Peoples Financial Services (PFIS) 8-K PEOPLES FINANCIAL SERVICES CORP. Reports Unaudited Third Quarter 2022 Earnings

Exhibit 99.1

NEWS RELEASE

TO BUSINESS EDITOR:

PEOPLES FINANCIAL SERVICES CORP. Reports Unaudited Third Quarter 2022 Earnings

Scranton, PA, October 20, 2022/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, 2022.

Peoples reported net income of $10.0 million, or $1.38 per diluted share for the three months ended September 30, 2022, a 9.6% increase when compared to $9.1 million, or $1.26 per share for the comparable period of 2021. The increase in earnings for the three months ended September 30, 2022 is due to a $3.0 million increase to net interest income when compared to the year ago period. Partially offsetting the increases were higher noninterest expenses of $1.8 million due to higher salaries and benefits and occupancy and equipment costs in part due to ongoing investment in the Company’s market expansion strategy and digital technology upgrade.

Net income for the nine months ended September 30, 2022, totaled $29.0 million or $4.01 per diluted share, a 6.8% increase over $27.1 million or $3.74 per diluted share in the prior year’s period. The increase in earnings in the nine months ended September 30, 2022 is a result of increased net interest income of $8.3 million and an increase of $0.3 million in noninterest income. Partially offsetting the increases were a $1.7 million increase in provision for loan losses and an increase of $5.5 million in noninterest expense. Strong loan growth resulted in a provision for loan losses of $1.7 million in the current nine month period, as compared to no loan loss provision in the year ago period. Higher noninterest expenses were mainly due to higher salaries and benefits of $2.7 million and higher occupancy and equipment costs of $2.2 million in part due to our continued investment in the market expansion strategy and our recent digital technology upgrade implemented during the second half of 2021.

NOTABLES

● Record year-to-date earnings of $29.0 million or $4.01 per diluted share.

● Dividends paid during the first nine months of 2022 totaled $1.18 per share representing a 5.4% increase from the same period in 2021.

● Net loan growth for the nine months ended September 30, 2022, excluding Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans, was $340.7 million or 20.2% annualized.

● Deposit growth during the three and nine months ended September 30, 2022, excluding brokered deposits, totaled $230.2 million and $127.4 million, respectively.  During the three months ended September 30, 2022, deposit growth enabled the Company to pay-off its short-term borrowings at the Federal Home Loan Bank of Pittsburgh.

● Return on average assets (“ROAA”) was 1.14% for the three and nine months ended September 30, 2022 compared to 1.17% and 1.21% for the comparable periods in 2021.

● Return on average equity (“ROE”) was 12.69% and 11.93% for the three and nine months ended September 30, 2022 compared to 11.01% and 11.24% for the comparable periods in 2021.

● Return on average tangible equity, a non-GAAP measure¹, was 15.94% and 14.82% for the three and nine months ended September 30, 2022 compared to 13.69% and 14.03% for the comparable periods in 2021.

● Tax-equivalent net interest income, a non-GAAP measure¹, increased $8.6 million or 13.4% to $72.7 million for the nine months ended September 30, 2022 compared to $64.1 million for the same period in 2021.

● Nonperforming assets as a percentage of total assets at September 30, 2022 improved to 0.12% as compared to 0.15% at December 31, 2021, and 0.19% at September 30, 2021.

¹ See reconciliation of non-GAAP financial measures on p.17 and 18

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 INCOME STATEMENT REVIEW

In March 2022, the Federal Open Market Committee ("FOMC") began increasing the federal funds rate in an attempt to curb inflation. Since then, there have been 5 rate increases, totaling 300 basis points and additional rate hikes are anticipated through year-end. These increases directly impact our core source of income, net interest income through yields on investments and loans and the cost of funding via deposits and borrowings. Through September 30, 2022, we have realized higher rates on our existing adjustable and variable rate loans and new originations. The benefit of higher asset yields however, has been partially mitigated by higher funding costs primarily during the three months ended September 30, 2022, as rate-sensitive depositors are seeking higher rates. We anticipate that funding costs will continue to increase in the future as a result of the FOMC rate adjustments, local competition for deposits or the cost of alternative funding.

Calculated on a fully taxable equivalent basis (“FTE”), a non-GAAP measure¹, our net interest margin for the three months ended September 30, 2022 was 3.08%, an increase of 2 basis points when compared to the three months ended June 30 2022, and an increase of 1 basis point when compared to 3.07% for the same three month period in 2021.  The increase in net interest margin from the prior three month period was due to an increase in the volume and yield of earning assets, which offset higher funding costs.  The tax-equivalent yield on interest-earning assets increased 25 basis points to 3.59% during the three months ended September 30, 2022 from 3.34% during the three months ended June 30, 2022, and increased 22 basis points when compared to 3.37% for the three months ended September 30, 2021.  Our cost of funds, which represents our average rate paid on total interest-bearing liabilities, increased 33 basis points to 0.72% for the three months ended September 30, 2022 when compared to 0.39% during the three months ended June 30, 2022 and increased 30 basis compared to 0.42% in the prior year period. Each of these increases was due to the higher costs of deposits and short-term borrowings used to fund loan growth.

Third Quarter 2022 Results – Comparison to Prior-Year Quarter

Tax-equivalent net interest income, a non-GAAP measure¹, for the three months ended September 30, increased $3.1 million or 13.9% to $25.5 million in 2022 from $22.4 million in 2021. The increase in tax equivalent net interest income was due to higher tax-equivalent interest income of $5.2 million less higher interest expense of $2.1 million.

