Peoples Financial Services (PFIS) 8-K PEOPLES FINANCIAL SERVICES CORP. Reports Unaudited First Quarter 2023 Earnings

Exhibit 99.1

NEWS RELEASE

TO BUSINESS EDITOR:

PEOPLES FINANCIAL SERVICES CORP. Reports Unaudited First Quarter 2023 Earnings

Scranton, PA, April 27, 2023/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 months ended March 31, 2023.

Peoples reported net income of $7.6 million, or $1.05 per diluted share for the three months ended March 31, 2023, a 21.3% decrease when compared to $9.6 million, or $1.33 per share for the comparable period of 2022. The decrease in earnings for the three months ended March 31, 2023 was due to a higher provision for credit losses and higher operating expenses which more than offset an increase in net interest income and noninterest income.

Net interest income for the current period increased $0.4 million when compared to the three months ended March 31, 2022 on strong loan growth resulting in higher interest income partially offset by increased costs of funds. The provision for credit losses increased $1.0 million due to loan growth and our Current Expected Credit Losses (CECL) related model impact from updated forecasted economic conditions.  The year ago period included a provision for credit losses of $0.3 million based on our allowance for credit losses methodology and then current conditions. Noninterest expenses for the three months ended March 31, 2023 increased $2.2 million compared to the prior year’s period due to higher salaries and benefits, other expenses, including an increase in FDIC assessments and loan account processing fees, and gains on other real estate owned in the year ago period.

During the quarter ended March 31, 2023, $65.6 million in securities were sold at a net gain of $81 thousand as part of our strategy to add liquidity and reduce short-term borrowings. Core net income, a non-GAAP measure¹, which we defined as excluding the gains or losses from sales of our investment securities portfolio, for the three months ended March 31, totaled $7.5 million and $9.6 million in 2023 and 2022, respectively. Core net income per share, a non-GAAP measure¹, for the three months ended March 31, 2023 was $1.04, a 21.8% decrease from $1.33 reported for the same period in 2022.

FINANCIAL HIGHLIGHTS

● Net income for the three months ended March 31, 2023 was $7.6 million or $1.05 per diluted share.

● Dividends paid during the three months ended March 31, 2023 totaled $0.41 per share representing a 5.1% increase from 2022.

● Sold $65.6 million of investment securities, including U.S. Treasury bonds, tax-exempt municipals and mortgage-backed securities at a net gain of $81 thousand. The proceeds were used to pay-down higher cost short-term borrowings.

● Adopted the CECL accounting standard effective January 1, 2023, which resulted in a decrease to the Allowance for Credit Losses (ACL) of $3.3 million and an increase to the reserve for unfunded commitments of $0.3 million. The adoption also resulted in an increase to retained earnings of $2.3 million, net of tax.

● Net loan growth for the three months ended March 31, 2023 was $90.0 million or 13.5% annualized and consisted primarily of commercial real estate loans.

● The provision for credit losses was $1.3 million for the three months ended March 31, 2023 due to loan growth and CECL related model impact from updated forecasted economic conditions.

¹ See reconciliation of non-GAAP financial measures on p. 16 - 17

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● Core deposit growth for the three months ended March 31, 2023 totaled $28.0 million. In addition, to improve on-balance sheet liquidity, brokered deposits were increased $161.4 million, which included $166.9 million of longer-term Callable CDs at a weighted average cost of 5.18%. Overall, total deposits grew by $189.4 million to $3.2 billion.

● At March 31, 2023, the Company had $1.7 billion in additional liquidity available in the form of lines of credit at the Federal Reserve Bank and Federal Home Loan Bank of Pittsburgh (FHLB), brokered deposit capacity and unencumbered securities that may be pledged as collateral, representing 45.7% of total assets and 51.9% of total deposits.

● At March 31, 2023, the Company was well capitalized as evidenced by the following capital ratios: leverage ratio of 9.66%, common equity tier 1 capital ratio of 12.00% , tier 1 capital ratio of 12.00% and total capital ratio of 12.88%

● 16,573 shares were purchased at an average price per share of $49.79 and retired under the Company’s common stock repurchase plan. The Company, in response to market volatility and economic uncertainty caused by the two large bank failures, has temporarily suspended its stock repurchase plan to preserve capital.

● Asset quality remained strong as nonperforming assets as a percentage of total assets at March 31, 2023 was 0.05%, compared to 0.12% and 0.14% at December 31, 2022 and March 31, 2022.

 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 nine rate increases, totaling 475 basis points. There were seven rate hikes in 2022, two increases during the first three months of 2023 and an additional rate hike is anticipated at the May 2023 FOMC meeting. 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 March 31, 2023, 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 offset by higher funding costs as rate-sensitive depositors seek 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 and the cost of alternative funding.

Calculated on a fully taxable equivalent basis, a non-GAAP measure¹, our net interest margin for the three months ended March 31, 2023 was 2.81%, a decrease of 16 basis points when compared to the 2.97% for the three months ended December 31, 2022 and March 31, 2022.  The decrease in net interest margin from the prior three month period and year ago period was due to higher funding costs offsetting the increased yield and balance of earning assets. The tax-equivalent yield on interest-earning assets increased 32 basis points to 4.16% during the three months ended March 31, 2023 from 3.84% during the three months ended December 31, 2022, and increased 94 basis points when compared to 3.22% for the three months ended March 31, 2022.  Our cost of funds, which represents our average rate paid on total interest-bearing liabilities, increased 65 basis points to 1.85% for the three months ended March 31, 2023 when compared to 1.20% during the three months ended December 31, 2022 and increased 150 basis points compared to 0.35% in the prior year period. We continued to increase interest rates paid on deposits during the quarter in order to pay competitive rates to attract new deposits and retain current balances. Our cost of interest-bearing deposits increased 60 basis points during the current three month period to 1.68% from 1.08% in the prior three month period ended December 31, 2022. Our cost of total deposits for the three months ended March 31, 2023 increased 46 basis points to 1.27% from 0.81% during the three months ended December 31, 2022.

