PEOPLES FINANCIAL SERVICES CORP. Reports Unaudited Third Quarter 2023 Earnings

Rhea-AI Summary

Peoples Financial Services Corp. reported a 32.3% decrease in net income for the three months ended September 30, 2023, compared to the same period in 2022. The decrease was mainly due to lower net interest income and higher operating expenses. For the nine months ended September 30, 2023, net income decreased by 17.5%. Peoples also announced a strategic combination with FNCB Bancorp, Inc., which is expected to close in the first half of 2024.

Positive

• Net income decreased by 32.3% for the three months ended September 30, 2023, compared to the same period in 2022.
• Net income decreased by 17.5% for the nine months ended September 30, 2023, compared to the same period in 2022.
• Peoples announced a strategic combination with FNCB Bancorp, Inc., expected to close in the first half of 2024.

Negative

• Net interest income decreased by $3.7 million for the three months ended September 30, 2023, compared to the same period in 2022.
• Operating expenses increased by $1.1 million for the three months ended September 30, 2023, compared to the same period in 2022.

SCRANTON, Pa., Oct. 30, 2023 /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, 2023.

Peoples reported net income of $6.7 million, or $0.95 per diluted share for the three months ended September 30, 2023, a 32.3% decrease when compared to $10.0 million, or $1.38 per share for the comparable period of 2022. Quarterly net income included lower net interest income of $3.7 million due to higher deposit costs, and higher operating expenses of $1.1 million mainly due to acquisition related expenses as noted below, partially offset by a lower provision for credit losses of $0.6 million and higher noninterest income of $0.4 million.

For the nine months ended September 30, 2023, net income was $23.8 million, or $3.31 per diluted share, a 17.5% decrease when compared to $29.0 million, or $4.01 per diluted share for the comparable period of 2022.  Net interest income for the current period decreased $4.9 million when compared to the nine months ended September 30, 2022 as higher interest income due to increased rates was more than offset by increased funding costs.  Higher operating expenses of $4.5 million were partially offset by a $2.8 million decrease to the provision for credit losses and a $0.3 million increase in noninterest income. 

Core net income, a non-GAAP measure¹, excludes acquisition related expenses from the previously announced combination further discussed below, of $869 thousand and $990 thousand incurred during the three and nine months ended September 30, 2023, respectively.  Core net income totaled $7.5 million or $1.05 per diluted share for the three months ended September 30, 2023 compared to $10.0 million, or $1.38 per share for the comparable period of 2022.  For the nine months ended September 30, 2023, core net income was $24.5 million and $3.42 per diluted share, compared to $29.0 million and $4.01 per diluted share in the year ago period.

STRATEGIC COMBINATION WITH FNCB BANCORP, INC.

On September 27, 2023, Peoples announced it had entered into a definitive agreement to strategically combine with FNCB Bancorp, Inc., the parent company of FNCB Bank ("FNCB").  The transaction is expected to close in the first half of 2024, subject to satisfaction of customary closing conditions, including regulatory approvals and shareholder approval from both Peoples and FNCB shareholders.  Highlights of the proposed transaction include:

• Strategic merger that creates a bank holding company with nearly $5.5 billion in assets.
• #2 ranked deposit market share in the Scranton-Wilkes Barre metro statistical area and #5 ranked Pennsylvania-headquartered community bank under $20 billion in total assets.
• The proposed transaction is projected to deliver estimated 59% EPS accretion to Peoples in 2025, inclusive of all merger synergies, and a 51% dividend increase to Peoples shareholders.

FINANCIAL HIGHLIGHTS

• Net income for the nine months ended September 30, 2023 was $23.8 million or $3.31 per diluted share.
• Dividends paid during the nine months ended September 30, 2023 totaled $1.23 per share representing a 4.2% increase from the comparable period in 2022.
• Net loan growth for the three and nine months ended September 30, 2023 was $27.7 million and $140.9 million and consisted primarily of commercial real estate loans.
• Total deposits grew $318.5 million to $3.4 billion during the first nine months of 2023 with core deposits, excluding brokered deposits, increasing $70.5 million or 2.3% during the same period. Core deposits increased $135.6 million during the three months ended September 30, 2023 due in part to seasonal inflows of municipal deposits.
• At September 30, 2023, the Company had $254.5 million in cash and cash equivalents, an increase of $216.7 million from December 31, 2022. 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 48.5% of total assets and 55.1% of total deposits.
• At September 30, 2023, total estimated insured deposits, were approximately $2.4 billion, or 71.6% of total deposits; as compared to approximately $1.9 billion, or 63.1% of total deposits at December 31, 2022. Included in the uninsured total at September 30, 2023 is $475.7 million of municipal deposits collateralized by letters of credit issued by the FHLB and pledged investment securities, and $0.2 million of affiliate company deposits. Total insured and collateralized deposits represent 85.7% and 77.9% of total deposits at September 30, 2023 and December 31, 2022, respectively.
• 89,558 shares were repurchased during the three months ended September 30, 2023 at an average price per share of $43.95 and retired under the Company's common stock repurchase plan, which was terminated during the quarter.
• Tangible book value increased 5.3% to $37.07 at September 30, 2023 from $35.19 at December 31, 2022.
• Asset quality remained strong as nonperforming assets as a percentage of total assets at September 30, 2023 was 0.10%, compared to 0.12% and 0.12% at December 31, 2022 and September 30, 2022.

  INCOME STATEMENT REVIEW

• Calculated on a fully taxable equivalent basis, a non-GAAP measure¹, our net interest margin for the three months ended September 30, 2023 was 2.44%, a decrease of 17 basis points when compared to the 2.61% for the three months ended June 30, 2023 and 64 basis points when compared to 3.08% for the same three month period in 2022. The decrease in net interest margin from the prior three month period and 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 9 basis points to 4.40% during the three months ended September 30, 2023 from 4.31% during the three months ended June 30, 2023, and increased 81 basis points when compared to 3.59% for the three months ended September 30, 2022.
• Our cost of funds, which represents our average rate paid on total interest-bearing liabilities, increased 32 basis points to 2.61% for the three months ended September 30, 2023 when compared to 2.29% during the three months ended June 30, 2023 and increased 189 basis points compared to 0.72% in the prior year period. We continued to increase interest rates paid on deposits during the quarter to attract new deposits, retain current balances and maintain liquidity.
• Our cost of interest-bearing deposits increased 32 basis points during the current three month period to 2.53% from 2.21% in the prior three month period ended June 30, 2023, and increased 194 basis points compared to 0.59% for the three months ended September 30, 2022.
• Our cost of total deposits for the three months ended September 30, 2023 increased 28 basis points to 2.00% from 1.72% during the three months ended June 30, 2023, and increased 156 basis points compared to 0.44% for the three months ended September 30, 2022.

Third Quarter 2023 Results – Comparison to Prior-Year Quarter

Tax-equivalent net interest income, a non-GAAP measure¹, for the three months ended September 30, decreased $3.7 million or 14.5% to $21.8 million in 2023 from $25.5 million in 2022. The decrease in tax equivalent net interest income was due to higher tax-equivalent interest income of $9.5 million less elevated interest expense of $13.2 million.