The higher interest income was the result of an increase in average earning assets, which offset a negative rate variance due to lower yields on the investment portfolio. Average earning assets were $391.1 million higher in the three month period ended September 30, 2022 when compared to the year ago period. PPP loans averaged $27.5 million in the three-month period ended September 30, 2022 with interest and net fees totaling approximately $0.2 million compared to average balances of $122.3 million with interest and net fees totaling $2.5 million in the year ago period. The tax-equivalent yield on the loan portfolio was 4.09% and 4.06% for the three months ended September 30, 2022 and 2021. Excluding PPP loans, the tax-equivalent yield of the loan portfolio was 4.10% and 3.83% at September 30, 2022 and 2021, respectively. This increase was due to the higher rates on adjustable and floating rate loans, which comprise 49.0% of our portfolio loans, and new loan originations. Loans, net averaged $2.6 billion for the three months ended September 30, 2022 and $2.2 billion for the comparable period in 2021. For the three months ended September 30, the tax-equivalent yield on total investments decreased to 1.67% in 2022 from 2.01% in 2021. Average investments totaled $656.4 million in 2022 and $365.5 million in 2021.

The increased interest expense in the current three month period is due primarily to higher rates on public funds and customer non-maturity deposits driven by the higher interest rate environment.  The Company's total cost of deposits increased during the three months ended September 30, 2022 compared to the year ago period by 19 basis points to 0.44%, and the cost of interest-bearing deposits increased to 0.59% from 0.34% in the previous year three month period. The Company utilized short-term FHLB borrowings during the current period which added $0.5 million of interest expense at a cost of 2.30% compared to no short-term borrowings in the year ago period.

Average interest-bearing liabilities increased $297.8 million for the three months ended September 30, 2022, compared to the corresponding period last year due to an increase in non-maturity and public fund deposits and short-term borrowings. Average noninterest-bearing deposits also increased by 10.8% from the prior period and now represent 25.7% of total deposits.

For the three months ended September 30, 2022, the provision for loan losses was $0.5 million, the result of $62.5 million of non-PPP net loan growth during the quarter. For the year ago period, the provision for loan losses was $0.4

2

million due to loan growth, improved credit quality and the reversal of previous COVID-related asset quality qualitative adjustments.

Noninterest income for the three months ended September 30, 2022 was $3.3 million, a $0.1 million decrease from $3.4 million for the three months ended September 30, 2021. The decline was due to reduced wealth management fees, which are based on account valuations and have been negatively impacted by stock market fluctuations, as well as mortgage banking revenue which has declined due to lower originations and volumes of mortgages sold into the secondary market as the interest rates on mortgages have risen.

Noninterest expense increased $1.8 million or 12.6% to $15.9 million for the three months ended September 30, 2022, from $14.1 million for the three months ended September 30, 2021. Salaries and employee benefits increased $0.6 million or 8.2% due to annual merit increases and the addition of lending teams and credit support staff in our newest expansion markets of Piscataway, New Jersey and Pittsburgh, Pennsylvania that opened during the fourth quarter of 2021. Occupancy and equipment expenses were higher by $0.7 million in the current period due to information technology investments related in part to mobile/digital banking solutions implemented during the second half of 2021.

The provision for income tax expense increased $0.2 million for the three months ended September 30, 2022 compared to the year ago period due to higher taxable income in the current period.

Nine-Month Results – Comparison to Prior Year First Nine Months

Calculated on a fully taxable equivalent basis (“FTE”), a non-GAAP measure¹, the net interest margin for the nine months ended September 30, 2022 was 3.04%, a decrease of 2 basis points over the prior year’s period of 3.06%. Excluding the impact of PPP loan interest and net fees, the net interest margin increased to 3.00% in the current period from 2.95% in the year ago period. Tax-equivalent net interest income, a non-GAAP measure¹, for the nine months ended September 30, increased $8.6 million or 13.4% to $72.7 million in 2022 from $64.1 million in 2021. The increase in net interest income was driven by an increase in average earning assets of $400.0 million, partially offset by a negative rate variance, and higher funding costs due to an increase of $295.0 million in average interest-bearing liabilities and higher interest rates. The 2022 period included $1.7 million in SBA PPP interest and fees, a decrease of $4.6 million compared to the $6.3 million in the year ago period. Average loans increased $272.4 million and investments increased $304.5 million compared to September 30, 2021. The yield on earning assets was 3.39% for the first nine months of 2022 compared to 3.41% in 2021. The cost of interest bearing liabilities during the nine month period fell slightly to 0.49% from 0.50% a year ago.

For the nine months ended September 30, 2022, the provision for loan losses was $1.7 million, primarily the result of $340.7 million growth of non-PPP loans. For the nine months ended September 30, 2021, there was no provision for loan losses due to improved credit quality and reversal of COVID related asset quality adjustments made in the prior year’s period.

Noninterest income for the nine months ended September 30, 2022 was $10.6 million, a $0.3 million increase from $10.3 million for the nine months ended September 30, 2021. During the period, service charges, fees and commissions increased $0.7 million due in part to the reversal of an accrual of a $0.3 million bank owned life insurance benefit in the year ago period, higher consumer and commercial deposit service charges and higher revenue related to debit card activity. Mortgage banking income decreased $0.4 million during the nine months ended September 30, 2022 compared to the prior year on lower sales volumes.

Noninterest expense for the nine months ended September 30, 2022, was $45.7 million, an increase of $5.5 million from $40.2 million for the prior year’s period. The increase was due primarily to $2.7 million in higher salaries and benefits expense due to annual merit increases, our investment into our newest expansion markets and lower deferred loan origination costs, which are recorded as a contra-salary expense. Occupancy and equipment expenses were higher by $2.2 million in the current period due to information technology investments related to mobile/digital banking solutions implemented during the second half of 2021 and additional costs related to entrance into the Piscataway, New Jersey and Pittsburgh, Pennsylvania markets. Other expenses, which include professional, consulting and loan processing fees, accounted for an increase of $0.4 million.

The provision for income taxes for the nine months ended September 30, 2022 decreased $0.3 million and the effective tax rate was 16.2% as compared to 17.7% in the prior period. The lower effective tax rate in 2022 was due to a $0.6 million deferred tax adjustment recorded in 2021 and higher levels of tax-exempt income in the current period.

