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PW

PENNS WOODS BANCORP INC (PWOD)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 EPS was $0.64, up 106% year over year from $0.31; net income rose to $4.801M from $2.224M, driven by higher net interest income and lower non-interest expense versus Q3 2023 . Net interest margin expanded to 2.88% from 2.65% in Q3 2023 and from 2.83% in Q2 2024, reflecting repricing of legacy assets and portfolio growth .
  • Funding costs continued to rise: annualized cost of total deposits increased to 2.27% vs 2.14% in Q2 and 1.64% in Q3 2023, amid competition and migration into time deposits; efficiency ratio improved to 62.26% from 66.25% in Q2 and 72.76% in Q3 2023 .
  • Credit metrics mixed: NPLs rose to 0.42% of loans vs 0.36% in Q2 and 0.20% in Q3 2023; allowance for credit losses held at 0.62% of loans; net charge-offs were $328k in Q3 after recoveries in Q2 .
  • Balance sheet trends: total assets reached $2.259B; interest-bearing deposits grew $151.6M YoY; brokered deposits rose to $167.7M to fund loan growth while reducing reliance on short-term borrowings; dividend held at $0.32/share (Q4 declaration) .

What Went Well and What Went Wrong

What Went Well

  • Net interest margin expanded to 2.88% QoQ and YoY; management cited “repricing of legacy assets coupled with portfolio growth” and higher securities yields as drivers .
  • Efficiency improved meaningfully: efficiency ratio fell to 62.26% from 66.25% in Q2 and 72.76% in Q3 2023, supporting stronger profitability metrics (ROA 0.86%, ROE 9.60%) .
  • Funding mix optimization: “Brokered deposits have been utilized to assist with funding the loan portfolio growth… while lowering the reliance on higher cost short-term borrowings” .

What Went Wrong

  • Deposit costs rose sharply: rate paid on interest-bearing deposits increased 76 bps YoY in Q3 ($3.1M higher expense), with time deposit rates up 70 bps ($2.2M added expense) due to competition and deposit migration .
  • Credit quality pressure: NPL ratio increased to 0.42% (from 0.36% in Q2 and 0.20% in Q3 2023); net charge-offs were $328k in Q3 (vs net recoveries in Q2) .
  • Core deposits softness: core deposits declined $6.6M YoY as customers sought higher yields in time deposits, though core balances remained broadly stable around ~$1.2B over five quarters .

Financial Results

MetricQ3 2023Q1 2024Q2 2024Q3 2024
Total interest and dividend income ($USD Thousands)$23,921 $26,230 $27,029 $28,188
Net interest income ($USD Thousands)$13,332 $13,746 $14,515 $15,056
Provision for credit losses ($USD Thousands)$1,372 $138 $(1,177) $740
Non-interest income ($USD Thousands)$1,875 $2,462 $2,025 $2,421
Non-interest expense ($USD Thousands)$11,172 $11,623 $10,996 $10,884
Net income ($USD Thousands)$2,224 $3,808 $5,390 $4,801
Diluted EPS ($USD)$0.31 $0.51 $0.72 $0.64
Net interest margin (%)2.65% 2.69% 2.83% 2.88%
Annualized cost of total deposits (%)1.64% 2.01% 2.14% 2.27%
Efficiency ratio (%)72.76% 71.41% 66.25% 62.26%

KPIs and Balance Sheet

KPIQ3 2023Q1 2024Q2 2024Q3 2024
Total assets ($USD Billions)$2.176B $2.210B $2.235B $2.259B
Loans, net ($USD Billions)$1.806B $1.844B $1.855B $1.864B
Noninterest-bearing deposits ($USD Millions)$471.5 $471.5 $461.1 $452.9
Interest-bearing deposits ($USD Millions)$1,095.8 $1,147.1 $1,187.0 $1,247.4
Brokered deposits ($USD Millions)$106.7 $125.8 $128.5 $167.7
NPLs to total loans (%)0.20% 0.43% 0.36% 0.42%
ACL to total loans (%)0.71% 0.62% 0.60% 0.62%
Net charge-offs (recoveries) ($USD Thousands)$33 $380 $(396) $328
ROA (annualized, %)0.41% 0.69% 0.97% 0.86%
ROE (annualized, %)5.06% 8.03% 11.12% 9.60%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quarterly cash dividend per shareQ4 2024$0.32 (Q3 declaration maintained) $0.32 payable Dec 23, 2024 Maintained
Deposit campaigns focusOngoing5–24 months maturities in 2022–2024 Focus centered on 5 months in Q3 2024 Maintained emphasis

Note: No formal revenue/EPS guidance ranges were provided in Q3 materials .

