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Peoples Financial Services Corp. Reports Second Quarter 2018 Earnings

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Peoples Financial Services Corp. Reports Second Quarter 2018 Earnings

PR Newswire

SCRANTON, Pa., July 24, 2018 /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, 2018.  Peoples reported net income of $6.0 million, or $0.81 per share for the second quarter of 2018, compared to $5.7 million, or $0.77 per share for the comparable period of 2017. The increase in earnings for the current period is the product of higher net interest income of $1.5 million due to growth in our average earning assets of $172.3 million from the year ago period and a reduction in income taxes due to the Tax Cuts and Jobs Act of 2017, which reduced the corporate tax rate to 21% effective January 1, 2018. These increases were partially offset by lower noninterest income due to the sale of our merchant services business in the second quarter of 2017 and higher noninterest expenses related to our market expansion initiative.

Peoples Financial Services Corp. Logo. (PRNewsFoto/Peoples Financial Services Corp.) (PRNewsFoto/PEOPLES FINANCIAL SERVICES CORP_)

Net income for the six months ended June 30, 2018, totaled $11.8 million or $1.60 per share compared to $10.5 million or $1.41 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 $2.9 million due to our earning asset growth coupled with a reduction in income taxes due to the lower corporate tax rate, offset by lower noninterest income due to the sale of our merchant services business in the year ago period.

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 investment securities available-for-sale, gains on the sale of other business lines and the non-recurring tax provision related to the Tax Cuts and Jobs Act of 2017. 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 $5.7 million and $4.4 million in 2018 and 2017, respectively. Core net income per share for the three months ended June 30, 2018 was $0.78, an increase from $0.59 for the same period in 2017. These results in 2018 exclude a pre-tax $8 thousand gain in the value of our equity investment securities portfolio and a nonrecurring pre-tax $291 thousand gain from the sale of our credit card portfolio while the results for 2017 exclude a pre-tax $2.3 million gain from the sale of our merchant services business.

Core net income for the six months ended June 30, 2018 was $11.6 million or $1.57 per share compared to $9.2 million or $1.24 per share for the same period of 2017. Results for the six months ended June 30, 2018 exclude a nonrecurring pre-tax gain of $291 thousand from the sale of our credit card portfolio. The 2017 results were impacted by the pre-tax gain of $2.3 million from the sale of our merchant services business.

NOTABLES

  • Loans, net growth of $60.3 million in the six months ended June 30, 2018 (7.2% annualized rate), with growth of $156.0 million or 9.8% since June 30, 2017.
  • Deposits were relatively flat in the first half of 2018 but grew $79.4 million or 4.8% since June 30, 2017.
  • Tangible book value per share improved to $27.50 at June 30, 2018 from $26.83 at December 31, 2017 and from $26.56 at June 30, 2017.
  • Tax-equivalent net interest income increased to $35.7 million for the six months ended June 30, 2018 compared to $33.6 million for the same period in 2017.
  • Return on average assets was 1.08% for the six months ended June 30, 2018 compared to 1.04% for the comparable period in 2017. Return on average equity was 8.90% for the six months ended June 30, 2018 compared to 8.13% for the year ago period.
  • Nonperforming assets to loans, net, and foreclosed assets decreased to 0.63% at June 30, 2018, from 0.68% at December 31, 2017 and 0.73% at June 30, 2017.
  • The effective tax rate decreased to 11.8% in the first half of 2018 resulting from the tax reform legislation enacted in December 2017. This compares favorably to 21.8% for the same period in 2017.
  • Completed the sale of our credit card portfolio to a non-related third party at an after tax gain of $230 thousand.

