PEOPLES FINANCIAL SERVICES CORP. Reports Unaudited Third Quarter 2022 Earnings

Rhea-AI Summary

Peoples Financial Services Corp. (PFIS) reported a net income of $10.0 million or $1.38 per diluted share for Q3 2022, marking a 9.6% increase from Q3 2021. Year-to-date earnings totaled $29.0 million or $4.01 per share, up 6.8%. The growth was driven by a $3.0 million rise in net interest income, despite $1.8 million in increased noninterest expenses. Notable increases in loan growth reached 20.2% annualized, while deposits grew $230.2 million in Q3. However, a provision for loan losses of $1.7 million was noted, reflecting strong loan growth.

Positive

• Net income increased 9.6% YOY to $10.0 million for Q3 2022.
• Year-to-date earnings reached $29.0 million, up 6.8%.
• Net interest income rose by $3.0 million in Q3.
• Loan growth was strong at 20.2% annualized for the nine months.
• Deposits grew by $230.2 million in Q3.

Negative

• Provision for loan losses increased by $1.7 million.
• Noninterest expenses rose by $1.8 million, mainly due to higher salaries and benefits.

SCRANTON, Pa., Oct. 20, 2022 /PRNewswire/ -- Peoples Financial Services Corp. ("Peoples") (NASDAQ: PFIS), the bank holding company for Peoples Security Bank and Trust Company, today reported unaudited financial results at and for the three and nine months ended September 30, 2022.

Peoples reported net income of $10.0 million, or $1.38 per diluted share for the three months ended September 30, 2022, a 9.6% increase when compared to $9.1 million, or $1.26 per share for the comparable period of 2021. The increase in earnings for the three months ended September 30, 2022 is due to a $3.0 million increase to net interest income when compared to the year ago period. Partially offsetting the increases were higher noninterest expenses of $1.8 million due to higher salaries and benefits and occupancy and equipment costs in part due to ongoing investment in the Company's market expansion strategy and digital technology upgrade.

Net income for the nine months ended September 30, 2022, totaled $29.0 million or $4.01 per diluted share, a 6.8% increase over $27.1 million or $3.74 per diluted share in the prior year's period.  The increase in earnings in the nine months ended September 30, 2022 is a result of increased net interest income of $8.3 million and an increase of $0.3 million in noninterest income. Partially offsetting the increases were a $1.7 million increase in provision for loan losses and an increase of $5.5 million in noninterest expense.  Strong loan growth resulted in a provision for loan losses of $1.7 million in the current nine month period, as compared to no loan loss provision in the year ago period.  Higher noninterest expenses were mainly due to higher salaries and benefits of $2.7 million and higher occupancy and equipment costs of $2.2 million in part due to our continued investment in the market expansion strategy and our recent digital technology upgrade implemented during the second half of 2021.

NOTABLES

• Record year-to-date earnings of $29.0 million or $4.01 per diluted share.
• Dividends paid during the first nine months of 2022 totaled $1.18 per share representing a 5.4% increase from the same period in 2021.
• Net loan growth for the nine months ended September 30, 2022, excluding Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loans, was $340.7 million or 20.2% annualized.
• Deposit growth during the three and nine months ended September 30, 2022, excluding brokered deposits, totaled $230.2 million and $127.4 million, respectively.  During the three months ended September 30, 2022, deposit growth enabled the Company to pay-off its short-term borrowings at the Federal Home Loan Bank of Pittsburgh.
• Return on average assets ("ROAA") was 1.14% for the three and nine months ended September 30, 2022 compared to 1.17% and 1.21% for the comparable periods in 2021.
• Return on average equity ("ROE") was 12.69% and 11.93% for the three and nine months ended September 30, 2022 compared to 11.01% and 11.24% for the comparable periods in 2021.
• Return on average tangible equity, a non-GAAP measure¹, was 15.94% and 14.82% for the three and nine months ended September 30, 2022 compared to 13.69% and 14.03% for the comparable periods in 2021.
• Tax-equivalent net interest income, a non-GAAP measure¹, increased $8.6 million or 13.4% to $72.7 million for the nine months ended September 30, 2022 compared to $64.1 million for the same period in 2021.
• Nonperforming assets as a percentage of total assets at September 30, 2022 improved to 0.12% as compared to 0.15% at December 31, 2021, and 0.19% at September 30, 2021.

¹ See reconciliation of non-GAAP financial measures on p.17 and 18

INCOME STATEMENT REVIEW

In March 2022, the Federal Open Market Committee ("FOMC") began increasing the federal funds rate in an attempt to curb inflation.   Since then, there have been 5 rate increases, totaling 300 basis points and additional rate hikes are anticipated through year-end. These increases directly impact our core source of income, net interest income through yields on investments and loans and the cost of funding via deposits and borrowings.  Through September 30, 2022, we have realized higher rates on our existing adjustable and variable rate loans and new originations.  The benefit of higher asset yields however, has been partially mitigated by higher funding costs primarily during the three months ended September 30, 2022, as rate-sensitive depositors are seeking higher rates.  We anticipate that funding costs will continue to increase in the future as a result of the FOMC rate adjustments, local competition for deposits or the cost of alternative funding.

Calculated on a fully taxable equivalent basis ("FTE"), a non-GAAP measure¹, our net interest margin for the three months ended September 30, 2022 was 3.08%, an increase of 2 basis points when compared to the three months ended June 30 2022, and an increase of 1 basis point when compared to 3.07% for the same three month period in 2021.  The increase in net interest margin from the prior three month period was due to an increase in the volume and yield of earning assets, which offset higher funding costs.  The tax-equivalent yield on interest-earning assets increased 25 basis points to 3.59% during the three months ended September 30, 2022 from 3.34% during the three months ended June 30, 2022, and increased 22 basis points when compared to 3.37% for the three months ended September 30, 2021.  Our cost of funds, which represents our average rate paid on total interest-bearing liabilities, increased 33 basis points to 0.72% for the three months ended September 30, 2022 when compared to 0.39% during the three months ended June 30, 2022 and increased 30 basis compared to 0.42% in the prior year period.  Each of these increases was due to the higher costs of deposits and short-term borrowings used to fund loan growth. 

