycle and downturns in the local, regional or national economies. For a list of other factors which could affect the Company’s results, see the Company’s filings with the Securities and Exchange Commission, including “Item 1A. Risk Factors,” set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
You should not place undue reliance on any forward-looking statements. These statements speak only as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company undertakes no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this press release.
Previous press releases and additional information can be obtained from the Company’s website at www.pwod.com.
| Contact: | Richard A. Grafmyre, Chief Executive Officer | |||||||
| 110 Reynolds Street | ||||||||
| Williamsport, PA 17702 | ||||||||
| 570-322-1111 | e-mail: pwod@pwod.com | |||||||
3
PENNS WOODS BANCORP, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
| June 30, | ||||||||||||||||||||
| (In Thousands, Except Share Data) | 2021 | 2020 | % Change | |||||||||||||||||
| ASSETS: | ||||||||||||||||||||
| Noninterest-bearing balances | $ | 27,731 | $ | 26,932 | 2.97 | % | ||||||||||||||
| Interest-bearing balances in other financial institutions | 199,389 | 188,242 | 5.92 | % | ||||||||||||||||
| Federal funds sold | 40,000 | — | n/a | |||||||||||||||||
| Total cash and cash equivalents | 267,120 | 215,174 | 24.14 | % | ||||||||||||||||
| Investment debt securities, available for sale, at fair value | 171,783 | 164,369 | 4.51 | % | ||||||||||||||||
| Investment equity securities, at fair value | 1,269 | 1,291 | (1.70) | % | ||||||||||||||||
| Investment securities, trading | 43 | 37 | 16.22 | % | ||||||||||||||||
| Restricted investment in bank stock, at fair value | 15,120 | 14,849 | 1.83 | % | ||||||||||||||||
| Loans held for sale | 4,927 | 5,146 | (4.26) | % | ||||||||||||||||
| Loans | 1,337,947 | 1,349,347 | (0.84) | % | ||||||||||||||||
| Allowance for loan losses | (14,438) | (12,977) | 11.26 | % | ||||||||||||||||
| Loans, net | 1,323,509 | 1,336,370 | (0.96) | % | ||||||||||||||||
| Premises and equipment, net | 34,629 | 32,873 | 5.34 | % | ||||||||||||||||
| Accrued interest receivable | 8,363 | 8,068 | 3.66 | % | ||||||||||||||||
| Bank-owned life insurance | 34,005 | 29,368 | 15.79 | % | ||||||||||||||||
| Investment in limited partnerships | 4,795 | 1,596 | 200.44 | % | ||||||||||||||||
| Goodwill | 17,104 | 17,104 | — | % | ||||||||||||||||
| Intangibles | 568 | 777 | (26.90) | % | ||||||||||||||||
| Operating lease right of use asset | 2,946 | 3,231 | (8.82) | % | ||||||||||||||||
| Deferred tax asset | 3,624 | 3,284 | 10.35 | % | ||||||||||||||||
| Other assets | 5,065 | 4,827 | 4.93 | % | ||||||||||||||||
| TOTAL ASSETS | $ | 1,894,870 | $ | 1,838,364 | 3.07 | % | ||||||||||||||
| LIABILITIES: | ||||||||||||||||||||
| Interest-bearing deposits | $ | 1,086,352 | $ | 1,055,981 | 2.88 | % | ||||||||||||||
| Noninterest-bearing deposits | 477,344 | 418,324 | 14.11 | % | ||||||||||||||||
| Total deposits | 1,563,696 | 1,474,305 | 6.06 | % | ||||||||||||||||
