GlobeNewswire Inc | Jul 22, 2020 02:31PM EDT

July 22, 2020

WILLIAMSPORT, Pa., July 22, 2020 (GLOBE NEWSWIRE) -- Penns Woods Bancorp,Inc. (NASDAQ: PWOD)

Penns Woods Bancorp,Inc. achieved net income of $6.8 million for the six months ended June 30, 2020, resulting in basic and diluted earnings per share of $0.97.

Highlights

-- Net income, as reported under GAAP, for the three and six months ended June30, 2020 was $3.8 million and $6.8 million, respectively compared to $4.2 and $8.2 million for the same period of 2019. Results for the three and six months ended June30, 2020 compared to 2019 were impacted by an increase in after-tax securities gains of $138,000 (from a gain of $18,000 to a gain of $156,000) for the three month period and $108,000 (from a gain of $70,000 to a gain of $178,000) for the six month period. -- The provision for loan losses increased $330,000 and $720,000, respectfully, for the three and six months ended June 30, 2020, to $645,000 and $1,395,000 compared to $315,000 and $675,000 for the 2019 periods. The increase is the result of the economic uncertainty caused by the COVID-19 pandemic. -- Basic and diluted earnings per share for the three and six months ended June 30, 2020 were $0.53 and $0.97, respectively, compared to basic and diluted earnings per share of $0.60 and $1.16 for the three and six months ended June 30, 2019. -- Return on average assets was 0.85% for the three months ended June 30, 2020, compared to 1.02% for the corresponding period of 2019. Return on average assets was 0.79% for the six months ended June 30, 2020, compared to 0.99% for the corresponding period of 2019. -- Return on average equity was 9.59% for the three months ended June 30, 2020, compared to 11.42% for the corresponding period of 2019. Return on average equity was 8.75% for the six months ended June 30, 2020, compared to 11.27% for the corresponding period of 2019.

COVID-19 Activity

-- Approximately one third of employees working remotely. -- As of June 30, 2020, loan modification/deferral program in place to defer payments up to 90 days for principal and/or interest with $241.6 million in loan principal affected by this program. -- 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 2020. -- Increased the provision for loan losses due to the economic uncertainty caused by the COVID-19 pandemic. -- Net interest margin compression expected to continue as the rate environment remains below historical levels. -- Total paycheck protection program loans held at June 30, 2020 total $12.3 million.

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 $3.6 million for the three months ended June30, 2020 compared to $4.2 million for the same period of 2019. Core earnings were $6.7 million for the six months ended June 30, 2020, compared to $8.1 million for the same period of 2019. Core earnings per share for the three months ended June30, 2020 were $0.51 basic and diluted, compared to $0.60 basic and diluted core earnings per share for the same period of 2019. Core earnings per share for the six months ended June 30, 2020 were $0.95 basic and diluted, compared to $1.15 basic and diluted for the same period of 2019. Core return on average assets and core return on average equity were 0.81% and 9.19% for the three months ended June 30, 2020, compared to 1.01% and 11.37% for the corresponding period of 2019. Core return on average assets and core return on average equity were 0.77% and 8.52% for the six months ended June 30, 2020 compared to 0.98% and 11.18% for the corresponding period of 2019. 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, 2020 was 3.01% and 3.09%, compared to 3.39% and 3.37% for the corresponding periods of 2019. The decrease in the net interest margin was driven by a decrease in the yield of the investment portfolio of 64 and 63 basis points ("bps"), respectively, for the three and six month periods. Further compressing the net interest margin was the significant increase of interest-bearing deposits within the earning asset portfolio. These deposits carry a current yield of a few basis points with the balance steadily increasing as commercial customers have received PPP funding and retail customers have received stimulus funding. Rates paid on interest-bearing liabilities were decreased during the three months ended June 30, 2020 and will partially offset the decline in earning asset yield.

Assets

Total assets increased $126.9 million to $1.8 billion at June30, 2020 compared to June30, 2019. Net loans decreased $28.9 million to $1.3 billion at June30, 2020 compared to June30, 2019, 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. The investment portfolio increased $17.9 million from June30, 2019 to June30, 2020 due to increases in the corporate and taxable municipal portfolios.