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 BALANCE SHEET REVIEW

At September 30, 2022, total assets, loans and deposits were $3.5 billion, $2.6 billion and $3.1 billion, respectively. Loan growth for the nine months ended September 30, 2022, excluding SBA PPP loans, was $340.7 million or 20.2% annualized due to improved loan demand and organic growth in our newest markets. Loan growth, excluding PPP loans, during the three months ended September 30, 2022 totaled $62.5 million. Higher interest rates and economic uncertainty may result in lower loan demand and lower growth over the near-term when compared to the first nine months of 2022. Commercial real estate loans made up the majority of the growth with tax-exempt loans and residential real estate loans also showing increases. During the nine months ended September 30, 2022, the SBA forgave PPP loans totaling $46.2 million. Gross SBA PPP loans remaining at September 30, 2022 total $22.7 million. Net deferred SBA PPP fees remaining at September 30, 2022 totaled $0.3 million and are expected to be earned throughout the remainder of 2022 as the remaining SBA PPP loans are forgiven or repaid.  Total investments were $570.5 million at September 30, 2022, compared to $588.7 million at December 31, 2021. The decrease to the investment portfolio resulted from the unrealized loss on the available for sale portfolio, maturities and pay-downs, offset in part by purchases completed during the first six months of 2022. At September 30, 2022, the available-for-sale investment portfolio had an unrealized loss of $74.6 million compared to an unrealized loss of $1.8 million at December 31, 2021, which was the result of the rapid increase in interest rates as the FOMC increased rates five times from March through September 2022 totaling 300 basis points. Our federal funds sold balance decreased $172.8 million to $69.6 million at September 30, 2022 from $242.4 million at December 31, 2021 and was used to fund our loan growth and investment purchases during the period. Total deposits increased $160.7 million from December 31, 2021 as we experienced an increase of $109.4 million in public fund deposits. Non-interest bearing deposits increased $32.2 million, or 4.4% and interest-bearing deposits increased $128.5 million, or 5.8% during the nine months ended September 30, 2022. Short-term borrowings used to fund a portion of our loan growth and offset the deposit outflows in the second quarter were repaid in the third quarter from the increase of $212.9 million in deposits, in part due to seasonal inflows of public fund deposits.

Stockholders' equity equaled $301.8 million or $42.14 per share at September 30, 2022, and $340.1 million or $47.44 per share at December 31, 2021. The decrease in stockholders’ equity from December 31, 2021 is primarily attributable to a decrease to accumulated other comprehensive income (“AOCI”) resulting from an increase to the unrealized loss on investment securities and dividends paid to shareholders, partially offset by net income.  Tangible stockholders' equity decreased to $33.26 per share at September 30, 2022, from $38.54 per share at December 31, 2021. Dividends declared for the nine months ended September 30, 2022 amounted to $1.18 per share, a 5.4% increase from the 2021 period, representing a dividend payout ratio of 29.4%. During the three months ended September 30, 2022, 7,911 shares were purchased and retired under the Company’s common stock repurchase plan.

ASSET QUALITY REVIEW

Asset quality metrics remained strong and continued to improve. Nonperforming assets were $4.2 million or 0.16% of loans, net and foreclosed assets at September 30, 2022, compared to $5.0 million or 0.21% of loans, net and foreclosed assets at December 31, 2021. As a percentage of total assets, nonperforming assets improved to 0.12% at September 30, 2022 compared to 0.15% at December 31, 2021.  The decrease in non-performing assets from the end of the year was primarily due to the sale in the current period of the Company’s foreclosed properties which totaled $0.5 million at December 31, 2021; at September 30, 2022 People’s had no foreclosed properties.

The Company's allowance for loan losses increased to $29.8 million as net charge-offs of $0.3 million were offset by a provision for loan losses of $1.7 million.  The allowance for loan losses equaled $29.8 million or 1.14% of loans, net at September 30, 2022 compared to $28.4 million or 1.22% of loans, net, at December 31, 2021.   Excluding PPP loans which do not carry an allowance for loan losses due to a 100% government guarantee, the ratio equaled 1.15% at September 30, 2022.  Loans charged-off, net of recoveries, for the nine months ended September 30, 2022, equaled $0.3 million or 0.02% of average loans, compared to $0.2 million or 0.02% of average loans for the comparable period last year.

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About Peoples:

Peoples Financial Services Corp. is the parent company of Peoples Security Bank and Trust Company, a community bank serving Allegheny, Bucks, Lackawanna, Lebanon, Lehigh, Luzerne, Monroe, Montgomery, Northampton, Schuylkill, Susquehanna, and Wyoming Counties in Pennsylvania, Middlesex County in New Jersey and Broome County in New York through 28 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.

In addition to evaluating its results of operations in accordance with U.S. generally accepted accounting principles (“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 in this release contain items, which Peoples considers non-core, namely the gain on the sale of the Visa Class B shares. 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.

SOURCE: Peoples Financial Services Corp.
/Contact:	MEDIA/INVESTORS, Marie L. Luciani, Investor Relations Officer, 570.346.7741 or marie.luciani@psbt.com
Co:	Peoples Financial Services Corp.
St:	Pennsylvania
In:	Fin

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. and Peoples Security Bank and Trust Company (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; the COVID-19 crisis and the governmental responses to the crisis; the impact on financial markets from geopolitical conflicts such as the military conflict between Russia and Ukraine; 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.

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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]

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Summary Data

Peoples Financial Services Corp.

