Penns Woods Bancorp, Inc. Reports Second Quarter 2024 Earnings

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Insights

Penns Woods Bancorp's Q2 2024 earnings report reveals a mixed financial performance with some positive trends and areas of concern. The company reported net income of $5.4 million for Q2 2024, a significant increase from $4.2 million in Q2 2023. This improvement is primarily attributed to a $1.1 million increase in net interest income and a 14 basis point rise in net interest margin compared to Q1 2024.

However, the six-month performance shows a more modest improvement, with net income increasing from $8.8 million in H1 2023 to $9.2 million in H1 2024. The annualized return on average assets for H1 2024 slightly decreased to 0.83% from 0.86% in H1 2023, indicating a marginal decline in efficiency.

The bank's loan portfolio grew by $97.2 million year-over-year, reaching $1.9 billion. This growth, coupled with higher yields, resulted in increased interest income. However, the cost of funds also rose significantly, with interest-bearing liabilities seeing a 120 bps increase in rates paid for H1 2024 compared to H1 2023.

The non-performing loans ratio increased to 0.36% from 0.24% year-over-year, which warrants monitoring. On a positive note, the allowance for credit losses decreased to 0.60% of total loans, down from 0.66% a year ago, suggesting improved loan quality overall.

In summary, while Penns Woods Bancorp shows some positive trends in earnings and loan growth, the increasing cost of funds and slight uptick in non-performing loans require careful management to maintain profitability in the coming quarters.

Penns Woods Bancorp's Q2 2024 results reflect the broader trends in the banking sector, particularly the impact of the Federal Reserve's interest rate policies. The bank's ability to grow its loan portfolio by 5.1% year-over-year in a challenging environment is commendable and indicates strong demand in its market areas.

The shift in deposit composition is noteworthy, with a $84.0 million increase in time deposits and a $14.8 million decrease in non-interest bearing deposits. This trend, driven by customers seeking higher yields, is likely to continue pressuring the bank's net interest margin in the near term.

The use of brokered deposits, which increased by $41.3 million year-over-year, to fund loan growth is a strategy that bears watching. While it provides necessary liquidity, it could potentially increase funding costs and impact profitability if not managed carefully.

The bank's minimal exposure ($15.5 million) to non-owner occupied office space is a positive factor, given the current uncertainties in the commercial real estate market. This prudent approach to lending may help shield the bank from potential losses in this sector.

Lastly, the increase in shareholders' equity and the improvement in book value per share from $24.69 to $26.13 year-over-year strengthens the bank's capital position. This could provide a buffer against potential economic headwinds and support future growth initiatives.

07/25/2024 - 02:30 PM

WILLIAMSPORT, Pa., July 25, 2024 (GLOBE NEWSWIRE) -- Penns Woods Bancorp, Inc. (NASDAQ: PWOD)

Penns Woods Bancorp, Inc. achieved net income of $9.2 million for the six months ended June 30, 2024, resulting in basic and diluted earnings per share of $1.22.

Highlights

Net income, as reported under GAAP, for the three and six months ended June 30, 2024 was $5.4 million and $9.2 million, respectively, compared to $4.2 million and $8.8 million for the same periods of 2023. Results for the three and six months ended June 30, 2024 compared to 2023 were impacted by a increase in net interest income of $1.1 million and $577,000 as the cost of funds has stabilized, which led to a 14 basis point increase in the net interest margin for the second quarter of 2024 compared to the first quarter of 2024. The disposal of assets related to two former branch properties resulted in a one time after-tax loss of $261,000 for the six month period ended June 30, 2024.
The allowance for credit losses was impacted for the three and six months ended June 30, 2024 by negative provisions for credit losses of $1.2 million and $1.0 million, respectively, compared to negative provisions for credit losses of $1.2 million and $1.1 million for the 2023 periods. The recognition of negative provisions for credit losses for all periods is due primarily to recoveries during the second quarter of 2024 and 2023 on a commercial loan. In addition, a minimal level of loan charge-offs contributed to the recognition of the negative provisions for credit losses.
Basic and diluted earnings per share for the three and six months ended June 30, 2024 were $0.72 and $1.22, respectively, compared to basic and diluted earnings per share of $0.59 and $1.25 for the three and six month periods ended June 30, 2023.
Annualized return on average assets was 0.97% for the three months ended June 30, 2024, compared to 0.80% for the corresponding period of 2023. Annualized return on average assets was 0.83% for the six months ended June 30, 2024, compared to 0.86% for the corresponding period of 2023.
Annualized return on average equity was 11.12% for the three months ended June 30, 2024, compared to 9.53% for the corresponding period of 2023. Annualized return on average equity was 9.67% for the six months ended June 30, 2024, compared to 10.37% for the corresponding period of 2023.

