1. PFIS reported $15M net income for Q1 2025, up from $6.1M. 2. Return on average assets increased to 1.22%, up from 0.47%. 3. Merger with FNCB led to a reduction in acquisition costs. 4. Noninterest expenses dropped significantly to $27.4M from $34.8M. 5. Total assets stood at $5 billion with loans at $4 billion.
The significant increase in net income and efficiency reduction positively impacts valuation, similar to past upward trends seen during effective mergers.
The robust financial results and decreasing noninterest expenses signal strong operational efficiency, likely to attract investors promptly.
Immediate financial performance indicators suggest short-term price gains; historically, positive quarterly reports lead to stock appreciation.
DUNMORE, Pa., May 1, 2025 /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, 2025.
Peoples reported net income of $15.0 million, or $1.49 per diluted share for the three months ended March 31, 2025, compared to a net income of $6.1 million, or $0.61 per diluted share for the three months ended December 31, 2024. Return on average assets and return on average equity for the three months ended March 31, 2025 was 1.22% and 12.70% on an annualized basis compared to 0.47% and 5.07% for the three months ended December 31, 2024.
Net income on a linked-quarter basis increased primarily due to higher net interest income, a lower provision for credit losses, and reduced noninterest expenses. On July 1, 2024, Peoples consummated the merger of FNCB Bancorp, Inc. ("FNCB") into Peoples and the merger of FNCB Bank into the Bank (collectively referred to as the "FNCB merger"). Non-recurring acquisition related expenses totaled $0.2 million in the quarter ended March 31, 2025 compared to $5.0 million in the three months ended December 31, 2024.
In addition to evaluating its results of operations in accordance with U.S. generally accepted accounting principles ("GAAP"), Peoples routinely supplements its evaluation with an analysis of certain non-GAAP financial measures, such as tangible stockholders' equity, core net income and pre-provision revenue ratios, and tax-equivalent net interest income and related ratios, among others. The reported results included in this release contain items which Peoples considers non-core, namely acquisition related expenses, nonrecurring provisions for non-purchase credit deteriorated ("non-PCD") loans and gain or loss on the sale of securities available for sale. Peoples believes the reported non-GAAP financial measures provide information useful to investors in understanding its operating performance and trends. Where non-GAAP disclosures are used in this press release, a reconciliation to the comparable GAAP measure is provided in the accompanying tables. The non-GAAP financial measures Peoples uses may differ from the non-GAAP financial measures of other financial institutions.
Core net income and core earnings per diluted share, non-GAAP measures, exclude the non-recurring acquisition related expenses of $0.2 million and $5.0 million incurred during the three months ended March 31, 2025 and December 31, 2024, respectively, and totaled $15.1 million or $1.51 per diluted share for the three months ended March 31, 2025 compared to $10.0 million, or $0.99 per diluted share for the three months ended December 31, 2024.
Income before income taxes was $18.3 million and $5.8 million for the three months ended March 31, 2025 and December 31, 2024, respectively. Pre-provision net revenue (PPNR) and PPNR per diluted share, non-GAAP measures, for the three months ended March 31, 2025 were $18.3 million or $1.82 per diluted share. The PPNR and PPNR diluted earnings per share for the prior quarter were $9.6 million or $0.96 per diluted share.
Peoples acquired FNCB and its wholly-owned subsidiary FNCB Bank by merger on July 1, 2024. The merger and acquisition method of accounting was used to account for the transaction with Peoples as the acquirer. The Company recorded the assets and liabilities of FNCB at their respective fair values as of July 1, 2024. The transaction was valued at approximately $133.7 million. Primary reasons for the merger included: expansion of the branch network and enhancing market share positions in northeastern Pennsylvania; attractive low-cost funding base; strong cultural alignment and a deep commitment to shareholders, customers, employees, and communities served by Peoples and FNCB, meaningful value creation to shareholders; increased trading liquidity for both companies and increased dividends for Peoples shareholders.
At the time of the merger, FNCB contributed, after fair value purchase accounting adjustments, approximately $1.8 billion in assets, $421.9 million in investments, $1.2 billion in loans, $1.4 billion in deposits, $226.3 million in Federal Home Loan Bank ("FHLB") advances and other borrowings, and $8.0 million in junior subordinated debt. The excess of the merger consideration over the fair value of the net FNCB assets acquired and liabilities assumed resulted in $12.6 million of goodwill. The FNCB merger also resulted in a core deposit intangible valued at $36.6 million or 5.1% of core deposits.
The Company's financial results for any periods ended prior to July 1, 2024 only reflect Peoples results on a stand-alone basis. As a result of the FNCB merger and the below listed adjustments related to the FNCB merger, the Company's financial results for the three months ended March 31, 2025 may not be directly comparable to prior reported periods. The following schedule highlights specific merger-related activity for the three months ended March 31, 2025 and December 31, 2024:
| Quarter Ended | Quarter Ended | (Dollars in thousands) |
|---|---|---|
| March 31, 2025 | December 31, 2024 | Acquisition related expenses $154 |
| Total net M&A costs and non-recurring transaction costs | $154 | |
First Quarter 2025 Results – Comparison to Fourth Quarter 2024:
Net interest income for the three months ended March 31, 2025 increased $1.0 million to $39.5 million from $38.5 million for the three months ended December 31, 2024. Tax-equivalent net interest income, a non-GAAP measure, for the three months ended March 31, 2025 increased $1.0 million or 2.6% to $40.2 million from $39.2 million for the three months ended December 31, 2024.
At March 31, 2025, total assets, loans, and deposits were $5.0 billion, $4.0 billion, and $4.3 billion, respectively.
Total loans declined $2.0 million during the first quarter to $4.0 billion at March 31, 2025. Reductions in commercial real estate, indirect auto, and other consumer loans were partially offset by growth in commercial loans, residential real estate loans, and equipment financing loans.
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We make statements in this press release, and we may from time to time make other statements regarding our outlook or expectations for future financial or operating results and/or other matters regarding or affecting Peoples Financial Services Corp. and its subsidiaries (collectively, "Peoples") and other statements that are not historical facts that are considered "forward-looking statements."