Exhibit 99.1

NEWS RELEASE

TO BUSINESS EDITOR:

PEOPLES FINANCIAL SERVICES CORP. Reports Unaudited Third Quarter 2023 Earnings

Scranton, PA, October 30, 2023/PRNEWSWIRE/ – Peoples Financial Services Corp. (“Peoples”) (NASDAQ: PFIS), the bank holding company for Peoples Security Bank and Trust Company, today reported unaudited financial results at and for the three and nine months ended September 30, 2023.

Peoples reported net income of $6.7 million, or $0.95 per diluted share for the three months ended September 30, 2023, a 32.3% decrease when compared to $10.0 million, or $1.38 per share for the comparable period of 2022. Quarterly net income included lower net interest income of $3.7 million due to higher deposit costs, and higher operating expenses of $1.1 million mainly due to acquisition related expenses as noted below, partially offset by a lower provision for credit losses of $0.6 million and higher noninterest income of $0.4 million.

For the nine months ended September 30, 2023, net income was $23.8 million, or $3.31 per diluted share, a 17.5% decrease when compared to $29.0 million, or $4.01 per diluted share for the comparable period of 2022. Net interest income for the current period decreased $4.9 million when compared to the nine months ended September 30, 2022 as higher interest income due to increased rates was more than offset by increased funding costs. Higher operating expenses of $4.5 million were partially offset by a $2.8 million decrease to the provision for credit losses and a $0.3 million increase in noninterest income.

Core net income, a non-GAAP measure1, excludes acquisition related expenses from the previously announced combination further discussed below, of $869 thousand and $990 thousand incurred during the three and nine months ended September 30, 2023, respectively. Core net income totaled $7.5 million or $1.05 per diluted share for the three months ended September 30, 2023 compared to $10.0 million, or $1.38 per share for the comparable period of 2022. For the nine months ended September 30, 2023, core net income was $24.5 million and $3.42 per diluted share, compared to $29.0 million and $4.01 per diluted share in the year ago period.

STRATEGIC COMBINATION WITH FNCB BANCORP, INC.

On September 27, 2023, Peoples announced it had entered into a definitive agreement to strategically combine with FNCB Bancorp, Inc., the parent company of FNCB Bank (“FNCB”). The transaction is expected to close in the first half of 2024, subject to satisfaction of customary closing conditions, including regulatory approvals and shareholder approval from both Peoples and FNCB shareholders. Highlights of the proposed transaction include:

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FINANCIAL HIGHLIGHTS

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1 See reconciliation of non-GAAP financial measures on pp.18-20

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  INCOME STATEMENT REVIEW

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Third Quarter 2023 Results – Comparison to Prior-Year Quarter

Tax-equivalent net interest income, a non-GAAP measure1, for the three months ended September 30, decreased $3.7 million or 14.5% to $21.8 million in 2023 from $25.5 million in 2022. The decrease in tax equivalent net interest income was due to higher tax-equivalent interest income of $9.5 million less elevated interest expense of $13.2 million.

1 See reconciliation of non-GAAP financial measures on pp.18-20

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The higher interest income was the result of an increase in yield and average balance of earning assets. Average earning assets were $255.6 million higher in the three month period ended September 30, 2023 when compared to the year ago period. The tax-equivalent yield on the loan portfolio was 4.85% and 4.09% for the three months ended September 30, 2023 and 2022, respectively. This increase was due to the higher rates on adjustable and floating rate loans, and new loan originations. Loans, net, averaged $2.9 billion for the three months ended September 30, 2023 and $2.6 billion for the comparable period in 2022. For the three months ended September 30, the tax-equivalent yield on total investments increased to 1.75% in 2023 from 1.67% in 2022. Average investments totaled $542.5 million in the three months ended September 30, 2023 and $656.4 million in the three months ended September 30, 2022.

