Exhibit 99.1

NEWS RELEASE

TO BUSINESS EDITOR:

PEOPLES FINANCIAL SERVICES CORP. Reports Unaudited Fourth Quarter 2022 Earnings

Scranton, PA, January 26, 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 twelve months ended December 31, 2022.

Peoples reported net income of $9.1 million, or $1.27 per diluted share for the three months ended December 31, 2022, a 44.3% decrease when compared to $16.4 million, or $2.28 per share for the comparable period of 2021. The decrease in earnings for the three months ended December 31, 2022 was due primarily to an after-tax gain of $9.6 million from the sale of Visa Class B shares in the year ago fourth quarter period and an after-tax loss of $1.6 million on the sale of securities available for sale in the current period. The sale of lower yielding U.S. Treasury bonds and the immediate reinvestment of the proceeds into higher yielding, longer duration mortgage-backed securities is expected to improve net interest income over the near term.  Net interest income for the current period increased $2.8 million on strong loan growth resulting in higher interest income partially offset by increased costs of funds. The current period includes a credit to the provision for loans losses of $2.1 million based on application of our allowance for loan losses methodology that included a decline in historical loss factors and overall improvement to the credit quality of the loan portfolio based on current conditions.  The year ago period included a provision for loan losses of $1.8 million based on our allowance for loan losses methodology and then current conditions.  Noninterest expenses for the three months ended December 31, 2022 increased $2.5 million compared to the prior year’s period due to higher salaries, benefits, occupancy and equipment costs in part due to ongoing investment in the Company’s market expansion strategy and digital technology upgrade.

Core net income, a non-GAAP measure1, which we defined as excluding the gain on the sale of the Visa Class B shares and gains or losses from our investment securities portfolio, for the three months ended December 31, totaled $10.7 million and $6.8 million in 2022 and 2021, respectively. Core net income per share, a non-GAAP measure1, for the three months ended December 31, 2022 was $1.49, a 56.8% increase from $0.95 reported for the same period in 2021. The increase in core net income in the current three month period is due primarily to a $3.9 million decrease to the provision for loan losses, the product of a $2.1 million credit to the provision due to a release from the allowance for loan losses in the current period based on our allowance for loan losses methodology and changes to historical loss factors and improved credit quality of the loan portfolio based on current conditions, and a $1.8 million provision in the year ago period based on our loan losses methodology and then current conditions.  Net interest income for the current period increased $2.8 million on strong loan growth resulting in higher interest income partially offset by increased funding costs.  Noninterest expenses for the current period increased $2.5 million due to higher salaries, benefits, 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 year ended December 31, 2022, totaled $38.1 million or $5.28 per diluted share, a 12.5% decrease over $43.5 million or $6.02 per diluted share in the prior year. The decrease in earnings in the twelve months ended December 31, 2022 is a result of lower noninterest income due to the pre-tax $2.0 million loss on the sale of available for sale securities in the current period and the pre-tax gain of $12.2 million from the sale of Visa Class B shares in the prior year, combined with higher noninterest expenses.  Higher net interest income and a lower provision for loan losses partially offset the declines. Net interest income increased $11.1 million due to $447.5 million in non-PPP loan growth and a higher rate environment, offset in part by higher deposit and borrowing costs. The provision for loan losses decreased from the prior year by $2.2 million due to a lower reserve requirement based on our loan losses methodology that included a reduction in historical losses. Higher noninterest expenses were due to higher salaries and benefits of $3.8 million and higher occupancy and equipment costs of $3.7 million in part due to our continued investment in the market expansion strategy which included a full-year of operations in our newest markets, and our recent digital technology upgrade implemented during the second half of 2021.

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

1


Core net income, a non-GAAP measure1, for the twelve months ended December 31, 2022 was $39.7 million or $5.50 per diluted share, a 17.3% increase when compared to $33.9 million or $4.69 per diluted share for the same period of 2021. The increase in core net income for the current period is due to an increase to net interest income of $11.1 million, a lower provision for loan losses of $2.2 million in the current period and higher noninterest income of $0.3 million in the current twelve month period when excluding the pre-tax gain of $12.2 million from the sale of Visa Class B shares in the year ago period and a pre-tax loss of $2.0 million on the sale of securities available for sale during the current period, partially offset by higher noninterest expense of $7.4 million in the twelve months ended December 31, 2022.

NOTABLES

Annual earnings of $38.1 million or $5.28 per diluted share. Core earnings of $39.7 million and $5.50 per share.
Tax-equivalent net interest income, a non-GAAP measure1, increased $11.5 million or 13.3% to $97.7 million for the twelve months ended December 31, 2022 compared to $86.1 million for the same period in 2021.
Dividends paid during 2022 totaled $1.58 per share representing a 5.3% increase from 2021.
Net loan growth for the twelve months ended December 31, 2022, excluding Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans, was $447.5 million or 19.8% annualized.
Deposit growth during the twelve months ended December 31, 2022, excluding brokered deposits, totaled $59.6 million.
Return on average assets (“ROAA”) was 1.04% and 1.12% for the three and twelve months ended December 31, 2022 compared to 1.97% and 1.41% for the comparable periods in 2021.
Core return on average assets, a non-GAAP measure1, was 1.22% and 1.16% for the three and twelve months ended December 31, 2022 compared to 0.82% and 1.10% for the prior year’s periods.
Return on average equity (“ROE”) was 11.79% and 11.87% for the three and twelve months ended December 31, 2022 compared to 19.34% and 13.34% for the comparable periods in 2021.
Core return on average equity, a non-GAAP measure1, was 13.81% and 12.35% for the three and twelve months ended December 31, 2022 compared to 8.03% and 10.40% for the prior year’s periods.
Return on average tangible equity, a non-GAAP measure1, was 14.87% and 15.01% for the three and twelve months ended December 31, 2022 compared to 23.87% and 16.60% for the comparable periods in 2021.
Core return on average tangible equity, a non-GAAP measure1, was 17.41% and 15.62% for the three and twelve months ended December 31, 2022 compared to 9.91% and 12.90% for the comparable periods in 2021.
Nonperforming assets as a percentage of total assets at December 31, 2022 improved to 0.12% as compared to 0.15% at December 31, 2021.
During the quarter, our Doylestown branch was relocated to a newly constructed full service facility to enhance our commitment to the Bucks County region.

  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 7 rate increases, totaling 425 basis points and additional rate hikes are anticipated in 2023. 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 December 31, 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 December 31, 2022, as rate-sensitive depositors seek 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 and the cost of alternative funding.

2


Calculated on a fully taxable equivalent basis, a non-GAAP measure1, our net interest margin for the three months ended December 31, 2022 was 2.97%, a decrease of 11 basis points when compared to the three months ended September 30, 2022, and an increase of 15 basis points when compared to 2.82% for the same three month period in 2021.  The decrease in net interest margin from the prior three month period was due to higher funding costs offsetting the higher yield and volume of earning assets. The tax-equivalent yield on interest-earning assets increased 25 basis points to 3.84% during the three months ended December 31, 2022 from 3.59% during the three months ended September 30, 2022, and increased 76 basis points when compared to 3.08% for the three months ended December 31, 2021.  Our cost of funds, which represents our average rate paid on total interest-bearing liabilities, increased 48 basis points to 1.20% for the three months ended December 31, 2022 when compared to 0.72% during the three months ended September 30, 2022 and increased 83 basis points compared to 0.37% 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.

