EX-99.1 2 ex-99d1.htm EX-99.1 pfis_Ex99_1

Exhibit 99.1

NEWS RELEASE

TO BUSINESS EDITOR:

PEOPLES FINANCIAL SERVICES CORP. Reports Second Quarter 2019 Earnings

Scranton, PA, July 23, 2019/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 six months ended June 30, 2019.  Peoples reported net income of $7.1 million, or $0.96 per share for the three months ended June 30, 2019, compared to $6.0 million, or $0.81 per share for the comparable period of 2018. The increase in earnings for the three months ended June 30, 2019 is the product of higher net interest income of $1.1 million due to growth in our average earning assets of $102.3 million from the year ago period and a decrease to the provision for loan losses of $0.7 million when comparing the three months ended June 30, 2019 to the same period in 2018,  partially offset by an increase of $0.9 million in noninterest expenses in the current period.

Net income for the six months ended June 30, 2019, totaled $13.6 million or $1.83 per share, a 14.8% increase when compared to $11.8 million or $1.60 per share for the same period last year.  The increase in earnings in the current period is the result of higher net interest income of $2.2 million due to our earning asset growth coupled with a reduction in the provision for loan losses which resulted in a decrease to the provision of $0.7 million when comparing the six months ended June 30, 2019 to the same period in 2018.

In addition to evaluating its results of operations in accordance with 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 herein contain items, which Peoples considers non-core, namely gains and losses incurred within the investment securities portfolio and gains on the sale of other business lines. 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.

Core net income, which we have defined to exclude losses or gains on investment securities and gains from other nonrecurring sources, for the three months ended June 30, totaled $7.1 million and $5.7 million in 2019 and 2018, respectively. Core net income per share for the three months ended June 30, 2019 was $0.96, an increase from $0.77 for the same period in 2018. These results in 2019 exclude a pre-tax $23 thousand gain on the sale of debt securities and a $9 thousand unrealized loss on our equity investment portfolio while the results for 2018 exclude a pre-tax $8 thousand gain in the value of our equity investment securities portfolio and a pre-tax $291 thousand gain from the sale of our credit card portfolio. 

Core net income for the six months ended June 30, 2019 was $13.5 million or $1.83 per share, an increase of 16.9% compared to $11.6 million or $1.57 per share for the same period of 2018. Results for the six months ended June 30, 2019 exclude a pre-tax gain of $23 thousand on the sale of debt securities and a $8 thousand unrealized loss on our equity investment securities portfolio. The 2018 results were impacted by the pre-tax gain of $291 thousand from the sale of our credit card portfolio.

NOTABLES

·

Loans, net growth of $105.4 million or 6.0% since June 30, 2018, with growth of $35.5 million or 3.9% annualized for the six months ended June 30, 2019.

·

Deposits have grown $157.9 million or 9.2% compared to June 30, 2018. Deposits increased $1.8 million or 0.2% annualized for the six months ended June 30, 2019.

·

Tangible book value per share improved to $30.58 at June 30, 2019 from $28.78 at December 31, 2018 and from $27.50 at June 30, 2018.

·

Tax-equivalent net interest income increased  $2.2 million or 6.3% to $37.9 million for the six months ended June 30, 2019 compared to $35.7 million for the same period in 2018.

1

·

Return on average assets was 1.18%  and return on average equity was 9.63%  for the six months ended June 30, 2019 compared to 1.08% and 8.90%, respectively for the six months ended June 30, 2018.

·

The allowance for loan losses to loans, net was 1.18% at June 30, 2019, an increase from 1.17% at December 31, 2018 and 1.12% at June 30, 2018.

·

Opened our newest office in Lebanon County in June of 2019 servicing portions of Central Pennsylvania.

 

 INCOME STATEMENT REVIEW

Calculated on a fully taxable equivalent basis (“FTE”), our tax-equivalent net interest margin for the three and six months ended June 30  were 3.62% and 3.60% respectively in 2019, compared to 3.58%  and 3.57% respectively for the same periods in 2018. The tax-equivalent yield on earning assets increased 29 basis points to 4.49%  and 4.46% for the three and six months ended June 30, 2019 from 4.20% and 4.17% during the corresponding periods of 2018.  At the same time, we experienced higher interest-bearing liability costs due to increases in short-term market rates. Our cost of funds, which represents our average rate paid on total interest-bearing liabilities, increased 36 and 37 basis points to 1.17% and 1.15% respectively for the three and six months ended June 30, 2019 when compared to 0.81%  and 0.78% respectively for the same periods in 2018. Although the Federal Open Market Committee (FOMC) has maintained the federal funds rate in a range of 2.25% to 2.50% through the first half of 2019, the short end of the yield curve has remained elevated resulting in higher deposit costs.  

Tax-equivalent net interest income for the six months ended June 30, increased $2.2 million or 6.3% to $37.9 million in 2019 from $35.7 million in 2018. The increase in tax equivalent net interest income was primarily due to a $117.3 million increase in average loans for the six months ended June 30, 2019 when compared to the same period in 2018. The tax-equivalent yield on the loan portfolio increased to 4.75% for the six months ended June 30, 2019, compared to 4.42% for the comparable period in 2018. Loans, net averaged $1.8 billion for the six months ended June 30, 2019 and $1.7 billion for the comparable period in 2018. For the six months ended June 30, the tax-equivalent yield on total investments decreased to 2.53% in 2019 from 2.60% in 2018. Average investments totaled $274.2 million in 2019 and $280.9 million in 2018. Average interest-bearing liabilities increased $54.8 million for the six months ended June 30, 2019, compared to the corresponding period last year.