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 $5.4 million and $9.2 million, respectively, for the three and six months ended June 30, 2024 compared to $4.2 million and $8.9 million for the same periods of 2023. Basic and diluted core earnings per share (non-GAAP) for the three and six months ended June 30, 2024 were $0.72 and $1.23, respectively, while basic and diluted core earnings per share for the same periods of 2023 were $0.60 and $1.26. Annualized core return on average assets and core return on average equity (non-GAAP) were 0.98% and 11.15%, respectively, for the three months ended June 30, 2024, compared to 0.80% and 9.60% for the corresponding period of 2023. Annualized core return on average assets and core return on average equity (non-GAAP) were 0.83% and 9.72%, respectively, for the six months ended June 30, 2024, compared to 0.86% and 10.44% for the corresponding period of 2023. A reconciliation of the non-GAAP financial measures of core earnings, core return on assets, core return on equity, core earnings per share and tangible book value 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 six months ended June 30, 2024 was 2.83% and 2.75% respectively, compared to 2.77% and 2.92% for the corresponding periods of 2023. The increase in the net interest margin for the three month period was driven by an increase in the rate paid on interest-earning assets of 74 basis points ("bps"), while the decrease in the net interest margin for the six month period was driven by a 120 bps increase in the rate paid on interest-bearing liabilities. The FOMC rate increases enacted over the past several years contributed to the increase in rate paid on interest-bearing liabilities as the rate paid on interest-bearing liabilities increased 86 bps and 120 bps for the three and six month periods ended June 30, 2024 compared to the same periods of 2023. Short-term borrowings decreased in volume, which offset the impact of an increase in rate paid, resulting in a decrease of $1.1 million and $580,000 in expense for the three and six month periods ended June 30, 2024 compared to the same periods of 2023. The rate paid on interest-bearing deposits increased 115 bps and 137 bps or $4.0 million and $8.6 million in expense for the three and six month periods ended June 30, 2024 compared to the corresponding periods of 2023 due to the FOMC rate actions, an increase in competition for deposits, and a migration of deposit balances from core deposits to higher rate time deposits. The rates paid on time deposits significantly contributed to the increase in funding costs as rates paid for the three and six month periods ended June 30, 2024 compared to the same periods of 2023 increased 119 bps and 150 bps, respectively, or $2.8 million and $6.0 million in expense, as deposit gathering campaigns continued to focus on time deposits with a maturity of five months. In addition, brokered deposits have been utilized to assist with funding 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 2023. The average loan portfolio balance increased $120.8 million and $153.0 million for the three and six month periods ended June 30, 2024 compared to the same periods of 2023 as the average yield on the portfolio increased 73 bps and 76 bps resulting in an increase in taxable equivalent interest income of $4.7 million and $10.5 million for the periods. The three and six month periods ended June 30, 2024 were impacted by an increase of 78 bps and 79 bps in the yield earned on the securities portfolio as legacy securities matured with the funds reinvested at higher rates, which resulted in an increase of taxable equivalent interest income of $434,000 and $897,000, respectively.