INCOME STATEMENT REVIEW

The tax-equivalent net interest margin for the three and six months ended June 30 were 3.58% and 3.57% respectively in 2018, compared to 3.68% and 3.71% respectively for the same periods in 2017. Yields and interest income on our tax-exempt loans and investment securities were computed on a taxable-equivalent basis assuming a 21% tax rate in 2018 and a 35% tax rate in 2017, reflecting the 21% statutory tax rate that became effective for Peoples on January 1, 2018, under the Tax Cuts and Jobs Act of 2017. The change in tax rate in the current period resulted in an eight basis point reduction to our tax-equivalent yield on earning assets for the three and six months ended June 30, 2018. This coupled with higher interest-bearing liability costs are the factors in the decrease to our net interest margin on a taxable-equivalent basis from the three and six months ended June 30, 2017 to June 30, 2018.

Tax-equivalent net interest income for the six months ended June 30, increased $2.1 million or 6.0% to $35.7 million in 2018 from $33.6 million in 2017. The increase in tax equivalent net interest income was primarily due to a $182.0 million increase in average earning assets for the six months ended June 30, 2018 when compared to the same period in 2017. The tax-equivalent yield on the loan portfolio increased to 4.42% for the six months ended June 30, 2018, compared to 4.38% for the comparable period in 2017. The current period tax-equivalent yield on the loan portfolio would have been 4.48% had it been calculated using the 35% tax rate. Loans, net averaged $1.7 billion for the six months ended June 30, 2018 and $1.6 billion for the comparable period in 2017. For the six months ended June 30, the tax-equivalent yield on total investments decreased to 2.60% in 2018 from 2.87% in 2017. The current period tax-equivalent yield on total investments would have remained level at 2.87% had it been calculated using the 35% tax rate. Average investments totaled $280.9 million in 2018 and $272.9 million in 2017. Average interest-bearing liabilities increased $138.3 million for the six months ended June 30, 2018, compared to the corresponding period last year. The cost of funds, which represents our average rate paid on total interest-bearing liabilities, increased to 0.78% in the six months ended June 30, 2018 from 0.59% for the same period of 2017.

The provision for loan losses totaled $2.1 million for the six months ended June 30, 2018 and $2.4 million for the six months ended June 30, 2017. For the quarter ended June 30, the provision for loan losses was $1.1 million in 2018 and $1.2 million in 2017.

For the six months ended June 30, noninterest income totaled $7.2 million in 2018, a decrease from $10.2 million in 2017. The gain on sale of our credit card portfolio was $291 thousand in 2018 compared to a gain on the sale of our merchant services portfolio of $2.3 million in 2017. Otherwise, increases in service charges, fees and commissions, and income generated from wealth management services partially offset decreases in revenues from merchant services, income from fiduciary activities, income from mortgage banking activities and life insurance investment income. For the three months ended June 30, noninterest income totaled $3.7 million in 2018, a decrease from $6.4 million in the comparable 2017 period. The largest decrease was to merchant services income due to the sale of our merchant business in the second quarter of 2017.  Increases in service charges, fees and commissions, which include the gain from the sale of our credit card portfolio, were more than offset by decreases in the other components of noninterest income.

Noninterest expense increased $219 thousand or 0.8% to $26.6 million for the six months ended June 30, 2018, from $26.4 million for the six months ended June 30, 2017. Salaries and employee benefits increased $1.0 million or 7.9% due to merit increases and continued investment in our expansion markets in the Lehigh Valley and King of Prussia. Occupancy and equipment expenses also increased due to our market expansion when comparing the first half of 2018 and 2017 as those expenses increased $690 thousand or 14.2%. Offsetting the increase in salaries and occupancy expenses, merchant services related expenses decreased $1.8 million for the six months ended June 30, 2018 due to the sale of our merchant business in the second quarter of 2017. In addition, during the six months ended June 30, 2018, increases to other expenses, which include such items as FDIC insurance and assessments and donations, were only partially offset by decreases in professional fees and outside services and amortization expense recognized. For the second quarter of 2018, noninterest expense decreased to $13.5 million from $14.0 million for the same period in 2017, a decrease of $0.5 million or 3.6%. The sale of our merchant services portfolio resulted in a $1.0 million reduction to expenses. As with the year-to-date results, the buildout of our expansion plan led to increases in salaries and employee benefit expense as well as occupancy expenses when comparing the two periods.

