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

, /PRNewswire/ -- Peoples Financial Services Corp. ("Peoples" or the "Company") (NASDAQ: PFIS), the bank holding company for Peoples Security Bank and Trust Company, today reported unaudited financial results at and for the three and twelve months ended December 31, 2024. Peoples reported net income of $6.1 million, or $0.61 per diluted share for the three months ended December 31, 2024, compared to a net loss of $4.3 million, or $0.43 per diluted share for the three months ended September 30, 2024. Quarterly net income increased primarily due to lower provisions for credit losses and noninterest expenses, which offset reduced net interest income. On July 1, 2024, Peoples consummated the merger of FNCB Bancorp, Inc. into Peoples and the merger of FNCB Bank into Peoples Security Bank and Trust Company (collectively referred to as the "FNCB merger"). Non-recurring acquisition related expenses totaled $5.0 million in the quarter ended December 31, 2024 compared to $24.0 million in the prior quarter, which included a $14.3 million provision for credit losses on non-purchase credit deteriorated ("non-PCD") loans acquired in the FNCB merger and acquisition related expenses of $9.7 million. In addition to evaluating its results of operations in accordance with U.S. generally accepted accounting principles ("GAAP"), Peoples routinely supplements its evaluation with an analysis of certain non-GAAP financial measures, such as tangible stockholders' equity, core net income and pre-provision revenue ratios, and tax-equivalent net interest income and related ratios, among others. The reported results included in this release contain items, which Peoples considers non-core, namely acquisition related expenses, nonrecurring provisions for non-PDC loans and gain or loss on the sale of securities available for sale. Peoples believes the reported non-GAAP financial measures provide information useful to investors in understanding its operating performance and trends. Where non-GAAP disclosures are used in this press release, a reconciliation to the comparable GAAP measure is provided in the accompanying tables. The non-GAAP financial measures Peoples uses may differ from the non-GAAP financial measures of other financial institutions. Core net income and core earnings per diluted share1, non-GAAP measures, exclude the non-recurring acquisition related expenses of $5.0 million and $24.0 million incurred during the three months ended December 31, 2024 and September 30, 2024, respectively, and totaled $10.0 million or $0.99 per diluted share for the three months ended December 31, 2024 compared to $16.5 million, or $1.64 per diluted share for the three months ended September 30, 2024. Income before taxes was $5.8 million for the three months ended December 31, 2024 compared to a loss of $5.0 million for the three months ended September 30, 2024. Pre-provision net revenue (PPNR) and PPNR per diluted share1, non-GAAP measures, for the three months ended December 31, 2024 was $9.6 million or $0.96 per diluted share. The PPNR and PPNR diluted earnings per share for the prior quarter was $8.7 million or $0.86 per diluted share. Core pre-provision net revenue (PPNR) and core PPNR per diluted share1, non-GAAP measures, which exclude acquisition related expenses, the provision for credit losses and the provision for credit losses on unfunded commitments from income before taxes, for the three months ended December 31, 2024 was $14.6 million or $1.46 per diluted share. The core PPNR and core PPNR diluted earnings per share for the prior quarter was $18.3 million or $1.83 per diluted share. For the twelve months ended December 31, 2024, net income was $8.5 million, or $0.99 per diluted share, compared to $27.4 million, or $3.83 per diluted share for the comparable period of 2023. Net income for the current period decreased $18.9 million when compared to the twelve months ended December 31, 2023 due to $30.5 million of non-recurring charges, including $16.2 million of acquisition expenses and a $14.3 million provision for credit losses on non-PCD loans related to the FNCB merger, which were partially offset by higher interest income due to increased levels of earning assets. 1 See reconciliation of non-GAAP financial measures on pg.19-21. Core net income and core earnings per diluted share1, non-GAAP measures, totaled $32.4 million or $3.77 per diluted share for the twelve months ended December 31, 2024 compared to $28.9 million, or $4.03 per diluted share for the comparable period of 2023. Pre-provision net revenue (PPNR) and PPNR per diluted share1, non-GAAP measures, for the twelve months ended December 31, 2024 were $27.6 million and $3.21 per diluted share, respectively. The PPNR and PPNR diluted earnings per share for the corresponding prior year period was $33.1 million or $4.62 per diluted share. Core pre-provision net revenue (PPNR) and core PPNR per diluted share1, non-GAAP measures, for the twelve months ended December 31, 2024 were $43.8 million and $5.10 per diluted share, respectively. The core PPNR and core PPNR diluted earnings per share for the corresponding prior year period was $34.9 million and $4.88 per diluted share. Merger with FNCB Peoples acquired FNCB and its wholly-owned subsidiary FNCB Bank by merger on July 1, 2024. The merger and acquisition method of accounting was used to account for the transaction with Peoples as the acquirer. The Company recorded the assets and liabilities of FNCB at their respective fair values as of July 1, 2024. The transaction was valued at approximately $133.7 million. Primary reasons for the merger included: expansion of the branch network and commanding market share positions in northeastern Pennsylvania; attractive low-cost funding base; strong cultural alignment and a deep commitment to shareholders, customers, employees, and communities served by Peoples and FNCB, meaningful value creation to shareholders; increased trading liquidity for both companies and increased dividends for Peoples shareholders. At the time of the merger, FNCB contributed, after fair value purchase accounting adjustments, approximately $1.8 billion in assets, $421.9 million in investments, $1.2 billion in loans, $1.4 billion in deposits, $226.3 million in Federal Home Loan Bank ("FHLB") advances and other borrowings, and $8.0 million in subordinated debt and trust preferred debentures. The excess of the merger consideration over the fair value of the net FNCB assets acquired and liabilities assumed resulted in $13.0 million of goodwill. The FNCB merger also resulted in a core deposit intangible valued at $36.6 million or 5.1% of core deposits. The Company incurred non-recurring expenses of $5.0 million and $30.5 million for the three and twelve months ended December 31, 2024, respectively, related to merger and acquisition costs, and an increased allowance for credit losses related to the acquisition of PCD and non-PCD loans acquired in the FNCB merger. The Company's financial results for any periods ended prior to July 1, 2024 only reflect Peoples results on a stand alone basis. As a result of the FNCB merger and the below listed adjustments related to the FNCB merger, the Company's financial results for the three months and twelve months ended December 31, 2024 may not be directly comparable to prior reported periods. The following schedule highlights specific merger related activity for the three and twelve months ended December 31, 2024: Schedule of Merger & Acquisition Costs and Non-Recurring Merger Related Activity (Unaudited) Quarter Ended Year Ended (Dollars in thousands) December 31, 2024 December 31, 2024 Acquisition related expenses $ 4,990 $ 16,200 Provision for credit losses for FNCB non-PCD loans 14,328 Total net M&A costs and non-recurring transaction costs $ 4,990 $ 30,528 NOTABLES IN THE QUARTER Paid a fourth quarter dividend of $0.6175 per share, representing an increase of 50.6% over the year ago quarter's dividend. Completed our core operating system integration to achieve highest efficiency. Realigned our branch network to achieve maximum coverage with minimum redundancy. Allowance for credit losses to loans, net increased to 1.05% at December 31, 2024 from 0.97% and 0.77% at September 30, 2024 and December 31, 