Fourth Quarter 2022 Results – Comparison to Prior-Year Quarter

Tax-equivalent net interest income, a non-GAAP measure1, for the three months ended December 31, increased $2.9 million or 13.2% to $24.9 million in 2022 from $22.0 million in 2021. The increase in tax equivalent net interest income was due to higher tax-equivalent interest income of $8.1 million less elevated interest expense of $5.2 million.

The higher interest income was the result of an increase in yield and average volume of earning assets. Average earning assets were $224.5 million higher in the three month period ended December 31, 2022 when compared to the year ago period. PPP loans averaged $22.4 million in the three-month period ended December 31, 2022 with interest and net fees totaling approximately $90 thousand compared to average balances of $73.2 million with interest and net fees totaling $808 thousand in the year ago period. The tax-equivalent yield on the loan portfolio was 4.35% and 3.78% for the three months ended December 31, 2022 and 2021. Excluding PPP loans, the tax-equivalent yield of the loan portfolio was 4.38% and 3.76% for the three months ended December 31, 2022 and 2021, respectively. This increase was due to the higher rates on adjustable and floating rate loans, and new loan originations. Loans, net averaged $2.7 billion for the three months ended December 31, 2022 and $2.3 billion for the comparable period in 2021. For the three months ended December 31, the tax-equivalent yield on total investments increased to 1.68% in 2022 from 1.65% in 2021. Average investments totaled $640.0 million in 2022 and $551.1 million in 2021.

The increased interest expense in the current three month period is due primarily to higher rates on public funds and non-maturity deposits driven by the higher interest rate environment.  The Company's total cost of deposits increased during the three months ended December 31, 2022 compared to the year ago period by 59 basis points to 0.81%, and the cost of interest-bearing deposits increased to 1.08% from 0.29% in the previous year three month period. Short-term FHLB borrowings were utilized in the current period to fund loan growth; short term borrowings averaged $49.4 million in the current period and added $0.5 million of interest expense at an average cost of 4.20% compared to no short-term borrowings in the year ago period.

Average interest-bearing liabilities increased $172.8 million for the three months ended December 31, 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 increased $33.5 million or 4.6% from the prior period and now represent 24.8% of total deposits.

For the three months ended December 31, 2022, $2.1 million was released from the allowance for loans losses compared to a provision for loan losses of $1.8 million in the year ago period. The current period reversal was due to the roll-off of historical losses from the 3 year calculation period. For the year ago period, the provision for loan losses increased due to $138.1 million in non-PPP loan growth.

Noninterest income for the three months ended December 31, 2022 was $1.2 million, a $14.1 million decrease from the prior year’s quarter due primarily to a pre-tax $2.0 million loss on the sale of securities available for sale in the fourth quarter 2022 and the $12.2 million pre-tax gain from the sale of Visa Class B shares in the prior year’s quarter. Noninterest income, excluding the loss on the sale of securities available for sale and the gain from the sale of Visa Class B shares, increased $0.1 million to $3.2 million for the three months ended December 31, 2022. The increase was due to higher service charges, fees and commissions offset in part by reduced interest rate swap revenues which were negatively impacted by interest rate movements.

3


Noninterest expense increased $2.5 million or 16.7% to $17.2 million for the three months ended December 31, 2022, from $14.8 million for the three months ended December 31, 2021. Salaries and employee benefits increased $1.1 million or 13.6% 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 $1.5 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 decreased $2.5 million for the three months ended December 31, 2022 compared to the year ago period due to higher taxable income in the prior year’s period due to the Visa Class B shares gain. The effective tax rate for the quarter ended December 31, 2022 was 15.6% compared to 19.4% in the year ago period.

2022 vs. 2021 Full Year Results

Calculated on a fully taxable equivalent basis (“FTE”), a non-GAAP measure1, the net interest margin for the twelve months ended December 31, 2022 was 3.02%, an increase of 3 basis points over the prior year’s period of 2.99%. Excluding the impact of PPP loan interest and net fees, the net interest margin increased to 3.00% in the current period from 2.90% in the year ago period. Tax-equivalent net interest income, a non-GAAP measure1, for the twelve months ended December 31, increased $11.5 million or 13.4% to $97.7 million in 2022 from $86.1 million in 2021. The increase in net interest income was driven by an increase in average earning assets of $355.8 million and a higher yield on those assets, partially offset by higher funding costs due to an increase of $264.2 million in average interest-bearing liabilities and higher interest rates. The 2022 period included $1.8 million in SBA PPP interest and fees, a decrease of $5.3 million compared to the $7.1 million in the year ago period. Average loans increased $302.1 million and investments increased $250.1 million compared to December 31, 2021. The yield on earning assets was 3.50% for 2022 compared to 3.32% in 2021. The cost of interest bearing liabilities during the twelve month period rose to 0.68% from 0.46% a year ago.

For the year ended December 31, 2022, $0.4 million was released from the allowance for loans losses compared to a provision for loan losses of $1.8 million in the year ago period. The current period release was due to application of our allowance for loan losses methodology that included a decline in historical loss factors and overall improvement to the quality of the loan portfolio based on current conditions. The provision in the year ago period was due to application of our allowance for loan losses methodology and evaluation of qualitative factors that existed at December 31, 2021.

Noninterest income for the twelve months ended December 31, 2022 was $11.8 million, a $13.8 million decrease from $25.6 million for the twelve months ended December 31, 2021. The prior year’s period includes a pre-tax $12.2 million gain on the sale of Visa Class B shares. Excluding the current year’s loss on sale of securities and the prior year’s Visa Class B shares gain, noninterest income for the year ended December 31, 2022 increased $0.3 million. During the year, service charges, fees and commissions increased $0.9 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 $0.5 million during the twelve months ended December 31, 2022 compared to the prior year on lower sales volumes.

Noninterest expense for the twelve months ended December 31, 2022, was $63.0 million, an increase of $7.4 million from $55.6 million for the prior year’s period. The increase was due primarily to $3.8 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 $3.7 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 deposit insurance assessments, accounted for an increase of $0.4 million.

The provision for income taxes for the year ended December 31, 2022 decreased $2.4 million and the effective tax rate was 16.0% as compared to 18.7% in the prior period due to the Visa Class B shares gain in the prior year’s period.

