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Penns Woods Bancorp, Inc. Reports Second Quarter 2023 Earnings
المصدر: Nasdaq GlobeNewswire / 25 يوليو 2023 13:52:07 America/New_York
WILLIAMSPORT, Pa., July 25, 2023 (GLOBE NEWSWIRE) -- Penns Woods Bancorp, Inc. (NASDAQ: PWOD)
Penns Woods Bancorp, Inc. achieved net income of $8.8 million for the six months ended June 30, 2023, resulting in basic and diluted earnings per share of $1.25.
Highlights
- Net income, as reported under GAAP, for the three and six months ended June 30, 2023 was $4.2 million and $8.8 million, compared to $4.2 million and $7.7 million for the same periods of 2022. Results for the three and six months ended June 30, 2023 compared to 2022 were impacted by a decrease in after-tax securities losses of $12,000 (from a loss of $43,000 to a loss of $31,000) for the three month period and a decrease in after-tax securities losses of $29,000 (from a loss of $91,000 to a loss of $62,000) for the six month period. In addition, bank-owned life insurance income increased due to a gain on death benefit of $380,000 during the six months ended June 30, 2023, while an after-tax loss of $201,000 related to a branch closure negatively impacted the six months ended June 30, 2022.
- The provision for credit losses decreased $850,000 and $629,000 for the three and six months ended June 30, 2023 to a recovery of $1.2 million and $1.1 million, respectively compared to a provision of $330,000 and $480,000 for the 2022 periods due primarily to a recovery on a commercial loan during the second quarter of 2023. The decrease in the provision for credit losses also resulted from improving loan portfolio credit metrics and a minimal level of loan charge-offs.
- Basic and diluted earnings per share for the three and six months ended June 30, 2023 were $0.59 and $1.25. Basic and diluted earnings per share for the three and six months ended June 30, 2022 were $0.60 and $1.08.
- Annualized return on average assets was 0.80% for three months ended June 30, 2023, compared to 0.88% for the corresponding period of 2022. Annualized return on average assets was 0.86% for the six months ended June 30, 2023, compared to 0.80% for the corresponding period of 2022.
- Annualized return on average equity was 9.53% for the three months ended June 30, 2023, compared to 10.15% for the corresponding period of 2022. Annualized return on average equity was 10.37% for the six months ended June 30, 2023, compared to 9.20% for the corresponding period of 2022.
Net Income
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 $4.2 million and $8.9 million for the three and six months ended June 30, 2023 compared to $4.3 million and $7.8 million for the same periods of 2022. Core earnings per share for the three and six months ended June 30, 2023 was $0.60 and $1.26 basic and diluted, compared to $0.61 and $1.10 basic and diluted core earnings per share for the same periods of 2022. Annualized core return on average assets and core return on average equity were 0.80% and 9.60% for the three months ended June 30, 2023, compared to 0.89% and 10.25% for the corresponding periods of 2022. Core return on average assets and core return on average equity were 0.86% and 10.44% for the six months ended June 30, 2023 compared to 0.81% and 9.31% for the corresponding periods of 2022. 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.