The increased interest expense in the three months ended September 30, 2023 was due primarily to higher rates on consumer, business and municipal deposits driven by the higher interest rate environment. The Company's total cost of deposits increased during the three months ended September 30, 2023 compared to the year ago period by 156 basis points to 2.00%, and the cost of interest-bearing deposits increased 194 basis points to 2.53% from 0.59% in the previous year three month period. Short-term borrowings averaged $21.8 million in the current period and added $0.3 million of interest expense at an average cost of 5.31% compared to $78.9 million in short-term borrowings and interest expense of $0.5 million in the year ago period at an average cost of 2.30%.

Average interest-bearing liabilities increased $319.3 million for the three months ended September 30, 2023, compared to the corresponding period last year due primarily to an increase in non-maturity and brokered certificate of deposits. Average noninterest-bearing deposits decreased $82.5 million or 10.7% from the prior period and represented 21.0% of total average deposits in the period, due in part to a shift to interest-bearing accounts.

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For the three months ended September 30, 2023, a credit of $0.2 million was recorded to the provision for credit losses compared to a provision of $0.5 million in the year ago period. The current period provision credit was due to the impact of various factors such as updated economic assumptions as well as changes in qualitative adjustments, portfolio composition and asset quality. Changes to qualitative factors related to lower loan growth. The year ago period included a provision for credit losses of $0.5 million based on our previous allowance for credit losses methodology and then current conditions.

Noninterest income for the three months ended September 30, 2023 was $3.7 million, a $0.4 million increase from the prior year’s quarter. Higher retail and commercial account service charges and swap related revenue, was partially offset by lower mortgage banking fees.

Noninterest expense increased $1.1 million or 7.0% to $17.1 million for the three months ended September 30, 2023, from $15.9 million for the three months ended September 30, 2022. Acquisition related expenses, including legal and consulting and advisory fees, totaled $0.9 million. Salaries and employee benefits increased $0.3 million or 3.7% due to annual merit increases; new hires; lower deferred loan origination costs; and higher employee benefit costs. Occupancy and equipment expenses were higher by $0.3 million in the current period due to the increase in information technology expenses and higher facilities maintenance costs. Other expenses decreased $0.2 million due primarily to lower Pennsylvania shares taxes, partially offset by higher FDIC assessments and loan account processing fees.

The provision for income tax expense was $1.3 million for the three months ended September 30, 2023 and $2.0 million for the three months ended September 30, 2022, a decrease of $0.7 million due to lower taxable income.

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

Our net interest margin, a non-GAAP measure1, for the nine months ended September 30, 2023 was 2.62%, a decrease of 42 basis points over the prior year’s period of 3.04%. Tax-equivalent net interest income, a non-GAAP measure1, for the nine months ended September 30 decreased $4.8 million, or 6.6%, to $67.9 million in 2023 from $72.7 million in 2022. The decrease in net interest income was the result of higher loan interest income due to increased volume and rates on new loans and those that are repricing, offset by the higher cost of deposit funding. In addition, the 2023 period included $0.2 million in Small Business Administration Paycheck Protection Program (PPP) interest and fees, compared to the $1.7 million in the year ago period. Investments decreased $85.0 million compared to September 30, 2022, as the Company engaged in investment sales during the first three months of 2023 to, in part, fund loan growth and repay short-term borrowings. The yield on earning assets was 4.29% for the first nine months of 2023 compared to 3.39% for the nine month period ended September 30, 2022. The cost of interest bearing liabilities during the nine month period ended September 30, 2023 increased 177 basis points to 2.26% from 0.49% for the nine months ended September 30, 2022 as the cost of all deposit products and short-term borrowing costs increased.

1See reconciliation of non-GAAP financial measures on pp.18-20

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Furthermore, the Company, as part of its strategy to improve on-balance sheet liquidity, added $259.0 million of brokered certificate of deposits at an average cost of 5.16% during the first nine months of 2023.

For the nine months ended September 30, 2023, a credit to the provision for credit losses of $1.1 million was recorded due to various factors including updated economic assumptions as well as changes in qualitative factors, portfolio composition and improved asset quality.

