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

Penns Woods Bancorp, Inc. achieved net income of $8.8 million for the six months ended June 30, 2023, resulting in basic and diluted earnings per share of $1.25.

Highlights

Net income, as reported under GAAP, for the three and six months ended June 30, 2023 was $4.2 million and $8.8 million, compared to $4.2 million and $7.7 million for the same periods of 2022. Results for the three and six months ended June 30, 2023 compared to 2022 were impacted by a decrease in after-tax securities losses of $12,000 (from a loss of $43,000 to a loss of $31,000) for the three month period and a decrease in after-tax securities losses of $29,000 (from a loss of $91,000 to a loss of $62,000) for the six month period. In addition, bank-owned life insurance income increased due to a gain on death benefit of $380,000 during the six months ended June 30, 2023, while an after-tax loss of $201,000 related to a branch closure negatively impacted the six months ended June 30, 2022.
The provision for credit losses decreased $850,000 and $629,000 for the three and six months ended June 30, 2023 to a recovery of $1.2 million and $1.1 million, respectively compared to a provision of $330,000 and $480,000 for the 2022 periods due primarily to a recovery on a commercial loan during the second quarter of 2023. The decrease in the provision for credit losses also resulted from improving loan portfolio credit metrics and a minimal level of loan charge-offs.
Basic and diluted earnings per share for the three and six months ended June 30, 2023 were $0.59 and $1.25. Basic and diluted earnings per share for the three and six months ended June 30, 2022 were $0.60 and $1.08.
Annualized return on average assets was 0.80% for three months ended June 30, 2023, compared to 0.88% for the corresponding period of 2022. Annualized return on average assets was 0.86% for the six months ended June 30, 2023, compared to 0.80% for the corresponding period of 2022.
Annualized return on average equity was 9.53% for the three months ended June 30, 2023, compared to 10.15% for the corresponding period of 2022. Annualized return on average equity was 10.37% for the six months ended June 30, 2023, compared to 9.20% for the corresponding period of 2022.

Net Income

Net income from core operations ("core earnings"), which is a non-generally accepted accounting principles (GAAP) measure of net income excluding net securities gains or losses, was $4.2 million and $8.9 million for the three and six months ended June 30, 2023 compared to $4.3 million and $7.8 million for the same periods of 2022. Core earnings per share for the three and six months ended June 30, 2023 was $0.60 and $1.26 basic and diluted, compared to $0.61 and $1.10 basic and diluted core earnings per share for the same periods of 2022. Annualized core return on average assets and core return on average equity were 0.80% and 9.60% for the three months ended June 30, 2023, compared to 0.89% and 10.25% for the corresponding periods of 2022. Core return on average assets and core return on average equity were 0.86% and 10.44% for the six months ended June 30, 2023 compared to 0.81% and 9.31% for the corresponding periods of 2022. A reconciliation of the non-GAAP financial measures of core earnings, core return on assets, core return on equity, and core earnings per share described in this press release to the comparable GAAP financial measures is included at the end of this press release.

Net Interest Margin

The net interest margin for the three and six months ended June 30, 2023 was 2.77% and 2.92%, compared to 3.12% and 3.03% for the corresponding periods of 2022. The decrease in the net interest margin for the three and six month periods was driven by an increase in the rate paid on interest-bearing liabilities of 198 and 161 basis points ("bps"), respectively. The FOMC rate increases during 2022 and 2023 contributed to the increases in rate paid on interest-bearing liabilities as the rate paid on short-term borrowings increased 513 bps and 498 bps for the three and six month periods ended June 30, 2023 compared to the same periods of 2022. Short-term borrowings increased in volume and rate paid as this funding source was utilized to provide funding for the growth in the loan portfolio, resulting in an increase of $2.2 million and $3.7 million in expense for the three and six month periods ended June 30, 2023 compared to the same periods of 2022. The rate paid on interest-bearing deposits increased 158 and 127 bps for the three and six month periods ended June 30, 2023 compared to the corresponding periods of 2022 due to the FOMC rate actions and an increase in competition for deposits. The rates paid on time deposits significantly contributed to the increase in funding costs as rates paid for the three and six month periods ended June 30, 2023 compared to the same periods of 2022 increased 266 bps and 211 bps, respectively, as deposit gathering campaigns initiated in the latter part of 2022 continued throughout 2023. In addition, brokered deposit have been utilized to assist with the funding of the loan portfolio growth and contributed to the increase in time deposit funding costs. Partially offsetting the increase in funding cost was an increases in the yield on interest-earning assets and growth in the average balance of the earning asset portfolio compared to the same periods in 2022. The average loan portfolio balance increased $291.2 million and $278.9 million for the three and six month periods, respectively, as the average yield on the portfolio increased 81 and 71 bps for the same periods. The three and six month periods ended June 30, 2023 were impacted by an increase of 109 and 99 bps in the yield earned on the securities portfolio as legacy securities matured with the funds reinvested at higher rates.

