Penns Woods Bancorp, Inc. Reports Fourth Quarter and Year Ended 2023 Earnings

Rhea-AI Summary

Penns Woods Bancorp, Inc. achieved net income of $16.6 million for the twelve months ended December 31, 2023, resulting in basic and diluted earnings per share of $2.34. The company experienced a decrease in net interest income and after-tax securities losses, while bank-owned life insurance income, the sale of a former branch property, and a decrease in the provision for credit losses positively impacted the financials.

Positive

• Net income of $16.6 million for the twelve months ended December 31, 2023
• Basic and diluted earnings per share of $2.34
• Decrease in net interest income and after-tax securities losses
• Increase in bank-owned life insurance income
• Sale of a former branch property and a decrease in the provision for credit losses

Negative

• Decrease in net interest income due to the velocity and magnitude of the rate increases enacted by the Federal Open Market Committee
• Decrease in after-tax securities losses

Insights

Financial Analyst

The reported net income of $16.6 million for Penns Woods Bancorp, Inc. signifies a modest decrease from the previous year's $17.4 million. This change reflects the dynamic nature of the banking sector, particularly in response to the Federal Open Market Committee's aggressive rate hikes. The rise in interest expense highlights the cost of borrowing in a higher rate environment, which can squeeze net interest margins—a key profitability metric for banks.

Moreover, the reduction in the provision for credit losses, resulting in a recovery, is indicative of an improving credit quality within the bank's loan portfolio. This could be a result of prudent risk management practices and a favorable economic environment leading to fewer defaults. The bank's strategy to grow its commercial loan and indirect auto lending portfolios seems to be bearing fruit, evidenced by the increase in net loans.

However, the dip in annualized return on average assets and equity for the twelve-month period, despite an increase for the three-month period, suggests that while short-term profitability has improved, the bank may be facing challenges in sustaining long-term profitability at the same level. This could be due to the increased funding costs and competitive pressures for deposits. Potential investors should monitor how the bank manages these pressures and whether it can continue to grow its loan portfolio without adversely impacting its net interest margin.

Market Research Analyst

The reported increase in the average loan portfolio balance and the yield on interest-earning assets is a positive signal for Penns Woods Bancorp, Inc.'s growth prospects. This indicates the bank's ability to capitalize on higher interest rates to generate more income from its lending activities. However, the increase in funding costs, particularly the rates paid on time deposits and borrowings, could potentially offset these gains if the bank is unable to pass these costs onto borrowers through higher lending rates.

From a market competition perspective, the bank's use of brokered deposits and deposit gathering campaigns to fund loan growth is noteworthy. This strategy reflects a need to remain competitive in attracting deposits, which is crucial in a rising rate environment. The bank's focus on electronic deposit banking could also be a strategic move to enhance customer convenience and retain depositors in an increasingly digital banking landscape.

Investors should consider the bank's strategies for asset growth and deposit retention, as these will be key factors in its ability to navigate the competitive and changing banking environment. The bank's ability to maintain or improve its net interest margin in the face of rising deposit rates will be an important determinant of its financial performance going forward.

Legal Expert

While the financial analysis of Penns Woods Bancorp, Inc.'s performance is primarily the domain of financial experts, from a legal and regulatory standpoint, the bank's adherence to the Current Expected Credit Losses (CECL) accounting standard is of interest. The decrease in the allowance for credit losses, which is now 0.62% of total loans, reflects the bank's assessment of the risk of credit losses within its loan portfolio under this forward-looking accounting model. Compliance with such financial reporting standards is critical for investor confidence and for meeting regulatory requirements.

Additionally, the bank's use of non-GAAP financial measures, such as core earnings, requires transparent reconciliation to GAAP measures to ensure investors have a clear understanding of the bank's operational performance. The bank's communication and disclosure practices around these measures must be precise to avoid any potential legal or regulatory scrutiny.

Investors should be aware of the bank's compliance with financial reporting standards and its risk management practices, as these can have significant implications for the bank's reputation and legal standing.

WILLIAMSPORT, Pa., Jan. 29, 2024 (GLOBE NEWSWIRE) -- Penns Woods Bancorp, Inc. (NASDAQ: PWOD)

Penns Woods Bancorp, Inc. achieved net income of $16.6 million for the twelve months ended December 31, 2023, resulting in basic and diluted earnings per share of $2.34.