On a trailing twelve month basis, our average cost of interest-bearing deposits increased 141 basis points, from 0.27% at March 31, 2022 to 1.68% at March 31, 2023, representing a beta on interest-bearing deposits of approximately 31.3%. Our overall cost of total deposits increased 107 basis points from 0.20% at March 31, 2022 to 1.27%, representing a beta on total deposits of approximately 23.8%. Each of these increases was due to the higher costs of deposits and short-term borrowings used to fund loan growth.

First Quarter 2023 Results – Comparison to Prior-Year Quarter

Tax-equivalent net interest income, a non-GAAP measure¹, for the three months ended March 31, increased $0.4 million or 2.0% to $23.5 million in 2023 from $23.1 million in 2022. The increase in tax equivalent net interest income was due to higher tax-equivalent interest income of $9.7 million less elevated interest expense of $9.3 million.

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The higher interest income was the result of an increase in yield and average balance of earning assets. Average earning assets were $236.6 million higher in the three month period ended March 31, 2023 when compared to the year ago period. PPP loans averaged $22.2 million in the three-month period ended March 31, 2023 with interest and net fees totaling approximately $73 thousand compared to average balances of $49.0 million with interest and net fees totaling $1.0 million in the year ago period. The tax-equivalent yield on the loan portfolio was 4.66% and 3.85% for the three months ended March 31, 2023 and 2022. Excluding PPP loans, the tax-equivalent yield of the loan portfolio was 4.68% and 3.75% for the three months ended March 31, 2023 and 2022, respectively. This increase was due to the higher rates on adjustable and floating rate loans, and new loan originations. Loans, net averaged $2.8 billion for the three months ended March 31, 2023 and $2.4 billion for the comparable period in 2022. For the three months ended March 31, the tax-equivalent yield on total investments increased to 1.83% in 2023 from 1.68% in 2022. Average investments totaled $599.7 million in the first three months of 2023 and $633.7 million in the first three months of 2022.

The increased interest expense in the three months ended March 31, 2023 was due primarily to higher rates on consumer, business and municipal deposits driven by the higher interest rate environment.  The Company's total cost of deposits increased during the three months ended March 31, 2023 compared to the year ago period by 107 basis points to 1.27%, and the cost of interest-bearing deposits increased 141 basis points to 1.68% from 0.27% in the previous year three month period. Short-term FHLB borrowings were utilized in the current period to fund loan growth; short term borrowings averaged $91.5 million in the current period and added $1.1 million of interest expense at an average cost of 4.81% compared to no short-term borrowings in the year ago period.

Average interest-bearing liabilities also increased $217.9 million for the three months ended March 31, 2023, compared to the corresponding period last year due to an increase in non-maturity and brokered deposits and short-term borrowings. Average noninterest-bearing deposits increased $10.5 million or 1.4% from the prior period and now represent 24.2% of total deposits.

For the three months ended March 31, 2023, the provision for credit losses was $1.3 million compared to $0.3 million in the year ago period. The current period provision increase was due to loan growth and the impact of the economic forecast on portfolio loss rates.

Noninterest income for the three months ended March 31, 2023 was $3.7 million, a $0.3 million increase from the prior year’s quarter due primarily to higher retail and commercial account service charges, increased debit card interchange revenue and a higher FHLB dividend, partially offset by lower swap related revenue.

Noninterest expense increased $2.2 million or 15.4% to $16.5 million for the three months ended March 31, 2023, from $14.3 million for the three months ended March 31, 2022. Salaries and employee benefits increased $1.0 million or 12.9% due to annual merit increases; new hires; lower deferred loan origination costs; and higher employee benefit costs. Occupancy and equipment expenses were higher by $0.3 million in the current period due to the increase in transactional costs relating to our expansion market volume. Other expenses increased $0.5 million due primarily to higher FDIC assessments and loan account processing fees. The year ago period included gains on the sale of other real estate owned of $0.5 million which we classify in noninterest expense; the current year period included no gains.

The provision for income tax expense decreased $0.4 million for the three months ended March 31, 2023 compared to the year ago period due to lower taxable income in the current year’s period. The effective tax rate for the quarter ended March 31, 2023 was 15.5% compared to 16.0% in the year ago period.

BALANCE SHEET REVIEW

At March 31, 2023, total assets, loans and deposits were $3.7 billion, $2.8 billion and $3.2 billion, respectively. During the quarter, investment sales, deposit growth and FHLB term borrowings were utilized to fund loan growth and repay short-term borrowings.

Loan growth for the three months ended March 31, 2023, excluding PPP loans, was $88.0 million or 13.1% annualized. This represents a reduction in growth compared to the three months ended December 31, 2022, in which loan growth was $106.4 million. Higher interest rates and economic uncertainty may result in lower loan demand and lower growth over the near-term. Commercial real estate loans made up the majority of the growth with residential real estate loans also increasing. At March 31, 2023, gross PPP loans remaining totaled $22.2 million and net deferred PPP fees remaining totaled $0.2 million and are expected to be earned during 2023 as the remaining SBA PPP loans are forgiven or repaid.  

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Total investments were $507.9 million at March 31, 2023, compared to $569.0 million at December 31, 2022. At March 31, 2023, the available-for-sale securities totaled $418.1 million and the held-to-maturity securities totaled $89.7 million and comprised 82.3% and 17.7% of the overall portfolio, respectively. The unrealized losses on the held-to-maturity portfolio totaled $12.6 million and $14.6 million at March 31, 2023 and December 31, 2022, respectively. During the three month period ended March 31, 2023, $65.6 million in U.S. Treasury, tax-exempt municipals and mortgage-backed securities were sold at a net gain of $81 thousand. The proceeds were used to pay-down higher cost short-term borrowings.

