secQ398
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 March 31, 1998 Commission file number
0-17077
PENNS WOODS BANCORP, INC.
Incorporated in Pennsylvania
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 or
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 [ X ] NO[ ]
On March 31, 1998 there were 2,565,958 shares of the
Registrant's common stock outstanding.
PART I FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PENNS WOODS BANCORP, INC.
CONSOLIDATED BALANCE SHEET
AT DATES INDICATED
March 31, December 31,
1998 1997
--------------------------------
(IN THOUSANDS)
<S> <C> <C>
ASSETS:
Cash and due from banks $8,937 $12,557
Securities available-for-sale 74,648 75,400
Securities held-to-maturity 3,440 3,234
Loans, net of unearned discount 190,679 187,567
Allowance for loan losses (2,418) (2,414)
Loans, net 188,261 185,153
Bank premises and equipment, net 3,683 3,835
Foreclosed assets held for sale 0 35
Accrued interest receivable 1,549 1,708
Other assets 2,747 2,066
--------------------------------
TOTAL ASSETS $283,265 $283,988
================================
LIABILITIES:
Demand Deposits $33,064 $35,811
Interest-bearing demand deposits 39,241 38,499
Savings deposits 44,488 43,399
Time deposits 103,695 102,827
--------------------------------
Total deposits $220,488 $220,536
Federal funds purchased 1,800 6,980
Securities sold under repurchase agr 10,821 8,580
Accrued interest payable 799 907
Other Liabilities 4,631 4,011
Total liabilities --------------------------------
$238,539 $241,014
--------------------------------
SHAREHOLDERS' EQUITY:
Common stock, par value $10 per share,
10,000,000 shares authorized $25,660 $12,828
Stock dividend distributable 0 12,828
Additional paid-in capital 4,720 4,712
Retained earnings 7,832 6,621
Accumulated other comprehensive income 6,514 5,985
--------------------------------
$44,726 $42,974
Total shareholders' equity--------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $283,265 $283,988
================================
</TABLE>
PENNS WOODS BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
FOR THE PERIODS INDICATED
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS QUARTER QUARTER
ENDED ENDED ENDED ENDED
March 31, 1998 March 31, 1997 March 31, 1998 March 31, 1997
----------------------------------------------------------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C>
INTEREST INCOME:
Interest and fees on loans $4,302 $3,819 $4,302 $3,819
Interest and dividends on investment----------------------------------------------------------------
Taxable interest 645 724 645 724
Nontaxable interest 214 437 214 437
Dividends 194 131 194 131
----------------------------------------------------------------
Total interest and dividends
on investments 1,053 1,292 1,053 1,292
----------------------------------------------------------------
Total interest income 5,355 5,111 5,355 5,111
----------------------------------------------------------------
INTEREST EXPENSE:
Interest on deposits 1,960 1,885 1,960 1,885
Interest on Federal funds purchased 55 99 55 99
Interest on securities sold under
repurchase agreements 118 98 118 98
Interest on other borrowings 0 0 0 0
----------------------------------------------------------------
Total interest expense 2,133 2,082 2,133 2,082
----------------------------------------------------------------
Net interest income 3,222 3,029 3,222 3,029
Provision for loan losses 75 60 75 60
----------------------------------------------------------------
Net interest income after provision for
loan losses 3,147 2,969 3,147 2,969
----------------------------------------------------------------
OTHER OPERATING INCOME:
Service charges 255 201 255 201
Securities gains 609 1,176 609 1,176
Other income 73 75 73 75
----------------------------------------------------------------
