Penns Woods Bancorp (PWOD) 8-K Results of Operations and Financial Condition

Exhibit 99.1

Press Release – For Immediate Release

October 17, 2005

Contact:

Penns Woods Bancorp, Inc.

Mr. Ronald A. Walko

President and Chief Executive Officer

115 South Main Street

Jersey Shore, PA  17740

570-322-1111

Penns Woods Bancorp, Inc. Announces 2005 Third Quarter Earnings

Jersey Shore, PA – Penns Woods Bancorp, Inc. (NASDAQ:PWOD) today reported net income for the three and nine months ended September 30, 2005 of $2,948,000 and $8,423,000 compared to $2,826,000 and $8,303,000 for the same periods of 2004.  Basic and dilutive earnings per share for the three and nine months ended September 30, 2005 were $0.89 and $2.54 as compared to $0.85 and $2.50 for the three and nine months ended September 30, 2004.  Return on average assets and return on average equity was 2.12% and 16.54% for the three months ended September 30, 2005 as compared to 2.07% and 16.07% for the corresponding period of 2004.  The nine month earnings results correlate to a return on average assets and return on average equity of 2.05% and 14.94% as compared to 2.07% and 15.62% for the nine months ended September 30, 2004.

Net income from core operations for the three and nine months ended September 30, 2005, excluding security gains, were $2,581,000 and $7,199,000, respectively.  Operating earnings for the three and nine months ended September 30, 2005 were impacted by additional bank-owned life insurance revenue of $196,000.   Earnings for 2005 have also been impacted by the opening of our new North Atherton Street branch in State College in May 2005.

The net interest margin has increased for the nine months ended September 30, 2005 to 4.52% from 4.47% for the corresponding period of 2004.  The increase is due to several factors including a shift in the investment portfolio to tax-exempt bonds.  In addition, the growth in average earning assets of $10,407,000 was funded primarily with growth in average interest bearing deposits of $2,904,000 and growth of average demand deposits of $5,658.000.

Total assets increased $11,150,000 or 1.99% to $570,419,000 from $559,269,000 at September 30, 2004.  A continued emphasis on commercial loans has led to an increase in the net loan portfolio of $13,676,000 from September 2004 to 2005.  In addition to the loan growth, an investment in a low income housing complex was undertaken during the third quarter as part of the company’s reinvestment into the community and for corporate tax planning purposes.

“During the third quarter, we continued our focus on growing the company by following our game plan of making quality loans and providing quality customer service to each and every customer.   The quality service is a result of the corporate team approach that has been developed over the years and the high service standards that our employees, management, and directors have set.  It is our employees that have brought about our success and our employees that will continue to foster the growth and success of the company” stated Ronald A. Walko, President and Chief Executive Officer of Penns Woods Bancorp, Inc.

Shareholders’ equity increased $2,108,000 to $74,490,000 at September 30, 2005 as earnings outpaced a decline in accumulated other comprehensive income of $2,113,000.  The current level of shareholders’ equity equates to a book value per share of $22.43 as compared to $21.81 at September 30, 2004.  During the three months ended September 30, 2005 a dividend of $0.47 per share was paid to shareholders.  The dividend represented a 34.3% increase over the dividend of $0.35 paid during the comparable period of 2004 and an increase of $0.01 or 2.2% over the second quarter 2005 dividend.  A dividend of $1.38 has been paid during the nine months ended September 30, 2005 as compared to $1.05 for the comparable period of 2004 an increase of $0.33 or 31.4%.  “The Board of Directors, during the first quarter of 2005, decided to substantially increase the quarterly dividend as a result of continued profitability and the decision to discontinue special dividends.  This will create value for our shareholders as they will receive an increased quarterly dividend, while the company eliminates the cost associated with the distribution of the special dividend,” commented Mr. Walko. The range of closing prices for Penns Woods Bancorp, Inc. “PWOD” stock was between $44.11 and $45.96 during the three months ended September 30, 2005 and between $44.11 and $50.00 for the nine months ended September 30, 2005.

