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2022 Annual Report

TABLE OF CONTENTS

Letter to Shareholders

2

Performance Highlights

3

Consolidated Balance Sheet

6

Consolidated Statement of Income

7

Consolidated Statement of Comprehensive Income

8

Consolidated Statement of Changes in Shareholder's Equity

9

Consolidated Statement of Cash Flows

10

Form 10-K

11

Board of Directors

110

1

Dear Shareholders,

2022 was a very successful year for PWOD. Strong high quality loan growth supported by well diversified funding sources produced record earnings. These earnings were further supported through cost control and continued growth in efficiencies from technological investments added over the past several years. Our customers continue to increase utilization of our eBanking products as the number of mobile banking accounts more than doubled and the number of eStatement accounts increased by 16%. We continue to benefit by conservative balance sheet management with an emphasis on acquiring high-quality assets and managing duration. Our success continues to be predicated upon the performance of a great team of employees who continue to perform at the highest level.

Our footprint expansion continues to pay dividends as markets entered over the past several years have produced significant growth and synergies. The overall balance sheet growth was further supported by strong growth in our core markets driven by a robust mortgage business, consumer lending, and commercial lending. We continue to provide economic benefit within our markets through these lending efforts. Further, we are proud of our commitment to our communities as we continue to support and contribute to charities and nonprofit organizations. Our contributions in 2022 to these entities was in excess of $460,000. We ask, that like us, you continue to support our communities to make it a better place to live and prosper. Together we can make a difference.

Financial Highlights

PWOD continued to return strong results during the past year. Highlights from the period ending December 31, 2022 include:

Twelve Months Ended

Twelve Months Ended

% Change

December 31, 2022

December 31, 2021

Net Income

$17,422,000

$16,033,000

8.66%

Basic EPS

$2.47

$2.27

8.81%

Total Deposits

$1,556,460,000

$1,621,315,000

(4.00)%

Core Deposits

$1,410,178,000

$1,415,948,000

(0.41)%

Net Loans

$1,624,094,000

$1,377,971,000

17.86%

Total Assets

$2,000,080,000

$1,940,809,000

3.05%

Final Note

On behalf of the leadership team, all bank employees, and the board of directors we thank you for your support and confidence in our company. Our ability to drive shareholder value over the past 10 years has been unparalleled by our peer banks as illustrated in the Growth in Economic Value graph on the next page. Again, thank you.

Sincerely,

Richard A. Grafmyre, CFP®

Chief Executive Officer

2

PERFORMANCE HIGHLIGHTS

Growth in Economic Value - Since YE 2012

Tangible Book Value "TBV" + Dividends

Annual Growth Rates

TBV + Dividends CAGR - Since YE 2012

160%

8.2%

PWOD

Peers

140%

7.5%

120%

118.9%

PWOD

Outperformance

105.6%

of 13%

100%

Peers

80%

60%

2022 ROATCE(1) + Dividends

40%

18.4%

17.3%

20%

6.0%

3.4%

0%

13.9% 12.5%

Peers

Source: S&P Global Market Intelligence.

Note: Peer group consists of major-exchange traded U.S. banks with total assets between $1 billion and $3 billion, excluding merger targets and mutuals.

(1) ROATCE = Return on Average Tangible Common Equity.

Total Assets

Tier 1 Capital ($M)

$ in billions

$1.2 $1.2 $1.3 $1.3

$0.9

$1.7 $1.7

$1.5

$168

$1.8 $1.9 $2.0

$78

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

3

PERFORMANCE HIGHLIGHTS

Loan Composition

2022

Other

Commercial, Financial,

1%

and Ag.

Construction

12%

3%

Auto

11%

CRE

Resi

30%

43%

Deposit Composition

2022

Time

Deposits

10%

Non-Interest

Money

Bearing

Market

33%

17%

NOW

24%

Savings

16%

Cost of Interest Bearing Deposits:

0.34

%

Yield on Total Loans:

3.95 %

Cost of Total Deposits:

0.23

%

CRE / TRBC:

262 %

Cost of Funds:

0.41

%

Source: Company documents.