The higher interest income was the result of an increase in yield and average balance of earning assets.  Average earning assets were $255.6 million higher in the three month period ended September 30, 2023 when compared to the year ago period.  The tax-equivalent yield on the loan portfolio was 4.85% and 4.09% for the three months ended September 30, 2023 and 2022, respectively.  This increase was due to the higher rates on adjustable and floating rate loans, and new loan originations.  Loans, net, averaged $2.9 billion for the three months ended September 30, 2023 and $2.6 billion for the comparable period in 2022. For the three months ended September 30, the tax-equivalent yield on total investments increased to 1.75% in 2023 from 1.67% in 2022. Average investments totaled $542.5 million in the three months ended September 30, 2023 and $656.4 million in the three months ended September 30, 2022.

The increased interest expense in the three months ended September 30, 2023 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 September 30, 2023 compared to the year ago period by 156 basis points to 2.00%, and the cost of interest-bearing deposits increased 194 basis points to 2.53% from 0.59% in the previous year three month period. Short-term borrowings averaged $21.8 million in the current period and added $0.3 million of interest expense at an average cost of 5.31% compared to $78.9 million in short-term borrowings and interest expense of $0.5 million in the year ago period at an average cost of 2.30%.

Average interest-bearing liabilities increased $319.3 million for the three months ended September 30, 2023, compared to the corresponding period last year due primarily to an increase in non-maturity and brokered certificate of deposits.  Average noninterest-bearing deposits decreased $82.5 million or 10.7% from the prior period and represented 21.0% of total average deposits in the period, due in part to a shift to interest-bearing accounts.

For the three months ended September 30, 2023, a credit of $0.2 million was recorded to the provision for credit losses compared to a provision of $0.5 million in the year ago period.  The current period provision 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 related to lower loan growth. The year ago period included a provision for credit losses of $0.5 million based on our previous allowance for credit losses methodology and then current conditions.

Noninterest income for the three months ended September 30, 2023 was $3.7 million, a $0.4 million increase from the prior year's quarter.  Higher retail and commercial account service charges and swap related revenue, was partially offset by lower mortgage banking fees.

Noninterest expense increased $1.1 million or 7.0% to $17.1 million for the three months ended September 30, 2023, from $15.9 million for the three months ended September 30, 2022. Acquisition related expenses, including legal and consulting and advisory fees, totaled $0.9 million. Salaries and employee benefits increased $0.3 million or 3.7% due to annual merit increases; new hires; lower deferred loan origination costs; and higher employee benefit costs.  Occupancy and equipment expenses were higher by $0.3 million in the current period due to the increase in information technology expenses and higher facilities maintenance costs. Other expenses decreased $0.2 million due primarily to lower Pennsylvania shares taxes, partially offset by higher FDIC assessments and loan account processing fees. 

The provision for income tax expense was $1.3 million for the three months ended September 30, 2023 and $2.0 million for the three months ended September 30, 2022, a decrease of $0.7 million due to lower taxable income.

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

Our net interest margin, a non-GAAP measure¹, for the nine months ended September 30, 2023 was 2.62%, a decrease of 42 basis points over the prior year's period of 3.04%.  Tax-equivalent net interest income, a non-GAAP measure¹, for the nine months ended September 30 decreased $4.8 million, or 6.6%, to $67.9 million in 2023 from $72.7 million in 2022.  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. In addition, the 2023 period included $0.2 million in Small Business Administration Paycheck Protection Program (PPP) interest and fees, compared to the $1.7 million in the year ago period. Investments decreased $85.0 million compared to September 30, 2022, as the Company engaged in investment sales during the first three months of 2023 to, in part, fund loan growth and repay short-term borrowings.  The yield on earning assets was 4.29% for the first nine months of 2023 compared to 3.39% for the nine month period ended September 30, 2022.  The cost of interest bearing liabilities during the nine month period ended September 30, 2023 increased 177 basis points to 2.26% from 0.49% for the nine months ended September 30, 2022 as the cost of all 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 nine months of 2023.  

For the nine months ended September 30, 2023, a credit to the provision for credit losses of $1.1 million was recorded due to various factors including updated economic assumptions as well as changes in qualitative factors, portfolio composition and improved asset quality.

Noninterest income was $10.9 million for the nine months ended September 30, 2023 and $10.6 million for the comparable period ended September 30, 2022.  During the period, service charges, fees and commissions increased $0.6 million, due in part to a $0.4 million increase in consumer and commercial deposit service charges and increased dividends on FHLB stock.  Merchant services income decreased $0.3 million during the nine months ended September 30, 2023 compared to the prior year on lower transaction volume incentives.  Interest rate swap revenue decreased $0.2 million on lower origination volume and market value adjustments.

Noninterest expense for the nine months ended September 30, 2023, was $50.2 million, an increase of $4.5 million from $45.7 million for the nine months ended September 30, 2022.  The increase was due primarily to $2.0 million in higher salaries and benefits expense due to annual merit increases, expansion market investments and lower deferred loan origination costs, which are recorded as a contra-salary expense, of $0.7 million due to lower loan origination volume compared to the year ago period.  Occupancy and equipment expenses were higher by $0.6 million in the current period due to higher technology costs related to increased account and transaction volumes and increased facility expenses.  The year ago period included $0.5 million of gains from the sale of other real estate owned, which is included in noninterest expense.  Acquisition related expenses totaled $1.0 million.  Other expenses including professional fees, loan account processing fees, Pennsylvania shares tax and FDIC assessments accounted for an increase of $0.7 million.

The provision for income taxes for the nine months ended September 30, 2023 decreased $1.1 million and the effective tax rate was 16.0% as compared to 16.2% in the prior period. 

BALANCE SHEET REVIEW

At September 30, 2023, total assets, loans and deposits were $3.8 billion, $2.9 billion and $3.4 billion, respectively. During the nine month period, investment sales, deposit growth and FHLB term borrowings were utilized to fund loan growth and repay short-term borrowings.

Loan growth for nine months ended September 30, 2023 was $140.9 million or 6.9% annualized.  Growth slowed during the three months ended September 30, 2023 and June 30, 2023, totaling $27.7 million and $25.2 million, respectively, when compared to loan growth of $88.0 million during the first three months of 2023.  The Company has intentionally slowed loan growth and has focused on building liquidity due to economic uncertainty.  Commercial real estate loans made up the majority of the growth with residential real estate loans also increasing.  At September 30, 2023, gross PPP loans remaining totaled $22.0 million and net deferred PPP fees remaining totaled $0.2 million.