Assets

Total assets increased to $2.1 billion at June 30, 2023, an increase of $243.5 million compared to June 30, 2022. Cash and cash equivalents decreased $46.1 million as interest-bearing accounts in other financial institutions decreased $11.9 million and fed funds sold decreased $40.0 million as excess liquidity was primarily utilized to fund the growth in the loan portfolio. Net loans increased $283.1 million to $1.8 billion at June 30, 2023 compared to June 30, 2022, as an emphasis was placed on commercial loan growth coupled with growth in indirect auto lending. The investment portfolio increased $5.1 million from June 30, 2022 to June 30, 2023 as restricted investment in bank stock increased $11.0 million as additional stock was required to be held in the Federal Home Loan Bank of Pittsburgh ("FHLB") due to an increase in the level of borrowings from the FHLB.

Non-performing Loans

The ratio of non-performing loans to total loans ratio decreased to 0.24% at June 30, 2023 from 0.34% at June 30, 2022, as non-performing loans decreased to $4.3 million at June 30, 2023 from $5.1 million at June 30, 2022. The majority of non-performing loans involve loans that are either in a secured position and have sureties with a strong underlying financial position or have been classified as individually evaluated loans that have a specific allocation recorded within the allowance for credit losses. Net loan recoveries of $349,000 for the six months ended June 30, 2023 impacted the allowance for credit losses, which was 0.66% of total loans at June 30, 2023 compared to 0.97% at June 30, 2022 (prior to the adoption of CECL).

Deposits

Deposits decreased $35.8 million to $1.6 billion at June 30, 2023 compared to June 30, 2022. Noninterest-bearing deposits decreased $48.4 million to $475.9 million at June 30, 2023 compared to June 30, 2022. Core deposits declined as deposits migrated from core deposit accounts into time deposits as market rates increased due to the FOMC rate increases and increased competition for deposits. Core deposit gathering efforts remained focused on increasing the utilization of electronic (internet and mobile) deposit banking by our customers. Interest-bearing deposits increased $12.5 million from June 30, 2022 to June 30, 2023 primarily due to increased utilization of brokered deposits of $79.2 million as this funding source was utilized to supplement funding loan portfolio growth, while reducing the need to draw upon available borrowing lines. A campaign to attract time deposits with a maturity of five to twenty-four months was started during the latter part of 2022 and has continued during the first six months of 2023.

Shareholders' Equity

Shareholders' equity increased $8.3 million to $174.4 million at June 30, 2023 compared to June 30, 2022. Accumulated other comprehensive loss of $13.8 million at June 30, 2023 increased from a loss of $9.7 million at June 30, 2022 as a result of a $9.8 million net unrealized loss on available for sale securities at June 30, 2023 compared to an unrealized loss of $6.2 million at June 30, 2022 coupled with an increase in loss of $622,000 in the defined benefit plan obligation. The current level of shareholders' equity equates to a book value per share of $24.70 at June 30, 2023 compared to $23.56 at June 30, 2022, and an equity to asset ratio of 8.17% at June 30, 2023 and 8.78% at June 30, 2022. Dividends declared for the six months ended June 30, 2023 and 2022 were $0.64 per share.

Penns Woods Bancorp, Inc. is the parent company of Jersey Shore State Bank, which operates sixteen branch offices providing financial services in Lycoming, Clinton, Centre, Montour, Union, and Blair Counties, and Luzerne Bank, which operates eight branch offices providing financial services in Luzerne County, and United Insurance Solutions, LLC, which offers insurance products. Investment and insurance products are offered through Jersey Shore State Bank's subsidiary, The M Group, Inc. D/B/A The Comprehensive Financial Group.

