Penns Woods Bancorp(PWOD) - 2021 Q4 - Annual Report

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]