Breaking Down Penns Woods Bancorp, Inc. (PWOD) Financial Health: Key Insights for Investors

If you're looking at Penns Woods Bancorp, Inc. (PWOD) financial data, you need to understand the full picture, which goes beyond the strong Q1 2025 results; you're not just analyzing a standalone bank anymore, you're looking at a successful exit. The bank reported a Q1 2025 net income of $7.4 million, a massive jump from the $3.8 million in Q1 2024, which drove diluted earnings per share (EPS) to $0.95, and its net interest margin (NIM) expanded nicely to 3.13%, showing solid operational health right up until the end. But the real story for investors is the final chapter: the acquisition by Northwest Bancshares, Inc., which closed in July 2025, valuing the transaction at approximately $270.4 million. So, while the Q1 2025 balance sheet showed total assets at a healthy $2.3 billion, the key question now is how the terms of that merger-including the expected 23% accretion to Northwest Bancshares, Inc.'s 2026 EPS-impact your capital allocation decisions moving forward.

Revenue Analysis

You need to know where the money is coming from, especially for a regional bank like Penns Woods Bancorp, Inc. (PWOD) that was recently acquired. The direct takeaway is that PWOD's revenue is overwhelmingly dependent on its core lending business, with Net Interest Income (NII) accounting for nearly 86% of its top line in the last full fiscal year before the merger.

For the trailing twelve months (TTM) leading up to the end of Q1 2025, the company reported a total revenue of $74.31 million, representing a solid 16.68% year-over-year growth. This near-term acceleration is a key factor in understanding the bank's value proposition leading into its acquisition by Northwest Bancshares, Inc. in July 2025. This acquisition is the single most significant change to the revenue outlook for the entity going forward.

Breakdown of Primary Revenue Sources (2024 Fiscal Year)

As a bank holding company, Penns Woods Bancorp, Inc.'s revenue streams fall into two buckets: Net Interest Income (NII) and Non-interest Income. NII is the spread-what the bank earns from loans minus what it pays on deposits. Non-interest income is essentially fees for services. The 2024 fiscal year clearly shows the reliance on traditional banking activities.

Here's the quick math on the $68.498 million in total revenue reported for the fiscal year ended December 31, 2024:

That 85.96% NII contribution is typical for a regional bank focusing on core commercial and retail banking in North Central and North Eastern Pennsylvania. The primary revenue sources are interest earned from commercial, consumer, and mortgage loans.

Near-Term Growth and Shifting Dynamics

The year-over-year revenue growth rate has been strong, with 2024 annual revenue of $68.38 million marking a 6.11% increase over 2023. The trend accelerated sharply into 2025. In the first quarter of 2025 alone, revenue hit $21.68 million, showing a massive 37.72% jump compared to the same period in 2024.

This surge was driven almost entirely by the core business. Net Interest Income increased by $2.4 million in Q1 2025 over Q1 2024, pushing the Net Interest Margin (NIM)-the key measure of lending profitability-to 3.13% from 2.69%. That's a powerful expansion of the spread. Non-interest income, while a smaller piece of the pie, also saw a lift from gains on loan sales and higher brokerage commissions in the same period.

• NII is the main engine, running hot into 2025.
• Loan portfolio focus: commercial loans and indirect auto lending.
• Non-interest income diversification includes: securities brokerage, financial planning, and insurance products.

The biggest change, of course, is the aforementioned acquisition. Penns Woods Bancorp, Inc. was acquired by Northwest Bancshares, Inc. in July 2025. This means the standalone revenue streams you are analyzing will now be integrated into a much larger entity's financial reporting, changing the segment contribution picture entirely. For a deeper dive into the players involved, read Exploring Penns Woods Bancorp, Inc. (PWOD) Investor Profile: Who's Buying and Why?

Profitability Metrics

You're looking at Penns Woods Bancorp, Inc. (PWOD) because you see the strong Q1 2025 performance, but you need to know if the profitability is sustainable, especially with the Northwest Bancshares, Inc. acquisition closing in July 2025. The short answer is that PWOD's core profitability metrics for Q1 2025 show significant improvement year-over-year, largely driven by Net Interest Margin (NIM) expansion and a one-time loan recovery, but a cautious eye is needed on the operational efficiency (Efficiency Ratio) compared to industry peers.

