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Penns Woods Bancorp, Inc. Reports First Quarter 2022 Earnings

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Penns Woods Bancorp, Inc.
Penns Woods Bancorp, Inc.

WILLIAMSPORT, Pa., April 21, 2022 (GLOBE NEWSWIRE) -- Penns Woods Bancorp, Inc. (NASDAQ: PWOD)

Penns Woods Bancorp, Inc. achieved net income of $3.4 million for the three months ended March 31, 2022, resulting in basic and diluted earnings per share of $0.49.

Highlights

  • Net income, as reported under GAAP, for the three months ended March 31, 2022 was $3.4 million compared to $3.4 million for the same period of 2021. Results for the three months ended March 31, 2022 compared to 2021 were impacted by an increase in after-tax securities losses of $142,000 (from a gain of $94,000 to a loss of $48,000) for the three month period. In addition, an after-tax loss of $201,000 related to a branch closure negatively impacted the three months ended March 31, 2022.

  • The provision for loan losses decreased $365,000 for the three months ended March 31, 2022 to $150,000 compared to $515,000 for the 2021 period. The provision for loan losses was elevated in 2021 due primarily to the uncertainty caused by the COVID-19 pandemic.

  • Basic and diluted earnings per share for the three months ended March 31, 2022 were $0.49. Basic and diluted earnings per share for the three months ended March 31, 2021 were $0.49.

  • Annualized return on average assets was 0.72% for three months ended March 31, 2022, compared to 0.75% for the corresponding period of 2021.

  • Annualized return on average equity was 8.17% for the three months ended March 31, 2022, compared to 8.59% for the corresponding period of 2021.

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 $3.5 million for the three months ended March 31, 2022 compared to $3.3 million for the same period of 2021. Core earnings per share for the three months ended March 31, 2022 were $0.48 basic and diluted, compared to $0.47 basic and diluted core earnings per share for the same period of 2021. Core return on average assets and core return on average equity were 0.73% and 8.28% for the three months ended March 31, 2022, compared to 0.73% and 8.35% for the corresponding period of 2021. Core earnings for the three months ended March 31, 2022 were impacted negatively by an after-tax loss of $201,000 relating to a branch closure. 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 months ended March 31, 2022 was 2.93%, compared to 2.88% for the corresponding period of 2021. The increase in the net interest margin for the three month period was driven by a decline in the rate paid on interest-bearing deposits of 35 basis points ("bps") as rates paid decreased throughout 2021 and through the first three months of 2022. Leading the decline in the rate paid on interest-bearing deposits was a 94 bps decline in the rate paid on time deposits as time deposits issued prior to the COVID-19 pandemic matured. Offsetting the decrease in rates paid on the interest bearing liabilities was a decrease in the yield of the loan portfolio of 26 bps coupled with the yield on the investment portfolio declining 32 bps as legacy earning assets were paid down or matured.

Assets

Total assets increased $20.6 million to $1.9 billion at March 31, 2022 compared to March 31, 2021. Cash and cash equivalents decreased $58.9 million as interest-bearing accounts in other financial institutions decreased $106.1 million which was partially offset by an increase of $50.0 million in federal funds sold. Net loans increased $70.2 million to $1.4 billion at March 31, 2022 compared to March 31, 2021, as the economy continued recovering from the various negative economic impact caused by the COVID-19 pandemic and an emphasis was placed on commercial loan growth. The investment portfolio increased $7.5 million from March 31, 2021 to March 31, 2022 as a portion of the excess cash liquidity was invested primarily into short-term municipal bonds with a maturity of five years or less.

Non-performing Loans

The ratio of non-performing loans to total loans ratio decreased to 0.38% at March 31, 2022 from 0.69% at March 31, 2021 as non-performing loans have decreased to $5.3 million at March 31, 2022 from $9.3 million at March 31, 2021. 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 a specific allocation for any impairment recorded within the allowance for loan losses. Net loan charge-offs of $303,000 for the three months ended March 31, 2022 impacted the allowance for loan losses, which was 1.00% of total loans at March 31, 2022 compared to 1.06% at March 31, 2021.