Total deposits increased $189.4 million during the three months ending March 31, 2023. Noninterest-bearing deposits decreased $26.7 million and interest-bearing deposits increased $216.0 million during the three months ended March 31, 2023. The increase in deposits was due to a $161.4 million net increase in brokered deposits and a $123.3 million increase in retail and commercial accounts partially offset by a $95.3 million seasonal decrease in municipal deposits. During the three months ended March 31, 2023, the Company utilized a portion of its contingency funding sources and added $166.9 million of longer-term callable brokered CDs to improve its on-balance sheet liquidity position and mitigate risk to higher rates. The Company has the option to call the CDs after an initial three or six month period.

The deposit base consisted of 48.6% retail accounts, 33.2% commercial accounts, 12.5% municipal relationships and 5.7% brokered deposits at March 31, 2023. At March 31, 2023, 76.6% of deposits were fully insured by the FDIC while $757.4 million or 23.4% of total deposits were not insured by the FDIC. In addition, at March 31, 2023 $292.0 million in letters of credit were pledged as collateral for municipal deposits. As an additional resource to our uninsured depositors, we offer all depositors access to IntraFi's CDARS and ICS programs which allows deposit customers to obtain full FDIC deposit insurance while maintaining their relationship with our Bank.

During the three months ended March 31, 2023, the Company utilized a portion of its available line at the FHLB and increased its long-term debt $25.0 million due to favorable pricing on the borrowings versus alternative funding sources.

In addition to deposit gathering and our current long term borrowings, we have additional sources of liquidity available such as overnight borrowings from the FHLB, the Federal Reserve’s Discount Window and Borrower-in-Custody (BIC) program, correspondent bank lines of credit, brokered deposit capacity and unencumbered securities. Although we do not plan to access the Federal Reserve's Bank Term Funding Program (BTFP), we have $391.0 million of borrowing capacity based on the par value of unencumbered securities available as collateral under this line. At March 31, 2023, we had $1.7 billion in additional liquidity representing 45.7% of total assets and 51.9% of total deposits. For additional information on our deposit portfolio and additional sources of liquidity see the tables on page 14.

The Company maintained its well capitalized position at March 31, 2023. Stockholders' equity equaled $328.6 million or $45.96 per share at March 31, 2023, and $315.4 million or $44.06 per share at December 31, 2022. The increase in stockholders’ equity from December 31, 2022 is primarily attributable to net income and a decrease to accumulated other comprehensive loss (“AOCI”) resulting from a reduction in the unrealized loss on available for sale securities. The net after tax unrealized loss on available for sale securities included in AOCI at March 31, 2023 and December 31, 2022 was $43.5 million and $52.0 million, respectively.

Tangible stockholders' equity, a non-GAAP measure¹, increased to $37.09 per share at March 31, 2023, from $35.19 per share at December 31, 2022. Dividends declared for the three months ended March 31, 2023 amounted to $0.41 per share, a 5.1% increase from the 2022 period, representing a dividend payout ratio of 39.0%. During the three months ended March 31, 2023, 16,573 shares were purchased and retired under the Company’s common stock repurchase plan at an average price per share of $49.79. In response to market volatility and economic uncertainty, the Company has temporarily suspended its stock repurchase plan to preserve capital.

ASSET QUALITY REVIEW

Asset quality metrics remained strong and continued to improve. Nonperforming assets were $1.9 million or 0.07% of loans, net and foreclosed assets at March 31, 2023, compared to $4.1 million or 0.15% of loans, net and foreclosed assets at December 31, 2022. As a percentage of total assets, nonperforming assets improved to 0.05% at March 31, 2023 compared to 0.12% at December 31, 2022.  The decrease in nonperforming assets was due to the reclassification of troubled debt restructurings due to a change in accounting guidance, reduced levels of loans 90 days or more past due and still accruing, collection activities, and a decline in nonaccrual loans as a result of a sizable principal reduction on a commercial real estate loan. At March 31, 2023 the Company had no foreclosed properties.

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Effective January 1, 2023, the Company transitioned to ASU 2016-13 Financial Instruments – Credit Losses (Topic 326), commonly referred to as CECL. As a result of the transition to CECL, the allowance for credit losses was reduced $3.3 million to $24.2 million and the reserve for unfunded commitments was increased $270 thousand to $450 thousand. The cumulative adjustment, net of tax, was offset to retained earnings. In addition to the transition adjustment, a $1.3 million provision and net charge-offs of $9 thousand were applied. 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% of loans, net, at December 31, 2022.  Loans charged-off, net of recoveries, for the three months ended March 31, 2023 were minimal at $9 thousand, compared to $0.3 million 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 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 or loss on the sale of 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.

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 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, deposit flows, real estate values and competition; changes in customer behaviors, including consumer spending, borrowing and savings habits; changes in accounting principles, policies, and guidelines including our adoption of Current Expected Credit Losses (CECL) methodology, and any potential volatility in the Company’s operating results due to application of the CECL methodology; 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; the soundness of other financial institutions and any indirect exposure related to the closings of Silicon Valley Bank (“SVB”), Signature Bank and Silvergate Bank and their impact on the broader market through other customers, suppliers and partners or that the conditions which resulted in the liquidity concerns with SVB, Signature Bank and

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Silvergate Bank may also adversely impact, directly or indirectly, other financial institutions and market participants with which the Company has commercial or deposit relationships 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]

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Summary Data

Peoples Financial Services Corp.

