** **

**SECURITIESAND EXCHANGE COMMISSION**

**WASHINGTON,D.C.  20549**

 

**FORM 10-Q**

 

 
| **ý****  Quarterly Report pursuant to Section 13 or  15 (d) of the Securities Exchange Act of 1934**                                                                                                                                                                              |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                        |
| **for the Quarterly Period Ended March 31,  2004,**                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                        |
| **o****  Transition report pursuant to Section 13  or 15 (d) of the Exchange Act**                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                        |
| **for the Transition Period from                        to                      .** |
|                                                                                                                                                                                                                                                                                        |
| **No. 0-17077**                                                                                                                                                                                                                                                                             |
| **(Commission File Number)**                                                                                                                                                                                                                                                                |

 

**PENNS WOODS BANCORP, INC.**

(Exact name of Registrant as specified in itscharter)

 

| **PENNSYLVANIA**                                                |   | **23-2226454**                        |
|-----------------------------------------------------------------|--------|---------------------------------------|
| (State or other jurisdiction of  incorporation or organization) |   | (I.R.S. Employer  Identification No.) |
|                                                            |   |                                  |
| **300  Market Street, Williamsport, Pennsylvania**              |   | **17701**                             |
| (Address of principal executive offices)                        |   | (Zip Code)                            |
|                                                            |   |                                  |
| **(570) 322-1111**                                              |
| Registrant’s telephone number, including  area code        |

 

Indicate by check mark whether the Registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that Registrantwas required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.

 

YES ý             NO o

 

Indicate by check mark whether the registrant is an accelerated filer(as defined in Rule 12 b-2 of the Exchange Act)

 

YES ý             NO o

 

On May 10, 2004 there were 3,319,420 of the Registrant’s common stockoutstanding.

 

** **

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**PENNSWOODS BANCORP, INC.**

**INDEXTO QUARTERLY REPORT ON FORM 10-Q**

 

 
| **Part  I**                      | **Financial  Information**                                                                                            |      |
|----------------------------------|-----------------------------------------------------------------------------------------------------------------------|-----------|
| **Item  1.**                     | **Financial  Statements**                                                                                             |      |
|                             |                                                                                                                  |      |
|                             | Consolidated Balance Sheet  (unaudited) as of March 31, 2004 ^l                                                       | 3         |
|                             |                                                                                                                  |      |
|                             | Consolidated Statement of Income  (unaudited) for the Three Months ended March 31, 2004 and 2003                      | 4         |
|                             |                                                                                                                  |      |
|                             | Consolidated Statement of Comprehensive  Income (unaudited) For the Three Months ended March 31, 2004 and 2003        | 5         |
|                             |                                                                                                                  |      |
|                             | Consolidated Statement of Changes in  Shareholders’ Equity (unaudited) for the Three Months ended March 31, 2004 | 6         |
|                             |                                                                                                                  |      |
|                             | Consolidated Statement of Cash Flows (unaudited)  for the Three Months ended March 31, 2004 and 2003                  | 7         |
|                             |                                                                                                                  |      |
|                             | Notes to  Unaudited Consolidated Financial Statements                                                                 | 8-12      |
| **Item 2.**                      | **Management’s Discussion and Analysis of  Financial Condition and Results of Operations**                       | 12-19     |
| **Item 3.**                      | **Quantitative and Qualitative  Disclosure About Market Risk**                                                        | **19-20** |
| **Item 4.**                      | **Controls and Procedures**                                                                                           | **20**    |
|                             |                                                                                                                  |      |
| **Part II**                      | **Other Information**                                                                                                 |      |
| **Item 1.**                      | **Legal Proceedings**                                                                                                 | 20        |
| **Item 2.**                      | **Changes  in Securities, Use of Proceeds, and Issuer Purshases of Equity  Securities**                               | 20-21     |
| **Item 3.**                      | **Defaults Upon Senior Securities**                                                                                   | 21        |
| **Item 4.**                      | **Submission of Matters to a Vote of Security  Holders**                                                              | 21-22     |
| **Item 5.**                      | **Other Information**                                                                                                 | 22        |
| **Item 6.**                      | **Exhibits and Reports on Form 8-K**                                                                                  | 22        |
|                             |                                                                                                                  |
| **Signatures**                   | 22                                                                                                                    |
| **Exhibits  Index and Exhibits** | 22-26                                                                                                                 |

 

2

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PENNSWOODS BANCORP, INC.

CONSOLIDATED BALANCE SHEET (UNAUDITED)

 
|                                                                                              |   | **March 31,  2004** |    | **December  31,  2003** |   |
|---------------------------------------------------------------------------------------------------|--------|---------------------|---------|-------------------------|--------|
|                                                                                              |   | **(in  thousands)** |    |
| ASSETS:                                                                                           |   |                |    |                    |   |
| Cash and due from banks                                                                           |   | $                   | 12,112  |                    | $      | 10,230 |   |
| Investment securities available for sale                                                          |   | 207,079             |    | 210,611                 |   |
| Investment securities held to maturity  (market value of $713 and $701)                           |   | 699                 |    | 686                     |   |
| Loans held for sale                                                                               |   | 3,694               |    | 4,803                   |   |
| Loans, net of unearned discount of $956 and  $793                                                 |   | 278,548             |    | 275,828                 |   |
| Allowance for loan losses                                                                         |   | (3,099              | )       | (3,069                  | )      |
| Loans, net                                                                                        |   | 275,449             |    | 272,759                 |   |
|                                                                                              |   |                |    |                    |   |
| Premises and equipment, net                                                                       |   | 4,575               |    | 4,625                   |   |
| Accrued interest receivable                                                                       |   | 2,109               |    | 2,242                   |   |
| Bank-owned life insurance                                                                         |   | 8,998               |    | 8,908                   |   |
| Goodwill                                                                                          |   | 3,032               |    | 3,032                   |   |
| Other assets                                                                                      |   | 8,420               |    | 9,485                   |   |
| TOTAL ASSETS                                                                                      |   | $                   | 526,167 |                    | $      | 527,381 |   |
|                                                                                              |   |                |    |                    |   |
| LIABILITIES:                                                                                      |   |                |    |                    |   |
| Noninterest-bearing demand deposits                                                               |   | $                   | 63,721  |                    | $      | 64,875 |   |
| Interest-bearing demand deposits                                                                  |   | 80,012              |    | 77,245                  |   |
| Savings deposits                                                                                  |   | 69,465              |    | 67,298                  |   |
| Time deposits                                                                                     |   | 129,039             |    | 124,900                 |   |
| Total deposits                                                                                    |   | 342,237             |    | 334,318                 |   |
|                                                                                              |   |                |    |                    |   |
| Short-term borrowings                                                                             |   | 30,594              |    | 47,265                  |   |
| Other borrowings                                                                                  |   | 75,878              |    | 70,878                  |   |
| Accrued interest payable                                                                          |   | 829                 |    | 836                     |   |
| Other liabilities                                                                                 |   | 5,322               |    | 4,315                   |   |
| Total liabilities                                                                                 |   | 454,860             |    | 457,612                 |   |
| SHAREHOLDERS’ EQUITY:                                                                        |   |                |    |                    |   |
| Common stock, par value $10; 10,000,000  shares authorized; 3,327,420 and 3,326,560 shares issued |   | 33,274              |    | 33,265                  |   |
| Additional paid-in capital                                                                        |   | 17,581              |    | 17,559                  |   |
| Retained earnings                                                                                 |   | 14,532              |    | 13,022                  |   |
| Accumulated other comprehensive income                                                            |   | 6,259               |    | 6,132                   |   |
| Less:   Treasury stock, at cost (8,000 and 5,000 shares)                                     |   | (339                | )       | (209                    | )      |
| Total shareholders’ equity                                                                   |   | 71,307              |    | 69,769                  |   |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY                                                   |   | $                   | 526,167 |                    | $      | 527,381 |   |

