WILLIAMSPORT, Pa., April 22, 2021 (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, 2021, 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, 2021 was $3.4 million compared to $3.1 million for the same period of 2020. Results for the three months ended March 31, 2021 compared to 2020 were impacted by an increase in after-tax securities gains of $72,000 (from a gain of $22,000 to a gain of $94,000) for the three month period.
Gain on sale of loans increased $464,000 for the three months ended March 31, 2021, to $908,000, compared to $444,000 for the 2020 period. The increase is the result of a significant increase in the number of consumers who are refinancing their mortgage due to the current low interest rate environment.
The provision for loan losses decreased $235,000 for the three months ended March 31, 2021, to $515,000, compared to $750,000 for the 2020 period. The provision for loan losses was elevated in 2020 due primarily to the uncertainty caused by the COVID-19 pandemic.
Basic and diluted earnings per share for the three months ended March 31, 2021 was $0.49. Basic earnings per share for the three months ended March 31, 2020 was $0.44 with diluted earnings per share of $0.43.
Return on average assets was 0.75% for the three months ended March 31, 2021, compared to 0.74% for the corresponding period of 2020.
Return on average equity was 8.59% for the three months ended March 31, 2021, compared to 7.83% for the corresponding period of 2020.

COVID-19 Activity

Approximately one third of employees working remotely.
As of March 31, 2021, loan modification/deferral program in place to defer payments up to 180 days for principal and/or interest with only $12.3 million in loan principal remaining in deferral.
All COVID-19 related loan deferrals meet the requirements to not be considered a troubled debt restructuring.
Participated in the Paycheck Protection Program ("PPP") by primarily utilizing third parties to service and place the loans.
Significantly reduced deposit rates during the latter half of March 2020 continuing through December 2020.
Total paycheck protection program loans originated to be held on balance sheet at March 31, 2021 total $19.8 million.

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 $3.3 million for the three months ended March 31, 2021 compared to $3.1 million for the same period of 2020. Core earnings per share for the three months ended March 31, 2021 were $0.47 basic and diluted, compared to $0.44 basic and $0.43 diluted core earnings per share for the same period of 2020. Core return on average assets and core return on average equity were 0.73% and 8.35% for the three months ended March 31, 2021, compared to 0.73% and 7.77% for the corresponding period of 2020. 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, 2021 was 2.88%, compared to and 3.19% for the corresponding period of 2020. The decrease in the net interest margin was driven by a decrease in the yield of the loan portfolio of 31 basis points ("bps"), while the investment portfolio yield declined 77 bps, respectively, during the current low interest rate environment. Further compressing the net interest margin was the significant increase of interest-bearing deposits. These deposits carry a current yield of a few basis points as commercial customers have received PPP funding and retail customers have received stimulus funding. Rates paid on interest-bearing deposit liabilities decreased 60 bps as rates paid were decreased significantly during 2020 due to the economic impact of COVID-19 prolonging the low interest rate environment. These deposit rate decreases have partially offset the decline in earning asset yield.

Assets

Total assets increased $207.7 million to $1.9 billion at March 31, 2021 compared to March 31, 2020. Cash and cash equivalents increased significantly due to deposit growth resulting from the various economic recovery programs instituted at the state and federal levels that impacted both commercial and retail customers, coupled with customers becoming more risk adverse and seeking safety in a bank deposit. Net loans decreased $15.2 million to $1.3 billion at March 31, 2021 compared to March 31, 2020, as the COVID-19 business and travel restrictions curtailed various lending activities such as indirect auto, home equity, and commercial. Lending activity began to rebound as business and travel restrictions were lessened during the second half of 2020 and continues to rebound in 2021. The investment portfolio increased $11.8 million from March 31, 2020 to March 31, 2021 as a portion of the excess cash liquidity was invested into short-term municipal bonds.

