WILLIAMSPORT, Pa., Jan. 30, 2023 (GLOBE NEWSWIRE) -- Penns Woods Bancorp, Inc. (NASDAQ:PWOD)

Penns Woods Bancorp, Inc. achieved net income of $17.4 million for the twelve months ended December 31, 2022, resulting in basic and diluted earnings per share of $2.47.

Highlights

Net income, as reported under GAAP, for the three and twelve months ended December 31, 2022 was $4.5 million and $17.4 million, respectively, compared to $4.9 million and $16.0 million for the same periods of 2021. Results for the three and twelve months ended December 31, 2022 compared to 2021 were impacted by an increase in after-tax securities losses of $315,000 (from a gain of $284,000 to a loss of $31,000) for the three month period and an increase in after-tax securities losses of $809,000 (from a gain of $521,000 to a loss of $288,000) for the twelve month period. Three and twelve month results for the periods ended December 31, 2022 were impacted by a goodwill impairment charge of $653,000 (after-tax $516,000) related to the wealth management unit (The M Group) as a decline in stock market valuations during 2022 resulted in a decreased level of net income for this entity. Results for the twelve months ended December 31, 2022 were impacted by additional compensation expense of $183,000 (after-tax $145,000) associated with the voluntary cash settlement of 346,725 outstanding stock options. In addition, an after-tax loss of $201,000 related to a branch closure negatively impacted results for the twelve months ended December 31, 2022.
The provision for loan losses increased $875,000 for the three months and $1.3 million for the twelve months ended December 31, 2022 to $575,000 and $1.9 million, respectively, compared to ($300,000) and $640,000 for the 2021 periods. The increases in the provision for loan losses were primarily due to the significant growth in the loan portfolio.
Basic and diluted earnings per share for the three and twelve months ended December 31, 2022 were $0.64 and $2.47. Basic and diluted earnings per share for the three and twelve months ended December 31, 2021 were $0.69 and $2.27.
Annualized return on average assets was 0.92% for three months ended December 31, 2022, compared to 1.02% for the corresponding period of 2021. Return on average assets was 0.90% for the twelve months ended December 31, 2022, compared to 0.85% for the corresponding period of 2021.
Annualized return on average equity was 10.92% for the three months ended December 31, 2022, compared to 11.59% for the corresponding period of 2021. Return on average equity was 10.73% for the twelve months ended December 31, 2022, compared to 9.93% 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 and goodwill impairment, was $5.1 million for the three months ended December 31, 2022 compared to $4.6 million for the same period of 2021. Core earnings were $18.2 million for the twelve months ended December 31, 2022, compared to $15.5 million for the same period of 2021. Core earnings per share for the three months ended December 31, 2022 were $0.71 basic and diluted, compared to $0.65 basic and diluted core earnings per share for the same period of 2021. Core earnings per share for the twelve months ended December 31, 2022 were $2.58 basic and diluted, compared to $2.20 basic and diluted for the same period of 2021. Annualized core return on average assets and core return on average equity were 1.04% and 12.25% for the three months ended December 31, 2022, compared to 0.96% and 10.92% for the corresponding period of 2021. Core return on average assets and core return on average equity were 0.94% and 11.22% for the twelve months ended December 31, 2022 compared to 0.82% and 9.61% for the corresponding period of 2021. Core earnings for the twelve months ended December 31, 2022 were impacted negatively by an after-tax compensation expense of $145,000 relating to the voluntary cash settlement of 346,725 stock options along with 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 and twelve months ended December 31, 2022 was 3.42% and 3.24%, compared to 2.90% and 2.85% for the corresponding periods of 2021. The increase in the net interest margin for the three and twelve month periods was driven by an increase in earning asset yield of 79 and 28 basis points ("bps") as the yield on earning assets increased during 2022 due to the rate increases enacted by the Federal Open Market Committee ("FOMC"). The three and twelve month periods ended December 31, 2022 were impacted by an increase of 58 and 8 bps in the yield earned on the securities portfolio as legacy securities matured with the funds reinvested at higher rates. The FOMC rate increases during 2022 and the utilization of excess on balance sheet liquidity during the first nine months of 2022 caused the rate paid on interest-bearing deposits to increase 19 and decrease 17 bps for the three months and twelve months ended December 31, 2022, respectively, compared to the comparable periods of 2021. The excess on balance sheet liquidity allowed deposit rates to be held at historically low levels for the majority of 2022 with rate increases occurring primarily during the fourth quarter of 2022.