4


 BALANCE SHEET REVIEW

At December 31, 2022, total assets, loans and deposits were $3.6 billion, $2.7 billion and $3.0 billion, respectively. Loan growth for the twelve months ended December 31, 2022, excluding PPP loans, was $447.5 million or 19.8% due to improved loan demand and organic growth in our newest markets. Loan growth, excluding PPP loans, during the three months ended December 31, 2022 totaled $106.8 million. Higher interest rates and economic uncertainty may result in lower loan demand and lower growth over the near-term when compared to the year-ended December 31, 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 twelve months ended December 31, 2022, the SBA forgave PPP loans totaling $46.6 million. Gross PPP loans remaining at December 31, 2022 total $22.3 million. Net deferred PPP fees remaining at December 31, 2022 totaled $0.2 million and are expected to be earned during 2023 as the remaining SBA PPP loans are forgiven or repaid.  

Total investments were $569.0 million at December 31, 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. At December 31, 2022, the available for sale portfolio had an unrealized loss of $66.3 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 seven times from March through December 2022 totaling 425 basis points. During the quarter, $45.5 million in low yielding, shorter term available for sale U.S. Treasury securities were sold at a loss of $2.0 million with the proceeds reinvested into higher yielding, longer term mortgage backed securities. The loss is expected to be earned back in less than fifteen months based on the approximate 374 basis point increase in yield on the purchased bonds.

Loan growth during the period was funded by federal funds sold, deposit inflows and short-term borrowings. During the year, the federal funds sold balance decreased from $242.4 million, total deposits increased $83.2 million and short-term borrowing increased to $114.9 million. Noninterest-bearing deposits increased $35.0 million, or 4.8% and interest-bearing deposits increased $48.2 million, or 2.2% during the twelve months ended December 31, 2022.

Stockholders' equity equaled $315.4 million or $44.06 per share at December 31, 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 loss (“AOCI”) resulting from an increase to the unrealized loss on available for sale securities and dividends paid to shareholders, partially offset by net income.  Tangible stockholders' equity decreased to $35.19 per share at December 31, 2022, from $38.54 per share at December 31, 2021. Dividends declared for the twelve months ended December 31, 2022 amounted to $1.58 per share, a 5.3% increase from the 2021 period, representing a dividend payout ratio of 29.9%. During the three months ended December 31, 2022, 4,732 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 $4.1 million or 0.15% of loans, net and foreclosed assets at December 31, 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 December 31, 2022 compared to 0.15% at December 31, 2021.  The decrease in nonperforming assets was due to the sale of the Company’s foreclosed properties which totaled $0.5 million at December 31, 2021 and a $1.1 million decrease to nonaccrual and restructured loans due in part to the sale of a pool of commercial and residential nonaccrual loans with a book balance of $0.9 million, partially offset by a $0.7 million increase to loans past due ninety days and still accruing. At December 31, 2022 the Company had no foreclosed properties.

The Company's allowance for loan losses decreased $2.3 million to $27.5 million due to net charge-offs of $0.2 million combined with a release of the allowance for loan losses of $2.1 million during the quarter ended December 31, 2022 based on our allowance methodology.  For the twelve months ended December 31, 2022, the allowance decreased $0.9 million, the product of a credit to the provision for loan losses of $0.4 million and net charge-offs of $0.5 million. The allowance for loan losses equaled $27.5 million or 1.01% of loans, net at December 31, 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 1.01% at December 31, 2022 and 1.26% at December 31, 2021.  Loans charged-off, net of recoveries, for the twelve months ended December 31, 2022, equaled $0.5 million or 0.02% of average loans, compared to $0.7 million or 0.03% of average loans for the comparable period last year.

5


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 loss on the sale of securities available for sale and 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.

SOURCE: Peoples Financial Services Corp.

/Contact: 

MEDIA/INVESTORS, Marie L. Luciani, Investor Relations Officer, 570.346.7741 or marie.luciani@psbt.com

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.

6


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]

7


Summary Data

Peoples Financial Services Corp.

Five Quarter Trend (Unaudited)

(In thousands, except share and per share data)

  

Dec 31

  

Sept 30

  

June 30

  

Mar 31

  

Dec 31

 

2022

2022

2022

2022

2021

 

Key performance data:

Share and per share amounts:

Net income

$

1.27

$

1.38

$

1.30

$

1.33

$

2.28

Core net income (1)

$

1.49

$

1.38

$

1.30

$

1.33

$

0.95

Cash dividends declared

$

0.40

$

0.40

$

0.39

$

0.39

$

0.38

Book value

$

44.06

$

42.14

$

43.50

$

44.64

$

47.44

Tangible book value (1)

$

35.19

$

33.26

$

34.62

$

35.76

$

38.54

Market value:

High

$

57.60

$

56.09

$

56.99

$

52.99

$

53.06

Low

$

47.00

$

46.84

$

47.41

$

46.35

$

45.64

Closing

$

51.84

$

46.84

$

55.84

$

50.48

$

52.69

Market capitalization

$

371,072

$

335,503

$

400,410

$

362,398

$

377,754

Common shares outstanding

 

7,158,018

 

7,162,750

 

7,170,661

 

7,179,037

 

7,169,372

Selected ratios:

Return on average stockholders’ equity

 

11.79

%  

 

12.69

%  

 

11.71

%  

 

11.82

%  

 

19.34

%  

Core return on average stockholders’ equity (1)

 

13.81

%  

 

12.69

%  

 

11.71

%  

 

11.82

%  

 

8.03

%  

Return on average tangible stockholders’ equity

 

14.87

%  

 

15.94

%  

 

14.62

%  

 

14.65

%  

 

23.87

%  

Core return on average tangible stockholders’ equity (1)

 

17.41

%  

 

15.94

%  

 

14.62

%  

 

14.65

%  

 

9.91

%  

Return on average assets

 

1.04

%  

 

1.14

%  

 

1.12

%

 

1.17

%

 

1.97

%

Core return on average assets (1)

 

1.22

%  

 

1.14

%  

 

1.12

%  

 

1.17

%  

 

0.82

%  

Stockholders’ equity to total assets

 

8.87

%  

 

8.58

%  

 

9.12

%  

 

9.56

%  

 

10.09

%  

Efficiency ratio (1)(2)

 

60.07

%  

 

54.95

%  

 

54.89

%  

 

53.57

%  

 

58.26

%  

Nonperforming assets to loans, net, and foreclosed assets

 

0.15

%  

 

0.16

%  

 

0.18

%  

 

0.20

%  

 

0.21

%  

Nonperforming assets to total assets

0.12

%

0.12

%

0.13

%

0.14

%

0.15

%

Net charge-offs to average loans, net

 

0.03

%  

 

0.00

%  

 

0.00

%  

 

0.05

%  

 

0.01

%  

Allowance for loan losses to loans, net

 

1.01

%  

 

1.14

%  

 

1.14

%  

 

1.18

%  

 

1.22

%  

Interest-bearing assets yield (FTE) (3)

 

3.84

%  

 

3.59

%  

 

3.34

%  

 

3.22

%  

 

3.08

%  

Cost of funds

 

1.20

%  

 

0.72

%  

 

0.39

%  

 

0.35

%  

 

0.37

%  

Net interest spread (FTE) (3)

 

2.64

%  

 

2.87

%  

 

2.95

%  

 

2.87

%  

 

2.71

%  

Net interest margin (FTE) (3)

 

2.97

%  

 

3.08

%  

 

3.06

%  

 

2.97

%  

 

2.82

%  

(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 and Visa Class B shares.
(3)Tax-equivalent adjustments were calculated using the federal statutory tax rate prevailing during the indicated periods of 21%.

