Peoples Financial Services Corp. Reports Unaudited Third Quarter and Year to Date 2026 Earnings

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 and nine months ended September 30, 2026.

Peoples reported net income of $19.1 million, or $1.90 per diluted share for the three months ended September 30, 2026, an increase of $3.9 million compared to net income of $15.2 million, or $1.51 per diluted share for the three months ended September 30, 2025. Net income for the nine months ended September 30, 2026 totaled $48.7 million, or $4.85 per diluted share, an increase of $1.5 million, compared to $47.2 million, or $4.69 per diluted share for the same nine months of 2025. Return on average assets (“ROAA”) and return on average equity (“ROAE”) on an annualized basis for the three months ended September 30, 2026, were 1.41% and 14.07%, respectively, compared to 1.19% and 12.02%, respectively, for the three months ended September 30, 2025. For the nine months ended September 30, 2026, annualized ROAA and ROAE were 1.23% and 12.16%, respectively, compared to 1.25% and 12.86%, respectively, for the nine months ended September 30, 2025. The increase in net income for both the three- and nine-month periods was primarily attributable to higher net interest income and non-interest income, partially offset by increases in non-interest expense. For the three-month period ending September 30, 2026, there was a benefit of credit losses whereas the nine-month period recognized a provision of credit losses that partially offset the increase in net income for the year-to-date period.

“We are pleased with our strong third-quarter performance, highlighted by meaningful growth in net income and improved returns on both assets and equity. Higher net interest income and non-interest income reflect the strength of our core business, the dedication of our team, and our disciplined execution” commented Gerard A. Champi, President & CEO. “These results underscore the resilience and strength of our franchise and our continued focus on creating long-term value for our shareholders. As we move forward, we remain committed on delivering consistent financial performance while continuing to invest in our customers, employees, and the communities we serve.” concluded Mr. Champi.

In addition to evaluating its results of operations in accordance with U.S. generally accepted accounting principles (“GAAP”), Peoples routinely supplements its evaluation with an analysis of certain non-GAAP financial measures, such as tangible stockholders’ equity, core net income, and tax-equivalent net interest income and related ratios, among others. The reported results included in this release contain items, which Peoples considers non-core, namely net gains and losses on the sale of available for sale investment securities and acquisition-related expenses. Peoples believes the reported non-GAAP financial measures provide information useful to investors in understanding its operating performance and trends. Where non-GAAP disclosures are used in this press release, a reconciliation to the comparable GAAP measure is provided in the accompanying tables. The non-GAAP financial measures Peoples uses may differ from the non-GAAP financial measures of other financial institutions and should not be viewed as a substitute for GAAP.

NOTABLES

• On a linked quarter basis, total loans increased $60.7 million, or 5.6% annualized, to $4.4 billion as of September 30, 2026, from $4.3 billion as of June 30, 2026, and increased $347.1 million, or 8.6% annualized, from $4.0 billion as of September 30, 2025.

• Nonperforming assets were $10.3 million as of September 30, 2026, an improvement of $4.4 million from $14.7 million as of June 30, 2026, and $6.5 million from $16.8 million at September 30, 2025. Nonperforming assets represented 0.24% of loans, net and foreclosed assets as of September 30, 2026, versus 0.34% and 0.42% of loans, net and foreclosed assets as of June 30, 2026 and September 30, 2025, respectively.

• On a linked quarter basis, total deposits increased $163.3 million, or 14.4% annualized, to $4.7 billion as of September 30, 2026, from $4.5 billion as of June 30, 2026, and increased $382.4 million, or 8.9%, from $4.3 billion as of September 30, 2025.

• Book value per common share at September 30, 2026, increased $1.92 to $52.87 from $50.95 at September 30, 2025. Tangible book value per common share, a non-GAAP measure¹, increased $2.52 to $42.95 at September 30, 2026, compared to $40.43 at September 30, 2025.

