July 26, 2024

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

SCRANTON, Pa., July 25, 2024 /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 six months ended June 30, 2024.

Peoples reported net income of $3.3 million, or $0.46 per diluted share for the three months ended June 30, 2024, a 65.2% decrease when compared to $9.4 million, or $1.31 per diluted share for the comparable period of 2023. Quarterly net income included lower net interest income of $3.2 million due primarily to higher deposit costs, a higher provision for credit losses of $2.8 million and higher operating expenses of $1.5 million, which included $1.1 million of acquisition related expenses.

Core net income1, a non-GAAP measure, excludes acquisition related expenses from the strategic combination with FNCB Bancorp, Inc. completed July 1, 2024 and further discussed below of $1.1 million and $0.1 million incurred during the three months ended June 30, 2024 and 2023. Core net income1 totaled $4.2 million or $0.59 per diluted share for the three months ended June 30, 2024 compared to $9.5 million, or $1.33 per share for the comparable period of 2023.

Core pre-provision net revenue (PPNR)1, a non-GAAP measure, which excludes 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 June 30, 2024 was $5.2 million or $0.73 per diluted share. The PPNR for the corresponding prior year period was $9.0 million or $1.25 per diluted share.

For the six months ended June 30, 2024, net income was $6.7 million, or $0.95 per diluted share, a 60.3% decrease when compared to $17.0 million, or $2.37 per diluted share for the comparable period of 2023. Net interest income for the current period decreased $7.0 million when compared to the six months ended June 30, 2023 as higher interest income due to increased loan rates was more than offset by increased funding costs. Lower net income was due to the reduction in net interest income combined with higher operating expenses of $3.1 million, which included $1.6 million in acquisition related expenses, and a $2.2 million increase in the provision for credit losses.

Core net income1, a non-GAAP measure, totaled $8.1 million or $1.14 per diluted share for the six months ended June 30, 2024 compared to $17.0 million, or $2.37 per share for the comparable period of 2023.

Core pre-provision net revenue (PPNR)1, a non-GAAP measure, for the six months ended June 30, 2024 was $10.8 million or $1.52 per diluted share. The PPNR for the corresponding prior year period was $19.0 million or $2.65 per diluted share.

STRATEGIC COMBINATION WITH FNCB BANCORP, INC.

On July 1, 2024, Peoples completed its previously announced merger with FNCB Bancorp, Inc. (“FNCB”), pursuant to which FNCB merged with and into Peoples, and FNCB Bank merged with and into Peoples Security Bank and Trust Company (the “FNCB merger”). The reported results do not include the results of FNCB or reflect the completion of the FNCB merger. As of the date of completion, the combined organization is expected to have approximately $5.5 billion in assets with approximately $4.0 billion in loans and $4.7 billion in deposits throughout its operations spanning Pennsylvania, New York and New Jersey. All branches of the combined organization will operate under the Peoples Security Bank and Trust Company banner after the integration is completed.

NOTABLES IN THE QUARTER

Core net income2 for the three months ended June 30, 2024 was $4.2 million or $0.59 per diluted share. For the six months ended June 30, 2024, Core net income1 was $8.1 million or $1.14 per diluted share.For the six months ended June 30, 2024, loans, net grew $19.7 million or 1.4% annualized and consisted primarily of growth in commercial loans.Asset quality remained strong as nonperforming assets as a percentage of total assets at June 30, 2024 was 0.20%, compared to 0.13% at December 31, 2023.Total deposits decreased $214.1 million to $3.1 billion during 2024 due in part to seasonal outflows of municipal deposits.At June 30, 2024, the Company had $50.0 million in cash and cash equivalents, a decrease of $137.4 million from December 31, 2023. Additional contingent sources of available liquidity total $1.6 billion and include lines of credit at the Federal Reserve Bank and Federal Home Loan Bank of Pittsburgh (FHLB), brokered deposit capacity and unencumbered securities that may be pledged as collateral. The Company’s cash and cash equivalents balance and available liquidity represent 45.4% of total assets and 53.5% of total deposits.At June 30, 2024, estimated total insured deposits were approximately $2.3 billion, or 75.7% of total deposits; as compared to approximately $2.4 billion, or 73.1% of total deposits at December 31, 2023. Included in the uninsured total at June 30, 2024 is $239.5 million of municipal deposits collateralized by letters of credit issued by the FHLB and pledged investment securities, and $0.7 million of affiliate company deposits. Total insured and collateralized deposits represent 85.3% of total deposits at June 30, 2024.

INCOME STATEMENT REVIEW

Calculated on a fully taxable equivalent basis, a non-GAAP measure1, our net interest margin for the three months ended June 30, 2024 was 2.29%, consistent with the prior quarter and a decline of 32 basis points when compared to 2.61% for the same three month period in 2023. The decrease in net interest margin from the year ago period was due to higher funding costs offsetting the increased yield and balance of earning assets.The tax-equivalent yield on interest-earning assets increased 2 basis points to 4.58% during the three months ended June 30, 2024 from 4.56% during the three months ended March 31, 2024, and increased 27 basis points when compared to 4.31% for the three months ended June 30, 2023.Our cost of funds, which represents our average rate paid on total interest-bearing liabilities, increased 5 basis points to 3.01% for the three months ended June 30, 2024 when compared to 2.96% during the three months ended March 31, 2024 and increased 72 basis points compared to 2.29% in the prior year period.Our cost of interest-bearing deposits increased 2 basis points during the current three month period to 2.92% from 2.90% in the prior three month period ended March 31, 2024, and increased 71 basis points compared to 2.21% for the three months ended June 30, 2023.Our cost of total deposits for the three months ended June 30, 2024 and March 31, 2024 was 2.34%, and increased 62 basis points compared to 1.72% for the three months ended June 30, 2023.

Second Quarter 2024 Results – Comparison to Prior-Year Quarter

Tax-equivalent net interest income, a non-GAAP measure1, for the three months ended June 30, decreased $3.2 million or 14.1% to $19.4 million in 2024 from $22.6 million in 2023. The decrease in tax-equivalent net interest income was due to a $1.6 million increase in tax-equivalent interest income that was offset by a $4.8 million increase in interest expense.