Noninterest income was $10.9 million for the nine months ended September 30, 2023 and $10.6 million for the comparable period ended September 30, 2022.  During the period, service charges, fees and commissions increased $0.6 million, due in part to a $0.4 million increase in consumer and commercial deposit service charges and increased dividends on FHLB stock. Merchant services income decreased $0.3 million during the nine months ended September 30, 2023 compared to the prior year on lower transaction volume incentives. Interest rate swap revenue decreased $0.2 million on lower origination volume and market value adjustments.

Noninterest expense for the nine months ended September 30, 2023, was $50.2 million, an increase of $4.5 million from $45.7 million for the nine months ended September 30, 2022. The increase was due primarily to $2.0 million in higher salaries and benefits expense due to annual merit increases, expansion market investments and lower deferred loan origination costs, which are recorded as a contra-salary expense, of $0.7 million due to lower loan origination volume compared to the year ago period. Occupancy and equipment expenses were higher by $0.6 million in the current period due to higher technology costs related to increased account and transaction volumes and increased facility expenses. The year ago period included $0.5 million of gains from the sale of other real estate owned, which is included in noninterest expense. Acquisition related expenses totaled $1.0 million. Other expenses including professional fees, loan account processing fees, Pennsylvania shares tax and FDIC assessments accounted for an increase of $0.7 million.

The provision for income taxes for the nine months ended September 30, 2023 decreased $1.1 million and the effective tax rate was 16.0% as compared to 16.2% in the prior period.

BALANCE SHEET REVIEW

At September 30, 2023, total assets, loans and deposits were $3.8 billion, $2.9 billion and $3.4 billion, respectively. During the nine month period, investment sales, deposit growth and FHLB term borrowings were utilized to fund loan growth and repay short-term borrowings.

Loan growth for nine months ended September 30, 2023 was $140.9 million or 6.9% annualized. Growth slowed during the three months ended September 30, 2023 and June 30, 2023, totaling $27.7 million and $25.2 million, respectively, when compared to loan growth of $88.0 million during the first three months of 2023. The Company has intentionally slowed loan growth and has focused on building liquidity due to economic uncertainty. Commercial real estate loans made up the majority of the growth with residential real estate loans also increasing. At September 30, 2023, gross PPP loans remaining totaled $22.0 million and net deferred PPP fees remaining totaled $0.2 million.

Total investments were $468.6 million at September 30, 2023, compared to $569.0 million at December 31, 2022. At September 30, 2023, the available-for-sale securities totaled $382.2 million and the held-to-maturity securities totaled $86.2 million. The unrealized losses on the held-to-maturity portfolio totaled $17.4 million and $14.6 million at September 30, 2023 and December 31, 2022, respectively. During the three month period ended March 31, 2023, $65.6 million in U.S. Treasury, tax-exempt municipals and mortgage-backed securities were sold at a net gain of $81 thousand. The proceeds were used to pay-down higher cost short-term borrowings.

Total deposits increased $318.5 million during the nine months ending September 30, 2023. Noninterest-bearing deposits decreased $81.7 million and interest-bearing deposits increased $400.2 million during the nine months ended September 30, 2023. The increase in deposits was due to a $248.0 million net increase in brokered deposits, $135.3 million in commercial deposits and a $53.7 million increase in municipal deposits, partially offset by $118.4 million in reduced retail deposits. The Company added $259.0 million of longer-term callable brokered CDs during the first six months of 2023 to improve its on-balance sheet liquidity position and mitigate risk of higher rates. The Company has the option to call the CDs after an initial three or six month period.

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The deposit base consisted of 41.0% retail accounts, 32.8% commercial accounts, 18.1% municipal relationships and 8.1% brokered deposits at September 30, 2023. At September 30, 2023, total estimated uninsured deposits, were $955.9 million, or approximately 28.4% of total deposits as compared to $1.1 billion, or 36.9% of total deposits at December 31, 2022. Included in the uninsured total at September 30, 2023 is $475.7 million of municipal deposits collateralized by letters of credit issued by the FHLB and pledged investment securities, and $0.2 million of affiliate company deposits. As an additional resource to our uninsured depositors, we offer all depositors access to IntraFi's CDARS and ICS programs which allows deposit customers to obtain full FDIC deposit insurance while maintaining their relationship with our Bank.