Assets

Total assets increased $55.4 million to $2.0 billion at December 31, 2022 compared to December 31, 2021. Cash and cash equivalents decreased $223.5 million as interest-bearing accounts in other financial institutions decreased $181.7 million and fed funds sold decreased $50.0 million as excess liquidity was primarily utilized to fund the growth in the loan portfolio. Net loans increased $246.1 million to $1.6 billion at December 31, 2022 compared to December 31, 2021, as an emphasis was placed on commercial loan growth coupled with a significant increase in indirect auto lending. The investment portfolio increased $31.8 million from December 31, 2021 to December 31, 2022 as a portion of the excess cash liquidity was invested primarily into short and medium-term municipal bonds with a maturity of 10 years or less.

Non-performing Loans

The ratio of non-performing loans to total loans ratio decreased to 0.30% at December 31, 2022 from 0.45% at December 31, 2021, as non-performing loans decreased to $4.9 million at December 31, 2022 from $6.3 million at December 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 $449,000 for the twelve months ended December 31, 2022 impacted the allowance for loan losses, which was 0.95% of total loans at December 31, 2022 compared to 1.02% at December 31, 2021.

Deposits

Deposits decreased $64.9 million to $1.6 billion at December 31, 2022 compared to December 31, 2021. Noninterest-bearing deposits increased $24.7 million to $519.1 million at December 31, 2022 compared to December 31, 2021. Driving core deposit gathering efforts was the continued emphasis 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. Interest-bearing deposits decreased $89.6 million primarily due to a reduction in the Money Market Account portfolio coupled with the maturity of higher cost time deposits. A campaign to attract time deposits with a maturity of ten to twenty-four months was started during the latter part of 2022.

Shareholders' Equity

Shareholders' equity decreased $4.6 million to $167.7 million at December 31, 2022 compared to December 31, 2021. Accumulated other comprehensive loss of $14.0 million at December 31, 2022 increased from a loss of $1.1 million at December 31, 2021 as a result of a $9.8 million net unrealized loss on available for sale securities at December 31, 2022 (compared to an unrealized gain of $2.4 million at December 31, 2021) coupled with a increase in loss of $654,000 in the defined benefit plan obligation. The current level of shareholders' equity equates to a book value per share of $23.76 at December 31, 2022 compared to $24.37 at December 31, 2021, and an equity to asset ratio of 8.40% at December 31, 2022 and 8.88% at December 31, 2021. Dividends declared for the twelve months ended December 31, 2022 and 2021 were $1.28 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)

	December 31,
(In Thousands, Except Share and Per Share Data)	2022			2021			% Change
ASSETS:
Noninterest-bearing balances	$	27,390		$	19,233		42.41	%
Interest-bearing balances in other financial institutions		12,943			194,629		(93.35	)%
Federal funds sold		—			50,000		(100.00	)%
Total cash and cash equivalents		40,333			263,862		(84.71	)%

Investment debt securities, available for sale, at fair value		193,673			166,410		16.38	%
Investment equity securities, at fair value		1,142			1,288		(11.34	)%
Restricted investment in bank stock, at fair value		19,171			14,531		31.93	%
Loans held for sale		3,298			3,725		(11.46	)%
Loans		1,639,731			1,392,147		17.78	%
Allowance for loan losses		(15,637	)		(14,176	)	10.31	%
Loans, net		1,624,094			1,377,971		17.86	%
Premises and equipment, net		31,844			34,025		(6.41	)%
Accrued interest receivable		9,481			8,048		17.81	%
Bank-owned life insurance		34,452			33,768		2.03	%
Investment in limited partnerships		4,783			4,607		3.82	%
Goodwill		16,450			17,104		(3.82	)%
Intangibles		327			480		(31.88	)%
Operating lease right of use asset		2,651			2,851		(7.02	)%
Deferred tax asset		6,868			2,946		133.13	%
Other assets		7,640			9,193		(16.89	)%
TOTAL ASSETS	$	1,996,207		$	1,940,809		2.85	%

LIABILITIES:
Interest-bearing deposits	$	1,037,397		$	1,126,955		(7.95	)%
Noninterest-bearing deposits		519,063			494,360		5.00	%
Total deposits		1,556,460			1,621,315		(4.00	)%

Short-term borrowings		153,349			5,747		2,568.33	%
Long-term borrowings		102,783			125,963		(18.40	)%
Accrued interest payable		603			651		(7.37	)%
Operating lease liability		2,708			2,898		(6.56	)%
Other liabilities		12,639			11,961		5.67	%
TOTAL LIABILITIES		1,828,542			1,768,535		3.39	%