Total investments were $468.6 million at September 30, 2023, compared to $569.0 million at December 31, 2022.  At September 30, 2023, the available-for-sale securities totaled $382.2 million and the held-to-maturity securities totaled $86.2 million.  The unrealized losses on the held-to-maturity portfolio totaled $17.4 million and $14.6 million at September 30, 2023 and December 31, 2022, respectively.  During the three month period ended March 31, 2023, $65.6 million in U.S. Treasury, tax-exempt municipals and mortgage-backed securities were sold at a net gain of $81 thousand.  The proceeds were used to pay-down higher cost short-term borrowings. 

Total deposits increased $318.5 million during the nine months ending September 30, 2023.  Noninterest-bearing deposits decreased $81.7 million and interest-bearing deposits increased $400.2 million during the nine months ended September 30, 2023.  The increase in deposits was due to a $248.0 million net increase in brokered deposits, $135.3 million in commercial deposits and a $53.7 million increase in municipal deposits, partially offset by $118.4 million in reduced retail deposits.  The Company added $259.0 million of longer-term callable brokered CDs during the first six months of 2023 to improve its on-balance sheet liquidity position and mitigate risk of higher rates.  The Company has the option to call the CDs after an initial three or six month period.

The deposit base consisted of 41.0% retail accounts, 32.8% commercial accounts, 18.1% municipal relationships and 8.1% brokered deposits at September 30, 2023. At September 30, 2023, total estimated uninsured deposits, were $955.9 million, or approximately 28.4% of total deposits as compared to $1.1 billion, or 36.9% of total deposits at December 31, 2022.  Included in the uninsured total at September 30, 2023 is $475.7 million of municipal deposits collateralized by letters of credit issued by the FHLB and pledged investment securities, and $0.2 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.

During the nine months ended September 30, 2023, the Company utilized a portion of its available line at the FHLB and increased its long-term debt $25.0 million due to favorable pricing on the borrowings versus alternative funding sources. 

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 September 30, 2023, the Company had $254.5 million in cash and cash equivalents, an increase of $216.7 million from December 31, 2022.  Although we do not plan to access the Federal Reserve's Bank Term Funding Program (BTFP), we have $4.0 million in collateral availability and an additional $371.4 million of borrowing capacity based on the par value of unencumbered securities available as collateral under this line. At September 30, 2023, we had $1.6 billion in available additional liquidity representing 41.8% of total assets, 47.5% of total deposits and 167.3% of uninsured deposits.  For additional information on our deposit portfolio and additional sources of liquidity, see the tables on page 16.

The Company maintained its well capitalized position at September 30, 2023.  Stockholders' equity equaled $324.4 million or $46.07 per share at September 30, 2023, and $315.4 million or $44.06 per share at December 31, 2022. The increase in stockholders' equity from December 31, 2022 is primarily attributable to net income offset in part by an 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 September 30, 2023 and December 31, 2022 was $55.7 million and $52.0 million, respectively. 

Tangible stockholders' equity, a non-GAAP measure¹, increased to $37.07 per share at September 30, 2023, from $35.19 per share at December 31, 2022.  Dividends declared for the nine months ended September 30, 2023 amounted to $1.23 per share, a 4.2% increase from the 2022 period, representing a dividend payout ratio of 37.2% of net income.  During the nine months ended September 30, 2023, 131,686 shares were purchased and retired under the Company's common stock repurchase plan at an average price per share of $44.29. 

ASSET QUALITY REVIEW

Asset quality metrics remained strong and continued to improve.  Nonperforming assets were $3.8 million or 0.13% of loans, net and foreclosed assets at September 30, 2023, compared to $4.1 million or 0.15% of loans, net and foreclosed assets at December 31, 2022.  As a percentage of total assets, nonperforming assets improved to 0.10% at September 30, 2023 compared to 0.12% at December 31, 2022.  The decrease in nonperforming assets was due to the reclassification of accruing troubled debt restructurings due to the January 1, 2023 change in accounting guidance noted below, reduced levels of loans 90 days or more past due and still accruing and collection activities.   At September 30, 2023, the Company had no foreclosed properties.

Effective January 1, 2023, the Company transitioned to ASU 2016-13 Financial Instruments – Credit Losses (Topic 326), commonly referred to as Current Expected Credit Losses (CECL).  As a result of the transition to CECL, the allowance for credit losses was reduced $3.3 million to $24.2 million effective January 1, 2023 and the reserve for unfunded commitments was increased $270 thousand to $450 thousand.  The cumulative adjustment, net of tax, was recorded as an adjustment to retained earnings effective January 1, 2023. 

During the nine month period ended September 30, 2023, a $1.1 million credit to loan losses and net charge-offs of $76 thousand were recorded. The allowance for credit losses equaled $23.0 million or 0.80% of loans, net at September 30, 2023 compared to $27.5 million or 1.01% of loans, net, at December 31, 2022.  Loans charged-off, net of recoveries, for the nine months ended September 30, 2023 were minimal at $76 thousand, compared to $261 thousand 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 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") 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 impact on financial markets from geopolitical conflicts such as the military conflict between Russia and Ukraine and the developing conflict in Israel; credit risk associated with our lending activities; changes in interest rates, loan demand, deposit flows, real estate values and competition; changes in customer behaviors, including consumer spending, borrowing and savings habits;  changes in accounting principles, policies, and guidelines including our adoption of Current Expected Credit Losses (CECL) methodology, and any potential volatility in the Company's operating results due to application of the CECL methodology; 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; adverse developments in the financial industry generally, such as recent bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer and client behavior 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 and, specifically, the pending strategic combination involving the merger of FNCB with and into Peoples (the "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.  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.

Additional Information regarding the Merger and Where to Find It

In connection with the proposed Merger, Peoples will file a registration statement on Form S-4 with the SEC.  The registration statement will include a joint proxy statement of Peoples and FNCB, which also constitutes a prospectus of Peoples, that will be sent to shareholders of Peoples and shareholders of FNCB seeking certain approvals related to the proposed transaction.

The information contained in this release does not constitute an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any   such   jurisdiction.   INVESTORS AND SHAREHOLDERS OF PEOPLES AND  FNCB AND THEIR RESPECTIVE    AFFILIATES ARE  URGED TO  READ,  WHEN AVAILABLE, THE REGISTRATION STATEMENT ON FORM S-4, THE JOINT PROXY STATEMENT/PROSPECTUS TO BE INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT PEOPLES, FNCB AND THE PROPOSED TRANSACTION.  

Investors and shareholders will be able to obtain a free copy of the registration statement, including the joint proxy statement/prospectus as well as other relevant documents filed with the SEC containing information about Peoples and FNCB without charge, at the SEC s website www.sec.gov.  Copies of documents filed with the SEC by Peoples will be made available free of charge in the "Investor Relations" section of Peoples' website, www.psbt.com under the heading "SEC Filings." Copies of documents filed with the SEC by FNCB will be made available free of charge in the "About FNCB" section of FNCB's website,www.fncb.com.