INCOME STATEMENT REVIEW

• Net income increased $3.9 million, or 25.5%, to $19.1 million from $15.2 million in the year ago quarter and $4.3 million, or 29.2%, from $14.8 million for the three months ending June 30, 2026. Net income increased to $48.7 million, or 3.1%, from $47.2 million for the nine months ending September 30, 2026, and 2025, respectively.

• Net interest margin (“NIM”), calculated on a fully taxable equivalent (“FTE”) basis, a non-GAAP measure¹, for the three months ended September 30, 2026, improved 26 basis points to 3.80% as compared to 3.54% for the three months ended September 30, 2025, but contracted 2 basis points from 3.82% for the three months ended June 30, 2026. For the nine months ended September 30, the FTE NIM, a non-GAAP measure¹, improved 19 basis points to 3.77% in 2026 from 3.58% in 2025.

• The FTE yield on interest-earning assets, a non-GAAP measure¹, for the three months ended September 30, 2026, increased 15 basis points to 5.71% from 5.56% from the three months ended September 30, 2025, and increased 7 basis points from 5.64% for the three months ended June 30, 2026. For the nine months ended September 30, 2026, the FTE yield on interest-earning assets, a non-GAAP measure¹, was 5.62%, an increase of 4 basis points from 5.58% for the nine months ended September 30, 2025.

• The cost of funds, which represents the average rate paid on total interest-bearing liabilities, decreased 15 basis points to 2.49% from 2.64% for the three months ended September 30, 2026, and 2025 respectively. The cost of funds increased 9 basis points from 2.40% from the three months ended June 30, 2026. For the nine-month periods ended September 30, the cost of funds was 2.43% in 2026, a reduction of 18 basis points compared to 2.61% for 2025.

• The cost of interest-bearing deposits decreased 13 basis points to 2.26% for the three months ended September 30, 2026, from 2.39% as of the three months ended September 30, 2025, but increased 12 basis points from 2.14% for the three months ended June 30, 2026. For the nine months ended September 30, 2026, the cost of interest-bearing deposits decreased 23 basis points to 2.19% from 2.42% for the same nine months of 2025.

• The cost of total deposits, which includes the impact of noninterest-bearing deposits, was 1.79% for the third quarter of 2026, a decrease of 9 basis points from 1.88% for the third quarter of 2025. However, the cost of total deposits increased 11 basis points compared to 1.68% for the second quarter of 2026. The cost of deposits for the nine months ended September 30, 2026, was 1.72%, a decrease of 20 basis points from 1.92% for the comparable period of 2025.

Third Quarter 2026 Results – Comparison to Second Quarter 2026 and Third Quarter 2025

Net interest income increased $6.1 million to $47.3 million for the third quarter of 2026, compared to $41.2 million for the prior year third quarter. FTE net interest income, a non-GAAP measure¹, increased $6.4 million to $48.3 million as of September 30, 2026, from $41.9 million at September 30, 2025. Specifically, the increase in FTE net interest income, a non-GAAP measure¹, resulted largely from a $6.5 million increase in FTE interest income, while interest expense increased modestly by $0.2 million. The increase in interest income reflected improved earning asset yields and an increase in loan volume, while lower deposit and borrowing costs almost entirely offset the impact of growth in interest-bearing liabilities on interest expense. Linked quarter net interest income increased $1.7 million from $45.6 million at June 30, 2026. FTE net interest income for the linked quarters increased $1.8 million from $46.5 million in June 2026, which was due to a $3.8 million increase in FTE interest income, partially offset by a $2.0 million increase in interest expense. The linked quarters saw increases in funding costs as the Company utilized CD specials, brokered deposits and FHLB advances to fund loan growth.

For the three months ended September 30, 2026, the Company recorded a benefit for credit losses of $1.1 million, compared to a benefit of $0.8 million for the same period in 2025, and a provision of $3.1 million for the second quarter of 2026. The reduction in credit provisioning reflected improved asset quality metrics, seasoning of the equipment loan segment and lower specific reserves resulting from the successful resolution of nonperforming loans.

