Peoples Financial Services Corp. Reports Second Quarter 2016 Earnings

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Jul 22, 2016, 03:30 ET

SCRANTON, Pa., July 22, 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 six months ended June 30, 2016. Peoples reported net income of $4.9 million, or $0.66 per share for the second quarter of 2016, compared to $4.4 million, or $0.59 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 June 30, 2016 was $4.6 million, a $176 thousand increase from $4.4 million for the same period in 2015. Core net income per share for the three months ended June 30, 2016 was $0.62, compared to $0.59 for the same period in 2015.

Net income for the six months ended June 30, 2016, totaled $9.7 million or $1.32 per share compared to $9.5 million or $1.26 per share for the same period last year.

Core net income for the six months ended June 30, 2016 was $9.3 million, an increase of 4.5% from $8.9 million for the same period in 2015. Core net income per share for the six months ended June 30, 2016 was $1.26, an increase from $1.18 for the same period in 2015. The results for the six months ended June 30, 2016 include net gains on sale of investment securities of $623 thousand compared to $832 thousand in the first six months 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.

SECOND QUARTER NOTABLES

Loans, net grew $123.9 million, or 18.6% on an annualized basis in the first half of 2016 as demand increased throughout the Lehigh Valley and King of Prussia markets.
Deposits grew $41.1 million, or 5.7% on an annualized basis in the first six months of 2016.
Tangible book value per share improved $0.89 to $25.18 at June 30, 2016 from $24.29 at December 31, 2015 and $1.03 from $24.15 at June 30, 2015.
Tax-equivalent net interest margin remained level at 3.81% in the second quarter of 2016 when compared to the first quarter of 2016, and increased 2 basis points compared to 3.79% for the quarter ended December 31, 2015. Tax-equivalent net interest margin decreased 3 basis points compared to 3.84% for the quarter ended June 30, 2015.
Tax-equivalent net interest income increased $343 thousand to $16.2 million for the second quarter of 2016 compared to $15.8 million for the first quarter of 2016, and increased $1.2 million when compared to $14.9 million for the second quarter of 2015.

INCOME STATEMENT REVIEW

The tax-equivalent net interest margins for the three and six months ended June 30, were 3.81% for both periods in 2016, compared to 3.84% and 3.86% in 2015, respectively. Loan accretion included in loan interest income for the six months ended June 30, 2016, related to loans acquired in the fourth quarter of 2013, was $372 thousand, resulting in an increase in the tax-equivalent net interest margin of 4 basis points. For the second quarter of 2016, loan accretion included in loan interest income related to loans acquired was $157 thousand. Loan accretion included in loan interest income in the first half of 2015, related to loans acquired in the fourth quarter of 2013, was $347 thousand, resulting in an increase in the tax-equivalent net interest margin of 4 basis points. For the second quarter of 2015, loan accretion included in loan interest income related to loans acquired was $122 thousand.

Tax-equivalent net interest income for the six months ended June 30, increased $2.2 million to $32.0 million in 2016 from $29.8 million in 2015. The increase in tax equivalent net interest income was primarily due to a $135.5 million increase in earning assets in the first half of 2016 when compared to the same period in 2015. The tax-equivalent yield on the loan portfolio decreased to 4.49% for the six months ended June 30, 2016 compared to 4.66% for the comparable period in 2015. Loans, net averaged $1.4 billion in 2016 and $1.2 billion in 2015. For the six months ended June 30, the tax-equivalent yield on total investments increased to 2.90% in 2016 from 2.76% in 2015. Average investments totaled $279.0 million in 2016 and $310.5 million in 2015. Average interest-bearing liabilities increased $128.3 million for the six months ended June 30, 2016, compared to the corresponding period last year. The cost of funds increased to 0.55% in the six months ended June 30, 2016 from 0.52% for the same period of 2015. Tax-equivalent net interest income for the three months ended June 30, increased to $16.2 million in 2016 from $14.9 million in 2015.

The provision for loan losses totaled $2.4 million for the six months ended June 30, 2016, compared to $1.5 million for the same period last year. For the quarter ended June 30, the provision for loan losses was $1.2 million in 2016 and $750 thousand in 2015. The increase in the provision for loan losses in 2016 was primarily the result of increased loan growth.

