PEOPLES FINANCIAL SERVICES CORP. Reports Unaudited Fourth Quarter and Year to Date 2024 Earnings

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A detailed analysis of Peoples Financial's Q4 2024 results reveals a complex but strategically sound financial picture. The headline net income of $6.1 million represents significant improvement from Q3's loss, but more importantly, the core net income of $10.0 million demonstrates underlying strength when excluding merger-related costs.

The FNCB merger integration is progressing well with several strategic advantages materializing:

Expanded deposit base with 68.7% being insured deposits
Enhanced market presence in northeastern Pennsylvania
Successful core system integration improving operational efficiency
Branch network optimization reducing redundancy while maintaining coverage

Credit quality metrics warrant attention with the allowance for credit losses increasing to 1.05% of loans, up from 0.97% in Q3. The $3.4 million provision for credit losses in Q4, excluding merger effects, indicates some deterioration in the loan portfolio, particularly in equipment financing and commercial real estate segments.

The net interest margin has remained relatively stable at 3.25%, despite the challenging rate environment. The bank's ability to reduce deposit costs by 13 basis points to 2.20% demonstrates solid deposit management, though continued pressure on margins seems likely given the current rate environment.

The dividend increase of 50.6% year-over-year signals management's confidence in the combined entity's earning power and capital position. With $2.4 billion in available liquidity sources representing 50.2% of total assets, the bank maintains a strong buffer against potential stress scenarios.

02/06/2025 - 06:17 PM

SCRANTON, Pa., Feb. 6, 2025 /PRNewswire/ -- Peoples Financial Services Corp. ("Peoples" or the "Company") (NASDAQ: PFIS), the bank holding company for Peoples Security Bank and Trust Company, today reported unaudited financial results at and for the three and twelve months ended December 31, 2024.

Peoples reported net income of $6.1 million, or $0.61 per diluted share for the three months ended December 31, 2024, compared to a net loss of $4.3 million, or $0.43 per diluted share for the three months ended September 30, 2024. Quarterly net income increased primarily due to lower provisions for credit losses and noninterest expenses, which offset reduced net interest income. On July 1, 2024, Peoples consummated the merger of FNCB Bancorp, Inc. into Peoples and the merger of FNCB Bank into Peoples Security Bank and Trust Company (collectively referred to as the "FNCB merger"). Non-recurring acquisition related expenses totaled $5.0 million in the quarter ended December 31, 2024 compared to $24.0 million in the prior quarter, which included a $14.3 million provision for credit losses on non-purchase credit deteriorated ("non-PCD") loans acquired in the FNCB merger and acquisition related expenses of $9.7 million.

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, 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 acquisition related expenses, nonrecurring provisions for non-PDC loans 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.

Core net income and core earnings per diluted share^¹^, non-GAAP measures, exclude the non-recurring acquisition related expenses of $5.0 million and $24.0 million incurred during the three months ended December 31, 2024 and September 30, 2024, respectively, and totaled $10.0 million or $0.99 per diluted share for the three months ended December 31, 2024 compared to $16.5 million, or $1.64 per diluted share for the three months ended September 30, 2024.

Income before taxes was $5.8 million for the three months ended December 31, 2024 compared to a loss of $5.0 million for the three months ended September 30, 2024. Pre-provision net revenue (PPNR) and PPNR per diluted share¹, non-GAAP measures, for the three months ended December 31, 2024 was $9.6 million or $0.96 per diluted share. The PPNR and PPNR diluted earnings per share for the prior quarter was $8.7 million or $0.86 per diluted share. Core pre-provision net revenue (PPNR) and core PPNR per diluted share¹, non-GAAP measures, which exclude acquisition related expenses, the provision for credit losses and the provision for credit losses on unfunded commitments from income before taxes, for the three months ended December 31, 2024 was $14.6 million or $1.46 per diluted share. The core PPNR and core PPNR diluted earnings per share for the prior quarter was $18.3 million or $1.83 per diluted share.

For the twelve months ended December 31, 2024, net income was $8.5 million, or $0.99 per diluted share, compared to $27.4 million, or $3.83 per diluted share for the comparable period of 2023. Net income for the current period decreased $18.9 million when compared to the twelve months ended December 31, 2023 due to $30.5 million of non-recurring charges, including $16.2 million of acquisition expenses and a $14.3 million provision for credit losses on non-PCD loans related to the FNCB merger, which were partially offset by higher interest income due to increased levels of earning assets.


¹ See reconciliation of non-GAAP financial measures on pg.19-21.

Core net income and core earnings per diluted share¹, non-GAAP measures, totaled $32.4 million or $3.77 per diluted share for the twelve months ended December 31, 2024 compared to $28.9 million, or $4.03 per diluted share for the comparable period of 2023.

Pre-provision net revenue (PPNR) and PPNR per diluted share¹, non-GAAP measures, for the twelve months ended December 31, 2024 were $27.6 million and $3.21 per diluted share, respectively. The PPNR and PPNR diluted earnings per share for the corresponding prior year period was $33.1 million or $4.62 per diluted share. Core pre-provision net revenue (PPNR) and core PPNR per diluted share¹, non-GAAP measures, for the twelve months ended December 31, 2024 were $43.8 million and $5.10 per diluted share, respectively. The core PPNR and core PPNR diluted earnings per share for the corresponding prior year period was $34.9 million and $4.88 per diluted share.

Merger with FNCB

Peoples acquired FNCB and its wholly-owned subsidiary FNCB Bank by merger on July 1, 2024. The merger and acquisition method of accounting was used to account for the transaction with Peoples as the acquirer. The Company recorded the assets and liabilities of FNCB at their respective fair values as of July 1, 2024. The transaction was valued at approximately $133.7 million. Primary reasons for the merger included: expansion of the branch network and commanding market share positions in northeastern Pennsylvania; attractive low-cost funding base; strong cultural alignment and a deep commitment to shareholders, customers, employees, and communities served by Peoples and FNCB, meaningful value creation to shareholders; increased trading liquidity for both companies and increased dividends for Peoples shareholders.

At the time of the merger, FNCB contributed, after fair value purchase accounting adjustments, approximately $1.8 billion in assets, $421.9 million in investments, $1.2 billion in loans, $1.4 billion in deposits, $226.3 million in Federal Home Loan Bank ("FHLB") advances and other borrowings, and $8.0 million in subordinated debt and trust preferred debentures. The excess of the merger consideration over the fair value of the net FNCB assets acquired and liabilities assumed resulted in $13.0 million of goodwill. The FNCB merger also resulted in a core deposit intangible valued at $36.6 million or 5.1% of core deposits.

The Company incurred non-recurring expenses of $5.0 million and $30.5 million for the three and twelve months ended December 31, 2024, respectively, related to merger and acquisition costs, and an increased allowance for credit losses related to the acquisition of PCD and non-PCD loans acquired in the FNCB merger.

The Company's financial results for any periods ended prior to July 1, 2024 only reflect Peoples results on a stand alone basis. As a result of the FNCB merger and the below listed adjustments related to the FNCB merger, the Company's financial results for the three months and twelve months ended December 31, 2024 may not be directly comparable to prior reported periods. The following schedule highlights specific merger related activity for the three and twelve months ended December 31, 2024:

Schedule of Merger & Acquisition Costs and Non-Recurring Merger Related Activity (Unaudited)


		Quarter Ended		Year Ended
(Dollars in thousands)		December 31, 2024		December 31, 2024

Acquisition related expenses	$	4,990	$	16,200
Provision for credit losses for FNCB non-PCD loans				14,328
Total net M&A costs and non-recurring transaction costs	$	4,990	$	30,528

NOTABLES IN THE QUARTER

Paid a fourth quarter dividend of $0.6175 per share, representing an increase of 50.6% over the year ago quarter's dividend.
Completed our core operating system integration to achieve highest efficiency.
Realigned our branch network to achieve maximum coverage with minimum redundancy.
Allowance for credit losses to loans, net increased to 1.05% at December 31, 2024 from 0.97% and 0.77% at September 30, 2024 and December 31, 2023, respectively.
Return on average equity for the three months ended December 31, 2024 was 5.07% compared to negative 3.58% for the three months ended September 30, 2024; excluding the non-recurring charges, core return on average equity¹, a non-GAAP measure, was 8.31% on an annualized basis for the three months ended December 31, 2024 compared to 13.61% for the three months ended September 30, 2024.
Return on average assets for the three months ended December 31, 2024 was 0.47% compared to negative 0.33% for the three months ended September 30, 2024; excluding the non-recurring charges, core return on average assets¹, a non-GAAP measure, was 0.76% on an annualized basis for the three months ended December 31, 2024 compared to 1.24% for the three months ended September 30, 2024.
At December 31, 2024, the Company had $135.9 million in cash and cash equivalents, a decrease of $149.6 million from September 30, 2024. Additional contingent sources of available liquidity totaled $2.4 billion and include lines of credit at the Federal Reserve Bank and FHLB of Pittsburgh, brokered deposit capacity and unencumbered securities that may be pledged as collateral. The Company's cash and cash equivalents balance and available liquidity represented 50.2% of total assets and 58.0% of total deposits.
At December 31, 2024, estimated total insured deposits were approximately $3.0 billion, or 68.7% of total deposits. Included in the uninsured total at December 31, 2024 was $487.8 million of municipal deposits collateralized by letters of credit issued by the FHLB and pledged investment securities, and $1.4 million of affiliate company deposits. Total insured and collateralized deposits represented 79.7% of total deposits at December 31, 2024.