Noninterest income was $5.7 million and $5.5 million for the three months ended September 30, 2026, and 2025, respectively. The Company recorded a loss on the sales of administrative offices of $0.6 million in the third quarter of 2025. There were no such losses recorded during the third quarter of 2026. Non-interest income decreased $0.8 million from $6.5 million for the linked quarter ending June 30, 2026, primarily due to decreases in merchant services and service charges and the absence of the $0.3 million gain on the sale of a branch property that was part of a sale/leaseback transaction in the second quarter of 2026.

The current quarter’s non-interest expense increased $3.0 million to $31.7 million from the prior year’s same quarter non-interest expense of $28.7 million. Salaries and employee benefits increased $1.5 million associated with merit increases, staff additions, and higher benefit costs. Other expenses increased $1.1 million primarily due to increases in corporate business development and professional fees. Noninterest expense increased by $1.1 million from $30.6 million for the quarter ended June 30, 2026. Salaries increased $0.5 million, which primarily reflected staff additions and higher stock-based compensation expenses. Occupancy and equipment expenses increased $0.4 million resulting from higher data processing expenses. The efficiency ratio, a non-GAAP measure¹, was 56.12% for the quarter ended September 30, 2026, an increase as compared to 55.16% for the linked quarter ended June 30, 2026, but an improvement from 56.52% from the prior year quarter ended September 30, 2025.

Income tax expense was $3.3 million for the three months ended September 30, 2026, compared to $3.6 million for the three months ended September 30, 2025, and $3.6 million for the three months ended June 30, 2026. The effective tax rate was 14.6% for the three months ended September 30, 2026, 19.1% for the quarter ended September 30, 2025, and 19.6% for the three months ended June 30, 2026. The decrease in the effective tax rate for the current quarter was largely due to the purchase of 2025 federal tax credits during the three months ended September 30, 2026, which reduced income tax expense by $1.2 million.

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

Net interest income for the nine months ended September 30, 2026, increased $12.9 million to $135.8 million from $122.9 million for the nine months ended September 30, 2025. On an FTE basis, net interest income for the nine months ended September 30, 2026, increased $13.4 million to $138.5 million from $125.1 million for the nine months ended September 30, 2025. The increase in FTE net interest income was due to an $11.6 million increase in tax-equivalent interest income, a non-GAAP measure¹, coupled with a $1.8 million decrease in interest expense. The Company’s net interest spread widened 22 basis points to 3.19% for the nine months ended September 30, 2026 from 2.97% for the same nine-month period of 2025. Additionally, comparing the nine months ended September 30, 2026 and 2025, the Company’s FTE net interest margin improved by 19 basis points to 3.77% from 3.58%, respectively.

The increase in fully tax-equivalent interest income was driven primarily by higher earning asset balances, particularly taxable loans, and by higher balances and yields on tax-exempt investment securities. Lower overall FTE yields, mainly on taxable investments, partially offset these benefits.

Total average earning assets increased $241.4 million to $4.9 billion for the nine months ended September 30, 2026, from $4.7 billion for the same nine months of 2025. Average taxable loans increased $245.4 million to $4.0 billion from $3.7 billion comparing the nine months ended September 30, 2026, and 2025, respectively. The yield on taxable loans decreased 10 basis points to 6.03% from 6.13% between the two periods, which primarily reflected a 75 basis point reduction in the prime rate during the second half of 2025 offset slightly by the increase of 25 basis points in September 2026. Accretion associated with purchase accounting fair value discounts on purchased loans was $9.5 million for the nine months ended September 30, 2026, compared to $12.2 million for the same period of 2025. Average tax-exempt investments totaled $157.6 million for the nine months ended September 30, 2026, an increase of $66.7 million from $90.9 million for the same nine-month period ended September 30, 2025, while taxable investments averaged $430.9 million at September 30, 2026, compared to $549.8 million at September 30, 2025. Average interest earning deposits increased by $58.1 million to $100.9 million at September 30, 2026, from $42.8 million at September 30, 2025. The FTE yield on investments increased 76 basis points to 3.87% for the nine months ended September 30, 2026, from 3.11% for the same nine months of 2025.