Assets

Total assets increased to $2.2 billion at June 30, 2024, an increase of $99.3 million compared to June 30, 2023. Net loans increased $97.2 million to $1.9 billion at June 30, 2024 compared to June 30, 2023, as continued emphasis was placed on commercial loan growth coupled with growth in indirect auto lending. The investment portfolio increased $11.4 million from June 30, 2023 to June 30, 2024. Investment debt securities increased $13.1 million from June 30, 2023 to June 30, 2024 as fixed rate instruments with maturities of approximately ten years were added to the portfolio to lock in yields prior to anticipated FOMC actions to reduce interest rates. The decrease in total borrowings of $19.6 million to $363.5 million at June 30, 2024 was the result of increased utilization of brokered deposits which replaced short-term borrowings.

Non-performing Loans

The ratio of non-performing loans to total loans ratio increased to 0.36% at June 30, 2024 from 0.24% at June 30, 2023, as non-performing loans increased to $6.8 million at June 30, 2024 from $4.3 million at June 30, 2023. 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 $396,000 and $16,000 for the three and six months ended June 30, 2024, respectively, impacted the allowance for credit losses, which was 0.60% of total loans at June 30, 2024 compared to 0.66% at June 30, 2023. Exposure to non-owner occupied office space is minimal at $15.5 million at June 30, 2024 with none of these loans being delinquent.

Deposits

Deposits increased $94.3 million to $1.6 billion at June 30, 2024 compared to June 30, 2023. Noninterest-bearing deposits decreased $14.8 million to $461.1 million at June 30, 2024 compared to June 30, 2023. 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. Core deposits have remained stable at $1.2 billion over the past five quarters. Interest-bearing deposits increased $109.2 million from June 30, 2023 to June 30, 2024 primarily due to growth in the time deposit portfolio of $84.0 million as customers sought a higher rate of interest. Brokered deposit balances increased $41.3 million from June 20,2023 to June 30, 2024 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 throughout 2023 and 2024 with current efforts centered on five months.

Shareholders’ Equity

Shareholders’ equity increased $22.7 million to $197.1 million at June 30, 2024 compared to June 30, 2023 due in part to a registered at-the-market offering that generated $8.3 million in capital during the second half of 2023. During the three and six months ended June 30, 2024 there were no shares issued as part of the registered at-the-market offering. A total of 11,036 and 21,976 shares for net proceeds of $222,000 and $427,000 were issued as part of the Dividend Reinvestment Plan during the three and six months ended June 30 2024. Accumulated other comprehensive loss of $9.1 million at June 30, 2024 decreased from a loss of $13.8 million at June 30, 2023 as a result of a decrease in net unrealized loss on available for sale securities to $6.3 million at June 30, 2024 from a net unrealized loss of $9.8 million at June 30, 2023 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 $26.13 at June 30, 2024 compared to $24.69 at June 30, 2023, and an equity to asset ratio of 8.82% at June 30, 2024 and 8.17% at June 30, 2023. Tangible book value per share (a non-GAAP measure) increased to $23.93 at June 30, 2024 compared to $22.32 at June 30, 2023. Dividends declared for the three and six months ended June 30, 2024 and 2023 were $0.32 and $0.64 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, 2023.

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)

	June 30,
(In Thousands, Except Share and Per Share Data)		2024			2023		% Change
ASSETS:
Noninterest-bearing balances	$	24,996		$	32,265		(22.53	)	%
Interest-bearing balances in other financial institutions		10,100			12,596		(19.82	)	%
Total cash and cash equivalents		35,096			44,861		(21.77	)	%

Investment debt securities, available for sale, at fair value		199,718			186,626		7.02		%
Investment equity securities, at fair value		1,105			1,143		(3.32	)	%
Restricted investment in bank stock		22,781			24,438		(6.78	)	%
Loans held for sale		4,444			3,049		45.75		%
Loans		1,866,288			1,769,403		5.48		%
Allowance for credit losses		(11,234	)		(11,592	)	(3.09	)	%
Loans, net		1,855,054			1,757,811		5.53		%
Premises and equipment, net		28,966			31,180		(7.10	)	%
Accrued interest receivable		11,281			9,498		18.77		%
Bank-owned life insurance		33,024			33,524		(1.49	)	%
Investment in limited partnerships		7,240			8,402		(13.83	)	%
Goodwill		16,450			16,450		—		%
Intangibles		158			260		(39.23	)	%
Operating lease right of use asset		2,911			2,586		12.57		%
Deferred tax asset		4,433			6,332		(29.99	)	%
Other assets		11,956			9,159		30.54		%
TOTAL ASSETS	$	2,234,617		$	2,135,319		4.65		%

