PEOPLES FINANCIAL SERVICES CORP. Reports Third Quarter 2018 Earnings
SCRANTON, Pa., Oct. 23, 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 nine months ended September 30, 2018. Peoples reported net income of $6.7 million, or $0.91 per share for the third quarter of 2018, a 25.5% increase when compared to $5.4 million, or $0.72 per share for the comparable period of 2017. The increase in earnings for the three months ended September 30, 2018 is the product of higher net interest income of $1.3 million due to growth in our average earning assets of $178.4 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.
Net income for the nine months ended September 30, 2018, totaled $18.5 million or $2.50 per share, a 17.2% increase compared to $15.8 million or $2.14 per share for the same period last year. The increase in earnings for the nine months ended September 30, 2018 is the result of higher net interest income of $4.2 million due to our earning asset growth coupled with the $1.7 million reduction in income taxes due to the lower corporate tax rate. These increases were partially offset by lower noninterest income in the amount of $3.3 million due in part to the sale of our merchant services business in the second quarter of 2017.
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 September 30, totaled $6.7 million and $5.4 million in 2018 and 2017, respectively. Core net income per share for the three months ended September 30, 2018 was $0.91, an increase from $0.72 for the same period in 2017. Core net income in 2018 excludes a pre-tax $14 thousand gain in the value of our equity investment securities portfolio.
Core net income for the nine months ended September 30, 2018 was $18.3 million or $2.47 per share, a 26.1% increase compared to $14.5 million or $1.96 per share for the same period of 2017. Results for the nine months ended September 30, 2018 exclude pre-tax $14 thousand gain in the value of our equity investment securities portfolio and 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 $86.4 million in the nine months ended September 30, 2018 (6.8% annualized rate), with growth of $146.9 million or 9.0% since September 30, 2017.
- Deposits grew $108.8 million or 8.5% annualized for the nine months ended September 30, 2017. Compared to September 30, 2017, deposits have grown $140.0 million or 8.3%.
- Tangible book value per share improved to $27.99 at September 30, 2018 from $26.83 at December 31, 2017 and from $26.97 at September 30, 2017.
- Tax-equivalent net interest income increased to $54.0 million for the nine months ended September 30, 2018 compared to $51.1 million for the same period in 2017.
- Return on average assets was 1.19% and 1.12% for the three and nine months ended September 30, 2018 compared to 1.03% and 1.04%, respectively for the comparable periods in 2017. Return on average equity was 9.81% and 9.21% for the three and nine months ended September 30, 2018 compared to 8.00% and 8.09%, respectively for the three and nine months ended September 30, 2017.
- Nonperforming assets to loans, net, and foreclosed assets decreased to 0.65% at September 30, 2018, from 0.68% at December 31, 2017 and 0.83% at September 30, 2017.
- The effective tax rate decreased to 11.8% for the nine months ended September 30, 2018 resulting from the tax reform legislation enacted in December 2017. This compares favorably to 21.0% for the same period in 2017.
INCOME STATEMENT REVIEW
The tax-equivalent net interest margin for both the three and nine months ended September 30 was 3.57% in 2018, compared to 3.73% 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 resulted in an eight basis point reduction to our tax-equivalent yield on earning assets for the three and nine months ended September 30, 2018 from the corresponding period of 2017. This coupled with higher interest-bearing liability costs, due to the increase in short-term market rates, are the factors in the decrease to our net interest margin on a taxable-equivalent basis from the three and nine months ended September 30, 2017 to September 30, 2018.
Tax-equivalent net interest income for the nine months ended September 30, increased $2.9 million or 5.7% to $54.0 million in 2018 from $51.1 million in 2017. The increase in tax equivalent net interest income was primarily due to a $185.3 million increase in average earning assets for the nine months ended September 30, 2018 when compared to the same period in 2017. The tax-equivalent yield on the loan portfolio increased to 4.44% for the nine months ended September 30, 2018, compared to 4.39% for the comparable period in 2017. The tax-equivalent yield on the loan portfolio for the nine months ended September 30, 2018 would have been 4.50% had it been calculated using the 35% tax rate. Loans, net averaged $1.7 billion for the nine months ended September 30, 2018 and $1.6 billion for the comparable period in 2017. For the nine months ended September 30, the tax-equivalent yield on total investments decreased to 2.60% in 2018 from 2.85% in 2017. The tax-equivalent yield on total investments would have increased to 2.86% for the nine months ended September 30, 2018 had it been calculated using the 35% tax rate. Average investments totaled $282.3 million in 2018 and $269.9 million in 2017. Average interest-bearing liabilities increased $138.1 million for the nine months ended September 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 0.81% in the nine months ended September 30, 2018 from 0.60% for the same period of 2017 due to increases in short-term interest rates.
The provision for loan losses totaled $3.2 million for the nine months ended September 30, 2018 and $3.6 million for the nine months ended September 30, 2017. For the quarter ended September 30, the provision for loan losses was $1.1 million in 2018 and $1.2 million in 2017.