2023, respectively. Return on average equity for the three months ended December 31, 2024 was 5.07% compared to negative 3.58% for the three months ended September 30, 2024; excluding the non-recurring charges, core return on average equity1, a non-GAAP measure, was 8.31% on an annualized basis for the three months ended December 31, 2024 compared to 13.61% for the three months ended September 30, 2024. Return on average assets for the three months ended December 31, 2024 was 0.47% compared to negative 0.33% for the three months ended September 30, 2024; excluding the non-recurring charges, core return on average assets1, a non-GAAP measure, was 0.76% on an annualized basis for the three months ended December 31, 2024 compared to 1.24% for the three months ended September 30, 2024. At December 31, 2024, the Company had $135.9 million in cash and cash equivalents, a decrease of $149.6 million from September 30, 2024. Additional contingent sources of available liquidity totaled $2.4 billion and include lines of credit at the Federal Reserve Bank and FHLB of Pittsburgh, brokered deposit capacity and unencumbered securities that may be pledged as collateral. The Company's cash and cash equivalents balance and available liquidity represented 50.2% of total assets and 58.0% of total deposits. At December 31, 2024, estimated total insured deposits were approximately $3.0 billion, or 68.7% of total deposits. Included in the uninsured total at December 31, 2024 was $487.8 million of municipal deposits collateralized by letters of credit issued by the FHLB and pledged investment securities, and $1.4 million of affiliate company deposits. Total insured and collateralized deposits represented 79.7% of total deposits at December 31, 2024. INCOME STATEMENT REVIEW Net interest margin ("NIM"), calculated on a fully taxable equivalent ("FTE") basis, a non-GAAP measure1, for the three months ended December 31, 2024 was 3.25%, a decrease of 1 basis point compared to 3.26% for the three months ended September 30, 2024. The decrease in tax-equivalent NIM from the prior quarter was primarily due to a lower yield on interest-earning assets as a result of the Federal Open Market Committee ("FOMC") lowering rates in September and into the fourth quarter. The tax-equivalent yield on interest-earning assets, a non-GAAP measure1, decreased 12 basis points to 5.51% during the three months ended December 31, 2024 from 5.63% during the three months ended September 30, 2024. The cost of funds, which represents the average rate paid on total interest-bearing liabilities, decreased 16 basis points to 2.88% for the three months ended December 31, 2024 when compared to 3.04% during the three months ended September 30, 2024. The cost of interest-bearing deposits decreased 16 basis points during the three months ended December 31, 2024 to 2.75% from 2.91% in the three months ended September 30, 2024. The cost of total deposits for the three months ended December 31, 2024 was 2.20%, a decrease of 13 basis points from 2.33% for the three months ended September 30, 2024. 1 See reconciliation of non-GAAP financial measures on pg.19-21. Fourth Quarter 2024 Results – Comparison to Third Quarter 2024 Net interest income for the three months ended December 31, 2024 decreased $0.7 million to $38.5 million from $39.2 million for the three months ended September 30, 2024. Tax-equivalent net interest income, a non-GAAP measure1, for the three months ended December 31, 2024 decreased $0.8 million or 1.9% to $39.2 million from $40.0 million for the three months ended September 30, 2024. The decrease in tax-equivalent net interest income was due to a $2.5 million decrease in tax-equivalent interest income that was partially offset by a $1.7 million decrease in interest expense. Lower interest income was the result of decreases in the volume of earning assets and lower rates on floating rate assets resulting from the 100 basis point cut to the federal funds rate since September 2024. Average loans, net, decreased $32.9 million when comparing the three months ended December 31, 2024 to the prior three month period ended September 30, 2024. Average investments totaled $628.9 million in the three months ended December 31, 2024 and $700.6 million in the three months ended September 30, 2024. Average federal funds sold increased $37.3 million to $129.5 million for the three months ended December 31, 2024. The $1.7 million decrease in interest expense in the three months ended December 31, 2024 was due primarily to lowering rates paid on consumer, business and municipal deposit accounts in response to the FOMC's aforementioned actions, coupled with the reduced balances. The Company's total cost of deposits decreased 13 basis points to 2.20% during the three months ended December 31, 2024 compared to 2.33 % for the prior quarter. The cost of interest-bearing deposits decreased 16 basis point to 2.75% from 2.91% in the prior quarter. Short-term borrowings averaged $39.3 million in the three month period ended December 31, 2024 at an average cost of 4.80% compared to $43.9 million in short-term borrowings at an average cost of 4.98% during the three months ended September 30, 2024. Average interest-bearing liabilities decreased $39.3 million for the three months ended December 31, 2024, compared to the three months ended September 30, 2024. Average noninterest-bearing deposits decreased $4.5 million and represented 20.2% of total average deposits in the three months ended December 31, 2024 as compared to 20.1% in the three months ended September 30, 2024. For the three months ended December 31, 2024, $3.4 million was recorded to the provision for credit losses compared to $14.5 million in the prior quarter. The prior period provision included a non-recurring provision of $14.3 million for non-PCD loans acquired in the FNCB merger. Excluding the impact of the FNCB merger, the provision for credit losses for the three months ended September 30, 2024 was $0.2 million. The higher provision in the three months ended December 31, 2024 was due to higher net charge-offs of $0.9 million primarily in the equipment financing and commercial real estate portfolios which contributed to higher model loss rates. Noninterest income was $5.7 million for each of the three months ended December 31, 2024 and September 30, 2024. Higher interest rate swap revenue during the quarter ended December 31, 2024 was partially offset by lower gains on equity investments, as compared to the quarter ended September 30, 2024. Noninterest expense decreased $0.5 million to $35.0 million for the three months ended December 31, 2024, from $35.5 million for the three months ended September 30, 2024. Excluding acquisition related expenses of $5.0 million in the quarter ended December 31, 2024 and $9.7 million in the prior quarter, including legal and consulting, core system de-conversion fees, and severance fees, noninterest expenses increased $4.1 million. Salaries and employee benefits were $2.1 million higher due primarily to year-end employee incentive accruals. Other expenses increased $1.9 million to $6.5 million for the quarter due to the $0.4 million reserve on unfunded commitments, $0.4 million higher Federal Deposit Insurance Corporation ("FDIC") assessment costs on the Company and a $0.4 million writedown of a former branch property. The income tax benefit was $0.3 million and $0.7 million for the three months ended December 31, 2024 and September 30, 2024, respectively. The lower tax rate was due to the impact of permanent tax adjustments, such as tax exempt income and BOLI income, on a lower pre-tax income base. 1 See reconciliation of non-GAAP financial measures on pg.19-21. 