______________________

1 See reconciliation of non-GAAP financial measures on pp.18-20

[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
		2023			2023			2023			2022			2022
Key performance data:
Share and per share amounts:
Net income		$	0.95		$	1.31		$	1.05		$	1.27		$	1.38
Core net income (1)		$	1.05		$	1.31		$	1.04		$	1.49		$	1.38
Cash dividends declared		$	0.41		$	0.41		$	0.41		$	0.40		$	0.40
Book value		$	46.07		$	46.53		$	45.96		$	44.06		$	42.14
Tangible book value (1)		$	37.07		$	37.64		$	37.09		$	35.19		$	33.26
Market value:
High		$	48.19		$	44.60		$	53.48		$	57.60		$	56.09
Low		$	40.04		$	30.60		$	42.52		$	47.00		$	46.84
Closing		$	40.10		$	43.79		$	43.35		$	51.84		$	46.84
Market capitalization		$	282,338		$	312,241		$	309,985		$	371,072		$	335,503
Common shares outstanding			7,040,852			7,130,409			7,150,757			7,158,017			7,162,750
Selected ratios:
Return on average stockholders' equity			8.05	%		11.42	%		9.43	%		11.79	%		12.69	%
Core return on average stockholders' equity (1)			8.91	%		11.54	%		9.35	%		13.81	%		12.69	%
Return on average tangible stockholders' equity			9.95	%		14.12	%		11.71	%		14.87	%		15.94	%
Core return on average tangible stockholders' equity (1)			11.01	%		14.28	%		11.61	%		17.41	%		15.94	%
Return on average assets			0.72	%		1.04	%		0.86	%		1.04	%		1.14	%
Core return on average assets (1)			0.79	%		1.05	%		0.85	%		1.22	%		1.14	%
Stockholders' equity to total assets			8.48	%		9.01	%		8.93	%		8.87	%		8.58	%
Efficiency ratio (1)(2)			63.50	%		63.51	%		60.61	%		60.07	%		54.95	%
Nonperforming assets to loans, net, and foreclosed assets			0.13	%		0.07	%		0.07	%		0.15	%		0.16	%
Nonperforming assets to total assets			0.10	%		0.06	%		0.05	%		0.12	%		0.12	%
Net charge-offs to average loans, net			0.01	%		0.00	%		0.00	%		0.03	%		0.00	%
Allowance for credit losses to loans, net			0.80	%		0.82	%		0.90	%		1.01	%		1.14	%
Interest-bearing assets yield (FTE) (3)			4.40	%		4.31	%		4.16	%		3.84	%		3.59	%
Cost of funds			2.61	%		2.29	%		1.84	%		1.20	%		0.72	%
Net interest spread (FTE) (3)			1.79	%		2.02	%		2.32	%		2.64	%		2.87	%
Net interest margin (FTE) (3)			2.44	%		2.61	%		2.82	%		2.97	%		3.08	%

(1)	See Reconciliation of Non-GAAP financial measures on pages 18-20.
(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)
		Sept 30			Sept 30
Nine months ended		2023			2022
Interest income:
Interest and fees on loans:
Taxable		$	95,283		$	67,990
Tax-exempt			4,205			3,717
Interest and dividends on investment securities:
Taxable			5,973			6,176
Tax-exempt			1,210			1,546
Dividends			4			2
Interest on interest-bearing deposits in other banks			190			61
Interest on federal funds sold			2,914			201
Total interest income			109,779			79,693
Interest expense:
Interest on deposits			39,805			6,381
Interest on short-term borrowings			1,590			579
Interest on long-term debt			569			67
Interest on subordinated debt			1,330			1,330
Total interest expense			43,294			8,357
Net interest income			66,485			71,336
(Credit to) provision for credit losses			(1,103)			1,700
Net interest income after (credit to) provision for credit losses			67,588			69,636
Noninterest income:
Service charges, fees, commissions and other			5,847			5,167
Merchant services income			542			833
Commissions and fees on fiduciary activities			1,691			1,697
Wealth management income			1,177			1,064
Mortgage banking income			295			407
Increase in cash surrender value of life insurance			790			731
Interest rate swap revenue			512			757
Net (losses) on equity investment securities			(17)			(37)
Net gains on sale of investment securities available for sale			81
Total noninterest income			10,918			10,619
Noninterest expense:
Salaries and employee benefits expense			26,346			24,365
Net occupancy and equipment expense			12,678			12,061
Acquisition related expenses			990
Amortization of intangible assets			86			289
Net gains on sale of other real estate owned			(18)			(478)
Other expenses			10,140			9,480
Total noninterest expense			50,222			45,717
Income before income taxes			28,284			34,538
Provision for income tax expense			4,534			5,587
Net income		$	23,750		$	28,951
Other comprehensive loss:
Unrealized losses on investment securities available for sale		$	(4,690)		$	(72,791)
Reclassification adjustment for (gains) on available for sale securities included in net income			(81)
Change in derivative fair value			826			(740)
Income tax benefit related to other comprehensive (loss)			(851)			(15,442)
Other comprehensive loss, net of income tax benefit			(3,094)			(58,089)
Comprehensive income (loss)		$	20,656		$	(29,138)
Share and per share amounts:
Net income - basic		$	3.33		$	4.04
Net income - diluted			3.31			4.01
Cash dividends declared			1.23			1.18
Average common shares outstanding - basic			7,130,506			7,171,382
Average common shares outstanding - diluted			7,165,570			7,214,966

 

