Financial Performance - Net income for the three months ended March 31, 2024, was $3.8 million, down from $4.7 million for the same period in 2023, resulting in basic and diluted earnings per share of $0.51 compared to $0.66 and $0.64, respectively [2][4]. - Core earnings for the same period were $3.8 million, a decrease from $4.7 million in 2023, with annualized core return on average assets at 0.69% and core return on average equity at 8.09%, down from 0.93% and 11.19% in 2023 [4]. - Net income available to common shareholders decreased by 18.25% to $3,808, with diluted earnings per share falling by 20.31% to $0.51 [21]. - Net income for Q1 2024 was $3,808,000, a decrease of 18.3% from $4,658,000 in Q1 2023 [26]. - Basic earnings per share (EPS) for Q1 2024 was $0.51, a decrease of 22.7% compared to $0.66 in Q1 2023 [29]. Asset and Loan Growth - Total assets increased to $2.2 billion, up $145 million from March 31, 2023, with net loans rising by $155.5 million to $1.8 billion [8]. - Total assets increased by 7.02% to $2,210,116, compared to $2,065,143 in 2023 [19]. - Loans held for sale rose significantly by 97.07% to $3,360, while total loans increased by 9.14% to $1,855,347 [19]. - The average loan portfolio balance increased by $185.5 million, with a corresponding increase in taxable equivalent interest income of $5.9 million [7]. Non-Performing Loans and Credit Quality - Non-performing loans increased to $8.0 million, resulting in a non-performing loans to total loans ratio of 0.43%, up from 0.28% in the previous year [9]. - The provision for credit losses increased to $138,000 from $71,000 in the prior year, primarily due to a loan relationship moving to nonaccrual status [5]. - The provision for credit losses increased by 94.37% to $138, suggesting a more cautious outlook on credit quality [21]. - Non-performing loans increased to $7,958,000, representing 0.36% of total assets, up from 0.23% in Q1 2023 [27]. Deposits and Liabilities - Deposits decreased by $20.3 million to $1.6 billion, with noninterest-bearing deposits down $30.9 million, while interest-bearing deposits increased by $10.6 million [10]. - Total deposits rose to $1,618,562,000 in Q1 2024, compared to $1,638,835,000 in Q1 2023, reflecting a decrease of 1.2% [27]. - Total liabilities rose by 6.63% to $2,016,599, with long-term borrowings increasing by 97.21% to $261,770 [19]. Shareholders' Equity - Shareholders' equity rose by $19.5 million to $193.5 million, with a book value per share of $25.72, up from $24.64 in 2023 [11][12]. - Shareholders' equity increased to $193,517,000 in Q1 2024, compared to $173,970,000 in Q1 2023, marking an increase of 11.2% [27]. - Shareholders' equity increased by 11.24% to $193,517, reflecting a rise in additional paid-in capital by 14.01% [19]. Interest Income and Expense - The net interest margin decreased to 2.69% for the three months ended March 31, 2024, from 3.10% in the same period of 2023, primarily due to a 156 basis point increase in the rate paid on interest-bearing liabilities [5]. - Total interest and dividend income grew by 32.05% to $26,230, driven by a 32.52% increase in loans including fees [21]. - Interest expense surged by 124.29% to $12,484, primarily due to a 136.15% increase in deposits [21]. - Net interest income for Q1 2024 was $13,746,000, down from $14,298,000 in Q1 2023, reflecting a decline of 3.9% [26]. Operational Efficiency - The efficiency ratio for Q1 2024 was 71.41%, up from 65.46% in Q1 2023, indicating a decline in operational efficiency [26]. - The interest rate spread decreased to 1.84% from 2.60% in the previous year, indicating tighter margins [24]. Strategic Focus - The company continues to focus on increasing electronic deposit banking utilization among customers as part of its core deposit gathering efforts [10].

