Peoples Reverses Second-Quarter Profit Decline

The Tip Desk · November 10, 2026 · 3 min read

Net income rose to $19.1 million, or $1.90 a share, as a credit-loss benefit and higher net interest income offset a 2-basis-point NIM dip.

Peoples Financial Services Corp. (PFIS), the bank holding company for Peoples Security Bank and Trust Company, reported net income of $19.1 million, or $1.90 a share, for the three months ended September 30, 2026, reversing a second-quarter year-over-year profit decline. Annualized return on average assets was 1.41% and return on average equity was 14.07%.

The company said the increase was primarily attributable to higher net interest income and non-interest income, partially offset by higher non-interest expense, and that the third quarter included a benefit of credit losses. Net interest income rose $1.7 million to $47.3 million from $45.6 million in the second quarter. Fully tax-equivalent net interest income rose $1.8 million to $48.3 million, as FTE interest income increased $3.8 million and interest expense rose $2.0 million.

FTE net interest margin contracted 2 basis points to 3.80% from 3.82% in the second quarter, even as the FTE yield on interest-earning assets rose 7 basis points to 5.71%. The company said it used CD specials, brokered deposits and FHLB advances to fund loan growth, and the cost of interest-bearing deposits increased 12 basis points to 2.26% while the cost of total deposits rose 11 basis points to 1.79%.

Credit costs flipped. Peoples recorded a $1.1 million benefit for credit losses, reversing a $3.1 million provision in the second quarter, citing improved asset quality, seasoning of the equipment-loan segment and lower specific reserves after nonperforming-loan resolutions. Nonperforming assets fell $4.4 million to $10.3 million, or 0.24% of loans, net and foreclosed assets, from $14.7 million, or 0.34%, at June 30, 2026, primarily from favorable resolutions of several nonaccrual assets. Net charge-offs were $0.4 million. The allowance for credit losses declined to $40.8 million, or 0.93% of loans, net, from $42.3 million, or 0.98%.

Total loans increased $60.7 million, or 5.6% annualized, to $4.4 billion at September 30, 2026, a slower linked-quarter pace than the $112.6 million, or 10.8% annualized, increase to $4.3 billion at June 30. Increases were observed in the commercial and industrial and commercial and residential real estate portfolios; consumer loans and equipment financing were relatively flat, and indirect auto declined. Total deposits increased $163.3 million, or 14.4% annualized, to $4.7 billion, faster than the $83.5 million, or 7.6% annualized, linked-quarter increase in the second quarter. Interest-bearing deposits rose $138.7 million to $3.7 billion; noninterest-bearing deposits increased $24.5 million to $971.0 million. Brokered deposits fell to 5.4% of total deposits from 7.7% at June 30. Uninsured deposits rose to 34.8% from 31.0%.

Noninterest income decreased $0.8 million to $5.7 million from $6.5 million in the second quarter, on lower merchant services and service charges and the absence of a $0.3 million gain on a branch-property sale/leaseback recorded in the second quarter. Noninterest expense increased $1.1 million to $31.7 million, lifting the efficiency ratio to 56.12% from 55.16%, with salaries up $0.5 million and occupancy and equipment up $0.4 million on higher data-processing costs.

The effective tax rate fell to 14.6% from 19.6% in the second quarter, largely due to a $1.2 million reduction from the purchase of 2025 federal tax credits. Stockholders’ equity equaled $529.3 million, or $52.87 a share, at September 30, 2026. The company declared quarterly dividends of $0.625 for each quarter of 2026.