8


Peoples Financial Services Corp.

Consolidated Statements of Income (Unaudited)

(In thousands, except per share data)

    

Dec 31

    

Dec 31

 

Twelve months ended

2022

2021

 

Interest income:

Interest and fees on loans:

Taxable

$

95,505

$

82,493

Tax-exempt

 

5,084

 

3,957

Interest and dividends on investment securities:

Taxable

 

8,234

 

5,464

Tax-exempt

 

2,066

 

1,731

Dividends

 

2

 

74

Interest on interest-bearing deposits in other banks

 

101

 

8

Interest on federal funds sold

 

342

 

330

Total interest income

 

111,334

 

94,057

Interest expense:

Interest on deposits

 

12,632

 

7,310

Interest on short-term borrowings

 

1,103

 

78

Interest on long-term debt

 

76

 

260

Interest on subordinated debt

1,774

1,774

Total interest expense

 

15,585

 

9,422

Net interest income

 

95,749

 

84,635

(Credit) provision for loan losses

 

(449)

 

1,750

Net interest income after (credit) provision for loan losses

 

96,198

 

82,885

Noninterest income:

Service charges, fees, commissions and other

 

7,076

 

6,169

Merchant services income

 

964

 

879

Commissions and fees on fiduciary activities

 

2,229

 

2,273

Wealth management income

 

1,430

 

1,537

Mortgage banking income

 

511

 

975

Increase in cash surrender value of life insurance

 

1,020

 

889

Interest rate swap revenue

622

759

Net (losses) gains on equity investment securities

 

(31)

 

2

Net losses on sale of investment securities available for sale

(1,976)

Net gain on sale of Visa Class B shares

12,153

Total noninterest income

 

11,845

 

25,636

Noninterest expense:

Salaries and employee benefits expense

 

33,553

 

29,736

Net occupancy and equipment expense

 

16,578

 

12,848

Amortization of intangible assets

 

363

 

491

Net gain on sale of other real estate owned

(478)

(210)

Other expenses

 

12,661

 

12,139

Total noninterest expense

 

62,677

 

55,004

Income before income taxes

 

45,366

 

53,517

Provision for income tax expense

 

7,276

 

9,998

Net income

$

38,090

$

43,519

Other comprehensive loss:

Unrealized loss on investment securities available for sale

$

(66,435)

$

(11,487)

Reclassification adjustment for losses on available for sale securities included in net income

 

1,976

 

Change in pension liability

370

2,109

Change in derivative fair value

(728)

(322)

Income tax benefit related to other comprehensive loss

 

(13,995)

 

(2,037)

Other comprehensive loss, net of income tax benefit

 

(50,822)

 

(7,663)

Comprehensive (loss) income

$

(12,732)

$

35,856

Share and per share amounts:

Net income - basic

$

5.31

$

6.05

Net income - diluted

5.28

6.02

Cash dividends declared

1.58

1.50

Average common shares outstanding - basic

 

7,168,092

 

7,196,160

Average common shares outstanding - diluted

7,211,643

7,235,303

9


Peoples Financial Services Corp.

Consolidated Statements of Income (Unaudited)

(In thousands, except per share data)

    

Dec 31

    

Sept 30

    

June 30

    

Mar 31

    

Dec 31

 

Three months ended

2022

2022

2022

2022

2021

 

Interest income:

Interest and fees on loans:

Taxable

$

27,515

$

25,128

$

22,009

$

20,853

$

20,288

Tax-exempt

 

1,367

 

1,338

 

1,218

 

1,161

 

1,098

Interest and dividends on investment securities:

Taxable

 

2,058

 

2,096

 

2,108

 

1,972

 

1,660

Tax-exempt

 

520

 

521

 

515

 

510

 

498

Dividends

 

 

 

2

 

 

2

Interest on interest-bearing deposits in other banks

 

40

 

41

 

18

 

2

 

2

Interest on federal funds sold

 

141

 

106

 

22

 

73

 

102

Total interest income

 

31,641

29,230

25,892

 

24,571

 

23,650

Interest expense:

Interest on deposits

 

6,251

 

3,316

 

1,597

 

1,468

 

1,579

Interest on short-term borrowings

 

524

 

457

 

122

 

 

Interest on long-term debt

 

9

 

16

 

23

 

28

 

35

Interest on subordinated debt

444

443

443

444

444

Total interest expense

 

7,228

 

4,232

 

2,185

 

1,940

 

2,058

Net interest income

 

24,413

 

24,998

 

23,707

 

22,631

 

21,592

(Credit) provision for loan losses

 

(2,149)

 

450

 

950

 

300

 

1,750

Net interest income after (credit) provision for loan losses

 

26,562

24,548

22,757

 

22,331

 

19,842

Noninterest income:

Service charges, fees, commissions and other

 

1,909

 

1,714

 

1,761

 

1,692

 

1,693

Merchant services income

 

131

 

157

 

562

 

114

 

120

Commissions and fees on fiduciary activities

 

532

 

591

 

551

 

555

 

548

Wealth management income

 

366

 

339

 

374

 

351

 

330

Mortgage banking income

 

104

 

135

 

128

 

144

 

211

Increase in cash surrender value of life insurance

 

289

 

269

 

244

 

218

 

220

Interest rate swap revenue

(135)

130

284

343

15

Net gain (loss) on investment securities

6

(18)

(23)

4

(7)

Net losses on sale of investment securities available for sale

(1,976)

Net gain on sale of Visa Class B shares

12,153

Total noninterest income

 

1,226

3,317

3,881

 

3,421

 

15,283

Noninterest expense:

Salaries and employee benefits expense

 

9,188

 

8,474

 

7,851

 

8,040

 

8,087

Net occupancy and equipment expense

 

4,905

 

3,898

 

3,950

 

3,825

 

3,384

Amortization of intangible assets

 

74

 

96

 

97

 

96

 

116

Net gains on sale of other real estate

(20)

(458)

(15)

Other expenses

 

2,793

 

3,467

 

3,615

 

2,786

 

3,198

Total noninterest expense

 

16,960

 

15,935

 

15,493

 

14,289

 

14,770

Income before income taxes

 

10,828

 

11,930

 

11,145

 

11,463

 

20,355

Income tax expense

 

1,689

 

1,962

 

1,792

 

1,833

 

3,941

Net income

$

9,139

$

9,968

$

9,353

$

9,630

$

16,414

Other comprehensive income (loss):

Unrealized gain (loss) on investment securities available for sale

$

6,356

$

(21,510)

$

(18,669)

$

(32,612)

$

(3,078)

Reclassification adjustment for losses on available for sale securities included in net income

