PEOPLES FINANCIAL SERVICES CORP. Reports Unaudited First Quarter 2026 Earnings

Published: 2026-04-30 16:06:17 ET PFIS

Published on 04/30/2026 at 04:06 pm EDT

MOOSIC, Pa., April 30, 2026 /PRNewswire/ -- Peoples Financial Services Corp. ("Peoples" or the "Company") (NASDAQ: PFIS), the bank holding company for Peoples Security Bank and Trust Company (the "Bank"), today reported unaudited financial results at and for the three months ended March 31, 2026.

Peoples reported net income of $14.7 million, or $1.47 per diluted share for the three months ended March 31, 2026, compared to net income of $15.0 million, or $1.49 per diluted share for the three months ended March 31, 2025. Return on average assets ("ROAA") and return on average equity ("ROAE") on an annualized basis for the three months ended March 31, 2026, was 1.15% and 11.26% compared to 1.22% and 12.70% for the three months ended March 31, 2025. The $0.3 million reduction in net income comparing the three months ended March 31, 2026 and 2025 was primarily due to an increase in the provision for credit losses due to strong loan growth, coupled with an increase in non-interest expense, which were partially offset by increases in net interest income and non-interest income.

"We delivered a stable first quarter despite a more challenging operating environment," stated Gerard Champi, President and Chief Executive Officer of Peoples. The slight reduction in net income reflects our continued commitment to responsible credit management and investment in our people and infrastructure. At the same time, strong performance in net interest income and non-interest income underscores the resilience of our franchise. With ROAA and ROAE remaining healthy, we are well-positioned to build momentum throughout the year and continue creating value for our shareholders and communities. As we move through 2026, we are committed to disciplined expense management, thoughtful credit oversight, and continued investment in the capabilities that support sustainable growth." concluded Champi.

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, and tax-equivalent net interest income and related ratios, among others. The reported results included in this release contain items, which Peoples considers non-core, namely net gains and losses on the sale of available for sale ("AFS") investment securities and acquisition-related expenses. 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 and should not be viewed as a substitute for GAAP.

NOTABLES

INCOME STATEMENT REVIEW

First Quarter 2026 Results – Comparison to First Quarter 2025

Net interest income for the three months ended March 31, 2026, increased $3.4 million to $42.9 million from $39.5 million for the three months ended March 31, 2025. On a FTE basis, net interest income for the three months ended March 31, 2026, increased $3.4 million to $43.7 million from $40.3 million for the three months ended March 31, 2025. The increase in FTE net interest income was due to a $2.4 million increase in tax-equivalent interest income, a non-GAAP measure1, coupled with a $1.0 million decrease in interest expense. The Company's net interest spread widened 18 basis points to 3.10 % for the first quarter of 2026 from 2.92 % for the same quarter of 2025. Additionally, comparing the first quarters of 2026 and 2025, the Company's FTE net interest margin widened 17 basis points to 3.67% from 3.50 %, respectively.

The $2.4 million increase in FTE interest income was largely due to an increase in the volume of earning assets and increases to FTE yields on taxable investment securities. Total average earning assets increased $168.1 million comparing first quarters of 2026 and 2025, due primarily to increases in average taxable loans, tax-exempt investments and federal funds sold, partially offset by a reduction in average taxable investments and tax-exempt loans. Overall average loans, net, increased $139.7 million for the three months ended March 31, 2026, compared to the prior year three-month period ended March 31, 2025, as an increase in average taxable loans of $161.5 million was partially offset by a reduction in average tax-exempt loans of $21.8 million. Average investments totaled $611.0 million in the three months ended March 31, 2026, and $643.0 million in the three months ended March 31, 2025, a decrease of $32.0 million. Average federal funds sold increased $62.1 million to $88.1 million for the three months ended March 31, 2026, from $26.0 million for the three months ended March 31, 2025. The FTE yield on earning assets increased 1 basis point to 5.51% for the first quarter of 2026 from 5.50% for the comparable quarter of 2025. The yield on taxable loans decreased 13 basis points to 5.92% from 6.05% comparing the first quarters of 2026 and 2025, respectively, which primarily reflected a 75-basis point reduction in the prime rate during the second half of 2025. Additionally, accretion associated with purchase accounting fair value discounts on purchased loans was $3.1 million for the three months ended March 31, 2026, a decrease of $1.0 million as compared to $4.1 million for the same period of 2025. Remaining net discounts on purchased loans as of March 31, 2026 totaled $39.5 million. The FTE yield on the total investment securities portfolio increased 85 basis points to 3.80% for the three months ended March 31, 2026, from 2.95% for the same three months of 2025. The increase in yield was predominantly due to ongoing strategic portfolio repositioning as new purchases were added at yields higher than existing portfolio yields.