The provision for loan losses totaled $1.4 million for the six months ended June 30, 2019 and $2.1 million for the six months ended June 30, 2018.  For the quarter ended June 30, the provision for loan losses was $0.4 million in 2019 and $1.1 million in 2018.

For the six months ended June 30, noninterest income totaled $7.6 million in 2019, an increase from $7.2 million in 2018.  Fee income generated by commercial loan interest rate swap transactions totaled $0.8 million in the six months ended June 30, 2019 compared to $0.1 million during the corresponding period of 2018. In the year ago period, a  gain on the sale of our credit card portfolio of $291 thousand and the accrual of bank owned life insurance income of $365 thousand were recognized.  Increases in revenues from merchant services, income from fiduciary activities, and income generated from wealth management services, more than offset a  slight decrease in income from mortgage banking activities. For the three months ended June 30, noninterest income totaled $4.2 million in 2019, an increase from $3.7 million in 2018.   The increase was due to higher service charges, fees and commissions related to fee income generated from commercial loan interest rate swap transactions, increases in revenues from merchant services, income from fiduciary activities, and income generated from wealth management services, partially offset by a slight decrease in income from mortgage banking activities. 

Noninterest expense increased $1.3 million or 5.1% to $27.9 million for the six months ended June 30, 2019, from $26.6 million for the six months ended June 30, 2018. Salaries and employee benefits increased $1.3 million or 9.0%  due to annual merit increases and continued investment in our expansion markets in the Lehigh Valley, King of Prussia and Central Pennsylvania.  Occupancy and equipment expenses also increased due to our market expansion when comparing the first half of 2019 and 2018 as those expenses increased $0.3 million or 5.0%. In addition, during the six months ended June 30, 2019, increases to other expenses and donations, were  more than offset by decreases in professional fees and outside services, amortization expense recognized and FDIC insurance premiums and assessments.  Noninterest expense increased $0.9 million or 6.9% to $14.4 million for the three months ended June 30, 2019, from $13.5 million for the three months ended June 30, 2018. Salaries and employee benefits increased $0.6 million or 8.8% due to annual merit increases and continued investment in our expansion. Occupancy and equipment expenses also increased due to our market expansion when comparing the three months ending June 30, 2019 and 2018 as those expenses increased $0.1 

2

million or 4.7%.  In the other noninterest expense categories, increases in professional fees and outside services, donations and other expenses were partially offset by decreases in amortization expense recognized and FDIC insurance and assessments.

 

 BALANCE SHEET REVIEW

At June 30, 2019, total assets, loans and deposits were $2.3 billion, $1.9 billion and $1.9 billion, respectively. Loans, net increased $35.5 million or 3.9% annualized from December 31, 2018.  The growth in loans was primarily from commercial real estate and commercial and industrial loans.  Total deposits increased  $1.8 million or 0.2% annualized from December 31, 2018.  Non-interest bearing deposits increased $9.7 million or 4.8% annualized while interest-bearing deposits decreased $7.9 million or 1.1% annualized during the six months ended June 30, 2019. To fund balance sheet growth, long-term borrowings increased $15.1 million. Total investments were $269.9 million at June 30, 2019, including $261.7 million securities classified as available-for-sale and $8.0 million classified as held-to-maturity.

Stockholders’ equity equaled $291.6 million or $39.41 per share at June 30, 2019, and $278.6 million or $37.66 per share at December 31, 2018. Tangible stockholders’ equity improved to $30.58 per share at June 30, 2019, from $28.78 per share at December 31, 2018. Dividends declared for the six months ended June 30, 2019 amounted to $0.68 per share, a 4.6% increase from the year ago period, representing a dividend payout ratio of 37.2%.

ASSET QUALITY REVIEW

Nonperforming assets were $12.7 million or 0.68% of loans, net and foreclosed assets at June 30, 2019, compared to $10.0 million or 0.55% of loans, net and foreclosed assets at December 31, 2018. The increase in nonperforming assets was primarily due to placing a  large commercial credit on non-accrual. The allowance for loan losses equaled $21.9 million or 1.18% of loans, net at June 30, 2019 compared to $21.4 million or 1.17% of loans, net, at December 31, 2018.  Loans charged-off, net of recoveries, for the six months ended June 30, 2019, equaled $0.8 million or 0.09% of average loans, compared to $1.5 million or 0.17% 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 Bucks, Lackawanna, Lebanon, Lehigh, Luzerne, Monroe, Montgomery, Northampton, Schuylkill, Susquehanna, Wayne and Wyoming Counties in Pennsylvania 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.

 

 

 

 

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

3

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., Peoples Security Bank and Trust Company, and its subsidiaries (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; credit risk associated with our lending activities; changes in interest rates, loan demand, real estate values and competition; changes in accounting principles, policies, and guidelines; changes in any applicable law, rule, regulation or practice with respect to tax or legal issues; our ability to identify and address cyber-security risks and other economic, competitive, governmental, regulatory and technological factors affecting Peoples’ operations, pricing, products and services and other factors that may be described in Peoples’ Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission from time to time.