Five Quarter Trend (Unaudited)

(In thousands, except share and per share data)

	Sept 30			June 30			Mar 31			Dec 31			Sept 30
	2022			2022			2022			2021			2021
Key performance data:
Share and per share amounts:
Net income	$	1.38		$	1.30		$	1.33		$	2.28		$	1.26
Core net income (1)	$	1.38		$	1.30		$	1.33		$	0.95		$	1.26
Cash dividends declared	$	0.40		$	0.39		$	0.39		$	0.38		$	0.38
Book value	$	42.14		$	43.50		$	44.64		$	47.44		$	45.66
Tangible book value (1)	$	33.26		$	34.62		$	35.76		$	38.54		$	36.75
Market value:
High	$	56.09		$	56.99		$	52.99		$	53.06		$	46.92
Low	$	46.84		$	47.41		$	46.35		$	45.64		$	41.91
Closing	$	46.84		$	55.84		$	50.48		$	52.69		$	45.57
Market capitalization	$	335,503		$	400,410		$	362,398		$	377,754		$	327,057
Common shares outstanding		7,162,750			7,170,661			7,179,037			7,169,372			7,177,028
Selected ratios:
Return on average stockholders’ equity		12.69	%		11.71	%		11.82	%		19.34	%		11.01	%
Core return on average stockholders’ equity (1)		12.69	%		11.71	%		11.82	%		8.03	%		11.01	%
Return on average tangible stockholders’ equity		15.94	%		14.62	%		14.65	%		23.87	%		13.69	%
Core return on average tangible stockholders’ equity (1)		15.94	%		14.62	%		14.65	%		9.91	%		13.69	%
Return on average assets		1.14	%		1.12	%		1.17	%		1.97	%		1.17	%
Core return on average assets (1)		1.14	%		1.12	%		1.17	%		0.82	%		1.17	%
Stockholders’ equity to total assets		8.58	%		9.12	%		9.56	%		10.09	%		10.14	%
Efficiency ratio (1)(2)		54.95	%		54.89	%		53.57	%		59.80	%		54.32	%
Nonperforming assets to loans, net, and foreclosed assets		0.16	%		0.18	%		0.20	%		0.21	%		0.28	%
Nonperforming assets to total assets		0.12	%		0.13	%		0.14	%		0.15	%		0.19	%
Net charge-offs to average loans, net		0.00	%		0.00	%		0.05	%		0.01	%		0.08	%
Allowance for loan losses to loans, net		1.14	%		1.14	%		1.18	%		1.22	%		1.21	%
Interest-bearing assets yield (FTE) (3)		3.59	%		3.34	%		3.22	%		3.08	%		3.37	%
Cost of funds		0.72	%		0.39	%		0.35	%		0.37	%		0.42	%
Net interest spread (FTE) (3)		2.87	%		2.95	%		2.87	%		2.71	%		2.95	%
Net interest margin (FTE) (3)		3.08	%		3.06	%		2.97	%		2.82	%		3.07	%

(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%.

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Peoples Financial Services Corp.

Consolidated Statements of Income (Unaudited)

(In thousands, except per share data)

	Sept 30		Sept 30
Nine months ended	2022		2021
Interest income:
Interest and fees on loans:
Taxable	$	67,990	$	62,205
Tax-exempt		3,717		2,859
Interest and dividends on investment securities:
Taxable		6,176		3,804
Tax-exempt		1,546		1,233
Dividends		2		72
Interest on interest-bearing deposits in other banks		61		6
Interest on federal funds sold		201		228
Total interest income		79,693		70,407
Interest expense:
Interest on deposits		6,381		5,731
Interest on short-term borrowings		579		78
Interest on long-term debt		67		225
Interest on subordinated debt		1,330		1,330
Total interest expense		8,357		7,364
Net interest income		71,336		63,043
Provision for loan losses		1,700
Net interest income after provision for loan losses		69,636		63,043
Noninterest income:
Service charges, fees, commissions and other		5,167		4,476
Merchant services income		833		759
Commissions and fees on fiduciary activities		1,697		1,725
Wealth management income		1,064		1,207
Mortgage banking income		407		764
Increase in cash surrender value of life insurance		731		669
Interest rate swap revenue		757		744
Net (losses) gains on equity investment securities		(37)		9
Total noninterest income		10,619		10,353
Noninterest expense:
Salaries and employee benefits expense		24,365		21,649
Net occupancy and equipment expense		11,673		9,464
Amortization of intangible assets		289		375
Net gain on sale of other real estate owned		(478)		(195)
Other expenses		9,868		8,941
Total noninterest expense		45,717		40,234
Income before income taxes		34,538		33,162
Provision for income tax expense		5,587		6,057
Net income	$	28,951	$	27,105
Other comprehensive loss:
Unrealized loss on investment securities available-for-sale	$	(72,791)	$	(8,409)
Change in derivative fair value		(740)		(22)
Income tax benefit related to other comprehensive loss		(15,442)		(1,771)
Other comprehensive loss net of income tax benefit		(58,089)		(6,660)
Comprehensive (loss) income	$	(29,138)	$	20,445
Share and per share amounts:
Net income - basic	$	4.04	$	3.76
Net income - diluted		4.01		3.74
Cash dividends declared	$	1.18	$	1.12
Average common shares outstanding - basic		7,171,382		7,204,399
Average common shares outstanding - diluted		7,214,966		7,239,463

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Peoples Financial Services Corp.

Consolidated Statements of Income (Unaudited)

(In thousands, except per share data)