The higher interest income was the result of increases in the yield of earning assets. The tax-equivalent yield on the loan portfolio was 5.09% and 4.79% for the three months ended June 30, 2024 and 2023, respectively. This increase was due to the higher rates on adjustable and floating rate loans, and new loan originations. Average loans, net, increased $19.0 million when comparing the three months ended June 30, 2024 to the same three month period in 2023. For the three months ended June 30, the tax-equivalent yield on total investments increased to 1.80% in 2024 from 1.73% in 2023. Average investments totaled $529.6 million in the three months ended June 30, 2024 and $558.1 million in the three months ended June 30, 2023. Average federal funds sold decreased $48.4 million to $12.7 million for the three months ended June 30, 2024.

The increased interest expense in the three months ended June 30, 2024 was due primarily to higher rates on consumer, business and municipal deposits driven by the higher interest rate environment. The Company’s total cost of deposits increased during the three months ended June 30, 2024 compared to the year ago period by 62 basis points to 2.34%, and the cost of interest-bearing deposits increased 71 basis points to 2.92% from 2.21% in the corresponding period of the prior year. Short-term borrowings averaged $45.4 million in the current period at an average cost of 5.61% compared to $16.9 million in short-term borrowings at an average cost of 5.07% in the corresponding period of the prior year.

Average interest-bearing liabilities increased $31.1 million for the three months ended June 30, 2024, compared to the corresponding period last year. Average noninterest-bearing deposits decreased $91.5 million or 12.9% from the corresponding period of the prior year, due in part to a shift to interest-bearing accounts, and represented 19.3% of total average deposits in the three months ended June 30 2024 as compared to 21.7% in the corresponding period of the prior year.

For the three months ended June 30, 2024, $0.6 million was recorded to the provision for credit losses compared to a credit of $2.2 million in the year ago period. The current period provision was due to a higher calculated allowance for credit losses. The higher calculated allowance was due to the establishment of a $0.4 million specific reserve for an individually evaluated commercial real estate loan along with higher pooled loan reserves; additional reserves were required due to loan growth. The prior period credit was due to the impact of various factors such as updated economic assumptions as well as changes in qualitative adjustments, portfolio composition and asset quality. Changes to qualitative factors in the year ago period related to lower loan growth were partially offset by banking industry concerns which resulted in lower expected credit losses.

Noninterest income for the three months ended June 30, 2024 and 2023 was $3.5 million.

Noninterest expense increased $1.5 million or 9.3% to $18.2 million for the three months ended June 30, 2024, from $16.6 million for the three months ended June 30, 2023. Acquisition related expenses, including legal and consulting and advisory fees, totaled $1.1 million. Salaries and employee benefits were $8.5 million in both periods. Occupancy and equipment expenses increased $0.3 million in the current period due to higher information technology (IT) expense and higher facilities costs from inflationary price pressure. Other expenses increased $0.4 million due primarily to a partial write-down of the former East Stroudsburg branch property.

The provision for income tax expense was $0.4 million or 11.4% of pre-tax income for the three months ended June 30, 2024 and $1.8 million or 16.1% of pre-tax income for the three months ended June 30, 2023, a decrease of $1.4 million due to lower taxable income.

Six-Month Results – Comparison to Prior Year First Six Months

Our net interest margin, a non-GAAP measure3, for the six months ended June 30, 2024 was 2.29%, a decrease of 43 basis points over the prior year’s period of 2.72%. Tax-equivalent net interest income, a non-GAAP measure1 for the six months ended June 30, decreased $7.0 million, or 15.2%, to $39.2 million in 2024 from $46.2 million in 2023. The decrease in net interest income was the result of higher loan interest income due to increased volume and rates on new loans and those that are repricing, offset by the higher cost of deposit funding. Average investments decreased $47.1 million compared to June 30, 2023, as the Company engaged in investment sales in the year ago period to, in part, fund loan growth and repay short-term borrowings. The yield on earning assets was 4.57% for the first half of 2024 compared to 4.23% for the six month period ended June 30, 2023. The cost of interest bearing liabilities during the six month period ended June 30, 2024 increased 92 basis points to 2.99% from 2.07% for the six months ended June 30, 2023 as the cost of interest-bearing deposit products and short-term borrowing costs increased. Furthermore, the Company, as part of its strategy to improve on-balance sheet liquidity, added $259.0 million of brokered certificate of deposits at an average cost of 5.16% during the first six months of 2023.

For the six months ended June 30, 2024, a provision for credit losses of $1.3 million was recorded due to the establishment of a $0.4 million specific reserve for an individually evaluated commercial real estate loan along with higher pooled loan reserves. Pooled loan reserves increased due to loan growth and a higher model loss rate that was primarily attributed to the loan portfolio comparing favorably to peer performance and new originations. For the comparable prior year period, a credit to the provision for credit losses of $0.9 million was recorded due to various factors including updated economic assumptions as well as changes in qualitative factors, portfolio composition and asset quality.

Noninterest income was $6.9 million for the six months ended June 30, 2024 and $7.2 million for the comparable period ended June 30, 2023. During the period, interest rate swap revenue decreased $0.2 million on lower loan origination volume and market value adjustments. The prior year’s period included $0.1 million gains on the sale of investment securities.

Noninterest expense for the six months ended June 30, 2024, was $36.2 million, an increase of $3.0 million from $33.2 million for the six months ended June 30, 2023. The increase was due primarily to acquisition related expenses, occupancy and equipment expenses and other expenses, partially offset by reduced salary and benefits expenses. Salaries and employee benefits expenses decreased $0.3 million compared to the year ago period due to lower benefit costs. Occupancy and equipment expenses were higher by $0.9 million in the current period due to increased technology costs related to system upgrades and increased account and transaction volumes, and higher facilities costs. Acquisition related expenses totaled $1.6 million compared to $0.1 million a year ago. Other expenses increased $1.0 million due primarily to a $0.4 million partial write-down of the former East Stroudsburg branch property and an increase to the provision for unfunded commitments of $0.6 million resulting from a provision of $0.3 million in the current period and a credit of $0.3 million in the year ago period.

The provision for income taxes for the six months ended June 30, 2024 decreased $2.3 million and the effective tax rate was 11.8% as compared to 15.8% in the prior period.

