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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 2002, or
( ) Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 for the transition period from
No. 0-23863
(Commission File Number)
PEOPLES FINANCIAL SERVICES CORP.
(Exact Name of Registrant as Specified in its Charter)
Pennsylvania 23-2931852
(State of Incorporation) (IRS Employer ID Number)
50 Main Street
Hallstead, PA 18822
(Address of Principal Executive Offices) (Zip Code)
(570) 879-2175
(Registrant's Telephone Number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months or for such shorter period that the registrant was
required to file such reports, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No____
Number of shares outstanding as of November 12, 2002
COMMON STOCK ($2 Par Value) 2,099,550
--------------------------- --------------------------
(Title of Class) (Outstanding Shares)
PEOPLES FINANCIAL SERVICES CORP.
FORM 10-Q
For the Quarter Ended September 30, 2002
Contents
PART I. FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Consolidated Balance Sheets
as of September 30, 2002 (Unaudited)
and December 31, 2001 (Audited) 3
Consolidated Statements of Income
(Unaudited) for the Three Months and the Nine Months
Ended September 30, 2002, and 2001 4
Consolidated Statements of Stockholders'
Equity (Unaudited) for the Nine Months
Ended September 30, 2002, and 2001 5
Consolidated Statements of Cash Flows
(Unaudited) for the Nine Months
Ended September 30, 2002, and 2001 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosure 18
About Market Risk
Item 4. Controls and Procedures 18
PART II. OTHER INFORMATION 19
Item 1. Legal Proceedings 19
Item 2. Changes in Securities 19
Item 3. Defaults in Senior Securities 19
Item 4. Submission of Matters for Security Holder Vote 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 20
PEOPLES FINANCIAL SERVICES CORP.
CONSOLIDATED BALANCE SHEET
September 30, 2002 (UNAUDITED) and December 31, 2001
(In thousands, except per share data)
ASSETS: Sept 30, Dec 31,
2002 2001
--------- ----------
Cash and Due from Banks ..................... $ 8,465 $ 7,172
Interest Bearing Deposits with Other Banks... 101 107
--------- ---------
Cash and Cash Equivalents ................... 8,566 7,279
Securities Available for Sale ............... 105,691 100,783
Loans ....................................... 216,552 193,729
Allowance for Loan Loss ..................... (1,896) (1,816)
--------- ---------
Loans, Net .................................. 214,656 191,913
Bank Premises and Equipment, Net ............ 3,713 3,371
Accrued Interest Receivable ................. 2,139 2,282
Other Assets ................................ 9,534 9,719
--------- ---------
TOTAL Assets ................................ $ 344,299 $ 315,347
========= =========
LIABILITIES
Deposits, Non-Interest Bearing .............. $ 35,117 $ 30,664
Deposits, Interest Bearing .................. 224,376 208,227
--------- ---------
Total Deposits .............................. 259,493 238,891
Accrued Interest Payable .................... 659 703
Short-term Borrowings ....................... 11,316 21,338
Long-term Borrowings ........................ 34,822 20,000
Other Liabilities ........................... 853 661
--------- ---------
TOTAL Liabilities ........................... 307,143 281,593
========= =========
STOCKHOLDERS' EQUITY
Common Stock * .............................. 4,455 4,455
Surplus ..................................... 4,611 4,611
Retained Earnings ........................... 28,921 26,851
Accumulated Other Comprehensive Income ...... 2,035 536
Treasury Stock at Cost ...................... (2,866) (2,699)
--------- ---------
TOTAL Stockholders' Equity .................. 37,156 33,754
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY... $ 344,299 $ 315,347
========= =========
*Common Stock, par value $2 per share,12,500,000 shares authorized: 2,227,500
shares issued; 2,099,550 and 2,105,836 shares outstanding at September 30, 2002
and December 31, 2001, respectively
See Notes to Consolidated Financial Statements
PEOPLES FINANCIAL SERVICES CORP.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands, except per share data) Nine Months Ended Three Months Ended
Sept 30, Sept 30, Sept 30, Sept 30,
2002 2001 2002 2001
------- -------- -------- -------
INTEREST INCOME:
Loans Receivable, including fees ................ 11,387 11,090 3,872 3,757
Securities, Taxable ............................. 2,887 3,198 976 1,094
Tax Exempt ........................... 998 1,143 336 366
Dividends ............................ 51 64 10 22
Other ........................................... 23 180 5 48
------- ------- ------- ------
Total Interest Income ........................... 15,346 15,675 5,199 5,287
INTEREST EXPENSE:
Deposits ........................................ 5,023 6,720 1,573 2,179
Borrowed Funds .................................. 1,295 989 450 324
------- ------- ------- ------
Total Interest Expense .......................... 6,318 7,709 2,023 2,503
Net Interest Income ............................. 9,028 7,966 3,176 2,784
Provision for Loan Losses ....................... 120 20 60 0
------- ------- ------- ------
Net Interest Income, after Loan Loss Provision... 8,908 7,946 3,116 2,784
OTHER INCOME (LOSSES):
Customer Service Fees ........................... 870 831 313 284
Gains (losses) on Security Sales ................ 148 45 66 16
Impairment of Security .......................... (850) 0 0 0
Other ........................................... 501 397 169 172
------- ------- ------- ------
Total Other Income (Losses) ..................... 669 1,273 548 472
OTHER EXPENSES:
Salaries and Benefits ........................... 2,463 2,233 872 745
Occupancy ....................................... 297 217 102 75
Furniture and Equipment ......................... 254 289 73 92
FDIC Insurance and Assessments .................. 97 89 33 30
Professional Fees and Outside Services .......... 165 166 50 57
Computer Services and Supplies .................. 337 294 113 111
Taxes, Other Than Payroll and Income ............ 238 216 81 75
Other ........................................... 1,250 988 325 335
------- ------- ------- ------