The $1.0 million decrease in interest expense, comparing the three-month periods ended March 31, 2026, and March 31, 2025, was due primarily to decreases in average deposit rates and a reduction in average volumes of higher-costing time deposits, specifically, brokered deposits, partially offset by increases in average volumes on non-maturity deposits and borrowed funds. The average rate paid for interest-bearing deposits decreased 30 basis points to 2.16% for the three months ended March 31, 2026 from 2.46% from the same period of 2025 which largely reflected a reduction in overall market rates. Average interest-bearing deposits decreased $34.5 million to $3.4 billion, or 78.5% of total average deposits for the three months ended March 31, 2026, from $3.4 billion, or 79.7% of average total deposits, for the three months ended March 31, 2025. Average brokered deposits decreased $127.5 million to $121.0 million for the three months ended March 31, 2026, from $248.5 million for the comparable three-month period of 2025. Average noninterest bearing deposits increased $54.6 million to $929.7 million, or 21.5% of total average deposits for the three months ended March 31, 2026, from $875.1 million, or 20.3% of total average deposits for the three months ended March 31, 2025.

Average total borrowings increased $105.5 million to $264.5 million for the three months ended March 31, 2026, as compared to $159.0 million for the same period of 2025, which was primarily due to a combination of increases in long-term borrowings and the new issuance of subordinated debt, which occurred in the second quarter of 2025. Additionally, the Company's cost of borrowings increased 49 basis points to 5.67% for the three months ended March 31, 2026, compared to 5.18% for the same three months of 2025. The increase in average long-term debt was due primarily to term advances through the FHLB of Pittsburgh's community lending program as the Company shifted its wholesale funding from brokered CDs to FHLB advances with more favorable rates.

Short-term borrowings averaged $39.2 million for the three-month period ended March 31, 2026, at an average cost of 3.85% compared to $20.2 million at an average cost of 4.52% for the comparable three-month period in 2025. Long-term debt, which includes term borrowings from the FHLB of Pittsburgh, averaged $134.0 million for the three-month period ended March 31, 2026, at an average cost of 4.25% compared to $97.8 million at an average cost of 4.88% for the three months ended March 31, 2025. In June 2025, the Company called and redeemed $33.0 million of its subordinated notes due in June 2030 that repriced to 9.08% and issued $85.0 million in fixed-to-floating rate subordinated notes due June 2035 at an initial fixed rate through June 2030 of 7.75%. Subordinated debt, net of debt issuance costs, averaged $83.2 million for the three-month period ended March 31, 2026, at an average cost of 8.52% compared to $33.0 million at an average cost of 5.44% for the three months ended March 31, 2025. The average cost of subordinated debt for the three months ended March 31, 2026 included the impact from amortization of debt issuance costs.

For the three months ended March 31, 2026, the provision for credit losses was $1.4 million, an increase of $1.2 million from the $0.2 million recorded for the same three months of 2025. The increase was primarily due to the impact of significant loan growth during the quarter ended March 31, 2026, partially offset by decreases in qualitative factor adjustments primarily related to seasoning of the commercial equipment financing portfolio.

Noninterest income was $6.9 million and $6.3 million for the three months ended March 31, 2026, and 2025, respectively. The increase in non-interest income was primarily due to increases in interest rate swap income, net gains on equity securities and mortgage banking income. Interest rate swap income increased to $0.6 million from a negligible amount in the year ago quarter due to increased loan transaction volume. Net gains on equity investments securities were $0.5 million for the first quarter of 2026, an increase of $0.4 million compared to $0.1 million for the same quarter of 2025, primarily reflecting an increase in the market value of the Company's holding of common stock of publicly traded bank holding companies. Mortgage banking income, which includes gains on the sale of residential mortgage loans and commission income received on brokered mortgages, increased $0.1 million comparing the first quarters of 2026 and 2025 due primarily to an initiative to grow this line of business. Additionally, non-interest income for the first quarter of 2026 included a $0.5 million gain on the sale of a portion the Company's AFS mortgage-backed securities portfolio as part of an ongoing strategy, to restructure the portfolio with higher-yielding securities. Noninterest income for the first quarter of 2025 included a $0.7 million gain on the sale of the Company's former corporate headquarters in Scranton, PA.