LIABILITIES:
Interest-bearing deposits	$	1,187,001		$	1,077,820		10.13		%
Noninterest-bearing deposits		461,092			475,937		(3.12	)	%
Total deposits		1,648,093			1,553,757		6.07		%

Short-term borrowings		106,407			180,410		(41.02	)	%
Long-term borrowings		257,111			202,692		26.85		%
Accrued interest payable		5,474			2,129		157.12		%
Operating lease liability		2,983			2,642		12.91		%
Other liabilities		17,462			19,287		(9.46	)	%
TOTAL LIABILITIES		2,037,530			1,960,917		3.91		%

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; 8,051,699 and 7,573,713 shares issued; 7,541,474 and 7,063,488 shares outstanding		44,730			42,077		6.31		%
Additional paid-in capital		62,608			54,869		14.10		%
Retained earnings		111,622			104,104		7.22		%
Accumulated other comprehensive loss:
Net unrealized loss on available for sale securities		(6,328	)		(9,753	)	35.12		%
Defined benefit plan		(2,730	)		(4,080	)	33.09		%
Treasury stock at cost, 510,225 shares		(12,815	)		(12,815	)	—		%
TOTAL SHAREHOLDERS' EQUITY		197,087			174,402		13.01		%
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,234,617		$	2,135,319		4.65		%


PENNS WOODS BANCORP, INC. CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

	Three Months Ended June 30,										Six Months Ended June 30,
(In Thousands, Except Share and Per Share Data)		2024			2023		% Change					2024			2023		% Change
INTEREST AND DIVIDEND INCOME:
Loans including fees	$	24,529		$	19,846		23.60		%		$	48,389		$	37,851		27.84		%
Investment securities:
Taxable		1,745			1,287		35.59		%			3,339			2,505		33.29		%
Tax-exempt		75			118		(36.44	)	%			172			296		(41.89	)	%
Dividend and other interest income		680			642		5.92		%			1,359			1,105		22.99		%
TOTAL INTEREST AND DIVIDEND INCOME		27,029			21,893		23.46		%			53,259			41,757		27.55		%

INTEREST EXPENSE:
Deposits		8,877			4,851		82.99		%			16,840			8,223		104.79		%
Short-term borrowings		1,087			2,232		(51.30	)	%			3,092			3,672		(15.80	)	%
Long-term borrowings		2,550			1,424		79.07		%			5,066			2,178		132.60		%
TOTAL INTEREST EXPENSE		12,514			8,507		47.10		%			24,998			14,073		77.63		%

NET INTEREST INCOME		14,515			13,386		8.43		%			28,261			27,684		2.08		%

RECOVERY OF CREDIT LOSSES		(1,177	)		(1,180	)	0.25		%			(1,039	)		(1,109	)	6.31		%

NET INTEREST INCOME AFTER RECOVERY OF CREDIT LOSSES		15,692			14,566		7.73		%			29,300			28,793		1.76		%

NON-INTEREST INCOME:
Service charges		499			516		(3.29	)	%			1,014			1,012		0.20		%
Net debt securities losses, available for sale		(12	)		(19	)	36.84		%			(35	)		(80	)	56.25		%
Net equity securities (losses) gains		(7	)		(20	)	65.00		%			(17	)		1		N/M
Bank-owned life insurance		187			166		12.65		%			650			722		(9.97	)	%
Gain on sale of loans		300			244		22.95		%	.		605			475		27.37		%
Insurance commissions		127			115		10.43		%			280			280		—		%
Brokerage commissions		171			141		21.28		%			357			306		16.67		%
Loan broker income		268			317		(15.46	)	%			490			487		0.62		%
Debit card income		368			340		8.24		%			697			675		3.26		%
Other		124			222		(44.14	)	%			446			401		11.22		%
TOTAL NON-INTEREST INCOME		2,025			2,022		0.15		%			4,487			4,279		4.86		%