Total Other Expenses ............................ 5,101 4,492 1,649 1,520
------- ------- ------- ------
Income Before Income Taxes ...................... 4,476 4,727 2,015 1,736
Federal Income Taxes ............................ 1,038 1,178 513 446
------- ------- ------- ------
Net Income ...................................... 3,438 3,549 1,502 1,290
======= ======= ======= ======
Earnings Per Share, Basic ....................... 1.64 1.67 0.72 0.61
Earnings Per Share, Diluted ..................... 1.63 1.67 0.71 0.61
See Notes to Consolidated Financial Statements
PEOPLES FINANCIAL SERVICES CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(UNAUDITED)
(In thousands, except per share data) Accumulated
Other
Common Surplus Undivided Comprehensive Treasury Total
Stock Profit Income Stock
-------- --------- -------- ------------- --------- ---------
Balance, December 31, 2001 ............................$ 4,455 $ 4,611 $ 26,851 $ 536 ($ 2,699) $ 33,754
--------
Comprehensive Income
Net Income ........................................ 0 0 3,438 0 0 3,438
Net change in Unrealized gains (losses) on
securities available for sale, net of Taxes.... 0 0 0 1,499 0 1,499
--------
Cash Dividends Paid, 2002 ($0.65 per share) ............ 0 0 (1,368) 0 0 (1,368)
Treasury Stock Purchase ................................ 0 0 0 0 (167) (167)
--------
Balance, Sept 30, 2002 ................................$ 4,455 $ 4,611 $ 28,921 $ 2,035 ($ 2,866) $ 37,156
======== ======== ======== ======== ======== ========
Balance, December 31, 2000 ............................$ 4,455 $ 4,611 $ 23,544 ($ 130) ($ 1,628) $ 30,852
--------
Comprehensive Income
Net Income ........................................ 0 0 3,549 0 0 3,549
Net change in Unrealized gains (losses) on
securities available for sale, net of Taxes.... 0 0 0 1,371 0 1,371
Cash Dividends Paid, 2001 ($0.46 per share) ............ 0 0 (1,129) 0 0 (1,129)
--------
Treasury Stock Purchase ................................ 0 0 0 0 (1,014) (1,014)
--------
Balance, Sept 30, 2001 ................................$ 4,455 $ 4,611 $ 25,964 $ 1,241 ($ 2,642) $ 33,629
======== ======== ======== ======== ======== ========
See Notes to Consolidated Financial Statements
PEOPLES FINANCIAL SERVICES CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands) Nine Months Ended
Sept 30, Sept 30,
2002 2001
-------- --------
Cash Flows from Operating Activities
Net Income ........................................................$ 3,438 $ 3,549
Adjustments: Depreciation and amortization......................... 272 287
Provision for Loan Losses................................ 120 20
Gain/Loss on sale of equipment ............................ 0 0
Gain/loss on sale of other real estate .................... 22 16
Amortization of securities' premiums and accretion of discounts.... 190 52
(Gains) Losses on sales of investment securities, net.............. (148) (45)
Impairment of Security............................................. 850 0
Increase in accrued interest receivable............................ 143 61
Increase/Decrease in other assets.................................. (544) (42)
Increase/Decrease in accrued interest payable...................... (44) (21)
Increase/Decrease in other liabilities............................. 192 251
-------- --------
Net cash provided by operating activities.......................... 4,491 4,128
-------- --------
Cash Flows from investing activities
Proceeds from sale of available for sale securities................ 17,993 6,574
Proceeds from maturities of available for sale securities ......... 14,717 16,025
Purchase of available for sale securities ......................... (43,710) 27,697)
Principal payments on mortgage-backed securities................... 7,471 3,712
Net increase in loans ............................................. (22,967) (14,866)
Purchase of premises and equipment................................ (614) (234)
Proceeds from sale of other real estate............................ 39 184
Purchase of Investment in Life Insurance .......................... 0 (4,000)
-------- --------
Net cash used in investing activities ............................. (27,071) (20,302)
-------- --------
Cash flows from financing activities
Cash dividends paid ............................................... (1,368) (1,129)
Increase in deposits .............................................. 20,602 15,751
Net Increase/Decrease in long-term borrowing....................... 14,822 0
Net Increase/Decrease in short-term borrowing ..................... (10,022) 3,004
Purchase of treasury stock ........................................ (167) (1,014)
-------- --------
Net cash provided by financing activities ......................... 23,867 16,612
-------- --------
Net Increase/Decrease in cash/cash equivalents..................... 1,287 438
Cash and cash equivalents, beginning of year....................... 7,279 7,597
-------- --------
Cash and cash equivalents,end of period............................ 8,566 8,035
======== ========
Supplemental disclosures of cash paid
Interest Paid...................................................... 5,023 7,709
======== ========
Income Taxes Paid ................................................. 891 1,176
======== ========
Non-cash investing and financing activities
Transfers from loans to real estate through foreclosure............ 105 206
======== ========
See Notes to Consolidated Financial Statements
PEOPLES FINANCIAL SERVICES CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Peoples Financial
Services Corp. (the "Corporation" or the "Company") and its wholly owned
subsidiary, Peoples National Bank (the "Bank"). All material intercompany
accounts and transactions have been eliminated in consolidation.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. Management believes that all adjustments considered
necessary for a fair presentation have been included and are of a normal,
recurring nature. Operating results for the nine month period ended September
30, 2002, are not necessarily indicative of the results that may be expected for
the year ended December 31, 2002. For further information, refer to the
financial statements and footnotes included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2001.
2. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings
per share:
Three Months Ended Nine Months Ended
Sept 30, Sept 30, Sept 30, Sept 30,
2002 2001 2002 2001
---------- ---------- ---------- -----------
Net income applicable to common stock ............. $1,502,000 $1,290,000 $3,438,000 $3,549,000
Weighted average common shares outstanding ........ 2,099,550 2,114,583 2,102,086 2,125,229
Effect of dilutive securities, stock options ...... 4,182 0 3,849 0
--------- ---------- ---------- ----------
Weighted average common shares outstanding
used to calculated diluted earnings per share...... 2,103,732 2,114,583 2,105,935 2,125,229
Basic earnings per share .......................... $ 0.72 $ 0.61 $ 1.64 $ 1.67
Diluted earnings per share ........................ $ 0.71 $ 0.61 $ 1.63 $ 1.67
3. OTHER COMPREHENSIVE INCOME
The components of other comprehensive income and related tax effects for the
nine months ended September 30, 2002 and 2001 are as follows:
(In thousands)
Nine Months Ended
Sept 30, Sept 30,
2002 2001
------- ------
Unrealized Holding Gains (Losses) on Available for Sale Securities ................ $ 1,569 $ 2,122
Less: Reclassification Adjustment for Gains (Losses) Realized in Net Income........ (702) 45
------ ------
2,271 2,077
Tax Effect ........................................................................ (772) (706)
------ ------
Other Comprehensive Income ........................................................ $ 1,499 $ 1,371
====== ======
4. IMPAIRMENT OF SECURITY
Peoples Financial Services Corp., through its subsidiary, Peoples National Bank
holds an approximate $1 million (face value) WorldCom Group corporate bond in
its investment security portfolio. Peoples Financial Services Corp. recorded a
$850,000 impairment loss on this security in the second quarter ended June 30,
2002, related to the decline in market value of its WorldCom security.
It is reasonably possible that the loss estimate could change and the change
could be material,because the ultimate resolution of this matter is presently
unknown.
5. BRANCH ACQUISITION
On March 6, 2002, the Bank acquired certain assets, including furniture and
equipment, and assumed certain liabilities, including deposits and a premises
lease, of a branch located in Norwich, New York. The purchase price was
$50,000 (deposit premium) plus the book value cost of the personal property,
$110,000. Deposits assumed were $4,264,000.
6. NEW ACCOUNTING STANDARDS
In June of 2001, the Financial Accounting Standards Board issued Statement No.
142, "Goodwill and Other Intangible Assets."
Statement No. 142 prescribes that goodwill associated with a business
combination and intangible assets with an indefinite useful life should not be
amortized but should be tested for impairment at least annually. The Statement
requires intangibles that are separable from goodwill and that have a
determinable useful life to be amortized over the determinable useful life. The
provisions of this Statement became effective for the Company in January of
2002. Upon adoption of this Statement, goodwill and other intangible assets
arising from acquisitions completed before July 1, 2001 are accounted for in
accordance with the provisions of this Statement.
At January 1, 2002, the Company had core deposit acquisition premiums with a net
book value of $2,627,000, which will continue to be amortized under the new
rules.
In June of 2001, the Financial Accounting Standards Board issued Statement No.
143, "Accounting for Asset Retirement Obligations," which addresses the
financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
cost. This Statement requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The associated asset retirement
costs are capitalized as part of the carrying amount of the long-lived asset.
This Statement will become effective for the Company on January 1, 2003 but is
not expected to have a significant impact on the financial condition or results
of operations.
In April 2002, the Financial Accounting Standards Board issued Statement No.
145. "Rescission of Statements No.4, 44 and 64, Amendment of Statement No. 13".
This statement requires that debt extinguishment no longer be classified as an
extraordinary item because debt extinguishment has become a risk management
strategy for many companies. It also eliminates the inconsistent accounting
treatment for sale-leaseback transactions and for certain lease modifications
that have economic effects similar to sale-leaseback transactions. This
statement became effective as of May 15, 2002, and did not have a significant
impact on the Corporation's financial condition or results of operations.
In June 2002, the Financial Accounting Standards Board issued Statement No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities", which
nullifies EITF Issue 94-3, "Liability Recognition for Certain Employee
Termination Benefits and other Costs to Exit and Activity (including certain
costs incurred in a restructuring)." This statement delays recognition of these
costs until liabilities are incurred and requires fair value measurement. It
does not impact the recognition of liabilities incurred in connection with a
business combination or the disposal of long-lived assets. The provisions of
this statement are effective for exit or disposal activities initiated after
December 31,2002, and are not expected to have a significant impact on the
Corporation's financial condition or results of operations.
In October 2002, the Financial Accounting Standards Board issued Statement No.
147, "Acquisitions of Certain Financial Institutions." This statement provides
guidance on accounting for the acquisition of a financial institution, including
the acquisition of part of a financial institution. The statement defines the
criteria for determining whether the acquired financial institution meets the
conditions for a "business combination". If the acquisition meets the conditions
of a "business combination", the specialized accounting guidance under Statement
No. 72, "Accounting for Certain Acquisitions of Banking or Thrift Institutions"
will not apply after September 30, 2002, and the amount of the unidentifiable
intangible asset will be reclassified to goodwill upon adoption of Statement No.
147. The transition provisions were effective October 1, 2002, and did not have
a significant impact on the Corporation's financial condition or results of
operations.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
We present the following discussion and analysis of the consolidated financial
statements of the Corporation to provide insight into management's assessment
of financial results. The Corporation's only subsidiary, Peoples National Bank
provides financial services to individuals and businesses within the Bank's
primary market area made up of Susquehanna, Wyoming and northern Lackawanna
counties in Pennsylvania, and southern Broome County in New York. The Bank also
operates a branch in Norwich, New York. The Bank is a member of the Federal
Reserve System and is subject to regulation, supervision, and examination by the
Office of the Comptroller of the Currency. Current performance does not
guarantee and may not be indicative of similar performance in the future.
CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING INFORMATION
Except for historical information, this Report may be deemed to contain "forward
looking" information. Examples of forward looking information may include, but
are not limited to (a) projections of or statements regarding future earnings,
interest income, other income, earnings or loss per share, asset mix and
quality, growth prospects, capital structure and other financial terms, (b)
statements of plans and objectives of management or the Board of Directors, (c)
statements of future economic performance, and (d) statements of assumptions,
such as economic conditions in the market areas served by the Corporation and
the Bank, underlying other statements and statements about the Corporation and
the Bank or their respective businesses. Such forward looking information can be
identified by the use of forward looking terminology such as "believes,"
"expects," "may," "intends," "will," "should," "anticipates," or the negative of
any of the foregoing or other variations thereon or comparable terminology, or
by discussion of strategy. We can give no assurance that we will acheive the
future results covered by the forward looking information will be achieved. Such
statements are subject to risks, uncertainties, and to other factors, which
could cause actual results to differ materially from future results expressed or
implied by such forward looking information. Important factors that could impact
operating results include, but are not limited to, (i) the effects of changing
economic conditions in both the market areas served by the Corporation and the
Bank and nationally, (ii) credit risks of commercial, real estate, consumer and
other lending activities, (iii) significant changes in interest rates, (iv)
changes in federal and state banking laws and regulations which could affect
operations, (v) funding costs, and (vi) other external developments which could
materially affect business and operations.
CRITICAL ACCOUNTING POLICIES
Disclosure of the Company's significant accounting policies is included in Note
1 to the consolidated financial statements of the Company's Annual Report on
Form 10-K for the year ended December 31, 2001. Some of these policies are
particularly sensitive requiring that management make significant judgements,
estimates and assumptions. Additional information is contained on page 16 of
this report for the provision and allowance for loan losses.
OVERVIEW
Net income for the nine months ended September 30, 2002, decreased 3.13% to
$3.438 million as compared to $3.549 million for the nine months ended September
30, 2001. Diluted earnings per share decreased 2.40% to $1.63 per share for the
nine months ended September 30, 2002, from $1.67 per share for the nine months
ended September 30, 2001. Net income for the three months ended September 30,
2002, increased 16.43% or $212 thousand to $1.502 million as compared to $1.290
million for the three months ended September 30, 2001. Diluted earnings per
share increased 16.39% to $0.71 per share for the three months ended September
30, 2002, from $0.61 per share for the three months ended September 30, 2001. At
September 30, 2002, the Company had total assets of $344.299 million, total
loans of $214.656 million, and total deposits of $259.493 million.
FINANCIAL CONDITION
Cash and Cash Equivalents:
At September 30, 2002, cash, federal funds sold, and deposits with other banks
were $8.566 million as compared to $7.279 million at December 31, 2001. The
increase over the nine months of 2002 has been due mainly to an increase in
reserve requirements of the Federal Reserve Bank, which resulted in an increase
of $618 thousand in reserve balances as of September 30, 2002, when compared to
December 31, 2001.
Management believes the liquidity needs of the Corporation are satisfied by the
current balance of cash and cash equivalents, readily available access to
traditional funding sources, and the portion of the investment and loan
portfolios that matures within one year. The continuous decline in interest
rates continues to increase liquidity. The current sources of funds will enable
the Corporation to meet all its cash obligations as they come due.
Investments:
Investments were $105.691 million at September 30, 2002, increasing by $4.908
million from the December 31, 2001 total of $100.783 million. This increase is
the result of an arbitrage the Bank entered into in which a $5 million, 10-year
FHLB advance was matched against $5 million in 10-year municipal securities.
The transaction was entered into in September 2002 for the purpose of locking
in an attractive interest spread over the ten year term of the FHLB advance.
In the second quarter of 2002, the Company recognized an $850,000 impairment
loss on its $1 million investment in a WorldCom Group bond. The carrying value
of the bond is $150,000. WorldCom has declared bankruptcy and the ultimate
collectibility of the carrying value is presently unknown.
The investment portfolio is held as available for sale. This strategy was
implemented in 1995 to provide more flexibility in using the investment
portfolio for liquidity purposes as well as providing more flexibility in
selling when market opportunities occur.
Investments available for sale are accounted for at fair value with unrealized
gains or losses, net of deferred income taxes, reported as separate component of
stockholders' equity. The carrying value of investments as of September 30,
2002, included an unrealized gain of $3,084,000 reflected as accumulated other
comprehensive income of $2,035,000 in shareholders' equity, net of deferred
income taxes of $1,049,000. This compares to an unrealized gain of $812,000 at
December 31, 2001 reflected as accumulated other comprehensive income of
$536,000, net of deferred income taxes of 276,000.
Management monitors the earnings performance and effectiveness of liquidity of
the investment portfolio on a monthly basis through the Asset/Liability
Committee ("ALCO"). The ALCO also reviews and manages interest rate risk for the
Corporation. Through active balance sheet management and analysis of the
investment securities portfolio, the Corporation maintains sufficient liquidity
to satisfy depositor requirements and various credit needs of its customers.
Borrowings:
The Bank utilizes borrowings as a source of funds for its asset/liability
management. Advances are available from the FHLB provided certain standards
related to credit worthiness have been met. Repurchase and term agreements are
also available from the FHLB.