Highlights

• Net income, as reported under GAAP, for the three and twelve months ended December 31, 2023 was $5.6 million and $16.6 million, compared to $4.5 million and $17.4 million for the same periods of 2022. Results for the three and twelve months ended December 31, 2023 compared to 2022 were impacted by a decrease in net interest income of $1.6 million and $2.8 million, respectively, as interest expense increased significantly due to the velocity and magnitude of the rate increases enacted by the Federal Open Market Committee ("FOMC"). In addition, results were impacted by a decrease in after-tax securities losses of $17,000 (from a loss of $31,000 to a loss of $14,000) for the three month period and a decrease in after-tax securities losses of $147,000 (from a loss of $288,000 to a loss of $141,000) for the twelve month period. Bank-owned life insurance income increased due to a gain on death benefit of $380,000 during the twelve months ended December 31, 2023. The sale of a former branch property resulted in an after-tax gain of $117,000 for the twelve month period ended December 31, 2023, while an after-tax loss of $201,000 related to a branch closure negatively impacted the same period of 2022.
  
  
• The provision for credit losses decreased $2.3 million for the three months ended December 31, 2023 and decreased $3.4 million for the twelve months ended December 31, 2023 to a recovery of $1.7 million and $1.5 million, respectively, compared to a provision of $575,000 and $1.9 million for the 2022 periods. The decrease for the three and twelve month periods was due primarily to a recovery on a commercial loan which positively affected the historical loss rates, and the payoff of a nonperforming commercial loan.
  
  
• Basic and diluted earnings per share for the three and twelve months ended December 31, 2023 were $0.77 and $2.34, respectively, compared to basic and diluted earnings per share of $0.64 and $2.47 for the three and twelve month periods ended December 31, 2022.
  
  
• Annualized return on average assets was 1.02% for three months ended December 31, 2023, compared to 0.92% for the corresponding period of 2022. Annualized return on average assets was 0.79% for the twelve months ended December 31, 2023, compared to 0.90% for the corresponding period of 2022.
  
  
• Annualized return on average equity was 12.60% for the three months ended December 31, 2023, compared to 10.92% for the corresponding period of 2022. Annualized return on average equity was 9.84% for the twelve months ended December 31, 2023, compared to 10.73% for the corresponding period of 2022.
  

Net Income

Net income from core operations (“core earnings”), which is a non-generally accepted accounting principles (GAAP) measure of net income excluding net securities gains or losses, was $5.6 million and $16.7 million for the three and twelve months ended December 31, 2023 compared to $5.1 million and $18.2 million for the same periods of 2022. Basic and diluted core earnings per share (non-GAAP) for the three and twelve months ended December 31, 2023 were $0.77 and $2.36, respectively, while basic and diluted core earnings per share for the same periods of 2022 were $0.71 and $2.58. Annualized core return on average assets and core return on average equity (non-GAAP) were 1.02% and 12.63% for the three months ended December 31, 2023, compared to 1.04% and 12.25% for the corresponding periods of 2022. Core return on average assets and core return on average equity (non-GAAP) were 0.79% and 9.93% for the twelve months ended December 31, 2023 compared to 0.94% and 11.22% for the corresponding periods of 2022. A reconciliation of the non-GAAP financial measures of core earnings, core return on assets, core return on equity, and core earnings per share described in this press release to the comparable GAAP financial measures is included at the end of this press release.

Net Interest Margin

The net interest margin for the three and twelve months ended December 31, 2023 was 2.73% and 2.80%, compared to 3.42% and 3.24% for the corresponding periods of 2022. The decrease in the net interest margin for the three and twelve month periods was driven by an increase in the rate paid on interest-bearing liabilities of 215 and 197 basis points ("bps"), respectively. The FOMC rate increases during 2022 and 2023 contributed to the increases in rate paid on interest-bearing liabilities as the rate paid on short-term borrowings increased 165 bps and 192 bps for the three and twelve month periods ended December 31, 2023 compared to the same periods of 2022. Short-term borrowings increased in volume and rate paid as this funding source was utilized to provide funding for the growth in the loan portfolio, resulting in an increase of $1.3 million and $7.4 million, respectively, in expense for the three and twelve month periods ended December 31, 2023 compared to the same periods of 2022. The rate paid on interest-bearing deposits increased 207 and 168 bps for the three and twelve month periods ended December 31, 2023 compared to the corresponding periods of 2022 due to the FOMC rate actions and an increase in competition for deposits. The rates paid on time deposits significantly contributed to the increase in funding costs as rates paid for the three and twelve month periods ended December 31, 2023 compared to the same periods of 2022 increased 324 bps and 282 bps, respectively, as deposit gathering campaigns initiated in the latter part of 2022 continued throughout 2023. In addition, brokered deposits have been utilized to assist with the funding of the loan portfolio growth and contributed to the increase in time deposit funding costs. Partially offsetting the increase in funding cost was an increase in the yield on interest-earning assets and growth in the average balance of the earning assets portfolio compared to the same periods in 2022. The average loan portfolio balance increased $220.6 million and $263.7 million for the three and twelve month periods as the average yield on the portfolio increased 96 and 81 bps for the same periods. The three and twelve month periods ended December 31, 2023 were impacted by an increase of 81 and 94 bps in the yield earned on the securities portfolio as legacy securities matured with the funds reinvested at higher rates.