Part I [Business](index=4&type=section&id=Item%201.%20Business) Penns Woods Bancorp, Inc. operates as a bank holding company overseeing two bank subsidiaries and non-banking entities, providing diverse financial services under extensive regulatory oversight - The Corporation's primary business is managing its two wholly-owned bank subsidiaries, **Jersey Shore State Bank (JSSB)** and **Luzerne Bank**, which provide commercial and retail banking services[12](index=12&type=chunk) - Subsidiaries include **Woods Real Estate Development**, **Woods Investment Company**, **United Insurance Solutions**, and **The M Group** (offering insurance and securities brokerage)[12](index=12&type=chunk)[14](index=14&type=chunk)[17](index=17&type=chunk) - The Corporation and its subsidiaries are heavily regulated by the **Federal Reserve Board (FRB)**, the **Federal Deposit Insurance Corporation (FDIC)**, and the **Pennsylvania Department of Banking and Securities**[19](index=19&type=chunk) - As of December 31, 2023, **JSSB** had total assets of **$1.58 billion** and **Luzerne** had total assets of **$644.9 million**[47](index=47&type=chunk)[48](index=48&type=chunk) - The Banks operate **twenty-four** full-service offices across Lycoming, Clinton, Centre, Montour, Union, Blair, and Luzerne Counties in Pennsylvania, facing a highly competitive environment[61](index=61&type=chunk) [Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) The Corporation faces multiple risks including interest rate sensitivity, economic and credit vulnerabilities, operational and cybersecurity threats, and intense competition and regulation - Interest Rate Risk: Changes in interest rates could reduce income, cash flows, and asset values, as net interest income is sensitive to the spread between rates on assets and liabilities[67](index=67&type=chunk) - Economic and Credit Risk: The Corporation is vulnerable to adverse local economic conditions due to its geographic concentration, and declines in real estate values could reduce the value of collateral securing loans[68](index=68&type=chunk)[69](index=69&type=chunk) - Operational and Cybersecurity Risk: The business relies heavily on information systems, which are vulnerable to failures, security breaches, and cyber-attacks, potentially leading to financial loss and reputational damage[70](index=70&type=chunk)[71](index=71&type=chunk) - Competitive and Regulatory Risk: The Corporation faces substantial competition from various financial institutions, some with fewer regulatory constraints, and the heavily regulated banking industry is subject to changes that can increase costs[73](index=73&type=chunk)[74](index=74&type=chunk)[76](index=76&type=chunk) [Unresolved Staff Comments](index=15&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The Corporation reports that there are no unresolved staff comments - None[83](index=83&type=chunk) [Cybersecurity Risk Management, Strategy and Governance](index=15&type=section&id=Item%201C.%20Cybersecurity%20Risk%20Management%2C%20Strategy%20and%20Governance) The Corporation manages cybersecurity risk through board and committee oversight, experienced personnel, and third-party vendors, with no material incidents reported to date - Cybersecurity oversight is handled by the entire board of directors, supported by a senior management **Risk Management Committee** and an **Information Technology Steering Committee**[84](index=84&type=chunk)[85](index=85&type=chunk) - The IT Department is managed by a **CIO** with **28 years** of experience and includes a separate **Information Security Officer (ISO)** who is a **Certified Information Systems Security Professional**[86](index=86&type=chunk) - The Corporation uses third-party vendors for services like penetration testing and vulnerability assessments and maintains an **Incident Response Plan** that is tested annually[88](index=88&type=chunk)[89](index=89&type=chunk) - To date, the Corporation has not experienced any cybersecurity threats that have materially affected its business strategy, results of operations, or financial condition[90](index=90&type=chunk) [Properties](index=17&type=section&id=Item%202.%20Properties) As of December 31, 2023, the Corporation owns or leases various banking offices across Pennsylvania, all deemed adequate and in good condition - The Corporation's properties, consisting of owned and leased banking offices for its subsidiaries **Jersey Shore State Bank** and **Luzerne Bank**, are all located in Pennsylvania[92](index=92&type=chunk)[94](index=94&type=chunk) - All properties are reported to be in good condition and adequate for the Corporation's needs[92](index=92&type=chunk) [Legal Proceedings](index=18&type=section&id=Item%203.%20Legal%20Proceedings) Management believes no pending or threatened legal proceedings are likely to have a material adverse effect on the Corporation's financial position or results - Management states that there are no pending legal proceedings expected to have a material adverse effect on the Corporation's financial condition or results[95](index=95&type=chunk) [Mine Safety Disclosures](index=18&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the Corporation - Not applicable[96](index=96&type=chunk) Part II [Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=19&type=section&id=Item%205.