Penns Woods Bancorp, Inc. Reports Third Quarter 2023 Earnings

Rhea-AI Summary

Penns Woods Bancorp, Inc. reports net income of $11.1 million for the nine months ended September 30, 2023. Net interest income decreased due to rate increases by the FOMC. Bank-owned life insurance income increased. Provision for credit losses increased for the three months ended September 30, 2023. Return on average assets and return on average equity decreased compared to the same period in 2022. Non-performing loans and deposits decreased. Shareholders' equity increased.

Positive

• Penns Woods Bancorp, Inc. achieved net income of $11.1 million for the nine months ended September 30, 2023.
• Bank-owned life insurance income increased due to a gain on death benefit of $380,000 during the nine months ended September 30, 2023.
• The provision for credit losses increased $537,000 for the three months ended September 30, 2023.
• Non-performing loans decreased to $3.7 million at September 30, 2023 from $5.7 million at September 30, 2022.
• Deposits decreased $23.1 million to $1.6 billion at September 30, 2023 compared to September 30, 2022.
• Shareholders' equity increased $10.1 million to $174.5 million at September 30, 2023 compared to September 30, 2022.

Negative

• Net interest income decreased due to rate increases by the FOMC.
• Return on average assets and return on average equity decreased compared to the same period in 2022.
• Deposits decreased $23.1 million to $1.6 billion at September 30, 2023 compared to September 30, 2022.

WILLIAMSPORT, Pa., Oct. 25, 2023 (GLOBE NEWSWIRE) -- Penns Woods Bancorp, Inc. (NASDAQ: PWOD)

Penns Woods Bancorp, Inc. achieved net income of $11.1 million for the nine months ended September 30, 2023, resulting in basic and diluted earnings per share of $1.56 and $1.53.

Highlights

• Net income, as reported under GAAP, for the three and nine months ended September 30, 2023 was $2.2 million and $11.1 million, compared to $5.3 million and $12.9 million for the same periods of 2022. Results for the three and nine months ended September 30, 2023 compared to 2022 were impacted by a decrease in net interest income of $2.2 million and $1.2 million 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 $77,000 (from a loss of $167,000 to a loss of $90,000) for the three month period and a decrease in after-tax securities losses of $106,000 (from a loss of $258,000 to a loss of $152,000) for the nine month period. Bank-owned life insurance income increased due to a gain on death benefit of $380,000 during the nine months ended September 30, 2023, while an after-tax loss of $201,000 related to a branch closure negatively impacted the nine months ended September 30, 2022.
  
  
• The provision for credit losses increased $537,000 for the three months ended September 30, 2023 and decreased $1.1 million for the nine months ended September 30, 2023 due to a provision of $1.4 million and $263,000, respectively, for the 2023 periods compared to a provision of $835,000 and $1.3 million for the 2022 periods. The decrease for the nine month periods was due primarily to a recovery on a commercial loan during the second quarter of 2023. The increase in the provision for credit losses for the 2023 three month period was due primarily to loan portfolio growth as loan portfolio credit metrics continue to improve and loan net charge-offs remain at a low level.
  
  
• Basic earnings per share for the three and nine months ended September 30, 2023 were $0.31 and $1.56, while the diluted earnings per share were $0.31 and $1.53 for the periods. Basic and diluted earnings per share for the three and nine months ended September 30, 2022 were $0.74 and $1.83.
  
  
• Annualized return on average assets was 0.41% for three months ended September 30, 2023, compared to 1.09% for the corresponding period of 2022. Annualized return on average assets was 0.70% for the nine months ended September 30, 2023, compared to 0.89% for the corresponding period of 2022.
  