INCOME STATEMENT REVIEW

Net interest margin ("NIM"), calculated on a fully taxable equivalent ("FTE") basis, a non-GAAP measure¹, for the three months ended December 31, 2024 was 3.25%, a decrease of 1 basis point compared to 3.26% for the three months ended September 30, 2024. The decrease in tax-equivalent NIM from the prior quarter was primarily due to a lower yield on interest-earning assets as a result of the Federal Open Market Committee ("FOMC") lowering rates in September and into the fourth quarter.
The tax-equivalent yield on interest-earning assets, a non-GAAP measure¹, decreased 12 basis points to 5.51% during the three months ended December 31, 2024 from 5.63% during the three months ended September 30, 2024.
The cost of funds, which represents the average rate paid on total interest-bearing liabilities, decreased 16 basis points to 2.88% for the three months ended December 31, 2024 when compared to 3.04% during the three months ended September 30, 2024.
The cost of interest-bearing deposits decreased 16 basis points during the three months ended December 31, 2024 to 2.75% from 2.91% in the three months ended September 30, 2024.
The cost of total deposits for the three months ended December 31, 2024 was 2.20%, a decrease of 13 basis points from 2.33% for the three months ended September 30, 2024.


¹See reconciliation of non-GAAP financial measures on pg.19-21.

Fourth Quarter 2024 Results – Comparison to Third Quarter 2024

Net interest income for the three months ended December 31, 2024 decreased $0.7 million to $38.5 million from $39.2 million for the three months ended September 30, 2024. Tax-equivalent net interest income, a non-GAAP measure¹, for the three months ended December 31, 2024 decreased $0.8 million or 1.9% to $39.2 million from $40.0 million for the three months ended September 30, 2024. The decrease in tax-equivalent net interest income was due to a $2.5 million decrease in tax-equivalent interest income that was partially offset by a $1.7 million decrease in interest expense.

Lower interest income was the result of decreases in the volume of earning assets and lower rates on floating rate assets resulting from the 100 basis point cut to the federal funds rate since September 2024. Average loans, net, decreased $32.9 million when comparing the three months ended December 31, 2024 to the prior three month period ended September 30, 2024. Average investments totaled $628.9 million in the three months ended December 31, 2024 and $700.6 million in the three months ended September 30, 2024. Average federal funds sold increased $37.3 million to $129.5 million for the three months ended December 31, 2024.

The $1.7 million decrease in interest expense in the three months ended December 31, 2024 was due primarily to lowering rates paid on consumer, business and municipal deposit accounts in response to the FOMC's aforementioned actions, coupled with the reduced balances. The Company's total cost of deposits decreased 13 basis points to 2.20% during the three months ended December 31, 2024 compared to 2.33 % for the prior quarter. The cost of interest-bearing deposits decreased 16 basis point to 2.75% from 2.91% in the prior quarter. Short-term borrowings averaged $39.3 million in the three month period ended December 31, 2024 at an average cost of 4.80% compared to $43.9 million in short-term borrowings at an average cost of 4.98% during the three months ended September 30, 2024.

Average interest-bearing liabilities decreased $39.3 million for the three months ended December 31, 2024, compared to the three months ended September 30, 2024. Average noninterest-bearing deposits decreased $4.5 million and represented 20.2% of total average deposits in the three months ended December 31, 2024 as compared to 20.1% in the three months ended September 30, 2024.

For the three months ended December 31, 2024, $3.4 million was recorded to the provision for credit losses compared to $14.5 million in the prior quarter. The prior period provision included a non-recurring provision of $14.3 million for non-PCD loans acquired in the FNCB merger. Excluding the impact of the FNCB merger, the provision for credit losses for the three months ended September 30, 2024 was $0.2 million. The higher provision in the three months ended December 31, 2024 was due to higher net charge-offs of $0.9 million primarily in the equipment financing and commercial real estate portfolios which contributed to higher model loss rates.

Noninterest income was $5.7 million for each of the three months ended December 31, 2024 and September 30, 2024. Higher interest rate swap revenue during the quarter ended December 31, 2024 was partially offset by lower gains on equity investments, as compared to the quarter ended September 30, 2024.

Noninterest expense decreased $0.5 million to $35.0 million for the three months ended December 31, 2024, from $35.5 million for the three months ended September 30, 2024. Excluding acquisition related expenses of $5.0 million in the quarter ended December 31, 2024 and $9.7 million in the prior quarter, including legal and consulting, core system de-conversion fees, and severance fees, noninterest expenses increased $4.1 million. Salaries and employee benefits were $2.1 million higher due primarily to year-end employee incentive accruals. Other expenses increased $1.9 million to $6.5 million for the quarter due to the $0.4 million reserve on unfunded commitments, $0.4 million higher Federal Deposit Insurance Corporation ("FDIC") assessment costs on the Company and a $0.4 million writedown of a former branch property.

The income tax benefit was $0.3 million and $0.7 million for the three months ended December 31, 2024 and September 30, 2024, respectively. The lower tax rate was due to the impact of permanent tax adjustments, such as tax exempt income and BOLI income, on a lower pre-tax income base.


¹ See reconciliation of non-GAAP financial measures on pg.19-21.

2024 vs. 2023 Full Year Results

Net interest income for the twelve months ended December 31, 2024 increased $29.2 million to $116.0 million from $86.8 million for the twelve months ended December 31, 2023. The FTE NIM, a non-GAAP measure¹, for the twelve months ended December 31, 2024 was 2.84%, an increase of 30 basis points over the prior year's period of 2.54%. Tax-equivalent net interest income, a non-GAAP measure¹ for the twelve months ended December 31, increased $29.7 million, or 33.5%, to $118.4 million in 2024 from $88.7 million in 2023. The increase in tax-equivalent net interest income was primarily the result of higher loan interest income due to increased volume and rates on new loans acquired through the FNCB merger and an additional $9.0 million from accretion of purchase accounting marks on purchased loans. Average investments increased $57.9 million compared to December 31, 2023, due in part to the assumption of $426.1 million in investments from the FNCB merger. Subsequent to the merger, the Company engaged in investment sales of approximately $271.4 million to repay short-term borrowings and build on balance sheet liquidity. The tax-equivalent yield on earning assets was 5.14% for the twelve months of 2024 compared to 4.34% for the twelve months ended December 31, 2023. The cost of interest bearing liabilities during the twelve month period ended December 31, 2024 increased 51 basis points to 2.93% from 2.42% for the twelve months ended December 31, 2023 as the cost of interest-bearing deposit products and short-term borrowing costs increased. The net impact of the purchase accounting accretion and amortization of the loan, deposit and borrowing marks acquired and assumed in the FNCB merger was $7.3 million and contributed 18 basis points to the NIM.

For the twelve months ended December 31, 2024, a provision for credit losses of $19.1 million was recorded and included a $14.3 million day-one provision for non-PCD loans acquired in the FNCB merger. The balance includes adjustments through December 31, 2024 for individually evaluated and pooled loans. Excluding the day-one provision, the increase to the provision is due to $1.1 million in net charge-offs primarily in the equipment financing and indirect loan portfolios and higher ACL model loss rates.

Noninterest income was $18.3 million for the twelve months ended December 31, 2024 and $14.1 million for the comparable period ended December 31, 2023. During the period, service charges and fees increased $2.9 million, wealth management income increased $0.5 million, bank owned life insurance cash surrender value increased $0.5 million and gains on equity securities increased $0.1 million while interest rate swap revenue decreased $0.1 million on lower loan origination volume and market value adjustments.