NOTE: This press release contains financial information determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). Management uses the non-GAAP measure of net income from core operations in its analysis of the company's performance. This measure, as used by the Company, adjusts net income determined in accordance with GAAP to exclude the effects of special items, including significant gains or losses that are unusual in nature such as net securities gains and losses. Because these certain items and their impact on the Company's performance are difficult to predict, management believes presentation of financial measures excluding the impact of such items provides useful supplemental information in evaluating the operating results of the Company's core businesses. These disclosures should not be viewed as a substitute for net income determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

This press release may contain certain "forward-looking statements" including statements concerning plans, objectives, future events or performance and assumptions and other statements, which are statements other than statements of historical fact. The Company cautions readers that the following important factors, among others, may have affected and could in the future affect actual results and could cause actual results for subsequent periods to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company herein: (i) the effect of changes in laws and regulations, including federal and state banking laws and regulations, and the associated costs of compliance with such laws and regulations either currently or in the future as applicable; (ii) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies as well as by the Financial Accounting Standards Board, or of changes in the Company's organization, compensation and benefit plans; (iii) the effect on the Company's competitive position within its market area of the increasing consolidation within the banking and financial services industries, including the increased competition from larger regional and out-of-state banking organizations as well as non-bank providers of various financial services; (iv) the effect of changes in interest rates; (v) the effects of health emergencies, including the spread of infectious diseases or pandemics; or (vi) the effect of changes in the business cycle and downturns in the local, regional or national economies. For a list of other factors which could affect the Company's results, see the Company's filings with the Securities and Exchange Commission, including "Item 1A. Risk Factors," set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

You should not place undue reliance on any forward-looking statements. These statements speak only as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company undertakes no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this press release.

Previous press releases and additional information can be obtained from the Company's website at www.pwod.com.

Contact:		Richard A. Grafmyre, Chief Executive Officer 110 Reynolds Street Williamsport, PA 17702 570-322-1111		e-mail: pwod@pwod.com

PENNS WOODS BANCORP, INC.

CONSOLIDATED BALANCE SHEET

(UNAUDITED)

	June 30,
(In Thousands, Except Share and Per Share Data)		2023			2022		% Change
ASSETS:
Noninterest-bearing balances	$	32,265		$	26,540			21.57	%
Interest-bearing balances in other financial institutions		12,596			24,452			(48.49	)%
Federal funds sold		—			40,000			(100.00	)%
Total cash and cash equivalents		44,861			90,992			(50.70	)%

Investment debt securities, available for sale, at fair value		186,626			192,438			(3.02	)%
Investment equity securities, at fair value		1,143			1,186			(3.63	)%
Restricted investment in bank stock, at fair value		24,438			13,458			81.59	%
Loans held for sale		3,049			3,857			(20.95	)%
Loans		1,769,403			1,489,132			18.82	%
Allowance for credit losses		(11,592	)		(14,393	)		(19.46	)%
Loans, net		1,757,811			1,474,739			19.19	%
Premises and equipment, net		31,180			32,671			(4.56	)%
Accrued interest receivable		9,498			8,246			15.18	%
Bank-owned life insurance		33,524			34,115			(1.73	)%
Investment in limited partnerships		8,402			4,901			71.43	%
Goodwill		16,450			17,104			(3.82	)%
Intangibles		260			396			(34.34	)%
Operating lease right of use asset		2,586			2,747			(5.86	)%
Deferred tax asset		6,332			5,689			11.30	%
Other assets		9,159			9,267			(1.17	)%
TOTAL ASSETS	$	2,135,319		$	1,891,806			12.87	%

LIABILITIES:
Interest-bearing deposits	$	1,077,820		$	1,065,291			1.18	%
Noninterest-bearing deposits		475,937			524,288			(9.22	)%
Total deposits		1,553,757			1,589,579			(2.25	)%

Short-term borrowings		180,410			5,464			3,201.79	%
Long-term borrowings		202,692			112,874			79.57	%
Accrued interest payable		2,129			452			371.02	%
Operating lease liability		2,642			2,800			(5.64	)%
Other liabilities		19,287			14,583			32.26	%
TOTAL LIABILITIES		1,960,917			1,725,752			13.63	%

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; 7,573,713 and 7,559,165 shares issued; 7,063,488 and 7,048,940 shares outstanding		42,077			41,995			0.20	%
Additional paid-in capital		54,869			53,651			2.27	%
Retained earnings		104,104			92,903			12.06	%
Accumulated other comprehensive loss:
Net unrealized loss on available for sale securities		(9,753	)		(6,222	)		(56.75	)%
Defined benefit plan		(4,080	)		(3,458	)		(17.99	)%
Treasury stock at cost, 510,225		(12,815	)		(12,815	)		—	%
TOTAL SHAREHOLDERS' EQUITY		174,402			166,054			5.03	%
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	2,135,319		$	1,891,806			12.87	%

PENNS WOODS BANCORP, INC.

CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

	Three Months Ended June 30,									Six Months Ended June 30,
(In Thousands, Except Share and Per Share Data)		2023			2022		% Change				2023			2022		% Change
INTEREST AND DIVIDEND INCOME:
Loans including fees	$	19,846		$	13,620			45.71	%	$	37,851		$	26,658			41.99	%
Investment securities:
Taxable		1,287			864			48.96	%		2,505			1,601			56.46	%
Tax-exempt		118			194			(39.18	)%		296			358			(17.32	)%
Dividend and other interest income		642			506			26.88	%		1,105			842			31.24	%
TOTAL INTEREST AND DIVIDEND INCOME		21,893			15,184			44.18	%		41,757			29,459			41.75	%

INTEREST EXPENSE:
Deposits		4,851			710			583.24	%		8,223			1,498			448.93	%
Short-term borrowings		2,232			2			n/m			3,672			3			n/m
Long-term borrowings		1,424			625			127.84	%		2,178			1,258			73.13	%
TOTAL INTEREST EXPENSE		8,507			1,337			536.28	%		14,073			2,759			410.08	%

NET INTEREST INCOME		13,386			13,847			(3.33	)%		27,684			26,700			3.69	%

(Recovery) provision for loan credit		(614	)		330			(286.06	)%		(605	)		480			(226.04	)%
(Recovery) provision for off balance sheet credit exposures		(566	)		—			n/a			(504	)		—			n/a
TOTAL (RECOVERY) PROVISION FOR CREDIT LOSSES		(1,180	)		330			(457.58	)%		(1,109	)		480			(331.04	)%

NET INTEREST INCOME AFTER (RECOVERY) PROVISION FOR CREDIT LOSSES		14,566			13,517			7.76	%		28,793			26,220			9.81	%

NON-INTEREST INCOME:
Service charges		516			509			1.38	%		1,012			1,004			0.80	%
Debt securities losses, available for sale		(19	)		(10	)		(90.00	)%		(80	)		(12	)		(566.67	)%
Net equity securities (losses) gains		(20	)		(44	)		54.55	%		1			(103	)		100.97	%
Bank-owned life insurance		166			161			3.11	%		722			331			118.13	%
Gain on sale of loans		244			266			(8.27	)%		475			611			(22.26	)%
Insurance commissions		115			107			7.48	%		280			277			1.08	%
Brokerage commissions		141			158			(10.76	)%		306			358			(14.53	)%
Loan broker income		317			371			(14.56	)%		487			912			(46.60	)%
Debit card income		340			391			(13.04	)%		675			736			(8.29	)%
Other		222			228			(2.63	)%		401			435			(7.82	)%
TOTAL NON-INTEREST INCOME		2,022			2,137			(5.38	)%		4,279			4,549			(5.94	)%

