PEOPLES FINANCIAL SERVICES CORP. Reports Unaudited First Quarter 2026 Earnings

Apr 30 2026 21:05 BST

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

Total loans increased $123.3 million or 12.3% on an annualized basis to $4.2 billion at March 31, 2026 from $4.1 billion at December 31, 2025.
Completed a partial repositioning of the investment securities portfolio during the first quarter of 2026, selling $31.9 million of U.S. government agency and sponsored agency mortgage backed securities resulting in pre-tax gain of approximately $0.5 million. Approximately half of the $32.4 million proceeds from the sale were re-deployed into the available for sale investment portfolio with the remaining proceeds used to fund loan demand. This repositioning followed a previous repositioning completed in the fourth quarter 2025.
Book value per common share at March 31, 2026, increased to $52.50 from $48.21 at March 31, 2025. Tangible book value per common share, a non-GAAP measure^[1], increased to $42.29 at March 31, 2026, compared to $37.35 at March 31, 2025.
Peoples' asset quality remained strong as the ratio of non-performing assets to total loans, net and foreclosed assets improved to 0.29% at March 31, 2026, from 0.30% at December 31, 2025, and 0.59% at March 31, 2025. Non-performing assets as a percentage of total assets remained unchanged at 0.23% at both March 31, 2026 and December 31, 2025, but improved from 0.47% at March 31, 2025.

INCOME STATEMENT REVIEW

Net interest margin ("NIM"), calculated on a fully taxable equivalent ("FTE") basis, a non-GAAP measure¹, for the three months ended March 31, 2026, improved 7 basis points to 3.67% from 3.60% for the three months ended December 31, 2025, and 17 basis points as compared to 3.50% for the three months ended March 31, 2025.
The FTE yield on interest-earning assets, a non-GAAP measure^[2], decreased 5 basis points to 5.51% for the three months ended March 31, 2026, from 5.56% for the three months ended December 31, 2025, and increased 1 basis point from 5.50% for the same three months of 2025.
The cost of funds, which represents the average rate paid on total interest-bearing liabilities, decreased 14 basis points to 2.41% for the three months ended March 31, 2026, from 2.55% for the three months ended December 31, 2025, and 17 basis points from 2.58% for the three months ended March 31, 2025.
The cost of interest-bearing deposits decreased 14 basis points for the three months ended March 31, 2026, to 2.16% from 2.30% for the three months ended December 31, 2025, and 30 basis points from 2.46% for the three months ended March 31, 2025.
The cost of total deposits, which includes the impact of noninterest-bearing deposits, was 1.70% for the first quarter of 2026, a decrease of 12 basis points compared to 1.82% for the fourth quarter of 2025, and a decrease of 26 basis points from 1.96% for the same quarter of 2025.
The efficiency ratio, a non-GAAP measure¹, was 57.09% for the quarter ended March 31, 2026, an increase, as compared to 55.77% for the same quarter of 2025, but an improvement as compared to 59.53% for the quarter ended December 31, 2025.

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			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		$	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	%		0.23	%		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		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		32		41
Interest on interest-bearing deposits in other banks		89		95		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		43
Net gains on equity investments		456		125		71
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		50		(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	$	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		89	3.76			9,683		95	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		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		75,986		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		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		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		750		27
Total nonperforming assets	$	12,347	$	12,070	$	23,684


		Mar 31		Dec 31		Mar 31
Three months ended		2026		2025		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			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								34
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			75,986			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								34
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								34
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								34
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		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			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			71
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.