Third Quarter 2022 Results – Comparison to Prior-Year Quarter

Tax-equivalent net interest income, a non-GAAP measure¹, for the three months ended September 30, increased $3.1 million or 13.9% to $25.5 million in 2022 from $22.4 million in 2021. The increase in tax equivalent net interest income was due to higher tax-equivalent interest income of $5.2 million less higher interest expense of $2.1 million. 

The higher interest income was the result of an increase in average earning assets, which offset a negative rate variance due to lower yields on the investment portfolio.  Average earning assets were $391.1 million higher in the three month period ended September 30, 2022 when compared to the year ago period.  PPP loans averaged $27.5 million in the three-month period ended September 30, 2022 with interest and net fees totaling approximately $0.2 million compared to average balances of $122.3 million with interest and net fees totaling $2.5 million in the year ago period. The tax-equivalent yield on the loan portfolio was 4.09% and 4.06% for the three months ended September 30, 2022 and 2021. Excluding PPP loans, the tax-equivalent yield of the loan portfolio was 4.10% and 3.83% at September 30, 2022 and 2021, respectively.   This increase was due to the higher rates on adjustable and floating rate loans, which comprise 49.0% of our portfolio loans, and new loan originations.  Loans, net averaged $2.6 billion for the three months ended September 30, 2022 and $2.2 billion for the comparable period in 2021. For the three months ended September 30, the tax-equivalent yield on total investments decreased to 1.67% in 2022 from 2.01% in 2021. Average investments totaled $656.4 million in 2022 and $365.5 million in 2021.

The increased interest expense in the current three month period is due primarily to higher rates on public funds and customer non-maturity deposits driven by the higher interest rate environment.  The Company's total cost of deposits increased during the three months ended September 30, 2022 compared to the year ago period by 19 basis points to 0.44%, and the cost of interest-bearing deposits increased to 0.59% from 0.34% in the previous year three month period. The Company utilized short-term FHLB borrowings during the current period which added $0.5 million of interest expense at a cost of 2.30% compared to no short-term borrowings in the year ago period.

Average interest-bearing liabilities increased $297.8 million for the three months ended September 30, 2022, compared to the corresponding period last year due to an increase in non-maturity and public fund deposits and short-term borrowings.  Average noninterest-bearing deposits also increased by 10.8% from the prior period and now represent 25.7% of total deposits.

For the three months ended September 30, 2022, the provision for loan losses was $0.5 million, the result of $62.5 million of non-PPP net loan growth during the quarter.  For the year ago period, the provision for loan losses was $0.4 million due to loan growth,  improved credit quality and the reversal of previous COVID-related asset quality qualitative adjustments.

Noninterest income for the three months ended September 30, 2022 was $3.3 million, a $0.1 million decrease from $3.4 million for the three months ended September 30, 2021. The decline was due to reduced wealth management fees, which are based on account valuations and have been negatively impacted by stock market fluctuations, as well as mortgage banking revenue which has declined due to lower originations and volumes of mortgages sold into the secondary market as the interest rates on mortgages have risen.

Noninterest expense increased $1.8 million or 12.6% to $15.9 million for the three months ended September 30, 2022, from $14.1 million for the three months ended September 30, 2021. Salaries and employee benefits increased $0.6 million or 8.2% due to annual merit increases and the addition of lending teams and credit support staff in our newest expansion markets of Piscataway, New Jersey and Pittsburgh, Pennsylvania that opened during the fourth quarter of 2021.  Occupancy and equipment expenses were higher by $0.7 million in the current period due to information technology investments related in part to mobile/digital banking solutions implemented during the second half of 2021.

The provision for income tax expense increased $0.2 million for the three months ended September 30, 2022 compared to the year ago period due to higher taxable income in the current period.

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

Calculated on a fully taxable equivalent basis ("FTE"), a non-GAAP measure¹, the net interest margin for the nine months ended September 30, 2022 was 3.04%, a decrease of 2 basis points over the prior year's period of 3.06%.   Excluding the impact of PPP loan interest and net fees, the net interest margin increased to 3.00% in the current period from 2.95% in the year ago period.  Tax-equivalent net interest income, a non-GAAP measure¹, for the nine months ended September 30, increased $8.6 million or 13.4% to $72.7 million in 2022 from $64.1 million in 2021.  The increase in net interest income was driven by an increase in average earning assets of $400.0 million, partially offset by a negative rate variance, and higher funding costs due to an increase of $295.0 million in average interest-bearing liabilities and higher interest rates.  The 2022 period included $1.7 million in SBA PPP interest and fees, a decrease of $4.6 million compared to the $6.3 million in the year ago period. Average loans increased $272.4 million and investments increased $304.5 million compared to September 30, 2021.  The yield on earning assets was 3.39% for the first nine months of 2022 compared to 3.41% in 2021.  The cost of interest bearing liabilities during the nine month period fell slightly to 0.49% from 0.50% a year ago. 

For the nine months ended September 30, 2022, the provision for loan losses was $1.7 million, primarily the result of $340.7 million growth of non-PPP loans.  For the nine months ended September 30, 2021, there was no provision for loan losses due to improved credit quality and reversal of COVID related asset quality adjustments made in the prior year's period.

Noninterest income for the nine months ended September 30, 2022 was $10.6 million, a $0.3 million increase from $10.3 million for the nine months ended September 30, 2021. During the period, service charges, fees and commissions increased $0.7 million due in part to the reversal of an accrual of a $0.3 million bank owned life insurance benefit in the year ago period, higher consumer and commercial deposit service charges and higher revenue related to debit card activity.  Mortgage banking income decreased $0.4 million during the nine months ended September 30, 2022 compared to the prior year on lower sales volumes.

Noninterest expense for the nine months ended September 30, 2022, was $45.7 million, an increase of $5.5 million from $40.2 million for the prior year's period.  The increase was due primarily to $2.7 million in higher salaries and benefits expense due to annual merit increases, our investment into our newest expansion markets and lower deferred loan origination costs, which are recorded as a contra-salary expense.   Occupancy and equipment expenses were higher by $2.2 million in the current period due to information technology investments related to mobile/digital banking solutions implemented during the second half of 2021 and additional costs related to entrance into the Piscataway, New Jersey and Pittsburgh, Pennsylvania  markets.  Other expenses, which include professional, consulting and loan processing fees, accounted for an increase of $0.4 million.