NON-INTEREST EXPENSE:
Salaries and employee benefits		6,400			6,312		1.39		%			12,822			12,488		2.67		%
Occupancy		758			772		(1.81	)	%			1,663			1,638		1.53		%
Furniture and equipment		766			790		(3.04	)	%			1,705			1,636		4.22		%
Software amortization		222			173		28.32		%			412			356		15.73		%
Pennsylvania shares tax		351			279		25.81		%			671			527		27.32		%
Professional fees		572			906		(36.87	)	%			1,124			1,594		(29.49	)	%
Federal Deposit Insurance Corporation deposit insurance		421			452		(6.86	)	%			780			697		11.91		%
Marketing		78			272		(71.32	)	%			149			427		(65.11	)	%
Intangible amortization		25			32		(21.88	)	%			51			67		(23.88	)	%
Other		1,403			1,441		(2.64	)	%			3,242			2,897		11.91		%
TOTAL NON-INTEREST EXPENSE		10,996			11,429		(3.79	)	%			22,619			22,327		1.31		%
INCOME BEFORE INCOME TAX PROVISION		6,721			5,159		30.28		%			11,168			10,745		3.94		%
INCOME TAX PROVISION		1,331			988		34.72		%			1,970			1,916		2.82		%
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS'	$	5,390		$	4,171		29.23		%		$	9,198		$	8,829		4.18		%
EARNINGS PER SHARE - BASIC	$	0.72		$	0.59		22.03		%		$	1.22		$	1.25		(2.40	)	%
EARNINGS PER SHARE - DILUTED	$	0.72		$	0.59		22.03		%		$	1.22		$	1.25		(2.40	)	%
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC		7,529,239			7,062,018		6.62		%			7,520,880			7,060,218		6.52		%
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED		7,529,239			7,062,018		6.62		%			7,520,880			7,060,218		6.52		%


PENNS WOODS BANCORP, INC. AVERAGE BALANCES AND INTEREST RATES (UNAUDITED)

	Three Months Ended
	June 30, 2024						June 30, 2023
(Dollars in Thousands)	Average Balance (1)		Interest		Average Rate		Average Balance (1)		Interest		Average Rate
ASSETS:
Tax-exempt loans (3)	$	68,826	$	493	2.88	%	$	66,613	$	461	2.78	%
All other loans		1,790,712		24,140	5.42	%		1,672,111		19,482	4.67	%
Total loans (2)		1,859,538		24,633	5.33	%		1,738,724		19,943	4.60	%

Taxable securities		203,687		2,296	4.58	%		190,862		1,807	3.84	%
Tax-exempt securities (3)		12,896		95	3.00	%		23,310		150	2.61	%
Total securities		216,583		2,391	4.49	%		214,172		1,957	3.71	%

Interest-bearing balances in other financial institutions		10,783		129	4.81	%		9,961		122	4.91	%

Total interest-earning assets		2,086,904		27,153	5.24	%		1,962,857		22,022	4.50	%

Other assets		129,783						133,239

TOTAL ASSETS	$	2,216,687					$	2,096,096

LIABILITIES AND SHAREHOLDERS’ EQUITY:
Savings	$	218,430		261	0.48	%	$	232,889		155	0.27	%
Super Now deposits		218,200		1,086	2.00	%		271,438		913	1.35	%
Money market deposits		310,323		2,594	3.36	%		293,682		1,665	2.27	%
Time deposits		448,571		4,936	4.43	%		261,947		2,118	3.24	%
Total interest-bearing deposits		1,195,524		8,877	2.99	%		1,059,956		4,851	1.84	%