For the six months ended June 30, noninterest income totaled $8.0 million in 2016, an increase from $7.9 million in 2015. Net gains on sale of investment securities were $623 thousand in 2016 compared to $832 thousand in 2015. Increases in revenues from merchant services, income from fiduciary activities, wealth management services and life insurance investment income more than offset a decrease in service charges, fees and commissions and income from mortgage banking activities. For the three months ended June 30, 2016, noninterest income totaled $4.1 million, including $381 thousand in recognized gains from sales of investment securities available-for-sale, compared to $3.6 million for the same period in 2015. No gain or loss from the sale of investment securities available-for-sale was recognized during the three months ended June 30, 2015.

Noninterest expense increased $1.1 million or 5.0% to $23.7 million for the six months ended June 30, 2016, from $22.6 million for the six months ended June 30, 2015. For the second quarter, noninterest expense amounted to $12.1 million in 2016 and $11.5 million in 2015. The buildout of our expansion plan, wealth management platform as well as severance costs led to the increases in salaries and employee benefit expense.

BALANCE SHEET REVIEW

Total assets, loans and deposits totaled $1.9 billion, $1.5 billion and $1.5 billion, respectively, at June 30, 2016. Loans, net grew $123.9 million or 18.6% on an annualized basis in the first half of 2016. Loans, net increased $233.3 million or 18.9% from June 30, 2015 to June 30, 2016. Deposits grew $41.1 million or 5.7% on an annualized basis in the first half of 2016. Total deposits increased $72.1 million or 5.1% at June 30, 2016 when compared to June 30, 2015. Noninterest-bearing deposits increased $2.8 million or 1.8% on an annualized basis while interest-bearing deposits increased $38.3 million or 6.8% on an annualized basis through the first six months of 2016. Total investments were $262.6 million at June 30, 2016, including $251.4 million securities classified as available-for-sale and $11.2 million classified as held-to-maturity.

Stockholders' equity equaled $254.3 million or $34.40 per share at June 30, 2016, and $248.8 million or $33.57 per share at December 31, 2015. Tangible stockholders' equity improved to $25.18 per share at June 30, 2016, from $24.29 per share at December 31, 2015. Dividends declared for the six months ended June 30, 2016 amounted to $0.62 per share representing a dividend payout ratio of 47.0%.

ASSET QUALITY REVIEW

Nonperforming assets were $13.2 million or 0.90% of loans, net and foreclosed assets at June 30, 2016, compared to $12.5 million or 0.93% at December 31, 2015. The allowance for loan losses equaled $14.8 million or 1.01% of loans, net at June 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 six months ended June 30, 2016, equaled $576 thousand or 0.08% of average loans, compared to $410 thousand or 0.07% of average loans for comparable period last year.

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.

Summary Data Peoples Financial Services Corp. Five Quarter Trend (In thousands, except per share data)


	June 30			Mar 31			Dec 31			Sept 30			June 30
	2016			2016			2015			2015			2015
Key performance data:
Per share data:
Net income	$	0.66		$	0.66		$	0.52		$	0.58		$	0.59
Core net income (1)	$	0.62		$	0.64		$	0.50		$	0.57		$	0.59
Cash dividends declared	$	0.31		$	0.31		$	0.31		$	0.31		$	0.31
Book value	$	34.40		$	33.98		$	33.57		$	33.53		$	33.20
Tangible book value (1)	$	25.18		$	24.73		$	24.29		$	24.49		$	24.15
Market value:
High	$	40.55		$	38.77		$	41.96		$	41.60		$	43.76
Low	$	35.56		$	33.22		$	34.43		$	34.56		$	36.89
Closing	$	39.14		$	37.20		$	38.08		$	34.93		$	39.61
Market capitalization	$	289,407		$	275,254		$	282,196		$	262,642		$	298,767
Common shares outstanding		7,394,143			7,399,298			7,410,606			7,519,109			7,542,725
Selected ratios:
Return on average stockholders' equity		7.72	%		7.85	%		6.12	%		7.00	%		7.14	%
Core return on average stockholders' equity (1)		7.33	%		7.62	%		5.90	%		6.85	%		7.14	%
Return on average tangible stockholders' equity (1)		10.59	%		10.87	%		8.43	%		9.62	%		9.84	%
Core return on average tangible stockholders' equity (1)		10.05	%		10.52	%		8.14	%		9.41	%		9.84	%
Return on average assets		1.03	%		1.06	%		0.85	%		1.00	%		1.03	%
Core return on average assets (1)		0.98	%		1.03	%		0.82	%		0.98	%		1.03	%
Stockholders' equity to total assets		13.30	%		13.50	%		13.68	%		14.22	%		14.33	%
Efficiency ratio (2)		59.33	%		58.05	%		64.16	%		60.82	%		60.39	%
Nonperforming assets to loans, net, and foreclosed assets		0.90	%		0.88	%		0.93	%		0.92	%		0.86	%
Net charge-offs to average loans, net		0.16	%		0.01	%		0.11	%		0.09	%		0.04	%
Allowance for loan losses to loans, net		1.01	%		1.00	%		0.97	%		0.95	%		0.93	%
Earning assets yield (FTE) (3)		4.23	%		4.22	%		4.17	%		4.11	%		4.22	%
Cost of funds		0.55	%		0.54	%		0.51	%		0.50	%		0.50	%
Net interest spread (FTE) (3)		3.68	%		3.68	%		3.66	%		3.61	%		3.72	%
Net interest margin (FTE) (3)		3.81	%		3.81	%		3.79	%		3.74	%		3.84	%