Noninterest expense increased $2.5 million to $29.9 million for the three months ended March 31, 2026, from $27.4 million for the three months ended March 31, 2025, which primarily reflected increases in salaries and employee benefits expense, occupancy and equipment expenses, and other expenses. Salaries and employee benefits expense was $14.5 million for the three months ended March 31, 2026, compared to $13.5 million for the same three months in 2025. The $1.0 million increase resulted primarily from annual merit increases and higher health insurance costs. Net occupancy and equipment expense was $7.7 million for the first quarter of 2026, an increase of $1.1 million from $6.6 million for the same quarter of 2025. The increase was largely caused by higher maintenance costs due to elevated snowplowing costs and increases in data processing expenses. Other expenses increased $1.0 million to $5.4 million for the three months ended March 31, 2026 from $4.4 million for the three months ended March 31, 2025. The increase in other expenses primarily reflected increases in corporate business development and bank shares tax expense.

Income tax expense was $3.7 million for the three months ended March 31, 2026, compared to $3.2 million for the three months ended March 31, 2025. The effective tax rate was 20.4% for the three months ended March 31, 2026, and 17.8% in the prior year's same quarter. The increase in the effective tax rate was largely due to an increase in amortization associated with the Company's low income housing tax credits investments, coupled with an increase in the provision for state income taxes.

BALANCE SHEET REVIEW

At March 31, 2026, total assets, loans, and deposits were $5.4 billion, $4.2 billion, and $4.4 billion, respectively.

Total loans increased $123.3 million to $4.2 billion at March 31, 2026, as compared to $4.1 billion at December 31, 2025. Strong demand in all markets for commercial loans, commercial and residential real estate loans, and municipal loans were partially offset by reductions to equipment financing, consumer and indirect auto loans.

Total investments were $542.9 million at March 31, 2026, compared to $587.2 million at December 31, 2025. At March 31, 2026, available for sale securities totaled $469.3 million, a decrease of $43.3 million from $512.6 million at December 31, 2025. During the quarter ended March 31, 2026, the Company sold $31.9 million of its U.S. government agency and sponsored agency mortgage backed securities in a partial repositioning of its available for sale securities portfolio. The transaction resulted in a pre-tax gain of approximately $0.5 million. Held to maturity ("HTM") securities totaled $70.6 million at March 31, 2026, a decrease of $1.4 million from $72.0 million at December 31, 2025. The unrealized loss on AFS securities increased $3.9 million from $29.1 million at December 31, 2025, to $33.0 million at March 31, 2026. The unrealized losses on the held to maturity portfolio totaled $9.6 million at March 31, 2026 and $9.2 million at December 31, 2025. The increases in unrealized losses related to the AFS and HTM investment portfolios reflected increased market interest rates comparing March 31, 2026 to December 31, 2025.

Total deposits were $4.4 billion at March 31, 2026, a decrease of $8.7 million from $4.4 billion at December 31, 2025. Noninterest-bearing deposits increased $14.8 million to $969.3 million at March 31, 2026, from $954.5 million at December 31, 2025. Interest-bearing deposits decreased $23.5 million comparing March 31, 2026, and December 31, 2025, which largely reflected decreases in retail time deposits, and brokered deposits partially offset by increases in money market and interest-bearing demand deposits. As part of strategic balance sheet management initiatives, the Company continued to reduce its higher rate brokered CD portfolio. As a result, brokered time deposits decreased $40.1 million to $112.1 million at March 31, 2026 from $152.2 million at December 31, 2025. Total retail deposits, which exclude brokered deposits, increased $31.4 million to $4.3 billion at March 31, 2026, from $4.3 billion at December 31, 2025.

The Company maintained a strong capital position at March 31, 2026. Stockholders' equity equaled $525.5 million or $52.50 per share at March 31, 2026, compared to $519.8 million or $52.01 per share at December 31, 2025. The increase in stockholders' equity from December 31, 2025, is primarily attributable to net income, partially offset by dividends paid to shareholders and a $2.9 million increase to accumulated other comprehensive loss resulting primarily from a $3.0 million increase in the unrealized loss on AFS securities, net of deferred income taxes, to $25.8 million at March 31, 2026 from $22.8 million at December 31, 2025.