Noninterest expense for the twelve months ended December 31, 2024, was $106.7 million, an increase of $38.9 million from $67.8 million for the twelve months ended December 31, 2023. The increase was due primarily to higher acquisition related expenses, and higher expenses due to additional full time equivalent employees and facilities from the FNCB merger. Acquisition related expenses totaled $16.2 million compared to $1.8 million a year ago. Salaries and employee benefits expenses increased $10.5 million compared to the year ago period due to the addition of 195 full time equivalent employees from FNCB at the time of the FNCB merger. Occupancy and equipment expenses were higher by $5.2 million in the current period due to increased technology costs related to system integration and increased account and transaction volumes, and higher facilities costs. Other expenses increased $5.6 million to $19.1 million due to increased FDIC insurance assessments, the write down of a former branch office and the inherent costs of a larger organization. The provision for income taxes for the twelve months ended December 31, 2024 decreased $5.2 million as compared to the prior period due to the impact of increased permanent tax adjustments, such as tax exempt income and BOLI income, on a lower pre-tax income base.


¹ See reconciliation of non-GAAP financial measures on pg.19-21.

BALANCE SHEET REVIEW

At December 31, 2024, total assets, loans and deposits were $5.1 billion, $4.0 billion and $4.4 billion, respectively.

Loan growth for the twelve months ended December 31, 2024 was $1.1 billion or 40.1%, due primarily to the $1.2 billion in loans acquired in the FNCB merger. Commercial loans made up the majority of the growth with residential real estate loans also increasing.

Total investments were $606.9 million at December 31, 2024, compared to $483.9 million at December 31, 2023. At December 31, 2024, the available for sale securities totaled $526.3 million and the held to maturity securities totaled $78.2 million. The unrealized loss on the available for sale securities decreased $2.5 million from $51.5 million at December 31, 2023 to $49.0 million at December 31, 2024. The unrealized losses on the held to maturity portfolio totaled $13.0 million and $13.2 million at December 31, 2024 and December 31, 2023, respectively.

At December 31, 2024, goodwill was $76.3 million, an increase of $12.9 million from $63.4 million at December 31, 2023. Goodwill declined $0.6 million from September 30, 2024 due to an adjustment in the fourth quarter to the fair value of certain assets acquired in the FNCB merger.

Total deposits increased $1.1 billion during the twelve months ended December 31, 2024 due primarily to the $1.4 billion in deposits acquired in the FNCB merger, partially offset by reductions in brokered CDs and seasonal outflows of non-maturity deposits. Noninterest-bearing deposits increased $290.8 million and interest-bearing deposits increased $837.7 million during the twelve months ended December 31, 2024. The Company had $256.4 million and $261.0 million of longer-term brokered CDs at December 31, 2024 and December 31, 2023, respectively. During the quarter ended December 31, 2024, the Company called $100.7 million of its higher cost brokered CDs in order to reduce its cost of funds.

The Company's deposit base consisted of 40.4% retail accounts, 34.9% commercial accounts, 18.9% municipal relationships and 5.8% brokered deposits at December 31, 2024. At December 31, 2024, total estimated uninsured deposits, were $1.4 billion, or approximately 31.3% of total deposits. Included in the uninsured total at December 31, 2024 is $487.8 million of municipal deposits collateralized by letters of credit issued by the FHLB and pledged investment securities, and $1.4 million of affiliate company deposits. We also offer customers access to CDARS and ICS programs through which their deposits may be allocated to separate FDIC-insured institutions, while they are able to maintain their relationship with the bank.

In addition to deposit gathering and current long-term debt, we have additional sources of liquidity available such as cash and cash equivalents, overnight borrowings from the FHLB, the Federal Reserve's Discount Window, correspondent bank lines of credit, brokered deposit capacity and unencumbered securities. At December 31, 2024, the Company had $135.9 million in cash and cash equivalents, a decrease of $51.5 million from $187.4 million at December 31, 2023. For additional information on the deposit portfolio and additional sources of liquidity, see the tables on page 17.

The Company maintained its well capitalized position at December 31, 2024. Stockholders equity equaled $469.0 million or $46.94 per share at December 31, 2024, and $340.4 million or $48.35 per share at December 31, 2023. The increase in stockholders' equity from December 31, 2023 is primarily attributable to the FNCB merger, net income less dividends to shareholders, partially offset by a $3.7 million decrease to accumulated other comprehensive loss ("AOCL") resulting from a reduction in the unrealized loss on available for sale securities. The net after tax unrealized loss on available for sale securities included in AOCL at December 31, 2024 and December 31, 2023 was $30.3 million and $40.3 million, respectively.

Tangible book value¹, a non-GAAP measure, decreased to $35.88 per share at December 31, 2024, from $39.35 per share at December 31, 2023. Dividends declared for the twelve months ended December 31, 2024 amounted to $2.06 per share.

ASSET QUALITY REVIEW

Nonperforming assets were $23.0 million or 0.58% of loans, net and foreclosed assets at December 31, 2024, compared to $4.9 million or 0.17% of loans, net and foreclosed assets at December 31, 2023. Nonperforming assets at December 31, 2024 included $8.5 million of loans acquired in the FNCB merger, of which, $6.4 million were PCD loans assumed in the FNCB merger. As a percentage of total assets, nonperforming assets totaled 0.45% at December 31, 2024 compared to 0.13% at December 31, 2023. At December 31, 2024, the Company had one foreclosed property recorded at $27 thousand.

During the twelve months ended December 31, 2024, net charge-offs were $1.1 million and the provision for credit losses totaled $19.1 million. The provision for credit losses included a $14.3 million FNCB merger related day one adjustment for non-PCD loans. The allowance for credit losses equaled $41.8 million or 1.05% of loans, net, at December 31, 2024 compared to $21.9 million or 0.77% of loans, net, at December 31, 2023. Loans charged-off, net of recoveries, for the three months ended December 31, 2024 were $0.9 million, compared to $2.8 million for the comparable period last year.


¹ See reconciliation of non-GAAP financial measures on pg.19-21.

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 39 full-service community banking offices located within Allegheny, Bucks, Lackawanna, 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, 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:

We make statements in this press release, and we may from time to time make other statements regarding our outlook or expectations for future financial or operating results and/or other matters regarding or affecting Peoples Financial Services Corp. and its subsidiaries (collectively, "Peoples") and other statements that are not historical facts that are considered "forward-looking statements" as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements may be identified by the use of such words as "believe," "expect," "anticipate," "should," "planned," "estimated," "intend" and "potential." For these statements, Peoples claims the protection of the statutory safe harbors for forward-looking statements.

Peoples cautions you that undue reliance should not be placed on forward-looking statements and that a number of important factors could cause actual results to differ materially from those currently anticipated in any forward-looking statement. Such factors include, but are not limited to: macroeconomic trends, including interest rates and inflation; the effects of any recession in the United States; the impact on financial markets from geopolitical conflict, including from wars, military conflict or trade policies, including tariffs or retaliatory tariffs; the possibility that Peoples may be unable to achieve the expected synergies and operating efficiencies of the FNCB merger within the expected timeframes or at all; the possibility that Peoples may be unable to successfully integrate operations of FNCB or that the integration may be more difficult, time consuming or costly than expected; the FNCB merger may divert management's attention from ongoing business operations and opportunities; effects of the FNCB merger on our ability to retain customers and retain and hire key personnel and maintain relationships with our vendors, and on our operating results and business generally; the dilution caused by Peoples' issuance of additional shares of its capital stock in connection with the FNCB merger; the outcome of any legal proceedings that may be threatened or instituted against Peoples; changes in interest rates; economic conditions, particularly in our market area; legislative and regulatory changes and the ability to comply with the significant laws and regulations governing the banking and financial services business; monetary and fiscal policies of the U.S. government, including policies of the U.S. Department of Treasury and the Federal Reserve System; adverse developments in the financial industry generally, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer and client behavior; credit risk associated with lending activities and changes in the quality and composition of our loan and investment portfolios; demand for loan and other products; deposit flows; competition; changes in the values of real estate and other collateral securing the loan portfolio, particularly in our market area; changes in relevant accounting principles and guidelines; inability of third party service providers to perform; our ability to prevent, detect and respond to cyberattacks; and other factors that may be described in our 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.