Net Interest Margin
The net interest margin for the three and six months ended June 30, 2023 was 2.77% and 2.92%, compared to 3.12% and 3.03% for the corresponding periods of 2022. The decrease in the net interest margin for the three and six month periods was driven by an increase in the rate paid on interest-bearing liabilities of 198 and 161 basis points ("bps"), respectively. The FOMC rate increases during 2022 and 2023 contributed to the increases in rate paid on interest-bearing liabilities as the rate paid on short-term borrowings increased 513 bps and 498 bps for the three and six month periods ended June 30, 2023 compared to the same periods of 2022. Short-term borrowings increased in volume and rate paid as this funding source was utilized to provide funding for the growth in the loan portfolio, resulting in an increase of $2.2 million and $3.7 million in expense for the three and six month periods ended June 30, 2023 compared to the same periods of 2022. The rate paid on interest-bearing deposits increased 158 and 127 bps for the three and six month periods ended June 30, 2023 compared to the corresponding periods of 2022 due to the FOMC rate actions and an increase in competition for deposits. The rates paid on time deposits significantly contributed to the increase in funding costs as rates paid for the three and six month periods ended June 30, 2023 compared to the same periods of 2022 increased 266 bps and 211 bps, respectively, as deposit gathering campaigns initiated in the latter part of 2022 continued throughout 2023. In addition, brokered deposit have been utilized to assist with the funding of the loan portfolio growth and contributed to the increase in time deposit funding costs. Partially offsetting the increase in funding cost was an increases in the yield on interest-earning assets and growth in the average balance of the earning asset portfolio compared to the same periods in 2022. The average loan portfolio balance increased $291.2 million and $278.9 million for the three and six month periods, respectively, as the average yield on the portfolio increased 81 and 71 bps for the same periods. The three and six month periods ended June 30, 2023 were impacted by an increase of 109 and 99 bps in the yield earned on the securities portfolio as legacy securities matured with the funds reinvested at higher rates.
Assets
Total assets increased to $2.1 billion at June 30, 2023, an increase of $243.5 million compared to June 30, 2022. Cash and cash equivalents decreased $46.1 million as interest-bearing accounts in other financial institutions decreased $11.9 million and fed funds sold decreased $40.0 million as excess liquidity was primarily utilized to fund the growth in the loan portfolio. Net loans increased $283.1 million to $1.8 billion at June 30, 2023 compared to June 30, 2022, as an emphasis was placed on commercial loan growth coupled with growth in indirect auto lending. The investment portfolio increased $5.1 million from June 30, 2022 to June 30, 2023 as restricted investment in bank stock increased $11.0 million as additional stock was required to be held in the Federal Home Loan Bank of Pittsburgh ("FHLB") due to an increase in the level of borrowings from the FHLB.
Non-performing Loans
The ratio of non-performing loans to total loans ratio decreased to 0.24% at June 30, 2023 from 0.34% at June 30, 2022, as non-performing loans decreased to $4.3 million at June 30, 2023 from $5.1 million at June 30, 2022. 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 been classified as individually evaluated loans that have a specific allocation recorded within the allowance for credit losses. Net loan recoveries of $349,000 for the six months ended June 30, 2023 impacted the allowance for credit losses, which was 0.66% of total loans at June 30, 2023 compared to 0.97% at June 30, 2022 (prior to the adoption of CECL).
Deposits
Deposits decreased $35.8 million to $1.6 billion at June 30, 2023 compared to June 30, 2022. Noninterest-bearing deposits decreased $48.4 million to $475.9 million at June 30, 2023 compared to June 30, 2022. Core deposits declined as deposits migrated from core deposit accounts into time deposits as market rates increased due to the FOMC rate increases and increased competition for deposits. Core deposit gathering efforts remained focused on increasing the utilization of electronic (internet and mobile) deposit banking by our customers. Interest-bearing deposits increased $12.5 million from June 30, 2022 to June 30, 2023 primarily due to increased utilization of brokered deposits of $79.2 million as this funding source was utilized to supplement funding loan portfolio growth, while reducing the need to draw upon available borrowing lines. A campaign to attract time deposits with a maturity of five to twenty-four months was started during the latter part of 2022 and has continued during the first six months of 2023.
Shareholders’ Equity
Shareholders’ equity increased $8.3 million to $174.4 million at June 30, 2023 compared to June 30, 2022. Accumulated other comprehensive loss of $13.8 million at June 30, 2023 increased from a loss of $9.7 million at June 30, 2022 as a result of a $9.8 million net unrealized loss on available for sale securities at June 30, 2023 compared to an unrealized loss of $6.2 million at June 30, 2022 coupled with an increase in loss of $622,000 in the defined benefit plan obligation. The current level of shareholders’ equity equates to a book value per share of $24.70 at June 30, 2023 compared to $23.56 at June 30, 2022, and an equity to asset ratio of 8.17% at June 30, 2023 and 8.78% at June 30, 2022. Dividends declared for the six months ended June 30, 2023 and 2022 were $0.64 per share.
