Exhibit 99.1
[LOGO]
PENNS WOODS BANCORP, INC.
March 31, 2003
Quarterly Report
Member FDIC
PWOD
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NASDAQ
Listed
Dear Shareholder:
We are pleased to announce solid first quarter financial
results for Penns Woods Bancorp, Inc., parent company for the
Jersey Shore State Bank. Consolidated net income increased
4.29% over the first quarter of last year. At March 31, 2003,
net income was $2,187,000 or $.72 per basic and dilutive share
compared to net income at March 31, 2002 of $2,097,000 or $.69
per basic and dilutive share. Net operating income, exclusive
of security gains and a non-reoccurring income item last year of
$116,000, increased 3.01%. The Company's return on average
assets and return on average equity were 1.87% and 13.49%,
respectively.
Supporting solid earnings has been the consistent growth of
Penns Woods Bancorp, Inc.'s assets. Total assets increased
15.27% to $494,202,000 on March 31, 2003 from $428,716,000 March
31, 2002. Net loans also grew $5,221,000 to $248,222,000.
Similarly, total deposits increased 11.32% to $340,774,000.
Penns Woods Bancorp, Inc. has also increased total
shareholder value. On March 28, 2003 Penns Woods Bancorp, Inc.
paid a dividend of $.30 per share to shareholders, an 11%
increase compared to the same period of 2002. This represents a
dividend payout ratio of 42%. Including unrealized gains, total
shareholders' equity has grown to $64,840,000, or $21.40 per
share versus shareholders' equity this period last year of
$56,038,000, or $18.47 per share.
Historically low interest rates challenge the banking
industry by compressing bank's interest margins. Through
effective interest rate management, net interest income
increased $349,000 or 8% over the first quarter of last year.
The cost of funds were reduced and total interest income
maintained while remaining competitive in the market.
"Setting the standard for excellence and raising the bar
for community banks everywhere through exemplary performance and
leadership." This quote from the recently presented BNKElite
certificate from the BNK Advisory Group, summarizes the
philosophy of our staff. They are consistently trying to out do
their prior accomplishments and reach a new level of performance
for our customers and shareholders. This dedication to
customers and shareholders is the key reason for our success.
Looking forward, in May we will celebrate the first
anniversary of our State College branch. Since the decision was
made to enter the Centre County market we have taken deliberate
and steady steps to grow and succeed in a very competitive
market. It will be our continued goal to provide the
communities of the Centre County area the "Jersey Shore State
Bank" level of service.
Communication is a top priority and we are always seeking
better ways to keep our customers and investors informed. You
may now access our press releases, quarterly financial reports,
and our annual report by logging on to our website www.jssb.com.
We would like to thank our diligent directors, dedicated
employees, loyal customers and supporting shareholders for the
success of the Company.
Very truly yours,
/s/Theodore H. Reich /s/ Ronald A. Walko
Theodore H. Reich Ronald A. Walko
Chairman Emeritus President & Chief Executive Officer
MAIN OFFICE LOCK HAVEN BRANCH OFFICE
115 South Main Street, 4 West Main Street
P.O. Box 5098 Lock Haven, PA 17745
Jersey Shore, PA 17740 Phone 570-748-7785
Phone 570-398-2213
BRANCH OFFICE MILL HALL BRANCH OFFICE
112 Bridge Street 167 Hogan Boulevard
Jersey Shore, PA 17740 Mill Hall, PA 17751
Phone 570-398-4400 Phone 570-748-8680
DUBOISTOWN BRANCH OFFICE SPRING MILLS BRANCH OFFICE
2675 Euclid Avenue Ross Hill Road, P.O. Box 66
Williamsport, PA 17702 Spring Mills, PA 16875
Phone 570-326-3731 Phone 814-422-8836
WILLIAMSPORT BRANCH OFFICE ZION BRANCH OFFICE
300 Market Street 100 Cobblestone Road
Williamsport, PA 17701 Bellefonte, PA 16823
Phone 570-322-1111 Phone 814-383-2700
Toll-Free within Pennsylvania
1-888-412-5772
CENTRE HALL BRANCH OFFICE STATE COLLEGE BRANCH OFFICE
2842 Earlystown Road 1665 North Atherton Place
Centre Hall, PA 16828 State College, PA 16803
Phone 814-364-1600 Phone 814-272-4788
JERSEY SHORE STATE BANK THE M GROUP, INC.
Financial Center D/B/A The Comprehensive Financial
1952 Waddle Road, Suite 106 Group*
State College, PA 16803 705 Washington Boulevard
Phone 814-235-1710 Williamsport, PA 17701
Phone 570-322-4627
MONTGOMERY BRANCH OFFICE INTERNET BANKING
9094 Rt. 405 Highway Web Site
Montgomery, PA 17752 www.jssb.com
Phone 570-547-6642
TELEPHONE BANKING
Phone 570-320-2029 or
1-877-520-2265
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* Securities offered through Locust Street Securities, Inc.
(LSSI) - Member NASD, SIPC & MSRB - LSSI is not an affiliated
company.