Non-performing Loans

The ratio of non-performing loans to total loans ratio decreased to 0.82% at June30, 2020 from 1.12% at June30, 2019 as non-performing loans have decreased to $11.1 million at June30, 2020 from $15.4 million at June30, 2019 primarily due to a commercial loan relationship that was partially charged-off during the fourth quarter of 2019. 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 $312,000 for the six months ended June 30, 2020 impacted the allowance for loan losses, which was 0.96% of total loans at June30, 2020 compared to 1.02% at June 30, 2019.

Deposits

Deposits increased $147.2 million to $1.5 billion at June30, 2020 compared to June30, 2019. Noninterest-bearing deposits increased $95.6 million to $418.3 million at June30, 2020 compared to June30, 2019. Driving deposit growth was the receipt of PPP funding by commercial customers, stimulus funding by retail customers, and customers becoming more risk adverse and seeking safety in a bank deposit. Emphasis during 2020 has been 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.

Shareholders Equity

Shareholders equity increased $8.1 million to $159.6 million at June30, 2020 compared to June30, 2019.The change in accumulated other comprehensive loss from $2.8 million at June30, 2019 to $1.0 million at June30, 2020 is a result of an increase in unrealized gains on available for sale securities (from an unrealized gain of $2,419,000 at June 30, 2019 to an unrealized gain of $4.2 million at June30, 2020). The amount of accumulated other comprehensive loss at June30, 2020 was also impacted by the change in net excess of the projected benefit obligation over the fair value of the plan assets of the defined benefit pension plan, resulting in a decrease in the net loss of $43,000. The current level of shareholders equity equates to a book value per share of $22.66 at June30, 2020 compared to $21.53 at June30, 2019, and an equity to asset ratio of 8.68% at June30, 2020 compared to 8.85% at June30, 2019.Dividends declared for the six months ended June 30, 2020 and 2019 were $0.64 per share and $0.63 per share, respectively.

Penns Woods Bancorp,Inc. is the parent company of Jersey Shore State Bank, which operates seventeen branch offices providing financial services in Lycoming, Clinton, Centre, Montour, and Union Counties, and Luzerne Bank, which operates nine branch offices providing financial services in Luzerne County. Investment and insurance products are offered through Jersey Shore State Banks 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 companys 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 Companys 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 Companys 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 Companys organization, compensation and benefit plans; (iii)the effect on the Companys 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 Companys results, see the Companys filings with the Securities and Exchange Commission, including Item1A. Risk Factors, set forth in the Companys Annual Report on Form10-K for the fiscal year ended December31, 2019.

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 Companys 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

THIS INFORMATION IS SUBJECT TO YEAR-END AUDIT ADJUSTMENT

PENNS WOODS BANCORP,INC.CONSOLIDATED BALANCE SHEET(UNAUDITED)

June 30,(InThousands,ExceptShareData) 2020 2019 %ChangeASSETS: Noninterest-bearing balances $ 26,932 $ 21,102 27.63 %Interest-bearing balances in other 188,242 58,423 222.21 %financial institutionsTotal cash and cash equivalents 215,174 79,525 170.57 % Investment debt securities, 164,369 145,689 12.82 %available for sale, at fair valueInvestment equity securities, at 1,291 1,841 (29.88 )fair value %Investment securities, trading 37 44 (15.91 ) %Restricted investment in bank stock, 14,849 15,087 (1.58 )at fair value %Loans held for sale 5,146 2,880 78.68 %Loans 1,349,347 1,379,285 (2.17 ) %Allowance for loan losses (12,977 ) (14,001 ) (7.31 ) %Loans, net 1,336,370 1,365,284 (2.12 ) %Premises and equipment, net 32,873 33,483 (1.82 ) %Accrued interest receivable 8,068 5,708 41.35 %Bank-owned life insurance 29,368 28,955 1.43 %Goodwill 17,104 17,104 ? %Intangibles 777 1,022 (23.97 ) %Operating lease right of use asset 3,231 4,279 (24.49 ) %Deferred tax asset 3,284 3,712 (11.53 ) %Other assets 6,423 6,887 (6.74 ) %TOTAL ASSETS $ 1,838,364 $ 1,711,500 7.41 % LIABILITIES: Interest-bearing deposits $ 1,055,981 $ 1,004,331 5.14 %Noninterest-bearing deposits 418,324 322,755 29.61 %Total deposits 1,474,305 1,327,086 11.09 % Short-term borrowings 15,133 59,453 (74.55 ) %Long-term borrowings 171,885 154,597 11.18 %Accrued interest payable 1,530 1,482 3.24 %Operating lease liability 3,263 4,286 (23.87 ) %Other liabilities 12,640 13,055 (3.18 ) %TOTAL LIABILITIES 1,678,756 1,559,959 7.62 % SHAREHOLDERS? EQUITY: Preferred stock, no par value,3,000,000 shares authorized; no ? ? n/ashares issuedCommon stock, par value $5.55,22,500,000 shares authorized;7,522,573 and 7,519,347 shares 41,792 41,773 0.05 %issued; 7,042,348 and 7,039,122shares outstandingAdditional paid-in capital 51,956 51,087 1.70 %Retained earnings 78,910 73,565 7.27 %Accumulated other comprehensive loss:Net unrealized gain on available for 4,194 2,419 73.38 %sale securitiesDefined benefit plan (5,159 ) (5,202 ) 0.83 %Treasury stock at cost, 480,225 (12,115 ) (12,115 ) ? %TOTAL PENNS WOODS BANCORP, INC. 159,578 151,527 5.31 %SHAREHOLDERS' EQUITYNon-controlling interest 30 14 114.29 %TOTAL SHAREHOLDERS' EQUITY 159,608 151,541 5.32 %TOTAL LIABILITIES AND SHAREHOLDERS? $ 1,838,364 $ 1,711,500 7.41 %EQUITY