For the nine months ended September 30, noninterest income totaled $10.5 million in 2018, a decrease from $13.8 million in 2017. The gain on sale of our credit card portfolio was $291 thousand and gains on investment securities were $14 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, which included bank owned life insurance ("BOLI") proceeds and higher dividend income received on Federal Home Loan Bank ("FHLB") stock, and income from fiduciary activities partially offset decreases in revenues from merchant services, revenues generated from interest rate swap transactions, income generated from wealth management services, income from mortgage banking activities and life insurance investment income. For the three months ended September 30, noninterest income totaled $3.3 million in 2018, a decrease from $3.7 million in the comparable 2017 period. Decreases in service charges, fees and commissions was due to lower revenue generated from interest rate swap transactions during the three months ended September 30, 2018 when compared to the corresponding year ago period.
Noninterest expense increased $276 thousand or 0.7% to $39.1 million for the nine months ended September 30, 2018, from $38.8 million for the nine months ended September 30, 2017. Salaries and employee benefits increased $1.4 million or 7.3% 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 nine months ending September 30, 2018 and 2017 as those expenses increased $888 thousand or 12.1%. Offsetting the increase in salaries and occupancy expenses, merchant services related expenses decreased $1.8 million for the nine months ended September 30, 2018 due to the sale of our merchant business in the second quarter of 2017. Rounding out the nine months ended September 30, 2018, increases to other expenses, which include such items as FDIC insurance and assessments and donations, were more than offset by decreases in professional fees and outside services, amortization expense recognized and other expenses. For the third quarter of 2018, noninterest expense remained level at $12.5 million compared to the same period in 2017. As with the results for the nine months ended September 30, 2018, 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 September 30, 2018, total assets, loans and deposits were $2.3 billion, $1.8 billion and $1.8 billion, respectively. Loans, net increased $86.4 million, or 6.8% annualized from December 31, 2017 to September 30, 2018 and increased $146.9 million, or 9.0% from the year ago period. Total deposits grew $108.8 million, or 8.5% annualized from December 31, 2017 to September 30, 2018 and $140.0 million or 8.3% from September 30, 2017 to September 30, 2018. Non-interest bearing deposits increased $23.5 million or 8.3% annualized while interest–bearing deposits increased $85.3 million or 8.5% annualized during the nine months ended September 30, 2018. Short-term borrowings decreased $24.2 million in conjunction with the increase in deposits. Total investments were $283.6 million at September 30, 2018, including $274.8 million securities classified as available-for-sale and $8.6 million classified as held-to-maturity.
Stockholders' equity equaled $273.0 million or $36.89 per share at September 30, 2018, and $266.3 million or $36.00 per share at September 30, 2017. Tangible stockholders' equity improved to $27.99 per share at September 30, 2018, from $26.97 per share at September 30, 2017. Dividends declared for the nine months ended September 30, 2018 amounted to $0.98 per share, a 4.3% increase from the year ago period, representing a dividend payout ratio of 39.2%.
ASSET QUALITY REVIEW
Nonperforming assets were $11.5 million or 0.65% of loans, net and foreclosed assets at September 30, 2018, compared to $11.6 million or 0.68% of loans, net and foreclosed assets at December 31, 2017 and $13.6 million or 0.83% of loans, net and foreclosed assets at September 30, 2017. The allowance for loan losses equaled $20.4 million or 1.15% of loans, net at September 30, 2018 compared to $19.0 million or 1.12% of loans, net, at December 31, 2017 and $18.8 million or 1.15% of loans, net at September 30, 2017. Loans charged-off, net of recoveries, for the nine months ended September 30, 2018, equaled $1.7 million or 0.10% of average loans, compared to $730 thousand or 0.05% 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) |