Penns Woods Bancorp, Inc. is the parent company of Jersey Shore State Bank, which operates twelve branch offices providing financial services in Lycoming, Clinton and Centre Counties.  Investment and insurance products are offered through the bank’s subsidiary, The M Group, Inc. D/B/A The Comprehensive Financial Group.

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 PWOD, 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. Because certain of these items and their impact on PWOD’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 PWOD’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 other than statements of historical fact.  PWOD 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 PWOD 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 PWOD’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; and (v) the effect of changes in the business cycle and downturns in the local, regional or national economies.

Previous press releases and additional information can be obtained from the company’s website at www.jssb.com.

THIS INFORMATION IS SUBJECT TO YEAR-END AUDIT ADJUSTMENT

Contact:	Ronald A. Walko
	(570) 322-1111
	(888) 412-5772 (Toll-Free in Pennsylvania)
	email-jssb@jssb.com

PENNS WOODS BANCORP, INC.

CONSOLIDATED BALANCE SHEET

(UNAUDITED)

	September 30,			September 30,
(In Thousands, Except Share Data)	2005			2004			% Change
ASSETS:
Noninterest-bearing balances	$	13,113		$	16,895		-22.4	%
Interest-bearing deposits in other financial institutions	27			32			-15.6	%
Total cash and cash equivalents	13,140			16,927			-22.4	%
Investment securities, available for sale, at fair value	192,039			200,088			-4.0	%
Investment securities held to maturity (fair value of $241 and $664)	266			658			-59.6	%
Loans held for sale	3,908			6,675			-41.5	%
Loans, net of unearned discount of $1,025 and $1,079	330,651			316,731			4.4	%
Less: Allowance for loan and lease losses	3,492			3,248			7.5	%
Loans, net	327,159			313,483			4.4	%
Premises and equipment, net	6,141			4,692			30.9	%
Accrued interest receivable	2,520			2,168			16.2	%
Bank-owned life insurance	10,627			9,178			15.8	%
Goodwill	3,032			3,032			0.0	%
Other assets	11,587			2,368			389.3	%
TOTAL ASSETS	$	570,419		$	559,269		2.0	%
LIABILITIES:
Interest-bearing deposits	$	291,137		$	303,041		-3.9	%
Noninterest-bearing deposits	72,053			70,046			2.9	%
Total deposits	363,190			373,087			-2.7	%
Short-term borrowings	40,410			33,669			20.0	%
Long-term borrowings, Federal Home Loan Bank(FHLB)	84,478			75,878			11.3	%
Accrued interest payable	1,118			879			27.2	%
Other liabilities	6,733			3,374			99.6	%
TOTAL LIABILITIES	495,929			486,887			1.9	%
SHAREHOLDERS’ EQUITY:
Common stock, par value $10.00, 10,000,000 shares authorized; 3,332,399 and 3,327,457 shares issued	33,324			33,274			0.2	%
Additional paid-in capital	17,711			17,581			0.7	%
Retained earnings	22,102			17,839			23.9	%
Accumulated other comprehensive gain	1,914			4,027			-52.5	%
Less: Treasury stock at cost, 12,810 and 8,000 shares	(561		)	(339		)	65.5	%
TOTAL SHAREHOLDERS’ EQUITY	74,490			72,382			2.9	%
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	570,419		$	559,269		2.0	%

See accompanying notes to the unaudited consolidated financial statements.

PENNS WOODS BANCORP, INC.

CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
(In Thousands, Except Per Share Data)	2005		2004		% Change		2005		2004		% Change
INTEREST AND DIVIDEND INCOME:
Loans including fees	$	5,899	$	5,550	6.3	%	$	17,070	$	15,578	9.6	%
Investment Securities:
Taxable	967		1,698		-43.1	%	3,445		5,278		-34.7	%
Tax-exempt	969		422		129.6	%	2,246		1,133		98.2	%
Dividend	278		254		9.4	%	873		794		9.9	%
TOTAL INTEREST AND DIVIDEND INCOME	8,113		7,924		2.4	%	23,634		22,783		3.7	%
INTEREST EXPENSE:
Deposits	1,537		1,227		25.3	%	4,151		3,544		17.1	%
Short-term borrowings	199		131		51.9	%	545		367		48.5	%
Long-term borrowings	965		871		10.8	%	2,711		2,584		4.9	%
TOTAL INTEREST EXPENSE	2,701		2,229		21.2	%	7,407		6,495		14.0	%
NET INTEREST INCOME	5,412		5,695		-5.0	%	16,227		16,288		-0.4	%
PROVISION FOR LOAN LOSSES	180		165		9.1	%	540		315		71.4	%
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	5,232		5,530		-5.4	%	15,687		15,973		-1.8	%
NON-INTEREST INCOME:
Service charges	612		499		22.6	%	1,603		1,497		7.1	%
Securities gains, net	556		407		36.6	%	1,854		1,535		20.8	%
Bank-owned life insurance	288		90		220.0	%	475		270		75.9	%
Insurance commissions	507		637		-20.4	%	1,802		1,796		0.3	%
Other operating income	321		322		-0.3	%	964		944		2.1	%
TOTAL NON-INTEREST INCOME	2,284		1,955		16.8	%	6,698		6,042		10.9	%
NON-INTEREST EXPENSES:
Salaries and employee benefits	2,130		1,948		9.3	%	6,323		5,813		8.8	%
Occupancy expense, net	215		231		-6.9	%	838		704		19.0	%
Furniture and equipment expense	308		226		36.3	%	717		721		-0.6	%
Pennsylvania shares tax expense	138		131		5.3	%	417		377		10.6	%
Other operating expenses	1,031		973		6.0	%	3,035		2,820		7.6	%
TOTAL NON-INTEREST EXPENSES	3,822		3,509		8.9	%	11,330		10,435		8.6	%
INCOME BEFORE INCOME TAX PROVISION	3,694		3,976		-7.1	%	11,055		11,580		-4.5	%
INCOME TAX PROVISION	746		1,150		-35.1	%	2,632		3,277		-19.7	%
NET INCOME	$	2,948	$	2,826	4.3	%	$	8,423	$	8,303	1.4	%
EARNINGS PER SHARE - BASIC	$	0.89	$	0.85	4.7	%	$	2.54	$	2.50	1.6	%
EARNINGS PER SHARE - DILUTED	$	0.89	$	0.85	4.7	%	$	2.54	$	2.50	1.6	%
WEIGHTED AVERAGE SHARES OUTSTANDING-BASIC	3,310,719		3,319,457		-0.3	%	3,311,213		3,320,249		-0.3	%
WEIGHTED AVERAGE SHARES OUTSTANDING-DILUTED	3,312,464		3,323,608		-0.3	%	3,313,141		3,323,908		-0.3	%
DIVIDNEDS PER SHARE	$	0.47	$	0.35	34.3	%	$	1.38	$	1.05	31.4	%

See accompanying notes to the unaudited consolidated financial statements.

PENNS WOODS BANCORP, INC.