The forward-looking statements are made as of the date of this release, and, except as may be required by applicable law or regulation, Peoples assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

[TABULAR MATERIAL FOLLOWS]

Summary Data Peoples Financial Services Corp. Five Quarter Trend (Unaudited) (In thousands, except share and per share data)

	Dec 31			Sept 30			June 30			Mar 31			Dec 31
	2024			2024			2024			2024			2023
Key performance data:
Share and per share amounts:
Net (loss) income	$	0.61		$	(0.43)		$	0.46		$	0.49		$	0.51
Core net income (1)	$	0.99		$	1.64		$	0.59		$	0.55		$	0.61
Core net income (PPNR) (1)	$	1.46		$	1.83		$	0.73		$	0.79		$	0.95
Cash dividends declared	$	0.62		$	0.62		$	0.41		$	0.41		$	0.41
Book value	$	46.94		$	47.53		$	48.29		$	48.18		$	48.35
Tangible book value (1)	$	35.88		$	36.24		$	39.31		$	39.20		$	39.35
Market value:
High	$	58.76		$	50.49		$	46.25		$	48.84		$	49.99
Low	$	44.73		$	41.44		$	36.26		$	38.09		$	38.58
Closing	$	51.18		$	46.88		$	45.54		$	43.11		$	48.70
Market capitalization	$	511,325		$	468,549		$	321,388		$	304,238		$	342,889
Common shares outstanding		9,990,724			9,994,648			7,057,258			7,057,258			7,040,852
Selected ratios:
Return on average stockholders' equity		5.07	%		(3.58)	%		3.87	%		4.09	%		4.40	%
Core return on average stockholders' equity (1)		8.31	%		13.61	%		5.00	%		4.59	%		5.26	%
Return on average tangible stockholders' equity		6.62	%		(4.67)	%		4.76	%		5.02	%		5.46	%
Core return on average tangible stockholders' equity (1)		10.87	%		17.77	%		6.14	%		5.64	%		6.53	%
Return on average assets		0.47	%		(0.33)	%		0.37	%		0.38	%		0.38	%
Core return on average assets (1)		0.76	%		1.24	%		0.47	%		0.43	%		0.46	%
Stockholders' equity to total assets		9.21	%		8.86	%		9.42	%		9.27	%		9.10	%
Efficiency ratio (1)(2)		63.03	%		53.14	%		74.49	%		75.77	%		69.94	%
Nonperforming assets to loans, net, and foreclosed assets		0.58	%		0.53	%		0.25	%		0.27	%		0.17	%
Nonperforming assets to total assets		0.45	%		0.41	%		0.20	%		0.21	%		0.13	%
Net charge-offs to average loans, net		0.09	%		0.01	%		0.01	%		0.00	%		0.39	%
Allowance for credit losses to loans, net		1.05	%		0.97	%		0.81	%		0.79	%		0.77	%
Interest-bearing assets yield (FTE) (3)		5.51	%		5.63	%		4.58	%		4.56	%		4.49	%
Cost of funds (4)_		2.88	%		3.04	%		3.01	%		2.96	%		2.86	%
Net interest spread (FTE) (3) (4)		2.62	%		2.59	%		1.57	%		1.60	%		1.63	%
Net interest margin (FTE) (3)		3.25	%		3.26	%		2.29	%		2.29	%		2.30	%

(1)	See Reconciliation of Non-GAAP financial measures on pages 19-21.
(2)	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 available for sale.
(3)	Tax-equivalent adjustments were calculated using the federal statutory tax rate prevailing during the indicated periods of 21%.
(4)	Amount for the three months ended September 30, 2024 has been revised from the previously reported amount to correct an immaterial misclassification of deposits, namely a $210.3 million understatement of noninterest-bearing deposits and overstatement of interest-bearing deposits. The misclassification had no material impact on the September 30, 2024 financial statements.

Peoples Financial Services Corp. Consolidated Statements of Income (Unaudited) (In thousands, except per share data)

	Dec 31		Dec 31
Year ended	2024		2023
Interest income:
Interest and fees on loans:
Taxable	$	184,907	$	129,013
Tax-exempt		7,354		5,628
Interest and dividends on investment securities:
Taxable		12,930		7,912
Tax-exempt		1,550		1,582
Dividends		89		4
Interest on interest-bearing deposits in other banks		498		335
Interest on federal funds sold		4,132		5,377
Total interest income		211,460		149,851
Interest expense:
Interest on deposits		87,934		58,561
Interest on short-term borrowings		1,919		1,920
Interest on long-term debt		3,317		842
Interest on subordinated debt		1,774		1,774
Interest on junior subordinated debt		527
Total interest expense		95,471		63,097
Net interest income		115,989		86,754
Provision for credit losses		19,131		566
Net interest income after provision for credit losses		96,858		86,188
Noninterest income:
Service charges, fees, commissions and other		10,673		7,728
Merchant services income		896		693
Commissions and fees on fiduciary activities		2,270		2,219
Wealth management income		2,118		1,576
Mortgage banking income		389		390
Increase in cash surrender value of life insurance		1,572		1,067
Interest rate swap revenue		285		390
Net gains (losses) on equity investment securities		132		(11)
Net gains on sale of investment securities available for sale		1		81
Total noninterest income		18,336		14,133
Noninterest expense:
Salaries and employee benefits expense		45,746		35,285
Net occupancy and equipment expense		22,296		17,146
Acquisition related expenses		16,200		1,816
Amortization of intangible assets		3,367		105
Net loss (gains) on fixed assets				(18)
Other expenses		19,117		13,486
Total noninterest expense		106,726		67,820
Income before income taxes		8,468		32,501
(Benefit) provision for income tax expense		(30)		5,121
Net income	$	8,498	$	27,380
Other comprehensive income:
Unrealized gains on investment securities available for sale	$	2,569	$	14,804
Reclassification adjustment for gains on available for sale securities included in net income		(1)		(81)
Change in pension liability		1,518		1,129
Change in derivative fair value		632		(824)
Income tax expense related to other comprehensive income		1,062		3,043
Other comprehensive income, net of income tax expense		3,656		11,985
Comprehensive income	$	12,154	$	39,365
Share and per share amounts:
Net income - basic	$	1.00	$	3.85
Net income - diluted		0.99		3.83
Cash dividends declared		2.06		1.64
Average common shares outstanding - basic		8,531,122		7,107,908
Average common shares outstanding - diluted		8,586,035		7,151,471

Peoples Financial Services Corp. Consolidated Statements of Income (Loss) (Unaudited) (In thousands, except per share data)

	Dec 31		Sept 30		June 30		Mar 31		Dec 31
Three months ended	2024		2024		2024		2024		2023
Interest income:
Interest and fees on loans:
Taxable	$	57,048	$	59,412	$	34,406	$	34,041	$	33,730
Tax-exempt		2,238		2,299		1,399		1,418		1,423
Interest and dividends on investment securities:
Taxable		4,369		4,739		1,904		1,918		1,939
Tax-exempt		397		411		371		371		372
Dividends		30		55		2		2
Interest on interest-bearing deposits in other banks		113		150		115		120		145
Interest on federal funds sold		1,608		1,218		179		1,127		2,463
Total interest income		65,803		68,284		38,376		38,997		40,072
Interest expense:
Interest on deposits		24,718		26,398		18,114		18,704		18,756
Interest on short-term borrowings		474		550		633		262		330
Interest on long-term debt		1,389		1,389		269		270		273
Interest on subordinated debt		444		443		444		443		444
Interest on junior subordinated debt		267		260
Total interest expense		27,292		29,040		19,460		19,679		19,803
Net interest income		38,511		39,244		18,916		19,318		20,269
Provision for credit losses		3,369		14,458		596		708		1,669
Net interest income after provision for credit losses		35,142		24,786		18,320		18,610		18,600
Noninterest income:
Service charges, fees, commissions and other		3,368		3,384		1,885		2,036		1,881
Merchant services income		298		223		260		115		151
Commissions and fees on fiduciary activities		553		649		517		551		528
Wealth management income		633		708		416		361		399
Mortgage banking income		126		84		87		92		95
Increase in cash surrender value of life insurance		456		551		286		279		277
Interest rate swap revenue		260		(53)		102		(24)		(122)
Net (losses) gains on investment equity securities		(23)		175		(12)		(8)		6
Net gains on sale of investment securities available for sale				1
Total noninterest income		5,671		5,722		3,541		3,402		3,215
Noninterest expense:
Salaries and employee benefits expense		15,287		13,170		8,450		8,839		8,939
Net occupancy and equipment expense		6,559		6,436		4,576		4,725		4,468
Acquisition related expenses		4,990		9,653		1,071		486		826
Amortization of intangible assets		1,702		1,665						19
Other expenses		6,460		4,578		4,061		4,018		3,346
Total noninterest expense		34,998		35,502		18,158		18,068		17,598
Income (loss) before income taxes		5,815		(4,994)		3,703		3,944		4,217
Income tax (benefit) expense		(272)		(657)		421		478		587
Net income (loss)	$	6,087	$	(4,337)	$	3,282	$	3,466	$	3,630
Other comprehensive (loss) income:
Unrealized (loss) gain on investment securities available for sale	$	(10,175)	$	15,167	$	18	$	(2,441)	$	19,494
Reclassification adjustment for gains on available for sale securities included in net income				(1)
Change in benefit plan liabilities		1,518								1,129
Change in derivative fair value		817		(1,424)		160		1,079		(1,650)
Income tax (benefit) expense related to other comprehensive (loss) income		(1,686)		3,008		38		(298)		3,894