	Sept 30		June 30		Mar 31		Dec 31			Sept 30
Three months ended	2022		2022		2022		2021			2021
Interest income:
Interest and fees on loans:
Taxable	$	25,128	$	22,009	$	20,853	$	20,288		$	21,276
Tax-exempt		1,338		1,218		1,161		1,098			1,024
Interest and dividends on investment securities available-for-sale:
Taxable		2,096		2,108		1,972		1,660			1,285
Tax-exempt		521		515		510		498			432
Dividends				2				2			24
Interest on interest-bearing deposits in other banks		41		18		2		2			2
Interest on federal funds sold		106		22		73		102			124
Total interest income		29,230		25,892		24,571		23,650			24,167
Interest expense:
Interest on deposits		3,316		1,597		1,468		1,579			1,698
Interest on short-term borrowings		457		122
Interest on long-term debt		16		23		28		35			41
Interest on subordinated debt		443		443		444		444			443
Total interest expense		4,232		2,185		1,940		2,058			2,182
Net interest income		24,998		23,707		22,631		21,592			21,985
Provision for loan losses		450		950		300		1,750			400
Net interest income after provision for loan losses		24,548		22,757		22,331		19,842			21,585
Noninterest income:
Service charges, fees, commissions and other		1,714		1,761		1,692		1,693			1,667
Merchant services income		157		562		114		120			158
Commissions and fees on fiduciary activities		591		551		555		548			639
Wealth management income		339		374		351		330			432
Mortgage banking income		135		128		144		211			244
Increase in cash surrender value of life insurance		269		244		218		220			225
Interest rate swap revenue		130		284		343		15			79
Net (loss) gain on investment securities		(18)		(23)		4		(7)			5
Net gain on sale of Visa Class B shares								12,153
Total noninterest income		3,317		3,881		3,421		15,283			3,449
Noninterest expense:
Salaries and employee benefits expense		8,474		7,851		8,040		8,087			7,829
Net occupancy and equipment expense		3,898		3,950		3,825		3,384			3,150
Amortization of intangible assets		96		97		96		116			125
Net gains on sale of other real estate				(20)		(458)		(15)			(97)
Other expenses		3,467		3,615		2,786		3,198			3,140
Total noninterest expense		15,935		15,493		14,289		14,770			14,147
Income before income taxes		11,930		11,145		11,463		20,355			10,887
Income tax expense		1,962		1,792		1,833		3,941			1,791
Net income	$	9,968	$	9,353	$	9,630	$	16,414		$	9,096
Other comprehensive (loss) income:
Unrealized (loss) on investment securities available-for-sale	$	(21,510)	$	(18,669)	$	(32,612)	$	(3,078)		$	(3,130)
Change in derivative fair value		(46)		(201)		(493)		(300)			(128)
Income tax (benefit) related to other comprehensive (loss)		(4,527)		(3,963)		(6,952)		(266)			(684)
Other comprehensive (loss), net of income tax (benefit)		(17,029)		(14,907)		(26,153)		(1,003)			(2,574)
Comprehensive (loss) income	$	(7,061)	$	(5,554)	$	(16,523)	$	15,411		$	6,522
Share and per share amounts:
Net income - basic	$	1.39	$	1.30	$	1.34	$	2.29		$	1.26
Net income - diluted		1.38		1.30		1.33		2.28	���		1.26
Cash dividends declared	$	0.40	$	0.39	$	0.39	$	0.38		$	0.38
Average common shares outstanding - basic		7,169,809		7,172,181		7,172,455		7,172,501			7,198,125
Average common shares outstanding - diluted		7,213,147		7,215,890		7,216,421		7,207,565			7,233,189

9

Peoples Financial Services Corp.

Net Interest Margin (Unaudited)

(In thousands, fully taxable equivalent basis)

	Three Months Ended
	September 30, 2022						September 30, 2021
	Average		Interest Income/		Yield/		Average		Interest Income/		Yield/
	Balance		Expense		Rate		Balance		Expense		Rate
Assets:
Earning assets:
Loans:
Taxable	$	2,377,803	$	25,128	4.19	%	$	2,033,752	$	21,276	4.15	%
Tax-exempt		225,637		1,694	2.98			169,273		1,296	3.04
Total loans		2,603,440		26,822	4.09			2,203,025		22,572	4.06
Investments:
Taxable		544,782		2,096	1.53			280,767		1,309	1.85
Tax-exempt		111,578		659	2.34			84,701		547	2.56
Total investments		656,360		2,755	1.67			365,468		1,856	2.01
Interest-bearing deposits		9,180		41	1.77			12,004		2	0.07
Federal funds sold		13,665		106	3.08			311,015		124	0.16
Total earning assets		3,282,645		29,724	3.59	%		2,891,512		24,554	3.37	%
Less: allowance for loan losses		29,863						26,947
Other assets		210,724						229,403
Total assets	$	3,463,506	$	29,724			$	3,093,968	$	24,554
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Money market accounts	$	630,165	$	1,228	0.77	%	$	567,971	$	452	0.32	%
NOW accounts		770,582		1,184	0.61			667,867		499	0.30
Savings accounts		527,244		123	0.09			476,966		96	0.08
Time deposits less than $100		132,599		358	1.07			128,846		338	1.04
Time deposits $100 or more		168,239		423	1.00			166,218		313	0.75
Total interest-bearing deposits		2,228,829		3,316	0.59			2,007,868		1,698	0.34
Short-term borrowings		78,922		457	2.30			—		—	0.00
Long-term debt		1,369		16	4.64			3,475		41	4.68
Subordinated debt		33,000		443	5.33			33,000		443	5.37
Total borrowings		113,291		916	3.21			36,475		484	0.45
Total interest-bearing liabilities		2,342,120		4,232	0.72			2,044,343		2,182	0.42
Noninterest-bearing deposits		770,833						696,331
Other liabilities		38,840						25,635
Stockholders’ equity		311,713						327,659
Total liabilities and stockholders’ equity	$	3,463,506		4,232			$	3,093,968		2,182
Net interest income/spread			$	25,492	2.87	%			$	22,372	2.95	%
Net interest margin					3.08	%					3.07	%
Tax-equivalent adjustments:
Loans			$	356					$	272
Investments				138						115
Total adjustments			$	494					$	387

10

Peoples Financial Services Corp.

Net Interest Margin (Unaudited)

(In thousands, fully taxable equivalent basis)