Non-performing Loans

The ratio of non-performing loans to total loans ratio decreased to 0.69% at March 31, 2021 from 0.84% at March 31, 2020 as non-performing loans have decreased to $9.3 million at March 31, 2021 from $11.3 million at March 31, 2020 primarily due to a commercial loan relationship that was paid-off during the fourth quarter of 2020. 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 $116,000 for the three months ended March 31, 2021 impacted the allowance for loan losses, which was 1.06% of total loans at March 31, 2021 compared to 0.93% at March 31, 2020

Deposits

Deposits increased $237.6 million to $1.6 billion at March 31, 2021 compared to March 31, 2020. Noninterest-bearing deposits increased $146.2 million to $478.9 million at March 31, 2021 compared to March 31, 2020. 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.

Shareholders' Equity

Shareholders' equity increased $7.5 million to $164.1 million at March 31, 2021 compared to March 31, 2020. Accumulated other comprehensive loss of $2.5 million at March 31, 2021 increased from a loss of $2.2 million at March 31, 2020 primarily as a result of a change in the net excess of the projected benefit obligations under the defined benefit plan over the fair value of the plan's assets, resulting in an increase in the net loss of $361,000, offset by an increase in unrealized gains on available for sale securities (from an unrealized gain of $3.0 million at March 31, 2020 to an unrealized gain of $3.1 million at March 31, 2021). The current level of shareholders' equity equates to a book value per share of $23.25 at March 31, 2021 compared to $22.23 at March 31, 2020, and an equity to asset ratio of 8.65% at March 31, 2021 compared to 9.27% at March 31, 2020. Dividends declared for the three months ended March 31, 2021 and 2020 were $0.32 per share, respectively.

Penns Woods Bancorp, Inc. is the parent company of Jersey Shore State Bank, which operates eighteen 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. Investment and insurance products are offered through Jersey Shore State Bank's subsidiary, The M Group, Inc. D/B/A The Comprehensive Financial Group. Insurance products are offered through United Insurance Solutions, LLC, a joint venture that is a subsidiary of the holding company.

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, 2020.

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

THIS INFORMATION IS SUBJECT TO YEAR-END AUDIT ADJUSTMENT

PENNS WOODS BANCORP, INC. CONSOLIDATED BALANCE SHEET (UNAUDITED)

	March 31,
(In Thousands, Except Share Data)	2021			2020			% Change
ASSETS:
Noninterest-bearing balances	$	28,539		$	29,572		(3.49	)	%
Interest-bearing balances in other financial institutions	249,149			48,189			417.02		%
Total cash and cash equivalents	277,688			77,761			257.10		%

Investment debt securities, available for sale, at fair value	166,895			155,522			7.31		%
Investment equity securities, at fair value	1,265			1,281			(1.25	)	%
Investment securities, trading	44			37			18.92		%
Restricted investment in bank stock, at fair value	15,032			14,611			2.88		%
Loans held for sale	2,568			4,294			(40.20	)	%
Loans	1,335,899			1,349,400			(1.00	)	%
Allowance for loan losses	(14,202		)	(12,500		)	13.62		%
Loans, net	1,321,697			1,336,900			(1.14	)	%
Premises and equipment, net	34,910			33,170			5.25		%
Accrued interest receivable	8,583			5,307			61.73		%
Bank-owned life insurance	33,839			29,228			15.78		%
Goodwill	17,104			17,104			—		%
Intangibles	618			836			(26.08	)	%
Operating lease right of use asset	3,088			3,278			(5.80	)	%
Deferred tax asset	3,717			3,281			13.29		%
Other assets	9,144			5,898			55.04		%
TOTAL ASSETS	$	1,896,192		$	1,688,508		12.30		%

LIABILITIES:
Interest-bearing deposits	$	1,085,448		$	993,975		9.20		%
Noninterest-bearing deposits	478,916			332,759			43.92		%
Total deposits	1,564,364			1,326,734			17.91		%
Short-term borrowings	6,650			17,741			(62.52	)	%
Long-term borrowings	141,094			171,903			(17.92	)	%
Accrued interest payable	988			1,635			(39.57	)	%
Operating lease liability	3,130			3,299			(5.12	)	%
Other liabilities	15,903			10,608			49.92		%
TOTAL LIABILITIES	1,732,129			1,531,920			13.07		%