Other comprehensive (loss) income, net of income tax (benefit) expense		(6,154)		10,734		140		(1,064)		15,079
Comprehensive (loss) income	$	(67)	$	6,397	$	3,422	$	2,402	$	18,709
Share and per share amounts:
Net income - basic	$	0.61	$	(0.43)	$	0.47	$	0.49	$	0.52
Net income - diluted		0.61		(0.43)		0.46		0.49		0.51
Cash dividends declared		0.62		0.62		0.41		0.41		0.41
Average common shares outstanding - basic		9,994,605		9,987,627		7,057,258		7,052,912		7,040,852
Average common shares outstanding - diluted		10,051,337		10,044,449		7,114,115		7,102,112		7,091,015

Peoples Financial Services Corp. Net Interest Margin (Unaudited) (In thousands, fully taxable equivalent basis)

	Three Months Ended
	December 31, 2024						December 31, 2023
	Average		Interest Income/		Yield/		Average		Interest Income/		Yield/
	Balance		Expense		Rate		Balance		Expense		Rate
Assets:
Earning assets:
Loans:
Taxable	$	3,757,273	$	57,048	6.04	%	$	2,632,865	$	33,730	5.08	%
Tax-exempt		278,429		2,834	4.05			227,800		1,801	3.14
Total loans		4,035,702		59,882	5.90			2,860,665		35,531	4.93
Investments:
Taxable		541,526		4,399	3.23			450,533		1,939	1.71
Tax-exempt		87,419		502	2.29			87,297		471	2.14
Total investments		628,945		4,901	3.10			537,830		2,410	1.78
Interest-bearing deposits		9,116		113	4.93			10,432		145	5.51
Federal funds sold		129,517		1,608	4.94			176,983		2,463	5.52
Total earning assets		4,803,280		66,504	5.51	%		3,585,910		40,549	4.49	%
Less: allowance for credit losses		39,850						23,386
Other assets		440,029						211,864
Total assets	$	5,203,459	$	66,504			$	3,774,388	$	40,549
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Money market accounts	$	945,644	$	7,526	3.17	%	$	775,661	$	7,227	3.70	%
Interest-bearing demand and NOW accounts		1,276,206		7,549	2.35			814,695		4,925	2.40
Savings accounts		502,028		651	0.52			438,544		267	0.24
Time deposits less than $100		497,473		5,428	4.34			415,806		4,364	4.16
Time deposits $100 or more		351,970		3,564	4.03			216,450		1,973	3.62
Total interest-bearing deposits		3,573,321		24,718	2.75			2,661,156		18,756	2.80
Short-term borrowings		39,319		474	4.80			24,103		330	5.43
Long-term debt		111,135		1,389	4.97			25,000		273	4.33
Subordinated debt		33,000		444	5.35			33,000		444	5.34
Junior subordinated debt		8,026		267	13.23
Total borrowings		191,480		2,574	5.35			82,103		1,047	5.06
Total interest-bearing liabilities		3,764,801		27,292	2.88	%		2,743,259		19,803	2.86	%
Noninterest-bearing deposits		904,274						651,182
Other liabilities		56,445						52,760
Stockholders' equity		477,939						327,187
Total liabilities and stockholders' equity	$	5,203,459					$	3,774,388
Net interest income/spread			$	39,212	2.62	%			$	20,746	1.63	%
Net interest margin					3.25	%					2.30	%
Tax-equivalent adjustments:
Loans			$	596					$	378
Investments				105						99
Total adjustments			$	701					$	477

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. Net Interest Margin (Unaudited) (In thousands, fully taxable equivalent basis)

	For the Twelve Months Ended
	December 31, 2024						December 31, 2023
	Average		Interest Income/		Yield/		Average		Interest Income/		Yield/
	Balance		Expense		Rate		Balance		Expense		Rate
Assets:
Earning assets:
Loans:
Taxable	$	3,205,564	$	184,907	5.77	%	$	2,605,927	$	129,013	4.95	%
Tax-exempt		251,300		9,309	3.70			225,839		7,124	3.15
Total loans		3,456,864		194,216	5.62			2,831,766		136,137	4.81
Investments:
Taxable		529,649		13,019	2.46			468,403		7,916	1.69
Tax-exempt		87,563		1,962	2.24			90,897		2,003	2.20
Total investments		617,212		14,981	2.43			559,300		9,919	1.77
Interest-bearing deposits		9,434		498	5.28			6,373		335	5.26
Federal funds sold		78,698		4,132	5.25			98,535		5,377	5.46
Total earning assets		4,162,208		213,827	5.14	%		3,495,974		151,768	4.34	%
Less: allowance for credit losses		30,724						24,377
Other assets		362,130						211,618
Total assets	$	4,493,614	$	213,827			$	3,683,215	$	151,768
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Money market accounts	$	621,993	$	29,643	4.77	%	$	714,940	$	22,686	3.17	%
Interest-bearing demand and NOW accounts		1,261,095		23,674	1.88			779,977		15,586	2.00
Savings accounts		463,199		4,625	1.00			474,028		994	0.21
Time deposits less than $100		480,737		18,124	3.77			349,990		13,344	3.81
Time deposits $100 or more		291,482		11,868	4.07			200,743		5,951	2.96
Total interest-bearing deposits		3,118,506		87,934	2.82			2,519,678		58,561	2.32
Short-term borrowings		37,083		1,919	5.17			38,331		1,920	5.01
Long-term debt		68,441		3,317	4.85			19,448		842	4.33
Subordinated debt		33,000		1,774	5.38			33,000		1,774	5.38
Junior subordinated debt		4,028		527	13.08
Total borrowings		142,552		7,537	5.29			90,779		4,536	5.00
Total interest-bearing liabilities		3,261,058		95,471	2.93	%		2,610,457		63,097	2.42	%
Noninterest-bearing deposits		714,824						698,749
Other liabilities		106,970						44,786
Stockholders' equity		410,762						329,223
Total liabilities and stockholders' equity	$	4,493,614		95,471			$	3,683,215		63,097
Net interest income/spread			$	118,356	2.21	%			$	88,671	1.92	%
Net interest margin					2.84	%					2.54	%
Tax-equivalent adjustments:
Loans			$	1,955					$	1,496
Investments				412						421
Total adjustments			$	2,367					$	1,917

Peoples Financial Services Corp. Details of Net Interest Income and Net Interest Margin (Unaudited) (In thousands, fully taxable equivalent basis)

	Dec 31			Sept 30			June 30			Mar 31			Dec 31
Three months ended	2024			2024			2024			2024			2023
Net interest income:
Interest income:
Loans, net:
Taxable	$	57,048		$	59,412		$	34,406		$	34,041		$	33,730
Tax-exempt		2,834			2,910			1,771			1,795			1,801
Total loans, net		59,882			62,322			36,177			35,836			35,531
Investments:
Taxable		4,399			4,794			1,906			1,920			1,939
Tax-exempt		502			520			469			470			471
Total investments		4,901			5,314			2,375			2,390			2,410
Interest on interest-bearing balances in other banks		113			150			115			120			145
Federal funds sold		1,608			1,218			179			1,127			2,463
Total interest income		66,504			69,004			38,846			39,473			40,549
Interest expense:
Deposits		24,718			26,398			18,114			18,704			18,756
Short-term borrowings		474			550			633			262			330
Long-term debt		1,389			1,389			269			270			273
Subordinated debt		444			443			444			443			444
Junior subordinated debt		267			260
Total interest expense		27,292			29,040			19,460			19,679			19,803
Net interest income	$	39,212		$	39,964		$	19,386		$	19,794		$	20,746
Loans, net:
Taxable		6.04	%		6.24	%		5.25	%		5.20	%		5.08	%
Tax-exempt		4.05	%		4.16	%		3.20	%		3.20	%		3.14	%
Total loans, net		5.90	%		6.09	%		5.09	%		5.04	%		4.93	%
Investments:
Taxable		3.23	%		3.12	%		1.73	%		1.73	%		1.71	%
Tax-exempt		2.29	%		2.31	%		2.19	%		2.18	%		2.14	%
Total investments		3.10	%		3.02	%		1.80	%		1.80	%		1.78	%
Interest-bearing balances with banks		4.93	%		5.55	%		5.28	%		5.35	%		5.51	%
Federal funds sold		4.94	%		5.26	%		5.68	%		5.60	%		5.52	%
Total interest-earning assets		5.51	%		5.63	%		4.58	%		4.56	%		4.49	%
Interest expense:
Deposits (1)		2.75	%		2.91	%		2.92	%		2.90	%		2.80	%
Short-term borrowings		4.80	%		4.98	%		5.61	%		5.35	%		5.43	%
Long-term debt		4.97	%		4.94	%		4.33	%		4.34	%		4.33	%
Subordinated debt		5.35	%		5.34	%		5.41	%		5.40	%		5.34	%
Junior subordinated debt		13.23	%		12.93	%
Total interest-bearing liabilities (1)		2.88	%		3.04	%		3.01	%		2.96	%		2.86	%
Net interest spread (1)		2.62	%		2.59	%		1.57	%		1.60	%		1.63	%
Net interest margin		3.25	%		3.26	%		2.29	%		2.29	%		2.30	%