PENNS WOODS BANCORP, INC.CONSOLIDATED STATEMENT OF INCOME(UNAUDITED)

Three Months Ended June 30, Six Months Ended June 30,(InThousands,ExceptPerShareData) 2020 2019 %Change 2020 2019 %ChangeINTEREST AND DIVIDEND INCOME: Loans including fees $ 14,666 $ 15,300 (4.14 ) $ 29,323 $ 30,169 (2.80 ) % %Investment securities: Taxable 1,023 967 5.79 % 2,033 1,901 6.94 %Tax-exempt 169 179 (5.59 ) 314 353 (11.05 ) % %Dividend and other interest income 186 395 (52.91 ) 535 852 (37.21 ) % %TOTAL INTEREST AND DIVIDEND INCOME 16,044 16,841 (4.73 ) 32,205 33,275 (3.22 ) % % INTEREST EXPENSE: Deposits 2,802 2,871 (2.40 ) 5,837 5,171 12.88 % %Short-term borrowings 7 178 (96.07 ) 29 783 (96.30 ) % %Long-term borrowings 985 879 12.06 % 1,928 1,730 11.45 %TOTAL INTEREST EXPENSE 3,794 3,928 (3.41 ) 7,794 7,684 1.43 % % NET INTEREST INCOME 12,250 12,913 (5.13 ) 24,411 25,591 (4.61 ) % % PROVISION FOR LOAN LOSSES 645 315 104.76 % 1,395 675 106.67 % NET INTEREST INCOME AFTER PROVISION FOR LOAN 11,605 12,598 (7.88 ) 23,016 24,916 (7.63 )LOSSES % % NON-INTEREST INCOME: Service charges 312 592 (47.30 ) 861 1,154 (25.39 ) % %Debt securities gains (losses), available for 186 (2 ) 9,400.00 % 207 11 1,781.82 %saleEquity securities gains 11 22 (50.00 ) 31 65 (52.31 ) % %Securities gains (losses), trading 1 3 (66.67 ) (13 ) 13 (200.00 ) % %Bank-owned life insurance 144 123 17.07 % 336 291 15.46 %Gain on sale of loans 1,028 347 196.25 % 1,472 663 122.02 %Insurance commissions 92 119 (22.69 ) 219 253 (13.44 ) % %Brokerage commissions 186 356 (47.75 ) 555 679 (18.26 ) % %Debit card income 310 389 (20.31 ) 584 699 (16.45 ) % %Other 351 520 (32.50 ) 806 895 (9.94 ) % %TOTAL NON-INTEREST INCOME 2,621 2,469 6.16 % 5,058 4,723 7.09 % NON-INTEREST EXPENSE: Salaries and employee benefits 5,230 5,523 (5.31 ) 10,897 11,024 (1.15 ) % %Occupancy 626 668 (6.29 ) 1,328 1,447 (8.22 ) % %Furniture and equipment 828 784 5.61 % 1,688 1,536 9.90 %Software amortization 236 188 25.53 % 486 395 23.04 %Pennsylvania shares tax 323 285 13.33 % 608 578 5.19 %Professional fees 658 727 (9.49 ) 1,280 1,249 2.48 % %Federal Deposit Insurance Corporation deposit 185 236 (21.61 ) 379 504 (24.80 )insurance % %Marketing 56 33 69.70 % 109 135 (19.26 ) %Intangible amortization 59 69 (14.49 ) 121 140 (13.57 ) % %Other 1,410 1,546 (8.80 ) 2,825 2,865 (1.40 ) % %TOTAL NON-INTEREST EXPENSE 9,611 10,059 (4.45 ) 19,721 19,873 (0.76 ) % %INCOME BEFORE INCOME TAX PROVISION 4,615 5,008 (7.85 ) 8,353 9,766 (14.47 ) % %INCOME TAX PROVISION 851 759 12.12 % 1,512 1,571 (3.76 ) %NET INCOME $ 3,764 $ 4,249 (11.41 ) $ 6,841 $ 8,195 (16.52 ) % %Earnings attributable to noncontrolling 4 4 n/a 8 6 33.33 %interestNET INCOME AVAILABLE TO COMMON SHAREHOLDERS' $ 3,760 $ 4,245 (11.43 ) $ 6,833 $ 8,189 (16.56 ) % %EARNINGS PER SHARE - BASIC $ 0.53 $ 0.60 (11.67 ) $ 0.97 $ 1.16 (16.38 ) % %EARNINGS PER SHARE - DILUTED $ 0.53 $ 0.60 (11.67 ) $ 0.97 $ 1.16 (16.38 ) % %WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC 7,041,629 7,038,503 0.04 % 7,041,185 7,038,068 0.04 %WEIGHTED AVERAGE SHARES OUTSTANDING - 7,041,629 7,038,503 0.04 % 7,041,185 7,038,068 0.04 %DILUTEDDIVIDENDS DECLARED PER SHARE $ 0.32 $ 0.31 3.23 % $ 0.64 $ 0.63 1.59 %