Deposits

Deposits increased $48.0 million to $1.6 billion at March 31, 2022 compared to March 31, 2021. Noninterest-bearing deposits increased $35.2 million to $514.1 million at March 31, 2022 compared to March 31, 2021. Driving deposit growth was the receipt of PPP funding by commercial customers, stimulus funding by retail customers, and customers becoming more risk averse and seeking safety in a bank deposit. Emphasis remains on increasing the utilization of electronic (internet and mobile) deposit banking among our customers. Utilization of internet and mobile banking has increased since the start of 2020 due to these efforts coupled with a change in consumer behavior due to the business and travel restrictions caused by the COVID-19 pandemic. The increased level of deposits has allowed for a $28.2 million decrease in long-term borrowings.

Shareholders’ Equity

Shareholders’ equity increased $4.4 million to $168.4 million at March 31, 2022 compared to March 31, 2021. Accumulated other comprehensive loss of $6.5 million at March 31, 2022 increased from a loss of $2.5 million at March 31, 2021 as a result of a increase of $6.2 million in the net unrealized losses on available for sale securities and a change in the defined benefit plan of $2.1 million. The current level of shareholders’ equity equates to a book value per share of $23.81 at March 31, 2022 compared to $23.25 at March 31, 2021, and an equity to asset ratio of 8.79% at March 31, 2022 and 8.65% at March 31, 2021. Dividends declared for the three months ended March 31, 2022 and 2021 were $0.32 per share.

Penns Woods Bancorp, Inc. is the parent company of Jersey Shore State Bank, which operates seventeen 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, 2021.

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)

March 31,

(In Thousands, Except Share Data)

2022

2021

% Change

ASSETS:

Noninterest-bearing balances

$

25,717

$

28,539

(9.89)

%

Interest-bearing balances in other financial institutions

143,086

249,149

(42.57)

%

Federal funds sold

50,000

n/a

Total cash and cash equivalents

218,803

277,688

(21.21)

%

Investment debt securities, available for sale, at fair value

175,674

166,895

5.26

%

Investment equity securities, at fair value

1,193

1,265

(5.69)

%

Investment securities, trading

36

44

(18.18)

%

Restricted investment in bank stock, at fair value

13,795

15,032

(8.23)

%

Loans held for sale

1,360

2,568

(47.04)

%

Loans

1,405,966

1,335,899

5.24

%

Allowance for loan losses

(14,023

)

(14,202

)

(1.26)

%

Loans, net

1,391,943

1,321,697

5.31

%

Premises and equipment, net

33,259

34,910

(4.73)

%

Accrued interest receivable

8,129

8,583

(5.29)

%

Bank-owned life insurance

33,953

33,839

0.34

%

Investment in limited partnerships

4,600

4,655

(1.18)

%

Goodwill

17,104

17,104

%

Intangibles

437

618

(29.29)

%

Operating lease right of use asset

2,795

3,088

(9.49)

%

Deferred tax asset

4,569

3,717

22.92

%

Other assets

9,159

4,489

104.03

%

TOTAL ASSETS

$

1,916,809

$

1,896,192

1.09

%

LIABILITIES:

Interest-bearing deposits

$

1,098,265

$

1,085,448

1.18

%

Noninterest-bearing deposits

514,130

478,916

7.35

%

Total deposits

1,612,395

1,564,364

3.07

%

Short-term borrowings

6,634

6,650

(0.24)

%

Long-term borrowings

112,918

141,094

(19.97)

%

Accrued interest payable

471

988

(52.33)

%

Operating lease liability

2,847

3,130

(9.04)

%

Other liabilities

13,117

15,903

(17.52)