BALANCE SHEET REVIEW

At June 30, 2024, total assets, loans and deposits were $3.6 billion, $2.9 billion and $3.1 billion, respectively. During the six month period, federal funds sold were utilized to fund loan growth and seasonal deposit outflows.

Loan growth for the six months ended June 30, 2024 was $19.7 million or 1.4%, which is consistent with the Company’s current balance sheet strategy to slow loan growth. Commercial loans made up the majority of the growth with residential real estate loans also increasing.

Total investments were $466.9 million at June 30, 2024, compared to $483.9 million at December 31, 2023. At June 30, 2024, the available for sale securities totaled $385.2 million and the held to maturity securities totaled $81.6 million. The unrealized loss on the available for sale securities increased $2.4 million from $51.5 million at December 31, 2023 to $53.9 million at June 30, 2024. The unrealized losses on the held to maturity portfolio totaled $13.4 million and $13.2 million at June 30, 2024 and December 31, 2023, respectively.

Total deposits decreased $214.1 million during the six months ended June 30, 2024. Noninterest-bearing deposits decreased $23.7 million and interest-bearing deposits decreased $190.4 million during the six months ended June 30, 2024. The decrease in deposits was due to a $121.3 million decrease in municipal deposits, $48.1 million decrease in retail deposits and a $32.6 million decrease in commercial deposits. The Company had $248.9 million and $261.0 million of longer-term callable brokered CDs at June 30, 2024 and December 31, 2023, respectively. The Company at any time has the option to call the majority of the CDs. Deposits declined due in part to seasonal outflows of municipal deposits and commercial depositors drawing down their noninterest-bearing balances.

The deposit base consisted of 42.8% retail accounts, 34.7% commercial accounts, 14.4% municipal relationships and 8.1% brokered deposits at June 30, 2024. At June 30, 2024, total estimated uninsured deposits, were $744.7 million, or approximately 24.3% of total deposits as compared to $883.5 million, or 26.9% of total deposits at December 31, 2023. Included in the uninsured total at June 30, 2024 is $239.5 million of municipal deposits collateralized by letters of credit issued by the FHLB and pledged investment securities, and $0.7 million of affiliate company deposits. As an additional resource to our uninsured depositors, we offer all depositors access to IntraFi’s CDARS and ICS programs which allows deposit customers to obtain full FDIC deposit insurance while maintaining their relationship with our bank.

In addition to deposit gathering and our current long term borrowings, we have additional sources of liquidity available such as cash and cash equivalents, overnight borrowings from the FHLB, the Federal Reserve’s Discount Window and Borrower-in-Custody program, correspondent bank lines of credit, brokered deposit capacity and unencumbered securities. At June 30, 2024, the Company had $50.0 million in cash and cash equivalents, a decrease of $137.4 million from December 31, 2023. At June 30, 2024, we had $1.6 billion in available additional liquidity representing 45.4% of total assets, 53.5% of total deposits and 220.4% of uninsured deposits. For additional information on our deposit portfolio and additional sources of liquidity, see the tables on page 15.

The Company maintained its well capitalized position at June 30, 2024. Stockholders’ equity equaled $340.8 million or $48.29 per share at June 30, 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 net income less dividends to shareholders, partially offset by a $0.9 million increase to accumulated other comprehensive loss (“AOCI”) resulting from an increase in the unrealized loss on available for sale securities. The net after tax unrealized loss on available for sale securities included in AOCI at June 30, 2024 and December 31, 2023 was $42.1 million and $40.3 million, respectively.

Tangible stockholders’ equity, a non-GAAP measure4, decreased to $39.31 per share at June 30, 2024, from $39.35 per share at December 31, 2023. Dividends declared for the six months ended June 30, 2024 amounted to $0.82 per share, representing a dividend payout ratio of 86.3% of net income.

ASSET QUALITY REVIEW

Asset quality metrics remained strong. Nonperforming assets were $7.1 million or 0.25% of loans, net and foreclosed assets at June 30, 2024, compared to $4.9 million or 0.17% of loans, net and foreclosed assets at December 31, 2023. As a percentage of total assets, nonperforming assets totaled 0.20% at June 30, 2024 compared to 0.13% at December 31, 2023. The increase in nonaccrual loans was primarily due to downgrading one loan totaling $2.65 million to nonaccrual. This loan also carries a 70% government agency guaranty. At June 30, 2024, the Company had one foreclosed property recorded at $27 thousand.

During the six month period ended June 30, 2024, net charge-offs were $76 thousand and our provision for credit losses totaled $1.3 million. The allowance for credit losses equaled $23.1 million or 0.81% of loans, net, at June 30, 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 June 30, 2024 were $69 thousand, compared to $25 thousand for the comparable period last year.

About Peoples:

Peoples Financial Services Corp. is the parent company of Peoples Security Bank and Trust Company, a community bank serving Allegheny, Bucks, Lackawanna, Lebanon, Lehigh, Luzerne, Monroe, Montgomery, Northampton, Susquehanna, Wayne and Wyoming Counties in Pennsylvania, Middlesex County in New Jersey and Broome County in New York through 44 offices. 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, flexible and reasonable operating procedures and consistently applied credit policies.

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 Peoples Security Bank and Trust Company (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 conflicts such as the military conflict between Russia and Ukraine and the conflict in Israel; risks associated with business combinations, the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the FNCB merger within the expected timeframes or at all and to successfully integrate operations of FNCB and those of Peoples, which 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 completion 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.

In addition to these risks, acquisitions and business combinations present risks other than those presented by the nature of the business acquired. Acquisitions and business combinations and, specifically, the FNCB merger may be substantially more expensive to complete than originally anticipated, and the anticipated benefits may be significantly harder – or take longer – to achieve than expected, if they are achieved at all. As a regulated financial institution, our pursuit of attractive acquisition and business combination opportunities could be negatively impacted by regulatory delays or other regulatory issues. Regulatory and/or legal issues related to the pre-acquisition operations of an acquired or combined business may cause reputational harm to Peoples following the acquisition or combination, and integration of the acquired or combined business with ours may result in additional future costs arising as a result of those issues.