PENNS WOODS BANCORP, INC.AVERAGE BALANCES AND INTEREST RATES

Three Months Ended June 30, 2020 June 30, 2019(DollarsinThousands) Average Interest Average Average Interest Average Balance Rate Balance RateASSETS: Tax-exempt loans $ 44,916 $ 348 3.12 % $ 71,193 $ 548 3.09 %All other loans 1,294,745 14,391 4.47 % 1,313,388 14,867 4.54 %Total loans 1,339,661 14,739 4.43 % 1,384,581 15,415 4.47 % Taxable securities 147,352 1,193 3.29 % 130,802 1,300 4.03 %Tax-exempt securities 28,280 213 3.06 % 27,971 227 3.29 %Total securities 175,632 1,406 3.26 % 158,773 1,527 3.90 % Interest-bearing deposits 144,948 16 0.04 % 10,431 62 2.38 % Total interest-earning 1,660,241 16,161 3.92 % 1,553,785 17,004 4.39 %assets Other assets 116,750 113,443 TOTAL ASSETS $ 1,776,991 $ 1,667,228 LIABILITIES AND SHAREHOLDERS? EQUITY:Savings $ 190,243 67 0.14 % $ 170,142 51 0.12 %Super Now deposits 251,691 409 0.65 % 246,454 453 0.74 %Money market deposits 229,362 418 0.73 % 249,169 596 0.96 %Time deposits 362,545 1,908 2.12 % 335,721 1,771 2.12 %Total interest-bearing 1,033,841 2,802 1.09 % 1,001,486 2,871 1.15 %deposits Short-term borrowings 11,174 7 0.83 % 32,086 178 2.23 %Long-term borrowings 171,895 985 2.21 % 147,571 879 2.24 %Total borrowings 183,069 992 2.12 % 179,657 1,057 2.23 % Total interest-bearing 1,216,910 3,794 1.24 % 1,181,143 3,928 1.31 %liabilities Demand deposits 384,591 317,623 Other liabilities 18,583 19,747 Shareholders? equity 156,907 148,715 TOTAL LIABILITIES AND $ 1,776,991 $ 1,667,228 SHAREHOLDERS? EQUITYInterest rate spread 2.68 % 3.08 %Net interest income/margin $ 12,367 3.01 % $ 13,076 3.39 %