Five Quarter Trend (Unaudited)

(In thousands, except share and per share data)

	Mar 31			Dec 31			Sept 30			June 30			Mar 31
	2023			2022			2022			2022			2022
Key performance data:
Share and per share amounts:
Net income	$	1.05		$	1.27		$	1.38		$	1.30		$	1.33
Core net income (1)	$	1.04		$	1.49		$	1.38		$	1.30		$	1.33
Cash dividends declared	$	0.41		$	0.40		$	0.40		$	0.39		$	0.39
Book value	$	45.96		$	44.06		$	42.14		$	43.50		$	44.64
Tangible book value (1)	$	37.09		$	35.19		$	33.26		$	34.62		$	35.76
Market value:
High	$	53.48		$	57.60		$	56.09		$	56.99		$	52.99
Low	$	42.52		$	47.00		$	46.84		$	47.41		$	46.35
Closing	$	43.35		$	51.84		$	46.84		$	55.84		$	50.48
Market capitalization	$	309,985		$	371,072		$	335,503		$	400,410		$	362,398
Common shares outstanding		7,150,757			7,158,018			7,162,750			7,170,661			7,179,037
Selected ratios:
Return on average stockholders’ equity		9.43	%		11.79	%		12.69	%		11.71	%		11.82	%
Core return on average stockholders’ equity (1)		9.35	%		13.81	%		12.69	%		11.71	%		11.82	%
Return on average tangible stockholders’ equity		11.71	%		14.87	%		15.94	%		14.62	%		14.65	%
Core return on average tangible stockholders’ equity (1)		11.61	%		17.41	%		15.94	%		14.62	%		14.65	%
Return on average assets		0.86	%		1.04	%		1.14	%		1.12	%		1.17	%
Core return on average assets (1)		0.85	%		1.22	%		1.14	%		1.12	%		1.17	%
Stockholders’ equity to total assets		8.93	%		8.87	%		8.58	%		9.12	%		9.56	%
Efficiency ratio (1)(2)		60.61	%		60.07	%		54.95	%		54.89	%		53.57	%
Nonperforming assets to loans, net, and foreclosed assets		0.07	%		0.15	%		0.16	%		0.18	%		0.20	%
Nonperforming assets to total assets		0.05	%		0.12	%		0.12	%		0.13	%		0.14	%
Net charge-offs to average loans, net		0.00	%		0.03	%		0.00	%		0.00	%		0.05	%
Allowance for credit losses to loans, net		0.90	%		1.01	%		1.14	%		1.14	%		1.18	%
Interest-bearing assets yield (FTE) (3)		4.16	%		3.84	%		3.59	%		3.34	%		3.22	%
Cost of funds		1.85	%		1.20	%		0.72	%		0.39	%		0.35	%
Net interest spread (FTE) (3)		2.31	%		2.64	%		2.87	%		2.95	%		2.87	%
Net interest margin (FTE) (3)		2.81	%		2.97	%		3.08	%		3.06	%		2.97	%

(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)

	Mar 31		Mar 31
Three months ended	2023		2022
Interest income:
Interest and fees on loans:
Taxable	$	30,049	$	20,853
Tax-exempt		1,389		1,161
Interest and dividends on investment securities:
Taxable		2,124		1,972
Tax-exempt		457		510
Dividends		2
Interest on interest-bearing deposits in other banks		14		2
Interest on federal funds sold		243		73
Total interest income		34,278		24,571
Interest expense:
Interest on deposits		9,678		1,468
Interest on short-term borrowings		1,086
Interest on long-term debt		27		28
Interest on subordinated debt		443		444
Total interest expense		11,234		1,940
Net interest income		23,044		22,631
Provision for credit losses		1,264		300
Net interest income after provision for credit losses		21,780		22,331
Noninterest income:
Service charges, fees, commissions and other		1,965		1,692
Merchant services income		118		114
Commissions and fees on fiduciary activities		557		555
Wealth management income		398		351
Mortgage banking income		103		144
Increase in cash surrender value of life insurance		258		218
Interest rate swap revenue		223		343
Net (losses) gains on equity investment securities		(29)		4
Net gains on sale of investment securities available for sale		81
Total noninterest income		3,674		3,421
Noninterest expense:
Salaries and employee benefits expense		9,080		8,040
Net occupancy and equipment expense		4,103		3,825
Amortization of intangible assets		29		96
Net losses (gains) on sale of other real estate owned				(458)
Other expenses		3,274		2,786
Total noninterest expense		16,486		14,289
Income before income taxes		8,968		11,463
Provision for income tax expense		1,389		1,833
Net income	$	7,579	$	9,630
Other comprehensive income (loss):
Unrealized gains (losses) on investment securities available for sale	$	10,836	$	(32,612)
Reclassification adjustment for gains on available for sale securities included in net income		(81)
Change in derivative fair value		(1,970)		(493)
Income tax expense (benefit) related to other comprehensive income (loss)		1,891		(6,952)
Other comprehensive income (loss), net of income tax expense (benefit)		6,894		(26,153)
Comprehensive income (loss)	$	14,473	$	(16,523)
Share and per share amounts:
Net income - basic	$	1.06	$	1.34
Net income - diluted		1.05		1.33
Cash dividends declared		0.41		0.39
Average common shares outstanding - basic		7,157,553		7,172,455
Average common shares outstanding - diluted		7,198,970		7,216,421

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Peoples Financial Services Corp.