 

Seeaccompanying notes to the unaudited consolidated financial statements.

 

3

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PENNSWOODS BANCORP, INC.

CONSOLIDATED STATEMENT OFINCOME (UNAUDITED)

 
|                                                 |     | **Three  Months Ended  March 31,**        |      |
|------------------------------------------------------|----------|-------------------------------------------|-----------|
|                                                 |     | **2004**                                  |      | **2003** |   |
|                                                 |     | **(in  thousands except per share data)** |      |
| INTEREST AND DIVIDEND INCOME:                        |     |                                      |      |   |   |
| Interest and fees on loans                           |     | $                                         | 4,891     |   | $ | 4,995 |   |
| Interest and dividends on investments:               |     |                                      |      |   |   |
| Taxable                                              |     | 2,029                                     |      | 1,199 |   |
| Tax-exempt                                           |     | 391                                       |      | 863 |   |
| Other dividend and interest income                   |     | 16                                        |      | 35 |   |
|                                                 |     |                                      |      |   |   |
| Total interest and dividend income                   |     | 7,327                                     |      | 7,092 |   |
| INTEREST EXPENSE:                                    |     |                                      |      |   |   |
| Interest on deposits                                 |     | 1,135                                     |      | 1,633 |   |
| Interest on short-term borrowings                    |     | 137                                       |      | 72 |   |
| Interest on other borrowings                         |     | 852                                       |      | 681 |   |
| Total interest expense                               |     | 2,124                                     |      | 2,386 |   |
| Net interest income                                  |     | 5,203                                     |      | 4,706 |   |
| Provision for loan losses                            |     | 75                                        |      | 90 |   |
| Net interest income after provision for  loan losses |     | 5,128                                     |      | 4,616 |   |
| OTHER INCOME:                                        |     |                                      |      |   |   |
| Service charges                                      |     | 476                                       |      | 465 |   |
| Securities gains, net                                |     | 545                                       |      | 101 |   |
| Earnings on bank-owned life insurance                |     | 90                                        |      | 104 |   |
| Insurance commissions                                |     | 614                                       |      | 358 |   |
| Other operating income                               |     | 312                                       |      | 255 |   |
| Total other operating income                         |     | 2,037                                     |      | 1,283 |   |
| OTHER EXPENSES:                                      |     |                                      |      |   |   |
| Salaries and employee benefits                       |     | 1,979                                     |      | 1,635 |   |
| Occupancy expense, net                               |     | 243                                       |      | 233 |   |
| Furniture and equipment expense                      |     | 265                                       |      | 285 |   |
| Pennsylvania shares tax expense                      |     | 116                                       |      | 115 |   |
| Other expenses                                       |     | 870                                       |      | 871 |   |
| Total other operating expenses                       |     | 3,473                                     |      | 3,139 |   |
| INCOME BEFORE INCOME TAX PROVISION                   |     | 3,692                                     |      | 2,760 |   |
| APPLICABLE INCOME TAX PROVISION                      |     | 1,019                                     |      | 573 |   |
| NET INCOME                                           |     | $                                         | 2,673     |   | $ | 2,187 |   |
|                                                 |     |                                      |      |   |   |
| EARNINGS PER SHARE                                   | -BASIC   |                                      | $         | 0.80 |   | $ | 0.66 |   |
|                                                 | -DILUTED |                                      | $         | 0.80 |   | $ | 0.66 |   |
|                                                 |     |                                      |      |   |   |
| DIVIDENDS PER SHARE                                  |     | $                                         | 0.35      |   | $ | 0.27 |   |
|                                                 |     |                                      |      |   |   |
| WEIGHTED AVERAGE SHARES OUTSTANDING                  | -BASIC   |                                      | 3,321,853 |   | 3,333,393 |   |
|                                                 | -DILUTED |                                      | 3,325,395 |   | 3,335,101 |   |

 

Seeaccompanying notes to the unaudited consolidated financial statements.

 

4

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PENNSWOODS BANCORP, INC.

CONSOLIDATED STATEMENT OF COMPREHENSIVEINCOME (UNAUDITED)

 
|                                                               |   | **Three  Months Ended March 31,** |   |
|--------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                               |   | **2004**                          |   | **2003** |   |
|                                                               |   | **(in  thousands)**               |   |
| Net Income                                                         |   | $                                 | 2,673  |   | $ | 2,187 |   |
| Other comprehensive income:                                        |   |                              |   |   |   |
| Unrealized gains on available for sale  securities                 |   | $                                 | 738    |   | $ | 816 |   |
| Less: Reclassification adjustment for gain  included in net income |   | 545                               |   | 101 |   |
| Other comprehensive income before tax                              |   | 193                               |   | 715 |   |
| Income tax expense related to other  comprehensive income          |   | 66                                |   | 243 |   |
| Other comprehensive income, net of tax                             |   | 127                               |   | 472 |   |
| Comprehensive income                                               |   | $                                 | 2,800  |   | $ | 2,659 |   |

 

Seeaccompanying notes to the unaudited consolidated financial statements.