1,976

Change in benefit plan liabilities

370

2,109

Change in derivative fair value

12

(46)

(201)

(493)

(300)

Income tax expense (benefit) related to other comprehensive income (loss)

 

1,447

 

(4,527)

 

(3,963)

 

(6,952)

 

(266)

Other comprehensive income (loss), net of income tax expense (benefit)

 

7,267

 

(17,029)

 

(14,907)

 

(26,153)

 

(1,003)

Comprehensive income (loss)

$

16,406

$

(7,061)

$

(5,554)

$

(16,523)

$

15,411

Share and per share amounts:

Net income - basic

$

1.28

$

1.39

$

1.30

$

1.34

$

2.29

Net income - diluted

1.27

1.38

1.30

1.33

2.28

Cash dividends declared

0.40

0.40

0.39

0.39

0.38

Average common shares outstanding - basic

 

7,158,329

 

7,169,809

 

7,172,181

 

7,172,455

 

7,172,501

Average common shares outstanding - diluted

 

7,201,785

 

7,213,147

 

7,215,890

 

7,216,421

 

7,207,565

10


Peoples Financial Services Corp.

Net Interest Margin (Unaudited)

(In thousands, fully taxable equivalent basis)

Three Months Ended

December 31, 2022

December 31, 2021

Average

Interest Income/

Yield/

Average

Interest Income/

Yield/

    

Balance  

    

Expense

    

Rate  

    

Balance  

    

Expense

    

Rate  

Assets:

Earning assets:

Loans:

Taxable

$

2,441,358

$

27,515

4.47

%

$

2,088,935

$

20,288

3.85

%

Tax-exempt

223,293

1,730

3.08

185,471

1,390

2.97

Total loans

2,664,651

29,245

4.35

2,274,406

21,678

3.78

Investments:

Taxable

528,826

2,058

1.54

446,096

1,662

1.48

Tax-exempt

111,206

658

2.35

105,044

630

2.38

Total investments

640,032

2,716

1.68

551,140

2,292

1.65

Interest-bearing deposits

4,649

40

3.41

9,739

2

0.08

Federal funds sold

14,477

141

3.86

264,068

102

0.15

Total earning assets

3,323,809

32,142

3.84

%

3,099,353

24,074

3.08

%

Less: allowance for loan losses

29,754

27,049

Other assets

198,907

229,172

Total assets

$

3,492,962

$

32,142

$

3,301,476

$

24,074

Liabilities and Stockholders’ Equity:

Interest-bearing liabilities:

Money market accounts

$

682,721

$

2,908

1.69

%

$

580,756

$

409

0.28

%

NOW accounts

794,032

2,244

1.12

816,345

543

0.26

Savings accounts

530,829

180

0.13

486,614

93

0.08

Time deposits less than $100

125,315

333

1.05

128,791

316

0.97

Time deposits $100 or more

169,077

586

1.38

163,923

218

0.53

Total interest-bearing deposits

2,301,974

6,251

1.08

2,176,429

1,579

0.29

Short-term borrowings

49,444

524

4.20

0.00

Long-term debt

814

9

4.87

2,959

35

4.69

Subordinated debt

33,000

444

5.33

33,000

444

5.34

Total borrowings

83,258

977

4.66

35,959

479

5.28

Total interest-bearing liabilities

2,385,232

7,228

1.20

2,212,388

2,058

0.37

Noninterest-bearing deposits

758,889

725,414

Other liabilities

41,436

26,924

Stockholders’ equity

307,405

336,750

Total liabilities and stockholders’ equity

$

3,492,962

7,228

$

3,301,476

2,058

Net interest income/spread

$

24,914

2.64

%

$

22,016

2.71

%

Net interest margin

2.97

%

2.82

%

Tax-equivalent adjustments:

Loans

$

363

$

292

Investments

138

132

Total adjustments

$

501

$

424

11


Peoples Financial Services Corp.

Net Interest Margin (Unaudited)

(In thousands, fully taxable equivalent basis)

For the Twelve Months Ended

 

December 31, 2022

 

December 31, 2021

 

Average

Interest Income/

Yield/

 

Average

Interest Income/

Yield/

 

    

Balance  

    

Expense

    

Rate  

    

Balance  

    

Expense

    

Rate  

    

Assets:

    

    

    

    

    

Earning assets:

Loans:

Taxable

$

2,306,455

$

95,505

 

4.14

%  

$

2,063,168

$

82,493

 

4.00

%  

Tax-exempt

 

216,195

6,436

 

2.98

157,409

5,009

 

3.18

Total loans

2,522,650

101,941

4.04

2,220,577

87,502

 

3.94

Investments:

Taxable

 

537,566

8,236

 

1.53

313,319

5,538

 

1.77

Tax-exempt

 

111,083

2,615

 

2.35

85,200

2,191

 

2.57

Total investments

648,649

10,851

1.67

398,519

7,729

 

1.94

Interest-bearing deposits

 

8,536

101

 

1.17

11,123

8

 

0.07

Federal funds sold

53,056

342

 

0.65

246,891

330

 

0.13

Total earning assets

 

3,232,891

 

113,235

 

3.50

%  

2,877,110

95,569

 

3.32

%  

Less: allowance for loan losses

 

29,298

27,209

Other assets

 

210,392

227,293

Total assets

$

3,413,985

$

113,235

$

3,077,194

$

95,569

Liabilities and Stockholders’ Equity:

Interest-bearing liabilities:

Money market accounts

$

624,528

$

4,967

 

0.80

%  

$

549,169

$

1,960

 

0.36

%  

NOW accounts

 

791,653

4,493

 

0.57

666,885

2,202

 

0.33

Savings accounts

 

520,770

496

 

0.10

468,851

382

 

0.08

Time deposits less than $100

 

127,801

1,299

 

1.02

128,313

1,416

 

1.10

Time deposits $100 or more

 

162,998

1,377

 

0.84

172,711

1,350

 

0.78

Total interest-bearing deposits

2,227,750

12,632

 

0.57

1,985,929

7,310

 

0.37

Short-term borrowings

 

42,680

1,103

 

2.58

13,973

78

 

0.56

Long-term debt

 

1,634

76

 

4.65

7,948

260

 

3.27

Subordinated debt

33,000

1,774

 

5.38

33,000

1,774

 

5.38

Total borrowings

77,314

2,953

 

3.82

54,921

2,112

 

3.85

Total interest-bearing liabilities

 

2,305,064

 

15,585

 

0.68

 

2,040,850

 

9,422

 

0.46

Noninterest-bearing deposits

 

753,399

 

684,527

Other liabilities

 

34,517

 

25,704

Stockholders’ equity

 

321,005

 

326,113

Total liabilities and stockholders’ equity

$

3,413,985

15,585

$

3,077,194

9,422

Net interest income/spread

$

97,650

 

2.82

%  

$

86,147

 

2.86

%  

Net interest margin

 

3.02

%  

 

2.99

%  

Tax-equivalent adjustments:

Loans

$

1,352

$

1,052

Investments

 

549

 

460

Total adjustments

$

1,901

$

1,512

12


Peoples Financial Services Corp.