  
• Annualized return on average equity was 5.06% for the three months ended September 30, 2023, compared to 12.61% for the corresponding period of 2022. Annualized return on average equity was 8.58% for the nine months ended September 30, 2023, compared to 10.48% 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 $2.3 million and $11.2 million for the three and nine months ended September 30, 2023 compared to $5.4 million and $13.2 million for the same periods of 2022. Basic core earnings per share for the three and nine months ended September 30, 2023 was $0.33 and $1.59, while the diluted core earnings per share was $0.32 and $1.55, compared to $0.77 and $1.87 basic and diluted core earnings per share for the same periods of 2022. Annualized core return on average assets and core return on average equity were 0.43% and 5.26% for the three months ended September 30, 2023, compared to 1.12% and 13.02% for the corresponding periods of 2022. Core return on average assets and core return on average equity were 0.71% and 8.69% for the nine months ended September 30, 2023 compared to 0.91% and 10.69% 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 nine months ended September 30, 2023 was 2.65% and 2.82%, compared to 3.47% and 3.17% for the corresponding periods of 2022. The decrease in the net interest margin for the three and nine month periods was driven by an increase in the rate paid on interest-bearing liabilities of 239 and 189 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 429 bps and 467 bps for the three and nine month periods ended September 30, 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 $2.4 million and $6.1 million in expense for the three and nine month periods ended September 30, 2023 compared to the same periods of 2022. The rate paid on interest-bearing deposits increased 207 and 154 bps for the three and nine month periods ended September 30, 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 nine month periods ended September 30, 2023 compared to the same periods of 2022 increased 328 bps and 259 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 asset portfolio compared to the same periods in 2022. The average loan portfolio balance increased $276.8 million and $278.2 million for the three and nine month periods, respectively, as the average yield on the portfolio increased 87 and 76 bps for the same periods. The three and nine month periods ended September 30, 2023 were impacted by an increase of 113 and 101 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 September 30, 2023, an increase of $271.4 million compared to September 30, 2022.  Net loans increased $260.1 million to $1.8 billion at September 30, 2023 compared to September 30, 2022, as an emphasis was placed on commercial loan growth coupled with growth in indirect auto lending. The investment portfolio increased $7.2 million from September 30, 2022 to September 30, 2023 as restricted investment in bank stock increased $10.8 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 $277.7 million to $411.4 million at September 30, 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 0.20% at September 30, 2023 from 0.37% at September 30, 2022, as non-performing loans decreased to $3.7 million at September 30, 2023 from $5.7 million at September 30, 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 $316,000 for the nine months ended September 30, 2023 impacted the allowance for credit losses, which was 0.71% of total loans at September 30, 2023 compared to 0.97% at September 30, 2022 (prior to the adoption of CECL).

Deposits

Deposits decreased $23.1 million to $1.6 billion at September 30, 2023 compared to September 30, 2022. Noninterest-bearing deposits decreased $65.9 million to $471.5 million at September 30, 2023 compared to September 30, 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 $42.7 million from September 30, 2022 to September 30, 2023 primarily due to increased utilization of brokered deposits of $101.2 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 the first nine months of 2023 with current efforts centered on five to twelve months.

Shareholders’ Equity

Shareholders’ equity increased $10.1 million to $174.5 million at September 30, 2023 compared to September 30, 2022.  During the three months ended September 30, 2023 the Company sold 34,411 shares of common stock, for net proceeds of $752,000, in a registered at-the-market offering. An additional 8,349 shares for net proceeds of $200,000 were issued as part of the Dividend Reinvestment Plan during the three months ended September 30, 2023. Accumulated other comprehensive loss of $14.9 million at September 30, 2023 increased from a loss of $14.6 million at September 30, 2022 as a result of a $10.9 million net unrealized loss on available for sale securities at September 30, 2023 compared to an unrealized loss of $11.1 million at September 30, 2022 coupled with an increase in loss of $607,000 in the defined benefit plan obligation. The current level of shareholders’ equity equates to a book value per share of $24.55 at September 30, 2023 compared to $23.32 at September 30, 2022, and an equity to asset ratio of 8.02% at September 30, 2023 and 8.63% at September 30, 2022. Dividends declared for the nine months ended September 30, 2023 and 2022 were $0.96 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)