Three Months Ended June 30, 2020 2019Total interest income $ 16,044 $ 16,841 Total interest expense 3,794 3,928 Net interest income 12,250 12,913 Tax equivalent adjustment 117 163 Net interest income (fully taxable equivalent) $ 12,367 $ 13,076

PENNS WOODS BANCORP, INC.AVERAGE BALANCES AND INTEREST RATES

Six Months Ended June 30, 2020 June 30, 2019(DollarsinThousands) Average Interest Average Average Interest Average Balance Rate Balance RateASSETS: Tax-exempt loans $ 48,346 $ 752 3.13 % $ 71,874 $ 1,087 3.05 %All other loans 1,299,893 28,729 4.44 % 1,313,121 29,310 4.50 %Total loans 1,348,239 29,481 4.40 % 1,384,995 30,397 4.43 % Taxable securities 145,070 2,466 3.46 % 128,431 2,650 4.18 %Tax-exempt securities 26,027 397 3.10 % 27,344 447 3.31 %Total securities 171,097 2,863 3.40 % 155,775 3,097 4.03 % Interest-bearing deposits 85,832 102 0.24 % 8,493 103 2.45 % Total interest-earning 1,605,168 32,446 4.07 % 1,549,263 33,597 4.38 %assets Other assets 114,085 112,806 TOTAL ASSETS $ 1,719,253 $ 1,662,069 LIABILITIES AND SHAREHOLDERS? EQUITY:Savings $ 184,042 158 0.17 % $ 168,543 81 0.10 %Super Now deposits 235,758 833 0.71 % 239,022 832 0.70 %Money market deposits 220,035 895 0.82 % 245,307 1,068 0.88 %Time deposits 370,902 3,951 2.14 % 317,782 3,190 2.02 %Total interest-bearing 1,010,737 5,837 1.16 % 970,654 5,171 1.07 %deposits Short-term borrowings 11,011 29 0.53 % 63,881 783 2.47 %Long-term borrowings 166,024 1,928 2.34 % 145,890 1,730 2.24 %Total borrowings 177,035 1,957 2.22 % 209,771 2,513 2.31 % Total interest-bearing 1,187,772 7,794 1.32 % 1,180,425 7,684 1.29 %liabilities Demand deposits 355,704 315,380 Other liabilities 19,551 20,953 Shareholders? equity 156,226 145,311 TOTAL LIABILITIES AND $ 1,719,253 $ 1,662,069 SHAREHOLDERS? EQUITYInterest rate spread 2.75 % 3.09 %Net interest income/margin $ 24,652 3.09 % $ 25,913 3.37 %

Six Months Ended June 30, 2020 2019Total interest income $ 32,205 $ 33,275 Total interest expense 7,794 7,684 Net interest income 24,411 25,591 Tax equivalent adjustment 241 322 Net interest income (fully taxable equivalent) $ 24,652 $ 25,913

(DollarsinThousands,ExceptPerShareData) QuarterEnded 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019Operating Data Net income $ 3,760 $ 3,073 $ 2,833 $ 4,650 $ 4,245 Net interest income 12,250 12,161 12,321 12,903 12,913 Provision for loan losses 645 750 1,700 360 315 Net security gains 198 28 489 170 23 Non-interest income, excluding net security gains 2,423 2,409 2,418 2,652 2,446 Non-interest expense 9,611 10,110 10,294 9,541 10,059 Performance Statistics Net interest margin 3.01 % 3.19 % 3.22 % 3.32 % 3.39 %Annualized return on average assets 0.85 % 0.74 % 0.68 % 1.10 % 1.02 %Annualized return on average equity 9.60 % 7.83 % 7.22 % 12.18 % 11.42 %Annualized net loan charge-offs to average loans 0.05 % 0.04 % 1.19 % 0.03 % 0.03 %Net charge-offs 168 144 4,055 112 106 Efficiency ratio 65.10 % 68.96 % 69.42 % 60.98 % 65.04 % Per Share Data Basic earnings per share $ 0.53 $ 0.44 $ 0.40 $ 0.66 $ 0.60 Diluted earnings per share 0.53 0.43 0.39 0.66 0.60 Dividend declared per share 0.32 0.32 0.32 0.31 0.31 Book value 22.66 22.23 22.01 22.03 21.53 Common stock price: High 27.75 35.36 35.58 30.93 30.17 Low 20.01 19.05 29.68 26.87 26.03 Close 22.71 24.30 35.58 30.83 30.17 Weighted average common shares: Basic 7,042 7,041 7,040 7,037 7,038 Fully Diluted 7,042 7,103 7,338 7,037 7,038 End-of-period common shares: Issued 7,523 7,521 7,521 7,518 7,518 Treasury 480 480 480 480 480