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		2023			2023			2023			2022			2022
Interest income:
Interest and fees on loans:
Taxable		$	33,095		$	32,139		$	30,049		$	27,515		$	25,128
Tax-exempt			1,411			1,405			1,389			1,367			1,338
Interest and dividends on investment securities:
Taxable			1,920			1,929			2,124			2,058			2,096
Tax-exempt			375			378			457			520			521
Dividends						2			2
Interest on interest-bearing deposits in other banks			91			85			14			40			41
Interest on federal funds sold			1,873			798			243			141			106
Total interest income			38,765			36,736			34,278			31,641			29,230
Interest expense:
Interest on deposits			16,481			13,714			9,610			6,251			3,316
Interest on short-term borrowings			291			213			1,086			524			457
Interest on long-term debt			273			269			27			9			16
Interest on subordinated debt			443			444			443			444			443
Total interest expense			17,488			14,640			11,166			7,228			4,232
Net interest income			21,277			22,096			23,112			24,413			24,998
(Credit to) provision for credit losses			(166)			(2,201)			1,264			(2,149)			450
Net interest income after (credit to) provision for credit losses			21,443			24,297			21,848			26,562			24,548
Noninterest income:
Service charges, fees, commissions and other			1,900			1,982			1,965			1,909			1,714
Merchant services income			170			254			118			131			157
Commissions and fees on fiduciary activities			606			528			557			532			591
Wealth management income			393			386			398			366			339
Mortgage banking income			87			105			103			104			135
Increase in cash surrender value of life insurance			270			262			258			289			269
Interest rate swap revenue			266			23			223			(135)			130
Net gains (losses) on investment equity securities						12			(29)			6			(18)
Net gains (losses) on sale of investment securities available for sale									81			(1,976)
Total noninterest income			3,692			3,552			3,674			1,226			3,317
Noninterest expense:
Salaries and employee benefits expense			8,784			8,482			9,080			9,188			8,474
Net occupancy and equipment expense			4,298			4,277			4,103			5,045			4,025
Acquisition related expenses			869			121
Amortization of intangible assets			29			28			29			74			96
Net gains on sale of other real estate			(18)
Other expenses			3,092			3,706			3,342			2,653			3,340
Total noninterest expense			17,054			16,614			16,554			16,960			15,935
Income before income taxes			8,081			11,235			8,968			10,828			11,930
Income tax expense			1,335			1,810			1,389			1,689			1,962
Net income		$	6,746		$	9,425		$	7,579		$	9,139		$	9,968
Other comprehensive (loss) income:
Unrealized (loss) gain on investment securities available for sale		$	(10,378)		$	(5,148)		$	10,836		$	6,356		$	(21,510)
Reclassification adjustment for (gains) losses on available for sale securities included in net income									(81)			1,976
Change in benefit plan liabilities												370
Change in derivative fair value			747			2,049			(1,970)			12			(46)
Income tax (benefit) expense related to other comprehensive (loss) income			(2,074)			(668)			1,891			1,447			(4,527)
Other comprehensive (loss) income, net of income tax (benefit) expense			(7,557)			(2,431)			6,894			7,267			(17,029)
Comprehensive (loss) income		$	(811)		$	6,994		$	14,473		$	16,406		$	(7,061)
Share and per share amounts:
Net income - basic		$	0.95		$	1.32		$	1.06		$	1.28		$	1.39
Net income - diluted			0.95			1.31			1.05			1.27			1.38
Cash dividends declared			0.41			0.41			0.41			0.40			0.40
Average common shares outstanding - basic			7,088,745			7,145,975			7,157,553			7,158,329			7,169,809
Average common shares outstanding - diluted			7,120,685			7,177,915			7,198,970			7,201,785			7,213,147

 

Peoples Financial Services Corp.
Net Interest Margin (Unaudited)
(In thousands, fully taxable equivalent basis)
		Three Months Ended
		September 30, 2023									September 30, 2022
		Average			Interest Income/			Yield/			Average			Interest Income/			Yield/
		Balance			Expense			Rate			Balance			Expense			Rate
Assets:
Earning assets:
Loans:
Taxable		$	2,627,700		$	33,095		5.00	%		$	2,377,803		$	25,128		4.19	%
Tax-exempt			226,628			1,786		3.13				225,637			1,694		2.98
Total loans			2,854,328			34,881		4.85				2,603,440			26,822		4.09
Investments:
Taxable			454,727			1,920		1.68				544,782			2,096		1.53
Tax-exempt			87,731			475		2.15				111,578			659		2.34
Total investments			542,458			2,395		1.75				656,360			2,755		1.67
Interest-bearing deposits			6,893			91		5.24				9,180			41		1.77
Federal funds sold			134,583			1,873		5.52				13,665			106		3.08
Total earning assets			3,538,262			39,240		4.40	%			3,282,645			29,724		3.59	%
Less: allowance for credit losses			23,691									29,863
Other assets			215,472									210,724
Total assets		$	3,730,043		$	39,240					$	3,463,506		$	29,724
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Money market accounts		$	697,387		$	5,945		3.38	%		$	630,165		$	1,228		0.77	%
Interest-bearing demand and NOW accounts			800,978			4,335		2.15				770,582			1,184		0.61
Savings accounts			462,468			272		0.23				527,244			123		0.09
Time deposits less than $100			412,705			4,234		4.07				132,599			358		1.07
Time deposits $100 or more			208,153			1,695		3.23				168,239			423		1.00
Total interest-bearing deposits			2,581,691			16,481		2.53				2,228,829			3,316		0.59
Short-term borrowings			21,759			291		5.31				78,922			457		2.30
Long-term debt			25,000			273		4.33				1,369			16		4.64
Subordinated debt			33,000			443		5.33				33,000			443		5.33
Total borrowings			79,759			1,007		5.01				113,291			916		3.21
Total interest-bearing liabilities			2,661,450			17,488		2.61				2,342,120			4,232		0.72
Noninterest-bearing deposits			688,301									770,833
Other liabilities			47,788									38,840
Stockholders' equity			332,504									311,713
Total liabilities and stockholders' equity		$	3,730,043								$	3,463,506
Net interest income/spread					$	21,752		1.79	%					$	25,492		2.87	%
Net interest margin								2.44	%								3.08	%
Tax-equivalent adjustments:
Loans					$	375								$	356
Investments						100									138
Total adjustments					$	475								$	494

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 Nine Months Ended
		September 30, 2023								September 30, 2022
		Average			Interest Income/			Yield/		Average			Interest Income/			Yield/
		Balance			Expense			Rate		Balance			Expense			Rate
Assets:
Earning assets:
Loans:
Taxable		$	2,596,848		$	95,283		4.91	%	$	2,260,993		$	67,990		4.02	%
Tax-exempt			225,178			5,323		3.16			213,803			4,705		2.94
Total loans			2,822,026			100,606		4.77			2,474,796			72,695		3.93
Investments:
Taxable			474,425			5,977		1.68			540,512			6,178		1.53
Tax-exempt			92,111			1,532		2.22			111,041			1,957		2.36
Total investments			566,536			7,509		1.77			651,553			8,135		1.67
Interest-bearing deposits			5,004			190		5.08			9,846			61		0.83
Federal funds sold			72,098			2,914		5.40			66,057			201		0.41
Total earning assets			3,465,664			111,219		4.29	%		3,202,252			81,092		3.39	%
Less: allowance for credit losses			24,711								29,144
Other assets			211,537								216,960
Total assets		$	3,652,490		$	111,219				$	3,390,068		$	81,092
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Money market accounts		$	694,478		$	15,459		2.98	%	$	604,918		$	2,061		0.46	%
Interest bearing demand and NOW accounts			768,277			10,661		1.86			790,852			2,248		0.38
Savings accounts			485,985			727		0.20			517,381			316		0.08
Time deposits less than $100			327,810			8,980		3.66			128,639			965		1.00
Time deposits $100 or more			195,450			3,978		2.72			160,949			791		0.66
Total interest-bearing deposits			2,472,000			39,805		2.15			2,202,739			6,381		0.39
Short-term borrowings			43,125			1,590		4.93			40,401			579		1.92
Long-term debt			17,576			569		4.33			1,911			67		4.69
Subordinated debt			33,000			1,330		5.39			33,000			1,330		5.39
Total borrowings			93,701			3,489		4.98			75,312			1,976		3.51
Total interest-bearing liabilities			2,565,701			43,294		2.26			2,278,051			8,357		0.49
Noninterest-bearing deposits			714,779								751,549
Other liabilities			42,101								35,947
Stockholders' equity			329,909								324,521
Total liabilities and stockholders' equity		$	3,652,490							$	3,390,068
Net interest income/spread					$	67,925		2.03	%				$	72,735		2.90	%
Net interest margin								2.62	%							3.04	%
Tax-equivalent adjustments:
Loans					$	1,118							$	988
Investments						322								411
Total adjustments					$	1,440							$	1,399