(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)

	June 30		June 30
Six Months Ended	2016		2015
Interest income:
Interest and fees on loans:
Taxable	$	29,106	$	26,731
Tax-exempt		1,531		1,129
Interest and dividends on investment securities:
Taxable		1,304		1,716
Tax-exempt		1,750		1,640
Dividends		21		15
Interest on interest-bearing deposits in other banks		32		26
Interest on federal funds sold				9
Total interest income		33,744		31,266
Interest expense:
Interest on deposits		2,605		2,460
Interest on short-term borrowings		166		12
Interest on long-term debt		714		511
Total interest expense		3,485		2,983
Net interest income		30,259		28,283
Provision for loan losses		2,400		1,500
Net interest income after provision for loan losses		27,859		26,783
Noninterest income:
Service charges, fees, commissions		2,971		3,154
Merchant services income		1,952		1,753
Commissions and fees on fiduciary activities		956		946
Wealth management income		708		403
Mortgage banking income		399		470
Life insurance investment income		395		377
Net gains on sale of investment securities available-for-sale		623		832
Total noninterest income		8,004		7,935
Noninterest expense:
Salaries and employee benefits expense		11,236		10,846
Net occupancy and equipment expense		4,682		4,617
Merchant services expense		1,380		1,183
Amortization of intangible assets		602		600
Other expenses		5,831		5,359
Total noninterest expense		23,731		22,605
Income before income taxes		12,132		12,113
Provision for income tax expense		2,395		2,638
Net income	$	9,737	$	9,475
Other comprehensive income:
Unrealized gain (loss) on investment securities available-for-sale	$	2,123	$	(692)
Reclassification adjustment for gains included in net income		(623)		(832)
Income tax expense (benefit) related to other comprehensive income		525		(533)
Other comprehensive income (loss), net of income taxes		975		(991)
Comprehensive income	$	10,712	$	8,484
Per share data:
Net income	$	1.32	$	1.26
Cash dividends declared	$	0.62	$	0.62
Average common shares outstanding		7,399,318		7,547,272