NON-INTEREST EXPENSE:
Salaries and employee benefits		6,312			6,141			2.78	%		12,488			12,405			0.67	%
Occupancy		772			740			4.32	%		1,638			1,650			(0.73	)%
Furniture and equipment		790			746			5.90	%		1,636			1,638			(0.12	)%
Software amortization		173			219			(21.00	)%		356			472			(24.58	)%
Pennsylvania shares tax		279			396			(29.55	)%		527			785			(32.87	)%
Professional fees		906			582			55.67	%		1,594			1,120			42.32	%
Federal Deposit Insurance Corporation deposit insurance		452			228			98.25	%		697			430			62.09	%
Marketing		272			220			23.64	%		427			284			50.35	%
Intangible amortization		32			41			(21.95	)%		67			85			(21.18	)%
Other		1,441			1,107			30.17	%		2,897			2,558			13.25	%
TOTAL NON-INTEREST EXPENSE		11,429			10,420			9.68	%		22,327			21,427			4.20	%
INCOME BEFORE INCOME TAX PROVISION		5,159			5,234			(1.43	)%		10,745			9,342			15.02	%
INCOME TAX PROVISION		988			1,003			(1.50	)%		1,916			1,679			14.12	%
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS'	$	4,171		$	4,231			(1.42	)%	$	8,829		$	7,663			15.22	%
EARNINGS PER SHARE - BASIC	$	0.59		$	0.60			(1.67	)%	$	1.25		$	1.08			15.74	%
EARNINGS PER SHARE - DILUTED	$	0.59		$	0.60			(1.67	)%	$	1.25		$	1.08			15.74	%
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC		7,062,018			7,059,045			0.04	%		7,060,218			7,065,772			(0.08	)%
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED		7,062,018			7,059,045			0.04	%		7,060,218			7,065,772			(0.08	)%

PENNS WOODS BANCORP, INC.

AVERAGE BALANCES AND INTEREST RATES

(UNAUDITED)

	Three Months Ended
	June 30, 2023							June 30, 2022
(Dollars in Thousands)	Average Balance (1)		Interest		Average Rate			Average Balance (1)		Interest		Average Rate
ASSETS:
Tax-exempt loans (3)	$	66,613	$	461		2.78	%	$	52,886	$	331		2.51	%
All other loans		1,672,111		19,482		4.67	%		1,394,631		13,358		3.84	%
Total loans (2)		1,738,724		19,943		4.60	%		1,447,517		13,689		3.79	%

Federal funds sold		—		—		n/a			48,352		154		1.28	%

Taxable securities		190,862		1,807		3.84	%		154,484		1,048		2.75	%
Tax-exempt securities (3)		23,310		150		2.61	%		45,824		245		2.17	%
Total securities		214,172		1,957		3.71	%		200,308		1,293		2.62	%

Interest-bearing balances in other financial institutions		9,961		122		4.91	%		102,172		168		0.66	%

Total interest-earning assets		1,962,857		22,022		4.50	%		1,798,349		15,304		3.42	%

Other assets		133,239							131,117

TOTAL ASSETS	$	2,096,096						$	1,929,466

LIABILITIES AND SHAREHOLDERS' EQUITY:
Savings	$	232,889		155		0.27	%	$	248,063		24		0.04	%
Super Now deposits		271,438		913		1.35	%		388,002		239		0.25	%
Money market deposits		293,682		1,665		2.27	%		304,636		210		0.28	%
Time deposits		261,947		2,118		3.24	%		164,301		237		0.58	%
Total interest-bearing deposits		1,059,956		4,851		1.84	%		1,105,002		710		0.26	%

Short-term borrowings		169,723		2,232		5.27	%		5,636		2		0.14	%
Long-term borrowings		182,719		1,424		3.13	%		112,901		625		2.22	%
Total borrowings		352,442		3,656		4.16	%		118,537		627		2.12	%

Total interest-bearing liabilities		1,412,398		8,507		2.42	%		1,223,539		1,337		0.44	%

Demand deposits		484,607							518,467
Other liabilities		24,059							20,708
Shareholders' equity		175,032							166,752

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	2,096,096						$	1,929,466
Interest rate spread (3)						2.08	%						2.98	%
Net interest income/margin (3)			$	13,515		2.77	%			$	13,967		3.12	%

1. Information on this table has been calculated using average daily balance sheets to obtain average balances.

2. Non-accrual loans have been included with loans for the purpose of analyzing net interest earnings.

3. Income and rates on fully taxable equivalent basis include an adjustment for the difference between annual income from tax-exempt obligations and the taxable equivalent of such income at the standard tax rate of 21%

	Three Months Ended June 30,
		2023		2022
Total interest income	$	21,893	$	15,184
Total interest expense		8,507		1,337
Net interest income (GAAP)		13,386		13,847
Tax equivalent adjustment		129		120
Net interest income (fully taxable equivalent) (non-GAAP)	$	13,515	$	13,967

PENNS WOODS BANCORP, INC.

