Peoples Financial Services (US:PFIS)2025-08-11 20:03Financial Position - Total assets increased by $16.2 million or 0.6% annualized, totaling $5.1 billion at June 30, 2025[165]. - Cash and cash equivalents rose by $39.9 million to $175.7 million, while investments decreased by $24.1 million to $582.8 million[165][166]. - Deposits decreased by $120.2 million to $4.3 billion, primarily due to the redemption of brokered deposits[167]. - Total stockholders' equity increased by $25.1 million to $494.1 million, driven by net income and a reduction in unrealized losses[169]. - Total loans remained relatively unchanged at $4.0 billion, with commercial and industrial loans increasing by $37.1 million to $873.1 million[177]. - Investment securities available for sale totaled $505.2 million, a decrease of $21.1 million or 4.0% from the previous period[170]. - Average investments increased by $103.4 million or 19.4% to $635.1 million compared to the same period last year[173]. - Goodwill has a net carrying value of $76.0 million, with no impairment noted as of June 30, 2025[162]. - Nonperforming assets decreased by $5.5 million to $17.5 million, or 0.34% of total assets, at June 30, 2025, down from $23.0 million or 0.45% at December 31, 2024[182]. - Nonaccrual loans decreased by $5.1 million to $17.4 million at June 30, 2025, from $22.5 million at December 31, 2024[183]. Income and Earnings - For the six months ended June 30, 2025, net income was $32.0 million, or $3.18 per diluted share, compared to $6.7 million, or $0.95 per diluted share for the same period in 2024, reflecting a significant increase in earnings[217]. - The net interest margin increased to 3.60% for the six months ended June 30, 2025, up from 2.29% in the prior year's period, driven by higher net interest income of $43.5 million[217]. - Noninterest income for the three months ended June 30, 2025, was $6.2 million, an increase of $2.7 million from $3.6 million in the same period of 2024, primarily due to higher service charges and fees[216]. - The company declared dividends of $1.24 per share for the six months ended June 30, 2025, up from $0.82 per share for the same period in 2024[213]. - The annualized return on average assets (ROA) was 1.36% for the second quarter of 2025, compared to 0.37% for the same period in 2024, reflecting improved profitability[218]. Interest and Loans - The FTE yield on the loan portfolio increased by 92 basis points to 5.99% for the six months ended June 30, 2025[179]. - Total interest-earning assets for the six months ended June 30, 2025, amounted to $4,662,260 with an interest income of $129,181, yielding 5.59%, compared to $3,446,252 and $78,319, yielding 4.57% in 2024[240]. - FTE net interest income increased by $23.5 million to $42.9 million in Q2 2025, compared to $19.4 million in Q2 2024, driven by a higher volume of earning assets[225]. - The net interest spread rose to 3.08% in Q2 2025 from 1.57% in Q2 2024, as the earning asset yield increased by 110 basis points[225]. - Total loans increased to $3,990,056 with an interest income of $60,373, yielding 6.07%, compared to $2,859,819 and $36,177, yielding 5.09% in the same period of 2024[238]. Deposits and Borrowings - Total deposits decreased by $120.2 million, or 5.5% annualized, to $4.3 billion at June 30, 2025, from $4.4 billion at December 31, 2024[187]. - Interest-bearing deposits averaged $3.4 billion for the six months ended June 30, 2025, an increase of $860.4 million compared to $2.5 billion in 2024, primarily due to the merger with FNCB[190]. - Total borrowings increased by $115.4 million to $271.0 million at June 30, 2025, compared to $155.6 million at December 31, 2024[192]. - Average interest-bearing liabilities rose by $949.7 million to $3.6 billion for the six months ended June 30, 2025, resulting in a net increase in interest expense of $15.6 million[233]. Expenses and Efficiency - Noninterest expense increased by $10.1 million to $28.3 million for the three months ended June 30, 2025, compared to $18.2 million for the same period in 2024[245]. - Salaries and employee benefits rose by $5.3 million for the quarter and $10.0 million for the six-month period ended June 30, 2025, primarily due to merger-related increases in headcount[245]. - The efficiency ratio, a non-GAAP measure, is monitored to assess operating expenses relative to income generation, with a lower ratio indicating better management of expenses[222]. - For the three months ended June 30, 2025, the efficiency ratio (non-GAAP) improved to 53.9% from 74.5% in 2024, indicating enhanced operational efficiency[223]. Interest Rate Risk Management - Interest rate risk (IRR) is the primary market risk exposure, affecting net interest income and the economic value of equity[249]. - As of June 30, 2025, net interest income simulations indicated that exposure to changing interest rates remained within established tolerance levels[253]. - The projected impact of a 100 basis point increase in interest rates would decrease net interest income by 0.1%[258]. - Management replaced approximately $120.0 million of high-cost brokered CDs with lower-cost options to mitigate interest expense[257]. - The ALCO regularly reviews interest rate shift scenarios to evaluate exposure and develop strategies to manage risk[256].