PEOPLES FINANCIAL SERVICES CORP. Reports Unaudited Second Quarter and Year to Date 2024 Earnings

SCRANTON, Pa., July 25, 2024 /PRNewswire/ -- Peoples Financial Services Corp. ("Peoples" or the "Company") (NASDAQ: PFIS), the bank holding company for Peoples Security Bank and Trust Company, today reported unaudited financial results at and for the three and six months ended June 30, 2024.

Peoples reported net income of $3.3 million, or $0.46 per diluted share for the three months ended June 30, 2024, a 65.2% decrease when compared to $9.4 million, or $1.31 per diluted share for the comparable period of 2023. Quarterly net income included lower net interest income of $3.2 million due primarily to higher deposit costs, a higher provision for credit losses of $2.8 million and higher operating expenses of $1.5 million, which included $1.1 million of acquisition related expenses.

Core net income¹, a non-GAAP measure, excludes acquisition related expenses from the strategic combination with FNCB Bancorp, Inc. completed July 1, 2024 and further discussed below of $1.1 million and $0.1 million incurred during the three months ended June 30, 2024 and 2023. Core net income¹ totaled $4.2 million or $0.59 per diluted share for the three months ended June 30, 2024 compared to $9.5 million, or $1.33 per share for the comparable period of 2023. 

Core pre-provision net revenue (PPNR)¹, a non-GAAP measure, which excludes acquisition related expenses, the provision for credit losses and the provision for credit losses on unfunded commitments from income before taxes, for the three months ended June 30, 2024 was $5.2 million or $0.73 per diluted share.  The PPNR for the corresponding prior year period was $9.0 million or $1.25 per diluted share.

For the six months ended June 30, 2024, net income was $6.7 million, or $0.95 per diluted share, a 60.3% decrease when compared to $17.0 million, or $2.37 per diluted share for the comparable period of 2023.  Net interest income for the current period decreased $7.0 million when compared to the six months ended June 30, 2023 as higher interest income due to increased loan rates was more than offset by increased funding costs.  Lower net income was due to the reduction in net interest income combined with higher operating expenses of $3.1 million, which included $1.6 million in acquisition related expenses, and a $2.2 million increase in the provision for credit losses.

Core net income¹, a non-GAAP measure, totaled $8.1 million or $1.14 per diluted share for the six months ended June 30, 2024 compared to $17.0 million, or $2.37 per share for the comparable period of 2023. 

Core pre-provision net revenue (PPNR)¹, a non-GAAP measure, for the six months ended June 30, 2024 was $10.8 million or $1.52 per diluted share.  The PPNR for the corresponding prior year period was $19.0 million or $2.65 per diluted share.

STRATEGIC COMBINATION WITH FNCB BANCORP, INC.

On July 1, 2024, Peoples completed its previously announced merger with FNCB Bancorp, Inc. ("FNCB"), pursuant to which FNCB merged with and into Peoples, and FNCB Bank merged with and into Peoples Security Bank and Trust Company (the "FNCB merger"). The reported results do not include the results of FNCB or reflect the completion of the FNCB merger.  As of the date of completion, the combined organization is expected to have approximately $5.5 billion in assets with approximately $4.0 billion in loans and $4.7 billion in deposits throughout its operations spanning Pennsylvania, New York and New Jersey.  All branches of the combined organization will operate under the Peoples Security Bank and Trust Company banner after the integration is completed.

NOTABLES IN THE QUARTER

• Core net income² for the three months ended June 30, 2024 was $4.2 million or $0.59 per diluted share. For the six months ended June 30, 2024, Core net income1 was $8.1 million or $1.14 per diluted share.
• For the six months ended June 30, 2024, loans, net grew $19.7 million or 1.4% annualized and consisted primarily of growth in commercial loans.
• Asset quality remained strong as nonperforming assets as a percentage of total assets at June 30, 2024 was 0.20%, compared to 0.13% at December 31, 2023.
• Total deposits decreased $214.1 million to $3.1 billion during 2024 due in part to seasonal outflows of municipal deposits.
• At June 30, 2024, the Company had $50.0 million in cash and cash equivalents, a decrease of $137.4 million from December 31, 2023. Additional contingent sources of available liquidity total $1.6 billion and include lines of credit at the Federal Reserve Bank and Federal Home Loan Bank of Pittsburgh (FHLB), brokered deposit capacity and unencumbered securities that may be pledged as collateral. The Company's cash and cash equivalents balance and available liquidity represent 45.4% of total assets and 53.5% of total deposits.
• At June 30, 2024, estimated total insured deposits were approximately $2.3 billion, or 75.7% of total deposits; as compared to approximately $2.4 billion, or 73.1% of total deposits at December 31, 2023. Included in the uninsured total at June 30, 2024 is $239.5 million of municipal deposits collateralized by letters of credit issued by the FHLB and pledged investment securities, and $0.7 million of affiliate company deposits. Total insured and collateralized deposits represent 85.3% of total deposits at June 30, 2024.

INCOME STATEMENT REVIEW 

• Calculated on a fully taxable equivalent basis, a non-GAAP measure¹, our net interest margin for the three months ended June 30, 2024 was 2.29%, consistent with the prior quarter and a decline of 32 basis points when compared to 2.61% for the same three month period in 2023. The decrease in net interest margin from the year ago period was due to higher funding costs offsetting the increased yield and balance of earning assets.
• The tax-equivalent yield on interest-earning assets increased 2 basis points to 4.58% during the three months ended June 30, 2024 from 4.56% during the three months ended March 31, 2024, and increased 27 basis points when compared to 4.31% for the three months ended June 30, 2023.
• Our cost of funds, which represents our average rate paid on total interest-bearing liabilities, increased 5 basis points to 3.01% for the three months ended June 30, 2024 when compared to 2.96% during the three months ended March 31, 2024 and increased 72 basis points compared to 2.29% in the prior year period.
• Our cost of interest-bearing deposits increased 2 basis points during the current three month period to 2.92% from 2.90% in the prior three month period ended March 31, 2024, and increased 71 basis points compared to 2.21% for the three months ended June 30, 2023.
• Our cost of total deposits for the three months ended June 30, 2024 and March 31, 2024 was 2.34%, and increased 62 basis points compared to 1.72% for the three months ended June 30, 2023.

Second Quarter 2024 Results – Comparison to Prior-Year Quarter

Tax-equivalent net interest income, a non-GAAP measure1, for the three months ended June 30, decreased $3.2 million or 14.1% to $19.4 million in 2024 from $22.6 million in 2023.  The decrease in tax-equivalent net interest income was due to a $1.6 million increase in tax-equivalent interest income that was offset by a $4.8 million increase in interest expense.

The higher interest income was the result of increases in the yield of earning assets.  The tax-equivalent yield on the loan portfolio was 5.09% and 4.79% for the three months ended June 30, 2024 and 2023, respectively.  This increase was due to the higher rates on adjustable and floating rate loans, and new loan originations.  Average loans, net, increased $19.0 million when comparing the three months ended June 30, 2024 to the same three month period in 2023.  For the three months ended June 30, the tax-equivalent yield on total investments increased to 1.80% in 2024 from 1.73% in 2023.  Average investments totaled $529.6 million in the three months ended June 30, 2024 and $558.1 million in the three months ended June 30, 2023.  Average federal funds sold decreased $48.4 million to $12.7 million for the three months ended June 30, 2024.