%20Market%20for%20the%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The Corporation's common stock trades on NASDAQ under 'PWOD', consistently paid a **$0.32** quarterly dividend, and had **3,632** shareholders as of March 1, 2024, with no Q4 2023 share repurchases - The Corporation's common stock is listed on the **NASDAQ Global Select Market** under the symbol "**PWOD**"[99](index=99&type=chunk) Common Stock Price and Dividend Information | Year | Quarter | High Price | Low Price | Dividend Declared | | :--- | :--- | :--- | :--- | :--- | | **2023** | Q1 | $27.77 | $21.90 | $0.32 | | | Q2 | $27.34 | $21.95 | $0.32 | | | Q3 | $27.17 | $20.70 | $0.32 | | | Q4 | $23.64 | $20.05 | $0.32 | | **2022** | All | $24.67 - $26.89 | $22.02 - $23.64 | $0.32 per quarter | | **2021** | All | $24.42 - $27.78 | $20.55 - $23.50 | $0.32 per quarter | - As of March 1, 2024, the Corporation had approximately **3,632** shareholders of record[102](index=102&type=chunk) - No shares of the Corporation's common stock were purchased by the Corporation during the fourth quarter of 2023, with a publicly announced plan allowing for the purchase of up to **353,000** shares[102](index=102&type=chunk)[103](index=103&type=chunk) [Reserved]](index=20&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Consolidated%20Financial%20Condition%20and%20Results%20of%20Operations) The Corporation's 2023 performance saw decreased net interest income and increased expenses, while total assets grew to **$2.2 billion** and equity rose to **$191.6 million** [Results of Operations](index=20&type=section&id=Results%20of%20Operations) For 2023, net interest income decreased, a credit loss recovery was recorded, and non-interest expenses increased, resulting in an **18.28%** effective tax rate Consolidated Income Statement Summary (In Thousands) | (In Thousands) | 2023 | 2022 | 2021 | |---|---|---|---| | Net Interest Income | $54,964 | $57,780 | $49,718 | | (Recovery) Provision for Credit Losses | $(1,479) | $1,910 | $640 | | Total Non-Interest Income | $8,375 | $8,713 | $11,669 | | Total Non-Interest Expense | $44,496 | $42,998 | $40,905 | | Consolidated Net Income | $16,608 | $17,422 | $16,048 | [Financial Condition](index=26&type=section&id=Financial%20Condition) As of December 31, 2023, total assets grew to **$2.20 billion** driven by loan growth, with shareholders' equity rising to **$191.6 million** Consolidated Balance Sheet Summary (In Thousands) | (In Thousands) | Dec 31, 2023 | Dec 31, 2022 | |---|---|---| | Total Assets | $2,204,809 | $2,000,080 | | Loans, net | $1,828,318 | $1,624,094 | | Total Deposits | $1,589,493 | $1,556,460 | | Total Liabilities | $2,013,253 | $1,832,415 | | Total Shareholders' Equity | $191,556 | $167,665 | [Liquidity, Interest Rate Sensitivity, and Market Risk](index=34&type=section&id=Liquidity%2C%20Interest%20Rate%20Sensitivity%2C%20and%20Market%20Risk) The Corporation manages liquidity and interest rate risk, maintaining adequate liquidity and an asset-sensitive position, with a **100** basis point rate increase projected to raise net interest income by **2.68%** - The Corporation has a current borrowing capacity at the **FHLB** of **$859,444,000**, with **$463,079,000** available as of December 31, 2023, and additional credit lines of **$100,000,000** with correspondent banks[177](index=177&type=chunk) - The Corporation currently maintains an asset-sensitive gap position due to the short duration of its loan and investment portfolios[178](index=178&type=chunk) Net Interest Income Rate Shock Forecast (12-months ending Dec 31, 2024) | Parallel Rate Shock (bps) | Net Interest Income (in thousands) | % Change from Static | | :--- | :--- | :--- | | -300 | $59,827 | -9.55% | | -200 | $62,027 | -6.22% | | -100 | $64,174 | -2.98% | | Static | $66,144 | — | | +100 | $67,918 | 2.68% | | +200 | $69,354 | 4.85% | | +300 | $70,586 | 6.72% | | +400 | $71,763 | 8.50% | [Critical Accounting Policies](index=36&type=section&id=Critical%20Accounting%20Policies) The Corporation's critical accounting policies, including Allowance for Credit Losses and Goodwill impairment, require significant management judgment and estimation - Allowance for Credit Losses (ACL): Determining the ACL involves a high degree of judgment regarding cash flow assumptions, probability of default, economic forecasts, and qualitative factors[185](index=185&type=chunk) - Goodwill and Other Intangible Assets: These assets are assessed annually for impairment by estimating future cash flows, with a write-down required if estimated future cash flows are less than the recorded asset balances[187](index=187&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Corporation's primary market risks are interest rate and liquidity risks, actively managed to respond to market changes - The Corporation's main market risks are interest rate risk and liquidity risk[191](index=191&type=chunk) - Management monitors interest rate sensitivity internally and believes it is well-positioned to respond to market changes[191](index=191&type=chunk) [Financial Statements and Supplementary Data](index=38&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the Corporation's audited consolidated financial statements for 2023, 2022, and 2021, along with detailed explanatory notes [Consolidated Financial Statements](index=38&type=section&id=Consolidated%20Financial%20Statements) Presents the primary consolidated financial statements, including Balance Sheets, Income Statements, and Cash Flows for 2021-2023 Key Financial Statement Data (in thousands) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | **Balance Sheet** | | | | Total Assets | $2,204,809 | $2,000,080 | | Loans, net | $1,828,318 | $1,624,094 | | Total Deposits | $1,589,493 | $1,556,460 | | Total Shareholders' Equity | $191,556 | $167,665 | | **Income Statement (FY)** | **2023** | **2022** | | Net Interest Income | $54,964 | $57,780 | | Net Income | $16,608 | $17,422 | [Notes to Consolidated Financial Statements](index=44&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed notes supporting the consolidated financial statements, covering key accounting policies, loan quality, and regulatory capital - Note 1: The company adopted **ASU 2016-13 (CECL)** on January 1, 2023, which replaced the incurred loss methodology for measuring credit losses, resulting in a net decrease to the **Allowance for Credit Losses (ACL)** of **$3,789,000**[219](index=219&type=chunk)[220](index=220&type=chunk) - Note 6: Details the loan portfolio's credit quality, aging, and the allowance for credit losses, with non-accrual loans decreasing to **$998,000** in 2023 from **$3,615,000** in 2022[291](index=291&type=chunk) - Note 8: An impairment charge of **$653,000** was recognized on goodwill related to **The M Group** in 2022, with no impairment recognized in 