The provision for income taxes for the nine months ended September 30, 2022 decreased $0.3 million and the effective tax rate was 16.2% as compared to 17.7% in the prior period.  The lower effective tax rate in 2022 was due to a $0.6 million deferred tax adjustment recorded in 2021 and higher levels of tax-exempt income in the current period.

 BALANCE SHEET REVIEW

At September 30, 2022, total assets, loans and deposits were $3.5 billion, $2.6 billion and $3.1 billion, respectively. Loan growth for the nine months ended September 30, 2022, excluding SBA PPP loans, was $340.7 million or 20.2% annualized due to improved loan demand and organic growth in our newest markets.  Loan growth, excluding PPP loans, during the three months ended September 30, 2022 totaled $62.5 million.  Higher interest rates and economic uncertainty may result in lower loan demand and lower growth over the near-term when compared to the first nine months of 2022.  Commercial real estate loans made up the majority of the growth with tax-exempt loans and residential real estate loans also showing increases.  During the nine months ended September 30, 2022, the SBA forgave PPP loans totaling $46.2 million.  Gross SBA PPP loans remaining at September 30, 2022 total $22.7 million.  Net deferred SBA PPP fees remaining at September 30, 2022 totaled $0.3 million and are expected to be earned throughout the remainder of 2022 as the remaining SBA PPP loans are forgiven or repaid.  Total investments were $570.5 million at September 30, 2022, compared to $588.7 million at December 31, 2021.  The decrease to the investment portfolio resulted from the unrealized loss on the available for sale portfolio, maturities and pay-downs, offset in part by purchases completed during the first six months of 2022.  At September 30, 2022, the available-for-sale investment portfolio had an unrealized loss of $74.6 million compared to an unrealized loss of $1.8 million at December 31, 2021, which was the result of the rapid increase in interest rates as the FOMC increased rates five times from March through September 2022 totaling 300 basis points.  Our federal funds sold balance decreased $172.8 million to $69.6 million at September 30, 2022 from $242.4 million at December 31, 2021 and was used to fund our loan growth and investment purchases during the period.  Total deposits increased $160.7 million from December 31, 2021 as we experienced an increase of $109.4 million in public fund deposits.  Non-interest bearing deposits increased $32.2 million, or 4.4% and interest-bearing deposits increased $128.5 million, or 5.8% during the nine months ended September 30, 2022. Short-term borrowings used to fund a portion of our loan growth and offset the deposit outflows in the second quarter were repaid in the third quarter from the increase of $212.9 million in deposits, in part due to seasonal inflows of public fund deposits.

Stockholders' equity equaled $301.8 million or $42.14 per share at September 30, 2022, and $340.1 million or $47.44 per share at December 31, 2021. The decrease in stockholders' equity from December 31, 2021 is primarily attributable to a decrease to accumulated other comprehensive income ("AOCI") resulting from an increase to the unrealized loss on investment securities and dividends paid to shareholders, partially offset by net income.  Tangible stockholders' equity decreased to $33.26 per share at September 30, 2022, from $38.54 per share at December 31, 2021. Dividends declared for the nine months ended September 30, 2022 amounted to $1.18 per share, a 5.4% increase from the 2021 period, representing a dividend payout ratio of 29.4%.  During the three months ended September 30, 2022, 7,911 shares were purchased and retired under the Company's common stock repurchase plan.

ASSET QUALITY REVIEW

Asset quality metrics remained strong and continued to improve.  Nonperforming assets were $4.2 million or 0.16% of loans, net and foreclosed assets at September 30, 2022, compared to $5.0 million or 0.21% of loans, net and foreclosed assets at December 31, 2021.  As a percentage of total assets, nonperforming assets improved to 0.12% at September 30, 2022 compared to 0.15% at December 31, 2021.  The decrease in non-performing assets from the end of the year was primarily due to the sale in the current period of the Company's foreclosed properties which totaled $0.5 million at December 31, 2021; at September 30, 2022 People's had no foreclosed properties.

The Company's allowance for loan losses increased to $29.8 million as net charge-offs of $0.3 million were offset by a provision for loan losses of $1.7 million.  The allowance for loan losses equaled $29.8 million or 1.14% of loans, net at September 30, 2022 compared to $28.4 million or 1.22% of loans, net, at December 31, 2021.   Excluding PPP loans which do not carry an allowance for loan losses due to a 100% government guarantee, the ratio equaled 1.15% at September 30, 2022.  Loans charged-off, net of recoveries, for the nine months ended September 30, 2022, equaled $0.3 million or 0.02% of average loans, compared to $0.2 million or 0.02% of average loans 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, Schuylkill, Susquehanna, and Wyoming Counties in Pennsylvania, Middlesex County in New Jersey and Broome County in New York through 28 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 and core net income ratios.  The reported results included in this release contain items, which Peoples considers non-core, namely the gain on the sale of the Visa Class B shares.  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.