 

5

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PENNSWOODS BANCORP, INC.

CONSOLIDATED STATEMENT OFCHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

(inthousands except per share data)

 
|                                                                                |   | **COMMON  STOCK** |   | **ADDITIONAL  PAID-IN** |   | **RETAINED** |   | **ACCUMULATED  OTHER  COMPREHENSIVE** |   | **TREASURY** |   | **TOTAL  SHAREHOLDERS’** |   |
|-------------------------------------------------------------------------------------|--------|-------------------|--------|-------------------------|--------|--------------|--------|---------------------------------------|--------|--------------|--------|-------------------------------|--------|
|                                                                                |   | **SHARES**        |   | **AMOUNT**              |   | **CAPITAL**  |   | **EARNINGS**                          |   | **INCOME**   |   | **STOCK**                     |   | **EQUITY** |   |
| Balance, December 31, 2003                                                          |   | 3,326,560         |   | $                       | 33,265 |         | $      | 17,559                                |   | $            | 13,022 |                          | $      | 6,132 |   | $ | (209 | ) | $ | 69,769 |   |
|                                                                                |   |              |   |                    |   |         |   |                                  |   |         |   |                          |   |   |   |
| Net income for the three months ended March 31, 2004                                |   |              |   |                    |   |         |   | 2,673                                 |   |         |   |                          |   | 2,673 |   |
| Dividends declared, $0.35                                                           |   |              |   |                    |   |         |   | (1,163                                | )      |         |   |                          |   | (1,163 | ) |
| Treasury Stock acquired (3,000 shares)                                              |   |              |   |                    |   |         |   |                                  |   |         |   | (130                          | )      | (130 | ) |
| Net change in unrealized gain on investments available for sale, net  of tax of $66 |   |              |   |                    |   |         |   |                                  |   | 127          |   |                          |   | 127 |   |
| Stock options exercised                                                             |   | 860               |   | 9                       |   | 22           |   |                                  |   |         |   |                          |   | 31 |   |
| Balance, March 31, 2004                                                             |   | 3,327,420         |   | $                       | 33,274 |         | $      | 17,581                                |   | $            | 14,532 |                          | $      | 6,259 |   | $ | (339 | ) | $ | 71,307 |   |

 

See accompanyingnotes to the unaudited consolidated financial statements.

 

6

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PENNS WOODS BANCORP, INC.

CONSOLIDATED STATEMENT OFCASH FLOWS(UNAUDITED)

 
|                                                                               |   | **Three Months  Ended  March 31,** |   |
|------------------------------------------------------------------------------------|--------|------------------------------------|--------|
|                                                                               |   | **2004**                           |   | **2003** |   |
|                                                                               |   | **(in  thousands)**                |   |
| OPERATING ACTIVITIES:                                                              |   |                               |   |   |   |
| Net Income                                                                         |   | $                                  | 2,673  |   | $ | 2,187 |   |
| Adjustments to reconcile net income to net  cash provided by operating activities: |   |                               |   |   |   |
| Depreciation                                                                       |   | 158                                |   | 201 |   |
| Provision for loan losses                                                          |   | 75                                 |   | 90 |   |
| Accretion and amortization of investment  security discounts                       |   |                               |   |   |   |
| and premiums                                                                       |   | 3                                  |   | (142 | ) |
| Securities gains                                                                   |   | (545                               | )      | (101 | ) |
| Originations of loans held for sale                                                |   | (2,056                             | )      | (2,258 | ) |
| Proceeds of loans held for sale                                                    |   | 3,165                              |   | 2,837 |   |
| Earnings on bank-owned life insurance                                              |   | 90                                 |   | 104 |   |
| Change in deferred income tax                                                      |   | 1,637                              |   | 664 |   |
| Other, net                                                                         |   | (245                               | )      | (85 | ) |
| Net cash provided by operating activities                                          |   | 4,955                              |   | 3,497 |   |
| INVESTING ACTIVITIES:                                                              |   |                               |   |   |   |
| Investment securities available for sale:                                          |   |                               |   |   |   |
| Proceeds from sales                                                                |   | 35,792                             |   | 3,703 |   |
| Proceeds from calls and maturities                                                 |   | 5,364                              |   | 8,182 |   |
| Purchases                                                                          |   | (36,890                            | )      | (33,664 | ) |
| Investment securities held to maturity:                                            |   |                               |   |   |   |
| Proceeds from calls and maturities                                                 |   | 1                                  |   | 29 |   |
| Purchases                                                                          |   | (14                                | )      | (24 | ) |
| Net decrease (increase) in loans                                                   |   | (2,804                             | )      | 6,580 |   |
| Acquisition of bank premises and equipment                                         |   | (108                               | )      | (76 | ) |
| Proceeds from the sale of foreclosed assets                                        |   | 134                                |   | — |   |
| Gross proceeds from redemption of  regulatory stock                                |   | 1,718                              |   | — |   |
| Gross purchases of regulatory stock                                                |   | (1,252                             | )      | (979 | ) |
| Net cash provided by (used in) investing  activities                               |   | 1,941                              |   | (16,249 | ) |
| FINANCING ACTIVITIES:                                                              |   |                               |   |   |   |
| Net increase in interest-bearing deposits                                          |   | 9,073                              |   | 7,993 |   |
| Net decrease in noninterest-bearing  deposits                                      |   | (1,154                             | )      | (7,067 | ) |
| Proceeds of long-term borrowings                                                   |   | 5,000                              |   | 19,100 |   |
| Net decrease in short-term borrowings                                              |   | (16,671                            | )      | (146 | ) |
| Dividends paid                                                                     |   | (1,163                             | )      | (908 | ) |
| Stock options exercised                                                            |   | 31                                 |   | 33 |   |
| Purchase of Treasury Stock                                                         |   | (130                               | )      | (86 | ) |
| Net cash provided by (used in) financing  activities                               |   | (5,014                             | )      | 18,919 |   |
| NET INCREASE IN CASH AND CASH EQUIVALENTS                                          |   | 1,882                              |   | 6,167 |   |
| CASH AND CASH EQUIVALENTS, BEGINNING                                               |   | 10,230                             |   | 11,731 |   |
| CASH AND CASH EQUIVALENTS, ENDING                                                  |   | $                                  | 12,112 |   | $ | 17,898 |   |

 

The Company paid approximately $2,131,000 and$2,495,000 interest on deposits and borrowings during the first quarter of 2004and 2003, respectively.