The increased interest expense in the three months ended June 30, 2024 was due primarily to higher rates on consumer, business and municipal deposits driven by the higher interest rate environment.  The Company's total cost of deposits increased during the three months ended June 30, 2024 compared to the year ago period by 62 basis points to 2.34%, and the cost of interest-bearing deposits increased 71 basis points to 2.92% from 2.21% in the corresponding period of the prior year.  Short-term borrowings averaged $45.4 million in the current period at an average cost of 5.61% compared to $16.9 million in short-term borrowings at an average cost of 5.07% in the corresponding period of the prior year.

Average interest-bearing liabilities increased $31.1 million for the three months ended June 30, 2024, compared to the corresponding period last year.  Average noninterest-bearing deposits decreased $91.5 million or 12.9% from the corresponding period of the prior year, due in part to a shift to interest-bearing accounts, and represented 19.3% of total average deposits in the three months ended June 30 2024 as compared to 21.7% in the corresponding period of the prior year.

For the three months ended June 30, 2024, $0.6 million was recorded to the provision for credit losses compared to a credit of $2.2 million in the year ago period.  The current period provision was due to a higher calculated allowance for credit losses.  The higher calculated allowance was due to the establishment of a $0.4 million specific reserve for an individually evaluated commercial real estate loan along with higher pooled loan reserves; additional reserves were required due to loan growth. The prior period credit was due to the impact of various factors such as updated economic assumptions as well as changes in qualitative adjustments, portfolio composition and asset quality.  Changes to qualitative factors in the year ago period related to lower loan growth were partially offset by banking industry concerns which resulted in lower expected credit losses.

Noninterest income for the three months ended June 30, 2024 and 2023 was $3.5 million.

Noninterest expense increased $1.5 million or 9.3% to $18.2 million for the three months ended June 30, 2024, from $16.6 million for the three months ended June 30, 2023.  Acquisition related expenses, including legal and consulting and advisory fees, totaled $1.1 million.  Salaries and employee benefits were $8.5 million in both periods.  Occupancy and equipment expenses increased $0.3 million in the current period due to higher information technology (IT) expense and higher facilities costs from inflationary price pressure.  Other expenses increased $0.4 million due primarily to a partial write-down of the former East Stroudsburg branch property.

The provision for income tax expense was $0.4 million or 11.4% of pre-tax income for the three months ended June 30, 2024 and $1.8 million or 16.1% of pre-tax income for the three months ended June 30, 2023, a decrease of $1.4 million due to lower taxable income.

Six-Month Results – Comparison to Prior Year First Six Months

Our net interest margin, a non-GAAP measure³, for the six months ended June 30, 2024 was 2.29%, a decrease of 43 basis points over the prior year's period of 2.72%.  Tax-equivalent net interest income, a non-GAAP measure¹ for the six months ended June 30, decreased $7.0 million, or 15.2%, to $39.2 million in 2024 from $46.2 million in 2023.  The decrease in net interest income was the result of higher loan interest income due to increased volume and rates on new loans and those that are repricing, offset by the higher cost of deposit funding.  Average investments decreased $47.1 million compared to June 30, 2023, as the Company engaged in investment sales in the year ago period to, in part, fund loan growth and repay short-term borrowings.  The yield on earning assets was 4.57% for the first half of 2024 compared to 4.23% for the six month period ended June 30, 2023.  The cost of interest bearing liabilities during the six month period ended June 30, 2024 increased 92 basis points to 2.99% from 2.07% for the six months ended June 30, 2023 as the cost of interest-bearing deposit products and short-term borrowing costs increased.  Furthermore, the Company, as part of its strategy to improve on-balance sheet liquidity, added $259.0 million of brokered certificate of deposits at an average cost of 5.16% during the first six months of 2023.  

For the six months ended June 30, 2024, a provision for credit losses of $1.3 million was recorded due to the establishment of a $0.4 million specific reserve for an individually evaluated commercial real estate loan along with higher pooled loan reserves.  Pooled loan reserves increased due to loan growth and a higher model loss rate that was primarily attributed to the loan portfolio comparing favorably to peer performance and new originations.  For the comparable prior year period, a credit to the provision for credit losses of $0.9 million was recorded due to various factors including updated economic assumptions as well as changes in qualitative factors, portfolio composition and asset quality.

Noninterest income was $6.9 million for the six months ended June 30, 2024 and $7.2 million for the comparable period ended June 30, 2023.  During the period, interest rate swap revenue decreased $0.2 million on lower loan origination volume and market value adjustments.  The prior year's period included $0.1 million gains on the sale of investment securities.

Noninterest expense for the six months ended June 30, 2024, was $36.2 million, an increase of $3.0 million from $33.2 million for the six months ended June 30, 2023.  The increase was due primarily to acquisition related expenses, occupancy and equipment expenses and other expenses, partially offset by reduced salary and benefits expenses.  Salaries and employee benefits expenses decreased $0.3 million compared to the year ago period due to lower benefit costs.  Occupancy and equipment expenses were higher by $0.9 million in the current period due to increased technology costs related to system upgrades and increased account and transaction volumes, and higher facilities costs.  Acquisition related expenses totaled $1.6 million compared to $0.1 million a year ago.  Other expenses increased $1.0 million due primarily to a $0.4 million partial write-down of the former East Stroudsburg branch property and an increase to the provision for unfunded commitments of $0.6 million resulting from a provision of $0.3 million in the current period and a credit of $0.3 million in the year ago period. 

The provision for income taxes for the six months ended June 30, 2024 decreased $2.3 million and the effective tax rate was 11.8% as compared to 15.8% in the prior period. 

BALANCE SHEET REVIEW

At June 30, 2024, total assets, loans and deposits were $3.6 billion, $2.9 billion and $3.1 billion, respectively. During the six month period, federal funds sold were utilized to fund loan growth and seasonal deposit outflows.  

Loan growth for the six months ended June 30, 2024 was $19.7 million or 1.4%, which is consistent with the Company's current balance sheet strategy to slow loan growth.  Commercial loans made up the majority of the growth with residential real estate loans also increasing.

Total investments were $466.9 million at June 30, 2024, compared to $483.9 million at December 31, 2023.  At June 30, 2024, the available for sale securities totaled $385.2 million and the held to maturity securities totaled $81.6 million.  The unrealized loss on the available for sale securities increased $2.4 million from $51.5 million at December 31, 2023 to $53.9 million at June 30, 2024.  The unrealized losses on the held to maturity portfolio totaled $13.4 million and $13.2 million at June 30, 2024 and December 31, 2023, respectively. 

Total deposits decreased $214.1 million during the six months ended June 30, 2024.  Noninterest-bearing deposits decreased $23.7 million and interest-bearing deposits decreased $190.4 million during the six months ended June 30, 2024.  The decrease in deposits was due to a $121.3 million decrease in municipal deposits, $48.1 million decrease in retail deposits and a $32.6 million decrease in commercial deposits.  The Company had $248.9 million and $261.0 million of longer-term callable brokered CDs at June 30, 2024 and December 31, 2023, respectively.  The Company at any time has the option to call the majority of the CDs.  Deposits declined due in part to seasonal outflows of municipal deposits and commercial depositors drawing down their noninterest-bearing balances.

The deposit base consisted of 42.8% retail accounts, 34.7% commercial accounts, 14.4% municipal relationships and 8.1% brokered deposits at June 30, 2024.  At June 30, 2024, total estimated uninsured deposits, were $744.7 million, or approximately 24.3% of total deposits as compared to $883.5 million, or 26.9% of total deposits at December 31, 2023.  Included in the uninsured total at June 30, 2024 is $239.5 million of municipal deposits collateralized by letters of credit issued by the FHLB and pledged investment securities, and $0.7 million of affiliate company deposits.  As an additional resource to our uninsured depositors, we offer all depositors access to IntraFi's CDARS and ICS programs which allows deposit customers to obtain full FDIC deposit insurance while maintaining their relationship with our bank.