Consolidated Statements of Income (Unaudited)

(In thousands, except per share data)

	Mar 31		Dec 31		Sept 30		June 30		Mar 31
Three months ended	2023		2022		2022		2022		2022
Interest income:
Interest and fees on loans:
Taxable	$	30,049	$	27,515	$	25,128	$	22,009	$	20,853
Tax-exempt		1,389		1,367		1,338		1,218		1,161
Interest and dividends on investment securities:
Taxable		2,124		2,058		2,096		2,108		1,972
Tax-exempt		457		520		521		515		510
Dividends		2						2
Interest on interest-bearing deposits in other banks		14		40		41		18		2
Interest on federal funds sold		243		141		106		22		73
Total interest income		34,278		31,641		29,230		25,892		24,571
Interest expense:
Interest on deposits		9,678		6,251		3,316		1,597		1,468
Interest on short-term borrowings		1,086		524		457		122
Interest on long-term debt		27		9		16		23		28
Interest on subordinated debt		443		444		443		443		444
Total interest expense		11,234		7,228		4,232		2,185		1,940
Net interest income		23,044		24,413		24,998		23,707		22,631
Provision for (reversal of) credit losses		1,264		(2,149)		450		950		300
Net interest income after provision for (reversal of) credit losses		21,780		26,562		24,548		22,757		22,331
Noninterest income:
Service charges, fees, commissions and other		1,965		1,909		1,714		1,761		1,692
Merchant services income		118		131		157		562		114
Commissions and fees on fiduciary activities		557		532		591		551		555
Wealth management income		398		366		339		374		351
Mortgage banking income		103		104		135		128		144
Increase in cash surrender value of life insurance		258		289		269		244		218
Interest rate swap revenue		223		(135)		130		284		343
Net gains (losses) on investment equity securities		(29)		6		(18)		(23)		4
Net gains (losses) on sale of investment securities available-for-sale		81		(1,976)
Total noninterest income		3,674		1,226		3,317		3,881		3,421
Noninterest expense:
Salaries and employee benefits expense		9,080		9,188		8,474		7,851		8,040
Net occupancy and equipment expense		4,103		4,905		3,898		3,950		3,825
Amortization of intangible assets		29		74		96		97		96
Net losses (gains) on sale of other real estate								(20)		(458)
Other expenses		3,274		2,793		3,467		3,615		2,786
Total noninterest expense		16,486		16,960		15,935		15,493		14,289
Income before income taxes		8,968		10,828		11,930		11,145		11,463
Income tax expense		1,389		1,689		1,962		1,792		1,833
Net income	$	7,579	$	9,139	$	9,968	$	9,353	$	9,630
Other comprehensive income (loss):
Unrealized gain (loss) on investment securities available for sale	$	10,836	$	6,356	$	(21,510)	$	(18,669)	$	(32,612)
Reclassification adjustment for (gains) losses on available for sale securities included in net income		(81)		1,976
Change in benefit plan liabilities				370
Change in derivative fair value		(1,970)		12		(46)		(201)		(493)
Income tax expense (benefit) related to other comprehensive income (loss)		1,891		1,447		(4,527)		(3,963)		(6,952)
Other comprehensive income (loss), net of income tax expense (benefit)		6,894		7,267		(17,029)		(14,907)		(26,153)
Comprehensive income (loss)	$	14,473	$	16,406	$	(7,061)	$	(5,554)	$	(16,523)
Share and per share amounts:
Net income - basic	$	1.06	$	1.28	$	1.39	$	1.30	$	1.34
Net income - diluted		1.05		1.27		1.38		1.30		1.33
Cash dividends declared		0.41		0.40		0.40		0.39		0.39
Average common shares outstanding - basic		7,157,553		7,158,329		7,169,809		7,172,181		7,172,455
Average common shares outstanding - diluted		7,198,970		7,201,785		7,213,147		7,215,890		7,216,421

9

Peoples Financial Services Corp.

Net Interest Margin (Unaudited)

(In thousands, fully taxable equivalent basis)

	Three Months Ended
	March 31, 2023						March 31, 2022
	Average		Interest Income/		Yield/		Average		Interest Income/		Yield/
	Balance		Expense		Rate		Balance		Expense		Rate
Assets:
Earning assets:
Loans:
Taxable	$	2,546,068	$	30,049	4.79	%	$	2,148,251	$	20,853	3.94	%
Tax-exempt		223,917		1,757	3.18			203,645		1,470	2.93
Total loans		2,769,985		31,806	4.66			2,351,896		22,323	3.85
Investments:
Taxable		499,327		2,126	1.73			523,301		1,972	1.53
Tax-exempt		100,368		576	2.33			110,394		646	2.37
Total investments		599,695		2,702	1.83			633,695		2,618	1.68
Interest-bearing deposits		1,218		14	4.66			5,888		2	0.14
Federal funds sold		19,353		243	5.09			162,218		73	0.18
Total earning assets		3,390,251		34,765	4.16	%		3,153,697		25,016	3.22	%
Less: allowance for credit losses		24,557						28,717
Other assets		209,151						216,581
Total assets	$	3,574,845	$	34,765			$	3,341,561	$	25,016
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Money market accounts	$	721,864	$	4,588	2.58	%	$	595,991	$	385	0.26	%
Interest bearing demand and NOW accounts		731,398		2,806	1.56			820,016		488	0.24
Savings accounts		512,655		216	0.17			505,816		93	0.07
Time deposits less than $100		192,519		1,181	2.49			127,610		302	0.96
Time deposits $100 or more		179,515		887	2.00			162,196		200	0.50
Total interest-bearing deposits		2,337,951		9,678	1.68			2,211,629		1,468	0.27
Short-term borrowings		91,530		1,086	4.81
Long-term debt		2,482		27	4.41			2,474		28	4.59
Subordinated debt		33,000		443	5.44			33,000		444	5.38
Total borrowings		127,012		1,556	4.97			35,474		472	5.32
Total interest-bearing liabilities		2,464,963		11,234	1.85			2,247,103		1,940	0.35
Noninterest-bearing deposits		744,931						734,348
Other liabilities		38,917						29,816
Stockholders’ equity		326,034						330,294
Total liabilities and stockholders’ equity	$	3,574,845		11,234			$	3,341,561		1,940
Net interest income/spread			$	23,531	2.31	%			$	23,076	2.87	%
Net interest margin					2.81	%					2.97	%
Tax-equivalent adjustments:
Loans			$	368					$	309
Investments				119						136
Total adjustments			$	487					$	445

10

Peoples Financial Services Corp.