BALANCE SHEET REVIEW

At June 30, 2018, total assets, loans and deposits were $2.2 billion, $1.8 billion and $1.7 billion, respectively. Loans, net increased $60.3 million, or 7.2% annualized from December 31, 2017 to June 30, 2018 and increased $156.0 million, or 9.8% from the year ago period. Total deposits grew $79.4 million or 4.8% from June 30, 2017 to June 30, 2018.  Non-interest bearing deposits increased $44.1 million or 12.4% while interest–bearing deposits increased $35.3 million or 2.8% during that period. During the first half of 2018, total deposits have remained relatively flat which resulted in higher short-term borrowings to fund the loan growth. Total investments were $284.1 million at June 30, 2018, including $275.1 million securities classified as available-for-sale and $8.8 million classified as held-to-maturity.

Stockholders' equity equaled $269.5 million or $36.43 per share at June 30, 2018, and $263.5 million or $35.63 per share at June 30, 2017. Tangible stockholders' equity improved to $27.50 per share at June 30, 2018, from $26.56 per share at June 30, 2017. Dividends declared for the six months ended June 30, 2018 amounted to $0.65 per share, a 4.8% increase from the year ago period, representing a dividend payout ratio of 40.6%.

ASSET QUALITY REVIEW

Nonperforming assets were $11.0 million or 0.63% of loans, net and foreclosed assets at June 30, 2018, compared to $11.6 million or 0.68% of loans, net and foreclosed assets at December 31, 2017 and $11.6 million or 0.73% of loans, net and foreclosed assets at June 30, 2017. The allowance for loan losses equaled $19.6 million or 1.12% of loans, net at June 30, 2018 compared to $19.0 million or 1.12% of loans, net, at December 31, 2017 and $17.8 million or 1.11% of loans, net at June 30, 2017. Loans charged-off, net of recoveries, for the six months ended June 30, 2018, equaled $1.5 million or 0.09% of average loans, compared to $559 thousand or 0.04% 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, Lehigh, Luzerne, Monroe, Montgomery, Northampton, Susquehanna, Wayne and Wyoming Counties in Pennsylvania and Broome County in New York through 27 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.

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]

 

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




2018


2018


2017


2017


2017


Key performance data:

















Per share data:

















Net income


$

0.81


$

0.79


$

0.36


$

0.72


$

0.77


Core net income (1)


$

0.78


$

0.79


$

0.71


$

0.72


$

0.59


Cash dividends declared


$

0.33


$

0.32


$

0.32


$

0.32


$

0.31


Book value


$

36.43


$

36.05


$

35.82


$

36.00


$

35.63


Tangible book value (1)


$

27.50


$

27.08


$

26.83


$

26.97


$

26.56


Market value:

















High


$

51.68


$

47.53


$

51.06


$

49.00


$

45.73


Low


$

43.72


$

41.06


$

44.04


$

39.25


$

39.25


Closing


$

47.02


$

45.65


$

46.58


$

47.80


$

43.73


Market capitalization


$

347,904


$

337,650


$

344,529


$

353,553


$

323,434


Common shares outstanding



7,399,054



7,396,505



7,396,505



7,396,505



7,396,163


Selected ratios:

















Return on average stockholders' equity



8.90

%


8.89

%


3.92

%


8.00

%


8.71

%

Core return on average stockholders' equity (1)



8.55

%


8.90

%


7.81

%


8.00

%


6.70

%

Return on average tangible stockholders' equity



11.81

%


11.84

%


5.22

%


10.70

%


11.73

%

Core return on average tangible stockholders' equity (1)