In addition to deposit gathering and our current long term borrowings, we have additional sources of liquidity available such as cash and cash equivalents, overnight borrowings from the FHLB, the Federal Reserve's Discount Window and Borrower-in-Custody program, correspondent bank lines of credit, brokered deposit capacity and unencumbered securities.  At June 30, 2024, the Company had $50.0 million in cash and cash equivalents, a decrease of $137.4 million from December 31, 2023.  At June 30, 2024, we had $1.6 billion in available additional liquidity representing 45.4% of total assets, 53.5% of total deposits and 220.4% of uninsured deposits.  For additional information on our deposit portfolio and additional sources of liquidity, see the tables on page 15.

The Company maintained its well capitalized position at June 30, 2024.  Stockholders' equity equaled $340.8 million or $48.29 per share at June 30, 2024, and $340.4 million or $48.35 per share at December 31, 2023. The increase in stockholders' equity from December 31, 2023 is primarily attributable net income less dividends to shareholders, partially offset by a $0.9 million increase to accumulated other comprehensive loss ("AOCI") resulting from an increase in the unrealized loss on available for sale securities.  The net after tax unrealized loss on available for sale securities included in AOCI at June 30, 2024 and December 31, 2023 was $42.1 million and $40.3 million, respectively. 

Tangible stockholders' equity, a non-GAAP measure⁴, decreased to $39.31 per share at June 30, 2024, from $39.35 per share at December 31, 2023.  Dividends declared for the six months ended June 30, 2024 amounted to $0.82 per share, representing a dividend payout ratio of 86.3% of net income.  

ASSET QUALITY REVIEW

Asset quality metrics remained strong.  Nonperforming assets were $7.1 million or 0.25% of loans, net and foreclosed assets at June 30, 2024, compared to $4.9 million or 0.17% of loans, net and foreclosed assets at December 31, 2023.  As a percentage of total assets, nonperforming assets totaled 0.20% at June 30, 2024 compared to 0.13% at December 31, 2023.  The increase in nonaccrual loans was primarily due to downgrading one loan totaling $2.65 million to nonaccrual.  This loan also carries a 70% government agency guaranty.  At June 30, 2024, the Company had one foreclosed property recorded at $27 thousand.

During the six month period ended June 30, 2024, net charge-offs were $76 thousand and our provision for credit losses totaled $1.3 million.  The allowance for credit losses equaled $23.1 million or 0.81% of loans, net, at June 30, 2024 compared to $21.9 million or 0.77% of loans, net, at December 31, 2023.  Loans charged-off, net of recoveries, for the three months ended June 30, 2024 were $69 thousand, compared to $25 thousand for the comparable period last year.

About Peoples:

Peoples Financial Services Corp. is the parent company of Peoples Security Bank and Trust Company, a community bank serving Allegheny, Bucks, Lackawanna, Lebanon, Lehigh, Luzerne, Monroe, Montgomery, Northampton, Susquehanna, Wayne and Wyoming Counties in Pennsylvania, Middlesex County in New Jersey and Broome County in New York through 44 offices.  Each office, interdependent with the community, offers a comprehensive array of financial products and services to individuals, businesses, not-for-profit organizations and government entities.  Peoples' business philosophy includes offering direct access to senior management and other officers and providing friendly, informed and courteous service, local and timely decision making, flexible and reasonable operating procedures and consistently applied credit policies.

In addition to evaluating its results of operations in accordance with U.S. generally accepted accounting principles ("GAAP"), Peoples routinely supplements its evaluation with an analysis of certain non-GAAP financial measures, such as tangible stockholders' equity, core net income and pre-provision revenue ratios, among others.  The reported results included in this release contain items, which Peoples considers non-core, namely acquisition related expenses and gain or loss on the sale of securities available for sale.  Peoples believes the reported non-GAAP financial measures provide information useful to investors in understanding its operating performance and trends.  Where non-GAAP disclosures are used in this press release, a reconciliation to the comparable GAAP measure is provided in the accompanying tables.  The non-GAAP financial measures Peoples uses may differ from the non-GAAP financial measures of other financial institutions.

Safe Harbor Forward-Looking Statements:

We make statements in this press release, and we may from time to time make other statements regarding our outlook or expectations for future financial or operating results and/or other matters regarding or affecting Peoples Financial Services Corp. and Peoples Security Bank and Trust Company (collectively, "Peoples") and other statements that are not historical facts that are considered "forward-looking statements" as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements may be identified by the use of such words as "believe," "expect," "anticipate," "should," "planned," "estimated," "intend" and "potential." For these statements, Peoples claims the protection of the statutory safe harbors for forward-looking statements.

Peoples cautions you that undue reliance should not be placed on forward-looking statements and that a number of important factors could cause actual results to differ materially from those currently anticipated in any forward-looking statement. Such factors include, but are not limited to: macroeconomic trends, including interest rates and inflation; the effects of any recession in the United States; the impact on financial markets from geopolitical conflicts such as the military conflict between Russia and Ukraine and the conflict in Israel; risks associated with business combinations, the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the FNCB merger within the expected timeframes or at all and to successfully integrate operations of FNCB and those of Peoples, which may be more difficult, time consuming or costly than expected; the FNCB merger may divert management's attention from ongoing business operations and opportunities; effects of the completion of the FNCB merger on our ability to retain customers and retain and hire key personnel and maintain relationships with our vendors, and on our operating results and business generally; the dilution caused by Peoples' issuance of additional shares of its capital stock in connection with the FNCB merger; the outcome of any legal proceedings that may be threatened or instituted against Peoples; changes in interest rates; economic conditions, particularly in our market area; legislative and regulatory changes and the ability to comply with the significant laws and regulations governing the banking and financial services business; monetary and fiscal policies of the U.S. government, including policies of the U.S. Department of Treasury and the Federal Reserve System; adverse developments in the financial industry generally, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer and client behavior; credit risk associated with lending activities and changes in the quality and composition of our loan and investment portfolios; demand for loan and other products; deposit flows; competition; changes in the values of real estate and other collateral securing the loan portfolio, particularly in our market area; changes in relevant accounting principles and guidelines; inability of third party service providers to perform; our ability to prevent, detect and respond to cyberattacks; and other factors that may be described in our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission from time to time.

In addition to these risks, acquisitions and business combinations present risks other than those presented by the nature of the business acquired. Acquisitions and business combinations and, specifically, the FNCB merger may be substantially more expensive to complete than originally anticipated, and the anticipated benefits may be significantly harder - or take longer - to achieve than expected, if they are achieved at all.  As a regulated financial institution, our pursuit of attractive acquisition and business combination opportunities could be negatively impacted by regulatory delays or other regulatory issues.  Regulatory and/or legal issues related to the pre-acquisition operations of an acquired or combined business may cause reputational harm to Peoples following the acquisition or combination, and integration of the acquired or combined business with ours may result in additional future costs arising as a result of those issues.