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; 7,537,242 and 7,521,491 shares issued; 7,057,017 and 7,041,266 shares outstanding	41,873			41,786			0.21		%
Additional paid-in capital	52,818			51,701			2.16		%
Retained earnings	83,948			77,403			8.46		%
Accumulated other comprehensive (loss) gain:
Net unrealized gain on available for sale securities	3,095			2,986			3.65		%
Defined benefit plan	(5,560		)	(5,199		)	(6.94	)	%
Treasury stock at cost, 480,225	(12,115		)	(12,115		)	—		%
TOTAL PENNS WOODS BANCORP, INC. SHAREHOLDERS' EQUITY	164,059			156,562			4.79		%
Non-controlling interest	4			26			(84.62	)	%
TOTAL SHAREHOLDERS' EQUITY	164,063			156,588			4.77		%
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,896,192		$	1,688,508		12.30		%

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

	Three Months Ended March 31,
(In Thousands, Except Per Share Data)	2021			2020			% Change
INTEREST AND DIVIDEND INCOME:
Loans including fees	$	13,345		$	14,657		(8.95	)	%
Investment securities:
Taxable	819			1,010			(18.91	)	%
Tax-exempt	171			145			17.93		%
Dividend and other interest income	260			349			(25.50	)	%
TOTAL INTEREST AND DIVIDEND INCOME	14,595			16,161			(9.69	)	%

INTEREST EXPENSE:
Deposits	1,684			3,035			(44.51	)	%
Short-term borrowings	2			22			(90.91	)	%
Long-term borrowings	839			943			(11.03	)	%
TOTAL INTEREST EXPENSE	2,525			4,000			(36.88	)	%

NET INTEREST INCOME	12,070			12,161			(0.75	)	%

PROVISION FOR LOAN LOSSES	515			750			(31.33	)	%

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	11,555			11,411			1.26		%

NON-INTEREST INCOME:
Service charges	383			549			(30.24	)	%
Debt securities gains, available for sale	138			21			557.14		%
Equity securities (losses) gains	(23		)	20			(215.00	)	%
Securities gains (losses), trading	4			(14		)	128.57		%
Bank-owned life insurance	173			192			(9.90	)	%
Gain on sale of loans	908			444			104.50		%
Insurance commissions	157			127			23.62		%
Brokerage commissions	219			369			(40.65	)	%
Debit card income	380			274			38.69		%
Other	275			455			(39.56	)	%
TOTAL NON-INTEREST INCOME	2,614			2,437			7.26		%

NON-INTEREST EXPENSE:
Salaries and employee benefits	5,598			5,667			(1.22	)	%
Occupancy	976			702			39.03		%
Furniture and equipment	809			860			(5.93	)	%
Software amortization	198			250			(20.80	)	%
Pennsylvania shares tax	352			285			23.51		%
Professional fees	583			622			(6.27	)	%
Federal Deposit Insurance Corporation deposit insurance	221			194			13.92		%
Marketing	63			53			18.87		%
Intangible amortization	53			62			(14.52	)	%
Other	1,098			1,415			(22.40	)	%
TOTAL NON-INTEREST EXPENSE	9,951			10,110			(1.57	)	%
INCOME BEFORE INCOME TAX PROVISION	4,218			3,738			12.84		%
INCOME TAX PROVISION	771			661			16.64		%
NET INCOME	$	3,447		$	3,077		12.02		%
Earnings attributable to noncontrolling interest	6			4			50.00		%
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS'	$	3,441		$	3,073		11.98		%
EARNINGS PER SHARE - BASIC	$	0.49		$	0.44		11.36		%
EARNINGS PER SHARE - DILUTED	$	0.49		$	0.43		13.95		%
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC	7,055,116			7,040,740			0.20		%
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED	7,055,116			7,102,990			(0.67	)	%
DIVIDENDS DECLARED PER SHARE	$	0.32		$	0.32		—		%