Assets

Total assets increased to $2.2 billion at December 31, 2023, an increase of $204.7 million compared to December 31, 2022.  Net loans increased $204.2 million to $1.8 billion at December 31, 2023 compared to December 31, 2022, as continued emphasis was placed on commercial loan growth coupled with growth in indirect auto lending. The investment portfolio increased $2.4 million from December 31, 2022 to December 31, 2023 as restricted investment in bank stock increased $5.2 million resulting from the requirement to hold additional stock in the Federal Home Loan Bank of Pittsburgh ("FHLB") due to an increase in the level of borrowings from the FHLB. The increase in total borrowings of $142.4 million to $398.5 million at December 31, 2023 was utilized to provide funding for the growth in the loan portfolio.

Non-performing Loans

The ratio of non-performing loans to total loans ratio decreased to 0.17% at December 31, 2023 from 0.30% at December 31, 2022, as non-performing loans decreased to $3.1 million at December 31, 2023 from $4.9 million at December 31, 2022. The majority of non-performing loans involve loans that are either in a secured position and have sureties with a strong underlying financial position or have been classified as individually evaluated loans that have a specific allocation recorded within the allowance for credit losses. Net loan recoveries of $525,000 for the twelve months ended December 31, 2023 impacted the allowance for credit losses, which was 0.62% of total loans at December 31, 2023 compared to 0.95% at December 31, 2022 (prior to the adoption of CECL).

Deposits

Deposits increased $33.0 million to $1.6 billion at December 31, 2023 compared to December 31, 2022. Noninterest-bearing deposits decreased $47.9 million to $471.2 million at December 31, 2023 compared to December 31, 2022.  Core deposits declined as deposits migrated from core deposit accounts into time deposits as market rates increased due to the FOMC rate increases and increased competition for deposits. Core deposit gathering efforts remained focused on increasing the utilization of electronic (internet and mobile) deposit banking by our customers. Interest-bearing deposits increased $80.9 million from December 31, 2022 to December 31, 2023 primarily due to increased utilization of brokered deposits of $116.4 million as this funding source was utilized to supplement funding loan portfolio growth, while reducing the need to draw upon available borrowing lines. A campaign to attract time deposits with a maturity of five to twenty-four months commenced during the latter part of 2022 and has continued during 2023 with current efforts centered on five to ten months.

Shareholders’ Equity

Shareholders’ equity increased $23.9 million to $191.6 million at December 31, 2023 compared to December 31, 2022.  During the twelve months ended December 31, 2023 the Company sold 420,069 shares of common stock, for net proceeds of $8.3 million, in a registered at-the-market offering. An additional 17,929 shares for net proceeds of $406,000 were issued as part of the Dividend Reinvestment Plan during the twelve months ended December 31, 2023. Accumulated other comprehensive loss of $9.2 million at December 31, 2023 decreased from a loss of $14.0 million at December 31, 2022 as a result of a decrease in net unrealized loss on available for sale securities to $6.4 million at December 31, 2023 from a net unrealized loss of $9.8 million at December 31, 2022 coupled with a decrease in loss of $1.4 million in the defined benefit plan obligation. The current level of shareholders’ equity equates to a book value per share of $25.51 at December 31, 2023 compared to $23.76 at December 31, 2022, and an equity to asset ratio of 8.69% at December 31, 2023 and 8.40% at December 31, 2022. Dividends declared for the twelve months ended December 31, 2023 and 2022 were $1.28 per share.

Penns Woods Bancorp, Inc. is the parent company of Jersey Shore State Bank, which operates sixteen branch offices providing financial services in Lycoming, Clinton, Centre, Montour, Union, and Blair Counties, and Luzerne Bank, which operates eight branch offices providing financial services in Luzerne County, and United Insurance Solutions, LLC, which offers insurance products.  Investment and insurance products are offered through Jersey Shore State Bank’s subsidiary, The M Group, Inc. D/B/A The Comprehensive Financial Group.