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

 

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

 

[TABULAR MATERIAL FOLLOWS]

 

4

Summary Data

Peoples Financial Services Corp.

Five Quarter Trend

(In thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

June 30

  

Mar 31

  

Dec 31

  

Sept 30

  

June 30

 

 

 

2019

 

2019

 

2018

 

2018

 

2018

 

Key performance data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per share data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

0.96

 

$

0.87

 

$

0.86

 

$

0.91

 

$

0.81

 

Core net income (1)

 

$

0.96

 

$

0.87

 

$

0.86

 

$

0.91

 

$

0.77

 

Cash dividends declared

 

$

0.34

 

$

0.34

 

$

0.33

 

$

0.33

 

$

0.33

 

Book value

 

$

39.41

 

$

38.46

 

$

37.66

 

$

36.89

 

$

36.43

 

Tangible book value (1)

 

$

30.58

 

$

29.61

 

$

28.78

 

$

27.99

 

$

27.50

 

Market value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

High

 

$

45.41

 

$

46.74

 

$

44.06

 

$

48.10

 

$

51.68

 

Low

 

$

42.00

 

$

40.34

 

$

40.00

 

$

42.40

 

$

43.72

 

Closing

 

$

44.99

 

$

45.24

 

$

44.06

 

$

42.40

 

$

47.02

 

Market capitalization

 

$

332,885

 

$

334,733

 

$

326,002

 

$

313,720

 

$

347,904

 

Common shares outstanding

 

 

7,399,078

 

 

7,399,054

 

 

7,399,054

 

 

7,399,054

 

 

7,399,054

 

Selected ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average stockholders’ equity

 

 

9.98

% 

 

9.26

% 

 

9.21

% 

 

9.81

% 

 

8.90

% 

Core return on average stockholders’ equity (1)

 

 

9.97

% 

 

9.26

% 

 

9.21

% 

 

9.79

% 

 

8.55

% 

Return on average tangible stockholders’ equity

 

 

12.93

% 

 

12.08

% 

 

12.10

% 

 

12.95

% 

 

11.81

% 

Core return on average tangible stockholders’ equity (1)

 

 

12.91

% 

 

12.08

% 

 

12.10

% 

 

12.93

% 

 

11.34

% 

Return on average assets

 

 

1.24

%

 

1.13

%

 

1.12

%

 

1.19

%

 

1.08

%

Core return on average assets (1)

 

 

1.24

% 

 

1.13

% 

 

1.12

% 

 

1.19

% 

 

1.03

% 

Stockholders’ equity to total assets

 

 

12.55

% 

 

12.28

% 

 

12.17

% 

 

12.09

% 

 

12.06

% 

Efficiency ratio (2)

 

 

61.15

% 

 

60.03

% 

 

59.42

% 

 

57.00

% 

 

61.98

% 

Nonperforming assets to loans, net, and foreclosed assets

 

 

0.68

% 

 

0.76

% 

 

0.55

% 

 

0.65

% 

 

0.63

% 

Net charge-offs to average loans, net

 

 

0.11

% 

 

0.07

% 

 

0.02

% 

 

0.05

% 

 

0.28

% 

Allowance for loan losses to loans, net

 

 

1.18

% 

 

1.20

% 

 

1.17

% 

 

1.15

% 

 

1.12

% 

Interest-bearing assets yield (FTE) (3)

 

 

4.49

% 

 

4.44

% 

 

4.38

% 

 

4.25

% 

 

4.20

% 

Cost of funds

 

 

1.17

% 

 

1.14

% 

 

0.99

% 

 

0.89

% 

 

0.81

% 

Net interest spread (FTE) (3)

 

 

3.32

% 

 

3.30

% 

 

3.39

% 

 

3.36

% 

 

3.39

% 

Net interest margin (FTE) (3)

 

 

3.62

% 

 

3.58

% 

 

3.63

% 

 

3.57

% 

 

3.58

% 

(1)

See Reconciliation of Non-GAAP financial measures.

(2)

Total noninterest expense less amortization of intangible assets divided by tax-equivalent net interest income and noninterest income less net gains(losses) on investment securities available-for-sale.

(3)

Tax-equivalent adjustments were calculated using the federal statutory tax rate prevailing during the indicated periods of 21%.

5

Peoples Financial Services Corp.