Total other operating income 937 1,452 937 1,452
----------------------------------------------------------------
OTHER OPERATING EXPENSES:
Salaries and employee benefits 971 948 971 948
Occupancy expense, net 133 121 133 121
Furniture and equipment expense 158 149 158 149
Other expenses 561 558 561 558
----------------------------------------------------------------
Total other operating expenses 1,823 1,776 1,823 1,776
----------------------------------------------------------------
INCOME BEFORE TAXES 2,261 2,645 2,261 2,645
INCOME TAX PROVISION 589 699 589 699
----------------------------------------------------------------
NET INCOME $1,672 $1,946 $1,672 $1,946
================================================================
EARNINGS PER SHARE - BASIC AND DILUTED 0.65 0.76 0.65 0.76
================================================================
WEIGHTED AVERAGE SHARES OUTSTANDING 2,565,728 2,554,596 2,565,728 2,554,596
================================================================
</TABLE>
PENNS WOODS BANCORP, INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIODS INDICATED
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1998 1997
--------------------------------
(IN THOUSANDS)
<S> <C>
NET INCOME $1,672 $1,946
--------------------------------
OTHER COMPREHENSIVE INCOME (LOSS),
Unrealized gains on securities:
Gains (losses) arising during the quarter 1,138 602
Reclassification adjustment for gains included
in net income (609) (1,176)
--------------------------------
OTHER COMPREHENSIVE INCOME (LOSS), BEFORE TAX 529 (574)
INCOME TAX EXPENSE RELATED TO OTHER COMPREHENSIVE
INCOME (LOSS) 180 (195)
--------------------------------
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX 349 (379)
--------------------------------
COMPREHENSIVE INCOME $2,021 $1,567
================================
<FN>
PENNS WOODS BANCORP, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE QUARTERS ENDING MARCH 31, 1998 AND MARCH 31, 1997
Note :
During the first quarter of 1998, Penns Woods Bancorp, Inc. adopted FASB
Statement no. 130, Reporting Comprehensive Income. Statement no. 130
requires the reporting of comprehensive income in addition to net income
from operations. Comprehensive income is a more inclusive financial
reporting methodology that includes disclosure of certain financial
information that historically has not been recognized in the calculation of
net income.
At quarterend March 31, 1998 and March 31, 1997, securities classified as
available-for-sale were held, which had unrealized gains/(losses)
of $529,000 and ($574,000) before tax, respectively. The tax (expense)/
benefit for each period was ($180,000) and $195,000, resepctively,
resulting in other comprehensive income/loss of $349,000 for the quarter
ended March 31, 1998 and ($379,000) for the quarter ended March 31, 1997.
</FN>
</TABLE>
PENNS WOODS BANCORP, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
UNREALIZED
APPREC.
COMMON STOCK ADDITIONAL (DEPREC.) ON TOTAL
STOCK DIVIDEND PAID-IN RETAINED SECURITIES SHAREHOLDERS'
SHARES AMOUNT DISTRIBUTABLE CAPITAL EARNINGS AVAIL.-FOR-SALE EQUITY
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997 1,282,779 $12,828 $12,828 $4,712 $6,621 $5,985 $42,974
Net income for the three months
ended March 31, 1998 1,672 1,672
Stock split effected in the form
of a 100% stock dividend 1,282,779 12,828 (12,828)
Dividends declared, $0.18 (461) (461)
Net change in unrealized
appreciation (depreciation) 529 529
Stock options exercised 400 4 8 12
---------------------------------------------------------------------------------------------------
Balance, March 31, 1998 2,565,958 $25,660 $0 $4,720 $7,832 $6,514 $44,726
===================================================================================================
</TABLE>
PENNS WOODS BANCORP, INC.
