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

Penns Woods Bancorp, Inc. achieved net income of $11.1 million for the nine months ended September 30, 2023, resulting in basic and diluted earnings per share of $1.56 and $1.53.

Highlights

Net income, as reported under GAAP, for the three and nine months ended September 30, 2023 was $2.2 million and $11.1 million, compared to $5.3 million and $12.9 million for the same periods of 2022. Results for the three and nine months ended September 30, 2023 compared to 2022 were impacted by a decrease in net interest income of $2.2 million and $1.2 million as interest expense increased significantly due to the velocity and magnitude of the rate increases enacted by the Federal Open Market Committee ("FOMC"). In addition, results were impacted by a decrease in after-tax securities losses of $77,000 (from a loss of $167,000 to a loss of $90,000) for the three month period and a decrease in after-tax securities losses of $106,000 (from a loss of $258,000 to a loss of $152,000) for the nine month period. Bank-owned life insurance income increased due to a gain on death benefit of $380,000 during the nine months ended September 30, 2023, while an after-tax loss of $201,000 related to a branch closure negatively impacted the nine months ended September 30, 2022.
The provision for credit losses increased $537,000 for the three months ended September 30, 2023 and decreased $1.1 million for the nine months ended September 30, 2023 due to a provision of $1.4 million and $263,000, respectively, for the 2023 periods compared to a provision of $835,000 and $1.3 million for the 2022 periods. The decrease for the nine month periods was due primarily to a recovery on a commercial loan during the second quarter of 2023. The increase in the provision for credit losses for the 2023 three month period was due primarily to loan portfolio growth as loan portfolio credit metrics continue to improve and loan net charge-offs remain at a low level.
Basic earnings per share for the three and nine months ended September 30, 2023 were $0.31 and $1.56, while the diluted earnings per share were $0.31 and $1.53 for the periods. Basic and diluted earnings per share for the three and nine months ended September 30, 2022 were $0.74 and $1.83.
Annualized return on average assets was 0.41% for three months ended September 30, 2023, compared to 1.09% for the corresponding period of 2022. Annualized return on average assets was 0.70% for the nine months ended September 30, 2023, compared to 0.89% for the corresponding period of 2022.
Annualized return on average equity was 5.06% for the three months ended September 30, 2023, compared to 12.61% for the corresponding period of 2022. Annualized return on average equity was 8.58% for the nine months ended September 30, 2023, compared to 10.48% 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 $2.3 million and $11.2 million for the three and nine months ended September 30, 2023 compared to $5.4 million and $13.2 million for the same periods of 2022. Basic core earnings per share for the three and nine months ended September 30, 2023 was $0.33 and $1.59, while the diluted core earnings per share was $0.32 and $1.55, compared to $0.77 and $1.87 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 0.43% and 5.26% for the three months ended September 30, 2023, compared to 1.12% and 13.02% for the corresponding periods of 2022. Core return on average assets and core return on average equity were 0.71% and 8.69% for the nine months ended September 30, 2023 compared to 0.91% and 10.69% 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 nine months ended September 30, 2023 was 2.65% and 2.82%, compared to 3.47% and 3.17% for the corresponding periods of 2022. The decrease in the net interest margin for the three and nine month periods was driven by an increase in the rate paid on interest-bearing liabilities of 239 and 189 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 429 bps and 467 bps for the three and nine month periods ended September 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 $2.4 million and $6.1 million in expense for the three and nine month periods ended September 30, 2023 compared to the same periods of 2022. The rate paid on interest-bearing deposits increased 207 and 154 bps for the three and nine month periods ended September 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 nine month periods ended September 30, 2023 compared to the same periods of 2022 increased 328 bps and 259 bps, respectively, as deposit gathering campaigns initiated in the latter part of 2022 continued throughout 2023. In addition, brokered deposits 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 increase 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 $276.8 million and $278.2 million for the three and nine month periods, respectively, as the average yield on the portfolio increased 87 and 76 bps for the same periods. The three and nine month periods ended September 30, 2023 were impacted by an increase of 113 and 101 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 $2.2 billion at September 30, 2023, an increase of $271.4 million compared to September 30, 2022. Net loans increased $260.1 million to $1.8 billion at September 30, 2023 compared to September 30, 2022, as an emphasis was placed on commercial loan growth coupled with growth in indirect auto lending. The investment portfolio increased $7.2 million from September 30, 2022 to September 30, 2023 as restricted investment in bank stock increased $10.8 million resulting from the requirement to hold additional stock in the Federal Home Loan Bank of Pittsburgh ("FHLB") due to an increase in the level of borrowings from the FHLB. The increase in total borrowings of $277.7 million to $411.4 million at September 30, 2023 was utilized to provide funding for the growth in the loan portfolio.

