Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

June 3, 2024

Date of Report (Date of earliest event reported)

PENNS WOODS BANCORP, INC.

(Exact name of registrant as specified in its charter)

Pennsylvania	000-17077	23-2226454
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Ident. No.)

300 Market Street, P.O. Box 967, Williamsport, Pennsylvania		17703-0967
(Address of principal executive offices)		(Zip Code)

(570) 322-1111 Registrant’s telephone number, including area code

N/A
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $5.55 par value	PWOD	The Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Amendment to Employment Agreement

On June 4, 2024, Penns Woods Bancorp, Inc. (the “Company”) and Richard A. Grafmyre, Chief Executive Officer of the Company, entered into an Amendment No. 3, dated as of June 3, 2024 (the “Amendment”), to Mr. Grafmyre’s existing Amended and Restated Employment Agreement, dated March 9, 2021, as amended by an Amendment No. 1, dated July 15, 2022, and an Amendment No. 2, dated December 12, 2023 (as so amended, the “Employment Agreement”). The Amendment, which is effective as of June 3, 2024, amends the Employment Agreement to (i) eliminate the provision of the Employment Agreement providing for payments for unused time-off, commencing January 1, 2024, (ii) reduce Mr. Grafmyre’s annual base salary to $850,000, annualized commencing with the first pay period for June 2024, and (iii) cap Mr. Grafmyre’s maximum annual potential bonus amount under the Company’s incentive bonus plan at $325,000.

Except as modified by the Amendment, the Employment Agreement remains in effect in accordance with its terms. A copy of the Amendment is attached hereto as Exhibit 10.4. The foregoing description of the Amendment is qualified by reference to the Amendment.

Incentive Bonus Plan Metrics for 2024

The Board of Directors has revised the Company’s annual incentive bonus plan to incorporate the following metrics for the period ending December 31, 2024: return on average equity, return on average assets, earnings per share, asset growth, and credit quality (net charge-offs as a percentage of average loans). As with the changes to Mr. Grafmyre’s compensation reflected in the Amendment, changes to the metrics for the annual incentive bonus plan are the result of a review of peer and industry practices and feedback received from shareholders. The bonus metrics will complement the historical and continued focus on tangible book value plus dividend growth (139% versus peer 124% from December 31, 2013 to 2023), loan portfolio growth ($455 million from December 31, 2018 to 2023), and credit quality (cumulative net charge-offs to average loans of 0.5% versus all banks 2.1% for the period of December 31, 2018 to 2023).

Item 9.01

Financial Statements and Exhibits.

(d)           Exhibits:

10.1	Amended and Restated Employment Agreement, dated March 9, 2021, between Penns Woods Bancorp, Inc. and Richard A. Grafmyre (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on March 10, 2021).

10.2	Amendment No. 1 to Employment Agreement, dated July 15, 2022, between Penns Woods Bancorp, Inc. and Richard A. Grafmyre (incorporated by reference to Exhibit 10.2 of the Registrant's Current Report on Form 8-K filed on July 21, 2022).

10.3	Amendment No. 2 to Employment Agreement, dated December 12, 2023, between Penns Woods Bancorp, Inc. and Richard A. Grafmyre (incorporated by reference to Exhibit 10.2 of the Registrant's Current Report on Form 8-K filed on December 15, 2023).

10.4	Amendment No. 3 to Employment Agreement, dated as of June 3, 2024, between Penns Woods Bancorp, Inc. and Richard A. Grafmyre.

99.1	Press release, dated June 4, 2024, re employment contract amendment.

104	Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PENNS WOODS BANCORP, INC.

Dated: June 4, 2024

	By:	/s/ Brian L. Knepp
		Brian L. Knepp
		President and Chief Financial Officer

Exhibit 10.4

AMENDED AND RESTATED
EMPLOYMENT AGREEMENT

(Amendment No. 3)

THIS AMENDMENT NO. 3 TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of June 3, 2024, between PENNS WOODS BANCORP, INC. (“Penns Woods”), a Pennsylvania business corporation, and RICHARD A. GRAFMYRE, an adult individual (“Executive”).