AVERAGE BALANCES AND INTEREST RATES

(UNAUDITED)

	Six Months Ended
	June 30, 2023							June 30, 2022
(Dollars in Thousands)	Average Balance (1)		Interest		Average Rate			Average Balance (1)		Interest		Average Rate
ASSETS:
Tax-exempt loans (3)	$	65,669	$	909		2.79	%	$	50,775	$	639		2.54	%
All other loans		1,636,798		37,133		4.57	%		1,372,810		26,153		3.84	%
Total loans (2)		1,702,467		38,042		4.51	%		1,423,585		26,792		3.80	%

Federal funds sold		—		—		n/a			49,171		247		1.01	%

Taxable securities		186,168		3,386		3.67	%		149,489		1,968		2.67	%
Tax-exempt securities (3)		28,409		375		2.66	%		43,416		453		2.12	%
Total securities		214,577		3,761		3.53	%		192,905		2,421		2.54	%

Interest-bearing balances in other financial institutions		9,985		224		4.52	%		129,704		228		0.35	%

Total interest-earning assets		1,927,029		42,027		4.20	%		1,795,365		29,688		3.34	%

Other assets		132,561							128,624

TOTAL ASSETS	$	2,059,590						$	1,923,989

LIABILITIES AND SHAREHOLDERS' EQUITY:
Savings	$	238,067		275		0.23	%	$	244,528		46		0.04	%
Super Now deposits		318,669		1,852		1.17	%		379,496		434		0.23	%
Money market deposits		291,719		2,945		2.04	%		301,744		396		0.26	%
Time deposits		225,414		3,151		2.82	%		177,487		622		0.71	%
Total interest-bearing deposits		1,073,869		8,223		1.54	%		1,103,255		1,498		0.27	%

Short-term borrowings		145,871		3,672		5.09	%		5,416		3		0.11	%
Long-term borrowings		151,169		2,178		2.91	%		114,077		1,258		2.23	%
Total borrowings		297,040		5,850		3.98	%		119,493		1,261		2.13	%

Total interest-bearing liabilities		1,370,909		14,073		2.07	%		1,222,748		2,759		0.46	%

Demand deposits		491,356							512,441
Other liabilities		27,050							22,184
Shareholders' equity		170,275							166,616

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	2,059,590						$	1,923,989
Interest rate spread (3)						2.13	%						2.88	%
Net interest income/margin (3)			$	27,954		2.92	%			$	26,929		3.03	%

	Six Months Ended June 30,
		2023		2022
Total interest income	$	41,757	$	29,459
Total interest expense		14,073		2,759
Net interest income		27,684		26,700
Tax equivalent adjustment		270		229
Net interest income (fully taxable equivalent) (non-GAAP)	$	27,954	$	26,929

(Dollars in Thousands, Except Per Share Data, Unaudited)	Quarter Ended
	6/30/2023			3/31/2023			12/31/2022			9/30/2022			6/30/2022
Operating Data
Net income	$	4,171		$	4,658		$	4,509		$	5,250		$	4,231
Net interest income		13,386			14,298			15,548			15,532			13,847
(Recovery) provision for credit losses		(1,180	)		71			575			855			330
Net security losses		(39	)		(40	)		(39	)		(211	)		(54	)
Non-interest income, excluding net security losses		2,061			2,297			2,120			2,294			2,191
Non-interest expense		11,429			10,898			11,251			10,320			10,420

Performance Statistics
Net interest margin		2.77	%		3.10	%		3.42	%		3.47	%		3.12	%
Annualized return on average assets		0.80	%		0.92	%		0.92	%		1.09	%		0.88	%
Annualized return on average equity		9.53	%		11.12	%		10.92	%		12.61	%		10.15	%
Annualized net loan charge-offs (recoveries) to average loans		(0.11	)%		0.03	%		0.04	%		0.01	%		(0.01	)%
Net (recoveries) charge-offs		(472	)		123			149			37			(40	)
Efficiency ratio		73.78	%		65.46	%		59.79	%		57.70	%		64.72	%

Per Share Data
Basic earnings per share	$	0.59		$	0.66		$	0.64		$	0.74		$	0.60
Diluted earnings per share		0.59			0.64			0.64			0.74			0.60
Dividend declared per share		0.32			0.32			0.32			0.32			0.32
Book value		24.70			24.64			23.76			23.32			23.56
Common stock price:
High		27.34			27.77			26.89			24.29			24.35
Low		21.95			21.90			23.15			22.02			22.34
Close		25.03			23.10			26.62			22.91			23.09
Weighted average common shares:
Basic		7,062			7,058			7,055			7,051			7,059
Fully Diluted		7,062			7,334			7,055			7,051			7,059
End-of-period common shares:
Issued		7,574			7,570			7,567			7,563			7,559
Treasury		(510	)		(510	)		(510	)		(510	)		(510	)