Tangible book value, a non-GAAP measure[3], increased to $42.29 per share at March 31, 2026, from $41.64 per share at December 31, 2025. Dividends declared for the first quarter of 2026 were $0.625 per share compared to $0.6175 for the same quarter of 2025.

ASSET QUALITY REVIEW

The Company's asset quality was stable at March 31, 2026 as compared to December 31, 2025, but showed significant improvement compared to March 31, 2025. Nonperforming assets, which include nonperforming loans, loans past due 90 days or more and still accruing, and foreclosed assets, were $12.3 million or 0.29% of loans, net, and foreclosed assets at March 31, 2026, compared to $12.1 million or 0.30% of loans, net, and foreclosed assets at December 31, 2025, which resulted from an increase in loans on nonaccrual status partially offset by a reduction in accruing loans that were past due 90 days or more. However, as compared to March 31, 2025, nonperforming assets decreased $11.3 million from $23.7 million, which was primarily due to an $11.6 million reduction in nonaccrual loans. As a percentage of total assets, nonperforming assets were 0.23% at both March 31, 2026, and December 31, 2025 compared to 0.47% at March 31, 2025. At March 31, 2026, and December 31, 2025, the Company had one foreclosed commercial property recorded at $0.8 million.

During the three months ended March 31, 2026, net charge-offs were $0.8 million and the provision for credit losses was $1.4 million, compared to net charge-offs of $0.9 million and a provision for credit losses of $0.2 million for the same period of 2025. The allowance for credit losses equaled $39.6 million or 0.94% of loans, net, at March 31, 2026, compared to $39.0 million or 0.96% of loans, net, at December 31, 2025 and $41.1 million or 1.03% of loans, net at March 31, 2025.

________________1 See reconciliation of non-GAAP financial measures on pg.12-13.

About Peoples:

Peoples Financial Services Corp. is the bank holding company of Peoples Security Bank and Trust Company, an independent community bank serving its retail and commercial customers through 40 full-service community banking offices located within Allegheny, Bucks, Lackawanna, Lancaster, Lebanon, Lehigh, Luzerne, Monroe, Montgomery, Northampton, Susquehanna, Wayne and Wyoming Counties in Pennsylvania, Middlesex County in New Jersey and Broome County in New York. 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, and local and timely decision making. For more information visit psbt.com.

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, core net income and pre-provision revenue ratios, among others. The reported results included in this release contain items, which Peoples considers non-core, namely acquisition related expenses and 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.

Safe Harbor Forward-Looking Statements:

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which are subject to risks and uncertainties. These statements are based on assumptions and may describe future plans, strategies and expectations of Peoples Financial Services Corp. and its subsidiaries (the "Company") that are subject to significant risks and uncertainties and are subject to change based on various factors (some of which are beyond the Company's control). These forward-looking statements are generally identified by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project" or similar expressions. All statements in this release, other than statements of historical facts, are forward-looking statements.

The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Important factors that could cause the Company's actual results to differ materially from those in the forward-looking statements include, but are not limited to: changes in interest rates, including their effect on the Company's investment values; impairment charges relating to the Company's investment portfolio; credit risks in connection with the Company's lending activities; the Company's exposure to commercial and industrial, construction, commercial real estate, and equipment finance loans; the Company's ability to maintain an adequate allowance for credit losses; access to liquidity; the strength of the Company's customer deposit levels; unrealized losses; reliance on the Company's subsidiaries; accounting procedures, policies and requirements; changes in the value of goodwill; the Company's ability to attract and retain key personnel; the strength of the Company's disclosure controls and procedures and internal controls over financial reporting; potential for errors, omissions or fraud; environmental liabilities; reliance on third-party vendors and service providers; the Company's ability to compete effectively in the Company's industry and within the Company's market area, including with respect to competition from financial technology companies and non-bank entities; the development and use of AI in business processes, services, and products; the Company's ability to prevent, detect and respond to cybersecurity threats and incidents; a failure of information technology, whether due to a breach, cybersecurity incident, or ability to keep pace with growth and developments; the Company's ability to comply with privacy and data protection requirements; changes in U.S. or regional economic conditions; the soundness of other financial institutions; changes in laws and regulations; fiscal and monetary policies of the federal government and its agencies; a failure to meet minimum capital requirements; the Company's ability to realize the anticipated benefits of future acquisitions or a change in control; and the Company's ability to pay dividends. Additional factors that may affect the Company's results are discussed in the Company's 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.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Except as required by applicable law or regulation, the Company does not undertake, and specifically disclaims any obligation, to release publicly the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

[TABULAR MATERIAL FOLLOWS]

Summary Data

Peoples Financial Services Corp.