2023[244](index=244&type=chunk)[312](index=312&type=chunk) - Note 18: As of December 31, 2023, the Corporation and its subsidiary banks were categorized as "**well capitalized**" under all regulatory frameworks, exceeding minimum capital requirements[354](index=354&type=chunk)[356](index=356&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=82&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The Corporation reports that there have been no changes in or disagreements with its accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure - None[389](index=389&type=chunk) [Controls and Procedures](index=82&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded the Corporation's disclosure controls and internal control over financial reporting were effective as of December 31, 2023, with no material weaknesses - Management concluded that the Corporation's disclosure controls and procedures were effective as of December 31, 2023[390](index=390&type=chunk) - Management assessed the effectiveness of internal control over financial reporting using the **COSO framework** and concluded it was effective as of December 31, 2023, with no material weaknesses found[395](index=395&type=chunk)[396](index=396&type=chunk) - No material changes were made to the Corporation's internal control over financial reporting during the fourth quarter of 2023[391](index=391&type=chunk) [Other Information](index=85&type=section&id=Item%209B.%20Other%20Information) During the fourth quarter of 2023, none of the Corporation's directors or executive officers adopted or terminated a securities trading plan under Rule 10b5-1(c) or any non-Rule 10b5-1 trading arrangement - No directors or executive officers adopted or terminated a **Rule 10b5-1** trading plan or similar arrangement in Q4 2023[411](index=411&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=86&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This section is not applicable to the Corporation - Not applicable[413](index=413&type=chunk) Part III [Directors, Executive Officers, and Corporate Governance](index=86&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the Corporation's Proxy Statement for its 2024 annual meeting of shareholders - Information is incorporated by reference from the **2024 Proxy Statement**[415](index=415&type=chunk) [Executive Compensation](index=86&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation, including Compensation Discussion and Analysis, compensation tables, and retirement plans, is incorporated by reference from the Corporation's 2024 Proxy Statement - Information is incorporated by reference from the **2024 Proxy Statement**[416](index=416&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=86&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership is incorporated by reference from the 2024 Proxy Statement, detailing securities for issuance under approved equity compensation plans - Information on beneficial ownership is incorporated by reference from the **2024 Proxy Statement**[417](index=417&type=chunk) Equity Compensation Plan Information as of December 31, 2023 | Plan Category | Securities to be issued upon exercise | Weighted-average exercise price | Securities remaining available for future issuance | | :--- | :--- | :--- | :--- | | Approved by security holders | 1,000,000 | $25.55 | 192,500 | | Not approved by security holders | — | — | — | | **Total** | **1,000,000** | **$25.55** | **192,500** | [Certain Relationships and Related Transactions, and Director Independence](index=86&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the Corporation's 2024 Proxy Statement - Information is incorporated by reference from the **2024 Proxy Statement**[419](index=419&type=chunk) [Principal Accounting Fees and Services](index=86&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services, including audit fees, audit-related fees, tax fees, and pre-approval policies, is incorporated by reference from the Corporation's 2024 Proxy Statement - Information is incorporated by reference from the **2024 Proxy Statement**[420](index=420&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=87&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements, schedules, and exhibits filed as part of the annual report, including corporate governance documents and certifications - The consolidated financial statements are located in **Item 8** of this report[422](index=422&type=chunk) - Financial statement schedules have been omitted because the required information is not applicable or is included within the financial statements or notes[422](index=422&type=chunk) - A detailed list of exhibits is provided, including corporate governance documents, material contracts, certifications by the **CEO** and **CFO**, and the **XBRL** interactive data file[424](index=424&type=chunk)

Financial Performance - Net income for the three months ended September 30, 2023 was $2.2 million, a decrease from $5.3 million in the same period of 2022, while net income for the nine months was $11.1 million compared to $12.9 million in 2022[129]. - Basic earnings per share for the three months ended September 30, 2023 were $0.31, down from $0.74 in 2022, and for the nine months, it was $1.56 compared to $1.83 in 2022[134]. - Core earnings for the three months ended September 30, 2023 were $2.3 million, down from $5.4 million in 2022, and for the nine months, it was $11.2 million compared to $13.2 million in 2022[129]. - Total non-interest income for the three months ended September 30, 2023, decreased by $208,000 compared to the same period in 2022, with a notable decline in loan broker commissions by 44.98%[161]. - Total non-interest income decreased by $478,000, or 7.21%, from $6,632,000 in September 30, 2022 to $6,154,000 in September 30, 2023[163]. Interest Income and Expense - Interest and dividend income increased by $7.1 million (41.85%) for the three months and $19.4 million (41.78%) for the nine months ended September 30, 2023 compared to the same periods in 2022[135][138]. - Interest expense surged by $9.3 million (694.97%) for the three months and $20.6 