 

See accompanying notes to theunaudited consolidated financial statements.

 

7

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**PENNS WOODS BANCORP, INC. AND SUBSIDIARIES**

 

**NOTES****TOCONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

 

**NOTE 1. Basis of Presentation**

The consolidated financialstatements include the accounts of Penns Woods Bancorp, Inc. (the “Company”)and its wholly-owned subsidiaries Woods Investment Company, Inc., Woods RealEstate Development Company, Inc., and Jersey Shore State Bank (the “Bank”) andits wholly-owned subsidiary, The M Group, Inc. D/B/A The ComprehensiveFinancial Group (“The M Group”).  Allsignificant inter-company balances and transactions have been eliminated in theconsolidation.

 

The accompanying unaudited consolidated financial statements have beenprepared in accordance with instructions to Form 10-Q and, therefore, do notnecessarily include all information which would be included in auditedfinancial statements.  The informationfurnished reflects all normal recurring adjustments which are, in the opinionof management, necessary for the fair statement of the results of the period.  The results of operations for the interimperiods are not necessarily indicative of the results to be expected for thefull year or any other future period. The unaudited consolidated financialstatements should be read in conjunction with Form 10-K for the year endedDecember 31, 2003.

 

**RecentAccounting Pronouncements**

 

In December 2003, the Financial Accounting Standards Board (FASB)issued a revision to Interpretation 46, Consolidation of Variable InterestEntities, which established standards for identifying a variable interestentity (VIE) and for determining under what circumstances a VIE should beconsolidated with its primary beneficiary. Application of this Interpretation is required in financial statementsof public entities that have interests in special-purpose entities for periodsending after December 15, 2003. Application by public entities, other than small business issuers, forall other types of VIEs is required in financial statements for periods endingafter March 15, 2004.  Small businessissuers must apply this Interpretation to all other types of VIEs at the end ofthe first reporting

 

8

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period ending after December 15, 2004. The adoption of this interpretation has not and is not expected to havea material effect on the Company’s financial position or results of operations.

 

**NOTE2.  Per Share Data**

 

There are no convertible securities, whichwould affect the numerator in calculating basic and dilutive earnings pershare, therefore, net income as presented on the consolidated statement ofincome will be used as the numerator. The following table sets forth the composition of the weighted averagecommon shares (denominator) used in the basic and dilutive per sharecomputation.

 
|                                                                                                      |   | **Three  Months Ended  March 31,** |   |
|-----------------------------------------------------------------------------------------------------------|--------|------------------------------------|--------|
|                                                                                                      |   | **2004**                           |   | **2003** |   |
|                                                                                                      |   |                               |   |   |   |
| Weighted average common shares outstanding                                                                |   | 3,327,315                          |   | 3,451,048 |   |
|                                                                                                      |   |                               |   |   |   |
| Average treasury stock shares                                                                             |   | (5,462                             | )      | (117,655 | ) |
|                                                                                                      |   |                               |   |   |   |
| Weighted average common shares and common  stock equivalents used to calculate basic earnings per share   |   | 3,321,853                          |   | 3,333,393 |   |
|                                                                                                      |   |                               |   |   |   |
| Additional common stock equivalents (stock  options) used to calculate diluted earnings per share         |   | 3,542                              |   | 1,708 |   |
|                                                                                                      |   |                               |   |   |   |
| Weighted average common shares and common  stock equivalents used to calculate diluted earnings per share |   | 3,325,395                          |   | 3,335,101 |   |

 

Options to purchase 10,890 shares of commonstock at the price of $48.35 were outstanding during the three months endedMarch 31, 2004, and 22,385 shares of common stock at the prices of $48.35 and$38.18 per share were outstanding during the three months ended March 31, 2003,but were not included in the computation of diluted earnings per share becauseto do so would have been anti-dilutive.

 

9

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**Note 3.  NetPeriodic Benefit Cost-Defined Benefit Plans**

 

For a detailed disclosure on the Company’s pension and employeebenefits plans, please refer to Note K of the Company’s Consolidated FinancialStatements included in the 2003 Annual Report on Form 10-K.

 

The following sets forth the components of net periodic benefit cost ofthe domestic non-contributory defined benefit plans for the three months endedMarch 31, 2004 and March 31, 2003 respectively.

 
|                                  |   | **Pension  Benefits** |   |
|---------------------------------------|--------|-----------------------|--------|
|                                  |   | **2004**              |   | **2003** |   |
|                                  |   |                  |   |   |   |
| Service cost                          |   | $                     | 113    |   | $ | 111 |   |
| Interest cost                         |   | 106                   |   | 96 |   |
| Expected return on plan assets        |   | (84                   | )      | (64 | ) |
| Amortization of transition obligation |   | (1                    | )      | (1 | ) |
| Amortization of prior service cost    |   | 6                     |   | 6 |   |
| Amortization of net (gain) loss       |   | 14                    |   | 21 |   |
| Net periodic cost                     |   | $                     | 154    |   | $ | 169 |   |

 

**Employer Contributions**

 

The Company previously disclosed in its consolidated financialstatements included in the 2003 Annual Report on Form 10-K that it expected tocontribute $560,000 to its defined benefit plan in 2004.  As of March 31,2004, a contribution of $148,000 has been made.  The Company presently anticipates contributing an additional$444,000 to fund its pension plan in 2004 for a total of $592,000.

 

**Note 4.  Off Balance Sheet Risk**

 

The Company is a party to financialinstruments with off-balance sheet risk in the normal course of business tomeet the financing needs of its customers. These financial instruments include commitments to extend credit andstandby letters of credit.  Theseinstruments involve, to varying degrees, elements of credit, interest rate orliquidity risk in excess of the amount recognized in the consolidated balancesheet.  The contract amounts of theseinstruments express the extent of involvement the Company has in particularclasses of financial instruments.

 

The Company’s exposure to credit loss fromnonperformance by the other party to the financial instruments for commitmentsto extend credit and standby letters of credit is represented by thecontractual amount of these instruments. The Company uses the same credit policies in making commitments andconditional obligations as it does for on-balance sheet instruments.