Non-performing Loans

The ratio of non-performing loans to total loans ratio decreased to 0.20% at September 30, 2023 from 0.37% at September 30, 2022, as non-performing loans decreased to $3.7 million at September 30, 2023 from $5.7 million at September 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 $316,000 for the nine months ended September 30, 2023 impacted the allowance for credit losses, which was 0.71% of total loans at September 30, 2023 compared to 0.97% at September 30, 2022 (prior to the adoption of CECL).

Deposits

Deposits decreased $23.1 million to $1.6 billion at September 30, 2023 compared to September 30, 2022. Noninterest-bearing deposits decreased $65.9 million to $471.5 million at September 30, 2023 compared to September 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 $42.7 million from September 30, 2022 to September 30, 2023 primarily due to increased utilization of brokered deposits of $101.2 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 commenced during the latter part of 2022 and has continued during the first nine months of 2023 with current efforts centered on five to twelve months.

Shareholders' Equity

Shareholders' equity increased $10.1 million to $174.5 million at September 30, 2023 compared to September 30, 2022. During the three months ended September 30, 2023 the Company sold 34,411 shares of common stock, for net proceeds of $752,000, in a registered at-the-market offering. An additional 8,349 shares for net proceeds of $200,000 were issued as part of the Dividend Reinvestment Plan during the three months ended September 30, 2023. Accumulated other comprehensive loss of $14.9 million at September 30, 2023 increased from a loss of $14.6 million at September 30, 2022 as a result of a $10.9 million net unrealized loss on available for sale securities at September 30, 2023 compared to an unrealized loss of $11.1 million at September 30, 2022 coupled with an increase in loss of $607,000 in the defined benefit plan obligation. The current level of shareholders' equity equates to a book value per share of $24.55 at September 30, 2023 compared to $23.32 at September 30, 2022, and an equity to asset ratio of 8.02% at September 30, 2023 and 8.63% at September 30, 2022. Dividends declared for the nine months ended September 30, 2023 and 2022 were $0.96 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)

	September 30,
(In Thousands, Except Share and Per Share Data)		2023			2022		% Change
ASSETS:
Noninterest-bearing balances	$	26,651		$	24,418		9.14	%
Interest-bearing balances in other financial institutions		8,939			12,444		(28.17	)%
Total cash and cash equivalents		35,590			36,862		(3.45	)%

Investment debt securities, available for sale, at fair value		184,667			188,196		(1.88	)%
Investment equity securities, at fair value		1,072			1,130		(5.13	)%
Restricted investment in bank stock, at fair value		25,289			14,539		73.94	%
Loans held for sale		4,083			2,485		64.31	%
Loans		1,818,461			1,560,700		16.52	%
Allowance for credit losses		(12,890	)		(15,211	)	(15.26	)%
Loans, net		1,805,571			1,545,489		16.83	%
Premises and equipment, net		30,746			32,227		(4.60	)%
Accrued interest receivable		10,500			8,647		21.43	%
Bank-owned life insurance		33,695			34,288		(1.73	)%
Investment in limited partnerships		8,275			4,771		73.44	%
Goodwill		16,450			17,104		(3.82	)%
Intangibles		235			361		(34.90	)%
Operating lease right of use asset		2,562			2,699		(5.08	)%
Deferred tax asset		6,961			7,187		(3.14	)%
Other assets		10,772			9,131		17.97	%
TOTAL ASSETS	$	2,176,468		$	1,905,116		14.24	%

LIABILITIES:
Interest-bearing deposits	$	1,095,760		$	1,053,012		4.06	%
Noninterest-bearing deposits		471,507			537,403		(12.26	)%
Total deposits		1,567,267			1,590,415		(1.46	)%

