PEOPLES FINANCIAL SERVICES CORP. Reports Third Quarter 2016 Earnings

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Oct 21, 2016, 03:04 ET

SCRANTON, Pa., Oct. 21, 2016 /PRNewswire/ -- Peoples Financial Services Corp. ("Peoples") (NASDAQ: PFIS), the bank holding company for Peoples Security Bank and Trust Company, today reported unaudited financial results at and for the three and nine months ended September 30, 2016. Peoples reported net income of $5.1 million, or $0.69 per share for the third quarter of 2016, compared to $4.4 million, or $0.58 per share, for the comparable period of 2015.

Core net income, excluding net gains on sale of investment securities available-for-sale, net of tax for the three months ended September 30, 2016 was $5.1 million, a $805 thousand increase from $4.3 million for the same period in 2015. Core net income per share for the three months ended September 30, 2016 was $0.69, compared to $0.57 for the same period in 2015.

Net income for the nine months ended September 30, 2016, totaled $14.9 million or $2.01 per share compared to $13.9 million or $1.84 per share for the same period last year.

Core net income for the nine months ended September 30, 2016 was $14.5 million, an increase of 9.1% from $13.2 million for the same period in 2015. Core net income per share for the nine months ended September 30, 2016 was $1.95, an increase from $1.76 for the same period in 2015. The results for the nine months ended September 30, 2016 include net gains on sale of investment securities of $623 thousand compared to $979 thousand in the comparable period of 2015.

In addition to evaluating its results of operations in accordance with accounting principles generally accepted in the United States of America ("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 for 2016 and 2015 included herein contain items which Peoples considers non-core, namely net gains on sales of investment securities available-for-sale. Peoples believes the reported non-GAAP financial measures provide information useful to investors in understanding its operating performance and trends. Where non-GAAP disclosures are used in this press release, a reconciliation to the comparable GAAP measure is provided in the accompanying tables. The non-GAAP financial measures Peoples uses may differ from the non-GAAP financial measures of other financial institutions.

THIRD QUARTER NOTABLES

Loans, net grew $181.5 million, or 18.1% on an annualized basis for the nine months ended September 30, 2016.
Deposits grew $110.0 million, or 10.1% on an annualized basis for the nine months ended September 30, 2016.
Book value per share improved $1.11 to $34.68 at September 30, 2016 from $33.57 at December 31, 2016, and $1.15 from $33.53 at September 30, 2015.
Tangible book value per share improved $1.21 to $25.50 at September 30, 2016 from $24.29 at December 31, 2015 and $1.01 from $24.49 at September 30, 2015.
Tax-equivalent net interest margin increased to 3.76% in the third quarter of 2016 when compared to 3.74% for the third quarter of 2015. Tax-equivalent net interest margin decreased 5 basis points compared to 3.81% for the quarter ended June 30, 2016.
Tax-equivalent net interest income increased $394 thousand to $16.6 million for the third quarter of 2016 compared to $16.2 million for the second quarter of 2016, and increased $1.7 million when compared to $14.9 million for the third quarter of 2015.
Regulatory approval was granted to establish branch offices in Bethlehem, Pennsylvania and King of Prussia, Pennsylvania.

INCOME STATEMENT REVIEW

The tax-equivalent net interest margins for the three and nine months ended September 30, were 3.76% and 3.79% in 2016, compared to 3.74% and 3.82% in 2015, respectively. Loan accretion included in loan interest income for the three and nine months ended September 30, 2016 was $189 thousand and $561 thousand, resulting in an increase in the tax-equivalent net interest margin of 4 basis points for each respective period. Comparatively, loan accretion included in loan interest income for the three and nine months ended September 30, 2015 was $128 thousand and $475 thousand, also resulting in an increase in the tax-equivalent net interest margin of 4 basis points for each respective period.