Consolidated Statements of Income

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

    

June 30

    

June 30

 

Six Months Ended

 

2019

 

2018

 

Interest income:

 

 

 

 

 

 

 

Interest and fees on loans:

 

 

 

 

 

 

 

Taxable

 

$

40,744

 

$

35,748

 

Tax-exempt

 

 

2,208

 

 

1,741

 

Interest and dividends on investment securities:

 

 

 

 

 

 

 

Taxable

 

 

2,035

 

 

1,792

 

Tax-exempt

 

 

1,082

 

 

1,362

 

Dividends

 

 

41

 

 

35

 

Interest on interest-bearing deposits in other banks

 

 

23

 

 

82

 

Total interest income

 

 

46,133

 

 

40,760

 

Interest expense:

 

 

 

 

 

 

 

Interest on deposits

 

 

7,124

 

 

3,793

 

Interest on short-term borrowings

 

 

1,408

 

 

1,508

 

Interest on long-term debt

 

 

576

 

 

621

 

Total interest expense

 

 

9,108

 

 

5,922

 

Net interest income

 

 

37,025

 

 

34,838

 

Provision for loan losses

 

 

1,400

 

 

2,100

 

Net interest income after provision for loan losses

 

 

35,625

 

 

32,738

 

Noninterest income:

 

 

 

 

 

 

 

Service charges, fees, commissions

 

 

4,489

 

 

3,973

 

Merchant services income

 

 

655

 

 

559

 

Commissions and fees on fiduciary activities

 

 

999

 

 

982

 

Wealth management income

 

 

747

 

 

743

 

Mortgage banking income

 

 

285

 

 

309

 

Life insurance investment income

 

 

378

 

 

378

 

Net gain on investment securities

 

 

15

 

 

 

 

Net gains on sale of credit card loans

 

 

 

 

 

291

 

Total noninterest income

 

 

7,568

 

 

7,235

 

Noninterest expense:

 

 

 

 

 

 

 

Salaries and employee benefits expense

 

 

15,632

 

 

14,345

 

Net occupancy and equipment expense

 

 

5,810

 

 

5,534

 

Amortization of intangible assets

 

 

374

 

 

450

 

Other expenses

 

 

6,103

 

 

6,248

 

Total noninterest expense

 

 

27,919

 

 

26,577

 

Income before income taxes

 

 

15,274

 

 

13,396

 

Provision for income tax expense

 

 

1,718

 

 

1,585

 

Net income

 

$

13,556

 

$

11,811

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

Unrealized gain (loss) on investment securities available-for-sale

 

$

5,050

 

$

(3,215)

 

Reclassification adjustment for gains included in net income

 

 

(23)

 

 

 

 

Change in derivative fair value

 

 

506

 

 

 

 

Income tax related to other comprehensive income (loss)

 

 

1,162

 

 

(677)

 

Other comprehensive income (loss), net of income taxes

 

 

4,371

 

 

(2,538)

 

Comprehensive income

 

$

17,927

 

$

9,273

 

Per share data:

 

 

 

 

 

 

 

Net income

 

$

1.83

 

$

1.60

 

Cash dividends declared

 

$

0.68

 

$

0.65

 

Average common shares outstanding

 

 

7,399,178

 

 

7,396,519

 

 

 

 

6

 

Peoples Financial Services Corp.

Consolidated Statements of Income

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

June 30

    

Mar 31

    

Dec 31

    

Sept 30

    

June 30

 

Three months ended

 

2019

 

2019

 

2018

 

2018

 

2018

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

$

20,641

 

$

20,103

 

$

19,806

 

$

18,798

 

$

18,239

 

Tax-exempt

 

 

1,109

 

 

1,099

 

 

1,006

 

 

919

 

 

871

 

Interest and dividends on investment securities available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

1,025

 

 

1,012

 

 

1,009

 

 

998

 

 

934

 

Tax-exempt

 

 

520

 

 

562

 

 

620

 

 

639

 

 

661

 

Dividends

 

 

22

 

 

19

 

 

21

 

 

16

 

 

19

 

Interest on interest-bearing deposits in other banks

 

 

15

 

 

 6

 

 

20

 

 

49

 

 

42

 

Total interest income

 

 

23,332

 

 

22,801

 

 

22,482

 

 

21,419

 

 

20,766

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

3,713

 

 

3,411

 

 

3,211

 

 

2,342

 

 

1,959

 

Interest on short-term borrowings

 

 

595

 

 

813

 

 

421

 

 

809

 

 

841

 

Interest on long-term debt

 

 

296

 

 

280

 

 

302

 

 

315

 

 

315

 

Total interest expense

 

 

4,604

 

 

4,504

 

 

3,934

 

 

3,466

 

 

3,115

 

Net interest income

 

 

18,728

 

 

18,297

 

 

18,548

 

 

17,953

 

 

17,651

 

Provision for loan losses

 

 

350

 

 

1,050

 

 

1,050

 

 

1,050

 

 

1,050

 

Net interest income after provision for loan losses

 

 

18,378

 

 

17,247

 

 

17,498

 

 

16,903

 

 

16,601

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges, fees, commissions

 

 

2,490

 

 

1,999

 

 

1,822

 

 

1,883

 

 

1,885

 

Merchant services income

 

 

457

 

 

198

 

 

122

 

 

128

 

 

309

 

Commissions and fees on fiduciary activities

 

 

492

 

 

507

 

 

484

 

 

570

 

 

485

 

Wealth management income

 

 

370

 

 

377

 

 

399

 

 

305

 

 

332

 

Mortgage banking income

 

 

137

 

 

148

 

 

155

 

 

163

 

 

162

 

Life insurance investment income

 

 

192

 

 

186

 

 

189

 

 

190

 

 

191

 

Net gain on investment securities

 

 

14

 

 

 1

 

 

 

 

 

14

 

 

 8

 

Net gain on sale of credit card loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

291

 