Penns Woods Bancorp, Inc. is the parent company of Jersey Shore State Bank, which operates sixteen 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, 2022.
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
570-322-1111e-mail: pwod@pwod.com PENNS WOODS BANCORP, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)June 30, (In Thousands, Except Share and Per Share Data) 2023 2022 % Change ASSETS: Noninterest-bearing balances $ 32,265 $ 26,540 21.57 % Interest-bearing balances in other financial institutions 12,596 24,452 (48.49 )% Federal funds sold — 40,000 (100.00 )% Total cash and cash equivalents 44,861 90,992 (50.70 )% Investment debt securities, available for sale, at fair value 186,626 192,438 (3.02 )% Investment equity securities, at fair value 1,143 1,186 (3.63 )% Restricted investment in bank stock, at fair value 24,438 13,458 81.59 % Loans held for sale 3,049 3,857 (20.95 )% Loans 1,769,403 1,489,132 18.82 % Allowance for credit losses (11,592 ) (14,393 ) (19.46 )% Loans, net 1,757,811 1,474,739 19.19 % Premises and equipment, net 31,180 32,671 (4.56 )% Accrued interest receivable 9,498 8,246 15.18 % Bank-owned life insurance 33,524 34,115 (1.73 )% Investment in limited partnerships 8,402 4,901 71.43 % Goodwill 16,450 17,104 (3.82 )% Intangibles 260 396 (34.34 )% Operating lease right of use asset 2,586 2,747 (5.86 )% Deferred tax asset 6,332 5,689 11.30 % Other assets 9,159 9,267 (1.17 )% TOTAL ASSETS $ 2,135,319 $ 1,891,806 12.87 % LIABILITIES: Interest-bearing deposits $ 1,077,820 $ 1,065,291 1.18 % Noninterest-bearing deposits 475,937 524,288 (9.22 )% Total deposits 1,553,757 1,589,579 (2.25 )% Short-term borrowings 180,410 5,464 3,201.79 % Long-term borrowings 202,692 112,874 79.57 % Accrued interest payable 2,129 452 371.02 % Operating lease liability 2,642 2,800 (5.64 )% Other liabilities 19,287 14,583 32.26 % TOTAL LIABILITIES 1,960,917 1,725,752 13.63 % SHAREHOLDERS’ EQUITY: Preferred stock, no par value, 3,000,000 shares authorized; no shares issued — — n/a Common stock, par value $5.55, 22,500,000 shares authorized; 7,573,713 and 7,559,165 shares issued; 7,063,488 and 7,048,940 shares outstanding 42,077 41,995 0.20 % Additional paid-in capital 54,869 53,651 2.27 % Retained earnings 104,104 92,903 12.06 % Accumulated other comprehensive loss: Net unrealized loss on available for sale securities (9,753 ) (6,222 ) (56.75 )% Defined benefit plan (4,080 ) (3,458 ) (17.99 )% Treasury stock at cost, 510,225 (12,815 ) (12,815 ) — % TOTAL SHAREHOLDERS' EQUITY 174,402 166,054 5.03 % TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 2,135,319 $ 1,891,806 12.87 % PENNS WOODS BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)Three Months Ended June 30, Six Months Ended June 30, (In Thousands, Except Share and Per Share Data) 2023 2022 % Change 2023 2022 % Change INTEREST AND DIVIDEND INCOME: Loans including fees $ 19,846 $ 13,620 45.71 % $ 37,851 $ 26,658 41.99 % Investment securities: Taxable 1,287 864 48.96 % 2,505 1,601 56.46 % Tax-exempt 118 194 (39.18 )% 296 358 (17.32 )% Dividend and other interest income 642 506 26.88 % 1,105 842 31.24 % TOTAL INTEREST AND DIVIDEND