 

10

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The Company may require collateral or othersecurity to support financial instruments with off-balance sheet credit risk.

 

Financial instruments whose contract amountsrepresent credit risk are as follows:

 

|                         |   | **March 31,  2004** |   | **December  31,  2003** |   |
|------------------------------|--------|---------------------|--------|-------------------------|--------|
| Commitments to extend credit |   | $                   | 48,822 |                    | $      | 47,454 |   |
|                         |   |                |   |                    |   |
| Standby letters of credit    |   | $                   | 816    |                    | $      | 258 |   |

 

Commitments to extend credit are legallybinding agreements to lend to customers. Commitments generally have fixed expiration dates or other terminationclauses and may require payment of fees. Since many of the commitments are expected to expire without being drawnupon, the total commitment amounts do not necessarily represent futureliquidity requirements.  The Companyevaluates each customer’s credit worthiness on a case-by-case basis.  The amount of collateral obtained, if deemednecessary by the Company, on extension of credit is based on management’scredit assessment of the counterparty.

 

Standby letters of credit represent conditional commitments issued bythe Company to guarantee the performance of a customer to a third party.  These instruments are issued primarily tosupport bid or performance related contracts. The coverage period for these instruments is typically a one year periodwith an annual renewal option subject to prior approval by management.  Fees earned from the issuance of theseletters are recognized upon expiration of the coverage period.  For secured letters of credit, thecollateral is typically Bank deposit instruments or customer business assets.

 

**Reclassification of Comparative Amounts**

 

Certain comparative amounts for the prior periods have beenreclassified to conform to current period presentations.  Such reclassifications had no effect on netincome or stockholders’ equity.

 

11

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**CAUTIONARY STATEMENTFOR PURPOSES OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995**

 

This Report contains certain “forward-looking statements” includingstatements concerning plans, objectives, future events or performance andassumptions and other statements which are other than statements of historical fact.  The Company wishes to caution readers thatthe following important factors, among others, may have affected and could inthe future affect the Company’s actual results and could cause the Company’sactual results for subsequent periods to differ materially from those expressedin any forward-looking statement made by or on behalf of the Companyherein:  (i) the effect of changes inlaws and regulations, including federal and state banking laws and regulations,which the Company must comply, and the associated costs of compliance with suchlaws and regulations either currently or in the future as applicable; (ii) theeffect of changes in accounting policies and practices, as may be adopted bythe 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 the Company’s competitive position within its market areaof the increasing consolidation within the banking and financial services industries,including the increased competition from larger regional and out-of-statebanking organizations as well as non-bank providers of various financialservices; (iv) the effect of changes in interest rates; and (v) the effect ofchanges in the business cycle and downturns in the local, regional or nationaleconomies.

 

**ITEM2****. Management’s Discussion and Analysis of FinancialCondition and Results of Operation**

 

**EARNINGS SUMMARY**

 

**Comparison of the Three Months Ended March31, 2004 and 2003**

 

**Net Interest Income**

 

The $497,000 increase of net interest income is the result of theexpansion of total interest-earning assets and the reduction of the interestrates paid on deposits partially offset by declining interest rates oninterest-earning assets.  Total securitiesexperienced a rate decline of 65 basis points effected by management’srepositioning from longer term States & Political securities to shorterterm U.S. Government securities.  Whileweighted average interest rates in the loan portfolio decreased 80 basispoints, the expansion into the Centre County market facilitated the loan growthof over $27,308,000.  The opportunity toborrow funds at historically low interest rates funded the loan and security 

 

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growth.  Management reducedinterest expense $498,000 primarily by lowering weighted average interest ratespaid on deposits 69 basis points.

 

**Interest Income**

 

For the three months ended March 31, 2004, total interest incomeincreased $235,000 with interest and dividends on investments increasing$339,000 and interest and fees on loans decreasing $104,000.  The increase in earnings on investments isprimarily the result of an increase of $31,860,000 in the average balance ofinvestment securities held for the current period relative to the same period ayear ago.  The decrease in the return onloans is primarily the result of approximately an 85 basis point decline inyield.

 

On a tax equivalent basis, calculated utilizing the statutory tax rateof 34%, investment security income increased $95,000 for the first three monthsof 2004 compared to the first three months of 2003.  The increase of taxable security income of $830,000 is due to thesignificant purchase of U.S. Government securities over the past year, with theaverage of these shorter term securities increasing $62,079,000,  while the decrease in the average of longerterm tax-exempt States & Political securities decreased tax equivalentinterest income $716,000.  Managementhas repositioned the investment portfolio from longer term assets to shorterterm assets to take advantage of the cash flow opportunities for reinvestmentin anticipation of rising rates. The net growth in the volume of investmentholdings has generated additional interest income that has offset the 60 basispoint decline in the overall portfolios weighted average interest rates.

 

Within the loan portfolio, an 85 basis point decrease of the taxequivalent return on loans was mostly offset by an increase in the averagebalance of loans of $24,721,000 in comparing the three months ended March 31,2004 to the same period for 2003.  Theloan growth is attributed mostly to the expansion into the Centre Countymarket.  Variable rate loans within theportfolio and other new loan originations at lower effective rates havecontributed to the reduction of net income compared to a year ago reflective ofthe historically low rates.

 

**Interest Expense**

 

For the three months ended March 31, 2004, total interest expensedecreased by $262,000 or 10% compared to the first three months of 2003.  Low interest rates have positively impactedinterest expense.  Management’sadjustment of rates paid while continuing to monitor the local competition forall deposit accounts contributed the most substantial decrease in interestexpense.  The weighted average rate ofinterest paid on deposits declined 69 basis points for the three months endedMarch 31, 2004 since the same

 

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period in 2003 resulting in the decrease of interest paid on savingsdeposits of $250,000 and $248,000 on time deposits.

 

Favorable long-term borrowing rates offer opportunities to reduceinterest expenses over the coming years. At the end of the first quarter of 2003, the Company borrowed anadditional $20 million in long term advances through the FHLB to minimizefuture borrowing costs and to enhance asset and liability positioning.  These additional borrowings were utilized bymanagement to take advantage of current investment opportunities whileminimizing interest rate risk.  The$171,000 increase in expense on long-term borrowings is the result of theseadditional advances with average advances of $20,963,000 offset by the 50 basispoint decline in the resulting weighted average interest rate for the firstquarter of 2004 compared to the same period of 2003. Interest paid onshort-term borrowings increased $65,000 as a result of an increase in theaverage balances of $25,523,000 offset partially by the decline in the weightedaverage interest rate of 72 basis points. Overnight borrowings increased as a result of leveraging the purchase ofsecurities and loan growth.