CONSOLIDATED STATEMENT
OF CASH FLOWS
FOR THE QUARTERS ENDED MARCH 31, 1998 AND MARCH 31, 1997
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1998 1997
--------------------------------
(IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $1,672 $1,946
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation 94 99
Provision for loan losses 75 60
Amortization of investment security premiums 14 6
Accretion of investment security discounts (23) (39)
Securities gains, net (609) (1,176)
Gain on sale of foreclosed assets (12) (26)
Decrease in all other assets (518) (73)
Increase in all other liabilities 239 612
--------------------------------
Net cash provided by operating activies 932 1,409
--------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of securities available-for-sale (4,884) (14,877)
Proceeds from sale of securities available-for-sale 5,060 14,384
Proceeds from the sale of foreclosed assets 47 53
Purchase of securities held-to-maturity (224) 0
Proceeds from calls and maturities of securities hel 1,013 26
Proceeds from calls and maturities of securities ava 1,000 0
Net increase in loans (3,183) (845)
Acquisition of bank premises and equipment 57 (99)
--------------------------------
Net cash (used in) provided by investing activities (1,114) (1,358)
--------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in interest-bearing deposits 2,698 7,344
Net (decrease) increase in noninterest-bearing deposits (2,747) 1,650
Net increase in sec. sold under repurch. agree. 2,242 6,153
(Decrease) in other borrowed funds (5,180) (14,490)
Dividends paid (462) (319)
Stock options exercised 11 0
--------------------------------
Net cash (used in) provided by financing activities (3,438) 338
--------------------------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (3,620) 389
CASH AND CASH EQUIVALENTS, BEGINNING 12,557 8,014
--------------------------------
CASH AND CASH EQUIVALENTS, ENDING $8,937 $8,403
================================
</TABLE>
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, 1997.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EARNINGS SUMMARY
Interest Income
For the three months ended March 31, 1998,
total interest income increased by $244,000
or 4.77% compared to the same period in 1997.
This increase is due to an increase of $483,000
in interest and fees on loans and a decrease in
total interest and dividends on investments of
$239,000.
The increase in interest and fees on
loans of $244,000 was primarily due to
an increase in the loan volume during the first
three months, ended March 31, 1998 of $3,112,000,
and also due to loan fees and late charges collected.
Interest and dividends on investments
decreased due to the net effect of a $79,000
decrease in taxable interest, a $223,000 decrease
in nontaxable interest and an increase in
dividend income of $63,000.
Interest Expense
For the three months ended March 31, 1998
total interest expense increased $51,000 or
2.45% over the same period in 1997. The
increase in interest expense can be attributed
to the interest paid on time deposits, due to the
increase in volume of such deposits. In
addition, there was an increase in the amount of
interest paid on securities sold under repurchase
agreements due to the increase in volume
of these accounts.
Provision for Loan Losses
The provision for losses for the three
months ended March 31, 1998 increased
$15,000 from the corresponding period in
1997. This increase reflects an anticipated
rise in consumer loan losses throughout the
remainder of the year.
As of the first quarter of 1998, charge offs
exceeded recoveries by $70,000 compared to
the first quarter of 1997 when recoveries
exceeded charge offs by $6,000. Provisions
to date total $75,000 as compared to
provisions through March 31, 1997 of
$60,000.
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 fine
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 .41 times at March 31, 1998 a slight
decrease in coverage from the .40 times at
December 31, 1997. The increase in
non-performing loans occurred mainly in the
commercial loan portfolio. 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 three months
ended March 31, 1998 decreased $515,000.
This decrease is due to the net effect of an
increase in service charges collected of
$54,000, a decrease in securities gains
realized of $567,000 and a slight decrease in
other income of $2,000.
The increase in service charges was
a result of an increase in service charges
collected on deposit accounts.
The overall decrease in other operating
income was primarily due to
the decrease in securities gains recognized of
$567,000. Realized gains were on sales
of bonds that were sold in effort to better
match the Bank's rate-sensitive assets and
rate-sensitive liabilities given the current
economic conditions. In addition, gains
were realized 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 three months ended March 31, 1998
total other operating expenses increased $47,000
over the same period in 1997.
Employee salaries and benefits
increased $23,000 as a result of increases in
salary levels and the hiring of additional employees.
Occupancy expense increased $12,000 and
furniture and equipment expense increased
$9,000. The increase in occupancy
expense can be partially attributed to the
opening of the Bank's Mortgage/Loan Center
that was opened in State College, Pennsylvania
on July 7, 1997. In addition, there was an
increase in the amount of maintenance an
repairs expense incurred during the first
quarter of 1998 compared to the first quarter
of 1997.
The $9,000 increase in furniture and
equipment expense can be attributed mainly
to an increase in lease expense associated
with the upgrading of the Bank's computer
system.