The forward-looking statements are made as of the date of this release, and, except as may be required by applicable law or regulation, Peoples assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

 [TABULAR MATERIAL FOLLOWS]

 

Summary Data Peoples Financial Services Corp.  Five Quarter Trend (Unaudited) (In thousands, except share and per share data)
		June 30			Mar 31			Dec 31			Sept 30			June 30
		2024			2024			2023			2023			2023
Key performance data:
Share and per share amounts:
Net income		$	0.46		$	0.49		$	0.51		$	0.95		$	1.31
Core net income (1)		$	0.59		$	0.55		$	0.61		$	1.05		$	1.31
Core net income (PPNR) (1)		$	0.73		$	0.79		$	0.95		$	1.23		$	1.25
Cash dividends declared		$	0.41		$	0.41		$	0.41		$	0.41		$	0.41
Book value		$	48.29		$	48.18		$	48.35		$	46.07		$	46.53
Tangible book value (1)		$	39.31		$	39.20		$	39.35		$	37.07		$	37.64
Market value:
High		$	46.25		$	48.84		$	49.99		$	48.19		$	44.60
Low		$	36.26		$	38.09		$	38.58		$	40.04		$	30.60
Closing		$	45.54		$	43.11		$	48.70		$	40.10		$	43.79
Market capitalization		$	321,388		$	304,238		$	342,889		$	282,338		$	312,241
Common shares outstanding			7,057,258			7,057,258			7,040,852			7,040,852			7,130,409
Selected ratios:
Return on average stockholders' equity			3.87	%		4.09	%		4.40	%		8.05	%		11.42	%
Core return on average stockholders' equity (1)			5.00	%		4.59	%		5.26	%		8.91	%		11.54	%
Return on average tangible stockholders' equity			4.76	%		5.02	%		5.46	%		9.95	%		14.12	%
Core return on average tangible stockholders' equity (1)			6.14	%		5.64	%		6.53	%		11.01	%		14.28	%
Return on average assets			0.37	%		0.38	%		0.38	%		0.72	%		1.04	%
Core return on average assets (1)			0.47	%		0.43	%		0.46	%		0.79	%		1.05	%
Stockholders' equity to total assets			9.42	%		9.27	%		9.10	%		8.48	%		9.01	%
Efficiency ratio (1)(2)			74.49	%		75.77	%		69.94	%		63.50	%		63.51	%
Nonperforming assets to loans, net, and foreclosed assets			0.25	%		0.27	%		0.17	%		0.13	%		0.07	%
Nonperforming assets to total assets			0.20	%		0.21	%		0.13	%		0.10	%		0.06	%
Net charge-offs to average loans, net			0.01	%		0.00	%		0.39	%		0.01	%		0.00	%
Allowance for credit losses to loans, net			0.81	%		0.79	%		0.77	%		0.80	%		0.82	%
Interest-bearing assets yield (FTE) (3)			4.58	%		4.56	%		4.49	%		4.40	%		4.31	%
Cost of funds			3.01	%		2.96	%		2.86	%		2.61	%		2.29	%
Net interest spread (FTE) (3)			1.57	%		1.60	%		1.63	%		1.79	%		2.02	%
Net interest margin (FTE) (3)			2.29	%		2.29	%		2.30	%		2.44	%		2.61	%

(1)	See Reconciliation of Non-GAAP financial measures on pages 17-19.
(2)	Total noninterest expense less amortization of intangible assets and acquisition related expenses, divided by tax-equivalent net interest income and noninterest income less net gains (losses) on investment securities available for sale.
(3)	Tax-equivalent adjustments were calculated using the federal statutory tax rate prevailing during the indicated periods of 21%.

 

Peoples Financial Services Corp. Consolidated Statements of Income (Unaudited) (In thousands, except per share data)
		June 30			June 30
Six months ended		2024			2023
Interest income:
Interest and fees on loans:
Taxable		$	68,447		$	62,188
Tax-exempt			2,817			2,794
Interest and dividends on investment securities:
Taxable			3,822			4,053
Tax-exempt			742			835
Dividends			4			4
Interest on interest-bearing deposits in other banks			235			99
Interest on federal funds sold			1,306			1,041
Total interest income			77,373			71,014
Interest expense:
Interest on deposits			36,818			23,324
Interest on short-term borrowings			895			1,299
Interest on long-term debt			539			296
Interest on subordinated debt			887			887
Total interest expense			39,139			25,806
Net interest income			38,234			45,208
Provision for (credit to) credit losses			1,304			(937)
Net interest income after provision for (credit to) credit losses			36,930			46,145
Noninterest income:
Service charges, fees, commissions and other			3,921			3,947
Merchant services income			375			372
Commissions and fees on fiduciary activities			1,068			1,085
Wealth management income			777			784
Mortgage banking income			179			208
Increase in cash surrender value of life insurance			565			520
Interest rate swap revenue			78			246
Net losses on equity investment securities			(20)			(17)
Net gains on sale of investment securities available for sale						81
Total noninterest income			6,943			7,226
Noninterest expense:
Salaries and employee benefits expense			17,289			17,562
Net occupancy and equipment expense			9,301			8,380
Acquisition related expenses			1,557			121
Amortization of intangible assets						57
Other expenses			8,079			7,048
Total noninterest expense			36,226			33,168
Income before income taxes			7,647			20,203
Provision for income tax expense			899			3,199
Net income		$	6,748		$	17,004
Other comprehensive (loss) income :
Unrealized (losses) gains on investment securities available for sale		$	(2,423)		$	5,688
Reclassification adjustment for gains on available for sale securities included in net income						(81)
Change in derivative fair value			1,239			79
Income tax (benefit) expense related to other comprehensive (loss) income			(260)			1,223
Other comprehensive (loss) income, net of income tax (benefit) expense			(924)			4,463
Comprehensive income		$	5,824		$	21,467
Share and per share amounts:
Net income - basic		$	0.96		$	2.38
Net income - diluted			0.95			2.37
Cash dividends declared			0.82			0.82
Average common shares outstanding - basic			7,055,085			7,151,732
Average common shares outstanding - diluted			7,108,113			7,188,384

 