Short-term borrowings		193,746			30,901		526.99	%
Long-term borrowings		217,645			102,829		111.66	%
Accrued interest payable		2,716			427		536.07	%
Operating lease liability		2,619			2,753		(4.87	)%
Other liabilities		17,935			13,302		34.83	%
TOTAL LIABILITIES		2,001,928			1,740,627		15.01	%

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; 7,620,250 and 7,563,200 shares issued; 7,110,025 and 7,052,975 shares outstanding		42,335			42,019		0.75	%
Additional paid-in capital		55,890			53,958		3.58	%
Retained earnings		104,067			95,896		8.52	%
Accumulated other comprehensive loss:
Net unrealized loss on available for sale securities		(10,886	)		(11,125	)	2.15	%
Defined benefit plan		(4,051	)		(3,444	)	(17.62	)%
Treasury stock at cost, 510,225		(12,815	)		(12,815	)	—	%
TOTAL SHAREHOLDERS' EQUITY		174,540			164,489		6.11	%
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	2,176,468		$	1,905,116		14.24	%

PENNS WOODS BANCORP, INC.

CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

	Three Months Ended September 30,									Nine Months Ended September 30,
(In Thousands, Except Share and Per Share Data)		2023			2022		% Change				2023			2022		% Change
INTEREST AND DIVIDEND INCOME:
Loans including fees	$	21,720		$	15,051		44.31	%		$	59,571		$	41,709		42.83	%
Investment securities:
Taxable		1,365			949		43.84	%			3,870			2,550		51.76	%
Tax-exempt		114			236		(51.69	)%			410			594		(30.98	)%
Dividend and other interest income		722			628		14.97	%			1,827			1,470		24.29	%
TOTAL INTEREST AND DIVIDEND INCOME		23,921			16,864		41.85	%			65,678			46,323		41.78	%

INTEREST EXPENSE:
Deposits		6,463			693		832.61	%			14,686			2,191		570.29	%
Short-term borrowings		2,412			26		n/m				6,084			29		n/m
Long-term borrowings		1,714			613		179.61	%			3,892			1,871		108.02	%
TOTAL INTEREST EXPENSE		10,589			1,332		694.97	%			24,662			4,091		502.84	%

NET INTEREST INCOME		13,332			15,532		(14.16	)%			41,016			42,232		(2.88	)%

Provision for loan credit losses		1,331			855		55.67	%			726			1,335		(45.62	)%
Provision (recovery) for off balance sheet credit exposures		41			—		n/a				(463	)		—		n/a
TOTAL PROVISION FOR CREDIT LOSSES		1,372			855		60.47	%			263			1,335		(80.30	)%

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		11,960			14,677		(18.51	)%			40,753			40,897		(0.35	)%

NON-INTEREST INCOME:
Service charges		545			559		(2.50	)%			1,557			1,563		(0.38	)%
Debt securities losses, available for sale		(78	)		(156	)	50.00	%			(158	)		(168	)	5.95	%
Net equity securities losses		(36	)		(55	)	34.55	%			(35	)		(158	)	77.85	%
Bank-owned life insurance		170			170		—	%			892			501		78.04	%
Gain on sale of loans		290			294		(1.36	)%	.		765			905		(15.47	)%
Insurance commissions		136			109		24.77	%			416			386		7.77	%
Brokerage commissions		142			142		—	%			448			500		(10.40	)%
Loan broker income		241			438		(44.98	)%			728			1,350		(46.07	)%
Debit card income		320			344		(6.98	)%			995			1,080		(7.87	)%
Other		145			238		(39.08	)%			546			673		(18.87	)%
TOTAL NON-INTEREST INCOME		1,875			2,083		(9.99	)%			6,154			6,632		(7.21	)%