Expenses included under the other expenses
heading are such items as: advertising, postage,
maintenance, FDIC, other insurance,
Pennsylvania State shares tax,
legal and professional fees, telephone,
printing and supplies and other general and
administrative expenses. An overall decrease
in other expenses totalled $3,000.
Provision for Income Taxes
Provision for income taxes for the three
months ended March 31, 1998 resulted in an
effective income tax rate of 26.05%
compared to 26.43% for the corresponding
period in 1997. The decrease noted is
primarily a result of the decrease in the amount
of security gains included in taxable income.
ASSET/LIABILITY MANAGEMENT
Assets
At March 31, 1998, cash, federal funds sold,
and investment securities totalled
$87,025,000, or a net decrease of $4,166,000
over the corresponding balance at December
31, 1997. Investment securities and cash
decreased by $546,000 and $3,620,000,
respectively. During this period, net loans
increased by $3,108,000 to $188,261,000.
The decrease in investment securities from
December 31, 1997 to March 31, 1998 can be
attributed to the net effect of various purchases and
sales of investments during the first three months
with the main transactions being in equity
securities.
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
In addition, management frequently reviews and
utilizes the results of examinations and reports
provided by the committee, regulators, and
independent loan review consultants, on the
adequacy of the loan loss allowance.
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
$2,418,000 at March 31, 1998, a slight increase of
$4,000 over the balance at December 31,
1997. For the three months ended March 31, 1998,
the provision for loan losses totalled
$75,000. As a percent of loans, the
allowance for loan losses at March 31, 1998
totalled 1.27% versus 1.29% at December 31,
1997.
Loans accounted for on a non-accrual basis
totalled $650,000 and $552,000 at March
31, 1998 and December 31, 1997 respectively.
Accruing loans, contractually delinquent 90
days or more were $335,000 at March 31, 1998
and $409,000 at December 31, 1997.
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 .41
times at March 31, 1998 and .40 times at
December 31, 1997. 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 there are no credits of substance that
have 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 March 31, 1998 the balance of other real
estate was $0 compared to $35,000 at
December 31, 1997. The property that was
being held in the account on December 31,
1997 was sold in February, 1998.
Deposits
At March 31, 1998 total deposits amounted to
$220,488,000 representing a decrease of
$48,000 or a .02% decrease from total
deposits at December 31, 1997.
Other Liabilities
At March 31, 1998, other liabilities
totalled $4,631,000 or a $620,000 increase
over the balance at December 31, 1997. This
increase is primarily due to an increase in
accrued taxes and accrued expenses.
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 March 31, 1998, regulatory capital to
total assets was 15.79% compared to 15.13%
at December 31, 1997. Primary capital to
total assets at March 31, 1998 was 16.64%
compared to 15.98% at December 31, 1997.
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 risk-based capital guidelines.
The Company's Tier 1 Capital to total risk
weighted assets ratio is 21.11% and the
total capital ratio to total risk weighted
assets ratio is 22.36%.
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, 70% maximum
2. Net Loans to Total Deposits, 85% maximum
3. Net Loans to Core Deposits, 90% maximum
4. Investments to Total Assets, 40% maximum
5. Investments to Total Deposits, 50% maximum
6. Total Liquid Assets to Total Assets, 25% minimum
7. Total Liquid Assets to Total Liabilities, 25% minimum
8. Volatility Liability Dependence Ratio, 10% maximum
The Bank has maintained a liquidity level at or above the
guidelines of the FDIC and the Pennsylvania Department
of Banking. The Bank has available to it Federal Funds
lines of credit totalling $8,000,000 from correspondent banks.
In addition, the Bank has an agreement with the Federal
Home Loan Bank of Pittsburgh that enables the Bank
to receive advances up to $86,732,000 for terms of 1
to 120 days under the Federal Home Loan Bank's
"Repo Plus" credit program.
All of the funding mentioned is available to the Bank,
should the need for short-term funds arise.