Peoples Financial Services Corp. Consolidated Statements of Income (Unaudited) (In thousands, except per share data)
		June 30			Mar 31			Dec 31			Sept 30			June 30
Three months ended		2024			2024			2023			2023			2023
Interest income:
Interest and fees on loans:
Taxable		$	34,406		$	34,041		$	33,730		$	33,095		$	32,139
Tax-exempt			1,399			1,418			1,423			1,411			1,405
Interest and dividends on investment securities:
Taxable			1,904			1,918			1,939			1,920			1,929
Tax-exempt			371			371			372			375			378
Dividends			2			2									2
Interest on interest-bearing deposits in other banks			115			120			145			91			85
Interest on federal funds sold			179			1,127			2,463			1,873			798
Total interest income			38,376			38,997			40,072			38,765			36,736
Interest expense:
Interest on deposits			18,114			18,704			18,756			16,481			13,714
Interest on short-term borrowings			633			262			330			291			213
Interest on long-term debt			269			270			273			273			269
Interest on subordinated debt			444			443			444			443			444
Total interest expense			19,460			19,679			19,803			17,488			14,640
Net interest income			18,916			19,318			20,269			21,277			22,096
Provision for (credit to) credit losses			596			708			1,669			(166)			(2,201)
Net interest income after provision for (credit to) credit losses			18,320			18,610			18,600			21,443			24,297
Noninterest income:
Service charges, fees, commissions and other			1,885			2,036			1,881			1,900			1,982
Merchant services income			260			115			151			170			254
Commissions and fees on fiduciary activities			517			551			528			606			528
Wealth management income			416			361			399			393			386
Mortgage banking income			87			92			95			87			105
Increase in cash surrender value of life insurance			286			279			277			270			262
Interest rate swap revenue			102			(24)			(122)			266			23
Net (losses) gains on investment equity securities			(12)			(8)			6						12
Total noninterest income			3,541			3,402			3,215			3,692			3,552
Noninterest expense:
Salaries and employee benefits expense			8,450			8,839			8,939			8,784			8,482
Net occupancy and equipment expense			4,576			4,725			4,468			4,298			4,277
Acquisition related expenses			1,071			486			826			869			121
Amortization of intangible assets									19			29			28
Net gains on sale of other real estate												(18)
Other expenses			4,061			4,018			3,346			3,092			3,706
Total noninterest expense			18,158			18,068			17,598			17,054			16,614
Income before income taxes			3,703			3,944			4,217			8,081			11,235
Income tax expense			421			478			587			1,335			1,810
Net income		$	3,282		$	3,466		$	3,630		$	6,746		$	9,425
Other comprehensive (loss) income:
Unrealized gain (loss) on investment securities available for sale		$	18		$	(2,441)		$	19,494		$	(10,378)		$	(5,148)
Change in benefit plan liabilities									1,129
Change in derivative fair value			160			1,079			(1,650)			747			2,049
Income tax expense (benefit) related to other comprehensive income (loss)			38			(298)			3,894			(2,074)			(668)
Other comprehensive income (loss), net of income tax expense (benefit)			140			(1,064)			15,079			(7,557)			(2,431)
Comprehensive income (loss)		$	3,422		$	2,402		$	18,709		$	(811)		$	6,994
Share and per share amounts:
Net income - basic		$	0.47		$	0.49		$	0.52		$	0.95		$	1.32
Net income - diluted			0.46			0.49			0.51			0.95			1.31
Cash dividends declared			0.41			0.41			0.41			0.41			0.41
Average common shares outstanding - basic			7,057,258			7,052,912			7,040,852			7,088,745			7,145,975
Average common shares outstanding - diluted			7,114,115			7,102,112			7,091,015			7,120,685			7,177,915

 

Peoples Financial Services Corp. Net Interest Margin (Unaudited) (In thousands, fully taxable equivalent basis)
		Three Months Ended
		June 30, 2024									June 30, 2023
		Average			Interest Income/			Yield/			Average			Interest Income/			Yield/
		Balance			Expense			Rate			Balance			Expense			Rate
Assets:
Earning assets:
Loans:
Taxable		$	2,637,164		$	34,406		5.25	%		$	2,615,881		$	32,139		4.93	%
Tax-exempt			222,655			1,771		3.20				224,960			1,780		3.17
Total loans			2,859,819			36,177		5.09				2,840,841			33,919		4.79
Investments:
Taxable			443,146			1,906		1.73				469,712			1,931		1.65
Tax-exempt			86,418			469		2.19				88,371			481		2.18
Total investments			529,564			2,375		1.80				558,083			2,412		1.73
Interest-bearing deposits			8,763			115		5.28				6,839			85		4.99
Federal funds sold			12,672			179		5.68				61,093			798		5.24
Total earning assets			3,410,818			38,846		4.58	%			3,466,856			37,214		4.31	%
Less: allowance for credit losses			23,046									25,895
Other assets			221,294									209,915
Total assets		$	3,609,066		$	38,846					$	3,650,876		$	37,214
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Money market accounts		$	714,669		$	6,749		3.80	%		$	664,451		$	4,958		2.99	%
Interest-bearing demand and NOW accounts			729,196			4,400		2.43				771,690			3,537		1.84
Savings accounts			408,883			280		0.28				483,385			239		0.20
Time deposits less than $100			403,069			3,964		3.96				375,799			3,620		3.86
Time deposits $100 or more			240,481			2,721		4.55				198,355			1,360		2.75
Total interest-bearing deposits			2,496,298			18,114		2.92				2,493,680			13,714		2.21
Short-term borrowings			45,383			633		5.61				16,854			213		5.07
Long-term debt			25,000			269		4.33				25,000			269		4.32
Subordinated debt			33,000			444		5.41				33,000			444		5.40
Total borrowings			103,383			1,346		5.24				74,854			926		4.96
Total interest-bearing liabilities			2,599,681			19,460		3.01				2,568,534			14,640		2.29
Noninterest-bearing deposits			620,256									711,729
Other liabilities			48,630									39,494
Stockholders' equity			340,499									331,119
Total liabilities and stockholders' equity		$	3,609,066								$	3,650,876
Net interest income/spread					$	19,386		1.57	%					$	22,574		2.02	%
Net interest margin								2.29	%								2.61	%
Tax-equivalent adjustments:
Loans					$	372								$	375
Investments						98									103
Total adjustments					$	470								$	478

The average balances of assets and liabilities, corresponding interest income and expense and resulting average yields or rates paid are summarized as follows. Averages for earning assets include nonaccrual loans. Investment averages include available for sale securities at amortized cost. Income on investment securities and loans is adjusted to a tax-equivalent basis using the prevailing federal statutory tax rate of 21%.

 

Peoples Financial Services Corp. Net Interest Margin (Unaudited) (In thousands, fully taxable equivalent basis)
		For the Six Months Ended
		June 30, 2024								June 30, 2023
		Average			Interest Income/			Yield/		Average			Interest Income/			Yield/
		Balance			Expense			Rate		Balance			Expense			Rate
Assets:
Earning assets:
Loans:
Taxable		$	2,634,859		$	68,447		5.22	%	$	2,581,167		$	62,188		4.86	%
Tax-exempt			223,974			3,566		3.20			224,442			3,537		3.18
Total loans			2,858,833			72,013		5.07			2,805,609			65,725		4.72
Investments:
Taxable			445,071			3,826		1.73			484,437			4,057		1.69
Tax-exempt			86,641			939		2.18			94,337			1,057		2.26
Total investments			531,712			4,765		1.80			578,774			5,114		1.78
Interest-bearing deposits			8,894			235		5.31			4,044			99		4.94
Federal funds sold			46,813			1,306		5.61			40,338			1,041		5.20
Total earning assets			3,446,252			78,319		4.57	%		3,428,765			71,979		4.23	%
Less: allowance for credit losses			22,668								25,230
Other assets			219,324								209,535
Total assets		$	3,642,908		$	78,319				$	3,613,070		$	71,979
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Money market accounts		$	734,779		$	13,884		3.80	%	$	692,999		$	9,514		2.77	%
Interest-bearing demand and NOW accounts			756,827			9,237		2.45			751,655			6,326		1.70
Savings accounts			415,849			555		0.27			497,939			455		0.18
Time deposits less than $100			406,131			8,301		4.11			284,659			4,746		3.36
Time deposits $100 or more			231,470			4,841		4.21			188,993			2,283		2.44
Total interest-bearing deposits			2,545,056			36,818		2.91			2,416,245			23,324		1.95
Short-term borrowings			32,535			895		5.53			53,985			1,299		4.85
Long-term debt			25,000			539		4.34			13,803			296		4.32
Subordinated debt			33,000			887		5.41			33,000			887		5.42
Total borrowings			90,535			2,321		5.16			100,788			2,482		4.97
Total interest-bearing liabilities			2,635,591			39,139		2.99			2,517,033			25,806		2.07
Noninterest-bearing deposits			618,433								728,238
Other liabilities			48,159								39,208
Stockholders' equity			340,725								328,591
Total liabilities and stockholders' equity		$	3,642,908							$	3,613,070
Net interest income/spread					$	39,180		1.58	%				$	46,173		2.16	%
Net interest margin								2.29	%							2.72	%
Tax-equivalent adjustments:
Loans					$	749							$	743
Investments						197								222
Total adjustments					$	946							$	965