		September 30,
(In Thousands, Except Share and Per Share Data)			2023				2022			% Change
ASSETS:
Noninterest-bearing balances		$	26,651			$	24,418			9.14	%
Interest-bearing balances in other financial institutions			8,939				12,444			(28.17	)%
Total cash and cash equivalents			35,590				36,862			(3.45	)%
Investment debt securities, available for sale, at fair value			184,667				188,196			(1.88	)%
Investment equity securities, at fair value			1,072				1,130			(5.13	)%
Restricted investment in bank stock, at fair value			25,289				14,539			73.94	%
Loans held for sale			4,083				2,485			64.31	%
Loans			1,818,461				1,560,700			16.52	%
Allowance for credit losses			(12,890	)			(15,211	)		(15.26	)%
Loans, net			1,805,571				1,545,489			16.83	%
Premises and equipment, net			30,746				32,227			(4.60	)%
Accrued interest receivable			10,500				8,647			21.43	%
Bank-owned life insurance			33,695				34,288			(1.73	)%
Investment in limited partnerships			8,275				4,771			73.44	%
Goodwill			16,450				17,104			(3.82	)%
Intangibles			235				361			(34.90	)%
Operating lease right of use asset			2,562				2,699			(5.08	)%
Deferred tax asset			6,961				7,187			(3.14	)%
Other assets			10,772				9,131			17.97	%
TOTAL ASSETS		$	2,176,468			$	1,905,116			14.24	%
LIABILITIES:
Interest-bearing deposits		$	1,095,760			$	1,053,012			4.06	%
Noninterest-bearing deposits			471,507				537,403			(12.26	)%
Total deposits			1,567,267				1,590,415			(1.46	)%
Short-term borrowings			193,746				30,901			526.99	%
Long-term borrowings			217,645				102,829			111.66	%
Accrued interest payable			2,716				427			536.07	%
Operating lease liability			2,619				2,753			(4.87	)%
Other liabilities			17,935				13,302			34.83	%
TOTAL LIABILITIES			2,001,928				1,740,627			15.01	%
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; 7,620,250 and 7,563,200 shares issued; 7,110,025 and 7,052,975 shares outstanding			42,335				42,019			0.75	%
Additional paid-in capital			55,890				53,958			3.58	%
Retained earnings			104,067				95,896			8.52	%
Accumulated other comprehensive loss:
Net unrealized loss on available for sale securities			(10,886	)			(11,125	)		2.15	%
Defined benefit plan			(4,051	)			(3,444	)		(17.62	)%
Treasury stock at cost, 510,225			(12,815	)			(12,815	)		—	%
TOTAL SHAREHOLDERS' EQUITY			174,540				164,489			6.11	%
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	2,176,468			$	1,905,116			14.24	%

    

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

		Three Months Ended September 30,											Nine Months Ended September 30,
(In Thousands, Except Share and Per Share Data)			2023				2022			% Change				2023				2022			% Change
INTEREST AND DIVIDEND INCOME:
Loans including fees		$	21,720			$	15,051			44.31	%		$	59,571			$	41,709			42.83	%
Investment securities:
Taxable			1,365				949			43.84	%			3,870				2,550			51.76	%
Tax-exempt			114				236			(51.69	)%			410				594			(30.98	)%
Dividend and other interest income			722				628			14.97	%			1,827				1,470			24.29	%
TOTAL INTEREST AND DIVIDEND INCOME			23,921				16,864			41.85	%			65,678				46,323			41.78	%
INTEREST EXPENSE:
Deposits			6,463				693			832.61	%			14,686				2,191			570.29	%
Short-term borrowings			2,412				26			n/m				6,084				29			n/m
Long-term borrowings			1,714				613			179.61	%			3,892				1,871			108.02	%
TOTAL INTEREST EXPENSE			10,589				1,332			694.97	%			24,662				4,091			502.84	%
NET INTEREST INCOME			13,332				15,532			(14.16	)%			41,016				42,232			(2.88	)%
Provision for loan credit losses			1,331				855			55.67	%			726				1,335			(45.62	)%
Provision (recovery) for off balance sheet credit exposures			41				—			n/a				(463	)			—			n/a
TOTAL PROVISION FOR CREDIT LOSSES			1,372				855			60.47	%			263				1,335			(80.30	)%
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES			11,960				14,677			(18.51	)%			40,753				40,897			(0.35	)%
NON-INTEREST INCOME:
Service charges			545				559			(2.50	)%			1,557				1,563			(0.38	)%
Debt securities losses, available for sale			(78	)			(156	)		50.00	%			(158	)			(168	)		5.95	%
Net equity securities losses			(36	)			(55	)		34.55	%			(35	)			(158	)		77.85	%
Bank-owned life insurance			170				170			—	%			892				501			78.04	%
Gain on sale of loans			290				294			(1.36	)%	.		765				905			(15.47	)%
Insurance commissions			136				109			24.77	%			416				386			7.77	%
Brokerage commissions			142				142			—	%			448				500			(10.40	)%
Loan broker income			241				438			(44.98	)%			728				1,350			(46.07	)%
Debit card income			320				344			(6.98	)%			995				1,080			(7.87	)%
Other			145				238			(39.08	)%			546				673			(18.87	)%
TOTAL NON-INTEREST INCOME			1,875				2,083			(9.99	)%			6,154				6,632			(7.21	)%
NON-INTEREST EXPENSE:
Salaries and employee benefits			6,290				6,016			4.55	%			18,778				18,421			1.94	%
Occupancy			784				730			7.40	%			2,422				2,380			1.76	%
Furniture and equipment			867				816			6.25	%			2,503				2,454			2.00	%
Software amortization			237				188			26.06	%			593				660			(10.15	)%
Pennsylvania shares tax			280				334			(16.17	)%			807				1,119			(27.88	)%
Professional fees			719				626			14.86	%			2,313				1,746			32.47	%
Federal Deposit Insurance Corporation deposit insurance			425				260			63.46	%			1,122				690			62.61	%
Marketing			167				151			10.60	%			594				435			36.55	%
Intangible amortization			25				34			(26.47	)%			92				119			(22.69	)%
Other			1,378				1,165			18.28	%			4,275				3,723			14.83	%
TOTAL NON-INTEREST EXPENSE			11,172				10,320			8.26	%			33,499				31,747			5.52	%
INCOME BEFORE INCOME TAX PROVISION			2,663				6,440			(58.65	)%			13,408				15,782			(15.04	)%
INCOME TAX PROVISION			439				1,190			(63.11	)%			2,355				2,869			(17.92	)%
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS'		$	2,224			$	5,250			(57.64	)%		$	11,053			$	12,913			(14.40	)%
EARNINGS PER SHARE - BASIC		$	0.31			$	0.74			(58.11	)%		$	1.56			$	1.83			(14.75	)%
EARNINGS PER SHARE - DILUTED		$	0.31			$	0.74			(58.11	)%		$	1.53			$	1.83			(16.39	)%
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC			7,072,440				7,051,228			0.30	%			7,064,336				7,060,871			0.05	%
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED			7,228,940				7,051,228			2.52	%			7,220,836				7,060,871			2.27	%