Tax-equivalent net interest income for the nine months ended September 30, increased $3.9 million to $48.6 million in 2016 from $44.7 million in 2015. The increase in tax equivalent net interest income was primarily due to a $148.1 million increase in earning assets for the nine months ended September 30, 2016 when compared to the same period in 2015. The tax-equivalent yield on the loan portfolio decreased to 4.45% for the nine months ended September 30, 2016 compared to 4.61% for the comparable period in 2015. Loans, net averaged $1.4 billion in 2016 and $1.2 billion in 2015. For the nine months ended September 30, the tax-equivalent yield on total investments increased to 2.89% in 2016 from 2.70% in 2015. Average investments totaled $272.5 million in 2016 and $314.9 million in 2015. Average interest-bearing liabilities increased $136.0 million for the nine months ended September 30, 2016, compared to the corresponding period last year. The cost of funds increased to 0.55% in the nine months ended September 30, 2016 from 0.51% for the same period of 2015. Tax-equivalent net interest income for the three months ended September 30, increased to $16.6 million in 2016 from $14.9 million in 2015.

The provision for loan losses totaled $3.6 million for the nine months ended September 30, 2016, compared to $2.4 million for the same period last year. For the quarter ended September 30, the provision for loan losses was $1.2 million in 2016 and $900 thousand in 2015. The increase in the provision for loan losses in 2016 was primarily the result of increased loan growth.

For the nine months ended September 30, 2016 and 2015, noninterest income totaled $12.0 million. Net gains on sale of investment securities were $623 thousand in 2016 compared to $979 thousand in 2015. Increases in revenues from merchant services, income from fiduciary activities, wealth management services and life insurance investment income offset decreases in service charges, fees and commissions and income from mortgage banking activities. For the three months ended September 30, 2016 and 2015, noninterest income totaled $4.0 million. No gain or loss from the sale of investment securities available-for-sale was recognized during the three months ended September 30, 2016; a gain from the sale of investment securities of $147 thousand was recognized during the same period last year.

Noninterest expense increased $1.4 million or 4.2% to $35.7 million for the nine months ended September 30, 2016, from $34.3 million for the nine months ended September 30, 2015. For the third quarter, noninterest expense amounted to $12.0 million in 2016 and $11.7 million in 2015. The buildout of our expansion plan, wealth management platform as well as severance costs led to increases in salaries and employee benefit expense.

BALANCE SHEET REVIEW

Total assets, loans and deposits totaled $2.0 billion, $1.5 billion and $1.6 billion, respectively, at September 30, 2016. Loans, net grew $181.5 million or 18.1% on an annualized basis in the nine months ended September 30, 2016. Loans, net increased $251.8 million or 19.8% from September 30, 2015 to September 30, 2016. Deposits grew $110.0 million or 10.1% on an annualized basis in the nine months ended September 30, 2016. Total deposits increased $121.2 million or 8.4% at September 30, 2016 when compared to September 30, 2015. Noninterest-bearing deposits increased $21.8 million or 9.1% on an annualized basis while interest-bearing deposits increased $88.2 million or 10.4% on an annualized basis for the nine months ended September 30, 2016. Total investments were $260.8 million at September 30, 2016, including $249.9 million securities classified as available-for-sale and $10.9 million classified as held-to-maturity.

Stockholders' equity equaled $256.4 million or $34.68 per share at September 30, 2016, and $248.8 million or $33.57 per share at December 31, 2015. Tangible stockholders' equity improved to $25.50 per share at September 30, 2016, from $24.29 per share at December 31, 2015. Dividends declared for the nine months ended September 30, 2016 amounted to $0.93 per share representing a dividend payout ratio of 46.3%.

ASSET QUALITY REVIEW

Nonperforming assets were $14.2 million or 0.93% of loans, net and foreclosed assets at September 30, 2016, compared to $12.5 million or 0.93% at December 31, 2015. The allowance for loan losses equaled $15.7 million or 1.03% of loans, net at September 30, 2016 compared to $13.0 million or 0.97% of loans, net, at December 31, 2015. Loans charged-off, net of recoveries, for the nine months ended September 30, 2016, equaled $863 thousand or 0.08% of average loans, compared to $695 thousand or 0.08% of average loans for 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, Susquehanna, Wayne and Wyoming Counties in Pennsylvania and Broome County in New York through 24 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 per share data)