million (502.84%) for the nine months ended September 30, 2023 compared to the same periods in 2022[139][140]. - Total interest income for Q3 2023 was $23.9 million, up from $16.9 million in Q3 2022, while total interest expense rose to $10.6 million from $1.3 million in the same period[148]. - The net interest income on a fully taxable equivalent basis for Q3 2023 was $13.5 million, down from $15.7 million in Q3 2022[148]. - Net interest income decreased by $2,219,000 for the three months ended September 30, 2023, compared to the same period in 2022, primarily due to a decrease in volume and rate changes[149]. Asset and Loan Portfolio - The increase in loan portfolio income was attributed to a higher average loan portfolio balance and an increase in the average rate earned on the portfolio[135]. - The average loan portfolio balance increased by $276.8 million for Q3 2023 and $278.2 million for the nine months ended September 30, 2023, with an increase in average yield of 87 bps and 76 bps respectively[142]. - Gross loans increased by $178,730,000, or 10.90%, from $1,639,731,000 at December 31, 2022 to $1,818,461,000 at September 30, 2023, driven by increases in residential and commercial real estate mortgages and consumer automobile loans[170]. - The total interest-earning assets increased by $7,038,000 for the three months ended September 30, 2023, compared to the same period in 2022[149]. Credit Losses and Nonperforming Loans - The provision for credit losses increased by $517,000 for the three months ended September 30, 2023, while it decreased by $1.1 million for the nine months due to a recovery on a commercial loan[129]. - The provision for credit losses for the three months ended September 30, 2023, was $1,372,000, an increase from $855,000 in the same period of 2022, attributed to loan portfolio growth[155]. - Nonperforming loans decreased to $3,683,000 at September 30, 2023, down from $4,890,000 at December 31, 2022, indicating a reduction in the nonperforming loans ratio to 0.20%[156]. - The ratio of nonperforming loans to total loans decreased from 0.37% at September 30, 2022, to 0.20% at September 30, 2023[156]. Deposits and Borrowings - Total deposits decreased by $10,807,000 from $40,333,000 at December 31, 2022 to $35,590,000 at September 30, 2023, while time deposits increased by $111,601,000[179]. - Demand deposits decreased by $47,556,000 (9.16%) from $519,063,000 to $471,507,000, while NOW accounts saw a significant decline of $151,844,000 (40.76%) from $372,574,000 to $220,730,000[180]. - Total borrowed funds increased by 60.62%, or $155,259,000, reaching $411,391,000 as of September 30, 2023, compared to $256,132,000 at December 31, 2022[181]. - Long-term FHLB borrowings rose by $115,000,000 (121.05%) from $95,000,000 to $210,000,000, indicating a strategic move to lock in interest rates[183]. Capital and Liquidity - Common Equity Tier I Capital ratio was 9.505% as of September 30, 2023, down from 9.973% on December 31, 2022, while Total Capital ratio decreased from 10.925% to 10.290%[190]. - The Company maintained a Common Equity Tier I Capital of $173,291,000 for risk-weighted assets as of September 30, 2023, compared to $165,346,000 at the end of 2022[190]. - The net loans to total deposits ratio was 115% as of September 30, 2023, indicating a focus on maintaining liquidity while managing interest rate risk[193]. - Management believes the Company has sufficient liquidity to satisfy estimated short-term and long-term funding needs[197]. Interest Rate Sensitivity - The Company aims to maintain a capital level sufficient to support existing assets and anticipated growth, ensuring favorable access to capital markets[186]. - The Company’s asset/liability management policy includes a market value at risk calculation to monitor the effects of interest rate changes on shareholders' equity[200]. - Interest rate sensitivity is assessed through a simulation analysis, with no substantial changes in the Company's gap analysis compared to the previous year[207]. - Management emphasizes that movements in interest rates affect financial condition more significantly than changes in inflation rates[206].

WASHINGTON, D.C. 20549 FORM 10-Q ☑ Quarterly Report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended June 30, 2023. ☐ Transition report pursuant to Section 13 or 15 (d) of the Exchange Act Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION For the Transition Period from to . No. 0-17077 (Commission File Number) PENNS WOODS BANCORP INC. (Exact name of Registrant as specified in its charter) Pennsylvania 300 Market Street, P.O. Box 967 23-2 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☑ Quarterly Report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended March 31, 2023. ☐ Transition report pursuant to Section 13 or 15 (d) of the Exchange Act For the Transition Period from to . No. 0-17077 (Commission File Number) PENNS WOODS BANCORP INC. (Exact name of Registrant as specified in its charter) Pennsylvania 300 Market Street, P.O. Box 967 23- ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from to Commission file number 0-17077 PENNS WOODS BANCORP, INC. (Exact name of registrant as specified in its charter) | Title of each class | ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☑ Quarterly Report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended September 30, 2022. ☐ Transition report pursuant to Section 13 or 15 (d) of the Exchange Act For the Transition Period from to . No. 0-17077 (Commission File Number) PENNS WOODS BANCORP INC. (Exact name of Registrant as specified in its charter) Pennsylvania 300 Market Street, P.O. Box 967 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☑ Quarterly Report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended June 30, 2022. ☐ Transition report pursuant to Section 13 or 15 (d) of the Exchange Act For the Transition Period from to . No. 0-17077 (Commission File Number) PENNS WOODS BANCORP INC. (Exact name of Registrant as specified in its charter) Pennsylvania 300 Market Street, P.O. Box 967 23-2 ...

