Peoples Financial Services (US:PFIS)2023-05-10 20:31Financial Performance - Net income for the three months ended March 31, 2023, was $7.6 million or $1.05 per diluted share, a 21.3% decrease from $9.6 million or $1.33 per share for the same period in 2022[203]. - Noninterest income for the same period was $3.7 million, an increase of $0.3 million or 7.4% from $3.4 million a year ago, driven by higher retail and commercial account service charges[226]. - Noninterest expenses rose by $2.2 million or 15.4% to $16.5 million for the three months ended March 31, 2023, compared to $14.3 million in the prior year, with salaries and employee benefits increasing by $1.0 million or 12.9%[228]. - The company recorded an income tax expense of $1.4 million, representing 15.5% of pre-tax income for the three months ended March 31, 2023, down from 16.0% in the same period last year[229]. Asset and Loan Growth - Total assets increased by $125.0 million or 14.3% annualized, reaching $3.7 billion at March 31, 2023, compared to $3.6 billion at December 31, 2022[149]. - Total loans rose to $2.8 billion at March 31, 2023, an increase of $88.0 million from $2.7 billion at December 31, 2022[149]. - Commercial real estate loans increased by $73.1 million or 17.3% annualized, reaching $1.8 billion at March 31, 2023[157]. - Consumer loans increased by $3.0 million or 13.4% annualized, totaling $93.3 million at March 31, 2023[158]. - Residential real estate loans rose by $11.7 million or 14.4% annualized, reaching $342.5 million at March 31, 2023[159]. - For the three months ended March 31, 2023, total loans averaged $2.8 billion, an increase of $418.1 million or 17.8% compared to the same period in 2022[160]. Deposit Changes - Deposits increased by $189.4 million to $3.2 billion at March 31, 2023, with a $161.4 million increase in brokered deposits[150]. - Total deposits increased by $189.4 million or 25.2% annualized to $3.2 billion from $3.0 billion at December 31, 2022[170]. - Noninterest-bearing deposits decreased by $26.7 million or 14.0% annualized, while interest-bearing deposits increased by $216.1 million or 38.5% annualized during the same period[170]. Investment Portfolio - The investment portfolio decreased by $59.6 million or 12.5% to $418.1 million at March 31, 2023, primarily due to the sale of $65.6 million in securities[151]. - The tax-equivalent yield on the investment portfolio increased by 15 basis points to 1.83% for the three months ended March 31, 2023[154]. Equity and Capital - Total stockholders' equity increased by $13.3 million to $328.6 million at March 31, 2023, due to net income and a decrease in accumulated other comprehensive loss[149]. - Stockholders' equity totaled $328.6 million or $45.96 per share at March 31, 2023, an increase from $315.4 million or $44.06 per share at December 31, 2022[197]. - The Bank's Tier 1 capital to risk-weighted asset ratio was 12.00% at March 31, 2023, compared to 12.27% at December 31, 2022, meeting all capital adequacy requirements[202]. Interest Income and Expense - Net interest income adjusted to FTE for Q1 2023 was $23.5 million, compared to $23.1 million for Q1 2022, reflecting an increase in interest income[206]. - Total interest expense rose by $9.3 million to $11.2 million for the three months ended March 31, 2023, compared to $1.9 million in the same period in 2022[212]. - The overall yield on earning assets increased by 94 basis points to 4.16% for the three months ended March 31, 2023, compared to 3.22% in 2022[211]. - The tax-equivalent yield on the entire loan portfolio was 4.66% for the three months ended March 31, 2023, an increase of 81 basis points from the comparable period last year[160]. Credit Losses and Provisions - The allowance for credit losses equaled $25.4 million or 0.90% of loans, net at March 31, 2023, compared to $27.5 million or 1.01% at December 31, 2022[168]. - Loans charged-off, net of recoveries, for the three months ended March 31, 2023, equaled $9 thousand, less than 0.01% of average loans, compared to $276 thousand or 0.05% for the same period last year[168]. - For the three months ended March 31, 2023, the provision for credit losses increased by $1.0 million to $1.3 million from $0.3 million in the same period last year, primarily due to loan growth and changes in projected portfolio loss rates[225]. Interest Rate Risk and Funding Costs - The Federal Open Market Committee (FOMC) has increased the federal funds target rate by 500 basis points since March 2022, impacting funding costs which increased by 65 basis points compared to the previous quarter[237]. - The company anticipates that funding costs will continue to increase due to FOMC rate adjustments and local competition for deposits[173]. - The total cost of funds increased by 150 basis points to 1.85% for the three months ended March 31, 2023, compared to 0.35% in the prior year[212]. - The interest rate risk position is more asset-sensitive as of March 31, 2023, compared to December 31, 2022, due to an increase in floating rate overnight federal funds sold[235]. Dividends - Dividends declared were $0.41 per share for the three months ended March 31, 2023, compared to $0.39 per share for the same period in 2022, with a payout ratio of 39.0%[200]. - The Company plans to continue its dividend payment policy, with a second quarter dividend of $0.41 per share declared on April 28, 2023[200].