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

(In thousands, fully taxable equivalent basis)

	Mar 31			Dec 31			Sept 30			June 30			Mar 31
Three months ended	2023			2022			2022			2022			2022
Net interest income:
Interest income:
Loans, net:
Taxable	$	30,049		$	27,515		$	25,128		$	22,009		$	20,853
Tax-exempt		1,757			1,730			1,694			1,542			1,470
Total loans, net		31,806			29,245			26,822			23,551			22,323
Investments:
Taxable		2,126			2,058			2,096			2,110			1,972
Tax-exempt		576			658			659			652			646
Total investments		2,702			2,716			2,755			2,762			2,618
Interest on interest-bearing balances in other banks		14			40			41			18			2
Federal funds sold		243			141			106			22			73
Total interest income		34,765			32,142			29,724			26,353			25,016
Interest expense:
Deposits		9,678			6,251			3,316			1,597			1,468
Short-term borrowings		1,086			524			457			122
Long-term debt		27			9			16			23			28
Subordinated debt		443			444			443			443			444
Total interest expense		11,234			7,228			4,232			2,185			1,940
Net interest income	$	23,531		$	24,914		$	25,492		$	24,168		$	23,076
Loans, net:
Taxable		4.79	%		4.47	%		4.19	%		3.92	%		3.94	%
Tax-exempt		3.18	%		3.08	%		2.98	%		2.92	%		2.93	%
Total loans, net		4.66	%		4.35	%		4.09	%		3.83	%		3.85	%
Investments:
Taxable		1.73	%		1.54	%		1.53	%		1.53	%		1.53	%
Tax-exempt		2.33	%		2.35	%		2.34	%		2.35	%		2.37	%
Total investments		1.83	%		1.68	%		1.67	%		1.67	%		1.68	%
Interest-bearing balances with banks		4.66	%		3.41	%		1.77	%		0.68	%		0.14	%
Federal funds sold		5.09	%		3.86	%		3.08	%		0.37	%		0.18	%
Total interest-earning assets		4.16	%		3.84	%		3.59	%		3.34	%		3.22	%
Interest expense:
Deposits		1.68	%		1.08	%		0.59	%		0.30	%		0.27	%
Short-term borrowings		4.81	%		4.20	%		2.30	%		1.40	%��
Long-term debt		4.41	%		4.87	%		4.64	%		4.85	%		4.59	%
Subordinated debt		5.44	%		5.33	%		5.33	%		5.38	%		5.38	%
Total interest-bearing liabilities		1.85	%		1.20	%		0.72	%		0.39	%		0.35	%
Net interest spread		2.31	%		2.64	%		2.87	%		2.95	%		2.87	%
Net interest margin		2.81	%		2.97	%		3.08	%		3.06	%		2.97	%

11

Peoples Financial Services Corp.

Consolidated Balance Sheets (Unaudited)

(In thousands)

	Mar 31		Dec 31		Sept 30		June 30		Mar 31
At period end	2023		2022		2022		2022		2022
Assets:
Cash and due from banks	$	31,354	$	37,675	$	35,000	$	39,693	$	35,863
Interest-bearing balances in other banks		7,129		193		8,410		8,040		4,440
Federal funds sold		102,100				69,600				101,200
Investment securities:
Available for sale		418,125		477,703		477,590		513,911		535,482
Equity investments carried at fair value		81		110		103		121		144
Held to maturity		89,705		91,179		92,771		94,446		95,829
Total investments		507,911		568,992		570,464		608,478		631,455
Loans held for sale						653		681		161
Loans		2,818,043		2,730,116		2,623,706		2,565,579		2,397,681
Less: allowance for credit losses		25,444		27,472		29,822		29,374		28,407
Net loans		2,792,599		2,702,644		2,593,884		2,536,205		2,369,274
Goodwill		63,370		63,370		63,370		63,370		63,370
Premises and equipment, net		56,561		55,667		54,394		53,094		51,977
Bank owned life insurance		48,598		48,344		48,235		47,968		43,828
Deferred tax assets		16,015		18,739		20,796		16,269		12,306
Accrued interest receivable		11,678		11,715		10,082		9,303		9,221
Other intangible assets, net		77		105		179		276		372
Other assets		41,079		46,071		41,739		38,162		29,334
Total assets	$	3,678,471	$	3,553,515	$	3,516,806	$	3,421,539	$	3,352,801
Liabilities:
Deposits:
Noninterest-bearing	$	746,089	$	772,765	$	769,935	$	747,558	$	759,986
Interest-bearing		2,489,878		2,273,833		2,354,205		2,163,725		2,204,878
Total deposits		3,235,967		3,046,598		3,124,140		2,911,283		2,964,864
Short-term borrowings		17,280		114,930		14,700		129,170
Long-term debt		25,000		555		1,104		1,646		2,182
Subordinated debt		33,000		33,000		33,000		33,000		33,000
Accrued interest payable		2,304		903		1,129		1,269		844
Other liabilities		36,286		42,179		40,923		33,274		31,450
Total liabilities		3,349,837		3,238,165		3,214,996		3,109,642		3,032,340
Stockholders’ equity:
Common stock		14,323		14,321		14,330		14,346		14,352
Capital surplus		126,231		126,850		126,845		126,986		127,192
Retained earnings		237,522		230,515		224,238		217,139		210,584
Accumulated other comprehensive loss		(49,442)		(56,336)		(63,603)		(46,574)		(31,667)
Total stockholders’ equity		328,634		315,350		301,810		311,897		320,461
Total liabilities and stockholders’ equity	$	3,678,471	$	3,553,515	$	3,516,806	$	3,421,539	$	3,352,801

12

Peoples Financial Services Corp.