Part I Financial Information [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements for the quarter ended March 31, 2022, show a slight decrease in total assets to $1.917 billion from $1.941 billion at year-end 2021, with net income remaining stable at $3.4 million, but a comprehensive loss of $2.0 million due to increased unrealized losses on available-for-sale securities [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail financial statement presentation, recent accounting pronouncements, and provide in-depth information on key financial components, including a significant increase in investment securities unrealized losses, growth in the loan portfolio, and increased off-balance sheet commitments - The company expects to adopt ASU 2016-13 (CECL model) for fiscal years beginning after December 15, 2022, and anticipates a one-time cumulative-effect adjustment to the allowance for loan losses upon adoption[26](index=26&type=chunk) Investment Securities Unrealized Losses (March 31, 2022) | (In Thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | | :--- | :--- | :--- | :--- | :--- | | **Total debt securities** | **$179,565** | **$967** | **$(4,858)** | **$175,674** | - As of March 31, 2022, the company had 172 securities in a continuous unrealized loss position for less than twelve months and 25 for twelve months or greater, with management determining these declines to be temporary, resulting from interest rate changes, and does not intend to sell these securities before recovery[44](index=44&type=chunk)[45](index=45&type=chunk) Loan Portfolio Composition (March 31, 2022) | (In Thousands) | Amount | % of Total | | :--- | :--- | :--- | | Commercial, financial, and agricultural | $162,273 | 11.5% | | Real estate mortgage - Residential | $613,161 | 43.6% | | Real estate mortgage - Commercial | $443,415 | 31.5% | | Consumer automobile loans | $135,568 | 9.6% | | Other | $51,289 | 3.8% | | **Total Loans** | **$1,405,706** | **100.0%** | - Total impaired loans stood at **$13.3 million** as of March 31, 2022, with a related allowance of **$954 thousand**, a decrease from **$14.0 million** in impaired loans at year-end 2021[58](index=58&type=chunk) - As of March 31, 2022, only one loan with an outstanding balance of **$158 thousand** remained in the COVID-19 related payment deferral program, down significantly from 70 loans with a balance of **$12.3 million** a year prior[63](index=63&type=chunk) Off-Balance Sheet Risk (Commitments) | (In Thousands) | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Commitments to extend credit | $231,011 | $184,364 | | Standby letters of credit | $8,644 | $7,027 | | **Total** | **$249,985** | **$201,639** | Consolidated Balance Sheet Highlights (Unaudited) | (In Thousands) | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$1,916,809** | **$1,940,809** | | Loans, net | $1,391,943 | $1,377,971 | | Total Deposits | $1,612,395 | $1,621,315 | | **Total Liabilities** | **$1,748,382** | **$1,768,535** | | **Total Shareholders' Equity** | **$168,427** | **$172,274** | Consolidated Statement of Income Highlights (Unaudited) | (In Thousands, Except Per Share Data) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net Interest Income | $12,853 | $12,070 | | Provision for Loan Losses | $150 | $515 | | Non-Interest Income | $2,412 | $2,614 | | Non-Interest Expense | $11,007 | $9,951 | | **Net Income** | **$3,432** | **$3,441** | | **Earnings Per Share - Diluted** | **$0.49** | **$0.49** | - The company reported a comprehensive loss of **$2.0 million** for Q1 2022, a significant shift from a comprehensive income of **$1.86 million** in Q1 2021, primarily due to a **$5.4 million** after-tax other comprehensive loss, driven by unrealized losses on available-for-sale securities[14](index=14&type=chunk) Consolidated Statement of Cash Flows Highlights (Unaudited) | (In Thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,090 | $9,390 | | Net cash (used for) provided by investing activities | $(28,911) | $814 | | Net cash (used for) provided by financing activities | $(23,238) | $54,126 | | **Net (Decrease) Increase in Cash** | **$(45,059)** | **$64,330** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reported stable net income of $3.4 million for Q1 2022, with EPS of $0.49, unchanged from Q1 2021, driven by improved net interest margin and reduced loan loss provision, despite higher non-interest expenses and a one-time branch closure charge, while maintaining a strong capital position [Earnings Summary](index=30&type=section&id=Earnings%20Summary) Net income for Q1 2022 was $3.43 million, nearly flat compared to $3.44 million in Q1 2021, with unchanged basic and diluted EPS of $0.49, impacted by after-tax securities losses and a one-time branch closure loss, while non-GAAP core earnings increased to $3.48 million GAAP to Non-GAAP Reconciliation | (In Thousands, Except Per Share Data) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | GAAP net income | $3,432 | $3,441 | | Less: net securities (losses) gains, net of tax | $(48) | $94 | | **Non-GAAP core earnings** | **$3,480** | **$3,347** | | **Non-GAAP core operating EPS** | **$0.50** | **$0.47** | - Return on average assets (ROA) was **0.72%** and return on average equity (ROE) was **8.17%** for Q1 2022, compared to **0.75%** and **8.59%** for the same period in 2021[114](index=114&type=chunk) [Net Interest Income and Margin](index=31&type=section&id=Net%20Interest%20Income%20and%20Margin) Net interest income for Q1 2022 increased to $12.85 million from $12.07 million in Q1 2021, with the net interest margin expanding by 5 basis points to 2.93% year-over-year, primarily driven by a significant decrease in total interest expense due to lower rates paid on deposits, partially offset by a decline in loan portfolio yield - Total interest income