Total short-term borrowings at September 30, 2002, were $11.316 million as
compared to $21.338 million on December 31, 2001, showing a decrease of $10.022
million. This was due in large part to an increase in long-term borrowings at
the Federal Home Loan Bank, which were $34.822 million at September 30, 2002, as
compared to $20 million at December 31, 2001. The Bank has taken an
additional $15 million in long term borrowings in the nine months ended
September 30, 2002.
Loans:
The Bank's loan volume has continued to grow during the first nine months of
2002. The September 30, 2002, total was $214.656 million compared to the
December 31, 2001 total of $191.913 million. This shows a growth of $22.743
million in the last nine-month period. The growth is the result of loan demand
within the communities in which the Bank's branches operate, as well as
commercial loan demand in those same areas.
Increasing the loan to deposit ratio is a goal of the Bank, but loan quality is
always considered in this effort. Management continues its efforts to
maintain strong underwriting standards for both commercial and consumer credit.
The Bank's lending continues to consist primarily of retail lending which
includes single family residential mortgages and other consumer lending. Most
commercial lending is done primarily with locally owned small businesses.
Deposits:
Deposits are attracted from within the Bank's primary market area through the
offering of various deposit instruments including NOW accounts, money market
accounts, savings accounts, certificate of deposits, and IRAs. During the
nine-month period ended September 30, 2002, total deposits increased by $20.602
million to $259.493 million. On March 6, 2002, the Bank assumed deposits
totaling $4.3 million through the acquisition of a branch in Norwich, New York.
Capital:
The adequacy of the Corporation's capital is reviewed on an ongoing basis with
reference to the size, composition and quality of the Corporation's resources
and regulatory guidelines. Management seeks to maintain a level of capital
sufficient to support existing assets and anticipated asset growth, maintain
favorable access to capital markets, and preserve high quality credit ratings.
As of September 30, 2002, regulatory capital to total assets was 9.72% as
compared to 9.89% on December 31, 2001. The Company repurchases its stock in the
open market or from individuals as warranted to leverage the capital account and
to provide stock for a dividend reinvestment plan. In the nine months ended
September 30, 2002, the Company purchased 6,286 shares for the treasury at a
total cost of $167,000.
The Corporation has complied with the standards of capital adequacy mandated by
the banking regulators. The bank regulators have established "risk-based"
capital requirements designed to measure capital adequacy. Risk-based capital
ratios reflect the relative risks of various assets the banks hold in their
portfolios. A weight category of either 0% (lowest risk asset), 20%, 50%, or
100% (highest risk assets) is assigned to each asset on the balance sheet.
Capital is being maintained in compliance with risk-based capital guidelines.
The Company's Tier 1 capital to total risk weighted asset ratio was 14.19% and
the total capital ratio to total risk weighted assets ratio was 15.02% at
September 30, 2002. The Corporation is deemed to be well capitalized under
regulatory standards.
Liquidity and Interest Rate Sensitivity:
Liquidity measures an organization's ability to meet cash obligations as they
come due. The consolidated statement of cash flows presented in the accompanying
financial statements included in Part I of this Form 10-Q provide analysis of
the Corporation's cash and cash equivalents. Additionally, management considers
that portion of the loan and investment portfolio that matures within one year
as part of the Corporation's liquid assets.
The Company's Asset/Liability Committee (ALCO) addresses the liquidity needs of
the Bank to see that sufficient funds are available to meet credit demands and
deposit withdrawals as well as to the placement of available funds in the
investment portfolio. In assessing liquidity requirements, equal consideration
is given to the current position as well as the future outlook.
The Company's financial statements do not reflect various commitments that are
made in the normal course of business, which may involve some liquidity risk.
These commitments consist primarily of commitments to grant new loans and
unfunded commitments of existing loans and letters of credit made under the same
standards as on-balance sheet instruments. Unused commitments on September 30,
2002, totaled $27.908 million, which consisted of $18.634 million in unfunded
commitments of existing loans, $8.569 million to grant new loans and $705
thousand in letters of credit. Due to fixed maturity dates and specified
conditions within these instruments, many will expire without being drawn upon.
Management believes that amounts actually drawn upon can be funded in the normal
course of operations and therefore, do not represent a significant liquidity
risk to the Company.
The management of interest rate sensitivity seeks to avoid fluctuating net
interest margins and to provide consistent net interest income through periods
of changing interest rates.
The Company's risk of loss arising from adverse changes in the fair value of
financial instruments, or market risk, is composed primarily of interest rate
risk. The primary objective of the Company's asset/liability management
activities is to maximize net interest income while maintaining acceptable
levels of interest rate risk. The Company's Asset/Liability Committee (ALCO) is
responsible for establishing policies to limit exposure to interest rate risk,
and to ensure procedures are established to monitor compliance with those
policies. The guidelines established by ALCO are reviewed by the Company's Board
of Directors.
The tools used to monitor sensitivity are the Statement of Interest Sensitivity
Gap and the interest rate shock analysis. The Bank uses a software model to
measure and to keep track. In addition, an outside source does a periodic
analysis to make sure our internal analysis is current and correct. The
Statement of Interest Sensitivity Gap is a good assessment of current position
and is a very useful tool for the ALCO in performing its job. This report is
monitored in an effort to "match" maturities or repricing opportunities of
assets and liabilities in order to attain the maximum interest within risk
tolerance policy guidelines. The statement does, although, have inherent
limitations in that certain assets and liabilities may react to changes in
interest rates in different ways with some categories reacting in advance of
changes and some lagging behind the changes. In addition, there are estimates
used in determining the actual propensity to change of certain items such as
deposits without maturities.