Details of Net Interest Income and Net Interest Margin (Unaudited)

(In thousands, fully taxable equivalent basis)

    

Dec 31

    

Sept 30

    

June 30

    

Mar 31

    

Dec 31

 

Three months ended

2022

2022

2022

2022

2021

 

Net interest income:

Interest income:

Loans, net:

Taxable

$

27,515

$

25,128

$

22,009

$

20,853

$

20,288

Tax-exempt

 

1,730

 

1,694

 

1,542

 

1,470

 

1,390

Total loans, net

 

29,245

26,822

23,551

 

22,323

 

21,678

Investments:

Taxable

 

2,058

 

2,096

 

2,110

 

1,972

 

1,662

Tax-exempt

 

658

 

659

 

652

 

646

 

630

Total investments

 

2,716

 

2,755

 

2,762

 

2,618

 

2,292

Interest on interest-bearing balances in other banks

 

40

 

41

 

18

 

2

 

2

Federal funds sold

 

141

 

106

 

22

 

73

 

102

Total interest income

 

32,142

29,724

26,353

 

25,016

 

24,074

Interest expense:

Deposits

 

6,251

 

3,316

 

1,597

 

1,468

 

1,579

Short-term borrowings

 

524

 

457

 

122

 

 

Long-term debt

 

9

 

16

 

23

 

28

 

35

Subordinated debt

444

443

443

444

444

Total interest expense

 

7,228

 

4,232

 

2,185

 

1,940

 

2,058

Net interest income

$

24,914

$

25,492

$

24,168

$

23,076

$

22,016

Loans, net:

Taxable

 

4.47

%  

 

4.19

%  

 

3.92

%  

 

3.94

%  

 

3.85

%

Tax-exempt

 

3.08

%  

 

2.98

%  

 

2.92

%  

 

2.93

%  

 

2.97

%

Total loans, net

 

4.35

%  

 

4.09

%  

 

3.83

%  

 

3.85

%  

 

3.78

%

Investments:

Taxable

 

1.54

%  

 

1.53

%  

 

1.53

%  

 

1.53

%  

 

1.48

%

Tax-exempt

 

2.35

%  

 

2.34

%  

 

2.35

%  

 

2.37

%  

 

2.38

%

Total investments

 

1.68

%  

 

1.67

%  

 

1.67

%  

 

1.68

%  

 

1.65

%

Interest-bearing balances with banks

 

3.41

%  

 

1.77

%  

 

0.68

%  

 

0.14

%  

 

0.09

%

Federal funds sold

 

3.86

%  

 

3.08

%  

 

0.37

%  

 

0.18

%  

 

0.15

%

Total interest-earning assets

 

3.84

%  

 

3.59

%  

 

3.34

%  

 

3.22

%  

 

3.08

%

Interest expense:

Deposits

 

1.08

%  

 

0.59

%  

 

0.30

%  

 

0.27

%  

 

0.29

%

Short-term borrowings

 

4.20

%  

 

2.30

%  

 

1.40

%  

 

 

Long-term debt

 

4.87

%  

 

4.64

%  

 

4.85

%  

 

4.59

%  

 

4.68

%

Subordinated debt

5.33

%  

5.33

%  

5.38

%  

5.38

%  

5.38

%

Total interest-bearing liabilities

 

1.20

%  

 

0.72

%  

 

0.39

%  

 

0.35

%  

 

0.37

%

Net interest spread

 

2.64

%  

 

2.87

%  

 

2.95

%  

 

2.87

%  

 

2.71

%

Net interest margin

 

2.97

%  

 

3.08

%  

 

3.06

%  

 

2.97

%  

 

2.82

%

13


Peoples Financial Services Corp.

Consolidated Balance Sheets (Unaudited)

(In thousands)

    

Dec 31

    

Sept 30

    

June 30

    

Mar 31

    

Dec 31

 

At period end

2022

2022

2022

2022

2021

 

Assets:

Cash and due from banks

$

37,675

$

35,000

$

39,693

$

35,863

$

30,415

Interest-bearing balances in other banks

 

193

 

8,410

 

8,040

 

4,440

 

7,093

Federal funds sold

69,600

101,200

242,425

Investment securities:

Available for sale

 

477,703

 

477,590

 

513,911

 

535,482

 

517,321

Equity investments carried at fair value

 

110

 

103

 

121

 

144

 

140

Held to maturity

 

91,179

 

92,771

 

94,446

 

95,829

 

71,213

Loans held for sale

 

 

653

 

681

 

161

 

408

Loans

 

2,730,116

 

2,623,706

 

2,565,579

 

2,397,681

 

2,329,173

Less: allowance for loan losses

 

27,472

 

29,822

 

29,374

 

28,407

 

28,383

Net loans

 

2,702,644

 

2,593,884

 

2,536,205

 

2,369,274

 

2,300,790

Goodwill

 

63,370

 

63,370

 

63,370

 

63,370

 

63,370

Premises and equipment, net

 

55,667

 

54,394

 

53,094

 

51,977

 

51,502

Bank owned life insurance

48,344

48,235

47,968

43,828

42,754

Deferred tax assets

18,739

20,796

16,269

12,306

5,354

Accrued interest receivable

 

11,715

 

10,082

 

9,303

 

9,221

 

8,528

Other intangible assets, net

 

105

 

179

 

276

 

372

 

468

Other assets

 

46,071

 

41,739

 

38,162

 

29,334

 

27,702

Total assets

$

3,553,515

$

3,516,806

$

3,421,539

$

3,352,801

$

3,369,483

Liabilities:

Deposits:

Noninterest-bearing

$

772,765

$

769,935

$

747,558

$

759,986

$

737,756

Interest-bearing

 

2,273,833

 

2,354,205

 

2,163,725

 

2,204,878

 

2,225,641

Total deposits

 

3,046,598

 

3,124,140

 

2,911,283

 

2,964,864

 

2,963,397

Short-term borrowings

 

114,930

 

14,700

 

129,170

 

 

Long-term debt

 

555

 

1,104

 

1,646

 

2,182

 

2,711

Subordinated debt

33,000

33,000

33,000

33,000

33,000

Accrued interest payable

 

903

 

1,129

 

1,269

 

844

 

408

Other liabilities

 

42,179

 

40,923

 

33,274

 

31,450

 

29,841

Total liabilities

 

3,238,165

3,214,996

3,109,642

 

3,032,340

 

3,029,357

Stockholders’ equity:

Common stock

 

14,321

 

14,330

 

14,346

 

14,352

 

14,341

Capital surplus

 

126,850

 

126,845

 

126,986

 

127,192

 

127,549

Retained earnings

 

230,515

 

224,238

 

217,139

 

210,584

 

203,750

Accumulated other comprehensive loss

 

(56,336)

 

(63,603)

 

(46,574)

 

(31,667)

 

(5,514)

Total stockholders’ equity

 

315,350

 

301,810

 

311,897

 

320,461

 

340,126

Total liabilities and stockholders’ equity

$

3,553,515

$

3,516,806

$

3,421,539

$

3,352,801

$

3,369,483

14


Peoples Financial Services Corp.