2024 vs. 2023 Full Year Results Net interest income for the twelve months ended December 31, 2024 increased $29.2 million to $116.0 million from $86.8 million for the twelve months ended December 31, 2023. The FTE NIM, a non-GAAP measure1, for the twelve months ended December 31, 2024 was 2.84%, an increase of 30 basis points over the prior year's period of 2.54%. Tax-equivalent net interest income, a non-GAAP measure1 for the twelve months ended December 31, increased $29.7 million, or 33.5%, to $118.4 million in 2024 from $88.7 million in 2023. The increase in tax-equivalent net interest income was primarily the result of higher loan interest income due to increased volume and rates on new loans acquired through the FNCB merger and an additional $9.0 million from accretion of purchase accounting marks on purchased loans. Average investments increased $57.9 million compared to December 31, 2023, due in part to the assumption of $426.1 million in investments from the FNCB merger. Subsequent to the merger, the Company engaged in investment sales of approximately $271.4 million to repay short-term borrowings and build on balance sheet liquidity. The tax-equivalent yield on earning assets was 5.14% for the twelve months of 2024 compared to 4.34% for the twelve months ended December 31, 2023. The cost of interest bearing liabilities during the twelve month period ended December 31, 2024 increased 51 basis points to 2.93% from 2.42% for the twelve months ended December 31, 2023 as the cost of interest-bearing deposit products and short-term borrowing costs increased. The net impact of the purchase accounting accretion and amortization of the loan, deposit and borrowing marks acquired and assumed in the FNCB merger was $7.3 million and contributed 18 basis points to the NIM. For the twelve months ended December 31, 2024, a provision for credit losses of $19.1 million was recorded and included a $14.3 million day-one provision for non-PCD loans acquired in the FNCB merger. The balance includes adjustments through December 31, 2024 for individually evaluated and pooled loans. Excluding the day-one provision, the increase to the provision is due to $1.1 million in net charge-offs primarily in the equipment financing and indirect loan portfolios and higher ACL model loss rates. Noninterest income was $18.3 million for the twelve months ended December 31, 2024 and $14.1 million for the comparable period ended December 31, 2023. During the period, service charges and fees increased $2.9 million, wealth management income increased $0.5 million, bank owned life insurance cash surrender value increased $0.5 million and gains on equity securities increased $0.1 million while interest rate swap revenue decreased $0.1 million on lower loan origination volume and market value adjustments. Noninterest expense for the twelve months ended December 31, 2024, was $106.7 million, an increase of $38.9 million from $67.8 million for the twelve months ended December 31, 2023. The increase was due primarily to higher acquisition related expenses, and higher expenses due to additional full time equivalent employees and facilities from the FNCB merger. Acquisition related expenses totaled $16.2 million compared to $1.8 million a year ago. Salaries and employee benefits expenses increased $10.5 million compared to the year ago period due to the addition of 195 full time equivalent employees from FNCB at the time of the FNCB merger. Occupancy and equipment expenses were higher by $5.2 million in the current period due to increased technology costs related to system integration and increased account and transaction volumes, and higher facilities costs. Other expenses increased $5.6 million to $19.1 million due to increased FDIC insurance assessments, the write down of a former branch office and the inherent costs of a larger organization. The provision for income taxes for the twelve months ended December 31, 2024 decreased $5.2 million as compared to the prior period due to the impact of increased permanent tax adjustments, such as tax exempt income and BOLI income, on a lower pre-tax income base. 1 See reconciliation of non-GAAP financial measures on pg.19-21. BALANCE SHEET REVIEW At December 31, 2024, total assets, loans and deposits were $5.1 billion, $4.0 billion and $4.4 billion, respectively. Loan growth for the twelve months ended December 31, 2024 was $1.1 billion or 40.1%, due primarily to the $1.2 billion in loans acquired in the FNCB merger. Commercial loans made up the majority of the growth with residential real estate loans also increasing. Total investments were $606.9 million at December 31, 2024, compared to $483.9 million at December 31, 2023. At December 31, 2024, the available for sale securities totaled $526.3 million and the held to maturity securities totaled $78.2 million. The unrealized loss on the available for sale securities decreased $2.5 million from $51.5 million at December 31, 2023 to $49.0 million at December 31, 2024. The unrealized losses on the held to maturity portfolio totaled $13.0 million and $13.2 million at December 31, 2024 and December 31, 2023, respectively. At December 31, 2024, goodwill was $76.3 million, an increase of $12.9 million from $63.4 million at December 31, 2023. Goodwill declined $0.6 million from September 30, 2024 due to an adjustment in the fourth quarter to the fair value of certain assets acquired in the FNCB merger. Total deposits increased $1.1 billion during the twelve months ended December 31, 2024 due primarily to the $1.4 billion in deposits acquired in the FNCB merger, partially offset by reductions in brokered CDs and seasonal outflows of non-maturity deposits. Noninterest-bearing deposits increased $290.8 million and interest-bearing deposits increased $837.7 million during the twelve months ended December 31, 2024. The Company had $256.4 million and $261.0 million of longer-term brokered CDs at December 31, 2024 and December 31, 2023, respectively. During the quarter ended December 31, 2024, the Company called $100.7 million of its higher cost brokered CDs in order to reduce its cost of funds. The Company's deposit base consisted of 40.4% retail accounts, 34.9% commercial accounts, 18.9% municipal relationships and 5.8% brokered deposits at December 31, 2024. At December 31, 2024, total estimated uninsured deposits, were $1.4 billion, or approximately 31.3% of total deposits. Included in the uninsured total at December 31, 2024 is $487.8 million of municipal deposits collateralized by letters of credit issued by the FHLB and pledged investment securities, and $1.4 million of affiliate company deposits. We also offer customers access to CDARS and ICS programs through which their deposits may be allocated to separate FDIC-insured institutions, while they are able to maintain their relationship with the bank. In addition to deposit gathering and current long-term debt, we have additional sources of liquidity available such as cash and cash equivalents, overnight borrowings from the FHLB, the Federal Reserve's Discount Window, correspondent bank lines of credit, brokered deposit capacity and unencumbered securities. At December 31, 2024, the Company had $135.9 million in cash and cash equivalents, a decrease of $51.5 million from $187.4 million at December 31, 2023. For additional information on the deposit portfolio and additional sources of liquidity, see the tables on page 17. The Company maintained its well capitalized position at December 31, 2024. Stockholders equity equaled $469.0 million or $46.94 per share at December 31, 2024, and $340.4 million or $48.35 per share at December 31, 2023. The increase in stockholders' equity from December 31, 2023 is primarily attributable to the FNCB merger, net income less dividends to shareholders, partially offset by a $3.7 million decrease to accumulated other comprehensive loss ("AOCL") resulting from a reduction in the unrealized loss on available for sale securities. The net after tax unrealized loss on available for sale securities included in AOCL at December 31, 2024 and December 31, 2023 was $30.3 million and $40.3 million, respectively. Tangible book value1, a non-GAAP measure, decreased to $35.88 per share at December 31, 2024, from $39.35 per share at December 31, 2023. Dividends declared for the twelve months ended December 31, 2024 amounted to $2.06 per share. ASSET QUALITY REVIEW Nonperforming assets were $23.0 million or 0.58% of loans, net and foreclosed assets at December 31, 2024, compared to $4.9 million or 0.17% of loans, net and foreclosed assets at December 31, 2023. Nonperforming assets at December 31, 2024 included $8.5 million of loans acquired in the FNCB merger, of which, $6.4 million were PCD loans assumed in the FNCB merger. As a percentage of total assets, nonperforming assets totaled 0.45% at December 31, 2024 compared to 0.13% at December 31, 2023. At December 31, 2024, the Company