Loan and Asset Quality Data (Unaudited)

(In thousands)

At period end	March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022
Commercial
Taxable	$	375,033	$	377,215	$	371,164	$	371,153	$	370,574
Non-taxable		224,343		222,043		224,764		225,656		210,184
Total		599,376		599,258		595,928		596,809		580,758
Real estate
Commercial real estate		1,782,911		1,709,827		1,620,116		1,569,658		1,436,196
Residential		342,459		330,728		326,223		317,672		306,068
Total		2,125,370		2,040,555		1,946,339		1,887,330		1,742,264
Consumer
Indirect Auto		86,587		76,491		70,006		69,161		64,870
Consumer Other		6,710		13,812		11,433		12,279		9,789
Total		93,297		90,303		81,439		81,440		74,659
Total	$	2,818,043	$	2,730,116	$	2,623,706	$	2,565,579	$	2,397,681

	Mar 31		Dec 31		Sept 30		June 30		Mar 31
At quarter end	2023		2022		2022		2022		2022
Nonperforming assets:
Nonaccrual/restructured loans	$	1,798	$	3,386	$	3,938	$	4,387	$	4,573
Accruing loans past due 90 days or more		59		748		280		190		103
Foreclosed assets
Total nonperforming assets	$	1,857	$	4,134	$	4,218	$	4,577	$	4,676

		Mar 31		Dec 31		Sept 30		June 30		Mar 31
Three months ended		2023		2022		2022		2022		2022
Allowance for credit losses:
Beginning balance	$	27,472	$	29,822	$	29,374	$	28,407	$	28,383
ASU 2016-13 Transition Adjustment		(3,283)
Adjusted beginning balance		24,189		29,822		29,374		28,407		28,383
Charge-offs		75		233		101		98		355
Recoveries		66		32		99		115		79
Provision for credit losses		1,264		(2,149)		450		950		300
Ending balance	$	25,444	$	27,472	$	29,822	$	29,374	$	28,407

13

Peoples Financial Services Corp.

Deposit and Liquidity Detail (Unaudited)

(In thousands)

At period end	March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022
Interest-bearing deposits:
Money market accounts	$	775,511	$	685,323	$	706,947	$	592,989	$	605,686
Interest bearing demand and NOW accounts		698,888		772,712		813,743		752,397		797,333
Savings accounts		500,709		523,931		530,124		518,146		515,169
Time deposits less than $250		400,327		199,136		224,517		219,690		200,345
Time deposits $250 or more		114,443		92,731		78,874		80,503		86,345
Total interest-bearing deposits		2,489,878		2,273,833		2,354,205		2,163,725		2,204,878
Noninterest-bearing deposits		746,089		772,765		769,935		747,558		759,986
Total deposits	$	3,235,967	$	3,046,598	$	3,124,140	$	2,911,283	$	2,964,864

		March 31, 2023
At period end		Amount	Percent of Total		Number of accounts		Average Balance
Deposit Detail:
Retail	$	1,572,393	48.6	%	71,100	$	22
Commercial		1,076,060	33.3		11,659		93
Municipal		402,544	12.4		1,366		303
Brokered		184,970	5.7		18		10,276
Total Deposits	$	3,235,967	100.0		84,143	$	10,695
Uninsured		757,373	23.4	%
Insured		2,478,594	76.6
		December 31, 2022
At period end		Amount	Percent of Total		Number of accounts		Average Balance
Deposit Detail:
Retail	$	1,568,208	51.5	%	76,972	$	20
Commercial		956,969	31.4		11,560		84
Municipal		497,807	16.3		1,383		371
Brokered		23,614	0.8		11		2,147
Total Deposits	$	3,046,598	100.00		89,926	$	2,623
Uninsured		724,595	23.8	%
Insured		2,322,003	76.2

					Total Available
At March 31, 2023		Total Available		Outstanding		for Future Liquidity
FHLB advances	$	1,180,971	$	317,149	$	863,822
Federal Reserve discount window		225,037				225,037
Correspondent bank lines of credit		18,000				18,000
Other sources of liquidity:
Brokered deposits		367,847		184,970		182,877
Unencumbered securities		391,116				391,116
Total sources of liquidity	$	2,182,971	$	502,119	$	1,680,852

14

Peoples Financial Services Corp.

Consolidated Balance Sheets (Unaudited)

(In thousands)

	Mar 31		Dec 31		Sept 30		June 30		Mar 31
Average quarterly balances	2023		2022		2022		2022		2022
Assets:
Loans, net:
Taxable	$	2,546,068	$	2,441,358	$	2,377,803	$	2,254,405	$	2,148,251
Tax-exempt		223,917		223,293		225,637		211,885		203,645
Total loans, net		2,769,985		2,664,651		2,603,440		2,466,290		2,351,896
Investments:
Taxable		499,327		528,826		544,782		553,078		523,301
Tax-exempt		100,368		111,206		111,578		111,138		110,394
Total investments		599,695		640,032		656,360		664,216		633,695
Interest-bearing balances with banks		1,218		4,649		9,180		10,694		5,888
Federal funds sold		19,353		14,477		13,665		23,920		162,218
Total interest-earning assets		3,390,251		3,323,809		3,282,645		3,165,120		3,153,697
Other assets		184,594		169,153		180,861		181,900		187,864
Total assets	$	3,574,845	$	3,492,962	$	3,463,506	$	3,347,020	$	3,341,561
Liabilities and stockholders’ equity:
Deposits:
Interest-bearing	$	2,337,951	$	2,301,974	$	2,228,829	$	2,167,569	$	2,211,629
Noninterest-bearing		744,931		758,889		770,833		756,225		734,348
Total deposits		3,082,882		3,060,863		2,999,662		2,923,794		2,945,977
Short-term borrowings		91,530		49,444		78,922		34,953
Long-term debt		2,482		814		1,369		1,901		2,474
Subordinated debt		33,000		33,000		33,000		33,000		33,000
Other liabilities		38,917		41,436		38,840		33,080		29,816
Total liabilities		3,248,811		3,185,557		3,151,793		3,026,728		3,011,267
Stockholders’ equity		326,034		307,405		311,713		320,292		330,294
Total liabilities and stockholders’ equity	$	3,574,845	$	3,492,962	$	3,463,506	$	3,347,020	$	3,341,561

15

Peoples Financial Services Corp.