Interest expense decreased $1.8 million to $68.2 million for the nine months ended September 30, 2026, compared with $70.0 million for the same period in 2025, primarily due to lower average deposit rates overall, coupled with a reduction in average small dollar time deposits, which offset net balance increases in the non-maturing deposit portfolio. These benefits were partially offset by higher average balances on borrowings and subordinated debt exceeding reductions in borrowing rates. The average rate paid on interest-bearing deposits decreased 23 basis points to 2.19% from 2.42%, reflecting lower market rates in 2026 in addition to lower costs related to interest bearing demand accounts when compared to 2025.

Average small dollar time deposits, which include brokered deposits, decreased $68.5 million to $321.3 million, for the nine months ended September 30, 2026, from $389.8 million for the nine months ended September 30, 2025. The average rate paid for small dollar time deposits decreased 53 basis points to 3.29% from 3.82% for the nine months ended September 30, 2026, and 2025, respectively, partially the result of a reduction of $50.9 million in average brokered deposits, which the Company let roll off at maturity. These higher-costing deposits were replaced with lower cost non-maturing deposits and borrowings. Average subordinated debt increased $25.9 million to $83.3 million for the nine months ended September 30, 2026, from $57.4 million for the same period in 2025, while the average rate paid on subordinated debt increased 93 basis points to 8.42% from 7.49% for the periods ended September 30, 2026, and 2025, respectively, due to a net new issuance of subordinated debt in the second quarter of 2025 in the amount of $52 million.

For the nine months ended September 30, 2026, the provision for credit losses was $3.3 million, an increase of $4.2 million from a $0.9 million benefit recorded for the same nine months of 2025. The increase in loan provisioning in the first nine months of 2026 was primarily impacted by significant loan growth, while the benefit in the first nine months of the prior year reflected reductions in non-accrual assets and declines in model loss rates.

Noninterest income was $19.1 million and $18.0 million for the nine months ended September 30, 2026, and 2025, respectively. The $1.1 million increase in noninterest income was primarily due to increases in interest rate swap income of $0.6 million, along with combined net gains of $0.5 million on the sale of investment securities available for sale, a $0.3 million gain on the sale and market value appreciation of equity securities and a $0.4 million increase in mortgage banking income, partially offset by a decrease in service charge, fee, and commission income of $0.7 million. The current nine-month period ended September 30, 2026, includes a gain on the sale of a branch property of $0.3 million that was part of the aforementioned sale/leaseback transaction. The comparable prior year period included a loss of $0.6 million on the sales of administrative offices, offset by gain of $0.7 million on the sale of the Company’s former corporate headquarters in Scranton, PA.

Noninterest expense increased $7.9 million to $92.2 million for the nine months ended September 30, 2026, from $84.3 million for the nine months ended September 30, 2025. This increase is primarily due to increases in salaries and employee benefits expenses, occupancy and equipment expenses, and other expenses. Salaries and employee benefits expense was $45.2 million for the nine months ended September 30, 2026, compared to $41.4 million for the same nine months in 2025. The $3.8 million increase resulted primarily from annual merit increases, staff additions and higher health insurance costs. Net occupancy and equipment expenses were $22.7 million for the first nine months of 2026, an increase of $2.6 million from $20.1 million for the same nine-month period in 2025. The increase was largely caused by higher rent expenses associated with the new corporate headquarters and increases in data processing expenses related to the implementation of an on-line account opening platform. Other expenses increased $2.6 million to $17.7 million from $15.1 million for the nine months ending September 30, 2025. This increase in other expenses includes an increase in advertising, corporate business development, and legal expenses. The efficiency ratio, a non-GAAP measure¹, was 56.10% in 2026 and 55.38% for the nine months ended September 30, 2026, and 2025, respectively.

Income tax expense was $10.7 million for the nine months ended September 30, 2026, compared to $10.3 million for the nine months ended September 30, 2025. The effective tax rate was 18.0% for the nine months ended September 30, 2026, and 17.9% in the prior year’s same nine-month period.