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.
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		2023			2023			2023			2022			2022
Net interest income:
Interest income:
Loans, net:
Taxable		$	33,095		$	32,139		$	30,049		$	27,515		$	25,128
Tax-exempt			1,786			1,780			1,757			1,730			1,694
Total loans, net			34,881			33,919			31,806			29,245			26,822
Investments:
Taxable			1,920			1,931			2,126			2,058			2,096
Tax-exempt			475			481			576			658			659
Total investments			2,395			2,412			2,702			2,716			2,755
Interest on interest-bearing balances in other banks			91			85			14			40			41
Federal funds sold			1,873			798			243			141			106
Total interest income			39,240			37,214			34,765			32,142			29,724
Interest expense:
Deposits			16,481			13,714			9,610			6,251			3,316
Short-term borrowings			291			213			1,086			524			457
Long-term debt			273			269			27			9			16
Subordinated debt			443			444			443			444			443
Total interest expense			17,488			14,640			11,166			7,228			4,232
Net interest income		$	21,752		$	22,574		$	23,599		$	24,914		$	25,492
Loans, net:
Taxable			5.00	%		4.93	%		4.79	%		4.47	%		4.19	%
Tax-exempt			3.13	%		3.17	%		3.18	%		3.08	%		2.98	%
Total loans, net			4.85	%		4.79	%		4.66	%		4.35	%		4.09	%
Investments:
Taxable			1.68	%		1.65	%		1.73	%		1.54	%		1.53	%
Tax-exempt			2.15	%		2.18	%		2.33	%		2.35	%		2.34	%
Total investments			1.75	%		1.73	%		1.83	%		1.68	%		1.67	%
Interest-bearing balances with banks			5.24	%		5.04	%		4.66	%		3.41	%		1.77	%
Federal funds sold			5.52	%		5.24	%		5.09	%		3.86	%		3.08	%
Total interest-earning assets			4.40	%		4.31	%		4.16	%		3.84	%		3.59	%
Interest expense:
Deposits			2.53	%		2.21	%		1.67	%		1.08	%		0.59	%
Short-term borrowings			5.31	%		5.07	%		4.81	%		4.20	%		2.30	%
Long-term debt			4.33	%		4.32	%		4.41	%		4.87	%		4.64	%
Subordinated debt			5.33	%		5.40	%		5.44	%		5.33	%		5.33	%
Total interest-bearing liabilities			2.61	%		2.29	%		1.84	%		1.20	%		0.72	%
Net interest spread			1.79	%		2.02	%		2.32	%		2.64	%		2.87	%
Net interest margin			2.44	%		2.61	%		2.82	%		2.97	%		3.08	%

 

Peoples Financial Services Corp.
Consolidated Balance Sheets (Unaudited)
(In thousands)
		Sept 30			June 30			Mar 31			Dec 31			Sept 30
At period end		2023			2023			2023			2022			2022
Assets:
Cash and due from banks		$	39,285		$	37,774		$	31,354		$	37,675		$	35,000
Interest-bearing balances in other banks			9,550			5,814			7,129			193			8,410
Federal funds sold			205,700			93,100			102,100						69,600
Investment securities:
Available for sale			382,227			395,826			418,125			477,703			477,590
Equity investments carried at fair value			92			92			81			110			103
Held to maturity			86,246			88,211			89,705			91,179			92,771
Total investments			468,565			484,129			507,911			568,992			570,464
Loans held for sale															653
Loans			2,870,969			2,843,238			2,818,043			2,730,116			2,623,706
Less: allowance for credit losses			23,010			23,218			25,444			27,472			29,822
Net loans			2,847,959			2,820,020			2,792,599			2,702,644			2,593,884
Goodwill			63,370			63,370			63,370			63,370			63,370
Premises and equipment, net			61,936			57,712			56,561			55,667			54,394
Bank owned life insurance			49,123			48,857			48,598			48,344			48,235
Deferred tax assets			17,956			16,258			16,015			18,739			20,796
Accrued interest receivable			12,769			11,406			11,678			11,715			10,082
Other intangible assets, net			19			48			77			105			179
Other assets			49,567			43,287			41,079			46,071			41,739
Total assets		$	3,825,799		$	3,681,775		$	3,678,471		$	3,553,515		$	3,516,806
Liabilities:
Deposits:
Noninterest-bearing		$	691,071		$	713,375		$	746,089		$	772,765		$	769,935
Interest-bearing			2,674,012			2,516,106			2,489,878			2,273,833			2,354,205
Total deposits			3,365,083			3,229,481			3,235,967			3,046,598			3,124,140
Short-term borrowings			27,020			19,530			17,280			114,930			14,700
Long-term debt			25,000			25,000			25,000			555			1,104
Subordinated debt			33,000			33,000			33,000			33,000			33,000
Accrued interest payable			4,777			4,701			2,304			903			1,129
Other liabilities			46,529			38,276			36,286			42,179			40,923
Total liabilities			3,501,409			3,349,988			3,349,837			3,238,165			3,214,996
Stockholders' equity:
Common stock			14,093			14,272			14,323			14,321			14,330
Capital surplus			121,870			125,371			126,231			126,850			126,845
Retained earnings			247,857			244,017			237,522			230,515			224,238
Accumulated other comprehensive loss			(59,430)			(51,873)			(49,442)			(56,336)			(63,603)
Total stockholders' equity			324,390			331,787			328,634			315,350			301,810
Total liabilities and stockholders' equity		$	3,825,799		$	3,681,775		$	3,678,471		$	3,553,515		$	3,516,806

 

Peoples Financial Services Corp.
Loan and Asset Quality Data (Unaudited)
(In thousands)
At period end		September 30, 2023			June 30, 2023			March 31, 2023			December 31, 2022			September 30, 2022
Commercial
Taxable		$	351,545		$	384,091		$	375,033		$	377,215		$	371,164
Non-taxable			229,635			225,796			224,343			222,043			224,764
Total			581,180			609,887			599,376			599,258			595,928
Real estate
Commercial real estate			1,846,350			1,794,355			1,782,911			1,709,827			1,620,116
Residential			357,647			348,911			342,459			330,728			326,223
Total			2,203,997			2,143,266			2,125,370			2,040,555			1,946,339
Consumer
Indirect Auto			78,953			83,348			86,587			76,491			70,006
Consumer Other			6,839			6,737			6,710			13,812			11,433
Total			85,792			90,085			93,297			90,303			81,439
Total		$	2,870,969		$	2,843,238		$	2,818,043		$	2,730,116		$	2,623,706

 