| Short-term borrowings | 7,520 | 15,133 | (50.31) | % | ||||||||||||||||
| Long-term borrowings | 141,051 | 171,885 | (17.94) | % | ||||||||||||||||
| Accrued interest payable | 961 | 1,530 | (37.19) | % | ||||||||||||||||
| Operating lease liability | 2,992 | 3,263 | (8.31) | % | ||||||||||||||||
| Other liabilities | 11,815 | 12,640 | (6.53) | % | ||||||||||||||||
| TOTAL LIABILITIES | 1,728,035 | 1,678,756 | 2.94 | % | ||||||||||||||||
| SHAREHOLDERS’ EQUITY: | ||||||||||||||||||||
| Preferred stock, no par value, 3,000,000 shares authorized; no shares issued | — | — | n/a | |||||||||||||||||
| Common stock, par value $5.55, 22,500,000 shares authorized; 7,541,627 and 7,522,573 shares issued; 7,061,402 and 7,042,348 shares outstanding | 41,897 | 41,792 | 0.25 | % | ||||||||||||||||
| Additional paid-in capital | 53,205 | 51,956 | 2.40 | % | ||||||||||||||||
| Retained earnings | 85,281 | 78,910 | 8.07 | % | ||||||||||||||||
| Accumulated other comprehensive gain (loss): | ||||||||||||||||||||
| Net unrealized gain on available for sale securities | 4,085 | 4,194 | (2.60) | % | ||||||||||||||||
| Defined benefit plan | (5,523) | (5,159) | (7.06) | % | ||||||||||||||||
| Treasury stock at cost, 480,225 | (12,115) | (12,115) | — | % | ||||||||||||||||
| TOTAL PENNS WOODS BANCORP, INC. SHAREHOLDERS' EQUITY | 166,830 | 159,578 | 4.54 | % | ||||||||||||||||
| Non-controlling interest | 5 | 30 | (83.33) | % | ||||||||||||||||
| TOTAL SHAREHOLDERS' EQUITY | 166,835 | 159,608 | 4.53 | % | ||||||||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,894,870 | $ | 1,838,364 | 3.07 | % | ||||||||||||||
4
PENNS WOODS BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||
| (In Thousands, Except Per Share Data) | 2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||||||||||||||||||||||||||||
| INTEREST AND DIVIDEND INCOME: | ||||||||||||||||||||||||||||||||||||||
| Loans including fees | $ | 13,099 | $ | 14,666 | (10.68) | % | $ | 26,444 | $ | 29,323 | (9.82) | % | ||||||||||||||||||||||||||
| Investment securities: | ||||||||||||||||||||||||||||||||||||||
| Taxable | 838 | 1,023 | (18.08) | % | 1,657 | 2,033 | (18.49) | % | ||||||||||||||||||||||||||||||
| Tax-exempt | 164 | 169 | (2.96) | % | 335 | 314 | 6.69 | % | ||||||||||||||||||||||||||||||
| Dividend and other interest income | 305 | 186 | 63.98 | % | 565 | 535 | 5.61 | % | ||||||||||||||||||||||||||||||
| TOTAL INTEREST AND DIVIDEND INCOME | 14,406 | 16,044 | (10.21) | % | 29,001 | 32,205 | (9.95) | % | ||||||||||||||||||||||||||||||
| INTEREST EXPENSE: | ||||||||||||||||||||||||||||||||||||||
| Deposits | 1,489 | 2,802 | (46.86) | % | 3,173 | 5,837 | (45.64) | % | ||||||||||||||||||||||||||||||
| Short-term borrowings | 2 | 7 | (71.43) | % | 4 | 29 | (86.21) | % | ||||||||||||||||||||||||||||||
| Long-term borrowings | 820 | 985 | (16.75) | % | 1,659 | 1,928 | (13.95) | % | ||||||||||||||||||||||||||||||
| TOTAL INTEREST EXPENSE | 2,311 | 3,794 | (39.09) | % | 4,836 | 7,794 | (37.95) | % | ||||||||||||||||||||||||||||||
| NET INTEREST INCOME | 12,095 | 12,250 | (1.27) | % | 24,165 | 24,411 | (1.01) | % | ||||||||||||||||||||||||||||||