decreased slightly by **2.2%** YoY to **$14.28 million**, while total interest expense fell sharply by **43.7%** YoY to **$1.42 million**[121](index=121&type=chunk)[123](index=123&type=chunk) - The net interest margin increased to **2.93%** in Q1 2022 from **2.88%** in Q1 2021, primarily driven by a **35 bps** decline in the rate paid on interest-bearing deposits, led by a **94 bps** drop in the rate paid on time deposits[124](index=124&type=chunk) [Provision for Loan Losses and Asset Quality](index=33&type=section&id=Provision%20for%20Loan%20Losses%20and%20Asset%20Quality) The provision for loan losses was significantly reduced to $150 thousand for Q1 2022, reflecting improved economic conditions and reduced COVID-related loan deferrals, while asset quality improved with nonperforming loans decreasing to $5.3 million (0.38% of total loans) and the allowance for loan losses providing strong coverage of 265.5% of nonperforming loans - The provision for loan losses decreased to **$150 thousand** in Q1 2022 from **$515 thousand** in Q1 2021, attributed to economic improvement and reduced uncertainty from the COVID-19 pandemic[134](index=134&type=chunk) Nonperforming Loan Trend | (In Thousands) | March 31, 2022 | December 31, 2021 | March 31, 2021 | | :--- | :--- | :--- | :--- | | Total Nonperforming Loans | $5,281 | $6,250 | $9,272 | - The ratio of nonperforming loans to total loans improved to **0.38%** at March 31, 2022, from **0.45%** at December 31, 2021[135](index=135&type=chunk) - The allowance for loan losses to nonperforming loans ratio increased to **265.54%** at March 31, 2022, up from **226.82%** at the end of 2021, indicating stronger coverage[135](index=135&type=chunk) [Non-interest Income and Expense](index=35&type=section&id=Non-interest%20Income%20and%20Expense) Total non-interest income decreased by $202 thousand YoY to $2.4 million, primarily due to a $563 thousand reduction in gain on sale of loans, partially offset by a $360 thousand increase in loan broker commissions, while total non-interest expense rose by $1.06 million YoY to $11.0 million, driven by higher salaries and a one-time branch closure write-down - A decrease in 'Gain on sale of loans' by **$563 thousand** was largely offset by an increase in 'Loan broker commissions' of **$360 thousand**, reflecting a shift in business mix[139](index=139&type=chunk)[141](index=141&type=chunk) - Salaries and employee benefits, the largest expense component, increased by **11.9%** YoY to **$6.3 million** due to the current employment environment and retention efforts[142](index=142&type=chunk)[143](index=143&type=chunk) - Other non-interest expense increased by **$354 thousand**, primarily due to a **$254 thousand** write-down related to a branch closure[142](index=142&type=chunk) [Financial Condition Analysis](index=37&type=section&id=Financial%20Condition%20Analysis) Total assets decreased slightly to $1.92 billion, while gross loans grew by $13.8 million to $1.41 billion, led by residential and construction real estate, and the investment portfolio's fair value increased despite unrealized losses, with total deposits decreasing due to a strategic shift from higher-cost time deposits to core deposits, and borrowed funds reduced, maintaining a strong capital position - Gross loans increased by **0.99%** during the quarter to **$1.406 billion**, driven by growth in residential and construction real estate mortgages[148](index=148&type=chunk)[149](index=149&type=chunk) - Total deposits decreased by **$8.9 million**, reflecting a **$31.8 million** reduction in time deposits, partially offset by a **$22.8 million** increase in core deposits (demand, NOW, money market, and savings accounts)[155](index=155&type=chunk)[156](index=156&type=chunk) - Total borrowed funds decreased by **9.23%** to **$119.6 million**, mainly due to the maturity of **$13.0 million** in long-term FHLB borrowings[157](index=157&type=chunk)[158](index=158&type=chunk) Company Capital Ratios (March 31, 2022) | Ratio | Actual | Minimum to be Well Capitalized | | :--- | :--- | :--- | | Common Equity Tier I Capital | 10.730% | 6.500% | | Tier I Capital | 10.730% | 8.000% | | Total Capital | 11.690% | 10.000% | | Tier I Leverage | 8.330% | 5.000% | - The company's interest rate sensitivity analysis shows it is asset sensitive, with a **100 basis point** parallel upward shift in rates projected to increase net interest income by **6.17%** over the next twelve months[173](index=173&type=chunk)[177](index=177&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate risk and liquidity risk, which are monitored through various measures, with no substantial changes in the market risk profile since the 2021 year-end report, indicating the company is well-positioned to respond to market interest rate changes - The company's main market risks are identified as interest rate risk and liquidity risk[180](index=180&type=chunk) - No substantial changes in market risk exposure were reported compared to the information provided in the Annual Report on Form 10-K for the year ended December 31, 2021[180](index=180&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2022, with no material changes occurring during the quarter that affected internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report[182](index=182&type=chunk) - There were no material changes to the company's internal control over financial reporting during the first quarter of 2022[183](index=183&type=chunk) Part II Other Information [Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - There are no legal proceedings to report[185](index=185&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any common stock during the quarter ended March 31, 2022, but subsequently, on April 12, 2022, the Board of Directors authorized a new share repurchase program for up to 354,000 shares, or approximately 5% of outstanding shares, effective through April 30, 2023 - No shares of common stock were repurchased during the three months ended March 31, 2022[188](index=188&type=chunk) - A new stock repurchase plan was authorized on April 12, 2022, allowing for the repurchase of up to **354,000 shares** through April 30, 2023[188](index=188&type=chunk) [Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO as required by the Sarbanes-Oxley Act, and the interactive data files (XBRL) - Exhibits filed include CEO and CFO certifications under Rule 13a-14(a) and Section 1350, as well as XBRL interactive data files[194](index=194&type=chunk)