	Sept 30			June 30			Mar 31			Dec 31			Sept 30
	2016			2016			2016			2015			2015
Key performance data:
Per share data:
Net income	$	0.69		$	0.66		$	0.66		$	0.52		$	0.58
Core net income (1)	$	0.69		$	0.62		$	0.64		$	0.50		$	0.57
Cash dividends declared	$	0.31		$	0.31		$	0.31		$	0.31		$	0.31
Book value	$	34.68		$	34.40		$	33.98		$	33.57		$	33.53
Tangible book value (1)	$	25.50		$	25.18		$	24.73		$	24.29		$	24.49
Market value:
High	$	40.76		$	40.55		$	38.77		$	41.96		$	41.60
Low	$	37.93		$	35.56		$	33.22		$	34.43		$	34.56
Closing	$	40.76		$	39.14		$	37.20		$	38.08		$	34.93
Market capitalization	$	301,385		$	289,407		$	275,254		$	282,196		$	262,642
Common shares outstanding		7,394,143			7,394,143			7,399,298			7,410,606			7,519,109
Selected ratios:
Return on average stockholders' equity		7.95	%		7.72	%		7.85	%		6.12	%		7.00	%
Core return on average stockholders' equity (1)		7.95	%		7.33	%		7.62	%		5.90	%		6.85	%
Return on average tangible stockholders' equity (1)		10.82	%		10.59	%		10.87	%		8.43	%		9.62	%
Core return on average tangible stockholders' equity (1)		10.82	%		10.05	%		10.52	%		8.14	%		9.41	%
Return on average assets		1.05	%		1.03	%		1.06	%		0.85	%		1.00	%
Core return on average assets (1)		1.05	%		0.98	%		1.03	%		0.82	%		0.98	%
Stockholders' equity to total assets		13.01	%		13.30	%		13.50	%		13.68	%		14.22	%
Efficiency ratio (2)		56.89	%		59.33	%		58.05	%		64.16	%		60.82	%
Nonperforming assets to loans, net, and foreclosed assets		0.93	%		0.90	%		0.88	%		0.93	%		0.92	%
Net charge-offs to average loans, net		0.08	%		0.16	%		0.01	%		0.11	%		0.09	%
Allowance for loan losses to loans, net		1.03	%		1.01	%		1.00	%		0.97	%		0.95	%
Earning assets yield (FTE) (3)		4.17	%		4.23	%		4.22	%		4.17	%		4.11	%
Cost of funds		0.54	%		0.55	%		0.54	%		0.51	%		0.50	%
Net interest spread (FTE) (3)		3.63	%		3.68	%		3.68	%		3.66	%		3.61	%
Net interest margin (FTE) (3)		3.76	%		3.81	%		3.81	%		3.79	%		3.74	%

(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 prevailing federal statutory tax rate of 35%.

Peoples Financial Services Corp.
Consolidated Statements of Income
(In thousands, except per share data)


	Sept 30		Sept 30
Nine Months Ended	2016		2015
Interest income:
Interest and fees on loans:
Taxable	$	44,400	$	40,072
Tax-exempt		2,301		1,714
Interest and dividends on investment securities:
Taxable		1,879		2,508
Tax-exempt		2,611		2,498
Dividends		31		24
Interest on interest-bearing deposits in other banks		47		39
Interest on federal funds sold				9
Total interest income		51,269		46,864
Interest expense:
Interest on deposits		3,961		3,689
Interest on short-term borrowings		282		23
Interest on long-term debt		1,067		756
Total interest expense		5,310		4,468
Net interest income		45,959		42,396
Provision for loan losses		3,600		2,400
Net interest income after provision for loan losses		42,359		39,996
Noninterest income:
Service charges, fees, commissions		4,513		4,685
Merchant services income		3,209		2,936
Commissions and fees on fiduciary activities		1,495		1,487
Wealth management income		979		627
Mortgage banking income		616		667
Life insurance investment income		594		569
Net gains on sale of investment securities available-for-sale		623		979
Total noninterest income		12,029		11,950
Noninterest expense:
Salaries and employee benefits expense		16,702		16,243
Net occupancy and equipment expense		6,998		6,863
Merchant services expense		2,270		2,006
Amortization of intangible assets		899		896
Other expenses		8,879		8,303
Total noninterest expense		35,748		34,311
Income before income taxes		18,640		17,635
Provision for income tax expense		3,785		3,751
Net income	$	14,855	$	13,884
Other comprehensive income:
Unrealized gain (loss) on investment securities available-for-sale	$	1,003	$	134
Reclassification adjustment for gains included in net income		(623)		(979)
Income tax expense (benefit) related to other comprehensive income		133		(296)
Other comprehensive income (loss), net of income taxes		247		(549)
Comprehensive income	$	15,102	$	13,335
Per share data:
Net income	$	2.01	$	1.84
Cash dividends declared	$	0.93	$	0.93
Average common shares outstanding		7,397,581		7,543,751