INCOME 21,893 15,184 44.18 % 41,757 29,459 41.75 % INTEREST EXPENSE: Deposits 4,851 710 583.24 % 8,223 1,498 448.93 % Short-term borrowings 2,232 2 n/m 3,672 3 n/m Long-term borrowings 1,424 625 127.84 % 2,178 1,258 73.13 % TOTAL INTEREST EXPENSE 8,507 1,337 536.28 % 14,073 2,759 410.08 % NET INTEREST INCOME 13,386 13,847 (3.33 )% 27,684 26,700 3.69 % (Recovery) provision for loan credit (614 ) 330 (286.06 )% (605 ) 480 (226.04 )% (Recovery) provision for off balance sheet credit exposures (566 ) — n/a (504 ) — n/a TOTAL (RECOVERY) PROVISION FOR CREDIT LOSSES (1,180 ) 330 (457.58 )% (1,109 ) 480 (331.04 )% NET INTEREST INCOME AFTER (RECOVERY) PROVISION FOR CREDIT LOSSES 14,566 13,517 7.76 % 28,793 26,220 9.81 % NON-INTEREST INCOME: Service charges 516 509 1.38 % 1,012 1,004 0.80 % Debt securities losses, available for sale (19 ) (10 ) (90.00 )% (80 ) (12 ) (566.67 )% Net equity securities (losses) gains (20 ) (44 ) 54.55 % 1 (103 ) 100.97 % Bank-owned life insurance 166 161 3.11 % 722 331 118.13 % Gain on sale of loans 244 266 (8.27 )% 475 611 (22.26 )% Insurance commissions 115 107 7.48 % 280 277 1.08 % Brokerage commissions 141 158 (10.76 )% 306 358 (14.53 )% Loan broker income 317 371 (14.56 )% 487 912 (46.60 )% Debit card income 340 391 (13.04 )% 675 736 (8.29 )% Other 222 228 (2.63 )% 401 435 (7.82 )% TOTAL NON-INTEREST INCOME 2,022 2,137 (5.38 )% 4,279 4,549 (5.94 )% NON-INTEREST EXPENSE: Salaries and employee benefits 6,312 6,141 2.78 % 12,488 12,405 0.67 % Occupancy 772 740 4.32 % 1,638 1,650 (0.73 )% Furniture and equipment 790 746 5.90 % 1,636 1,638 (0.12 )% Software amortization 173 219 (21.00 )% 356 472 (24.58 )% Pennsylvania shares tax 279 396 (29.55 )% 527 785 (32.87 )% Professional fees 906 582 55.67 % 1,594 1,120 42.32 % Federal Deposit Insurance Corporation deposit insurance 452 228 98.25 % 697 430 62.09 % Marketing 272 220 23.64 % 427 284 50.35 % Intangible amortization 32 41 (21.95 )% 67 85 (21.18 )% Other 1,441 1,107 30.17 % 2,897 2,558 13.25 % TOTAL NON-INTEREST EXPENSE 11,429 10,420 9.68 % 22,327 21,427 4.20 % INCOME BEFORE INCOME TAX PROVISION 5,159 5,234 (1.43 )% 10,745 9,342 15.02 % INCOME TAX PROVISION 988 1,003 (1.50 )% 1,916 1,679 14.12 % NET INCOME AVAILABLE TO COMMON SHAREHOLDERS' $ 4,171 $ 4,231 (1.42 )% $ 8,829 $ 7,663 15.22 % EARNINGS PER SHARE - BASIC $ 0.59 $ 0.60 (1.67 )% $ 1.25 $ 1.08 15.74 % EARNINGS PER SHARE - DILUTED $ 0.59 $ 0.60 (1.67 )% $ 1.25 $ 1.08 15.74 % WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC 7,062,018 7,059,045 0.04 % 7,060,218 7,065,772 (0.08 )% WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED 7,062,018 7,059,045 0.04 % 7,060,218 7,065,772 (0.08 )% PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES
(UNAUDITED)Three Months Ended June 30, 2023 June 30, 2022 (Dollars in Thousands) Average
Balance (1)Interest Average
RateAverage
Balance (1)Interest Average