Three Quarter Trend (Unaudited)

(In thousands, except share and per share data)

Mar 31

Dec 31

Mar 31

2026

2025

Key performance data:

Share and per share amounts:

Net income

1.47

1.19

1.49

Core net income (1)

1.43

1.36

1.51

Cash dividends declared

0.6250

0.6175

Book value

52.50

52.01

48.21

Tangible book value (1)

42.29

41.64

37.35

Market value:

High

57.17

53.22

53.70

Low

47.82

44.54

44.47

Closing

53.33

48.71

44.47

Market capitalization

533,859

486,837

444,499

Common shares outstanding

10,010,488

9,994,595

9,995,483

Selected ratios:

Return on average stockholders' equity (2)

11.26

9.16

12.70

Core return on average stockholders' equity (1)(2)

10.95

10.49

12.80

Return on average tangible stockholders' equity (1)(2)

13.97

11.47

16.46

Core return on average tangible stockholders' equity (1)(2)

13.59

13.14

16.59

Return on average assets (2)

1.15

0.92

1.22

Core return on average assets (1)(2)

1.12

1.05

1.23

Stockholders' equity to total assets

9.69

9.86

9.64

Efficiency ratio (1)(3)

57.09

59.53

55.77

Nonperforming assets to loans, net, and foreclosed assets

0.29

0.30

0.59

Nonperforming assets to total assets

0.23

0.47

Net charge-offs to average loans, net (2)

0.08

0.18

0.09

Allowance for credit losses to loans, net

0.94

0.96

1.03

Interest earning assets yield (FTE) (4)

5.51

5.56

5.50

Cost of funds

2.41

2.55

2.58

Net interest spread (FTE) (4)

3.10

3.01

2.92

Net interest margin (FTE) (1)(4)

3.67

3.60

3.50

(1)

See Reconciliation of Non-GAAP financial measures on pages 12-13.

(2)

Presented on an annualized basis.

(3)

Total noninterest expense less amortization of intangible assets and acquisition related expenses, divided by tax-equivalent net interest income and noninterest income less net gains (losses) on investment securities AFS and net (losses) gains on sales of fixed assets.

(4)

Tax-equivalent adjustments were calculated using the federal statutory tax rate prevailing during the indicated periods of 21%.

Peoples Financial Services Corp.

Consolidated Statements of Income and Comprehensive Income (Unaudited)

(In thousands, except per share data)

Three Months Ended

Mar 31

Dec 31

Mar 31

2026

2025

Interest income:

Interest and fees on loans:

Taxable

56,316

58,576

55,212

Tax-exempt

2,068

1,658

2,245

Interest and dividends on investment securities:

Taxable

4,035

4,371

4,134

Tax-exempt

1,133

708

396

Dividends

259

Interest on interest-bearing deposits in other banks

113

Interest on federal funds sold

804

1,332

285

Total interest income

64,704

66,772

62,426

Interest expense:

Interest on deposits

18,139

19,830

20,847

Interest on short-term borrowings

372

311

225

Interest on long-term debt

1,404

1,665

1,177

Interest on subordinated debt

1,749

1,750

443

Interest on junior subordinated debt

173

182

186

Total interest expense

21,837

23,738

22,878

Net interest income

42,867

43,034

39,548

Provision for credit losses

1,387

975

200

Net interest income after provision (benefit) for credit losses

41,480

42,059

39,348

Noninterest income:

Service charges, fees, commissions and other

3,157

3,164

3,404

Merchant services income

180

163

231

Commissions and fees on fiduciary activities

551

560

537

Wealth management income

646

739

650

Mortgage banking income

241

162

114

Increase in cash surrender value of life insurance

497

472

526

Interest rate swap income

660

718

Net gains on equity investments

456

125

Net gains (losses) on sale of investment securities available for sale

510

(2,241)

Net (losses) gains on sale of fixed assets

(139)

680

Total noninterest income

6,898

3,723

6,256

Noninterest expense:

