PWOD Penns Woods Bancorp Inc

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 Officer110 Reynolds StreetWilliamsport, PA 17702570-322-1111		e-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 Rate				Average Balance (1)				Interest				Average Rate
ASSETS:
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 Rate				Average Balance (1)				Interest				Average Rate
ASSETS:
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