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)

June 30

Mar 31

Dec 31

Sept 30

June 30

2024

2023

Key performance data:

Share and per share amounts:

Net income

0.46

0.49

0.51

0.95

1.31

Core net income (1)

0.59

0.55

0.61

1.05

1.31

Core net income (PPNR) (1)

0.73

0.79

0.95

1.23

1.25

Cash dividends declared

0.41

Book value

48.29

48.18

48.35

46.07

46.53

Tangible book value (1)

39.31

39.20

39.35

37.07

37.64

Market value:

High

46.25

48.84

49.99

48.19

44.60

Low

36.26

38.09

38.58

40.04

30.60

Closing

45.54

43.11

48.70

40.10

43.79

Market capitalization

321,388

304,238

342,889

282,338

312,241

Common shares outstanding

7,057,258

7,040,852

7,130,409

Selected ratios:

Return on average stockholders’
equity

3.87

4.09

4.40

8.05

11.42

Core return on average stockholders’
equity (1)

5.00

4.59

5.26

8.91

11.54

Return on average tangible
stockholders’ equity

4.76

5.02

5.46

9.95

14.12

Core return on average tangible
stockholders’ equity (1)

6.14

5.64

6.53

11.01

14.28

Return on average assets

0.37

0.38

0.72

1.04

Core return on average assets (1)

0.47

0.43

0.46

0.79

1.05

Stockholders’ equity to total assets

9.42

9.27

9.10

8.48

9.01

Efficiency ratio (1)(2)

74.49

75.77

69.94

63.50

63.51

Nonperforming assets to loans, net,
and foreclosed assets

0.25

0.27

0.17

0.13

0.07

Nonperforming assets to total assets

0.20

0.21

0.13

0.10

0.06

Net charge-offs to average loans, net

0.01

0.00

0.39

0.01

0.00

Allowance for credit losses to loans,
net

0.81

0.79

0.77

0.80

0.82

Interest-bearing assets yield (FTE)
(3)

4.58

4.56

4.49

4.40

4.31

Cost of funds

3.01

2.96

2.86

2.61

2.29

Net interest spread (FTE) (3)

1.57

1.60

1.63

1.79

2.02

Net interest margin (FTE) (3)

2.29

2.30

2.44

2.61

(1)

See Reconciliation of Non-GAAP financial measures on pages 17-19.

(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%.

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

June 30

Six months ended

2024

2023

Interest income:

Interest and fees on loans:

Taxable

68,447

62,188

Tax-exempt

2,817

2,794

Interest and dividends on investment securities:

Taxable

3,822

4,053

Tax-exempt

742

835

Dividends

Interest on interest-bearing deposits in other banks

235

Interest on federal funds sold

1,306

1,041

Total interest income

77,373

71,014

Interest expense:

Interest on deposits

36,818

23,324

Interest on short-term borrowings

895

1,299

Interest on long-term debt

539

296

Interest on subordinated debt

887

Total interest expense

39,139

25,806

Net interest income

38,234

45,208

Provision for (credit to) credit losses

1,304

(937)

Net interest income after provision for (credit to) credit losses

36,930

46,145

Noninterest income:

Service charges, fees, commissions and other

3,921

3,947

Merchant services income

375

372

Commissions and fees on fiduciary activities

1,068

1,085

Wealth management income

777

784

Mortgage banking income

179

208

Increase in cash surrender value of life insurance

565

520

Interest rate swap revenue

246

Net losses on equity investment securities

(20)

(17)

Net gains on sale of investment securities available for sale

Total noninterest income

6,943

7,226

Noninterest expense:

Salaries and employee benefits expense

17,289

17,562

Net occupancy and equipment expense

9,301

8,380

Acquisition related expenses

1,557

121

Amortization of intangible assets

Other expenses

8,079

7,048

Total noninterest expense

36,226

33,168

Income before income taxes

7,647

20,203

Provision for income tax expense

899

3,199

Net income

6,748

17,004

Other comprehensive (loss) income :

Unrealized (losses) gains on investment securities available for sale

(2,423)

5,688

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

(81)

Change in derivative fair value

1,239

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

(260)

1,223

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

(924)

4,463

Comprehensive income

5,824

21,467

Share and per share amounts:

Net income – basic

0.96

2.38

Net income – diluted

0.95

2.37

Cash dividends declared

0.82

Average common shares outstanding – basic

7,055,085

7,151,732

Average common shares outstanding – diluted

7,108,113

7,188,384

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

June 30

Mar 31

Dec 31

Sept 30

June 30

Three months ended

2024

2023

Interest income:

Interest and fees on loans:

Taxable

34,406

34,041

33,730

33,095

32,139

Tax-exempt

1,399

1,418

1,423

1,411

1,405

Interest and dividends on investment securities:

Taxable

1,904

1,918

1,939

1,920

1,929

Tax-exempt

371

372

375

378

Dividends

Interest on interest-bearing deposits in other banks

115

120

145

Interest on federal funds sold

179

1,127

2,463

1,873

798

Total interest income

38,376

38,997

40,072

38,765

36,736

Interest expense:

Interest on deposits

18,114

18,704

18,756

16,481

13,714

Interest on short-term borrowings

633

262

330

291

213

Interest on long-term debt

269

270

273

269

Interest on subordinated debt

444

443

444

443

444

Total interest expense

19,460

19,679

19,803

17,488

14,640

Net interest income

18,916

19,318

20,269

21,277

22,096

Provision for (credit to) credit losses

596

708

1,669

(166)

(2,201)

Net interest income after provision for (credit to) credit
losses

18,320

18,610

18,600

21,443

24,297

Noninterest income:

Service charges, fees, commissions and other

1,885

2,036

1,881

1,900

1,982

Merchant services income

260

115

151

170

254

Commissions and fees on fiduciary activities

517

551

528

606

528

Wealth management income

416

361

399

393

386

Mortgage banking income

105

Increase in cash surrender value of life insurance

286

279

277

270

262

Interest rate swap revenue

102

(24)

(122)

266

Net (losses) gains on investment equity securities

(12)

(8)

Total noninterest income

3,541

3,402

3,215

3,692

3,552

Noninterest expense:

Salaries and employee benefits expense

8,450

8,839

8,939

8,784

8,482

Net occupancy and equipment expense

4,576

4,725

4,468

4,298

4,277

Acquisition related expenses

1,071

486

826

869

121

Amortization of intangible assets

Net gains on sale of other real estate

(18)

Other expenses

4,061

4,018

3,346

3,092

3,706

Total noninterest expense

18,158

18,068

17,598

17,054

16,614

Income before income taxes

3,703

3,944

4,217

8,081

11,235

Income tax expense

421

478

587

1,335

1,810

Net income

3,282

3,466

3,630

6,746

9,425

Other comprehensive (loss) income:

Unrealized gain (loss) on investment securities available for sale

(2,441)

19,494

(10,378)

(5,148)

Change in benefit plan liabilities

1,129

Change in derivative fair value

160

1,079

(1,650)

747

2,049

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

(298)

3,894

(2,074)

(668)

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

140

(1,064)

15,079

(7,557)

(2,431)

Comprehensive income (loss)

3,422

2,402

18,709

(811)

6,994

Share and per share amounts:

Net income – basic

0.47

0.49

0.52

0.95

1.32

Net income – diluted

0.46

0.49

0.51

0.95

1.31

Cash dividends declared

0.41

Average common shares outstanding – basic

7,057,258

7,052,912

7,040,852

7,088,745

7,145,975

Average common shares outstanding – diluted

7,114,115

7,102,112

7,091,015

7,120,685

7,177,915

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

Three Months Ended

June 30, 2024

June 30, 2023

Average

Interest Income/

Yield/

Average

Interest Income/

Yield/

Balance

Expense

Rate

Balance

Expense

Rate

Assets:

Earning assets:

Loans:

Taxable

2,637,164

34,406

5.25

2,615,881

32,139

4.93

Tax-exempt

222,655

1,771

3.20

224,960

1,780

3.17

Total loans

2,859,819

36,177

5.09

2,840,841

33,919

4.79

Investments:

Taxable

443,146

1,906

1.73

469,712

1,931

1.65

Tax-exempt

86,418

469

2.19

88,371

481

2.18

Total investments

529,564

2,375

1.80

558,083

2,412

1.73

Interest-bearing deposits

8,763

115

5.28

6,839

4.99

Federal funds sold

12,672

179

5.68

61,093

798

5.24

Total earning assets

3,410,818

38,846

4.58

3,466,856

37,214

4.31

Less: allowance for credit losses

23,046

25,895

Other assets

221,294

209,915

Total assets

3,609,066

38,846

3,650,876

37,214

Liabilities and Stockholders’ Equity:

Interest-bearing liabilities:

Money market accounts

714,669

6,749

3.80

664,451

4,958

2.99

Interest-bearing demand and NOW
accounts

729,196

4,400

2.43

771,690

3,537

1.84

Savings accounts

408,883

280

0.28

483,385

239

0.20

Time deposits less than $100

403,069

3,964

3.96

375,799

3,620

3.86

Time deposits $100 or more

240,481

2,721

4.55

198,355

1,360

2.75

Total interest-bearing
deposits

2,496,298

18,114

2.92

2,493,680

13,714

2.21

Short-term borrowings

45,383

633

5.61

16,854

213

5.07

Long-term debt

25,000

269

4.33

25,000

269

4.32

Subordinated debt

33,000

444

5.41

33,000

444

5.40

Total borrowings

103,383

1,346

5.24

74,854

926

4.96

Total interest-bearing
liabilities

2,599,681

19,460

3.01

2,568,534

14,640

2.29

Noninterest-bearing deposits

620,256

711,729

Other liabilities

48,630

39,494

Stockholders’ equity

340,499

331,119

Total liabilities and
stockholders’ equity

3,609,066

3,650,876

Net interest income/spread

19,386

1.57

22,574

2.02

Net interest margin

2.29

2.61

Tax-equivalent adjustments:

Loans

372

375

Investments

103

Total adjustments

470

478

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 Six Months Ended

June 30, 2024

June 30, 2023

Average

Interest Income/

Yield/

Average

Interest Income/

Yield/

Balance

Expense

Rate

Balance

Expense

Rate

Assets:

Earning assets:

Loans:

Taxable

2,634,859

68,447

5.22

2,581,167

62,188

4.86

Tax-exempt

223,974

3,566

3.20

224,442

3,537

3.18

Total loans

2,858,833

72,013

5.07

2,805,609

65,725

4.72

Investments:

Taxable

445,071

3,826

1.73

484,437

4,057

1.69

Tax-exempt

86,641

939

2.18

94,337

1,057

2.26

Total investments

531,712

4,765

1.80

578,774

5,114

1.78

Interest-bearing deposits

8,894

235

5.31

4,044

4.94

Federal funds sold

46,813

1,306

5.61

40,338

1,041

5.20

Total earning assets

3,446,252

78,319

4.57

3,428,765

71,979

4.23

Less: allowance for credit losses

22,668

25,230

Other assets

219,324

209,535

Total assets

3,642,908

78,319

3,613,070

71,979

Liabilities and Stockholders’ Equity:

Interest-bearing liabilities:

Money market accounts

734,779

13,884

3.80

692,999

9,514

2.77

Interest-bearing demand and NOW
accounts

756,827

9,237

2.45

751,655

6,326

1.70

Savings accounts

415,849

555

0.27

497,939

455

0.18

Time deposits less than $100

406,131

8,301

4.11

284,659

4,746

3.36

Time deposits $100 or more

231,470

4,841

4.21

188,993

2,283

2.44

Total interest-bearing
deposits

2,545,056

36,818

2.91

2,416,245

23,324

1.95

Short-term borrowings

32,535

895

5.53

53,985

1,299

4.85

Long-term debt

25,000

539

4.34

13,803

296

4.32

Subordinated debt

33,000

887

5.41

33,000

887

5.42

Total borrowings

90,535

2,321

5.16

100,788

2,482

4.97

Total interest-bearing
liabilities

2,635,591

39,139

2.99

2,517,033

25,806

2.07

Noninterest-bearing deposits

618,433

728,238

Other liabilities

48,159

39,208

Stockholders’ equity

340,725

328,591

Total liabilities and
stockholders’ equity

3,642,908

3,613,070

Net interest income/spread

39,180

1.58

46,173

2.16

Net interest margin

2.29

2.72

Tax-equivalent adjustments:

Loans

749

743

Investments

197

222

Total adjustments

946

965

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

June 30

Mar 31

Dec 31

Sept 30

June 30

Three months ended

2024

2023

Net interest income:

Interest income:

Loans, net:

Taxable

34,406

34,041

33,730

33,095

32,139

Tax-exempt

1,771

1,795

1,801

1,786

1,780

Total loans, net

36,177

35,836

35,531

34,881

33,919

Investments:

Taxable

1,906

1,920

1,939

1,920

1,931

Tax-exempt

469

470

471

475

481

Total investments

2,375

2,390

2,410

2,395

2,412

Interest on interest-bearing balances in other banks

115

120

145

Federal funds sold

179

1,127

2,463

1,873

798

Total interest income

38,846

39,473

40,549

39,240

37,214

Interest expense:

Deposits

18,114

18,704

18,756

16,481

13,714

Short-term borrowings

633

262

330

291

213

Long-term debt

269

270

273

269

Subordinated debt

444

443

444

443

444

Total interest expense

19,460

19,679

19,803

17,488

14,640

Net interest income

19,386

19,794

20,746

21,752

22,574

Loans, net:

Taxable

5.25

5.20

5.08

5.00

4.93

Tax-exempt

3.20

3.14

3.13

3.17

Total loans, net

5.09

5.04

4.93

4.85

4.79

Investments:

Taxable

1.73

1.71

1.68

1.65

Tax-exempt

2.19

2.18

2.14

2.15

2.18

Total investments

1.80

1.78

1.75

1.73

Interest-bearing balances with banks

5.28

5.35

5.51

5.24

4.99

Federal funds sold

5.68

5.60

5.52

5.24

Total interest-earning assets

4.58

4.56

4.49

4.40

4.31

Interest expense:

Deposits

2.92

2.90

2.80

2.53

2.21

Short-term borrowings

5.61

5.35

5.43

5.31

5.07

Long-term debt

4.33

4.34

4.33

4.32

Subordinated debt

5.41

5.40

5.34

5.33

5.40

Total interest-bearing liabilities

3.01

2.96

2.86

2.61

2.29

Net interest spread

1.57

1.60

1.63

1.79

2.02

Net interest margin

2.29

2.30

2.44

2.61

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

June 30

Mar 31

Dec 31

Sept 30

June 30

At period end

2024

2023

Assets:

Cash and due from banks

41,234

32,009

33,524

39,285

37,774

Interest-bearing balances in other banks

8,722

8,259

9,141

9,550

5,814

Federal funds sold

69,700

144,700

205,700

93,100

Investment securities:

Available for sale

385,240

394,413

398,927

382,227

395,826

Equity investments carried at fair value

Held to maturity

81,598

83,306

84,851

86,246

88,211

Total investments

466,916

477,810

483,876

468,565

484,129

Loans held for sale

300

250

Loans

2,869,553

2,858,412

2,849,897

2,870,969

2,843,238

Less: allowance for credit losses

23,123

22,597

21,895

23,010

23,218

Net loans

2,846,430

2,835,815

2,828,002

2,847,959

2,820,020

Goodwill

63,370

Premises and equipment, net

58,565

59,097

61,276

61,936

57,712

Bank owned life insurance

49,955

49,673

49,397

49,123

48,857

Deferred tax assets

14,460

14,241

13,770

17,956

16,258

Accrued interest receivable

13,326

13,565

12,734

12,769

11,406

Other intangible assets, net

Other assets

53,077

45,299

42,249

49,567

43,287

Total assets

3,616,055

3,669,138

3,742,289

3,825,799

3,681,775

Liabilities:

Deposits:

Noninterest-bearing

620,971

623,408

644,683

691,071

713,375

Interest-bearing

2,443,988

2,580,530

2,634,354

2,674,012

2,516,106

Total deposits

3,064,959

3,203,938

3,279,037

3,365,083

3,229,481

Short-term borrowings

104,250

20,260

17,590

27,020

19,530

Long-term debt

25,000

Subordinated debt

33,000

Accrued interest payable

5,507

5,327

5,765

4,777

4,701

Other liabilities

42,532

41,621

41,475

46,529

38,276

Total liabilities

3,275,248

3,329,146

3,401,867

3,501,409

3,349,988

Stockholders’ equity:

Common stock

14,122

14,093

14,272

Capital surplus

122,449

122,162

122,130

121,870

125,371

Retained earnings

249,511

249,123

248,550

247,857

244,017

Accumulated other comprehensive loss

(45,275)

(45,415)

(44,351)

(59,430)

(51,873)

Total stockholders’ equity

340,807

339,992

340,422

324,390

331,787

Total liabilities and stockholders’
equity

3,616,055

3,669,138

3,742,289

3,825,799

3,681,775

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

At period end

June 30, 2024

March 31, 2024

December 31, 2023

September 30, 2023

June 30, 2023

Commercial

Taxable

411,112

400,439

317,245

351,545

384,091

Non-taxable

220,893

224,083

226,470

229,635

225,796

Total

632,005

624,522

543,715

581,180

609,887

Real estate

Commercial real estate

1,793,652

1,794,086

1,863,118

1,846,350

1,794,355

Residential

369,671

361,490

360,803

357,647

348,911

Total

2,163,323

2,155,576

2,223,921

2,203,997

2,143,266

Consumer

Indirect Auto

66,792

71,675

75,389

78,953

83,348

Consumer Other

7,433

6,639

6,872

6,839

6,737

Total

74,225

78,314

82,261

85,792

90,085

Total

2,869,553

2,858,412

2,849,897

2,870,969

2,843,238

June 30

Mar 31

Dec 31

Sept 30

June 30

At quarter end

2024

2023

Nonperforming assets:

Nonaccrual/restructured loans

7,116

7,056

3,961

3,060

1,900

Accruing loans past due 90 days or more

656

986

700

181

Foreclosed assets

Total nonperforming assets

7,143

7,712

4,947

3,760

2,081

June 30

Mar 31

Dec 31

Sept 30

June 30

Three months ended

2024

2023

Allowance for credit losses:

Beginning balance

22,597

21,895

23,010

23,218

25,444

Charge-offs

135

108

2,808

Recoveries

102

Provision for (credit to) credit losses

596

708

1,669

(166)

(2,201)

Ending balance

23,123

22,597

21,895

23,010

23,218

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

At period end

June 30, 2024

March 31, 2024

December 31, 2023

September 30, 2023

June 30, 2023

Interest-bearing deposits:

Money market accounts

690,631

759,305

782,243

767,868

670,669

Interest-bearing demand and NOW
accounts

715,890

754,673

796,426

825,066

760,690

Savings accounts

397,827

415,459

429,011

447,684

470,340

Time deposits less than $250

504,879

517,009

505,409

512,646

504,672

Time deposits $250 or more

134,761

134,084

121,265

120,748

109,735

Total interest-bearing deposits

2,443,988

2,580,530

2,634,354

2,674,012

2,516,106

Noninterest-bearing deposits

620,971

623,408

644,683

691,071

713,375

Total deposits

3,064,959

3,203,938

3,279,037

3,365,083

3,229,481

June 30, 2024

At period end

Amount

Percent of Total

Number of accounts

Average Balance

Deposit Detail:

Retail

1,310,252

42.8

69,658

Commercial

1,063,980

34.7

13,469

Municipal

441,786

14.4

1,832

241

Brokered

248,941

8.1

11,854

Total Deposits

3,064,959

100.0

84,980

Uninsured

744,674

24.3

Insured

2,320,285

75.7

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

Commercial

1,096,547

33.4

13,433

Municipal

563,124

17.2

1,856

303

Brokered

260,995

8.0

10,875

Total Deposits

3,279,037

100.00

85,647

Uninsured

883,530

26.9

Insured

2,395,507

73.1

Total Available

At June 30, 2024

Total Available

Outstanding

for Future Liquidity

FHLB advances

1,273,642

349,280

924,362

Federal Reserve – Discount Window & Bank Term
Funding Program

413,536

Correspondent bank lines of credit

18,000

Other sources of liquidity:

Brokered deposits

361,606

248,941

112,665

Unencumbered securities

172,346

Total sources of liquidity

2,239,130

598,221

1,640,909

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

June 30

Mar 31

Dec 31

Sept 30

June 30

Average quarterly balances

2024

2023

Assets:

Loans, net:

Taxable

2,637,164

2,632,554

2,632,865

2,627,700

2,615,881

Tax-exempt

222,655

225,293

227,800

226,628

224,960

Total loans, net

2,859,819

2,857,847

2,860,665

2,854,328

2,840,841

Investments:

Taxable

443,146

446,996

450,533

454,727

469,712

Tax-exempt

86,418

86,864

87,297

87,731

88,371

Total investments

529,564

533,860

537,830

542,458

558,083

Interest-bearing balances with banks

8,763

9,025

10,432

6,893

6,839

Federal funds sold

12,672

80,955

176,983

134,583

61,093

Total interest-earning assets

3,410,818

3,481,687

3,585,910

3,538,262

3,466,856

Other assets

198,248

195,063

188,478

191,781

184,020

Total assets

3,609,066

3,676,750

3,774,388

3,730,043

3,650,876

Liabilities and stockholders’ equity:

Deposits:

Interest-bearing

2,496,298

2,593,813

2,661,156

2,581,691

2,493,680

Noninterest-bearing

620,256

616,610

651,182

688,301

711,729

Total deposits

3,116,554

3,210,423

3,312,338

3,269,992

3,205,409

Short-term borrowings

45,383

19,687

24,103

21,759

16,854

Long-term debt

25,000

Subordinated debt

33,000

Other liabilities

48,630

47,688

52,760

47,788

39,494

Total liabilities

3,268,567

3,335,798

3,447,201

3,397,539

3,319,757

Stockholders’ equity

340,499

340,952

327,187

332,504

331,119

Total liabilities and stockholders’
equity

3,609,066

3,676,750

3,774,388

3,730,043

3,650,876

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

June 30

Mar 31

Dec 31

Sept 30

June 30

Three months ended

2024

2023

Core net income per share:

Net income GAAP

3,282

3,466

3,630

6,746

9,425

Adjustments:

Add: Acquisition related expenses

1,071

486

826

869

121

Less: Acquisition related expenses tax adjustment

122

115

144

Core net income

4,231

3,893

4,341

7,471

9,527

Average common shares outstanding – diluted

7,114,115

7,102,112

7,091,015

7,120,685

7,177,915

Core net income per share

0.59

0.55

0.61

1.05

1.33

Tangible book value:

Total stockholders’ equity

340,807

339,992

340,422

324,390

331,787

Less: Goodwill

63,370

Less: Other intangible assets, net

Total tangible stockholders’ equity

277,437

276,622

277,052

261,001

268,369

Common shares outstanding

7,057,258

7,040,852

7,130,409

Tangible book value per share

39.31

39.20

39.35

37.07

37.64

Core return on average stockholders’ equity:

Net income GAAP

3,282

3,466

3,630

6,746

9,425

Adjustments:

Add: Acquisition related expenses

1,071

486

826

869

121

Less: Acquisition related expenses tax adjustment

122

115

144

Core net income

4,231

3,893

4,341

7,471

9,527

Average stockholders’ equity

340,499

340,952

327,187

332,504

331,119

Core return on average stockholders’ equity

5.00

4.59

5.26

8.91

11.54

Return on average tangible equity:

Net income GAAP

3,282

3,466

3,630

6,746

9,425

Average stockholders’ equity

340,499

340,952

327,187

332,504

331,119

Less: average intangibles

63,370

63,380

63,404

63,433

Average tangible stockholders’ equity

277,129

277,582

263,807

269,100

267,686

Return on average tangible stockholders’ equity

4.76

5.02

5.46

9.95

14.12

Core return on average tangible stockholders’ equity:

Net income GAAP

3,282

3,466

3,630

6,746

9,425

Adjustments:

Add: Acquisition related expenses

1,071

486

826

869

121

Less: Acquisition related expenses tax adjustment

122

115

144

Core net income

4,231

3,893

4,341

7,471

9,527

Average stockholders’ equity

340,499

340,952

327,187

332,504

331,119

Less: average intangibles

63,370

63,380

63,404

63,433

Average tangible stockholders’ equity

277,129

277,582

263,807

269,100

267,686

Core return on average tangible stockholders’ equity

6.14

5.64

6.53

11.01

14.28

Core return on average assets:

Net income GAAP

3,282

3,466

3,630

6,746

9,425

Adjustments:

Add: Acquisition related expenses

1,071

486

826

869

121

Less: Acquisition related expenses tax adjustment

122

115

144

Core net income

4,231

3,893

4,341

7,471

9,527

Average assets

3,609,066

3,676,750

3,774,388

3,730,043

3,650,876

Core return on average assets

0.47

0.43

0.46

0.79

1.05

Core pre-provision net revenue (PPNR) per share:

Income before taxes (GAAP)

3,703

3,944

4,217

8,081

11,235

Add: Acquisition related expenses

1,071

486

826

869

121

Add: Provision for (credit to) credit losses

596

708

1,669

(166)

(2,201)

Add: Provision for (credit to) credit losses on unfunded
commitments

(197)

487

(2)

(12)

(171)

Core PPNR (non-GAAP)

5,173

5,625

6,710

8,772

8,984

Average common shares outstanding-diluted

7,114,115

7,102,112

7,091,015

7,120,685

7,177,915

Core PPNR per share (non-GAAP)

0.73

0.79

0.95

1.23

1.25

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

June 30

Six months ended

2024

2023

Core net income per share:

Net income GAAP

6,748

17,004

Adjustments:

Less: Gain on sale of available for sale securities

Add: Gain on sale of available for sale securities tax adjustment

Add: Acquisition related expenses

1,557

121

Less: Acquisition related expenses tax adjustment

183

Core net income

8,122

17,042

Average common shares outstanding – diluted

7,108,113

7,188,384

Core net income per share

1.14

2.37

Core return on average stockholders’ equity:

Net income GAAP

6,748

17,004

Adjustments:

Less: Gain on sale of available for sale securities

Add: Gain on sale of available for sale securities tax adjustment

Add: Acquisition related expenses

1,557

121

Less: Acquisition related expenses tax adjustment

183

Core net income

8,122

17,042

Average stockholders’ equity

340,725

328,591

Core return on average stockholders’ equity

4.79

10.46

Return on average tangible equity:

Net income GAAP

6,748

17,004

Average stockholders’ equity

340,725

328,591

Less: average intangibles

63,375

63,694

Average tangible stockholders’ equity

277,350

264,897

Return on average tangible stockholders’ equity

4.89

12.94

Core return on average tangible stockholders’ equity:

Net income GAAP

6,748

17,004

Adjustments:

Less: Gain on sale of available for sale securities

Add: Gain on sale of available for sale securities tax adjustment

Add: Acquisition related expenses

1,557

121

Less: Acquisition related expenses tax adjustment

183

Core net income

8,122

17,042

Average stockholders’ equity

340,725

328,591

Less: average intangibles

63,375

63,694

Average tangible stockholders’ equity

277,350

264,897

Core return on average tangible stockholders’ equity

5.89

12.97

Core return on average assets:

Net income GAAP

6,748

17,004

Adjustments:

Less: Gain on sale of available for sale securities

Add: Gain on sale of available for sale securities tax adjustment

Add: Acquisition related expenses

1,557

121

Less: Acquisition related expenses tax adjustment

183

Core net income

8,122

17,042

Average assets

3,642,908

3,613,070

Core return on average assets

0.45

0.95

Core pre-provision net revenue (PPNR) per share:

Income before taxes (GAAP)

7,647

20,203

Add: Acquisition related expenses

1,557

121

Add: Provision for (credit to) credit losses

1,304

(937)

Add: Provision for (credit to) credit losses on unfunded commitments

290

(356)

Core PPNR (non-GAAP)

10,798

19,031

Average common shares outstanding-diluted

7,108,113

7,188,384

Core PPNR per share (non-GAAP)

1.52

2.65

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 six months
ended June 30, 2024 and 2023:

Three months ended June 30

2024

2023

Interest income (GAAP)

38,376

36,736

Adjustment to FTE

470

478

Interest income adjusted to FTE (non-GAAP)

38,846

37,214

Interest expense

19,460

14,640

Net interest income adjusted to FTE (non-GAAP)

19,386

22,574

Six months ended June 30

2024

2023

Interest income (GAAP)

77,373

71,014

Adjustment to FTE

946

965

Interest income adjusted to FTE (non-GAAP)

78,319

71,979

Interest expense

39,139

25,806

Net interest income adjusted to FTE (non-GAAP)

39,180

46,173

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 six months ended June 30, 2024 and 2023:

Three months ended June 30

2024

2023

Efficiency ratio (non-GAAP):

Noninterest expense (GAAP)

18,158

16,614

Less: Amortization of intangible assets expense

Less: Acquisition related expenses

1,071

121

Noninterest expense (non-GAAP)

17,087

16,707

Net interest income (GAAP)

18,916

22,096

Plus: Taxable equivalent adjustment

471

478

Noninterest income (GAAP)

3,541

3,552

Less: Net gains (losses) on equity securities

(12)

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

22,940

26,114

Efficiency ratio (non-GAAP)

74.49

63.98

Six months ended June 30

2024

2023

Efficiency ratio (non-GAAP):

Noninterest expense (GAAP)

36,226

33,168

Less: Amortization of intangible assets expense

Less: Acquisition related expenses

1,557

121

Noninterest expense (non-GAAP)

34,669

32,990

Net interest income (GAAP)

38,234

45,208

Plus: Taxable equivalent adjustment

946

965

Noninterest income (GAAP)

6,943

7,226

Less: Net losses on equity securities

(20)

(17)

Less: Gains on sale of available for sale securities

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

46,143

53,335

Efficiency ratio (non-GAAP)

75.13

61.85

1 See reconciliation of non-GAAP financial measures on pg.17-19

2 See reconciliation of non-GAAP financial measures on pg.17-19

3 See reconciliation of non-GAAP financial measures on pg.17-19

4 See reconciliation of non-GAAP financial measures on pg.17-19

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SOURCE Peoples Financial Services Corp.

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

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

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