Total noninterest income

 

 

4,152

 

 

3,416

 

 

3,171

 

 

3,253

 

 

3,663

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits expense

 

 

8,037

 

 

7,595

 

 

7,116

 

 

6,946

 

 

7,390

 

Net occupancy and equipment expense

 

 

2,849

 

 

2,961

 

 

2,682

 

 

2,681

 

 

2,720

 

Amortization of intangible assets

 

 

182

 

 

192

 

 

211

 

 

220

 

 

220

 

Other expenses

 

 

3,361

 

 

2,742

 

 

3,364

 

 

2,690

 

 

3,166

 

Total noninterest expense

 

 

14,429

 

 

13,490

 

 

13,373

 

 

12,537

 

 

13,496

 

Income before income taxes

 

 

8,101

 

 

7,173

 

 

7,296

 

 

7,619

 

 

6,768

 

Income tax expense

 

 

957

 

 

761

 

 

904

 

 

902

 

 

811

 

Net income

 

$

7,144

 

$

6,412

 

$

6,392

 

$

6,717

 

$

5,957

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on investment securities available-for-sale

 

$

2,611

 

$

2,439

 

$

2,380

 

$

(1,179)

 

$

(839)

 

Reclassification adjustment for gains included in net income

 

 

(23)

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in pension liability

 

 

 

 

 

 

 

 

(591)

 

 

 

 

 

 

 

Change in derivative fair value

 

 

443

 

 

63

 

 

246

 

 

 

 

 

 

 

Income tax related to other comprehensive income (loss)

 

 

637

 

 

525

 

 

429

 

 

(248)

 

 

(176)

 

Other comprehensive income (loss), net of income taxes

 

 

2,394

 

 

1,977

 

 

1,606

 

 

(931)

 

 

(663)

 

Comprehensive income

 

$

9,538

 

$

8,389

 

$

7,998

 

$

5,786

 

$

5,294

 

Per share data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

0.96

 

$

0.87

 

$

0.86

 

$

0.91

 

$

0.81

 

Cash dividends declared

 

$

0.34

 

$

0.34

 

$

0.33

 

$

0.33

 

$

0.33

 

Average common shares outstanding

 

 

7,399,302

 

 

7,399,054

 

 

7,399,054

 

 

7,399,054

 

 

7,396,533

 

 

7

Peoples Financial Services Corp.

Details of Net Interest and Net Interest Margin

(In thousands, fully taxable equivalent basis)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

June 30

    

Mar 31

    

Dec 31

    

Sept 30

    

June 30

 

Three months ended

 

2019

 

2019

 

2018

 

2018

 

2018

 

Net interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

$

20,641

 

$

20,103

 

$

19,806

 

$

18,798

 

$

18,239

 

Tax-exempt

 

 

1,404

 

 

1,391

 

 

1,274

 

 

1,162

 

 

1,103

 

Total loans, net

 

 

22,045

 

 

21,494

 

 

21,080

 

 

19,960

 

 

19,342

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

1,045

 

 

1,031

 

 

1,047

 

 

1,062

 

 

991

 

Tax-exempt

 

 

659

 

 

711

 

 

785

 

 

811

 

 

837

 

Total investments

 

 

1,704

 

 

1,742

 

 

1,832

 

 

1,873

 

 

1,828

 

Interest on interest-bearing balances in other banks

 

 

17

 

 

 6

 

 

 3

 

 

 1

 

 

 2

 

Total interest income

 

 

23,766

 

 

23,242

 

 

22,915

 

 

21,834

 

 

21,172

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

3,713

 

 

3,411

 

 

3,211

 

 

2,342

 

 

1,959

 

Short-term borrowings

 

 

595

 

 

813

 

 

421

 

 

809

 

 

841

 

Long-term debt

 

 

296

 

 

280

 

 

302

 

 

315

 

 

315

 

Total interest expense

 

 

4,604

 

 

4,504

 

 

3,934

 

 

3,466

 

 

3,115

 

Net interest income

 

$

19,162

 

$

18,738

 

$

18,981

 

$

18,368

 

$

18,057

 

Loans, net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

4.85

%  

 

4.79

%  

 

4.73

%  

 

4.57

%  

 

4.52

%

Tax-exempt

 

 

3.96

%  

 

3.91

%  

 

3.80

%  

 

3.74

%  

 

3.60

%

Total loans, net

 

 

4.78

%  

 

4.72

%  

 

4.66

%  

 

4.51

%  

 

4.46

%

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

2.21

%  

 

2.25

%  

 

2.25

%  

 

2.28

%  

 

2.22

%

Tax-exempt

 

 

3.20

%  

 

3.17

%  

 

3.25

%  

 

3.25

%  

 

3.25

%

Total investments

 

 

2.51

%  

 

2.55

%  

 

2.60

%  

 

2.62

%  

 

2.60

%

Interest-bearing balances with banks

 

 

2.67

%  

 

2.37

%  

 

2.28

%  

 

1.05

%  

 

2.35

%

Total interest-bearing assets

 

 

4.49

%  

 

4.44

%  

 

4.38

%  

 

4.25

%  

 

4.20

%

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

1.03

%  

 

0.96

%  

 

0.87

%  

 

0.69

%  

 

0.59

%

Short-term borrowings

 

 

2.69

%  

 

2.70

%  

 

2.56

%  

 

2.23

%  

 

2.06

%

Long-term debt

 

 

2.83

%  

 

3.02

%  

 

2.63

%  

 

2.57

%  

 

2.57

%

Total interest-bearing liabilities

 

 

1.17

%  

 

1.14

%  

 

0.99

%  

 

0.89

%  

 

0.81

%

Net interest spread

 

 

3.32

%  

 

3.30

%  

 

3.39

%  

 

3.36

%  

 

3.39

%

Net interest margin

 

 

3.62

%  

 

3.58

%  

 

3.63

%  

 

3.57

%  

 

3.58

%

 

8

Peoples Financial Services Corp.