Earnings Call Themes & Trends

No earnings call transcript was found for Q3 2024 in our document set; themes below synthesize management commentary from earnings press releases.

TopicPrevious Mentions (Q1 and Q2 2024)Current Period (Q3 2024)Trend
Net interest margin and asset repricingNIM 2.69% in Q1; pressure from higher deposit/borrowing costs; asset yield uplift from repricing and higher securities yields NIM expanded to 2.88%; uplift from repricing and portfolio growth; securities yield +55–70 bps YoY Improving
Deposit competition and migrationDeposit costs up sharply; migration from core to time deposits; utilization of brokered deposits Continued migration to time deposits; deposit cost up 76 bps YoY; brokered deposits up to $167.7M Persisting headwind on funding costs
Loan growth emphasisCommercial and indirect auto lending drove loan growth; average loans +$185.5M YoY in Q1, +$120.8M YoY in Q2 Net loans +$58.0M YoY; continued focus on commercial and indirect auto Moderating but steady
Credit quality and NPLsNPLs rose to 0.43% in Q1; Q2 improved to 0.36% with recoveries NPLs at 0.42%; net charge-offs in Q3; ACL steady at 0.62% Mixed; slightly weaker vs Q2
Borrowings relianceShort-term borrowings increased in Q1 to fund loans; Q2 reliance reduced via brokered deposits Short-term borrowings decreased YoY; brokered deposits used to reduce reliance on lines Positive mix shift
AOCI and equityAOCI improved; book value per share increased; ATM issuance in 2023 boosted capital Equity up to $203.7M; BVPS $26.96; tangible BVPS $24.77; AOCI loss decreased materially Improving capital and TBVPS

Management Commentary

  • “Results… were impacted by an increase in net interest income… as the cost of funds has stabilized.” (Q3 press release highlights) .
  • “Driving the increase in the yield and interest income on the earning assets portfolio was the repricing of legacy assets coupled with portfolio growth.” .
  • “Brokered deposits have been utilized to assist with funding the loan portfolio growth and contributed to the increase in time deposit funding costs, while lowering the reliance on higher cost short-term borrowings.” .
  • “Core deposits have remained stable at $1.2 billion over the past five quarters.” .
  • “Exposure to non-owner occupied office space is minimal at $13.9 million… with none of these loans being delinquent.” .

Q&A Highlights

No earnings call transcript for Q3 2024 was identified; therefore Q&A highlights and any call-based guidance clarifications are unavailable in our sources [List: earnings-call-transcript returned none].

Estimates Context

  • Wall Street consensus estimates (S&P Global) for PWOD Q3 2024 EPS and revenue were unavailable in our SPGI data set; PWOD lacks a current Capital IQ mapping, suggesting limited formal coverage. As a result, we cannot assess beat/miss versus consensus [GetEstimates error].
MetricQ3 2024 ActualConsensus EstimateSurprise
EPS ($)$0.64 N/AN/A
Total interest and dividend income ($USD Thousands)$28,188 N/AN/A

Key Takeaways for Investors

  • Earnings quality improved: higher NIM and lower efficiency ratio supported EPS strength despite elevated deposit costs; watch for continued NIM expansion into Q4 if asset repricing persists .
  • Funding cost remains the key swing factor: time deposit and brokered deposit utilization is effective for loan funding but raises interest expense; stability in deposit costs would be a catalyst for margin upside .
  • Credit normalization bears monitoring: NPLs ticked up and Q3 saw net charge-offs; ACL coverage stable; limited office CRE exposure mitigates sector-specific risk .
  • Balance sheet resilience: total assets at $2.259B, equity ratio at 9.02%, and tangible BVPS up to $24.77 provide capital support for growth and dividends .
  • Dividend continuity: $0.32/share declared for Q4 indicates confidence in earnings power and capital; income investors should view the payout as steady near term .
  • Near-term trading: focus on sequential NIM progression and efficiency improvements; any signs of easing deposit competition or mix shift back toward core deposits could drive positive sentiment .
  • Medium-term thesis: sustained commercial and indirect auto loan growth, asset yield uplift, and disciplined expense control underpin ROA/ROE improvements; brokered deposits should taper as core growth resumes and rates normalize .