		Sept 30			June 30			Mar 31			Dec 31			Sept 30
At quarter end		2023			2023			2023			2022			2022
Nonperforming assets:
Nonaccrual/restructured loans		$	3,060		$	1,900		$	1,798		$	3,386		$	3,938
Accruing loans past due 90 days or more			700			181			59			748			280
Foreclosed assets
Total nonperforming assets		$	3,760		$	2,081		$	1,857		$	4,134		$	4,218
		Sept 30			June 30			Mar 31			Dec 31			Sept 30
Three months ended		2023			2023			2023			2022			2022
Allowance for credit losses:
Beginning balance		$	23,218		$	25,444		$	27,472		$	29,822		$	29,374
ASU 2016-13 Transition Adjustment									(3,283)
Adjusted beginning balance			23,218			25,444			24,189			29,822			29,374
Charge-offs			65			77			75			233			101
Recoveries			23			52			66			32			99
(Credit to) provision for credit losses			(166)			(2,201)			1,264			(2,149)			450
Ending balance		$	23,010		$	23,218		$	25,444		$	27,472		$	29,822

 

Peoples Financial Services Corp.
Deposit and Liquidity Detail (Unaudited)
(In thousands)
At period end		September 30, 2023			June 30, 2023			March 31, 2023			December 31, 2022			September 30, 2022
Interest-bearing deposits:
Money market accounts		$	767,868		$	670,669		$	775,511		$	685,323		$	706,947
Interest bearing demand and NOW accounts			825,066			760,690			698,888			772,712			813,743
Savings accounts			447,684			470,340			500,709			523,931			530,124
Time deposits less than $250			512,646			504,672			400,327			199,136			224,517
Time deposits $250 or more			120,748			109,735			114,443			92,731			78,874
Total interest-bearing deposits			2,674,012			2,516,106			2,489,878			2,273,833			2,354,205
Noninterest-bearing deposits			691,071			713,375			746,089			772,765			769,935
Total deposits		$	3,365,083		$	3,229,481		$	3,235,967		$	3,046,598		$	3,124,140

 

			September 30, 2023
At period end			Amount		Percent of Total			Number of accounts		Average Balance
Deposit Detail:
Retail		$	1,383,211		41.0	%		70,835	$	20
Commercial			1,102,473		32.8			13,288		83
Municipal			607,785		18.1			1,811		336
Brokered			271,614		8.1			28		9,701
Total Deposits		$	3,365,083		100.0			85,962	$	39
Uninsured			955,942		28.4	%
Insured			2,409,141		71.6
			December 31, 2022
At period end			Amount		Percent of Total			Number of accounts		Average Balance
Deposit Detail:
Retail		$	1,501,641		49.3	%		71,039	$	21
Commercial			967,244		31.7			11,891		81
Municipal			554,099		18.2			1,623		341
Brokered			23,614		0.8			30		787
Total Deposits		$	3,046,598		100.00			84,583	$	36
Uninsured			1,125,252		36.9	%
Insured			1,921,346		63.1

 

								Total Available
At September 30, 2023			Total Available			Outstanding			for Future Liquidity
FHLB advances		$	1,234,264		$	405,951		$	828,313
Federal Reserve - Discount Window			266,519						266,519
Correspondent bank lines of credit			18,000						18,000
Federal Reserve - Bank Term Funding Program			4,000						4,000
Other sources of liquidity:
Brokered deposits			382,580			271,614			110,966
Unencumbered securities			371,444						371,444
Total sources of liquidity		$	2,276,807		$	677,565		$	1,599,242

 

Peoples Financial Services Corp.
Consolidated Balance Sheets (Unaudited)
(In thousands)
		Sept 30			June 30			Mar 31			Dec 31			Sept 30
Average quarterly balances		2023			2023			2023			2022			2022
Assets:
Loans, net:
Taxable		$	2,627,700		$	2,615,881		$	2,546,068		$	2,441,358		$	2,377,803
Tax-exempt			226,628			224,960			223,917			223,293			225,637
Total loans, net			2,854,328			2,840,841			2,769,985			2,664,651			2,603,440
Investments:
Taxable			454,727			469,712			499,327			528,826			544,782
Tax-exempt			87,731			88,371			100,368			111,206			111,578
Total investments			542,458			558,083			599,695			640,032			656,360
Interest-bearing balances with banks			6,893			6,839			1,218			4,649			9,180
Federal funds sold			134,583			61,093			19,353			14,477			13,665
Total interest-earning assets			3,538,262			3,466,856			3,390,251			3,323,809			3,282,645
Other assets			191,781			184,020			184,594			169,153			180,861
Total assets		$	3,730,043		$	3,650,876		$	3,574,845		$	3,492,962		$	3,463,506
Liabilities and stockholders' equity:
Deposits:
Interest-bearing		$	2,581,691		$	2,493,680		$	2,337,951		$	2,301,974		$	2,228,829
Noninterest-bearing			688,301			711,729			744,931			758,889			770,833
Total deposits			3,269,992			3,205,409			3,082,882			3,060,863			2,999,662
Short-term borrowings			21,759			16,854			91,530			49,444			78,922
Long-term debt			25,000			25,000			2,482			814			1,369
Subordinated debt			33,000			33,000			33,000			33,000			33,000
Other liabilities			47,788			39,494			38,917			41,436			38,840
Total liabilities			3,397,539			3,319,757			3,248,811			3,185,557			3,151,793
Stockholders' equity			332,504			331,119			326,034			307,405			311,713
Total liabilities and stockholders' equity		$	3,730,043		$	3,650,876		$	3,574,845		$	3,492,962		$	3,463,506

 