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

		Three Months Ended
		September 30, 2023									September 30, 2022
(Dollars in Thousands)		Average  Balance (1)			Interest			Average  Rate			Average  Balance (1)			Interest			Average  Rate
ASSETS:
Tax-exempt loans (3)		$	68,243		$	462		2.69	%		$	58,735		$	394		2.66	%
All other loans			1,730,669			21,355		4.90	%			1,463,330			14,740		4.00	%
Total loans (2)			1,798,912			21,817		4.81	%			1,522,065			15,134		3.94	%
Federal funds sold			—			—		—	%			33,641			218		2.57	%
Taxable securities			193,019			1,945		4.09	%			159,721			1,158		2.94	%
Tax-exempt securities (3)			20,777			144		2.81	%			49,177			299		2.47	%
Total securities			213,796			2,089		3.96	%			208,898			1,457		2.83	%
Interest-bearing balances in other financial institutions			11,868			142		4.75	%			34,202			201		2.33	%
Total interest-earning assets			2,024,576			24,048		4.72	%			1,798,806			17,010		3.76	%
Other assets			131,451									130,576
TOTAL ASSETS		$	2,156,027								$	1,929,382
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Savings		$	225,357			181		0.32	%		$	249,083			26		0.04	%
Super Now deposits			244,387			1,174		1.91	%			405,173			287		0.28	%
Money market deposits			294,006			1,862		2.51	%			287,660			200		0.28	%
Time deposits			342,450			3,246		3.76	%			148,968			180		0.48	%
Total interest-bearing deposits			1,106,200			6,463		2.32	%			1,090,884			693		0.25	%
Short-term borrowings			173,364			2,412		5.52	%			8,062			26		1.23	%
Long-term borrowings			204,901			1,714		3.32	%			109,269			613		2.23	%
Total borrowings			378,265			4,126		4.33	%			117,331			639		2.16	%
Total interest-bearing liabilities			1,484,465			10,589		2.83	%			1,208,215			1,332		0.44	%
Demand deposits			471,494									533,681
Other liabilities			24,193									21,008
Shareholders’ equity			175,875									166,478
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	2,156,027								$	1,929,382
Interest rate spread (3)								1.89	%								3.32	%
Net interest income/margin (3)					$	13,459		2.65	%					$	15,678		3.47	%

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 September 30,
			2023			2022
Total interest income		$	23,921		$	16,864
Total interest expense			10,589			1,332
Net interest income (GAAP)			13,332			15,532
Tax equivalent adjustment			127			146
Net interest income (fully taxable equivalent) (non-GAAP)		$	13,459		$	15,678