Consolidated Balance Sheets

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

June 30

    

Mar 31

    

Dec 31

    

Sept 30

    

June 30

 

At period end

 

2019

 

2019

 

2018

 

2018

 

2018

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

26,615

 

$

24,364

 

$

32,569

 

$

40,458

 

$

35,249

 

Interest-bearing balances in other banks

 

 

3,347

 

 

1,688

 

 

47

 

 

137

 

 

130

 

Federal funds sold

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale

 

 

261,665

 

 

270,384

 

 

269,682

 

 

274,794

 

 

275,050

 

Equity investments carried at fair value

 

 

283

 

 

292

 

 

291

 

 

291

 

 

278

 

Held-to-maturity

 

 

7,969

 

 

8,162

 

 

8,361

 

 

8,551

 

 

8,780

 

Loans held for sale

 

 

831

 

 

 

 

 

749

 

 

98

 

 

 

 

Loans, net

 

 

1,858,799

 

 

1,849,602

 

 

1,823,266

 

 

1,779,445

 

 

1,753,389

 

Less: allowance for loan losses

 

 

21,930

 

 

22,105

 

 

21,379

 

 

20,413

 

 

19,573

 

Net loans

 

 

1,836,869

 

 

1,827,497

 

 

1,801,887

 

 

1,759,032

 

 

1,733,816

 

Premises and equipment, net

 

 

46,468

 

 

44,728

 

 

38,889

 

 

37,467

 

 

37,148

 

Accrued interest receivable

 

 

7,303

 

 

7,211

 

 

7,115

 

 

6,565

 

 

6,802

 

Goodwill

 

 

63,370

 

 

63,370

 

 

63,370

 

 

63,370

 

 

63,370

 

Other intangible assets, net

 

 

1,921

 

 

2,104

 

 

2,296

 

 

2,507

 

 

2,727

 

Other assets

 

 

67,625

 

 

68,144

 

 

63,737

 

 

64,573

 

 

72,276

 

Total assets

 

$

2,324,266

 

$

2,317,944

 

$

2,288,993

 

$

2,257,843

 

$

2,235,626

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

419,995

 

$

432,830

 

$

410,260

 

$

404,293

 

$

400,518

 

Interest-bearing

 

 

1,456,804

 

 

1,435,400

 

 

1,464,762

 

 

1,423,571

 

 

1,318,343

 

Total deposits

 

 

1,876,799

 

 

1,868,230

 

 

1,875,022

 

 

1,827,864

 

 

1,718,861

 

Short-term borrowings

 

 

82,700

 

 

109,000

 

 

86,500

 

 

99,450

 

 

187,450

 

Long-term debt

 

 

52,980

 

 

37,446

 

 

37,906

 

 

48,461

 

 

48,911

 

Accrued interest payable

 

 

1,058

 

 

878

 

 

1,195

 

 

745

 

 

538

 

Other liabilities

 

 

19,146

 

 

17,821

 

 

9,756

 

 

8,352

 

 

10,322

 

Total liabilities

 

 

2,032,683

 

 

2,033,375

 

 

2,010,379

 

 

1,984,872

 

 

1,966,082

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

14,798

 

 

14,798

 

 

14,798

 

 

14,798

 

 

14,798

 

Capital surplus

 

 

135,384

 

 

135,393

 

 

135,310

 

 

135,226

 

 

135,143

 

Retained earnings

 

 

145,106

 

 

140,478

 

 

136,582

 

 

132,631

 

 

128,356

 

Accumulated other comprehensive loss

 

 

(3,705)

 

 

(6,100)

 

 

(8,076)

 

 

(9,684)

 

 

(8,753)

 

Total stockholders’ equity

 

 

291,583

 

 

284,569

 

 

278,614

 

 

272,971

 

 

269,544

 

Total liabilities and stockholders’ equity

 

$

2,324,266

 

$

2,317,944

 

$

2,288,993

 

$

2,257,843

 

$

2,235,626

 

 

9

Peoples Financial Services Corp.