 

Peoples Financial Services Corp. Details of Net Interest Income and Net Interest Margin (Unaudited) (In thousands, fully taxable equivalent basis)
		June 30			Mar 31			Dec 31			Sept 30			June 30
Three months ended		2024			2024			2023			2023			2023
Net interest income:
Interest income:
Loans, net:
Taxable		$	34,406		$	34,041		$	33,730		$	33,095		$	32,139
Tax-exempt			1,771			1,795			1,801			1,786			1,780
Total loans, net			36,177			35,836			35,531			34,881			33,919
Investments:
Taxable			1,906			1,920			1,939			1,920			1,931
Tax-exempt			469			470			471			475			481
Total investments			2,375			2,390			2,410			2,395			2,412
Interest on interest-bearing balances in other banks			115			120			145			91			85
Federal funds sold			179			1,127			2,463			1,873			798
Total interest income			38,846			39,473			40,549			39,240			37,214
Interest expense:
Deposits			18,114			18,704			18,756			16,481			13,714
Short-term borrowings			633			262			330			291			213
Long-term debt			269			270			273			273			269
Subordinated debt			444			443			444			443			444
Total interest expense			19,460			19,679			19,803			17,488			14,640
Net interest income		$	19,386		$	19,794		$	20,746		$	21,752		$	22,574
Loans, net:
Taxable			5.25	%		5.20	%		5.08	%		5.00	%		4.93	%
Tax-exempt			3.20	%		3.20	%		3.14	%		3.13	%		3.17	%
Total loans, net			5.09	%		5.04	%		4.93	%		4.85	%		4.79	%
Investments:
Taxable			1.73	%		1.73	%		1.71	%		1.68	%		1.65	%
Tax-exempt			2.19	%		2.18	%		2.14	%		2.15	%		2.18	%
Total investments			1.80	%		1.80	%		1.78	%		1.75	%		1.73	%
Interest-bearing balances with banks			5.28	%		5.35	%		5.51	%		5.24	%		4.99	%
Federal funds sold			5.68	%		5.60	%		5.52	%		5.52	%		5.24	%
Total interest-earning assets			4.58	%		4.56	%		4.49	%		4.40	%		4.31	%
Interest expense:
Deposits			2.92	%		2.90	%		2.80	%		2.53	%		2.21	%
Short-term borrowings			5.61	%		5.35	%		5.43	%		5.31	%		5.07	%
Long-term debt			4.33	%		4.34	%		4.33	%		4.33	%		4.32	%
Subordinated debt			5.41	%		5.40	%		5.34	%		5.33	%		5.40	%
Total interest-bearing liabilities			3.01	%		2.96	%		2.86	%		2.61	%		2.29	%
Net interest spread			1.57	%		1.60	%		1.63	%		1.79	%		2.02	%
Net interest margin			2.29	%		2.29	%		2.30	%		2.44	%		2.61	%

 

Peoples Financial Services Corp. Consolidated Balance Sheets (Unaudited) (In thousands)
		June 30			Mar 31			Dec 31			Sept 30			June 30
At period end		2024			2024			2023			2023			2023
Assets:
Cash and due from banks		$	41,234		$	32,009		$	33,524		$	39,285		$	37,774
Interest-bearing balances in other banks			8,722			8,259			9,141			9,550			5,814
Federal funds sold						69,700			144,700			205,700			93,100
Investment securities:
Available for sale			385,240			394,413			398,927			382,227			395,826
Equity investments carried at fair value			78			91			98			92			92
Held to maturity			81,598			83,306			84,851			86,246			88,211
Total investments			466,916			477,810			483,876			468,565			484,129
Loans held for sale						300			250
Loans			2,869,553			2,858,412			2,849,897			2,870,969			2,843,238
Less: allowance for credit losses			23,123			22,597			21,895			23,010			23,218
Net loans			2,846,430			2,835,815			2,828,002			2,847,959			2,820,020
Goodwill			63,370			63,370			63,370			63,370			63,370
Premises and equipment, net			58,565			59,097			61,276			61,936			57,712
Bank owned life insurance			49,955			49,673			49,397			49,123			48,857
Deferred tax assets			14,460			14,241			13,770			17,956			16,258
Accrued interest receivable			13,326			13,565			12,734			12,769			11,406
Other intangible assets, net												19			48
Other assets			53,077			45,299			42,249			49,567			43,287
Total assets		$	3,616,055		$	3,669,138		$	3,742,289		$	3,825,799		$	3,681,775
Liabilities:
Deposits:
Noninterest-bearing		$	620,971		$	623,408		$	644,683		$	691,071		$	713,375
Interest-bearing			2,443,988			2,580,530			2,634,354			2,674,012			2,516,106
Total deposits			3,064,959			3,203,938			3,279,037			3,365,083			3,229,481
Short-term borrowings			104,250			20,260			17,590			27,020			19,530
Long-term debt			25,000			25,000			25,000			25,000			25,000
Subordinated debt			33,000			33,000			33,000			33,000			33,000
Accrued interest payable			5,507			5,327			5,765			4,777			4,701
Other liabilities			42,532			41,621			41,475			46,529			38,276
Total liabilities			3,275,248			3,329,146			3,401,867			3,501,409			3,349,988
Stockholders' equity:
Common stock			14,122			14,122			14,093			14,093			14,272
Capital surplus			122,449			122,162			122,130			121,870			125,371
Retained earnings			249,511			249,123			248,550			247,857			244,017
Accumulated other comprehensive loss			(45,275)			(45,415)			(44,351)			(59,430)			(51,873)
Total stockholders' equity			340,807			339,992			340,422			324,390			331,787
Total liabilities and stockholders' equity		$	3,616,055		$	3,669,138		$	3,742,289		$	3,825,799		$	3,681,775

 

Peoples Financial Services Corp. Loan and Asset Quality Data (Unaudited) (In thousands)
At period end		June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023
Commercial
Taxable		$	411,112		$	400,439		$	317,245		$	351,545		$	384,091
Non-taxable			220,893			224,083			226,470			229,635			225,796
Total			632,005			624,522			543,715			581,180			609,887
Real estate
Commercial real estate			1,793,652			1,794,086			1,863,118			1,846,350			1,794,355
Residential			369,671			361,490			360,803			357,647			348,911
Total			2,163,323			2,155,576			2,223,921			2,203,997			2,143,266
Consumer
Indirect Auto			66,792			71,675			75,389			78,953			83,348
Consumer Other			7,433			6,639			6,872			6,839			6,737
Total			74,225			78,314			82,261			85,792			90,085
Total		$	2,869,553		$	2,858,412		$	2,849,897		$	2,870,969		$	2,843,238

 

		June 30			Mar 31			Dec 31			Sept 30			June 30
At quarter end		2024			2024			2023			2023			2023
Nonperforming assets:
Nonaccrual/restructured loans		$	7,116		$	7,056		$	3,961		$	3,060		$	1,900
Accruing loans past due 90 days or more						656			986			700			181
Foreclosed assets			27
Total nonperforming assets		$	7,143		$	7,712		$	4,947		$	3,760		$	2,081

 