A Deep Dive into Penns Woods Bancorp, Inc. (PWOD)'s Profitability

For a bank, traditional Gross Profit Margin isn't the most useful metric, as the 'cost of goods sold' is interest expense, which is already factored into Net Interest Income (NII). We focus on the Net Interest Margin (NIM), which tells us how well the bank manages its core business of lending and borrowing. For the first quarter of 2025, PWOD reported a Net Income of $7.4 million, which is a massive 93.5% increase from the $3.8 million reported in Q1 2024. This growth is defintely a strong signal, but it was heavily influenced by a $2.4 million rise in NII and a non-recurring $1.3 million commercial loan recovery that led to a negative provision for credit losses.

Here's the quick math on the key profitability ratios, which are essential for comparing PWOD to its regional bank peers:

• Net Interest Margin (NIM): Expanded to 3.13% in Q1 2025, up from 2.69% in Q1 2024. This is a clear win, showing the bank is earning more on its loans relative to what it pays on deposits.
• Return on Average Assets (ROAA): Jumped to 1.31% (annualized) in Q1 2025, a significant improvement from 0.69% in the prior year. This tells you the bank is using its $2.3 billion in assets much more effectively to generate profit.
• Return on Average Equity (ROAE): Soared to 14.76% (annualized), nearly doubling the 8.03% from Q1 2024. This is a great sign for shareholders, indicating strong returns on their invested capital.

Profitability Ratios vs. Industry Averages (Q1 2025)

When you stack PWOD against the broader regional bank industry, the Q1 2025 performance looks strong, but you need to factor in the one-time items. The industry aggregate Return on Assets (ROA) for Q1 2025 was around 1.16% [cite: 9 in previous thought], which means PWOD's ROAA of 1.31% outperformed the average.

The Net Profit Margin (Net Income / Total Revenue) for the regional bank sector generally sits around 25.3% [cite: 19 in previous thought]. While PWOD's exact Q1 2025 Net Profit Margin is not explicitly stated in the earnings release, the annualized ROAA and ROAE figures suggest a highly profitable quarter. The key comparison points are:

Operational Efficiency and Cost Management

Operational efficiency is measured by the Efficiency Ratio (Non-Interest Expense as a percentage of Total Revenue), which tells you how much the bank spends to earn a dollar of revenue. The industry aggregate Efficiency Ratio for Q1 2025 was around 56.2% [cite: 9 in previous thought]. A lower number is better here. While PWOD's Q1 2025 Efficiency Ratio is not explicitly published in the summary, we know the quarter was impacted by $948,000 in after-tax merger-related expenses.

This is a critical point: merger costs temporarily inflate non-interest expense, so the reported Operating Profit Margin, or pre-tax, pre-provision net revenue (PPNR), is likely understated. You need to look past these one-time expenses to see the true operating leverage. The core trend is a focus on commercial loan growth and deposit gathering, which drove the NII increase and is a sign of good underlying operational strategy. For more on the strategic direction that drove these numbers, you can review the Mission Statement, Vision, & Core Values of Penns Woods Bancorp, Inc. (PWOD).

Debt vs. Equity Structure

You need a clear picture of how Penns Woods Bancorp, Inc. (PWOD) funded its operations, especially since the company was acquired mid-year. The quick takeaway is that while the bank was deleveraging in early 2025, its overall debt-to-equity profile was notably more aggressive than the regional bank average, a key factor in its pre-merger risk assessment.

As of March 31, 2025, the company's balance sheet showed a clear trend of reducing reliance on wholesale funding. Short-term and long-term borrowings-which is the bank's true debt, separate from customer deposits-decreased significantly. Specifically, short-term borrowings were down by $28.3 million and long-term borrowings fell by $47.2 million in the year leading up to Q1 2025. This reduction was possible because deposit growth provided a cheaper, more stable funding source.

Here's the quick math on their leverage profile, which tells a more nuanced story about their capital structure:

• Debt-to-Equity (D/E) Ratio: Penns Woods Bancorp, Inc.'s D/E ratio was approximately 1.42.
• Long-Term Debt/Equity Ratio: This specific metric stood at 1.03.
• Industry Standard: The average D/E ratio for US Regional Banks is closer to 0.49.