Loan and Deposit Account Detail (Unaudited)

(In thousands)

At the period end

    

December 31, 2022

    

September 30, 2022

    

June 30, 2022

    

March 31, 2022

    

December 31, 2021

Commercial

Taxable

$

377,215

$

371,164

$

371,153

$

370,574

$

424,455

Non-taxable

222,043

224,764

225,656

210,184

188,672

Total

599,258

595,928

596,809

580,758

613,127

Real estate

Commercial real estate

1,709,827

 

1,620,116

 

1,569,658

 

1,436,196

 

1,343,539

Residential

330,728

 

326,223

 

317,672

 

306,068

 

297,624

Total

2,040,555

1,946,339

1,887,330

1,742,264

1,641,163

Consumer

Indirect Auto

76,491

70,006

69,161

64,870

65,791

Consumer Other

13,812

 

11,433

 

12,279

 

9,789

 

9,092

Total

90,303

81,439

81,440

74,659

74,883

Total

$

2,730,116

$

2,623,706

$

2,565,579

$

2,397,681

$

2,329,173

At the period end

    

December 31, 2022

    

September 30, 2022

    

June 30, 2022

    

March 31, 2022

    

December 31, 2021

Interest-bearing deposits:

Money market accounts

$

685,323

$

706,947

$

592,989

$

605,686

$

588,245

NOW accounts

 

772,712

 

813,743

 

752,397

797,333

 

851,086

Savings accounts

 

523,931

 

530,124

 

518,146

515,169

 

491,796

Time deposits less than $250

 

199,136

 

224,517

 

219,690

200,345

 

203,719

Time deposits $250 or more

 

92,731

 

78,874

 

80,503

86,345

 

90,795

Total interest-bearing deposits

 

2,273,833

 

2,354,205

 

2,163,725

2,204,878

 

2,225,641

Noninterest-bearing deposits

 

772,765

 

769,935

 

747,558

759,986

 

737,756

Total deposits

$

3,046,598

$

3,124,140

$

2,911,283

$

2,964,864

$

2,963,397

15


Peoples Financial Services Corp.

Consolidated Balance Sheets (Unaudited)

(In thousands)

    

Dec 31

    

Sept 30

    

June 30

    

Mar 31

    

Dec 31

 

Average quarterly balances

2022

2022

2022

2022

2021

 

Assets:

Loans, net:

Taxable

$

2,441,358

$

2,377,803

$

2,254,405

$

2,148,251

$

2,088,935

Tax-exempt

 

223,293

 

225,637

 

211,885

 

203,645

 

185,471

Total loans, net

 

2,664,651

2,603,440

2,466,290

 

2,351,896

 

2,274,406

Investments:

Taxable

 

528,826

 

544,782

 

553,078

 

523,301

 

446,096

Tax-exempt

 

111,206

 

111,578

 

111,138

 

110,394

 

105,044

Total investments

 

640,032

 

656,360

 

664,216

 

633,695

 

551,140

Interest-bearing balances with banks

 

4,649

 

9,180

 

10,694

 

5,888

 

9,739

Federal funds sold

 

14,477

 

13,665

 

23,920

 

162,218

 

264,068

Total interest-earning assets

 

3,323,809

 

3,282,645

 

3,165,120

 

3,153,697

 

3,099,353

Other assets

 

169,153

 

180,861

 

181,900

 

187,864

 

202,123

Total assets

$

3,492,962

$

3,463,506

$

3,347,020

$

3,341,561

$

3,301,476

Liabilities and stockholders’ equity:

Deposits:

Interest-bearing

$

2,301,974

$

2,228,829

$

2,167,569

$

2,211,629

$

2,176,429

Noninterest-bearing

 

758,889

 

770,833

 

756,225

 

734,348

 

725,414

Total deposits

 

3,060,863

 

2,999,662

 

2,923,794

 

2,945,977

 

2,901,843

Short-term borrowings

 

49,444

 

78,922

 

34,953

 

 

Long-term debt

 

814

 

1,369

 

1,901

 

2,474

 

2,959

Subordinated debt

33,000

33,000

33,000

33,000

33,000

Other liabilities

 

41,436

 

38,840

 

33,080

 

29,816

 

26,924

Total liabilities

 

3,185,557

3,151,793

3,026,728

 

3,011,267

 

2,964,726

Stockholders’ equity

 

307,405

 

311,713

 

320,292

 

330,294

 

336,750

Total liabilities and stockholders’ equity

$

3,492,962

$

3,463,506

$

3,347,020

$

3,341,561

$

3,301,476

16


Peoples Financial Services Corp.

Asset Quality Data (Unaudited)

(In thousands)

    

Dec 31

    

Sept 30

    

June 30

    

Mar 31

    

Dec 31

 

At quarter end

2022

2022

2022

2022

2021

 

Nonperforming assets:

Nonaccrual/restructured loans

$

3,386

$

3,938

$

4,387

$

4,573

$

4,461

Accruing loans past due 90 days or more

 

748

 

280

 

190

 

103

 

13

Foreclosed assets

 

 

 

 

 

487

Total nonperforming assets

$

4,134

$

4,218

$

4,577

$

4,676

$

4,961

Three months ended

Allowance for loan losses:

Beginning balance

$

29,822

$

29,374

$

28,407

$

28,383

$

26,693

Charge-offs

 

233

 

101

 

98

 

355

 

105

Recoveries

 

32

 

99

 

115

 

79

 

45

Provision for loan losses

 

(2,149)

 

450

 

950

 

300

 

1,750

Ending balance

$

27,472

$

29,822

$

29,374

$

28,407

$

28,383

17


Peoples Financial Services Corp.

Reconciliation of Non-GAAP Financial Measures (Unaudited)

(In thousands, except share and per share data)

    

Dec 31

    

Sept 30

June 30

    

Mar 31

    

Dec 31

 

Three months ended

2022

2022

2022

2022

2021

 

Core net income per share:

Net income GAAP

$

9,139

$

9,968

$

9,353

$

9,630

$

16,414

Adjustments:

Less: Gain on sale of Visa Class B shares

12,153

Less: Loss on sale of available for sale securities

(1,976)

Add: Loss on sale of available for sale securities tax adjustment

(415)

Add: Gain on sale of Visa Class B shares tax adjustment

2,552

Core net income

$

10,700

$

9,968

$

9,353

$

9,630

$

6,813

Average common shares outstanding - diluted

 

7,201,785

 

7,213,147

 

7,215,365

 

7,216,421

 

7,207,565

Core net income per share

$

1.49

$

1.38

$

1.30

$

1.33

$

0.95

Tangible book value:

Total stockholders’ equity

$

315,350

$

301,810

$

311,897

$

320,461

$

340,126

Less: Goodwill

 