			June 30			Mar 31					Dec 31					Sept 30					June 30
Three months ended			2024			2024					2023					2023					2023
Allowance for credit losses:
Beginning balance		$	22,597		$		21,895			$		23,010			$		23,218			$		25,444
Charge-offs			135				108					2,808					65					77
Recoveries			65				102					24					23					52
Provision for (credit to) credit losses			596				708					1,669					(166)					(2,201)
Ending balance		$	23,123		$		22,597			$		21,895			$		23,010			$		23,218

 

Peoples Financial Services Corp. Deposit and Liquidity Detail (Unaudited) (In thousands)
At period end		June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023
Interest-bearing deposits:
Money market accounts		$	690,631		$	759,305		$	782,243		$	767,868		$	670,669
Interest-bearing demand and NOW accounts			715,890			754,673			796,426			825,066			760,690
Savings accounts			397,827			415,459			429,011			447,684			470,340
Time deposits less than $250			504,879			517,009			505,409			512,646			504,672
Time deposits $250 or more			134,761			134,084			121,265			120,748			109,735
Total interest-bearing deposits			2,443,988			2,580,530			2,634,354			2,674,012			2,516,106
Noninterest-bearing deposits			620,971			623,408			644,683			691,071			713,375
Total deposits		$	3,064,959		$	3,203,938		$	3,279,037		$	3,365,083		$	3,229,481

 

			June 30, 2024
At period end			Amount		Percent of Total			Number of accounts		Average Balance
Deposit Detail:
Retail		$	1,310,252		42.8	%		69,658	$	19
Commercial			1,063,980		34.7			13,469		79
Municipal			441,786		14.4			1,832		241
Brokered			248,941		8.1			21		11,854
Total Deposits		$	3,064,959		100.0			84,980	$	36
Uninsured			744,674		24.3	%
Insured			2,320,285		75.7
			December 31, 2023
At period end			Amount		Percent of Total			Number of accounts		Average Balance
Deposit Detail:
Retail		$	1,358,371		41.4	%		70,334	$	19
Commercial			1,096,547		33.4			13,433		82
Municipal			563,124		17.2			1,856		303
Brokered			260,995		8.0			24		10,875
Total Deposits		$	3,279,037		100.00			85,647	$	38
Uninsured			883,530		26.9	%
Insured			2,395,507		73.1

 

								Total Available
At June 30, 2024			Total Available			Outstanding			for Future Liquidity
FHLB advances		$	1,273,642		$	349,280		$	924,362
Federal Reserve - Discount Window & Bank Term Funding Program			413,536						413,536
Correspondent bank lines of credit			18,000						18,000
Other sources of liquidity:
Brokered deposits			361,606			248,941			112,665
Unencumbered securities			172,346						172,346
Total sources of liquidity		$	2,239,130		$	598,221		$	1,640,909

 

Peoples Financial Services Corp. Consolidated Balance Sheets (Unaudited) (In thousands)
		June 30			Mar 31			Dec 31			Sept 30			June 30
Average quarterly balances		2024			2024			2023			2023			2023
Assets:
Loans, net:
Taxable		$	2,637,164		$	2,632,554		$	2,632,865		$	2,627,700		$	2,615,881
Tax-exempt			222,655			225,293			227,800			226,628			224,960
Total loans, net			2,859,819			2,857,847			2,860,665			2,854,328			2,840,841
Investments:
Taxable			443,146			446,996			450,533			454,727			469,712
Tax-exempt			86,418			86,864			87,297			87,731			88,371
Total investments			529,564			533,860			537,830			542,458			558,083
Interest-bearing balances with banks			8,763			9,025			10,432			6,893			6,839
Federal funds sold			12,672			80,955			176,983			134,583			61,093
Total interest-earning assets			3,410,818			3,481,687			3,585,910			3,538,262			3,466,856
Other assets			198,248			195,063			188,478			191,781			184,020
Total assets		$	3,609,066		$	3,676,750		$	3,774,388		$	3,730,043		$	3,650,876
Liabilities and stockholders' equity:
Deposits:
Interest-bearing		$	2,496,298		$	2,593,813		$	2,661,156		$	2,581,691		$	2,493,680
Noninterest-bearing			620,256			616,610			651,182			688,301			711,729
Total deposits			3,116,554			3,210,423			3,312,338			3,269,992			3,205,409
Short-term borrowings			45,383			19,687			24,103			21,759			16,854
Long-term debt			25,000			25,000			25,000			25,000			25,000
Subordinated debt			33,000			33,000			33,000			33,000			33,000
Other liabilities			48,630			47,688			52,760			47,788			39,494
Total liabilities			3,268,567			3,335,798			3,447,201			3,397,539			3,319,757
Stockholders' equity			340,499			340,952			327,187			332,504			331,119
Total liabilities and stockholders' equity		$	3,609,066		$	3,676,750		$	3,774,388		$	3,730,043		$	3,650,876

 

Peoples Financial Services Corp. Reconciliation of Non-GAAP Financial Measures (Unaudited) (In thousands, except share and per share data)
		June 30			Mar 31			Dec 31			Sept 30			June 30
Three months ended		2024			2024			2023			2023			2023
Core net income per share:
Net income GAAP		$	3,282		$	3,466		$	3,630		$	6,746		$	9,425
Adjustments:
Add: Acquisition related expenses			1,071			486			826			869			121
Less: Acquisition related expenses tax adjustment			122			59			115			144			19
Core net income		$	4,231		$	3,893		$	4,341		$	7,471		$	9,527
Average common shares outstanding - diluted			7,114,115			7,102,112			7,091,015			7,120,685			7,177,915
Core net income per share		$	0.59		$	0.55		$	0.61		$	1.05		$	1.33
Tangible book value:
Total stockholders' equity		$	340,807		$	339,992		$	340,422		$	324,390		$	331,787
Less: Goodwill			63,370			63,370			63,370			63,370			63,370
Less: Other intangible assets, net												19			48
Total tangible stockholders' equity		$	277,437		$	276,622		$	277,052		$	261,001		$	268,369
Common shares outstanding			7,057,258			7,057,258			7,040,852			7,040,852			7,130,409
Tangible book value per share		$	39.31		$	39.20		$	39.35		$	37.07		$	37.64
Core return on average stockholders' equity:
Net income GAAP		$	3,282		$	3,466		$	3,630		$	6,746		$	9,425
Adjustments:
Add: Acquisition related expenses			1,071			486			826			869			121
Less: Acquisition related expenses tax adjustment			122			59			115			144			19
Core net income		$	4,231		$	3,893		$	4,341		$	7,471		$	9,527
Average stockholders' equity		$	340,499		$	340,952		$	327,187		$	332,504		$	331,119
Core return on average stockholders' equity			5.00	%		4.59	%		5.26	%		8.91	%		11.54	%
Return on average tangible equity:
Net income GAAP		$	3,282		$	3,466		$	3,630		$	6,746		$	9,425
Average stockholders' equity		$	340,499		$	340,952		$	327,187		$	332,504		$	331,119
Less: average intangibles			63,370			63,370			63,380			63,404			63,433
Average tangible stockholders' equity		$	277,129		$	277,582		$	263,807		$	269,100		$	267,686
Return on average tangible stockholders' equity			4.76	%		5.02	%		5.46	%		9.95	%		14.12	%
Core return on average tangible stockholders' equity:
Net income GAAP		$	3,282		$	3,466		$	3,630		$	6,746		$	9,425
Adjustments:
Add: Acquisition related expenses			1,071			486			826			869			121
Less: Acquisition related expenses tax adjustment			122			59			115			144			19
Core net income		$	4,231		$	3,893		$	4,341		$	7,471		$	9,527
Average stockholders' equity		$	340,499		$	340,952		$	327,187		$	332,504		$	331,119
Less: average intangibles			63,370			63,370			63,380			63,404			63,433
Average tangible stockholders' equity		$	277,129		$	277,582		$	263,807		$	269,100		$	267,686
Core return on average tangible stockholders' equity			6.14	%		5.64	%		6.53	%		11.01	%		14.28	%
Core return on average assets:
Net income GAAP		$	3,282		$	3,466		$	3,630		$	6,746		$	9,425
Adjustments:
Add: Acquisition related expenses			1,071			486			826			869			121
Less: Acquisition related expenses tax adjustment			122			59			115			144			19
Core net income		$	4,231		$	3,893		$	4,341		$	7,471		$	9,527
Average assets		$	3,609,066		$	3,676,750		$	3,774,388		$	3,730,043		$	3,650,876
Core return on average assets			0.47	%		0.43	%		0.46	%		0.79	%		1.05	%
Core pre-provision net revenue (PPNR) per share:
Income before taxes (GAAP)		$	3,703		$	3,944		$	4,217		$	8,081		$	11,235
Add: Acquisition related expenses			1,071			486			826			869			121
Add: Provision for (credit to) credit losses			596			708			1,669			(166)			(2,201)
Add: Provision for (credit to) credit losses on unfunded commitments			(197)			487			(2)			(12)			(171)
Core PPNR (non-GAAP)		$	5,173		$	5,625		$	6,710		$	8,772		$	8,984
Average common shares outstanding-diluted			7,114,115			7,102,112			7,091,015			7,120,685			7,177,915
Core PPNR per share (non-GAAP)		$	0.73		$	0.79		$	0.95		$	1.23		$	1.25