Salaries and employee benefits expense

14,517

14,971

13,481

Net occupancy and equipment expense

7,675

7,333

6,610

Acquisition related expenses

154

Amortization of intangible assets

1,517

1,515

1,683

FDIC insurance and assessments

756

683

1,022

Other expenses

5,398

6,562

4,403

Total noninterest expense

29,863

31,064

27,353

Income before income taxes

18,515

14,718

18,251

Income tax expense

3,768

2,742

3,242

Net income

14,747

11,976

15,009

Other comprehensive (loss) income:

Unrealized (loss) gain on investment securities available for sale

(3,383)

2,728

5,572

Reclassification adjustment for net (gains) losses on available for sale securities included in net income

(510)

2,241

Change in benefit plan liabilities

674

Change in derivative fair value

156

(148)

Income tax (benefit) expense related to other comprehensive (loss) income

(820)

1,208

1,183

Other comprehensive (loss) income, net of income tax (benefit) expense

(2,917)

4,485

4,241

Comprehensive income

11,830

16,461

19,250

Share and per share amounts:

Net income - basic

1.47

1.20

1.50

Net income - diluted

1.47

1.19

1.49

Cash dividends declared

0.6250

0.6175

Average common shares outstanding - basic

10,002,903

9,994,595

9,992,922

Average common shares outstanding - diluted

10,029,213

10,083,044

10,043,186

Peoples Financial Services Corp.

Net Interest Margin (Unaudited)

(In thousands, fully taxable equivalent basis)

Three Months Ended

March 31, 2026

December 31, 2025

March 31, 2025

Average

Interest

Yield/

Average

Interest

Yield/

Average

Interest

Yield/

Balance

Inc./Exp.

Rate

Balance

Inc./Exp.

Rate

Balance

Inc./Exp.

Rate

Assets:

Earning assets:

Loans:

Taxable

3,859,588

56,316

5.92

3,756,872

58,576

6.19

3,698,124

55,212

6.05

Tax-exempt

258,745

2,618

4.10

261,029

2,099

3.19

280,555

2,842

4.11

Total loans

4,118,333

58,934

5.80

4,017,901

60,675

5.99

3,978,679

58,054

5.92

Investments:

Taxable

461,292

4,294

3.78

529,838

4,403

3.30

555,910

4,175

3.05

Tax-exempt

149,700

1,434

3.88

113,302

896

3.14

87,072

501

2.33

Total investments

610,992

5,728

3.80

643,140

5,299

3.27

642,982

4,676

2.95

Interest-bearing deposits

9,591

3.76

9,683

3.89

11,197

113

4.09

Federal funds sold

88,066

804

3.70

134,742

1,332

3.92

25,979

285

4.45

Total earning assets

4,826,982

65,555

5.51

4,805,466

67,401

5.56

4,658,837

63,128

5.50

Less: allowance for credit losses

39,470

40,117

42,084

Other assets

399,812

414,296

391,924

Total assets

5,187,324

5,179,645

5,008,677

Liabilities and stockholders' equity:

Interest-bearing liabilities:

Money market accounts

1,020,493

6,471

2.57

972,871

6,780

2.76

687,522

6,570

3.88

Interest-bearing demand and NOW accounts

1,224,040

5,938

1.97

1,248,045

6,520

2.07

1,465,210

6,416

1.78

Savings accounts

504,166

421

0.34

495,001

403

0.32

498,791

361

0.29

Time deposits less than $100

270,285

2,109

3.16

316,533

2,670

3.35

424,363

4,228

4.04

Time deposits $100 or more

383,825

3,200

3.38

387,476

3,457

3.54

361,469

3,272

3.67

Total interest-bearing deposits

3,402,809

18,139

2.16

3,419,926

19,830

2.30

3,437,355

20,847

2.46

Short-term borrowings

39,180

372

3.85

31,862

311

3.87

20,176

225

4.52

Long-term debt

133,990

1,404

4.25

145,447

1,665

4.54

97,769

1,177

4.88

Subordinated debt

83,222

1,749

8.52

83,137

1,750

8.35

33,000

443

5.44

Junior subordinated debt

8,150

173

8.61

8,125

182

8.89

8,050

186

9.37

Total borrowings

264,542

3,698

5.67

268,571

3,908

5.77

158,995

2,031

5.18

Total interest-bearing liabilities

3,667,351

21,837

2.41

3,688,497

23,738

2.55

3,596,350

22,878

2.58

Noninterest-bearing deposits

929,686

914,014

875,053

Other liabilities

58,944

58,201

58,018

Stockholders' equity

531,343

518,933

479,256

Total liabilities and stockholders' equity

5,187,324

5,179,645

5,008,677

Net interest income/spread

43,718

3.10

43,663

3.01

40,250

2.92

Net interest margin

3.67

3.60

3.50

Tax-equivalent adjustments:

Loans

550

441

597

Investments

301

188

105

Total adjustments

851

629

702

The average balances of assets and liabilities, corresponding interest income and expense and resulting average yields or rates paid are summarized as follows. Averages for earning assets include nonaccrual loans. Investment averages include available for sale securities at amortized cost. Income on investment securities and loans is adjusted to a tax-equivalent basis using the prevailing federal statutory tax rate of 21%.