had one foreclosed property recorded at $27 thousand. During the twelve months ended December 31, 2024, net charge-offs were $1.1 million and the provision for credit losses totaled $19.1 million. The provision for credit losses included a $14.3 million FNCB merger related day one adjustment for non-PCD loans. The allowance for credit losses equaled $41.8 million or 1.05% of loans, net, at December 31, 2024 compared to $21.9 million or 0.77% of loans, net, at December 31, 2023. Loans charged-off, net of recoveries, for the three months ended December 31, 2024 were $0.9 million, compared to $2.8 million for the comparable period last year. 1 See reconciliation of non-GAAP financial measures on pg.19-21. About Peoples: Peoples Financial Services Corp. is the bank holding company of Peoples Security Bank and Trust Company, an independent community bank serving its retail and commercial customers through 39 full-service community banking offices located within Allegheny, Bucks, Lackawanna, Lebanon, Lehigh, Luzerne, Monroe, Montgomery, Northampton, Susquehanna, Wayne and Wyoming Counties in Pennsylvania, Middlesex County in New Jersey and Broome County in New York. Each office, interdependent with the community, offers a comprehensive array of financial products and services to individuals, businesses, not-for-profit organizations and government entities. Peoples' business philosophy includes offering direct access to senior management and other officers and providing friendly, informed and courteous service, local and timely decision making. For more information visit psbt.com. In addition to evaluating its results of operations in accordance with U.S. generally accepted accounting principles ("GAAP"), Peoples routinely supplements its evaluation with an analysis of certain non-GAAP financial measures, such as tangible stockholders' equity, core net income and pre-provision revenue ratios, among others. The reported results included in this release contain items, which Peoples considers non-core, namely acquisition related expenses and gain or loss on the sale of securities available for sale. Peoples believes the reported non-GAAP financial measures provide information useful to investors in understanding its operating performance and trends. Where non-GAAP disclosures are used in this press release, a reconciliation to the comparable GAAP measure is provided in the accompanying tables. The non-GAAP financial measures Peoples uses may differ from the non-GAAP financial measures of other financial institutions. Safe Harbor Forward-Looking Statements: We make statements in this press release, and we may from time to time make other statements regarding our outlook or expectations for future financial or operating results and/or other matters regarding or affecting Peoples Financial Services Corp. and its subsidiaries (collectively, "Peoples") and other statements that are not historical facts that are considered "forward-looking statements" as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements may be identified by the use of such words as "believe," "expect," "anticipate," "should," "planned," "estimated," "intend" and "potential." For these statements, Peoples claims the protection of the statutory safe harbors for forward-looking statements. Peoples cautions you that undue reliance should not be placed on forward-looking statements and that a number of important factors could cause actual results to differ materially from those currently anticipated in any forward-looking statement. Such factors include, but are not limited to: macroeconomic trends, including interest rates and inflation; the effects of any recession in the United States; the impact on financial markets from geopolitical conflict, including from wars, military conflict or trade policies, including tariffs or retaliatory tariffs; the possibility that Peoples may be unable to achieve the expected synergies and operating efficiencies of the FNCB merger within the expected timeframes or at all; the possibility that Peoples may be unable to successfully integrate operations of FNCB or that the integration may be more difficult, time consuming or costly than expected; the FNCB merger may divert management's attention from ongoing business operations and opportunities; effects of the FNCB merger on our ability to retain customers and retain and hire key personnel and maintain relationships with our vendors, and on our operating results and business generally; the dilution caused by Peoples' issuance of additional shares of its capital stock in connection with the FNCB merger; the outcome of any legal proceedings that may be threatened or instituted against Peoples; changes in interest rates; economic conditions, particularly in our market area; legislative and regulatory changes and the ability to comply with the significant laws and regulations governing the banking and financial services business; monetary and fiscal policies of the U.S. government, including policies of the U.S. Department of Treasury and the Federal Reserve System; adverse developments in the financial industry generally, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer and client behavior; credit risk associated with lending activities and changes in the quality and composition of our loan and investment portfolios; demand for loan and other products; deposit flows; competition; changes in the values of real estate and other collateral securing the loan portfolio, particularly in our market area; changes in relevant accounting principles and guidelines; inability of third party service providers to perform; our ability to prevent, detect and respond to cyberattacks; and other factors that may be described in our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission from time to time. The forward-looking statements are made as of the date of this release, and, except as may be required by applicable law or regulation, Peoples assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements. [TABULAR MATERIAL FOLLOWS] Summary Data Peoples Financial Services Corp. Five Quarter Trend (Unaudited) (In thousands, except share and per share data) Dec 31 Sept 30 June 30 Mar 31 Dec 31 2024 2024 2024 2024 2023 Key performance data: Share and per share amounts: Net (loss) income $ 0.61 $ (0.43) $ 0.46 $ 0.49 $ 0.51 Core net income (1) $ 0.99 $ 1.64 $ 0.59 $ 0.55 $ 0.61 Core net income (PPNR) (1) $ 1.46 $ 1.83 $ 0.73 $ 0.79 $ 0.95 Cash dividends declared $ 0.62 $ 0.62 $ 0.41 $ 0.41 $ 0.41 Book value $ 46.94 $ 47.53 $ 48.29 $ 48.18 $ 48.35 Tangible book value (1) $ 35.88 $ 36.24 $ 39.31 $ 39.20 $ 39.35 Market value: High $ 58.76 $ 50.49 $ 46.25 $ 48.84 $ 49.99 Low $ 44.73 $ 41.44 $ 36.26 $ 38.09 $ 38.58 Closing $ 51.18 $ 46.88 $ 45.54 $ 43.11 $ 48.70 Market capitalization $ 511,325 $ 468,549 $ 321,388 $ 304,238 $ 342,889 Common shares outstanding 9,990,724 9,994,648 7,057,258 7,057,258 7,040,852 Selected ratios: Return on average stockholders' equity 5.07 % (3.58) % 3.87 % 4.09 % 4.40 % Core return on average stockholders' equity (1) 8.31 % 13.61 % 5.00 % 4.59 % 5.26 % Return on average tangible stockholders' equity 6.62 % (4.67) % 4.76 % 5.02 % 5.46 % Core return on average tangible stockholders' equity (1) 10.87 % 17.77 % 6.14 % 5.64 % 6.53 % Return on average assets 0.47 % (0.33) % 0.37 % 0.38 % 0.38 % Core return on average assets (1) 0.76 % 1.24 % 0.47 % 0.43 % 0.46 % Stockholders' equity to total assets 9.21 % 8.86 % 9.42 % 9.27 % 9.10 % Efficiency ratio (1)(2) 63.03 % 53.14 % 74.49 % 75.77 % 69.94 % Nonperforming assets to loans, net, and foreclosed assets 0.58 % 0.53 % 0.25 % 0.27 % 0.17 % Nonperforming assets to total assets 0.45 % 0.41 % 0.20 % 0.21 % 0.13 % Net charge-offs to average loans, net 0.09 % 0.01 % 0.01 % 0.00 % 0.39 % Allowance for credit losses to loans, net 1.05 % 0.97 % 0.81 % 0.79 % 0.77 % Interest-bearing assets yield (FTE) (3) 5.51 % 5.63 % 4.58 % 4.56 % 4.49 % Cost of funds (4)_ 2.88 % 3.04 % 3.01 % 2.96 % 2.86 % Net interest spread (FTE) (3) (4) 2.62 % 2.59 % 1.57 % 1.60 % 1.63 % Net interest margin (FTE) (3) 3.25 % 3.26 % 2.29 % 2.29 % 2.30 % (1) See Reconciliation of Non-GAAP financial measures on pages 19-21. (2) Total noninterest expense less amortization of intangible assets and acquisition related expenses, divided by