Penns Woods Bancorp (PWOD) 8-K/A Completion of Acquisition or Disposition of Assets

Exhibit 99.1

Pro Forma Combined Consolidated Balance Sheets as of March 31, 2013

Unaudited (In thousands, except share and per share data)

	Penns Woods			Luzerne			Combined			Pro Forma Adjustments			Pro Forma Combined
Assets:
Cash	$	13,068		$	24,568		$	37,636		$	(2,876	)(8)	$	34,760
Securities	288,577			22,626			311,203			33		(6)	311,236
Loans	512,422			248,354			760,776			(3,776		)(2)(3)	757,000
Allowance for Loan Losses	(8,830		)	(3,152		)	(11,982		)	3,152		(4)	(8,830		)
Loans, net	503,592			245,202			748,794			(624		)	748,170
Fixed assets	9,128			6,843			15,971			1,260		(7)	17,231
Accrued interest receivable	4,070			—			4,070			—			4,070
Bank-owned life insurance	16,517			—			16,517			—			16,517
Goodwill	3,032			—			3,032			12,848		(1)	15,880
Other intangibles	—			—			—			2,015		(10)(11)	2,015
Other assets	15,013			10,399			25,412			(603		)	24,809
Total assets	$	852,997		$	309,638		$	1,162,635		$	12,053		$	1,174,688
Liabilities and Shareholders’ Equity:
Deposits - Interest bearing	$	538,833		$	191,392		$	730,225		$	912	(5)	$	731,137
Deposits - Noninterest bearing	120,471			81,105			201,576			—			201,576
Short-term borrowing	16,632			3,515			20,147			—			20,147
Long-term borrowing	71,278			1,891			73,169			—			73,169
Accrued interest payable	357			—			357			—			357
Other liabilities	12,413			2,768			15,181			—			15,181
Total liabilities	759,984			280,671			1,040,655			912			1,041,567
Preferred stock	—			—			—			—			—
Common stock	33,496			1,697			35,193			6,458		(9)	41,651
Additional paid-in capital	18,170			232			18,402			31,721		(9)	50,123
Retained earnings	43,948			26,848			70,796			(26,848		)(9)	43,948
Accumulated other comprehensive income	3,709			276			3,985			(276		)(9)	3,709
Treasury Stock	(6,310		)	(86		)	(6,396		)	86		(9)	(6,310		)
Total equity	93,013			28,967			121,980			11,141			133,121
Total liabilities and shareholders’ equity	$	852,997		$	309,638		$	1,162,635		$	12,053		$	1,174,688
Per Share Data:
Common shares outstanding	3,838,926			676,694			4,515,620			978,977			4,817,903
Book value per common share	$	24.23		$	42.81								$	27.63
Tangible book value per common share:
Total equity	$	93,013		$	28,967								$	133,121
Less: preferred stock	—			—									—
Less: goodwill and intangibles	3,032			—									17,895
Total tangible equity	$	89,981		$	28,967								$	115,226
Tangible book value per common share	$	23.44		$	42.81								$	23.92