Peoples Financial Services Corp.

Consolidated Balance Sheets (Unaudited)

(In thousands)

Mar 31

Dec 31

Mar 31

Ending Balance Sheet

2026

2025

Assets:

Cash and due from banks

59,479

58,420

60,125

Interest-bearing balances in other banks

7,939

9,321

9,196

Federal funds sold

261,194

201,243

7,781

Investment securities:

Available for sale

469,261

512,563

503,043

Held to maturity

70,557

72,047

76,689

Equity investments carried at fair value

3,054

2,598

2,500

Total investments

542,872

587,208

582,232

Loans held for sale

1,181

805

420

Loans

4,190,202

4,066,896

3,991,539

Less: allowance for credit losses

39,586

39,007

41,054

Net loans

4,150,616

4,027,889

3,950,485

Goodwill

75,986

Premises and equipment, net

79,206

78,496

72,492

Bank owned life insurance

83,417

88,645

87,953

Deferred tax assets

26,264

26,555

32,628

Accrued interest receivable

17,991

17,633

16,436

Other intangible assets, net

26,161

27,700

32,488

Other assets

91,024

70,677

71,136

Total assets

5,423,330

5,270,578

4,999,358

Liabilities:

Deposits:

Noninterest-bearing

969,341

954,485

901,398

Interest-bearing

3,456,028

3,479,584

3,415,529

Total deposits

4,425,369

4,434,069

4,316,927

Short-term borrowings

179,321

32,721

14,840

Long-term debt

134,750

134,352

88,403

Subordinated debt

83,289

83,187

33,000

Junior subordinated debt

8,167

8,140

8,063

Accrued interest payable

7,890

6,792

5,439

Other liabilities

59,039

51,470

50,832

Total liabilities

4,897,825

4,750,731

4,517,504

Stockholders' equity:

Common stock

20,047

20,015

20,014

Capital surplus

251,065

251,023

250,488

Retained earnings

282,001

273,500

247,806

Accumulated other comprehensive loss

(27,608)

(24,691)

(36,454)

Total stockholders' equity

525,505

519,847

481,854

Total liabilities and stockholders' equity

5,423,330

5,270,578

4,999,358

Book value per common share

52.50

52.01

48.21

Tangible book value per common share (1)

42.29

41.64

37.35

(1) See reconciliation of Non-GAAP financial measures on pages 12-13.

Peoples Financial Services Corp.

Loan and Asset Quality Data (Unaudited)

(In thousands)

Mar 31

Dec 31

Mar 31

At period end

2026

2025

Commercial and industrial

675,446

667,948

658,858

Municipal

212,586

202,303

194,139

Real estate

Commercial

2,423,027

2,314,110

2,275,241

Residential

618,156

602,309

560,067

Total

3,041,183

2,916,419

2,835,308

Consumer

Indirect auto

85,726

93,742

108,819

Consumer other

15,592

17,496

14,209

Total

101,318

111,238

123,028

Equipment financing

159,669

168,988

180,206

Total

4,190,202

4,066,896

3,991,539

Mar 31

Dec 31

Mar 31

At period end

2026

2025

Nonperforming assets:

Nonaccrual/restructured loans

11,437

10,796

23,002

Accruing loans past due 90 days or more

160

524

655

Foreclosed assets

750

Total nonperforming assets

12,347

12,070

23,684

Mar 31

Dec 31

Mar 31

Three months ended

2026

2025

Allowance for credit losses:

Beginning balance

39,007

39,843

41,776

Charge-offs

976

1,960

1,233

Recoveries

168

149

311

Provision for credit losses

1,387

975

200

Ending balance

39,586

39,007

41,054

Peoples Financial Services Corp.