BALANCE SHEET REVIEW

Total loans were $4.4 billion at September 30, 2026, an increase of $60.7 million compared to $4.3 billion at June 30, 2026, and an increase of $347.1 million compared to $4.0 billion at September 30, 2025. Comparing September 30, 2026, and 2025, the Company saw strong demand in all markets for commercial and residential real estate loans, commercial and industrial loans, and municipal loans, with decreases seen in the Company’s equipment financing and indirect auto loan portfolio. Comparing September 30, 2026, to June 30, 2026, increases were observed in the commercial and industrial portfolio and in the commercial and residential real estate portfolio. Consumer loans and the equipment financing portfolios were relatively flat, while the indirect auto portfolio decreased.

Total investments were $510.2 million at September 30, 2026, compared to $529.6 million at June 30, 2026, and $610.3 million at September 30, 2025. At September 30, 2026, available for sale securities totaled $440.8 million, a decrease of $17.3 million from $458.1 million at June 30, 2026, and a decrease of $93.7 million from $534.5 million at September 30, 2025. Held to maturity securities totaled $66.7 million at September 30, 2026, a decrease of $2.1 million from $68.8 million at June 30, 2026, and a decrease of $6.6 million from $73.3 million at September 30, 2025. Due to strong loan demand, cash flows from repayments of investment securities and a portion of the proceeds from sales of investments during the first three months of 2026 were redirected and used to fund loan growth.

Total deposits were $4.7 billion at September 30, 2026, an increase of $163.3 million from $4.5 billion at June 30, 2026, and an increase of $382.4 million from $4.3 billion at September 30, 2025. Noninterest-bearing deposits increased $24.5 million to $971.0 million at September 30, 2026, from $946.5 million at June 30, 2026, and increased $59.1 million from $912.0 million at September 30, 2025. Interest-bearing deposits increased $138.7 million to $3.7 billion from $3.6 billion at June 30, 2026, and increased $323.4 million from $3.4 billion at September 30, 2025, primarily reflecting a strategic deposit growth effort which offset a decrease in brokered deposits. Brokered deposits represented 5.4% of total deposits at September 30, 2026, and 7.7% of total deposits at June 30, 2026, compared with 3.9% at September 30, 2025. Approximately 34.8% of deposits were uninsured at September 30, 2026, compared with 31.0% uninsured at June 30, 2026, and 32.3% at September 30, 2025.

The Company maintained a strong capital position at September 30, 2026. Stockholders’ equity equaled $529.3 million or $52.87 per share at September 30, 2026, compared to $536.2 million or $53.56 per share at June 30, 2026, and $509.3 million, or $50.95 per share at September 30, 2025. Stockholders’ equity was impacted by net income, offset by dividends to shareholders and an increase in accumulated other comprehensive loss primarily due to market rate adjustments related to available for sale investments.

Tangible book value, a non-GAAP measure¹ was $42.95 per share at September 30, 2026, $43.51 per share at June 30, 2026, and $40.43 at September 30, 2025. The Company declared quarterly dividends of $0.625 for each quarter of 2026 and $0.6175 for the quarter ending September 30, 2025. Dividends for the year totaled $1.875 per share for 2026 and $1.853 per share for 2025.

ASSET QUALITY REVIEW

The Company experienced strong improvement in asset quality during the three- and nine-month periods of 2026. Nonperforming assets, which include nonperforming loans, loans past due 90 days or more and still accruing, and foreclosed assets, were $10.3 million or 0.24% of loans, net and foreclosed assets, at September 30, 2026, a $4.4 million decrease compared to $14.7 million, or 0.34% of loans, net and foreclosed assets at June 30, 2026. The linked-quarter decrease was primarily due to favorable resolutions of several nonaccrual assets during the third quarter of 2026. In comparison to the prior year period, nonperforming assets decreased $6.5 million from $16.8 million, or 0.42% of loans, net and foreclosed assets at September 30, 2025, primarily reflecting a $4.3 million reduction in nonaccrual loans and the final resolution of a foreclosed property. Nonperforming assets represented 0.19% of total assets at September 30, 2026, compared to 0.27% at June 30, 2026, and 0.33% at September 30, 2025.