(Dollars in Thousands)	Quarter Ended
	6/30/2023			3/31/2023			12/31/2022			9/30/2022			6/30/2022
Financial Condition Data:
General
Total assets	$	2,135,319		$	2,065,143		$	2,000,080		$	1,905,116		$	1,891,806
Loans, net		1,757,811			1,688,289			1,624,094			1,545,489			1,474,739
Goodwill		16,450			16,450			16,450			17,104			17,104
Intangibles		260			292			327			361			396
Total deposits		1,553,757			1,638,835			1,556,460			1,590,415			1,589,579
Noninterest-bearing		475,937			502,352			519,063			537,403			524,288
Savings		229,108			239,526			247,952			249,532			249,057
NOW		238,353			363,548			372,574			392,140			353,102
Money Market		296,957			300,273			270,589			268,532			309,453
Time Deposits		226,224			191,203			137,949			137,348			145,714
Brokered Deposits		87,178			41,933			8,333			5,460			7,965
Total interest-bearing deposits		1,077,820			1,136,483			1,037,397			1,053,012			1,065,291

Core deposits*		1,240,355			1,405,699			1,410,178			1,447,607			1,435,900
Shareholders' equity		174,402			173,970			167,665			164,489			166,054

Asset Quality
Non-performing loans	$	4,276		$	4,766		$	4,890		$	5,743		$	5,100
Non-performing loans to total assets		0.20	%		0.23	%		0.24	%		0.30	%		0.27	%
Allowance for loan losses		11,592			11,734			15,637			15,211			14,393
Allowance for loan losses to total loans		0.66	%		0.69	%		0.95	%		0.97	%		0.97	%
Allowance for loan losses to non-performing loans		271.09	%		246.20	%		319.78	%		264.86	%		282.22	%
Non-performing loans to total loans		0.24	%		0.28	%		0.30	%		0.37	%		0.34	%

Capitalization
Shareholders' equity to total assets		8.17	%		8.42	%		8.40	%		8.63	%		8.78	%

* Core deposits are defined as total deposits less time deposits and brokered deposits.

Reconciliation of GAAP and Non-GAAP Financial Measures

(UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in Thousands, Except Per Share Data)		2023			2022			2023			2022
GAAP net income	$	4,171		$	4,231		$	8,829		$	7,663
Net securities losses, net of tax		31			43			62			91
Non-GAAP core earnings	$	4,202		$	4,274		$	8,891		$	7,754

	Three Months Ended June 30,						Six Months Ended June 30,
		2023			2022			2023			2022
Return on average assets (ROA)		0.80	%		0.88	%		0.86	%		0.80	%
Net securities losses, net of tax		—	%		0.01	%		—	%		0.01	%
Non-GAAP core ROA		0.80	%		0.89	%		0.86	%		0.81	%

	Three Months Ended June 30,						Six Months Ended June 30,
		2023			2022			2023			2022
Return on average equity (ROE)		9.53	%		10.15	%		10.37	%		9.20	%
Net securities losses, net of tax		0.07	%		0.10	%		0.07	%		0.11	%
Non-GAAP core ROE		9.60	%		10.25	%		10.44	%		9.31	%

	Three Months Ended June 30,						Six Months Ended June 30,
		2023			2022			2023			2022
Basic earnings per share (EPS)	$	0.59		$	0.60		$	1.25		$	1.08
Net securities losses, net of tax		0.01			0.01			0.01			0.02
Non-GAAP basic core EPS	$	0.60		$	0.61		$	1.26		$	1.10

	Three Months Ended June 30,						Six Months Ended June 30,
		2023			2022			2023			2022
Diluted EPS	$	0.59		$	0.60		$	1.25		$	1.08
Net securities losses, net of tax		0.01			0.01			0.01			0.02
Non-GAAP diluted core EPS	$	0.60		$	0.61		$	1.26		$	1.10

Penns Woods Bancorp, Inc. Reports Second Quarter 2023 Earnings