11.34

%


11.85

%


10.39

%


10.70

%


9.03

%

Return on average assets



1.08

%


1.08

%


0.49

%


1.03

%


1.11

%

Core return on average assets (1)



1.03

%


1.08

%


0.98

%


1.03

%


0.85

%

Stockholders' equity to total assets



12.06

%


12.17

%


12.21

%


12.73

%


12.76

%

Efficiency ratio (2)



61.98

%


60.69

%


57.81

%


57.81

%


63.95

%

Nonperforming assets to loans, net, and foreclosed assets



0.63

%


0.72

%


0.68

%


0.83

%


0.73

%

Net charge-offs to average loans, net



0.28

%


0.07

%


0.26

%


0.04

%


0.09

%

Allowance for loan losses to loans, net



1.12

%


1.14

%


1.12

%


1.15

%


1.11

%

Interest-bearing assets yield (FTE) (3)



4.20

%


4.14

%


4.13

%


4.19

%


4.14

%

Cost of funds



0.81

%


0.74

%


0.66

%


0.61

%


0.60

%

Net interest spread (FTE) (3)



3.39

%


3.40

%


3.47

%


3.58

%


3.54

%

Net interest margin (FTE) (3)



3.58

%


3.57

%


3.63

%


3.73

%


3.68

%



(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% in 2018 and 35% in 2017.


 

 

Peoples Financial Services Corp.

Consolidated Statements of Income

(In thousands, except per share data)












June 30


June 30


Six Months Ended


2018


2017


Interest income:








Interest and fees on loans:








Taxable


$

35,748


$

31,486


Tax-exempt



1,741



1,521


Interest and dividends on investment securities:








Taxable



1,792



1,416


Tax-exempt



1,362



1,546


Dividends



35



24


Interest on interest-bearing deposits in other banks



82



67


Total interest income



40,760



36,060


Interest expense:








Interest on deposits



3,793



2,963


Interest on short-term borrowings



1,508



422


Interest on long-term debt



621



697


Total interest expense



5,922



4,082


Net interest income



34,838



31,978


Provision for loan losses



2,100



2,400


Net interest income after provision for loan losses



32,738



29,578


Noninterest income:








Service charges, fees, commissions



4,264



3,254


Merchant services income



559



2,193


Commissions and fees on fiduciary activities



982



1,002


Wealth management income



743



667


Mortgage banking income



309



383


Life insurance investment income



378



384


Net gains on sale of merchant services business






2,278


Total noninterest income



7,235



10,161


Noninterest expense:








Salaries and employee benefits expense



14,345



13,301


Net occupancy and equipment expense



5,534



4,844


Merchant services expense



3



1,763


Amortization of intangible assets



450



526


Other expenses



6,245



5,924


Total noninterest expense



26,577



26,358


Income before income taxes



13,396



13,381


Provision for income tax expense



1,585



2,922


Net income


$

11,811


$

10,459


Other comprehensive income (loss):








Unrealized (losses) gains on investment securities available-for-sale


$

(3,215)


$

1,457


Income tax related to other comprehensive income



(677)



510


Other comprehensive (loss) income, net of income taxes



(2,538)



947


Comprehensive income


$

9,273


$

11,406


Per share data:








Net income


$

1.60


$

1.41


Cash dividends declared


$

0.65


$

0.62


Average common shares outstanding



7,396,519



7,395,158


 

 

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


2018


2018


2017


2017


2017


Interest income:

















Interest and fees on loans:

















Taxable


$

18,239


$

17,509


$

16,925


$

16,535


$

15,945


Tax-exempt



871



870



829



813



795


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

















Taxable



934



858



819



714



719


Tax-exempt



661



701



737



716



752


Dividends



19



16



15



13



12


Interest on interest-bearing deposits in other banks



42



40



26



40



38


Total interest income



20,766



19,994



19,351



18,831



18,261


Interest expense:

