 

**Provision for Loan Losses**

 

The provision for loan losses is based upon management’s quarterlyreview of the loan portfolio.  Thepurpose of the review is to assess loan quality, identify impaired loans,analyze delinquencies, ascertain loan growth, evaluate potential charge-offsand recoveries, and assess general economic conditions in the marketsserved.  An external independent loanreview is also performed annually for the Bank.  Management remains committed to an aggressive program of problemloan identification and resolution.

 

The allowance is calculated by applying loss factors to outstandingloans by type, excluding loans for which a specific allowance has beendetermined.  Loss factors are based onmanagement’s consideration of the nature of the portfolio segments, changes inmix and volume of the loan portfolio, and historical loan loss experience.  In addition, management considers industrystandards and trends with respect to non-performing loans and its knowledge andexperience with specific lending segments.

 

Although management believes that it uses the best informationavailable to make such determinations and that the allowance for loan losses isadequate to provide for probable losses inherent in its loan portfolio at March31, 2004, future adjustments could be necessary if circumstances or economicconditions differ substantially from the assumptions used in making the initialdeterminations.  A downturn in the localeconomy, employment and delays in receiving financial information fromborrowers could result in increased levels of non-performing assets andcharge-offs, increased loan loss provisions and reductions in income.  Additionally, as an integral part of theexamination process, bank regulatory agencies periodically review the Bank’sloan loss allowance.  The bankingagencies could require the recognition of additions to the loan loss allowancebased on their judgment of information available to them at the time of theirexamination.

 

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While management has attributed the allowance for loan losses tovarious portfolio segments, the allowance is available for the entireportfolio.

 

The allowance for loan losses increased from $3,069,000 at December 31,2003 to $3,099,000 at March 31, 2004. The allowance for loan losses was 1.1% of total loans at March 31, 2004as well as December 31, 2003.  Thispercentage is consistent with the Bank’s historical experience and peerbanks.  Management’s conclusion is thatthe allowance for loan losses is adequate to provide for probable lossesinherent in its loan portfolio as of the balance sheet date.

 

The provision for loan losses totaled $75,000 for the three monthsended March 31, 2004.  The provision forthe same period in 2003 was $90,000. For the three months period ending March 31, 2004, charge-offs exceededrecoveries by $45,000 compared to the same period ended March 31, 2003, whencharge-offs exceeded recoveries by $25,000.

 

An overall decrease was experienced in non-performing loans from theDecember 31, 2003 total of $1,256,000 to $1,129,000 on March 31, 2004.  This decline consisted of a commercial andindustrial loans decrease of $40,000, a real estate secured loan decrease of$100,000 and an installment loans increase of $13,000.

 

Based upon this analysis, as well as the others noted above, seniormanagement has concluded that the allowance for loan losses remains at a leveladequate to provide for probable losses inherent in its loan portfolio.

 

**Other Operating Income**

 

Other operating income for the three months ended March 31, 2004increased $754,000.  Net security gainsrepresented an increase of $444,000 resulting from management reacting to theopportunities available to sell investment securities without significantlyimpacting the overall effective yield of the investment portfolio.  Management continues to closely monitor theinvestment portfolio for other similar opportunities which may becomeavailable.  Excluding net securitygains, other income increased $310,000, primarily due to the $256,000 growth ofinsurance commissions earned by the Bank’s subsidiary, The M Group.  In the last year, The M Group added newpersonnel and has expanded its market area. Miscellaneous income increased $57,000 due to normal operations andservice charges grew $11,000 as the weighted average balance of demand depositsincreased.

 

**Other Operating Expense**

 

An overall increase in other expenses totaled $334,000 for the firstquarter of 2004 compared to the same period in 2003 and is the result of normaloperational cost increases.  Commissioncosts increased $159,000 as a result of the growth in sales of

 

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financial products offered by The M Group, Inc.  Normal salary increases attributed anincrease of $185,000.

 

**Provision for Income Taxes**

 

The provision for income taxes for the three months ended March 31,2004 resulted in an effective income tax rate of 27.60% compared to 20.76% forthe corresponding period in 2003.  Thisincreasing effective tax rate is the result of management’s repositioning ofthe investment portfolio from tax-exempt securities to taxable securities.  The tax effects of the repositioning wereexamined by management as part of the strategic plan.

 

**ASSET/LIABILITY MANAGEMENT**

 

**Assets**

 

At March 31, 2004, total assets were $526.2 million compared to $527.4million at December 31, 2003.  Cash anddue from banks decreased $1.9 million during the first three months of2004.  Investment securities totaled$207.8 million at March 31, 2004 for a net decrease of $3.5 million over thecorresponding balance at December 31, 2003. The decline of investments is primarily due to the principal payments ofthe mortgage-back securities of $5.3 million. Mortgage-backed agency securities were purchased and sold for a netincrease of $1.6 million.  Managementshortened the average life of the portfolio, increased annual yield, andrealized a profit on sales in order to strengthen the portfolio.  During this period, net loans increased by$2.7 million to $275.5 million as a result of expansion into the Centre County.  Loans held for resale decreased $1.1 millionto $3.7 million due to normal closing processes.

 

**Deposits**

 

At March 31, 2004,  totaldeposits amounted to $342.2 million representing an increase of $7.9 millionfrom total deposits at December 31, 2003. Non-interest bearing demand deposits decreased $1.2 million and interest-bearingdemand deposits increased $2.8 million from year end 2003 to March 31, 2004.Savings accounts increased $2.2 million and time deposits increased $4.1million. This growth is attributed to normal operations as well as theincreased expansion in Centre County. Additionally, the Bank obtained municipaldeposits of $2.8 million during the first quarter of 2004.

 

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**Capital**

 

The adequacy of the Company’scapital is reviewed on an ongoing basis with reference to the size, compositionand quality of the Company’s resources and regulatory guidelines.  Management seeks to maintain a level ofcapital sufficient to support

existing assets and anticipated asset growth, maintain favorable accessto capital markets and preserve high quality credit ratings.