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; 7,566,810 and 7,550,272 shares issued; 7,056,585 and 7,070,047 shares outstanding		42,039			41,945		0.22	%
Additional paid-in capital		54,252			53,795		0.85	%
Retained earnings		98,147			89,761		9.34	%
Accumulated other comprehensive (loss) gain:
Net unrealized (loss) gain on available for sale securities		(9,819	)		2,373		(513.78	)%
Defined benefit plan		(4,139	)		(3,485	)	(18.77	)%
Treasury stock at cost, 510,225 and 480,225		(12,815	)		(12,115	)	5.78	%
TOTAL SHAREHOLDERS' EQUITY		167,665			172,274		(2.68	)%
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,996,207		$	1,940,809		2.85	%

PENNS WOODS BANCORP, INC.

CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

	Three Months Ended December 31,									Twelve Months Ended December 31,
(In Thousands, Except Share and Per Share Data)	2022			2021			% Change			2022			2021			% Change
INTEREST AND DIVIDEND INCOME:
Loans including fees	$	16,973		$	13,406		26.61	%		$	58,682		$	53,232		10.24	%
Investment securities:
Taxable		1,084			790		37.22	%			3,634			3,281		10.76	%
Tax-exempt		229			160		43.13	%			823			655		25.65	%
Dividend and other interest income		319			343		(7.00	)%			1,789			1,246		43.58	%
TOTAL INTEREST AND DIVIDEND INCOME		18,605			14,699		26.57	%			64,928			58,414		11.15	%

INTEREST EXPENSE:
Deposits		1,499			1,064		40.88	%			3,690			5,545		(33.45	)%
Short-term borrowings		978			2		n/m				1,007			9		n/m
Long-term borrowings		580			712		(18.54	)%			2,451			3,142		(21.99	)%
TOTAL INTEREST EXPENSE		3,057			1,778		71.93	%			7,148			8,696		(17.80	)%

NET INTEREST INCOME		15,548			12,921		20.33	%			57,780			49,718		16.22	%

PROVISION (RECOVERY) FOR LOAN LOSSES		575			(300	)	291.67	%			1,910			640		198.44	%

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		14,973			13,221		13.25	%			55,870			49,078		13.84	%

NON-INTEREST INCOME:
Service charges		540			485		11.34	%			2,103			1,703		23.49	%
Debt securities (losses) gains, available for sale		(51	)		376		(113.56	)%			(219	)		699		(131.33	)%
Net equity securities gains (losses}		12			(16	)	175.00	%			(146	)		(40	)	(265.00	)%
Bank-owned life insurance		163			302		(46.03	)%			664			916		(27.51	)%
Gain on sale of loans		226			440		(48.64	)%	.		1,131			2,474		(54.28	)%
Insurance commissions		105			117		(10.26	)%			491			553		(11.21	)%
Brokerage commissions		120			188		(36.17	)%			620			851		(27.14	)%
Loan broker income		324			715		(54.69	)%			1,674			2,164		(22.64	)%
Debit card income		384			345		11.30	%			1,464			1,511		(3.11	)%
Other		258			243		6.17	%			931			838		11.10	%
TOTAL NON-INTEREST INCOME		2,081			3,195		(34.87	)%			8,713			11,669		(25.33	)%

NON-INTEREST EXPENSE:
Salaries and employee benefits		5,846			5,907		(1.03	)%			24,267			23,014		5.44	%
Occupancy		700			771		(9.21	)%			3,080			3,209		(4.02	)%
Furniture and equipment		834			859		(2.91	)%			3,288			3,522		(6.64	)%
Software amortization		180			236		(23.73	)%			840			868		(3.23	)%
Pennsylvania shares tax		333			253		31.62	%			1,452			1,350		7.56	%
Professional fees		688			550		25.09	%			2,434			2,432		0.08	%
Federal Deposit Insurance Corporation deposit insurance		248			258		(3.88	)%			938			963		(2.60	)%
Marketing		255			111		129.73	%			690			545		26.61	%
Intangible amortization		35			44		(20.45	)%			154			191		(19.37	)%
Goodwill impairment		653			—		n/a				653			—		n/a
Other		1,479			1,270		16.46	%			5,202			4,811		8.13	%
TOTAL NON-INTEREST EXPENSE		11,251			10,259		9.67	%			42,998			40,905		5.12	%
INCOME BEFORE INCOME TAX PROVISION		5,803			6,157		(5.75	)%			21,585			19,842		8.78	%
INCOME TAX PROVISION		1,294			1,278		1.25	%			4,163			3,794		9.73	%
NET INCOME	$	4,509		$	4,879		(7.58	)%		$	17,422		$	16,048		8.56	%
Earnings attributable to noncontrolling interest		—			—		—	%			—			15		(100.00	)%
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS'	$	4,509		$	4,879		(7.58	)%		$	17,422		$	16,033		8.66	%
EARNINGS PER SHARE - BASIC	$	0.64		$	0.69		(7.25	)%		$	2.47		$	2.27		8.81	%
EARNINGS PER SHARE - DILUTED	$	0.64		$	0.69		(7.25	)%		$	2.47		$	2.27		8.81	%
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC		7,055,181			7,068,327		(0.19	)%			7,059,437			7,061,818		(0.03	)%
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED		7,055,181			7,068,327		(0.19	)%			7,059,437			7,061,818		(0.03	)%