Interest on deposits



1,959



1,834



1,833



1,654



1,529


Interest on short-term borrowings



841



667



301



177



248


Interest on long-term debt



315



306



307



344



349


Total interest expense



3,115



2,807



2,441



2,175



2,126


Net interest income



17,651



17,187



16,910



16,656



16,135


Provision for loan losses



1,050



1,050



1,200



1,200



1,200


Net interest income after provision for loan losses



16,601



16,137



15,710



15,456



14,935


Noninterest income:

















Service charges, fees, commissions



2,176



2,088



1,934



2,156



1,682


Merchant services income



309



250



185



165



1,178


Commissions and fees on fiduciary activities



485



497



515



540



494


Wealth management income



332



411



330



414



348


Mortgage banking income



162



147



208



193



204


Life insurance investment income



191



187



192



193



195


Net (loss) gain on investment securities



8



(8)











Net gains on sale of merchant services business















2,278


Total noninterest income



3,663



3,572



3,364



3,661



6,379


Noninterest expense:

















Salaries and employee benefits expense



7,390



6,955



6,819



6,550



7,026


Net occupancy and equipment expense



2,720



2,814



2,648



2,483



2,450


Merchant services expense



1



2



12



33



1,033


Amortization of intangible assets



220



230



249



259



258


Other expenses



3,165



3,080



2,727



3,155



3,235


Total noninterest expense



13,496



13,081



12,455



12,480



14,002


Income before income taxes



6,768



6,628



6,619



6,637



7,312


Income tax expense



811



774



3,971



1,287



1,653


Net income


$

5,957


$

5,854


$

2,648


$

5,350


$

5,659


Other comprehensive (loss) income :

















Unrealized (losses) gains on investment securities available-for-sale


$

(839)


$

(2,376)


$

(2,866)


$

(381)


$

1,184


Change in pension liability









318








Income tax related to other comprehensive (loss) income



(176)



(499)



(892)



(133)



414


Reclassification related to tax reform legislation









(1,101)








Other comprehensive (loss) income, net of income taxes



(663)



(1,877)



(2,757)



(248)



770


Comprehensive income (loss)


$

5,294


$

3,977


$

(109)


$

5,102


$

6,429


Per share data:

















Net income


$

0.81


$

0.79


$

0.36


$

0.72


$

0.77


Cash dividends declared


$

0.33


$

0.32


$

0.32


$

0.32


$

0.31


Average common shares outstanding



7,396,533



7,396,505



7,396,505



7,396,505



7,396,163


 

 

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


2018


2018


2017


2017


2017


Net interest income:

















Interest income

















Loans, net:

















Taxable


$

18,239


$

17,509


$

16,925


$

16,535


$

15,945


Tax-exempt



1,103



1,101



1,274



1,250



1,223


Total loans, net



19,342



18,610



18,199



17,785



17,168


Investments:

















Taxable



991



912



859



766



768


Tax-exempt



837



887



1,132



1,102



1,156


Total investments



1,828



1,799



1,991



1,868



1,924


Interest on interest-bearing balances in other banks



2



2



2



1



1


Federal funds sold

















Total interest income



21,172



20,411



20,192



19,654



19,093


Interest expense:

















Deposits



1,959



1,834



1,833



1,654



1,529


Short-term borrowings



841



667



301



177



248


Long-term debt



315



306



307



344



349


Total interest expense



3,115



2,807



2,441



2,175



2,126


Net interest income


$

18,057


$

17,604


$

17,751


$

17,479


$

16,967


Loans, net:

















Taxable



4.52

%


4.45

%


4.36

%


4.43

%


4.37

%

Tax-exempt



3.60

%


3.57

%


4.36

%


4.33

%


4.29

%

Total loans, net



4.46

%


4.38

%


4.36

%


4.42

%


4.36

%

Investments:

















