Executive Summary

Q1 2025 delivered a clean beat: Primary EPS was $1.51 vs Wall Street consensus $1.33*; GAAP diluted EPS was $1.49. “Revenue” (Street definition) was $44.75M vs $44.30M consensus*, with net interest income up quarter-over-quarter and operating costs normalizing .
Net interest margin expanded 25 bps to 3.50% as deposit costs fell 24–29 bps; efficiency ratio improved to 55.77% from 63.03% in Q4 2024, driving higher PPNR and ROA/ROE .
Credit stayed benign: provision fell to $0.2M (from $3.4M), ACL/loans held ~1.03%, and NPAs ticked slightly to 0.59% of loans + foreclosed assets .
Offsets: total deposits declined $90.6M on seasonal outflows and brokered CD reduction; loans were essentially flat (-$2.0M) .
Potential stock reaction catalysts: sustained NIM tailwind from deposit repricing, continued expense normalization, and stable credit metrics following the FNCB integration .

What Went Well and What Went Wrong

What Went Well
- NIM and funding costs: “Net interest margin… was 3.50%… an increase of 25 bps… cost of funds decreased 30 bps to 2.58%… cost of interest-bearing deposits decreased 29 bps… cost of total deposits… 1.96%” .
- Expense normalization and stronger core profitability: noninterest expense fell $7.4M q/q (ex-M&A, down $2.6M); efficiency ratio improved to 55.77% .
- Provision relief and solid returns: provision dropped to $0.2M; ROA/ROE improved to 1.22%/12.70% (core ROA/ROE 1.23%/12.80%) .
What Went Wrong
- Deposit and balance pressure: deposits fell $90.6M q/q on seasonal outflows and fewer brokered CDs; loans declined $2.0M .
- Modest uptick in NPAs: nonperforming assets rose to $23.7M (0.59% of loans + foreclosed assets) vs $23.0M (0.58%) in Q4 2024 .
- One-time income contribution: $680K gain on sale of fixed assets boosted noninterest income, a non-recurring benefit .

Financial Results

Performance vs prior year and prior quarter

Metric	Q1 2024 (YoY)	Q4 2024 (QoQ)	Q1 2025 (Current)
GAAP Diluted EPS ($)	$0.49	$0.61	$1.49
Core EPS ($)	$0.55	$0.99	$1.51
“Revenue” ($M)	n/a	$44.22*	$44.75*
Net Interest Income ($M)	$19.32	$38.51	$39.55
Noninterest Income ($M)	$3.39	$5.51	$6.26
Provision for Credit Losses ($M)	$0.71	$3.37	$0.20
Net Income ($M)	$3.47	$6.09	$15.01
NIM (FTE) (%)	2.29%	3.25%	3.50%
Efficiency Ratio (Non-GAAP) (%)	75.73%	63.03%	55.77%
ROA (%)	0.38%	0.47%	1.22%
ROE (%)	4.09%	5.07%	12.70%

Note: “Revenue” reflects Street convention (net interest income + noninterest income). *Values retrieved from S&P Global.

Loan portfolio mix (period-end)

Category ($M)	Sep 30, 2024	Dec 31, 2024	Mar 31, 2025
Commercial (Taxable + Nontaxable)	$890.1	$836.0	$853.0
CRE	$2,309.6	$2,294.1	$2,275.2
Residential RE	$550.6	$551.9	$560.1
Consumer (incl. Indirect Auto)	$146.0	$132.4	$123.0
Equipment Finance	$173.5	$179.1	$180.2
Total Loans	$4,069.7	$3,993.5	$3,991.5

Deposit mix and liquidity

KPI	Sep 30, 2024	Dec 31, 2024	Mar 31, 2025
Deposit Mix (% retail/commercial/municipal/brokered)	38.6% / 33.3% / 19.7% / 8.4%	40.4% / 34.9% / 18.9% / 5.8%	42.0% / 35.7% / 16.8% / 5.5%
Uninsured Deposits (% of total)	33.8%	31.3%	30.0%
Cost of Total Deposits (%)	2.33%	2.20%	1.96%
Available Liquidity (Total)	$2.24B	$2.42B	$2.40B

Credit quality

KPI	Q3 2024	Q4 2024	Q1 2025
NPAs ($M)	$21.5	$23.0	$23.7
NPAs / Loans+REO (%)	0.53%	0.58%	0.59%
Net Charge-offs ($M)	$0.08	$0.93	$0.92
ACL ($M)	$39.34	$41.78	$41.05
ACL / Loans (%)	0.97%	1.05%	1.03%

Guidance Changes

The company did not provide formal quantitative guidance (revenue/margins/OpEx/tax) in Q1 2025 materials. Dividend policy was reaffirmed.