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

		Nine Months Ended
		September 30, 2023									September 30, 2022
(Dollars in Thousands)		Average  Balance (1)			Interest			Average  Rate			Average  Balance (1)			Interest			Average  Rate
ASSETS:
Tax-exempt loans (3)		$	66,372		$	1,371		2.76	%		$	53,269		$	1,033		2.59	%
All other loans			1,668,596			58,488		4.69	%			1,403,504			40,893		3.90	%
Total loans (2)			1,734,968			59,859		4.61	%			1,456,773			41,926		3.85	%
Federal funds sold			—			—		—	%			43,938			465		1.41	%
Taxable securities			188,477			5,331		3.78	%			152,937			3,126		2.76	%
Tax-exempt securities (3)			25,837			519		2.69	%			45,357			752		2.24	%
Total securities			214,314			5,850		3.65	%			198,294			3,878		2.64	%
Interest-bearing balances in other financial institutions			10,619			366		4.61	%			97,520			429		0.59	%
Total interest-earning assets			1,959,901			66,075		4.41	%			1,796,525			46,698		3.48	%
Other assets			132,133									129,048
TOTAL ASSETS		$	2,092,034								$	1,925,573
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Savings		$	233,784			456		0.26	%		$	246,063			72		0.04	%
Super Now deposits			293,636			3,026		1.38	%			388,149			721		0.25	%
Money market deposits			292,490			4,807		2.20	%			296,998			596		0.27	%
Time deposits			264,855			6,397		3.23	%			167,876			802		0.64	%
Total interest-bearing deposits			1,084,765			14,686		1.81	%			1,099,086			2,191		0.27	%
Short-term borrowings			155,136			6,084		5.26	%			6,308			29		0.59	%
Long-term borrowings			169,276			3,892		3.07	%			112,457			1,871		2.22	%
Total borrowings			324,412			9,976		4.12	%			118,765			1,900		2.14	%
Total interest-bearing liabilities			1,409,177			24,662		2.34	%			1,217,851			4,091		0.45	%
Demand deposits			484,662									519,599
Other liabilities			26,334									23,814
Shareholders’ equity			171,861									164,309
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	2,092,034								$	1,925,573
Interest rate spread (3)								2.07	%								3.03	%
Net interest income/margin (3)					$	41,413		2.82	%					$	42,607		3.17	%

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%

		Nine Months Ended September 30,
			2023			2022
Total interest income		$	65,678		$	46,323
Total interest expense			24,662			4,091
Net interest income			41,016			42,232
Tax equivalent adjustment			397			375
Net interest income (fully taxable equivalent) (non-GAAP)		$	41,413		$	42,607

(Dollars in Thousands, Except Per Share Data, Unaudited)		Quarter Ended
		9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022
Operating Data
Net income		$	2,224			$	4,171			$	4,658			$	4,509			$	5,250
Net interest income			13,332				13,386				14,298				15,548				15,532
Provision (recovery) for credit losses			1,372				(1,180	)			71				575				855
Net security losses			(114	)			(39	)			(40	)			(39	)			(211	)
Non-interest income, excluding net security losses			1,989				2,061				2,297				2,120				2,294
Non-interest expense			11,172				11,429				10,898				11,251				10,320
Performance Statistics
Net interest margin			2.65	%			2.77	%			3.10	%			3.42	%			3.47	%
Annualized return on average assets			0.41	%			0.80	%			0.92	%			0.92	%			1.09	%
Annualized return on average equity			5.06	%			9.53	%			11.12	%			10.92	%			12.61	%
Annualized net loan charge-offs (recoveries) to average loans			0.01	%		(0.11		)%			0.03	%			0.04	%			0.01	%
Net charge-offs (recoveries)			33				(472	)			123				149				37
Efficiency ratio			72.76	%			73.78	%			65.46	%			59.79	%			57.70	%
Per Share Data
Basic earnings per share		$	0.31			$	0.59			$	0.66			$	0.64			$	0.74
Diluted earnings per share			0.31				0.59				0.64				0.64				0.74
Dividend declared per share			0.32				0.32				0.32				0.32				0.32
Book value			24.55				24.70				24.64				23.76				23.32
Common stock price:
High			27.17				27.34				27.77				26.89				24.29
Low			20.70				21.95				21.90				23.15				22.02
Close			21.08				25.03				23.10				26.62				22.91
Weighted average common shares:
Basic			7,072				7,062				7,058				7,055				7,051
Fully Diluted			7,229				7,062				7,334				7,055				7,051
End-of-period common shares:
Issued			7,620				7,574				7,570				7,567				7,563
Treasury			(510	)			(510	)			(510	)			(510	)			(510	)