During the nine months ended September 30, 2023, the Company utilized a portion of its available line at the FHLB and increased its long-term debt $25.0 million due to favorable pricing on the borrowings versus alternative funding sources.

In addition to deposit gathering and our current long term borrowings, we have additional sources of liquidity available such as cash and cash equivalents, overnight borrowings from the FHLB, the Federal Reserve’s Discount Window and Borrower-in-Custody program, correspondent bank lines of credit, brokered deposit capacity and unencumbered securities. At September 30, 2023, the Company had $254.5 million in cash and cash equivalents, an increase of $216.7 million from December 31, 2022. Although we do not plan to access the Federal Reserve's Bank Term Funding Program (BTFP), we have $4.0 million in collateral availability and an additional $371.4 million of borrowing capacity based on the par value of unencumbered securities available as collateral under this line. At September 30, 2023, we had $1.6 billion in available additional liquidity representing 41.8% of total assets, 47.5% of total deposits and 167.3% of uninsured deposits. For additional information on our deposit portfolio and additional sources of liquidity, see the tables on page 16.

The Company maintained its well capitalized position at September 30, 2023. Stockholders' equity equaled $324.4 million or $46.07 per share at September 30, 2023, and $315.4 million or $44.06 per share at December 31, 2022. The increase in stockholders’ equity from December 31, 2022 is primarily attributable to net income offset in part by an increase to accumulated other comprehensive loss (“AOCI”) resulting from an increase in the unrealized loss on available for sale securities. The net after tax unrealized loss on available for sale securities included in AOCI at September 30, 2023 and December 31, 2022 was $55.7 million and $52.0 million, respectively.

Tangible stockholders' equity, a non-GAAP measure1, increased to $37.07 per share at September 30, 2023, from $35.19 per share at December 31, 2022. Dividends declared for the nine months ended September 30, 2023 amounted to $1.23 per share, a 4.2% increase from the 2022 period, representing a dividend payout ratio of 37.2% of net income. During the nine months ended September 30, 2023, 131,686 shares were purchased and retired under the Company’s common stock repurchase plan at an average price per share of $44.29.

ASSET QUALITY REVIEW

Asset quality metrics remained strong and continued to improve. Nonperforming assets were $3.8 million or 0.13% of loans, net and foreclosed assets at September 30, 2023, compared to $4.1 million or 0.15% of loans, net and foreclosed assets at December 31, 2022. As a percentage of total assets, nonperforming assets improved to 0.10% at September 30, 2023 compared to 0.12% at December 31, 2022.  The decrease in nonperforming assets was due to the reclassification of accruing troubled debt restructurings due to the January 1, 2023 change in accounting guidance noted below, reduced levels of loans 90 days or more past due and still accruing and collection activities. At September 30, 2023, the Company had no foreclosed properties.

Effective January 1, 2023, the Company transitioned to ASU 2016-13 Financial Instruments – Credit Losses (Topic 326), commonly referred to as Current Expected Credit Losses (CECL). As a result of the transition to CECL, the allowance for credit losses was reduced $3.3 million to $24.2 million effective January 1, 2023 and the reserve for unfunded commitments was increased $270 thousand to $450 thousand. The cumulative adjustment, net of tax, was recorded as an adjustment to retained earnings effective January 1, 2023.

During the nine month period ended September 30, 2023, a $1.1 million credit to loan losses and net charge-offs of $76 thousand were recorded. The allowance for credit losses equaled $23.0 million or 0.80% of loans, net at September 30, 2023 compared to $27.5 million or 1.01% of loans, net, at December 31, 2022. Loans charged-off, net of recoveries, for the nine months ended September 30, 2023 were minimal at $76 thousand, compared to $261 thousand or 0.02% of average loans for the comparable period last year.