Taxable



2.22

%


2.15

%


2.01

%


1.93

%


1.93

%

Tax-exempt



3.25

%


3.33

%


4.08

%


4.09

%


4.17

%

Total investments



2.60

%


2.61

%


2.82

%


2.81

%


2.85

%

Interest-bearing balances with banks



2.35

%


1.74

%


0.74

%


1.46

%


1.31

%

Federal funds sold

















Total interest-bearing assets



4.20

%


4.14

%


4.13

%


4.19

%


4.14

%

Interest expense:

















Deposits



0.59

%


0.56

%


0.54

%


0.50

%


0.48

%

Short-term borrowings



2.06

%


1.66

%


1.43

%


1.30

%


1.13

%

Long-term debt



2.57

%


2.51

%


2.44

%


2.43

%


2.44

%

Total interest-bearing liabilities



0.81

%


0.74

%


0.66

%


0.61

%


0.60

%

Net interest spread



3.39

%


3.40

%


3.47

%


3.58

%


3.54

%

Net interest margin



3.58

%


3.57

%


3.63

%


3.73

%


3.68

%

 

 

Peoples Financial Services Corp.

Consolidated Balance Sheets

(In thousands)





















June 30


Mar 31


Dec 31


Sept 30


June 30


At period end


2018


2018


2017


2017


2017


Assets:

















Cash and due from banks


$

35,249


$

26,699


$

36,336


$

31,839


$

41,026


Interest-bearing balances in other banks



130



76



1,152



1,067



375


Federal funds sold

















Investment securities:

















Available-for-sale



275,050



271,378



272,502



259,108



256,774


Equity investments carried at fair value



278



189



46



30





Held-to-maturity



8,780



9,028



9,274



9,564



9,868


Loans held for sale









106



460





Loans, net



1,753,389



1,725,781



1,693,065



1,632,515



1,597,362


Less: allowance for loan losses



19,573



19,718



18,960



18,831



17,802


Net loans



1,733,816



1,706,063



1,674,105



1,613,684



1,579,560


Premises and equipment, net



37,148



37,511



37,557



37,373



35,892


Accrued interest receivable



6,802



6,482



6,936



5,908



6,206


Goodwill



63,370



63,370



63,370



63,370



63,370


Other intangible assets, net



2,727



2,948



3,178



3,427



3,685


Other assets



72,276



66,644



64,469



66,406



68,002


Total assets


$

2,235,626


$

2,190,388


$

2,169,031


$

2,092,236


$

2,064,758


Liabilities:

















Deposits:

















Noninterest-bearing


$

400,518


$

394,729


$

380,729


$

372,146


$

356,435


Interest-bearing



1,318,343



1,325,289



1,338,289



1,315,709



1,282,998


Total deposits



1,718,861



1,720,018



1,719,018



1,687,855



1,639,433


Short-term borrowings



187,450



142,500



123,675



71,900



91,500


Long-term debt



48,911



49,265



49,734



50,199



57,160


Accrued interest payable



538



518



497



481



431


Other liabilities



10,322



11,463



11,131



15,505



12,725


Total liabilities



1,966,082



1,923,764



1,904,055



1,825,940



1,801,249


Stockholders' equity:

















Common stock



14,798



14,793



14,793



14,793



14,792


Capital surplus



135,143



135,080



135,043



134,988



134,937


Retained earnings



128,356



124,841



121,353



119,971



116,988


Accumulated other comprehensive loss



(8,753)



(8,090)



(6,213)



(3,456)



(3,208)


Total stockholders' equity



269,544



266,624



264,976



266,296



263,509


Total liabilities and stockholders' equity


$

2,235,626


$

2,190,388


$

2,169,031


$

2,092,236


$

2,064,758


 

 

Peoples Financial Services Corp.