RateASSETS: Tax-exempt loans (3) $ 66,613 $ 461 2.78 % $ 52,886 $ 331 2.51 % All other loans 1,672,111 19,482 4.67 % 1,394,631 13,358 3.84 % Total loans (2) 1,738,724 19,943 4.60 % 1,447,517 13,689 3.79 % Federal funds sold — — n/a 48,352 154 1.28 % Taxable securities 190,862 1,807 3.84 % 154,484 1,048 2.75 % Tax-exempt securities (3) 23,310 150 2.61 % 45,824 245 2.17 % Total securities 214,172 1,957 3.71 % 200,308 1,293 2.62 % Interest-bearing balances in other financial institutions 9,961 122 4.91 % 102,172 168 0.66 % Total interest-earning assets 1,962,857 22,022 4.50 % 1,798,349 15,304 3.42 % Other assets 133,239 131,117 TOTAL ASSETS $ 2,096,096 $ 1,929,466 LIABILITIES AND SHAREHOLDERS’ EQUITY: Savings $ 232,889 155 0.27 % $ 248,063 24 0.04 % Super Now deposits 271,438 913 1.35 % 388,002 239 0.25 % Money market deposits 293,682 1,665 2.27 % 304,636 210 0.28 % Time deposits 261,947 2,118 3.24 % 164,301 237 0.58 % Total interest-bearing deposits 1,059,956 4,851 1.84 % 1,105,002 710 0.26 % Short-term borrowings 169,723 2,232 5.27 % 5,636 2 0.14 % Long-term borrowings 182,719 1,424 3.13 % 112,901 625 2.22 % Total borrowings 352,442 3,656 4.16 % 118,537 627 2.12 % Total interest-bearing liabilities 1,412,398 8,507 2.42 % 1,223,539 1,337 0.44 % Demand deposits 484,607 518,467 Other liabilities 24,059 20,708 Shareholders’ equity 175,032 166,752 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 2,096,096 $ 1,929,466 Interest rate spread (3) 2.08 % 2.98 % Net interest income/margin (3) $ 13,515 2.77 % $ 13,967 3.12 % 1. Information on this table has been calculated using average daily balance sheets to obtain average balances.
2. Non-accrual loans have been included with loans for the purpose of analyzing net interest earnings.
3. Income and rates on fully taxable equivalent basis include an adjustment for the difference between annual income from tax-exempt obligations and the taxable equivalent of such income at the standard tax rate of 21%Three Months Ended June 30, 2023 2022 Total interest income $ 21,893 $ 15,184 Total interest expense 8,507 1,337 Net interest income (GAAP) 13,386 13,847 Tax equivalent adjustment 129 120 Net interest income (fully taxable equivalent) (non-GAAP) $ 13,515 $ 13,967 PENNS WOODS BANCORP, INC.
AVERAGE BALANCES AND INTEREST RATES
(UNAUDITED)Six Months Ended June 30, 2023 June 30, 2022 (Dollars in Thousands) Average
Balance (1)Interest Average
RateAverage
Balance (1)Interest Average
RateASSETS: Tax-exempt loans (3) $ 65,669 $ 909 2.79 % $ 50,775 $ 639 2.54 % All other loans 1,636,798 37,133 4.57 % 1,372,810 26,153 3.84 % Total loans (2) 1,702,467 38,042 4.51 % 1,423,585 26,792 3.80 % Federal funds sold — — n/a 49,171 247 1.01 % Taxable securities 186,168 3,386 3.67 % 149,489 1,968 2.67 % Tax-exempt securities (3) 28,409 375 2.66 % 43,416 453 2.12 % Total securities 214,577 3,761 3.53 % 192,905 2,421 2.54 % Interest-bearing balances in other financial institutions 9,985 224 4.52 % 129,704 228 0.35 % Total interest-earning assets 1,927,029 42,027 4.20 % 1,795,365 29,688 3.34 % Other assets 132,561 128,624 TOTAL ASSETS $ 2,059,590 $ 1,923,989 LIABILITIES AND SHAREHOLDERS’ EQUITY: Savings $ 238,067 275 0.23 % $ 244,528 46 0.04 % Super Now deposits 318,669 1,852 1.17 % 379,496 434 0.23 % Money market deposits 291,719 2,945 2.04 % 301,744 396 0.26 % Time deposits 225,414 3,151 2.82 % 177,487 622 0.71 % Total interest-bearing