NOTE:  This press release contains financial information determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).  Management uses the non-GAAP measure of net income from core operations in its analysis of the company’s performance. This measure, as used by the Company, adjusts net income determined in accordance with GAAP to exclude the effects of special items, including significant gains or losses that are unusual in nature such as net securities gains and losses. Because these certain items and their impact on the Company’s performance are difficult to predict, management believes presentation of financial measures excluding the impact of such items provides useful supplemental information in evaluating the operating results of the Company’s core businesses. These disclosures should not be viewed as a substitute for net income determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

This press release may contain certain “forward-looking statements” including statements concerning plans, objectives, future events or performance and assumptions and other statements, which are statements other than statements of historical fact.  The Company cautions readers that the following important factors, among others, may have affected and could in the future affect actual results and could cause actual results for subsequent periods to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company herein: (i) the effect of changes in laws and regulations, including federal and state banking laws and regulations, and the associated costs of compliance with such laws and regulations either currently or in the future as applicable; (ii) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies as well as by the Financial Accounting Standards Board, or of changes in the Company’s organization, compensation and benefit plans; (iii) the effect on the Company’s competitive position within its market area of the increasing consolidation within the banking and financial services industries, including the increased competition from larger regional and out-of-state banking organizations as well as non-bank providers of various financial services; (iv) the effect of changes in interest rates; (v) the effects of health emergencies, including the spread of infectious diseases or pandemics; or (vi) the effect of changes in the business cycle and downturns in the local, regional or national economies.  For a list of other factors which could affect the Company’s results, see the Company’s filings with the Securities and Exchange Commission, including “Item 1A.  Risk Factors,” set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

You should not place undue reliance on any forward-looking statements.  These statements speak only as of the date of this press release, even if subsequently made available by the Company on its website or otherwise.  The Company undertakes no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this press release.

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

Contact:	Richard A. Grafmyre, Chief Executive Officer
	110 Reynolds Street
	Williamsport, PA 17702
	570-322-1111	e-mail: pwod@pwod.com

PENNS WOODS BANCORP, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
		December 31,
(In Thousands, Except Share and Per Share Data)			2023				2022			% Change
ASSETS:
Noninterest-bearing balances		$	28,969			$	27,390			5.76	%
Interest-bearing balances in other financial institutions			8,493				12,943			(34.38	)%
Total cash and cash equivalents			37,462				40,333			(7.12	)%
Investment debt securities, available for sale, at fair value			190,945				193,673			(1.41	)%
Investment equity securities, at fair value			1,122				1,142			(1.75	)%
Restricted investment in bank stock			24,323				19,171			26.87	%
Loans held for sale			3,993				3,298			21.07	%
Loans			1,839,764				1,639,731			12.20	%
Allowance for credit losses			(11,446	)			(15,637	)		(26.80	)%
Loans, net			1,828,318				1,624,094			12.57	%
Premises and equipment, net			30,250				31,844			(5.01	)%
Accrued interest receivable			11,044				9,481			16.49	%
Bank-owned life insurance			33,867				34,452			(1.70	)%
Investment in limited partnerships			7,815				8,656			(9.72	)%
Goodwill			16,450				16,450			—	%
Intangibles			210				327			(35.78	)%
Operating lease right of use asset			2,512				2,651			(5.24	)%
Deferred tax asset			4,655				6,868			(32.22	)%
Other assets			11,843				7,640			55.01	%
TOTAL ASSETS		$	2,204,809			$	2,000,080			10.24	%
LIABILITIES:
Interest-bearing deposits		$	1,118,320			$	1,037,397			7.80	%
Noninterest-bearing deposits			471,173				519,063			(9.23	)%
Total deposits			1,589,493				1,556,460			2.12	%
Short-term borrowings			145,926				153,349			(4.84	)%
Long-term borrowings			252,598				102,783			145.76	%
Accrued interest payable			3,814				603			532.50	%
Operating lease liability			2,570				2,708			(5.10	)%
Other liabilities			18,852				16,512			14.17	%
TOTAL LIABILITIES			2,013,253				1,832,415			9.87	%
SHAREHOLDERS’ EQUITY:
Preferred stock, no par value, 3,000,000 shares authorized; no shares issued			—				—			n/a
Common stock, par value $5.55, 22,500,000 shares authorized; 8,019,219 and 7,566,810 shares issued; 7,508,994 and 7,056,585 shares outstanding			44,550				42,039			5.97	%
Additional paid-in capital			61,733				54,252			13.79	%
Retained earnings			107,238				98,147			9.26	%
Accumulated other comprehensive loss:
Net unrealized loss on available for sale securities			(6,396	)			(9,819	)		34.86	%
Defined benefit plan			(2,754	)			(4,139	)		33.46	%
Treasury stock at cost, 510,225 shares			(12,815	)			(12,815	)		—	%
TOTAL SHAREHOLDERS' EQUITY			191,556				167,665			14.25	%
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	2,204,809			$	2,000,080			10.24	%