(DollarsinThousands,ExceptPerShareData) QuarterEnded 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019Financial Condition Data: General Total assets $ 1,838,364 $ 1,688,508 $ 1,665,323 $ 1,673,095 $ 1,711,500 Loans, net 1,336,370 1,336,900 1,343,650 1,350,735 1,365,284 Goodwill 17,104 17,104 17,104 17,104 17,104 Intangibles 777 836 898 960 1,022 Total deposits 1,474,305 1,326,734 1,324,005 1,332,407 1,327,086 Noninterest-bearing 418,324 332,759 334,746 327,329 322,755 Savings 195,964 183,929 176,732 171,370 171,992 NOW 268,348 229,919 218,605 219,466 238,410 Money Market 247,753 204,832 216,038 239,926 238,352 Time Deposits 343,915 375,295 377,884 374,316 355,577 Total interest-bearing deposits 1,055,980 993,975 989,259 1,005,078 1,004,331 Core deposits* 1,130,389 951,439 946,121 958,091 971,509 Shareholders? equity 159,578 156,562 154,960 155,061 151,527 Asset Quality Non-performing loans $ 11,097 $ 11,300 $ 12,421 $ 17,208 $ 15,383 Non-performing loans to total assets 0.60 % 0.67 % 0.75 % 1.03 % 0.90 %Allowance for loan losses 12,977 12,500 11,894 14,249 14,001 Allowance for loan losses to total loans 0.96 % 0.93 % 0.88 % 1.04 % 1.02 %Allowance for loan losses to non-performing 116.94 % 110.62 % 95.76 % 82.80 % 91.02 %loansNon-performing loans to total loans 0.82 % 0.84 % 0.92 % 1.26 % 1.12 % Capitalization Shareholders? equity to total assets 8.68 % 9.27 % 9.31 % 9.27 % 8.85 %

* Core deposits are defined as total deposits less time deposits

Reconciliation of GAAP and Non-GAAP Financial Measures

Three Months Ended Six Months Ended June 30, June 30,(DollarsinThousands,ExceptPerShareData) 2020 2019 2020 2019GAAP net income $ 3,760 $ 4,245 $ 6,833 $ 8,189 Less: net securities gains, net of tax 156 18 178 70 Non-GAAP core earnings $ 3,604 $ 4,227 $ 6,655 $ 8,119 Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019Return on average assets (ROA) 0.85 % 1.02 % 0.79 % 0.99 %Less: net securities gains, net of tax 0.04 % 0.01 % 0.02 % 0.01 %Non-GAAP core ROA 0.81 % 1.01 % 0.77 % 0.98 % Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019Return on average equity (ROE) 9.59 % 11.42 % 8.75 % 11.27 %Less: net securities gains, net of tax 0.40 % 0.05 % 0.23 % 0.09 %Non-GAAP core ROE 9.19 % 11.37 % 8.52 % 11.18 % Three Months Ended Six Months Ended June June 30, 30, 2020 2019 2020 2019Basic earnings per share (EPS) $ 0.53 $ 0.60 $ 0.97 $ 1.16 Less: net securities gains, net of tax 0.02 ? 0.02 0.01 Non-GAAP basic core EPS $ 0.51 $ 0.60 $ 0.95 $ 1.15 Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019Diluted EPS $ 0.53 $ 0.60 $ 0.97 $ 1.16 Less: net securities gains, net of tax 0.02 ? 0.02 0.01 Non-GAAP diluted core EPS $ 0.51 $ 0.60 $ 0.95 $ 1.15

Loan Deferrals

(InThousands) AmountCommercial, financial, and agricultural $ 28,482 Real estate mortgage: Residential 66,133 Commercial 132,217 Construction 7,250 Consumer automobile loans 283 Other consumer installment loans 7,243 Total loan deferrals $ 241,608