| PROVISION FOR LOAN LOSSES | 350 | 645 | (45.74) | % | 865 | 1,395 | (37.99) | % | ||||||||||||||||||||||||||||||
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 11,745 | 11,605 | 1.21 | % | 23,300 | 23,016 | 1.23 | % | ||||||||||||||||||||||||||||||
| NON-INTEREST INCOME: | ||||||||||||||||||||||||||||||||||||||
| Service charges | 379 | 312 | 21.47 | % | 762 | 861 | (11.50) | % | ||||||||||||||||||||||||||||||
| Debt securities gains, available for sale | 137 | 186 | (26.34) | % | 275 | 207 | 32.85 | % | ||||||||||||||||||||||||||||||
| Equity securities gains (losses) | 4 | 10 | (60.00) | % | (19) | 30 | (163.33) | % | ||||||||||||||||||||||||||||||
| Securities (losses) gains, trading | (1) | — | n/a | 3 | (14) | 121.43 | % | |||||||||||||||||||||||||||||||
| Bank-owned life insurance | 162 | 144 | 12.50 | % | 335 | 336 | (0.30) | % | ||||||||||||||||||||||||||||||
| Gain on sale of loans | 670 | 1,028 | (34.82) | % | 1,578 | 1,472 | 7.20 | % | ||||||||||||||||||||||||||||||
| Insurance commissions | 150 | 92 | 63.04 | % | 307 | 219 | 40.18 | % | ||||||||||||||||||||||||||||||
| Brokerage commissions | 207 | 186 | 11.29 | % | 426 | 555 | (23.24) | % | ||||||||||||||||||||||||||||||
| Debit card income | 398 | 310 | 28.39 | % | 778 | 584 | 33.22 | % | ||||||||||||||||||||||||||||||
| Other | 803 | 353 | 127.48 | % | 1,078 | 808 | 33.42 | % | ||||||||||||||||||||||||||||||
| TOTAL NON-INTEREST INCOME | 2,909 | 2,621 | 10.99 | % | 5,523 | 5,058 | 9.19 | % | ||||||||||||||||||||||||||||||
| NON-INTEREST EXPENSE: | ||||||||||||||||||||||||||||||||||||||
| Salaries and employee benefits | 5,672 | 5,230 | 8.45 | % | 11,270 | 10,897 | 3.42 | % | ||||||||||||||||||||||||||||||
| Occupancy | 717 | 626 | 14.54 | % | 1,693 | 1,328 | 27.48 | % | ||||||||||||||||||||||||||||||
| Furniture and equipment | 971 | 828 | 17.27 | % | 1,780 | 1,688 | 5.45 | % | ||||||||||||||||||||||||||||||
| Software amortization | 208 | 236 | (11.86) | % | 406 | 486 | (16.46) | % | ||||||||||||||||||||||||||||||
| Pennsylvania shares tax | 372 | 323 | 15.17 | % | 724 | 608 | 19.08 | % | ||||||||||||||||||||||||||||||
| Professional fees | 684 | 658 | 3.95 | % | 1,267 | 1,280 | (1.02) | % | ||||||||||||||||||||||||||||||
| Federal Deposit Insurance Corporation deposit insurance | 264 | 185 | 42.70 | % | 485 | 379 | 27.97 | % | ||||||||||||||||||||||||||||||
| Marketing | 140 | 56 | 150.00 | % | 203 | 109 | 86.24 | % | ||||||||||||||||||||||||||||||
| Intangible amortization | 50 | 59 | (15.25) | % | 103 | 121 | (14.88) | % | ||||||||||||||||||||||||||||||
| Other | 1,170 | 1,410 | (17.02) | % | 2,268 | 2,825 | (19.72) | % | ||||||||||||||||||||||||||||||
| TOTAL NON-INTEREST EXPENSE | 10,248 | 9,611 | 6.63 | % | 20,199 | 19,721 | 2.42 | % | ||||||||||||||||||||||||||||||
| INCOME BEFORE INCOME TAX PROVISION | 4,406 | 4,615 | (4.53) | % | 8,624 | 8,353 | 3.24 | % | ||||||||||||||||||||||||||||||
| INCOME TAX PROVISION | 813 | 851 | (4.47) | % | 1,584 | 1,512 | 4.76 | % | ||||||||||||||||||||||||||||||