PENNS WOODS BANCORP, INC. AVERAGE BALANCES AND INTEREST RATES

	Three Months Ended
	March 31, 2021						March 31, 2020
(Dollars in Thousands)	Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate
ASSETS:
Tax-exempt loans	$	45,534	$	349	3.11	%	$	52,979	$	404	3.07	%
All other loans	1,293,395		13,069		4.10	%	1,303,838		14,338		4.42	%
Total loans	1,338,929		13,418		4.06	%	1,356,817		14,742		4.37	%
Taxable securities	145,047		1,033		2.89	%	142,788		1,273		3.63	%
Tax-exempt securities	36,369		216		2.41	%	23,773		184		3.15	%
Total securities	181,416		1,249		2.79	%	166,561		1,457		3.56	%
Interest-bearing deposits	195,995		46		0.10	%	26,716		86		1.29	%
Total interest-earning assets	1,716,340		14,713		3.48	%	1,550,094		16,285		4.23	%
Other assets	124,074						112,219

TOTAL ASSETS	$	1,840,414					$	1,662,313

LIABILITIES AND SHAREHOLDERS' EQUITY:
Savings	$	214,636	44		0.08	%	$	177,840	91		0.21	%
Super Now deposits	289,236		267		0.37	%	219,826		424		0.78	%
Money market deposits	306,000		267		0.35	%	210,708		477		0.91	%
Time deposits	254,460		1,106		1.76	%	379,259		2,043		2.17	%
Total interest-bearing deposits	1,064,332		1,684		0.64	%	987,633		3,035		1.24	%
Short-term borrowings	5,680		2		0.14	%	10,847		22		0.85	%
Long-term borrowings	141,483		839		2.40	%	159,920		943		2.37	%
Total borrowings	147,163		841		2.32	%	170,767		965		2.28	%
Total interest-bearing liabilities	1,211,495		2,525		0.85	%	1,158,400		4,000		1.39	%
Demand deposits	445,759						326,817
Other liabilities	22,872						19,991
Shareholders' equity	160,288						157,105
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,840,414					$	1,662,313
Interest rate spread					2.63	%					2.84	%
Net interest income/margin			$	12,188	2.88	%			$	12,285	3.19	%

	Three Months Ended March 31,
	2021		2020
Total interest income	$	14,595	$	16,161
Total interest expense	2,525		4,000
Net interest income	12,070		12,161
Tax equivalent adjustment	118		124
Net interest income (fully taxable equivalent)	$	12,188	$	12,285

(Dollars in Thousands, Except Per Share Data)	Quarter Ended
	3/31/2021			12/31/2020			9/30/2020			6/30/2020			3/31/2020
Operating Data
Net income	$	3,441		$	3,901		$	4,472		$	3,760		$	3,073
Net interest income	12,070			11,967			11,845			12,250			12,161
Provision for loan losses	515			585			645			645			750
Net security gains	119			374			1,011			196			27
Non-interest income, excluding net security gains	2,495			2,701			3,024			2,423			2,409
Non-interest expense	9,951			9,640			9,707			9,611			10,110

Performance Statistics
Net interest margin	2.88		%	2.81		%	2.76		%	3.01		%	3.19		%
Annualized return on average assets	0.75		%	0.85		%	0.97		%	0.85		%	0.74		%
Annualized return on average equity	8.59		%	9.55		%	11.05		%	9.60		%	7.83		%
Annualized net loan charge-offs to average loans	0.04		%	0.06		%	0.06		%	0.05		%	0.04		%
Net charge-offs	116			211			193			168			144
Efficiency ratio	67.96		%	65.36		%	64.89		%	65.10		%	68.96		%