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		2023			2023			2023			2022			2022
Core net income per share:
Net income GAAP		$	6,746		$	9,425		$	7,579		$	9,139		$	9,968
Adjustments:
Less: Gain (loss) on sale of available for sale securities									81			(1,976)
Add: Gain (loss) on sale of available for sale securities tax adjustment									17			(415)
Add: Acquisition related expenses			869			121
Less: Acquisition related expenses tax adjustment			144			19
Core net income		$	7,471		$	9,527		$	7,515		$	10,700		$	9,968
Average common shares outstanding - diluted			7,120,685			7,177,915			7,198,970			7,201,785			7,213,147
Core net income per share		$	1.05		$	1.33		$	1.04		$	1.49		$	1.38
Tangible book value:
Total stockholders' equity		$	324,390		$	331,787		$	328,634		$	315,350		$	301,810
Less: Goodwill			63,370			63,370			63,370			63,370			63,370
Less: Other intangible assets, net			19			48			77			105			179
Total tangible stockholders' equity		$	261,001		$	268,369		$	265,187		$	251,875		$	238,261
Common shares outstanding			7,040,851			7,130,409			7,150,757			7,158,017			7,162,750
Tangible book value per share		$	37.07		$	37.64		$	37.09		$	35.19		$	33.26
Core return on average stockholders' equity:
Net income GAAP		$	6,746		$	9,425		$	7,579		$	9,139		$	9,968
Adjustments:
Less: Gain (loss) on sale of available for sale securities						—			81			(1,976)
Add: Gain (loss) on sale of available for sale securities tax adjustment						—			17			(415)
Add: Acquisition related expenses			869			121
Less: Acquisition related expenses tax adjustment			144			19
Core net income		$	7,471		$	9,527		$	7,515		$	10,700		$	9,968
Average stockholders' equity		$	332,504		$	331,119		$	326,034		$	307,405		$	311,713
Core return on average stockholders' equity			8.91	%		11.54	%		9.35	%		13.81	%		12.69	%
Return on average tangible equity:
Net income GAAP		$	6,746		$	9,425		$	7,579		$	9,139		$	9,968
Average stockholders' equity		$	332,504		$	331,119		$	326,034		$	307,405		$	311,713
Less: average intangibles			63,404			63,433			63,461			63,512			63,549
Average tangible stockholders' equity		$	269,101		$	267,686		$	262,573		$	243,893		$	248,164
Return on average tangible stockholders' equity			9.95	%		14.12	%		11.71	%		14.87	%		15.94	%
Core return on average tangible stockholders' equity:
Net income GAAP		$	6,746		$	9,425		$	7,579		$	9,139		$	9,968
Adjustments:
Less: Gain (loss) on sale of available for sale securities									81			(1,976)
Add: Gain (loss) on sale of available for sale securities tax adjustment									17			(415)
Add: Acquisition related expenses			869			121
Less: Acquisition related expenses tax adjustment			144			19
Core net income		$	7,471		$	9,527		$	7,515		$	10,700		$	9,968
Average stockholders' equity		$	332,504		$	331,119		$	326,034		$	307,405		$	311,713
Less: average intangibles			63,404			63,433			63,461			63,512			63,549
Average tangible stockholders' equity		$	269,101		$	267,686		$	262,573		$	243,893		$	248,164
Core return on average tangible stockholders' equity			11.01	%		14.28	%		11.61	%		17.41	%		15.94	%
Core return on average assets:
Net income GAAP		$	6,746		$	9,425		$	7,579		$	9,139		$	9,968
Adjustments:
Less: Gain (loss) on sale of available for sale securities									81			(1,976)
Add: Gain (loss) on sale of available for sale securities tax adjustment									17			(415)
Add: Acquisition related expenses			869			121
Less: Acquisition related expenses tax adjustment			144			19
Core net income		$	7,471		$	9,527		$	7,515		$	10,700		$	9,968
Average assets		$	3,730,043		$	3,650,876		$	3,574,845		$	3,492,962		$	3,463,506
Core return on average assets			0.79	%		1.05	%		0.85	%		1.22	%		1.14	%

 

Peoples Financial Services Corp.
Reconciliation of Non-GAAP Financial Measures (Unaudited)
(In thousands, except share and per share data)
		Sept 30			Sept 30
Nine months ended		2023			2022
Core net income per share:
Net income GAAP		$	23,750		$	28,951
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			990
Less: Acquisition related expenses tax adjustment			163
Core net income		$	24,513		$	28,951
Average common shares outstanding - diluted			7,165,570			7,214,966
Core net income per share		$	3.42		$	4.01
Core return on average stockholders' equity:
Net income GAAP		$	23,750		$	28,951
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			990
Less: Acquisition related expenses tax adjustment			163
Core net income		$	24,513		$	28,951
Average stockholders' equity			329,909			324,521
Core return on average stockholders' equity			9.93	%		11.93	%
Return on average tangible equity:
Net income GAAP		$	23,750		$	28,951
Average stockholders' equity			329,909			324,521
Less: average intangibles			63,432			63,694
Average tangible stockholders' equity		$	266,477		$	260,827
Return on average tangible stockholders' equity			11.92	%		14.84	%
Core return on average tangible stockholders' equity:
Net income GAAP		$	23,750		$	28,951
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			990
Less: Acquisition related expenses tax adjustment			163
Core net income		$	24,513		$	28,951
Average stockholders' equity			329,909			324,521
Less: average intangibles			63,432			63,694
Average tangible stockholders' equity		$	266,477		$	260,827
Core return on average tangible stockholders' equity			12.30	%		14.84	%
Core return on average assets:
Net income GAAP		$	23,750		$	28,951
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			990
Less: Acquisition related expenses tax adjustment			163
Core net income		$	24,513		$	28,951
Average assets			3,652,490			3,390,068
Core return on average assets			0.90	%		1.14	%

 

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 nine months ended September 30, 2023 and 2022:
Three months ended September 30		2023			2022
Interest income (GAAP)		$	38,765		$	29,230
Adjustment to FTE			475			494
Interest income adjusted to FTE (non-GAAP)			39,240			29,724
Interest expense			17,488			4,232
Net interest income adjusted to FTE (non-GAAP)		$	21,752		$	25,492
Nine months ended September 30		2023			2022
Interest income (GAAP)		$	109,779		$	79,693
Adjustment to FTE			1,440			1,399
Interest income adjusted to FTE (non-GAAP)			111,219			81,092
Interest expense			43,294			8,357
Net interest income adjusted to FTE (non-GAAP)		$	67,925		$	72,735
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 nine months ended September 30, 2023 and 2022:
Three months ended September 30		2023			2022
Efficiency ratio (non-GAAP):
Noninterest expense (GAAP)		$	17,054		$	15,935
Less: Amortization of intangible assets expense			29			96
Less: Acquisition related expenses			869
Noninterest expense  (non-GAAP)			16,156			15,839
Net interest income (GAAP)			21,277			24,998
Plus: Taxable equivalent adjustment			475			494
Noninterest income (GAAP)			3,692			3,317
Less: Net gains (losses) on equity securities						(18)
Net interest income (FTE) plus noninterest income (non-GAAP)		$	25,444		$	28,827
Efficiency ratio (non-GAAP)			63.50	%		54.95	%
Nine months ended September 30		2023			2022
Efficiency ratio (non-GAAP):
Noninterest expense (GAAP)		$	50,222		$	45,717
Less: Amortization of intangible assets expense			86			289
Less: Acquisition related expenses			990
Noninterest expense  (non-GAAP)			49,146			45,428
Net interest income (GAAP)			66,485			71,336
Plus: Taxable equivalent adjustment			1,440			1,399
Noninterest income (GAAP)			10,918			10,619
Less: Net losses on equity securities			(17)			(37)
Less: Gains on sale of available for sale securities			81
Net interest income (FTE) plus noninterest income (non-GAAP)		$	78,779		$	83,391
Efficiency ratio (non-GAAP)			62.38	%		54.48	%

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/peoples-financial-services-corp-reports-unaudited-third-quarter-2023-earnings-301971958.html

SOURCE Peoples Financial Services Corp.

FAQ

What was the net income for the three months ended September 30, 2023?

The net income for the three months ended September 30, 2023, was $6.7 million.

What was the net income for the nine months ended September 30, 2023?

The net income for the nine months ended September 30, 2023, was $23.8 million.

What is the strategic combination announced by Peoples?

Peoples announced a strategic combination with FNCB Bancorp, Inc., expected to close in the first half of 2024.