Co: Peoples Financial Services Corp. 
St: Pennsylvania 
In: Fin 

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") 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 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: prevailing economic and political conditions, particularly in our market area; the COVID-19 crisis and the governmental responses to the crisis; the impact on financial markets from geopolitical conflicts such as the military conflict between Russia and Ukraine; credit risk associated with our lending activities; changes in interest rates, loan demand, real estate values and competition; changes in accounting principles, policies, and guidelines; changes in any applicable law, rule, regulation or practice with respect to tax or legal issues; our ability to identify and address cyber-security risks and other economic, competitive, governmental, regulatory and technological factors affecting Peoples' operations, pricing, products and services and other factors that may be described in Peoples' 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 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.  As regulated financial institutions, 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)
		Sept 30			June 30			Mar 31			Dec 31			Sept 30
		2022			2022			2022			2021			2021
Key performance data:
Share and per share amounts:
Net income		$	1.38		$	1.30		$	1.33		$	2.28		$	1.26
Core net income (1)		$	1.38		$	1.30		$	1.33		$	0.95		$	1.26
Cash dividends declared		$	0.40		$	0.39		$	0.39		$	0.38		$	0.38
Book value		$	42.14		$	43.50		$	44.64		$	47.44		$	45.66
Tangible book value (1)		$	33.26		$	34.62		$	35.76		$	38.54		$	36.75
Market value:
High		$	56.09		$	56.99		$	52.99		$	53.06		$	46.92
Low		$	46.84		$	47.41		$	46.35		$	45.64		$	41.91
Closing		$	46.84		$	55.84		$	50.48		$	52.69		$	45.57
Market capitalization		$	335,503		$	400,410		$	362,398		$	377,754		$	327,057
Common shares outstanding			7,162,750			7,170,661			7,179,037			7,169,372			7,177,028
Selected ratios:
Return on average stockholders' equity			12.69	%		11.71	%		11.82	%		19.34	%		11.01	%
Core return on average stockholders' equity (1)			12.69	%		11.71	%		11.82	%		8.03	%		11.01	%
Return on average tangible stockholders' equity			15.94	%		14.62	%		14.65	%		23.87	%		13.69	%
Core return on average tangible stockholders' equity (1)			15.94	%		14.62	%		14.65	%		9.91	%		13.69	%
Return on average assets			1.14	%		1.12	%		1.17	%		1.97	%		1.17	%
Core return on average assets (1)			1.14	%		1.12	%		1.17	%		0.82	%		1.17	%
Stockholders' equity to total assets			8.58	%		9.12	%		9.56	%		10.09	%		10.14	%
Efficiency ratio (1)(2)			54.95	%		54.89	%		53.57	%		59.80	%		54.32	%
Nonperforming assets to loans, net, and foreclosed assets			0.16	%		0.18	%		0.20	%		0.21	%		0.28	%
Nonperforming assets to total assets			0.12	%		0.13	%		0.14	%		0.15	%		0.19	%
Net charge-offs to average loans, net			0.00	%		0.00	%		0.05	%		0.01	%		0.08	%
Allowance for loan losses to loans, net			1.14	%		1.14	%		1.18	%		1.22	%		1.21	%
Interest-bearing assets yield (FTE) (3)			3.59	%		3.34	%		3.22	%		3.08	%		3.37	%
Cost of funds			0.72	%		0.39	%		0.35	%		0.37	%		0.42	%
Net interest spread (FTE) (3)			2.87	%		2.95	%		2.87	%		2.71	%		2.95	%
Net interest margin (FTE) (3)			3.08	%		3.06	%		2.97	%		2.82	%		3.07	%

(1)	See Reconciliation of Non-GAAP financial measures.
(2)	Total noninterest expense less amortization of intangible assets 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)
		Sept 30			Sept 30
Nine months ended		2022			2021
Interest income:
Interest and fees on loans:
Taxable		$	67,990		$	62,205
Tax-exempt			3,717			2,859
Interest and dividends on investment securities:
Taxable			6,176			3,804
Tax-exempt			1,546			1,233
Dividends			2			72
Interest on interest-bearing deposits in other banks			61			6
Interest on federal funds sold			201			228
Total interest income			79,693			70,407
Interest expense:
Interest on deposits			6,381			5,731
Interest on short-term borrowings			579			78
Interest on long-term debt			67			225
Interest on subordinated debt			1,330			1,330
Total interest expense			8,357			7,364
Net interest income			71,336			63,043
Provision for loan losses			1,700
Net interest income after provision for loan losses			69,636			63,043
Noninterest income:
Service charges, fees, commissions and other			5,167			4,476
Merchant services income			833			759
Commissions and fees on fiduciary activities			1,697			1,725
Wealth management income			1,064			1,207
Mortgage banking income			407			764
Increase in cash surrender value of life insurance			731			669
Interest rate swap revenue			757			744
Net (losses) gains on equity investment securities			(37)			9
Total noninterest income			10,619			10,353
Noninterest expense:
Salaries and employee benefits expense			24,365			21,649
Net occupancy and equipment expense			11,673			9,464
Amortization of intangible assets			289			375
Net gain on sale of other real estate owned			(478)			(195)
Other expenses			9,868			8,941
Total noninterest expense			45,717			40,234
Income before income taxes			34,538			33,162
Provision for income tax expense			5,587			6,057
Net income		$	28,951		$	27,105
Other comprehensive loss:
Unrealized loss on investment securities available-for-sale		$	(72,791)		$	(8,409)
Change in derivative fair value			(740)			(22)
Income tax benefit related to other comprehensive loss			(15,442)			(1,771)
Other comprehensive loss net of income tax benefit			(58,089)			(6,660)
Comprehensive (loss) income		$	(29,138)		$	20,445
Share and per share amounts:
Net income - basic		$	4.04		$	3.76
Net income - diluted			4.01			3.74
Cash dividends declared		$	1.18		$	1.12
Average common shares outstanding - basic			7,171,382			7,204,399
Average common shares outstanding - diluted			7,214,966			7,239,463

 