Total Loans

Total Deposits

$ in millions

$ in millions

$1,800

$1,600

$1,400

$1,200

$1,000

$800

$600

$400

$200

$0

$1,639

$1,800

$1,600

$186

$10

$1,392

$1,384

$1,354

$1,343

$43

$1,400

$1,246

$133

$25

$151

$23

$156

$139

$9

$20

$1,200

$80

$27

$37

$44

$38

$39

$501

$332

$32

$372

$363

$373

$447

$1,000

$800

$708

$600

$597

$622

$623

$590

$596

$400

$200

$179

$189

$156

$165

$163

$190

$0

$1,621

$1,556

$1,494

$205

$146

$1,324

$264

$1,146

$1,220

$319

$271

$378

$287

$284

$229

$366

$373

$238

$239

$216

$288

$208

$219

$236

$248

$215

$210

$161

$166

$177

$449

$494

$519

$321

$335

$303

2017

2018

2019

2020

2021

2022

2017

2018

2019

2020

2021

2022

Commercial

R/E Residential

R/E Commercial

Noninterest Bearing

Savings

NOW

Money Market

Time Deposits

R/E Construction

Installment

Automobile

Source: Company documents.

4

PERFORMANCE HIGHLIGHTS

Accounts in thousands

Estatement Accounts

Internet Banking Accounts

58.0

50.1

24.1

25.1

24.2

42.5

45.2

18.3

15.7

37.3

2018

2019

2020

2021

2022

2018

2019

2020

2021

2022

Source: Company documents.

Mobile Banking Users

5.7

2.0

2.4

1.3

0.9

2018

2019

2020

2021

2022

Return on Equity (%)

Return on Average Assets (%)

10.7%

9.7% 9.9%

2020 2021 2022

0.86% 0.85% 0.90%

2020 2021 2022

Earnings Per Share

$2.47

$2.16 $2.27

2020 2021 2022

Source: S&P Global Market Intelligence, Company documents.

5

PENNS WOODS BANCORP, INC.

CONSOLIDATED BALANCE SHEET

December 31,

(In Thousands, Except Share Data)

2022

2021

ASSETS:

Noninterest-bearingbalances

$

27,390

$

19,233

Interest-bearingdeposits in other financial institutions

12,943

194,629

Federal funds sold

-

50,000

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Total cash and cash equivalents

40,333

263,862

Investment debt securities, available for sale, at fair value

193,673

166,410

Investment equity securities, at fair value

1,142

1,288

Restricted investment in bank stock, at cost

19,171

14,531

Loans held for sale

3,298

3,725

Loans

1,639,731

1,392,147

Allowance for loan losses

(15,637)

(14,176)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Loans, net

1,624,094

1,377,971

Premises and equipment, net

31,844

34,025

Accrued interest receivable

9,481

8,048

Bank-ownedlife insurance

34,452

33,768

Investment in limited partnerships

8,656

4,607

Goodwill

16,450

17,104

Intangibles

327

480

Operating lease right of use asset

2,651

2,851

Deferred tax assets

6,868

2,946

Other assets

7,640

9,193

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .TOTAL ASSETS

$

2,000,080

$

1,940,809

LIABILITIES:

Interest-bearingdeposits

$

1,037,397

$

1,126,955

Noninterest-bearingdeposits

519,063

494,360

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Total deposits

1,556,460

1,621,315

Short-termborrowings

153,349

5,747

Long-termborrowings

102,783

125,963

Accrued interest payable

603

651

Operating lease liability

2,708

2,898

Other liabilities

16,512

11,961

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .TOTAL LIABILITIES

1,832,415

1,768,535

SHAREHOLDERS' EQUITY:

Preferred stock, no par value, 3,000,000 shares authorized; no shares issued

-

-

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

Additional paid-incapital

54,252

53,795

Retained earnings

98,147

89,761

Accumulated other comprehensive (loss) gain:

Net unrealized (loss) gain on available for sale securities

(9,819)

2,373

Defined benefit plan

(4,139)

(3,485)

Treasury stock at cost, 510,225 and 480,225 shares

(12,815)

(12,115)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .TOTAL SHAREHOLDERS' EQUITY

167,665

172,274

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

2,000,080

$

1,940,809

See accompanying notes to the consolidated financial statements.

6

PENNS WOODS BANCORP, INC.

CONSOLIDATED STATEMENT OF INCOME

(In Thousands, Except Per Share Data)

Year Ended December 31,

2022

2021

2020

INTEREST AND DIVIDEND INCOME:

Loans, including fees

. . . . . . . . . . . . . $

58,682

$

53,232

$

57,217

Investment securities:

Taxable

. . . . . . . . . . . . .

3,634

3,281

3,778

Tax-exempt

. . . . . . . . . . . . .

823

655

650

Dividend and other interest income

. . . . . . . . . . . . .

1,789

1,246

993

. . . . . . . . . . . . . . . . . . . . . . . .TOTAL INTEREST AND DIVIDEND INCOME

. . . . . . . . . . . . .

64,928

58,414

62,638

INTEREST EXPENSE:

Deposits

. . . . . . . . . . . . .