WITNESSETH:

WHEREAS, Penns Woods and Executive are parties to an amended and restated employment agreement, dated March 9, 2021, as amended by an Amendment No. 1 to Employment Agreement, dated July 15, 2022 (“Amendment No. 1 to Employment Agreement”), and an Amendment No. 2 to Employment Agreement, dated December 12, 2023 (“Amendment No. 2 to Employment Agreement”)(as so amended, the “Employment Agreement”); and

WHEREAS, Penns Woods and Executive desire to further amend the Employment Agreement as provided herein.

NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows:

1. Amendment to Section 4(a) of Employment Agreement. Section 4(a) of the Employment Agreement is hereby amended and restated in its entirety to read as follows:

“(a) Salary. Executive shall be paid a base salary at the rate of $850,000 per year, annualized commencing with the first pay period for June 2024, payable at such times as salaries are paid to other executive officers of Penns Woods. The Board of Directors of Penns Woods shall review Executive’s base salary annually and may, from time to time, in its discretion increase Executive’s base salary. Any and all such increases in base salary shall be deemed to constitute amendments to this subsection to reflect the increased amounts, effective as of the dates established for such increases by appropriate corporate action.”

2. Amendment to Section 4(b) of Employment Agreement. Section 4(b) of the Employment Agreement is hereby amended and restated in its entirety to read as follows:

“(b) Discretionary Bonus. Executive shall be entitled to participate in an equitable manner with other senior management employees of Penns Woods in such annual or other periodic bonus programs (if any) as may be maintained from time to time by Penns Woods for its executive officers; provided, however, that Executive’s bonus under such programs (if any) shall in no event exceed $325,000 in cash for any calendar year. At the discretion of the Compensation Committee of the Penns Wood Board, (i) up to fifty percent (50%) of the aggregate amount of any discretionary bonus payable to Executive with respect to any year may be paid in Penns Woods common stock issued under the Penns Woods 2020 Equity Incentive Plan in lieu of cash and (ii), with respect to any year in which a portion of the discretionary bonus is payable in Penns Woods common stock, any portion of the remaining bonus amount otherwise payable in cash for such year (up to 100% of the aggregate bonus amount payable for such year) may be payable in the form of Penns Woods common stock with the consent of Executive. The aggregate number of shares of Penns Woods common stock issuable with respect to any year shall be subject to any limitations on the total number of shares that may be issued to any individual under any plan, program, or policy of Penns Woods then in effect. Any shares of Penns Woods common stock issued to Executive under this Section shall be subject to the same restrictions on transfer as are applicable shares issued under the 2020 Non-Employee Director Compensation Plan; provided, however, that (i) when Executive attains age 71 no more than a one (1) year transfer restriction shall apply to any such shares and (ii) when Executive attains age 72, all transfer restrictions then applicable to any such shares shall lapse.

3. Amendment to Section 4(c) of Employment Agreement. Section 4(c) of the Employment Agreement is hereby amended and restated in its entirety to read as follows:

(c) Vacation and Sick Leave. Executive shall be entitled to such paid time off as may be determined in accordance with the personnel policies of Penns Woods from time to time in effect (currently thirty-four (34) days for Executive). Executive shall not receive any payments for unused paid time off.

4. Ratification of Employment Agreement. Except as amended by this Amendment No. 3 to Amended and Restated Employment Agreement, all terms and conditions of the Employment Agreement remain in full force and effect, and nothing contained in this Amendment No. 3 to Amended and Restated Employment Agreement shall be deemed to alter or amend any provision of the Employment Agreement except as specifically provided herein. References in the Employment Agreement to the "Agreement" shall be deemed to be references to the Employment Agreement (as amended by Amendment No. 1 to Employment Agreement and Amendment No. 2 to Employment Agreement) as further amended hereby.

5. Notices. Except as otherwise provided in this Amendment No. 3 to Amended and Restated Employment Agreement, any notice required or permitted to be given under this Amendment No. 3 to Amended and Restated Employment Agreement shall be deemed properly given if in writing and if mailed by registered or certified mail, postage prepaid with return receipt requested, to Executive’s residence (as then reflected in the personnel records of the Employer), in the case of notices to Executive, and to the then principal offices of Penns Woods, in the case of notices to the Employer.

6. Waiver. No provision of this Amendment No. 3 to Amended and Restated Employment Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in writing and signed by Executive and the Employer. No waiver by any party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Amendment No. 3 to Amended and Restated Employment Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

7. Assignment. This Amendment No. 3 to Amended and Restated Employment Agreement shall not be assignable by any party, except by Penns Woods to any of its affiliated companies or to any successor in interest to its businesses.