	For the Nine Months Ended
	September 30, 2022						September 30, 2021
	Average		Interest Income/		Yield/		Average		Interest Income/		Yield/
	Balance		Expense		Rate		Balance		Expense		Rate
Assets:
Earning assets:
Loans:
Taxable	$	2,260,993	$	67,990	4.02	%	$	2,054,486	$	62,205	4.05	%
Tax-exempt		213,803		4,705	2.94			147,952		3,619	3.27
Total loans		2,474,796		72,695	3.93			2,202,438		65,824	4.00
Investments:
Taxable		540,512		6,178	1.53			268,573		3,876	1.93
Tax-exempt		111,041		1,957	2.36			78,512		1,561	2.66
Total investments		651,553		8,135	1.67			347,085		5,437	2.09
Interest-bearing deposits		9,846		61	0.83			11,589		6	0.07
Federal funds sold		66,057		201	0.41			241,103		228	0.13
Total earning assets		3,202,252		81,092	3.39	%		2,802,215		71,495	3.41	%
Less: allowance for loan losses		29,144						27,264
Other assets		216,960						227,297
Total assets	$	3,390,068	$	81,092			$	3,002,248	$	71,495
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Money market accounts	$	604,918	$	2,061	0.46	%	$	538,524	$	1,551	0.39	%
NOW accounts		790,852		2,248	0.38			616,518		1,659	0.36
Savings accounts		517,381		316	0.08			462,865		289	0.08
Time deposits less than $100		128,639		965	1.00			128,152		1,100	1.15
Time deposits $100 or more		160,949		791	0.66			175,673		1,132	0.86
Total interest-bearing deposits		2,202,739		6,381	0.39			1,921,732		5,731	0.40
Short-term borrowings		40,401		579	1.92			18,682	��	77	0.55
Long-term debt		1,911		67	4.69			9,629		226	3.14
Subordinated debt		33,000		1,330	5.39			33,000		1,330	5.37
Total borrowings		75,312		1,976	3.51			61,311		1,633	3.56
Total interest-bearing liabilities		2,278,051		8,357	0.49			1,983,043		7,364	0.50
Noninterest-bearing deposits		751,549						670,748
Other liabilities		35,947						25,929
Stockholders’ equity		324,521						322,528
Total liabilities and stockholders’ equity	$	3,390,068		8,357			$	3,002,248		7,364
Net interest income/spread			$	72,735	2.90	%			$	64,131	2.91	%
Net interest margin					3.04	%					3.06	%
Tax-equivalent adjustments:
Loans			$	988					$	760
Investments				411						328
Total adjustments			$	1,399					$	1,088

11

Peoples Financial Services Corp.

Details of Net Interest Income and Net Interest Margin (Unaudited)

(In thousands, fully taxable equivalent basis)

	Sept 30			June 30			Mar 31			Dec 31			Sept 30
Three months ended	2022			2022			2022			2021			2021
Net interest income:
Interest income:
Loans, net:
Taxable	$	25,128		$	22,009		$	20,853		$	20,288		$	21,276
Tax-exempt		1,694			1,542			1,470			1,390			1,296
Total loans, net		26,822			23,551			22,323			21,678			22,572
Investments:
Taxable		2,096			2,110			1,972			1,662			1,309
Tax-exempt		659			652			646			630			547
Total investments		2,755			2,762			2,618			2,292			1,856
Interest on interest-bearing balances in other banks		41			18			2			2			2
Federal funds sold		106			22			73			102			124
Total interest income		29,724			26,353			25,016			24,074			24,554
Interest expense:
Deposits		3,316			1,597			1,468			1,579			1,698
Short-term borrowings		457			122
Long-term debt		16			23			28			35			41
Subordinated debt		443			443			444			444			443
Total interest expense		4,232			2,185			1,940			2,058			2,182
Net interest income	$	25,492		$	24,168		$	23,076		$	22,016		$	22,372
Loans, net:
Taxable		4.19	%		3.92	%		3.94	%		3.85	%		4.15	%
Tax-exempt		2.98	%		2.92	%		2.93	%		2.97	%		3.04	%
Total loans, net		4.09	%		3.83	%		3.85	%		3.78	%		4.06	%
Investments:
Taxable		1.53	%		1.53	%		1.53	%		1.48	%		1.85	%
Tax-exempt		2.34	%		2.35	%		2.37	%		2.38	%		2.56	%
Total investments		1.67	%		1.67	%		1.68	%		1.65	%		2.01	%
Interest-bearing balances with banks		1.77	%		0.68	%		0.14	%		0.09	%		0.07	%
Federal funds sold		3.08	%		0.37	%		0.18	%		0.15	%		0.16	%
Total interest-earning assets		3.59	%		3.34	%		3.22	%		3.08	%		3.37	%
Interest expense:
Deposits		0.59	%		0.30	%		0.27	%		0.29	%		0.34	%
Short-term borrowings		2.30	%		1.40	%									%
Long-term debt		4.64	%		4.85	%		4.59	%		4.68	%		4.68	%
Subordinated debt		5.33	%		5.38	%		5.38	%		5.38	%		5.37	%
Total interest-bearing liabilities		0.72	%		0.39	%		0.35	%		0.37	%		0.42	%
Net interest spread		2.87	%		2.95	%		2.87	%		2.71	%		2.95	%
Net interest margin		3.08	%		3.06	%		2.97	%		2.82	%		3.07	%

12

Peoples Financial Services Corp.

Consolidated Balance Sheets (Unaudited)

(In thousands)

	Sept 30		June 30		Mar 31		Dec 31		Sept 30
At period end	2022		2022		2022		2021		2021
Assets:
Cash and due from banks	$	35,000	$	39,693	$	35,863	$	30,415	$	33,662
Interest-bearing balances in other banks		8,410		8,040		4,440		7,093		7,425
Federal funds sold		69,600				101,200		242,425		319,500
Investment securities:
Available-for-sale		477,590		513,911		535,482		517,321		461,372
Equity investments carried at fair value		103		121		144		140		147
Held-to-maturity		92,771		94,446		95,829		71,213		32,848
Loans held for sale		653		681		161		408		997
Loans		2,623,706		2,565,579		2,397,681		2,329,173		2,205,661
Less: allowance for loan losses		29,822		29,374		28,407		28,383		26,693
Net loans		2,593,884		2,536,205		2,369,274		2,300,790		2,178,968
Premises and equipment, net		54,394		53,094		51,977		51,502		50,682
Accrued interest receivable		10,082		9,303		9,221		8,528		8,280
Goodwill		63,370		63,370		63,370		63,370		63,370
Other intangible assets, net		179		276		372		468		584
Bank owned life insurance		48,235		47,968		43,828		42,754		42,734
Other assets		62,535		54,431		41,640		33,056		32,956
Total assets	$	3,516,806	$	3,421,539	$	3,352,801	$	3,369,483	$	3,233,525
Liabilities:
Deposits:
Noninterest-bearing	$	769,935	$	747,558	$	759,986	$	737,756	$	712,601
Interest-bearing		2,354,205		2,163,725		2,204,878		2,225,641		2,128,318
Total deposits		3,124,140		2,911,283		2,964,864		2,963,397		2,840,919
Short-term borrowings		14,700		129,170
Long-term debt		1,104		1,646		2,182		2,711		3,235
Subordinated debt		33,000		33,000		33,000		33,000		33,000
Accrued interest payable		1,129		1,269		844		408		872
Other liabilities		40,923		33,274		31,450		29,841		27,767
Total liabilities		3,214,996		3,109,642		3,032,340		3,029,357		2,905,793
Stockholders’ equity:
Common stock		14,330		14,346		14,352		14,341		14,356
Capital surplus		126,845		126,986		127,192		127,549		127,826
Retained earnings		224,238		217,139		210,584		203,750		190,061
Accumulated other comprehensive loss		(63,603)		(46,574)		(31,667)		(5,514)		(4,511)
Total stockholders’ equity		301,810		311,897		320,461		340,126		327,732
Total liabilities and stockholders’ equity	$	3,516,806	$	3,421,539	$	3,352,801	$	3,369,483	$	3,233,525