tax-equivalent net interest income and noninterest income less net gains (losses) on investment securities available for sale. (3) Tax-equivalent adjustments were calculated using the federal statutory tax rate prevailing during the indicated periods of 21%. (4) Amount for the three months ended September 30, 2024 has been revised from the previously reported amount to correct an immaterial misclassification of deposits, namely a $210.3 million understatement of noninterest-bearing deposits and overstatement of interest-bearing deposits. The misclassification had no material impact on the September 30, 2024 financial statements. Peoples Financial Services Corp. Consolidated Statements of Income (Unaudited) (In thousands, except per share data) Dec 31 Dec 31 Year ended 2024 2023 Interest income: Interest and fees on loans: Taxable $ 184,907 $ 129,013 Tax-exempt 7,354 5,628 Interest and dividends on investment securities: Taxable 12,930 7,912 Tax-exempt 1,550 1,582 Dividends 89 4 Interest on interest-bearing deposits in other banks 498 335 Interest on federal funds sold 4,132 5,377 Total interest income 211,460 149,851 Interest expense: Interest on deposits 87,934 58,561 Interest on short-term borrowings 1,919 1,920 Interest on long-term debt 3,317 842 Interest on subordinated debt 1,774 1,774 Interest on junior subordinated debt 527 Total interest expense 95,471 63,097 Net interest income 115,989 86,754 Provision for credit losses 19,131 566 Net interest income after provision for credit losses 96,858 86,188 Noninterest income: Service charges, fees, commissions and other 10,673 7,728 Merchant services income 896 693 Commissions and fees on fiduciary activities 2,270 2,219 Wealth management income 2,118 1,576 Mortgage banking income 389 390 Increase in cash surrender value of life insurance 1,572 1,067 Interest rate swap revenue 285 390 Net gains (losses) on equity investment securities 132 (11) Net gains on sale of investment securities available for sale 1 81 Total noninterest income 18,336 14,133 Noninterest expense: Salaries and employee benefits expense 45,746 35,285 Net occupancy and equipment expense 22,296 17,146 Acquisition related expenses 16,200 1,816 Amortization of intangible assets 3,367 105 Net loss (gains) on fixed assets (18) Other expenses 19,117 13,486 Total noninterest expense 106,726 67,820 Income before income taxes 8,468 32,501 (Benefit) provision for income tax expense (30) 5,121 Net income $ 8,498 $ 27,380 Other comprehensive income: Unrealized gains on investment securities available for sale $ 2,569 $ 14,804 Reclassification adjustment for gains on available for sale securities included in net income (1) (81) Change in pension liability 1,518 1,129 Change in derivative fair value 632 (824) Income tax expense related to other comprehensive income 1,062 3,043 Other comprehensive income, net of income tax expense 3,656 11,985 Comprehensive income $ 12,154 $ 39,365 Share and per share amounts: Net income - basic $ 1.00 $ 3.85 Net income - diluted 0.99 3.83 Cash dividends declared 2.06 1.64 Average common shares outstanding - basic 8,531,122 7,107,908 Average common shares outstanding - diluted 8,586,035 7,151,471 Peoples Financial Services Corp. Consolidated Statements of Income (Loss) (Unaudited) (In thousands, except per share data) Dec 31 Sept 30 June 30 Mar 31 Dec 31 Three months ended 2024 2024 2024 2024 2023 Interest income: Interest and fees on loans: Taxable $ 57,048 $ 59,412 $ 34,406 $ 34,041 $ 33,730 Tax-exempt 2,238 2,299 1,399 1,418 1,423 Interest and dividends on investment securities: Taxable 4,369 4,739 1,904 1,918 1,939 Tax-exempt 397 411 371 371 372 Dividends 30 55 2 2 Interest on interest-bearing deposits in other banks 113 150 115 120 145 Interest on federal funds sold 1,608 1,218 179 1,127 2,463 Total interest income 65,803 68,284 38,376 38,997 40,072 Interest expense: Interest on deposits 24,718 26,398 18,114 18,704 18,756 Interest on short-term borrowings 474 550 633 262 330 Interest on long-term debt 1,389 1,389 269 270 273 Interest on subordinated debt 444 443 444 443 444 Interest on junior subordinated debt 267 260 Total interest expense 27,292 29,040 19,460 19,679 19,803 Net interest income 38,511 39,244 18,916 19,318 20,269 Provision for credit losses 3,369 14,458 596 708 1,669 Net interest income after provision for credit losses 35,142 24,786 18,320 18,610 18,600 Noninterest income: Service charges, fees, commissions and other 3,368 3,384 1,885 2,036 1,881 Merchant services income 298 223 260 115 151 Commissions and fees on fiduciary activities 553 649 517 551 528 Wealth management income 633 708 416 361 399 Mortgage banking income 126 84 87 92 95 Increase in cash surrender value of life insurance 456 551 286 279 277 Interest rate swap revenue 260 (53) 102 (24) (122) Net (losses) gains on investment equity securities (23) 175 (12) (8) 6 Net gains on sale of investment securities available for sale 1 Total noninterest income 5,671 5,722 3,541 3,402 3,215 Noninterest expense: Salaries and employee benefits expense 15,287 13,170 8,450 8,839 8,939 Net occupancy and equipment expense 6,559 6,436 4,576 4,725 4,468 Acquisition related expenses 4,990 9,653 1,071 486 826 Amortization of intangible assets 1,702 1,665 19 Other expenses 6,460 4,578 4,061 4,018 3,346 Total noninterest expense 34,998 35,502 18,158 18,068 17,598 Income (loss) before income taxes 5,815 (4,994) 3,703 3,944 4,217 Income tax (benefit) expense (272) (657) 421 478 587 Net income (loss) $ 6,087 $ (4,337) $ 3,282 $ 3,466 $ 3,630 Other comprehensive (loss) income: Unrealized (loss) gain on investment securities available for sale $ (10,175) $ 15,167 $ 18 $ (2,441) $ 19,494 Reclassification adjustment for gains on available for sale securities included in net income (1) Change in benefit plan liabilities 1,518 1,129 Change in derivative fair value 817 (1,424) 160 1,079 (1,650) Income tax (benefit) expense related to other comprehensive (loss) income (1,686) 3,008 38 (298) 3,894 Other comprehensive (loss) income, net of income tax (benefit) expense (6,154) 10,734 140 (1,064) 15,079 Comprehensive (loss) income $ (67) $ 6,397 $ 3,422 $ 2,402 $ 18,709 Share and per share amounts: Net income - basic $ 0.61 $ (0.43) $ 0.47 $ 0.49 $ 0.52 Net income - diluted 0.61 (0.43) 0.46 0.49 0.51 Cash dividends declared 0.62 0.62 0.41 0.41 0.41 Average common shares outstanding - basic 9,994,605 9,987,627 7,057,258 7,052,912 7,040,852 Average common shares outstanding - diluted 10,051,337 10,044,449 7,114,115 7,102,112 7,091,015 Peoples Financial Services Corp. Net Interest Margin (Unaudited) (In thousands, fully taxable equivalent basis) Three Months Ended December 31, 2024 December 31, 2023 Average Interest Income/ Yield/ Average Interest Income/ Yield/ Balance Expense Rate Balance Expense Rate Assets: Earning assets: Loans: Taxable $ 3,757,273 $ 57,048 6.04 % $ 2,632,865 $ 33,730 5.08 % Tax-exempt 278,429 2,834 4.05 227,800 1,801 3.14 Total loans 4,035,702 59,882 5.90 2,860,665 35,531 4.93 Investments: Taxable 541,526 4,399 3.23 450,533 1,939 1.71 Tax-exempt 87,419 502 2.29 87,297 471 2.14 Total investments 628,945 4,901 3.10 537,830 2,410 1.78 Interest-bearing deposits 9,116 113 4.93 10,432 145 5.51 Federal funds sold 129,517 1,608 4.94 176,983 2,463 5.52 Total earning assets 4,803,280 66,504 5.51 % 3,585,910 40,549 4.49 % Less: allowance for credit losses 39,850 23,386 Other assets 440,029 211,864 Total assets $ 5,203,459 $ 66,504 $ 3,774,388 $ 40,549 Liabilities and Stockholders' Equity: Interest-bearing liabilities: Money market accounts $ 945,644 $ 7,526 3.17 % $ 775,661 $ 7,227 3.70 % Interest-bearing demand and NOW accounts 1,276,206 7,549 2.35 814,695 4,925 2.40 Savings accounts 502,028 651 0.52 438,544 267 0.24 Time deposits less than $100 497,473 5,428 4.34 415,806 4,364 4.16 Time deposits $100 or more 351,970 3,564 4.03 216,450 1,973 3.62 Total interest-bearing deposits 3,573,321 24,718 2.75 2,661,156 18,756 2.80 Short-term borrowings 39,319 474 4.80 24,103 330 5.43 Long-term debt 111,135 1,389 4.97 25,000 273 4.33 Subordinated debt 33,000 444 5.35 33,000 444 5.34 Junior subordinated debt 8,026 267 13.23 Total borrowings 191,480 2,574 5.35 82,103 1,047 5.06 Total interest-bearing liabilities 3,764,801 27,292 2.88 % 2,743,259 19,803 2.86 % Noninterest-bearing deposits 904,274 651,182 Other