AVERAGE BALANCES AND INTEREST RATES

	For the Three Months Ended
	September 30, 2005						September 30, 2004
	Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate
Tax-exempt loans	$	7,959	$	126	6.28	%	$	1,446	$	20	5.49	%
All other loans	323,952		5,816		7.12	%	311,794		5,537		7.05	%
Total Loans	331,911		5,942		7.10	%	313,240		5,557		7.04	%
Taxable securities	105,186		1,245		4.73	%	171,440		1,952		4.55	%
Tax-exempt securitites	90,551		1,468		6.48	%	34,800		639		7.34	%
Total securities	195,737		2,713		5.54	%	206,240		2,591		5.03	%
Total interest-earning assets	527,648		8,655		6.52	%	519,480		8,148		6.24	%
Other assets	28,941						27,588
Total assets	$	556,589					$	547,068
Savings	$	64,786	126		0.77	%	$	71,081	148		0.83	%
Super Now deposits	50,001		106		0.84	%	63,017		126		0.79	%
Money market deposits	28,427		109		1.52	%	35,031		98		1.11	%
Time deposits	155,144		1,196		3.06	%	131,579		855		2.58	%
Total Deposits	298,358		1,537		2.04	%	300,708		1,227		1.62	%
Short-term borrowings	27,069		199		2.92	%	30,287		131		1.72	%
Long-term borrowings	84,478		965		4.53	%	75,878		871		4.55	%
Total borrowings	111,547		1,164		4.14	%	106,165		1,002		3.74	%
Total interest-bearing liabilities	409,905		$	2,701	2.61	%	406,873		$	2,229	2.17	%
Demand deposits	70,472						65,717
Other liabilities	4,906						4,137
Shareholders’ equity	71,306						70,341
	$	556,589					$	547,068
Interest rate spread					3.91	%					4.07	%
Net interest income/margin			$	5,954	4.49	%			$	5,919	4.54	%

	For the Three Months Ended September 30,
	2005		2004
Total interest income	$	8,113	$	7,924
Total interest expense	2,701		2,229
Net interest income	$	5,412	$	5,695
Tax equivalent adjustment	542		224
Net interest income (fully taxable equivalent)	$	5,954	$	5,919

PENNS WOODS BANCORP, INC.

AVERAGE BALANCES AND INTEREST RATES

	For the Nine Months Ended
	September 30, 2005						September 30, 2004
	9/30/2005						9/30/2004
	Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate
Tax-exempt loans	$	4,500	$	186	5.53	%	$	1,385	$	65	6.27	%
All other loans	323,151		16,947		7.01	%	294,177		15,535		7.06	%
Total Loans	327,651		17,133		6.99	%	295,562		15,600		7.06	%
Taxable securities	120,425		4,318		4.78	%	177,572		6,072		4.56	%
Tax-exempt securitites	67,226		3,403		6.75	%	31,761		1,717		7.21	%
Total securities	187,651		7,721		5.49	%	209,333		7,789		4.96	%
Total interest-earning assets	515,302		24,854		6.44	%	504,895		23,389		6.19	%
Other assets	33,361						29,393
Total assets	$	548,663					$	534,288
Savings	$	65,868	382		0.78	%	$	69,776	432		0.83	%
Super Now deposits	51,680		324		0.84	%	53,868		276		0.69	%
Money market deposits	30,398		306		1.35	%	35,264		292		1.11	%
Time deposits	144,159		3,139		2.91	%	130,293		2,544		2.61	%
Total Deposits	292,105		4,151		1.90	%	289,201		3,544		1.64	%
Short-term borrowings	28,268		545		2.58	%	31,683		367		1.55	%
Long-term borrowings	79,587		2,711		4.55	%	75,403		2,584		4.58	%
Total borrowings	107,855		3,256		4.04	%	107,086		2,951		3.68	%
Total interest-bearing liabilities	399,960		7,407		2.48	%	396,287		6,495		2.19	%
Demand deposits	68,547						62,889
Other liabilities	4,988						4,252
Shareholders’ equity	75,168						70,860
	$	548,663					$	534,288
Interest rate spread					3.97	%					4.00	%
Net interest income/margin			$	17,447	4.52	%			$	16,894	4.47	%

	For the Nine Months Ended September 30,
	2005		2004
Total interest income	$	23,634	$	22,783
Total interest expense	7,407		6,495
Net interest income	$	16,227	$	16,288
Tax equivalent adjustment	1,220		606
Net interest income (fully taxable equivalent)	$	17,447	$	16,894