13

Peoples Financial Services Corp.

Loan and Deposit Account Detail (Unaudited)

(In thousands)

At the period end	September 30, 2022		June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021
Commercial
Taxable	$	371,164	$	371,153	$	370,574	$	424,455	$	414,956
Non-taxable		224,764		225,656		210,184		188,672		173,510
Total		595,928		596,809		580,758		613,127		588,466
Real estate
Commercial real estate		1,620,116		1,569,658		1,436,196		1,343,539		1,248,693
Residential		326,223		317,672		306,068		297,624		291,404
Total		1,946,339		1,887,330		1,742,264		1,641,163		1,540,097
Consumer
Indirect Auto		70,006		69,161		64,870		65,791		68,148
Consumer Other		11,433		12,279		9,789		9,092		8,950
Total		81,439		81,440		74,659		74,883		77,098
Total	$	2,623,706	$	2,565,579	$	2,397,681	$	2,329,173	$	2,205,661

At the period end	September 30, 2022		June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021
Interest-bearing deposits:
Money market accounts	$	706,947	$	592,989	$	605,686	$	588,245	$	571,679
NOW accounts		813,743		752,397		797,333		851,086		780,033
Savings accounts		530,124		518,146		515,169		491,796		478,012
Time deposits less than $250		224,517		219,690		200,345		203,719		208,691
Time deposits $250 or more		78,874		80,503		86,345		90,795		89,903
Total interest-bearing deposits		2,354,205		2,163,725		2,204,878		2,225,641		2,128,318
Noninterest-bearing deposits		769,935		747,558		759,986		737,756		712,601
Total deposits	$	3,124,140	$	2,911,283	$	2,964,864	$	2,963,397	$	2,840,919

14

Peoples Financial Services Corp.

Consolidated Balance Sheets (Unaudited)

(In thousands)

	Sept 30		June 30		Mar 31		Dec 31		Sept 30
Average quarterly balances	2022		2022		2022		2021		2021
Assets:
Loans, net:
Taxable	$	2,377,803	$	2,254,405	$	2,148,251	$	2,088,935	$	2,033,752
Tax-exempt		225,637		211,885		203,645		185,471		169,273
Total loans, net		2,603,440		2,466,290		2,351,896		2,274,406		2,203,025
Investments:
Taxable		544,782		553,078		523,301		446,096		280,767
Tax-exempt		111,578		111,138		110,394		105,044		84,701
Total investments		656,360		664,216		633,695		551,140		365,468
Interest-bearing balances with banks		9,180		10,694		5,888		9,739		12,004
Federal funds sold		13,665		23,920		162,218		264,068		311,015
Total interest-earning assets		3,282,645		3,165,120		3,153,697		3,099,353		2,891,512
Other assets		180,862		181,900		187,864		202,123		202,456
Total assets	$	3,463,506	$	3,347,020	$	3,341,561	$	3,301,476	$	3,093,968
Liabilities and stockholders’ equity:
Deposits:
Interest-bearing	$	2,228,828	$	2,167,569	$	2,211,629	$	2,176,429	$	2,007,868
Noninterest-bearing		770,833		756,225		734,348		725,414		696,331
Total deposits		2,999,661		2,923,794		2,945,977		2,901,843		2,704,199
Short-term borrowings		78,922		34,953
Long-term debt		1,369		1,901		2,474		2,959		3,475
Subordinated debt		33,000		33,000		33,000		33,000		33,000
Other liabilities		38,841		33,080		29,816		26,924		25,635
Total liabilities		3,151,794		3,026,728		3,011,267		2,964,726		2,766,309
Stockholders’ equity		311,713		320,292		330,294		336,750		327,659
Total liabilities and stockholders’ equity	$	3,463,506	$	3,347,020	$	3,341,561	$	3,301,476	$	3,093,968

15

Peoples Financial Services Corp.

Asset Quality Data (Unaudited)

(In thousands)

	Sept 30		June 30		Mar 31		Dec 31		Sept 30
At quarter end	2022		2022		2022		2021		2021
Nonperforming assets:
Nonaccrual/restructured loans	$	3,938	$	4,387	$	4,573	$	4,461	$	5,559
Accruing loans past due 90 days or more		280		190		103		13		78
Foreclosed assets								487		487
Total nonperforming assets	$	4,218	$	4,577	$	4,676	$	4,961	$	6,124
Three months ended
Allowance for loan losses:
Beginning balance	$	29,374	$	28,407	$	28,383	$	26,693	$	26,739
Charge-offs		101		98		355		105		466
Recoveries		99		115		79		45		20
Provision for loan losses		450		950		300		1,750		400
Ending balance	$	29,822	$	29,374	$	28,407	$	28,383	$	26,693

16

Peoples Financial Services Corp.