||||||||||||||||
Sept 30 |
June 30 |
Mar 31 |
Dec 31 |
Sept 30 |
||||||||||||
2018 |
2018 |
2018 |
2017 |
2017 |
||||||||||||
Key performance data: |
||||||||||||||||
Per share data: |
||||||||||||||||
Net income |
$ |
0.91 |
$ |
0.81 |
$ |
0.79 |
$ |
0.36 |
$ |
0.72 |
||||||
Core net income (1) |
$ |
0.91 |
$ |
0.77 |
$ |
0.79 |
$ |
0.71 |
$ |
0.72 |
||||||
Cash dividends declared |
$ |
0.33 |
$ |
0.33 |
$ |
0.32 |
$ |
0.32 |
$ |
0.32 |
||||||
Book value |
$ |
36.89 |
$ |
36.43 |
$ |
36.05 |
$ |
35.82 |
$ |
36.00 |
||||||
Tangible book value (1) |
$ |
27.99 |
$ |
27.50 |
$ |
27.08 |
$ |
26.83 |
$ |
26.97 |
||||||
Market value: |
||||||||||||||||
High |
$ |
48.10 |
$ |
51.68 |
$ |
47.53 |
$ |
51.06 |
$ |
49.00 |
||||||
Low |
$ |
42.40 |
$ |
43.72 |
$ |
41.06 |
$ |
44.04 |
$ |
39.25 |
||||||
Closing |
$ |
42.40 |
$ |
47.02 |
$ |
45.65 |
$ |
46.58 |
$ |
47.80 |
||||||
Market capitalization |
$ |
313,720 |
$ |
347,904 |
$ |
337,650 |
$ |
344,529 |
$ |
353,553 |
||||||
Common shares outstanding |
7,399,054 |
7,399,054 |
7,396,505 |
7,396,505 |
7,396,505 |
|||||||||||
Selected ratios: |
||||||||||||||||
Return on average stockholders' equity |
9.81 |
% |
8.90 |
% |
8.89 |
% |
3.92 |
% |
8.00 |
% |
||||||
Core return on average stockholders' |
9.79 |
% |
8.55 |
% |
8.90 |
% |
7.81 |
% |
8.00 |
% |
||||||
Return on average tangible stockholders' equity |
12.95 |
% |
11.81 |
% |
11.84 |
% |
5.22 |
% |
10.70 |
% |
||||||
Core return on average tangible stockholders' equity (1) |
12.93 |
% |
11.34 |
% |
11.85 |
% |
10.39 |
% |
10.70 |
% |
||||||
Return on average assets |
1.19 |
% |
1.08 |
% |
1.08 |
% |
0.49 |
% |
1.03 |
% |
||||||
Core return on average assets (1) |
1.19 |
% |
1.03 |
% |
1.08 |
% |
0.98 |
% |
1.03 |
% |
||||||
Stockholders' equity to total assets |
12.09 |
% |
12.06 |
% |
12.17 |
% |
12.21 |
% |
12.73 |
% |
||||||
Efficiency ratio (2) |
57.00 |
% |
61.98 |
% |
60.69 |
% |
57.81 |
% |
57.81 |
% |
||||||
Nonperforming assets to loans, net, and foreclosed assets |
0.65 |
% |
0.63 |
% |
0.72 |
% |
0.68 |
% |
0.83 |
% |
||||||
Net charge-offs to average loans, net |
0.05 |
% |
0.28 |
% |
0.07 |
% |
0.26 |
% |
0.04 |
% |
||||||
Allowance for loan losses to loans, net |
1.15 |
% |
1.12 |
% |
1.14 |
% |
1.12 |
% |
1.15 |
% |
||||||
Interest-bearing assets yield (FTE) (3) |
4.25 |
% |
4.20 |
% |
4.14 |
% |
4.13 |
% |
4.19 |
% |
||||||
Cost of funds |
0.89 |
% |
0.81 |
% |
0.74 |
% |
0.66 |
% |
0.61 |
% |
||||||
Net interest spread (FTE) (3) |
3.36 |
% |
3.39 |
% |
3.40 |
% |
3.47 |
% |
3.58 |
% |
||||||
Net interest margin (FTE) (3) |
3.57 |
% |
3.58 |
% |
3.57 |
% |
3.63 |
% |
3.73 |
% |
||||||
(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) |
|||||||
Sept 30 |
Sept 30 |
||||||
Nine Months Ended |
2018 |
2017 |
|||||
Interest income: |
|||||||
Interest and fees on loans: |
|||||||
Taxable |
$ |
54,546 |
$ |
48,021 |
|||
Tax-exempt |
2,660 |
2,334 |
|||||
Interest and dividends on investment securities: |
|||||||
Taxable |
2,790 |
2,130 |
|||||
Tax-exempt |
2,001 |
2,262 |
|||||
Dividends |
51 |
37 |
|||||
Interest on interest-bearing deposits in other banks |
131 |
107 |
|||||
Total interest income |
62,179 |
54,891 |
|||||
Interest expense: |
|||||||
Interest on deposits |
6,135 |
4,617 |
|||||
Interest on short-term borrowings |
2,317 |
599 |
|||||
Interest on long-term debt |
936 |
1,041 |
|||||
Total interest expense |
9,388 |
6,257 |
|||||
Net interest income |
52,791 |
48,634 |
|||||
Provision for loan losses |
3,150 |
3,600 |
|||||
Net interest income after provision for loan losses |
49,641 |
45,034 |
|||||
Noninterest income: |
|||||||
Service charges, fees, commissions |
5,856 |
5,410 |
|||||
Merchant services income |
687 |
2,358 |
|||||