| NET INCOME | $ | 3,593 | $ | 3,764 | (4.54) | % | $ | 7,040 | $ | 6,841 | 2.91 | % | ||||||||||||||||||||||||||
| Earnings attributable to noncontrolling interest | 5 | 4 | 25.00 | % | 11 | 8 | 37.50 | % | ||||||||||||||||||||||||||||||
| NET INCOME AVAILABLE TO COMMON SHAREHOLDERS' | $ | 3,588 | $ | 3,760 | (4.57) | % | $ | 7,029 | $ | 6,833 | 2.87 | % | ||||||||||||||||||||||||||
| EARNINGS PER SHARE - BASIC | $ | 0.51 | $ | 0.53 | (3.77) | % | $ | 1.00 | $ | 0.97 | 3.09 | % | ||||||||||||||||||||||||||
| EARNINGS PER SHARE - DILUTED | $ | 0.51 | $ | 0.53 | (3.77) | % | $ | 1.00 | $ | 0.97 | 3.09 | % | ||||||||||||||||||||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC | 7,059,667 | 7,041,629 | 0.26 | % | 7,057,404 | 7,041,185 | 0.23 | % | ||||||||||||||||||||||||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED | 7,059,667 | 7,041,629 | 0.26 | % | 7,057,404 | 7,041,185 | 0.23 | % | ||||||||||||||||||||||||||||||
| DIVIDENDS DECLARED PER SHARE | $ | 0.32 | $ | 0.32 | — | % | $ | 0.64 | $ | 0.64 | — | % | ||||||||||||||||||||||||||
5
PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||
| June 30, 2021 | June 30, 2020 | |||||||||||||||||||||||||||||||||||||
| (Dollars in Thousands) | Average Balance | Interest | Average Rate | Average Balance | Interest | Average Rate | ||||||||||||||||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||||||||||||||||
| Tax-exempt loans | $ | 46,926 | $ | 334 | 2.85 | % | $ | 44,916 | $ | 348 | 3.12 | % | ||||||||||||||||||||||||||
| All other loans | 1,285,853 | 12,835 | 4.00 | % | 1,294,745 | 14,391 | 4.47 | % | ||||||||||||||||||||||||||||||
| Total loans | 1,332,779 | 13,169 | 3.96 | % | 1,339,661 | 14,739 | 4.43 | % | ||||||||||||||||||||||||||||||
| Federal funds sold | 25,538 | 45 | 0.71 | % | — | — | — | % | ||||||||||||||||||||||||||||||
| Taxable securities | 148,415 | 1,051 | 2.87 | % | 147,352 | 1,193 | 3.29 | % | ||||||||||||||||||||||||||||||
| Tax-exempt securities | 36,469 | 208 | 2.31 | % | 28,280 | 213 | 3.06 | % | ||||||||||||||||||||||||||||||
| Total securities | 184,884 | 1,259 | 2.76 | % | 175,632 | 1,406 | 3.26 | % | ||||||||||||||||||||||||||||||
| Interest-bearing deposits | 218,868 | 48 | 0.09 | % | 144,948 | 16 | 0.04 | % | ||||||||||||||||||||||||||||||
| Total interest-earning assets | 1,762,069 | 14,521 | 3.31 | % | 1,660,241 | 16,161 | 3.92 | % | ||||||||||||||||||||||||||||||
| Other assets | 128,402 | 116,750 | ||||||||||||||||||||||||||||||||||||
| TOTAL ASSETS | $ | 1,890,471 | $ | 1,776,991 | ||||||||||||||||||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY: | ||||||||||||||||||||||||||||||||||||||
| Savings | $ | 225,625 | 28 | 0.05 | % | $ | 190,243 | 67 | 0.14 | % | ||||||||||||||||||||||||||||
| Super Now deposits | 285,672 | 208 | 0.29 | % | 251,691 | 409 | 0.65 | % | ||||||||||||||||||||||||||||||
| Money market deposits | 309,749 | 256 | 0.33 | % | 229,362 | 418 | 0.73 | % | ||||||||||||||||||||||||||||||
| Time deposits | 256,345 | 997 | 1.56 | % | 362,545 | 1,908 | 2.12 | % | ||||||||||||||||||||||||||||||
| Total interest-bearing deposits | 1,077,391 | 1,489 | 0.55 | % | 1,033,841 | 2,802 | 1.09 | % | ||||||||||||||||||||||||||||||