Reconciliation of Non-GAAP Financial Measures (Unaudited)

(In thousands, except share and per share data)

	Sept 30			June 30			Mar 31			Dec 31			Sept 30
Three months ended	2022			2022			2022			2021			2021
Core net income per share:
Net income GAAP	$	9,968		$	9,353		$	9,630		$	16,414		$	9,096
Adjustments:
Less: Gain on sale of Visa Class B shares											12,153
Add: Gain on sale of Visa Class B shares tax adjustment											2,552
Net income Core	$	9,968		$	9,353		$	9,630		$	6,813		$	9,096
Average common shares outstanding - diluted		7,213,147			7,215,365			7,216,421			7,207,565			7,233,189
Core net income per share	$	1.38		$	1.30		$	1.33		$	0.95		$	1.26
Tangible book value:
Total stockholders’ equity	$	301,810		$	311,897		$	320,461		$	340,126		$	327,732
Less: Goodwill		63,370			63,370			63,370			63,370			63,370
Less: Other intangible assets, net		179			276			372			468			584
Total tangible stockholders’ equity	$	238,261		$	248,251		$	256,719		$	276,289		$	263,778
Common shares outstanding		7,162,750			7,170,661			7,179,037			7,169,372			7,177,028
Tangible book value per share	$	33.26		$	34.62		$	35.76		$	38.54		$	36.75
Core return on average stockholders’ equity:
Net income GAAP	$	9,968		$	9,353		$	9,630		$	16,414		$	9,096
Adjustments:
Less: Gain on sale of Visa Class B shares											12,153
Add: Gain on sale of Visa Class B shares tax adjustment											2,552
Net income Core	$	9,968		$	9,353		$	9,630		$	6,813		$	9,096
Average stockholders’ equity	$	311,713		$	320,292		$	330,294		$	336,750		$	327,659
Core return on average stockholders’ equity		12.69	%		11.71	%		11.82	%		8.03	%		11.01	%
Return on average tangible equity:
Net income GAAP	$	9,968		$	9,353		$	9,630		$	16,414		$	9,096
Average stockholders’ equity	$	311,713		$	320,292		$	330,294		$	336,750		$	327,659
Less: average intangibles		63,598			63,694			63,790			63,896			64,017
Average tangible stockholders’ equity	$	248,115		$	256,598		$	266,504		$	272,854		$	263,642
Return on average tangible stockholders’ equity		15.94	%		14.62	%		14.65	%		23.87	%		13.69	%
Core return on average tangible stockholders’ equity:
Net income GAAP	$	9,968		$	9,353		$	9,630		$	16,414		$	9,096
Adjustments:
Less: Gain on sale of Visa Class B shares											12,153
Add: Gain on sale of Visa Class B shares tax adjustment											2,552
Net income Core	$	9,968		$	9,353		$	9,630		$	6,813		$	9,096
Average stockholders’ equity	$	311,713		$	320,292		$	330,294		$	336,750		$	327,659
Less: average intangibles		63,598			63,694			63,790			63,896			64,017
Average tangible stockholders’ equity	$	248,115		$	256,598		$	266,504		$	272,854		$	263,642
Core return on average tangible stockholders’ equity		15.94	%		14.62	%		14.65	%		9.91	%		13.69	%
Core return on average assets:
Net income GAAP	$	9,968		$	9,353		$	9,630		$	16,414		$	9,096
Adjustments:
Less: Gain on sale of Visa Class B shares											12,153
Add: Gain on sale of Visa Class B shares tax adjustment											2,552
Net income Core	$	9,968		$	9,353		$	9,630		$	6,813		$	9,096
Average assets	$	3,463,506		$	3,347,020		$	3,341,561		$	3,301,476		$	3,093,968
Core return on average assets		1.14	%		1.12	%		1.17	%		0.82	%		1.17	%

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Peoples Financial Services Corp.

Reconciliation of Non-GAAP Financial Measures (Unaudited)

(In thousands, except share and per share data)

The following table reconciles the non-GAAP financial measures of FTE net interest income for the three and nine months ended September 30, 2022 and 2021

Three months ended September 30	2022		2021
Interest income (GAAP)	$	29,230	$	24,167
Adjustment to FTE		494		387
Interest income adjusted to FTE (non-GAAP)		29,724		24,554
Interest expense		4,232		2,182
Net interest income adjusted to FTE (non-GAAP)	$	25,492	$	22,372
Nine months ended September 30	2022		2021
Interest income (GAAP)	$	79,693	$	70,407
Adjustment to FTE		1,399		1,088
Interest income adjusted to FTE (non-GAAP)		81,092		71,495
Interest expense		8,357		7,364
Net interest income adjusted to FTE (non-GAAP)	$	72,735	$	64,131

The efficiency ratio is noninterest expenses, less amortization of intangible assets, as a percentage of FTE net interest income plus noninterest income. The following table reconciles the non-GAAP financial measures of the efficiency ratio to GAAP for the three and nine months ended September 30, 2022 and 2021:

Three months ended September 30	2022			2021
Efficiency ratio (non-GAAP):
Noninterest expense (GAAP)	$	15,935		$	14,147
Less: amortization of intangible assets expense		96			125
Noninterest expense adjusted for amortization of assets expense (non-GAAP)		15,839			14,022
Net interest income (GAAP)		24,998			21,985
Plus: taxable equivalent adjustment		494			387
Noninterest income (GAAP)		3,317			3,449
Less: net (losses) gains on equity securities		(18)			5
Net interest income (FTE) plus noninterest income (non-GAAP)	$	28,827		$	25,816
Efficiency ratio (non-GAAP)		54.95	%		54.32	%
Nine months ended September 30	2022			2021
Efficiency ratio (non-GAAP):
Noninterest expense (GAAP)	$	45,717		$	40,234
Less: amortization of intangible assets expense		289			375
Noninterest expense adjusted for amortization of assets expense (non-GAAP)		45,428			39,859
Net interest income (GAAP)		71,336			63,043
Plus: taxable equivalent adjustment		1,399			1,088
Noninterest income (GAAP)		10,619			10,353
Less: net (losses) gains on equity securities		(37)			9
Net interest income (FTE) plus noninterest income (non-GAAP)	$	83,391		$	74,475
Efficiency ratio (non-GAAP)		54.48	%		53.52	%

18