NON-INTEREST EXPENSE:
Salaries and employee benefits		6,290			6,016		4.55	%			18,778			18,421		1.94	%
Occupancy		784			730		7.40	%			2,422			2,380		1.76	%
Furniture and equipment		867			816		6.25	%			2,503			2,454		2.00	%
Software amortization		237			188		26.06	%			593			660		(10.15	)%
Pennsylvania shares tax		280			334		(16.17	)%			807			1,119		(27.88	)%
Professional fees		719			626		14.86	%			2,313			1,746		32.47	%
Federal Deposit Insurance Corporation deposit insurance		425			260		63.46	%			1,122			690		62.61	%
Marketing		167			151		10.60	%			594			435		36.55	%
Intangible amortization		25			34		(26.47	)%			92			119		(22.69	)%
Other		1,378			1,165		18.28	%			4,275			3,723		14.83	%
TOTAL NON-INTEREST EXPENSE		11,172			10,320		8.26	%			33,499			31,747		5.52	%
INCOME BEFORE INCOME TAX PROVISION		2,663			6,440		(58.65	)%			13,408			15,782		(15.04	)%
INCOME TAX PROVISION		439			1,190		(63.11	)%			2,355			2,869		(17.92	)%
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS'	$	2,224		$	5,250		(57.64	)%		$	11,053		$	12,913		(14.40	)%
EARNINGS PER SHARE - BASIC	$	0.31		$	0.74		(58.11	)%		$	1.56		$	1.83		(14.75	)%
EARNINGS PER SHARE - DILUTED	$	0.31		$	0.74		(58.11	)%		$	1.53		$	1.83		(16.39	)%
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC		7,072,440			7,051,228		0.30	%			7,064,336			7,060,871		0.05	%
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED		7,228,940			7,051,228		2.52	%			7,220,836			7,060,871		2.27	%

PENNS WOODS BANCORP, INC.

AVERAGE BALANCES AND INTEREST RATES

(UNAUDITED)

	Three Months Ended
	September 30, 2023						September 30, 2022
(Dollars in Thousands)	Average Balance (1)		Interest		Average Rate		Average Balance (1)		Interest		Average Rate
ASSETS:
Tax-exempt loans (3)	$	68,243	$	462	2.69	%	$	58,735	$	394	2.66	%
All other loans		1,730,669		21,355	4.90	%		1,463,330		14,740	4.00	%
Total loans (2)		1,798,912		21,817	4.81	%		1,522,065		15,134	3.94	%

Federal funds sold		—		—	—	%		33,641		218	2.57	%

Taxable securities		193,019		1,945	4.09	%		159,721		1,158	2.94	%
Tax-exempt securities (3)		20,777		144	2.81	%		49,177		299	2.47	%
Total securities		213,796		2,089	3.96	%		208,898		1,457	2.83	%

Interest-bearing balances in other financial institutions		11,868		142	4.75	%		34,202		201	2.33	%

Total interest-earning assets		2,024,576		24,048	4.72	%		1,798,806		17,010	3.76	%

Other assets		131,451						130,576

TOTAL ASSETS	$	2,156,027					$	1,929,382

LIABILITIES AND SHAREHOLDERS' EQUITY:
Savings	$	225,357		181	0.32	%	$	249,083		26	0.04	%
Super Now deposits		244,387		1,174	1.91	%		405,173		287	0.28	%
Money market deposits		294,006		1,862	2.51	%		287,660		200	0.28	%
Time deposits		342,450		3,246	3.76	%		148,968		180	0.48	%
Total interest-bearing deposits		1,106,200		6,463	2.32	%		1,090,884		693	0.25	%

Short-term borrowings		173,364		2,412	5.52	%		8,062		26	1.23	%
Long-term borrowings		204,901		1,714	3.32	%		109,269		613	2.23	%
Total borrowings		378,265		4,126	4.33	%		117,331		639	2.16	%

Total interest-bearing liabilities		1,484,465		10,589	2.83	%		1,208,215		1,332	0.44	%

Demand deposits		471,494						533,681
Other liabilities		24,193						21,008
Shareholders' equity		175,875						166,478

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	2,156,027					$	1,929,382
Interest rate spread (3)					1.89	%					3.32	%
Net interest income/margin (3)			$	13,459	2.65	%			$	15,678	3.47	%

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 September 30,
		2023		2022
Total interest income	$	23,921	$	16,864
Total interest expense		10,589		1,332
Net interest income (GAAP)		13,332		15,532
Tax equivalent adjustment		127		146
Net interest income (fully taxable equivalent) (non-GAAP)	$	13,459	$	15,678

PENNS WOODS BANCORP, INC.