(1)

Amount for the three months ended September 30, 2024 has been revised from the previously reported amount to correct an immaterial misclassification of deposits, namely a $210.3 million understatement of noninterest-bearing deposits and overstatement of interest-bearing deposits. The misclassification had no material impact on the September 30, 2024 financial statements.

Peoples Financial Services Corp. Consolidated Balance Sheets (Unaudited) (In thousands)

	Dec 31		Sept 30		June 30		Mar 31		Dec 31
At period end	2024		2024		2024		2024		2023
Assets:
Cash and due from banks	$	47,029	$	97,090	$	41,234	$	32,009	$	33,524
Interest-bearing balances in other banks		8,593		10,286		8,722		8,259		9,141
Federal funds sold		80,229		178,093				69,700		144,700
Investment securities:
Available for sale		526,329		562,486		385,240		394,413		398,927
Equity investments carried at fair value		2,430		3,921		78		91		98
Held to maturity		78,184		79,861		81,598		83,306		84,851
Total investments		606,943		646,268		466,916		477,810		483,876
Loans held for sale				803				300		250
Loans		3,993,505		4,069,683		2,869,553		2,858,412		2,849,897
Less: allowance for credit losses		41,776		39,341		23,123		22,597		21,895
Net loans		3,951,729		4,030,342		2,846,430		2,835,815		2,828,002
Goodwill		76,325		76,958		63,370		63,370		63,370
Premises and equipment, net		73,283		75,877		58,565		59,097		61,276
Bank owned life insurance		87,429		87,401		49,955		49,673		49,397
Deferred tax assets		32,006		33,078		14,460		14,241		13,770
Accrued interest receivable		15,632		17,979		13,326		13,565		12,734
Other intangible assets, net		34,197		35,907
Other assets		78,586		70,056		53,077		45,299		42,249
Total assets	$	5,091,981	$	5,360,138	$	3,616,055	$	3,669,138	$	3,742,289
Liabilities:
Deposits:
Noninterest-bearing (1)	$	935,516	$	927,864	$	620,971	$	623,408	$	644,683
Interest-bearing (1)		3,472,036		3,710,000		2,443,988		2,580,530		2,634,354
Total deposits		4,407,552		4,637,864		3,064,959		3,203,938		3,279,037
Short-term borrowings		15,900		37,346		104,250		20,260		17,590
Long-term debt		98,637		111,489		25,000		25,000		25,000
Subordinated debt		33,000		33,000		33,000		33,000		33,000
Junior subordinated debt		8,039		8,015
Accrued interest payable		5,503		6,829		5,507		5,327		5,765
Other liabilities		54,400		50,544		42,532		41,621		41,475
Total liabilities		4,623,031		4,885,087		3,275,248		3,329,146		3,401,867
Stockholders' equity:
Common stock		19,995		19,993		14,122		14,122		14,093
Capital surplus		250,695		250,578		122,449		122,162		122,130
Retained earnings		238,955		239,021		249,511		249,123		248,550
Accumulated other comprehensive loss		(40,695)		(34,541)		(45,275)		(45,415)		(44,351)
Total stockholders' equity		468,950		475,051		340,807		339,992		340,422
Total liabilities and stockholders' equity	$	5,091,981	$	5,360,138	$	3,616,055	$	3,669,138	$	3,742,289

(1)

Amount at September 30, 2024 has been revised from the previously reported amount to correct an immaterial misclassification of deposits, namely a $210.3 million understatement of noninterest-bearing deposits and overstatement of interest-bearing deposits. The misclassification had no material impact on the September 30, 2024 financial statements.

Peoples Financial Services Corp. Loan and Asset Quality Data (Unaudited) (In thousands)

At period end	December 31, 2024		September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023
Commercial
Taxable	$	556,630	$	616,369	$	411,112	$	400,439	$	317,245
Non-taxable		279,390		273,710		220,893		224,083		226,470
Total		836,020		890,079		632,005		624,522		543,715
Real estate
Commercial real estate		2,294,113		2,309,588		1,793,652		1,794,086		1,863,118
Residential		551,851		550,590		369,671		361,490		360,803
Total		2,845,964		2,860,178		2,163,323		2,155,576		2,223,921
Consumer
Indirect Auto		119,704		130,380		66,792		71,675		75,389
Consumer Other		12,697		15,580		7,433		6,639		6,872
Total		132,401		145,960		74,225		78,314		82,261
Equipment Financing		179,120		173,466
Total	$	3,993,505	$	4,069,683	$	2,869,553	$	2,858,412	$	2,849,897


	Dec 31		Sept 30		June 30		Mar 31		Dec 31
At quarter end	2024		2024		2024		2024		2023
Nonperforming assets:
Nonaccrual/restructured loans	$	22,517	$	20,949	$	7,116	$	7,056	$	3,961
Accruing loans past due 90 days or more		458		569				656		986
Foreclosed assets		27		27		27
Total nonperforming assets	$	23,002	$	21,545	$	7,143	$	7,712	$	4,947


		Dec 31		Sept 30		June 30		Mar 31		Dec 31
Three months ended		2024		2024		2024		2024		2023
Allowance for credit losses:
Beginning balance	$	39,341	$	23,123	$	22,597	$	21,895	$	23,010
Merger-related adjustments - Non PCD Loans				14,328
Merger-related adjustments - PCD Loans				1,842
Charge-offs		1,108		534		135		108		2,808
Recoveries		174		452		65		102		24
Provision for credit losses		3,369		130		596		708		1,669
Ending balance	$	41,776	$	39,341	$	23,123	$	22,597	$	21,895

Peoples Financial Services Corp. Deposit and Liquidity Detail (Unaudited) (In thousands)

At period end	December 31, 2024		September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023
Interest-bearing deposits:
Money market accounts	$	936,239	$	1,018,575	$	690,631	$	759,305	$	782,243
Interest-bearing demand and NOW accounts (1)		1,238,853		1,229,083		715,890		754,673		796,426
Savings accounts		492,180		509,412		397,827		415,459		429,011
Time deposits less than $250		620,725		824,791		504,879		517,009		505,409
Time deposits $250 or more		184,039		128,139		134,761		134,084		121,265
Total interest-bearing deposits (1)		3,472,036		3,710,000		2,443,988		2,580,530		2,634,354
Noninterest-bearing deposits (1)		935,516		927,864		620,971		623,408		644,683
Total deposits	$	4,407,552	$	4,637,864	$	3,064,959	$	3,203,938	$	3,279,037


		December 31, 2024
At period end		Amount	Percent of Total		Number of accounts		Average Balance
Deposit Detail:
Retail	$	1,779,729	40.4	%	98,583	$	18
Commercial		1,538,757	34.9		18,675		82
Municipal		832,665	18.9		2,427		343
Brokered		256,401	5.8		28		9,157
Total Deposits	$	4,407,552	100.0		119,713	$	37

Uninsured		1,381,492	31.3	%
Insured		3,026,060	68.7

		December 31, 2023
At period end		Amount	Percent of Total		Number of accounts		Average Balance
Deposit Detail:
Retail	$	1,358,371	41.4	%	70,334	$	19
Commercial		1,096,547	33.4		13,433		82
Municipal		563,124	17.2		1,856		303
Brokered		260,995	8.0		24		10,875
Total Deposits	$	3,279,037	100.0		85,647	$	38