The following table sets forth the Bank's interest rate
sensitivity as of March 31, 1998:
<TABLE>
<CAPTION>
AFTER ONE AFTER TWO AFTER
WITHIN BUT WITHIN BUT WITHIN FIVE
ONE YEAR TWO YEARS FIVE YEARS YEARS
<S> <C> <C> <C> <C>
Earning assets: (1) (2)
Investment securities (1) $ 10,664 $11,417 $25,439 $20,822
Loans (2) 74,901 24,119 74,100 17,562
------------------------------------------------------------
Total earning assets 85,565 35,536 99,539 38,384
Deposits (3) 96,526 23,791 53,468 13,638
Borrowings 7,504 250 4,867 0
------------------------------------------------------------
Total interest bearing
liabilities 104,030 24,041 58,335 13,638
Net non-interest bearing
funding (4) 10,262 7,838 19,149 21,731
------------------------------------------------------------
Total net funding sources 114,292 31,879 77,484 35,369
Excess assets (liabilities) (28,727) 3,657 22,055 3,015
Cumulative excess
assets (liabilities) (28,727) (25,070) (3,015) 0
<FN>
(1) Investment balances reflect estimated prepayments
on mortgage-backed securities.
(2) Loan balances include annual repayment assumptions
based on projected cash flow from the loan portfolio.
The cash flow projections are based on the terms of
the credit facilities and estimated prepayments on
fixed rate mortgage loans. Loans include loans held
for resale.
(3) Adjustments to the interest sensitivity of Savings,
NOW and MMDA account balances reflect managerial
assumptions based on historical experience,
expected behavior in future rate environments and
the Bank's positioning for these products.
(4) Net non-interest bearing funds is the sum of non-interest
bearing liabilities and shareholders' equity minus
non-interest earning assets and reflect managerial
assumptions as to the appropriate investment
maturities for these sources.
In this analysis the company examines the result of a 100 and 200
basis point change in market interest rates and the effect on net
interest income. It is assumed that the change is instantaneous and
that all rates move in a parallel manner. In addition, it is assumed
that rates on core deposit products such as NOW's, savings accounts,
and the MMDA accounts will be adjusted by 50% of the assumed
rate change. Assumptions are also made concerning prepayment
speeds on mortgage loans and mortgage securities. The results of
this rate shock are a useful tool to assist the Company in assessing
interest rate risk inherent in its balance sheet. Below are the results
of this rate shock analysis as of March 31, 1998.
Net Interest Income
Change in Rates Change (After tax)
-200 $338
-100 $187
+100 ($215)
+200 ($436)
The model utilized to create the report presented above makes
various estimates at each level of interest rate change regarding
cash flow from principal repayment on loans and
mortgage-backed securities and or call activity on investment
securities. Actual results could differ significantly from these
estimates which would result in significant differences in the
calculated projected change. In addition, the limits stated above
do not necessarily represent the level of change under which
management would undertake specific measure to realign its
portfolio in order to reduce the projected level of change.
Generally, management believes the Company is well positioned
to respond expeditiously when the market interest rate outlook
changes.
</FN>
</TABLE>
Inflation
The asset and liability structure of a financial insitution is
primarily monetary in nature, therefore, interest rates
rather than inflation have a more significant impact on
the Corporation's performance. Interest rates are not always
affected in the same direction or magnitude as prices of
other goods and services, but are reflective of fiscal
policy initiatives or economic factors which are not
measured by a price index.
Year 2000 Compliance; Management Information Systems
The Bank utilizes software and related computer technologies
essential to its operations that will be effected by the
Year 2000 issue. In 1997, the Bank established a year
2000 compliance committee to address the risks of the
critical internal bank systems as well as external
systems provided by third parties. A comprehensive
plan was developed detailing the sequence of events
and actions to be taken as the Year 2000 approaches.
The year 2000 compliance expense and related potential
effect on the Company's earnings cannot be determined
by management at the present time.
