Peoples Financial Services (PFIS) - 2025 Q3 - Quarterly Report

Financial Performance - For the nine months ended September 30, 2025, net income was $47.2 million, or $4.69 per diluted share, compared to $2.4 million, or $0.30 per diluted share for the same period in 2024, reflecting a significant increase in net interest income[222]. - The company's net interest income for the nine months ended September 30, 2025, increased by $45.4 million to $122.9 million, primarily due to the FNCB merger and net accretion impact of $11.2 million[222]. - Noninterest income for the nine months ended September 30, 2025, was $18.0 million, an increase of $5.3 million from $12.7 million in the same period of 2024[222]. - For the three months ended September 30, 2025, net interest income increased by $1.9 million to $41.9 million compared to $40.0 million in 2024[233]. - Net interest income for the three months ended September 30, 2025, was $41,897 thousand, with a net interest margin of 3.54%[246]. Asset and Liability Management - Total assets increased by $68.0 million, or 1.8% annualized, totaling $5.2 billion at September 30, 2025[168]. - Total loans increased by $22.9 million, or 0.8% annualized, totaling $4.0 billion at September 30, 2025[179]. - Total deposits decreased by $117.8 million, or 3.6% annualized, to $4.3 billion at September 30, 2025, from $4.4 billion at December 31, 2024[191]. - Total borrowings increased by $149.0 million to $304.6 million at September 30, 2025, compared to $155.6 million at December 31, 2024[196]. - Total short-term borrowings increased by $60.4 million to $76.3 million at September 30, 2025[170]. Equity and Capital - Total stockholders' equity increased by $40.3 million to $509.3 million at September 30, 2025, largely due to net income[171]. - Stockholders' equity increased to $509.3 million, or $50.95 per share, as of September 30, 2025, up from $469.0 million, or $46.94 per share at December 31, 2024[217]. - The company's Tier 1 capital to total average assets ratio was 10.31% as of September 30, 2025, compared to 8.37% at December 31, 2024, indicating improved capital adequacy[220]. Interest Rate Risk Management - The company's interest rate risk position is well-matched for both rising and falling interest rate environments in the first twelve months, with a sustained falling rate presenting the greatest potential risk to NII over the long term[264]. - The ALCO reported that exposure to changing interest rates remained within established tolerance levels as of September 30, 2025[262]. - A 100 basis point increase in interest rates is projected to decrease NII by 0.1% for the 12 months ending September 30, 2025[267]. - The company’s strategy includes managing interest rate risk through the pricing and structure of loans and deposits, as well as off-balance sheet interest rate contracts[260]. - The ALCO regularly reviews interest rate shift scenarios, including changes of up to 400 basis points, to evaluate interest rate risk exposure[265]. Credit Quality - Total nonperforming assets decreased by $6.2 million to $16.8 million, or 0.33% of total assets, at September 30, 2025, down from $23.0 million, or 0.45% at December 31, 2024[185]. - Nonaccrual loans decreased by $8.1 million to $14.4 million at September 30, 2025, from $22.5 million at December 31, 2024[186]. - The allowance for credit losses was $39.8 million, or 0.99% of loans, net, at September 30, 2025, down from $41.8 million, or 1.05% at December 31, 2024[188]. - The provision for credit losses recorded a credit of $0.8 million in Q3 2025, a positive variance of $15.3 million compared to a provision of $14.5 million in Q3 2024[221]. Operational Efficiency - The efficiency ratio improved to 55.4% for the nine months ended September 30, 2025, compared to 64.2% for the same period in 2024[255]. - The efficiency ratio (non-GAAP) for the three months ended September 30, 2025, was 56.52%, an increase from 53.13% in 2024[230]. - Noninterest expense decreased by $6.8 million to $28.7 million for the three months ended September 30, 2025, from $35.5 million for the same period in 2024, primarily due to reduced acquisition-related expenses[253]. Investment Portfolio - Average investments for the nine months ended September 30, 2025, increased by $52.0 million, or 8.8%, to $640.7 million compared to the same period last year[176]. - The FTE yield on the investment portfolio increased by 82 basis points to 3.11% for the nine months ended September 30, 2025[176]. - The yield on the taxable investment portfolio increased by 91 basis points to 3.21% during the nine months ended September 30, 2025, resulting in an increase of $3.7 million in interest income[242]. Dividends and Shareholder Returns - The company declared dividends of $1.86 per share for the nine months ended September 30, 2025, up from $1.44 per share for the same period in 2024[218].