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	2016		2016		2015		2015		2015
Interest income:
Interest and fees on loans:
Taxable	$	14,760	$	14,346	$	13,932	$	13,341	$	13,391
Tax-exempt		780		751		637		585		570
Interest and dividends on investment securities available-for-sale:
Taxable		617		687		699		792		816
Tax-exempt		875		875		887		858		835
Dividends		11		10		11		9		6
Interest on interest-bearing deposits in other banks		15		17		10		13		15
Interest on federal funds sold						1				5
Total interest income		17,058		16,686		16,177		15,598		15,638
Interest expense:
Interest on deposits		1,322		1,283		1,264		1,229		1,192
Interest on short-term borrowings		89		77		30		11		4
Interest on long-term debt		354		360		275		245		252
Total interest expense		1,765		1,720		1,569		1,485		1,448
Net interest income		15,293		14,966		14,608		14,113		14,190
Provision for loan losses		1,200		1,200		1,300		900		750
Net interest income after provision for loan losses		14,093		13,766		13,308		13,213		13,440
Noninterest income:
Service charges, fees, commissions		1,527		1,444		1,560		1,531		1,542
Merchant services income		1,038		914		919		1,183		963
Commissions and fees on fiduciary activities		474		482		459		541		487
Wealth management income		296		412		218		224		198
Mortgage banking income		195		204		205		197		248
Life insurance investment income		202		193		198		192		188
Net gains on sale of investment securities available-for-sale		381		242		210		147
Total noninterest income		4,113		3,891		3,769		4,015		3,626
Noninterest expense:
Salaries and employee benefits expense		5,904		5,332		5,290		5,397		5,613
Net occupancy and equipment expense		2,245		2,437		2,241		2,246		2,149
Merchant services expense		748		632		637		823		650
Amortization of intangible assets		297		305		286		296		295
Other expenses		2,919		2,912		4,014		2,944		2,804
Total noninterest expense		12,113		11,618		12,468		11,706		11,511
Income before income taxes		6,093		6,039		4,609		5,522		5,555
Income tax expense		1,238		1,157		770		1,113		1,124
Net income	$	4,855	$	4,882	$	3,839	$	4,409	$	4,431
Other comprehensive income (loss):
Unrealized gains (losses) on investment securities available-for-sale	$	1,128	$	995	$	(644)	$	826	$	(1,459)
Reclassification adjustment for gains included in net income		(381)		(242)		(210)		(147)
Change in pension liability						(296)
Income tax expense (benefit) related to other comprehensive income (loss)		262		264		(404)		237		(510)
Other comprehensive income (loss), net of income taxes		485		489		(746)		442		(949)
Comprehensive income	$	5,340	$	5,371	$	3,093	$	4,851	$	3,482
Per share data:
Net income	$	0.66	$	0.66	$	0.52	$	0.58	$	0.59
Cash dividends declared	$	0.31	$	0.31	$	0.31	$	0.31	$	0.31
Average common shares outstanding		7,395,127		7,403,510		7,435,440		7,536,824		7,546,198

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	2016			2016			2015			2015			2015
Net interest income:
Interest income
Loans, net:
Taxable	$	14,760		$	14,346		$	13,932		$	13,341		$	13,391
Tax-exempt		1,200			1,155			979			901			877
Total loans, net		15,960			15,501			14,911			14,242			14,268
Investments:
Taxable		628			697			710			801			822
Tax-exempt		1,346			1,346			1,366			1,320			1,285
Total investments		1,974			2,043			2,076			2,121			2,107
Interest on interest-bearing balances in other banks		15			17			10			13			15
Federal funds sold								1						5
Total interest income		17,949			17,561			16,998			16,376			16,395
Interest expense:
Deposits		1,322			1,283			1,264			1,229			1,192
Short-term borrowings		89			77			30			11			4
Long-term debt		354			360			275			245			252
Total interest expense		1,765			1,720			1,569			1,485			1,448
Net interest income	$	16,184		$	15,841		$	15,429		$	14,891		$	14,947
Loans, net:
Taxable		4.47	%		4.52	%		4.51	%		4.50	%		4.62	%
Tax-exempt		4.40	%		4.45	%		4.67	%		4.82	%		4.89	%
Total loans, net		4.47	%		4.52	%		4.52	%		4.52	%		4.63	%
Investments:
Taxable		1.79	%		1.76	%		1.60	%		1.54	%		1.60	%
Tax-exempt		4.28	%		4.24	%		4.34	%		4.46	%		5.05	%
Total investments		2.95	%		2.86	%		2.74	%		2.60	%		2.74	%
Interest-bearing balances with banks		2.16	%		1.46	%		0.83	%		0.85	%		0.57	%
Federal funds sold								0.54	%					0.35	%
Total earning assets		4.23	%		4.22	%		4.17	%		4.11	%		4.22	%
Interest expense:
Deposits		0.45	%		0.45	%		0.44	%		0.43	%		0.43	%
Short-term borrowings		0.57	%		0.58	%		0.42	%		0.39	%		0.38	%
Long-term debt		2.39	%		2.41	%		2.83	%		3.10	%		3.16	%
Total interest-bearing liabilities		0.55	%		0.54	%		0.51	%		0.50	%		0.50	%
Net interest spread		3.68	%		3.68	%		3.66	%		3.61	%		3.72	%
Net interest margin		3.81	%		3.81	%		3.79	%		3.74	%		3.84	%