To be fair, banks are inherently highly leveraged because customer deposits are technically liabilities, but even using the standard D/E calculation for a financial institution, Penns Woods Bancorp, Inc.'s 1.42 ratio was nearly three times the regional bank average of 0.49. This higher leverage meant the company was using more debt capital relative to shareholder equity to generate returns, which can boost return on equity (ROE) but also raises the financial risk profile. You were getting a higher return on equity, but with a defintely higher risk base.

The biggest financing event of 2025 wasn't a debt issuance, but an equity-based exit. The company was acquired by Northwest Bancshares, Inc. (NWBI) in an all-stock transaction valued at approximately $270.4 million, which closed on July 25, 2025. This merger effectively capped the company's independent debt-to-equity strategy, replacing it with the capital structure of the acquiring institution. The all-stock nature of the deal meant the transaction was fundamentally an equity funding solution for the shareholders, avoiding new debt for the acquisition itself.

The balance of funding was shifting from debt toward deposits and ultimately culminated in a full equity-based acquisition. The reduction in borrowings was a smart, near-term move to stabilize funding costs before the merger. For a deeper dive into who was holding the stock leading up to this event, you should check out Exploring Penns Woods Bancorp, Inc. (PWOD) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You're looking for a clear picture of Penns Woods Bancorp, Inc.'s (PWOD) ability to meet its near-term obligations, which, for a bank, means looking past the typical corporate liquidity ratios and focusing on funding stability and asset quality. The short answer is that as of Q1 2025, the company's liquidity position is strong, driven by robust deposit growth that allowed for a significant reduction in higher-cost borrowings.

The company successfully executed a strategy to fund loan growth internally, rather than relying on external, more expensive funding sources. This is a defintely positive sign for their financial health heading into the latter half of 2025, especially considering the announced merger with Northwest Bancshares, Inc. which completed in July 2025.

Assessing Penns Woods Bancorp, Inc.'s Liquidity Positions

When you look at a bank's liquidity, the traditional Current Ratio (Current Assets / Current Liabilities) and Quick Ratio are often very low because a bank's primary assets-loans-are not considered 'current' in the standard calculation, but they are the core source of future cash flow. For Penns Woods Bancorp, Inc., the reported Current Ratio and Quick Ratio are both around 0.06. This low figure is normal for a bank, but it tells you nothing about their operational liquidity.

A more meaningful analysis for a financial institution involves examining the composition of its funding and its ability to cover short-term liabilities (like deposits) with liquid assets and stable funding sources. The key liquidity positions show strength:

• Total Assets: Increased to $2.3 billion as of March 31, 2025.
• Deposit Growth: Deposits saw a significant increase of $105.4 million, reaching $1.7 billion.
• Borrowing Reduction: This deposit influx allowed the company to reduce short-term borrowings by $28.3 million and long-term borrowings by $47.2 million from March 31, 2024, to March 31, 2025.

Cash Flow and Working Capital Trends

The working capital trend for Penns Woods Bancorp, Inc. is a shift from reliance on borrowings to greater deposit funding. This move reduces interest expense and improves the net interest margin, which expanded to 3.13% in Q1 2025, up from 2.69% in Q1 2024.

The company's cash flow strategy for the first quarter of 2025 was clear: redirect cash from lower-yielding investments to higher-yielding loans. Here's the quick math on the major cash flow movements:

The decision to decrease the investment portfolio by $14.3 million to fund a $43.3 million increase in net loans shows a deliberate and successful shift in investing cash flow to maximize interest income. Also, the substantial decrease in both short and long-term borrowings is a major positive for financing cash flow, reducing future interest obligations. This is a very healthy capital deployment strategy.

Liquidity Concerns and Strengths

The primary strength is the stability of the funding base and the improved net interest margin. The significant growth in deposits, up $105.4 million, means Penns Woods Bancorp, Inc. is less reliant on volatile, market-based funding. The equity-to-asset ratio also improved to 9.41% at March 31, 2025, up from 8.76% a year prior, which strengthens the solvency cushion.