PENNS WOODS BANCORP, INC.

AVERAGE BALANCES AND INTEREST RATES

(UNAUDITED)

	Three Months Ended
	December 31, 2022						December 31, 2021
(Dollars in Thousands)	Average Balance(1)		Interest		Average Rate		Average Balance(1)		Interest		Average Rate
ASSETS:
Tax-exempt loans (3)	$	61,756	$	408	2.62	%	$	46,583	$	317	2.70	%
All other loans		1,546,338		16,651	4.27	%		1,320,972		13,156	3.95	%
Total loans (2)		1,608,094		17,059	4.21	%		1,367,555		13,473	3.91	%

Federal funds sold		—		—	—	%		47,391		85	0.71	%

Taxable securities		167,405		1,329	3.22	%		148,434		978	2.67	%
Tax-exempt securities (3)		41,167		290	2.86	%		38,043		202	2.15	%
Total securities		208,572		1,619	3.15	%		186,477		1,180	2.57	%

Interest-bearing deposits		5,797		74	5.06	%		184,591		70	0.15	%

Total interest-earning assets		1,822,463		18,752	4.09	%		1,786,014		14,808	3.30	%

Other assets		128,084						130,859

TOTAL ASSETS	$	1,950,547					$	1,916,873

LIABILITIES AND SHAREHOLDERS' EQUITY:
Savings	$	249,793		66	0.10	%	$	233,791		22	0.04	%
Super Now deposits		385,060		623	0.64	%		345,653		206	0.24	%
Money market deposits		268,519		509	0.75	%		301,651		211	0.28	%
Time deposits		144,491		301	0.83	%		218,260		625	1.14	%
Total interest-bearing deposits		1,047,863		1,499	0.57	%		1,099,355		1,064	0.38	%

Short-term borrowings		97,585		978	3.98	%		7,255		2	0.11	%
Long-term borrowings		102,814		580	2.24	%		125,991		712	2.25	%
Total borrowings		200,399		1,558	3.09	%		133,246		714	2.13	%

Total interest-bearing liabilities		1,248,262		3,057	0.97	%		1,232,601		1,778	0.57	%

Demand deposits		517,977						496,478
Other liabilities		19,151						19,463
Shareholders' equity		165,157						168,331

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,950,547					$	1,916,873
Interest rate spread (3)					3.12	%					2.73	%
Net interest income/margin (3)			$	15,695	3.42	%			$	13,030	2.90	%

Information on this table has been calculated using average daily balance sheets to obtain average balances.
Non-accrual loans have been included with loans for the purpose of analyzing net interest earnings.
Income and rates on fully taxable equivalent basis include an adjustment for the difference between annual income from tax-exempt obligations and the taxable equivalent of such income at the standard tax rate of 21%

	Three Months Ended December 31,
	2022		2021
Total interest income	$	18,605	$	14,699
Total interest expense		3,057		1,778
Net interest income (GAAP)		15,548		12,921
Tax equivalent adjustment		147		109
Net interest income (fully taxable equivalent) (non-GAAP)	$	15,695	$	13,030

PENNS WOODS BANCORP, INC.