MANAGEMENT AND BOARD OF DIRECTORS
(Penns Woods Bancorp, Inc. and Jersey Shore State Bank)
OFFICERS
Ronald A. Walko President and Chief Executive Officer
of Penns Woods Bancorp, Inc. &
Jersey Shore State Bank
Hubert A. Valencik Senior Vice President of Penns Woods
Bancorp, Inc., Senior Vice President
& Operations Officer of Jersey Shore
State Bank
William H. Rockey Senior Vice President of Penns Woods
Bancorp, Inc. & Jersey Shore State Bank
Sonya E. Scott Secretary of Penns Woods Bancorp, Inc.,
Vice President & Chief Financial
Officer of Jersey Shore State Bank
Ann M. Riles Vice President & Senior Loan Officer
Paul R. Mamolen Chief Operating Officer of the
Comprehensive Financial Group & Vice
President of Jersey Shore State Bank
Robert J. Glunk Vice President of Branch Administration
& Business Development
Stephen M. Tasselli Vice President
G. David Gundy Vice President
William P. Young, Jr. EDP Systems Officer
Leon T. Koskie Vice President & Branch Manager
Gerald J. Seman Vice President & Mortgage Officer
Leslie K. Benshoff Cashier and Bookkeeping Manager
Marilyn R. Neyhart Assistant Vice President, Assistant
Secretary & Loan Operations Officer
Larry G. Garverick Assistant Vice President & Loan Officer
C. Jacqueline Gottshall Assistant Cashier & Branch Manager
John R. Frey Assistant Vice President &
Compliance Officer
Theodore J. Szuhaj Collections Manager
William V. Mauck Assistant Vice President
Michael A. Musto Assistant Vice President
Beverly S. Rupert Assistant Vice President &
Branch Manager
JoAnn M. DiPasquale Personnel Officer
Craig A. Russell Assistant Vice President &
Branch Manager
David R. Palski Assistant Vice President &
Branch Manager
Tammy L. Dole Assistant Vice President &
Assistant Branch Manager
Mary L. Baier Assistant Branch Manager &
I.R.A. Coordinator
Christopher J. Dunlap Assistant in Collections
Judith A. Smith Assistant Secretary
Margery K. Remick Assistant Secretary
Doris M. Fogleman Assistant Bookkeeping Manager
Mary E. Falls Assistant Branch Manager
Cynthia A. Flanagan Assistant Branch Manager
Lori A. Strimple Marketing Manager
Margaret J. Shaffer Relationship Manager
Bonnie H. Ripka Assistant Branch Manager
Peter J. Nastase, II Assistant Branch Manager
Diana M. Blazina Assistant Branch Manager
Kristen S. Bangson Assistant Branch Manager
Janine E. Hilborn Assistant Controller
REGISTERED REPRESENTATIVES
FOR THE COMPREHENSIVE FINANCIAL GROUP
(See branch listing for complete disclosure)*
Debra R. Murray-Martin, CMFC
Lock Haven Branch
Sonya L. Snyder-Barclay
Williamsport Branch
DIRECTORS
Phillip H. Bower Owner, Central Equipment Company
Lynn S. Bowes Farmer
Michael J. Casale, Jr. Attorney, Casale & Bonner, P.C.
H. Thomas Davis, Jr. Senior Vice President,
Franklin Insurance Company
James M. Furey, II President and Owner
Eastern Wood Products Company
Jay H. McCormick President & Owner,
J.H.M. Enterprises, Inc.
R. Edward Nestlerode, Jr. Vice President of
Nestlerode Contracting, Co. Inc.
James E. Plummer Retired, Former President of Lock
Haven Savings Bank,
Secretary, Jersey Shore State Bank
William H. Rockey Senior Vice President of Penns Woods
Bancorp, Inc., Senior Vice President
of Jersey Shore State Bank
Ronald A. Walko President and Chief Executive
Officer of Penns Woods Bancorp,
Inc., President and Chief Executive
Officer of Jersey Shore State Bank
WILLIAMSPORT AREA ADVISORY DIRECTORS
Robert H. Kauffeld Architect
James T. Wolyniec President,
Wolyniec Construction, Inc.
HONORARY DIRECTORS
Theodore H. Reich, Chairman Emeritus
Raymond D. Eck
Joseph G. Gehret, Sr.
Howard M. Thompson
Allan W. Lugg
William S. Frazier
FINANCIAL HIGHLIGHTS
Three Months Ended
March 31,
2003 2002
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<s> <c> <c>
Per-Share Data
Net income - basic $ 0.72 $ 0.69
Net income -diluted 0.72 0.69
Cash dividends 0.30 0.27
Shareholders' equity 21.40 18.47
Balances at March 31 (in thousands),
Total Assets $494,202,000 $428,716,000
Net loans 248,222,000 243,001,000
Deposits 340,774,000 306,113,000
Shareholders' Equity 64,840,000 56,038,000
Profitability Ratios
Return on average assets 1.87% 2.01%
Return on average shareholders' equity 13.49% 14.91%
Common Stock Price Performance
Price Range Per Share
High Low Dividend
<s> <c> <c> <c>
2003
First Quarter 45.40 36.15 0.30
2002
First Quarter 35.00 32.33 0.27
Second Quarter 36.37 33.00 0.27
Third Quarter 35.70 32.20 0.27
Fourth Quarter 36.85 33.00 0.55
THIS INTERIM FINANCIAL INFORMATION
IS SUBJECT TO YEAR-END AUDIT ADJUSTMENT
MARKET MAKERS
Merrill Lynch
1 West Third Street
Williamsport, PA 17701
Telephone: 570-327-6651
800-937-0769
Janney Montgomery Scott
Sovereign Bank Plaza
33 West 3rd Street, Suite 201
Williamsport, PA 17701
Telephone 800-652-6639
Ryan, Beck & Co.