Consolidated Balance Sheets

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

June 30

    

Mar 31

    

Dec 31

    

Sept 30

    

June 30

 

Average quarterly balances

 

2019

 

2019

 

2018

 

2018

 

2018

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

$

1,707,730

 

$

1,701,737

 

$

1,662,290

 

$

1,632,012

 

$

1,616,729

 

Tax-exempt

 

 

142,310

 

 

144,119

 

 

133,100

 

 

123,199

 

 

122,876

 

Total loans, net

 

 

1,850,040

 

 

1,845,856

 

 

1,795,390

 

 

1,755,211

 

 

1,739,605

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

189,265

 

 

185,696

 

 

184,345

 

 

184,623

 

 

178,957

 

Tax-exempt

 

 

82,565

 

 

90,961

 

 

95,698

 

 

99,142

 

 

103,279

 

Total investments

 

 

271,830

 

 

276,657

 

 

280,043

 

 

283,765

 

 

282,236

 

Interest-bearing balances with banks

 

 

2,554

 

 

1,028

 

 

523

 

 

377

 

 

342

 

Total interest-bearing assets

 

 

2,124,424

 

 

2,123,541

 

 

2,075,956

 

 

2,039,353

 

 

2,022,183

 

Other assets

 

 

190,583

 

 

187,537

 

 

186,491

 

 

198,229

 

 

195,919

 

Total assets

 

$

2,315,007

 

$

2,311,078

 

$

2,262,447

 

$

2,237,582

 

$

2,218,102

 

Liabilities and stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing

 

$

1,449,665

 

$

1,445,861

 

$

1,459,155

 

$

1,351,709

 

$

1,327,036

 

Noninterest-bearing

 

 

426,791

 

 

406,733

 

 

403,488

 

 

405,671

 

 

394,461

 

Total deposits

 

 

1,876,456

 

 

1,852,594

 

 

1,862,643

 

 

1,757,380

 

 

1,721,497

 

Short-term borrowings

 

 

88,792

 

 

121,954

 

 

65,192

 

 

144,162

 

 

163,596

 

Long-term debt

 

 

41,948

 

 

37,663

 

 

45,503

 

 

48,670

 

 

49,136

 

Other liabilities

 

 

20,773

 

 

17,977

 

 

13,794

 

 

15,609

 

 

15,376

 

Total liabilities

 

 

2,027,969

 

 

2,030,188

 

 

1,987,132

 

 

1,965,821

 

 

1,949,605

 

Stockholders’ equity

 

 

287,038

 

 

280,890

 

 

275,315

 

 

271,761

 

 

268,497

 

Total liabilities and stockholders’ equity

 

$

2,315,007

 

$

2,311,078

 

$

2,262,447

 

$

2,237,582

 

$

2,218,102

 

 

10

Peoples Financial Services Corp.

Asset Quality Data

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

June 30

    

Mar 31

    

Dec 31

    

Sept 30

    

June 30

 

 

 

2019

 

2019

 

2018

 

2018

 

2018

 

At quarter end

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual/restructured loans

 

$

11,926

 

$

12,803

 

$

8,669

 

$

10,576

 

$

10,424

 

Accruing loans past due 90 days or more

 

 

341

 

 

829

 

 

923

 

 

584

 

 

84

 

Foreclosed assets

 

 

408

 

 

360

 

 

376

 

 

342

 

 

500

 

Total nonperforming assets

 

$

12,675

 

$

13,992

 

$

9,968

 

$

11,502

 

$

11,008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

22,105

 

$

21,379

 

$

20,413

 

$

19,573

 

$

19,718

 

Charge-offs

 

 

576

 

 

374

 

 

202

 

 

328

 

 

1,398

 

Recoveries

 

 

51

 

 

50

 

 

118

 

 

118

 

 

203

 

Provision for loan losses

 

 

350

 

 

1,050

 

 

1,050

 

 

1,050

 

 

1,050

 

Ending balance

 

$

21,930

 

$

22,105

 

$

21,379

 

$

20,413

 

$

19,573

 

 

11

Peoples Financial Services Corp.

Reconciliation of Non-GAAP Financial Measures

(In thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

June 30

    

Mar 31

 

Dec 31

    

Sept 30

    

June 30

 

Three months ended

 

2019

 

2019

 

2018

 

2018

 

2018

 

Core net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income GAAP

 

$

7,144

 

$

6,412

 

$

6,392

 

$

6,717

 

$

5,957

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Gain on sale of business line

 

 

 

 

 

 

 

 

 

 

 

 

 

 

291

 

Less: (gain) loss on investment securities

 

 

(14)

 

 

(1)

 

 

 

 

 

(14)

 

 

(8)

 

Add: (gain) loss on investment securities tax adjustment

 

 

(3)

 

 

 

 

 

 

 

 

(3)

 

 

(2)

 

Add: Gain on sale of business line tax adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 
61

 

Net income Core

 

$

7,133

 

$

6,411

 

$

6,392

 

$

6,706

 

$

5,721

 

Average common shares outstanding

 

 

7,399,302

 

 

7,399,054

 

 

7,399,054

 

 

7,399,054

 

 

7,396,533

 

Core net income per share

 

$

0.96

 

$

0.87

 

$

0.86

 

$

0.91

 

$

0.77

 

Tangible book value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

$

291,583

 

$

284,569

 

$

278,614

 

$

272,971

 

$

269,544

 

Less: Goodwill

 

 

63,370

 

 

63,370

 

 

63,370

 

 

63,370

 

 

63,370

 

Less: Other intangible assets, net

 

 

1,921

 

 

2,104

 

 

2,296

 

 

2,507

 

 

2,727

 

Total tangible stockholders’ equity

 