The only potential near-term concern is the integration risk associated with the announced merger, which completed in July 2025. While the merger itself is a strategic move, any large integration carries operational and liquidity risks until systems are fully combined, which is now the focus for the combined entity.

For a deeper dive into the valuation and strategic frameworks, you can read the full analysis at Breaking Down Penns Woods Bancorp, Inc. (PWOD) Financial Health: Key Insights for Investors.

Valuation Analysis

You're looking at Penns Woods Bancorp, Inc. (PWOD) to understand its final valuation picture, but the most critical insight is that this is a historical analysis: the company was acquired by Northwest Bancshares, Inc. and delisted from NASDAQ on July 25, 2025. This means the final stock price movements and valuation ratios reflect the market's reaction to the merger and the final trading period, not an ongoing investment opportunity.

The core question of whether Penns Woods Bancorp, Inc. was overvalued or undervalued hinges on its pre-acquisition metrics, which suggested it was trading at a discount compared to peers. As of early July 2025, the market assigned a P/E (Price-to-Earnings) ratio of only 11, which was lower than the peer average, suggesting the stock was attractive for its earnings power. Its Price-to-Book (P/B) ratio stood at 1.13, meaning the market valued the company's equity at just 13% over its accounting book value-a common sign of undervaluation in the regional banking sector.

Here's the quick math on the final valuation metrics, which were essentially a floor for the merger price:

• Price-to-Earnings (P/E): 11 (as of July 2025 TTM)
• Price-to-Book (P/B): 1.13 (as of July 2025)
• Enterprise Value (EV): $474.67M

The stock price trend leading up to the acquisition was volatile. Over the 12 months prior to the acquisition, the stock price fell by 19.82%, with a 52-week trading range between a low of $24.82 and a high of $34.56. The final closing price was around $30.00 per share, but the merger agreement ultimately paid shareholders a value of $34.44 per share, confirming the pre-acquisition market price was indeed undervalued relative to the final deal price.

For income-focused investors, Penns Woods Bancorp, Inc. maintained a strong dividend profile right up to the acquisition, which was a key part of its investment thesis. The TTM (Trailing Twelve Months) dividend payout was $1.28 per share, resulting in a final dividend yield of 4.27% as of July 2025. The payout ratio-the percentage of earnings distributed as dividends-was a sustainable 45%. This combination of a high yield and a conservative payout ratio made it a defintely attractive regional bank stock.

Analyst consensus was mixed but leaned toward value. Just before the acquisition, the stock was generally considered an 'attractive' value play and a 'hold candidate' by some analysts, largely due to those low P/E and P/B multiples. The final merger price of $34.44 per share validates the idea that the underlying value was higher than the market's trading price. For a deeper dive into the company's strategic foundation, you can review its Mission Statement, Vision, & Core Values of Penns Woods Bancorp, Inc. (PWOD).

Risk Factors

You need to understand that the primary risk for Penns Woods Bancorp, Inc. (PWOD) as an independent entity is now moot, because the company was acquired by Northwest Bancshares, Inc. (NWBI) on July 25, 2025. The immediate risk of holding PWOD stock-that the deal would collapse-is gone. Now, the focus shifts to the integration and the general, persistent risks that drove the regional banking sector toward consolidation in the first place.

Before the acquisition, the company faced the classic challenges of a smaller regional bank. The most significant financial risk was interest rate sensitivity. While the company did well in the first quarter of 2025, expanding its net interest margin (NIM) to 3.13% from 2.69% in Q1 2024, this expansion was driven by rate increases on assets, but it also exposed the bank to higher funding costs, especially as interest-bearing deposits rose by $111.1 million. That's a defintely tight wire to walk.

• Interest Rate Risk: Volatility in the Federal Reserve's policy directly impacts the value of the bank's $1.9 billion loan portfolio and its investment securities.
• Regulatory Burden: Compliance costs for a smaller bank are disproportionately high, a constant drag on the bottom line.
• Competitive Pressure: Operating in North Central and Northeastern Pennsylvania, the bank faced intense competition from larger, more technologically advanced institutions.