liabilities 56,445 52,760 Stockholders' equity 477,939 327,187 Total liabilities and stockholders' equity $ 5,203,459 $ 3,774,388 Net interest income/spread $ 39,212 2.62 % $ 20,746 1.63 % Net interest margin 3.25 % 2.30 % Tax-equivalent adjustments: Loans $ 596 $ 378 Investments 105 99 Total adjustments $ 701 $ 477 The average balances of assets and liabilities, corresponding interest income and expense and resulting average yields or rates paid are summarized as follows. Averages for earning assets include nonaccrual loans. Investment averages include available for sale securities at amortized cost. Income on investment securities and loans is adjusted to a tax-equivalent basis using the prevailing federal statutory tax rate of 21%. Peoples Financial Services Corp. Net Interest Margin (Unaudited) (In thousands, fully taxable equivalent basis) For the Twelve Months Ended December 31, 2024 December 31, 2023 Average Interest Income/ Yield/ Average Interest Income/ Yield/ Balance Expense Rate Balance Expense Rate Assets: Earning assets: Loans: Taxable $ 3,205,564 $ 184,907 5.77 % $ 2,605,927 $ 129,013 4.95 % Tax-exempt 251,300 9,309 3.70 225,839 7,124 3.15 Total loans 3,456,864 194,216 5.62 2,831,766 136,137 4.81 Investments: Taxable 529,649 13,019 2.46 468,403 7,916 1.69 Tax-exempt 87,563 1,962 2.24 90,897 2,003 2.20 Total investments 617,212 14,981 2.43 559,300 9,919 1.77 Interest-bearing deposits 9,434 498 5.28 6,373 335 5.26 Federal funds sold 78,698 4,132 5.25 98,535 5,377 5.46 Total earning assets 4,162,208 213,827 5.14 % 3,495,974 151,768 4.34 % Less: allowance for credit losses 30,724 24,377 Other assets 362,130 211,618 Total assets $ 4,493,614 $ 213,827 $ 3,683,215 $ 151,768 Liabilities and Stockholders' Equity: Interest-bearing liabilities: Money market accounts $ 621,993 $ 29,643 4.77 % $ 714,940 $ 22,686 3.17 % Interest-bearing demand and NOW accounts 1,261,095 23,674 1.88 779,977 15,586 2.00 Savings accounts 463,199 4,625 1.00 474,028 994 0.21 Time deposits less than $100 480,737 18,124 3.77 349,990 13,344 3.81 Time deposits $100 or more 291,482 11,868 4.07 200,743 5,951 2.96 Total interest-bearing deposits 3,118,506 87,934 2.82 2,519,678 58,561 2.32 Short-term borrowings 37,083 1,919 5.17 38,331 1,920 5.01 Long-term debt 68,441 3,317 4.85 19,448 842 4.33 Subordinated debt 33,000 1,774 5.38 33,000 1,774 5.38 Junior subordinated debt 4,028 527 13.08 Total borrowings 142,552 7,537 5.29 90,779 4,536 5.00 Total interest-bearing liabilities 3,261,058 95,471 2.93 % 2,610,457 63,097 2.42 % Noninterest-bearing deposits 714,824 698,749 Other liabilities 106,970 44,786 Stockholders' equity 410,762 329,223 Total liabilities and stockholders' equity $ 4,493,614 95,471 $ 3,683,215 63,097 Net interest income/spread $ 118,356 2.21 % $ 88,671 1.92 % Net interest margin 2.84 % 2.54 % Tax-equivalent adjustments: Loans $ 1,955 $ 1,496 Investments 412 421 Total adjustments $ 2,367 $ 1,917 Peoples Financial Services Corp. Details of Net Interest Income and Net Interest Margin (Unaudited) (In thousands, fully taxable equivalent basis) Dec 31 Sept 30 June 30 Mar 31 Dec 31 Three months ended 2024 2024 2024 2024 2023 Net interest income: Interest income: Loans, net: Taxable $ 57,048 $ 59,412 $ 34,406 $ 34,041 $ 33,730 Tax-exempt 2,834 2,910 1,771 1,795 1,801 Total loans, net 59,882 62,322 36,177 35,836 35,531 Investments: Taxable 4,399 4,794 1,906 1,920 1,939 Tax-exempt 502 520 469 470 471 Total investments 4,901 5,314 2,375 2,390 2,410 Interest on interest-bearing balances in other banks 113 150 115 120 145 Federal funds sold 1,608 1,218 179 1,127 2,463 Total interest income 66,504 69,004 38,846 39,473 40,549 Interest expense: Deposits 24,718 26,398 18,114 18,704 18,756 Short-term borrowings 474 550 633 262 330 Long-term debt 1,389 1,389 269 270 273 Subordinated debt 444 443 444 443 444 Junior subordinated debt 267 260 Total interest expense 27,292 29,040 19,460 19,679 19,803 Net interest income $ 39,212 $ 39,964 $ 19,386 $ 19,794 $ 20,746 Loans, net: Taxable 6.04 % 6.24 % 5.25 % 5.20 % 5.08 % Tax-exempt 4.05 % 4.16 % 3.20 % 3.20 % 3.14 % Total loans, net 5.90 % 6.09 % 5.09 % 5.04 % 4.93 % Investments: Taxable 3.23 % 3.12 % 1.73 % 1.73 % 1.71 % Tax-exempt 2.29 % 2.31 % 2.19 % 2.18 % 2.14 % Total investments 3.10 % 3.02 % 1.80 % 1.80 % 1.78 % Interest-bearing balances with banks 4.93 % 5.55 % 5.28 % 5.35 % 5.51 % Federal funds sold 4.94 % 5.26 % 5.68 % 5.60 % 5.52 % Total interest-earning assets 5.51 % 5.63 % 4.58 % 4.56 % 4.49 % Interest expense: Deposits (1) 2.75 % 2.91 % 2.92 % 2.90 % 2.80 % Short-term borrowings 4.80 % 4.98 % 5.61 % 5.35 % 5.43 % Long-term debt 4.97 % 4.94 % 4.33 % 4.34 % 4.33 % Subordinated debt 5.35 % 5.34 % 5.41 % 5.40 % 5.34 % Junior subordinated debt 13.23 % 12.93 % Total interest-bearing liabilities (1) 2.88 % 3.04 % 3.01 % 2.96 % 2.86 % Net interest spread (1) 2.62 % 2.59 % 1.57 % 1.60 % 1.63 % Net interest margin 3.25 % 3.26 % 2.29 % 2.29 % 2.30 % (1) Amount for the three months ended September 30, 2024 has been revised from the previously reported amount to correct an immaterial misclassification of deposits, namely a $210.3 million understatement of noninterest-bearing deposits and overstatement of interest-bearing deposits. The misclassification had no material impact on the September 30, 2024 financial statements. Peoples Financial Services Corp. Consolidated Balance Sheets (Unaudited) (In thousands) Dec 31 Sept 30 June 30 Mar 31 Dec 31 At period end 2024 2024 2024 2024 2023 Assets: Cash and due from banks $ 47,029 $ 97,090 $ 41,234 $ 32,009 $ 33,524 Interest-bearing balances in other banks 8,593 10,286 8,722 8,259 9,141 Federal funds sold 80,229 178,093 69,700 144,700 Investment securities: Available for sale 526,329 562,486 385,240 394,413 398,927 Equity investments carried at fair value 2,430 3,921 78 91 98 Held to maturity 78,184 79,861 81,598 83,306 84,851 Total investments 606,943 646,268 466,916 477,810 483,876 Loans held for sale 803 300 250 Loans 3,993,505 4,069,683 2,869,553 2,858,412 2,849,897 Less: allowance for credit losses 41,776 39,341 23,123 22,597 21,895 Net loans 3,951,729 4,030,342 2,846,430 2,835,815 2,828,002 Goodwill 76,325 76,958 63,370 63,370 63,370 Premises and equipment, net 73,283 75,877 58,565 59,097 61,276 Bank owned life insurance 87,429 87,401 49,955 49,673 49,397 Deferred tax assets 32,006 33,078 14,460 14,241 13,770 Accrued interest receivable 15,632 17,979 13,326 13,565 12,734 Other intangible assets, net 34,197 35,907 Other assets 78,586 70,056 53,077 45,299 42,249 Total assets $ 5,091,981 $ 5,360,138 $ 3,616,055 $ 3,669,138 $ 3,742,289 Liabilities: Deposits: Noninterest-bearing (1) $ 935,516 $ 927,864 $ 620,971 $ 623,408 $ 644,683 Interest-bearing (1) 3,472,036 3,710,000 2,443,988 2,580,530 2,634,354 Total deposits 4,407,552 4,637,864 3,064,959 3,203,938 3,279,037 Short-term borrowings 15,900 37,346 104,250 20,260 17,590 Long-term debt 98,637 111,489 25,000 25,000 25,000 Subordinated debt 33,000 33,000 33,000 33,000 33,000 Junior subordinated debt 8,039 8,015 Accrued interest payable 5,503 6,829 5,507 5,327 5,765 Other liabilities 54,400 50,544 42,532 41,621 41,475 Total liabilities 4,623,031 4,885,087 3,275,248 3,329,146 3,401,867 Stockholders' equity: Common stock 19,995 19,993 14,122 14,122 14,093 Capital surplus 250,695 250,578 122,449 122,162 122,130 Retained earnings 238,955 239,021 249,511 249,123 248,550 Accumulated other comprehensive loss (40,695) (34,541) (45,275) (45,415) (44,351) Total stockholders' equity 468,950 475,051 340,807 339,992 340,422 Total liabilities and stockholders' equity $ 5,091,981 $ 5,360,138 $ 3,616,055 $ 3,669,138 $ 3,742,289 (1) Amount at September 30, 2024 has been revised from the previously reported amount to correct an immaterial misclassification of deposits, namely a $210.3 million understatement of noninterest-bearing deposits and overstatement of interest-bearing deposits. The misclassification had no material impact on the September 30, 2024 financial statements. Peoples Financial Services Corp. Loan and Asset Quality Data (Unaudited) (In thousands) At period end December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 Commercial Taxable $ 556,630 $ 616,369 $ 411,112 $ 400,439 $ 317,245 Non-taxable 279,390 273,710 220,893 224,083 226,470 Total 836,020 890,079 632,005 624,522 543,715 Real