Per Share Data
Basic earnings per share	$	0.49		$	0.55		$	0.63		$	0.53		$	0.44
Diluted earnings per share	0.49			0.55			0.63			0.53			0.43
Dividend declared per share	0.32			0.32			0.32			0.32			0.32
Book value	23.25			23.27			23.05			22.66			22.23
Common stock price:
High	27.78			27.30			22.83			27.75			35.36
Low	20.55			19.61			19.61			20.01			19.05
Close	24.09			26.01			19.85			22.71			24.30
Weighted average common shares:
Basic	7,055			7,050			7,045			7,042			7,041
Fully Diluted	7,055			7,050			7,045			7,042			7,103
End-of-period common shares:
Issued	7,537			7,533			7,528			7,523			7,521
Treasury	480			480			480			480			480

(Dollars in Thousands, Except Per Share Data)	Quarter Ended
	3/31/2021			12/31/2020			9/30/2020			6/30/2020			3/31/2020
Financial Condition Data:
General
Total assets	$	1,896,192		$	1,834,643		$	1,840,779		$	1,838,364		$	1,688,508
Loans, net	1,321,697			1,330,524			1,335,711			1,336,370			1,336,900
Goodwill	17,104			17,104			17,104			17,104			17,104
Intangibles	618			671			724			777			836
Total deposits	1,564,364			1,494,443			1,491,810			1,474,305			1,326,734
Noninterest-bearing	478,916			449,357			434,248			418,324			332,759
Savings	224,890			209,924			202,781			195,964			183,929
NOW	290,355			287,775			268,463			268,348			229,919
Money Market	324,207			283,742			274,480			247,753			204,832
Time Deposits	245,996			263,645			311,838			343,915			375,295
Total interest-bearing deposits	1,085,448			1,045,086			1,057,562			1,055,980			993,975

Core deposits*	1,318,368			1,230,798			1,179,972			1,130,389			951,439
Shareholders' equity	164,059			164,142			162,422			159,578			156,562

Asset Quality
Non-performing loans	$	9,272		$	10,334		$	10,553		$	11,097		$	11,300
Non-performing loans to total assets	0.49		%	0.56		%	0.57		%	0.60		%	0.67		%
Allowance for loan losses	14,202			13,803			13,429			12,977			12,500
Allowance for loan losses to total loans	1.06		%	1.03		%	1.00		%	0.96		%	0.93		%
Allowance for loan losses to non-performing loans	153.17		%	133.57		%	127.25		%	116.94		%	110.62		%
Non-performing loans to total loans	0.69		%	0.77		%	0.78		%	0.82		%	0.84		%

Capitalization
Shareholders' equity to total assets	8.65		%	8.95		%	8.82		%	8.68		%	9.27		%

* Core deposits are defined as total deposits less time deposits

Reconciliation of GAAP and Non-GAAP Financial Measures

	Three Months Ended March 31,
(Dollars in Thousands, Except Per Share Data)	2021			2020
GAAP net income	$	3,441		$	3,073
Less: net securities gains, net of tax		94			22
Non-GAAP core earnings	$	3,347		$	3,051

	Three Months Ended March 31,
	2021			2020
Return on average assets (ROA)	0.75		%	0.74		%
Less: net securities gains, net of tax	0.02		%	0.01		%
Non-GAAP core ROA	0.73		%	0.73		%

	Three Months Ended March 31,
	2021			2020
Return on average equity (ROE)	8.59		%	7.83		%
Less: net securities gains, net of tax	0.24		%	0.06		%
Non-GAAP core ROE	8.35		%	7.77		%

	Three Months Ended March 31,
	2021			2020
Basic earnings per share (EPS)	$	0.49		$	0.44
Less: net securities gains, net of tax	0.02			—
Non-GAAP basic core EPS	$	0.47		$	0.44

	Three Months Ended March 31,
	2021			2020
Diluted EPS	$	0.49		$	0.43
Less: net securities gains, net of tax	0.02			—
Non-GAAP diluted core EPS	$	0.47		$	0.43

COVID-19 Loan Deferrals as of March 31, 2021

(In Thousands)	Amount
Commercial, financial, and agricultural	$	1,710
Real estate mortgage:
Residential	2,177
Commercial	8,307
Consumer automobile loans	96
Other consumer installment loans	55
Total loan deferrals	$	12,345

Penns Woods Bancorp, Inc. Reports First Quarter 2021 Earnings