Peoples Financial Services Corp. Consolidated Statements of Income (Unaudited) (In thousands, except per share data)
		Sept 30			June 30			Mar 31			Dec 31			Sept 30
Three months ended		2022			2022			2022			2021			2021
Interest income:
Interest and fees on loans:
Taxable		$	25,128		$	22,009		$	20,853		$	20,288		$	21,276
Tax-exempt			1,338			1,218			1,161			1,098			1,024
Interest and dividends on investment securities available-for-sale:
Taxable			2,096			2,108			1,972			1,660			1,285
Tax-exempt			521			515			510			498			432
Dividends						2						2			24
Interest on interest-bearing deposits in other banks			41			18			2			2			2
Interest on federal funds sold			106			22			73			102			124
Total interest income			29,230			25,892			24,571			23,650			24,167
Interest expense:
Interest on deposits			3,316			1,597			1,468			1,579			1,698
Interest on short-term borrowings			457			122
Interest on long-term debt			16			23			28			35			41
Interest on subordinated debt			443			443			444			444			443
Total interest expense			4,232			2,185			1,940			2,058			2,182
Net interest income			24,998			23,707			22,631			21,592			21,985
Provision for loan losses			450			950			300			1,750			400
Net interest income after provision for loan losses			24,548			22,757			22,331			19,842			21,585
Noninterest income:
Service charges, fees, commissions and other			1,714			1,761			1,692			1,693			1,667
Merchant services income			157			562			114			120			158
Commissions and fees on fiduciary activities			591			551			555			548			639
Wealth management income			339			374			351			330			432
Mortgage banking income			135			128			144			211			244
Increase in cash surrender value of life insurance			269			244			218			220			225
Interest rate swap revenue			130			284			343			15			79
Net (loss) gain on investment securities			(18)			(23)			4			(7)			5
Net gain on sale of Visa Class B shares												12,153
Total noninterest income			3,317			3,881			3,421			15,283			3,449
Noninterest expense:
Salaries and employee benefits expense			8,474			7,851			8,040			8,087			7,829
Net occupancy and equipment expense			3,898			3,950			3,825			3,384			3,150
Amortization of intangible assets			96			97			96			116			125
Net gains on sale of other real estate						(20)			(458)			(15)			(97)
Other expenses			3,467			3,615			2,786			3,198			3,140
Total noninterest expense			15,935			15,493			14,289			14,770			14,147
Income before income taxes			11,930			11,145			11,463			20,355			10,887
Income tax expense			1,962			1,792			1,833			3,941			1,791
Net income		$	9,968		$	9,353		$	9,630		$	16,414		$	9,096
Other comprehensive (loss) income:
Unrealized (loss) on investment securities available-for-sale		$	(21,510)		$	(18,669)		$	(32,612)		$	(3,078)		$	(3,130)
Change in derivative fair value			(46)			(201)			(493)			(300)			(128)
Income tax (benefit) related to other comprehensive (loss)			(4,527)			(3,963)			(6,952)			(266)			(684)
Other comprehensive (loss), net of income tax (benefit)			(17,029)			(14,907)			(26,153)			(1,003)			(2,574)
Comprehensive (loss) income		$	(7,061)		$	(5,554)		$	(16,523)		$	15,411		$	6,522
Share and per share amounts:
Net income - basic		$	1.39		$	1.30		$	1.34		$	2.29		$	1.26
Net income - diluted			1.38			1.30			1.33			2.28			1.26
Cash dividends declared		$	0.40		$	0.39		$	0.39		$	0.38		$	0.38
Average common shares outstanding - basic			7,169,809			7,172,181			7,172,455			7,172,501			7,198,125
Average common shares outstanding - diluted			7,213,147			7,215,890			7,216,421			7,207,565			7,233,189

 

Peoples Financial Services Corp. Net Interest Margin (Unaudited) (In thousands, fully taxable equivalent basis)
		Three Months Ended
		September 30, 2022								September 30, 2021
		Average			Interest Income/			Yield/		Average			Interest Income/			Yield/
		Balance			Expense			Rate		Balance			Expense			Rate
Assets:
Earning assets:
Loans:
Taxable		$	2,377,803		$	25,128		4.19	%	$	2,033,752		$	21,276		4.15	%
Tax-exempt			225,637			1,694		2.98			169,273			1,296		3.04
Total loans			2,603,440			26,822		4.09			2,203,025			22,572		4.06
Investments:
Taxable			544,782			2,096		1.53			280,767			1,309		1.85
Tax-exempt			111,578			659		2.34			84,701			547		2.56
Total investments			656,360			2,755		1.67			365,468			1,856		2.01
Interest-bearing deposits			9,180			41		1.77			12,004			2		0.07
Federal funds sold			13,665			106		3.08			311,015			124		0.16
Total earning assets			3,282,645			29,724		3.59	%		2,891,512			24,554		3.37	%
Less: allowance for loan losses			29,863								26,947
Other assets			210,724								229,403
Total assets		$	3,463,506		$	29,724				$	3,093,968		$	24,554
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Money market accounts		$	630,165		$	1,228		0.77	%	$	567,971		$	452		0.32	%
NOW accounts			770,582			1,184		0.61			667,867			499		0.30
Savings accounts			527,244			123		0.09			476,966			96		0.08
Time deposits less than $100			132,599			358		1.07			128,846			338		1.04
Time deposits $100 or more			168,239			423		1.00			166,218			313		0.75
Total interest-bearing deposits			2,228,829			3,316		0.59			2,007,868			1,698		0.34
Short-term borrowings			78,922			457		2.30			—			—		0.00
Long-term debt			1,369			16		4.64			3,475			41		4.68
Subordinated debt			33,000			443		5.33			33,000			443		5.37
Total borrowings			113,291			916		3.21			36,475			484		0.45
Total interest-bearing liabilities			2,342,120			4,232		0.72			2,044,343			2,182		0.42
Noninterest-bearing deposits			770,833								696,331
Other liabilities			38,840								25,635
Stockholders' equity			311,713								327,659
Total liabilities and stockholders' equity		$	3,463,506			4,232				$	3,093,968			2,182
Net interest income/spread					$	25,492		2.87	%				$	22,372		2.95	%
Net interest margin								3.08	%							3.07	%
Tax-equivalent adjustments:
Loans					$	356							$	272
Investments						138								115
Total adjustments					$	494							$	387

 