Peoples Financial Services Corp.
Consolidated Statements of Income
(In thousands, except per share data)


	Sept 30		June 30		Mar 31		Dec 31		Sept 30
Three months ended	2016		2016		2016		2015		2015
Interest income:
Interest and fees on loans:
Taxable	$	15,294	$	14,760	$	14,346	$	13,932	$	13,341
Tax-exempt		770		780		751		637		585
Interest and dividends on investment securities available-for-sale:
Taxable		575		617		687		699		792
Tax-exempt		861		875		875		887		858
Dividends		10		11		10		11		9
Interest on interest-bearing deposits in other banks		15		15		17		10		13
Interest on federal funds sold								1
Total interest income		17,525		17,058		16,686		16,177		15,598
Interest expense:
Interest on deposits		1,356		1,322		1,283		1,264		1,229
Interest on short-term borrowings		116		89		77		30		11
Interest on long-term debt		353		354		360		275		245
Total interest expense		1,825		1,765		1,720		1,569		1,485
Net interest income		15,700		15,293		14,966		14,608		14,113
Provision for loan losses		1,200		1,200		1,200		1,300		900
Net interest income after provision for loan losses		14,500		14,093		13,766		13,308		13,213
Noninterest income:
Service charges, fees, commissions		1,542		1,527		1,444		1,560		1,531
Merchant services income		1,257		1,038		914		919		1,183
Commissions and fees on fiduciary activities		539		474		482		459		541
Wealth management income		271		296		412		218		224
Mortgage banking income		217		195		204		205		197
Life insurance investment income		199		202		193		198		192
Net gains on sale of investment securities available-for-sale				381		242		210		147
Total noninterest income		4,025		4,113		3,891		3,769		4,015
Noninterest expense:
Salaries and employee benefits expense		5,466		5,904		5,332		5,290		5,397
Net occupancy and equipment expense		2,316		2,245		2,437		2,241		2,246
Merchant services expense		890		748		632		637		823
Amortization of intangible assets		297		297		305		286		296
Other expenses		3,048		2,919		2,912		4,014		2,944
Total noninterest expense		12,017		12,113		11,618		12,468		11,706
Income before income taxes		6,508		6,093		6,039		4,609		5,522
Income tax expense		1,390		1,238		1,157		770		1,113
Net income	$	5,118	$	4,855	$	4,882	$	3,839	$	4,409
Other comprehensive (loss) income :
Unrealized (losses) gains on investment securities available-for-sale	$	(1,120)	$	1,128	$	995	$	(644)	$	826
Reclassification adjustment for gains included in net income				(381)		(242)		(210)		(147)
Change in pension liability								(296)
Income tax (benefit) expense related to other comprehensive (loss) income		(392)		262		264		(404)		237
Other comprehensive (loss) income, net of income taxes		(728)		485		489		(746)		442
Comprehensive income	$	4,390	$	5,340	$	5,371	$	3,093	$	4,851
Per share data:
Net income	$	0.69	$	0.66	$	0.66	$	0.52	$	0.58
Cash dividends declared	$	0.31	$	0.31	$	0.31	$	0.31	$	0.31
Average common shares outstanding		7,394,143		7,395,127		7,403,510		7,435,440		7,536,824

Peoples Financial Services Corp.
Details of Net Interest and Net Interest Margin
(In thousands, fully taxable equivalent basis)