Commissions and fees on fiduciary activities |
1,552 |
1,542 |
|||||
Wealth management income |
1,048 |
1,081 |
|||||
Mortgage banking income |
472 |
576 |
|||||
Life insurance investment income |
568 |
577 |
|||||
Net gain on investment securities |
14 |
||||||
Net gain on sale of credit card loans |
291 |
||||||
Net gains on sale of merchant services business |
2,278 |
||||||
Total noninterest income |
10,488 |
13,822 |
|||||
Noninterest expense: |
|||||||
Salaries and employee benefits expense |
21,291 |
19,851 |
|||||
Net occupancy and equipment expense |
8,215 |
7,327 |
|||||
Merchant services expense |
6 |
1,796 |
|||||
Amortization of intangible assets |
670 |
785 |
|||||
Other expenses |
8,932 |
9,079 |
|||||
Total noninterest expense |
39,114 |
38,838 |
|||||
Income before income taxes |
21,015 |
20,018 |
|||||
Provision for income tax expense |
2,487 |
4,209 |
|||||
Net income |
$ |
18,528 |
$ |
15,809 |
|||
Other comprehensive income (loss): |
|||||||
Unrealized (losses) gains on investment securities available-for-sale |
$ |
(4,394) |
$ |
1,076 |
|||
Income tax related to other comprehensive income |
(925) |
377 |
|||||
Other comprehensive (loss) income, net of income taxes |
(3,469) |
699 |
|||||
Comprehensive income |
$ |
15,059 |
$ |
16,508 |
|||
Per share data: |
|||||||
Net income |
$ |
2.50 |
$ |
2.14 |
|||
Cash dividends declared |
$ |
0.98 |
$ |
0.94 |
|||
Average common shares outstanding |
7,397,373 |
7,395,612 |
|||||
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 |
2018 |
2018 |
2018 |
2017 |
2017 |
|||||||||||
Interest income: |
||||||||||||||||
Interest and fees on loans: |
||||||||||||||||
Taxable |
$ |
18,798 |
$ |
18,239 |
$ |
17,509 |
$ |
16,925 |
$ |
16,535 |
||||||
Tax-exempt |
919 |
871 |
870 |
829 |
813 |
|||||||||||
Interest and dividends on investment securities available-for-sale: |
||||||||||||||||
Taxable |
998 |
934 |
858 |
819 |
714 |
|||||||||||
Tax-exempt |
639 |
661 |
701 |
737 |
716 |
|||||||||||
Dividends |
16 |
19 |
16 |
15 |
13 |
|||||||||||
Interest on interest-bearing deposits in other banks |
49 |
42 |
40 |
26 |
40 |
|||||||||||
Total interest income |
21,419 |
20,766 |
19,994 |
19,351 |
18,831 |
|||||||||||
Interest expense: |
||||||||||||||||
Interest on deposits |
2,342 |
1,959 |
1,834 |
1,833 |
1,654 |
|||||||||||
Interest on short-term borrowings |
809 |
841 |
667 |
301 |
177 |
|||||||||||
Interest on long-term debt |
315 |
315 |
306 |
307 |
344 |
|||||||||||
Total interest expense |
3,466 |
3,115 |
2,807 |
2,441 |
2,175 |
|||||||||||
Net interest income |
17,953 |
17,651 |
17,187 |
16,910 |
16,656 |
|||||||||||
Provision for loan losses |
1,050 |
1,050 |
1,050 |
1,200 |
1,200 |
|||||||||||
Net interest income after provision for loan losses |
16,903 |
16,601 |
16,137 |
15,710 |
15,456 |
|||||||||||
Noninterest income: |
||||||||||||||||
Service charges, fees, commissions |
1,883 |
1,885 |
2,088 |
1,934 |
2,156 |
|||||||||||
Merchant services income |
128 |
309 |
250 |
185 |
165 |
|||||||||||
Commissions and fees on fiduciary activities |
570 |
485 |
497 |
515 |
540 |
|||||||||||
Wealth management income |
305 |
332 |
411 |
330 |
414 |
|||||||||||
Mortgage banking income |
163 |
162 |
147 |
208 |
193 |
|||||||||||
Life insurance investment income |
190 |
191 |
187 |
192 |
193 |
|||||||||||
Net gain (loss) on investment securities |
14 |
8 |
(8) |
|||||||||||||
Net gain on sale of credit card loans |
291 |
|||||||||||||||
Total noninterest income |
3,253 |
3,663 |
3,572 |
3,364 |
3,661 |
|||||||||||
Noninterest expense: |
||||||||||||||||
Salaries and employee benefits expense |
6,946 |
7,390 |
6,955 |
6,819 |
6,550 |
|||||||||||
Net occupancy and equipment expense |
2,681 |
2,720 |
2,814 |
2,648 |
2,483 |
|||||||||||
Merchant services expense |
3 |
1 |
2 |
12 |
33 |
|||||||||||
Amortization of intangible assets |
220 |
220 |
230 |
249 |
259 |
|||||||||||
Other expenses |
2,687 |
3,165 |
3,080 |
2,727 |
3,155 |
|||||||||||
Total noninterest expense |
12,537 |
13,496 |
13,081 |
12,455 |
12,480 |
|||||||||||
Income before income taxes |