CAUTIONARY STATEMENT FOR PURPOSES OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
This Report contains certain "forward-looking statements" including
statements concerning plans, objectives, future events or performance
and assumptions and other statements which are other than
statements of historical fact. Penns Woods Bancorp, Inc. and its
subsidiaries (the "Company") wishes to caution readers that the
following important factors, among others, may have affected and
could in the future affect the Company's actual results and could
cause the Company's actual results for subsequent periods to
differ materially from those expressed in any forward-looking
statement made by or on behalf of the Company herin: (i) the effect
of changes in laws and regulations, including federal and state
banking laws and regulations, which the Company must comply,
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 Standars 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 nonbank
providers of various financial services; (iv) the effect
of changes in interest rates; and (v) the effect of changes
in the business cycle and downturns in the local, regional
or national economies.
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.
Part II. OTHER INFORMATION
Item 5. Other Information.
On July 7, 1997, Jersey Shore State Bank opened a Mortgage/Loan
Center in State College, Pennsylvania. Loan applications, including
secondary mortgage applications will be accepted at this Loan
Center.
Item 6. Exhibits and reports on Form 8-K.
a. Exhibits:
Number Description
- --------------------------
(11) Statement Regarding Computation of Per Share Earnings
(27) Financial Data Schedule
b. Reports: No reports on Form 8-K were filed in the first
quarter of 1998.
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: May 15, 1998
----------------------------------
Ronald A. Walko, Sr. Vice President
Date: May 15, 1998
----------------------------------
Sonya E. Hartranft, Secretary
Description
- --------------------------
(11) Statement Regarding Computation of Per Share Earnings
(27) Financial Data Schedule
EXHIBIT 11
<TABLE>
STATEMENT OF COMPUTATION OF EARNING PER SHARE
FOR THE PERIOD ENDED 3/31/98
LESS FRACTION
SHARES FRACTIONAL OF WEIGHTED
DATE OUTSTANDING RESTATEMENT SHARES YEAR SHARES
- --------------------------------------------------------------------------------------
<S> <C>
1/01/98-1/14 1,282,779 2 - 14/90 399,087
1/15/98-2/25 2,565,598 - - 42/90 1,197,279
2/26/98-3/31 2,565,958 - - 34/90 969,362
WEIGHTED SHARES OUTSTANDING 3/31/98 2,565,728
================
<S> <C> <C>
NET INCOME 3/31/98 $1,672,000
WEIGHTED SHARES OUTSTANDING 3/31/98 2,565,728
EARNINGS PER SHARE 3/31/98 - BASIC $0.65
================
NET INCOME 3/31/98 $1,672,000
WEIGHTED SHARES OUTSTANDING 3/31/98 2,565,728
DILUTIVE EFFECT OF STOCK OPTIONS 3/31/ 14,813
2,580,541
EARNINGS PER SHARE 3/31/98 - DILUTED $0.65
================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1998
<CASH> 8937
<INT-BEARING-DEPOSITS> 187424
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 74648
<INVESTMENTS-CARRYING> 3440
<INVESTMENTS-MARKET> 0
<LOANS> 190645
<ALLOWANCE> 2418
<TOTAL-ASSETS> 283328
<DEPOSITS> 220488
<SHORT-TERM> 12621
<LIABILITIES-OTHER> 5493
<LONG-TERM> 0
0
0
<COMMON> 25660
<OTHER-SE> 19066
<TOTAL-LIABILITIES-AND-EQUITY> 283328
<INTEREST-LOAN> 4302
<INTEREST-INVEST> 1053
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 5355
<INTEREST-DEPOSIT> 1960
<INTEREST-EXPENSE> 173
<INTEREST-INCOME-NET> 3222
<LOAN-LOSSES> 75
<SECURITIES-GAINS> 609
<EXPENSE-OTHER> 1823
<INCOME-PRETAX> 2261
<INCOME-PRE-EXTRAORDINARY> 2261
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1672
<EPS-PRIMARY> .65
<EPS-DILUTED> .65
<YIELD-ACTUAL> 0
<LOANS-NON> 650
<LOANS-PAST> 475
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2414
<CHARGE-OFFS> 91
<RECOVERIES> 21
<ALLOWANCE-CLOSE> 2418
<ALLOWANCE-DOMESTIC> 2418
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