Consolidated Balance Sheets

(In thousands)





















June 30


Mar 31


Dec 31


Sept 30


June 30


Average quarterly balances


2018


2018


2017


2017


2017


Assets:

















Loans, net:

















Taxable


$

1,616,729


$

1,596,493


$

1,540,356


$

1,482,215


$

1,464,401


Tax-exempt



122,876



125,142



116,055



114,455



114,287


Total loans, net



1,739,605



1,721,635



1,656,411



1,596,670



1,578,688


Investments:

















Taxable



178,957



171,634



169,973



157,104



159,841


Tax-exempt



103,279



107,917



109,979



106,865



111,061


Total investments



282,236



279,551



279,952



263,969



270,902


Interest-bearing balances with banks



342



467



1,069



272



307


Federal funds sold

















Total interest-bearing assets



2,022,183



2,001,653



1,937,432



1,860,911



1,849,897


Other assets



195,919



194,928



195,815



195,773



196,913


Total assets


$

2,218,102


$

2,196,581


$

2,133,247


$

2,056,684


$

2,046,810


Liabilities and stockholders' equity:

















Deposits:

















Interest-bearing


$

1,327,036


$

1,323,993


$

1,338,282


$

1,299,661


$

1,270,459


Noninterest-bearing



394,461



377,124



376,888



366,610



356,282


Total deposits



1,721,497



1,701,117



1,715,170



1,666,271



1,626,741


Short-term borrowings



163,596



162,965



83,791



54,084



87,739


Long-term debt



49,136



49,486



49,949



56,270



57,372


Other liabilities



15,376



16,054



16,411



14,820



14,305


Total liabilities



1,949,605



1,929,622



1,865,321



1,791,445



1,786,157


Stockholders' equity



268,497



266,959



267,926



265,239



260,653


Total liabilities and stockholders' equity


$

2,218,102


$

2,196,581


$

2,133,247


$

2,056,684


$

2,046,810


 

 

Peoples Financial Services Corp.

Asset Quality Data

(In thousands)





















June 30


Mar 31


Dec 31


Sept 30


June 30




2018


2018


2017


2017


2017


At quarter end

















Nonperforming assets:

















Nonaccrual/restructured loans


$

10,424


$

11,283


$

10,559


$

11,714


$

10,429


Accruing loans past due 90 days or more



84



435



734



1,509



835


Foreclosed assets



500



685



284



358



384


Total nonperforming assets


$

11,008


$

12,403


$

11,577


$

13,581


$

11,648



















Three months ended

















Allowance for loan losses:

















Beginning balance


$

19,718


$

18,960


$

18,831


$

17,802


$

16,969


Charge-offs



1,398



426



1,139



268



431


Recoveries



203



134



68



97



64


Provision for loan losses



1,050



1,050



1,200



1,200



1,200


Ending balance


$

19,573


$

19,718


$

18,960


$

18,831


$

17,802


 

 

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


2018


2018


2017


2017


2017


Core net income per share:

















Net income GAAP


$

5,957


$

5,854


$

2,648


$

5,350


$

5,659


Adjustments:

















Less: Gain on sale of business line



291












2,278


Add: (gains) losses on investment securities



(8)



8











Less: (gains) losses on investment securities tax adjustment



(2)



2











Add: Expenses related to sale of merchant services business















271


Add: Gain on sale of business line tax adjustment



61












702


Add: Tax expense from the Tax Cuts and Jobs Act of 2017









2,623








Net income Core


$

5,721


$

5,860


$

5,271


$

5,350


$

4,354


Average common shares outstanding



7,396,533



7,396,505



7,396,505



7,396,505



7,396,163


Core net income per share


$

0.78


$

0.79


$

0.71


$

0.72


$

0.59


Tangible book value:

















Total stockholders' equity


$

269,544


$

266,624


$

264,976


$

266,296


$

263,509


Less: Goodwill



63,370



63,370



63,370



63,370



63,370


Less: Other intangible assets, net



2,727



2,948



3,178



3,427



3,685


Total tangible stockholders' equity


$

203,447


$

200,306


$

198,428


$

199,499


$

196,454


Common shares outstanding



7,399,054



7,396,505



7,396,505



7,396,505



7,396,163


Tangible book value per share


$

27.50


$

27.08


$

26.83


$

26.97


$

26.56


Core return on average stockholders' equity:

















