Penns Woods Bancorp(US:PWOD)2025-03-13 19:04Interest Income and Expense - Reported net interest income increased by $3,916,000 to $58,880,000 for the year ended December 31, 2024, compared to 2023 [115]. - Total interest income rose by $18,103,000 or $18,064,000 on a tax equivalent basis, primarily due to growth in the loan portfolio balance and yield [115]. - Interest expense increased by $14,187,000 to $50,818,000 for the year ended December 31, 2024, driven by a 96 basis point increase in the average rate paid on interest-bearing deposits [116]. - The average rate paid on time deposits increased by 87 basis points, contributing to the rise in interest expense [116]. - Total interest income for 2023 was $91,595,000, up from $64,928,000 in 2022, reflecting a significant increase in the loan portfolio [123]. - Net interest income for 2023 was $54,964,000, a decrease of $2,816,000 compared to 2022 [117]. - The interest rate spread for 2024 was 1.98%, down from 2.10% in 2023 [120]. - The company experienced a net increase in interest income of $3,877,000 from 2023 to 2024, despite a decrease in net interest income from 2022 to 2023 [125]. Credit Losses and Allowance - The allowance for credit losses increased from $11,446,000 at December 31, 2023 to $11,848,000 at December 31, 2024, representing 0.63% of total loans compared to 0.62% in the previous year [130]. - The provision for loan credit losses totaled $942,000 for the year ended December 31, 2024, compared to a recovery of $927,000 for the year ended December 31, 2023, reflecting a significant increase in net charge-offs and gross loan growth of $37,314,000 [131]. - The allowance for credit losses decreased from $15,637,000 at December 31, 2022 to $11,446,000 at December 31, 2023, primarily due to the adoption of CECL, which reduced the reserve by $3,789,000 [132]. - Non-performing loans increased due to the addition of a commercial relationship during 2024, with the majority being secured loans with strong underlying financial positions [131]. - The allowance for credit losses allocated to commercial, financial, and agricultural loans was $2,323,000, representing 1.10% of total loans in that category [167]. - The total non-accrual loans outstanding were $4,388,000, which is 0.23% of total loans [167]. - The allowance for credit losses allocated to consumer automobile loans was $2,909,000, with a ratio of net charge-offs to recoveries at (0.37)% [167]. - The allowance for credit losses (ACL) increased to $(11,848,000) in 2024 from $(11,446,000) in 2023, indicating a rise in expected credit losses [307]. Non-Interest Income and Expenses - Total non-interest income increased by $1,243,000 from $8,375,000 in 2023 to $9,618,000 in 2024, with notable increases in gain on sale of loans and loan broker income due to higher mortgage volume [135]. - Salaries and employee benefits increased by $1,194,000 from $25,062,000 in 2023 to $26,256,000 in 2024, primarily due to routine wage and benefit increases [140]. - Total non-interest expenses rose by $1,988,000 from $44,496,000 in 2023 to $46,484,000 in 2024, with merger-related expenses of $735,000 incurred during the fourth quarter of 2024 [139]. - Total non-interest expense increased to $46,484 thousand in 2024, up from $44,496 thousand in 2023, a rise of 4.5% [213]. Loans and Deposits - Gross loans increased by $200,033,000, or 12.2%, from $1,639,731,000 in 2022 to $1,839,764,000 in 2023 [152]. - The residential loan segment increased by $31,906,000, or 4.00%, from $798,501,000 in 2023 to $830,407,000 in 2024 [153]. - The total loans outstanding as of December 31, 2024 amounted to $1,876,115,000, with a net charge-off of $540,000 or 0.03% of average loans for the year [162]. - Total average deposits increased by $89,919,000 or 5.72% from 2023 to 2024, with time deposits rising by $167,617,000 [175]. - The net loans to total deposits ratio was 109% as of December 31, 2024, indicating a strong liquidity position [188]. - The total past due loans (30 to 89 days) increased to $22,773,000 in 2024 from $16,553,000 in 2023, marking a growth of about 37.0% [306]. - The total past due loans (90 days or more) also increased to $6,064,000 in 2024 from $3,148,000 in 2023, reflecting a rise of approximately 92.0% [306]. Shareholders' Equity and Income - Shareholders' equity increased by $13,675,000 to $205,231,000 at December 31, 2024, resulting in a book value per share of $27.16 [182]. - Consolidated net income for 2024 was $17,739 thousand, compared to $16,608 thousand in 2023, reflecting a year-over-year increase of 6.8% [213]. - The percentage of dividends declared to net income was 54.38% in 2024, slightly down from 55.18% in 2023 [186]. - The company declared dividends of $1.28 per share, totaling $9,646,000 in 2024, compared to $9,164,000 in 2023 [219]. Investment Portfolio - The fair value of the investment portfolio decreased by $2,748,000 from December 31, 2022, to December 31, 2023, primarily due to a decrease in the municipal segment [147]. - The total investment portfolio decreased by $6,414,000, or 3.34%, from $192,067,000 in 2023 to $185,653,000 in 2024 [148]. - Approximately 82% of the debt securities portfolio is currently rated A or higher by S&P or Moody's, indicating strong credit quality [146]. - The total yield of the investment portfolio was 3.90% as of December 31, 2024 [148]. - The net unrealized loss on available-for-sale securities was $(4,567,000) as of December 31, 2024, compared to $(6,396,000) in 2023 [286]. Mergers and Acquisitions - The merger agreement between Penns Woods Bancorp, Inc. and Northwest Bancshares, Inc. may impact future operational efficiencies and integration efforts [208]. - The Corporation will merge with Northwest Bancshares, Inc., with each share of the Corporation's common stock converting into 2.385 shares of Northwest common stock [229]. - The Merger requires approval from regulatory authorities and shareholders, with a special meeting scheduled for April 22, 2025 [230]. Management and Operational Strategies - Management's review of the loan portfolio includes assessing loan quality, analyzing delinquencies, and evaluating potential charge-offs and recoveries [157]. - The Corporation's liquidity management includes cash on hand, loan repayments, and sales of investments, ensuring sufficient resources for funding needs [191]. - The Corporation maintains a gap position that is asset sensitive, with a focus on short-term funding and a slight lengthening of the investment portfolio due to higher yields [194]. - Management emphasizes interest rate sensitivity and utilizes a market value at risk calculation to monitor the effects of interest rate changes on shareholders' equity [195]. - The Corporation's asset/liability management aims to match maturities and rates between assets and liabilities to cope with market rate fluctuations [193].