Exhibit 99.1
[LOGO]
PENNS WOODS BANCORP, INC.
June 30, 2003
Quarterly Report
Member FDIC
PWOD
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NASDAQ
Listed
Dear Shareholders:
Penns Woods Bancorp, Inc., parent company of Jersey Shore
State Bank, is proud to announce solid earnings of $5,524,000 or
$1.82 per basic and dilutive share for the period ended June 30,
2003 compared to net earnings for the same period in 2002 of
$4,137,000 or $1.36 per basic and dilutive share, indicating a
33.52% increase. Operating earnings, excluding net security
gains of $1,221,000, were $4,303,000 for the first six months of
2003 representing a 3.76% increase over the second quarter in
2002. Assets at June 30, 2003 totaled $515,209,000, an increase
of $70,283,000 over the same period in 2002. The leveraging of
our balance sheet to take advantage of low interest rates along
with the investing of our excess liquidity has produced the
$66,000,000 increase in our available for sale securities.
In addition to excellent growth, financial ratios continue
to be sound. At June 30, 2003, Penns Woods Bancorp, Inc.'s
return on average assets and return on average equity were 2.29%
and 16.63% respectively, compared to 1.94% and 14.55% for the
same period in 2002. During the second quarter, net income was
also increased due to the opportunity to take gains in the
securities market. Return on average assets and return on
average equity excluding security gains are 1.79% and 12.94% for
period ended June 30, 2003 compared to 2.00% and 14.99% for the
first half of 2002.
On June 25, 2003, the Federal Open Market Committee lowered
its Federal Funds Target rate to its lowest level in 45 years.
Despite this challenging interest rate environment, our net
interest income has increased $746,000 or 8.46% over the first
half of 2002. This has been achieved through asset growth,
including growth in our investment portfolio, and the reduction
in our cost of funds. These lower rates bring intense
refinancing and new customers to our bank, more than half of our
secondary mortgage market activity is home purchase financing.
Our diligent staff is doing an excellent job with the
extraordinary volume.
The continued success and growth of Jersey Shore State Bank
has recently acquired national recognition. In June 2003,
Independent Banker magazine ranked Jersey Shore State Bank,
based on 2002 performance, fourth in the nation for our return
on average assets at 2.31% and eleventh in the nation for return
on average equity at 21.02%. Jersey Shore State Bank was
compared to other Independent Community Bankers Association
banks with $250 million-$500 million in assets. In July of
2003, Penns Woods Bancorp Inc.'s strong performance gained the
attention of the Frank Russell Company and was placed on the
Russell 2000 index. The Russell 2000 is the most widely quoted
index used to measure the overall performance of small- to mid-
cap company shares. Placement on this index is not only an
achievement, but will also prompt broader exposure to our
company.
We would like to extend our appreciation to our loyal
shareholders, valued customers, and devoted employees. Without
your encouragement and confidence, the continued progress and
accomplishments of our company would not be possible.
Very truly yours,
/s/Theodore H. Reich /s/ Ronald A. Walko
Theodore H. Reich Ronald A. Walko
Chairman Emeritus President & Chief Executive Officer
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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.
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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
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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
4
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. Packer 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
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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
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FINANCIAL HIGHLIGHTS
Six Months Ended
June 30,
2003 2002
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<s> <c> <c>
Per-Share Data
Net income - basic $ 1.82 $ 1.36
Net income - diluted 1.82 1.36
Cash dividends 0.60 0.54
Shareholders' equity 22.77 19.23
Balances at June 30 (in thousands),
Total Assets $515,209,000 $444,926,000
Net loans 251,849,000 248,806,000
Deposits 340,564,000 315,633,000
Shareholders' Equity 69,015,000 58,336,000
Profitability Ratios
Return on average assets 2.29% 1.94%
Return on average shareholders' equity 16.63% 14.55%
Common Stock Price Performance
Price Range Per Share
High Low Dividend
<s> <c> <c> <c>
2003
First Quarter 45.40 36.15 0.30
Second Quarter 52.17 41.48 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
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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
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CONSOLIDATED BALANCE SHEET
(Unaudited)
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JUNE 30,
2003 2002
(IN THOUSANDS)
=============================
<s> <c> <c>
ASSETS:
Cash and due from banks $ 14,109 $ 12,887
Investment securities available for sale 218,731 152,318
Investment securities held to maturity 966 1,252
Loans held for sale 2,622 1,940
Loans, net of unearned discount of 254,890 251,806
Allowance for loan and lease losses (3,041) (3,000)
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LOANS, NET 251,849 248,806
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Bank premises and equipment, net 4,652 4,514
Accrued interest receivable 2,545 2,605
Bank-owned life insurance 8,711 8,327
Goodwill 3,032 3,032
Other assets 7,992 9,245
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TOTAL ASSETS $ 515,209 $ 444,926
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LIABILITIES:
Interest-bearing deposits $ 282,097 $ 265,061
Noninterest-bearing deposits 58,467 50,572
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TOTAL DEPOSITS 340,564 315,633
Short-term borrowings 29,306 20,869
Other borrowings 70,878 46,778
Accrued interest payable 957 1,134
Other liabilities 4,489 2,176
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TOTAL LIABILITIES $ 446,194 $ 386,590
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SHAREHOLDERS' EQUITY:
Common stock par value $10.00, 10,000,000 shares
authorized; 3,138,132 and 3,131,644 shares issued
at June 30, 2003 and 2002, respectively 31,381 31,316
Additional paid-in capital 18,322 18,230
Retained earnings 15,455 9,486
Accumulated other comprehensive gain 7,354 2,511
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 69,015 58,336
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 515,209 $ 444,926
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THIS INTERIM STATEMENT IS SUBJECT TO YEAR-END AUDIT ADJUSTMENT
9
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
=============================
June 30,
2003 2002
(IN THOUSANDS)
=============================
<s> <c> <c>
INTEREST INCOME:
Interest and fees on loans $ 9,902 $ 10,454
Interest and dividends on investments:
Taxable 2,769 2,171
Tax Exempt 1,593 1,569
Other dividend and interest income 79 81
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TOTAL INTEREST INCOME 14,343 14,275
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INTEREST EXPENSE:
Interest on deposits 3,122 4,007
Interest on short-term borrowings 172 276
Interest on other borrowings 1,487 1,176
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TOTAL INTEREST EXPENSE 4,781 5,459
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NET INTEREST INCOME 9,562 8,816
PROVISION FOR LOAN LOSSES 135 185
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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 9,427 8,631
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OTHER INCOME:
Service charges 937 832
Securities gains (losses),net 1,851 (191)
Earnings on bank-owned life insurance 207 201
Insurance commissions 750 1,112
Other operating income 483 573
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TOTAL OTHER INCOME, NET 4,228 2,527
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OTHER EXPENSES:
Salaries and employee benefits 3,320 3,489
Occupancy expense, net 465 404
Furniture and equipment expense 548 412
Other operating expenses 1,992 1,703
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TOTAL OTHER EXPENSES 6,325 6,008
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INCOME BEFORE INCOME TAX PROVISION 7,330 5,150
APPLICABLE INCOME TAX PROVISION 1,806 1,013
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NET INCOME $ 5,524 $ 4,137
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Earnings per share - basic $ 1.82 $ 1.36
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Earnings per share - diluted $ 1.82 $ 1.36
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Basic weighted average shares outstanding 3,030,281 3,035,750
THIS INTERIM STATEMENT IS SUBJECT TO YEAR-END AUDIT ADJUSTMENT
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