8. Entire Agreement; Effect on Prior Agreements. This Amendment No. 3 to Amended and Restated Employment Agreement contains the entire agreement of the parties relating to the subject matter hereof, and supersedes and replaces any prior agreement relating to the subject matter hereof.

9. Validity. The invalidity or unenforceability of any provision of this Amendment No. 3 to Amended and Restated Employment Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

10. Applicable Law. This Amendment No. 3 to Amended and Restated Employment Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to its conflict of laws principles.

11. Headings. The section headings of this Amendment No. 3 to Amended and Restated Employment Agreement are for convenience only and shall not control or affect the meaning or construction, or limit the scope or intent, of any of the provisions hereof.

12. Number. Words used herein in the singular form shall be construed as being used in the plural form, as the context requires, and vice versa.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties have executed this Amendment No. 3 to Amended and Restated Employment Agreement as of the date set forth below.

PENNS WOODS BANCORP, INC.

By:	R. Edward Nestlerode, Jr.	Date: June 3, 2024
	Chairman
	(“Penns Woods”)

/s/ Richard A. Grafmyre		Date: June 3, 2024
RICHARD A. GRAFMYRE
(“Executive”)

Exhibit 99.1

PENNS WOODS BANCORP, INC. AMENDS CEO GRAFMYRE CONTRACT

Williamsport, PA – June 4, 2024 Penns Woods Bancorp, Inc. (NASDAQ:PWOD) announced today that a mutual agreement has been reached with its Chief Executive Officer, Richard A. Grafmyre CFP®, to amend Mr. Grafmyre’s employment agreement. The amendment was agreed upon after conducting a review of reported compensation data for the Company’s peer group, industry compensation analysis, and discussions with shareholders. The amendment, effective June 3, 2024 removes the provision for Mr. Grafmyre to be compensated for unused paid time off (beginning with paid time off earned during the 2024 annual period), reduces Mr. Grafmyre’s base salary to $850,000, and sets his maximum annual potential bonus amount at $325,000. These changes will reduce the maximum total annual compensation for Mr. Grafmyre by approximately $150,000 and will place a greater emphasis on at-risk compensation to better reflect the changes being seen within the Company’s peer group.

The Company’s bonus plan has been revised to incorporate the following metrics for the 2024 period: return on average equity, return on average assets, earnings per share, asset growth, and credit quality (net charge-offs as a percentage of average loans). As with the changes to Mr. Grafmyre’s compensation, these changes are the result of a review of peer and industry practices and feedback received from shareholders. The bonus metrics will complement the historical and continued focus on tangible book value plus dividend growth (139% versus peer 124% from December 31, 2013 to 2023), loan portfolio growth ($455 million from December 31, 2018 to 2023), and credit quality (cumulative net charge-offs to average loans of 0.5% versus all banks 2.1% for the period of December 31, 2018 to 2023).

The Company’s Board of Directors believes the employment agreement amendment and the revised bonus plan metrics will more closely align compensation to performance while incorporating peer and industry standards with a greater percentage of total compensation considered at-risk. Executive compensation and the bonus plan metrics and design will continue to be reviewed annually.

About Penns Woods Bancorp, Inc.

Penns Woods Bancorp, Inc. is the bank holding company for Jersey Shore State Bank and Luzerne Bank. The banks serve customers in North Central and North Eastern Pennsylvania through their retail banking, commercial banking, mortgage services and financial services divisions. Penns Woods Bancorp, Inc. stock is listed on the NASDAQ National Market under the symbol PWOD.

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
	300 Market Street, Williamsport, PA, 17701
	(570) 322-1111
	(888) 412-5772
	pwod@pwod.com
	www.pwod.com

Cover	Jun. 03, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jun. 03, 2024
Entity File Number	000-17077
Entity Registrant Name	PENNS WOODS BANCORP, INC.
Entity Central Index Key	0000716605
Entity Tax Identification Number	23-2226454
Entity Incorporation, State or Country Code	PA
Entity Address, Address Line One	300 Market Street
Entity Address, Address Line Two	P.O. Box 967
Entity Address, City or Town	Williamsport
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	17703-0967
City Area Code	570
Local Phone Number	322-1111
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $5.55 par value
Trading Symbol	PWOD
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false