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

	June 30		Mar 31		Dec 31		Sept 30		June 30
At period end	2016		2016		2015		2015		2015
Assets:
Cash and due from banks	$	29,805	$	23,699	$	28,218	$	36,015	$	28,847
Interest-bearing balances in other banks		272		299		4,699		4,970		6,710
Federal funds sold
Investment securities:
Available-for-sale		251,382		264,175		284,935		299,832		318,790
Held-to-maturity		11,262		11,681		12,109		13,107		13,626
Total investments		262,644		275,856		297,044		312,939		332,416
Loans held for sale				78				3,439		2,879
Loans, net		1,464,808		1,409,691		1,340,865		1,270,545		1,231,541
Less: allowance for loan losses		14,799		14,158		12,975		12,043		11,428
Net loans		1,450,009		1,395,533		1,327,890		1,258,502		1,220,113
Premises and equipment, net		29,510		29,386		28,157		27,002		26,552
Accrued interest receivable		5,952		5,455		5,796		5,327		5,507
Goodwill		63,370		63,370		63,370		63,370		63,370
Other intangible assets, net		4,795		5,091		5,397		4,606		4,901
Other assets		65,253		63,603		58,487		56,600		56,460
Total assets	$	1,911,610	$	1,862,370	$	1,819,058	$	1,772,770	$	1,747,755
Liabilities:
Deposits:
Noninterest-bearing	$	323,785	$	323,456	$	320,978	$	303,741	$	296,823
Interest-bearing		1,173,078		1,152,003		1,134,832		1,140,909		1,127,944
Total deposits		1,496,863		1,475,459		1,455,810		1,444,650		1,424,767
Short-term borrowings		86,300		60,350		38,325		30,250		25,860
Long-term debt		59,232		59,773		60,354		31,000		31,663
Accrued interest payable		453		506		560		496		443
Other liabilities		14,437		14,837		15,241		14,286		14,618
Total liabilities		1,657,285		1,610,925		1,570,290		1,520,682		1,497,351
Stockholders' equity:
Common stock		14,788		14,799		14,821		15,038		15,086
Capital surplus		134,835		134,994		135,371		139,263		140,045
Retained earnings		105,852		103,288		100,701		99,165		97,093
Accumulated other comprehensive loss		(1,150)		(1,636)		(2,125)		(1,378)		(1,820)
Total stockholders' equity		254,325		251,445		248,768		252,088		250,404
Total liabilities and stockholders' equity	$	1,911,610	$	1,862,370	$	1,819,058	$	1,772,770	$	1,747,755

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

	June 30		Mar 31		Dec 31		Sept 30		June 30
Average quarterly balances	2016		2016		2015		2015		2015
Assets:
Loans, net:
Taxable	$	1,327,003	$	1,276,491	$	1,226,295	$	1,176,533	$	1,163,445
Tax-exempt		109,770		104,326		83,176		74,203		71,978
Total loans, net		1,436,773		1,380,817		1,309,471		1,250,736		1,235,423
Investments:
Taxable		144,223		159,584		175,620		206,153		205,949
Tax-exempt		126,620		127,623		124,694		117,497		101,967
Total investments		270,843		287,207		300,314		323,650		307,916
Interest-bearing balances with banks		372		4,686		4,791		6,081		10,583
Federal funds sold						735		653		5,722
Total earning assets		1,707,988		1,672,710		1,615,311		1,581,120		1,559,644
Other assets		184,714		178,933		171,839		171,390		166,634
Total assets	$	1,892,702	$	1,851,643	$	1,787,150	$	1,752,510	$	1,726,278
Liabilities and stockholders' equity:
Deposits:
Interest-bearing	$	1,174,686	$	1,159,159	$	1,147,296	$	1,140,012	$	1,123,810
Noninterest-bearing		327,937		313,908		309,665		305,753		300,855
Total deposits		1,502,623		1,473,067		1,456,961		1,445,765		1,424,665
Short-term borrowings		62,659		53,436		28,016		11,130		4,232
Long-term debt		59,504		60,064		38,494		31,330		31,989
Other liabilities		15,131		15,755		14,722		14,368		16,438
Total liabilities		1,639,917		1,602,322		1,538,193		1,502,593		1,477,324
Stockholders' equity		252,785		249,321		248,957		249,917		248,954
Total liabilities and stockholders' equity	$	1,892,702	$	1,851,643	$	1,787,150	$	1,752,510	$	1,726,278

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

	June 30		Mar 31		Dec 31		Sept 30		June 30
	2016		2016		2015		2015		2015
At quarter end
Nonperforming assets:
Nonaccrual/restructured loans	$	9,778	$	10,020	$	10,744	$	9,646	$	9,143
Accruing loans past due 90 days or more		2,071		977		763		1,631		1,072
Foreclosed assets		1,353		1,409		957		458		334
Total nonperforming assets	$	13,202	$	12,406	$	12,464	$	11,735	$	10,549