7,619 |
6,768 |
6,628 |
6,619 |
6,637 |
|||||||||||
Income tax expense |
902 |
811 |
774 |
3,971 |
1,287 |
|||||||||||
Net income |
$ |
6,717 |
$ |
5,957 |
$ |
5,854 |
$ |
2,648 |
$ |
5,350 |
||||||
Other comprehensive (loss) income : |
||||||||||||||||
Unrealized losses on investment securities available-for-sale |
$ |
(1,179) |
$ |
(839) |
$ |
(2,376) |
$ |
(2,866) |
$ |
(381) |
||||||
Change in pension liability |
318 |
|||||||||||||||
Income tax related to other comprehensive loss |
(248) |
(176) |
(501) |
(892) |
(133) |
|||||||||||
Reclassification related to tax reform legislation |
(1,101) |
|||||||||||||||
Other comprehensive loss, net of income taxes |
(931) |
(663) |
(1,875) |
(2,757) |
(248) |
|||||||||||
Comprehensive income (loss) |
$ |
5,786 |
$ |
5,294 |
$ |
3,979 |
$ |
(109) |
$ |
5,102 |
||||||
Per share data: |
||||||||||||||||
Net income |
$ |
0.91 |
$ |
0.81 |
$ |
0.79 |
$ |
0.36 |
$ |
0.72 |
||||||
Cash dividends declared |
$ |
0.33 |
$ |
0.33 |
$ |
0.32 |
$ |
0.32 |
$ |
0.32 |
||||||
Average common shares outstanding |
7,399,054 |
7,396,533 |
7,396,505 |
7,396,505 |
7,396,505 |
|||||||||||
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 |
2018 |
2018 |
2018 |
2017 |
2017 |
|||||||||||
Net interest income: |
||||||||||||||||
Interest income |
||||||||||||||||
Loans, net: |
||||||||||||||||
Taxable |
$ |
18,798 |
$ |
18,239 |
$ |
17,509 |
$ |
16,925 |
$ |
16,535 |
||||||
Tax-exempt |
1,162 |
1,103 |
1,101 |
1,274 |
1,250 |
|||||||||||
Total loans, net |
19,960 |
19,342 |
18,610 |
18,199 |
17,785 |
|||||||||||
Investments: |
||||||||||||||||
Taxable |
1,062 |
993 |
912 |
858 |
766 |
|||||||||||
Tax-exempt |
811 |
835 |
887 |
1,133 |
1,102 |
|||||||||||
Total investments |
1,873 |
1,828 |
1,799 |
1,991 |
1,868 |
|||||||||||
Interest on interest-bearing balances in other banks |
1 |
2 |
2 |
2 |
1 |
|||||||||||
Federal funds sold |
||||||||||||||||
Total interest income |
21,834 |
21,172 |
20,411 |
20,192 |
19,654 |
|||||||||||
Interest expense: |
||||||||||||||||
Deposits |
2,342 |
1,959 |
1,834 |
1,833 |
1,654 |
|||||||||||
Short-term borrowings |
809 |
841 |
667 |
301 |
177 |
|||||||||||
Long-term debt |
315 |
315 |
306 |
307 |
344 |
|||||||||||
Total interest expense |
3,466 |
3,115 |
2,807 |
2,441 |
2,175 |
|||||||||||
Net interest income |
$ |
18,368 |
$ |
18,057 |
$ |
17,604 |
$ |
17,751 |
$ |
17,479 |
||||||
Loans, net: |
||||||||||||||||
Taxable |
4.57 |
% |
4.52 |
% |
4.45 |
% |
4.36 |
% |
4.43 |
% |
||||||
Tax-exempt |
3.74 |
% |
3.60 |
% |
3.57 |
% |
4.36 |
% |
4.33 |
% |
||||||
Total loans, net |
4.51 |
% |
4.46 |
% |
4.38 |
% |
4.36 |
% |
4.42 |
% |
||||||
Investments: |
||||||||||||||||
Taxable |
2.28 |
% |
2.23 |
% |
2.15 |
% |
2.00 |
% |
1.93 |
% |
||||||
Tax-exempt |
3.25 |
% |
3.24 |
% |
3.33 |
% |
4.09 |
% |
4.09 |
% |
||||||
Total investments |
2.62 |
% |
2.60 |
% |
2.61 |
% |
2.82 |
% |
2.81 |
% |
||||||
Interest-bearing balances with banks |
1.05 |
% |
2.35 |
% |
1.74 |
% |
0.74 |
% |
1.46 |
% |
||||||
Federal funds sold |
||||||||||||||||
Total interest-bearing assets |
4.25 |
% |
4.20 |
% |
4.14 |
% |
4.13 |
% |
4.19 |
% |
||||||
Interest expense: |
||||||||||||||||
Deposits |
0.69 |
% |
0.59 |
% |
0.56 |
% |
0.54 |
% |
0.50 |
% |
||||||
Short-term borrowings |
2.23 |
% |
2.06 |
% |
1.66 |
% |
1.43 |
% |
1.30 |
% |
||||||
Long-term debt |
2.57 |
% |
2.57 |
% |
2.51 |
% |
2.44 |
% |
2.43 |
% |
||||||
Total interest-bearing liabilities |
0.89 |
% |
0.81 |
% |
0.74 |
% |
0.66 |
% |
0.61 |
% |
||||||
Net interest spread |
3.36 |
% |
3.39 |
% |
3.40 |
% |
3.47 |
% |
3.58 |
% |
||||||
Net interest margin |
3.57 |
% |
3.58 |
% |
3.57 |
% |
3.63 |
% |
3.73 |
% |
||||||
Peoples Financial Services Corp. |
||||||||||||||||
Consolidated Balance Sheets |
||||||||||||||||
(In thousands) |
||||||||||||||||
Sept 30 |
June 30 |
Mar 31 |
Dec 31 |
Sept 30 |
||||||||||||
At period end |
2018 |
2018 |
2018 |
2017 |
2017 |
|||||||||||
Assets: |
||||||||||||||||
Cash and due from banks |
$ |
40,458 |
$ |
35,249 |
$ |
26,699 |
$ |
36,336 |
$ |
31,839 |