1See reconciliation of non-GAAP financial measures on pp.18-20

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About Peoples:

Peoples Financial Services Corp. is the parent company of Peoples Security Bank and Trust Company, a community bank serving Allegheny, Bucks, Lackawanna, Lebanon, Lehigh, Luzerne, Monroe, Montgomery, Northampton, Schuylkill, Susquehanna, and Wyoming Counties in Pennsylvania, Middlesex County in New Jersey and Broome County in New York through 28 offices. 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, flexible and reasonable operating procedures and consistently applied credit policies.

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 and core net income ratios. 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.

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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 Peoples Security Bank and Trust Company (collectively, “Peoples”) 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 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: prevailing economic and political conditions, particularly in our market area; the impact on financial markets from geopolitical conflicts such as the military conflict between Russia and Ukraine and the developing conflict in Israel; credit risk associated with our lending activities; changes in interest rates, loan demand, deposit flows, real estate values and competition; changes in customer behaviors, including consumer spending, borrowing and savings habits; changes in accounting principles, policies, and guidelines including our adoption of Current Expected Credit Losses (CECL) methodology, and any potential volatility in the Company’s operating results due to application of the CECL methodology; changes in any applicable law, rule, regulation or practice with respect to tax or legal issues; our ability to identify and address cyber-security risks and other economic, competitive, governmental, regulatory and technological factors affecting Peoples’ operations, pricing, products and services; adverse developments in the financial industry generally, such as recent bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer and client behavior and other factors that may be described in Peoples’ 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.

In addition to these risks, acquisitions and business combinations present risks other than those presented by the nature of the business acquired. Acquisitions and business combinations and, specifically, the pending strategic combination involving the merger of FNCB with and into Peoples (the “Merger”) may be substantially more expensive to complete than originally anticipated, and the anticipated benefits may be significantly harder-or take longer-to achieve than expected.

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As regulated financial institutions, our pursuit of attractive acquisition and business combination opportunities could be negatively impacted by regulatory delays or other regulatory issues. Regulatory and/or legal issues related to the pre-acquisition operations of an acquired or combined business may cause reputational harm to Peoples following the acquisition or combination, and integration of the acquired or combined business with ours may result in additional future costs arising as a result of those issues.

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.

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Additional Information regarding the Merger and Where to Find It

In connection with the proposed Merger, Peoples will file a registration statement on Form S-4 with the SEC. The registration statement will include a joint proxy statement of Peoples and FNCB, which also constitutes a prospectus of Peoples, that will be sent to shareholders of Peoples and shareholders of FNCB seeking certain approvals related to the proposed transaction.

The information contained in this release does not constitute an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. INVESTORS AND SHAREHOLDERS OF PEOPLES AND FNCB AND THEIR RESPECTIVE AFFILIATES ARE URGED TO READ, WHEN AVAILABLE, THE REGISTRATION STATEMENT ON FORM S-4, THE JOINT PROXY STATEMENT/PROSPECTUS TO BE INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT PEOPLES, FNCB AND THE PROPOSED TRANSACTION.

Investors and shareholders will be able to obtain a free copy of the registration statement, including the joint proxy statement/prospectus as well as other relevant documents filed with the SEC containing information about Peoples and FNCB without charge, at the SEC s website www.sec.gov. Copies of documents filed with the SEC by Peoples will be made available free of charge in the "Investor Relations" section of Peoples' website, www.psbt.com under the heading "SEC Filings." Copies of documents filed with the SEC by FNCB will be made available free of charge in the "About FNCB" section of FNCB's website,www.fncb.com.

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[TABULAR MATERIAL FOLLOWS]

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Summary Data

Peoples Financial Services Corp.

Five Quarter Trend (Unaudited)

(In thousands, except share and per share data)

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Peoples Financial Services Corp.

Consolidated Statements of Income (Unaudited)

(In thousands, except per share data)

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9

Peoples Financial Services Corp.

Consolidated Statements of Income (Unaudited)

(In thousands, except per share data)

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10

Peoples Financial Services Corp.

Net Interest Margin (Unaudited)

(In thousands, fully taxable equivalent basis)

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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%. 

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Peoples Financial Services Corp.

Net Interest Margin (Unaudited)

(In thousands, fully taxable equivalent basis)

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