Three months ended
Allowance for loan losses:
Beginning balance	$	14,158	$	12,975	$	12,043	$	11,428	$	10,803
Charge-offs		632		123		573		315		174
Recoveries		73		106		205		30		49
Provision for loan losses		1,200		1,200		1,300		900		750
Ending balance	$	14,799	$	14,158	$	12,975	$	12,043	$	11,428

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

	June 30			Mar 31			Dec 31			Sept 30			June 30
Three months ended	2016			2016			2015			2015			2015
Core net income per share:
Net income GAAP	$	4,855		$	4,882		$	3,839		$	4,409		$	4,431
Adjustments:
Less: Gains on sale of investment securities, net of tax		248			157			136			96
Net income Core	$	4,607		$	4,725		$	3,703		$	4,313		$	4,431
Average common shares outstanding		7,395,127			7,403,510			7,435,440			7,536,824			7,546,198
Core net income per share	$	0.62		$	0.64		$	0.50		$	0.57		$	0.59
Tangible book value:
Total stockholders' equity	$	254,325		$	251,445		$	248,768		$	252,088		$	250,404
Less: Goodwill		63,370			63,370			63,370			63,370			63,370
Less: Other intangible assets, net		4,795			5,091			5,397			4,606			4,901
Total tangible stockholders' equity	$	186,160		$	182,984		$	180,001		$	184,112		$	182,133
Common shares outstanding		7,394,143			7,399,298			7,410,606			7,519,109			7,542,725
Tangible book value per share	$	25.18		$	24.73		$	24.29		$	24.49		$	24.15
Core return on average stockholders' equity:
Net income GAAP	$	4,855		$	4,882		$	3,839		$	4,409		$	4,431
Adjustments:
Less: Gains on sale of investment securities, net of tax		248			157			136			96
Net income Core	$	4,607		$	4,725		$	3,703		$	4,313		$	4,431
Average stockholders' equity	$	252,785		$	249,321		$	248,957		$	249,917		$	248,954
Core return on average stockholders' equity		7.33	%		7.62	%		5.90	%		6.85	%		7.14	%
Return on average tangible equity:
Net income GAAP	$	4,855		$	4,882		$	3,839		$	4,409		$	4,431
Average stockholders' equity	$	252,785		$	249,321		$	248,957		$	249,917		$	248,954
Less: average intangibles		68,313			68,614			68,372			68,124			68,419
Average tangible stockholders' equity	$	184,472		$	180,707		$	180,585		$	181,793		$	180,535
Return on average tangible stockholders' equity		10.59	%		10.87	%		8.43	%		9.62	%		9.84	%
Core return on average tangible stockholders' equity:
Net income GAAP	$	4,855		$	4,882		$	3,839		$	4,409		$	4,431
Adjustments:
Less: Gains on sale of investment securities, net of tax		248			157			136			96
Net income Core	$	4,607		$	4,725		$	3,703		$	4,313		$	4,431
Average stockholders' equity	$	252,785		$	249,321		$	248,957		$	249,917		$	248,954
Less: average intangibles		68,313			68,614			68,372			68,124			68,419
Average tangible stockholders' equity	$	184,472		$	180,707		$	180,585		$	181,793		$	180,535
Core return on average tangible stockholders' equity		10.05	%		10.52	%		8.14	%		9.41	%		9.84	%
Core return on average assets:
Net income GAAP	$	4,855		$	4,882		$	3,839		$	4,409		$	4,431
Adjustments:
Less: Gains on sale of investment securities, net of tax		248			157			136			96
Net income Core	$	4,607		$	4,725		$	3,703		$	4,313		$	4,431
Average assets	$	1,892,702		$	1,851,643		$	1,787,150		$	1,752,510		$	1,726,278
Core return on average assets		0.98	%		1.03	%		0.82	%		0.98	%		1.03	%

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

	June 30		June 30
Six Months Ended	2016		2015
Core net income per share:
Net income GAAP	$	9,737	$	9,475
Adjustments:
Less: Gains on sale of investment securities, net of tax		405		541
Net income Core	$	9,332	$	8,934
Average common shares outstanding		7,399,318		7,547,272
Core net income per share	$	1.26	$	1.18