deposits 1,073,869 8,223 1.54 % 1,103,255 1,498 0.27 % Short-term borrowings 145,871 3,672 5.09 % 5,416 3 0.11 % Long-term borrowings 151,169 2,178 2.91 % 114,077 1,258 2.23 % Total borrowings 297,040 5,850 3.98 % 119,493 1,261 2.13 % Total interest-bearing liabilities 1,370,909 14,073 2.07 % 1,222,748 2,759 0.46 % Demand deposits 491,356 512,441 Other liabilities 27,050 22,184 Shareholders’ equity 170,275 166,616 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 2,059,590 $ 1,923,989 Interest rate spread (3) 2.13 % 2.88 % Net interest income/margin (3) $ 27,954 2.92 % $ 26,929 3.03 % 1. Information on this table has been calculated using average daily balance sheets to obtain average balances.
2. Non-accrual loans have been included with loans for the purpose of analyzing net interest earnings.
3. Income and rates on fully taxable equivalent basis include an adjustment for the difference between annual income from tax-exempt obligations and the taxable equivalent of such income at the standard tax rate of 21%Six Months Ended June 30, 2023 2022 Total interest income $ 41,757 $ 29,459 Total interest expense 14,073 2,759 Net interest income 27,684 26,700 Tax equivalent adjustment 270 229 Net interest income (fully taxable equivalent) (non-GAAP) $ 27,954 $ 26,929 (Dollars in Thousands, Except Per Share Data, Unaudited) Quarter Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Operating Data Net income $ 4,171 $ 4,658 $ 4,509 $ 5,250 $ 4,231 Net interest income 13,386 14,298 15,548 15,532 13,847 (Recovery) provision for credit losses (1,180 ) 71 575 855 330 Net security losses (39 ) (40 ) (39 ) (211 ) (54 ) Non-interest income, excluding net security losses 2,061 2,297 2,120 2,294 2,191 Non-interest expense 11,429 10,898 11,251 10,320 10,420 Performance Statistics Net interest margin 2.77 % 3.10 % 3.42 % 3.47 % 3.12 % Annualized return on average assets 0.80 % 0.92 % 0.92 % 1.09 % 0.88 % Annualized return on average equity 9.53 % 11.12 % 10.92 % 12.61 % 10.15 % Annualized net loan charge-offs (recoveries) to average loans (0.11 )% 0.03 % 0.04 % 0.01 % (0.01 )% Net (recoveries) charge-offs (472 ) 123 149 37 (40 ) Efficiency ratio 73.78 % 65.46 % 59.79 % 57.70 % 64.72 % Per Share Data Basic earnings per share $ 0.59 $ 0.66 $ 0.64 $ 0.74 $ 0.60 Diluted earnings per share 0.59 0.64 0.64 0.74 0.60 Dividend declared per share 0.32 0.32 0.32 0.32 0.32 Book value 24.70 24.64 23.76 23.32 23.56 Common stock price: High 27.34 27.77 26.89 24.29 24.35 Low 21.95 21.90 23.15 22.02 22.34 Close 25.03 23.10 26.62 22.91 23.09 Weighted average common shares: Basic 7,062 7,058 7,055 7,051 7,059 Fully Diluted 7,062 7,334 7,055 7,051 7,059 End-of-period common shares: Issued 7,574 7,570 7,567 7,563 7,559 Treasury (510 ) (510 ) (510 ) (510 ) (510 ) (Dollars in Thousands) Quarter Ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Financial Condition Data: General Total assets $ 2,135,319 $ 2,065,143 $ 2,000,080 $ 1,905,116 $ 1,891,806 Loans, net 1,757,811 1,688,289 1,624,094 1,545,489 1,474,739 Goodwill 16,450 16,450 16,450 17,104 17,104 Intangibles 260 292 327 361 396 Total deposits 1,553,757 1,638,835 1,556,460 