Peoples Financial Services Corp. Net Interest Margin (Unaudited) (In thousands, fully taxable equivalent basis)
		For the Nine Months Ended
		September 30, 2022								September 30, 2021
		Average			Interest Income/			Yield/		Average			Interest Income/			Yield/
		Balance			Expense			Rate		Balance			Expense			Rate
Assets:
Earning assets:
Loans:
Taxable		$	2,260,993		$	67,990		4.02	%	$	2,054,486		$	62,205		4.05	%
Tax-exempt			213,803			4,705		2.94			147,952			3,619		3.27
Total loans			2,474,796			72,695		3.93			2,202,438			65,824		4.00
Investments:
Taxable			540,512			6,178		1.53			268,573			3,876		1.93
Tax-exempt			111,041			1,957		2.36			78,512			1,561		2.66
Total investments			651,553			8,135		1.67			347,085			5,437		2.09
Interest-bearing deposits			9,846			61		0.83			11,589			6		0.07
Federal funds sold			66,057			201		0.41			241,103			228		0.13
Total earning assets			3,202,252			81,092		3.39	%		2,802,215			71,495		3.41	%
Less: allowance for loan losses			29,144								27,264
Other assets			216,960								227,297
Total assets		$	3,390,068		$	81,092				$	3,002,248		$	71,495
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Money market accounts		$	604,918		$	2,061		0.46	%	$	538,524		$	1,551		0.39	%
NOW accounts			790,852			2,248		0.38			616,518			1,659		0.36
Savings accounts			517,381			316		0.08			462,865			289		0.08
Time deposits less than $100			128,639			965		1.00			128,152			1,100		1.15
Time deposits $100 or more			160,949			791		0.66			175,673			1,132		0.86
Total interest-bearing deposits			2,202,739			6,381		0.39			1,921,732			5,731		0.40
Short-term borrowings			40,401			579		1.92			18,682			77		0.55
Long-term debt			1,911			67		4.69			9,629			226		3.14
Subordinated debt			33,000			1,330		5.39			33,000			1,330		5.37
Total borrowings			75,312			1,976		3.51			61,311			1,633		3.56
Total interest-bearing liabilities			2,278,051			8,357		0.49			1,983,043			7,364		0.50
Noninterest-bearing deposits			751,549								670,748
Other liabilities			35,947								25,929
Stockholders' equity			324,521								322,528
Total liabilities and stockholders' equity		$	3,390,068			8,357				$	3,002,248			7,364
Net interest income/spread					$	72,735		2.90	%				$	64,131		2.91	%
Net interest margin								3.04	%							3.06	%
Tax-equivalent adjustments:
Loans					$	988							$	760
Investments						411								328
Total adjustments					$	1,399							$	1,088

 

Peoples Financial Services Corp. Details of Net Interest Income and Net Interest Margin (Unaudited) (In thousands, fully taxable equivalent basis)
		Sept 30			June 30			Mar 31			Dec 31			Sept 30
Three months ended		2022			2022			2022			2021			2021
Net interest income:
Interest income:
Loans, net:
Taxable		$	25,128		$	22,009		$	20,853		$	20,288		$	21,276
Tax-exempt			1,694			1,542			1,470			1,390			1,296
Total loans, net			26,822			23,551			22,323			21,678			22,572
Investments:
Taxable			2,096			2,110			1,972			1,662			1,309
Tax-exempt			659			652			646			630			547
Total investments			2,755			2,762			2,618			2,292			1,856
Interest on interest-bearing balances in other banks			41			18			2			2			2
Federal funds sold			106			22			73			102			124
Total interest income			29,724			26,353			25,016			24,074			24,554
Interest expense:
Deposits			3,316			1,597			1,468			1,579			1,698
Short-term borrowings			457			122
Long-term debt			16			23			28			35			41
Subordinated debt			443			443			444			444			443
Total interest expense			4,232			2,185			1,940			2,058			2,182
Net interest income		$	25,492		$	24,168		$	23,076		$	22,016		$	22,372
Loans, net:
Taxable			4.19	%		3.92	%		3.94	%		3.85	%		4.15	%
Tax-exempt			2.98	%		2.92	%		2.93	%		2.97	%		3.04	%
Total loans, net			4.09	%		3.83	%		3.85	%		3.78	%		4.06	%
Investments:
Taxable			1.53	%		1.53	%		1.53	%		1.48	%		1.85	%
Tax-exempt			2.34	%		2.35	%		2.37	%		2.38	%		2.56	%
Total investments			1.67	%		1.67	%		1.68	%		1.65	%		2.01	%
Interest-bearing balances with banks			1.77	%		0.68	%		0.14	%		0.09	%		0.07	%
Federal funds sold			3.08	%		0.37	%		0.18	%		0.15	%		0.16	%
Total interest-earning assets			3.59	%		3.34	%		3.22	%		3.08	%		3.37	%
Interest expense:
Deposits			0.59	%		0.30	%		0.27	%		0.29	%		0.34	%
Short-term borrowings			2.30	%		1.40	%									%
Long-term debt			4.64	%		4.85	%		4.59	%		4.68	%		4.68	%
Subordinated debt			5.33	%		5.38	%		5.38	%		5.38	%		5.37	%
Total interest-bearing liabilities			0.72	%		0.39	%		0.35	%		0.37	%		0.42	%
Net interest spread			2.87	%		2.95	%		2.87	%		2.71	%		2.95	%
Net interest margin			3.08	%		3.06	%		2.97	%		2.82	%		3.07	%

 

Peoples Financial Services Corp. Consolidated Balance Sheets (Unaudited) (In thousands)
		Sept 30			June 30			Mar 31			Dec 31			Sept 30
At period end		2022			2022			2022			2021			2021
Assets:
Cash and due from banks		$	35,000		$	39,693		$	35,863		$	30,415		$	33,662
Interest-bearing balances in other banks			8,410			8,040			4,440			7,093			7,425
Federal funds sold			69,600						101,200			242,425			319,500
Investment securities:
Available-for-sale			477,590			513,911			535,482			517,321			461,372
Equity investments carried at fair value			103			121			144			140			147
Held-to-maturity			92,771			94,446			95,829			71,213			32,848
Loans held for sale			653			681			161			408			997
Loans			2,623,706			2,565,579			2,397,681			2,329,173			2,205,661
Less: allowance for loan losses			29,822			29,374			28,407			28,383			26,693
Net loans			2,593,884			2,536,205			2,369,274			2,300,790			2,178,968
Premises and equipment, net			54,394			53,094			51,977			51,502			50,682
Accrued interest receivable			10,082			9,303			9,221			8,528			8,280
Goodwill			63,370			63,370			63,370			63,370			63,370
Other intangible assets, net			179			276			372			468			584
Bank owned life insurance			48,235			47,968			43,828			42,754			42,734
Other assets			62,535			54,431			41,640			33,056			32,956
Total assets		$	3,516,806		$	3,421,539		$	3,352,801		$	3,369,483		$	3,233,525
Liabilities:
Deposits:
Noninterest-bearing		$	769,935		$	747,558		$	759,986		$	737,756		$	712,601
Interest-bearing			2,354,205			2,163,725			2,204,878			2,225,641			2,128,318
Total deposits			3,124,140			2,911,283			2,964,864			2,963,397			2,840,919
Short-term borrowings			14,700			129,170
Long-term debt			1,104			1,646			2,182			2,711			3,235
Subordinated debt			33,000			33,000			33,000			33,000			33,000
Accrued interest payable			1,129			1,269			844			408			872
Other liabilities			40,923			33,274			31,450			29,841			27,767
Total liabilities			3,214,996			3,109,642			3,032,340			3,029,357			2,905,793
Stockholders' equity:
Common stock			14,330			14,346			14,352			14,341			14,356
Capital surplus			126,845			126,986			127,192			127,549			127,826
Retained earnings			224,238			217,139			210,584			203,750			190,061
Accumulated other comprehensive loss			(63,603)			(46,574)			(31,667)			(5,514)			(4,511)
Total stockholders' equity			301,810			311,897			320,461			340,126			327,732
Total liabilities and stockholders' equity		$	3,516,806		$	3,421,539		$	3,352,801		$	3,369,483		$	3,233,525