During the three months ended September 30, 2026, net charge-offs were $0.4 million and the benefit for credit losses was $1.1 million, compared to net charge-offs of $0.2 million and a benefit for credit losses of $0.8 million for the same period of 2025. For the nine months ended September 30, 2026, net charge-offs were $1.6 million and the provision for credit losses was $3.3 million, compared to net charge-offs of $1.1 million and a benefit for credit losses of $0.9 million for the same nine months of 2025. The allowance for credit losses equaled $40.8 million or 0.93% of loans, net, as of September 30, 2026, compared to $42.3 million or 0.98% of loans, net, as of June 30, 2026, and $39.8 million or 0.99% of loans, net as of September 30, 2025.

About Peoples:

Peoples Financial Services Corp. is the bank holding company of Peoples Security Bank and Trust Company, an independent community bank serving its retail and commercial customers through 40 full-service community banking offices located within Allegheny, Bucks, Lackawanna, Lancaster, Lebanon, Lehigh, Luzerne, Monroe, Montgomery, Northampton, Susquehanna, Wayne and Wyoming Counties in Pennsylvania, Middlesex County in New Jersey and Broome County in New York. Each office, interdependent with the community, offers a comprehensive array of financial products and services to individuals, businesses, not-for-profit organizations, and government entities. Peoples’ business philosophy includes offering direct access to senior management and other officers and providing friendly, informed and courteous service, and local and timely decision making. For more information visit psbt.com.

Safe Harbor Forward-Looking Statements:

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to risks and uncertainties. These statements are based on assumptions and may describe future plans, strategies and expectations of Peoples Financial Services Corp. and its subsidiaries (the “Company”) that are subject to significant risks and uncertainties and are subject to change based on various factors (some of which are beyond the Company’s control). These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions. All statements in this release, other than statements of historical facts, are forward-looking statements.

The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Important factors that could cause the Company’s actual results to differ materially from those in the forward-looking statements include, but are not limited to: changes in interest rates, including their effect on the Company’s investment values; impairment charges relating to the Company’s investment portfolio; credit risks in connection with the Company’s lending activities; the Company’s exposure to commercial and industrial, construction, commercial real estate, and equipment finance loans; the Company’s ability to maintain an adequate allowance for credit losses; access to liquidity; the strength of the Company’s customer deposit levels; unrealized losses; reliance on the Company’s subsidiaries; accounting procedures, policies and requirements; changes in the value of goodwill; the Company’s ability to attract and retain key personnel; the strength of the Company’s disclosure controls and procedures and internal controls over financial reporting; potential for errors, omissions or fraud; environmental liabilities; reliance on third-party vendors and service providers; the Company’s ability to compete effectively in the Company’s industry and within the Company’s market area, including with respect to competition from financial technology companies and non-bank entities; the development and use of artificial intelligence (“AI”) in business processes, services, and products, including emerging focus among regulators and other officials related to risks in connection with the development and use of AI; the Company’s ability to prevent, detect and respond to cybersecurity threats and incidents; a failure of information technology, whether due to a breach, cybersecurity incident, or ability to keep pace with growth and developments; the Company’s ability to comply with privacy and data protection requirements; changes in U.S. or regional economic conditions; the soundness of other financial institutions; changes in laws and regulations; geopolitical instability, including wars and other conflicts; fiscal and monetary policies of the federal government and its agencies; a failure to meet minimum capital requirements; the Company’s ability to realize the anticipated benefits of future acquisitions or a change in control; and the Company’s ability to pay dividends. Additional factors that may affect the Company’s results are discussed in the Company’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission from time to time.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Except as required by applicable law or regulation, the Company does not undertake, and specifically disclaims any obligation, to release publicly the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

[TABULAR MATERIAL FOLLOWS]

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%.