Interest Income and Expenses - Reported net interest income increased by $1,495,000 to $49,718,000 for the year ended December 31, 2021, compared to 2020, despite a decrease in yield on earning assets to 3.35% from 3.80%[104] - Total interest income decreased by $4,224,000 for 2021, primarily due to a decrease in the tax equivalent yield on the loan portfolio, which fell by 28 basis points[104] - Interest expense decreased by $5,719,000 to $8,696,000 for the year ended December 31, 2021, driven by a 51 basis point decrease in the average rate paid on interest-bearing deposits[105] - Total interest income for 2021 was $58,414,000, down from $62,638,000 in 2020[112] - Net interest income on a fully taxable equivalent basis for 2021 was $50,167,000, compared to $48,699,000 in 2020[112] - The interest rate spread for 2021 was 2.64%, compared to 2.61% in 2020[109] - The average yield on total interest-earning assets decreased to 3.35% in 2021 from 3.80% in 2020[109] Loan Portfolio and Allowance for Loan Losses - The allowance for loan losses increased from $13,803,000 at December 31, 2020 to $14,176,000 at December 31, 2021, representing 1.02% of total loans[118] - The provision for loan losses totaled $640,000 for the year ended December 31, 2021, a significant decrease from $2,625,000 in 2020[119] - Nonperforming loans decreased by $4,084,000 in 2021 as the economic environment improved[119] - The total amount of loans with variable interest rates was $1,077,110,000, which is approximately 77.3% of total loans[140] - The total amount of loans with fixed interest rates was $314,736,000, accounting for about 22.7% of total loans[140] - The allowance for loan losses at the end of 2021 was $14,176,000, an increase from $13,803,000 in 2020, reflecting a 2.69% growth[150] - The ratio of allowance for loan losses to total loans was 1.02% as of December 31, 2021, compared to 1.03% in 2020[151] - Non-accrual loans decreased to $5,389,000 in 2021 from $9,122,000 in 2020, indicating improved loan portfolio performance[156] Non-Interest Income and Expenses - Total non-interest income decreased by $499,000 from 2020 to 2021, with a notable decrease in net securities gains by $893,000[122] - Debit card income increased by $231,000 in 2021, attributed to a rise in debit card usage as COVID-19 restrictions eased[122] - Total non-interest expenses increased by $1,837,000 from 2020 to 2021, driven by routine wage increases and a return to full staffing levels[126] - Total non-interest expenses increased to $40,905,000 in 2021, up from $39,068,000 in 2020, reflecting an increase of about 5%[196] Assets and Equity - The total assets increased to $1,889,942,000 in 2021 from $1,780,104,000 in 2020[109] - Shareholders' equity rose by $8,128,000 to $172,274,000 at December 31, 2021, resulting in a book value per share of $24.37[162] - The Corporation's total assets increased to $1,940,809,000 in 2021 from $1,834,643,000 in 2020, representing a growth of approximately 5.8%[194] - The total liabilities of the Corporation were $1,768,535,000 in 2021, compared to $1,670,497,000 in 2020, showing an increase of approximately 5.9%[194] Cash Flow and Financing Activities - Net cash provided by operating activities decreased to $17,923,000 in 2021 from $22,000,000 in 2020, reflecting a decline of 18.9%[204] - The net cash used for investing activities was $55,979,000 in 2021, compared to a net cash provided of $10,739,000 in 2020, indicating a significant shift in investment strategy[204] - The net cash provided by financing activities was $88,560,000 in 2021, down from $153,508,000 in 2020, indicating a change in financing strategy[204] Regulatory and Compliance - The Corporation's common equity tier 1 capital to risk-weighted assets was 10.791% at December 31, 2021, exceeding the minimum requirement of 7.000%[164] - Management evaluated the Federal Home Loan Bank stock and concluded it was not impaired, maintaining regulatory capital ratios above requirements[287] Earnings and Dividends - Consolidated net income rose to $16,048,000 in 2021, compared to $15,224,000 in 2020, marking an increase of approximately 5%[199] - Earnings per share (basic and diluted) increased to $2.27 in 2021 from $2.16 in 2020, representing a growth of about 5%[196] - Dividends declared for the twelve months ended December 31, 2021, were $1.28 per share, consistent with the previous year[162] Investment Portfolio - The fair value of the investment portfolio increased by $4,109,000 from December 31, 2020, to December 31, 2021, reaching $167,698,000[133] - Approximately 85% of the debt securities portfolio is rated A or higher, indicating strong credit quality[133] - The total amortized cost of investment securities as of December 31, 2021, was $163,406,000, with a fair value of $166,410,000[275] Accounting Standards Updates - The Company is currently evaluating the impact of various ASUs on its financial position and results of operations[257][263][264] - ASU 2020-06 simplifies accounting for certain financial instruments, effective for public business entities after December 15, 2021, and for all other entities after December 15, 2023[259]