Pro Forma Consolidated Statements of Income

For the Twelve Months Ended December 31, 2012

(In Thousands, Except Share Data)	PWOD		LUZR		Combined		Pro Forma Adjustments			Pro Forma Combined
Interest and dividend income:
Loans, including fees	$	25,372	$	12,029	$	37,401	$	(794	)(2)	$	36,607
Investment securities	11,369		470		11,839		—			11,839
Other dividend and interest income	366		38		404		—			404
Total interest and dividend income	37,107		12,537		49,644		(794		)	48,850
Interest expense:
Deposits	3,645		1,335		4,980		(467		)(5)	4,513
Borrowings	2,566		200		2,766		—			2,766
Total interest expense	6,211		1,535		7,746		(467		)	7,279
Net interest income	30,896		11,002		41,898		(327		)	41,571
Provision for loan losses	2,525		716		3,241		—			3,241
Net interest income after provision for loan losses	28,371		10,286		38,657		(327		)	38,330
Non-interest income:
Service charges	1,894		1,141		3,035		—			3,035
Securities gains, net	1,285		1		1,286		—			1,286
Earnings on bank-owned life insurance	670		243		913		—			913
Gain on sale of loans	1,386		—		1,386		—			1,386
Insurance commissions	1,357		—		1,357		—			1,357
Brokerage commissions	912		—		912		—			912
Other	2,596		532		3,128		—			3,128
Total non-interest income	10,100		1,917		12,017		—			12,017
Non-interest expense:
Salaries and employee benefits	11,762		4,978		16,740		—			16,740
Occupancy, net	1,270		1,209		2,479		42		(7)	2,521
Furniture and equipment	1,452		—		1,452		—			1,452
PA shares tax	674		196		870		—			870
Amortization of investment in limited partnerships	661		—		661		—			661
FDIC deposit insurance	468		180		648		—			648
Amortization of intangible assets	—		—		—		366		(10)(11)	366
Other	5,736		2,274		8,010		—			8,010
Total non-interest expense	22,023		8,837		30,860		408			31,268
Income before taxes	16,448		3,366		19,814		(735		)	19,079
Income tax expense	2,598		1,066		3,664		(250		)(12)	3,414
Net Income	$	13,850	$	2,300	$	16,150	$	(485	)	$	15,665
Weighted average shares outstanding:
Basic	3,838,516		676,694				978,977			4,817,493
Diluted	3,838,516		676,694				978,977			4,817,493
Earnings per share:
Basic	$	3.61	$	3.40			$	(0.50	)	$	3.25
Diluted	$	3.61	$	3.40			$	(0.50	)	$	3.25

Pro Forma Consolidated Statements of Income

For the Three Months Ended March 31, 2013

(In Thousands, Except Share Data)	PWOD		LUZR		Combined		Pro Forma Adjustments			Pro Forma Combined
Interest and dividend income:
Loans, including fees	$	6,768	$	2,890	$	9,658	$	(200	)(2)	$	9,458
Investment securities	2,710		104		2,814		—			2,814
Other dividend and interest income	62		—		62		—			62
Total interest and dividend income	9,540		2,994		12,534		(200		)	12,334
Interest expense:
Deposits	791		266		1,057		(138		)(5)	919
Borrowings	544		21		565		—			565
Total interest expense	1,335		287		1,622		(138		)	1,484
Net interest income	8,205		2,707		10,912		(62		)	10,850
Provision for loan losses	500		191		691		—			691
Net interest income after provision for loan losses	7,705		2,516		10,221		(62		)	10,159
Non-interest income:
Service charges	442		158		600		—			600
Securities gains, net	986		—		986		—			986
Earnings on bank-owned life insurance	138		60		198		—			198
Gain on sale of loans	351		—		351		—			351
Insurance commissions	264		—		264		—			264
Brokerage commissions	248		—		248		—			248
Other	304		251		555		—			555
Total non-interest income	2,733		469		3,202		—			3,202
Non-interest expense:
Salaries and employee benefits	3,068		1,356		4,424		—			4,424
Occupancy, net	351		322		673		11		(7)	684
Furniture and equipment	408		—		408		—			408
PA shares tax	184		73		257		—			257
Amortization of investment in limited partnerships	165		—		165		—			165
FDIC deposit insurance	129		46		175		—			175
Amortization of intangible assets	—		—		—		92		(10)(11)	92
Other	1,546		589		2,135		—			2,135
Total non-interest expense	5,851		2,386		8,237		103			8,340
Income before taxes	4,587		599		5,186		(165		)	5,021
Income tax expense	903		182		1,085		(56		)(12)	1,029
Net Income	$	3,684	$	417	$	4,101	$	(109	)	$	3,992
Weighted average shares outstanding:
Basic	3,838,671		676,694				978,977			4,817,903
Diluted	3,838,671		676,694				978,977			4,817,903
Earnings per share:
Basic	$	0.96	$	0.62			$	(0.11	)	$	0.83
Diluted	$	0.96	$	0.62			$	(0.11	)	$	0.83