63,370

 

63,370

 

63,370

 

63,370

 

63,370

Less: Other intangible assets, net

 

105

 

179

 

276

 

372

 

468

Total tangible stockholders’ equity

$

251,875

$

238,261

$

248,251

$

256,719

$

276,289

Common shares outstanding

 

7,158,018

 

7,162,750

 

7,170,661

 

7,179,037

 

7,169,372

Tangible book value per share

$

35.19

$

33.26

$

34.62

$

35.76

$

38.54

Core return on average stockholders’ equity:

Net income GAAP

$

9,139

$

9,968

$

9,353

$

9,630

$

16,414

Adjustments:

Less: Gain on sale of Visa Class B shares

12,153

Less: Loss on sale of available for sale securities

(1,976)

Add: Loss on sale of available for sale securities tax adjustment

(415)

Add: Gain on sale of Visa Class B shares tax adjustment

2,552

Core net income

$

10,700

$

9,968

$

9,353

$

9,630

$

6,813

Average stockholders’ equity

$

307,405

$

311,713

$

320,292

$

330,294

$

336,750

Core return on average stockholders’ equity

 

13.81

%  

 

12.69

%  

 

11.71

%  

 

11.82

%  

 

8.03

%

Return on average tangible equity:

Net income GAAP

$

9,139

$

9,968

$

9,353

$

9,630

$

16,414

Average stockholders’ equity

$

307,405

$

311,713

$

320,292

$

330,294

$

336,750

Less: average intangibles

 

63,512

 

63,549

 

63,694

 

63,790

 

63,896

Average tangible stockholders’ equity

$

243,893

$

248,164

$

256,598

$

266,504

$

272,854

Return on average tangible stockholders’ equity

 

14.87

%  

 

15.94

%  

 

14.62

%  

 

14.65

%  

 

23.87

%

Core return on average tangible stockholders’ equity:

Net income GAAP

$

9,139

$

9,968

$

9,353

$

9,630

$

16,414

Adjustments:

Less: Gain on sale of Visa Class B shares

12,153

Less: Loss on sale of available for sale securities

(1,976)

Add: Loss on sale of available for sale securities tax adjustment

(415)

Add: Gain on sale of Visa Class B shares tax adjustment

2,552

Core net income

$

10,700

$

9,968

$

9,353

$

9,630

$

6,813

Average stockholders’ equity

$

307,405

$

311,713

$

320,292

$

330,294

$

336,750

Less: average intangibles

 

63,512

63,549

63,694

 

63,790

 

63,896

Average tangible stockholders’ equity

$

243,893

$

248,164

$

256,598

$

266,504

$

272,854

Core return on average tangible stockholders’ equity

 

17.41

%  

 

15.94

%  

 

14.62

%  

 

14.65

%  

 

9.91

%

Core return on average assets:

Net income GAAP

$

9,139

$

9,968

$

9,353

$

9,630

$

16,414

Adjustments:

Less: Gain on sale of Visa Class B shares

12,153

Less: Loss on sale of available for sale securities

(1,976)

Add: Loss on sale of available for sale securities tax adjustment

(415)

Add: Gain on sale of Visa Class B shares tax adjustment

2,552

Core net income

$

10,700

$

9,968

$

9,353

$

9,630

$

6,813

Average assets

$

3,492,962

$

3,463,506

$

3,347,020

$

3,341,561

$

3,301,476

Core return on average assets

 

1.22

%  

 

1.14

%  

 

1.12

%  

 

1.17

%  

 

0.82

%

18


Peoples Financial Services Corp.

Reconciliation of Non-GAAP Financial Measures (Unaudited)

(In thousands, except share and per share data)

    

Dec 31

    

Dec 31

 

Year ended

2022

2021

 

Core net income per share:

Net income (GAAP)

$

38,090

$

43,519

Adjustments:

Less: Gain on sale of Visa Class B shares

12,153

Less: Loss on sale of available for sale securities

 

(1,976)

 

Add: Loss on sale of available for sale securities tax adjustment

(415)

 

Add: Gain on sale of Visa Class B shares tax adjustment

2,552

Core net income

$

39,651

$

33,918

Average common shares outstanding - basic

 

7,168,092

 

7,196,160

Average common shares outstanding - diluted

7,211,643

7,235,303

Core net income per share - basic

$

5.53

$

4.71

Core net income per share - diluted

$

5.50

$

4.69

The following tables reconcile the non-GAAP financial measures of FTE net interest income for the three and twelve months ended December 31, 2022 and 2021:

Three months ended December 31

    

2022

    

2021

    

Interest income (GAAP)

$

31,641

$

23,650

Adjustment to FTE

 

501

 

424

Interest income adjusted to FTE (non-GAAP)

 

32,142

 

24,074

Interest expense

 

7,228

 

2,058

Net interest income adjusted to FTE (non-GAAP)

$

24,914

$

22,016

Twelve months ended December 31

    

2022

    

2021

Interest income (GAAP)

$

111,334

$

94,057

Adjustment to FTE

 

1,901

 

1,512

Interest income adjusted to FTE (non-GAAP)

 

113,235

 

95,569

Interest expense

 

15,585

 

9,422

Net interest income adjusted to FTE (non-GAAP)

$

97,650

$

86,147

19


The efficiency ratio is noninterest expenses, less amortization of intangible assets, 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 twelve months ended December 31, 2022 and 2021:

Three months ended December 31

    

2022

    

2021

    

Efficiency ratio (non-GAAP):

Noninterest expense (GAAP)

$

16,960

$

14,770

Less: amortization of intangible assets expense

 

74

 

116

Noninterest expense adjusted for amortization of assets expense (non-GAAP)

16,886

14,654

Net interest income (GAAP)

24,413

21,592

Plus: taxable equivalent adjustment

501

424

Noninterest income (GAAP)

1,226

15,283

Less: Net gains (losses) on equity securities

6

(7)

Less: Loss on sale of available for sale securities

(1,976)

Less: Gain on sale of Visa Class B shares

12,153

Net interest income (FTE) plus noninterest income (non-GAAP)

$

28,110

$

25,153

Efficiency ratio (non-GAAP)

60.07

%

58.26

%

Twelve months ended December 31

    

2022

    

2021

    

Efficiency ratio (non-GAAP):

Noninterest expense (GAAP)

$

62,677

$

55,004

Less: Amortization of intangible assets expense

 

363

 

491

Noninterest expense adjusted for amortization of assets expense (non-GAAP)

62,314

54,513

Net interest income (GAAP)

95,749

84,635

Plus: Taxable equivalent adjustment

1,901

1,512

Noninterest income (GAAP)

11,845

25,636

Less: Net (losses) gains on equity securities

(31)

2

Less: Loss on sale of available for sale securities

(1,976)

Less: Gain on sale of Visa Class B shares

12,153

Net interest income (FTE) plus noninterest income (non-GAAP)

$

111,502

$

99,628

Efficiency ratio (non-GAAP)

55.89

%

54.72

%

20