3,690

5,545

10,565

Short-termborrowings

. . . . . . . . . . . . .

1,007

9

43

Long-termborrowings

. . . . . . . . . . . . .

2,451

3,142

3,807

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .TOTAL INTEREST EXPENSE

. . . . . . . . . . . . .

7,148

8,696

14,415

.NET INTEREST INCOME

. . . . . . . . . . . . .

57,780

49,718

48,223

PROVISION FOR LOAN LOSSES

. . . . . . . . . . . . .

1,910

640

2,625

.NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES .

. . . . . . . . . . . . .

55,870

49,078

45,598

NON-INTEREST INCOME:

Service charges

. . . . . . . . . . . . .

2,103

1,703

1,690

Net debt securities (losses) gains, available for sale

. . . . . . . . . . . . .

(219)

699

1,592

Net equity securities (losses) gains

. . . . . . . . . . . . .

(146)

(40)

16

Bank-ownedlife insurance

. . . . . . . . . . . . .

664

916

653

Gain on sale of loans

. . . . . . . . . . . . .

1,131

2,474

4,148

Insurance commissions

. . . . . . . . . . . . .

491

553

416

Brokerage commissions

. . . . . . . . . . . . .

620

851

970

Loan broker income

. . . . . . . . . . . . .

1,674

2,164

673

Debit card income

. . . . . . . . . . . . .

1,464

1,511

1,280

Other

. . . . . . . . . . . . .

931

838

730

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .TOTAL NON-INTERESTINCOME

. . . . . . . . . . . . .

8,713

11,669

12,168

NON-INTEREST EXPENSE:

Salaries and employee benefits

. . . . . . . . . . . . .

24,267

23,014

21,632

Occupancy

. . . . . . . . . . . . .

3,080

3,209

2,650

Furniture and equipment

. . . . . . . . . . . . .

3,288

3,522

3,411

Software amortization

. . . . . . . . . . . . .

840

868

978

Pennsylvania shares tax

. . . . . . . . . . . . .

1,452

1,350

1,289

Professional fees

. . . . . . . . . . . . .

2,434

2,432

2,362

Federal Deposit Insurance Corporation deposit insurance

. . . . . . . . . . . . .

938

963

939

Marketing

. . . . . . . . . . . . .

690

545

261

Intangible amortization

. . . . . . . . . . . . .

154

191

227

Goodwill impairment

. . . . . . . . . . . . .

653

-

-

Other

. . . . . . . . . . . . .

5,202

4,811

5,319

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .TOTAL NON-INTERESTEXPENSE

. . . . . . . . . . . . .

42,998

40,905

39,068

.INCOME BEFORE INCOME TAX PROVISION

. . . . . . . . . . . . .

21,585

19,842

18,698

INCOME TAX PROVISION

. . . . . . . . . . . . .

4,163

3,794

3,474

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .CONSOLIDATED NET INCOME

. . . . . . . . . . . . .

$

17,422

$

16,048

$

15,224

Earnings attributable to noncontrolling interest

. . . . . . . . . . . . .

-

15

18

NET INCOME ATTRIBUTABLE TO PENNS WOODS BANCORP, INC.

. . . . . . . . . . . . .

$

17,422

$

16,033

$

15,206

.EARNINGS PER SHARE - BASIC

. . . . . . . . . . . . . $

2.47

$

2.27

$

2.16

EARNINGS PER SHARE - DILUTED

$

2.47

$

2.27

$

2.16

. . . . . . . . . .WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC

. . . . . . . . . . . . .

7,059,437

7,061,818

7,044,542

. . . . . . . .WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED

. . . . . . . . . . . . .

7,059,437

7,061,818

7,044,542

See accompanying notes to the consolidated financial statements.

7

PENNS WOODS BANCORP, INC.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year Ended December 31,

(In Thousands)

2022

2021

2020

Net Income

$

17,422

$

16,048

$

15,224

Other comprehensive (loss) income:

Change in unrealized (loss) gain on available for sale securities

(15,652)

(2,264)

4,452

Tax effect

3,287

475

(935)

Net realized loss (gain) included in net income

219

(699)

(1,592)

Tax effect

(46)

147

334

(Accretion) amortization of unrecognized pension and post-retirement items

(827)

2,674

(461)

Tax effect

173

(563)

97

Total other comprehensive (loss) income

(12,846)

(230)

1,895

Comprehensive income

$

4,576

$

15,818

$

17,119

See accompanying notes to the consolidated financial statements.

8

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Penns Woods Bancorp Inc. published this content on 15 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 May 2024 07:55:05 UTC.