The following table sets forth the Company's interest sensitivity analysis as
of September 30, 2002:
In thousands
Maturity or Repricing In:
3 3-6 6-12 1-5 Over 5
Months Months Months Years Years
------ ------- ------ ------- -------
RATE SENSITIVE ASSETS
Loans ..................................... $ 29,446 $ 14,348 $ 25,402 $ 96,930 $ 48,530
Securities ................................ 9,759 2,091 5,756 57,107 35,262
------ ------- ------ ------- -------
Total Rate Sensitive Assets ............... 39,205 16,439 31,158 154,037 83,792
------ ------- ------ ------- -------
Cummulative Rate Sensitive Assets ......... $ 39,205 $ 55,644 $ 86,802 $240,839 $324,631
------ ------- ------ ------- -------
RATE SENSITIVE LIABILITIES
Interest Bearing Checking ................. 756 756 1,512 12,097 10,081
Money Market Deposits ..................... 1,053 1,053 2,106 16,849 14,041
Regular Savings ........................... 2,567 1,666 3,330 26,636 22,197
CDs and IRAs .............................. 17,210 13,952 28,354 56,509 1,653
Short-term Borrowings ..................... 11,316 0 0 0 0
Long-term Borrowings ...................... 0 0 15,000 19,822
------ ------- ------ ------- -------
Total Rate Sensitive Liabilities .......... $ 32,902 $ 17,427 $ 35,302 $127,091 $ 67,794
------ ------- ------ ------- -------
Cummulative Rate Sensitive Liabilities .... $ 32,902 $ 50,329 $ 85,631 $212,722 $280,516
------ ------- ------ ------- -------
Period Gap ................................ 6,303 (988) (4,144) 26,946 15,998
Cummulative Gap ........................... 6,303 5,315 1,171 28,117 44,115
Cummulative RSA to RSL .................... 119.16% 110.56% 101.37% 113.22% 115.73%
Cummulative Gap to Total Assets ........... 1.97% 1.66% 0.37% 8.78% 13.77%
RESULTS OF OPERATIONS
Net Interest Income:
For the nine months ended September 30, 2002, total interest income decreased by
$329,000 or 2.10%, to $15.346 million as compared to $15.675 million for the
nine months ended September 30, 2001. This decrease was primarily due to the
decrease in yield on earning assets, which decreased to 6.72% as compared to
7.49% for the first nine months of 2001 offset by an increase in average earning
assets. Average earning assets increased to $305.610 million as of September 30,
2002, as compared to $279.921 million as of September 30, 2001
Total interest income was $5.199 million for the three-month period ended
September 30, 2002, compared to $ 5.287 million for the comparable period in
2001. These results are comparable to the year-to-date amount.
Total interest expense decreased by $1.391 million or 18.04% to $6.318 million
for the nine months ended September 30, 2002, from $7.709 million for the nine
months ended September 30, 2001. This decrease was attributable to the decrease
in the cost of funds, which decreased to 3.31% as compared to 4.44% for the
first nine months of 2001 offset by an increase in interest-bearing liabilities.
Average interest-bearing liabilities increased to $255.441 million as of
September 30, 2002, as compared to $232.221 million as of September 30, 2001.
Total interest expense was $2.023 million for the three month period ended
September 30, 2002, compared to $2.503 million for the comparable three month
period in 2001, a reduction of $480 thousand between the compared quarters.
Again, these results are comparable to the year-to-date amounts.
The increase in the net interest income for the three and nine month periods
ended September 30, 2002, when compared to the same periods in 2001, can be
primarily attributed to the down turn in interest rates affecting us on the
liability side and the increase in volume in loans on the asset side. Net
interest income for the first nine months of 2002 was $9.028 million compared to
$7.966 million for the first nine months of 2001. This was an increase of $1.062
million or 13.33%.
The Bank's net interest spread increased to 3.41% for the first nine months of
2002 from 3.05% for the first nine months of 2001. The net interest margin
increased to 3.96% from 3.80% for the nine-month periods ended September 30,
2002, and 2001, respectively. Although there was an increase in the volume of
interest-earning assets and interest-bearing liabilities, the increases in net
interest spread and the net interest margin, respectively, for the first nine
months of 2002 were the result of a decline in interest rates, which impacted
interest expense to a greater extent than interest income.
Provision for Loan Loss:
The provision for loan loss for the nine-month period ending September 30, 2002,
showed an increase of $100 thousand from the comparable period in 2001. During
2002, the provision total was $120 thousand as compared to $20 thousand in 2001.
Monthly increases to the provision for loan losses were not booked from February
2001 through December 2001. The booking of the provision was continued in March
2002. This decision was based on loan loss calculations and allocations
performed by the loan department.
The provision for loan losses was $60 thousand for the three months ended
September 30, 2002, compared to no provision for the three months ended
September 30, 2001.
Management believes that the Bank's loan growth continues to be strong. One of
the Bank's goals is to increase the loan to deposit ratio without jeopardizing
loan quality. To reach its goal, management has continued its efforts to create
strong underwriting standards for both commercial and consumer credit. The
Bank's lending consists primarily of retail lending which includes single family
residential mortgages and other consumer lending and commercial lending
primarily to locally owned small businesses.
In the nine-month period ended September 30, 2002, charge-offs totaled $90,000
while net charge-offs totaled $40,000 as compared to $85,000 and $47,000
respectively for the same nine-month period in 2001. Collection efforts are an
area in which the Bank strives to improve on an ongoing basis. The results of
which are lower net charge-offs.
In the three-month period ended September 30, 2002, charge-offs totaled $46,000
compared to $35,000 for the same period in 2001. Net charge-offs were $13,000
and $28,000 respectively.