Metric	Period	Previous Guidance	Current Guidance	Change
Quarterly Dividend/Share	Q2 2025	$0.6175 (Q4 2024 declared)	$0.6175 payable Jun 13, 2025	Maintained

Earnings Call Themes & Trends

No Q1 2025 earnings call transcript was available in our document system. Themes below reflect company press releases.

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q1 2025)	Trend
NIM and Deposit Costs	Q3/Q4: NIM 3.26%→3.25% as Fed cuts started; cost of funds/IB deposits eased q/q	NIM 3.50% with 25 bps q/q expansion; cost of total deposits down to 1.96%	Improving
FNCB Integration	Q3: Meaningful non-recurring charges; system integration underway	M&A expenses fell to $0.2M; efficiency ratio 55.77%	Integration largely executed, benefits emerging
Credit	Q3: Day-1 non-PCD provision $14.3M; ACL to 0.97%	Provision $0.2M; ACL/loans 1.03%; NPAs 0.59%	Stabilizing
Liquidity/Uninsured Deposits	Q3/Q4: Liquidity >$2.2B; uninsured ~33–31%	Liquidity ~$2.40B; uninsured ~30%	Solid, improving mix
Balance Growth	Q3/Q4: Loans moderated post-merger; deposit mix shifting	Loans -$2.0M q/q; deposits -$90.6M (seasonal, fewer brokered CDs)	Flat to slightly negative near-term

Management Commentary

“Net interest margin… was 3.50%, an increase of 25 basis points… The cost of funds decreased 30 bps to 2.58%… cost of interest-bearing deposits decreased 29 bps to 2.46%… cost of total deposits… 1.96%.”
“Noninterest expense decreased $7.4 million… Excluding acquisition related expenses… noninterest expenses decreased $2.6 million.”
“Provision… was $0.2 million… declined… due mainly to a reduction in qualitative factors for the equipment financing loan portfolio… and a decline in the model loss rate primarily driven by a change in economic forecasting.”
“Total deposits decreased $90.6 million… due primarily to seasonal outflows… and reductions in brokered CDs.”
“Nonperforming assets were $23.7 million or 0.59%… compared to $23.0 million or 0.58%… at December 31, 2024.”

Q&A Highlights

No Q1 2025 earnings call transcript was found; therefore, Q&A themes and tone changes are unavailable from a call. This recap reflects disclosures in the 8-K/press releases .

Estimates Context

EPS: Primary EPS was $1.51 vs consensus $1.33 (2 estimates), a clear beat of ~$0.18 (≈14%). Revenue: $44.75M vs consensus $44.30M (2 estimates), a slight beat.
Street likely revises higher on NIM momentum and lower run-rate expenses; note purchase accounting accretion ($3.7M NII; ~30–32 bps of NIM) remains a tailwind to normalize over time .
Estimates (EPS, revenue, and # of estimates) are from S&P Global. Values marked with * below are retrieved from S&P Global.

Metric	Consensus	Actual	# of Estimates
Primary EPS	$1.33*	$1.51* (GAAP diluted: $1.49)	2*
Revenue ($M)	$44.30*	$44.75*	2*

Values retrieved from S&P Global.

Key Takeaways for Investors

Margin tailwind in place: deposit repricing lowered funding costs faster than asset yields, expanding NIM to 3.50% and improving PPNR; monitor sustainability as rate paths evolve and accretion normalizes .
Operating leverage is reappearing: sharp q/q OpEx reduction (and efficiency to 55.77%) supports earnings durability post-integration .
Credit metrics stable with modest provisioning and steady ACL/loans at ~1.03%; NPAs slightly higher but contained at 0.59% .
Balance dynamics soft near-term: seasonal deposit outflows and deliberate brokered CD reductions, with loans essentially flat; watch for underlying core deposit and loan traction into Q2 .
Capital and book value improved; tangible book per share rose to $37.35 (from $35.88), aided by AOCI improvement .
Shareholder returns intact: $0.6175 dividend maintained (up ~50.6% y/y); supports total return profile .
Near-term stock drivers: continued NIM expansion, expense discipline, and stable credit could support estimate revisions and sentiment; seasonal deposit rebuild and loan growth are watch items .

Additional Documents Reviewed

8-K (Item 2.02) filing incorporating the Q1 2025 earnings press release .
Q4 2024 and Q3 2024 earnings releases for trend analysis .
Dividend press release (Q2 2025 declaration) .

Appendix: Prior Quarter Snapshots (for trend)

Q4 2024: GAAP EPS $0.61; core EPS $0.99; NIM 3.25%; efficiency 63.03%; provision $3.37M; NPAs 0.58% .
Q3 2024: GAAP EPS $(0.43) due to merger-related charges; core EPS $1.64; NIM 3.26%; efficiency 53.14%; day-1 non-PCD provision $14.3M .

PEOPLES FINANCIAL SERVICES CORP. (PFIS)·Q1 2025 Earnings Summary