Uninsured		883,530	26.9	%
Insured		2,395,507	73.1


					Total Available
At December 31, 2024		Total Available		Outstanding		for Future Liquidity
FHLB advances	$	1,680,100	$	587,817	$	1,092,283
Federal Reserve - Discount Window		621,462				621,462
Correspondent bank lines of credit		18,000				18,000
Other sources of liquidity:
Brokered deposits		763,797		256,401		507,396
Unencumbered securities		182,170				182,170
Total sources of liquidity	$	3,265,529	$	844,218	$	2,421,311

(1)

Peoples Financial Services Corp. Consolidated Balance Sheets (Unaudited) (In thousands)

	Dec 31		Sept 30		June 30		Mar 31		Dec 31
Average quarterly balances	2024		2024		2024		2024		2023
Assets:
Loans, net:
Taxable	$	3,757,273	$	3,790,138	$	2,637,164	$	2,632,554	$	2,632,865
Tax-exempt		278,429		278,496		222,655		225,293		227,800
Total loans, net		4,035,702		4,068,634		2,859,819		2,857,847		2,860,665
Investments:
Taxable		541,526		611,032		443,146		446,996		450,533
Tax-exempt		87,419		89,532		86,418		86,864		87,297
Total investments		628,945		700,564		529,564		533,860		537,830
Interest-bearing balances with banks		9,116		10,820		8,763		9,025		10,432
Federal funds sold		129,517		92,171		12,672		80,955		176,983
Total interest-earning assets		4,803,280		4,872,189		3,410,818		3,481,687		3,585,910
Other assets		400,179		419,005		198,248		195,063		188,478
Total assets	$	5,203,459	$	5,291,194	$	3,609,066	$	3,676,750	$	3,774,388
Liabilities and stockholders' equity:
Deposits:
Interest-bearing (1)	$	3,573,321	$	3,607,405	$	2,496,298	$	2,593,813	$	2,661,156
Noninterest-bearing (1)		904,274		908,776		620,256		616,610		651,182
Total deposits		4,477,595		4,516,181		3,116,554		3,210,423		3,312,338
Short-term borrowings		39,319		43,895		45,383		19,687		24,103
Long-term debt		111,135		111,804		25,000		25,000		25,000
Subordinated debt		33,000		33,000		33,000		33,000		33,000
Junior subordinated debt		8,026		8,000
Other liabilities		56,445		96,177		48,630		47,688		52,760
Total liabilities		4,725,520		4,809,057		3,268,567		3,335,798		3,447,201
Stockholders' equity		477,939		482,137		340,499		340,952		327,187
Total liabilities and stockholders' equity	$	5,203,459	$	5,291,194	$	3,609,066	$	3,676,750	$	3,774,388

(1)

Quarterly averages at September 30, 2024 have been revised from the previously reported amounts to correct an immaterial misclassification of deposits, namely a $210.3 million understatement of noninterest-bearing deposits and overstatement of interest-bearing deposits. The misclassification had no material impact on the September 30, 2024 financial statements.

Peoples Financial Services Corp. Reconciliation of Non-GAAP Financial Measures (Unaudited) (In thousands, except share and per share data)

	Dec 31			Sept 30			June 30			Mar 31			Dec 31
Three months ended	2024			2024			2024			2024			2023
Core net income per share:
Net income (loss) GAAP	$	6,087		$	(4,337)		$	3,282		$	3,466		$	3,630
Adjustments:
Add: ACL provision for FNCB acquired legacy loans					14,328
Less: ACL provision for FNCB acquired legacy loans tax adjustment					1,885
Add: Acquisition related expenses		4,990			9,653			1,071			486			826
Less: Acquisition related expenses tax adjustment		1,089			1,270			122			59			115
Core net income	$	9,988		$	16,489		$	4,231		$	3,893		$	4,341
Average common shares outstanding - diluted		10,051,337			10,044,449			7,114,115			7,102,112			7,091,015
Core net income per share	$	0.99		$	1.64		$	0.59		$	0.55		$	0.61

Tangible book value:
Total stockholders' equity	$	468,950		$	475,051		$	340,807		$	339,992		$	340,422
Less: Goodwill		76,325			76,958			63,370			63,370			63,370
Less: Other intangible assets, net		34,197			35,907
Total tangible stockholders' equity	$	358,428		$	362,186		$	277,437		$	276,622		$	277,052
Common shares outstanding		9,990,724			9,994,648			7,057,258			7,057,258			7,040,852
Tangible book value per share	$	35.88		$	36.24		$	39.31		$	39.20		$	39.35

Core return on average stockholders' equity:
Net income (loss) GAAP	$	6,087		$	(4,337)		$	3,282		$	3,466		$	3,630
Adjustments:
Add: ACL provision for FNCB acquired legacy loans					14,328
Less: ACL provision for FNCB acquired legacy loans tax adjustment					1,885
Add: Acquisition related expenses		4,990			9,653			1,071			486			826
Less: Acquisition related expenses tax adjustment		1,089			1,270			122			59			115
Core net income	$	9,988		$	16,489		$	4,231		$	3,893		$	4,341
Average stockholders' equity	$	477,939		$	482,137		$	340,499		$	340,952		$	327,187
Core return on average stockholders' equity		8.31	%		13.61	%		5.00	%		4.59	%		5.26	%

Return on average tangible stockholders' equity:
Net income (loss) GAAP	$	6,087		$	(4,337)		$	3,282		$	3,466		$	3,630
Average stockholders' equity	$	477,939		$	482,137		$	340,499		$	340,952		$	327,187
Less: average intangibles		112,399			113,032			63,370			63,370			63,380
Average tangible stockholders' equity	$	365,540		$	369,105		$	277,129		$	277,582		$	263,807
Return on average tangible stockholders' equity		6.62	%		(4.67)	%		4.76	%		5.02	%		5.46	%

Core return on average tangible stockholders' equity:
Net income (loss) GAAP	$	6,087		$	(4,337)		$	3,282		$	3,466		$	3,630
Adjustments:
Add: ACL provision for FNCB acquired legacy loans					14,328
Less: ACL provision for FNCB acquired legacy loans tax adjustment					1,885
Add: Acquisition related expenses		4,990			9,653			1,071			486			826
Less: Acquisition related expenses tax adjustment		1,089			1,270			122			59			115
Core net income	$	9,988		$	16,489		$	4,231		$	3,893		$	4,341
Average stockholders' equity	$	477,939		$	482,137		$	340,499		$	340,952		$	327,187
Less: average intangibles		112,399			113,032			63,370			63,370			63,380
Average tangible stockholders' equity	$	365,540		$	369,105		$	277,129		$	277,582		$	263,807
Core return on average tangible stockholders' equity		10.87	%		17.77	%		6.14	%		5.64	%		6.53	%

Core return on average assets:
Net income (loss) GAAP	$	6,087		$	(4,337)		$	3,282		$	3,466		$	3,630
Adjustments:
Add: ACL provision for FNCB acquired legacy loans					14,328
Less: ACL provision for FNCB acquired legacy loans tax adjustment					1,885
Add: Acquisition related expenses		4,990			9,653			1,071			486			826
Less: Acquisition related expenses tax adjustment		1,089			1,270			122			59			115
Core net income	$	9,988		$	16,489		$	4,231		$	3,893		$	4,341
Average assets	$	5,203,459		$	5,291,194		$	3,609,066		$	3,676,750		$	3,774,388
Core return on average assets		0.76	%		1.24	%		0.47	%		0.43	%		0.46	%

Pre-provision net revenue (PPNR) per share:
Income (Loss) before taxes (GAAP)	$	5,815		$	(4,994)		$	3,703		$	3,944		$	4,217
Add: ACL provision for FNCB acquired legacy loans					14,328
Add: Provision for credit losses		3,369			130			596			708			1,669
Add: Provision for credit losses on unfunded commitments		452			(785)			(197)			487			(2)
PPNR (non-GAAP)	$	9,636		$	8,679		$	4,102		$	5,139		$	5,884
Average common shares outstanding-diluted		10,051,337			10,044,449			7,114,115			7,102,112			7,091,015
PPNR per share (non-GAAP)	$	0.96		$	0.86		$	0.58		$	0.72		$	0.83

Core pre-provision net revenue (PPNR) per share:
Income (Loss) before taxes (GAAP)	$	5,815		$	(4,994)		$	3,703		$	3,944		$	4,217
Add: Acquisition related expenses		4,990			9,653			1,071			486			826
Add: ACL provision for FNCB acquired legacy loans					14,328
Add: Provision for credit losses		3,369			130			596			708			1,669
Add: Provision for credit losses on unfunded commitments		452			(785)			(197)			487			(2)
Core PPNR (non-GAAP)	$	14,626		$	18,332		$	5,173		$	5,625		$	6,710
Average common shares outstanding-diluted		10,051,337			10,044,449			7,114,115			7,102,112			7,091,015
Core PPNR per share (non-GAAP)	$	1.46		$	1.83		$	0.73		$	0.79		$	0.95

(1) Current quarter tax adjustments use a rate of 21.8%, prior quarters use the effective tax rate for the quarter.