Monthly, senior management utilizes a detailed analysis of the loan portfolio to
determine loan loss reserve adequacy. The process considers all "problem loans"
including classified, criticized, and monitored loans. Prior loan loss history
and current market trends, both nationally and locally, are taken into
consideration. A watch list of potential problem loans is maintained and
monitored on a monthly basis by the board of directors. The Bank has not had nor
presently has any foreign loans. Based upon this analysis, senior management has
concluded that the allowance of loan loss is adequate.
Other Income:
Total Other Income decreased 47.45% or $604 thousand to $669 thousand for the
nine-month period ended September 30, 2002, from $1.273 million for the same
period in 2001. Total Other Income increased 9.49% or $76 thousand to $548
thousand for the three-month period ended September 30, 2002, from $472 thousand
for the three-month period ended September 30, 2001.
The decrease in Total Other Income year-to-date September 30, 2002, is due to
the $850 thousand charge for the impairment of a security within the Bank's
investment portfolio as described in Footnote 4 to the September 30, 2002,
interim financial statements. This occurred during the second quarter of 2002.
Other Income, excluding securities gains and losses, was $1.371 million for the
nine-month period ended September 30, 2002, compared to $1.228 million for the
same period in 2001. This is an increase of $143 thousand or 11.64%. For the
three-month period ended September 30, 2002, Other Income, excluding securities
gains and losses, was $482 thousand compared to $456 thousand for the same
period in 2001. This is an increase of $26 thousand or 3.37%.
Customer Service Fees increased 4.69% or $39 thousand to $870 thousand for the
nine-month period ended September 30, 2002, from $831 thousand for the same
period in 2001. Customer Service Fees increased 10.21% or $29 thousand to $313
thousand for the three-month period ended September 30, 2002, compared to $284
thousand for the three-month period ended September 30, 2001. This is due to
more aggressive overdraft collection and retention efforts on behalf of Bank
staff.
Other Operating Income increased 26.20% or $104 thousand to $501 thousand for
the nine-month period ended September 30, 2002, from $397 thousand for the same
period in 2001. The most notable components of the increase to Other Operating
Income are the income from Bank Owned Life Insurance (BOLI) which is up $88
thousand when comparing the nine months ended September 30, 2002, to September
30, 2001, and the income from the Community Bank Insurance Agency (CBIA) which
is up $10,000 when comparing the nine months ended September 30, 2002, to
September 30, 2001. The BOLI was new as of July 2001 and the CBIA is new in
2002. Other Operating Income decreased 1.74% or $3 thousand to $169 thousand for
the three-month period ended September 30, 2002, compared to $172 thousand for
the three-month period ended September 30, 2001.
Other Operating Expenses
Total Other Expenses increased 13.56% or $609 thousand to $5.101 million for the
nine-month period ended September 30, 2002, from $4.492 million for the same
period in 2001. Total Other Expenses increased 8.49% or $129 thousand to $1.649
million for the three-month period ended September 30, 2002, from $1.520 million
for the same period in 2001.
Salaries and Benefits expenses increased 10.30% or $230 thousand to $2.463
million for the nine-month period ended September 30, 2002, from $2.233 million
for the same period in 2001. Salaries and Benefits expenses increased 17.05% or
$127 thousand to $872 thousand for the three-month period ended September 30,
2002, from $745 thousand for the same period in 2001.
Salary increases from 2001 to 2002 are partly responsible for this increase, as
well as the addition of a sales position in 2002. Also included in the increase
is a 7.40% increase in health insurance premiums which started in June of 2002.
Occupancy expenses increased 36.87% or $80 thousand to $297 thousand for the
nine-month period ended September 30, 2002, from $217 thousand for the same
period in 2001. Occupancy expenses increased 36.00% or $27 thousand to $102
thousand for the three-month period ended September 30, 2002, from $75 thousand
for the same period in 2001. New in 2002 is the lease of the Norwich office, as
described in Footnote 5 to the September 30, 2002, interim financial statements.
Also included in the increase is the depreciation expense taken for building
improvements implemented at the Bank's Tunkhannock branch. The improvements cost
$195 thousand and were booked in April of 2002.
Other expenses increased by 26.52% or $262 thousand to $1.250 million for the
nine-month period ended September 30, 2002, from $988 thousand for he same
period in 2001. Other expenses decreased 2.99% or $10 thousand to $325 thousand
for the three-month period ended September 30, 2002, from $335 thousand for the
same period in 2001.
The largest increase in other expenses when comparing the nine-months ended
September 30, 2002 and 2001 are as follows: stationary, print and supplies are
up $30 thousand or 33.79%, Donations are up $21 thousand or 63.98%, Phone
expense is up $13 thousand or 35.09%, Insurance expense is up $10 thousand or
32.00%, and Promotions are up $17 thousand or 70.08%. The increase in Donations
includes an ORE property which was gifted to a local charity in January 2002 in
the amount of $17 thousand. Promotion expense includes $10 thousand for special
calendars handed out at branch offices. Also included in other expenses for 2002
is $158 thousand provision for possible losses on the alleged fraud on the sale
of securities by Bentley Financial Services, Inc. recorded in the first quarter
of 2002.
Income Tax Provision
The Income Tax Provision decreased 11.88% or $140 thousand to $1.038 million for
the nine-month period ended September 30, 2002, from $1.178 million for the same
period in 2001. The Income Tax Provision increased 15.02% or $67 thousand to
$513 thousand for the three-month period ended September 30, 2002, from $446
thousand for the same period in 2001.
The decrease year-to-date is the result of the $850 thousand charge for the
impairment of a security within the Bank's investment portfolio as described in
Footnote 4 to the September 30, 2002, interim financial statements. This
occurred during the second quarter of 2002.