 

Bank holding companies arerequired to comply with the Federal Reserve Board’s risk-based capitalguidelines.  The risk-based capitalrules are designed to make regulatory capital requirements more sensitive todifferences in risk profiles among banks and bank holding companies and tominimize disincentives for holding liquid assets.  Specifically, each is required to maintain certain minimum dollaramounts and ratios of Total risk-based, Tier I risk-based and Tier I leveragecapital requirements. In addition to the capital requirements, the FederalDeposit Insurance Corporation Improvements Act (FDICIA) established fivecapital categories ranging from “well capitalized” to “criticallyundercapitalized.” To be classified as “well capitalized”, Total risk-based,Tier I risked- based and Tier I leverage capital ratios must be at least 10%,6%, and 5% respectively.

 

At March 31, 2004, the Companywas “well capitalized” with a total risk based capital ratio of 23.29%, a TierI capital ratio of 21.20% and a Tier I leverage ratio of 12.10%.

 

**Liquidity and Interest Rate Sensitivity**

 

The asset/liability committeeaddresses the liquidity needs of the Bank to see that sufficient funds areavailable to meet credit demands and deposit withdrawals as well as to theplacement of available funds in the investment portfolio.  In assessing liquidity requirements, equalconsideration is given to the current position as well as

the future outlook.

 

The following internally maintained liquidity measures are monitoredand kept within the limits cited.

 

1.  Net Loans to TotalAssets,  70% maximum

 

2.  Net Loans to Total Deposits,92.5% maximum

 

3.  Net Loans to Core Deposits,100% maximum

 

4.  Investments to Total Assets,40% maximum

 

5.  Investments to TotalDeposits, 50% maximum

 

6.  Total Liquid Assets to TotalAssets, 25% minimum

 

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7.  Total Liquid Assets to TotalLiabilities, 25% minimum

 

8. Net Core Funding Dependence, 35% maximum

 

Fundamental objectives of the Company’s asset/liability managementprocess are to maintain adequate liquidity while minimizing interest raterisk.  The maintenance of adequateliquidity provides the Company with the ability to meet its financial obligationsto depositors, loan customers and stockholders.  Additionally, it provides funds for normal operating expendituresand business opportunities as they arise. The objective of interest rate sensitivity management is to increase netinterest income by managing interest sensitive assets and liabilities in such away that they can be repriced in response to changes in market interest rates.

 

The Company, like other financial institutions, must have sufficientfunds available to meet its liquidity needs for deposit withdrawals, loancommitments and expenses.  In order tocontrol cash flow, the bank estimates future flows of cash from deposits andloan payments.  The primary sources offunds are deposits, principal and interest payments on loans and mortgage-backedsecurities, as well as Federal Home Loan Bank borrowings.  Funds generated are used principally to fundloans and purchase investment securities. Management believes the Company has adequate resources to meet itsnormal funding requirements.

 

Management monitors the Company’s liquidity on both a long andshort-term basis thereby, providing management necessary information to reactto current balance sheet trends.  Cashflow needs are assessed and sources of funds are determined.  Funding strategies consider both customerneeds and economical cost.  Both shortand long term funding needs are addressed by maturities and sales of availablefor sale investment securities, loan repayments and maturities, and liquidatingmoney market investments such as federal funds sold.  The use of these resources, in conjunction with access to creditprovides core ingredients to satisfy depositor, borrower and creditor needs.

 

Management monitors and determines the desirable level ofliquidity.  Consideration is given toloan demand, investment opportunities, deposit pricing and growth potential aswell as the current cost of borrowing funds. The Company has a current borrowing capacity at the Federal Home LoanBank of $291.8 million.  In addition tothis credit arrangement the Company has additional lines of credit withcorrespondent banks of $10.5 million. The Company’s management believes that ithas sufficient liquidity to satisfy estimated short-term and long-term fundingneeds.  Federal Home Loan Bank advances totaled$91.9 million as of March 31, 2004.

 

Interest rate sensitivity, which is closely related to liquiditymanagement, is a function of the repricing characteristics of the Company’sportfolio of assets and liabilities. Asset/liability management strives to match maturities and rates betweenloan and investment security assets with the deposit liabilities and borrowingsthat fund them.  Successfulasset/liability management results in a balance sheet structure which can cope

 

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effectively with market rate fluctuations. The matching process isaffected by segmenting both assets and liabilities into future time periods(usually 12 months, or less) based upon when repricing can be effected.  Repriceable assets are subtracted fromrepriceable liabilities, for a specific time period to determine the “gap”, ordifference. Once known, the gap is managed based on predictions about futuremarket interest rates.  Intentionalmismatching, or gapping, can enhance net interest income if market rates moveas predicted.  However, if market ratesbehave in a manner contrary to predictions, net interest income willsuffer.  Gaps, therefore, contain anelement of risk and must be prudently managed. In addition to gap management, the Company has an asset/liabilitymanagement policy which incorporates a market value at risk calculation whichis used to determine the effects of interest rate movements on shareholders’equity and a simulation analysis to monitor the effects of interest ratechanges on the Company’s balance sheets.

 

There has been no substantial changes in the Company’s gap analyses orsimulation analyses compared to the information provided in the Company’s SEC10-K for the period ended December 31, 2003.

 

Generally, management believes the Company is well positioned torespond expeditiously when the market interest rate outlook changes.

 

**Inflation**

 

The asset and liability structure of a financial institution isprimarily monetary in nature, therefore, interest rates rather than inflationhave a more significant impact on the Corporation’s performance.  Interest rates are not always affected inthe same direction or magnitude as prices of other goods and services, but are reflectiveof fiscal policy initiatives or economic factors which are not measured by aprice index.

 

In reference to the attached financial statements, all adjustments areof a normal recurring nature pursuant to Rule 10-01 (b) (8) of Regulation S-X.

 

**Item 3****.  Quantitative and Qualitative DisclosureAbout Market Risk**

Market risk for the Company is comprised primarily from interest raterisk exposure and liquidity risk. Interest rate risk and liquidity risk management is performed at theBank level as well as the Company level. The Company’s interest rate sensitivity is monitored by managementthrough selected interest rate risk measures produced internally.  There has been no substantial changes in theCompany’s gap analyses or simulation analyses compared to the informationprovided in the Company’s SEC 10-K for the period ended December 31, 2003.  Additional information and details areprovided in the Interest Sensitivity section of Item 2. Management’s Discussionand Analysis of Financial Condition and Results of Operations.