Net income GAAP


$

5,957


$

5,854


$

2,648


$

5,350


$

5,659


Adjustments:

















Less: Gain on sale of business line



291












2,278


Add: (gains) losses on investment securities



(8)



8











Less: (gains) losses on investment securities tax adjustment



(2)



2











Add: Expenses related to sale of merchant services business















271


Add: Gain on sale of business line tax adjustment



61












702


Add: Tax expense from the Tax Cuts and Jobs Act of 2017









2,623








Net income Core


$

5,721


$

5,860


$

5,271


$

5,350


$

4,354


Average stockholders' equity


$

268,497


$

266,959


$

267,926


$

265,239


$

260,653


Core return on average stockholders' equity



8.55

%


8.90

%


7.81

%


8.00

%


6.70

%

Return on average tangible equity:

















Net income GAAP


$

5,957


$

5,854


$

2,648


$

5,350


$

5,659


Average stockholders' equity


$

268,497


$

266,959


$

267,926


$

265,239


$

260,653


Less: average intangibles



66,208



66,433



66,673



66,926



67,185


Average tangible stockholders' equity


$

202,289


$

200,526


$

201,253


$

198,313


$

193,468


Return on average tangible stockholders' equity



11.81

%


11.84

%


5.22

%


10.70

%


11.73

%

Core return on average tangible stockholders' equity:

















Net income GAAP


$

5,957


$

5,854


$

2,648


$

5,350


$

5,659


Adjustments:

















Less: Gain on sale of business line



291












2,278


Add: (gains) losses on investment securities



(8)



8











Less: (gains) losses on investment securities tax adjustment



(2)



2











Add: Expenses related to sale of merchant services business















271


Add: Gain on sale of business line tax adjustment



61












702


Add: Tax expense from the Tax Cuts and Jobs Act of 2017









2,623








Net income Core


$

5,721


$

5,860


$

5,271


$

5,350


$

4,354


Average stockholders' equity


$

268,497


$

266,959


$

267,926


$

265,239


$

260,653


Less: average intangibles



66,208



66,433



66,673



66,926



67,185


Average tangible stockholders' equity


$

202,289


$

200,526


$

201,253


$

198,313


$

193,468


Core return on average tangible stockholders' equity



11.34

%


11.85

%


10.39

%


10.70

%


9.03

%

Core return on average assets:

















Net income GAAP


$

5,957


$

5,854


$

2,648


$

5,350


$

5,659


Adjustments:

















Less: Gain on sale of business line



291












2,278


Add: (gains) losses on investment securities



(8)



8











Less: (gains) losses on investment securities tax adjustment



(2)



2











Add: Expenses related to sale of merchant services business















271


Add: Gain on sale of business line tax adjustment



61












702


Add: Tax expense from the Tax Cuts and Jobs Act of 2017









2,623








Net income Core


$

5,721


$

5,860


$

5,271


$

5,350


$

4,354


Average assets


$

2,218,102


$

2,196,581


$

2,133,247


$

2,056,684


$

2,046,810


Core return on average assets



1.03

%


1.08

%


0.98

%


1.03

%


0.85

%


 

 

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


2018


2017


Core net income per share:








Net income GAAP


$

11,811


$

10,459


Adjustments:








Less: Gain on sale of business line



291



2,278


Add: Expenses related to sale of merchant services business






271


Add: Gain on sale of business line tax adjustment



61



702


Net income Core


$

11,581


$

9,154


Average common shares outstanding



7,396,519



7,395,158


Core net income per share


$

1.57


$

1.24


 

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SOURCE Peoples Financial Services Corp.

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