Penns Woods Bancorp, Inc. Reports Fourth Quarter 2021 Earnings

Williamsport, PA — January 26, 2022 - Penns Woods Bancorp, Inc. (NASDAQ: PWOD)

Penns Woods Bancorp, Inc. achieved net income of $16.0 million for the twelve months ended December 31, 2021, resulting in basic and diluted earnings per share of $2.27.

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 $4.6 million for the three months ended December 31, 2021 compared to $3.6 million for the same period of 2020. Core earnings were $15.5 million for the twelve months ended December 31, 2021, compared to $13.9 million for the same period of 2020. Core earnings per share for the three months ended December 31, 2021 were $0.65 basic and diluted, compared to $0.51 basic and diluted core earnings per share for the same period of 2020. Core earnings per share for the twelve months ended December 31, 2021 were $2.20 basic and diluted, compared to $1.98 basic and diluted for the same period of 2020. Core return on average assets and core return on average equity were 0.96% and 10.92% for the three months ended December 31, 2021, compared to 0.79% and 8.83% for the corresponding period of 2020. Core return on average assets and core return on average equity were 0.82% and 9.61% for the twelve months ended December 31, 2021 compared to 0.78% and 8.85% 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.

The net interest margin for the three and twelve months ended December 31, 2021 was 2.90% and 2.85%, compared to 2.81% and 2.94% for the corresponding period of 2020. The increase in the net interest margin for the three month period and decrease for the twelve month period was driven by a decrease in the yield of the loan portfolio of 19 and 28 basis points ("bps"), while the investment portfolio yield declined 38 and 54 bps, respectively, during the current low interest rate environment. Offsetting the decline in yield on the earning asset portfolio was a decline in rate paid on interest-bearing deposits of 44 and 51 bps for the three and twelve month periods as rates paid were decreased significantly during 2020 and 2021 due to the economic impact of COVID-19 prolonging the low interest rate environment.

Total assets increased $106.2 million to $1.9 billion at December 31, 2021 compared to December 31, 2020.  Cash and cash equivalents increased significantly as federal funds sold increased $50 million 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 averse and seeking safety in a bank deposit. Net loans increased $47.4 million to $1.4 billion at December 31, 2021 compared to December 31, 2020, as the COVID-19 business and travel restrictions and supply chain interruptions 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 continued to rebound in 2021 in particular the fourth quarter. The investment portfolio increased $3.3 million from December 31, 2020 to December 31, 2021 as a portion of the excess cash liquidity was invested into short-term municipal bonds.

The ratio of non-performing loans to total loans ratio decreased to 0.45% at December 31, 2021 from 0.77% at December 31, 2020 as non-performing loans have decreased to $6.3 million at December 31, 2021 from $10.3 million at December 31, 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 $267,000 for the twelve months ended December 31, 2021 impacted the allowance for loan losses, which was 1.02% of total loans at December 31, 2021 compared to 1.03% at December 31, 2020.

Deposits increased $126.9 million to $1.6 billion at December 31, 2021 compared to December 31, 2020.  Noninterest-bearing deposits increased $45.0 million to $494.4 million at December 31, 2021 compared to December 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. The increased level of deposits has allowed for a decrease in long-term borrowings.

Shareholders’ equity increased $8.1 million to $172.3 million at December 31, 2021 compared to December 31, 2020.  Accumulated other comprehensive loss of $1.1 million at December 31, 2021 increased from a loss of $882,000 at December 31, 2020 as a result of a decrease of $2.3 million in the net unrealized gain on available for sale securities and a change in the defined benefit plan of $2.1 million.  The current level of shareholders’ equity equates to a book value per share of $24.37 at December 31, 2021 compared to $23.27 at December 31, 2020, and an equity to asset ratio of 8.88% at December 31, 2021 and 8.95% at December 31, 2020. Dividends declared for the twelve months ended December 31, 2021 and 2020 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, 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