estate Commercial real estate 2,294,113 2,309,588 1,793,652 1,794,086 1,863,118 Residential 551,851 550,590 369,671 361,490 360,803 Total 2,845,964 2,860,178 2,163,323 2,155,576 2,223,921 Consumer Indirect Auto 119,704 130,380 66,792 71,675 75,389 Consumer Other 12,697 15,580 7,433 6,639 6,872 Total 132,401 145,960 74,225 78,314 82,261 Equipment Financing 179,120 173,466 Total $ 3,993,505 $ 4,069,683 $ 2,869,553 $ 2,858,412 $ 2,849,897 Dec 31 Sept 30 June 30 Mar 31 Dec 31 At quarter end 2024 2024 2024 2024 2023 Nonperforming assets: Nonaccrual/restructured loans $ 22,517 $ 20,949 $ 7,116 $ 7,056 $ 3,961 Accruing loans past due 90 days or more 458 569 656 986 Foreclosed assets 27 27 27 Total nonperforming assets $ 23,002 $ 21,545 $ 7,143 $ 7,712 $ 4,947 Dec 31 Sept 30 June 30 Mar 31 Dec 31 Three months ended 2024 2024 2024 2024 2023 Allowance for credit losses: Beginning balance $ 39,341 $ 23,123 $ 22,597 $ 21,895 $ 23,010 Merger-related adjustments - Non PCD Loans 14,328 Merger-related adjustments - PCD Loans 1,842 Charge-offs 1,108 534 135 108 2,808 Recoveries 174 452 65 102 24 Provision for credit losses 3,369 130 596 708 1,669 Ending balance $ 41,776 $ 39,341 $ 23,123 $ 22,597 $ 21,895 Peoples Financial Services Corp. Deposit and Liquidity Detail (Unaudited) (In thousands) At period end December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 Interest-bearing deposits: Money market accounts $ 936,239 $ 1,018,575 $ 690,631 $ 759,305 $ 782,243 Interest-bearing demand and NOW accounts (1) 1,238,853 1,229,083 715,890 754,673 796,426 Savings accounts 492,180 509,412 397,827 415,459 429,011 Time deposits less than $250 620,725 824,791 504,879 517,009 505,409 Time deposits $250 or more 184,039 128,139 134,761 134,084 121,265 Total interest-bearing deposits (1) 3,472,036 3,710,000 2,443,988 2,580,530 2,634,354 Noninterest-bearing deposits (1) 935,516 927,864 620,971 623,408 644,683 Total deposits $ 4,407,552 $ 4,637,864 $ 3,064,959 $ 3,203,938 $ 3,279,037 December 31, 2024 At period end Amount Percent of Total Number of accounts Average Balance Deposit Detail: Retail $ 1,779,729 40.4 % 98,583 $ 18 Commercial 1,538,757 34.9 18,675 82 Municipal 832,665 18.9 2,427 343 Brokered 256,401 5.8 28 9,157 Total Deposits $ 4,407,552 100.0 119,713 $ 37 Uninsured 1,381,492 31.3 % Insured 3,026,060 68.7 December 31, 2023 At period end Amount Percent of Total Number of accounts Average Balance Deposit Detail: Retail $ 1,358,371 41.4 % 70,334 $ 19 Commercial 1,096,547 33.4 13,433 82 Municipal 563,124 17.2 1,856 303 Brokered 260,995 8.0 24 10,875 Total Deposits $ 3,279,037 100.0 85,647 $ 38 Uninsured 883,530 26.9 % Insured 2,395,507 73.1 Total Available At December 31, 2024 Total Available Outstanding for Future Liquidity FHLB advances $ 1,680,100 $ 587,817 $ 1,092,283 Federal Reserve - Discount Window 621,462 621,462 Correspondent bank lines of credit 18,000 18,000 Other sources of liquidity: Brokered deposits 763,797 256,401 507,396 Unencumbered securities 182,170 182,170 Total sources of liquidity $ 3,265,529 $ 844,218 $ 2,421,311 (1) Amount at September 30, 2024 has been revised from the previously reported amount to correct an immaterial misclassification of deposits, namely a $210.3 million understatement of noninterest-bearing deposits and overstatement of interest-bearing deposits. The misclassification had no material impact on the September 30, 2024 financial statements. Peoples Financial Services Corp. Consolidated Balance Sheets (Unaudited) (In thousands) Dec 31 Sept 30 June 30 Mar 31 Dec 31 Average quarterly balances 2024 2024 2024 2024 2023 Assets: Loans, net: Taxable $ 3,757,273 $ 3,790,138 $ 2,637,164 $ 2,632,554 $ 2,632,865 Tax-exempt 278,429 278,496 222,655 225,293 227,800 Total loans, net 4,035,702 4,068,634 2,859,819 2,857,847 2,860,665 Investments: Taxable 541,526 611,032 443,146 446,996 450,533 Tax-exempt 87,419 89,532 86,418 86,864 87,297 Total investments 628,945 700,564 529,564 533,860 537,830 Interest-bearing balances with banks 9,116 10,820 8,763 9,025 10,432 Federal funds sold 129,517 92,171 12,672 80,955 176,983 Total interest-earning assets 4,803,280 4,872,189 3,410,818 3,481,687 3,585,910 Other assets 400,179 419,005 198,248 195,063 188,478 Total assets $ 5,203,459 $ 5,291,194 $ 3,609,066 $ 3,676,750 $ 3,774,388 Liabilities and stockholders' equity: Deposits: Interest-bearing (1) $ 3,573,321 $ 3,607,405 $ 2,496,298 $ 2,593,813 $ 2,661,156 Noninterest-bearing (1) 904,274 908,776 620,256 616,610 651,182 Total deposits 4,477,595 4,516,181 3,116,554 3,210,423 3,312,338 Short-term borrowings 39,319 43,895 45,383 19,687 24,103 Long-term debt 111,135 111,804 25,000 25,000 25,000 Subordinated debt 33,000 33,000 33,000 33,000 33,000 Junior subordinated debt 8,026 8,000 Other liabilities 56,445 96,177 48,630 47,688 52,760 Total liabilities 4,725,520 4,809,057 3,268,567 3,335,798 3,447,201 Stockholders' equity 477,939 482,137 340,499 340,952 327,187 Total liabilities and stockholders' equity $ 5,203,459 $ 5,291,194 $ 3,609,066 $ 3,676,750 $ 3,774,388 (1) Quarterly averages at September 30, 2024 have been revised from the previously reported amounts to correct an immaterial misclassification of deposits, namely a $210.3 million understatement of noninterest-bearing deposits and overstatement of interest-bearing deposits. The misclassification had no material impact on the September 30, 2024 financial statements. Peoples Financial Services Corp. Reconciliation of Non-GAAP Financial Measures (Unaudited) (In thousands, except share and per share data) Dec 31 Sept 30 June 30 Mar 31 Dec 31 Three months ended 2024 2024 2024 2024 2023 Core net income per share: Net income (loss) GAAP $ 6,087 $ (4,337) $ 3,282 $ 3,466 $ 3,630 Adjustments: Add: ACL provision for FNCB acquired legacy loans 14,328 Less: ACL provision for FNCB acquired legacy loans tax adjustment 1,885 Add: Acquisition related expenses 4,990 9,653 1,071 486 826 Less: Acquisition related expenses tax adjustment 1,089 1,270 122 59 115 Core net income $ 9,988 $ 16,489 $ 4,231 $ 3,893 $ 4,341 Average common shares outstanding - diluted 10,051,337 10,044,449 7,114,115 7,102,112 7,091,015 Core net income per share $ 0.99 $ 1.64 $ 0.59 $ 0.55 $ 0.61 Tangible book value: Total stockholders' equity $ 468,950 $ 475,051 $ 340,807 $ 339,992 $ 340,422 Less: Goodwill 76,325 76,958 63,370 63,370 63,370 Less: Other intangible assets, net 34,197 35,907 Total tangible stockholders' equity $ 358,428 $ 362,186 $ 277,437 $ 276,622 $ 277,052 Common shares outstanding 9,990,724 9,994,648 7,057,258 7,057,258 7,040,852 Tangible book value per share $ 35.88 $ 36.24 $ 39.31 $ 39.20 $ 39.35 Core return on average stockholders' equity: Net income (loss) GAAP $ 6,087 $ (4,337) $ 3,282 $ 3,466 $ 3,630 Adjustments: Add: ACL provision for FNCB acquired legacy loans 14,328 Less: ACL provision for FNCB acquired legacy loans tax adjustment 1,885 Add: Acquisition related expenses 4,990 9,653 1,071 486 826 Less: Acquisition related expenses tax adjustment 1,089 1,270 122 59 115 Core net income $ 9,988 $ 16,489 $ 4,231 $ 3,893 $ 4,341 Average stockholders' equity $ 477,939 $ 482,137 $ 340,499 $ 340,952 $ 327,187 Core return on average stockholders' equity 8.31 % 13.61 % 5.00 % 4.59 % 5.26 % Return on average tangible stockholders' equity: Net income (loss) GAAP $ 6,087 $ (4,337) $ 3,282 $ 3,466 $ 3,630 Average stockholders' equity $ 477,939 $ 482,137 $ 340,499 $ 340,952 $ 327,187 Less: average intangibles 112,399 113,032 63,370 63,370 63,380 Average tangible stockholders' equity $ 365,540 $ 369,105 $ 277,129 $ 277,582 $ 263,807 Return on average tangible stockholders' equity 6.62 % (4.67) % 4.76 % 5.02 % 5.46 % Core return on average tangible stockholders' equity: Net income (loss) GAAP $ 6,087 $ (4,337) $ 3,282 $ 3,466 $ 3,630 Adjustments: Add: ACL provision for FNCB acquired legacy loans 14,328 Less: ACL provision for FNCB acquired legacy loans tax adjustment 1,885 Add: Acquisition related expenses 4,990 9,653 1,071 486 826 Less: Acquisition related expenses tax adjustment 1,089 1,270 122 59 115 Core net income $ 9,988 $ 16,489 $ 4,231 $ 3,893 $ 4,341 Average stockholders' equity $ 477,939 $ 482,137 $ 340,499 $ 340,952 $ 327,187 Less: average intangibles 112,399 113,032 63,370 63,370 63,380 Average tangible stockholders' equity $ 365,540 $ 369,105 $ 277,129 $ 277,582 $ 