Operational and Strategic Risks in the Merger Context

The biggest operational risk for Penns Woods Bancorp, Inc. in early 2025 was the merger itself, which showed up directly on the income statement. In the first quarter of 2025 alone, the company incurred after-tax merger-related expenses of $948,000. This is the cost of doing a deal, and it temporarily suppressed the otherwise strong Q1 2025 net income of $7.4 million. The strategic risk now is integration failure.

The merger's success hinges on Northwest Bancshares, Inc.'s ability to integrate Penns Woods Bancorp, Inc.'s 21 branch locations and systems without disrupting the customer base. If the system integration, which happened over July 26-27, 2025, causes significant customer friction or if the promised cost savings don't materialize, the value proposition for the combined entity suffers. The combined company is expected to realize cost savings synergies of $13 million, so execution is everything here. You can learn more about the investor profile that drove this decision by Exploring Penns Woods Bancorp, Inc. (PWOD) Investor Profile: Who's Buying and Why?

Mitigation and Post-Merger Outlook

The merger with Northwest Bancshares, Inc. is the ultimate mitigation strategy against the long-term risks of scale and competition. The new, combined institution boasts approximately $16.6 billion in total assets, giving it a much stronger capital base and greater lending capacity. This scale helps dilute the impact of regulatory costs and allows for more investment in technology to compete with national banks.

For investors, the risk has fundamentally shifted from the regional bank's standalone performance to the post-merger performance of Northwest Bancshares, Inc. The former Penns Woods Bancorp, Inc. shareholders received a fixed exchange ratio of 2.385x Northwest Bancshares, Inc. shares for each Penns Woods Bancorp, Inc. share, so your investment is now tied to a larger, more diversified regional bank. The key action now is to monitor Northwest Bancshares, Inc.'s quarterly reports for Q3 and Q4 2025 to track the realization of those projected synergies.

Growth Opportunities

You need to understand that the future growth prospects for Penns Woods Bancorp, Inc. (PWOD) are no longer about its standalone performance; the story is the successful integration into Northwest Bancshares, Inc. (NWBI). The merger, which was completed on July 25, 2025, fundamentally redefines the company's trajectory, shifting the focus to realizing merger synergies and expanded market reach.

The immediate growth driver is the realization of cost savings and revenue opportunities from combining the two organizations. Northwest Bancshares, Inc. expects to achieve approximately $13 million in annual cost synergies, which is a direct boost to the combined entity's bottom line. For investors who held Penns Woods Bancorp, Inc. stock, the transaction was structured as an all-stock exchange, which was valued at a premium of $0.19 per share over the market price just before the announcement.

Here's the quick math on the pre-merger strength: In the first quarter of 2025, before the acquisition closed, Penns Woods Bancorp, Inc. reported a net income of $7.4 million, which was a significant jump from $3.8 million in the same period of 2024. This translated to diluted earnings per share (EPS) of $0.95. That kind of momentum, driven by a net interest margin expansion to 3.13%, is what Northwest Bancshares, Inc. bought. Good performance makes for a better acquisition.

The key growth drivers now center on scale and cross-selling across a larger footprint:

• Market Expansion: The merger added 21 branch locations across North Central and Northeastern Pennsylvania, enhancing Northwest Bancshares, Inc.'s presence in key areas like the State College region.
• Cross-Selling Opportunities: The combined platform allows for extending product offerings across the entire customer base, leveraging the former Penns Woods Bancorp, Inc. footprint.
• Enhanced Scale: The combined company now operates with pro forma total assets exceeding $17 billion, which positions it as a much more competitive regional bank.

What this estimate hides is the execution risk (integration). Still, the strategic move was a clear path to growth, creating a stronger, more competitive bank. The former Penns Woods Bancorp, Inc. shareholders received 2.385 shares of Northwest Bancshares, Inc. common stock for each of their shares, which is the new vehicle for their growth.

The table below shows the pre-merger financial strength Penns Woods Bancorp, Inc. brought to the deal, which is the foundation of the combined growth prospects:

The competitive advantage for the newly integrated assets is now the collective scale and capital base of Northwest Bancshares, Inc., which is expected to be accretive (adding to earnings) by $0.26 per share, or 23.4%, for the acquiring company's shareholders. You can defintely dive deeper into the new entity's structure by Exploring Penns Woods Bancorp, Inc. (PWOD) Investor Profile: Who's Buying and Why?