 

Peoples Financial Services Corp. Loan and Deposit Account Detail (Unaudited) (In thousands)
At the period end		September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021
Commercial
Taxable		$	371,164		$	371,153		$	370,574		$	424,455		$	414,956
Non-taxable			224,764			225,656			210,184			188,672			173,510
Total			595,928			596,809			580,758			613,127			588,466
Real estate
Commercial real estate			1,620,116			1,569,658			1,436,196			1,343,539			1,248,693
Residential			326,223			317,672			306,068			297,624			291,404
Total			1,946,339			1,887,330			1,742,264			1,641,163			1,540,097
Consumer
Indirect Auto			70,006			69,161			64,870			65,791			68,148
Consumer Other			11,433			12,279			9,789			9,092			8,950
Total			81,439			81,440			74,659			74,883			77,098
Total		$	2,623,706		$	2,565,579		$	2,397,681		$	2,329,173		$	2,205,661

At the period end		September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021
Interest-bearing deposits:
Money market accounts		$	706,947		$	592,989		$	605,686		$	588,245		$	571,679
NOW accounts			813,743			752,397			797,333			851,086			780,033
Savings accounts			530,124			518,146			515,169			491,796			478,012
Time deposits less than $250			224,517			219,690			200,345			203,719			208,691
Time deposits $250 or more			78,874			80,503			86,345			90,795			89,903
Total interest-bearing deposits			2,354,205			2,163,725			2,204,878			2,225,641			2,128,318
Noninterest-bearing deposits			769,935			747,558			759,986			737,756			712,601
Total deposits		$	3,124,140		$	2,911,283		$	2,964,864		$	2,963,397		$	2,840,919

 

Peoples Financial Services Corp. Consolidated Balance Sheets (Unaudited) (In thousands)
		Sept 30			June 30			Mar 31			Dec 31			Sept 30
Average quarterly balances		2022			2022			2022			2021			2021
Assets:
Loans, net:
Taxable		$	2,377,803		$	2,254,405		$	2,148,251		$	2,088,935		$	2,033,752
Tax-exempt			225,637			211,885			203,645			185,471			169,273
Total loans, net			2,603,440			2,466,290			2,351,896			2,274,406			2,203,025
Investments:
Taxable			544,782			553,078			523,301			446,096			280,767
Tax-exempt			111,578			111,138			110,394			105,044			84,701
Total investments			656,360			664,216			633,695			551,140			365,468
Interest-bearing balances with banks			9,180			10,694			5,888			9,739			12,004
Federal funds sold			13,665			23,920			162,218			264,068			311,015
Total interest-earning assets			3,282,645			3,165,120			3,153,697			3,099,353			2,891,512
Other assets			180,862			181,900			187,864			202,123			202,456
Total assets		$	3,463,506		$	3,347,020		$	3,341,561		$	3,301,476		$	3,093,968
Liabilities and stockholders' equity:
Deposits:
Interest-bearing		$	2,228,828		$	2,167,569		$	2,211,629		$	2,176,429		$	2,007,868
Noninterest-bearing			770,833			756,225			734,348			725,414			696,331
Total deposits			2,999,661			2,923,794			2,945,977			2,901,843			2,704,199
Short-term borrowings			78,922			34,953
Long-term debt			1,369			1,901			2,474			2,959			3,475
Subordinated debt			33,000			33,000			33,000			33,000			33,000
Other liabilities			38,841			33,080			29,816			26,924			25,635
Total liabilities			3,151,794			3,026,728			3,011,267			2,964,726			2,766,309
Stockholders' equity			311,713			320,292			330,294			336,750			327,659
Total liabilities and stockholders' equity		$	3,463,506		$	3,347,020		$	3,341,561		$	3,301,476		$	3,093,968

 

Peoples Financial Services Corp. Asset Quality Data (Unaudited) (In thousands)
		Sept 30			June 30			Mar 31			Dec 31			Sept 30
At quarter end		2022			2022			2022			2021			2021
Nonperforming assets:
Nonaccrual/restructured loans		$	3,938		$	4,387		$	4,573		$	4,461		$	5,559
Accruing loans past due 90 days or more			280			190			103			13			78
Foreclosed assets												487			487
Total nonperforming assets		$	4,218		$	4,577		$	4,676		$	4,961		$	6,124
Three months ended
Allowance for loan losses:
Beginning balance		$	29,374		$	28,407		$	28,383		$	26,693		$	26,739
Charge-offs			101			98			355			105			466
Recoveries			99			115			79			45			20
Provision for loan losses			450			950			300			1,750			400
Ending balance		$	29,822		$	29,374		$	28,407		$	28,383		$	26,693

 