1,590,415 1,589,579 Noninterest-bearing 475,937 502,352 519,063 537,403 524,288 Savings 229,108 239,526 247,952 249,532 249,057 NOW 238,353 363,548 372,574 392,140 353,102 Money Market 296,957 300,273 270,589 268,532 309,453 Time Deposits 226,224 191,203 137,949 137,348 145,714 Brokered Deposits 87,178 41,933 8,333 5,460 7,965 Total interest-bearing deposits 1,077,820 1,136,483 1,037,397 1,053,012 1,065,291 Core deposits* 1,240,355 1,405,699 1,410,178 1,447,607 1,435,900 Shareholders’ equity 174,402 173,970 167,665 164,489 166,054 Asset Quality Non-performing loans $ 4,276 $ 4,766 $ 4,890 $ 5,743 $ 5,100 Non-performing loans to total assets 0.20 % 0.23 % 0.24 % 0.30 % 0.27 % Allowance for loan losses 11,592 11,734 15,637 15,211 14,393 Allowance for loan losses to total loans 0.66 % 0.69 % 0.95 % 0.97 % 0.97 % Allowance for loan losses to non-performing loans 271.09 % 246.20 % 319.78 % 264.86 % 282.22 % Non-performing loans to total loans 0.24 % 0.28 % 0.30 % 0.37 % 0.34 % Capitalization Shareholders’ equity to total assets 8.17 % 8.42 % 8.40 % 8.63 % 8.78 % * Core deposits are defined as total deposits less time deposits and brokered deposits.
Reconciliation of GAAP and Non-GAAP Financial Measures
(UNAUDITED)Three Months Ended June 30, Six Months Ended June 30, (Dollars in Thousands, Except Per Share Data) 2023 2022 2023 2022 GAAP net income $ 4,171 $ 4,231 $ 8,829 $ 7,663 Net securities losses, net of tax 31 43 62 91 Non-GAAP core earnings $ 4,202 $ 4,274 $ 8,891 $ 7,754 Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Return on average assets (ROA) 0.80 % 0.88 % 0.86 % 0.80 % Net securities losses, net of tax — % 0.01 % — % 0.01 % Non-GAAP core ROA 0.80 % 0.89 % 0.86 % 0.81 % Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Return on average equity (ROE) 9.53 % 10.15 % 10.37 % 9.20 % Net securities losses, net of tax 0.07 % 0.10 % 0.07 % 0.11 % Non-GAAP core ROE 9.60 % 10.25 % 10.44 % 9.31 % Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Basic earnings per share (EPS) $ 0.59 $ 0.60 $ 1.25 $ 1.08 Net securities losses, net of tax 0.01 0.01 0.01 0.02 Non-GAAP basic core EPS $ 0.60 $ 0.61 $ 1.26 $ 1.10 Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Diluted EPS $ 0.59 $ 0.60 $ 1.25 $ 1.08 Net securities losses, net of tax 0.01 0.01 0.01 0.02 Non-GAAP diluted core EPS $ 0.60 $ 0.61 $ 1.26 $ 1.10 
- Net income, as reported under GAAP, for the three and six months ended June 30, 2023 was $4.2 million and $8.8 million, compared to $4.2 million and $7.7 million for the same periods of 2022. Results for the three and six months ended June 30, 2023 compared to 2022 were impacted by a decrease in after-tax securities losses of $12,000 (from a loss of $43,000 to a loss of $31,000) for the three month period and a decrease in after-tax securities losses of $29,000 (from a loss of $91,000 to a loss of $62,000) for the six month period. In addition, bank-owned life insurance income increased due to a gain on death benefit of $380,000 during the six months ended June 30, 2023, while an after-tax loss of $201,000 related to a branch closure negatively impacted the six months ended June 30, 2022.