Short-term borrowings		79,190		1,087	5.52	%		169,723		2,232	5.27	%
Long-term borrowings		260,312		2,550	3.94	%		182,719		1,424	3.13	%
Total borrowings		339,502		3,637	4.31	%		352,442		3,656	4.16	%

Total interest-bearing liabilities		1,535,026		12,514	3.28	%		1,412,398		8,507	2.42	%

Demand deposits		459,876						484,607
Other liabilities		27,880						24,059
Shareholders’ equity		193,905						175,032

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,216,687					$	2,096,096
Interest rate spread (3)					1.96	%					2.08	%
Net interest income/margin (3)			$	14,639	2.83	%			$	13,515	2.77	%

Information on this table has been calculated using average daily balance sheets to obtain average balances.
Non-accrual loans have been included with loans for the purpose of analyzing net interest earnings.
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 June 30,
		2024		2023
Total interest income	$	27,029	$	21,893
Total interest expense		12,514		8,507
Net interest income (GAAP)		14,515		13,386
Tax equivalent adjustment		124		129
Net interest income (fully taxable equivalent) (non-GAAP)	$	14,639	$	13,515


PENNS WOODS BANCORP, INC. AVERAGE BALANCES AND INTEREST RATES (UNAUDITED)

	Six Months Ended
	June 30, 2024						June 30, 2023
(Dollars in Thousands)	Average Balance (1)		Interest		Average Rate		Average Balance (1)		Interest		Average Rate
ASSETS:
Tax-exempt loans (3)	$	69,026	$	956	2.78	%	$	65,669	$	909	2.79	%
All other loans		1,786,399		47,634	5.36	%		1,636,798		37,133	4.57	%
Total loans (2)		1,855,425		48,590	5.27	%		1,702,467		38,042	4.51	%

Taxable securities		201,981		4,440	4.42	%		186,168		3,386	3.67	%
Tax-exempt securities (3)		14,712		218	2.98	%		28,409		375	2.66	%
Total securities		216,693		4,658	4.32	%		214,577		3,761	3.53	%

Interest-bearing balances in other financial institutions		10,491		258	4.95	%		9,985		224	4.52	%

Total interest-earning assets		2,082,609		53,506	5.17	%		1,927,029		42,027	4.20	%

Other assets		130,370						132,561

TOTAL ASSETS	$	2,212,979					$	2,059,590

LIABILITIES AND SHAREHOLDERS’ EQUITY:
Savings	$	218,576		529	0.49	%	$	238,067		275	0.23	%
Super Now deposits		217,035		2,170	2.01	%		318,669		1,852	1.17	%
Money market deposits		301,515		4,953	3.30	%		291,719		2,945	2.04	%
Time deposits		427,870		9,188	4.32	%		225,414		3,151	2.82	%
Total interest-bearing deposits		1,164,996		16,840	2.91	%		1,073,869		8,223	1.54	%

Short-term borrowings		111,770		3,092	5.60	%		145,871		3,672	5.09	%
Long-term borrowings		260,004		5,066	3.92	%		151,169		2,178	2.91	%
Total borrowings		371,774		8,158	4.42	%		297,040		5,850	3.98	%

Total interest-bearing liabilities		1,536,770		24,998	3.27	%		1,370,909		14,073	2.07	%

Demand deposits		455,877						491,356
Other liabilities		30,178						27,050
Shareholders’ equity		190,154						170,275

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,212,979					$	2,059,590
Interest rate spread (3)					1.90	%					2.13	%
Net interest income/margin (3)			$	28,508	2.75	%			$	27,954	2.92	%

Information on this table has been calculated using average daily balance sheets to obtain average balances.
Non-accrual loans have been included with loans for the purpose of analyzing net interest earnings.
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%.