Reconciliation of Non-GAAP Financial Measures (Unaudited)

(In thousands, except share and per share data)

Three Months Ended

Mar 31

Dec 31

Mar 31

2026

2025

Core net income per share:

Net income GAAP

14,747

11,976

15,009

Adjustments:

Less: Net gains (losses) on sale of available for sale securities

510

(2,241)

Add: Net gains (losses) on sale of available for sale securities tax adjustment

112

(491)

Add: Acquisition related expenses

154

Less: Acquisition related expenses tax adjustment

Core net income

14,349

13,726

15,129

Average common shares outstanding - diluted

10,029,213

10,083,044

10,043,186

Core net income per diluted share

1.43

1.36

1.51

Tangible book value:

Total stockholders' equity

525,504

519,847

481,854

Less: Goodwill

75,986

Less: Other intangible assets, net

26,161

27,700

32,488

Total tangible stockholders' equity

423,357

416,161

373,380

Common shares outstanding

10,010,488

9,994,595

9,995,483

Tangible book value per share

42.29

41.64

37.35

Core return on average stockholders' equity:

Net income GAAP

14,747

11,976

15,009

Adjustments:

Less: Net gains (losses) on sale of available for sale securities

510

(2,241)

Add: Net gains (losses) on sale of available for sale securities tax adjustment

112

(491)

Add: Acquisition related expenses

154

Less: Acquisition related expenses tax adjustment

Core net income

14,349

13,726

15,129

Average stockholders' equity

531,343

518,933

479,256

Core return on average stockholders' equity

10.95

10.49

12.80

Return on average tangible stockholders' equity:

Net income GAAP

14,747

11,976

15,009

Average stockholders' equity

531,343

518,933

479,256

Less: goodwill and intangibles

103,156

104,550

109,386

Average tangible stockholders' equity

428,187

414,383

369,870

Return on average tangible stockholders' equity

13.97

11.47

16.46

Core return on average tangible stockholders' equity:

Net income GAAP

14,747

11,976

15,009

Adjustments:

Less: Net gains (losses) on sale of available for sale securities

510

(2,241)

Add: Net gains (losses) on sale of available for sale securities tax adjustment

112

(491)

Add: Acquisition related expenses

154

Less: Acquisition related expenses tax adjustment

Core net income

14,349

13,726

15,129

Average stockholders' equity

531,343

518,933

479,256

Less: goodwill and intangibles

103,156

104,550

109,386

Average tangible stockholders' equity

428,187

414,383

369,870

Core return on average tangible stockholders' equity

13.59

13.14

16.59

Core return on average assets:

Net income GAAP

14,747

11,976

15,009

Adjustments:

Less: Net gains (losses) on sale of available for sale securities

510

(2,241)

Add: Net gains (losses) on sale of available for sale securities tax adjustment

112

(491)

Add: Acquisition related expenses

154

Less: Acquisition related expenses tax adjustment

Core net income

14,349

13,726

15,129

Average assets

5,187,324

5,179,645

5,008,677

Core return on average assets

1.12

1.05

1.23

(1) Tax adjustments are calculated using the effective tax rate for the respective period.

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:

Mar 31

Dec 31

Mar 31

2026

2025

Interest income (GAAP)

64,704

66,772

62,426

Adjustment to FTE

851

629

702

Interest income adjusted to FTE (non-GAAP)

65,555

67,401

63,128

Interest expense

21,837

23,738

22,878

Net interest income adjusted to FTE (non-GAAP)

43,718

43,663

40,250

The efficiency ratio is noninterest expenses, less amortization of intangible assets and acquisition related costs, 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:

Mar 31

Dec 31

Mar 31

2026

2025

Efficiency ratio (non-GAAP):

Noninterest expense (GAAP)

29,863

31,064

27,353

Less: Amortization of intangible assets expense

1,517

1,515

1,683

Less: Acquisition related expenses

154

Adjusted Noninterest expense (non-GAAP)

28,346

29,549

25,516

Net interest income (GAAP)

42,867

43,034

39,548

Plus: Taxable equivalent adjustment

851

629

702

Noninterest income (GAAP)

6,898

3,723

6,256

Less: Net gains on equity securities

456

125

Less: Net gains (losses) on sale of investment securities available for sale

510

(2,241)

Less: Net (losses) gains on sale of fixed assets

(139)

680

Net interest income (FTE) plus noninterest income (non-GAAP)

49,650

49,641

45,755

Efficiency ratio (non-GAAP)

57.09

59.53

55.77

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SOURCE Peoples Financial Services Corp.