AVERAGE BALANCES AND INTEREST RATES

(UNAUDITED)

	Nine Months Ended
	September 30, 2023						September 30, 2022
(Dollars in Thousands)	Average Balance (1)		Interest		Average Rate		Average Balance (1)		Interest		Average Rate
ASSETS:
Tax-exempt loans (3)	$	66,372	$	1,371	2.76	%	$	53,269	$	1,033	2.59	%
All other loans		1,668,596		58,488	4.69	%		1,403,504		40,893	3.90	%
Total loans (2)		1,734,968		59,859	4.61	%		1,456,773		41,926	3.85	%

Federal funds sold		—		—	—	%		43,938		465	1.41	%

Taxable securities		188,477		5,331	3.78	%		152,937		3,126	2.76	%
Tax-exempt securities (3)		25,837		519	2.69	%		45,357		752	2.24	%
Total securities		214,314		5,850	3.65	%		198,294		3,878	2.64	%

Interest-bearing balances in other financial institutions		10,619		366	4.61	%		97,520		429	0.59	%

Total interest-earning assets		1,959,901		66,075	4.41	%		1,796,525		46,698	3.48	%

Other assets		132,133						129,048

TOTAL ASSETS	$	2,092,034					$	1,925,573

LIABILITIES AND SHAREHOLDERS' EQUITY:
Savings	$	233,784		456	0.26	%	$	246,063		72	0.04	%
Super Now deposits		293,636		3,026	1.38	%		388,149		721	0.25	%
Money market deposits		292,490		4,807	2.20	%		296,998		596	0.27	%
Time deposits		264,855		6,397	3.23	%		167,876		802	0.64	%
Total interest-bearing deposits		1,084,765		14,686	1.81	%		1,099,086		2,191	0.27	%

Short-term borrowings		155,136		6,084	5.26	%		6,308		29	0.59	%
Long-term borrowings		169,276		3,892	3.07	%		112,457		1,871	2.22	%
Total borrowings		324,412		9,976	4.12	%		118,765		1,900	2.14	%

Total interest-bearing liabilities		1,409,177		24,662	2.34	%		1,217,851		4,091	0.45	%

Demand deposits		484,662						519,599
Other liabilities		26,334						23,814
Shareholders' equity		171,861						164,309

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	2,092,034					$	1,925,573
Interest rate spread (3)					2.07	%					3.03	%
Net interest income/margin (3)			$	41,413	2.82	%			$	42,607	3.17	%

	Nine Months Ended September 30,
		2023		2022
Total interest income	$	65,678	$	46,323
Total interest expense		24,662		4,091
Net interest income		41,016		42,232
Tax equivalent adjustment		397		375
Net interest income (fully taxable equivalent) (non-GAAP)	$	41,413	$	42,607

(Dollars in Thousands, Except Per Share Data, Unaudited)	Quarter Ended
	9/30/2023			6/30/2023			3/31/2023			12/31/2022			9/30/2022
Operating Data
Net income	$	2,224		$	4,171		$	4,658		$	4,509		$	5,250
Net interest income		13,332			13,386			14,298			15,548			15,532
Provision (recovery) for credit losses		1,372			(1,180	)		71			575			855
Net security losses		(114	)		(39	)		(40	)		(39	)		(211	)
Non-interest income, excluding net security losses		1,989			2,061			2,297			2,120			2,294
Non-interest expense		11,172			11,429			10,898			11,251			10,320

Performance Statistics
Net interest margin		2.65	%		2.77	%		3.10	%		3.42	%		3.47	%
Annualized return on average assets		0.41	%		0.80	%		0.92	%		0.92	%		1.09	%
Annualized return on average equity		5.06	%		9.53	%		11.12	%		10.92	%		12.61	%
Annualized net loan charge-offs (recoveries) to average loans		0.01	%	(0.11		)%		0.03	%		0.04	%		0.01	%
Net charge-offs (recoveries)		33			(472	)		123			149			37
Efficiency ratio		72.76	%		73.78	%		65.46	%		59.79	%		57.70	%

Per Share Data
Basic earnings per share	$	0.31		$	0.59		$	0.66		$	0.64		$	0.74
Diluted earnings per share		0.31			0.59			0.64			0.64			0.74
Dividend declared per share		0.32			0.32			0.32			0.32			0.32
Book value		24.55			24.70			24.64			23.76			23.32
Common stock price:
High		27.17			27.34			27.77			26.89			24.29
Low		20.70			21.95			21.90			23.15			22.02
Close		21.08			25.03			23.10			26.62			22.91
Weighted average common shares:
Basic		7,072			7,062			7,058			7,055			7,051
Fully Diluted		7,229			7,062			7,334			7,055			7,051
End-of-period common shares:
Issued		7,620			7,574			7,570			7,567			7,563
Treasury		(510	)		(510	)		(510	)		(510	)		(510	)