$

226,292

 

$

219,095

 

$

212,948

 

$

207,094

 

$

203,447

 

Common shares outstanding

 

 

7,399,078

 

 

7,399,054

 

 

7,399,054

 

 

7,399,054

 

 

7,399,054

 

Tangible book value per share

 

$

30.58

 

$

29.61

 

$

28.78

 

$

27.99

 

$

27.50

 

Core return on average stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income GAAP

 

$

7,144

 

$

6,412

 

$

6,392

 

$

6,717

 

$

5,957

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Gain on sale of business line

 

 

 

 

 

 

 

 

 

 

 

 

 

 

291

 

Less: (gain) loss on investment securities

 

 

(14)

 

 

(1)

 

 

 

 

 

(14)

 

 

(8)

 

Add: (gain) loss on investment securities tax adjustment

 

 

(3)

 

 

 

 

 

 

 

 

(3)

 

 

(2)

 

Add: Gain on sale of business line tax adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

61

 

Net income Core

 

$

7,133

 

$

6,411

 

$

6,392

 

$

6,706

 

$

5,721

 

Average stockholders’ equity

 

$

287,038

 

$

280,890

 

$

275,315

 

$

271,761

 

$

268,497

 

Core return on average stockholders’ equity

 

 

9.97

%  

 

9.26

%  

 

9.21

%  

 

9.79

%  

 

8.55

%

Return on average tangible equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income GAAP

 

$

7,144

 

$

6,412

 

$

6,392

 

$

6,717

 

$

5,957

 

Average stockholders’ equity

 

$

287,038

 

$

280,890

 

$

275,315

 

$

271,761

 

$

268,497

 

Less: average intangibles

 

 

65,406

 

 

65,570

 

 

65,772

 

 

65,987

 

 

66,208

 

Average tangible stockholders’ equity

 

$

221,632

 

$

215,320

 

$

209,543

 

$

205,774

 

$

202,289

 

Return on average tangible stockholders’ equity

 

 

12.93

%  

 

12.08

%  

 

12.10

%  

 

12.95

%  

 

11.81

%

Core return on average tangible stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income GAAP

 

$

7,144

 

$

6,412

 

$

6,392

 

$

6,717

 

$

5,957

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Gain on sale of business line

 

 

 

 

 

 

 

 

 

 

 

 

 

 

291

 

Less: (gain) loss on investment securities

 

 

(14)

 

 

(1)

 

 

 

 

 

(14)

 

 

(8)

 

Add: (gain) loss on investment securities tax adjustment

 

 

(3)

 

 

 

 

 

 

 

 

(3)

 

 

(2)

 

Add: Gain on sale of business line tax adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

61

 

Net income Core

 

$

7,133

 

$

6,411

 

$

6,392

 

$

6,706

 

$

5,721

 

Average stockholders’ equity

 

$

287,038

 

$

280,890

 

$

275,315

 

$

271,761

 

$

268,497

 

Less: average intangibles

 

 

65,406

 

 

65,570

 

 

65,772

 

 

65,987

 

 

66,208

 

Average tangible stockholders’ equity

 

$

221,632

 

$

215,320

 

$

209,543

 

$

205,774

 

$

202,289

 

Core return on average tangible stockholders’ equity

 

 

12.91

%  

 

12.08

%  

 

12.10

%  

 

12.93

%  

 

11.34

%

Core return on average assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income GAAP

 

$

7,144

 

$

6,412

 

$

6,392

 

$

6,717

 

$

5,957

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Gain on sale of business line

 

 

 

 

 

 

 

 

 

 

 

 

 

 

291

 

Less: (gain) loss on investment securities

 

 

(14)

 

 

(1)

 

 

 

 

 

(14)

 

 

(8)

 

Add: (gain) loss on investment securities tax adjustment

 

 

(3)

 

 

 

 

 

 

 

 

(3)

 

 

(2)

 

Add: Gain on sale of business line tax adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

61

 

Net income Core

 

$

7,133

 

$

6,411

 

$

6,392

 

$

6,706

 

$

5,721

 

Average assets

 

$

2,315,007

 

$

2,311,078

 

$

2,262,447

 

$

2,237,582

 

$

2,218,102

 

Core return on average assets

 

 

1.24

%  

 

1.13

%  

 

1.12

%  

 

1.19

%  

 

1.03

%

12

Peoples Financial Services Corp.

Reconciliation of Non-GAAP Financial Measures

(In thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

    

June 30

    

June 30

 

Six Months Ended

 

2019

 

2018

 

Core net income per share:

 

 

 

 

 

 

 

Net income GAAP

 

$

13,556

 

$

11,811

 

Adjustments:

 

 

 

 

 

 

 

Less: Gain on sale of business line

 

 

 

 

 

291

 

Less: Gain on investment securities

 

 

(15)

 

 

 

 

Add: Gain on sale of business line tax adjustment

 

 

 

 

 

61

 

Add: Gain on investment securities tax adjustment

 

 

(3)

 

 

 

 

Net income Core

 

$

13,544

 

$

11,581

 

Average common shares outstanding

 

 

7,399,178

 

 

7,396,519

 

Core net income per share

 

$

1.83

 

$

1.57

 

 

13