    

PENNS WOODS BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
		Three Months Ended December 31,											Twelve Months Ended December 31,
(In Thousands, Except Share and Per Share Data)			2023				2022			% Change				2023				2022			% Change
INTEREST AND DIVIDEND INCOME:
Loans including fees		$	23,720			$	16,973			39.75	%		$	83,291			$	58,682			41.94	%
Investment securities:
Taxable			1,476				1,084			36.16	%			5,346				3,634			47.11	%
Tax-exempt			107				229			(53.28	)%			517				823			(37.18	)%
Dividend and other interest income			614				319			92.48	%			2,441				1,789			36.44	%
TOTAL INTEREST AND DIVIDEND INCOME			25,917				18,605			39.30	%			91,595				64,928			41.07	%
INTEREST EXPENSE:
Deposits			7,445				1,499			396.66	%			22,131				3,690			499.76	%
Short-term borrowings			2,317				978			136.91	%			8,401				1,007			734.26	%
Long-term borrowings			2,207				580			280.52	%			6,099				2,451			148.84	%
TOTAL INTEREST EXPENSE			11,969				3,057			291.53	%			36,631				7,148			412.47	%
NET INTEREST INCOME			13,948				15,548			(10.29	)%			54,964				57,780			(4.87	)%
(Recovery) provision for loan credit losses			(1,653	)			575			(387.48	)%			(927	)			1,910			(148.53	)%
Recovery for off balance sheet credit exposures			(89	)			—			n/a				(552	)			—			n/a
TOTAL (RECOVERY) PROVISION FOR CREDIT LOSSES			(1,742	)			575			(402.96	)%			(1,479	)			1,910			(177.43	)%
NET INTEREST INCOME AFTER (RECOVERY) PROVISION FOR CREDIT LOSSES			15,690				14,973			4.79	%			56,443				55,870			1.03	%
NON-INTEREST INCOME:
Service charges			533				540			(1.30	)%			2,090				2,103			(0.62	)%
Net debt securities losses, available for sale			(68	)			(51	)		(33.33	)%			(193	)			(219	)		11.87	%
Net equity securities gains (losses)			50				12			316.67	%			15				(146	)		110.27	%
Bank-owned life insurance			171				163			4.91	%			1,063				664			60.09	%
Gain on sale of loans			314				226			38.94	%	.		1,046				1,131			(7.52	)%
Insurance commissions			113				105			7.62	%			529				491			7.74	%
Brokerage commissions			127				120			5.83	%			575				620			(7.26	)%
Loan broker income			264				324			(18.52	)%			992				1,674			(40.74	)%
Debit card income			333				384			(13.28	)%			1,328				1,464			(9.29	)%
Other			384				258			48.84	%			930				931			(0.11	)%
TOTAL NON-INTEREST INCOME			2,221				2,081			6.73	%			8,375				8,713			(3.88	)%
NON-INTEREST EXPENSE:
Salaries and employee benefits			6,284				5,846			7.49	%			25,062				24,267			3.28	%
Occupancy			746				700			6.57	%			3,168				3,080			2.86	%
Furniture and equipment			889				834			6.59	%			3,392				3,288			3.16	%
Software amortization			250				180			38.89	%			843				840			0.36	%
Pennsylvania shares tax			275				333			(17.42	)%			1,082				1,452			(25.48	)%
Professional fees			640				688			(6.98	)%			2,953				2,434			21.32	%
Federal Deposit Insurance Corporation deposit insurance			456				248			83.87	%			1,578				938			68.23	%
Marketing			90				255			(64.71	)%			684				690			(0.87	)%
Intangible amortization			25				35			(28.57	)%			117				154			(24.03	)%
Goodwill impairment			—				653			n/a				—				653			n/a
Other			1,342				1,479			(9.26	)%			5,617				5,202			7.98	%
TOTAL NON-INTEREST EXPENSE			10,997				11,251			(2.26	)%			44,496				42,998			3.48	%
INCOME BEFORE INCOME TAX PROVISION			6,914				5,803			19.15	%			20,322				21,585			(5.85	)%
INCOME TAX PROVISION			1,359				1,294			5.02	%			3,714				4,163			(10.79	)%
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS'		$	5,555			$	4,509			23.20	%		$	16,608			$	17,422			(4.67	)%
EARNINGS PER SHARE - BASIC		$	0.77			$	0.64			20.31	%		$	2.34			$	2.47			(5.26	)%
EARNINGS PER SHARE - DILUTED		$	0.77			$	0.64			20.31	%		$	2.34			$	2.47			(5.26	)%
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC			7,255,222				7,055,181			2.84	%			7,112,450				7,059,437			0.75	%
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED			7,255,222				7,055,181			2.84	%			7,112,450				7,059,437			0.75	%

PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES
(UNAUDITED)
		Three Months Ended
		December 31, 2023									December 31, 2022
(Dollars in Thousands)		Average  Balance (1)			Interest			Average  Rate			Average  Balance (1)			Interest			Average  Rate
ASSETS:
Tax-exempt loans (3)		$	68,234		$	478		2.78	%		$	61,756		$	408		2.62	%
All other loans			1,760,509			23,342		5.26	%			1,546,338			16,651		4.27	%
Total loans (2)			1,828,743			23,820		5.17	%			1,608,094			17,059		4.21	%
Federal funds sold			—			—		—	%			—			—		—	%
Taxable securities			193,744			1,932		4.04	%			167,405			1,329		3.22	%
Tax-exempt securities (3)			18,041			135		3.03	%			41,167			290		2.86	%
Total securities			211,785			2,067		3.96	%			208,572			1,619		3.15	%
Interest-bearing balances in other financial institutions			11,795			158		5.31	%			5,797			74		5.06	%
Total interest-earning assets			2,052,323			26,045		5.04	%			1,822,463			18,752		4.09	%
Other assets			130,421									128,084
TOTAL ASSETS		$	2,182,744								$	1,950,547
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Savings		$	222,740			229		0.41	%		$	249,793			66		0.10	%
Super Now deposits			227,113			1,129		1.97	%			385,060			623		0.64	%
Money market deposits			293,542			2,217		3.00	%			268,519			509		0.75	%
Time deposits			377,516			3,870		4.07	%			144,491			301		0.83	%
Total interest-bearing deposits			1,120,911			7,445		2.64	%			1,047,863			1,499		0.57	%
Short-term borrowings			163,088			2,317		5.63	%			97,585			978		3.98	%
Long-term borrowings			235,998			2,207		3.71	%			102,814			580		2.24	%
Total borrowings			399,086			4,524		4.50	%			200,399			1,558		3.09	%
Total interest-bearing liabilities			1,519,997			11,969		3.12	%			1,248,262			3,057		0.97	%
Demand deposits			457,546									517,977
Other liabilities			28,786									19,151
Shareholders’ equity			176,415									165,157
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	2,182,744								$	1,950,547
Interest rate spread (3)								1.92	%								3.12	%
Net interest income/margin (3)					$	14,076		2.73	%					$	15,695		3.42	%

1. Information on this table has been calculated using average daily balance sheets to obtain average balances.
   
2. Non-accrual loans have been included with loans for the purpose of analyzing net interest earnings.
   
3. Income and rates on fully taxable equivalent basis include an adjustment for the difference between annual income         
   from tax-exempt obligations and the taxable equivalent of such income at the standard tax rate of 21%

	Three Months Ended December 31,
		2023			2022
Total interest income	$	25,917		$	18,605
Total interest expense		11,969			3,057
Net interest income (GAAP)		13,948			15,548
Tax equivalent adjustment		128			147
Net interest income (fully taxable equivalent) (non-GAAP)	$	14,076		$	15,695

PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES
(UNAUDITED)
		Twelve Months Ended
		December 31, 2023									December 31, 2022
(Dollars in Thousands)		Average  Balance (1)			Interest			Average  Rate			Average  Balance (1)			Interest			Average  Rate
ASSETS:
Tax-exempt loans (3)		$	66,863		$	1,849		2.77	%		$	55,364		$	1,441		2.60	%
All other loans			1,691,742			81,830		4.84	%			1,439,550			57,544		4.00	%
Total loans (2)			1,758,605			83,679		4.76	%			1,494,914			58,985		3.95	%
Federal funds sold			—			—		—	%			32,863			465		1.41	%
Taxable securities			189,804			7,263		3.83	%			156,584			4,455		2.88	%
Tax-exempt securities (3)			23,872			654		2.74	%			44,301			1,042		2.38	%
Total securities			213,676			7,917		3.71	%			200,885			5,497		2.77	%
Interest-bearing balances in other financial institutions			10,916			524		4.80	%			74,401			503		0.68	%
Total interest-earning assets			1,983,197			92,120		4.65	%			1,803,063			65,450		3.63	%
Other assets			131,704									128,213
TOTAL ASSETS		$	2,114,901								$	1,931,276
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Savings		$	231,000			685		0.30	%		$	247,003			138		0.06	%
Super Now deposits			276,868			4,155		1.50	%			387,370			1,344		0.35	%
Money market deposits			292,755			7,024		2.40	%			289,820			1,105		0.38	%
Time deposits			293,252			10,267		3.50	%			161,982			1,103		0.68	%
Total interest-bearing deposits			1,093,875			22,131		2.02	%			1,086,175			3,690		0.34	%
Short-term borrowings			157,140			8,401		5.36	%			29,315			1,007		3.44	%
Long-term borrowings			186,094			6,099		3.28	%			110,027			2,451		2.23	%
Total borrowings			343,234			14,500		4.23	%			139,342			3,458		2.48	%
Total interest-bearing liabilities			1,437,109			36,631		2.55	%			1,225,517			7,148		0.58	%
Demand deposits			477,828									519,189
Other liabilities			31,243									24,182
Shareholders’ equity			168,721									162,388
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	2,114,901								$	1,931,276
Interest rate spread (3)								2.10	%								3.05	%
Net interest income/margin (3)					$	55,489		2.80	%					$	58,302		3.24	%

1. Information on this table has been calculated using average daily balance sheets to obtain average balances.
   
2. Non-accrual loans have been included with loans for the purpose of analyzing net interest earnings.
   
3. Income and rates on fully taxable equivalent basis include an adjustment for the difference between annual income         
   from tax-exempt obligations and the taxable equivalent of such income at the standard tax rate of 21%

	Twelve Months Ended December 31,
		2023			2022
Total interest income	$	91,595		$	64,928
Total interest expense		36,631			7,148
Net interest income		54,964			57,780
Tax equivalent adjustment		525			522
Net interest income (fully taxable equivalent) (non-GAAP)	$	55,489		$	58,302

(Dollars in Thousands, Except Per Share Data, Unaudited)		Quarter Ended
		12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Operating Data
Net income		$	5,555			$	2,224			$	4,171			$	4,658			$	4,509
Net interest income			13,948				13,332				13,386				14,298				15,548
(Recovery) provision for credit losses			(1,742	)			1,372				(1,180	)			71				575
Net security losses			(18	)			(81	)			(39	)			(40	)			(39	)
Non-interest income, excluding net security losses			2,239				1,956				2,061				2,297				2,120
Non-interest expense			10,997				11,172				11,429				10,898				11,251
Performance Statistics
Net interest margin			2.73	%			2.65	%			2.77	%			3.10	%			3.42	%
Annualized return on average assets			1.02	%			0.41	%			0.80	%			0.92	%			0.92	%
Annualized return on average equity			12.60	%			5.06	%			9.53	%			11.12	%			10.92	%
Annualized net loan (recoveries) charge-offs to average loans		(0.05		)%			0.01	%		(0.11		)%			0.03	%			0.04	%
Net (recoveries) charge-offs			(209	)			33				(472	)			123				149
Efficiency ratio			67.78	%			72.76	%			73.78	%			65.46	%			59.79	%
Per Share Data
Basic earnings per share		$	0.77			$	0.31			$	0.59			$	0.66			$	0.64
Diluted earnings per share			0.77				0.31				0.59				0.64				0.64
Dividend declared per share			0.32				0.32				0.32				0.32				0.32
Book value			25.51				24.55				24.70				24.64				23.76
Common stock price:
High			23.64				27.17				27.34				27.77				26.89
Low			20.05				20.70				21.95				21.90				23.15
Close			22.51				21.08				25.03				23.10				26.62
Weighted average common shares:
Basic			7,255				7,072				7,062				7,058				7,055
Fully Diluted			7,255				7,229				7,062				7,334				7,055
End-of-period common shares:
Issued			8,019				7,620				7,574				7,570				7,567
Treasury			(510	)			(510	)			(510	)			(510	)			(510	)