	Quarter Ended
(Dollars in Thousands, Except Per Share Data)	9/30/2005			6/30/2005			3/31/2005			12/31/2004			9/30/2004
Operating Data
Net income	$	2,948		$	2,760		$	2,715		$	2,780		$	2,826
Net interest income	5,412			5,413			5,402			5,891			5,695
Provision for loan losses	180			180			180			150			165
Net Security Gains	556			687			611			641			407
Non-interest income, excluding net security gains	1,728			1,610			1,506			1,266			1,548
Non-interest expense	3,822			3,887			3,621			3,882			3,509
Performance Statistics
Net interest margin	4.49		%	4.58		%	4.57		%	4.84		%	4.54		%
Annualized return on average assets	2.12		%	2.03		%	2.01		%	2.03		%	2.07		%
Annualized return on average equity	16.54		%	14.81		%	14.56		%	15.10		%	16.07		%
Annualized net loan charge-offs to avg loans	0.22		%	0.11		%	0.15		%	0.00		%	0.05		%
Net charge-offs (recoveries)	180			87			119			75			75
Efficiency ratio	53.5			55.4			52.4			54.2			48.5
Net income per employee	18			17			18			18			18
Per Share Data
Basic earnings per share	$	0.89		$	0.83		$	0.82		$	0.83		$	0.85
Diluted earnings per share	0.89			0.83			0.82			0.83			0.85
Dividend declared per share	0.47			0.46			0.45			0.71			0.35
Book value	22.43			22.82			21.65			22.03			21.81
Common stock price:
High	45.96			49.90			50.00			50.12			50.75
Low	44.11			44.50			46.30			45.26			44.16
Close	45.00			45.82			49.01			48.00			46.84
Weighted average common shares:
Basic	3,311			3,312			3,311			3,319			3,319
Fully Diluted	3,312			3,314			3,313			3,323			3,324
End-of-period common shares:
Issued	3,332			3,332			3,332			3,332			3,327
Treasury	13			10			10			8			8

	Quarter Ended
(Dollars in Thousands, Except Per Share Data)	9/30/2005			6/30/2005			3/31/2005			12/31/2004			9/30/2004
Financial Condition Data:
General
Total assets	$	570,419		$	573,593		$	543,993		$	546,703		$	559,269
Loans, net	327,159			324,378			319,741			321,167			313,483
Intangibles	3,032			3,032			3,032			3,032			3,032
Total deposits	363,190			382,274			354,301			356,836			373,087
Noninterest-bearing	72,053			72,087			72,708			74,050			70,046
Savings	67,858			70,073			69,097			69,807			75,405
NOW	49,064			54,977			51,831			55,211			58,700
Money Market	26,757			29,745			31,310			32,377			35,356
Time Deposits	147,458			155,392			129,355			125,391			133,580
Total interest-bearing deposits	291,137			310,187			281,593			282,786			303,041
Core deposits*	215,732			226,882			224,946			231,445			239,507
Shareholders’ equity	74,490			75,795			71,911			73,165			72,382
Asset Quality
Non-performing assets	$	1,056		$	1,721		$	1,343		$	1,725		$	1,525
Non-performing assets to total assets	0.19		%	0.30		%	0.25		%	0.32		%	0.27		%
Allowance for loan losses	3,492			3,492			3,399			3,338			3,248
Allowance for loan losses to total loans	1.06		%	1.07		%	1.05		%	1.03		%	1.03		%
Allowance for loan losses to non-performing loans	330.68		%	202.91		%	253.09		%	193.51		%	212.98		%
Non-performing loans to total loans	0.32		%	0.52		%	0.42		%	0.53		%	0.48		%
Capitalization
Shareholders’ equity to total assets	13.06		%	13.21		%	13.22		%	13.38		%	12.94		%

* Core deposits are defined as total deposits less time deposits