| Short-term borrowings | 7,047 | 2 | 0.11 | % | 11,174 | 7 | 0.83 | % | ||||||||||||||||||||||||||||||
| Long-term borrowings | 141,076 | 820 | 2.33 | % | 171,895 | 985 | 2.21 | % | ||||||||||||||||||||||||||||||
| Total borrowings | 148,123 | 822 | 2.23 | % | 183,069 | 992 | 2.12 | % | ||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 1,225,514 | 2,311 | 0.76 | % | 1,216,910 | 3,794 | 1.24 | % | ||||||||||||||||||||||||||||||
| Demand deposits | 482,513 | 384,591 | ||||||||||||||||||||||||||||||||||||
| Other liabilities | 17,384 | 18,583 | ||||||||||||||||||||||||||||||||||||
| Shareholders’ equity | 165,060 | 156,907 | ||||||||||||||||||||||||||||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,890,471 | $ | 1,776,991 | ||||||||||||||||||||||||||||||||||
| Interest rate spread | 2.55 | % | 2.68 | % | ||||||||||||||||||||||||||||||||||
| Net interest income/margin | $ | 12,210 | 2.78 | % | $ | 12,367 | 3.01 | % | ||||||||||||||||||||||||||||||
| Three Months Ended June 30, | ||||||||||||||
| 2021 | 2020 | |||||||||||||
| Total interest income | $ | 14,406 | $ | 16,044 | ||||||||||
| Total interest expense | 2,311 | 3,794 | ||||||||||||
| Net interest income | 12,095 | 12,250 | ||||||||||||
| Tax equivalent adjustment | 115 | 117 | ||||||||||||
| Net interest income (fully taxable equivalent) | $ | 12,210 | $ | 12,367 | ||||||||||
6
| Six Months Ended | ||||||||||||||||||||||||||||||||||||||
| June 30, 2021 | June 30, 2020 | |||||||||||||||||||||||||||||||||||||
| (Dollars in Thousands) | Average Balance | Interest | Average Rate | Average Balance | Interest | Average Rate | ||||||||||||||||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||||||||||||||||
| Tax-exempt loans | $ | 46,177 | $ | 684 | 2.99 | % | $ | 48,346 | $ | 752 | 3.13 | % | ||||||||||||||||||||||||||
| All other loans | 1,289,660 | 25,904 | 4.05 | % | 1,299,893 | 28,729 | 4.44 | % | ||||||||||||||||||||||||||||||
| Total loans | 1,335,837 | 26,588 | 4.01 | % | 1,348,239 | 29,481 | 4.40 | % | ||||||||||||||||||||||||||||||
| Federal funds sold | 12,840 | 45 | 0.71 | % | — | — | — | % | ||||||||||||||||||||||||||||||
| Taxable securities | 146,740 | 2,083 | 2.88 | % | 145,070 | 2,466 | 3.46 | % | ||||||||||||||||||||||||||||||
| Tax-exempt securities | 36,420 | 424 | 2.36 | % | 26,027 | 397 | 3.10 | % | ||||||||||||||||||||||||||||||
| Total securities | 183,160 | 2,507 | 2.78 | % | 171,097 | 2,863 | 3.40 | % | ||||||||||||||||||||||||||||||
| Interest-bearing deposits | 207,495 | 94 | 0.09 | % | 85,832 | 102 | 0.24 | % | ||||||||||||||||||||||||||||||
| Total interest-earning assets | 1,739,332 | 29,234 | 3.39 | % | 1,605,168 | 32,446 | 4.07 | % | ||||||||||||||||||||||||||||||
| Other assets | 126,418 | 114,085 | ||||||||||||||||||||||||||||||||||||
| TOTAL ASSETS | $ | 1,865,750 | $ | 1,719,253 | ||||||||||||||||||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY: | ||||||||||||||||||||||||||||||||||||||
| Savings | $ | 220,161 | 72 | 0.07 | % | $ | 184,042 | 158 | 0.17 | % | ||||||||||||||||||||||||||||