 

Peoples Financial Services Corp. Reconciliation of Non-GAAP Financial Measures (Unaudited) (In thousands, except share and per share data)
		June 30			June 30
Six months ended		2024			2023
Core net income per share:
Net income GAAP		$	6,748		$	17,004
Adjustments:
Less: Gain on sale of available for sale securities						81
Add: Gain on sale of available for sale securities tax adjustment						17
Add: Acquisition related expenses			1,557			121
Less: Acquisition related expenses tax adjustment			183			19
Core net income		$	8,122		$	17,042
Average common shares outstanding - diluted			7,108,113			7,188,384
Core net income per share		$	1.14		$	2.37
Core return on average stockholders' equity:
Net income GAAP		$	6,748		$	17,004
Adjustments:
Less: Gain on sale of available for sale securities						81
Add: Gain on sale of available for sale securities tax adjustment						17
Add: Acquisition related expenses			1,557			121
Less: Acquisition related expenses tax adjustment			183			19
Core net income		$	8,122		$	17,042
Average stockholders' equity			340,725			328,591
Core return on average stockholders' equity			4.79	%		10.46	%
Return on average tangible equity:
Net income GAAP		$	6,748		$	17,004
Average stockholders' equity			340,725			328,591
Less: average intangibles			63,375			63,694
Average tangible stockholders' equity		$	277,350		$	264,897
Return on average tangible stockholders' equity			4.89	%		12.94	%
Core return on average tangible stockholders' equity:
Net income GAAP		$	6,748		$	17,004
Adjustments:
Less: Gain on sale of available for sale securities						81
Add: Gain on sale of available for sale securities tax adjustment						17
Add: Acquisition related expenses			1,557			121
Less: Acquisition related expenses tax adjustment			183			19
Core net income		$	8,122		$	17,042
Average stockholders' equity			340,725			328,591
Less: average intangibles			63,375			63,694
Average tangible stockholders' equity		$	277,350		$	264,897
Core return on average tangible stockholders' equity			5.89	%		12.97	%
Core return on average assets:
Net income GAAP		$	6,748		$	17,004
Adjustments:
Less: Gain on sale of available for sale securities						81
Add: Gain on sale of available for sale securities tax adjustment						17
Add: Acquisition related expenses			1,557			121
Less: Acquisition related expenses tax adjustment			183			19
Core net income		$	8,122		$	17,042
Average assets			3,642,908			3,613,070
Core return on average assets			0.45	%		0.95	%
Core pre-provision net revenue (PPNR) per share:
Income before taxes (GAAP)		$	7,647		$	20,203
Add: Acquisition related expenses			1,557			121
Add: Provision for (credit to) credit losses			1,304			(937)
Add: Provision for (credit to) credit losses on unfunded commitments			290			(356)
Core PPNR (non-GAAP)		$	10,798		$	19,031
Average common shares outstanding-diluted			7,108,113			7,188,384
Core PPNR per share (non-GAAP)		$	1.52		$	2.65

 

Peoples Financial Services Corp. Reconciliation of Non-GAAP Financial Measures (Unaudited) (In thousands, except share and per share data)
The following tables reconcile the non-GAAP financial measures of FTE net interest income for the three and six months ended June 30, 2024 and 2023:
Three months ended June 30		2024			2023
Interest income (GAAP)		$	38,376		$	36,736
Adjustment to FTE			470			478
Interest income adjusted to FTE (non-GAAP)			38,846			37,214
Interest expense			19,460			14,640
Net interest income adjusted to FTE (non-GAAP)		$	19,386		$	22,574
Six months ended June 30		2024			2023
Interest income (GAAP)		$	77,373		$	71,014
Adjustment to FTE			946			965
Interest income adjusted to FTE (non-GAAP)			78,319			71,979
Interest expense			39,139			25,806
Net interest income adjusted to FTE (non-GAAP)		$	39,180		$	46,173

 

The efficiency ratio is noninterest expenses, less amortization of intangible assets and acquisition related costs, as a percentage of FTE net interest income plus noninterest income. The following tables reconcile the non-GAAP financial measures of the efficiency ratio to GAAP for the three and six months ended June 30, 2024 and 2023:

Three months ended June 30		2024			2023
Efficiency ratio (non-GAAP):
Noninterest expense (GAAP)		$	18,158		$	16,614
Less: Amortization of intangible assets expense						28
Less: Acquisition related expenses			1,071			121
Noninterest expense (non-GAAP)			17,087			16,707
Net interest income (GAAP)			18,916			22,096
Plus: Taxable equivalent adjustment			471			478
Noninterest income (GAAP)			3,541			3,552
Less: Net gains (losses) on equity securities			(12)			12
Net interest income (FTE) plus noninterest income (non-GAAP)		$	22,940		$	26,114
Efficiency ratio (non-GAAP)			74.49	%		63.98	%
Six months ended June 30		2024			2023
Efficiency ratio (non-GAAP):
Noninterest expense (GAAP)		$	36,226		$	33,168
Less: Amortization of intangible assets expense						57
Less: Acquisition related expenses			1,557			121
Noninterest expense  (non-GAAP)			34,669			32,990
Net interest income (GAAP)			38,234			45,208
Plus: Taxable equivalent adjustment			946			965
Noninterest income (GAAP)			6,943			7,226
Less: Net losses on equity securities			(20)			(17)
Less: Gains on sale of available for sale securities						81
Net interest income (FTE) plus noninterest income (non-GAAP)		$	46,143		$	53,335
Efficiency ratio (non-GAAP)			75.13	%		61.85	%

 

1 See reconciliation of non-GAAP financial measures on pg.17-19

2 See reconciliation of non-GAAP financial measures on pg.17-19

3 See reconciliation of non-GAAP financial measures on pg.17-19

4 See reconciliation of non-GAAP financial measures on pg.17-19

 

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