balance low-yielding federal funds into higher-yielding US Treasury securities. As of June 30, 2022, the available-for-sale investment portfolio showed an unrealized loss of $53.1 million, compared to an unrealized loss of $1.8 million as of December 31, 2021, the result of rapidly rising rates of interest as the FOMC rose three times from March to June 2022 for a total of 150 basis points. The sold balance of our federal funds of $242.4 million as of December 31, 2021 was used to fund our loan growth and investment purchases during the period. Total deposits decreased by $52.1 million from December 31, 2021 as we experienced an outflow of public funds deposits. Non-interest bearing deposits increased by $9.8 million, or 1.3%, and interest bearing deposits decreased by $61.9 million, or 2.8%, during the six months ended 30 June 2022. Short-term borrowings were used to fund some of our loan growth and offset deposit outflows and as of June 30, 2022 totaled $129.2 million.

Equity was $311.9 million or $43.50 per share as of June 30, 2022 and $340.1 million or $47.44 per share as of December 31, 2021. The decrease in equity by December 31, 2021 is primarily attributable to a decrease in accumulated other income (AOCI) resulting from an increase in unrealized loss on investment securities and dividends paid to shareholders, partially offset by net income . Tangible equity decreased to $34.62 per share as of June 30, 2022 from $38.54 per share as of December 31, 2021. Dividends declared for the six months ended June 30, 2022 were $0.78 per share, an increase of 5.4% compared to the 2021 period, representing a payout ratio of 29.5%. During the quarter ended June 30, 2022, 6,853 shares were purchased and withdrawn under the Company’s common share buyback plan.


Non-performing assets represented $4.6 million or 0.18% of loans, net assets and foreclosed as of June 30, 2022, compared to $5.0 million or 0.21% of loans, net assets and foreclosed as of December 31 2021. As a percentage of total assets, non-performing assets improved to 0.13% as of June 30, 2022 compared to 0.15% as of December 31, 2021. The decrease in non-performing assets compared to the end of the year is primarily due to the sale during the current period of our foreclosed properties which totaled $0.5 million. as of December 31, 2021; as of June 30, 2022, we have no foreclosed properties.

The Company’s loan loss provision increased to $29.4 million as net write-offs of $0.3 million were offset by a loan loss provision of $1.3 million. The loan loss allowance at June 30, 2022 continued to reflect allowances added in 2020 following our adjustment of qualitative factors in our loan loss allowance methodology, due to the economic decline and the expectation of an increase in credit losses due to the negative impact of COVID-19 on the economy. and business operating conditions. The allowance for loan losses was $29.4 million or 1.14% of loans, net as of June 30, 2022, compared to $28.4 million or 1.22% of loans, net, as of June 31, 2022. December 2021. Excluding PPP loans which have no provision for loan losses due to a 100% government guarantee, the ratio was 1.16% as of June 30, 2022. Loans written off, net of of recoveries, for the six months ended June 30, 2022, amounted to $0.3 million or 0.02% of average loans, compared to $0.2 million or 0.02% of average loans for the comparable period of the previous 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 full range of financial products and services to individuals, businesses, non-profit organizations and government entities. Peoples’ business philosophy includes providing direct access to senior management and other leaders and providing friendly, informed and courteous service, local and timely decision-making, operating procedures flexible and reasonable and consistently applied credit policies.

In addition to evaluating its results of operations in accordance with U.S. generally accepted accounting principles (“GAAP”), Peoples regularly supplements its evaluation with an analysis of certain non-GAAP financial measures, such as tangible equity and basic net income ratios. The reported results included in this release contain items that Peoples considers non-essential, namely the gain on the sale of Visa’s Class B shares. Peoples believes that the published non-GAAP financial measures provide useful information for investors to understand its performance and operating trends. Where non-GAAP information is used in this press release, a reconciliation to the comparable GAAP measure is provided in the accompanying tables. Non-GAAP financial measures used by Peoples may differ from non-GAAP financial measures of other financial institutions.

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