	Sept 30			June 30			Mar 31			Dec 31			Sept 30
Three months ended	2016			2016			2016			2015			2015
Net interest income:
Interest income
Loans, net:
Taxable	$	15,294		$	14,760		$	14,346		$	13,932		$	13,341
Tax-exempt		1,184			1,200			1,155			979			901
Total loans, net		16,478			15,960			15,501			14,911			14,242
Investments:
Taxable		585			628			697			710			801
Tax-exempt		1,325			1,346			1,346			1,366			1,320
Total investments		1,910			1,974			2,043			2,076			2,121
Interest on interest-bearing balances in other banks		15			15			17			10			13
Federal funds sold											1
Total interest income		18,403			17,949			17,561			16,998			16,376
Interest expense:
Deposits		1,356			1,322			1,283			1,264			1,229
Short-term borrowings		116			89			77			30			11
Long-term debt		353			354			360			275			245
Total interest expense		1,825			1,765			1,720			1,569			1,485
Net interest income	$	16,578		$	16,184		$	15,841		$	15,429		$	14,891
Loans, net:
Taxable		4.39	%		4.47	%		4.52	%		4.51	%		4.50	%
Tax-exempt		4.36	%		4.40	%		4.45	%		4.67	%		4.82	%
Total loans, net		4.39	%		4.47	%		4.52	%		4.52	%		4.52	%
Investments:
Taxable		1.74	%		1.79	%		1.76	%		1.60	%		1.54	%
Tax-exempt		4.28	%		4.28	%		4.24	%		4.34	%		4.46	%
Total investments		2.94	%		2.95	%		2.86	%		2.74	%		2.60	%
Interest-bearing balances with banks		1.93	%		2.16	%		1.46	%		0.83	%		0.85	%
Federal funds sold											0.54	%
Total earning assets		4.17	%		4.23	%		4.22	%		4.17	%		4.11	%
Interest expense:
Deposits		0.45	%		0.45	%		0.45	%		0.44	%		0.43	%
Short-term borrowings		0.58	%		0.57	%		0.58	%		0.42	%		0.39	%
Long-term debt		2.38	%		2.39	%		2.41	%		2.83	%		3.10	%
Total interest-bearing liabilities		0.54	%		0.55	%		0.54	%		0.51	%		0.50	%
Net interest spread		3.63	%		3.68	%		3.68	%		3.66	%		3.61	%
Net interest margin		3.76	%		3.81	%		3.81	%		3.79	%		3.74	%

Peoples Financial Services Corp.
Consolidated Balance Sheets
(In thousands, except per share data)


	Sept 30		June 30		Mar 31		Dec 31		Sept 30
At period end	2016		2016		2016		2015		2015
Assets:
Cash and due from banks	$	31,620	$	29,805	$	23,699	$	28,218	$	36,015
Interest-bearing balances in other banks		294		272		299		4,699		4,970
Federal funds sold
Investment securities:
Available-for-sale		249,913		251,382		264,175		284,935		299,832
Held-to-maturity		10,864		11,262		11,681		12,109		13,107
Total investments		260,777		262,644		275,856		297,044		312,939
Loans held for sale		360				78				3,439
Loans, net		1,522,391		1,464,808		1,409,691		1,340,865		1,270,545
Less: allowance for loan losses		15,712		14,799		14,158		12,975		12,043
Net loans		1,506,679		1,450,009		1,395,533		1,327,890		1,258,502
Premises and equipment, net		33,049		29,510		29,386		28,157		27,002
Accrued interest receivable		5,309		5,952		5,455		5,796		5,327
Goodwill		63,370		63,370		63,370		63,370		63,370
Other intangible assets, net		4,498		4,795		5,091		5,397		4,606
Other assets		65,283		65,253		63,603		58,487		56,600
Total assets	$	1,971,239	$	1,911,610	$	1,862,370	$	1,819,058	$	1,772,770
Liabilities:
Deposits:
Noninterest-bearing	$	342,782	$	323,785	$	323,456	$	320,978	$	303,741
Interest-bearing		1,223,028		1,173,078		1,152,003		1,134,832		1,140,909
Total deposits		1,565,810		1,496,863		1,475,459		1,455,810		1,444,650
Short-term borrowings		75,300		86,300		60,350		38,325		30,250
Long-term debt		58,685		59,232		59,773		60,354		31,000
Accrued interest payable		434		453		506		560		496
Other liabilities		14,570		14,437		14,837		15,241		14,286
Total liabilities		1,714,799		1,657,285		1,610,925		1,570,290		1,520,682
Stockholders' equity:
Common stock		14,788		14,788		14,799		14,821		15,038
Capital surplus		134,853		134,835		134,994		135,371		139,263
Retained earnings		108,677		105,852		103,288		100,701		99,165
Accumulated other comprehensive loss		(1,878)		(1,150)		(1,636)		(2,125)		(1,378)
Total stockholders' equity		256,440		254,325		251,445		248,768		252,088
Total liabilities and stockholders' equity	$	1,971,239	$	1,911,610	$	1,862,370	$	1,819,058	$	1,772,770