| Super Now deposits | 287,444 | 475 | 0.33 | % | 235,758 | 833 | 0.71 | % | ||||||||||||||||||||||||||||||
| Money market deposits | 307,885 | 523 | 0.34 | % | 220,035 | 895 | 0.82 | % | ||||||||||||||||||||||||||||||
| Time deposits | 255,408 | 2,103 | 1.66 | % | 370,902 | 3,951 | 2.14 | % | ||||||||||||||||||||||||||||||
| Total interest-bearing deposits | 1,070,898 | 3,173 | 0.60 | % | 1,010,737 | 5,837 | 1.16 | % | ||||||||||||||||||||||||||||||
| Short-term borrowings | 6,368 | 4 | 0.13 | % | 11,011 | 29 | 0.53 | % | ||||||||||||||||||||||||||||||
| Long-term borrowings | 141,279 | 1,659 | 2.37 | % | 166,024 | 1,928 | 2.34 | % | ||||||||||||||||||||||||||||||
| Total borrowings | 147,647 | 1,663 | 2.27 | % | 177,035 | 1,957 | 2.22 | % | ||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 1,218,545 | 4,836 | 0.80 | % | 1,187,772 | 7,794 | 1.32 | % | ||||||||||||||||||||||||||||||
| Demand deposits | 464,237 | 355,704 | ||||||||||||||||||||||||||||||||||||
| Other liabilities | 21,227 | 19,551 | ||||||||||||||||||||||||||||||||||||
| Shareholders’ equity | 161,741 | 156,226 | ||||||||||||||||||||||||||||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,865,750 | $ | 1,719,253 | ||||||||||||||||||||||||||||||||||
| Interest rate spread | 2.59 | % | 2.75 | % | ||||||||||||||||||||||||||||||||||
| Net interest income/margin | $ | 24,398 | 2.83 | % | $ | 24,652 | 3.09 | % | ||||||||||||||||||||||||||||||
| Six Months Ended June 30, | ||||||||||||||
| 2021 | 2020 | |||||||||||||
| Total interest income | $ | 29,001 | $ | 32,205 | ||||||||||
| Total interest expense | 4,836 | 7,794 | ||||||||||||
| Net interest income | 24,165 | 24,411 | ||||||||||||
| Tax equivalent adjustment | 233 | 241 | ||||||||||||
| Net interest income (fully taxable equivalent) | $ | 24,398 | $ | 24,652 | ||||||||||
7
| (Dollars in Thousands, Except Per Share Data) | Quarter Ended | |||||||||||||||||||||||||||||||
| 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | 6/30/2020 | ||||||||||||||||||||||||||||
| Operating Data | ||||||||||||||||||||||||||||||||
| Net income | $ | 3,588 | $ | 3,441 | $ | 3,901 | $ | 4,472 | $ | 3,760 | ||||||||||||||||||||||
| Net interest income | 12,095 | 12,070 | 11,967 | 11,845 | 12,250 | |||||||||||||||||||||||||||
| Provision for loan losses | 350 | 515 | 585 | 645 | 645 | |||||||||||||||||||||||||||
| Net security gains | 140 | 119 | 374 | 1,011 | 196 | |||||||||||||||||||||||||||
| Non-interest income, excluding net security gains | 2,769 | 2,495 | 2,701 | 3,024 | 2,423 | |||||||||||||||||||||||||||
| Non-interest expense | 10,248 | 9,951 | 9,640 | 9,707 | 9,611 | |||||||||||||||||||||||||||
| Performance Statistics | ||||||||||||||||||||||||||||||||
| Net interest margin | 2.78 | % | 2.88 | % | 2.81 | % | 2.76 | % | 3.01 | % | ||||||||||||||||||||||
| Annualized return on average assets | 0.76 | % | 0.75 | % | 0.85 | % | 0.97 | % | 0.85 | % | ||||||||||||||||||||||
| Annualized return on average equity | 8.70 | % | 8.59 | % | 9.55 | % | 11.05 | % | 9.60 | % | ||||||||||||||||||||||