Peoples Financial Services Corp. Reconciliation of Non-GAAP Financial Measures (Unaudited) (In thousands, except share and per share data)

	Dec 31			Dec 31
Twelve months ended	2024			2023
Core net income per share:
Net income GAAP	$	8,498		$	27,380
Adjustments:
Add: ACL provision for FNCB acquired legacy loans		14,328
Less: ACL provision for FNCB acquired legacy loans tax adjustment		3,126
Less: Gain on sale of available for sale securities		1			81
Add: Gain on sale of available for sale securities tax adjustment					17
Add: Acquisition related expenses		16,200			1,816
Less: Acquisition related expenses tax adjustment		3,534			278
Core net income	$	32,365		$	28,854
Average common shares outstanding - diluted		8,586,035			7,151,471
Core net income per share	$	3.77		$	4.03

Core return on average stockholders' equity:
Net income GAAP	$	8,498		$	27,380
Adjustments:
Add: ACL provision for FNCB acquired legacy loans		14,328
Less: ACL provision for FNCB acquired legacy loans tax adjustment		3,126
Less: Gain on sale of available for sale securities		1			81
Add: Gain on sale of available for sale securities tax adjustment					17
Add: Acquisition related expenses		16,200			1,816
Less: Acquisition related expenses tax adjustment		3,534			278
Core net income	$	32,365		$	28,854
Average stockholders' equity		410,762			329,223
Core return on average stockholders' equity		7.88	%		8.76	%

Return on average tangible stockholders' equity:
Net income GAAP	$	8,498		$	27,380
Average stockholders' equity		410,762			329,223
Less: average intangibles		88,043			63,406
Average tangible stockholders' equity	$	322,719		$	265,817
Return on average tangible stockholders' equity		2.63	%		10.30	%

Core return on average tangible stockholders' equity:
Net income GAAP	$	8,498		$	27,380
Adjustments:
Add: ACL provision for FNCB acquired legacy loans		14,328
Less: ACL provision for FNCB acquired legacy loans tax adjustment		3,126
Less: Gain on sale of available for sale securities		1			81
Add: Gain on sale of available for sale securities tax adjustment					17
Add: Acquisition related expenses		16,200			1,816
Less: Acquisition related expenses tax adjustment		3,534			278
Core net income	$	32,365		$	28,854
Average stockholders' equity		410,762			329,223
Less: average intangibles		88,043			63,406
Average tangible stockholders' equity	$	322,719		$	265,817
Core return on average tangible stockholders' equity		10.03	%		10.85	%

Core return on average assets:
Net income GAAP	$	8,498		$	27,380
Adjustments:
Add: ACL provision for FNCB acquired legacy loans		14,328
Less: ACL provision for FNCB acquired legacy loans tax adjustment		3,126
Less: Gain on sale of available for sale securities		1			81
Add: Gain on sale of available for sale securities tax adjustment					17
Add: Acquisition related expenses		16,200			1,816
Less: Acquisition related expenses tax adjustment		3,534			278
Core net income	$	32,365		$	28,854
Average assets		4,493,614			3,683,215
Core return on average assets		0.72	%		0.78	%

Pre-provision net revenue (PPNR) per share:
Income before taxes (GAAP)	$	8,468		$	32,501
Add: ACL provision for FNCB acquired legacy loans		14,328
Add: Provision for credit losses		4,803			566
Add: Provision for credit losses on unfunded commitments		(43)			(2)
PPNR (non-GAAP)	$	27,556		$	33,065
Average common shares outstanding-diluted		8,586,035			7,151,471
PPNR per share (non-GAAP)	$	3.21		$	4.62

Core pre-provision net revenue (PPNR) per share:
Income before taxes (GAAP)	$	8,468		$	32,501
Add: ACL provision for FNCB acquired legacy loans		14,328
Add: Acquisition related expenses		16,200			1,816
Add: Provision for credit losses		4,803			566
Add: Provision for credit losses on unfunded commitments		(43)			(2)
Core PPNR (non-GAAP)	$	43,756		$	34,881
Average common shares outstanding-diluted		8,586,035			7,151,471
Core PPNR per share (non-GAAP)	$	5.10		$	4.88

(1) Above tax adjustments use a rate of 21.8% and 15.3% for 2024 and 2023, respectively.

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 and twelve months ended December 31, 2024 and 2023:

Three months ended December 31	2024		2023
Interest income (GAAP)	$	65,803	$	40,072
Adjustment to FTE		701		477
Interest income adjusted to FTE (non-GAAP)		66,504		40,549
Interest expense		27,292		19,803
Net interest income adjusted to FTE (non-GAAP)	$	39,212	$	20,746

Twelve months ended December 31	2024		2023
Interest income (GAAP)	$	211,460	$	149,851
Adjustment to FTE		2,367		1,917
Interest income adjusted to FTE (non-GAAP)		213,827		151,768
Interest expense		95,471		63,097
Net interest income adjusted to FTE (non-GAAP)	$	118,356	$	88,671

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 and twelve months ended December 31, 2024 and 2023:

Three months ended December 31	2024			2023
Efficiency ratio (non-GAAP):
Noninterest expense (GAAP)	$	34,998		$	17,598
Less: Amortization of intangible assets expense		1,702			19
Less: Acquisition related expenses		4,990			826
Noninterest expense (non-GAAP)		28,306			16,753

Net interest income (GAAP)		38,511			20,269
Plus: Taxable equivalent adjustment		701			477
Noninterest income (GAAP)		5,671			3,215
Less: Net (losses) gains on equity securities		(23)			6
Net interest income (FTE) plus noninterest income (non-GAAP)	$	44,906		$	23,955
Efficiency ratio (non-GAAP)		63.03	%		69.94	%

Twelve months ended December 31	2024			2023
Efficiency ratio (non-GAAP):
Noninterest expense (GAAP)	$	106,726		$	67,820
Less: Amortization of intangible assets expense		3,367			105
Less: Acquisition related expenses		16,200			1,816
Noninterest expense (non-GAAP)		87,159			65,899

Net interest income (GAAP)		115,989			86,754
Plus: Taxable equivalent adjustment		2,367			1,917
Noninterest income (GAAP)		18,336			14,133
Less: Net gains (losses) on equity securities		132			(11)
Less: Gains on sale of available for sale securities		1			81
Net interest income (FTE) plus noninterest income (non-GAAP)	$	136,559		$	102,734
Efficiency ratio (non-GAAP)		63.83	%		64.15	%

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SOURCE Peoples Financial Services Corp.

FAQ

What was PFIS's Q4 2024 earnings per share?

PFIS reported earnings of $0.61 per diluted share for Q4 2024.

How much did PFIS increase its dividend in Q4 2024?

PFIS increased its quarterly dividend by 50.6% compared to the year-ago quarter, paying $0.6175 per share.

What was the impact of the FNCB merger on PFIS's assets?

The FNCB merger contributed approximately $1.8 billion in assets, including $1.2 billion in loans and $1.4 billion in deposits.

What was PFIS's net interest margin in Q4 2024?

PFIS's net interest margin was 3.25% in Q4 2024, a decrease of 1 basis point from 3.26% in Q3 2024.

How much were PFIS's merger-related expenses in Q4 2024?

PFIS incurred non-recurring merger-related expenses of $5.0 million in Q4 2024.

PEOPLES FINANCIAL SERVICES CORP. Reports Unaudited Fourth Quarter and Year to Date 2024 Earnings

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PEOPLES FINANCIAL SERVICES CORP. Reports Unaudited Fourth Quarter and Year to Date 2024 Earnings

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What was PFIS's Q4 2024 earnings per share?

How much did PFIS increase its dividend in Q4 2024?

What was the impact of the FNCB merger on PFIS's assets?

What was PFIS's net interest margin in Q4 2024?

How much were PFIS's merger-related expenses in Q4 2024?

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