Peoples Financial Services Corp.
Consolidated Balance Sheets
(In thousands except per share data)


	Sept 30		June 30		Mar 31		Dec 31		Sept 30
Average quarterly balances	2016		2016		2016		2015		2015
Assets:
Loans, net:
Taxable	$	1,385,800	$	1,327,003	$	1,276,491	$	1,226,295	$	1,176,533
Tax-exempt		108,105		109,770		104,326		83,176		74,203
Total loans, net		1,493,905		1,436,773		1,380,817		1,309,471		1,250,736
Investments:
Taxable		136,645		144,223		159,584		175,620		206,153
Tax-exempt		123,177		126,620		127,623		124,694		117,497
Total investments		259,822		270,843		287,207		300,314		323,650
Interest-bearing balances with banks		412		372		4,686		4,791		6,081
Federal funds sold								735		653
Total earning assets		1,754,139		1,707,988		1,672,710		1,615,311		1,581,120
Other assets		188,256		184,714		178,933		171,839		171,390
Total assets	$	1,942,395	$	1,892,702	$	1,851,643	$	1,787,150	$	1,752,510
Liabilities and stockholders' equity:
Deposits:
Interest-bearing	$	1,195,645	$	1,174,686	$	1,159,159	$	1,147,296	$	1,140,012
Noninterest-bearing		337,337		327,937		313,908		309,665		305,753
Total deposits		1,532,982		1,502,623		1,473,067		1,456,961		1,445,765
Short-term borrowings		78,974		62,659		53,436		28,016		11,130
Long-term debt		58,960		59,504		60,064		38,494		31,330
Other liabilities		15,349		15,131		15,755		14,722		14,368
Total liabilities		1,686,265		1,639,917		1,602,322		1,538,193		1,502,593
Stockholders' equity		256,130		252,785		249,321		248,957		249,917
Total liabilities and stockholders' equity	$	1,942,395	$	1,892,702	$	1,851,643	$	1,787,150	$	1,752,510

Peoples Financial Services Corp.
Asset Quality Data
(In thousands)

	Sept 30		June 30		Mar 31		Dec 31		Sept 30
	2016		2016		2016		2015		2015
At quarter end
Nonperforming assets:
Nonaccrual/restructured loans	$	12,409	$	9,778	$	10,020	$	10,744	$	9,646
Accruing loans past due 90 days or more		1,109		2,071		977		763		1,631
Foreclosed assets		703		1,353		1,409		957		458
Total nonperforming assets	$	14,221	$	13,202	$	12,406	$	12,464	$	11,735

Three months ended
Allowance for loan losses:
Beginning balance	$	14,799	$	14,158	$	12,975	$	12,043	$	11,428
Charge-offs		355		632		123		573		315
Recoveries		68		73		106		205		30
Provision for loan losses		1,200		1,200		1,200		1,300		900
Ending balance	$	15,712	$	14,799	$	14,158	$	12,975	$	12,043

Peoples Financial Services Corp.
Reconciliation of Non-GAAP Financial Measures
(In thousands, except per share data)