Peoples Financial Services Corp. Reconciliation of Non-GAAP Financial Measures (Unaudited) (In thousands, except share and per share data)
		Sept 30			June 30			Mar 31			Dec 31			Sept 30
Three months ended		2022			2022			2022			2021			2021
Core net income per share:
Net income GAAP		$	9,968		$	9,353		$	9,630		$	16,414		$	9,096
Adjustments:
Less: Gain on sale of Visa Class B shares												12,153
Add: Gain on sale of Visa Class B shares tax adjustment												2,552
Net income Core		$	9,968		$	9,353		$	9,630		$	6,813		$	9,096
Average common shares outstanding - diluted			7,213,147			7,215,365			7,216,421			7,207,565			7,233,189
Core net income per share		$	1.38		$	1.30		$	1.33		$	0.95		$	1.26
Tangible book value:
Total stockholders' equity		$	301,810		$	311,897		$	320,461		$	340,126		$	327,732
Less: Goodwill			63,370			63,370			63,370			63,370			63,370
Less: Other intangible assets, net			179			276			372			468			584
Total tangible stockholders' equity		$	238,261		$	248,251		$	256,719		$	276,289		$	263,778
Common shares outstanding			7,162,750			7,170,661			7,179,037			7,169,372			7,177,028
Tangible book value per share		$	33.26		$	34.62		$	35.76		$	38.54		$	36.75
Core return on average stockholders' equity:
Net income GAAP		$	9,968		$	9,353		$	9,630		$	16,414		$	9,096
Adjustments:
Less: Gain on sale of Visa Class B shares												12,153
Add: Gain on sale of Visa Class B shares tax adjustment												2,552
Net income Core		$	9,968		$	9,353		$	9,630		$	6,813		$	9,096
Average stockholders' equity		$	311,713		$	320,292		$	330,294		$	336,750		$	327,659
Core return on average stockholders' equity			12.69	%		11.71	%		11.82	%		8.03	%		11.01	%
Return on average tangible equity:
Net income GAAP		$	9,968		$	9,353		$	9,630		$	16,414		$	9,096
Average stockholders' equity		$	311,713		$	320,292		$	330,294		$	336,750		$	327,659
Less: average intangibles			63,598			63,694			63,790			63,896			64,017
Average tangible stockholders' equity		$	248,115		$	256,598		$	266,504		$	272,854		$	263,642
Return on average tangible stockholders' equity			15.94	%		14.62	%		14.65	%		23.87	%		13.69	%
Core return on average tangible stockholders' equity:
Net income GAAP		$	9,968		$	9,353		$	9,630		$	16,414		$	9,096
Adjustments:
Less: Gain on sale of Visa Class B shares												12,153
Add: Gain on sale of Visa Class B shares tax adjustment												2,552
Net income Core		$	9,968		$	9,353		$	9,630		$	6,813		$	9,096
Average stockholders' equity		$	311,713		$	320,292		$	330,294		$	336,750		$	327,659
Less: average intangibles			63,598			63,694			63,790			63,896			64,017
Average tangible stockholders' equity		$	248,115		$	256,598		$	266,504		$	272,854		$	263,642
Core return on average tangible stockholders' equity			15.94	%		14.62	%		14.65	%		9.91	%		13.69	%
Core return on average assets:
Net income GAAP		$	9,968		$	9,353		$	9,630		$	16,414		$	9,096
Adjustments:
Less: Gain on sale of Visa Class B shares												12,153
Add: Gain on sale of Visa Class B shares tax adjustment												2,552
Net income Core		$	9,968		$	9,353		$	9,630		$	6,813		$	9,096
Average assets		$	3,463,506		$	3,347,020		$	3,341,561		$	3,301,476		$	3,093,968
Core return on average assets			1.14	%		1.12	%		1.17	%		0.82	%		1.17	%

 

Peoples Financial Services Corp. Reconciliation of Non-GAAP Financial Measures (Unaudited) (In thousands, except share and per share data)
The following table reconciles the non-GAAP financial measures of FTE net interest income for the three and nine months ended September 30, 2022 and 2021
Three months ended September 30		2022			2021
Interest income (GAAP)		$	29,230		$	24,167
Adjustment to FTE			494			387
Interest income adjusted to FTE (non-GAAP)			29,724			24,554
Interest expense			4,232			2,182
Net interest income adjusted to FTE (non-GAAP)		$	25,492		$	22,372
Nine months ended September 30		2022			2021
Interest income (GAAP)		$	79,693		$	70,407
Adjustment to FTE			1,399			1,088
Interest income adjusted to FTE (non-GAAP)			81,092			71,495
Interest expense			8,357			7,364
Net interest income adjusted to FTE (non-GAAP)		$	72,735		$	64,131

 

The efficiency ratio is noninterest expenses, less amortization of intangible assets, as a percentage of FTE net interest income plus noninterest income. The following table reconciles the non-GAAP financial measures of the efficiency ratio to GAAP for the three and nine months ended September 30, 2022 and 2021:

Three months ended September 30		2022			2021
Efficiency ratio (non-GAAP):
Noninterest expense (GAAP)		$	15,935		$	14,147
Less: amortization of intangible assets expense			96			125
Noninterest expense adjusted for amortization of assets expense (non-GAAP)			15,839			14,022
Net interest income (GAAP)			24,998			21,985
Plus: taxable equivalent adjustment			494			387
Noninterest income (GAAP)			3,317			3,449
Less: net (losses) gains on equity securities			(18)			5
Net interest income (FTE) plus noninterest income (non-GAAP)		$	28,827		$	25,816
Efficiency ratio (non-GAAP)			54.95	%		54.32	%
Nine months ended September 30		2022			2021
Efficiency ratio (non-GAAP):
Noninterest expense (GAAP)		$	45,717		$	40,234
Less: amortization of intangible assets expense			289			375
Noninterest expense adjusted for amortization of assets expense (non-GAAP)			45,428			39,859
Net interest income (GAAP)			71,336			63,043
Plus: taxable equivalent adjustment			1,399			1,088
Noninterest income (GAAP)			10,619			10,353
Less: net (losses) gains on equity securities			(37)			9
Net interest income (FTE) plus noninterest income (non-GAAP)		$	83,391		$	74,475
Efficiency ratio (non-GAAP)			54.48	%		53.52	%

 

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SOURCE Peoples Financial Services Corp.

FAQ

What were the earnings results for PFIS in Q3 2022?

PFIS reported net income of $10.0 million or $1.38 per diluted share, a 9.6% increase from Q3 2021.

How did PFIS perform year-to-date as of September 30, 2022?

Year-to-date earnings for PFIS totaled $29.0 million or $4.01 per diluted share, a 6.8% increase over the prior year's period.

What factors contributed to PFIS's income growth in Q3 2022?

The increase in income was primarily due to a $3.0 million rise in net interest income.

What was the loan growth percentage for PFIS for the nine months ended September 30, 2022?

PFIS achieved a net loan growth of 20.2% annualized for the nine months.

Did PFIS experience any increase in expenses during Q3 2022?

Yes, noninterest expenses increased by $1.8 million due to higher salaries and benefits.