AVERAGE BALANCES AND INTEREST RATES

(UNAUDITED)

	Twelve Months Ended
	December 31, 2022						December 31, 2021
(Dollars in Thousands)	Average Balance(1)		Interest		Average Rate		Average Balance(1)		Interest		Average Rate
ASSETS:
Tax-exempt loans (3)	$	55,364	$	1,441	2.60	%	$	46,312	$	1,308	2.82	%
All other loans		1,439,550		57,544	4.00	%		1,299,321		52,199	4.02	%
Total loans (2)		1,494,914		58,985	3.95	%		1,345,633		53,507	3.98	%

Federal funds sold		32,863		465	1.41	%		28,395		202	0.71	%

Taxable securities		156,584		4,455	2.88	%		148,066		4,083	2.80	%
Tax-exempt securities (3)		44,301		1,042	2.38	%		36,993		829	2.27	%
Total securities		200,885		5,497	2.77	%		185,059		4,912	2.69	%

Interest-bearing deposits		74,401		503	0.68	%		201,273		242	0.12	%

Total interest-earning assets		1,803,063		65,450	3.63	%		1,760,360		58,863	3.35	%

Other assets		128,213						129,582

TOTAL ASSETS	$	1,931,276					$	1,889,942

LIABILITIES AND SHAREHOLDERS' EQUITY:
Savings	$	247,003		138	0.06	%	$	225,637		116	0.05	%
Super Now deposits		387,370		1,344	0.35	%		307,446		900	0.29	%
Money market deposits		289,820		1,105	0.38	%		305,883		972	0.32	%
Time deposits		161,982		1,103	0.68	%		244,341		3,557	1.46	%
Total interest-bearing deposits		1,086,175		3,690	0.34	%		1,083,307		5,545	0.51	%

Short-term borrowings		29,315		1,007	3.44	%		7,178		9	0.13	%
Long-term borrowings		110,027		2,451	2.23	%		135,474		3,142	2.32	%
Total borrowings		139,342		3,458	2.48	%		142,652		3,151	2.21	%

Total interest-bearing liabilities		1,225,517		7,148	0.58	%		1,225,959		8,696	0.71	%

Demand deposits		519,189						478,984
Other liabilities		24,182						23,568
Shareholders' equity		162,388						161,431

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,931,276					$	1,889,942
Interest rate spread (3)					3.05	%					2.64	%
Net interest income/margin (3)			$	58,302	3.24	%			$	50,167	2.85	%

Information on this table has been calculated using average daily balance sheets to obtain average balances.
Non-accrual loans have been included with loans for the purpose of analyzing net interest earnings.
Income and rates on fully taxable equivalent basis include an adjustment for the difference between annual income from tax-exempt obligations and the taxable equivalent of such income at the standard tax rate of 21%

	Twelve Months Ended December 31,
	2022		2021
Total interest income	$	64,928	$	58,414
Total interest expense		7,148		8,696
Net interest income		57,780		49,718
Tax equivalent adjustment		522		449
Net interest income (fully taxable equivalent) (non-GAAP)	$	58,302	$	50,167

(Dollars in Thousands, Except Share and Per Share Data, Unaudited)	Quarter Ended
	12/31/2022			9/30/2022			6/30/2022			3/31/2022			12/31/2021
Operating Data
Net income	$	4,509		$	5,250		$	4,231		$	3,432		$	4,879
Net interest income		15,548			15,532			13,847			12,853			12,921
Provision (credit) for loan losses		575			855			330			150			(300	)
Net security (losses) gains		(39	)		(211	)		(54	)		(61	)		360
Non-interest income, excluding net security (losses) gains		2,120			2,294			2,191			2,473			2,835
Non-interest expense		11,251			10,320			10,420			11,007			10,259

Performance Statistics
Net interest margin		3.42	%		3.47	%		3.12	%		2.93	%		2.90	%
Annualized return on average assets		0.92	%		1.09	%		0.88	%		0.72	%		1.02	%
Annualized return on average equity		10.92	%		12.61	%		10.15	%		8.17	%		11.59	%
Annualized net loan charge-offs (recoveries) to average loans		0.04	%		0.01	%		(0.01	)%		0.09	%		0.02	%
Net charge-offs (recoveries)		149			37			(40	)		303			81
Efficiency ratio		59.79	%		57.70	%		64.72	%		71.53	%		64.83	%

Per Share Data
Basic earnings per share	$	0.64		$	0.74		$	0.60		$	0.49		$	0.69
Diluted earnings per share		0.64			0.74			0.60			0.49			0.69
Dividend declared per share		0.32			0.32			0.32			0.32			0.32
Book value		23.76			23.32			23.56			23.81			24.37
Common stock price:
High		26.89			24.29			24.35			24.67			24.65
Low		23.15			22.02			22.34			23.64			23.50
Close		26.62			22.91			23.09			24.43			23.65
Weighted average common shares:
Basic		7,055			7,051			7,059			7,073			7,068
Fully Diluted		7,055			7,051			7,059			7,073			7,068
End-of-period common shares:
Issued		7,567			7,563			7,559			7,555			7,550
Treasury		(510	)		(510	)		(510	)		(480	)		(480	)