	Sept 30			June 30			Mar 31			Dec 31			Sept 30
Three months ended	2016			2016			2016			2015			2015
Core net income per share:
Net income GAAP	$	5,118		$	4,855		$	4,882		$	3,839		$	4,409
Adjustments:
Less: Gains on sale of investment securities					381			242			210			147
Add: Gains on sale of investment securities tax adjustment					133			85			74			51
Net income Core	$	5,118		$	4,607		$	4,725		$	3,703		$	4,313
Average common shares outstanding		7,394,143			7,395,127			7,403,510			7,435,440			7,536,824
Core net income per share	$	0.69		$	0.62		$	0.64		$	0.50		$	0.57
Tangible book value:
Total stockholders' equity	$	256,440		$	254,325		$	251,445		$	248,768		$	252,088
Less: Goodwill		63,370			63,370			63,370			63,370			63,370
Less: Other intangible assets, net		4,498			4,795			5,091			5,397			4,606
Total tangible stockholders' equity	$	188,572		$	186,160		$	182,984		$	180,001		$	184,112
Common shares outstanding		7,394,143			7,394,143			7,399,298			7,410,606			7,519,109
Tangible book value per share	$	25.50		$	25.18		$	24.73		$	24.29		$	24.49
Core return on average stockholders' equity:
Net income GAAP	$	5,118		$	4,855		$	4,882		$	3,839		$	4,409
Adjustments:
Less: Gains on sale of investment securities					381			242			210			147
Add: Gains on sale of investment securities tax adjustment					133			85			74			51
Net income Core	$	5,118		$	4,607		$	4,725		$	3,703		$	4,313
Average stockholders' equity	$	256,130		$	252,785		$	249,321		$	248,957		$	249,917
Core return on average stockholders' equity		7.95	%		7.33	%		7.62	%		5.90	%		6.85	%
Return on average tangible equity:
Net income GAAP	$	5,118		$	4,855		$	4,882		$	3,839		$	4,409
Average stockholders' equity	$	256,130		$	252,785		$	249,321		$	248,957		$	249,917
Less: average intangibles		68,017			68,313			68,614			68,372			68,124
Average tangible stockholders' equity	$	188,113		$	184,472		$	180,707		$	180,585		$	181,793
Return on average tangible stockholders' equity		10.82	%		10.59	%		10.87	%		8.43	%		9.62	%
Core return on average tangible stockholders' equity:
Net income GAAP	$	5,118		$	4,855		$	4,882		$	3,839		$	4,409
Adjustments:
Less: Gains on sale of investment securities					381			242			210			147
Add: Gains on sale of investment securities tax adjustment					133			85			74			51
Net income Core	$	5,118		$	4,607		$	4,725		$	3,703		$	4,313
Average stockholders' equity	$	256,130		$	252,785		$	249,321		$	248,957		$	249,917
Less: average intangibles		68,017			68,313			68,614			68,372			68,124
Average tangible stockholders' equity	$	188,113		$	184,472		$	180,707		$	180,585		$	181,793
Core return on average tangible stockholders' equity		10.82	%		10.05	%		10.52	%		8.14	%		9.41	%
Core return on average assets:
Net income GAAP	$	5,118		$	4,855		$	4,882		$	3,839		$	4,409
Adjustments:
Less: Gains on sale of investment securities					381			242			210			147
Add: Gains on sale of investment securities tax adjustment					133			85			74			51
Net income Core	$	5,118		$	4,607		$	4,725		$	3,703		$	4,313
Average assets	$	1,942,395		$	1,892,702		$	1,851,643		$	1,787,150		$	1,752,510
Core return on average assets		1.05	%		0.98	%		1.03	%		0.82	%		0.98	%

Peoples Financial Services Corp.
Reconciliation of Non-GAAP Financial Measures
(In thousands, except per share data)


	Sept 30		Sept 30
Nine Months Ended	2016		2015
Core net income per share:
Net income GAAP	$	14,855	$	13,884
Adjustments:
Less: Gains on sale of investment securities		623		979
Add: Gains on sale of investment securities tax adjustment		218		343
Net income Core	$	14,450	$	13,248
Average common shares outstanding		7,397,581		7,543,751
Core net income per share	$	1.95	$	1.76