||||||
Interest-bearing balances in other banks |
137 |
130 |
76 |
1,152 |
1,067 |
|||||||||||
Federal funds sold |
||||||||||||||||
Investment securities: |
||||||||||||||||
Available-for-sale |
274,794 |
275,050 |
271,378 |
272,502 |
259,108 |
|||||||||||
Equity investments carried at fair value |
291 |
278 |
189 |
46 |
30 |
|||||||||||
Held-to-maturity |
8,551 |
8,780 |
9,028 |
9,274 |
9,564 |
|||||||||||
Loans held for sale |
98 |
106 |
460 |
|||||||||||||
Loans, net |
1,779,445 |
1,753,389 |
1,725,781 |
1,693,065 |
1,632,515 |
|||||||||||
Less: allowance for loan losses |
20,413 |
19,573 |
19,718 |
18,960 |
18,831 |
|||||||||||
Net loans |
1,759,032 |
1,733,816 |
1,706,063 |
1,674,105 |
1,613,684 |
|||||||||||
Premises and equipment, net |
37,467 |
37,148 |
37,511 |
37,557 |
37,373 |
|||||||||||
Accrued interest receivable |
6,565 |
6,802 |
6,482 |
6,936 |
5,908 |
|||||||||||
Goodwill |
63,370 |
63,370 |
63,370 |
63,370 |
63,370 |
|||||||||||
Other intangible assets, net |
2,507 |
2,727 |
2,948 |
3,178 |
3,427 |
|||||||||||
Other assets |
64,573 |
72,276 |
66,644 |
64,469 |
66,406 |
|||||||||||
Total assets |
$ |
2,257,843 |
$ |
2,235,626 |
$ |
2,190,388 |
$ |
2,169,031 |
$ |
2,092,236 |
||||||
Liabilities: |
||||||||||||||||
Deposits: |
||||||||||||||||
Noninterest-bearing |
$ |
404,293 |
$ |
400,518 |
$ |
394,729 |
$ |
380,729 |
$ |
372,146 |
||||||
Interest-bearing |
1,423,571 |
1,318,343 |
1,325,289 |
1,338,289 |
1,315,709 |
|||||||||||
Total deposits |
1,827,864 |
1,718,861 |
1,720,018 |
1,719,018 |
1,687,855 |
|||||||||||
Short-term borrowings |
99,450 |
187,450 |
142,500 |
123,675 |
71,900 |
|||||||||||
Long-term debt |
48,461 |
48,911 |
49,265 |
49,734 |
50,199 |
|||||||||||
Accrued interest payable |
745 |
538 |
518 |
497 |
481 |
|||||||||||
Other liabilities |
8,352 |
10,322 |
11,463 |
11,131 |
15,505 |
|||||||||||
Total liabilities |
1,984,872 |
1,966,082 |
1,923,764 |
1,904,055 |
1,825,940 |
|||||||||||
Stockholders' equity: |
||||||||||||||||
Common stock |
14,798 |
14,798 |
14,793 |
14,793 |
14,793 |
|||||||||||
Capital surplus |
135,226 |
135,143 |
135,080 |
135,043 |
134,988 |
|||||||||||
Retained earnings |
132,631 |
128,356 |
124,841 |
121,353 |
119,971 |
|||||||||||
Accumulated other comprehensive loss |
(9,684) |
(8,753) |
(8,090) |
(6,213) |
(3,456) |
|||||||||||
Total stockholders' equity |
272,971 |
269,544 |
266,624 |
264,976 |
266,296 |
|||||||||||
Total liabilities and stockholders' equity |
$ |
2,257,843 |
$ |
2,235,626 |
$ |
2,190,388 |
$ |
2,169,031 |
$ |
2,092,236 |
||||||
Peoples Financial Services Corp. |
||||||||||||||||
Consolidated Balance Sheets |
||||||||||||||||
(In thousands) |
||||||||||||||||
Sept 30 |
June 30 |
Mar 31 |
Dec 31 |
Sept 30 |
||||||||||||
Average quarterly balances |
2018 |
2018 |
2018 |
2017 |
2017 |
|||||||||||
Assets: |
||||||||||||||||
Loans, net: |
||||||||||||||||
Taxable |
$ |
1,632,012 |
$ |
1,616,729 |
$ |
1,596,493 |
$ |
1,540,356 |
$ |
1,482,215 |
||||||
Tax-exempt |
123,199 |
122,876 |
125,142 |
116,055 |
114,455 |
|||||||||||
Total loans, net |
1,755,211 |
1,739,605 |
1,721,635 |
1,656,411 |
1,596,670 |
|||||||||||
Investments: |
||||||||||||||||
Taxable |
184,623 |
178,957 |
171,634 |
169,973 |
157,104 |
|||||||||||
Tax-exempt |
99,142 |
103,279 |
107,917 |
109,979 |
106,865 |
|||||||||||
Total investments |
283,765 |
282,236 |
279,551 |
279,952 |
263,969 |
|||||||||||
Interest-bearing balances with banks |
377 |
342 |
467 |
1,069 |
272 |
|||||||||||
Federal funds sold |
||||||||||||||||
Total interest-bearing assets |
2,039,353 |
2,022,183 |
2,001,653 |
1,937,432 |
1,860,911 |
|||||||||||
Other assets |
198,229 |
195,919 |
194,928 |
195,815 |
195,773 |
|||||||||||
Total assets |
$ |
2,237,582 |
$ |
2,218,102 |
$ |
2,196,581 |
$ |
2,133,247 |
$ |
2,056,684 |
||||||
Liabilities and stockholders' equity: |
||||||||||||||||
Deposits: |
||||||||||||||||
Interest-bearing |
$ |
1,351,709 |
$ |
1,327,036 |
$ |
1,323,993 |
$ |
1,338,282 |
$ |
1,299,661 |
||||||
Noninterest-bearing |
405,671 |
394,461 |
377,124 |
376,888 |