%

TOTAL LIABILITIES

1,748,382

1,732,129

0.94

%

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; 7,554,567 and 7,537,242 shares issued; 7,074,342 and 7,057,017 shares outstanding

41,969

41,873

0.23

%

Additional paid-in capital

54,191

52,818

2.60

%

Retained earnings

90,928

83,948

8.31

%

Accumulated other comprehensive (loss) gain:

Net unrealized (loss) gain on available for sale securities

(3,074

)

3,095

(199.32)

%

Defined benefit plan

(3,472

)

(5,560

)

37.55

%

Treasury stock at cost, 480,225

(12,115

)

(12,115

)

%

TOTAL PENNS WOODS BANCORP, INC. SHAREHOLDERS' EQUITY

168,427

164,059

2.66

%

Non-controlling interest

4

(100.00)

%

TOTAL SHAREHOLDERS' EQUITY

168,427

164,063

2.66

%

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

1,916,809

$

1,896,192

1.09

%


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

Three Months Ended March 31,

(In Thousands, Except Per Share Data)

2022

2021

% Change

INTEREST AND DIVIDEND INCOME:

Loans including fees

$

13,038

$

13,345

(2.30)

%

Investment securities:

Taxable

737

819

(10.01)

%

Tax-exempt

164

171

(4.09)

%

Dividend and other interest income

336

260

29.23

%

TOTAL INTEREST AND DIVIDEND INCOME

14,275

14,595

(2.19)

%

INTEREST EXPENSE:

Deposits

788

1,684

(53.21)

%

Short-term borrowings

1

2

(50.00)

%

Long-term borrowings

633

839

(24.55)

%

TOTAL INTEREST EXPENSE

1,422

2,525

(43.68)

%

NET INTEREST INCOME

12,853

12,070

6.49

%

PROVISION FOR LOAN LOSSES

150

515

(70.87)

%

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

12,703

11,555

9.94

%

NON-INTEREST INCOME:

Service charges

495

383

29.24

%

Debt securities (losses) gains, available for sale

(2

)

138

(101.45)

%

Equity securities losses

(58

)

(23

)

(152.17)

%

Securities (losses) gains, trading

(1

)

4

(125.00)

%

Bank-owned life insurance

170

173

(1.73)

%

Gain on sale of loans

345

908

(62.00)

%

Insurance commissions

170

157

8.28

%

Brokerage commissions

200

219

(8.68)

%

Loan broker income

541

181

198.90

%

Debit card income

345

380

(9.21)

%

Other

207

94

120.21

%

TOTAL NON-INTEREST INCOME

2,412

2,614

(7.73)

%

NON-INTEREST EXPENSE:

Salaries and employee benefits

6,264

5,598

11.90

%

Occupancy

910

976

(6.76)

%

Furniture and equipment

892

809

10.26

%

Software amortization

253

198

27.78

%

Pennsylvania shares tax

389

352

10.51

%

Professional fees

538

583

(7.72)

%

Federal Deposit Insurance Corporation deposit insurance

202

221

(8.60)

%

Marketing

64

63

1.59

%

Intangible amortization

44

53

(16.98)

%

Other

1,451

1,098

32.15

%

TOTAL NON-INTEREST EXPENSE

11,007

9,951

10.61

%

INCOME BEFORE INCOME TAX PROVISION

4,108

4,218

(2.61)

%

INCOME TAX PROVISION

676

771

(12.32)

%

NET INCOME

$

3,432

$

3,447

(0.44)

%

Earnings attributable to noncontrolling interest

6

(100.00)

%

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS'

$

3,432

$

3,441

(0.26)

%

EARNINGS PER SHARE - BASIC

$

0.49

$

0.49

%

EARNINGS PER SHARE - DILUTED

$

0.49

$

0.49

%

WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC

7,072,575

7,055,116

0.25

%

WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED

7,072,575

7,055,116

0.25

%

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

Three Months Ended

March 31, 2022

March 31, 2021

(Dollars in Thousands)