Item 3. Quantitative and Qualitative Disclosure about Market Risk
The Fed Funds rate has remained the same for the third quarter of 2002. As of
September 30, 2002, the Bank is currently showing sensitivity to downward rate
shift scenarios. Based on discussions, this scenario seemed unlikely. The model
simulation used by the Bank's ALCO shows a possible increase in net interest
income of 0.09% or $11,000 in a +200 basis point rate shock and a decrease of
0.11% or $14,000 is shown in the model at a -200 basis point rate shock when
interest rate sensitivity is performed through December 2002. When testing is
extended through December 2003, an upward shock of 200 basis points results in
an increase in net interest income of 6.69% or $854,000 while a downward shock
of 200 basis points results in a decrease in net interest income of 11.61% or
$1,480,000. The net interest income risk position of the Bank remains within the
guidelines established by the Bank's asset/liability policy. The Bank
continuously monitors its rate sensitivity.
Equity value at risk is monitored regularly and is also within established
policy limits. Please refer to the Annual Report on Form 10-K filed with the
Securities and Exchange Commission for December 31, 2001 for further discussion
of this matter.
Item 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
The company maintains controls and procedures designed to ensure that
information required to be disclosed in the reports that the company
files or submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in
the rules and forms of the Securities and Exchange Commission. Based
upon their evaluation of those controls and procedures performed within
90 days of the filing date of this report, the chief executive and
chief financial officers of the company concluded that the company's
disclosure controls and procedures were adequate.
(b) Changes in internal controls.
The Company made no significant changes in its internal controls or in
other factors that could significantly affect these controls subsequent
to the date of the evaluation of the controls by the chief executive
and chief financial officers.
PART II
ITEM 1. LEGAL PROCEEDINGS
The nature of the Company's business generates a certain amount of litigation
involving matters arising out of the ordinary course of business. In the opinion
of management, there are no legal proceedings that might have a material effect
on the results of operations, liquidity, or the financial position of the
Company at this time.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS IN SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS FOR SECURITY HOLDER VOTE
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K
(a) Exhibits required by Item 601 of Regulation S-K:
(3.1) Articles of Incorporation of Peoples Financial Services Corp.*
(3.2) Bylaws of Peoples Financial Service Corp. as amended **
(10.1) Agreement dated January 14, 1997, between John W. Ord and
Peoples Financial Services Corp. *
(10.2) Excess Benefit Plan dated January 14, 1992, for John W. Ord *
(10.4) Termination Agreement dated January 1, 1997,
between Debra E. Dissinger and Peoples Financial Services Corp.*
(11) The statement regarding computation of per share earnings
required by this exhibit is contained in Note 1 to the
consolidated financial statements captioned "Earnings Per Common
Share" filed as part of Item 8 of this report.
(99) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 of both the Principal Executive Officer and the
Principal Financial Officer
* Incorporated by reference to the Corporation's
Registration Statement on Form 10 as filed with the
U.S. Securities and Exchange Commission on March 4,
1998
** Incorporated by reference to Exhibit 99.6 on Form
8K as filed with the U.S. Securities and Exchange
Commission on April 20, 2001
(b) Other events and reports on Form 8-K that have been previously filed
are as follows:
Press Release of Peoples Financial Services Corp. to the
Registrant's Current Report on Form 8-K as filed on July 8,
2002, previously submitted as Exhibit 99, regarding Second
Quarter Earnings and WorldCom Investments.
Press Release of Peoples Financial Services Corp. to the
Registrant's Current Report on Form 8-K as filed on July 11,
2002, previously submitted as Exhibit 99, regarding Six Month
Earnings and Dividend Report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PEOPLES FINANCIAL SERVICES CORP
By/s/John W. Ord
John W. Ord, President/CEO
By/s/ Debra E. Dissinger
Debra E. Dissinger, Executive Vice President/COO
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER OR
PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 81 U.S.C. SECTION 1350
I, John W. Ord, certify that:
1. I have reviewed this quarterly report on Form l0-Q of Peoples Financial
Services Corp.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report; and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on the required evaluation;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
By/s/ John W. Ord
Chief Executive Officer & President
Date: November 13, 2002
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER OR
PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 81 U.S.C. SECTION 1350
I, Debra E. Dissinger, certify that:
1. I have reviewed this quarterly report on Form l0-Q of Peoples Financial
Services Corp.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report; and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on the required evaluation;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
By/s/ Debra E. Dissinger
Executive Vice President
Date: November 13, 2002
EXHIBIT INDEX
ITEM NUMBER DESCRIPTION PAGE
99.1 Sarbanes-Oxley Act of 2002 Section 906 25
Certification of Chirf Executive Officer
99.2 Sarbanes-Oxley Act of 2002 Section 906 26
Certification of Chirf Financial Officer
Exhibit 99.1
CEETIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADDED BY
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Peoples Financial
Services Corp. (the "Company") for the period ended September 30, 2002, as filed
with the Securities and Exchange Commission (the "Report"), I, John W. Ord,
Chief Executive Officer and President, of the Company, certify, pursuant
to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of
2002, that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. To my knowledge, the information contained in the Report fairly
represents, in all material respects, the financial condition and
results of operations of the Company as of and for the period
covered by the Report.
By/s/ John W. Ord
Chief Executive Officer & President
Date: November 13, 2002
Exhibit 99.2
CEETIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADDED BY
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Peoples Financial
Services Corp. (the "Company") for the period ended September 30, 2002, as filed
with the Securities and Exchange Commission (the "Report"), I, Debra E.
Dissinger, Executive Vice President, of the Company, certify, pursuant to 18
U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002,
that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. To my knowledge, the information contained in the Report fairly
represents, in all material respects, the financial condition and
results of operations of the Company as of and for the period
covered by the Report.
By/s/ Debra E. Dissinger
Executive Vice President
Date: November 13, 2002