263,807 Core return on average tangible stockholders' equity 10.87 % 17.77 % 6.14 % 5.64 % 6.53 % Core return on average assets: Net income (loss) GAAP $ 6,087 $ (4,337) $ 3,282 $ 3,466 $ 3,630 Adjustments: Add: ACL provision for FNCB acquired legacy loans 14,328 Less: ACL provision for FNCB acquired legacy loans tax adjustment 1,885 Add: Acquisition related expenses 4,990 9,653 1,071 486 826 Less: Acquisition related expenses tax adjustment 1,089 1,270 122 59 115 Core net income $ 9,988 $ 16,489 $ 4,231 $ 3,893 $ 4,341 Average assets $ 5,203,459 $ 5,291,194 $ 3,609,066 $ 3,676,750 $ 3,774,388 Core return on average assets 0.76 % 1.24 % 0.47 % 0.43 % 0.46 % Pre-provision net revenue (PPNR) per share: Income (Loss) before taxes (GAAP) $ 5,815 $ (4,994) $ 3,703 $ 3,944 $ 4,217 Add: ACL provision for FNCB acquired legacy loans 14,328 Add: Provision for credit losses 3,369 130 596 708 1,669 Add: Provision for credit losses on unfunded commitments 452 (785) (197) 487 (2) PPNR (non-GAAP) $ 9,636 $ 8,679 $ 4,102 $ 5,139 $ 5,884 Average common shares outstanding-diluted 10,051,337 10,044,449 7,114,115 7,102,112 7,091,015 PPNR per share (non-GAAP) $ 0.96 $ 0.86 $ 0.58 $ 0.72 $ 0.83 Core pre-provision net revenue (PPNR) per share: Income (Loss) before taxes (GAAP) $ 5,815 $ (4,994) $ 3,703 $ 3,944 $ 4,217 Add: Acquisition related expenses 4,990 9,653 1,071 486 826 Add: ACL provision for FNCB acquired legacy loans 14,328 Add: Provision for credit losses 3,369 130 596 708 1,669 Add: Provision for credit losses on unfunded commitments 452 (785) (197) 487 (2) Core PPNR (non-GAAP) $ 14,626 $ 18,332 $ 5,173 $ 5,625 $ 6,710 Average common shares outstanding-diluted 10,051,337 10,044,449 7,114,115 7,102,112 7,091,015 Core PPNR per share (non-GAAP) $ 1.46 $ 1.83 $ 0.73 $ 0.79 $ 0.95 (1) Current quarter tax adjustments use a rate of 21.8%, prior quarters use the effective tax rate for the quarter. Peoples Financial Services Corp. Reconciliation of Non-GAAP Financial Measures (Unaudited) (In thousands, except share and per share data) Dec 31 Dec 31 Twelve months ended 2024 2023 Core net income per share: Net income GAAP $ 8,498 $ 27,380 Adjustments: Add: ACL provision for FNCB acquired legacy loans 14,328 Less: ACL provision for FNCB acquired legacy loans tax adjustment 3,126 Less: Gain on sale of available for sale securities 1 81 Add: Gain on sale of available for sale securities tax adjustment 17 Add: Acquisition related expenses 16,200 1,816 Less: Acquisition related expenses tax adjustment 3,534 278 Core net income $ 32,365 $ 28,854 Average common shares outstanding - diluted 8,586,035 7,151,471 Core net income per share $ 3.77 $ 4.03 Core return on average stockholders' equity: Net income GAAP $ 8,498 $ 27,380 Adjustments: Add: ACL provision for FNCB acquired legacy loans 14,328 Less: ACL provision for FNCB acquired legacy loans tax adjustment 3,126 Less: Gain on sale of available for sale securities 1 81 Add: Gain on sale of available for sale securities tax adjustment 17 Add: Acquisition related expenses 16,200 1,816 Less: Acquisition related expenses tax adjustment 3,534 278 Core net income $ 32,365 $ 28,854 Average stockholders' equity 410,762 329,223 Core return on average stockholders' equity 7.88 % 8.76 % Return on average tangible stockholders' equity: Net income GAAP $ 8,498 $ 27,380 Average stockholders' equity 410,762 329,223 Less: average intangibles 88,043 63,406 Average tangible stockholders' equity $ 322,719 $ 265,817 Return on average tangible stockholders' equity 2.63 % 10.30 % Core return on average tangible stockholders' equity: Net income GAAP $ 8,498 $ 27,380 Adjustments: Add: ACL provision for FNCB acquired legacy loans 14,328 Less: ACL provision for FNCB acquired legacy loans tax adjustment 3,126 Less: Gain on sale of available for sale securities 1 81 Add: Gain on sale of available for sale securities tax adjustment 17 Add: Acquisition related expenses 16,200 1,816 Less: Acquisition related expenses tax adjustment 3,534 278 Core net income $ 32,365 $ 28,854 Average stockholders' equity 410,762 329,223 Less: average intangibles 88,043 63,406 Average tangible stockholders' equity $ 322,719 $ 265,817 Core return on average tangible stockholders' equity 10.03 % 10.85 % Core return on average assets: Net income GAAP $ 8,498 $ 27,380 Adjustments: Add: ACL provision for FNCB acquired legacy loans 14,328 Less: ACL provision for FNCB acquired legacy loans tax adjustment 3,126 Less: Gain on sale of available for sale securities 1 81 Add: Gain on sale of available for sale securities tax adjustment 17 Add: Acquisition related expenses 16,200 1,816 Less: Acquisition related expenses tax adjustment 3,534 278 Core net income $ 32,365 $ 28,854 Average assets 4,493,614 3,683,215 Core return on average assets 0.72 % 0.78 % Pre-provision net revenue (PPNR) per share: Income before taxes (GAAP) $ 8,468 $ 32,501 Add: ACL provision for FNCB acquired legacy loans 14,328 Add: Provision for credit losses 4,803 566 Add: Provision for credit losses on unfunded commitments (43) (2) PPNR (non-GAAP) $ 27,556 $ 33,065 Average common shares outstanding-diluted 8,586,035 7,151,471 PPNR per share (non-GAAP) $ 3.21 $ 4.62 Core pre-provision net revenue (PPNR) per share: Income before taxes (GAAP) $ 8,468 $ 32,501 Add: ACL provision for FNCB acquired legacy loans 14,328 Add: Acquisition related expenses 16,200 1,816 Add: Provision for credit losses 4,803 566 Add: Provision for credit losses on unfunded commitments (43) (2) Core PPNR (non-GAAP) $ 43,756 $ 34,881 Average common shares outstanding-diluted 8,586,035 7,151,471 Core PPNR per share (non-GAAP) $ 5.10 $ 4.88 (1) Above tax adjustments use a rate of 21.8% and 15.3% for 2024 and 2023, respectively. Peoples Financial Services Corp. Reconciliation of Non-GAAP Financial Measures (Unaudited) (In thousands, except share and per share data) The following tables reconcile the non-GAAP financial measures of FTE net interest income for the three and twelve months ended December 31, 2024 and 2023: Three months ended December 31 2024 2023 Interest income (GAAP) $ 65,803 $ 40,072 Adjustment to FTE 701 477 Interest income adjusted to FTE (non-GAAP) 66,504 40,549 Interest expense 27,292 19,803 Net interest income adjusted to FTE (non-GAAP) $ 39,212 $ 20,746 Twelve months ended December 31 2024 2023 Interest income (GAAP) $ 211,460 $ 149,851 Adjustment to FTE 2,367 1,917 Interest income adjusted to FTE (non-GAAP) 213,827 151,768 Interest expense 95,471 63,097 Net interest income adjusted to FTE (non-GAAP) $ 118,356 $ 88,671 The efficiency ratio is noninterest expenses, less amortization of intangible assets and acquisition related costs, as a percentage of FTE net interest income plus noninterest income. The following tables reconcile the non-GAAP financial measures of the efficiency ratio to GAAP for the three and twelve months ended December 31, 2024 and 2023: Three months ended December 31 2024 2023 Efficiency ratio (non-GAAP): Noninterest expense (GAAP) $ 34,998 $ 17,598 Less: Amortization of intangible assets expense 1,702 19 Less: Acquisition related expenses 4,990 826 Noninterest expense (non-GAAP) 28,306 16,753 Net interest income (GAAP) 38,511 20,269 Plus: Taxable equivalent adjustment 701 477 Noninterest income (GAAP) 5,671 3,215 Less: Net (losses) gains on equity securities (23) 6 Net interest income (FTE) plus noninterest income (non-GAAP) $ 44,906 $ 23,955 Efficiency ratio (non-GAAP) 63.03 % 69.94 % Twelve months ended December 31 2024 2023 Efficiency ratio (non-GAAP): Noninterest expense (GAAP) $ 106,726 $ 67,820 Less: Amortization of intangible assets expense 3,367 105 Less: Acquisition related expenses 16,200 1,816 Noninterest expense (non-GAAP) 87,159 65,899 Net interest income (GAAP) 115,989 86,754 Plus: Taxable equivalent adjustment 2,367 1,917 Noninterest income (GAAP) 18,336 14,133 Less: Net gains (losses) on equity securities 132 (11) Less: Gains on sale of available for sale securities 1 81 Net interest income (FTE) plus noninterest income (non-GAAP) $ 136,559 $ 102,734 Efficiency ratio (non-GAAP) 63.83 % 64.15 % SOURCE Peoples Financial Services Corp. 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PEOPLES FINANCIAL SERVICES CORP. Reports Unaudited Fourth Quarter and Year to Date 2024 Earnings

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