366,610 |
|||||||||||
Total deposits |
1,757,380 |
1,721,497 |
1,701,117 |
1,715,170 |
1,666,271 |
|||||||||||
Short-term borrowings |
144,162 |
163,596 |
162,965 |
83,791 |
54,084 |
|||||||||||
Long-term debt |
48,670 |
49,136 |
49,486 |
49,949 |
56,270 |
|||||||||||
Other liabilities |
15,609 |
15,376 |
16,054 |
16,411 |
14,820 |
|||||||||||
Total liabilities |
1,965,821 |
1,949,605 |
1,929,622 |
1,865,321 |
1,791,445 |
|||||||||||
Stockholders' equity |
271,761 |
268,497 |
266,959 |
267,926 |
265,239 |
|||||||||||
Total liabilities and stockholders' equity |
$ |
2,237,582 |
$ |
2,218,102 |
$ |
2,196,581 |
$ |
2,133,247 |
$ |
2,056,684 |
||||||
Peoples Financial Services Corp. |
||||||||||||||||
Asset Quality Data |
||||||||||||||||
(In thousands) |
||||||||||||||||
Sept 30 |
June 30 |
Mar 31 |
Dec 31 |
Sept 30 |
||||||||||||
2018 |
2018 |
2018 |
2017 |
2017 |
||||||||||||
At quarter end |
||||||||||||||||
Nonperforming assets: |
||||||||||||||||
Nonaccrual/restructured loans |
$ |
10,576 |
$ |
10,424 |
$ |
11,283 |
$ |
10,559 |
$ |
11,714 |
||||||
Accruing loans past due 90 days or more |
584 |
84 |
435 |
734 |
1,509 |
|||||||||||
Foreclosed assets |
342 |
500 |
685 |
284 |
358 |
|||||||||||
Total nonperforming assets |
$ |
11,502 |
$ |
11,008 |
$ |
12,403 |
$ |
11,577 |
$ |
13,581 |
||||||
Three months ended |
||||||||||||||||
Allowance for loan losses: |
||||||||||||||||
Beginning balance |
$ |
19,573 |
$ |
19,718 |
$ |
18,960 |
$ |
18,831 |
$ |
17,802 |
||||||
Charge-offs |
328 |
1,398 |
426 |
1,139 |
268 |
|||||||||||
Recoveries |
118 |
203 |
134 |
68 |
97 |
|||||||||||
Provision for loan losses |
1,050 |
1,050 |
1,050 |
1,200 |
1,200 |
|||||||||||
Ending balance |
$ |
20,413 |
$ |
19,573 |
$ |
19,718 |
$ |
18,960 |
$ |
18,831 |
||||||
Peoples Financial Services Corp. |
||||||||||||||||
Reconciliation of Non-GAAP Financial Measures |
||||||||||||||||
(In thousands, except share and per share data) |
||||||||||||||||
Sept 30 |
June 30 |
Mar 31 |
Dec 31 |
Sept 30 |
||||||||||||
Three months ended |
2018 |
2018 |
2018 |
2017 |
2017 |
|||||||||||
Core net income per share: |
||||||||||||||||
Net income GAAP |
$ |
6,717 |
$ |
5,957 |
$ |
5,854 |
$ |
2,648 |
$ |
5,350 |
||||||
Adjustments: |
||||||||||||||||
Less: Gain on sale of business line |
291 |
|||||||||||||||
Add: (gains) losses on investment securities |
(14) |
(8) |
8 |
|||||||||||||
Less: (gains) losses on investment securities tax adjustment |
(3) |
(2) |
2 |
|||||||||||||
Add: Expenses related to sale of merchant services business |
||||||||||||||||
Add: Gain on sale of business line tax adjustment |
61 |
|||||||||||||||
Add: Tax expense from the Tax Cuts and Jobs Act of 2017 |
2,623 |
|||||||||||||||
Net income Core |
$ |
6,706 |
$ |
5,721 |
$ |
5,860 |
$ |
5,271 |
$ |
5,350 |
||||||
Average common shares outstanding |
7,399,054 |
7,396,533 |
7,396,505 |
7,396,505 |
7,396,505 |
|||||||||||
Core net income per share |
$ |
0.91 |
$ |
0.77 |
$ |
0.79 |
$ |
0.71 |
$ |
0.72 |
||||||
Tangible book value: |
||||||||||||||||
Total stockholders' equity |
$ |
272,971 |
$ |
269,544 |
$ |
266,624 |
$ |
264,976 |
$ |
266,296 |
||||||
Less: Goodwill |
63,370 |
63,370 |
63,370 |
63,370 |
63,370 |
|||||||||||
Less: Other intangible assets, net |
2,507 |
2,727 |
2,948 |
3,178 |
3,427 |
|||||||||||
Total tangible stockholders' equity |
$ |
207,094 |
$ |
203,447 |
$ |
200,306 |
$ |
198,428 |
$ |
199,499 |
||||||
Common shares outstanding |
7,399,054 |
7,399,054 |
7,396,505 |
7,396,505 |
7,396,505 |
|||||||||||
Tangible book value per share |
$ |
27.99 |
$ |
27.50 |
$ |
27.08 |
$ |
26.83 |
$ |
26.97 |
||||||
Core return on average stockholders' equity: |
||||||||||||||||
Net income GAAP |
$ |
6,717 |
$ |
5,957 |
$ |
5,854 |
$ |
2,648 |
$ |
5,350 |
||||||
Adjustments: |
||||||||||||||||
Less: Gain on sale of business line |
291 |
|||||||||||||||
Add: (gains) losses on investment securities |
(14) |
(8) |
8 |
|||||||||||||
Less: (gains) losses on investment securities tax adjustment |
(3) |
(2) |
2 |
|||||||||||||