(Dollars in Thousands)		Quarter Ended
		9/30/2023				6/30/2023				3/31/2023				12/31/2022				9/30/2022
Financial Condition Data:
General
Total assets		$	2,176,468			$	2,135,319			$	2,065,143			$	2,000,080			$	1,905,116
Loans, net			1,805,571				1,757,811				1,688,289				1,624,094				1,545,489
Goodwill			16,450				16,450				16,450				16,450				17,104
Intangibles			235				260				292				327				361
Total deposits			1,567,267				1,553,757				1,638,835				1,556,460				1,590,415
Noninterest-bearing			471,507				475,937				502,352				519,063				537,403
Savings			226,897				229,108				239,526				247,952				249,532
NOW			220,730				238,353				363,548				372,574				392,140
Money Market			291,889				296,957				300,273				270,589				268,532
Time Deposits			249,550				226,224				191,203				137,949				137,348
Brokered Deposits			106,694				87,178				41,933				8,333				5,460
Total interest-bearing deposits			1,095,760				1,077,820				1,136,483				1,037,397				1,053,012
Core deposits*			1,211,023				1,240,355				1,405,699				1,410,178				1,447,607
Shareholders’ equity			174,540				174,402				173,970				167,665				164,489
Asset Quality
Non-performing loans		$	3,683			$	4,276			$	4,766			$	4,890			$	5,743
Non-performing loans to total assets			0.17	%			0.20	%			0.23	%			0.24	%			0.30	%
Allowance for loan losses			12,890				11,592				11,734				15,637				15,211
Allowance for loan losses to total loans			0.71	%			0.66	%			0.69	%			0.95	%			0.97	%
Allowance for loan losses to non-performing loans			349.99	%			271.09	%			246.20	%			319.78	%			264.86	%
Non-performing loans to total loans			0.20	%			0.24	%			0.28	%			0.30	%			0.37	%
Capitalization
Shareholders’ equity to total assets			8.02	%			8.17	%			8.42	%			8.40	%			8.63	%

* 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 September 30,								Nine Months Ended September 30,
(Dollars in Thousands, Except Per Share Data)			2023				2022				2023				2022
GAAP net income		$	2,224			$	5,250			$	11,053			$	12,913
Net securities losses, net of tax			90				167				152				258
Non-GAAP core earnings		$	2,314			$	5,417			$	11,205			$	13,171
		Three Months Ended September 30,								Nine Months Ended September 30,
			2023				2022				2023				2022
Return on average assets (ROA)			0.41	%			1.09	%			0.70	%			0.89	%
Net securities losses, net of tax			0.02	%			0.03	%			0.01	%			0.02	%
Non-GAAP core ROA			0.43	%			1.12	%			0.71	%			0.91	%
		Three Months Ended September 30,								Nine Months Ended September 30,
			2023				2022				2023				2022
Return on average equity (ROE)			5.06	%			12.61	%			8.58	%			10.48	%
Net securities losses, net of tax			0.20	%			0.41	%			0.11	%			0.21	%
Non-GAAP core ROE			5.26	%			13.02	%			8.69	%			10.69	%
		Three Months Ended September 30,								Nine Months Ended September 30,
			2023				2022				2023				2022
Basic earnings per share (EPS)		$	0.31			$	0.74			$	1.56			$	1.83
Net securities losses, net of tax			0.02				0.03				0.03				0.04
Non-GAAP basic core EPS		$	0.33			$	0.77			$	1.59			$	1.87
		Three Months Ended September 30,								Nine Months Ended September 30,
			2023				2022				2023				2022
Diluted EPS		$	0.31			$	0.74			$	1.53			$	1.83
Net securities losses, net of tax			0.01				0.03				0.02				0.04
Non-GAAP diluted core EPS		$	0.32			$	0.77			$	1.55			$	1.87

FAQ

What was Penns Woods Bancorp, Inc.'s net income for the nine months ended September 30, 2023?

Penns Woods Bancorp, Inc. achieved net income of $11.1 million for the nine months ended September 30, 2023.

What caused the decrease in net interest income?

Net interest income decreased due to rate increases by the FOMC.

How did non-performing loans change from September 30, 2022 to September 30, 2023?

Non-performing loans decreased to $3.7 million at September 30, 2023 from $5.7 million at September 30, 2022.

What happened to deposits during the period?

Deposits decreased $23.1 million to $1.6 billion at September 30, 2023 compared to September 30, 2022.

How did shareholders' equity change from September 30, 2022 to September 30, 2023?

Shareholders' equity increased $10.1 million to $174.5 million at September 30, 2023 compared to September 30, 2022.