	Six months ended June 30,
		2024		2023
Total interest income	$	53,259	$	41,757
Total interest expense		24,998		14,073
Net interest income (GAAP)		28,261		27,684
Tax equivalent adjustment		247		270
Net interest income (fully taxable equivalent) (non-GAAP)	$	28,508	$	27,954

(Dollars in Thousands, Except Per Share Data, Unaudited)	Quarter Ended
	6/30/2024				3/31/2024				12/31/2023				9/30/2023				6/30/2023
Operating Data
Net income	$	5,390			$	3,808			$	5,555			$	2,224			$	4,171
Net interest income		14,515				13,746				13,948				13,332				13,386
(Recovery) provision for credit losses		(1,177	)			138				(1,742	)			1,372				(1,180	)
Net security losses		(19	)			(33	)			(18	)			(81	)			(39	)
Non-interest income, excluding net security losses		2,044				2,495				2,239				1,956				2,061
Non-interest expense		10,996				11,623				10,997				11,172				11,429

Performance Statistics
Net interest margin		2.83		%		2.69		%		2.73		%		2.65		%		2.77		%
Annualized cost of total deposits		2.14		%		2.01		%		1.89		%		1.64		%		1.26		%
Annualized non-interest income to average assets		0.37		%		0.45		%		0.41		%		0.35		%		0.39		%
Annualized non-interest expense to average assets		1.98		%		2.10		%		2.02		%		2.07		%		2.18		%
Annualized return on average assets		0.97		%		0.69		%		1.02		%		0.41		%		0.80		%
Annualized return on average equity		11.12		%		8.03		%		12.60		%		5.06		%		9.53		%
Annualized net loan (recoveries) charge-offs to average loans		(0.09	)	%		0.08		%		(0.05	)	%		0.01		%		(0.11	)	%
Net (recoveries) charge-offs		(396	)			380				(209	)			33				(472	)
Efficiency ratio		66.25		%		71.41		%		67.78		%		72.76		%		73.78		%

Per Share Data
Basic earnings per share	$	0.72			$	0.51			$	0.77			$	0.31			$	0.59
Diluted earnings per share		0.72				0.51				0.77				0.31				0.59
Dividend declared per share		0.32				0.32				0.32				0.32				0.32
Book value		26.13				25.72				25.51				24.55				24.69
Tangible book value		23.93				23.50				23.29				22.20				22.32
Common stock price:
High		21.08				22.64				23.64				27.17				27.34
Low		17.17				18.44				20.05				20.70				21.95
Close		20.55				19.41				22.51				21.08				25.03
Weighted average common shares:
Basic		7,529				7,513				7,255				7,072				7,062
Fully Diluted		7,529				7,513				7,255				7,229				7,062
End-of-period common shares:
Issued		8,052				8,036				8,019				7,620				7,574
Treasury		(510	)			(510	)			(510	)			(510	)			(510	)

(Dollars in Thousands, Unaudited)	Quarter Ended
	6/30/2024			3/31/2024			12/31/2023			9/30/2023			6/30/2023
Financial Condition Data:
General
Total assets	$	2,234,617		$	2,210,116		$	2,204,809		$	2,176,468		$	2,135,319
Loans, net		1,855,054			1,843,805			1,828,318			1,805,571			1,757,811
Goodwill		16,450			16,450			16,450			16,450			16,450
Intangibles		158			184			210			235			260
Total deposits		1,648,093			1,618,562			1,589,493			1,567,267			1,553,757
Noninterest-bearing		461,092			471,451			471,173			471,507			475,937
Savings		218,354			220,932			219,287			226,897			229,108
NOW		209,906			208,073			214,888			220,730			238,353
Money Market		320,101			299,916			299,353			291,889			296,957
Time Deposits		310,187			292,372			260,067			249,550			226,224
Brokered Deposits		128,453			125,818			124,725			106,694			87,178
Total interest-bearing deposits		1,187,001			1,147,111			1,118,320			1,095,760			1,077,820

Core deposits*		1,209,453			1,200,372			1,204,701			1,211,023			1,240,355
Shareholders’ equity		197,087			193,517			191,556			174,540			174,402