220 South Orange Avenue
Livingston, NJ 07039-5817
Telephone: 800-223-8969
Ferris Baker Watts, Inc.
6 Bird Cage Walk
Hollidaysburg, PA 16648
Telephone: 800-343-5149
Monroe Securities, Inc.
47 State Street
Rochester, NY 14614
Telephone: 800-766-5560
Legg Mason Wood Walker, Inc.
1735 Market Street, 10th Floor
Mellon Bank Center
Philadelphia, PA 19103
Telephone: 800-888-6673
Penns Woods Bancorp, Inc.'s common stock is listed on the NASDAQ
National Market and is traded under the symbol PWOD
CONSOLIDATED BALANCE SHEET
(Unaudited)
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MARCH 31,
2003 2002
(IN THOUSANDS)
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<s> <c> <c>
ASSETS:
Cash and due from banks $ 17,898 $ 15,687
Investment securities available for sale 199,173 141,082
Investment securities held to maturity 1,176 1,280
Loans held for sale. . 2,072 2,504
Loans, net of unearned discount of 251,240 245,959
Allowance for loan and lease losses (3,018) (2,958)
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LOANS, NET 248,222 243,001
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Bank premises and equipment, net 4,731 4,377
Accrued interest receivable 2,351 2,455
Bank-owned life insurance 8,607 8,227
Goodwill 3,032 3,032
Other assets 6,940 7,071
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TOTAL ASSETS $ 494,202 $ 428,716
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LIABILITIES:
Interest-bearing deposits $ 280,780 $ 254,927
Noninterest-bearing deposits 59,994 51,186
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TOTAL DEPOSITS 340,774 306,113
Short-term borrowings 13,417 20,804
Other borrowings 70,878 41,778
Accrued interest payable 983 1,063
Other liabilities 3,310 2,920
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TOTAL LIABILITIES $ 429,362 $ 372,678
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SHAREHOLDERS' EQUITY:
Common stock par value $10.00, 10,000,000 shares
authorized; 3,137,832 and 3,131,644 shares issued
at March 31, 2003 and 2002, respectively 31,378 31,316
Additional paid-in capital 18,314 18,230
Retained earnings 13,028 8,265
Accumulated other comprehensive gain 5,617 1,434
Treasury stock at cost, 107,703 shares in 2003
and 98,054 in 2002 (3,497) (3,207)
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TOTAL SHAREHOLDERS' EQUITY 64,840 56,038
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 494,202 $ 428,716
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THIS INTERIM STATEMENT IS SUBJECT TO YEAR-END AUDIT ADJUSTMENT
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
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MARCH 31,
2003 2002
(IN THOUSANDS)
=============================
<s> <c> <c>
INTEREST INCOME:
Interest and fees on loans $ 4,995 $ 5,270
Interest and dividends on investments:
Taxable interest 1,127 874
Non-taxable interest 863 785
Dividends 107 147
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TOTAL INTEREST INCOME 7,092 7,076
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INTEREST EXPENSE:
Interest on deposits 1,633 2,037
Interest on short-term borrowings 72 117
Interest on other borrowings 681 565
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TOTAL INTEREST EXPENSE 2,386 2,719
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NET INTEREST INCOME 4,706 4,357
PROVISION FOR LOAN LOSSES 90 105
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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 4,616 4,252
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OTHER INCOME:
Service charges 465 390
Securities gains (losses),net 101 (119)
Earnings on bank-owned life insurance 104 100
Insurance commissions 358 572
Other operating income 255 239
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TOTAL OTHER INCOME, NET 1,283 1,182
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OTHER EXPENSES:
Salaries and employee benefits 1,635 1,628
Occupancy expense, net 233 195
Furniture and equipment expense 317 207
Other operating expenses 954 822
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TOTAL OTHER EXPENSES 3,139 2,852
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INCOME BEFORE INCOME TAX PROVISION 2,760 2,582
APPLICABLE INCOME TAX PROVISION 573 485
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NET INCOME $ 2,187 $ 2,097
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Earnings per share - basic $ 0.72 $ 0.69
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Earnings per share - diluted $ 0.72 $ 0.69
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Basic weighted average shares outstanding 3,030,357 3,037,934
THIS INTERIM STATEMENT IS SUBJECT TO YEAR-END AUDIT ADJUSTMENT