Annualized net loan charge-offs to average loans | 0.03 | % | 0.04 | % | 0.06 | % | 0.06 | % | 0.05 | % | ||||||||||||||||||||||
| Net charge-offs | 114 | 116 | 211 | 193 | 168 | |||||||||||||||||||||||||||
| Efficiency ratio | 68.61 | % | 67.96 | % | 65.36 | % | 64.89 | % | 65.10 | % | ||||||||||||||||||||||
| Per Share Data | ||||||||||||||||||||||||||||||||
| Basic earnings per share | $ | 0.51 | $ | 0.49 | $ | 0.55 | $ | 0.63 | $ | 0.53 | ||||||||||||||||||||||
| Diluted earnings per share | 0.51 | 0.49 | 0.55 | 0.63 | 0.53 | |||||||||||||||||||||||||||
| Dividend declared per share | 0.32 | 0.32 | 0.32 | 0.32 | 0.32 | |||||||||||||||||||||||||||
| Book value | 23.63 | 23.25 | 23.27 | 23.05 | 22.66 | |||||||||||||||||||||||||||
| Common stock price: | 21.12 | |||||||||||||||||||||||||||||||
| High | 26.51 | 27.78 | 27.30 | 22.83 | 27.75 | |||||||||||||||||||||||||||
| Low | 23.03 | 20.55 | 19.61 | 19.61 | 20.01 | |||||||||||||||||||||||||||
| Close | 23.82 | 24.09 | 26.01 | 19.85 | 22.71 | |||||||||||||||||||||||||||
| Weighted average common shares: | ||||||||||||||||||||||||||||||||
| Basic | 7,060 | 7,055 | 7,050 | 7,045 | 7,042 | |||||||||||||||||||||||||||
| Fully Diluted | 7,060 | 7,055 | 7,050 | 7,045 | 7,042 | |||||||||||||||||||||||||||
| End-of-period common shares: | ||||||||||||||||||||||||||||||||
| Issued | 7,542 | 7,537 | 7,533 | 7,528 | 7,523 | |||||||||||||||||||||||||||
| Treasury | 480 | 480 | 480 | 480 | 480 | |||||||||||||||||||||||||||
8
| (Dollars in Thousands, Except Per Share Data) | Quarter Ended | |||||||||||||||||||||||||||||||
| 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | 6/30/2020 | ||||||||||||||||||||||||||||
| Financial Condition Data: | ||||||||||||||||||||||||||||||||
| General | ||||||||||||||||||||||||||||||||
| Total assets | $ | 1,894,870 | $ | 1,896,192 | $ | 1,834,643 | $ | 1,840,779 | $ | 1,838,364 | ||||||||||||||||||||||
| Loans, net | 1,323,509 | 1,321,697 | 1,330,524 | 1,335,711 | 1,336,370 | |||||||||||||||||||||||||||
| Goodwill | 17,104 | 17,104 | 17,104 | 17,104 | 17,104 | |||||||||||||||||||||||||||
| Intangibles | 568 | 618 | 671 | 724 | 777 | |||||||||||||||||||||||||||
| Total deposits | 1,563,696 | 1,564,364 | 1,494,443 | 1,491,810 | 1,474,305 | |||||||||||||||||||||||||||
| Noninterest-bearing | 477,344 | 478,916 | 449,357 | 434,248 | 418,324 | |||||||||||||||||||||||||||
| Savings | 226,573 | 224,890 | 209,924 | 202,781 | 195,964 | |||||||||||||||||||||||||||
| NOW | 296,450 | 290,355 | 287,775 | 268,463 | 268,348 | |||||||||||||||||||||||||||
| Money Market | 301,405 | 324,207 | 283,742 | 274,480 | 247,753 | |||||||||||||||||||||||||||
| Time Deposits | 261,924 | 245,996 | 263,645 | 311,838 | 343,915 | |||||||||||||||||||||||||||
| Total interest-bearing deposits | 1,086,352 | 1,085,448 | 1,045,086 | 1,057,562 | 1,055,980 | |||||||||||||||||||||||||||
| Core deposits* | 1,301,772 | 1,318,368 | 1,230,798 | 1,179,972 | 1,130,389 | |||||||||||||||||||||||||||
| Shareholders’ equity | 166,830 | 164,059 | 164,142 | 162,422 | 159,578 | |||||||||||||||||||||||||||
| Asset Quality | ||||||||||||||||||||||||||||||||