 

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Generally, management believes the Company is well positioned torespond expeditiously when the market interest rate outlook changes.

 

**Item 4****.  Controls and Procedures**

 

An analysis was performed under the supervision and with theparticipation of the Company’s management, including the Chief ExecutiveOfficer and the Chief Financial Officer, of the effectiveness of the design andoperation of the Company’s disclosure controls and procedures. Based on thatevaluation, the Company’s Chief Executive Officer and Chief Financial Officerconcluded that the Company’s disclosure controls and procedures were effectiveas of March 31, 2004. There has been no change in the Company’s internalcontrol over financial reporting that occurred during the quarter ended March31, 2004, that has materially affected, or is reasonably likely to materiallyaffect, the Company’s internal control over financial reporting.

 

**Part II****.  OTHER INFORMATION**

 

**Item 1****.  Legal Proceedings.**

None

 

**Item 2****.  Changes in Securities, Use of Proceeds, andIssuer Purchases of Equity Securities**

The following table sets forth certain information relating to sharesof the Company’s common stock repurchased by the Company during the quarterended March 31, 2004.

 

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**Issuer Purchases of EquitySecurities**

 
| **Period**                              |   | **Total  Number of  Shares (or  Units)  Purchased** |   | **Average  Price Paid  per Share (or  Units)  Purchased** |   | **Total  Number  of Shares (or  Units)  Purchased as  Part of  Publicly  Announced  Plans or  Programs** |   | **Maximum  Number (or  Approximate  Dollar Value)  of Shares (or  Units) that  May Yet Be  Purchased  Under the  Plans or  Programs** |   |
|-----------------------------------------|--------|-----------------------------------------------------|--------|-----------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                    |   |                                                |   |                                                      |   |                                                                                                     |   |                                                                                                                                  |   |
| Month#1(January 1- January 31, 2004)    |   | —                                              |   | —                                                    |   | —                                                                                                   |   | —                                                                                                                                |   |
|                                    |   |                                                |   |                                                      |   |                                                                                                     |   |                                                                                                                                  |   |
| Month#2 (February 1- February 29, 2004) |   | —                                              |   | —                                                    |   | —                                                                                                   |   | —                                                                                                                                |   |
|                                    |   |                                                |   |                                                      |   |                                                                                                     |   |                                                                                                                                  |   |
| Month#3 (March 1,- March 31, 2004)      |   | 3,000                                               |   | $                                                         | 43.30  |                                                                                                     | 3,000  |                                                                                                                                  | 54,619 |   |
|                                         |        |                                                     |        |                                                           |        |                                                                                                          |        |                                                                                                                                       |        |  |

 

The Companyannounced a repurchase program on August 10, 2000 which was approved bythe Board of Directors on August 8, 2000 for the repurchased of 171,600shares which will expire on August 8, 2004.

** **

**Item 3****.  Defaults Upon Senior Securities.**

None

 

**Item 4****.  Submission of Matters to a Vote of SecurityHolders**

Penns WoodsBancorp, Inc.’s annual meeting of the shareholders was held on April 28,2004.  The results of the items voted onare listed below:

 
| **Issue** |   | **Description**                              |   | **For**   |   | **Withhold** |   |
|-----------|--------|----------------------------------------------|--------|-----------|--------|--------------|--------|
|      |   |                                         |   |      |   |         |   |
| 1.        |   | Election of  Directors for a Three Year Term |   |      |   |         |   |
|      |   |                                         |   |      |   |         |   |
|      |   | Michael J. Casale, Jr.                       |   | 2,738,295 |   | 18,729       |   |
|      |   | R. Edward Nestlerode, Jr.                    |   | 2,742,402 |   | 14,622       |   |
|      |   | William H. Rockey                            |   | 2,696,053 |   | 60,971       |   |
|      |   | Ronald A. Walko                              |   | 2,698,910 |   | 58,114       |   |

 
| **Issue** |   | **Description**                                                                            |   | **For**   |   | **Against** |   | **Abstain** |   |
|-----------|--------|--------------------------------------------------------------------------------------------|--------|-----------|--------|-------------|--------|-------------|--------|
|      |   |                                                                                       |   |      |   |        |   |        |   |
| 2.        |   | Ratification of S.R. Snodgrass A.C.,  Certified Public Accountants as independent auditors |   | 2,732,074 |   | 10,936      |   | 14,014      |   |

 

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**Item5****.  OtherInformation**

None

 

**Item 6****.  Exhibits and Reports on Form 8-K.**

(A) Exhibits

 

(3)   (i)                                                              Articlesof Incorporation of the Registrant, as presently in effect (incorporated byreference to Exhibit 3.1 of the Registrant’s Registration Statement on FormS-4, No. 333-65821).

(3)   (ii)                                                           Bylawsof the Registrant as presently in effect (incorporated by reference to Exhibit3.2 of the Registrant’s Registration Statement on Form S-4, No. 333-65821).

(31) (i)                                                              Rule13a-14(a) Certification of Chief Executive Officer

(31) (ii)                                                           Rule13a-14(a) Certification of Chief Financial Officer

(32) (i)                                                              Certificationof Chief Executive Officer Section 1350

(32) (ii)                                                           Certificationof Chief Financial Officer Section 1350

(B) Reports on Form 8-K

January 13, 2004 - First Quarter Earnings Press Release April 13, 2004- First Quarter Shareholders’ Report

 

**SIGNATURES**

 

Pursuant to the requirements of the Securities Exchange Act of 1934,the Registrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized.

 

PENNS WOODS BANCORP, INC.

(Registrant)

 

 
| Date:  May 10, 2004 |                                                    |   |
|-------------------------------|---------------------------------------------------------|--------|
|                          | Ronald A. Walko, President and Chief  Executive Officer |
|                          |                                                    |
|                          |                                                    |
| Date:  May 10, 2004 |                                                    |   |
|                          | Sonya E. Scott, Secretary                               |

 

**EXHIBIT INDEX**

 

Exhibit 31(i)                                                                                  Rule13a-14(a) Certification of Chief Executive Officer

Exhibit 31(ii)                                                                               Rule13a-14(a) Certification of Chief Financial Officer

Exhibit 32(i)                                                                                  Section1350 Certification of Chief Executive Officer

Exhibit 32(ii)                                                                               Section1350 Certification of Chief Financial Officer

 

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