(Dollars in Thousands)		Quarter Ended
		12/31/2023				9/30/2023				6/30/2023				3/31/2023				12/31/2022
Financial Condition Data:
General
Total assets		$	2,204,809			$	2,176,468			$	2,135,319			$	2,065,143			$	2,000,080
Loans, net			1,828,318				1,805,571				1,757,811				1,688,289				1,624,094
Goodwill			16,450				16,450				16,450				16,450				16,450
Intangibles			210				235				260				292				327
Total deposits			1,589,493				1,567,267				1,553,757				1,638,835				1,556,460
Noninterest-bearing			471,173				471,507				475,937				502,352				519,063
Savings			219,287				226,897				229,108				239,526				247,952
NOW			214,888				220,730				238,353				363,548				372,574
Money Market			299,353				291,889				296,957				300,273				270,589
Time Deposits			260,067				249,550				226,224				191,203				137,949
Brokered Deposits			124,725				106,694				87,178				41,933				8,333
Total interest-bearing deposits			1,118,320				1,095,760				1,077,820				1,136,483				1,037,397
Core deposits*			1,204,701				1,211,023				1,240,355				1,405,699				1,410,178
Shareholders’ equity			191,556				174,540				174,402				173,970				167,665
Asset Quality
Non-performing loans		$	3,148			$	3,683			$	4,276			$	4,766			$	4,890
Non-performing loans to total assets			0.14	%			0.17	%			0.20	%			0.23	%			0.24	%
Allowance for loan losses			11,446				12,890				11,592				11,734				15,637
Allowance for loan losses to total loans			0.62	%			0.71	%			0.66	%			0.69	%			0.95	%
Allowance for loan losses to non-performing loans			363.60	%			349.99	%			271.09	%			246.20	%			319.78	%
Non-performing loans to total loans			0.17	%			0.20	%			0.24	%			0.28	%			0.30	%
Capitalization
Shareholders’ equity to total assets			8.69	%			8.02	%			8.17	%			8.42	%			8.40	%

* Core deposits are defined as total deposits less time deposits and brokered deposits.

Reconciliation of GAAP and Non-GAAP Financial Measures
(UNAUDITED)
		Three Months Ended December 31,								Twelve Months Ended December 31,
(Dollars in Thousands, Except Per Share Data)			2023				2022				2023				2022
GAAP net income		$	5,555			$	4,509			$	16,608			$	17,422
Net securities losses, net of tax			14				31				141				288
Goodwill impairment			—				516				—				516
Non-GAAP core earnings		$	5,569			$	5,056			$	16,749			$	18,226
		Three Months Ended December 31,								Twelve Months Ended December 31,
			2023				2022				2023				2022
Return on average assets (ROA)			1.02	%			0.92	%			0.79	%			0.90	%
Net securities losses, net of tax			—	%			0.01	%			—	%			0.01	%
Goodwill impairment			—	%			0.11	%			—	%			0.03	%
Non-GAAP core ROA			1.02	%			1.04	%			0.79	%			0.94	%
		Three Months Ended December 31,								Twelve Months Ended December 31,
			2023				2022				2023				2022
Return on average equity (ROE)			12.60	%			10.92	%			9.84	%			10.73	%
Net securities losses, net of tax			0.03	%			0.08	%			0.09	%			0.17	%
Goodwill impairment			—	%			1.25	%			—	%			0.32	%
Non-GAAP core ROE			12.63	%			12.25	%			9.93	%			11.22	%
		Three Months Ended December 31,								Twelve Months Ended December 31,
			2023				2022				2023				2022
Basic earnings per share (EPS)		$	0.77			$	0.64			$	2.34			$	2.47
Net securities losses, net of tax			—				—				0.02				0.04
Goodwill impairment			—				0.07				—				0.07
Non-GAAP basic core EPS		$	0.77			$	0.71			$	2.36			$	2.58
		Three Months Ended December 31,								Twelve Months Ended December 31,
			2023				2022				2023				2022
Diluted EPS		$	0.77			$	0.64			$	2.34			$	2.47
Net securities losses, net of tax			—				—				0.02				0.04
Goodwill impairment			—				0.07				—				0.07
Non-GAAP diluted core EPS		$	0.77			$	0.71			$	2.36			$	2.58

FAQ

What is the net income of Penns Woods Bancorp, Inc. for the twelve months ended December 31, 2023?

The net income was $16.6 million.

What were the basic and diluted earnings per share for Penns Woods Bancorp, Inc. for the twelve months ended December 31, 2023?

The basic and diluted earnings per share were $2.34.

What caused the decrease in net interest income?

The decrease was due to the velocity and magnitude of the rate increases enacted by the Federal Open Market Committee.

How did the sale of a former branch property impact the company's financials?

The sale resulted in an after-tax gain of $117,000 for the twelve month period ended December 31, 2023.

What was the impact of the provision for credit losses on the company's financials?

The provision for credit losses decreased $2.3 million for the three months ended December 31, 2023 and decreased $3.4 million for the twelve months ended December 31, 2023 to a recovery of $1.7 million and $1.5 million, respectively.