| Non-performing loans | $ | 7,931 | $ | 9,272 | $ | 10,334 | $ | 10,553 | $ | 11,097 | ||||||||||||||||||||||
| Non-performing loans to total assets | 0.42 | % | 0.49 | % | 0.56 | % | 0.57 | % | 0.60 | % | ||||||||||||||||||||||
| Allowance for loan losses | 14,438 | 14,202 | 13,803 | 13,429 | 12,977 | |||||||||||||||||||||||||||
| Allowance for loan losses to total loans | 1.08 | % | 1.06 | % | 1.03 | % | 1.00 | % | 0.96 | % | ||||||||||||||||||||||
Allowance for loan losses to non-performing loans | 182.05 | % | 153.17 | % | 133.57 | % | 127.25 | % | 116.94 | % | ||||||||||||||||||||||
| Non-performing loans to total loans | 0.59 | % | 0.69 | % | 0.77 | % | 0.78 | % | 0.82 | % | ||||||||||||||||||||||
| Capitalization | ||||||||||||||||||||||||||||||||
| Shareholders’ equity to total assets | 8.80 | % | 8.65 | % | 8.95 | % | 8.82 | % | 8.68 | % | ||||||||||||||||||||||
* Core deposits are defined as total deposits less time deposits
9
Reconciliation of GAAP and Non-GAAP Financial Measures
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| (Dollars in Thousands, Except Per Share Data) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| GAAP net income | $ | 3,588 | $ | 3,760 | $ | 7,029 | $ | 6,833 | ||||||||||||||||||
| Less: net securities gains, net of tax | 111 | 156 | 205 | 178 | ||||||||||||||||||||||
| Non-GAAP core earnings | $ | 3,477 | $ | 3,604 | $ | 6,824 | $ | 6,655 | ||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| Return on average assets (ROA) | 0.76 | % | 0.85 | % | 0.75 | % | 0.79 | % | ||||||||||||||||||
| Less: net securities gains, net of tax | 0.02 | % | 0.04 | % | 0.02 | % | 0.02 | % | ||||||||||||||||||
| Non-GAAP core ROA | 0.74 | % | 0.81 | % | 0.73 | % | 0.77 | % | ||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| Return on average equity (ROE) | 8.70 | % | 9.59 | % | 8.69 | % | 8.75 | % | ||||||||||||||||||
| Less: net securities gains, net of tax | 0.27 | % | 0.40 | % | 0.25 | % | 0.23 | % | ||||||||||||||||||
| Non-GAAP core ROE | 8.43 | % | 9.19 | % | 8.44 | % | 8.52 | % | ||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| Basic earnings per share (EPS) | $ | 0.51 | $ | 0.53 | $ | 1.00 | $ | 0.97 | ||||||||||||||||||
| Less: net securities gains, net of tax | 0.02 | 0.02 | 0.03 | 0.02 | ||||||||||||||||||||||
| Non-GAAP basic core EPS | $ | 0.49 | $ | 0.51 | $ | 0.97 | $ | 0.95 | ||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| Diluted EPS | $ | 0.51 | $ | 0.53 | $ | 1.00 | $ | 0.97 | ||||||||||||||||||
| Less: net securities gains, net of tax | 0.02 | 0.02 | 0.03 | 0.02 | ||||||||||||||||||||||
| Non-GAAP diluted core EPS | $ | 0.49 | $ | 0.51 | $ | 0.97 | $ | 0.95 | ||||||||||||||||||
COVID-19 Loan Deferrals as of June 30, 2021
| (In Thousands) | Amount | |||||||
| Commercial, financial, and agricultural | $ | 140 | ||||||
| Real estate mortgage: | ||||||||
| Residential | 892 | |||||||
| Commercial | 6,890 | |||||||
| Consumer automobile loans | — | |||||||
| Other consumer installment loans | 9 | |||||||
| Total loan deferrals | $ | 7,931 | ||||||
10