(Dollars in Thousands, Except Share and Per Share Data, Unaudited)	Quarter Ended
	12/31/2022			9/30/2022			6/30/2022			3/31/2022			12/31/2021
Financial Condition Data:
General
Total assets	$	1,996,207		$	1,905,116		$	1,891,806		$	1,916,809		$	1,940,809
Loans, net		1,624,094			1,545,489			1,474,739			1,391,943			1,377,971
Goodwill		16,450			17,104			17,104			17,104			17,104
Intangibles		327			361			396			437			480
Total deposits		1,556,460			1,590,415			1,589,579			1,612,395			1,621,315
Noninterest-bearing		519,063			537,403			524,288			514,130			494,360
Savings		247,952			249,532			249,057			245,661			236,312
NOW		372,574			392,140			353,102			379,838			366,399
Money Market		270,589			268,532			309,453			299,166			318,877
Time Deposits		146,282			142,808			153,679			173,600			205,367
Total interest-bearing deposits		1,037,397			1,053,012			1,065,291			1,098,265			1,126,955

Core deposits*		1,410,178			1,447,607			1,435,900			1,438,795			1,415,948
Shareholders' equity		167,665			164,489			166,054			168,427			172,274

Asset Quality
Non-performing loans	$	4,890		$	5,743		$	5,100		$	5,281		$	6,250
Non-performing loans to total assets		0.24	%		0.30	%		0.27	%		0.28	%		0.32	%
Allowance for loan losses		15,637			15,211			14,393			14,023			14,176
Allowance for loan losses to total loans		0.95	%		0.97	%		0.97	%		1.00	%		1.02	%
Allowance for loan losses to non-performing loans		319.78	%		264.86	%		282.22	%		265.54	%		226.82	%
Non-performing loans to total loans		0.30	%		0.37	%		0.34	%		0.38	%		0.45	%

Capitalization
Shareholders' equity to total assets		8.40	%		8.63	%		8.78	%		8.79	%		8.88	%

* Core deposits are defined as total deposits less time deposits

Reconciliation of GAAP and Non-GAAP Financial Measures

(UNAUDITED)

	Three Months Ended December 31,						Twelve Months Ended December 31,
(Dollars in Thousands, Except Per Share Data)	2022			2021			2022			2021
GAAP net income	$	4,509		$	4,879		$	17,422		$	16,033
Net securities losses (gains), net of tax		31			(284	)		288			(521	)
Goodwill impairment		516			—			516			—
Non-GAAP core earnings	$	5,056		$	4,595		$	18,226		$	15,512

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2022			2021			2022			2021
Return on average assets (ROA)		0.92	%		1.02	%		0.90	%		0.85	%
Net securities losses (gains), net of tax		0.01	%		(0.06	)%		0.01	%		(0.03	)%
Goodwill impairment		0.11	%		—	%		0.03	%		—	%
Non-GAAP core ROA		1.04	%		0.96	%		0.94	%		0.82	%

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2022			2021			2022			2021
Return on average equity (ROE)		10.92	%		11.59	%		10.73	%		9.93	%
Net securities losses (gains), net of tax		0.08	%		(0.67	)%		0.17	%		(0.32	)%
Goodwill impairment		1.25	%		—	%		0.32	%		—	%
Non-GAAP core ROE		12.25	%		10.92	%		11.22	%		9.61	%

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2022			2021			2022			2021
Basic earnings per share (EPS)	$	0.64		$	0.69		$	2.47		$	2.27
Net securities losses (gains), net of tax		—			(0.04	)		0.04			(0.07	)
Goodwill impairment		0.07			—			0.07			—
Non-GAAP basic core EPS	$	0.71		$	0.65		$	2.58		$	2.20

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2022			2021			2022			2021
Diluted EPS	$	0.64		$	0.69		$	2.47		$	2.27
Net securities losses (gains), net of tax		—			(0.04	)		0.04			(0.07	)
Goodwill impairment		0.07			—			0.07			—
Non-GAAP diluted core EPS	$	0.71		$	0.65		$	2.58		$	2.20

Penns Woods Bancorp, Inc. Reports Fourth Quarter and Year Ended 2022 Earnings