Penns Woods Bancorp, Inc. Reports First Quarter 2022 Earnings

 | Source: 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
 570-322-1111e-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