Reconciliation of Non-GAAP Financial Measures (Unaudited)

(In thousands, except share and per share data)

	Mar 31			Dec 31			Sept 30			June 30			Mar 31
Three months ended	2023			2022			2022			2022			2022
Core net income per share:
Net income GAAP	$	7,579		$	9,139		$	9,968		$	9,353		$	9,630
Adjustments:
Less: Loss on sale of available for sale securities		81			(1,976)
Add: Loss on sale of available for sale securities tax adjustment		17			(415)
Core net income	$	7,515		$	10,700		$	9,968		$	9,353		$	9,630
Average common shares outstanding - diluted		7,198,970			7,201,785			7,213,147			7,215,365			7,216,421
Core net income per share	$	1.04		$	1.49		$	1.38		$	1.30		$	1.33
Tangible book value:
Total stockholders’ equity	$	328,634		$	315,350		$	301,810		$	311,897		$	320,461
Less: Goodwill		63,370			63,370			63,370			63,370			63,370
Less: Other intangible assets, net		77			105			179			276			372
Total tangible stockholders’ equity	$	265,187		$	251,875		$	238,261		$	248,251		$	256,719
Common shares outstanding		7,150,757			7,158,018			7,162,750			7,170,661			7,179,037
Tangible book value per share	$	37.09		$	35.19		$	33.26		$	34.62		$	35.76
Core return on average stockholders’ equity:
Net income GAAP	$	7,579		$	9,139		$	9,968		$	9,353		$	9,630
Adjustments:
Less: Loss on sale of available for sale securities		81			(1,976)
Add: Loss on sale of available for sale securities tax adjustment		17			(415)
Core net income	$	7,515		$	10,700		$	9,968		$	9,353		$	9,630
Average stockholders’ equity	$	326,034		$	307,405		$	311,713		$	320,292		$	330,294
Core return on average stockholders’ equity		9.35	%		13.81	%		12.69	%		11.71	%		11.82	%
Return on average tangible equity:
Net income GAAP	$	7,579		$	9,139		$	9,968		$	9,353		$	9,630
Average stockholders’ equity	$	326,034		$	307,405		$	311,713		$	320,292		$	330,294
Less: average intangibles		63,461			63,512			63,549			63,694			63,790
Average tangible stockholders’ equity	$	262,573		$	243,893		$	248,164		$	256,598		$	266,504
Return on average tangible stockholders’ equity		11.71	%		14.87	%		15.94	%		14.62	%		14.65	%
Core return on average tangible stockholders’ equity:
Net income GAAP	$	7,579		$	9,139		$	9,968		$	9,353		$	9,630
Adjustments:
Less: Loss on sale of available for sale securities		81			(1,976)
Add: Loss on sale of available for sale securities tax adjustment		17			(415)
Core net income	$	7,515		$	10,700		$	9,968		$	9,353		$	9,630
Average stockholders’ equity	$	326,034		$	307,405		$	311,713		$	320,292		$	330,294
Less: average intangibles		63,461			63,512			63,549			63,694			63,790
Average tangible stockholders’ equity	$	262,573		$	243,893		$	248,164		$	256,598		$	266,504
Core return on average tangible stockholders’ equity		11.61	%		17.41	%		15.94	%		14.62	%		14.65	%
Core return on average assets:
Net income GAAP	$	7,579		$	9,139		$	9,968		$	9,353		$	9,630
Adjustments:
Less: Loss on sale of available for sale securities		81			(1,976)
Add: Loss on sale of available for sale securities tax adjustment		17			(415)
Core net income	$	7,515		$	10,700		$	9,968		$	9,353		$	9,630
Average assets	$	3,574,845		$	3,492,962		$	3,463,506		$	3,347,020		$	3,341,561
Core return on average assets		0.85	%		1.22	%		1.14	%		1.12	%		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 tables reconcile the non-GAAP financial measures of FTE net interest income for the three months ended March 31, 2023 and 2022:

Three months ended March 31	2023		2022
Interest income (GAAP)	$	34,278	$	24,571
Adjustment to FTE		487		445
Interest income adjusted to FTE (non-GAAP)		34,765		25,016
Interest expense		11,234		1,940
Net interest income adjusted to FTE (non-GAAP)	$	23,531	$	23,076

The efficiency ratio is noninterest expenses, less amortization of intangible assets, as a percentage of FTE net interest income plus noninterest income. The following tables reconcile the non-GAAP financial measures of the efficiency ratio to GAAP for the three months ended March 31, 2023 and 2022:

Three months ended March 31	2023			2022
Efficiency ratio (non-GAAP):
Noninterest expense (GAAP)	$	16,486		$	14,289
Less: amortization of intangible assets expense		29			96
Noninterest expense adjusted for amortization of assets expense (non-GAAP)		16,457			14,193
Net interest income (GAAP)		23,044			22,631
Plus: taxable equivalent adjustment		487			445
Noninterest income (GAAP)		3,674			3,421
Less: Net gains (losses) on equity securities		(29)			4
Less: Gain on sale of available for sale securities		81
Net interest income (FTE) plus noninterest income (non-GAAP)	$	27,153		$	26,493
Efficiency ratio (non-GAAP)		60.61	%		53.57	%

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