(Dollars in Thousands)	Quarter Ended
	9/30/2023			6/30/2023			3/31/2023			12/31/2022			9/30/2022
Financial Condition Data:
General
Total assets	$	2,176,468		$	2,135,319		$	2,065,143		$	2,000,080		$	1,905,116
Loans, net		1,805,571			1,757,811			1,688,289			1,624,094			1,545,489
Goodwill		16,450			16,450			16,450			16,450			17,104
Intangibles		235			260			292			327			361
Total deposits		1,567,267			1,553,757			1,638,835			1,556,460			1,590,415
Noninterest-bearing		471,507			475,937			502,352			519,063			537,403
Savings		226,897			229,108			239,526			247,952			249,532
NOW		220,730			238,353			363,548			372,574			392,140
Money Market		291,889			296,957			300,273			270,589			268,532
Time Deposits		249,550			226,224			191,203			137,949			137,348
Brokered Deposits		106,694			87,178			41,933			8,333			5,460
Total interest-bearing deposits		1,095,760			1,077,820			1,136,483			1,037,397			1,053,012

Core deposits*		1,211,023			1,240,355			1,405,699			1,410,178			1,447,607
Shareholders' equity		174,540			174,402			173,970			167,665			164,489

Asset Quality
Non-performing loans	$	3,683		$	4,276		$	4,766		$	4,890		$	5,743
Non-performing loans to total assets		0.17	%		0.20	%		0.23	%		0.24	%		0.30	%
Allowance for loan losses		12,890			11,592			11,734			15,637			15,211
Allowance for loan losses to total loans		0.71	%		0.66	%		0.69	%		0.95	%		0.97	%
Allowance for loan losses to non-performing loans		349.99	%		271.09	%		246.20	%		319.78	%		264.86	%
Non-performing loans to total loans		0.20	%		0.24	%		0.28	%		0.30	%		0.37	%

Capitalization
Shareholders' equity to total assets		8.02	%		8.17	%		8.42	%		8.40	%		8.63	%

* 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 September 30,						Nine Months Ended September 30,
(Dollars in Thousands, Except Per Share Data)		2023			2022			2023			2022
GAAP net income	$	2,224		$	5,250		$	11,053		$	12,913
Net securities losses, net of tax		90			167			152			258
Non-GAAP core earnings	$	2,314		$	5,417		$	11,205		$	13,171

	Three Months Ended September 30,						Nine Months Ended September 30,
		2023			2022			2023			2022
Return on average assets (ROA)		0.41	%		1.09	%		0.70	%		0.89	%
Net securities losses, net of tax		0.02	%		0.03	%		0.01	%		0.02	%
Non-GAAP core ROA		0.43	%		1.12	%		0.71	%		0.91	%

	Three Months Ended September 30,						Nine Months Ended September 30,
		2023			2022			2023			2022
Return on average equity (ROE)		5.06	%		12.61	%		8.58	%		10.48	%
Net securities losses, net of tax		0.20	%		0.41	%		0.11	%		0.21	%
Non-GAAP core ROE		5.26	%		13.02	%		8.69	%		10.69	%

	Three Months Ended September 30,						Nine Months Ended September 30,
		2023			2022			2023			2022
Basic earnings per share (EPS)	$	0.31		$	0.74		$	1.56		$	1.83
Net securities losses, net of tax		0.02			0.03			0.03			0.04
Non-GAAP basic core EPS	$	0.33		$	0.77		$	1.59		$	1.87

	Three Months Ended September 30,						Nine Months Ended September 30,
		2023			2022			2023			2022
Diluted EPS	$	0.31		$	0.74		$	1.53		$	1.83
Net securities losses, net of tax		0.01			0.03			0.02			0.04
Non-GAAP diluted core EPS	$	0.32		$	0.77		$	1.55		$	1.87

Penns Woods Bancorp, Inc. Reports Third Quarter 2023 Earnings