Add: Expenses related to sale of merchant services business |
||||||||||||||||
Add: Gain on sale of business line tax adjustment |
61 |
|||||||||||||||
Add: Tax expense from the Tax Cuts and Jobs Act of 2017 |
2,623 |
|||||||||||||||
Net income Core |
$ |
6,706 |
$ |
5,721 |
$ |
5,860 |
$ |
5,271 |
$ |
5,350 |
||||||
Average stockholders' equity |
$ |
271,761 |
$ |
268,497 |
$ |
266,959 |
$ |
267,926 |
$ |
265,239 |
||||||
Core return on average stockholders' equity |
9.79 |
% |
8.55 |
% |
8.90 |
% |
7.81 |
% |
8.00 |
% |
||||||
Return on average tangible equity: |
||||||||||||||||
Net income GAAP |
$ |
6,717 |
$ |
5,957 |
$ |
5,854 |
$ |
2,648 |
$ |
5,350 |
||||||
Average stockholders' equity |
$ |
271,761 |
$ |
268,497 |
$ |
266,959 |
$ |
267,926 |
$ |
265,239 |
||||||
Less: average intangibles |
65,987 |
66,208 |
66,433 |
66,673 |
66,926 |
|||||||||||
Average tangible stockholders' equity |
$ |
205,774 |
$ |
202,289 |
$ |
200,526 |
$ |
201,253 |
$ |
198,313 |
||||||
Return on average tangible stockholders' equity |
12.95 |
% |
11.81 |
% |
11.84 |
% |
5.22 |
% |
10.70 |
% |
||||||
Core return on average tangible stockholders' equity: |
||||||||||||||||
Net income GAAP |
$ |
6,717 |
$ |
5,957 |
$ |
5,854 |
$ |
2,648 |
$ |
5,350 |
||||||
Adjustments: |
||||||||||||||||
Less: Gain on sale of business line |
291 |
|||||||||||||||
Add: (gains) losses on investment securities |
(14) |
(8) |
8 |
|||||||||||||
Less: (gains) losses on investment securities tax adjustment |
(3) |
(2) |
2 |
|||||||||||||
Add: Expenses related to sale of merchant services business |
||||||||||||||||
Add: Gain on sale of business line tax adjustment |
61 |
|||||||||||||||
Add: Tax expense from the Tax Cuts and Jobs Act of 2017 |
2,623 |
|||||||||||||||
Net income Core |
$ |
6,706 |
$ |
5,721 |
$ |
5,860 |
$ |
5,271 |
$ |
5,350 |
||||||
Average stockholders' equity |
$ |
271,761 |
$ |
268,497 |
$ |
266,959 |
$ |
267,926 |
$ |
265,239 |
||||||
Less: average intangibles |
65,987 |
66,208 |
66,433 |
66,673 |
66,926 |
|||||||||||
Average tangible stockholders' equity |
$ |
205,774 |
$ |
202,289 |
$ |
200,526 |
$ |
201,253 |
$ |
198,313 |
||||||
Core return on average tangible stockholders' equity |
12.93 |
% |
11.34 |
% |
11.85 |
% |
10.39 |
% |
10.70 |
% |
||||||
Core return on average assets: |
||||||||||||||||
Net income GAAP |
$ |
6,717 |
$ |
5,957 |
$ |
5,854 |
$ |
2,648 |
$ |
5,350 |
||||||
Adjustments: |
||||||||||||||||
Less: Gain on sale of business line |
291 |
|||||||||||||||
Add: (gains) losses on investment securities |
(14) |
(8) |
8 |
|||||||||||||
Less: (gains) losses on investment securities tax adjustment |
(3) |
(2) |
2 |
|||||||||||||
Add: Expenses related to sale of merchant services business |
||||||||||||||||
Add: Gain on sale of business line tax adjustment |
61 |
|||||||||||||||
Add: Tax expense from the Tax Cuts and Jobs Act of 2017 |
2,623 |
|||||||||||||||
Net income Core |
$ |
6,706 |
$ |
5,721 |
$ |
5,860 |
$ |
5,271 |
$ |
5,350 |
||||||
Average assets |
$ |
2,237,582 |
$ |
2,218,102 |
$ |
2,196,581 |
$ |
2,133,247 |
$ |
2,056,684 |
||||||
Core return on average assets |
1.19 |
% |
1.03 |
% |
1.08 |
% |
0.98 |
% |
1.03 |
% |
||||||
Peoples Financial Services Corp. |
|||||||
Reconciliation of Non-GAAP Financial Measures |
|||||||
(In thousands, except share and per share data) |
|||||||
Sept 30 |
Sept 30 |
||||||
Nine Months Ended |
2018 |
2017 |
|||||
Core net income per share: |
|||||||
Net income GAAP |
$ |
18,528 |
$ |
15,809 |
|||
Adjustments: |
|||||||
Less: Gain on sale of business line |
291 |
2,278 |
|||||
Less: Gain on investment securities |
14 |
||||||
Add: Expenses related to sale of business line |
271 |
||||||
Add: Gain on sale of business line tax adjustment |
61 |
702 |
|||||
Add: Gain on investment securities tax adjustment |
3 |
||||||
Net income Core |
$ |
18,287 |
$ |
14,504 |
|||
Average common shares outstanding |
7,397,373 |
7,395,612 |
|||||
Core net income per share |
$ |
2.47 |
$ |
1.96 |
|||
SOURCE Peoples Financial Services Corp.
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