Asset Quality
Non-performing loans	$	6,784		$	7,958		$	3,148		$	3,683		$	4,276
Non-performing loans to total assets		0.30	%		0.36	%		0.14	%		0.17	%		0.20	%
Allowance for credit losses on loans		11,234			11,542			11,446			12,890			11,592
Allowance for credit losses on loans to total loans		0.60	%		0.62	%		0.62	%		0.71	%		0.66	%
Allowance for credit losses on loans to non-performing loans		165.60	%		145.04	%		363.60	%		349.99	%		271.09	%
Non-performing loans to total loans		0.36	%		0.43	%		0.17	%		0.20	%		0.24	%

Capitalization
Shareholders’ equity to total assets		8.82	%		8.76	%		8.69	%		8.02	%		8.17	%

* 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 June 30,						Six Months Ended June 30,
(Dollars in Thousands, Except Per Share Data, Unaudited)	2024			2023			2024			2023
GAAP net income	$	5,390		$	4,171		$	9,198		$	8,829
Net securities losses, net of tax		15			31			41			62
Non-GAAP core earnings	$	5,405		$	4,202		$	9,239		$	8,891

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Return on average assets (ROA)		0.97	%		0.80	%		0.83	%		0.86	%
Net securities losses, net of tax		0.01	%		—	%		—	%		—	%
Non-GAAP core ROA		0.98	%		0.80	%		0.83	%		0.86	%

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Return on average equity (ROE)		11.12	%		9.53	%		9.67	%		10.37	%
Net securities losses, net of tax		0.03	%		0.07	%		0.05	%		0.07	%
Non-GAAP core ROE		11.15	%		9.60	%		9.72	%		10.44	%

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Basic earnings per share (EPS)	$	0.72		$	0.59		$	1.22		$	1.25
Net securities losses, net of tax		—			0.01			0.01			0.01
Non-GAAP basic core EPS	$	0.72		$	0.60		$	1.23		$	1.26

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Diluted EPS	$	0.72		$	0.59		$	1.22		$	1.25
Net securities losses, net of tax		—			0.01			0.01			0.01
Non-GAAP diluted core EPS	$	0.72		$	0.60		$	1.23		$	1.26

(Dollars in Thousands, Except Share and Per Share Data, Unaudited)	Quarter Ended
	6/30/2024			3/31/2024			12/31/2023			9/30/2023			6/30/2023
Total shareholders' equity	$	197,087		$	193,517		$	191,556		$	174,540		$	174,402
Goodwill		(16,450	)		(16,450	)		(16,450	)		(16,450	)		(16,450	)
Intangibles		(158	)		(184	)		(210	)		(235	)		(260	)
Tangible shareholders' equity	$	180,479		$	176,883		$	174,896		$	157,855		$	157,692

Shares outstanding		7,541,474			7,525,372			7,508,994			7,110,025			7,063,488

Book value per share	$	26.13		$	25.72		$	25.51		$	24.55		$	24.69
Tangible book value per share	$	23.93		$	23.50		$	23.29		$	22.20		$	22.32

FAQ

What was Penns Woods Bancorp's (PWOD) net income for Q2 2024?

Penns Woods Bancorp (PWOD) reported net income of $5.4 million for Q2 2024.

How did PWOD's earnings per share (EPS) change in Q2 2024 compared to Q2 2023?

PWOD's basic and diluted earnings per share increased to $0.72 in Q2 2024, compared to $0.59 in Q2 2023.

What was the net interest margin for PWOD in Q2 2024?

The net interest margin for PWOD in Q2 2024 was 2.83%, a 14 basis point increase from Q1 2024.

How much did PWOD's total assets grow by June 30, 2024?

PWOD's total assets increased by $99.3 million to $2.2 billion as of June 30, 2024, compared to June 30, 2023.

What was the change in PWOD's net loans as of June 30, 2024?

PWOD's net loans increased by $97.2 million to $1.9 billion as of June 30, 2024, compared to June 30, 2023.

Penns Woods Bancorp, Inc. Reports Second Quarter 2024 Earnings

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Penns Woods Bancorp, Inc. Reports Second Quarter 2024 Earnings

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