(1)Summary of Purchase Price Calculation and Goodwill Resulting From Merger

(in Thousands, Except Share Data)
Purchase Price Consideration in Common Stock
Luzerne shares outstanding	676,694
Exchange ratio	1.5534
Penns Woods shares to be issued	978,977
Penns Woods closing price on March 31, 2013	$	40.97
Purchase price assigned to Luzerne shares exchanged for Penns Woods stock				$	40,108
Per share value assigned to Luzerne shares to be converted to cash consideration	$	61.86
Purchase price assigned to Luzerne shares exchanged for cash				2,876
Total purchase price				42,984
Net Assets Acquired:
Luzerne common shareholders’ equity at March 31, 2013	$	28,967
Core deposit intangible	1,882
Trade name intangivle	133
Adjustments to reflect assets acquired at fair value:
Loans	(3,776		)
Allowance for loan losses	3,152
Investments	33
Premises	1,260
Deferred tax assets	(603		)
Adjustment to reflect liabilities acquired at fair value:
Interest bearing deposits	(912		)
				30,136
Goodwill resulting from merger				$	12,848

(2)A fair value premium of $2,680 to reflect fair values of loans based on current interest rates of similar loans.  The adjustment will be recognized over approximately 12 years using an amortization method based upon the expected life of the loans and is expected to decrease pro forma pre-tax interest income by $794 in the first year following consummation.

(3)A fair value discount of $3,304 to reflect the credit risk of the loan portfolio.    No pro forma earnings impact was assumed from the loan credit adjustment.  The estimated fair value of the covered loans approximates their carrying value.

(4)Reversal of the Luzerne allowance for loan losses of $3,152 in accordance with acquisition method of accounting for the acquisition.

(5)A fair value premium of $912 to reflect the fair values of certain interest-bearing deposit liabilities based on current interest rates for similar instruments.  The adjustment will be recognized using an amortization method based upon the estimated maturities of the deposit liabilities.  This adjustment is expected to decrease pro forma pre-tax interest expense by $467 in the first year following consummation.

(6)Adjustment for fair value of investments of $33 for those classified as held to maturity.

(7)Adjustment of $1,260 to reflect the fair value of premises.  The adjustment will be amortized over an approximate period of 30 years and is expected to increase pro forma pre-tax noninterest expense by $42.

(8)Cash on hand of $2,876 is utilized for the cash portion of the merger consideration.

(9)Adjustment to reflect the issuance of common shares of Penns Woods common stock with a $8.33 par value in connection with the acquisition and the adjustments to shareholders’ equity for the elimination of Luzerne historical equity accounts.

Adjustment to common stock, par value $8.33	$	8,155
Less: historical value of Luzern common stock	1,697
Adjustment to common stock in the pro-forma unaudited combined consolidated balance sheet	$	6,458
Adjustment to additional paid-in capital	$	31,953
Less: historical value of Luzern common stock	232
Adjustment to additional paid-in capital in the pro-forma unaudited combined consolidated balance sheet	$	31,721

(10)Adjustment for core deposit intangible of $1,882 to reflect the fair value of this asset and the related amortization using an expected life of 10 years.  The amortization of the core deposit intangible is expected to increase pro forma pre-tax noninterest expense by $342 in the first year following consummation.

(11)Adjustment for trade name intangible of $133 to reflect the fair value of this asset and the related amortization over a 10 year period using an amortization method based upon the expected life of the asset.  The amortization of the trade name intangible is expected to increase pro forma pre-tax noninterest expense by $24 in the first year following consummation.

(12)Adjustment assumes a tax rate of 34% related to fair value adjustments on pre-tax amounts in the unaudited pro forma combined consolidated statement of income.