Average
Balance

Interest

Average
Rate

Average
Balance

Interest

Average
Rate

ASSETS:

Tax-exempt loans

$

47,974

$

308

2.60

%

$

45,534

$

349

3.11

%

All other loans

1,351,414

12,795

3.84

%

1,293,395

13,069

4.10

%

Total loans

1,399,388

13,103

3.80

%

1,338,929

13,418

4.06

%

Federal funds sold

50,000

93

0.75

%

%

Taxable securities

144,438

920

2.58

%

145,047

1,033

2.89

%

Tax-exempt securities

40,981

208

2.06

%

36,369

216

2.41

%

Total securities

185,419

1,128

2.47

%

181,416

1,249

2.79

%

Interest-bearing deposits

157,541

60

0.15

%

195,995

46

0.10

%

Total interest-earning assets

1,792,348

14,384

3.25

%

1,716,340

14,713

3.48

%

Other assets

127,421

124,074

TOTAL ASSETS

$

1,919,769

$

1,840,414

LIABILITIES AND SHAREHOLDERS’ EQUITY:

Savings

$

240,953

22

0.04

%

$

214,636

44

0.08

%

Super Now deposits

370,895

195

0.21

%

289,236

267

0.37

%

Money market deposits

298,820

186

0.25

%

306,000

267

0.35

%

Time deposits

190,819

385

0.82

%

254,460

1,106

1.76

%

Total interest-bearing deposits

1,101,487

788

0.29

%

1,064,332

1,684

0.64

%

Short-term borrowings

5,194

1

0.08

%

5,680

2

0.14

%

Long-term borrowings

115,267

633

2.23

%

141,483

839

2.40

%

Total borrowings

120,461

634

2.13

%

147,163

841

2.32

%

Total interest-bearing liabilities

1,221,948

1,422

0.47

%

1,211,495

2,525

0.85

%

Demand deposits

506,348

445,759

Other liabilities

23,357

22,872

Shareholders’ equity

168,116

160,288

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

1,919,769

$

1,840,414

Interest rate spread

2.78

%

2.63

%

Net interest income/margin

$

12,962

2.93

%

$

12,188

2.88

%


Three Months Ended March 31,

2022

2021

Total interest income

$

14,275

$

14,595

Total interest expense

1,422

2,525

Net interest income (GAAP)

12,853

12,070

Tax equivalent adjustment

109

118

Net interest income (fully taxable equivalent) (non-GAAP)

$

12,962

$

12,188


(Dollars in Thousands, Except Per Share Data, Unaudited)

Quarter Ended

3/31/2022

12/31/2021

9/30/2021

6/30/2021

3/31/2021

Operating Data

Net income

$

3,432

$

4,879

$

4,125

$

3,588

$

3,441

Net interest income

12,853

12,921

12,632

12,095

12,070

Provision for loan losses

150

(300

)

75

350

515

Net security (losses) gains

(61

)

360

40

140

119

Non-interest income, excluding net security gains

2,473

2,835

2,911

2,769

2,495

Non-interest expense

11,007

10,259

10,447

10,248

9,951

Performance Statistics

Net interest margin

2.93

%

2.90

%

2.85

%

2.78

%

2.88

%

Annualized return on average assets

0.72

%

1.02

%

0.86

%

0.76

%

0.75

%

Annualized return on average equity

8.17

%

11.59

%

9.85

%

8.70

%

8.59

%

Annualized net loan charge-offs (recoveries) to average loans

0.09

%

0.02

%

(0.01)

%

0.03

%

0.04

%

Net charge-offs (recoveries)

303

81

(44

)

114

116

Efficiency ratio

71.53

%

64.83

%

66.93

%

68.61

%

67.96

%

Per Share Data

Basic earnings per share

$

0.49

$

0.69

$

0.58

$

0.51

$

0.49

Diluted earnings per share

0.49

0.69

0.58

0.51

0.49

Dividend declared per share

0.32

0.32

0.32

0.32

0.32

Book value

23.81

24.37

23.84

23.63

23.25

Common stock price:

High

24.67

24.65

24.42

26.51

27.78

Low

23.64

23.50

22.78

23.03

20.55

Close

24.43

23.65

23.92

23.82

24.09

Weighted average common shares:

Basic

7,073

7,068

7,064

7,060

7,055

Fully Diluted

7,073

7,068

7,064

7,060

7,055

End-of-period common shares:

Issued

7,555

7,550

7,546

7,542

7,537

Treasury

480

480

480

480

480


(Dollars in Thousands, Except Per Share Data, Unaudited)

Quarter Ended

3/31/2022

12/31/2021

9/30/2021

6/30/2021

3/31/2021

Financial Condition Data:

General

Total assets

$

1,916,809

$

1,940,809

$

1,910,791

$

1,894,870

$

1,896,192

Loans, net

1,391,943

1,377,971

1,332,668

1,323,509

1,321,697

Goodwill

17,104

17,104

17,104

17,104

17,104

Intangibles

437

480

524

568

618

Total deposits

1,612,395

1,621,315

1,593,019

1,563,696

1,564,364

Noninterest-bearing

514,130

494,360

481,875

477,344

478,916

Savings

236,312

236,312

231,189

226,573

224,890

NOW

245,661

366,399

340,441

296,450

290,355

Money Market

299,166

318,877

305,156

301,405

324,207

Time Deposits

173,600

205,367

234,358

261,924

245,996

Total interest-bearing deposits

1,098,265

1,126,955

1,111,144

1,086,352

1,085,448

Core deposits*

1,438,795

1,415,948

1,358,661

1,301,772

1,318,368

Shareholders’ equity

168,427

172,274

168,478

166,830

164,059

Asset Quality

Non-performing loans

$

5,281

$

6,250

$

7,763

$

7,931

$

9,272

Non-performing loans to total assets

0.28

%

0.32

%

0.41

%

0.42

%

0.49

%

Allowance for loan losses

14,023

14,176

14,557

14,438

14,202

Allowance for loan losses to total loans

1.00

%

1.02

%

1.08

%

1.08

%

1.06

%

Allowance for loan losses to non-performing loans

265.54

%

226.82

%

187.52

%

182.05

%

153.17

%

Non-performing loans to total loans

0.38

%

0.45

%

0.58

%

0.59

%

0.69

%

Capitalization

Shareholders’ equity to total assets

8.79

%

8.88

%

8.82

%

8.80

%

8.65

%

* Core deposits are defined as total deposits less time deposits


Reconciliation of GAAP and Non-GAAP Financial Measures
(UNAUDITED)

Three Months Ended March 31,

(Dollars in Thousands, Except Per Share Data)

2022

2021

GAAP net income

$

3,432

$

3,441

Less: net securities (losses) gains, net of tax

(48

)

94

Non-GAAP core earnings

$

3,480

$

3,347

Three Months Ended March 31,

2022

2021

Return on average assets (ROA)

0.72

%

0.75

%

Less: net securities (losses) gains, net of tax

(0.01)

%

0.02

%

Non-GAAP core ROA

0.73

%

0.73

%

Three Months Ended March 31,

2022

2021

Return on average equity (ROE)

8.17

%

8.59

%

Less: net securities (losses) gains, net of tax

(0.11)

%

0.24

%

Non-GAAP core ROE

8.28

%

8.35

%

Three Months Ended March 31,

2022

2021

Basic earnings per share (EPS)

$

0.49

$

0.49

Less: net securities (losses) gains, net of tax

0.01

0.02

Non-GAAP basic core EPS

$

0.48

$

0.47

Three Months Ended March 31,

2022

2021

Diluted EPS

$

0.49

$

0.49

Less: net securities (losses) gains, net of tax

0.01

0.02

Non-GAAP diluted core EPS

$

0.48

$

0.47



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